Document:

exhibit10-91.htm

     

    
      

      

    

     

    Exhibit
10.91

    EXHIBIT
E

    

    SECURITY
AGREEMENT

    

                This
SECURITY AGREEMENT, dated as of August 1, 2008 (this “Agreement”), is among
Imaging Diagnostic Systems, Inc., a Florida corporation (the “Company”), all of the
Subsidiaries of the Company (such subsidiaries, the “Guarantors” and
together with the Company, the “Debtors”) and the
holders of the Company’s 8% Senior Secured Convertible Debentures due
one year following their issuance, in the original aggregate principal amount of
$800,000.00 (collectively, the “Debentures”) signatory hereto,
their endorsees, transferees and assigns (collectively, the “Secured
Parties”).

    

    W
I T N E S S E T H:

    

                WHEREAS,
pursuant to the Purchase Agreement (as defined in the Debentures), the Secured
Parties have severally agreed to extend the loans to the Company evidenced by
the Debentures;

    

                WHEREAS,
pursuant to a certain Subsidiary Guarantee, dated as of the date hereof
(the “Guarantee”), the Guarantors
have jointly and severally agreed to guarantee and act as surety for payment of
such Debentures; and

    

                WHEREAS,
in order to induce the Secured Parties to extend the loans evidenced by the
Debentures, each Debtor has agreed to execute and deliver to the Secured Parties
this Agreement and to grant the Secured Parties, pari passu with each other
Secured Party and through the Agent (as defined in Section 18 hereof), a
security interest in certain property of such Debtor to secure the prompt
payment, performance and discharge in full of all of the Company’s obligations
under the Debentures and the Guarantors’ obligations under the
Guarantee.

    

                NOW,
THEREFORE, in consideration of the agreements herein contained and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:

    

                1.                      Certain Definitions. As used
in this Agreement, the following terms shall have the meanings set forth in this
Section 1.  Terms used but not otherwise defined in this Agreement
that are defined in Article 9 of the UCC (such as “account”, “chattel paper”,
“commercial tort claim”, “deposit account”, “document”, “equipment”, “fixtures”,
“general intangibles”, “goods”, “instruments”, “inventory”, “investment
property”, “letter-of-credit rights”, “proceeds” and “supporting obligations”)
shall have the respective meanings given such terms in Article 9 of the
UCC.

    

    (a)           “Collateral” means the
collateral in which the Secured Parties are granted a security interest by this
Agreement and which shall include the following personal property of the
Debtors, whether presently owned or existing or hereafter acquired or coming
into existence, wherever situated, and all additions and accessions thereto and
all substitutions and replacements thereof, and all proceeds, products and
accounts thereof, including, without limitation, all proceeds from the sale or
transfer of the Collateral and of insurance covering the same and of any tort
claims in connection therewith, and all dividends, interest, cash, notes,
securities, equity interest or other property at any time and from time to time
acquired, receivable or otherwise distributed in respect of, or in exchange for,
any or all of the Pledged Securities (as defined below):

    

    (i)   All
goods, including, without limitation, (A) all machinery, equipment, computers,
motor vehicles, trucks, tanks, boats, ships, appliances, furniture, special and
general tools, fixtures, test and quality control devices and other equipment of
every kind and nature and wherever situated, together with all documents of
title and documents representing the same, all additions and accessions thereto,
replacements therefor, all parts therefor, and all substitutes for any of the
foregoing and all other items used and useful in connection with any
Debtor’s businesses and all improvements thereto; and (B) all
inventory;

    

    (ii)
           All contract
rights and other general intangibles, including, without limitation, all
partnership interests, membership interests, stock or other securities, rights
under any of the Organizational Documents, agreements related to the Pledged
Securities, licenses, distribution and other agreements, computer software
(whether “off-the-shelf”, licensed from any third party or developed by any
Debtor), computer software development rights, leases, franchises, customer
lists, quality control procedures, grants and rights, goodwill, trademarks,
service marks, trade styles, trade names, patents, patent applications,
copyrights, and income tax refunds;

     

    (iii)           All
accounts, together with all instruments, all documents of title representing any
of the foregoing, all rights in any merchandising, goods, equipment, motor
vehicles and trucks which any of the same may represent, and all right, title,
security and guaranties with respect to each account, including any right
of stoppage in transit;

    

    (iv)           All
documents, letter-of-credit rights, instruments and chattel paper;

    

    (v)           All
commercial tort claims;

    

    (vi)           All
deposit accounts and all cash (whether or not deposited in such deposit
accounts);

    

    (vii)           All
investment property;

    

    (viii)                       All
supporting obligations; and

    

    (ix)           All
files, records, books of account, business papers, and computer programs;
and

    

    (x)           the
products and proceeds of all of the foregoing Collateral set forth in clauses
(i)-(ix) above.

    

    Without
limiting the generality of the foregoing, the “Collateral” shall
include all investment property and general intangibles respecting ownership
and/or other equity interests in each Guarantor, including, without limitation,
the shares of capital stock and the other equity interests listed on Schedule H hereto (as
the same may be modified from time to time pursuant to the terms hereof), and
any other shares of capital stock and/or other equity interests of any other
direct or indirect subsidiary of any Debtor obtained in the future, and, in each
case, all certificates representing such shares and/or equity interests and, in
each case, all rights, options, warrants, stock, other securities and/or equity
interests that may hereafter be received, receivable or distributed in respect
of, or exchanged for, any of the foregoing and all rights arising under or in
connection with the Pledged Securities, including, but not limited to, all
dividends, interest and cash.

     

    Notwithstanding
the foregoing, nothing herein shall be deemed to constitute an assignment of any
asset which, in the event of an assignment, becomes void by operation of
applicable law or the assignment of which is otherwise prohibited by applicable
law (in each case to the extent that such applicable law is not overridden by
Sections 9-406, 9-407 and/or 9-408 of the UCC or other similar applicable law);
provided, however, that to the
extent permitted by applicable law, this Agreement shall create a valid security
interest in such asset and, to the extent permitted by applicable law, this
Agreement shall create a valid security interest in the proceeds of such
asset.

    

    (b)           “Intellectual
Property” means the collective reference to all rights, priorities and
privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, (i) all copyrights arising under the laws of the United States, any
other country or any political subdivision thereof, whether registered or
unregistered and whether published or unpublished, all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, (ii) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof, and all applications for letters patent of the United States or any
other country and all divisions, continuations and continuations-in-part
thereof, (iii) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade dress, service marks, logos,
domain names and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in
any similar office or agency of the United States, any State thereof or any
other country or any political subdivision thereof, or otherwise, and all common
law rights related thereto, (iv) all trade secrets arising under the laws of the
United States, any other country or any political subdivision thereof, (v) all
rights to obtain any reissues, renewals or extensions of the foregoing, (vi) all
licenses for any of the foregoing, and (vii) all causes of action for
infringement of the foregoing.

    

               (c)           “Majority in
Interest” means, at any time of determination, the majority in
interest (based on then-outstanding principal amounts of Debentures at the time
of such determination) of the Secured Parties.

    

               (d)           “Necessary
Endorsement” means undated stock powers endorsed in blank or other
proper instruments of assignment duly executed and such other instruments or
documents as the Agent (as that term is defined below) may reasonably
request.

    

    (e)           “Obligations” means
all of the liabilities and obligations (primary, secondary, direct,
contingent, sole, joint or several) due or to become due, or that are now or may
be hereafter contracted or acquired, or owing to, of any Debtor to the Secured
Parties, including, without limitation, all obligations under this Agreement,
the Debentures, the Guarantee and any other instruments, agreements or other
documents executed and/or delivered in connection herewith or therewith, in each
case, whether now or hereafter existing, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from any of the
Secured Parties as a preference, fraudulent transfer or otherwise as such
obligations may be amended, supplemented, converted, extended or modified from
time to time.  Without limiting the generality of the foregoing, the
term “Obligations” shall include, without limitation: (i) principal of, and
interest on the Debentures and the loans extended pursuant thereto; (ii) any and
all other fees, indemnities, costs, obligations and liabilities of the Debtors
from time to time under or in connection with this Agreement, the Debentures,
the Guarantee and any other instruments, agreements or other documents executed
and/or delivered in connection herewith or therewith; and (iii) all amounts
(including but not limited to post-petition interest) in respect of the
foregoing that would be payable but for the fact that the obligations to pay
such amounts are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any
Debtor.

    

    (f)           “Organizational
Documents” means with respect to any Debtor, the documents by which such
Debtor was organized (such as a certificate of incorporation, certificate of
limited partnership or articles of organization, and including, without
limitation, any certificates of designation for preferred stock or other forms
of preferred equity) and which relate to the internal governance of such Debtor
(such as bylaws, a partnership agreement or an operating, limited liability or
members agreement).

    

    (g)           “Pledged Interests”
shall have the meaning ascribed to such term in Section 4(j).

    

    (h)           “Pledged Securities”
shall have the meaning ascribed to such term in Section 4(i).

    

    (i)           “UCC” means the
Uniform Commercial Code of the State of New York and or any other applicable law
of any state or states which has jurisdiction with respect to all, or any
portion of, the Collateral or this Agreement, from time to time.  It
is the intent of the parties that defined terms in the UCC should be construed
in their broadest sense so that the term “Collateral” will be construed in its
broadest sense.  Accordingly if there are, from time to time, changes
to defined terms in the UCC that broaden the definitions, they are incorporated
herein and if existing definitions in the UCC are broader than the amended
definitions, the existing ones shall be controlling.

    

               2.           Grant of Security Interest in Collateral. As an
inducement for the Secured Parties to extend the loans as evidenced by the
Debentures and to secure the complete and timely payment, performance and
discharge in full, as the case may be, of all of the Obligations, each Debtor
hereby unconditionally and irrevocably pledges, grants and hypothecates to the
Secured Parties a security interest in and to, a lien upon and a right of
set-off against all of their respective right, title and interest of whatsoever
kind and nature in and to, the Collateral (a “Security Interest”
and, collectively, the “Security
Interests”).

    

               3.           Delivery of Certain
Collateral.  Contemporaneously or prior to the execution of
this Agreement, each Debtor shall deliver or cause to be delivered to the Agent
(a) any and all certificates and other instruments representing or evidencing
the Pledged Securities, and (b) any and all certificates and other instruments
or documents representing any of the other Collateral, in each case, together
with all Necessary Endorsements.  The Debtors are, contemporaneously
with the execution hereof, delivering to Agent, or have previously delivered to
Agent, a true and correct copy of each Organizational Document governing any of
the Pledged Securities.

    

                4.                      Representations, Warranties,
Covenants and Agreements of the Debtors. Except as set forth under
the corresponding section of the disclosure schedules delivered to the Secured
Parties concurrently herewith (the “Disclosure
Schedules”), which Disclosure Schedules shall be deemed a part hereof,
each Debtor represents and warrants to, and covenants and agrees with, the
Secured Parties as follows:

    

    (a)   Each
Debtor has the requisite corporate, partnership, limited liability company or
other power and authority to enter into this Agreement and otherwise to carry
out its obligations hereunder. The execution, delivery and performance by each
Debtor of this Agreement and the filings contemplated therein have been duly
authorized by all necessary action on the part of such Debtor and no further
action is required by such Debtor.  This Agreement has been duly executed
by each Debtor.  This Agreement constitutes the legal, valid and
binding obligation of each Debtor, enforceable against each Debtor in accordance
with its terms except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization and similar laws of general application
relating to or affecting the rights and remedies of creditors and by general
principles of equity.

    

     (b)           The
Debtors have no place of business or offices where their respective books of
account and records are kept (other than temporarily at the offices of its
attorneys or accountants) or places where Collateral is stored or located,
except as set forth on Schedule A attached
hereto.  Except as specifically set forth on Schedule A, each Debtor
is the record owner of the real property where such Collateral is located, and
there exist no mortgages or other liens on any such real property except for
Permitted Liens (as defined in the Debentures).  Except as disclosed
on Schedule A, none of such
Collateral is in the possession of any consignee, bailee, warehouseman, agent or
processor.

    

    (c)           Except
for Permitted Liens (as defined in the Debentures) and except as set forth on
Schedule B
attached hereto, the Debtors are the sole owner of the Collateral (except for
non-exclusive licenses granted by any Debtor in the ordinary course of
business), free and clear of any liens, security interests, encumbrances, rights
or claims, and are fully authorized to grant the Security
Interests.  Except as set forth on Schedule C attached
hereto, there is not on file in any governmental or regulatory authority, agency
or recording office an effective financing statement, security agreement,
license or transfer or any notice of any of the foregoing (other than those that
will be filed in favor of the Secured Parties pursuant to this Agreement)
covering or affecting any of the Collateral.  Except as set forth on
Schedule C attached
hereto and except pursuant to this Agreement, as long as this Agreement shall be
in effect, the Debtors shall not execute and shall not knowingly permit to be on
file in any such office or agency any other financing statement or other
document or instrument (except to the extent filed or recorded in favor of the
Secured Parties pursuant to the terms of this Agreement).

    

    (d)           No
written claim has been received that any Collateral or any Debtor's use of any
Collateral violates the rights of any third party. There has been no adverse
decision to any Debtor's claim of ownership rights in or exclusive rights to use
the Collateral in any jurisdiction or to any Debtor's right to keep and maintain
such Collateral in full force and effect, and there is no proceeding involving
said rights pending or, to the best knowledge of any Debtor, threatened before
any court, judicial body, administrative or regulatory agency, arbitrator or
other governmental authority.

    

    (e)           Each
Debtor shall at all times maintain its books of account and records relating to
the Collateral at its principal place of business and its Collateral at the
locations set forth on Schedule A attached
hereto and may not relocate such books of account and records or tangible
Collateral unless it delivers to the Secured Parties at least 30 days prior to
such relocation (i) written notice of such relocation and the new location
thereof (which must be within the United States) and (ii) evidence that
appropriate financing statements under the UCC and other necessary documents
have been filed and recorded and other steps have been taken to perfect the
Security Interests to create in favor of the Secured Parties a valid, perfected
and continuing perfected first priority lien in the Collateral.

    

    (f)           This
Agreement creates in favor of the Secured Parties a valid security interest
in the Collateral, subject only to Permitted Liens (as defined in the
Debentures) securing the payment and performance of the
Obligations.  Upon making the filings described in the immediately
following paragraph, all security interests created hereunder in any Collateral
which may be perfected by filing Uniform Commercial Code financing statements
shall have been duly perfected.  Except for the filing of the Uniform
Commercial Code financing statements referred to in the immediately following
paragraph, the recordation of the Intellectual Property Security Agreement (as
defined in Section 4(p) hereof) with respect to copyrights and copyright
applications in the United States Copyright Office referred to in paragraph (m),
the execution and delivery of deposit account control agreements satisfying the
requirements of Section 9-104(a)(2) of the UCC with respect to each deposit
account of the Debtors, and the delivery of the certificates and other
instruments provided in Section 3, no action is necessary to create, perfect or
protect the security interests created hereunder.  Without limiting
the generality of the foregoing, except for the filing of said financing
statements, the recordation of said Intellectual Property Security Agreement,
and the execution and delivery of said deposit account control agreements, no
consent of any third parties and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
is required for (i) the execution, delivery and performance of this Agreement,
(ii) the creation or perfection of the Security Interests created hereunder in
the Collateral or (iii) the enforcement of the rights of the Agent and the
Secured Parties hereunder.

    

     (g)           Each
Debtor hereby authorizes the Agent to file one or more financing statements
under the UCC, with respect to the Security Interests, with the proper filing
and recording agencies in any jurisdiction deemed proper by it.

    

     (h)           The
execution, delivery and performance of this Agreement by the Debtors does not
(i) violate any of the provisions of any Organizational Documents of any Debtor
or any judgment, decree, order or award of any court, governmental body or
arbitrator or any applicable law, rule or regulation applicable to any Debtor or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing any Debtor's debt or otherwise) or other understanding to
which any Debtor is a party or by which any property or asset of any Debtor is
bound or affected. If any, all required consents (including, without limitation,
from stockholders or creditors of any Debtor) necessary for any Debtor to enter
into and perform its obligations hereunder have been obtained.

    

     (i)             The
capital stock and other equity interests listed on Schedule H hereto
(the “Pledged
Securities”) represent all of the capital stock and other equity
interests of the Guarantors, and represent all capital stock and other equity
interests owned, directly or indirectly, by the Company.  All of the
Pledged Securities are validly issued, fully paid and nonassessable, and the
Company is the legal and beneficial owner of the Pledged Securities, free and
clear of any lien, security interest or other encumbrance except for the
security interests created by this Agreement and other Permitted Liens (as
defined in the Debentures).  

    

    (j)           The
ownership and other equity interests in partnerships and limited liability
companies (if any) included in the Collateral (the “Pledged Interests”)
by their express terms do not provide that they are securities governed by
Article 8 of the UCC and are not held in a securities account or by any
financial intermediary.

    

    (k)           Except
for Permitted Liens (as defined in the Debentures), each Debtor shall at all
times maintain the liens and Security Interests provided for hereunder as valid
and perfected first priority liens and security interests in the Collateral in
favor of the Secured Parties until this Agreement and the Security Interest
hereunder shall be terminated pursuant to Section 14 hereof.  Each
Debtor hereby agrees to defend the same against the claims of any and all
persons and entities. Each Debtor shall safeguard and protect all Collateral for
the account of the Secured Parties.  At the request of the Agent, each
Debtor will sign and deliver to the Agent on behalf of the Secured Parties at
any time or from time to time one or more financing statements pursuant to the
UCC in form reasonably satisfactory to the Agent and will pay the cost of filing
the same in all public offices wherever filing is, or is deemed by the Agent to
be, necessary or desirable to effect the rights and obligations provided for
herein. Without limiting the generality of the foregoing, each Debtor shall pay
all fees, taxes and other amounts necessary to maintain the Collateral and the
Security Interests hereunder, and each Debtor shall obtain and furnish to the
Agent from time to time, upon demand, such releases and/or subordinations of
claims and liens which may be required to maintain the priority of the Security
Interests hereunder.

    

    (l)           No
Debtor will transfer, pledge, hypothecate, encumber, license, sell or otherwise
dispose of any of the Collateral (except for non-exclusive licenses granted by a
Debtor in its ordinary course of business and sales of inventory by a Debtor in
its ordinary course of business) without the prior written consent of a Majority
in Interest.

    

    (m)                    Each
Debtor shall keep and preserve its equipment, inventory and other tangible
Collateral in good condition, repair and order and shall not operate or locate
any such Collateral (or cause to be operated or located) in any area excluded
from insurance coverage.

    

    (n)           Each
Debtor shall maintain with financially sound and reputable insurers, insurance
with respect to the Collateral, including Collateral hereafter acquired, against
loss or damage of the kinds and in the amounts customarily insured against by
entities of established reputation having similar properties similarly situated
and in such amounts as are customarily carried under similar circumstances by
other such entities and otherwise as is prudent for entities engaged in similar
businesses but in any event sufficient to cover the full replacement cost
thereof.  Each Debtor shall cause each insurance policy issued in
connection herewith to provide, and the insurer issuing such policy to certify
to the Agent, that (a) the Agent will be named as lender loss payee and
additional insured under each such insurance policy; (b) if such insurance be
proposed to be cancelled or materially changed for any reason whatsoever, such
insurer will promptly notify the Agent and such cancellation or change shall not
be effective as to the Agent for at least thirty (30) days after receipt by the
Agent of such notice, unless the effect of such change is to extend or increase
coverage under the policy; and (c) the Agent will have the right (but no
obligation) at its election to remedy any default in the payment of premiums
within thirty (30) days of notice from the insurer of such
default.  If no Event of Default (as defined in the Debentures) exists
and if the proceeds arising out of any claim or series of related claims do not
exceed $100,000, loss payments in each instance will be applied by the
applicable Debtor to the repair and/or replacement of property with respect to
which the loss was incurred to the extent reasonably feasible, and any loss
payments or the balance thereof remaining, to the extent not so applied, shall
be payable to the applicable Debtor; provided, however, that
payments received by any Debtor after an Event of Default occurs and is
continuing or in excess of $100,000 for any occurrence or series of related
occurrences shall be paid to the Agent on behalf of the Secured Parties and, if
received by such Debtor, shall be held in trust for the Secured Parties and
immediately paid over to the Agent unless otherwise directed in writing by the
Agent.   Copies of such policies or the related certificates, in
each case, naming the Agent as lender loss payee and additional insured shall be
delivered to the Agent at least annually and at the time any new policy of
insurance is issued.

    

    (o)           Each
Debtor shall, within ten (10) days of obtaining knowledge thereof, advise the
Secured Parties promptly, in sufficient detail, of any material adverse change
in the Collateral, and of the occurrence of any event which would have a
material adverse effect on the value of the Collateral or on the Secured
Parties’ security interest, through the Agent, therein.

    

     (p)                    Each
Debtor shall promptly execute and deliver to the Agent such further deeds,
mortgages, assignments, security agreements, financing statements or other
instruments, documents, certificates and assurances and take such further action
as the Agent may from time to time request and may in its sole discretion deem
necessary to perfect, protect or enforce the Secured Parties’ security interest
in the Collateral including, without limitation, if applicable, the execution
and delivery of a separate security agreement with respect to each Debtor’s
Intellectual Property (“Intellectual Property
Security Agreement”) in which the Secured Parties have been granted a
security interest hereunder, substantially in a form reasonably acceptable to
the Agent, which Intellectual Property Security Agreement, other than as stated
therein, shall be subject to all of the terms and conditions
hereof.

    

    (q)           Each
Debtor shall permit the Agent and its representatives and agents to inspect the
Collateral during normal business hours and upon reasonable prior notice, and to
make copies of records pertaining to the Collateral as may be reasonably
requested by the Agent from time to time.

    

    (r)           Each
Debtor shall take all steps reasonably necessary to diligently pursue and seek
to preserve, enforce and collect any rights, claims, causes of action and
accounts receivable in respect of the Collateral.

    

    (s)           Each
Debtor shall promptly notify the Secured Parties in sufficient detail upon
becoming aware of any attachment, garnishment, execution or other legal process
levied against any Collateral and of any other information received by such
Debtor that may materially affect the value of the Collateral, the Security
Interest or the rights and remedies of the Secured Parties
hereunder.

    

    (t)           All
information heretofore, herein or hereafter supplied to the Secured Parties by
or on behalf of any Debtor with respect to the Collateral is accurate and
complete in all material respects as of the date furnished.

    

    (u)           The
Debtors shall at all times preserve and keep in full force and effect their
respective valid existence and good standing and any rights and franchises
material to its business.

    

    (v)           No
Debtor will change its name, type of organization, jurisdiction of organization,
organizational identification number (if it has one), legal or corporate
structure, or identity, or add any new fictitious name unless it provides at
least 30 days prior written notice to the Secured Parties of such change and, at
the time of such written notification, such Debtor provides any financing
statements or fixture filings necessary to perfect and continue the perfection
of the Security Interests granted and evidenced by this Agreement.

    

    (w)                                               Except
in the ordinary course of business, no Debtor may consign any of its inventory
or sell any of its inventory on bill and hold, sale or return, sale on approval,
or other conditional terms of sale without the consent of the Agent which shall
not be unreasonably withheld.

    

    (x)           No
Debtor may relocate its chief executive office to a new location without
providing 30 days prior written notification thereof to the Secured Parties and
so long as, at the time of such written notification, such Debtor provides any
financing statements or fixture filings necessary to perfect and continue the
perfection of the Security Interests granted and evidenced by this
Agreement.

    

     (y)                    Each
Debtor was organized and remains organized solely under the laws of the state
set forth next to such Debtor’s name in Schedule D attached
hereto, which Schedule
D sets forth each Debtor’s organizational identification number or, if
any Debtor does not have one, states that one does not exist.

    

    (z)           
(i) The actual name of each Debtor is the name set forth in Schedule D attached
hereto; (ii) no Debtor has any trade names except as set forth on Schedule E attached
hereto; (iii) no Debtor has used any name other than that stated in the preamble
hereto or as set forth on Schedule E for the
preceding five years; and (iv) no entity has merged into any Debtor or been
acquired by any Debtor within the past five years except as set forth on Schedule
E.

    

    (aa)                    At
any time and from time to time that any Collateral consists of instruments,
certificated securities or other items that require or permit possession by the
secured party to perfect the security interest created hereby, the applicable
Debtor shall deliver such Collateral to the Agent.

    

               (bb)           Each
Debtor, in its capacity as issuer, hereby agrees to comply with any and all
orders and instructions of Agent regarding the Pledged Interests consistent with
the terms of this Agreement without the further consent of any Debtor as
contemplated by Section 8-106 (or any successor section) of the
UCC.  Further, each Debtor agrees that it shall not enter into a
similar agreement (or one that would confer “control” within the meaning of
Article 8 of the UCC) with any other person or entity.

     

    (cc)                    Each
Debtor shall cause all tangible chattel paper constituting Collateral to be
delivered to the Agent, or, if such delivery is not possible, then to cause such
tangible chattel paper to contain a legend noting that it is subject to the
security interest created by this Agreement.  To the extent that any
Collateral consists of electronic chattel paper, the applicable Debtor shall
cause the underlying chattel paper to be “marked” within the meaning of Section
9-105 of the UCC (or successor section thereto).

    

    (dd)                    If
there is any investment property or deposit account included as Collateral that
can be perfected by “control” through an account control agreement, the
applicable Debtor shall cause such an account control agreement, in form and
substance in each case satisfactory to the Agent, to be entered into and
delivered to the Agent for the benefit of the Secured Parties.

    

    (ee)                    To
the extent that any Collateral consists of letter-of-credit rights, the
applicable Debtor shall cause the issuer of each underlying letter of credit to
consent to an assignment of the proceeds thereof to the Secured
Parties.

    

    (ff)                    To
the extent that any Collateral is in the possession of any third party, the
applicable Debtor shall join with the Agent in notifying such third party of the
Secured Parties’ security interest in such Collateral and shall use its best
efforts to obtain an acknowledgement and agreement from such third party with
respect to the Collateral, in form and substance reasonably satisfactory to the
Agent.

    

    (gg)                    If
any Debtor shall at any time hold or acquire a commercial tort claim, such
Debtor shall promptly notify the Secured Parties in a writing signed by such
Debtor of the particulars thereof and grant to the Secured Parties in such
writing a security interest therein and in the proceeds thereof, all upon the
terms of this Agreement, with such writing to be in form and substance
satisfactory to the Agent.

    

    (hh)                    Each
Debtor shall immediately provide written notice to the Secured Parties of any
and all accounts which arise out of contracts with any governmental authority
and, to the extent necessary to perfect or continue the perfected status of the
Security Interests in such accounts and proceeds thereof, shall execute and
deliver to the Agent an assignment of claims for such accounts and cooperate
with the Agent in taking any other steps required, in its judgment, under the
Federal Assignment of Claims Act or any similar federal, state or local statute
or rule to perfect or continue the perfected status of the Security Interests in
such accounts and proceeds thereof.

    

     (ii)                    Each
Debtor shall cause each subsidiary of such Debtor to immediately become a party
hereto (an “Additional Debtor”), by executing and delivering an Additional
Debtor Joinder in substantially the form of Annex A attached
hereto and comply with the provisions hereof applicable to the
Debtors.  Concurrent therewith, the Additional Debtor shall deliver
replacement schedules for, or supplements to all other Schedules to (or referred
to in) this Agreement, as applicable, which replacement schedules shall
supersede, or supplements shall modify, the Schedules then in
effect.  The Additional Debtor shall also deliver such opinions of
counsel, authorizing resolutions, good standing certificates, incumbency
certificates, organizational documents, financing statements and other
information and documentation as the Agent may reasonably
request.  Upon delivery of the foregoing to the Agent, the Additional
Debtor shall be and become a party to this Agreement with the same rights and
obligations as the Debtors, for all purposes hereof as fully and to the same
extent as if it were an original signatory hereto and shall be deemed to have
made the representations, warranties and covenants set forth herein as of the
date of execution and delivery of such Additional Debtor Joinder, and all
references herein to the “Debtors” shall be deemed to include each Additional
Debtor.

    

    (jj)           Each
Debtor shall vote the Pledged Securities to comply with the covenants and
agreements set forth herein and in the Debentures.

    

    (kk)           Each
Debtor shall register the pledge of the applicable Pledged Securities on the
books of such Debtor.  Each Debtor shall notify each issuer of Pledged
Securities to register the pledge of the applicable Pledged Securities in the
name of the Secured Parties on the books of such issuer.  Further,
except with respect to certificated securities delivered to the Agent, the
applicable Debtor shall deliver to Agent an acknowledgement of pledge (which,
where appropriate, shall comply with the requirements of the relevant UCC with
respect to perfection by registration) signed by the issuer of the applicable
Pledged Securities, which acknowledgement shall confirm that: (a) it has
registered the pledge on its books and records; and (b) at any time directed by
Agent during the continuation of an Event of Default, such issuer will transfer
the record ownership of such Pledged Securities into the name of any designee of
Agent, will take such steps as may be necessary to effect the transfer, and will
comply with all other instructions of Agent regarding such Pledged Securities
without the further consent of the applicable Debtor.

    

    (ll)           In
the event that, upon an occurrence of an Event of Default, Agent shall sell all
or any of the Pledged Securities to another party or parties (herein called the
“Transferee”)
or shall purchase or retain all or any of the Pledged Securities, each Debtor
shall, to the extent applicable: (i) deliver to Agent or the Transferee, as the
case may be, the articles of incorporation, bylaws, minute books, stock
certificate books, corporate seals, deeds, leases, indentures, agreements,
evidences of indebtedness, books of account, financial records and all other
Organizational Documents and records of the Debtors and their direct and
indirect subsidiaries; (ii) use its best efforts to obtain resignations of the
persons then serving as officers and directors of the Debtors and their direct
and indirect subsidiaries, if so requested; and (iii) use its best efforts to
obtain any approvals that are required by any governmental or regulatory body in
order to permit the sale of the Pledged Securities to the Transferee or the
purchase or retention of the Pledged Securities by Agent and allow the
Transferee or Agent to continue the business of the Debtors and their direct and
indirect subsidiaries.

     

    (mm)                    Without
limiting the generality of the other obligations of the Debtors hereunder, each
Debtor shall promptly (i) cause to be registered at the United States Copyright
Office all of its material copyrights, (ii) cause the security interest
contemplated hereby with respect to all Intellectual Property registered at the
United States Copyright Office or United States Patent and Trademark Office to
be duly recorded at the applicable office, and (iii) give the Agent notice
whenever it acquires (whether absolutely or by license) or creates any
additional material Intellectual Property.

    

     (nn)                                 Each
Debtor will from time to time, at the joint and several expense of the Debtors,
promptly execute and deliver all such further instruments and documents, and
take all such further action as may be necessary or desirable, or as the Agent
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Secured Parties to
exercise and enforce their rights and remedies hereunder and with respect to any
Collateral or to otherwise carry out the purposes of this
Agreement.

    

    (oo)                    Schedule F attached
hereto lists all of the patents, patent applications, trademarks, trademark
applications, registered copyrights, and domain names owned by any of the
Debtors as of the date hereof.  Schedule F lists all
material licenses in favor of any Debtor for the use of any patents, trademarks,
copyrights and domain names as of the date hereof.  All material
patents and trademarks of the Debtors have been duly recorded at the United
States Patent and Trademark Office and all material copyrights of the Debtors
have been duly recorded at the United States Copyright Office.

