Exhibit 10.46

 

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American Sands Energy Corp.: Sunnyside Project
Proposal No. ESPP14038-01
Page 2 of 12 [flsmidth-small.jpg] 

 

 

PROPRIETARY AND CONFIDENTIAL STATEMENT

 

This proposal and all later refinements and amendments (collectively,
“Proposal”) contain intellectual property, technical know-how, pricing and cost
data and other highly confidential information that are proprietary to FLSmidth.
This Proposal and related documents may only be used as a basis to evaluate
FLSmidth as a potential supplier of equipment, technology, services and
technical solutions. For that purpose, you may disclose and distribute this
Proposal to persons in your organization and others retained by you to evaluate
its contents. However, no part of this Proposal can otherwise be disclosed or
distributed to others or quoted, copied or reproduced in any form for any
purpose without FLSmidth’s prior express written permission.

 

Revision Log

 

Revision Date Responsible Description

 

A

 

11/06/14

 

P. Keyser

Proposal for Review

& Approval

B 17/06/14 P. Keyser As Sold / Approved

 

 

IN WITNESS WHEREOF, American Sands Energy Corp. has approved the Scope of Work
hereto have executed this Agreement as of the date first set forth below.

 

American Sands Energy Corporation   FLSmidth USA,Inc.           By: William
Gibbs   By: Brian T. Field   Title: CEO   Title: Vice President   Signature: 
/s/ William Gibbs   Signature:  /s/ Brian T. Field   Date:   6/26/14   Date:
6/25/14  

 

 

 

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11 June 2014

 

American Sands Energy Corp. Sunnyside Project

201 S. Main St., Suite 1800

Salt Lake City, UT 84111

 

Ref: Engineering Activities for CAPEX and OPEX Estimate

Attention: Mr. Robin Gereluk

 

Dear Mr. Gereluk:

 

FLSmidth is pleased to provide the following proposal for the Sunnyside Project
Preliminary Budget Engineering Activities.

 

For the execution of the project, FLSmidth recommends the following approach:

 

Phase 1: FLSmidth will proceed with Preliminary Budget level efforts sufficient
to confirm flowsheets, equipment lists, preliminary General Arrangements, costs
and schedule to complete the design and supply. As a primary deliverable of this
Phase, FLSmidth will prepare and submit a report with supporting doucmentation
to ASEC for the CAPEX and OPEX of a 5,000 bbl/day oil sands plant and a budget
proposal for supply of a defined FLS scope on an Engineering, Procurement, and
technical Services (EPS) basis.

 

Phase 2: Upon approval of ASEC, FLSmidth will proceed with Detailed Engineering,
procurement of all required equipment, and all Project Management functions
within the EPS battery limits.

 

This proposal for the Phase 1, will be developed over a period of 2 - 3 months.

 

We trust the enclosed meets your expectations. Please let us know how we may be
of further assistance.

 

Sincerely,

 

FLSmidth USA, Inc.

 

 

/s/ Paul M. Keyser                             

Paul M. Keyser

Global Director – Extended Scope

Metallurgical Technologies

 

 

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TABLE OF CONTENTS

 

 

PROPRIETARY AND CONFIDENTIAL STATEMENT 2     REVISION LOG 2     PROPOSAL LETTER
3     11 JUNE 2014 3     1.  PROPOSAL SCOPE 5 1.1.  DIVISION OF RESPONSIBILITY
(DOR) MATRIX  5 1.2.  BATTERY LIMIT / ASSUMPTIONS 6     2. PROJECT ORGANIZATION
CHART – FLSMIDTH 7     3. PRICING AND COMMERCIAL TERMS 8 3.1.  PRICING 8
3.2.  GENERAL TERMS AND CONDITIONS 8     APPENDIX A: MUTUAL NON-DISCLOSURE AND
NON-USE AGREEMENT 10     APPENDIX B: TERMS AND CONDITIONS 16     APPENDIX C:
REPORT TABLE OF CONTENTS (DRAFT) 22

 

 

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1. PROPOSAL SCOPE

 

The Scope of Work included in this proposal is to perform the Preliminary Budget
Engineering activities to provide ASEC with a Class IV capital cost estimate
(+/-25%) and OPEX estimate for a proposed 5,000 bbl/d mined oil sands plant near
the city of Price, Utah.

 

1.1. Division of Responsibility (DOR) Matrix

 

The Scope of Work included on this proposal is according to the following DOR.

 

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The information transmitted by this document is the proprietary and confidential
property of FLSmidth and may not be duplicated, disclosed or utilized without
written consent from FLSmidth.

 

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1.2. Battery Limit / Assumptions

 

The block flow diagram below defines the battery limits of the study. FLSmidth
will, however, incorporate ASEC supplied information into the study with respect
to the distillation section of the plant.

 

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2. PROJECT ORGANIZATION CHART - FLSMIDTH

 

The Services will be performed primarily through the FLSmidth’s Metallurgical
Technologies Group, Extended Scope and Plant Systems Group within the Mineral
Processing Division, headquartered in Salt Lake City, Utah, USA. Our group is
uniquely positioned to provide the greatest value to ASEC. With an industry
experienced team, full-discipline engineering and project managers and a
world-class metallurgical testing laboratory combined with direct equipment
design and supply, FLSmidth can deliver superior designs at lower cost and in
less time than the traditional EPCM approach. Equipment supply specialists are
an integral part of the Project Execution Team. Thus, the client will benefit
from faster turn-around of OEM data, more reliable deliveries, and a more
fully-integrated Execution Plan. This translates directly into compressed
execution schedules, lower capital and assurances that the process will perform
as intended.