    

    (pp)                    Except
as set forth on Schedule G attached
hereto, none of the account debtors or other persons or entities obligated on
any of the Collateral is a governmental authority covered by the Federal
Assignment of Claims Act or any similar federal, state or local statute or rule
in respect of such Collateral.

    

               5.           Effect of Pledge on Certain
Rights. If
any of the Collateral subject to this Agreement consists of nonvoting equity or
ownership interests (regardless of class, designation, preference or rights)
that may be converted into voting equity or ownership interests upon the
occurrence of certain events (including, without limitation, upon the transfer
of all or any of the other stock or assets of the issuer), it is agreed that the
pledge of such equity or ownership interests pursuant to this Agreement or the
enforcement of any of Agent’s rights hereunder shall not be deemed to be the
type of event which would trigger such conversion rights notwithstanding any
provisions in the Organizational Documents or agreements to which any Debtor is
subject or to which any Debtor is party.

    

               6.
           Defaults. The following events
shall be “Events of
Default”:

    

    (a)   The
occurrence of an Event of Default (as defined in the Debentures) under the
Debentures;

    

    (b)   Any
representation or warranty of any Debtor in this Agreement shall prove to have
been incorrect in any material respect when made;

    

    (c)   The
failure by any Debtor to observe or perform any of its obligations hereunder for
five (5) days after delivery to such Debtor of notice of such failure by or on
behalf of a Secured Party unless such default is capable of cure but cannot be
cured within such time frame and such Debtor is using best efforts to cure same
in a timely fashion; or

    

    (d)   If
any provision of this Agreement shall at any time for any reason be declared to
be null and void, or the validity or enforceability thereof shall be contested
by any Debtor, or a proceeding shall be commenced by any Debtor, or by any
governmental authority having jurisdiction over any Debtor, seeking to establish
the invalidity or unenforceability thereof, or any Debtor shall deny that any
Debtor has any liability or obligation purported to be created under this
Agreement.

    

                7.              Duty To Hold In
Trust.

    

    (a)           Upon
the occurrence of any Event of Default and at any time thereafter, each Debtor
shall, upon receipt of any revenue, income, dividend, interest or other sums
subject to the Security Interests, whether payable pursuant to the Debentures or
otherwise, or of any check, draft, note, trade acceptance or other instrument
evidencing an obligation to pay any such sum, hold the same in trust for the
Secured Parties and shall forthwith endorse and transfer any such sums or
instruments, or both, to the Secured Parties, pro-rata in proportion to their
respective then-currently outstanding principal amount of Debentures for
application to the satisfaction of the Obligations (and if any Debenture is not
outstanding, pro-rata in proportion to the initial purchases of the remaining
Debentures).

    

    (b)           If
any Debtor shall become entitled to receive or shall receive any securities or
other property (including, without limitation, shares of Pledged Securities or
instruments representing Pledged Securities acquired after the date hereof, or
any options, warrants, rights or other similar property or certificates
representing a dividend, or any distribution in connection with any
recapitalization, reclassification or increase or reduction of capital, or
issued in connection with any reorganization of such Debtor or any of its direct
or indirect subsidiaries) in respect of the Pledged Securities (whether as an
addition to, in substitution of, or in exchange for, such Pledged Securities or
otherwise), such Debtor agrees to (i) accept the same as the agent of the
Secured Parties; (ii) hold the same in trust on behalf of and for the benefit of
the Secured Parties; and (iii) to deliver any and all certificates or
instruments evidencing the same to Agent on or before the close of business on
the fifth business day following the receipt thereof by such Debtor, in the
exact form received together with the Necessary Endorsements, to be held by
Agent subject to the terms of this Agreement as Collateral.

    

                8.              Rights and Remedies Upon
Default.

    

               (a)           Upon
the occurrence of any Event of Default and at any time thereafter, the Secured
Parties, acting through the Agent, shall have the right to exercise all of the
remedies conferred hereunder and under the Debentures, and the Secured Parties
shall have all the rights and remedies of a secured party under the
UCC.  Without limitation, the Agent, for the benefit of the Secured
Parties, shall have the following rights and powers:

    

    (i)   The
Agent shall have the right to take possession of the Collateral and, for that
purpose, enter, with the aid and assistance of any person, any premises where
the Collateral, or any part thereof, is or may be placed and remove the same,
and each Debtor shall assemble the Collateral and make it available to the Agent
at places which the Agent shall reasonably select, whether at such Debtor's
premises or elsewhere, and make available to the Agent, without rent, all of
such Debtor’s respective premises and facilities for the purpose of the Agent
taking possession of, removing or putting the Collateral in saleable or
disposable form.

    

    (ii)                       Upon
notice to the Debtors by Agent, all rights of each Debtor to exercise the voting
and other consensual rights which it would otherwise be entitled to exercise and
all rights of each Debtor to receive the dividends and interest which it would
otherwise be authorized to receive and retain, shall cease.  Upon such
notice, Agent shall have the right to receive, for the benefit of the Secured
Parties, any interest, cash dividends or other payments on the Collateral and,
at the option of Agent, to exercise in such Agent’s discretion all voting rights
pertaining thereto.  Without limiting the generality of the foregoing,
Agent shall have the right (but not the obligation) to exercise all rights with
respect to the Collateral as it were the sole and absolute owner thereof,
including, without limitation, to vote and/or to exchange, at its sole
discretion, any or all of the Collateral in connection with a merger,
reorganization, consolidation, recapitalization or other readjustment concerning
or involving the Collateral or any Debtor or any of its direct or indirect
subsidiaries.

    

    (iii)   The
Agent shall have the right to operate the business of each Debtor using the
Collateral and shall have the right to assign, sell, lease or otherwise dispose
of and deliver all or any part of the Collateral, at public or private sale or
otherwise, either with or without special conditions or stipulations, for cash
or on credit or for future delivery, in such parcel or parcels and at such time
or times and at such place or places, and upon such terms and conditions as the
Agent may deem commercially reasonable, all without (except as shall be required
by applicable statute and cannot be waived) advertisement or demand upon or
notice to any Debtor or right of redemption of a Debtor, which are hereby
expressly waived.  Upon each such sale, lease, assignment or other
transfer of Collateral, the Agent, for the benefit of the Secured Parties, may,
unless prohibited by applicable law which cannot be waived, purchase all or any
part of the Collateral being sold, free from and discharged of all trusts,
claims, right of redemption and equities of any Debtor, which are hereby waived
and released.

    

    (iv)                       The
Agent shall have the right (but not the obligation) to notify any account
debtors and any obligors under instruments or accounts to make payments directly
to the Agent, on behalf of the Secured Parties, and to enforce the Debtors’
rights against such account debtors and obligors.

    

    (v)                       The
Agent, for the benefit of the Secured Parties, may (but is not obligated to)
direct any financial intermediary or any other person or entity holding any
investment property to transfer the same to the Agent, on behalf of the Secured
Parties, or its designee.

    

    (vi)                       The
Agent may (but is not obligated to) transfer any or all Intellectual Property
registered in the name of any Debtor at the United States Patent and Trademark
Office and/or Copyright Office into the name of the Secured Parties or any
designee or any purchaser of any Collateral.

    

               (b)           The
Agent shall comply with any applicable law in connection with a disposition of
Collateral and such compliance will not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.  The Agent
may sell the Collateral without giving any warranties and may specifically
disclaim such warranties.  If the Agent sells any of the Collateral on
credit, the Debtors will only be credited with payments actually made by the
purchaser.  In addition, each Debtor waives any and all rights that it
may have to a judicial hearing in advance of the enforcement of any of the
Agent’s rights and remedies hereunder, including, without limitation, its right
following an Event of Default to take immediate possession of the Collateral and
to exercise its rights and remedies with respect thereto.

     

    (c)           For
the purpose of enabling the Agent to further exercise rights and remedies under
this Section 8 or elsewhere provided by agreement or applicable law, each Debtor
hereby grants to the Agent, for the benefit of the Agent and the Secured
Parties, an irrevocable, nonexclusive license (exercisable without payment of
royalty or other compensation to such Debtor) to use, license or sublicense
following an Event of Default, any Intellectual Property now owned or hereafter
acquired by such Debtor, and wherever the same may be located, and
including in such license access to all media in which any of the licensed items
may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof.

    

                9.              Applications of Proceeds. The
proceeds of any such sale, lease or other disposition of the Collateral
hereunder or from payments made on account of any insurance policy insuring any
portion of the Collateral shall be applied first, to the expenses of retaking,
holding, storing, processing and preparing for sale, selling, and the like
(including, without limitation, any taxes, fees and other costs incurred in
connection therewith) of the Collateral, to the reasonable attorneys’ fees and
expenses incurred by the Agent in enforcing the Secured Parties’ rights
hereunder and in connection with collecting, storing and disposing of the
Collateral, and then to satisfaction of the Obligations pro rata among the
Secured Parties (based on then-outstanding principal amounts of Debentures at
the time of any such determination), and to the payment of any other amounts
required by applicable law, after which the Secured Parties shall pay to the
applicable Debtor any surplus proceeds. If, upon the sale, license or other
disposition of the Collateral, the proceeds thereof are insufficient to pay all
amounts to which the Secured Parties are legally entitled, the Debtors will be
liable for the deficiency, together with interest thereon, at the rate of 18%
per annum or the lesser amount permitted by applicable law (the “Default Rate”), and
the reasonable fees of any attorneys employed by the Secured Parties to collect
such deficiency.  To the extent permitted by applicable law, each
Debtor waives all claims, damages and demands against the Secured Parties
arising out of the repossession, removal, retention or sale of the Collateral,
unless due solely to the gross negligence or willful misconduct of the Secured
Parties as determined by a final judgment (not subject to further appeal) of a
court of competent jurisdiction.

    

               10.           Securities Law
Provision.  Each Debtor recognizes that Agent may be limited in
its ability to effect a sale to the public of all or part of the Pledged
Securities by reason of certain prohibitions in the Securities Act of 1933, as
amended, or other federal or state securities laws (collectively, the “Securities Laws”),
and may be compelled to resort to one or more sales to a restricted group of
purchasers who may be required to agree to acquire the Pledged Securities for
their own account, for investment and not with a view to the distribution or
resale thereof.  Each Debtor agrees that sales so made may be at
prices and on terms less favorable than if the Pledged Securities were sold to
the public, and that Agent has no obligation to delay the sale of any Pledged
Securities for the period of time necessary to register the Pledged Securities
for sale to the public under the Securities Laws.  Each Debtor shall
cooperate with Agent in its attempt to satisfy any requirements under the
Securities Laws (including, without limitation, registration thereunder if
requested by Agent) applicable to the sale of the Pledged Securities by
Agent.

     

                11.              Costs and Expenses. Each
Debtor agrees to pay all reasonable out-of-pocket fees, costs and expenses
incurred in connection with any filing required hereunder, including without
limitation, any financing statements pursuant to the UCC, continuation
statements, partial releases and/or termination statements related thereto or
any expenses of any searches reasonably required by the Agent.  The
Debtors shall also pay all other claims and charges which in the reasonable
opinion of the Agent is reasonably likely to prejudice, imperil or otherwise
affect the Collateral or the Security Interests therein.  The Debtors
will also, upon demand, pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Agent, for the benefit of the Secured
Parties, may incur in connection with the creation, perfection, protection,
satisfaction, foreclosure, collection or enforcement of the Security Interest
and the preparation, administration, continuance, amendment or enforcement of
this Agreement and pay to the Agent the amount of any and all reasonable
expenses, including the reasonable fees and expenses of its counsel and of any
experts and agents, which the Agent, for the benefit of the Secured Parties, and
the Secured Parties may incur in connection with (i) the enforcement of
this Agreement, (ii) the custody or preservation of, or the sale of, collection
from, or other realization upon, any of the Collateral, or (iii) the exercise or
enforcement of any of the rights of the Secured Parties under the Debentures.
Until so paid, any fees payable hereunder shall be added to the principal
amount of the Debentures and shall bear interest at the Default
Rate.

    

                12.              Responsibility for Collateral.
The Debtors assume all liabilities and responsibility in connection with all
Collateral, and the Obligations shall in no way be affected or diminished by
reason of the loss, destruction, damage or theft of any of the Collateral or its
unavailability for any reason.  Without limiting the generality of the
foregoing, (a) neither the Agent nor any Secured Party (i) has any duty (either
before or after an Event of Default) to collect any amounts in respect of the
Collateral or to preserve any rights relating to the Collateral, or (ii) has any
obligation to clean-up or otherwise prepare the Collateral for sale, and
(b) each Debtor shall remain obligated and liable under each contract or
agreement included in the Collateral to be observed or performed by such Debtor
thereunder.  Neither the Agent nor any Secured Party shall have any
obligation or liability under any such contract or agreement by reason of or
arising out of this Agreement or the receipt by the Agent or any Secured Party
of any payment relating to any of the Collateral, nor shall the Agent or any
Secured Party be obligated in any manner to perform any of the obligations of
any Debtor under or pursuant to any such contract or agreement, to make inquiry
as to the nature or sufficiency of any payment received by the Agent or any
Secured Party in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or
file any claim, to take any action to enforce any performance or to collect the
payment of any amounts which may have been assigned to the Agent or to which the
Agent or any Secured Party may be entitled at any time or times.

    

               13.           Security Interests Absolute. All rights of the
Secured Parties and all obligations of the Debtors hereunder, shall be absolute
and unconditional, irrespective of: (a) any lack of validity or enforceability
of this Agreement, the Debentures or any agreement entered into in connection
with the foregoing, or any portion hereof or thereof; (b) any change in the
time, manner or place of payment or performance of, or in any other term of, all
or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from the Debentures or any other agreement entered into in
connection with the foregoing; (c) any exchange, release or nonperfection of any
of the Collateral, or any release or amendment or waiver of or consent to
departure from any other collateral for, or any guarantee, or any other
security, for all or any of the Obligations; (d) any action by the Secured
Parties to obtain, adjust, settle and cancel in its sole discretion any
insurance claims or matters made or arising in connection with the Collateral;
or (e) any other circumstance which might otherwise constitute any legal or
equitable defense available to a Debtor, or a discharge of all or any part of
the Security Interests granted hereby.  Until the Obligations shall
have been paid and performed in full, the rights of the Secured Parties shall
continue even if the Obligations are barred for any reason, including, without
limitation, the running of the statute of limitations or
bankruptcy.  Each Debtor expressly waives presentment, protest, notice
of protest, demand, notice of nonpayment and demand for performance. In the
event that at any time any transfer of any Collateral or any payment received by
the Secured Parties hereunder shall be deemed by final order of a court of
competent jurisdiction to have been a voidable preference or fraudulent
conveyance under the bankruptcy or insolvency laws of the United States, or
shall be deemed to be otherwise due to any party other than the Secured Parties,
then, in any such event, each Debtor’s obligations hereunder shall survive
cancellation of this Agreement, and shall not be discharged or satisfied by any
prior payment thereof and/or cancellation of this Agreement, but shall
remain a valid and binding obligation enforceable in accordance with the terms
and provisions hereof.  Each Debtor waives all right to require the
Secured Parties to proceed against any other person or entity or to apply any
Collateral which the Secured Parties may hold at any time, or to marshal assets,
or to pursue any other remedy. Each Debtor waives any defense arising by reason
of the application of the statute of limitations to any obligation secured
hereby.

    

                14.
              Term of Agreement. This
Agreement and the Security Interests shall terminate on the date on which all
payments under the Debentures have been indefeasibly paid in full and all other
Obligations have been paid or discharged; provided, however, that all
indemnities of the Debtors contained in this Agreement (including, without
limitation, Annex B hereto) shall survive and remain operative and in full force
and effect regardless of the termination of this Agreement.

    

    15.
           Power of Attorney; Further
Assurances.

    

     (a)           Each
Debtor authorizes the Agent, and does hereby make, constitute and appoint the
Agent and its officers, agents, successors or assigns with full power of
substitution, as such Debtor’s true and lawful attorney-in-fact, with power, in
the name of the Agent or such Debtor, to, after the occurrence and during the
continuance of an Event of Default, (i) endorse any note, checks, drafts, money
orders or other instruments of payment (including payments payable under or in
respect of any policy of insurance) in respect of the Collateral that may come
into possession of the Agent; (ii) to sign and endorse any financing statement
pursuant to the UCC or any invoice, freight or express bill, bill of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with accounts, and other documents
relating to the Collateral; (iii) to pay or discharge taxes, liens, security
interests or other encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and sue for monies due in respect of the Collateral; (v) to transfer any
Intellectual Property or provide licenses respecting any Intellectual Property;
and (vi) generally, at the option of the Agent, and at the expense of the
Debtors, at any time, or from time to time, to execute and deliver any and all
documents and instruments and to do all acts and things which the Agent deems
necessary to protect, preserve and realize upon the Collateral and the Security
Interests granted therein in order to effect the intent of this Agreement and
the Debentures all as fully and effectually as the Debtors might or could do;
and each Debtor hereby ratifies all that said attorney shall lawfully do or
cause to be done by virtue hereof.  This power of attorney is coupled
with an interest and shall be irrevocable for the term of this Agreement and
thereafter as long as any of the Obligations shall be
outstanding.  The designation set forth herein shall be deemed to
amend and supersede any inconsistent provision in the Organizational Documents
or other documents or agreements to which any Debtor is subject or to which any
Debtor is a party.  Without limiting the generality of the foregoing,
after the occurrence and during the continuance of an Event of Default, each
Secured Party is specifically authorized to execute and file any applications
for or instruments of transfer and assignment of any patents, trademarks,
copyrights or other Intellectual Property with the United States Patent and
Trademark Office and the United States Copyright Office.

    

     (b)           On
a continuing basis, each Debtor will make, execute, acknowledge, deliver, file
and record, as the case may be, with the proper filing and recording agencies in
any jurisdiction, including, without limitation, the jurisdictions indicated on
Schedule C
attached hereto, all such instruments, and take all such action as may
reasonably be deemed necessary or advisable, or as reasonably requested by the
Agent, to perfect the Security Interests granted hereunder and otherwise to
carry out the intent and purposes of this Agreement, or for assuring and
confirming to the Agent the grant or perfection of a perfected security interest
in all the Collateral under the UCC.

    

    (c)           Each
Debtor hereby irrevocably appoints the Agent as such Debtor’s attorney-in-fact,
with full authority in the place and instead of such Debtor and in the name of
such Debtor, from time to time in the Agent’s discretion, to take any action and
to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Agreement, including the filing, in its sole
discretion, of one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of such Debtor
where permitted by law, which financing statements may (but need not) describe
the Collateral as “all assets” or “all personal property” or words of like
import, and ratifies all such actions taken by the Agent.  This power
of attorney is coupled with an interest and shall be irrevocable for the term of
this Agreement and thereafter as long as any of the Obligations shall be
outstanding.

    

                16.              Notices. All notices,
requests, demands and other communications hereunder shall be subject to the
notice provision of the Purchase Agreement (as such term is defined in the
Debentures).

    

                17.              Other Security. To the extent
that the Obligations are now or hereafter  secured by property other
than the Collateral or by the guarantee, endorsement or property of any other
person, firm, corporation or other entity, then the Agent shall have the right,
in its sole discretion, to pursue, relinquish, subordinate, modify or take any
other action with respect thereto, without in any way modifying or affecting any
of the Secured Parties’ rights and remedies hereunder.

    

               18.           Appointment of Agent. The
Secured Parties hereby appoint Whalehaven Capital Fund Limited to act as their
agent (“Whalehaven” or
“Agent”) for
purposes of exercising any and all rights and remedies of the Secured Parties
hereunder. Such appointment shall continue until revoked in writing by a
Majority in Interest, at which time a Majority in Interest shall appoint a new
Agent, provided that Whalehaven may not be removed as Agent unless Whalehaven
shall then hold less than $500,000 in principal amount of Debentures; provided, further, that such
removal may occur only if each of the other Secured Parties shall then hold not
less than an aggregate of $1,000,000 in principal amount of
Debentures.  The Agent shall have the rights, responsibilities and
immunities set forth in Annex B
hereto.

    
 

                19.              Miscellaneous.

    

    (a)           No
course of dealing between the Debtors and the Secured Parties, nor any failure
to exercise, nor any delay in exercising, on the part of the Secured Parties,
any right, power or privilege hereunder or under the Debentures shall operate as
a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.

    

    (b)           All
of the rights and remedies of the Secured Parties with respect to the
Collateral, whether established hereby or by the Debentures or by any other
agreements, instruments or documents or by law shall be cumulative and may be
exercised singly or concurrently.

    

    (c)           This
Agreement, together with the exhibits and schedules hereto, contain the entire
understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into this
Agreement and the exhibits and schedules hereto. No provision of this
Agreement may be waived, modified, supplemented or amended except in a written
instrument signed, in the case of an amendment, by the Debtors and the Secured
Parties or, in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought.

    

    (d)           If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

    

    (e)           No
waiver of any default with respect to any provision, condition or requirement of
this Agreement shall be deemed to be a continuing waiver in the future or a
waiver of any subsequent default or a waiver of any other provision, condition
or requirement hereof, nor shall any delay or omission of any party to exercise
any right hereunder in any manner impair the exercise of any such
right.

    

    (f)
           This Agreement
shall be binding upon and inure to the benefit of the parties and their
successors and permitted assigns.  The Company and the Guarantors may
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of each Secured Party (other than by
merger).  Any Secured Party may assign any or all of its rights under
this Agreement to any Person (as defined in the Purchase Agreement) to whom such
Secured Party assigns or transfers any Obligations, provided such transferee
agrees in writing to be bound, with respect to the transferred Obligations, by
the provisions of this Agreement that apply to the “Secured
Parties.”

    

    (g)           Each
party shall take such further action and execute and deliver such further
documents as may be necessary or appropriate in order to carry out the
provisions and purposes of this Agreement.

    

    (h)   All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof.  Each Debtor agrees that all
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and the Debentures (whether brought
against a party hereto or its respective affiliates, directors, officers,
shareholders, partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of New York,
Borough of Manhattan. Each Debtor hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
Borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, that such proceeding is improper. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such proceeding by mailing a copy thereof via registered or
certified mail or overnight delivery (with evidence of delivery) to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law.  Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.

    

    (i)           This
Agreement may be executed in any number of counterparts, each of which when so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature were the original thereof.

    

    (j)           All
Debtors shall jointly and severally be liable for the obligations of each Debtor
to the Secured Parties hereunder.

    

    (k)           Each
Debtor shall indemnify, reimburse and hold harmless the Agent and the Secured
Parties and their respective partners, members, shareholders, officers,
directors, employees and agents (and any other persons with other titles that
have similar functions) (collectively, “Indemnitees”) from
and against any and all losses, claims, liabilities, damages, penalties, suits,
costs and expenses, of any kind or nature, (including fees relating to the cost
of investigating and defending any of the foregoing) imposed on, incurred by or
asserted against such Indemnitee in any way related to or arising from or
alleged to arise from this Agreement or the Collateral, except any such losses,
claims, liabilities, damages, penalties, suits, costs and expenses which result
from the gross negligence or willful misconduct of the Indemnitee as determined
by a final, nonappealable decision of a court of competent
jurisdiction.  This indemnification provision is in addition to, and
not in limitation of, any other indemnification provision in the Debentures, the
Purchase Agreement (as such term is defined in the Debentures) or any other
agreement, instrument or other document executed or delivered in connection
herewith or therewith.

    

    (l)           Nothing
in this Agreement shall be construed to subject Agent or any Secured Party to
liability as a partner in any Debtor or any if its direct or indirect
subsidiaries that is a partnership or as a member in any Debtor or any of its
direct or indirect subsidiaries that is a limited liability company, nor shall
Agent or any Secured Party be deemed to have assumed any obligations under any
partnership agreement or limited liability company agreement, as applicable, of
any such Debtor or any of its direct or indirect subsidiaries or otherwise,
unless and until any such Secured Party exercises its right to be substituted
for such Debtor as a partner or member, as applicable, pursuant
hereto.

    

    (m)           To
the extent that the grant of the security interest in the Collateral and the
enforcement of the terms hereof require the consent, approval or action of any
partner or member, as applicable, of any Debtor or any direct or indirect
subsidiary of any Debtor or compliance with any provisions of any of the
Organizational Documents, the Debtors hereby grant such consent and approval and
waive any such noncompliance with the terms of said documents.

    

    [SIGNATURE
PAGES FOLLOW]

    

    

                IN
WITNESS WHEREOF, the parties hereto have caused this Security Agreement to
be duly executed on the day and year first above written.

    

    

    
      	
              IMAGING
      DIAGNOSTIC SYSTEMS, INC.

               

            
	
              By:  /s/ Linda B. Grable

              Name:  Linda
      B. Grable

              Title:  CEO

               

            
	 
      
	
              [INSERT
      NAMES OF SUBSIDIARIES]

               

               

            
	
              By:__________________________________________

                   Name:

                   Title:

               

            

    

    

    

    

    

    

    

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO IMDS SA]

    

                    Name
of Investing Entity:    Whalehaven Capital Fund
Limited

    Signature of Authorized Signatory of
Investing entity:  /s/ Brian Mazzella

    Name of
Authorized Signatory:   Brian Mazzella

    Title of
Authorized Signatory:   CFO

     

    [SIGNATURE
PAGE OF HOLDERS FOLLOWS]

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    SCHEDULE
A

    

    

    Principal
Place of Business of Debtors:  6531 NW 18th Court,
Plantation, FL 33313

    

    

    Locations
Where Collateral is Located or Stored:  6531 NW 18th Court,
Plantation, FL 33313

    

    

    SCHEDULE
B

    

    Debtor is
the sole owner of the collateral

     

    

    SCHEDULE
C

    

    None

     

    

    SCHEDULE
D

    Legal
Names and Organizational Identification Numbers

    

    Imaging
Diagnostic Systems, Inc., State of Florida  P95000050570

    

    

    SCHEDULE
E

    

    None

     

    

    SCHEDULE
F

    Intellectual
Property

    

    
      	
              Imaging
      Diagnostic Systems, Inc.

            
	
              U.S.
      Patents

            
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              Patent
      #

            	
              For

            	
              Patent
      Date

            	 
      
	
              5,692,511

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              12/2/1997

            	 
      
	 
      	
              (Electronics
      & Imaging)

            	 
      	 
      
	
              6,195,580

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              2/27/2001

            	 
      
	 
      	
              (Patient
      Support Structure) in addition to above

            	 
      	 
      
	
              6,662,042

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              12/9/2003

            	 
      
	
              6,044,288

            	
              Device
      for Determining the Contour of the Surface

            	
              3/28/2000

            	 
      
	 
      	
              of
      an Object Being Scanned

            	 
      	 
      
	
              6,029,077

            	
              Device
      for Determining the Perimeter of the

            	
              2/22/2000

            	 
      
	 
      	
              Surface
      of an Object Being Scanned and for

            	 
      	 
      
	 
      	
              Limiting
      Reflection from the Object Surface

            	 
      	 
      
	
              6,150,649

            	
              Detector
      Array with Variable Amplifiers for Use

            	
              11/21/2000

            	 
      
	 
      	
              in
      a Laser Imaging Device

            	 
      	 
      
	
              6,331,700

            	
              Detector
      Array with Variable Amplifiers for Use

            	
              12/18/2001

            	 
      
	 
      	
              in
      a Laser Imaging Device

            	 
      	 
      
	
              6,100,520

            	
              Detector
      Array for Use in a Laser Imaging

            	
              8/8/2000

            	 
      
	 
      	
              Apparatus
      (Single Row of Detectors)

            	 
      	 
      
	
              6,211,512

            	
              Detector
      Array for Use in a Laser Imaging

            	
              4/3/2001

            	 
      
	 
      	
              Apparatus
      (WideEye-2 or more rows of Detectors)

            	 
      	 
      
	
              6,130,958

            	
              Method
      for Reconstructing the Image of an Object

            	
              10/10/2000

            	 
      
	 
      	
              Scanned
      with a Laser Imaging Apparatus

            	 
      	 
      
	
              5,952,664

            	
              Laser
      Imaging Apparatus Using Biomedical

            	
              9/14/1999

            	 
      
	 
      	
              Markers
      That Bind to Cancer Cells

            	 
      	 
      
	
              6,693,287

            	
              Laser
      Imaging Apparatus Using Biomedical

            	
              1/17/2004

            	 
      
	 
      	
              Markers
      That Bind to Cancer Cells

            	 
      	 
      
	
              6,339,216

            	
              Time-Resolved
      Breast Imaging Device

            	
              2/5/2002

            	 
      
	
              6,571,116

            	
              Multiple
      Wavelength Simultaneous Data

            	
              5/27/2003

            	 
      
	 
      	
              Acquisition
      Device For Breast Imaging

            	 
      	 
      
	
              6,738,658

            	
              Multiple
      Wavelength Simultaneous Data

            	
              5/18/2004

            	 
      
	 
      	
              Acquisition
      Device For Breast Imaging

            	 
      	 
      
	
              6,681,130

            	
              Method
      for Improving the Accuracy of Data

            	
              1/20/2004

            	 
      
	 
      	
              Obtained
      in a Laser Imaging Apparatus

            	 
      	 
      
	
              7,254,851

            	
              Breast
      Positioning in a Laser

            	
              7/14/2007

            	 
      
	
              7,155,274

            	
              Optical
      Computed Tomography Scanner

            	
              12/26/2006

            	 
      
	 
      	
              for
      Small Laboratory Animals

            	 
      	 
      
	
              7,212,848

            	
              Optical
      Computed Tomography Scanner

            	
              5/1/2007

            	 
      
	 
      	
              for
      Small Laboratory Animals

            	 
      	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	
              International
      Patents

            
	 
      	 
      	 
      	 
      
	
              Patent
      #

            	
              For

            	
              Country/Region

            	
              Patent
      Date

            
	
              712849

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              Australia

            	
              11/18/1999

            
	
              2223606

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              Canada

            	
              10/7/2003

            
	
              ZL95197940

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              China

            	
              5/19/2004

            
	
              0837649

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              Europe

            	
              12/10/2003

            
	
              1389441

            	
              Diagnostic
      Tomographic Laser Imaging Apparatus

            	
              Europe

            	
              5/10/2006

            
	
              1003419

            	
              Device
      for Determining the Contour of the Surface of an Object Being
      Scanned

            	
              Europe

            	
              7/4/2004

            
	
              HK
      1029506

            	
              Device
      for Determining the Contour of the Surface of an Object Being
      Scanned

            	
              Hong
      Kong

            	
              12/17/2004

            
	
              1005286

            	
              Method
      for Reconstructing the Image of an Object Scanned with a Laser Imaging
      Apparatus

            	
              Europe

            	
              7/28/2004

            
	
              HK
      1029508

            	
              Method
      for Reconstructing the Image of an Object Scanned with a Laser Imaging
      Apparatus

            	
              Hong
      Kong

            	
              12/31/2004

            
	
              775069

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              Australia

            	
              7/15/2004

            
	
              2,373,299

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              Canada

            	
              3/30/2004

            
	
              ZL
      99 8 16608.1

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              China

            	
              7/11/2007

            
	
              1181511

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              Europe

            	
              6/15/2005

            
	
              DE69925869T2

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              Germany

            	
              5/4/2006

            
	
              HK1043480B

            	
              Laser
      Imaging Apparatus Using Biomedical Markers That Bind to Cancer
      Cells

            	
              Hong
      Kong

            	
              1/27/2006

            
	
              2L01809326.4

            	
              Multiple
      Wavelength Simultaneous Data Acquisition Device For Breast
      Imaging

            	
              China

            	
              11/30/2005

            
	 
      	 
      	 
      	 
      

    

    

    

    SCHEDULE
G

    Account
Debtors

    

    None

     

    

    SCHEDULE
H

    Pledged
Securities

    

    None

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    ANNEX
A

    to

    SECURITY

    AGREEMENT

    

    
      	
               
      

            	
              FORM
      OF ADDITIONAL DEBTOR JOINDER

            

    

    

    Security
Agreement dated as of August 1, 2008 made by

    Imaging
Diagnostic Systems, Inc., a Florida corporation

    and its
subsidiaries party thereto from time to time, as Debtors

    to and in
favor of

    the
Secured Parties identified therein (the “Security
Agreement”)

    

               Reference
is made to the Security Agreement as defined above; capitalized terms used
herein and not otherwise defined herein shall have the meanings given to such
terms in, or by reference in, the Security Agreement.