 

The Organization Chart proposed by FLSmidth is as follows:

 

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3. PRICING AND COMMERCIAL TERMS

 

3.1. Pricing

 

The total cost for development of the Preliminary Budget Study is provided
below. FLSmidth will supply the services on a T&M basis up, not-to-exceed the
value below.

 

 

ITEM DESCRIPTION HOURS USD 1 Engineering Support Man Hours 1,243 $151,771      
  2 Travel Provision Not Included Not Included

 

Notes:

 

1- Meetings

A) Travel Expenses (Tickets, living expenses and hotel) will be under
reimbursable expenses and are excluded from this estimate.

 

2- General Notes

Note 1: Pricing excludes other taxes, duties or freight

Note 2: Proposal Validity 30 days

 

3.2. General Terms and Conditions

 

NDA Agreement Requirement:

 

The MUTUAL NON-DISCLOSURE AND NON-USE AGREEMENT, executed on 3 June 2014 and
signed by both ASEC and FLS will remain in effect.

 

Schedule:

 

FLSmidth will develop the project in 2-3 months commencing after the Project
Kick-Off Meeting is completed.

 

Terms and Conditions:

 

FLSmidth is including its standard Terms and Conditions are attached an made
part of this proposal.

 

Payment Terms:

 

FLSmidth proposes a T&M, not-to-exceed Contract, under the following conditions:

 

•FLSmidth shall invoice on or about the effective date of the Contract and the
Customer shall pay Contractor a twenty percent (20%) down payment of the
Contract Price for Engineering Services (“Down Payment”).

 

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•FLSmidth shall invoice the Customer on a monthly basis for the hours expended
during the previous month.

 

•Should the total of all invoices (Down Payment plus monthly invoices) the
not-to-exceed price less 10% be reached prior to completed of the project,
FLSmidth will stop monthly invoices until the the study report is delivered to
the Customer.

 

•Upon delivery of the Report in electronic format, FLSmidth will invoice the
remaining 10% of the contract value.

 

•Customer shall make payment of the invoiced amount no later than 15 (15) Days
after the date of Contractor’s invoice for such Engineering Services.

 

•Payments by the Customer to FLSmidth shall be by Electronic Transfer.

 

 

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APPENDIX A: MUTUAL NON-DISCLOSURE AND NON-USE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

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MUTUAL NON-DISCLOSURE AND

NON-USE AGREEMENT FOR PROJECTS

 

This Non-Disclosure and Non-Use Agreement (“Agreement”) is made this   3rd   day
of   June  , 2014    ,

 

BETWEEN [1]:

FLSmidth USA, Inc.        , a Delaware corporation (“FLSmidth”), with an office
at 7158 S. FLSmidth Drive, Midvale, Utah
84047-5559                                 ,

    AND [2]:
  American Sands Energy Corporation                 , a x corporation
£ partnership £                      organized under the laws of
Delaware          (“Company”), its principal place of business being: 201 S.
Main St., Suite 1800 Salt Lake City, UT 84111    .

 

BACKGROUND:

 

A.Each party or its client, or both, have certain technical and commercial
information which it considers to be proprietary and confidential.

 

B.

Each party or its client, or both, have certain technical and commercial
information which it considers to be proprietary and confidential. Each party
wishes to disclose to the other party Confidential Information in relation to
the Purpose. Each party wishes to ensure that the other party maintains the
confidentiality of its Confidential Information. In consideration of the
benefits to the parties of the disclosure of the Confidential Information, the
parties have agreed to comply with the following terms in connection with the
use and disclosure of Confidential Information.

 

NOW, THEREFORE, in consideration of the mutually binding covenants and
conditions set forth herein, as well as for other good and valuable
consideration, the parties agree as follows:

 

1.DEFINITIONS

 

1.1The definitions and rules of interpretation in this article apply in this
Agreement.

Confidential Information: all confidential information (however recorded,
preserved or disclosed) disclosed or made available directly or indirectly
(hereinafter “disclosed” or “disclose(s)”) by a party or its Representatives to
the other party or that party's Representatives, or both, on or after the date
of this Agreement in connection with:

 

(a)the Purpose;

 

(b)any information that would be regarded as confidential by a reasonable
business person relating to:

 

(i)the business, affairs, customers, clients, suppliers, plans, intentions, or
market opportunities of the Disclosing Party; and

 

(ii)the operations, processes, product information, systems, system services,
know-how, designs, trade secrets technical data, design information,
developments, discoveries, inventions, ideas, and theories of the Disclosing
Party; or

 

 

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(c)any information developed by the parties in the course of carrying out this
Agreement.

 

Disclosing Party: a party to this Agreement which discloses Confidential
Information.