    

               The
undersigned hereby agrees that upon delivery of this Additional Debtor Joinder
to the Secured Parties referred to above, the undersigned shall (a) be an
Additional Debtor under the Security Agreement, (b) have all the rights and
obligations of the Debtors under the Security Agreement as fully and to the same
extent as if the undersigned was an original signatory thereto and (c) be deemed
to have made the representations and warranties set forth therein as of the date
of execution and delivery of this Additional Debtor Joinder.  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE UNDERSIGNED SPECIFICALLY GRANTS TO
THE SECURED PARTIES A SECURITY INTEREST IN THE COLLATERAL AS MORE FULLY SET
FORTH IN THE SECURITY AGREEMENT AND ACKNOWLEDGES AND AGREES TO THE WAIVER OF
JURY TRIAL PROVISIONS SET FORTH THEREIN.

    

               Attached
hereto are supplemental and/or replacement Schedules to the Security Agreement,
as applicable.

    

               An
executed copy of this Joinder shall be delivered to the Secured Parties, and the
Secured Parties may rely on the matters set forth herein on or after the date
hereof.  This Joinder shall not be modified, amended or terminated
without the prior written consent of the Secured Parties.

    

    
      	
               
      

            	 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

               IN
WITNESS WHEREOF, the undersigned has caused this Joinder to be executed in the
name and on behalf of the undersigned.

    

    
      	 	
              [Name
      of Additional Debtor]

            

    

    

    
      	 	
              By:

            

    

    
      	 	
              Name:

            

    

    
      	 	
              Title:

            

    

    

    
      	 	
              Address:

            

    

    

    

    

    

    

    
      	
               
      

            	
              Dated:

            

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    ANNEX
B

    to

    SECURITY

    AGREEMENT

    

    THE
AGENT

    

                          1.  Appointment. The Secured Parties
(all capitalized terms used herein and not otherwise defined shall have the
respective meanings provided in the Security Agreement to which this Annex B is
attached (the "Agreement")), by
their acceptance of the benefits of the Agreement, hereby designate Whalehaven
Capital Fund Limited (“Whalehaven” or
“Agent”) as the
Agent to act as specified herein and in the Agreement.  Each Secured
Party shall be deemed irrevocably to authorize the Agent to take such action on
its behalf under the provisions of the Agreement and any other Transaction
Document (as such term is defined in the Purchase Agreement) and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof and such other powers as are reasonably incidental
thereto.  The Agent may perform any of its duties hereunder by or
through its agents or employees.

    

                          2.
Nature of Duties.  The Agent shall
have no duties or responsibilities except those expressly set forth in the
Agreement.  Neither the Agent nor any of its partners, members,
shareholders, officers, directors, employees or agents shall be liable for any
action taken or omitted by it as such under the Agreement or hereunder or
in connection herewith or therewith, be responsible for the consequence of any
oversight or error of judgment or answerable for any loss, unless caused solely
by its or their gross negligence or willful misconduct as determined by a final
judgment (not subject to further appeal) of a court of competent
jurisdiction.  The duties of the Agent shall be mechanical and
administrative in nature; the Agent shall not have by reason of the Agreement or
any other Transaction Document a fiduciary relationship in respect of any Debtor
or any Secured Party; and nothing in the Agreement or any other Transaction
Document, expressed or implied, is intended to or shall be so construed as to
impose upon the Agent any obligations in respect of the Agreement or any other
Transaction Document except as expressly set forth herein and
therein.

    

                          3.
Lack of Reliance on the
Agent.  Independently and without reliance upon the Agent, each
Secured Party, to the extent it deems appropriate, has made and shall continue
to make (i) its own independent investigation of the financial condition and
affairs of the Company and its subsidiaries in connection with such Secured
Party’s investment in the Debtors, the creation and continuance of the
Obligations, the transactions contemplated by the Transaction Documents, and the
taking or not taking of any action in connection therewith, and (ii) its own
appraisal of the creditworthiness of the Company and its subsidiaries, and of
the value of the Collateral from time to time, and the Agent shall have no duty
or responsibility, either initially or on a continuing basis, to provide any
Secured Party with any credit, market or other information with respect thereto,
whether coming into its possession before any Obligations are incurred or at any
time or times thereafter.  The Agent shall not be responsible to the
Debtors or any Secured Party for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith, or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of the Agreement or any other Transaction Document, or for the
financial condition of the Debtors or the value of any of the Collateral,
or be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of the Agreement or any
other Transaction Document, or the financial condition of the Debtors, or
the value of any of the Collateral, or the existence or possible existence of
any default or Event of Default under the Agreement, the Debentures or any of
the other Transaction Documents.

    

                          4.
Certain Rights of the
Agent.  The Agent shall have the right to take any action with
respect to the Collateral, on behalf of all of the Secured
Parties.  To the extent practical, the Agent shall request
instructions from the Secured Parties with respect to any material act or action
(including failure to act) in connection with the Agreement or any other
Transaction Document, and shall be entitled to act or refrain from acting in
accordance with the instructions of a Majority in Interest; if such instructions
are not provided despite the Agent’s request therefor, the Agent shall be
entitled to refrain from such act or taking such action, and if such action is
taken, shall be entitled to appropriate indemnification from the Secured Parties
in respect of actions to be taken by the Agent; and the Agent shall not
incur liability to any person or entity by reason of so
refraining.  Without limiting the foregoing, (a) no Secured Party
shall have any right of action whatsoever against the Agent as a result of the
Agent acting or refraining from acting hereunder in accordance with the terms of
the Agreement or any other Transaction Document, and the Debtors shall have no
right to question or challenge the authority of, or the instructions given to,
the Agent pursuant to the foregoing and (b) the Agent shall not be required to
take any action which the Agent believes (i) could reasonably be expected to
expose it to personal liability or (ii) is contrary to this Agreement, the
Transaction Documents or applicable law.

    

                          5.  Reliance.  The Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other document or telephone
message signed, sent or made by the proper person or entity, and, with respect
to all legal matters pertaining to the Agreement and the other Transaction
Documents and its duties thereunder, upon advice of counsel selected by it and
upon all other matters pertaining to this Agreement and the other Transaction
Documents and its duties thereunder, upon advice of other experts selected by
it. Anything to the contrary notwithstanding, the Agent shall have no
obligation whatsoever to any Secured Party to assure that the Collateral exists
or is owned by the Debtors or is cared for, protected or insured or that the
liens granted pursuant to the Agreement have been properly or sufficiently or
lawfully created, perfected, or enforced or are entitled to any particular
priority.

    

                          6.  Indemnification.  To the extent
that the Agent is not reimbursed and indemnified by the Debtors, the Secured
Parties will jointly and severally reimburse and indemnify the Agent, in
proportion to their initially purchased respective principal amounts of
Debentures, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in performing its duties hereunder or under
the Agreement or any other Transaction Document, or in any way relating to
or arising out of the Agreement or any other Transaction Document except for
those determined by a final judgment (not subject to further appeal) of a court
of competent jurisdiction to have resulted solely from the Agent's own gross
negligence or willful misconduct.  Prior to taking any action
hereunder as Agent, the Agent may require each Secured Party to deposit with it
sufficient sums as it determines in good faith is necessary to protect the Agent
for costs and expenses associated with taking such action.

    

                          7.  Resignation by the Agent.

    

    (a)  The
Agent may resign from the performance of all its functions and duties under the
Agreement and the other Transaction Documents at any time by giving 30 days'
prior written notice (as provided in the Agreement) to the Debtors and the
Secured Parties.  Such resignation shall take effect upon the
appointment of a successor Agent pursuant to clauses (b) and (c)
below.

    

    (b)  Upon
any such notice of resignation, the Secured Parties, acting by a Majority
in Interest, shall appoint a successor Agent hereunder.

    

    (c) If a
successor Agent shall not have been so appointed within said 30-day period, the
Agent shall then appoint a successor Agent who shall serve as Agent until such
time, if any, as the Secured Parties appoint a successor Agent as provided
above.  If a successor Agent has not been appointed within such 30-day
period, the Agent may petition any court of competent jurisdiction or may
interplead the Debtors and the Secured Parties in a proceeding for the
appointment of a successor Agent, and all fees, including, but not limited to,
extraordinary fees associated with the filing of interpleader and expenses
associated therewith, shall be payable by the Debtors on demand.

    

                          8.  Rights with respect to
Collateral.  Each Secured
Party agrees with all other Secured Parties and the Agent (i) that it shall not,
and shall not attempt to, exercise any rights with respect to its security
interest in the Collateral, whether pursuant to any other agreement or otherwise
(other than pursuant to this Agreement), or take or institute any action against
the Agent or any of the other Secured Parties in respect of the Collateral or
its rights hereunder (other than any such action arising from the breach of this
Agreement) and (ii) that such Secured Party has no other rights with respect to
the Collateral other than as set forth in this Agreement and the other
Transaction Documents. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent and the retiring Agent shall be discharged from its duties and
obligations under the Agreement.  After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of the Agreement including this Annex
B shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Agent.exv10w28

Exhibit 10.28

AIA Document A111TM -1997

Standard Form of Agreement Between Owner and Contractor

where the basis for payment is the COST OF THE WORK PLUS A FEE with a negotiated

Guaranteed Maximum Price

ADDITIONS AND DELETIONS:

The author of this document has added information needed for its completion. The author may also
have revised the text of the original AIA standard form. An Additions and Deletions Report that
notes added information as well as revisions to the standard form text is available from the author
and should be reviewed. A vertical line in the left margin of this document indicates where the
author has added necessary information and where the author has added to or deleted from the
original AIA text.

This document has important legal consequences. Consultation with an attorney is encouraged with
respect to its completion or modification.

This document is not intended for use in competitive bidding.

AIA Document A201 -1997, General Conditions of the Contract for Construction, is adopted in this
document by reference. Do not use with other general conditions unless this document is modified.

This document has been approved and endorsed by the Associated General Contractors of America.

AGREEMENT made as of the 28th day of March in the year Two Thousand and Eight

(In words, indicate day, month and year)

BETWEEN the Owner:

(Name, address and other information)

Hansen Medical

380 North Bernardo Avenue

Mountain View, CA 94043

Phone: 650-404-5840

Fax: 650-404-5901

and the Contractor:

(Name, address and other information)

W. L. Butler Construction, Inc.

204 Franklin Street

Redwood City CA 94063

The Project is:

(Name and location)

Hansen Medical

800 East Middlefield

Mountain View, CA 94043

WLB Project #71063

The Architect is:

(Name, address and other information)

DGA

550 Ellis Street

Mountain View, CA 94043

Phone: 650-943-1660

Fax: 650-943-1670

Email: cho@dga-mv.com

Cesar Ho, Senior Associate

The Owner and Contractor agree as follows.

AIA Document A111TM -1997. Copyright © 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, 1987
and 1997 by The American Institute of Architects. All rights reserved. WARNING: This AIA Document
is protected by U.S. Copyright Law and International Treaties. Unauthorized reproduction or
distribution of this AIA Document, or any portion of it, may result in severe civil and criminal
penalties, and will be prosecuted to the maximum extent possible under the law. This document was
produced by AIA software at 08:34:59 on 03/28/2008 under Order NO. 1000328416_1 which expires on
10/31/2008, and is not for resale.

1

 

ARTICLE 1 THE CONTRACT DOCUMENTS

The Contract Documents consist of this Agreement, Conditions of the Contract (General,
Supplementary and other Conditions), Drawings, Specifications, Addenda issued prior to execution of
this Agreement, other documents listed in this Agreement and Modifications issued after execution
of this Agreement; these form the Contract, and are as fully a part of the Contract as if attached
to this Agreement or repeated herein. The Contract represents the entire and integrated agreement
between the parties hereto and supersedes prior negotiations, representations or agreements, either
written or oral. An enumeration of the Contract Documents, other than Modifications, appears in
Article 15. If anything in the other Contract Documents is inconsistent with this Agreement, this
Agreement shall govern.

ARTICLE 2 THE WORK OF THIS CONTRACT

The Contractor shall fully execute the Work described in the Contract Documents, except to the
extent specifically indicated in the Contract Documents to be the responsibility of others.

ARTICLE 3 RELATIONSHIP OF THE PARTIES

The Contractor accepts the relationship of trust and confidence established by this Agreement and
covenants with the Owner to cooperate with the Architect and exercise the Contractor’s skill and
judgment in furthering the interests of the Owner; to furnish efficient business administration and
supervision; to furnish at all times an adequate supply of workers and materials; and to perform
the Work in an expeditious and economical manner consistent with the Owner’s interests. The Owner
agrees to furnish and approve, in a timely manner, information required by the Contractor and to
make payments to the Contractor in accordance with the requirements of the Contract Documents.

ARTICLE 4 DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION

§4.1 The date of commencement of the Work shall be the date of this Agreement unless a different
date is stated below or provision is made for the date to be fixed in a notice to proceed issued by
the Owner.
(Insert the date of commencement, if it differs from the date of this Agreement or, if applicable,
state that the date will be fixed in a notice to proceed.)

February 11, 2008

If, prior to commencement of the Work, the Owner requires time to file mortgages, mechanic’s liens
and other security interests, the Owner’s time requirement shall be as follows:

N/A

§ 4.2 The Contract Time shall be measured from the date of commencement.

§ 4.3 The Contractor shall achieve Substantial Completion of the entire Work not later than 130
calendar days from the date of commencement, or as follows:

(Insert number of calendar days. Alternatively, a calendar date may be used when coordinated with
the date of commencement. Unless stated elsewhere in the Contract Documents, insert any
requirements for earlier Substantial Completion of certain portions of the Work.)

N/A

	 	 	 
	Portion of Work	 	Substantial Completion date
	N/A

	 	June 19, 2008

, subject to adjustments of this Contract Time as provided in the Contract Documents.

(Insert provisions, if any, for liquidated damages relating to failure to complete on time, or for
bonus payments for early completion of the Work.)

See attached Addendum dated March 28, 2008

ARTICLE 5 BASIS FOR PAYMENT

§ 5.1 CONTRACT SUM

§ 5.1.1 The Owner shall pay the Contractor the Contract Sum in current funds for the Contractor’s
performance of the Contract. The Contract Sum is the Cost of the Work as defined in Article 7 plus
the Contractor’s Fee.

2

 

§ 5.1.2 The Contractor’s Fee is:

(State a lump sum, percentage of Cost of the Work or other provision for determining the
Contractor’s Fee, and describe the method of adjustment of the Contractor’s Fee for changes in the
Work.)

3.75 %

§ 5.2 GUARANTEED MAXIMUM PRICE

§ 5.2.1 The sum of the Cost of the Work and the Contractor’s Fee is guaranteed by the Contractor
not to exceed Seven Million Eight Hundred Nineteen Thousand Two Hundred Eighty-Six Dollars ($
7,819,286), subject to additions and deductions by Change Order as provided in the Contract
Documents. Such maximum sum is referred to in the Contract Documents as the Guaranteed Maximum
Price. Costs which would cause the Guaranteed Maximum Price to be exceeded shall be paid by the
Contractor without reimbursement by the Owner.

(Insert specific provisions if the Contractor is to participate in any savings.)

N/A

§ 5.2.2 The Guaranteed Maximum Price is based on the following alternates, if any, which are
described in the Contract Documents and are hereby accepted by the
Owner:

(State the numbers or other identification of accepted alternates. If decisions on other alternates
are to be made by the Owner subsequent to the execution of this Agreement, attach a schedule of
such other alternates showing the amount for each and the date when the amount expires.)

N/A

§ 5.2.3 Unit prices, if any, are as follows:

	 	 	 	 	 
	Description

	 	Units
	 	Price ($0.00)
	N/A

	 	N/A
	 	N/A

§ 5.2.4 Allowances, if any, are as follows

(Identify and state the amounts of any allowances, and state whether they include labor, materials,
or both.)

	 	 	 	 	 
	Allowance

	 	Amount ($ 0.00)
	 	Included items
	See Clarifications Dated 2/26/08
	 	 	 	 
	And 3/1808
	 	 	 	 

§ 5.2.5 Assumptions, if any, on which the Guaranteed Maximum Price is based are as follows :

N/A

§ 5.2.6 To the extent that the Drawings and Specifications are anticipated to require further
development by the Architect, the Contractor has provided in the Guaranteed Maximum Price for such
further development consistent with the Contract Documents and reasonably inferable therefrom. Such
further development does not include such things as changes in scope, systems, kinds and quality of
materials, finishes or equipment, all of which, if required, shall be incorporated by Change Order.

ARTICLE 6 CHANGES IN THE WORK

§ 6.1 Adjustments to the Guaranteed Maximum Price on account of changes in the Work may be
determined by any
of the methods listed in Section 7.3.3 of AIA Document A201-1997.

§ 6.2 In calculating adjustments to subcontracts (except those awarded with the Owner’s prior
consent on the basis of cost plus a fee) , the terms “cost” and “fee” as used in Section 7.3.3.3 of
AIA Document A201-1997 and the terms “costs” and “a reasonable allowance for overhead and profit”
as used in Section 7.3.6 of AIA Document A201-1997 shall have the meanings assigned to them in AIA
Document A201-1997 and shall not be modified by Articles 5, 7 and 8 of this Agreement. Adjustments
to subcontracts awarded with the Owner’s prior consent on the basis of cost plus a fee shall be
calculated in accordance with the terms of those subcontracts.

3

 

§ 6.3 In calculating adjustments to the Guaranteed Maximum Price, the terms “cost” and “costs” as
used in the above-referenced provisions of AIA Document A201-1997 shall mean the Cost of the Work
as defined in Article 7 of this Agreement and the terms “fee” and “a reasonable allowance for
overhead and profit” shall mean the Contractor’s Fee as defined in Section 5.1.2 of this Agreement.

§ 6.4 If no specific provision is made in Section 5.1 for adjustment of the Contractor’s Fee in the
case of changes in the Work, or if the extent of such changes is such, in the aggregate, that
application of the adjustment provisions of Section 5.1 will cause substantial inequity to the
Owner or Contractor, the Contractor’s Fee shall be equitably adjusted on the basis of the Fee
established for the original Work, and the Guaranteed Maximum Price shall be adjusted accordingly.

ARTICLE 7 COSTS TO BE REIMBURSED

§ 7.1 COST OF THE WORK

The term Cost of the Work shall mean costs necessarily incurred by the Contractor in the proper
performance of the Work. Such costs shall be at rates not higher than the standard paid at the
place of the Project except with prior consent of the Owner. The Cost of the Work shall include
only the items set forth in this Article 7.

§ 7.2 LABOR COSTS

§ 7.2.1 Wages of construction workers directly employed by the Contractor to perform the
construction of the Work at the site or, , at off-site workshops.

§ 7.2.2 Wages or salaries of the Contractor’s supervisory and administrative personnel when
stationed at the site and at the Contractor’s principal office, but only for that portion of their
time required for the work
(If it is intended that the wages or salaries of certain personnel stationed at the Contractor’s
principal or other offices shall be included in the Cost of the Work, identify in Article 14 the
personnel to be included and whether for all or only part of their time, and the rates at which
their time will be charged to the Work.)

§ 7.2.3 Wages and salaries of the Contractor’s supervisory or administrative personnel engaged, at
factories, workshops or on the road, in expediting the production or transportation of materials or
equipment required for the Work, but only for that portion of their time required for the Work.

7.2.4 Costs paid or incurred by the Contractor for taxes, insurance, contribution, assessments and
benefits required by law or collective bargaining agreements and, for personnel not covered by such
agreements, customary benefits such as sick leave, medical and health benefits, holidays, vacations
and pensions, provided such costs are based on wages and salaries included in the Cost of the Work
under Sections 7.2.1 through 7.2.3.

The cost for the employees of the contractor shall be calculated at the rates set forth below:

	 	 	 	 	 
	A. Principal

	 	Per Hour
	 	N/C
	B. Project Executive

	 	Per Hour
	 	N/C
	C. Sf. Project Manager

	 	Per Hour
	 	$135.00 
	D. Project Manager

	 	Per Hour
	 	$125.00 
	E. Quality Manager

	 	Per Hour
	 	See Project Manager Rate
	F. Senior Project Engineer

	 	Per Hour
	 	$95.00 
	G. Project Engineer

	 	Per Hour
	 	$75.00 
	H. Project Coordinator/Admin

	 	Per Hour
	 	$55.00 
	I. Sr MechlElec Coordinator

	 	Per Hour
	 	See Project Manager Rate
	J. MechlElec Coordinator

	 	Per Hour
	 	See Project Manager Rate
	K. Senior Estimator

	 	Per Hour
	 	$125.00 
	L. Estimator

	 	Per Hour
	 	$115.00 
	M. Safety Engineer

	 	Per Hour
	 	$100.00 
	N. Safety Coordinator

	 	Per Hour
	 	$100.00 
	O. Project Accountant

	 	Per Hour
	 	$75.00 
	P. Technical Support

	 	Per Hour
	 	$75.00 
	Q. General Superintendent

	 	Per Hour
	 	$125.00 

4

 

	 	 	 	 	 
	R. Senior Superintendent

	 	Per Hour
	 	$115.00 
	S. Superintendent

	 	Per Hour
	 	$100.00 
	T. Assistant Superintendent

	 	Per Hour
	 	$95.00 
	U. Carpenter Foreman

	 	Per Hour
	 	$100.00 
	V. Carpenter

	 	Per Hour
	 	$85.00 
	W. Shop Labor

	 	Per Hour
	 	$65.00 
	X. Laborer Foreman

	 	Per Hour
	 	$75.00 
	Y. Laborer

	 	Per Hour
	 	$65.00 

(Paragraphs deleted)

§ 7.3 SUBCONTRACT COSTS

§ 7.3.1 Amounts due by the Contractor to Subcontractors in accordance with the requirements of the
subcontracts.

§ 7.4 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED CONSTRUCTION

§ 7.4.1 Costs, including transportation and storage, of materials and equipment incorporated or to
be incorporated in the completed construction.

§ 7.4.2 Costs of materials described in the preceding Section 7.4.1 in excess of those actually
installed to allow for reasonable waste and spoilage. Unused excess materials, if any, shall become
the Owner’ s property at the completion of the Work or, at the Owner’s option, shall be sold by the
Contractor. Any amounts realized from such sales shall be credited to the Owner as a deduction from
the Cost of the Work.

§ 7.5 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND RELATED ITEMS

§7.5.1 Costs, including transportation and storage, installation, maintenance, dismantling and
removal of materials, supplies, temporary facilities, machinery, equipment, and hand tools not
customarily owned by construction workers, that are provided by the Contractor at the site and
fully consumed in the performance of the Work; and cost (less salvage value) of such items if not
fully consumed, whether sold to others or retained by the Contractor. Cost for items previously
used by the Contractor shall mean fair market value.

§ 7.5.2 Rental charges for temporary facilities, machinery, equipment, and hand tools not
customarily owned by construction workers that are provided by the Contractor at the site, whether
rented from the Contractor or others, and costs of transportation, installation, minor repairs and
replacements, dismantling and removal thereof.

§ 7.5.3 Costs of removal of debris from the site.

§ 7.5.4 Costs of document reproductions, facsimile transmissions and long-distance telephone calls,
postage and parcel delivery charges, telephone service at the site and reasonable petty cash
expenses of the site office.

§ 7.5.5 That portion of the reasonable expenses of the Contractor’s personnel incurred while
traveling in discharge of duties connected with the Work.

§ 7.5.6 Costs of materials and equipment suitably stored off the site at a mutually acceptable
location, if approved in advance by the Owner.

§ 7.6 MISCELLANEOUS COSTS

§ 7.6.1 That portion of insurance and bond premiums that can be directly attributed to this
Contract:

§ 7.6.2 Sales, use or similar taxes imposed by a governmental authority that are related to the
Work.

§ 7.6.3 Fees and assessments for the building permit and for other permits, licenses and
inspections for which the Contractor is required by the Contract Documents to pay.

§ 7.6.4 Fees of laboratories for tests required by the Contract Documents, except those related to
defective or nonconforming Work for which reimbursement is excluded by Section 13.5.3 of AIA
Document A201-1997 or other provisions of the Contract Documents, and which do not fall within the
scope of Section 7.7.3.

5

 

§ 7.6.5 Royalties and license fees paid for the use of a particular design, process or product
required by the Contract Documents; the cost of defending suits or claims for infringement of
patent rights arising from such requirement of the Contract Documents; and payments made in
accordance with legal judgments against the Contractor resulting from such suits or claims and
payments of settlements made with the Owner’s consent. However, such costs of legal defenses,
judgments and settlements shall not be included in the calculation of the Contractor’s Fee or
subject to the Guaranteed Maximum Price. If such royalties, fees and costs are excluded by the last
sentence of Section 3.17.1 of AIA Document A201-1997 or other provisions of the Contract Documents,
then they shall not be included in the Cost of the Work.

§ 7.6.6 Data processing costs related to the Work.

§ 7.6.7 Deposits lost for causes other than the Contractor’s negligence or failure to fulfill a
specific responsibility to the Owner as set forth in the Contract Documents.

§ 7.6.8 Legal, mediation and arbitration costs, including attorneys’ fees, other than those arising
from disputes between the Owner and Contractor, reasonably incurred by the Contractor in the
performance of the Work and with the Owner’s prior written approval; which approval shall not be
unreasonably withheld.

§7.6.9 Expenses incurred in accordance with the Contractor’s standard personnel policy for
relocation and temporary living allowances of personnel required for the Work, if approved by the
Owner.

§ 7.7 OTHER COSTS AND EMERGENCIES

§ 7.7.1 Other costs incurred in the performance of the Work if and to the extent approved in
advance in writing by the Owner.

§ 7.7.2 Costs due to emergencies incurred in taking action to prevent threatened damage, injury or
loss in case of an emergency affecting the safety of persons and property, as provided in Section
10.6 of AIA Document A201-1997.

§ 7.7.3 Costs of repairing or correcting damaged or nonconforming Work executed by the Contractor,
Subcontractors or suppliers, provided that such damaged or nonconforming Work was not caused by
negligence or failure to fulfill a specific responsibility of the Contractor and only to the extent
that the cost of repair or correction is not recoverable by the Contractor from insurance,
sureties, Subcontractors or suppliers.

ARTICLE 8 COSTS NOT TO BE REIMBURSED

§ 8.1 The Cost of the Work shall not include:

§ 8.1.1 Salaries and other compensation of the Contractor’s personnel stationed at the Contractor’s
principal office or offices other than the site office, except as specifically provided in Sections
7.2.2 and 7.2.3 or as may be provided in Article 14.

§ 8.1.2 Expenses of the Contractor’s principal office and offices other than the site office.

§8.1.3 Overhead and general expenses, except as may be expressly included in Article 7.

§ 8.1.4 The Contractor’s capital expenses, including interest on the Contractor’s capital employed
for the Work.

§ 8.1.5 Rental costs of machinery and equipment, except as specifically provided in Section 7.5.2.

§ 8.1.6 Except as provided in Section 7.7.3 of this Agreement, costs due to the negligence or
failure to fulfill a specific responsibility of the Contractor, Subcontractors and suppliers or
anyone directly or indirectly employed by any of them or for whose acts any of them may be liable.

§ 8.1.7 Any cost not specifically and expressly described in Article 7.

§ 8.1.8 Costs, other than costs included in Change Orders approved by the Owner, that would cause
the Guaranteed Maximum Price to be exceeded.

6

 

ARTICLE 9 DISCOUNTS, REBATES AND REFUNDS

§ 9.1 Cash discounts obtained on payments made by the Contractor shall accrue to the Owner if (1)
before making the payment, the Contractor included them in an Application for Payment and received
payment therefor from the Owner, or (2) the Owner has deposited funds with the Contractor with
which to make payments; otherwise, cash discounts shall accrue to the Contractor. Trade discounts,
rebates, refunds and amounts received from sales of surplus materials and equipment shall accrue to
the Owner, and the Contractor shall make provisions so that they can be secured.

§ 9.2 Amounts that accrue to the Owner in accordance with the provisions of Section 9.1 shall be
credited to the Owner as a deduction from the Cost of the Work.

ARTICLE 10 SUBCONTRACTS AND OTHER AGREEMENTS

§ 10.1 Those portions of the Work that the Contractor does not customarily perform with the
Contractor’s own personnel shall be performed under subcontracts or by other appropriate agreements
with the Contractor. The Owner may designate specific persons or entities from whom the Contractor
shall obtain bids. The Contractor shall obtain bids from Subcontractors and from suppliers of
materials or equipment fabricated especially for the Work and shall deliver such bids to the
Architect. The Owner shall then determine, with the advice of the Contractor and the Architect,
which bids will be accepted. The Contractor shall not be required to contract with anyone to whom
the Contractor has reasonable objection.

§ 10.2 If a specific bidder among those whose bids are delivered by the Contractor to the Architect
(1) is recommended to the Owner by the Contractor; (2) is qualified to perform that portion of the
Work; and (3) has submitted a bid that conforms to the requirements of the Contract Documents
without reservations or exceptions, but the Owner requires that another bid be accepted, then the
Contractor may require that a Change Order be issued to adjust the Guaranteed Maximum Price by the
difference between the bid of the person or entity recommended to the Owner by the Contractor and
the amount of the subcontract or other agreement actually signed with the person or entity
designated by the Owner.

§ 10.3 Subcontracts or other agreements shall conform to the applicable payment provisions of this
Agreement, and shall not be awarded on the basis of cost plus a fee without the prior consent of
the Owner.

ARTICLE 11 ACCOUNTING RECORDS

The Contractor shall keep full and detailed accounts and exercise such controls as may be necessary
for proper financial management under this Contract, and the accounting and control systems shall
be satisfactory to the Owner. The Owner and the Owner’s accountants shall be afforded access to,
and shall be permitted to audit and copy, the Contractor’s records, books, correspondence,
instructions, drawings, receipts, subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Contract, and the Contractor shall preserve these for a period of three years
after final payment, or for such longer period as may be required by law.

ARTICLE 12 PAYMENTS

§ 12.1 PROGRESS PAYMENTS

§ 12.1.1 Based upon Applications for Payment submitted to the Architect by the Contractor and
Certificates for Payment issued by the Architect, the Owner shall make progress payments on account
of the Contract Sum to the Contractor as provided below and elsewhere in the Contract Documents.

§ 12.1.2 The period covered by each Application for Payment shall be one calendar month ending on
the last day of the month, or as follows:

§ 12.1.3 Provided that an Application for Payment is received by the Architect not later than the
last day of a month, the Owner shall make payment to the Contractor not later than the 15th day of
the same month. If an Application for Payment is received by the Architect after the application
date fixed above, payment shall be made by the Owner not later than Thirty (30) days after the
Architect receives the Application for Payment.

§ 12.1.4 With each Application for Payment, the Contractor shall submit payrolls, petty cash
accounts, receipted invoices or invoices with check vouchers attached, and any other evidence
required by the Owner or Architect to

7

 

demonstrate that cash disbursements already made by the Contractor on account of the Cost of the
Work equal or exceed (1) progress payments already received by the Contractor; less (2) that
portion of those payments attributable to the Contractor’s Fee; plus (3) payrolls for the period
covered by the present Application for Payment.

§ 12.1.5 Each Application for Payment shall be based on the most recent schedule of values
submitted by the Contractor in accordance with the Contract Documents. The schedule of values shall
allocate the entire Guaranteed Maximum Price among the various portions of the Work, except that
the Contractor’ s Fee shall be shown as a single separate item. The schedule of values shall be
prepared in such form and supported by such data to substantiate its accuracy as the Architect may
require. This schedule, unless objected to by the Architect, shall be used as a basis for reviewing
the Contractor’s Applications for Payment.

§ 12.1.6 Applications for Payment shall show the percentage of completion of each portion of the
Work as of the end of the period covered by the Application for Payment. The percentage of
completion shall be the lesser of (1) the percentage of that portion of the Work which has actually
been completed; or (2) the percentage obtained by dividing (a) the expense that has actually been
incurred by the Contractor on account of that portion of the Work for which the Contractor has made
or intends to make actual payment prior to the next Application for Payment by (b) the share of the
Guaranteed Maximum Price allocated to that portion of the Work in the schedule of values.

§ 12.1.7 Subject to other provisions of the Contract Documents, the amount of each progress payment
shall be computed as follows:

	 	.1	 	take that portion of the Guaranteed Maximum Price properly allocable to
completed Work as determined by multiplying the percentage of completion of each
portion of the Work by the share of the Guaranteed Maximum Price allocated to that
portion of the Work in the schedule of values. Pending final determination of cost
to the Owner of changes in the Work, amounts not in dispute shall be included as
provided in Section 7.3.8 of AIA Document A201-1997;
	 
	 	.2	 	add that portion of the Guaranteed Maximum Price properly allocable to
materials and equipment delivered and suitably stored at the site for subsequent
incorporation in the Work, or if approved in advance by the Owner, suitably stored
off the site at a location agreed upon in writing;
	 
	 	.3	 	add the Contractor’s Fee, less retainage of ten (10% ).The Contractor’s Fee
shall be computed upon the Cost of the Work described in the two preceding Clauses
at the rate stated in Section 5.1.2 or, if the Contractor’s Fee is stated as a fixed
sum in that Subparagraph, shall be an amount that bears the same ratio to that
fixed-sum fee as the Cost of the Work in the two preceding Clauses bears to a
reasonable estimate of the probable Cost of the Work upon its completion;
	 
	 	.4	 	subtract the aggregate of previous payments made by the Owner;
	 
	 	.5	 	subtract the shortfall, if any, indicated by the Contractor in the
documentation required by Section 12.1.4 to substantiate prior Applications for
Payment, or resulting from errors subsequently discovered by the Owner’s accountants
in such documentation; and
	 
	 	.6	 	subtract amounts, if any, for which the Architect has withheld or nullified
a Certificate for Payment as provided in Section 9.5 of AIA Document A201-1997.

§ 12.1.8 Except with the Owner’s prior approval, payments to Subcontractors shall be subject to
retainage of ten (10%). The Owner and the Contractor shall agree upon a mutually acceptable
procedure for review and approval of payments and retention for Subcontractors.

§ 12.1.9 In taking action on the Contractor’s Applications for Payment, the Architect shall be
entitled to rely on the accuracy and completeness of the information furnished by the Contractor
and shall not be deemed to represent that the Architect has made a detailed examination, audit or
arithmetic verification of the documentation submitted in accordance with Section 12.1.4 or other
supporting data; that the Architect has made exhaustive or continuous onsite inspections or that
the Architect has made examinations to ascertain how or for what purposes the Contractor has used
amounts previously paid on account of the Contract. Such examinations, audits and verifications, if
required by the Owner, will be performed by the Owner’s accountants acting in the sole interest of
the Owner.

8

 

12.1.10 See article 15 of the General Conditions (AIA Document A201-1997) regarding payment of
Progress Payments.

§ 12.2 FINAL PAYMENT

§ 12.2.1 Final payment, constituting the entire unpaid balance of the Contract Sum, shall be made
by the Owner to the Contractor when:

	 	.1	 	the Contractor has fully performed the Contract except for the
Contractor’s responsibility to correct Work as provided in Section 12.2.2 of AIA
Document A201-1997, and to satisfy other requirements, if any, which extend beyond
final payment; and
	 
	 	.2	 	a final Certificate for Payment has been issued by the Architect.

§ 12.2.2 The Owner’s final payment to the Contractor shall be made no later than 30 days after the
issuance of the Architect’s final Certificate for Payment, or as follows:

N/A

§ 12.2.3 The Owner’s accountants will review and report in writing on the Contractor’s final
accounting within 30 days after delivery of the final accounting to the Architect by the
Contractor. Based upon such Cost of the Work as the Owner’s accountants report to be substantiated
by the Contractor’s final accounting, and provided the other conditions of Section 12.2.1 have been
met, the Architect will, within seven days after receipt of the written report of the Owner’s
accountants, either issue to the Owner a final Certificate for Payment with a copy to the
Contractor, or notify the Contractor and Owner in writing of the Architect’s reasons for
withholding a certificate as provided in Section 9.5.1 of the AIA Document A201-1997. The time
periods stated in this Section 12.2.3 supersede those stated in Section 9.4.1 of the AIA Document
A201-1997.

§ 12.2.4 If the Owner’s accountants report the Cost of the Work as substantiated by the
Contractor’s final accounting to be less than claimed by the Contractor, the Contractor shall be
entitled to demand mediation of the disputed amount without a further decision of the Architect.
Pending a final resolution by mediation, the Owner shall pay the Contractor the undisputed amount
in Contractor’s Application for Payment.

§ 12.2.5 If, subsequent to final payment and at the Owner’s request, the Contractor incurs costs
described in Article 7 and not excluded by Article 8 to correct defective or nonconforming Work,
the Owner shall reimburse the Contractor such costs and the Contractor’s Fee applicable thereto on
the same basis as if such costs had been incurred prior to final payment, but not in excess of the
Guaranteed Maximum Price. If the Contractor has participated in savings as provided in Section 5.2,
the amount of such savings shall be recalculated and appropriate credit given to the Owner in
determining the net amount to be paid by the Owner to the Contractor.

12.2.6 See Article 15 of the General Conditions (AIA Document A201-1997) regarding late payment of
the Final Payment.

ARTICLE 13 TERMINATION OR SUSPENSION

§ 13.1 The Contract may be terminated by the Contractor, or by the Owner for convenience, as
provided in Article 14 of AIA Document A201-1997. However, the amount to be paid to the Contractor
under Section 14.1.3 of AIA Document A201-1997 shall not exceed the amount the Contractor would be
entitled to receive under Section 13.2 below, except that the Contractor’s Fee shall be calculated
as if the Work had been fully completed by the Contractor, including a reasonable estimate of the
Cost of the Work for Work not actually completed.

§ 13.2 The Contract may be terminated by the Owner for cause as provided in Article 14 of AIA
Document A201-1997. The amount, if any, to be paid to the Contractor under Section 14.2.4 of AIA
Document A201-1997 shall not cause the Guaranteed Maximum Price to be exceeded, nor shall it exceed
an amount calculated as follows:

§13.2.1 Take the Cost of the Work incurred by the Contractor to the date of termination;

9

 

§ 13.2.2 Add the Contractor’s Fee computed upon the Cost of the Work to the date of termination at
the rate stated in Section 5.1.2 or, if the Contractor’s Fee is stated as a fixed sum in that
Section, an amount that bears the same ratio to that fixed-sum Fee as the Cost of the Work at the
time of termination bears to a reasonable estimate of the probable Cost of the Work upon its
completion; and

§ 13.2.3 Subtract the aggregate of previous payments made by the Owner.

§ 13.3 The Owner shall also pay the Contractor fair compensation, either by purchase or rental at
the election of the Owner, for any equipment owned by the Contractor that the Owner elects to
retain and that is not otherwise included in the Cost of the Work under Section 13.2.1. To the
extent that the Owner elects to take legal assignment of subcontracts and purchase orders
(including rental agreements), the Contractor shall, as a condition of receiving the payments
referred to in this Article 13, execute and deliver all such papers and take all such steps,
including the legal assignment of such subcontracts and other contractual rights of the Contractor,
as the Owner may require for the purpose of fully vesting in the Owner the rights and benefits of
the Contractor under such subcontracts or purchase orders.

§ 13.4 The Work may be suspended by the Owner as provided in Article 14 of AIA Document A201-1997;
in such case, the Guaranteed Maximum Price and Contract Time shall be increased as provided in
Section 14.3.2 of AIA Document A201-1997 except that the term “profit” shall be understood to mean
the Contractor’s Fee as described in Sections 5.1.2 and Section 6.4 of this Agreement.

ARTICLE 14 MISCELLANEOUS PROVISIONS

§ 14.1 Where reference is made in this Agreement to a provision AIA Document A201-1997 or another
Contract Document, the reference refers to that provision as amended or supplemented by other
provisions of the Contract Documents.

§ 14.2 Payments due and unpaid under the Contract are subject to late payment fees set forth in
Article 15 of the General Conditions (AIA Document A201-1997)

(Insert rate of interest agreed upon, if any.)

10% per annum

(Usury laws and requirements under the Federal Truth in Lending Act, similar state and local
consumer credit laws and other regulations at the Owner’s and Contractor’s principal places of
business, the location of the Project and elsewhere may affect the validity of this provision.
Legal advice should be obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)

§ 14.3 The Owner’s representative is:

(Name, address and other information.)

Frank Schembri,

Senior Director of Manufacturing

Hansen Medical

380 North Bernardo Avenue

Mountain View, CA 94043

Phone: 650-404-5840

Fax: 650-404-5901

Email: frank_schembri@hansenmedical.com

§ 14.4 The Contractor’s representative is:

(Name, address and other information.)

Dave Nevens, Jr.

Vice President

10

 

W. L. Butler Construction, Inc.

204 Franklin Street

Redwood City CA 94063

Phone: 650-361-1270

Fax: 650-361-8657

Dave.Nevens@wlbutler.com.

§ 14.5 Neither the Owner’s nor the Contractor’s representative shall be changed without ten days’
written notice to the other party.

§ 14.6 Other provisions:

14.7 The Construction Lender is: None

14.8 Contractors are required by law to be licensed and regulated by the Contractor’s State License
Board which had the jurisdiction to investigate complaints against contractors if a complaint
regarding a patent act or omission is filed within (4) four years of the alleged violation. A
complaint regarding a latent act or omission pertaining to structural defects must be files within
(10) ten years of the date of the alleged violation. Any questions concerning a contractor may be
referred to the Registrar. Contractor’s State License Board P.O. Box 26000, Sacramento CA 95826.

ARTICLE 15 ENUMERATION OF CONTRACT DOCUMENTS

§ 15.1 The Contract Documents, except for Modifications issued after execution of this Agreement,
are enumerated as follows:

§ 15.1.1 The Agreement is this executed 1997 edition of the Standard Form of Agreement Between
Owner and Contractor, AIA Document AIII-1997.

§ 15.1.2 The General Conditions are the 1997 edition of the General Conditions of the Contract for
Construction, AIA Document A201-1997.

§ 15.1.3 The Supplementary and other Conditions of the Contract are those contained in the Project
Manual dated , and are as follows:

	 	 	 	 	 
	Document

	 	Title
	 	Pages
	DGA Phase 1 Project Manual
	 	 	 	 
	Specifications dated January 9, 2008
	 	 	 	 

DGA Phase 2 Project Manual

Specifications dated January 30, 2008

§ 15.1.4 The Specifications are those contained in the Project Manual dated as in Section 15.1.3,
and are as follows:

(Either list the Specifications here or refer to an exhibit attached to this Agreement.)

Title of Specifications exhibit: N/A

(Table deleted)

§ 15.1.5 The Drawings are as follows, and are dated unless a different date is shown below:

(Either list the Drawings here or refer to an exhibit attached to this Agreement.)

Title of
Drawings exhibit: Exhibit “J” -Drawing List — Phase 1
dated 2/26/08 and Phase 2 dated 2/26/08

(Table deleted)

§ 15.1.6 The Addenda, if any, are as follows:

	 	 	 	 	 
	Number

N/A

	 	Date

N/A
	 	Pages

N/A

Portions of Addenda relating to bidding requirements are not part of the Contract Documents unless
the bidding requirements are also enumerated in this Article 15.

11

 

§ 15.1.7 Other Documents, if any, forming part of the Contract Documents are as follows:

(List here any additional documents, such as a list of alternates that are intended to form part of
the Contract Documents. AIA Document A201-1997 provides that bidding requirements such as
advertisement or invitation to bid, Instructions to Bidders, sample forms and the Contractor’s bid
are not part of the Contract Documents unless enumerated in this Agreement. They should be listed
here only if intended to be part of the Contract Documents.)

Exhibit “A” -Pre-Construction and Management Services Agreement dated 12/19/07

Exhibit “B” -General Conditions and Demo dated January 10, 2008

Exhibit “C” -MEP Design Builders Cost Analysis dated February 13, 2008

Exhibit “D” -Phase I Project Cost Form dated February 26, 2008

Exhibit “E” -Phase 2 Project Cost Form dated March 18, 2008

Exhibit “F” -Summary dated March 18, 2008

Exhibit “G” -Phase I Clarifications dated February 26, 2008 -Phase 2 Clarifications dated March 18, 2008

Exhibit “R” -Phase I Exclusions dated February 26, 2008 -Phase 2 dated March 18, 2008

Exhibit “I” -Amendment to AIA Documents dated March 28, 2008

Exhibit “J” -Phase I Drawing Log dated February 26, 2008 -Phase 2 Drawing Log dated February 26, 2008

Exhibit “K”-Project Schedule dated March 28, 2008

ARTICLE 16 INSURANCE AND BONDS

(List required limits of liability for insurance and bonds. AIA DocumentA201-1997 gives other
specific requirements for insurance and bonds.)

	 	 	 	 	 	 	 
	Type of insurance

	 	 	 	Limit of liability ($0.00)	 	 
	 
	(Row deleted)
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Steve Van Dick
 

OWNER (Signature)

	 	 
	 	/s/ David A. Nevens, Jr.           4/29/08
 

CONTRACTOR (Signature)
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	David A. Nevens, Jr.	 	 
	 

	 	 	 	Vice President	 	 
	Steve Van Dick, CFO
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	(Printed name and title)

	 	 	 	(Printed name and title)	 	 

12

 

Certification of Document’s Authenticity

AIA® Document D401TM -2003

I, David A. Nevens, Jr., hereby certify, to the best of my knowledge, information and belief, that
I created the attached final document simultaneously with its associated Additions and Deletions
Report and this certification at 08:34:59 03/28/2008 under Order No. 1000328416_1 from AIA Contract
Documents software and that in preparing the attached final document I made no changes to the
original text of AIA® Document A111TM-1997 Standard Form of Agreement Between Owner and Contractor
where the basis for payment is the COST OF THE WORK PLUS A FEE with a negotiated Guaranteed Maximum
Price, as published by the AIA in its software, other than those additions and deletions shown in
the associated Additions and Deletions Report.

	 	 	 
	/s/ David A. Nevens, Jr.
 

(Signed)

	 	 
	 
	 	 
	Vice President
 

(Title)
	 	 
	 
	 	 
	4/29/08
 

(Dated)
	 	 

AIA Document 0401 TM-2003. Copyright © 1992 and 2003 by The American Institute of Architects. All
rights reserved. WARNING: This AIA® Document is protected by U.S. Copyright Law and International
Treaties. Unauthorized reproduction or distribution of this AIA® Document, or any portion of it,
may result in severe civil and criminal penalties, and will be prosecuted to the maximum extent
possible under the law. This document was produced by AIA software at 08:34:59 on 03/28/2008 under
Order No. 1000328416_1 which expires on 10/31/2008, and is not
for resale.

User Notes: (3310834090)

1

 

AIA
Document A201TM - 1997

General Conditions of the Contract for Construction

ADDITIONS AND DELETIONS:

The author of this document has added information needed for its completion. The author may also
have revised the text of the original AIA standard form. An Additions and Deletions Report that
notes added information as well as revisions to the standard form text is available from the author
and should be reviewed. A vertical line in the left margin of this document indicates where the
author has added necessary information and where the author has added to or deleted from the
original AIA text.

This document has important legal consequences. Consultation with an attorney is encouraged with
respect to its completion or modification.

This document has been approved and endorsed by The Associated General Contractors of America

for the following PROJECT:

(Name and location or address):

Hansen Medical

800 East Middlefield Avenue

Mountain View, CA 94043

WLB Project #71063

THE OWNER:

(Name and address):

Hansen Medical

380 North Bernardo Avenue

Mountain View, CA 94043

THE ARCHITECT:

(Name and address):

DGA

550 Ellis Street

Mountain View, CA 94043

TABLE OF ARTICLES

1 GENERAL PROVISIONS

2 OWNER

3 CONTRACTOR

4 ADMINISTRATION OF THE CONTRACT

5 SUBCONTRACTORS

6 CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS

7 CHANGES IN THE WORK

8 TIME

9 PAYMENTS AND COMPLETION

10 PROTECTION OF PERSONS AND PROPERTY

11 INSURANCE AND BONDS

12 UNCOVERING AND CORRECTION OF WORK

13 MISCELLANEOUS PROVISIONS

AIA Document A201TM -1997. Copyright © 1911, 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1966,
1970, 1976, 1987 and 1997 by The American Institute of Architects. All rights reserved. WARNING:
This AIA® Document is protected by U.S. Copyright law and International Treaties. Unauthorized
reproduction or distribution of this AIA Document, or any portion of it, may result in severe civil
and criminal penalties, and will be prosecuted to the maximum extent possible under the law. This
document was produced by AIA software at 15:43:52 on 11/13/2007 under Order No. 1000328416_1 which
expires on 10/31/2008, and is not for
resale.

User Notes: (2934357826)

1

 

14 TERMINATION OR SUSPENSION OF THE CONTRACT

2

 

INDEX

(Numbers and Topics in Bold are Section Headings)

Acceptance of Nonconforming Work

9.6.6, 9.9.3, 12.3

Acceptance of Work

9.6.6,9.8.2,9.9.3,9.10.1,9.10.3, 12.3

Access to Work

3.16, 6.2.1, 12.1

Accident Prevention

4.2.3, 10

Acts and Omissions

3.2, 3.3.2,3.12.8,3.18,4.2.3,4.3.8,4.4.1,8.3.1,

9.5.1,10.2.5, 13.4.2, 13.7,14.1

Addenda

1.1.1,3.11

Additional Costs, Claims for

4.3.4,4.3.5,4.3.6, 6.1.1, 10.3

Additional Inspections and Testing

9.8.3, 12.2.1 , 13.5

Additional Time, Claims for

4.3.4, 4.3.7, 8.3.2

ADMINISTRATION OF THE CONTRACT

3.1.3, 4, 9.4, 9.5

Advertisement or Invitation to Bid

1.1.1

Aesthetic Effect

4.2.13, 4.5.1

Allowances

3.8

All-risk Insurance

11.4.1.1

Applications for Payment

4.2.5,7.3.8, 9.2,9.3,9.4,9.5.1,9.6.3,9.7.1,9.8.5,

9.10,11.1.3, l4.2.4, 14.4.3

Approvals

2.4,3.1.3, 3.5, 3.10.2,3.12, 4.2.7,9.3.2, 13.4.2,13.5

Arbitration

4.3.3, 4.4,4.5.1,4.5.2,4.6,8.3.1,9.7.1,11.4.9,

11.4.10

Architect

4.1

Architect, Definition of

4.1.1

Architect, Extent of Authority

2.4,3.12.7,4.2, 4.3.6,4.4,5.2,6.3,7.1.2,7.3.6,7.4,

9.2, 9.3.1,9.4,9.5, 9.8.3,9.10.1, 9.10.3,12.1,12.2.1,

13.5.1, 13.5.2, 14.2.2, 14.2.4

Architect, Limitations of Authority and

Responsibility

2.1.1, 3.3.3,3.12.4,3.12.8,3.12.10,4.1.2,4.2.1,

4.2.2, 4.2.3,4.2.6,4.2.7, 4.2.10,4.2.12,4.2.13,4.4,

5.2.1 , 7.4,9.4.2, 9.6.4,9.6.6

Architect’s Additional Services and Expenses

2.4,11.4.1.1,12.2.1,13.5.2,13.5.3,14.2.4

Architect’s Administration of the Contract

3.1.3,4.2,4.3.4,4.4,9.4,9.5

Architect’s Approvals

2.4,3.1.3,3.5.1,3.10.2,4.2.7

Architect’s Authority to Reject Work

3.5.1,4.2.6,12.1.2,12.2.1

Architect’s Copyright

1.6

Architect’s Decisions

4.2.6,4.2.7,4.2.11,4.2.12,4.2.13,4.3.4,4.4.1,4.4.5,

4.4.6,4.5,6.3,7.3.6,7.3.8,8.1.3,8.3.1,9.2,9.4,

9.5.1,9.8.4,9.9.1,13.5.2,14.2.2,14.2.4

Architect’s Inspections

4.2.2,4.2.9,4.3.4,9.4.2, 9.8.3,9.9.2,9.10.1,13.5

Architect’s Instructions

3.2.3,3.3.1,4.2.6,4.2.7,4.2.8,7.4.1,12.1,13.5.2

Architect’s Interpretations

4.2.11,4.2.12,4.3.6

Architect’s Project Representative

4.2.10

Architect’s Relationship with Contractor

1.1.2,1.6,3.1.3,3.2.1,3.2.2,3.2.3,3.3.1,3.4.2,3.5.1,

3.7.3, 3.10,3.11,3.12,3.16,3.18,4.1.2,4.1.3,4.2,

4.3.4,4.4.1,4.4.7,5.2,6.2.2,7,8.3.1,9.2,9.3,9.4,

9.5,9.7,9.8,9.9, 10.2.6,10.3,11.3,11.4.7,12,

13.4.2, 13.5

Architect’s Relationship with Subcontractors

1.1.2,4.2.3,4.2.4,4.2.6,9.6.3,9.6.4, 11.4.7

Architect’s Representations

9.4.2,9.5.1,9.10.1

Architect’s Site Visits

4.2.2,4.2.5,4.2.9,4.3.4,9.4.2,9.5.1,9.9.2,9.10.1,

13.5

Asbestos

10.3.1

Attorneys’ Fees

3.18.1,9.10.2,10.3.3

Award of Separate Contracts

6.1.1,6.1.2

Award of Subcontracts and Other Contracts for

Portions of the Work

5.2

Basic Definitions

1.1

Bidding Requirements

1.1.1,1.1.7,5.2.1,11.5.1

Boiler and Machinery Insurance

11.4.2

Bonds, Lien

9.10.2

Bonds, Performance, and Payment

7.3.6.4,9.6.7,9.10.3,11.4.9,11.5

Building Permit

3.7.1

Capitalization

1.3

Certificate of Substantial Completion

3

 

9.8.3,9.8.4,9.8.5

Certificates for Payment

4.2.5,4.2.9,9.3.3,9.4,9.5,9.6.1,9.6.6,9.7.1,9.10.1,

9.10.3, 13.7,14.1.1.3, 14.2.4

Certificates of Inspection, Testing or Approval

13.5.4

Certificates of Insurance

9.10.2,11.1.3

Change Orders

1.1.1,2.4.1,3.4.2,3.8.2.3,3.11.1,3.12.8,4.2.8,4.3.4,

4.3.9,5.2.3,7.1,7.2,7.3,8.3.1,9.3.1.1,9.10.3,

11.4.1.2,11.4.4,11.4.9,12.1.2

Change Orders, Definition of

7.2.1

CHANGES IN THE WORK

3.11,4.2.8,7, 8.3.1,9.3.1.1, 11.4.9

Claim, Definition of

4.3.1

Claims and Disputes

3.2.3, 4.3,4.4, 4.5,4.6, 6.1.1,6.3,7.3.8,9.3.3,9.10.4,

10.3.3

Claims and Timely Assertion of Claims

4.6.5

Claims for Additional Cost

3.2.3, 4.3.4,4.3.5,4.3.6,6.1.1,7.3.8, 10.3.2

Claims for Additional Time

3.2.3,4.3.4, 4.3.7, 6.1.1,8.3.2, 10.3.2

Claims for Concealed or Unknown Conditions

4.3.4

Claims for Damages

3.2.3,3.18,4.3.10, 6.1.1,8.3.3,9.5.1,9.6.7,10.3.3,

11.1.1, 11.4.5, 11.4.7, 14.1.3, 14.2.4

Claims Subject to Arbitration

4.4.1 , 4.5.1, 4.6.1

Cleaning Up

3.15,6.3

Commencement of Statutory Limitation Period

13.7

Commencement of the Work, Conditions Relating to

2.2. 1, 3.2.1,3.4.1,3.7.1,3.10.1,3.12.6,4.3.5,5.2.1,

5.2.3, 6.2.2,8.1.2,8.2.2,8.3.1,11.1, 11.4.1,11.4.6,

11.5.1

Commencement of the Work, Definition of

8.1.2

Communications Facilitating Contract

Administration

3.9.1,4.2.4

Completion, Conditions Relating to

1.6.1,3.4.1, 3.11, 3.15,4.2.2,4.2.9,8.2,9.4.2,9.8,

9.9.1,9.10, 12.2,13.7,14.1.2

COMPLETION, PAYMENTS AND

9

Completion, Substantial

4.2.9,8.1.1,8.1.3,8.2.3,9.4.2,9.8,9.9.1,9.10.3,

9.10.4.2,12.2,13.7

Compliance with Laws

1.6.1, 3.2.2,3.6,3.7,3.12.10,3.13, 4.1.1,4.4.8, 4.6.4,

4.6.6,9.6.4,10.2.2,11.1,11.4, 13.1,13.4, 13.5.1,

13.5.2,13.6,14.1.1,14.2.1.3

Concealed or Unknown Conditions

4.3.4,8.3.1, 10.3

Conditions of the Contract

1.1.1,1.1.7,6.1.1,6.1.4

Consent, Written

1.6,3.4.2,3.12.8,3.14.2,4.1.2, 4.3.4,4.6.4,9.3.2,

9.8.5,9.9.1,9.10.2,9.10.3,11.4.1, 13.2,13.4.2

CONSTRUCTION BY OWNER OR BY

SEPARATE CONTRACTORS

1.1.4,6

Construction Change Directive, Definition of

7.3.1

Construction Change Directives

1.1.1,3.12.8,4.2.8,4.3.9,7.1,7.3,9.3.1.1

Construction Schedules, Contractor’s

1.4.1.2,3.10,3.12.1,3.12.2,4.3.7.2,6.1.3

Contingent Assignment of Subcontracts

5.4, 14.2.2.2

Continuing Contract Performance

4.3.3

Contract, Definition of

1.1.2

CONTRACT, TERMINATION OR

SUSPENSION OF THE

5.4.1.1 , 11.4.9, 14

Contract Administration

3.1.3,4,9.4,9.5

Contract Award and Execution, Conditions Relating

to

3.7.1,3.10,5.2,6.1,11.1.3, 11.4.6,11.5.1

Contract Documents, The

1.1,1.2

Contract Documents, Copies Furnished and Use of

1.6,2.2.5, 5.3

Contract Documents, Definition of

1.1.1

Contract Sum

3.8,4.3.4,4.3.5,4.4.5,5.2.3,7.2, 7.3, 7.4, 9.1, 9.4.2,

9.5.1.4,9.6.7,9.7,10.3.2,11.4.1, 14.2.4, 14.3.2

Contract Sum, Definition of

9.1

Contract Time

4.3.4,4.3.7,4.4.5,5.2.3,7.2.1.3, 7.3, 7.4,8.1.1,8.2,

8.3.1,9.5.1,9.7,10.3.2,12.1.1, 14.3.2

Contract Time, Definition of

8.1.1

CONTRACTOR

3

Contractor, Definition of

3.1,6.1.2

Contractor’s Construction Schedules

1.4.1.2,3.10,3.12.1,3.12.2,4.3.7.2, 6.1.3

Contractor’s Employees

4

 