 

Purpose: to enable Company to solicit offers, bids or quotations from FLSmidth
for the supply of proprietary process and plant designs, proprietary and
auxiliary equipment, and technical services, and, if a contract is executed by
and between FLSmidth and Company, to enable FLSmidth to furnish or supply such
proprietary process and plant designs, proprietary and auxiliary equipment and
spare parts and technical services.

 

Recipient: a party to this Agreement which receives or obtains directly or
indirectly Confidential Information.

 

Representative: employees, officers, agents and other representatives of a
party, as the case may be.

 

2.OBLIGATIONS OF CONFIDENTIALITY

 

2.1The Recipient shall keep the Disclosing Party's Confidential Information
confidential and, except with the prior written consent of the Disclosing Party,
shall not, and shall ensure that its Representatives shall not:

 

(a)use or exploit the Confidential Information in any way except for the
Purpose; or

 

(b)disclose the Confidential Information in whole or in part to any third party,
except as expressly permitted by this Agreement; or

 

(c)copy, reduce to writing or otherwise record the Confidential Information
except as strictly necessary for the Purpose.

 

2.2The Recipient may only disclose the Disclosing Party's Confidential
Information to those of its Representatives who need to know this Confidential
Information for the Purpose, provided that:

 

  (a) it informs these Representatives of the confidential nature of the
Confidential Information before disclosure; and         (b) at all times, it is
responsible for these Representatives' compliance with the obligations set out
in this Agreement.

 

2.3A party may disclose Confidential Information to the extent required by law,
by any governmental or other regulatory authority or by a court or other
authority of competent jurisdiction provided that, to the extent it is legally
permitted to do so, it gives the other party as much notice of this disclosure
as possible.

 

2.4No party shall make, or permit any person to make, any public announcement
concerning this Agreement, the Purpose or its prospective interest in the
Purpose without the prior written consent of the other party (such consent not
to be unreasonably withheld or delayed) except as required by law or any
governmental or regulatory authority or by any court or other authority of
competent jurisdiction. No party shall make use of the other party's name or any
information acquired through its dealings with the other party for publicity or
marketing purposes without the prior written consent of the other party.

 

 

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3.EXCLUSIONS

 

Excluded from the obligations of this Agreement is any information that:

 

(a)is or becomes generally available to the public other than as a result of its
disclosure by the Recipient or its Representatives in breach of this Agreement;
or

 

(b)was available to the Recipient on a non-confidential basis prior to
disclosure by the Disclosing Party; or

 

(c)was, is or becomes available to the Recipient on a non-confidential basis
from a person who, to the Recipient's knowledge, is not bound by a
confidentiality agreement with the Disclosing Party or otherwise prohibited from
disclosing the information to the Recipient; or

 

(d)was lawfully in the possession of the Recipient before the information was
disclosed to it by the Disclosing Party; or

 

(e)the parties agree in writing is not confidential or may be disclosed; or

 

(f)is developed by or for the Recipient independently of the information
disclosed by the Disclosing Party.

 

4.RETURN OF INFORMATION

 

At the request of the Disclosing Party, the Recipient shall:

 

(a)return to the Disclosing Party all documents and materials (and any copies)
containing, reflecting, incorporating, or based on the Disclosing Party's
Confidential Information and shall also destroy any material it prepared which
incorporates any Confidential Information, and shall promptly certify such
destruction in a writing to Disclosing Party;

 

(b)erase all the Disclosing Party's Confidential Information from its computer
systems or which is stored in electronic form (to the extent possible); and

 

(c)certify in writing to the Disclosing Party that it has complied with the
requirements of this article, provided that a Recipient may retain documents and
materials containing, reflecting, incorporating, or based on the Disclosing
Party's Confidential Information to the extent required by law or any applicable
governmental or regulatory authority. The provisions of Article 2 shall continue
to apply to any such documents and materials retained by the Recipient, subject
to Article 3.

 

5.RESERVATION OF RIGHTS AND ACKNOWLEDGEMENT

 

5.1All Confidential Information shall remain the property of the Disclosing
Party. Each party reserves all rights in its Confidential Information. No
rights, including, but not limited to, intellectual property rights, in respect
of a party's Confidential Information are granted to the other party and no
obligations are imposed on the Disclosing Party other than those expressly
stated in this Agreement.

 

5.2Except as expressly stated in this agreement, no party makes any express or
implied warranty or representation concerning its Confidential Information, or
the accuracy or completeness of the Confidential Information.

 

 

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5.3The Recipient acknowledges that damages alone would not be an adequate remedy
for the breach of any of the provisions of this Agreement. Accordingly, without
prejudice to any other rights and remedies it may have, the Disclosing Party
shall be entitled to seek equitable relief (including without limitation
injunctive relief) concerning any threatened or actual breach of any of the
provisions of this agreement.

 

6.TERM AND TERMINATION

 

6.1Either party may at any time elect to discontinue providing Confidential
Information and to terminate this Agreement, effective on the giving of notice
thereof in writing to the other party. Upon the giving of such notice, except as
otherwise provided in this Agreement, the obligations and rights of the parties
when providing and receiving Confidential Information hereunder and the right to
use the Confidential Information for the Purpose shall cease. The obligations of
each party accrued during the term of this Agreement shall continue for a period
of 5 years from the termination of this Agreement provided that the Recipient’s
obligations with respect to any Confidential Information that is comprised of
trade secrets shall continue for so long as the information retains its trade
secret status.