3.3.2,3.4.3,3.8.1,3.9,3.18.2,4.2.3,4.2.6, 10.2, 10.3,

11.1.1,11.4.7, 14.1, 14.2.1.1 ,

Contractor’s Liability Insurance

11.1

Contractor’s Relationship with Separate Contractors

and Owner’s Forces

3.12.5,3.14.2,4.2.4, 6, 11.4.7, 12.1.2, 12.2.4

Contractor’s Relationship with Subcontractors

1.2.2,3.3.2,3.18.1,3.18.2,5,9.6.2,9.6.7,9.10.2,

11.4.1.2, 11.4.7, 11.4.8

Contractor’s Relationship with the Architect

1.1.2,1.6,3.1.3,3.2.1, 3.2.2,3.2.3,3.3.1,3.4.2,3.5.1,

3.7.3, 3.10,3.11,3.12,3.16,3.18, 4.1.2,4.1.3,4.2,

4.3.4,4.4.1 ,4.4.7,5.2, 6.2.2,7,8.3.1,9.2,9.3,9.4,

9.5, 9.7, 9.8, 9.9, 10.2.6, 10.3, 11.3,11.4.7,12,

13.4.2,13.5

Contractor’s Representations

1.5.2,3.5.1, 3.12.6, 6.2.2,8.2.1,9.3.3, 9.8.2

Contractor’s Responsibility for Those Performing the

Work

3.3.2,3.18,4.2.3,4.3.8,5.3.1,6.1.3, 6.2, 6.3, 9.5.1,

10

Contractor’s Review ofContract Documents

1.5.2,3.2,3.7.3

Contractor’s Right to Stop the Work

9.7

Contractor’s Right to Terminate the Contract

4.3.10,14.1

Contractor’s Submittals

3.10,3.11, 3.12,4.2.7,5.2.1,5.2.3,7.3.6,9.2, 9.3,

9.8.2,9.8.3,9.9.1,9.10.2,9.10.3, 11.1.3,11.5.2

Contractor’s Superintendent

3.9, 10.2.6

Contractor’s Supervision and Construction

Procedures

1.2.2, 3.3,3.4,3.12.10, 4.2.2,4.2.7,4.3.3,6.1.3,

6.2.4,7.1.3,7.3.4,7.3.6,8.2,10, 12, 14

Contractual Liability Insurance

11.1.1.8, 11.2, 11.3

Coordination and Correlation

1.2, 1.5.2,3.3.1,3.10,3.12.6, 6.1.3,6.2.1

Copies Furnished of Drawings and Specifications

1.6, 2.2.5, 3.11

Copyrights

1.6,3.17

Correction of Work

2.3,2.4,3.7.4,4.2.1,9.4.2,9.8.2,9.8.3, 9.9.1, 12.1.2,

12.2, 13.7.1.3

Correlation and Intent of the Contract Documents

1.2

Cost, Definition of

7.3.6

Costs

2.4,3.2.3,3.7.4,3.8.2,3.15.2,4.3,5.4.2,6.1.1,6.2.3,

7.3.3.3,7.3.6,7.3.7,7.3.8,9.10.2, 10.3.2, 10.5,11.3,

11.4, 12.1, 12.2.1, 12.2.4,13.5, 14

Cutting and Patching

6.2.5, 3.14

Damage to Construction ofOwner or Separate

Contractors

3.14.2, 6.2.4, 9.2.1.5, 10.2.1.2, 10.2.5, 10.6, 11.1,

11.4, 12.2.4

Damage to the Work

3.14.2,9.9.1,10.2.1.2,10.2.5,10.6,11.4,12.2.4

Damages, Claims for

3.2.3,3.18,4.3.10,6.1.1,8.3.3,9.5.1,9.6.7,10.3.3,

11.1.1,11.4.5, 11.4.7, 14.1.3, 14.2.4

Damages for Delay

6.1.1, 8.3.3,9.5.1.6,9.7, 10.3.2

Date of Commencement of the Work, Definition of

8.1.2

Date of Substantial Completion, Definition of

8.1.3

Day, Definition of

8.1.4

Decisions of the Architect

4.2.6,4.2.7,4.2.11, 4.2.12,4.2.13,4.3.4,4.4.1,4.4.5,

4.4.6,4.5,6.3,7.3.6,7.3.8,8.1.3,8.3.1,9.2,9.4,

9.5.1,9.8.4,9.9.1, 13.5.2, 14.2.2, 14.2.4

Decisions to Withhold Certification

9.4.1, 9.5, 9.7,14.1.1.3

Defective or Nonconforming Work, Acceptance,

Rejection and Correction of

2.3,2.4, 3.5.1,4.2.6,6.2.5,9.5.1,9.5.2,9.6.6,9.8.2,

9.9.3,9.10.4,12.2.1,13.7.1.3

Defective Work, Definition of

3.5. 1

Definitions

1.1,2.1.1,3.1,3.5.1,3.12.1,3.12.2, 3.12.3,4.1.1,

4.3.1,5.1,6.1.2,7.2.1,7.3.1,7.3.6,8.1, 9.1,9.8.1

Delays and Extensions of Time

3.2.3,4.3.1,4.3.4,4.3.7,4.4.5,5.2.3,7.2.1,7.3.1,

7.4.1,8.3,9.5.1,9.7.1,10.3.2, 10.6.1,14.3.2

Disputes

4.1.4,4.3,4.4,4.5, 4.6, 6.3, 7.3.8

Documents and Samples at the Site

3.11

Drawings, Definition of

1.1.5

Drawings and Specifications, Use and Ownership of

1.1.1, 1.3,2.2.5,3.11,5.3

Effective Date of Insurance

8.2.2, 11.1.2

Emergencies

4.3.5, 10.6, 14.1.1.2

Employees, Contractor’s

3.3.2,3.4.3,3.8.1,3.9,3.18.2,4.2.3,4.2.6,10.2, 10.3,

11.1.1 , 11.4.7, 14. 1, 14.2. 1.1

Equipment, Labor, Materials and

1.1.3, 1.1.6,3.4,3.5.1,3.8.2,3.8.3,3.12,3.13, 3.15.1,

4.2.6,4.2.7,5.2.1,6.2.1,7.3.6, 9.3.2,9.3.3,9.5.1.3,

9.10.2,10.2.1,10.2.4,14.2.1.2

Execution and Progress of the Work

5

 

1.1.3,1.2.1,1.2.2,2.2.3,2.2.5,3.1, 3.3,3.4, 3.5,3.7,

3.10,3.12,3.14,4.2.2,4.2.3,4.3.3,6.2.2,7.1.3,7.3.4,

8.2, 9.5, 9.9.1, 10.2,10.3, 12.2, 14.2, 14.3

Extensions ofTime

3.2.3,4.3.1, 4.3.4,4.3.7,4.4.5,5.2.3,7.2.1,7.3,7.4.1 ,

9.5.1, 9.7.1,10.3.2,10.6.1,14.3.2

Failure of Payment

4.3.6,9.5.1.3,9.7,9.10.2,14.1.1.3,14.2.1.2,13.6

Faulty Work

(See Defective or Nonconforming Work)

Final Completion and Final Payment

4.2.1,4.2.9,4.3.2,9.8.2, 9.10,11.1.2,11.1.3,11.4.1,

11.4.5,12.3.1, 13.7,14.2.4, 14.4.3

Financial Arrangements, Owner’s

2.2.1,13.2.2, 14.1.1.5

Fire and Extended Coverage Insurance

11.4

GENERAL PROVISIONS

1

Governing Law

13.1

Guarantees (See Warranty)

Hazardous Materials

10.2.4, 10.3, 10.5

Identification of Contract Documents

1.5.1

Identification of Subcontractors and Suppliers

5.2.1

Indemnification

3.17, 3.18, 9.10.2,10.3.3,10.5,11.4.1.2,11.4.7

Information and Services Required of the Owner

2. 1.2, 2.2,3.2.1 , 3.12.4, 3.12.10,4.2.7,4.3.3, 6.1.3,

6.1.4,6.2.5,9.3.2,9.6.1,9.6.4,9.9.2, 9.10.3,10.3.3,

11.2,11.4, 13.5.1,13.5.2,14.1. 1.4, 14.1.4

Injury or Damage to Person or Property

4.3.8, 10.2, 10.6

Inspections

3.1.3,3.3.3, 3.7.1,4.2.2,4.2.6,4.2.9,9.4.2,9.8.2,

9.8.3,9.9.2, 9.10.1,12.2.1,13.5

Instructions to Bidders

1.1.1

Instructions to the Contractor

3.2.3, 3.3.1,3.8.1,4.2.8,5.2.1 , 7, 12,8.2.2, 13.5.2

Insurance

3.18.1,6.1.1,7.3.6,8.2.1,9.3.2,9.8.4,9.9.1,9.10.2,

9.10.5, 11

Insurance, Boiler and Machinery

11.4.2

Insurance, Contractor’s Liability

11.1

Insurance, Effective Date of

8.2.2, 11.1.2

Insurance, Loss of Use

11.4.3

Insurance, Owner’s Liability

11.2

Insurance, Project Management Protective

Liability

11.3

Insurance,Property

10.2.5, 11.4

Insurance, Stored Materials

9.3.2, 11.4.1.4

INSURANCE AND BONDS

11

Insurance Companies, Consent to Partial Occupancy

9.9.1, 11.4.1.5

Insurance Companies, Settlement with

11.4.10

Intent of the Contract Documents

1.2.1,4.2.7,4.2.12,4.2.13,7.4

Interest

13.6

Interpretation

1.2.3,1.4,4.1.1,4.3.1,5.1,6.1.2,8.1.4

Interpretations, Written

4.2.11,4.2.12, 4.3.6

Joinder and Consolidation of Claims Required

4.6.4

Judgment on Final Award

4.6.6

Labor and Materials, Equipment

1.1.3,1.1.6, 3.4, 3.5.1,3.8.2,3.8.3,3.12,3.13,3.15.1,

42.6,4.2.7,5.2.1,6.2.1,7.3.6, 9.3.2,9.3.3,9.5.1.3,

9.10.2,10.2.1,10.2.4,14.2.1.2

Labor Disputes

8.3.1

Laws and Regulations

1.6,3.2.2,3.6,3.7,3.12.10,3.13,4.1.1,4.4.8,4.6,

9.6.4,9.9.1,10.2.2,11.1,11.4,13.1, 13.4,13.5.1,

13.5.2, 13.6, 14

Liens

2.1.2,4.4.8,8.2.2,9.3.3,9.10

Limitation on Consolidation or Joinder

4.6.4

Limitations, Statutes of

4.6.3, 12.2.6, 13.7

Limitations of Liability

2.3,3.2.1,3.5.1,3.7.3,3.12.8,3.12.10,3.17,3.18,

4.2.6,4.2.7,4.2.12,6.2.2,9.4.2,9.6.4, 9.6.7,9.10.4,

10.3.3,10.2.5,11.1.2,11.2.1,11.4.7,12.2.5, 13.4.2

Limitations of Time

2.1.2,2.2,2.4,3.2.1,3.7.3,3.10,3.11,3.12.5,3.15.1,

4.2.7,4.3,4.4,4.5,4.6,5.2,5.3, 5.4,6.2.4,7.3,7.4,

8.2,9.2,9.3.1,9.3.3,9.4.1,9.5,9.6,9.7,9.8,9.9,

9.10, 11.1.3, 11.4.1.5, 11.4.6, 11.4.10, 12.2, 13.5,

13.7, 14

Loss of Use Insurance

11.4.3

Material Suppliers

1.6,3.12.1,4.2.4,4.2.6,5.2.1,9.3,9.4.2,9.6,9.10.5

Materials, Hazardous

10.2.4, 10.3, 10.5

6

 

Materials, Labor, Equipment and

1.1.3,1.1.6,1.6.1,3.4,3.5.1,3.8.2,3.8.23,3.12, 3.13,

3.15.1,4.2.6,4.2.7,5.2.1,6.2.1, 7.3.6,9.3.2,9.3.3,

9.5.1.3, 9.10.2, 10.2.1,10.2.4, 14.2.1.2

Means, Methods, Techniques, Sequences and

Procedures of Construction

3.3.1, 3.12.10, 4.2.2, 4.2.7, 9.4.2

Mechanic’s Lien

4.4.8

Mediation

4.4.1,4.4.5,4.4.6,4.4.8, 4.5, 4.6.1, 4.6.2,8.3.1,10.5

Minor Changes in the Work

1.1.1,3.12.8, 4.2.8, 4.3.6, 7.1, 7.4

MISCELLANEOUS PROVISIONS

13

Modifications, Definition of

1.1.1

Modifications to the Contract

1.1.1, 1.1.2,3.7.3, 3.11,4.1.2,4.2.1,5.2.3,7,8.3.1,

9.7, 10.3.2, 11.4.1

Mutual Responsibility

6.2

Nonconforming Work, Acceptance of

9.6.6, 9.9.3, 12.3

Nonconforming Work, Rejection and Correction of

2.3,2.4,3.5.1,4.2.6,6.2.5,9.5.1,9.8.2, 9.9.3,9.10.4,

12.2.1, 13.7.1.3

Notice

2.2.1, 2.3,2.4, 3.2.3,3.3.1,3.7.2,3.7.4,3.12.9,4.3,

4.4.8,4.6.5,5.2.1,8.2.2,9.7,9.10, 10.2.2, 11.1.3,

11.4.6,12.2.2, 12.2.4, 13.3, 13.5.1,13.5.2,14.1, 14.2

Notice, Written

2.3,2.4,3.3.1, 3.9, 3.12.9,3.12.10,4.3, 4.4.8,4.6.5,

5.2.1,8.2.2, 9.7,9.10, 10.2.2, 10.3, 11.1.3,11.4.6,

12.2.2, 12.2.4, 13.3, 14

Notice of Testing and Inspections

13.5.1, 13.5.2

Notice to Proceed

8.2.2

Notices, Permits, Fees and

2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2

Observations, Contractor’s

1.5.2,3.2,3.7.3,4.3.4

Occupancy

2.2.2, 9.6.6, 9.8, 11.4.1.5

Orders, Written

1.1.1,2.3, 3.9,4.3.6, 7, 8.2.2, 11.4.9,12.1, 12.2,

13.5.2, 14.3.1

OWNER

2

Owner, Definition of

2.1

Owner, Information and Services Required of the

2.1.2, 2.2, 3.2.1,3.12.4, 3.12.10,4.2.7,4.3.3,6.1.3,

6.1.4,6.2.5,9.3.2, 9.6.1,9.6.4,9.9.2,9.10.3,10.3.3,

11.2,11.4,13.5.1 , 13.5.2, 14.1.1.4, 14.1.4

Owner’s Authority

1.6,2.1.1,2.3, 2.4,3.4.2,3.8.1,3.12.10,3.14.2,4.1.2,

4.1.3,4.2.4, 4.2.9, 4.3.6, 4.4.7, 5.2.1,5.2.4, 5.4.1,

6.1,6.3,7.2.1,7.3.1, 8.2.2,8.3.1,9.3.1,9.3.2,9.5.1,

9.9.1,9.10.2, 10.3.2,11.1.3,11.3.1,11.4.3,11.4.10,

12.2.2, 12.3.1,13.2.2, 14.3, 14.4

Owner’s Financial Capability

2.2.1, 13.2.2, 14.1.1.5

Owner’s Liability Insurance

11.2

Owner’s Loss of Use Insurance

11.4.3

Owner’s Relationship with Subcontractors

1.1.2, 5.2,5.3, 5.4,9.6.4,9.10.2, 14.2.2

Owner’s Right to Carry Out the Work

2.4, 12.2.4. 14.2.2.2

Owner’s Right to Clean Up

6.3

Owner’s Right to Perform Construction and to

Award Separate Contracts

6.1

Owner’s Right to Stop the Work

2.3

Owner’s Right to Suspend the Work

14.3

Owner’s Right to Terminate the Contract

14.2

Ownership and Use of Drawings, Specifications

and Other Instruments of Service

1.1.1, 1.6, 2.2.5,3.2.1,3.11.1, 3.17.1,4.2.12, 5.3

Partial Occupancy or Use

9.6.6, 9.9, 11.4.1.5

Patching, Cutting and

3.14,6.2.5

Patents

3.17

Payment, Applications for

4.2.5,7.3.8,9.2, 9.3, 9.4,9.5.1,9.6.3,9.7.1,9.8.5,

9.10.1,9.10.3,9.10.5,11.1.3,14.2.4, 14.4.3

Payment, Certificates for

4.2.5,4.2.9,9.3.3, 9.4, 9.5,9.6.1,9.6.6,9.7.1,9.10.1,

9.10.3,13.7,14.1.1.3,14.2.4

Payment, Failure of

4.3.6,9.5.1.3, 9.7, 9.10.2, 14.1.1.3, 14.2.1.2,13.6

Payment, Final

4.2.1,4.2.9,4.3.2,9.8.2, 9.10,11.1.2,11.1.3,11.4.1,

11.4.5, 12.3.1, 13.7,14.2.4, 14.4.3

Payment Bond, Performance Bond and

7.3.6.4,9.6.7,9.10.3,11.4.9, 11.5

Payments, Progress

4.3.3, 9.3,9.6,9.8.5, 9.10.3, 13.6, 14.2.3

PAYMENTS AND COMPLETION

9

Payments to Subcontractors

5.4.2, 9.5.1.3, 9.6.2, 9.6.3, 9.6.4, 9.6.7, 11.4.8,

14.2.1.2

PCB

10.3.1

7

 

Performance Bond and Payment Bond

7.3.6.4,9.6.7,9.10.3, 11.4.9,11.5

Permits, Fees and Notices

2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2

PERSONS AND PROPERTY, PROTECTION OF

10

Polychlorinated Biphenyl

10.3.1

Product Data, Definition of

3.12.2

Product Data and Samples, Shop Drawings

3.11, 3.12, 4.2.7

Progress and Completion

4.2.2,4.3.3, 8.2, 9.8, 9.9.1,14.1.4

Progress Payments

4.3.3, 9.3, 9.6, 9.8.5, 9.10.3, 13.6, 14.2.3

Project, Definition of the

1.1.4

Project Management Protective Liability

Insurance

11.3

Project Manual,.Definition of the

1.1.7

Project Manuals

2.2.5

Project Representatives

4.2.10

Property Insurance

10.2.5, 11.4

PROTECTION OF PERSONS AND PROPERTY

10

Regulations and Laws

1.6,3.2.2, 3.6,3.7,3.12.10,3.13,4.1.1,4.4.8,4.6,

9.6.4, 9.9.1,10.2.2,11.1,11.4,13.1, 13.4,13.5.1,

13.5.2, 13.6, 14

Rejection of Work

3.5.1,4.2.6, 12.2.1

Releases and Waivers of Liens

9.10.2

Representations

1.5.2, 3.5.1,3.12.6,6.2.2, 8.2.1,9.3.3,9.4.2,9.5.1,

9.8.2,9.10.1

Representatives

2. 1.1, 3.1.1 , 3.9, 4.1.1 , 4.2.1,4.2.10,5.1.1,5.1.2,

13.2.1

Resolution of Claims and Disputes

4.4, 4.5, 4.6

Responsibility for Those Performing the Work

3.3.2,3.18, 4.2.3,4.3.8,5.3.1,6.1.3,6.2,6.3,9.5.1,

10

Retainage

9.3.1,9.6.2,9.8.5,9.9.1,9.10.2,9.10.3

Review of Contract Documents and Field

Conditions by Contractor

1.5.2, 3.2, 3.7.3,3.12.7,6.1.3

Review of Contractor’s Submittals by Owner and Architect

3.10.1,3.10.2,3.11,3.12,4.2,5.2,6.1.3,9.2,9.8.2

Review of Shop Drawings, Product Data and

Samples by Contractor

3.12

Rights and Remedies

1.1.2,2.3,2.4,3.5.1,3.15.2,4.2.6,4.3.4,4.5,4.6,5.3,

5.4,6.1,6.3,7.3.1,8.3,9.5.1,9.7, 10.2.5,10.3,

12.2.2, 12.2.4, 13.4, 14

Royalties, Patents and Copyrights

3.17

Rules and Notices for Arbitration

4.6.2

Safety of Persons and Property

10.2,10.6

Safety Precautions and Programs

3.3.1,4.2.2,4.2.7,5.3.1, 10.1, 10.2,10.6

Samples, Definition of

3.12.3

Samples, Shop Drawings, Product Data and

3.11, 3.12, 4.2.7

Samples at the Site, Documents and

3.11

Schedule of Values

9.2,9.3.1

Schedules,

1.4.1.2,3.10, 3.Construction12.1, 3.12.2, 4.3.7.2,

6.1.3

Separate Contracts and Contractors

1.1.4,3.12.5,3.14.2,4.2.4,4.2.7,4.6.4,6,8.3.1,

11.4.7, 12.1.2, 12.2.5

Shop Drawings, Definition of

3.12.1

Shop Drawings, Product Data and Samples

3.11,3.12,4.2.7

Site, Use of

3.13, 6.1.1, 6.2.1

Site Inspections

1.2.2,3.2.1,3.3.3,3.7.1,4.2, 4.3.4,9.4.2,9.10.1,13.5

Site Visits, Architect’s

4.2.2,4.2.9,4.3.4,9.4.2,9.5.1,9.9.2,9.10.1,13.5

Special Inspections and Testing

4.2.6, 12.2.1, 13.5

Specifications, Definition of the

1.1.6

Specifications, The

1.1.1, 1.1.6, 1.1.7,1.2.2,1.6,3.11,3.12.10,3.17

Statute of Limitations

4.6.3, 12.2.6, 13.7

Stopping the Work

2.3, 4.3.6,9.7, 10.3, 14.1

Stored Materials

6.2.1,9.3.2,10.2.1.2,10.2.4, 11.4.1.4

Subcontractor, Definition of

5.1.1

SUBCONTRACTORS

8

 

5

Subcontractors, Work by

1.2.2, 3.3.2, 3.12.1,4.2.3, 5.2.3, 5.3,5.4,9.3.1.2,

9.6.7

Subcontractual Relations

5.3,5.4,9.3.1.2,9.6,9.10 10.2.1, 11.4.7, 11.4.8, 14.1,

14.2.1, 14.3.2

Submittals

1.6,3.10,3.11,3.12, 4.2.7,5.2.1, 5.2.3,7.3.6,9.2,

9.3,9.8,9.9.1,9.10.2, 9.10.3,11.1.3

Subrogation, Waivers of

6.1.1,11.4.5, 11.4.7

Substantial Completion

4.2.9,8.1.1,8.1.3,8.2.3, 9.4.2, 9.8, 9.9.1,9.10.3,

9.10.4.2,12.2, 13.7

Substantial Completion, Definition of

9.8.1

Substitution of Subcontractors

5.2.3,5.2.4

Substitution of Architect

4.1.3

Substitutions of Materials

3.4.2,3.5.1,7.3.7

Sub-subcontractor, Definition of

5.1.2

Subsurface Conditions

4.3 .4

Successors and Assigns

13.2

Superintendent

3.9,10.2.6

Supervision and Construction Procedures

1.2.2, 3.3, 3.4,3.12.10, 4.2.2, 4.2.7,4.3.3, 6.1.3,

6.2.4,7.1.3,7.3.6,8.2,8.3.1,9.4.2,10, 12,14

Surety

4.4.7, 5.4.1.2, 9.8.5, 9.10.2,9.10.3,14.2.2

Surety, Consent of

9.10.2,9.10.3

Surveys

2.2.3

Suspension by the Owner for Convenience

14.4

Suspension of the Work

5.4.2,14.3

Suspension or Termination of the Contract

4.3.6,5.4.1.1,11.4.9,14

Taxes

3.6, 3.8.2.1,7.3.6.4

Termination by the Contractor

4.3.10, 14.1

Termination by the Owner for Cause

4.3.10,5.4.1.1, 14.2

Termination of the Architect

4.1 .3

Termination of the Contractor

14.2.2

TERMINATION OR SUSPENSION OF THE

CONTRACT

14

Tests and Inspections

3.1.3,3.3.3,4.2.2,4.2.6,4.2.9,9.4.2,9.8.3,9.9.2,

9.10.1,10.3.2, 11.4.1.1,12.2.1, 13.5

TIME

8

Time, Delays and Extensions of

3.2.3,4.3.1,4.3.4, 4.3.7,4.4.5,5.2.3,7.2.1,7.3.1,

7.4.1, 8.3, 9.5.1,9.7.1,10.3.2, 10.6.1,14.3.2

Time Limits

2.1.2,2.2,2.4,3.2.1,3.7.3,3.10,3.11,3.12.5,3.15.1,

4.2,4.3,4.4,4.5,4.6,5.2,5.3,5.4, 6.2.4,7.3,7.4,

8.2,9.2,9.3.1,9.3.3,9.4.1,9.5,9.6,9.7,9.8,9.9,

9.10, 11.1.3, 11.4.1.5, 11.4.6, 11.4.10, 12.2, 13.5,

13.7, 14

Time Limits on Claims

4.3.2, 4.3.4, 4.3.8, 4.4, 4.5, 4.6

Title to Work

9.3.2, 9.3.3

UNCOVERING AND CORRECTION OF

WORK

12

Uncovering of Work

12.1

Unforeseen Conditions

4.3.4,8.3.1,10.3

Unit Prices

4.3.9,7.3.3.2

Use of Documents

1.1 .1,1.6,2.2.5,3.12.6, 5.3

Use of Site

3.13, 6.1.1, 6.2.1

Values, Schedule of

9.2, 9.3.1

Waiver of Claims by the Architect

13.4.2

Waiver of Claims by the Contractor

4.3.10, 9.10.5,11.4.7,13.4.2

Waiver of Claims by the Owner

4.3.10,9.9.3,9.10.3,9.10.4,11.4.3,11.4.5,11.4.7,

12.2.2.1, 13.4.2, 14.2.4

Waiver of Consequential Damages

4.3.10, 14.2.4

Waiver of Liens

9.10.2, 9.10.4

Waivers of Subrogation

6.1.1,11.4.5, 11.4.7

Warranty

3.5,4.2.9,4.3.5.3,9.3.3,9.8.4,9.9.1,9.10.4,12.2.2,

13.7.1.3

Weather Delays

4.3.7.2

Work, Definition of

1.1.3

Written Consent

9

 

1.6,3.4.2,3.12.8,3.14.2,4.1.2,4.3.4,4.6.4,9.3.2,

9.8.5,9.9.1,9.10.2,9.10.3,11.4.1, 13.2,13.4.2

Written Interpretations

4.2.11 , 4.2.12,4.3.6

Written Notice

2.3,2.4,3.3.1,3.9,3.12.9,3.12.10,4.3,4.4.8,4.6.5,

5.2.1,8.2.2,9.7,9.10,10.2.2,10.3, 11.1.3,11.4.6,

12.2.2, 12.2.4, 13.3, 14

Written Orders

1.1.1,2.3,3.9,4.3.6,7,8.2.2,11.4.9,12.1,12.2,

13.5.2, 14.3.1

10

 

ARTICLE 1 GENERAL PROVISIONS

§ 1.1 BASIC DEFINITIONS

§ 1.1.1 THE CONTRACT DOCUMENTS

The Contract Documents consist of the Agreement between Owner and Contractor (hereinafter the
Agreement), Conditions of the Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of the Contract, other documents listed in the
Agreement and Modifications issued after execution of the Contract. A Modification is (1) a written
amendment to the Contract signed by both parties, (2) a Change Order, (3) a Construction Change
Directive or (4) a written order for a minor change in the Work issued by the Architect. Unless
specifically enumerated in the Agreement, the Contract Documents do not include other documents
such as bidding requirements (advertisement or invitation to bid, Instructions to Bidders, sample
forms, the Contractor’ s bid or portions of Addenda relating to bidding requirements).

§ 1.1.2 THE CONTRACT

The Contract Documents form the Contract for Construction. The Contract represents the entire and
integrated agreement between the parties hereto and supersedes prior negotiations, representations
or agreements, either written or oral. The Contract may be amended or modified only by a
Modification. The Contract Documents shall not be construed to create a contractual relationship of
any kind (1) between the Architect and Contractor, (2) between the Owner and a Subcontractor or
Sub-subcontractor, (3) between the Owner and Architect or (4) between any persons or entities other
than the Owner and Contractor. The Architect shall, however, be entitled to performance and
enforcement of obligations under the Contract intended to facilitate performance of the Architect’s
duties.

§ 1.1.3 THE WORK

The term “Work” means the construction and services required by the Contract Documents, whether
completed or partially completed, and includes all other labor, materials, equipment and services
provided or to be provided by the Contractor to fulfill the Contractor’s obligations. The Work may
constitute the whole or a part of the Project.

§ 1.1.4 THE PROJECT

The Project is the total construction of which the Work performed under the Contract Documents may
be the whole or a part and which may include construction by the Owner or by separate contractors.

§ 1.1.5 THE DRAWINGS

The Drawings are the graphic and pictorial portions of the Contract Documents showing the design,
location and
dimensions of the Work, generally including plans, elevations, sections, details, schedules and
diagrams.

§ 1.1.6 THE SPECIFICATIONS

The Specifications are that portion of the Contract Documents consisting of the written
requirements for materials,
equipment, systems, standards and workmanship for the Work, and performance of related services.

§ 1.1.7 THE PROJECT MANUAL

The Project Manual is a volume assembled for the Work which may include the bidding requirements,
sample
forms, Conditions of the Contract and Specifications.

§ 1.2 CORRELATION AND INTENT OF THE CONTRACT DOCUMENTS

§ 1.2.1 The intent of the Contract Documents is to include all items necessary for the proper
execution and completion of the Work by the Contractor. The Contract Documents are complementary,
and what is required by one shall be as binding as if required by all; performance by the
Contractor shall be required only to the extent consistent with the Contract Documents and
reasonably inferable from them as being necessary to produce the indicated results.

§ 1.2.2 Organization of the Specifications into divisions, sections and articles, and arrangement
of Drawings shall not control the Contractor in dividing the Work among Subcontractors or in
establishing the extent of Work to be performed by any trade.

§ 1.2.3 Unless otherwise stated in the Contract Documents, words which have well-known technical or
construction industry meanings are used in the Contract Documents in accordance with such
recognized meanings.

11

 

§ 1.3 CAPITALIZATION

§ 1.3.1 Terms capitalized in these General Conditions include those which are (1) specifically
defined, (2) the titles of numbered articles or (3) the titles of other documents published by the
American Institute of Architects.

§ 1.4 INTERPRETATION

§ 1.4.1 In the interest of brevity the Contract Documents frequently omit modifying words such as
“all” and “any” and articles such as “the” and “an,” but the fact that a modifier or an article is
absent from one statement and appears in another is not intended to affect the interpretation of
either statement.

§ 1.5 EXECUTION OF CONTRACT DOCUMENTS

§ 1.5.1 The Contract Documents shall be signed by the Owner and Contractor. If either the Owner or
Contractor or both do not sign all the Contract Documents, the Architect shall identify such
unsigned Documents upon request.

§ 1.5.2 Execution of the Contract by the Contractor is a representation that the Contractor has
visited the s~te,
become generally familiar with local conditions under which the Work is to be performed and
correlated personal
observations with requirements of the Contract Documents.

§ 1.6 OWNERSHIP AND USE OF DRAWINGS, SPECIFICATIONS AND OTHER INSTRUMENTS OF SERVICE

§ 1.6.1 The Drawings, Specifications and other documents, including those in electronic form,
prepared by the
Architect and the Architect’s consultants are Instruments of Service through which the Work to be
executed by the
Contractor is described. The Contractor may retain one record set. Neither the Contractor nor any
Subcontractor,
Sub-subcontractor or material or equipment supplier shall own or claim a copyright in the Drawings,
Specifications
and other documents prepared by the Architect or the Architect’s consultants, and unless otherwise
indicated the
Architect and the Architect’s consultants shall be deemed the authors of them and will retain all
common law,
statutory and other reserved rights, in addition to the copyrights. All copies of Instruments of
Service, except the
Contractor’s record set, shall be returned or suitably accounted for to the Architect, on request,
upon completion of
the Work. The Drawings, Specifications and other documents prepared by the Architect and the
Architect’s
consultants, and copies thereof furnished to the Contractor, are for use solely with respect to
this Project. They are
not to be used by the Contractor or any Subcontractor, Sub-subcontractor or material or equipment
supplier on other
projects or for additions to this Project outside the scope of the Work without the specific
written consent of the
Owner, Architect and the Architect’s consultants. The Contractor, Subcontractors,
Sub-subcontractors and material
or equipment suppliers are authorized to use and reproduce applicable portions of the Drawings,
Specifications and
other documents prepared by the Architect and the Architect’s consultants appropriate to and for
use in the
execution of their Work under the Contract Documents. All copies made under this authorization
shall bear the
statutory copyright notice, if any, shown on the Drawings, Specifications and other documents
prepared by the
Architect and the Architect’s consultants. Submittal or distribution to meet official regulatory
requirements or for
other purposes in connection with this Project is not to be construed as publication in derogation
of the Architect’s
or Architect’ s consultants’ copyrights or other reserved rights.