 

6.2Termination of this Agreement shall not affect any accrued rights or remedies
to which either party is entitled.

 

7.MISCELLANEOUS

 

7.1Entire Agreement and Variation.

 

(a)This Agreement constitutes the whole agreement between the parties and
supersedes all previous agreements between the parties relating to its subject
matter. Each party acknowledges that, in entering into this Agreement, it has
not relied on, and shall have no right or remedy in respect of, any statement,
representation, assurance or warranty (whether made negligently or innocently)
other than as expressly set out in this Agreement. Nothing in this clause shall
limit or exclude any liability for fraud or for fraudulent misrepresentation.

 

(b)No variation of this Agreement shall be effective unless it is in writing and
signed by each of the parties (or their authorised representatives).

 

7.2No Waiver. Failure to exercise, or any delay in exercising, any right or
remedy provided under this Agreement or by law shall not constitute a waiver of
that or any other right or remedy, nor shall it preclude or restrict any further
exercise of that or any other right or remedy. No single or partial exercise of
any right or remedy provided under this Agreement or by law shall preclude or
restrict the further exercise of that or any other right or remedy.

 

7.3Severability. All provisions of this Agreement are severable, and the
unenforceability or invalidity of any of the provisions of this Agreement shall
not affect the validity or enforceability of the remaining provisions of this
Agreement. If any provision of this Agreement shall be found by a court of
competent jurisdiction to be unenforceable in any respect, then the court shall
revise such provision the least amount necessary in order to make it
enforceable.

 

 

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7.4Assignment. Except as otherwise provided in this Agreement, no party may
assign, sub-contract or deal in any way with, any of its rights or obligations
under this Agreement or any document referred to in it without the written
permission of the other party.

 

7.5Independent Contractors. FLSmldth and Company are and will at all times
solely remain Independent contractors of the other, and neither the execution
nor delivery of this Agreement, nor the disclosure and receipt of the
Confidential Information hereunder in any way implies or creates any onus or
obligation on the part of either FLSmidth or the Company to enter into any
business relationship or contract, or to purchase any product(s) or service(s).
Nothing in this Agreement shall, nor Is Intended to, constitute the parties as
principal-agent, partners, or trustee-beneficiary of each other.

 

7.6Governing Law and Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the jurisdiction where FLSmidth's main
office is located (Pennsylvania for FLSmidth Inc. and Utah for FL.Smldth USA
Inc.), notwithstanding the result that otherwise may arise from application of
the conflict of law rules of any competent jurisdiction. All disputes
concerning, arising from or relating In any way to this Agreement shall be
decided solely in the courts of the jurisdiction where FLSmidth's main office Is
located. The Parties agree that such courts shall have In personam jurisdiction
and venue over each of them.

 

7.7Counterparts. This Agreement may be executed in any number of counterparts,
by original or facsimile signature, each of which shall be deemed to be an
original and all counterparts taken together will be deemed to constitute one
and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth below.

 

 

American Sands Energy Corporation   FLSmidth USA,Inc.           By: William
Gibbs   By: Brian T. Field   Title: Chairman/CEO   Title: Vice President,
MetTech   Signature:  /s/ William Gibbs   Signature:      Date:   6/5/14   Date:
   

 

 

 

 

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APPENDIX B: TERMS AND CONDITIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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STANDARD TERMS AND CONDITIONS FOR SUPPLY OF ENGINEERING SERVICES

 

1.DEFINITIONS:

 

(a)“FLS” shall mean the FLSmidth entity providing the proposal.

(b)“Buyer” shall mean the purchaser, its representatives and/or its agents
acting on its behalf.

(c)“Proprietary Data” shall mean engineering, drawings, specifications and/or
instructions created by FLS.  (d)“Work” means the services that FLS is to
perform or provide under this Contract as set forth in FLS’ proposal.

 

2.PREVAILING DOCUMENTATION:

 

(a)FLS’ proposal, including these terms and conditions, and any timely
acceptance resulting from, arising out of, or connected with this proposal,
shall constitute the contract (the “Contract”), regardless of any rejection or
statement to the contrary in any document, which rejection, statement, and all
additional or different terms or conditions, are rejected unless expressly
accepted in writing by an authorized representative of FLS. No course of
dealing, usage of trade or course of performance may be used to imply or add
terms or conditions to or amend the terms or conditions of the Contract.

(b)FLS’ proposal, these terms and conditions, any confidentiality agreement
executed by the parties prior to or concurrent with the formation of the
Contract, and any conditions agreed to in writing by the parties embody the
entire understanding between FLS and Buyer. The Contract may only be amended by
a written Change Order signed by authorized representatives of both parties.

(c)Unless otherwise stated elsewhere in this proposal, or withdrawn or modified
by FLS at an earlier date, the proposal is valid for thirty (30) days. FLS
reserves the right to withdraw, or change the terms of this proposal at any time
before formation of the Contract.

(d)FLS’ obligation under the Contract shall not commence until the date when (i)
any down payment required in the proposal has been received by FLS; and (ii) any
Letter of Credit or other security instrument for payment as required in the
proposal has been received by FLS (the “Commencement Date”). If the Commencement
Date does not occur within thirty-one (31) days of the date on which the
Contract is executed, FLS may, at its option, either renegotiate the Contract
price and terms or terminate the Contract.