ARTICLE 2 OWNER

§ 2.1 GENERAL

§ 2.1.1 The Owner is the person or entity identified as such in the Agreement and is referred to
throughout the Contract Documents as if singular in number. The Owner shall designate in writing a
representative who shall have express authority to bind the Owner with respect to all matters
requiring the Owner’s approval or authorization. Except as otherwise provided in Section 4.2.1, the
Architect does not have such authority. The term “Owner” means the Owner or the Owner’s authorized
representative.

§ 2.1.2 The Owner shall furnish to the Contractor within fifteen days after receipt of a written
request, information necessary and relevant for the Contractor to evaluate, give notice of or
enforce mechanic’s lien rights. Such information shall include a correct statement of the record
legal title to the property on which the Project is located, usually referred to as the site, and
the Owner’s interest therein.

§ 2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER

§ 2.2.1 The Owner shall, at the written request of the Contractor, prior to commencement of the
Work and thereafter, furnish to the Contractor reasonable evidence that financial arrangements have
been made to fulfill the Owner’s obligations under the Contract. Furnishing of such evidence shall
be a condition precedent to commencement or

12

 

continuation of the Work. After such evidence has been furnished, the Owner shall not materially
vary such financial arrangements without prior notice to the Contractor.

§ 2.2.2 Except for permits and fees, including those required under Section 3.7.1, which are the
responsibility of the Contractor under the Contract Documents, the Owner shall secure and pay for
necessary approvals, easements, assessments and charges required for construction, use or occupancy
of permanent structures or for permanent changes in existing facilities.

§ 2.2.3 The Owner shall furnish surveys describing physical characteristics, legal limitations and
utility locations for the site of the Project, and a legal description of the site. The Contractor
shall be entitled to rely on the accuracy of information furnished by the Owner but shall exercise
proper precautions relating to the safe performance of the Work.

§ 2.2.4 Information or services required of the Owner by the Contract Documents shall be furnished
by the Owner with reasonable promptness. Any other information or services relevant to the
Contractor’s performance of the Work under the Owner’s control shall be furnished by the Owner
after receipt from the Contractor of a written request for such information or services.

§ 2.2.5 Unless otherwise provided in the Contract Documents, the Contractor will be furnished, free
of charge, such copies of Drawings and Project Manuals as are reasonably necessary for execution of
the Work.

§ 2.3 OWNER’S RIGHT TO STOP THE WORK

§ 2.3.1 If the Contractor fails to correct Work which is not in accordance with the requirements of
the Contract Documents as required by Section 12.2 or persistently fails to carry out Work in
accordance with the Contract Documents, the Owner may issue a written order to the Contractor to
stop the Work, or any portion thereof, until the cause for such order has been eliminated; however,
the right of the Owner to stop the Work shall not give rise to a duty on the part of the Owner to
exercise this right for the benefit of the Contractor or any other person or entity, except to the
extent required by Section 6.1.3.

§ 2.4 OWNER’S RIGHT TO CARRY OUT THE WORK

§ 2.4.1 If the Contractor defaults or neglects to carry out the Work in accordance with the
Contract Documents and fails within a seven-day period after receipt of written notice from the
Owner to commence and continue correction of such default or neglect with diligence and promptness,
the Owner may after such seven-day period give the Contractor a second written notice to correct
such deficiencies within a three-day period. If the Contractor within such three-day period after
receipt of such second notice fails to commence and continue to correct any deficiencies, the Owner
may, without prejudice to other remedies the Owner may have, correct such deficiencies. In such
case an appropriate Change Order shall be issued deducting from payments then or thereafter due the
Contractor the reasonable cost of correcting such deficiencies, including Owner’s expenses and
compensation for the Architect’s additional services made necessary by such default, neglect or
failure. Such action by the Owner and amounts charged to the Contractor are both subject to prior
approval of the Architect. If payments then or thereafter due the Contractor are not sufficient to
cover such amounts, the Contractor shall pay the difference to the Owner.

ARTICLE 3 CONTRACTOR

§ 3.1 GENERAL

§ 3.1.1 The Contractor is the person or entity identified as such in the Agreement and is referred
to throughout the Contract Documents as if singular in number. The term “Contractor” means the
Contractor or the Contractor’s authorized representative.

§ 3.1.2 The Contractor shall perform the Work in accordance with the Contract Documents.

§ 3.1.3 The Contractor shall not be relieved of obligations to perform the Work in accordance with
the Contract Documents either by activities or duties of the Architect in the Architect’s
administration of the Contract, or by tests, inspections or approvals required or performed by
persons other than the Contractor.

§
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY
CONTRACTOR

§ 3.2.1 Since the Contract Documents are complementary, before starting each portion of the Work,
the Contractor shall carefully study and compare the various Drawings and other Contract Documents
relative to that portion of the

13

 

Work, as well as the information furnished by the Owner pursuant to Section 2.2.3, shall take field
measurements of any existing conditions related to that portion of the Work and shall observe any
conditions at the site affecting it. These obligations are for the purpose of facilitating
construction by the Contractor and are not for the purpose of discovering errors, omissions, or
inconsistencies in the Contract Documents; however, any errors, inconsistencies or omissions
discovered by the Contractor shall be reported promptly to the Architect as a request for
information in such form as the Architect may require.

§ 3.2.2 Any design errors or omissions noted by the Contractor during this review shall be reported
promptly to the Architect, but it is recognized that the Contractor’s review is made in the
Contractor’s capacity as a contractor and not as a licensed design professional unless otherwise
specifically provided in the Contract Documents. The Contractor is not required to ascertain that
the Contract Documents are in accordance with applicable laws, statutes, ordinances, building
codes, and rules and regulations, but any nonconformity discovered by or made known to the
Contractor shall be reported promptly to the Architect.

§ 3.2.3 If the Contractor believes that additional cost or time is involved because of
clarifications or instructions issued by the Architect in response to the Contractor’s notices or
requests for information pursuant to Sections 3.2.1 and 3.2.2, the Contractor shall make Claims as
provided in Sections 4.3.6 and 4.3.7. If the Contractor fails to perform the obligations of
Sections 3.2.1 and 3.2.2, the Contractor shall pay such costs and damages to the Owner as would
have been avoided if the Contractor had performed such obligations. The Contractor shall not be
liable to the Owner or Architect for damages resulting from errors, inconsistencies or omissions in
the Contract Documents or for differences between field measurements or conditions and the Contract
Documents unless the Contractor recognized such error, inconsistency, omission or difference and
knowingly failed to report it to the Architect.

§ 3.3 SUPERVISION AND CONSTRUCTION PROCEDURES

§ 3.3.1 The Contractor shall supervise and direct the Work, using the Contractor’s best skill and
attention. The Contractor shall be solely responsible for and have control over construction means,
methods, techniques, sequences and procedures and for coordinating all portions of the Work under
the Contract, unless the Contract Documents give other specific instructions concerning these
matters. If the Contract Documents give specific instructions concerning construction means,
methods, techniques, sequences or procedures, the Contractor shall evaluate the jobsite safety
thereof and, except as stated below, shall be fully and solely responsible for the jobsite safety
of such means, methods, techniques, sequences or procedures. If the Contractor determines that such
means, methods, techniques, sequences or procedures may not be safe, the Contractor shall give
timely written notice to the Owner and Architect and shall not proceed with that portion of the
Work without further written instructions from the Architect. If the Contractor is then instructed
to proceed with the required means, methods, techniques, sequences or procedures without acceptance
of changes proposed by the Contractor, the Owner shall be solely responsible for any resulting loss
or damage.

§ 3.3.2 The Contractor shall be responsible to the Owner for acts and omissions of the Contractor’s
employees, Subcontractors and their agents and employees, and other persons or entities performing
portions of the Work for or on behalf of the Contractor or any of its Subcontractors.

§ 3.3.3 The Contractor shall be responsible for inspection of portions of Work already performed to
determine that such portions are in proper condition to receive subsequent Work.

§ 3.4 LABOR AND MATERIALS

§ 3.4.1 Unless otherwise provided in the Contract Documents, the Contractor shall provide and pay
for labor, materials, equipment, tools, construction equipment and machinery, , transportation, and
other facilities and services necessary for proper execution and completion of the Work, whether
temporary or permanent and whether or not incorporated or to be incorporated in the Work.

§ 3.4.2 The Contractor may make substitutions only with the consent of the Owner, after evaluation
by the Architect and in accordance with a Change Order.

§ 3.4.3 The Contractor shall enforce strict discipline and good order among the Contractor’s
employees and other persons carrying out the Contract. The Contractor shall not permit employment
of unfit persons or persons not skilled in tasks assigned to them.

14

 

§ 3.5 WARRANTY

§ 3.5.1 The Contractor warrants to the Owner and Architect that materials and equipment furnished
under the Contract will be of good quality and new unless otherwise required or permitted by the
Contract Documents, that the Work will be free from defects not inherent in the quality required or
permitted, and that the Work will conform to the requirements of the Contract Documents. Work not
conforming to these requirements, including substitutions not properly approved and authorized, may
be considered defective. The Contractor’s warranty excludes remedy for damage or defect caused by
abuse, modifications not executed by the Contractor, improper or insufficient maintenance, improper
operation, or normal wear and tear and normal usage. If required by the Architect, the Contractor
shall furnish satisfactory evidence as to the kind and quality of materials and equipment.

§ 3.6 TAXES

§ 3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for the Work provided by
the Contractor which are legally enacted when bids are received or negotiations concluded, whether
or not yet effective or merely scheduled to go into effect.

§ 3.7 PERMITS, FEES AND NOTICES

§ 3.7.1 Unless otherwise provided in the Contract Documents, the Contractor shall secure and pay
for the building permit and other permits and governmental fees, licenses and inspections necessary
for proper execution and completion of the Work which are customarily secured after execution of
the Contract and which are legally required when bids are received or negotiations concluded.

§ 3.7.2 The Contractor shall comply with and give notices required by laws, ordinances, rules,
regulations and lawful orders of public authorities applicable to performance of the Work.

§ 3.7.3 It is not the Contractor’s responsibility to ascertain that the Contract Documents are in
accordance with applicable laws, statutes, ordinances, building codes, and rules and regulations.
However, if the Contractor observes that portions of the Contract Documents are at variance
therewith, the Contractor shall promptly notify the Architect and Owner in writing, and necessary
changes shall be accomplished by appropriate Modification.

§ 3.7.4 If the Contractor performs Work knowing it to be contrary to laws, statutes, ordinances,
building codes, and rules and regulations without such notice to the Architect and Owner, the
Contractor shall assume appropriate responsibility for such Work and shall bear the costs
attributable to correction.

§ 3.8 ALLOWANCES

§ 3.8.1 The Contractor shall include in the Contract Sum all allowances stated in the Contract
Documents. Items covered by allowances shall be supplied for such amounts and by such persons or
entities as the Owner may direct, but the Contractor shall not be required to employ persons or
entities to whom the Contractor has reasonable objection.

§ 3.8.2 Unless otherwise provided in the Contract Documents:

	 	.1	 	allowances shall cover the cost to the Contractor of labor, installation
costs, materials and equipment delivered at the site and all required taxes, less
applicable trade discounts;
	 
	 	.2	 	Contractor’s costs for unloading and handling at the site, , overhead,
profit and other expenses contemplated for stated allowance amounts shall be
included in the Contract Sum but not in the allowances;
	 
	 	.3	 	whenever costs are more than or less than allowances, the Contract Sum shall
be adjusted accordingly by Change Order. The amount of the Change Order shall
reflect (1) the difference between actual costs and the allowances under Section
3.8.2. 1 and (2) changes in Contractor’s costs under Section 3.8.2.2.

§ 3.8.3 Materials and equipment under an allowance shall be selected by the Owner in sufficient
time to avoid delay
in the Work.

§ 3.9 SUPERINTENDENT

§ 3.9.1 The Contractor shall employ a competent superintendent and necessary assistants who shall
be in attendance at the Project site during performance of the Work. The superintendent shall
represent the Contractor, and communications given to the superintendent shall be as binding as if
given to the Contractor. Important

15

 

communications shall be confirmed in writing. Other communications shall be similarly confirmed on
written
request in each case.

§ 3.10 CONTRACTOR’S CONSTRUCTION SCHEDULES

§ 3.10.1 The Contractor, promptly after being awarded the Contract, shall prepare and submit for
the Owner’s and Architect’s information a Contractor’s construction schedule for the Work. The
schedule shall not exceed time limits current under the Contract Documents, shall be revised at
appropriate intervals as required by the conditions of the Work and Project, shall be related to
the entire Project to the extent required by the Contract Documents, and shall provide for
expeditious and practicable execution of the Work.

§ 3.10.2 The Contractor shall prepare and keep current, for the Architect’s approval, a schedule of
submittals which is coordinated with the Contractor’s construction schedule and allows the
Architect reasonable time to review submittals.

§ 3.10.3 The Contractor shall perform the Work in general accordance with the most recent schedules
submitted to the Owner and Architect.

§ 3.11 DOCUMENTS AND SAMPLES AT THE SITE

§ 3.11.1 The Contractor shall maintain at the site for the Owner one record copy of the Drawings,
Specifications, Addenda, Change Orders and other Modifications, in good order and marked currently
to record field changes and selections made during construction, and one record copy of approved
Shop Drawings, Product Data, Samples and similar required submittals. These shall be available to
the Architect and shall be delivered to the Architect for submittal to the Owner upon completion of
the Work.

§ 3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES

§ 3.12.1 Shop Drawings are drawings, diagrams, schedules and other data specially prepared for the
Work by the Contractor or a Subcontractor, Sub-subcontractor, manufacturer, supplier or distributor
to illustrate some portion of the Work.

§ 3.12.2 Product Data are illustrations, standard schedules, performance charts, instructions,
brochures, diagrams and other information furnished by the Contractor to illustrate materials or
equipment for some portion of the Work.

§ 3.12.3 Samples are physical examples which illustrate materials, equipment or workmanship and
establish standards by which the Work will be judged.

§ 3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not Contract Documents.
The purpose of their submittal is to demonstrate for those portions of the Work for which
submittals are required by the Contract Documents the way by which the Contractor proposes to
conform to the information given and the design concept expressed in the Contract Documents. Review
by the Architect is subject to the limitations of Section 4.2.7. Informational submittals upon
which the Architect is not expected to take responsive action may be so identified in the Contract
Documents. Submittals which are not required by the Contract Documents may be returned by the
Architect without action.

§ 3.12.5 The Contractor shall review for compliance with the Contract Documents, approve and submit
to the Architect Shop Drawings, Product Data, Samples and similar submittals required by the
Contract Documents with reasonable promptness and in such sequence as to cause no delay in the Work
or in the activities of the Owner or of separate contractors. Submittals which are not marked as
reviewed for compliance with the Contract Documents and approved by the Contractor may be returned
by the Architect without action.

§ 3.12.6 By approving and submitting Shop Drawings, Product Data, Samples and similar submittals,
the Contractor represents that the Contractor has determined and verified materials, field
measurements and field construction criteria related thereto, or will do so, and has checked and
coordinated the information contained within such submittals with the requirements of the Work and
of the Contract Documents.

§ 3.12.7 The Contractor shall perform no portion of the Work for which the Contract Documents
require submittal and review of Shop Drawings, Product Data, Samples or similar submittals until
the respective submittal has been approved by the Architect.

16

 

§ 3.12.8 The Work shall be in accordance with approved submittals except that the Contractor shall
not be relieved of responsibility for deviations from requirements of the Contract Documents by the
Architect’s approval of Shop Drawings, Product Data, Samples or similar submittals unless the
Contractor has specifically informed the Architect in writing of such deviation at the time of
submittal and (I) the Architect has given written approval to the specific deviation as a minor
change in the Work, or (2) a Change Order or Construction Change Directive has been issued
authorizing the deviation. The Contractor shall not be relieved of responsibility for errors or
omissions in Shop Drawings, Product Data, Samples or similar submittals by the Architect’s approval
thereof.

§ 3.12.9 The Contractor shall direct specific attention, in writing or on resubmitted Shop
Drawings, Product Data, Samples or similar submittals, to revisions other than those requested by
the Architect on previous submittals. In the absence of such written notice the Architect’s
approval of a resubmission shall not apply to such revisions.

§ 3.12.10 The Contractor shall not be required to provide professional services which constitute
the practice of architecture or engineering unless such services are specifically required by the
Contract Documents for a portion of the Work or unless the Contractor needs to provide such
services in order to carry out the Contractor’s responsibilities for construction means, methods,
techniques, sequences and procedures. The Contractor shall not be required to provide professional
services in violation of applicable law. If professional design services or certifications by a
design professional related to systems, materials or equipment are specifically required of the
Contractor by the Contract Documents, the Owner and the Architect will specify all performance and
design criteria that such services must satisfy. The Contractor shall cause such services or
certifications to be provided by a properly licensed design professional, whose signature and seal
shall appear on all drawings, calculations, specifications, certifications, Shop Drawings and other
submittals prepared by such professional. Shop Drawings and other submittals related to the Work
designed or certified by such professional, if prepared by others, shall bear such professional’s
written approval when submitted to the Architect. The Owner and the Architect shall be entitled to
rely upon the adequacy, accuracy and completeness of the services, certifications or approvals
performed by such design professionals, provided the Owner and Architect have specified to the
Contractor all performance and design criteria that such services must satisfy. Pursuant to this
Section 3.12.10, the Architect will promptly review, approve or take other appropriate action on
submittals only for the limited purpose of checking for conformance with information given and the
design concept expressed in the Contract Documents. The Contractor shall not be responsible for the
adequacy of the performance or design criteria required by the Contract Documents.

§ 3.13 USE OF SITE

§ 3.13.1 The Contractor shall confine operations at the site to areas permitted by law, ordinances,
permits and the Contract Documents and shall not unreasonably encumber the site with materials or
equipment.

§ 3.14 CUTTING AND PATCHING

§ 3.14.1 The Contractor shall be responsible for cutting, fitting or patching required to complete
the Work or to make its parts fit together properly.

§ 3.14.2 The Contractor shall not damage or endanger a portion of the Work or fully or partially
completed construction of the Owner or separate contractors by cutting, patching or otherwise
altering such construction, or by excavation. The Contractor shall not cut or otherwise alter such
construction by the Owner or a separate contractor except with written consent of the Owner and of
such separate contractor; such consent shall not be unreasonably withheld. The Contractor shall not
unreasonably withhold from the Owner or a separate contractor the Contractor’s consent to cutting
or otherwise altering the Work.

§ 3.15 CLEANING UP

§ 3.15.1 The Contractor shall keep the premises and surrounding area free from accumulation of
waste materials or rubbish caused by operations under the Contract. At completion of the Work, the
Contractor shall remove from and about the Project waste materials, rubbish, the Contractor’s
tools, construction equipment, machinery and surplus materials.

§ 3.15.2 If the Contractor fails to clean up as provided in the Contract Documents, the Owner may
do so and the cost thereof shall be charged to the Contractor.

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§ 3.16 ACCESS TO WORK

§ 3.16.1 The Contractor shall provide the Owner and Architect access to the Work in preparation and
progress wherever located.

§ 3.17 ROYALTIES, PATENTS AND COPYRIGHTS

§ 3.17.1 The Contractor shall pay all royalties and license fees. The Contractor shall defend suits
or claims for infringement of copyrights and patent rights and shall hold the Owner and Architect
harmless from loss on account thereof, but shall not be responsible for such defense or loss when a
particular design, process or product of a particular manufacturer or manufacturers is required by
the Contract Documents or where the copyright violations are contained in Drawings, Specifications
or other documents prepared by the Owner or Architect. However, if the Contractor has reason to
believe that the required design, process or product is an infringement of a copyright or a patent,
the Contractor shall be responsible for such loss unless such information is promptly furnished to
the Architect.

§ 3.18 INDEMNIFICATION

§ 3.18.1 To the fullest extent permitted by law and to the extent claims, damages, losses or
expenses are not covered by Project Management Protective Liability insurance purchased by the
Contractor in accordance with Section 11.3, the Contractor shall indemnify and hold harmless the
Owner, Architect, Architect’s consultants, and agents and employees of any of them from and against
claims, damages, losses and expenses, including but not limited to attorneys’ fees, arising out of
or resulting from performance of the Work, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or destruction of
tangible property (other than the Work itself), but only to the extent caused by the negligent acts
or omissions of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or
anyone for whose acts they may be liable, Such obligation shall not be construed to negate,
abridge, or reduce other rights or obligations of indemnity which would otherwise exist as to a
party or person described in this Section 3.18.

§ 3.18.2 In claims against any person or entity indemnified under this Section 3.18 by an employee
of the Contractor, a Subcontractor, anyone directly or indirectly employed by them or anyone for
whose acts they may be liable, the indemnification obligation under Section 3.18.1 shall not be
limited by a limitation on amount or type of damages, compensation or benefits payable by or for
the Contractor or a Subcontractor under workers’ compensation acts, disability benefit acts or
other employee benefit acts.

ARTICLE
4 ADMINISTRATION OF THE CONTRACT

§ 4.1 ARCHITECT

§ 4.1.1 The Architect is the person lawfully licensed to practice architecture or an entity
lawfully practicing architecture identified as such in the Agreement and is referred to throughout
the Contract Documents as if singular in number. The term “Architect” means the Architect or the
Architect’s authorized representative.

§ 4.1.2 Duties, responsibilities and limitations of authority of the Architect as set forth in the
Contract Documents shall not be restricted, modified or extended without written consent of the
Owner, Contractor and Architect. Consent shall not be unreasonably withheld.

§ 4.1.3 If the employment of the Architect is terminated, the Owner shall employ a new Architect
against whom the Contractor has no reasonable objection and whose status under the Contract
Documents shall be that of the former Architect.

§ 4.2 ARCHITECT’S ADMINISTRATION OF THE CONTRACT

§ 4.2.1 The Architect will provide administration of the Contract as described in the Contract
Documents, and will be an Owner’s representative (1) during construction, (2) until final payment
is due and (3) with the Owner’s concurrence, from time to time during the one-year period for
correction of Work described in Section 12.2. The Architect will have authority to act on behalf of
the Owner only to the extent provided in the Contract Documents, unless otherwise modified in
writing in accordance with other provisions of the Contract.

§ 4.2.2 The Architect, as a representative of the Owner, will visit the site at intervals
appropriate to the stage of the Contractor’s operations (1) to become generally familiar with and
to keep the Owner informed about the progress and quality of the portion of the Work completed, (2)
to endeavor to guard the Owner against defects and deficiencies in the Work, and (3) to determine
in general if the Work is being performed in a manner indicating that

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the Work, when fully completed, will be in accordance with the Contract Documents. However, the
Architect will not be required to make exhaustive or continuous on-site inspections to check the
quality or quantity of the Work. The Architect will neither have control over or charge of, nor be
responsible for, the construction means, methods, techniques, sequences or procedures, or for the
safety precautions and programs in connection with the Work, since these are solely the
Contractor’s rights and responsibilities under the Contract Documents, except as provided in
Section 3.3.1.

§ 4.2.3 The Architect will not be responsible for the Contractor’s failure to perform the Work in
accordance with the requirements of the Contract Documents. The Architect will not have control
over or charge of and will not be responsible for acts or omissions of the Contractor,
Subcontractors, or their agents or employees, or any other persons or entities performing portions
of the Work.

§ 4.2.4 Communications Facilitating Contract Administration. Except as otherwise provided in the
Contract Documents or when direct communications have been specially authorized, the Owner and
Contractor shall endeavor to communicate with each other through the Architect about matters
arising out of or relating to the Contract. Communications by and with the Architect’s consultants
shall be through the Architect. Communications by and with Subcontractors and material suppliers
shall be through the Contractor. Communications by and with separate contractors shall be through
the Owner.

§ 4.2.5 Based on the Architect’s evaluations of the Contractor’s Applications for Payment, the
Architect will review and certify the amounts due the Contractor and will issue Certificates for
Payment in such amounts.

§ 4.2.6 The Architect will have authority to reject Work that does not conform to the Contract
Documents. Whenever the Architect considers it necessary or advisable, the Architect will have
authority to require inspection or testing of the Work in accordance with Sections 13.5.2 and
13.5.3, whether or not such Work is fabricated, installed or completed. However, neither this
authority of the Architect nor a decision made in good faith either to exercise or not to exercise
such authority shall give rise to a duty or responsibility of the Architect to the Contractor,
Subcontractors, material and equipment suppliers, their agents or employees, or other persons or
entities performing portions of the Work.

§ 4.2.7 The Architect will review and approve or take other appropriate action upon the
Contractor’s submittals such as Shop Drawings, Product Data and Samples, but only for the limited
purpose of checking for conformance with information given and the design concept expressed in the
Contract Documents. The Architect’s action will be taken with such reasonable promptness as to
cause no delay in the Work or in the activities of the Owner, Contractor or separate contractors,
while allowing sufficient time in the Architect’s professional judgment to permit adequate review.
Review of such submittals is not conducted for the purpose of determining the accuracy and
completeness of other details such as dimensions and quantities, or for substantiating instructions
for installation or performance of equipment or systems, all of which remain the responsibility of
the Contractor as required by the Contract Documents. The Architect’s review of the Contractor’s
submittals shall not relieve the Contractor of the obligations under Sections 3.3, 3.5 and 3.12.
The Architect’s review shall not constitute approval of safety precautions or, unless otherwise
specifically stated by the Architect, of any construction means, methods, techniques, sequences or
procedures. The Architect’ s approval of a specific item shall not indicate approval of an assembly
of which the item is a component.

§ 4.2.8 The Architect will prepare Change Orders and Construction Change Directives, and may
authorize minor changes in the Work as provided in Section 7.4.

§ 4.2.9 The Architect will conduct inspections to determine the date or dates of Substantial
Completion and the date of final completion, will receive and forward to the Owner, for the Owner’s
review and records, written warranties and related documents required by the Contract and assembled
by the Contractor, and will issue a final Certificate for Payment upon compliance with the
requirements of the Contract Documents.

§ 4.2.10 If the Owner and Architect agree, the Architect will provide one or more project
representatives to assist in carrying out the Architect’s responsibilities at the site. The duties,
responsibilities and limitations of authority of such project representatives shall be as set forth
in an exhibit to be incorporated in the Contract Documents.

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§ 4.2.11 The Architect will interpret and decide matters concerning performance under and
requirements of, the Contract Documents on written request of either the Owner or Contractor. The
Architect’s response to such requests will be made in writing within any time limits agreed upon or
otherwise with reasonable promptness. If no agreement is made concerning the time within which
interpretations required of the Architect shall be furnished in compliance with this Section 4.2,
then delay shall not be recognized on account of failure by the Architect to furnish such
interpretations until 15 days after written request is made for them.

§ 4.2.12 Interpretations and decisions of the Architect will be consistent with the intent of and
reasonably inferable from the Contract Documents and will be in writing or in the form of drawings.
When making such interpretations and initial decisions, the Architect will endeavor to secure
faithful performance by both Owner and Contractor, will not show partiality to either and will not
be liable for results of interpretations or decisions so rendered in good faith.

§4.2.13 The Architect’s decisions on matters relating to aesthetic effect will be final if
consistent with the intent expressed in the Contract Documents.

§ 4.3 CLAIMS AND DISPUTES

§4.3.1 Definition. A Claim is a demand or assertion by one of the parties seeking, as a matter of
right, adjustment or interpretation of Contract terms, payment of money, extension of time or other
relief with respect to the terms of the Contract. The term “Claim” also includes other disputes and
matters in question between the Owner and Contractor arising out of or relating to the Contract.
Claims must be initiated by written notice. The responsibility to substantiate Claims shall rest
with the party making the Claim.

§ 4.3.2 Time Limits on Claims. Claims by either party must be initiated within 21 days after
occurrence of the event giving rise to such Claim or within 21 days after the claimant first
recognizes the condition giving rise to the Claim, whichever is later. Claims must be initiated by
written notice to the Architect and the other party.

§ 4.3.3 Continuing Contract Performance. Pending final resolution of a Claim except as otherwise
agreed in writing or as provided in Section 9.7.1and Article 14, the Contractor shall proceed
diligently with performance of the Contract and the Owner shall continue to make payments in
accordance with the Contract Documents.

§4.3.4 Claims for Concealed or Unknown Conditions. If conditions are encountered at the site which
are (1). subsurface or otherwise concealed physical conditions which differ materially from those
indicated in the Contract Documents or (2) unknown physical conditions of an unusual nature, which
differ materially from those ordinarily found to exist and generally recognized as inherent in
construction activities of the character provided for in the Contract Documents, then notice by the
observing party shall be given to the other party promptly before conditions are disturbed and in
no event later than 21 days after first observance of the conditions. The Architect will promptly
investigate such conditions and, if they differ materially and cause an increase or decrease in the
Contractor’s cost of, or time required for, performance of any part of the Work, will recommend an
equitable adjustment in the Contract Sum or Contract Time, or both. If the Architect determines
that the conditions at the site are not materially different from those indicated in the Contract
Documents and that no change in the terms of the Contract is justified, the Architect shall so
notify the Owner and Contractor in writing, stating the reasons. Claims by either party in
opposition to such determination must be made within 21 days after the Architect has given notice
of the decision. If the conditions encountered are materially different, the Contract Sum and
Contract Time shall be equitably adjusted, but if the Owner and Contractor cannot agree on an
adjustment in the Contract Sum or Contract Time, the adjustment shall be referred to the Architect
for initial determination, subject to further proceedings pursuant to Section 4.4.

§ 4.3.5 Claims for Additional Cost. If the Contractor wishes to make Claim for an increase in the
Contract Sum, written notice as provided herein shall be given before proceeding to execute the
Work. Prior notice is not required for Claims relating to an emergency endangering life or property
arising under Section 10.6.

§ 4.3.6 If the Contractor believes additional cost is involved for reasons including but not
limited to (1) a written interpretation from the Architect, (2) an order by the Owner to stop the
Work where the Contractor was not at fault, (3) a written order for a minor change in the Work
issued by the Architect, (4) failure of payment by the Owner, (5) termination of the Contract by
the Owner, (6) Owner’s suspension or (7) other reasonable grounds, Claim shall be filed in
accordance with this Section 4.3.

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§
4.3.7 Claims for Additional Time

§ 4.3.7.1 If the Contractor wishes to make Claim for an increase in the Contract Time, written
notice as provided herein shall be given. The Contractor’s Claim shall include an estimate of cost
and of probable effect of delay on progress of the Work. In the case of a continuing delay only one
Claim is necessary.

§ 4.3.7.2 If adverse weather conditions are the basis for a Claim for additional time, such Claim
shall be documented by data substantiating that weather conditions were abnormal for the period of
time, could not have been reasonably anticipated and had an adverse effect on the scheduled
construction.

§ 4.3.8 Injury or Damage to Person or Property. Ifeither party to the Contract suffers injury or
damage to person or property because of an act or omission of the other party, or of others for
whose acts such party is legally responsible, written notice of such injury or damage, whether or
not insured, shall be given to the other party within a reasonable time not exceeding 21 days after
discovery. The notice shall provide sufficient detail to enable the other party to investigate the
matter.

§ 4.3.9 If unit prices are stated in the Contract Documents or subsequently agreed upon, and if
quantities originally contemplated are materially changed in a proposed Change Order or
Construction Change Directive so that application of such unit prices to quantities of Work
proposed will cause substantial inequity to the Owner or Contractor, the applicable unit prices
shall be equitably adjusted.