(e)If FLS was authorized by Buyer to begin any part of the Work before the
Commencement Date, all such Work shall be deemed to have been performed solely
under and subject to these terms. Payments for such Work shall be credited
against the Contract price.  (f)Article headings are provided for convenience
and are not to be used in construing this Contract.

 

3.CONFIDENTIAL INFORMATION:

 

(a)All drawings, specifications, instructions, manuals, products, intellectual
property and other such information provided and/or furnished by FLS, whether in
written, oral or electronic format, as well as any discovery, invention,
development or improvement made or conceived by either party directly or
indirectly as a result of FLS performing the Work hereunder (collectively,
“Confidential Information”) shall be regarded as and shall remain the exclusive
property of FLS and shall not be disclosed by Buyer to any third party without
the express written permission of FLS. Buyer agrees to execute a confidentiality
agreement in a form acceptable to FLS upon request.  (b) All Proprietary Data
used by FLS in performing the Contract shall remain the sole property of FLS,
regardless of its disclosure to Buyer or persons acting on Buyer’s behalf.
Proprietary Data is confidential and Buyer shall not disclose any part of the
data to others without the prior written consent of FLS. FLS grants to Buyer a
non-exclusive license to utilize the Proprietary Data for purposes of design,
installation and construction, maintenance, improvement or repair of the
equipment, system, facility, works, or process which is the subject of the Work.
Use of Proprietary Data by Buyer is limited to the purposes of the Contract.
 (c)FLS and Buyer agree that, if Buyer breaches its obligations under this
Article: (i) the confidentiality of FLS’ Confidential Information, its
proprietary rights and interests in its Confidential Information and Proprietary
Data, and its business will be substantially threatened and impaired; (ii)
monetary relief will not provide an adequate remedy for such breach; (iii) and
notwithstanding Article 17 (Governing Law and Dispute Resolution), FLS shall be
entitled to immediate injunctive relief against Buyer and to such other
equitable and other relief as the circumstances may require.

 

4. CHANGES:

 

(a)A change in the scope of work (a “Change”) shall mean any modification,
addition, or deletion to the Work.

(b)Buyer may initiate a Change within the general scope of the Work by issuing
to FLS a written Change Request describing the proposed Change in detail, or
requesting FLS to estimate the cost to perform Buyer’s desired Change. Within
ten (10) days thereafter, or such longer period as Buyer may permit, FLS shall
prepare and forward to Buyer a detailed Change Estimate which shall include any
adjustment in price and schedule. If Buyer approves the Change Estimate, Buyer
shall issue a corresponding contract amendment (“Change Order”) adjusting the
price and schedule in accordance with the Change Estimate. Pending issuance of a
Change Order, FLS shall continue with the Work to the extent not affected by the
Change. If Buyer does not approve the Change Estimate, it shall either (i)
withdraw the Change Request, or (ii) negotiate with FLS to perform the Change
upon mutually agreeable terms. In any case, FLS shall be reimbursed for the cost
of preparing the Change Estimate. All Changes must be mutually approved and
agreed to in writing before they are to be performed by FLS.

(c)In the event either party believes a Change has occurred because of a
circumstance described in Article 4(d), it shall give written notice to the
other within thirty (30) days following its first knowledge of the circumstance,
and the parties shall endeavor to resolve by mutual agreement any dispute
regarding the occurrence of the Change, and any resulting adjustment in price
and schedule.  (d)In the event (i) FLS is required by changes in applicable laws
occurring after the date of this Contract to change the design of any equipment,
system, facility, works, process, or other part of the Work, or (ii) the Work is
canceled or delayed, suspended or interfered with by Buyer or any person or
cause within Buyer’s direct or indirect control, such circumstances shall be
treated as Changes.

 

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5.BUYER RESPONSIBILITY:

 

Buyer shall furnish FLS, in English, with all information, instructions and
drawings on which FLS’ timely and complete performance of the Contract is
dependent. Buyer represents that all information, instructions and drawings that
it has provided prior to the Contract date or provides thereafter to FLS are
complete, up to date, accurate and conform to applicable codes, ordinances,
laws, regulations and other requirements.

 

6.WARRANTY:

 

FLS warrants that all design and engineering services provided under this
Contract shall be performed in a professional manner by qualified and efficient
personnel, in accordance with generally accepted industry standards. FLS further
warrants that drawings and specifications resulting from these design and
engineering services shall conform to all applicable codes and standards in
effect at the time these services were performed. Any design and engineering
services not in conformance with the foregoing warranties shall be promptly
reperformed by FLS at FLS’ sole cost and expense, provided FLS is notified by
Buyer in writing of the nonconformance within one year after completion of such
services. Reperformance of any design and engineering services not in
conformance with the foregoing warranties constitutes FLS’ sole liability and
Buyer’s exclusive remedy for breach of warranties.

 

7.COMPLIANCE WITH LAWS AND REGULATIONS:

 

In performing the Work, FLS shall comply with all applicable laws, ordinances,
rules and regulations of governmental authorities located in the United States
bearing on the conduct of the Work at the time the Work was performed,
including, but not limited to, where applicable, laws and regulations pertaining
to non-discrimination in employment, the Fair Labor Standards Act of 1938, as
amended, OSHA, and MSHA. FLS shall be responsible for all U.S. federal, state
and local taxes and charges, including social security and unemployment
compensation taxes and withholding taxes, pertaining or applicable to its
employees or its income.

 

8.TIME OF PERFORMANCE OF THE WORK:

 

(a)FLS shall proceed with the Work with all reasonable dispatch, and shall use
its best efforts to complete the Work by the completion date(s) set forth in the
proposal.  (b)If FLS is rendered unable, wholly or in material part, by reason
of Force Majeure to carry out any of its obligations hereunder, such obligations
shall be suspended. “Force Majeure” shall include, but is not limited to events
or causes that are not reasonably within the control of FLS, including but not
limited to: fires and explosions; Acts of God (including, but not limited to,
floods, tornadoes, hurricanes and earthquakes); riots, insurrections, or civil
unrest; acts or threatened acts of terrorists and the results thereof; war,
blockades or other acts or threatened acts of war or military action; trade
embargoes or restrictions; changes in applicable law; governmental or judicial
acts, decrees, injunctions, restrictions or other orders; strikes; faulty or
defective castings, or unavailability of parts. FLS shall notify Buyer not later
than fourteen (14) days after learning of the Force Majeure event. The
occurrence of a Force Majeure event shall not excuse a party from any payment
obligation it may have under the Contract.

 

9.COMPENSATION:

 

  (a) To the extent the proposal provides that the Work is to be performed by
FLS for a fixed price, then Buyer agrees to timely pay FLS the fixed price
amount set forth in the proposal, in U.S. dollars, as full compensation for the
Work, subject to Article 4 (Changes). The fixed price does not include any cost
items not included in the scope of work as set forth in the proposal.   (b) To
the extent the proposal provides that the Work is to be performed by FLS on a
cost-reimbursable basis, then Buyer agrees to timely pay FLS, in U.S. dollars,
for the Work and associated expenses pursuant to FLS’ standard rates.

 

10.TAXES:

 

Buyer shall reimburse FLS, in addition to the price, for all federal, state,
provincial, municipal and/or local customs, duties, sales, use, VAT and other
similar taxes, excises and charges which FLS may pay or be required to pay in
connection with the Work (not including taxes pertaining or applicable to its
employees or its income).

 

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11.TERMS OF PAYMENT:

 

  (a) For all fixed price work, unless the parties set forth a schedule of
payments, FLS shall invoice Buyer monthly on a progress basis whereby the
percent of the fixed price that is due will be equal to the percent of the Work
that has been performed.   (b) For all cost-reimbursable Work, unless the
parties agree otherwise, FLS shall invoice Buyer on a monthly basis in
accordance with FLS’ standard invoicing procedures for Work completed and costs
incurred during the previous month.   (c) Unless otherwise agreed, terms of
payment are net thirty days to FLS from date of invoice. If any payment is not
made within the specified time, interest will be charged at the prime rate of
Citibank, N.A., of New York, New York, or at the maximum legal rate in the place
where services were performed, whichever is lower, with interest computed and
due monthly. In the event of any delay in payment, the Buyer will reimburse FLS
for all costs incurred in collection of amounts due.   (d) This Contract is
completely independent of all other contracts between the parties. Invoices
issued under this Contract shall not be subject to set off against any money due
or claimed to be due from FLS on account of any other transaction or claim.

 

12.PATENT INDEMNIFICATION:

 

  (a) Except as otherwise provided in (b), FLS shall defend, indemnify and hold
harmless Buyer against claims for infringement of valid United States patents
with respect to the Work. The Buyer shall notify FLS of such claims within ten
(10) days from the time it knew or should have known of them. If FLS’ design is
found to be infringing or the Buyer is enjoined from the use of such design, FLS
will at its own expense and option, either: (i) provide Buyer with a
non-infringing design; or (ii) obtain a license or other authorization
permitting Buyer to use the design.   (b) FLS’ liability and obligations under
this Article shall not apply if the basis of the alleged infringement is claimed
or proved to have arisen in whole or in part from (i) a design, process,
product, equipment, material, software or software documentation provided by or
through or specified by Buyer to FLS for its use in supplying the Work; (ii) a
modification of the Work by Buyer or third persons after delivery by FLS; or
(iii) a combination of the Work by Buyer or third persons with designs or
equipment supplied by others.

 

13.INDEMNIFICATION:

 

Each party shall indemnify the other from any and all third-person claims for
damages, losses, costs and expenses directly resulting from personal injury to
or death of any person, and damage to tangible third- person property, to the
extent such injury, death or damage is directly caused by the negligence, gross
negligence or willful misconduct of the indemnifying party.

 

14.INSURANCE:

 

FLS shall provide the following insurance coverage and maintain it in place
during the performance of the Work and for a period of one year thereafter: (i)
Workers’ Compensation Insurance, including Employer’s Liability coverage, in the
amount as required by law, for FLS’ employees; (ii) Commercial General Liability
and Property Damage Insurance with a combined single limit of $1,000,000 per
occurrence and $2,000,000 aggregate; and (iii) Automobile Liability Insurance
with a combined bodily injury and property damage limit of $1,000,000 per
occurrence.