§ 4.3.10 Claims for Consequential Damages. The Contractor and Owner waive Claims against each other
for consequential damages arising out of or relating to this Contract. This mutual waiver includes:

	 	.1	 	damages incurred by the Owner for rental expenses, for losses of use,
income, profit, financing, business and reputation, and for loss of management or
employee productivity or of the services of such persons; and
	 
	 	.2	 	damages incurred by the Contractor for principal office expenses including
the compensation of personnel stationed there, for losses of financing, business and
reputation, and for loss of profit except anticipated profit arising directly from
the Work.

This mutual waiver is applicable, without limitation, to all consequential damages due to either
party’s termination in accordance with Article 14. Nothing contained in this Section 4.3.10 shall
be deemed to preclude an award of liquidated direct damages, when applicable, in accordance with
the requirements of the Contract Documents.

§ 4.4 RESOLUTION OF CLAIMS AND DISPUTES

§ 4.4.1 Decision of Architect. Claims, including those alleging an error or omission by the
Architect but excluding those arising under Sections 10.3 through 10.5, shall be referred initially
to the Architect for decision. An initial decision by the Architect shall be required as a
condition precedent to mediation, arbitration or litigation of all Claims between the Contractor
and Owner arising prior to the date final payment is due, unless 30 days have passed after the
Claim has been referred to the Architect with no decision having been rendered by the Architect.
The Architect will not decide disputes between the Contractor and persons or entities other than
the Owner.

§ 4.4.2 The Architect will review Claims and within ten days of the receipt of the Claim take one
or more of the following actions: (1) request additional supporting data from the claimant or a
response with supporting data from the other party, (2) reject the Claim in whole or in part, (3)
approve the Claim, (4) suggest a compromise, or (5) advise the parties that the Architect is unable
to resolve the Claim if the Architect lacks sufficient information to evaluate the merits of the
Claim or if the Architect concludes that, in the Architect’s sole discretion, it would be
inappropriate for the Architect to resolve the Claim.

§ 4.4.3 In evaluating Claims, the Architect may, but shall not be obligated to, consult with or
seek information from either party or from persons with special knowledge or expertise who may
assist the Architect in rendering a decision. The Architect may request the Owner to authorize
retention of such persons at the Owner’s expense.

§ 4.4.4 If the Architect requests a party to provide a response to a Claim or to furnish additional
supporting data, such party shall respond, within ten days after receipt of such request, and shall
either provide a response on the requested supporting data, advise the Architect when the response
or supporting data will be furnished or advise the Architect that no supporting data will be
furnished. Upon receipt of the response or supporting data, if any, the Architect will either
reject or approve the Claim in whole or in part.

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§ 4.4.5 The Architect will approve or reject Claims by written decision, which shall state the
reasons therefor and which shall notify the parties of any change in the Contract Sum or Contract
Time or both. The approval or rejection of a Claim by the Architect shall be final and binding on
the parties but subject to mediation and arbitration.

§ 4.4.6 When a written decision of the Architect states that (I) the decision is final but subject
to mediation and arbitration and (2) a demand for arbitration of a Claim covered by such decision
must be made within 30 days after the date on which the party making the demand receives the final
written decision, then failure to demand arbitration within said 30 days’ period shall result in
the Architect’s decision becoming final and binding upon the Owner and Contractor. If the Architect
renders a decision after arbitration proceedings have been initiated, such decision may be entered
as evidence, but shall not supersede arbitration proceedings unless the decision is acceptable to
all parties concerned.

§ 4.4.7 Upon receipt of a Claim against the Contractor or at any time thereafter, the Architect or
the Owner may, but is not obligated to, notify the surety, if any, of the nature and amount of the
Claim. If the Claim relates to a possibility of a Contractor’s default, the Architect or the Owner
may, but is not obligated to, notify the surety and request the surety’s assistance in resolving
the controversy.

§ 4.4.8 If a Claim relates to or is the subject of a mechanic’s lien, the party asserting such
Claim may proceed in accordance with applicable law to comply with the lien notice or filing
deadlines prior to resolution of the Claim by the Architect, by mediation or by arbitration.

§ 4.5 MEDIATION

§ 4.5.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic
effect and except those waived as provided for in Sections 4.3.10,9.10.4 and 9.10.5 shall, after
initial decision by the Architect or 30 days after submission of the Claim to the Architect, be
subject to mediation as a condition precedent to arbitration or the institution of legal or
equitable proceedings by either party.

§ 4.5.2 The parties shall endeavor to resolve their Claims by mediation which, unless the parties
mutually agree otherwise, shall be in accordance with the Construction Industry Mediation Rules of
the American Arbitration Association currently in effect. Request for mediation shall be filed in
writing with the other party to the Contract and with the American Arbitration Association. The
request may be made concurrently with the filing of a demand for arbitration but, in such event,
mediation shall proceed in advance of arbitration or legal or equitable proceedings, which shall be
stayed pending mediation for a period of 60 days from the date of filing, unless stayed for a
longer period by agreement of the parties or court order.

§ 4.5.3 The parties shall share the mediator’s fee and any filing fees equally. The mediation shall
be held in the place where the Project is located, unless another location is mutually agreed upon.
Agreements reached in mediation shall be enforceable as settlement agreements in any court having
jurisdiction thereof.

§ 4.6 ARBITRATION

§ 4.6.1 Any Claim arising out of or related to the Contract, except Claims relating to aesthetic
effect and except those waived as provided for in Sections 4.3.10, 9.10.4 and 9.10.5, ,shall be
subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by
mediation in accordance with the provisions of Section 4.5.

§ 4.6.2 Claims not resolved by mediation shall be decided by arbitration which, unless the parties
mutually agree otherwise, shall be in accordance with the Construction Industry Arbitration Rules
of the American Arbitration Association currently in effect. The demand for arbitration shall be
filed in writing with the other party to the Contract and with the American Arbitration
Association, and a copy shall be filed with the Architect.

§ 4.6.3 A demand for arbitration shall be made in a reasonable time after the Claim has arisen, and
in no event shall it be made after the date when institution of legal or equitable proceedings
based on such Claim would be barred by the applicable statute of limitations as determined pursuant
to Section 13.7.

§ 4.6.4 Limitation on Consolidation or Joinder. No arbitration arising out of or relating to the
Contract shall include, by consolidation or joinder or in any other manner, the Architect, the
Architect’s employees or consultants, except by written consent containing specific reference to
the Agreement and signed by the Architect, Owner, Contractor

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and any other person or entity sought to be joined. No arbitration shall include, by consolidation
or joinder or in any other manner, parties other than the Owner, Contractor, a separate contractor
as described in Article 6 and other persons substantially involved in a common question of fact or
law whose presence is required if complete relief is to be accorded in arbitration. No person or
entity other than the Owner, Contractor or a separate contractor as described in Article 6 shall be
included as an original third party or additional third party to an arbitration whose interest or
responsibility is insubstantial. Consent to arbitration involving an additional person or entity
shall not constitute consent to arbitration of a Claim not described therein or with a person or
entity not named or described therein. The foregoing agreement to arbitrate and other agreements to
arbitrate with an additional person or entity duly consented to by parties to the Agreement shall
be specifically enforceable under applicable law in any court having jurisdiction thereof.

§ 4.6.5 Claims and Timely Assertion of Claims. The party filing a notice of demand for arbitration
must assert in the demand all Claims then known to that party on which arbitration is permitted to
be demanded.

§ 4.6.6 Judgment on Final Award. The award rendered by the arbitrator or arbitrators shall be
final, and judgment may be entered upon it in accordance with applicable law in any court having
jurisdiction thereof.

ARTICLE
5 SUBCONTRACTORS

§ 5.1 DEFINITIONS

§ 5.1.1 A Subcontractor is a person or entity who has a direct contract with the Contractor to
perform a portion of the Work at the site. The term “Subcontractor” is referred to throughout the
Contract Documents as if singular in number and means a Subcontractor or an authorized
representative of the Subcontractor. The term “Subcontractor” does not include a separate
contractor or subcontractors of a separate contractor.

§ 5.1.2 A Sub-subcontractor is a person or entity who has a direct or indirect contract with a
Subcontractor to perform a portion of the Work at the site. The term“Sub-subcontractor” is referred
to throughout the Contract Documents as if singular in number and means a Sub-subcontractor or an
authorized representative of the Subsubcontractor.

§ 5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK

§ 5.2.The Contractor, as soon as practicable after award of the Contract, shall furnish in writing
to the Owner through the Architect the names of persons or entities (including those who are to
furnish materials or equipment fabricated to a special design) proposed for each principal portion
of the Work. The Architect will promptly reply to the Contractor in writing stating whether or not
the Owner or the Architect, after due investigation, has reasonable objection to any such proposed
person or entity. Failure of the Owner or Architect to reply promptly shall constitute notice of no
reasonable objection.

(Paragraphs
deleted)

§ 5.2.2 The Contractor shall not contract with a proposed person or entity to whom the Owner or
Architect has made reasonable and timely objection. The Contractor shall not be required to
contract with anyone to whom the Contractor has made reasonable objection.

§ 5.2.3 If the Owner or Architect has reasonable objection to a person or entity proposed by the
Contractor, the Contractor shall propose another to whom the Owner or Architect has no reasonable
objection. If the proposed but rejected Subcontractor was reasonably capable of performing the
Work, the Contract Sum and Contract Time shall be increased or decreased by the difference, if any,
occasioned by such change, and an appropriate Change Order shall be issued before commencement of
the substitute Subcontractor’s Work. However, no increase in the Contract Sum or Contract Time
shall be allowed for such change unless the Contractor has acted promptly and responsively in
submitting names as required.

§ 5.2.4 The Contractor shall not change a Subcontractor, person or entity previously selected if
the Owner or Architect makes reasonable objection to such substitute.

§ 5.3 SUBCONTRACTUAL RELATIONS

§ 5.3.1 By appropriate agreement, written where legally required for validity, the Contractor shall
require each Subcontractor, to the extent of the Work to be performed by the Subcontractor, to be
bound to the Contractor by terms of the Contract Documents, and to assume toward the Contractor all
the obligations and responsibilities,

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including the responsibility for safety of the Subcontractor’s Work, which the Contractor, by these
Documents, assumes toward the Owner and Architect. Each subcontract agreement shall preserve and
protect the rights of the Owner and Architect under the Contract Documents with respect to the Work
to be performed by the Subcontractor so that subcontracting thereof will not prejudice such rights,
and shall allow to the Subcontractor, unless specifically provided otherwise in the subcontract
agreement, the benefit of all rights, remedies and redress against the Contractor that the
Contractor, by the Contract Documents, has against the Owner. Where appropriate, the Contractor
shall require each Subcontractor to enter into similar agreements with Sub-subcontractors. The
Contractor shall make available to each proposed Subcontractor. Upon request copies of the Contract
Documents to which the Subcontractor will be bond, Subcontractors will similarly make copies of
applicable portions of such documents available to their respective proposed Sub-subcontractors.

§ 5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS

§ 5.4.1 Each subcontract agreement for a portion of the Work is assigned by the Contractor to the
Owner provided that:

	 	.1	 	assignment is effective only after termination of the Contract by the Owner
for cause pursuant to Section 14.2 and only for those subcontract agreements which
the Owner accepts by notifying the Subcontractor and Contractor in writing; and
	 
	 	.2	 	assignment is subject to the prior rights of the surety, if any, obligated
under bond relating to the Contract.

§ 5.4.2 Upon such assignment, if the Work has been suspended for more than 30 days, the
Subcontractor’s compensation shall be equitably adjusted for increases in cost resulting from the
suspension.

ARTICLE
6 CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS

§ 6.1 OWNER’S RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS

§ 6.1.1 The Owner reserves the right to perform construction or operations related to the Project
with the Owner’s own forces, and to award separate contracts in connection with other portions of
the Project or other construction or operations on the site under Conditions of the Contract
identical or substantially similar to these including those portions related to insurance and
waiver of subrogation. If the Contractor claims that delay or additional cost is involved because
of such action by the Owner, the Contractor shall make such Claim as provided in Section 4.3.

§ 6.1.2 When separate contracts are awarded for different portions of the Project or other
construction or operations on the site, the term “Contractor” in the Contract Documents in each
case shall mean the Contractor who executes each separate Owner-Contractor Agreement.

§ 6.1.3 The Owner shall provide for coordination of the activities of the Owner’s own forces and of
each separate contractor with the Work of the Contractor, who shall cooperate with them. The
Contractor shall participate with other separate contractors and the Owner in reviewing their
construction schedules when directed to do so. The Contractor shall make any revisions to the
construction schedule deemed necessary after a joint review and mutual agreement. The construction
schedules shall then constitute the schedules to be used by the Contractor, separate contractors
and the Owner until subsequently revised.

§ 6.1.4 Unless otherwise provided in the Contract Documents, when the Owner performs construction
or operations related to the Project with the Owner’s own forces, the Owner shall be deemed to be
subject to the same obligations and to have the same rights which apply to the Contractor under the
Conditions of the Contract, including, without excluding others, those stated in Article 3, this
Article 6 and Articles 10, 11 and 12.

§ 6.2 MUTUAL RESPONSIBILITY

§ 6.2.1 The Contractor shall afford the Owner and separate contractors reasonable opportunity for
introduction and storage of their materials and equipment and performance of their activities, and
shall connect and coordinate the Contractor’s construction and operations with theirs as required
by the Contract Documents.

§ 6.2.2 If part of the Contractor’s Work depends for proper execution or results upon construction
or operations by the Owner or a separate contractor, the Contractor shall, prior to proceeding with
that portion of the Work, promptly report to the Architect apparent discrepancies or defects in
such other construction that would render it unsuitable for such proper execution and results.
Failure of the Contractor so to report shall constitute an acknowledgment that

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the Owner’s or separate contractor’s completed or partially completed construction is fit and
proper to receive the Contractor’s Work, except as to defects not then reasonably discoverable.

§ 6.2.3 The Owner shall be reimbursed by the Contractor for costs incurred by the Owner which are
payable to a separate contractor because of delays, improperly timed activities or defective
construction of the Contractor. The Owner shall be responsible to the Contractor for costs incurred
by the Contractor because of delays, improperly timed activities, damage to the Work or defective
construction of a separate contractor.

§ 6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the Contractor to
completed or partially completed construction or to property of the Owner or separate contractors
as provided in Section 10.2.5.

§ 6.2.5 The Owner and each separate contractor shall have the same responsibilities for cutting and
patching as are described for the Contractor in Section 3.14.

§ 6.3 OWNER’S RIGHT TO CLEAN UP

§ 6.3.1 If a dispute arises among the Contractor, separate contractors and the Owner as to the
responsibility under their respective contracts for maintaining the premises and surrounding area
free from waste materials and rubbish, the Owner may clean up and the Architect will allocate the
cost among those responsible.

ARTICLE
7 CHANGES IN THE WORK

§ 7.1 GENERAL

§ 7.1.1 Changes in the Work may be accomplished after execution of the Contract, and without
invalidating the Contract, by Change Order, Construction Change Directive or order for a minor
change in the Work, subject to the limitations stated in this Article 7 and elsewhere in the
Contract Documents.

§ 7.1.2 A Change Order shall be based upon agreement among the Owner, Contractor and Architect; a
Construction Change Directive requires agreement by the Owner and Architect and mayor may not be
agreed to by the Contractor; an order for a minor change in the Work may be issued by the Architect
alone.

§ 7.1.3 Changes in the Work shall be performed under applicable provisions of the Contract
Documents, and the Contractor shall proceed promptly, unless otherwise provided in the Change
Order, Construction Change Directive or order for a minor change in the Work.

§ 7.2 CHANGE ORDERS

§ 7.2.1 A Change Order is a written instrument prepared by the Architect and signed by the Owner,
Contractor and Architect, stating their agreement upon all of the following:

	 	.1	 	change in the Work;
	 
	 	.2	 	the amount of the adjustment, if any, in the Contract Sum; and
	 
	 	.3	 	the extent of the adjustment, if any, in the Contract Time.

§ 7.2.2 Methods used in determining adjustments to the Contract Sum may include those listed in
Section 7.3.3.

§ 7.3 CONSTRUCTION CHANGE DIRECTIVES

§ 7.3.1 A Construction Change Directive is a written order prepared by the Architect and signed by
the Owner and Architect, directing a change in the Work prior to agreement on adjustment, if any,
in the Contract Sum or Contract Time, or both. The Owner may by Construction Change Directive,
without invalidating the Contract, order changes in the Work within the general scope of the
Contract consisting of additions, deletions or other revisions, the Contract Sum and Contract Time
being adjusted accordingly.

§ 7.3.2 A Construction Change Directive shall be used in the absence of total agreement on the
terms of a Change Order.

§ 7.3.3 If the Construction Change Directive provides for an adjustment to the Contract Sum, the
adjustment shall be based on one of the following methods:

	 	.1	 	mutual acceptance of a lump sum properly itemized and supported by
sufficient substantiating data to permit evaluation;
	 
	 	.2	 	unit prices stated in the Contract Documents or subsequently agreed upon;

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	 	.3	 	cost to be determined in a manner agreed upon by the parties and a mutually
acceptable fixed or percentage fee; or
	 
	 	.4	 	as provided in Section 7.3.6.

§ 7.3.4 Upon receipt of a Construction Change Directive, the Contractor shall promptly proceed with
the change in the Work involved and advise the Architect of the Contractor’s agreement or
disagreement with the method, if any, provided in the Construction Change Directive for determining
the proposed adjustment in the Contract Sum or Contract Time.

§ 7.3.5 A Construction Change Directive signed by the Contractor indicates the agreement of the
Contractor therewith, including adjustment in Contract Sum and Contract Time or the method for
determining them. Such agreement shall be effective immediately and shall be recorded as a Change
Order.

§ 7.3.6 If the Contractor does not respond promptly or disagrees with the method for adjustment in
the Contract Sum, the method and the adjustment shall be determined by the Architect on the basis
of reasonable expenditures and savings of those performing the Work attributable to the change,
including, in case of an increase in the Contract Sum, a reasonable allowance for overhead and
profit. In such case, and also under Section 7.3.3.3, the Contractor shall keep and present, in
such form as the Architect may prescribe, an itemized accounting together with appropriate
supporting data. Unless otherwise provided in the Contract Documents, costs for the purposes of
this Section 7.3.6 shall be limited to the following:

	 	.1	 	costs of labor, including social security, old age and unemployment
insurance, fringe benefits required by agreement or custom, and workers’
compensation insurance;
	 
	 	.2	 	costs of materials, supplies and equipment, including cost of
transportation, whether incorporated or consumed;
	 
	 	.3	 	rental costs of machinery and equipment, exclusive of hand tools, whether
rented from the Contractor or others;
	 
	 	.4	 	costs of premiums for all bonds and insurance, permit fees, and sales, use
or similar taxes related to the Work; and
	 
	 	.5	 	additional costs of supervision and field office personnel directly
attributable to the change.
	 
	 	.6	 	cost of subcontractors

§ 7.3.7 The amount of credit to be allowed by the Contractor to the Owner for a deletion or change
which results in a net decrease in the Contract Sum shall be actual net cost as confirmed by the
Architect. When both additions and credits covering related Work or substitutions are involved in a
change, the allowance for overhead and profit shall be figured on the basis of net increase, if
any, with respect to that change.

§ 7.3.8 Pending final determination of the total cost of a Construction Change Directive to the
Owner, amounts not in dispute for such changes in the Work shall be included in Applications for
Payment accompanied by a Change Order indicating the parties’ agreement with part or all of such
costs. For any portion of such cost that remains in dispute, the Architect will make an interim
determination for purposes of monthly certification for payment for those costs. That determination
of cost shall adjust the Contract Sum on the same basis as a Change Order, subject to the right of
either party to disagree and assert a claim in accordance with Article 4.

§ 7.3.9 When the Owner and Contractor agree with the determination made by the Architect concerning
the adjustments in the Contract Sum and Contract Time, or otherwise reach agreement upon the
adjustments, such agreement shall be effective immediately and shall be recorded by preparation and
execution of an appropriate Change Order.

§ 7.4 MINOR CHANGES IN THE WORK

§ 7.4.1 The Architect will have authority to order minor changes in the Work not involving
adjustment in the Contract Sum or extension of the Contract Time and not inconsistent with the
intent of the Contract Documents. Such changes shall be effected by written order and shall be
binding on the Owner and Contractor. The Contractor shall carry out such written orders promptly.

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ARTICLE
8 TIME

§ 8.1 DEFINITIONS

§ 8.1.1 Unless otherwise provided, Contract Time is the period of time, including authorized
adjustments, allotted in the Contract Documents for Substantial Completion of the Work.

§ 8.1.2 The date of commencement of the Work is the date established in the Agreement.

§ 8.1.3 The date of Substantial Completion is the date certified by the Architect in accordance
with Section 9.8.

§ 8.1.4 The term “day” as used in the Contract Documents shall mean calendar day unless otherwise
specifically defined.

§ 8.2 PROGRESS AND COMPLETION

§ 8.2.1 Time limits stated in the Contract Documents are of the essence of the Contract. By
executing the Agreement the Contractor confirms that the Contract Time is a reasonable period for
performing the Work.

§ 8.2.2 The Contractor shall not knowingly, except by agreement or instruction of the Owner in
writing, prematurely commence operations on the site or elsewhere prior to the effective date of
insurance required by Article II to be furnished by the Contractor and Owner. The date of
commencement of the Work shall not be changed by the effective date of such insurance. Unless the
date of commencement is established by the Contract Documents or a notice to proceed given by the
Owner, the Contractor shall notify the Owner in writing not less than five days or other agreed
period before commencing the Work to permit the timely filing of mortgages, mechanic’s liens and
other security interests.

§ 8.2.3 The Contractor shall proceed expeditiously with adequate forces and shall achieve
Substantial Completion within the Contract Time.

§ 8.3 DELAYS AND EXTENSIONS OF TIME

§ 8.3.1 If the Contractor is delayed at any time in the commencement or progress of the Work by an
act or neglect of the Owner or Architect, or of an employee of either, or of a separate contractor
employed by the Owner, or by changes ordered in the Work, or by labor disputes, fire, unusual delay
in deliveries, unavoidable casualties or other causes beyond the Contractor’s control, or by delay
authorized by the Owner pending mediation and arbitration, or by other causes which the Architect
determines may justify delay, then the Contract Time shall be extended by Change Order for such
reasonable time as the Architect may determine.

§ 8.3.2 Claims relating to time shall be made in accordance with applicable provisions of Section
4.3.

§ 8.3.3 This Section 8.3 does not preclude recovery of damages for delay by either party under
other provisions of the Contract Documents.

ARTICLE
9 PAYMENTS AND COMPLETION

§ 9.1 CONTRACT SUM

§ 9.1.1 The Contract Sum is stated in the Agreement and, including authorized adjustments, is the
total amount payable by the Owner to the Contractor for performance of the Work under the Contract
Documents.

§ 9.2 SCHEDULE OF VALUES

§ 9.2.1 Before the first Application for Payment, the Contractor shall submit to the Architect a
schedule of values allocated to various portions of the Work, prepared in such form and supported
by such data to substantiate its accuracy as the Architect may require. This schedule, unless
objected to by the Architect, shall be used as a basis for reviewing the Contractor’s Applications
for Payment.

§ 9.3 APPLICATIONS FOR PAYMENT

§ 9.3.1 At least ten days before the date established for each progress payment, the Contractor
shall submit to the Architect an itemized Application for Payment for operations completed in
accordance with the schedule of values. Such application shall, be notarized, if required supported
by such data substantiating the Contractor’s right to payment as the Owner or Architect may
require, such as copies of requisitions from Subcontractors and material suppliers, and reflecting
retainage if provided for in the Contract Documents.

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§9.3.1.1 As provided in Section 7.3.8, such applications may include requests for payment on
account of changes in the Work which have been properly authorized by Construction Change
Directives, or by interim determinations of the Architect, but not yet included in Change Orders.

§ 9.3.1.2 Such applications may not include requests for payment for portions of the Work for which
the Contractor does not intend to pay to a Subcontractor or material supplier, unless such Work has
been performed by others whom the Contractor intends to pay.

§ 9.3.2 Unless otherwise provided in the Contract Documents, payments shall be made on account of
materials and equipment delivered and suitably stored at the site for subsequent incorporation in
the Work. If approved in advance by the Owner, payment may similarly be made for materials and
equipment suitably stored off the site at a location agreed upon in writing. Payment for materials
and equipment stored on or off the site shall be conditioned upon compliance by the Contractor with
procedures satisfactory to the Owner to establish the Owner’s title to such materials and equipment
or otherwise protect the Owner’s interest, and shall include the costs of applicable insurance,
storage and transportation to the site for such materials and equipment stored off the site.

§ 9.3.3 The Contractor warrants that title to all Work covered by an Application for Payment will
pass to the Owner no later than the time of payment. The Contractor further warrants that upon
submittal of an Application for Payment all Work for which Certificates for Payment have been
previously issued and payments received from the Owner shall, to the best of the Contractor’s
knowledge, information and belief, be free and clear of liens, claims, security interests or
encumbrances in favor of the Contractor, Subcontractors, material suppliers, or other persons or
entities making a claim by reason of having provided labor, materials and equipment relating to the
Work.

§ 9.4 CERTIFICATES FOR PAYMENT

§ 9.4.1 The Architect will , within seven days after receipt of the Contractor’s Application for
Payment, either issue to the Owner a Certificate for Payment, with a copy to the Contractor, for
such amount as the Architect determines is properly due, or notify the Contractor and Owner in
writing of the Architect’s reasons for withholding certification in whole or in part as provided in
Section 9.5.1.

§ 9.4.2 The issuance of a Certificate for Payment will constitute a representation by the Architect
to the Owner, based on the Architect’s evaluation of the Work and the data comprising the
Application for Payment, that the Work has progressed to the point indicated and that, to the best
of the Architect’s knowledge, information and belief, the quality of the Work is in accordance with
the Contract Documents. The foregoing representations are subject to an evaluation of the Work for
conformance with the Contract Documents upon Substantial Completion, to results of subsequent tests
and inspections, to correction of minor deviations from the Contract Documents prior to completion
and to specific qualifications expressed by the Architect. The issuance of a Certificate for
Payment will further constitute a representation that the Contractor is entitled to payment in the
amount certified. However, the issuance of a Certificate for Payment will not be a representation
that the Architect has (1) made exhaustive or continuous onsite inspections to check the quality or
quantity of the Work, (2) reviewed construction means, methods, techniques, sequences or
procedures, (3) reviewed copies of requisitions received from Subcontractors and material suppliers
and other data requested by the Owner to substantiate the Contractor’s right to payment, or (4)
made examination to ascertain how or for what purpose the Contractor has used money previously paid
on account of the Contract Sum.

§ 9.5 DECISIONS TO WITHHOLD CERTIFICATION

§ 9.5.1 The Architect may withhold a Certificate for Payment in whole or in part, to the extent
reasonably necessary to protect the Owner, if in the Architect’s opinion the representations to the
Owner required by Section 9.4.2 cannot be made. If the Architect is unable to certify payment in
the amount of the Application, the Architect will notify the Contractor and Owner as provided in
Section 9.4.1. If the Contractor and Architect cannot agree on a revised amount, the Architect will
promptly issue a Certificate for Payment for the amount for which the Architect is able to make
such representations to the Owner. The Architect may also withhold a Certificate for Payment or,
because of subsequently discovered evidence, may nullify the whole or a part of a Certificate for
Payment previously issued, to such extent as may be necessary in the Architect’s opinion to protect
the Owner from loss for which the Contractor is responsible, including loss resulting from acts and
omissions described in Section 3.3.2, because of:

	 	.1	 	defective Work not remedied;
	 
	 	.2	 	third party claims filed or reasonable evidence indicating probable filing
of such claims unless security acceptable to the Owner is provided by the
Contractor;

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	 	.3	 	failure of the Contractor to make payments properly to Subcontractors or for
labor, materials or equipment;
	 
	 	.4	 	reasonable evidence that the Work cannot be completed for the unpaid balance
of the Contract Sum;
	 
	 	.5	 	damage to the Owner or another contractor;
	 
	 	.6	 	reasonable evidence that the Work will not be completed within the Contract
Time, and that the unpaid balance would not be adequate to cover actual or
liquidated damages for the anticipated delay; or
	 
	 	.7	 	persistent failure to carry out the Work in accordance with the Contract
Documents.

§ 9.5.2 When the above reasons for withholding certification are removed, certification will be
made for amounts previously withheld.

§ 9.6 PROGRESS PAYMENTS

§ 9.6.1 After the Architect has issued a Certificate for Payment, the Owner shall make payment in
the manner and within the time provided in the Contract Documents, and shall so notify the
Architect.

§ 9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of payment from the
Owner, out of the amount paid to the Contractor on account of such Subcontractor’s portion of the
Work, the amount to which said Subcontractor is entitled, reflecting percentages actually retained
from payments to the Contractor on account of such Subcontractor’s portion of the Work. The
Contractor shall, by appropriate agreement with each Subcontractor, require each Subcontractor to
make payments to Sub-subcontractors in a similar manner.

§9.6.3 The Architect will, on request, furnish to a Subcontractor, if practicable, information
regarding percentages of completion or amounts applied for by the Contractor and action taken
thereon by the Architect and Owner on account of portions of the Work done by such Subcontractor.

§ 9.6.4 Neither the Owner nor Architect shall have an obligation to payor to see to the payment of
money to a Subcontractor except as may otherwise be required by law.

§ 9.6.5 Payment to material suppliers shall be treated in a manner similar to that provided in
Sections 9.6.2, 9.6.3 and 9.6.4.

§ 9.6.6 A Certificate for Payment, a progress payment, or partial or entire use or occupancy of the
Project by the Owner shall not constitute acceptance of Work not in accordance with the Contract
Documents.

§ 9.6.7 Unless the Contractor provides the Owner with a payment bond in the full penal sum of the
Contract Sum, payments received by the Contractor for Work properly performed by Subcontractors and
suppliers shall be held by the Contractor for those Subcontractors or suppliers who performed Work
or furnished materials, or both, under contract with the Contractor for which payment was made by
the Owner. Nothing contained herein shall require money to be placed in a separate account and not
commingled with money of the Contractor, shall create any fiduciary liability or tort liability on
the part of the Contractor for breach of trust or shall entitle any person or entity to an award of
punitive damages against the Contractor for breach of the requirements of this provision.

§ 9.7 FAILURE OF PAYMENT

§ 9.7.1 If the Architect does not issue a Certificate for Payment, through no fault of the
Contractor, within seven days after receipt of the Contractor’s Application for Payment, or if the
Owner does not pay the Contractor within seven days after the date established in the Contract
Documents the amount certified by the Architect or awarded by arbitration, then the Contractor may,
upon seven additional days’ written notice to the Owner and Architect, stop the Work until payment
of the amount owing has been received. The Contract Time shall be extended appropriately and the
Contract Sum shall be increased by the amount of the Contractor’s reasonable costs of shut-down,
delay and start-up, plus interest as provided for in the Contract Documents. See Article 15

§ 9.8 SUBSTANTIAL COMPLETION

§ 9.8.1 Substantial Completion is the stage in the progress of the Work when the Work or designated
portion thereof is sufficiently complete in accordance with the Contract Documents so that the
Owner can occupy or utilize the Work for its intended use.