 

15.TERMINATION AND SUSPENSION:

 

(a)Termination for Convenience. Buyer may terminate this Contract in whole or
part for its convenience by giving FLS fifteen (15) working days’ prior written
notice, at which time FLS shall cease to perform Work as directed. Upon
termination for convenience, Buyer shall pay FLS for all Work performed up to
the effective date of termination plus all reasonable costs incurred in
complying with Buyer’s instructions for terminating this Contract.
 (b)Suspension. Buyer may suspend all or any portion of the Work at any time by
giving FLS seven (7) working days’ prior written notice, at which time FLS shall
suspend Work as directed. Buyer shall compensate FLS for any additional costs
incurred by FLS in suspending the Work and for maintaining its personnel on
standby or protecting the documents and materials during the period of
suspension if so requested by Buyer. In addition, FLS may by written notice to
Buyer terminate all or any portion of its obligations under this Contract if the
Work is suspended for thirty (30) or more consecutive days or a total of sixty
(60) days in any continuous 150-day period through no fault of FLS or FLS’
subcontractors and vendors. Notwithstanding the foregoing, Buyer shall
immediately pay to FLS on demand all amounts due FLS for all Work executed prior
to any such suspension or termination and any and all costs and expenses
incurred by FLS arising out of or related in way to any such (a) suspension
including, but not limited to, additional work, services and/or other cost
escalations or increases, and any other cost or expense incurred by FLS by
reason of such suspension, or (b) termination including, but not limited to,
reasonable shutdown and termination expenses, and any and all amounts that would
have been otherwise payable to FLS as profit, overhead, incentive or bonus
through or upon completion or operation of the Work.

 

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(c)Buyer shall have the right to terminate this Contract if: (i) FLS becomes
bankrupt or makes an assignment for the benefit of its creditors; (ii) an
arbitration decision pursuant to the provisions of Article 17 (Governing Law and
Dispute Resolution) has established that FLS has materially breached a material
provision of the Contract and has failed to undertake remedial action to correct
such failure pursuant to the Contract following notice in writing by Buyer; or
(iii) FLS suspends or abandons performance of all work for a period of thirty
(30) days and it is established by an arbitration decision pursuant to Article
17 (Governing Law and Dispute Resolution) that FLS was not entitled to suspend
or abandon the work for such a period. In any such event, Buyer may terminate
the Contract upon receipt of written notice of the arbitration award or by
giving FLS thirty (30) days’ written notice of such termination. Upon such
termination both parties shall be released from any further obligations under
this Contract.  (d)FLS may suspend its performance of this Contract in whole or
in part on account of Buyer’s failure to make a payment when due or post
security when due, or on Buyer’s other material breach of Contract, following
seven (7) days’ notice by FLS. If the Buyer fails to make such payment or submit
such security for payment or cure such material breach within a period of thirty
(30) days of such notice, FLS shall have the right at its sole discretion to
terminate the Contract for Buyer’s default. In the event of such termination,
FLS shall be entitled to an amount equal to the percentage stage of completion
of the Work at the time of such termination times the Contract Price plus an
amount equal to ten percent (10%) of the Contract Price in lieu of profit.

 

16.LIMITATION OF LIABILITY:

 

  (a) It is expressly agreed that this Contract sets forth the sole and
exclusive remedies available to Buyer and that FLS’ liabilities are limited as
set forth herein. For the purposes of this article, “FLS” and “Buyer” shall
include such party’s parent companies, affiliates, subsidiaries, and related
companies, its other contractors, sub-vendors and subcontractors, and their
respective directors, officers, agents, employees, and assigns. Neither party
has granted or assumed any other warranties, guarantees, duties, liabilities, or
obligations, either express, implied, statutory, at law or in equity. It is
further expressly agreed that no breach of warranty or of contract or failure by
a party to fulfill any other conditions of this contract shall constitute a
failure of the essential purpose of the exclusive limited remedies.   (b)
Neither FLS nor Buyer shall under any circumstances be liable to the other party
for loss of profits, anticipated revenue, interest, loss of use, loss by reason
of plant shutdown or non-operation, cost of substitute power, equipment,
facilities or services, additional usage of fuel or utilities, cost of removal
of defective equipment and installation of conforming or non-defective
equipment, delays in installation of the work or completion of the project or
plant and/or alleged “impact” of any such delay (including, for example,
interferences, congestion, disruption, lack or restriction of access,
compression, coordination problems, loss of productivity or efficiency,
acceleration, escalation, out of sequence work, etc.), or other such claims
arising from any cause whatsoever, or for any special, incidental, indirect,
exemplary, punitive, or consequential damages, whether or not such loss or
damage is based in contract, warranty, tort (including negligence or strict
liability), indemnity or otherwise, and each party hereby releases the other
party and the respective agents and employees of each from all such liability.  
(c) FLS’ maximum aggregate liability for loss or damage arising under, resulting
from or in connection with the supply or use of the Work provided under this
Contract, or from the performance or breach of any obligation(s) imposed
hereunder, whether such liability arises from any one or more claims or actions
for breach of contract, tort (including negligence or strict liability), delayed
completion, warranty, indemnity or otherwise, unless otherwise more
restrictively limited by the terms hereof, shall be limited to twenty-five
percent (25%) of the total amount paid by Buyer to FLS hereunder. Buyer hereby
releases FLS, its agents and employees from any further liability therefor.  
(d) FLS EXPRESSLY DISCLAIMS ALL WARRANTIES OTHER THAN THOSE STATED IN THIS
CONTRACT, WHETHER EXPRESS, IMPLIED, STATUTORY, AT LAW OR IN EQUITY. THERE ARE NO
IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS OF PURPOSE, OR OTHERWISE.

 

17.GOVERNING LAW AND DISPUTE RESOLUTION:

 

(a)The Contract shall be governed by and construed in accordance with the laws
of the state in which FLS is located (Arizona for FLSmidth USA Inc.–Tucson
Operations; Illinois for Excel Foundry & Machine; Nebraska for FLSmidth USA
Inc.–Sioux City Operations; Pennsylvania for FLSmidth Inc. and FLSmidth USA
Inc.–Pfister; Tennessee for FLSmidth USA Inc.–Johnson City Operations; Utah for
FLSmidth USA Inc.–Salt Lake City Operations; Washington for FLSmidth USA
Inc.–Spokane Operations); and West Virginia for FLSmidth USA Inc.– Charleston
Operations), notwithstanding the result that otherwise may arise from
application of the conflict of law rules of any competent jurisdiction.  (b)All
disputes and claims concerning, arising from or relating in any way to the
Contract (collectively, “Disputes”) that cannot be settled by good faith
discussion, shall be resolved through binding arbitration by the American
Arbitration Association (“AAA”) pursuant to the AAA’s Commercial Arbitration
Rules in effect at the time. The arbitration shall be held in New York, New
York, and shall be conducted in English. The arbitrators shall have no right to
add to, subtract from or modify any of the provisions of this Contract, and
shall not exceed any limitations of liability and remedy provided in the
Contract. The arbitration award shall not be appealable or subject to recourse
to or review by any court or other arbitration. The arbitrator shall award the
substantially prevailing party full reimbursement of all fees and costs assessed
by or through the AAA (including arbitrator fees and any filing fee paid by that
Party) plus that Party’s attorneys’ fees and arbitration- related costs.

 

18.NOTICE:

 

Service of all notices under the Contract shall be sufficient if given
personally by mail, commercial express delivery, fax, electronically scanned
e-mail attachment or other similar means at the address set forth in the
proposal, or to such address as such party may provide in writing from time to
time. All notices shall be effective upon receipt.

 

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19.ASSIGNMENT:

 

Neither party shall assign this Contract or any benefits arising therefrom
without prior written consent of the other party, except that FLS reserves the
right without the consent of Buyer, to assign the Contract, or to subcontract
any portion of the work under the Contract to an affiliated company of FLS. In
the event FLS consents to any assignment, the rights of any assignee shall be
subject to all set-offs, counterclaims and other rights of FLS arising hereunder
and Buyer remains fully responsible for the performance by its assignee of all
conditions hereof.

 

20.DOCUMENTATION, PREVAILING LANGUAGE AND DATES:

 

Unless specifically provided for elsewhere in the Contract, all documentation,
including drawings and written materials, shall be in the English language. In
the event the text of the Contract is translated into a language other than
English, the English text shall prevail, control and be binding in the event of
any conflict or discrepancy. All dates shall be based on the Gregorian calendar.

 

21.PUBLICITY:

 

Neither party shall make or consent to publicity releases or announcements or
otherwise make written or verbal references to this Contract or the Work
performed or to be performed hereunder without the prior written consent of the
other party, which consent shall not be unreasonably withheld. Notwithstanding
the foregoing, FLS shall be entitled to include a summary description of the
project in its general promotional materials.

 

22.WAIVER OF BREACH:

 

Neither payment nor receipt of payment by a party; failure by a party to insist
on strict performance of the Contract; acceptance of the work by a party; or
waiver by a party of any breach of the Contract shall constitute a waiver by
that party of any other breach of the Contract or its right to demand and
enforce the other party’s compliance with its obligations hereunder.

 

23.INDEPENDENT CONTRACTOR:

 

It is expressly understood that FLS is an independent contractor, and that
neither FLS nor its principals, partners, employees or subcontractors are
servants, agents, partners, joint ventures or employees of Buyer in any way
whatsoever.

 

24.SEVERABILITY:

 

In the event that any of the provisions, or portions, or applications thereof,
of the Contract are held to be unenforceable or invalid by any court or tribunal
of competent jurisdiction, the parties shall negotiate an equitable adjustment
in the provisions of the Contract with a view toward effecting the purpose and
intent of the Contract and the validity and enforceability of the remaining
provisions, or portions, or applications thereof, shall not be affected thereby.

 

25.SURVIVAL OF TERMS:

 

Articles 3 (Confidential Information), 6 (Standards and Codes Controlling the
Work), 10 (Taxes), 12 (Patent Indemnification), 13 (Indemnification), 16
(Limitation of Liability), 17 (Governing Law and Dispute Resolution) and 22
(Waiver of Breach) shall survive completion or termination of the Contract.

 

 

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APPENDIX C: REPORT TABLE OF CONTENTS (DRAFT)

 

 

 

 

 

 

 

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