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§ 9.8.2 When the Contractor considers that the Work, or a portion thereof which the Owner agrees to
accept separately, is substantially complete, the Contractor shall prepare and submit to the
Architect a comprehensive list of items to be completed or corrected prior to final payment.
Failure to include an item on such list does not alter the responsibility of the Contractor to
complete all Work in accordance with the Contract Documents.

§ 9.8.3 Upon receipt of the Contractor’s list, the Architect will make an inspection to determine
whether the Work or designated portion thereof is substantially complete. If the Architect’s
inspection discloses any item, whether or not included on the Contractor’s list, which is not
sufficiently complete in accordance with the Contract Documents so that the Owner can occupy or
utilize the Work or designated portion thereof for its intended use, the Contractor shall, before
issuance of the Certificate of Substantial Completion, complete or correct such item upon
notification by the Architect. In such case, the Contractor shall then submit a request for another
inspection by the Architect to determine Substantial Completion.

§ 9.8.4 When the Work or designated portion thereof is substantially complete, the Architect will
prepare a Certificate of Substantial Completion which shall establish the date of Substantial
Completion, shall establish responsibilities of the Owner and Contractor for security, maintenance,
heat, utilities, damage to the Work and insurance, and shall fix the time within which the
Contractor shall finish all items on the list accompanying the Certificate. Warranties required by
the Contract Documents shall commence on the date of Substantial Completion of the Work or
designated portion thereof unless otherwise provided in the Certificate of Substantial Completion.

§ 9.8.5 The Certificate of Substantial Completion shall be submitted to the Owner and Contractor
for their written acceptance of responsibilities assigned to them in such Certificate. Upon such
acceptance and consent of surety, if any, the Owner shall make payment of retainage applying to
such Work or designated portion thereof. Such payment shall be adjusted for Work that is incomplete
or not in accordance with the requirements of the Contract Documents.

§ 9.9 PARTIAL OCCUPANCY OR USE

§ 9.9.1 The Owner may occupy or use any completed or partially completed portion of the Work at any
stage when such portion is designated by separate agreement with the Contractor, provided such
occupancy or use is consented to by the insurer as required under Section 11.4.1.5 and authorized
by public authorities having jurisdiction over the Work. Such partial occupancy or use may commence
whether or not the portion is substantially complete, provided the Owner and Contractor have
accepted in writing the responsibilities assigned to each of them for payments, retainage, if any,
security, maintenance, heat, utilities, damage to the Work and insurance, and have agreed in
writing concerning the period for correction of the Work and commencement of warranties required by
the Contract Documents. When the Contractor considers a portion substantially complete, the
Contractor shall prepare and submit a list to the Architect as provided under Section 9.8.2.
Consent of the Contractor to partial occupancy or use shall not be unreasonably withheld. The stage
of the progress of the Work shall be determined by written agreement between the Owner and
Contractor or, if no agreement is reached, by decision of the Architect.

§ 9.9.2 Immediately prior to such partial occupancy or use, the Owner, Contractor and Architect
shall jointly inspect the area to be occupied or portion of the Work to be used in order to
determine and record the condition of the Work.

§9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion or portions of the Work
shall not constitute acceptance of Work not complying with the requirements of the Contract
Documents.

§ 9.10 FINAL COMPLETION AND FINAL PAYMENT

§ 9.10.1 Upon receipt of written notice that the Work is ready for final inspection and acceptance
and upon receipt of a final Application for Payment, the Architect will promptly make such
inspection and, when the Architect finds the Work acceptable under the Contract Documents and the
Contract fully performed, the Architect will promptly issue a final Certificate for Payment stating
that to the best of the Architect’s knowledge, information and belief, and on the basis of the
Architect’s on-site visits and inspections, the Work has been completed in accordance with terms
and conditions of the Contract Documents and that the entire balance found to be due the Contractor
and noted in the final Certificate is due and payable. The Architect’s final Certificate for
Payment will constitute a further representation that conditions listed in Section 9.10.2 as
precedent to the Contractor’s being entitled to final payment have been fulfilled.

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§ 9.10.2 Neither final payment nor any remaining retained percentage shall become due until the
Contractor submits to the Architect (1) an affidavit that payrolls, bills for materials and
equipment, and other indebtedness connected with the Work for which the Owner or the Owner’s
property might be responsible or encumbered (less amounts withheld by Owner) have been paid or
otherwise satisfied, (2) a certificate evidencing that insurance required by the Contract Documents
to remain in force after final payment is currently in effect and will not be canceled or allowed
to expire until at least 30 days’ prior written notice has been given to the Owner, (3) a written
statement that the Contractor knows of no substantial reason that the insurance will not be
renewable to cover the period required by the Contract Documents, (4) consent of surety, if any, to
final payment and (5), if required by the Owner, other data establishing payment or satisfaction of
obligations, such as receipts, releases and waivers of liens, claims, security interests or
encumbrances arising out of the Contract, to the extent and in such form as may be designated by
the Owner. If a Subcontractor refuses to furnish a release or waiver required by the Owner, the
Contractor may furnish a bond satisfactory to the Owner to indemnify the Owner against such lien.
If such lien remains unsatisfied after payments are made, the Contractor shall refund to the Owner
all money that the Owner may be compelled to pay in discharging such lien, including all costs and
reasonable attorneys’ fees.

§ 9.10.3 If, after Substantial Completion of the Work, final completion thereof is materially
delayed through no fault of the Contractor or by issuance of Change Orders affecting final
completion, and the Architect so confirms, the Owner shall, upon application by the Contractor and
certification by the Architect, and without terminating the Contract, make payment of the balance
due for that portion of the Work fully completed and accepted. If the remaining balance for Work
not fully completed or corrected is less than retainage stipulated in the Contract Documents, and
if bonds have been furnished, the written consent of surety to payment of the balance due for that
portion of the Work fully completed and accepted shall be submitted by the Contractor to the
Architect prior to certification of such payment. Such payment shall be made under terms and
conditions governing final payment, except that it shall not constitute a waiver of claims.

§ 9.10.4 The making of final payment shall constitute a waiver of Claims by the Owner except those
arising from:

	 	.1	 	liens, Claims, security interests or encumbrances arising out of the Contract and unsettled;
	 
	 	.2	 	failure of the Work to comply with the requirements of the Contract Documents; or
	 
	 	.3	 	terms of special warranties required by the Contract Documents.

§ 9.10.5 Acceptance of final payment by the Contractor, a Subcontractor or material supplier shall
constitute a waiver of claims by that payee except those previously made in writing and identified
by that payee as unsettled at the time of final Application for Payment.

ARTICLE
10 PROTECTION OF PERSONS AND PROPERTY

§ 10.1 SAFETY PRECAUTIONS AND PROGRAMS

§ 10.1.1 The Contractor shall be responsible for initiating, maintaining and supervising all safety
precautions and programs in connection with the performance of the Contract.

§ 10.2 SAFETY OF PERSONS AND PROPERTY

§ 10.2.1 The Contractor shall take reasonable precautions for safety of, and shall provide
reasonable protection to prevent damage, injury or loss to:

	 	.1	 	employees on the Work and other persons who may be affected thereby;
	 
	 	.2	 	the Work and materials and equipment to be incorporated therein, whether in
storage on or off the site, under care, custody or control of the Contractor or the
Contractor’s Subcontractors or Subsubcontractors; and
	 
	 	.3	 	other property at the site or adjacent thereto, such as trees, shrubs,
lawns, walks, pavements, roadways, structures and utilities not designated for
removal, relocation or replacement in the course of construction.

§ 10.2.2 The Contractor shall give notices and comply with applicable laws, ordinances, rules,
regulations and lawful orders of public authorities bearing on safety of persons or property or
their protection from damage, injury or loss.

§ 10.2.3 The Contractor shall erect and maintain, as required by existing conditions and
performance of the Contract, reasonable safeguards for safety and protection, including posting
danger signs and other warnings against hazards, promulgating safety regulations and notifying
owners and users of adjacent sites and utilities.

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§ 10.2.4 When use or storage of explosives or other hazardous materials or equipment or unusual
methods are necessary for execution of the Work, the Contractor shall exercise utmost care and
carryon such activities under supervision of properly qualified personnel.

§ 10.2.5 The Contractor shall promptly remedy damage and loss (other than damage or loss insured
under property insurance required by the Contract Documents) to property referred to in Sections
10.2.1.2 and 10.2.1.3 caused in whole or in part by the Contractor, a Subcontractor, a
Sub-subcontractor, or anyone directly or indirectly employed by any of them, or by anyone for whose
acts they may be liable and for which the Contractor is responsible under Sections 10.2.1.2 and
10.2.1.3, except damage or loss attributable to acts or omissions of the Owner or Architect or
anyone directly or indirectly employed by either of them, or by anyone for whose acts either of
them may be liable, and not attributable to the fault or negligence of the Contractor. The
foregoing obligations of the Contractor are in addition to the Contractor’s obligations under
Section 3.18.

§ 10.2.6 The Contractor shall designate a responsible member of the Contractor’s organization at
the site whose duty shall be the prevention of accidents. This person shall be the Contractor’s
superintendent unless otherwise designated by the Contractor in writing to the Owner and Architect.

§ 10.2.7 The Contractor shall not load or permit any part of the construction or site to be loaded
so as to endanger its safety.

§ 10.3 HAZARDOUS MATERIALS

§ 10.3.1 If reasonable precautions will be inadequate to prevent foreseeable bodily injury or death
to persons resulting from a material or substance, including but not limited to asbestos or
polychlorinated biphenyl (PCB), encountered on the site by the Contractor, the Contractor shall,
upon recognizing the condition, immediately stop Work in the affected area and report the condition
to the Owner and Architect in writing.

§ 10.3.2 The Owner shall obtain the services of a licensed laboratory to verify the presence or
absence of the material or substance reported by the Contractor and, in the event such material or
substance is found to be present, to verify that it has been rendered harmless. Unless otherwise
required by the Contract Documents, the Owner shall furnish in writing to the Contractor and
Architect the names and qualifications of persons or entities who are to perform tests verifying
the presence or absence of such material or substance or who are to perform the task of removal or
safe containment of such material or substance. The Contractor and the Architect will promptly
reply to the Owner in writing stating whether or not either has reasonable objection to the persons
or entities proposed by the Owner. If either the Contractor or Architect has an objection to a
person or entity proposed by the Owner, the Owner shall propose another to whom the Contractor and
the Architect have no reasonable objection. When the material or substance has been rendered
harmless, Work in the affected area shall resume upon written agreement of the Owner and
Contractor. The Contract Time shall be extended appropriately and the Contract Sum shall be
increased in the amount of the Contractor’s reasonable additional costs of shut-down, delay and
start-up, which adjustments shall be accomplished as provided in Article 7.

§ 10.3.3 To the fullest extent permitted by law, the Owner shall indemnify and hold harmless the
Contractor, Subcontractors, Architect, Architect’s consultants and agents and employees of any of
them from and against claims, damages, losses and expenses, including but not limited to attorneys’
fees, arising out of or resulting from performance of the Work in the affected area if in fact the
material or substance presents the risk of bodily injury or death as described in Section 10.3.1
and has not been rendered harmless, provided that such claim, damage, loss or expense is
attributable to bodily injury, sickness, disease or death, or to injury to or destruction of
tangible property (other than the Work itself) and provided that such damage, loss or expense is
not due to the sole negligence of a party seeking indemnity.

§ 10.4 The Owner shall not be responsible under Section 10.3 for materials and substances brought
to the site by the Contractor unless such materials or substances were required by the Contract
Documents.

§ 10.5 If, without negligence on the part of the Contractor, the Contractor is held liable for the
cost of remediation of a hazardous material or substance solely by reason of performing Work as
required by the Contract Documents, the Owner shall indemnify the Contractor for all cost and
expense thereby incurred.

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§ 10.6 EMERGENCIES

§ 10.6.1 In an emergency affecting safety of persons or property, the Contractor shall act, at the
Contractor’s discretion, to prevent threatened damage, injury or loss. Additional compensation or
extension of time claimed by the Contractor on account of an emergency shall be determined as
provided in Section 4.3 and Article 7.

ARTICLE
11 INSURANCE AND BONDS

§ 11.1 CONTRACTOR’S LIABILITY INSURANCE

§ 11.1.1 The Contractor shall purchase from and maintain in a company or companies lawfully
authorized to do business in the jurisdiction in which the Project is located such insurance as
will protect the Contractor from claims set forth below which may arise out of or result from the
Contractor’s operations under the Contract and for which the Contractor may be legally liable,
whether such operations be by the Contractor or by a Subcontractor or by anyone directly or
indirectly employed by any of them, or by anyone for whose acts any of them may be liable:

	 	.1	 	claims under workers’ compensation, disability benefit and other similar
employee benefit acts which are applicable to the Work to be performed;
	 
	 	.2	 	claims for damages because of bodily injury, occupational sickness or
disease, or death of the Contractor’s employees;
	 
	 	.3	 	claims for damages because of bodily injury, sickness or disease, or death
of any person other than the Contractor’s employees;
	 
	 	.4	 	claims for damages insured by usual personal injury liability coverage;
	 
	 	.5	 	claims for damages, other than to the Work itself, because of injury to or
destruction of tangible property, including loss of use resulting therefrom;
	 
	 	.6	 	claims for damages because of bodily injury, death of a person or property
damage arising out of ownership, maintenance or use of a motor vehicle;
	 
	 	.7	 	claims for bodily injury or property damage arising out of completed
operations; and
	 
	 	.8	 	claims involving contractual liability insurance applicable to the
Contractor’s obligations under Section 3.18.

§ 11.1.2 The insurance required by Section 11.1.1 shall be written for not less than limits of
liability specified in the Contract Documents or required by law, whichever coverage is greater.
Coverages, whether written on an occurrence or claims-made basis, shall be maintained without
interruption from date of commencement of the Work until date of final payment and termination of
any coverage required to be maintained after final payment.

§ 11.1.3 Certificates of insurance acceptable to the Owner shall be filed with the Owner prior to
commencement of the Work. These certificates and the insurance policies required by this Section
11.1 shall contain a provision that coverages afforded under the policies will not be canceled or
allowed to expire until at least 30 days’ prior written notice has been given to the Owner. If any
of the foregoing insurance coverages are required to remain in force after final payment and are
reasonably available, an additional certificate evidencing continuation of such coverage shall be
submitted with the final Application for Payment as required by Section 9.10.2. Information
concerning reduction of coverage on account of revised limits or claims paid under the General
Aggregate, or both, shall be furnished by the Contractor with reasonable promptness in accordance
with the Contractor’s information and belief.

§ 11.2 OWNER’S LIABILITY INSURANCE

§ 11.2.1 The Owner shall be responsible for purchasing and maintaining the Owner’s usual liability
insurance.

§ 11.3 PROJECT MANAGEMENT PROTECTIVE LIABILITY INSURANCE

§ 11.3.1 Optionally, the Owner may require the Contractor to purchase and maintain Project
Management Protective Liability insurance from the Contractor’s usual sources as primary coverage
for the Owner’s, Contractor’s and Architect’s vicarious liability for construction operations under
the Contract. Unless otherwise required by the Contract Documents, the Owner shall reimburse the
Contractor by increasing the Contract Sum to pay the cost of purchasing and maintaining such
optional insurance coverage, and the Contractor shall not be responsible for purchasing any other
liability insurance on behalf of the Owner. The minimum limits of liability purchased with such
coverage shall be equal to the aggregate of the limits required for Contractor’s Liability
Insurance under Sections 11.1.1.2 through 11.1.1.5.

§ 11.3.2 To the extent damages are covered by Project Management Protective Liability insurance,
the Owner, Contractor and Architect waive all rights against each other for damages, except such
rights as they may have to the proceeds of such insurance. The policy shall provide for such
waivers of subrogation by endorsement or otherwise.

33

 

§ 11.3.3 The Owner shall not require the Contractor to include the Owner, Architect or other
persons or entities as additional insureds on the Contractor’s Liability Insurance coverage under
Section 11.1.

§ 11.4 PROPERTY INSURANCE

§ 11.4.1 Unless otherwise provided, the Owner shall purchase and maintain, in a company or
companies lawfully authorized to do business in the jurisdiction in which the Project is located,
property insurance written on a builder’s risk “all-risk” or equivalent policy form in the amount
of the initial Contract Sum, plus value of subsequent Contract modifications and cost of materials
supplied or installed by others, comprising total value for the entire Project at the site on a
replacement cost basis without optional deductibles. Such property insurance shall be maintained,
unless otherwise provided in the Contract Documents or otherwise agreed in writing by all persons
and entities who are beneficiaries of such insurance, until final payment has been made as provided
in Section 9.10 or until no person or entity other than the Owner has an insurable interest in the
property required by this Section 11.4 to be covered, whichever is later. This insurance shall
include interests of the Owner, the Contractor, Subcontractors and Subsubcontractors in the
Project.

§ 11.4.1.1 Property insurance shall be on an “all-risk” or equivalent policy form and shall
include, without limitation, insurance against the perils of fire (with extended coverage) and
physical loss or damage including, without duplication ofcoverage, theft, vandalism, malicious
mischief, collapse, earthquake, flood, windstorm, falsework, testing and startup, temporary
buildings and debris removal including demolition occasioned by enforcement of any applicable legal
requirements, and shall cover reasonable compensation for Architect’s and Contractor’s services and
expenses required as a result of such insured loss.

§ 11.4.1.2 If the Owner does not intend to purchase such property insurance required by the
Contract and with all of the coverages in the amount described above, the Owner shall so inform the
Contractor in writing prior to commencement of the Work. The Contractor may then effect insurance
which will protect the interests of the Contractor, Subcontractors and Sub-subcontractors in the
Work, and by appropriate Change Order the cost thereof shall be charged to the Owner. If the
Contractor is damaged by the failure or neglect of the Owner to purchase or maintain insurance as
described above, without so notifying the Contractor in writing, then the Owner shall bear all
reasonable costs properly attributable thereto.

§ 11.4.1.3 If the property insurance requires deductibles, the Owner shall pay costs not covered
because of such deductibles.

§ 11.4.1.4 This property insurance shall cover portions of the Work stored off the site, and also
portions of the Work in transit.

§ 11.4.1.5 Partial occupancy or use in accordance with Section 9.9 shall not commence until the
insurance company or companies providing property insurance have consented to such partial
occupancy or use by endorsement or otherwise. The Owner and the Contractor shall take reasonable
steps to obtain consent of the insurance company or companies and shall, without mutual written
consent, take no action with respect to partial occupancy or use that would cause cancellation,
lapse or reduction of insurance.

§ 11.4.2 Boiler and Machinery Insurance. The Owner shall purchase and maintain boiler and machinery
insurance required by the Contract Documents or by law, which shall specifically cover such insured
objects during installation and until final acceptance by the Owner; this insurance shall include
interests of the Owner, Contractor, Subcontractors and Sub-subcontractors in the Work, and the
Owner and Contractor shall be named insureds.

§ 11.4.3 Loss of Use Insurance. The Owner, at the Owner’s option, may purchase and maintain such
insurance as will insure the Owner against loss of use of the Owner’s property due to fire or other
hazards, however caused. The Owner waives all rights of action against the Contractor for loss of
use of the Owner’s property, including consequential losses due to fire or other hazards however
caused.

§ 11.4.4 If the Contractor requests in writing that insurance for risks other than those described
herein or other special causes of loss be included in the property insurance policy, the Owner
shall, if possible, include such insurance, and the cost thereof shall be charged to the Contractor
by appropriate Change Order.

34

 

§ 11.4.5 If during the Project construction period the Owner insures properties, real or personal
or both, at or adjacent to the site by property insurance under policies separate from those
insuring the Project, or if after final payment property insurance is to be provided on the
completed Project through a policy or policies other than those insuring the Project during the
construction period, the Owner shall waive all rights in accordance with the terms of Section
11.4.7 for damages caused by fire or other causes of loss covered by this separate property
insurance. All separate policies shall provide this waiver of subrogation by endorsement or
otherwise.

§ 11.4.6 Before an exposure to loss may occur, the Owner shall file with the Contractor a copy of
each policy that includes insurance coverages required by this Section 11.4. Each policy shall
contain all generally applicable conditions, definitions, exclusions and endorsements related to
this Project. Each policy shall contain a provision that the policy will not be canceled or allowed
to expire, and that its limits will not be reduced, until at least 30 days’ prior written notice
has been given to the Contractor.

§ 11.4.7 Waivers of Subrogation. The Owner and Contractor waive all rights against (1) each other
and any of their subcontractors, sub-subcontractors, agents and employees, each of the other, and
(2) the Architect, Architect’s consultants, separate contractors described in Article 6, if any,
and any of their subcontractors, sub-subcontractors, agents and employees, for damages caused by
fire or other causes of loss to the extent covered by property insurance obtained pursuant to this
Section 11.4 or other property insurance applicable to the Work, except such rights as they have to
proceeds of such insurance held by the Owner as fiduciary. The Owner or Contractor, as appropriate,
shall require of the Architect, Architect’s consultants, separate contractors described in Article
6, if any, and the subcontractors, sub-subcontractors, agents and employees of any of them, by
appropriate agreements, written where legally required for validity, similar waivers each in favor
of other parties enumerated herein. The policies shall provide such waivers of subrogation by
endorsement or otherwise. A waiver of subrogation shall be effective as to a person or entity even
though that person or entity would otherwise have a duty of indemnification, contractual or
otherwise, did not pay the insurance premium directly or indirectly, and whether or not the person
or entity had an insurable interest in the property damaged.

§ 11.4.8 A loss insured under Owner’s property insurance shall be adjusted by the Owner as
fiduciary and made payable to the Owner as fiduciary for the insureds, as their interests may
appear, subject to requirements of any applicable mortgagee clause and of Section 11.4.10. The
Contractor shall pay Subcontractors their just shares of insurance proceeds received by the
Contractor, and by appropriate agreements, written where legally required for validity, shall
require Subcontractors to make payments to their Sub-subcontractors in similar manner.

§ 11.4.9 If required in writing by a party in interest, the Owner as fiduciary shall, upon
occurrence of an insured loss, give bond for proper performance of the Owner’s duties. The cost of
required bonds shall be charged against proceeds received as fiduciary. The Owner shall deposit in
a separate account proceeds so received, which the Owner shall distribute in accordance with such
agreement as the parties in interest may reach, or in accordance with an arbitration award in which
case the procedure shall be as provided in Section 4.6. If after such loss no other special
agreement is made and unless the Owner terminates the Contract for convenience, replacement of
damaged property shall be performed by the Contractor after notification of a Change in the Work in
accordance with Article 7.

§ 11.4.10 The Owner as fiduciary shall have power to adjust and settle a loss with insurers unless
one of the parties in interest shall object in writing within five days after occurrence of loss to
the Owner’s exercise of this power; if such objection is made, the dispute shall be resolved as
provided in Sections 4.5 and 4.6. The Owner as fiduciary shall, in the case of arbitration, make
settlement with insurers in accordance with directions of the arbitrators. If distribution of
insurance proceeds by arbitration is required, the arbitrators will direct such distribution.

§ 11.5 PERFORMANCE BOND AND PAYMENT BOND

§ 11.5.1 The Owner shall have the right to require the Contractor to furnish bonds covering
faithful performance of the Contract and payment of obligations arising there under as stipulated
in bidding requirements or specifically required in the Contract Documents on the date of execution
of the Contract.

§ 11.5.2 Upon the request of any person or entity appearing to be a potential beneficiary of bonds
covering payment of obligations arising under the Contract, the Contractor shall promptly furnish a
copy of the bonds or shall permit a copy to be made.

35

 

ARTICLE
12 UNCOVERING AND CORRECTION OF WORK

§ 12.1 UNCOVERING OF WORK

§ 12.1.1 If a portion of the Work is covered contrary to the Architect’s request or to requirements
specifically expressed in the Contract Documents, it must, if required in writing by the Architect,
be uncovered for the Architect’s examination and be replaced at the Contractor’s expense without
change in the Contract Time.

§ 12.1.2 If a portion of the Work has been covered which the Architect has not specifically
requested to examine prior to its being covered, the Architect may request to see such Work and it
shall be uncovered by the Contractor. If such Work is in accordance with the Contract Documents,
costs of uncovering and replacement shall, by appropriate Change Order, be at the Owner’s expense.
If such Work is not in accordance with the Contract Documents, correction shall be at the
Contractor’s expense unless the condition was caused by the Owner or a separate contractor in which
event the Owner shall be responsible for payment of such costs.

§
12.2 CORRECTION OF WORK

§ 12.2.1 BEFORE OR AFTER SUBSTANTIAL COMPLETION

§ 12.2.1.1 The Contractor shall promptly correct Work rejected by the Architect or failing to
conform to the requirements of the Contract Documents, whether discovered before or after
Substantial Completion and whether or not fabricated, installed or completed. Costs of correcting
such rejected Work, including additional testing and inspections and compensation for the
Architect’s services and expenses made necessary thereby, shall be at the Contractor’s expense.

§ 12.2.2 AFTER SUBSTANTIAL COMPLETION

§ 12.2.2.1 In addition to the Contractor’s obligations under Section 3.5, if, within one year after
the date of Substantial Completion of the Wark or designated portion thereof or after the date for
commencement of warranties established under Section 9.9.1, or by terms of an applicable special
warranty required by the Contract Documents, any of the Work is found to be not in accordance with
the requirements of the Contract Documents, the Contractor shall correct it promptly after receipt
of written notice from the Owner to do so unless the Owner has previously given the Contractor a
written acceptance of such condition. The Owner shall give such notice promptly after discovery of
the condition. During the one-year period for correction of Work, if the Owner fails to notify the
Contractor and give the Contractor an opportunity to make the correction, the Owner waives the
rights to require correction by the Contractor and to make a claim for breach of warranty. If the
Contractor fails to correct nonconforming Work within a reasonable time during that period after
receipt of notice from the Owner or Architect, the Owner may correct it in accordance with Section
2.4.

§ 12.2.2.2 The one-year period for correction of Work shall be extended with respect to portions of
Work first performed after Substantial Completion by the period of time between Substantial
Completion and the actual performance of the Work.

§ 12.2.2.3 The one-year period for correction of Work shall not be extended by corrective Work
performed by the Contractor pursuant to this Section 12.2.

§ 12.2.3 The Contractor shall remove from the site portions of the Work which are not in accordance
with the requirements of the Contract Documents and are neither corrected by the Contractor nor
accepted by the Owner.

§ 12.2.4 The Contractor shall bear the cost of correcting destroyed or damaged construction,
whether completed or partially completed, of the Owner or separate contractors caused by the
Contractor’s correction or removal of Work which is not in accordance with the requirements of the
Contract Documents.

§ 12.2.5 Nothing contained in this Section 12.2 shall be construed to establish a period of
limitation with respect to other obligations which the Contractor might have under the Contract
Documents. Establishment of the one-year period for correction of Work as described in Section
12.2.2 relates only to the specific obligation of the Contractor to correct the Work, and has no
relationship to the time within which the obligation to comply with the Contract Documents may be
sought to be enforced, nor to the time within which proceedings may be commenced to establish the
Contractor’s liability with respect to the Contractor’s obligations other than specifically to
correct the Work.

36

 

§ 12.3 ACCEPTANCE OF NONCONFORMING WORK

§ 12.3.1 If the Owner prefers to accept Work which is not in accordance with the requirements of
the Contract Documents, the Owner may do so instead of requiring its removal and correction, in
which case the Contract Sum will be reduced as appropriate and equitable. Such adjustment shall be
effected whether or not final payment has been made.

ARTICLE
13 MISCELLANEOUS PROVISIONS

§ 13.1 GOVERNING LAW

§ 13.1.1 The Contract shall be governed by the law of the place where the Project is located.

§ 13.2 SUCCESSORS AND ASSIGNS

§ 13.2.1 The Owner and Contractor respectively bind themselves, their partners, successors, assigns
and legal representatives to the other party hereto and to partners, successors, assigns and legal
representatives of such other party in respect to covenants, agreements and obligations contained
in the Contract Documents. Except as provided in Section 13.2.2, neither party to the Contract
shall assign the Contract as a whole without written consent of the other. If either party attempts
to make such an assignment without such consent, that party shall nevertheless remain legally
responsible for all obligations under the Contract.

§ 13.2.2 The Owner may, without consent of the Contractor, assign the Contract to an institutional
lender providing construction financing for the Project. In such event, the lender shall assume the
Owner’s rights and obligations under the Contract Documents. The Contractor shall execute all
consents reasonably required to facilitate such assignment.

§ 13.3 WRITTEN NOTICE

§ 13.3.1 Written notice shall be deemed to have been duly served if delivered in person to the
individual or a member of the firm or entity or to an officer of the corporation for which it was
intended, or if delivered at or sent by registered or certified mail to the last business address
known to the party giving notice.

§ 13.4 RIGHTS AND REMEDIES

§ 13.4.1 Duties and obligations imposed by the Contract Documents and rights and remedies available
there under shall be in addition to and not a limitation of duties, obligations, rights and
remedies otherwise imposed or available by law.

§ 13.4.2 No action or failure to act by the Owner, Architect or Contractor shall constitute a
waiver of a right or duty afforded them under the Contract, nor shall such action or failure to act
constitute approval of or acquiescence in a breach there under, except as may be specifically
agreed in writing.

§ 13.5 TESTS AND INSPECTIONS

§ 13.5.1 Tests, inspections and approvals of portions of the Work required by the Contract
Documents or by laws, ordinances, rules, regulations or orders of public authorities having
jurisdiction shall be made at an appropriate time. Unless otherwise provided, the Contractor shall
make arrangements for such tests, inspections and approvals with an independent testing laboratory
or entity acceptable to the Owner, or with the appropriate public authority, and shall bear all
related costs of tests, inspections and approvals. The Contractor shall give the Architect timely
notice of when and where tests and inspections are to be made so that the Architect may be present
for such procedures. The Owner shall bear costs of tests, inspections or approvals which do not
become requirements until after bids are received or negotiations concluded.

§ 13.5.2 If the Architect, Owner or public authorities having jurisdiction determine that portions
of the Work require additional testing, inspection or approval not included under Section 13.5.1,
the Architect will, upon written authorization from the Owner, instruct the Contractor to make
arrangements for such additional testing, inspection or approval by an entity acceptable to the
Owner, and the Contractor shall give timely notice to the Architect of when and where tests and
inspections are to be made so that the Architect may be present for such procedures. Such costs,
except as provided in Section 13.5.3, shall be at the Owner’s expense.

§ 13.5.3 If such procedures for testing, inspection or approval under Sections 13.5.1 and 13.5.2
reveal failure of the portions of the Work to comply with requirements established by the Contract
Documents, all costs made necessary

37

 

by such failure including those of repeated procedures and compensation for the Architect’s
services and expenses shall be at the Contractor’s expense.

§ 13.5.4 Required certificates of testing, inspection or approval shall, unless otherwise required
by the Contract Documents, be secured by the Contractor and promptly delivered to the Architect.

§ 13.5.5 If the Architect is to observe tests, inspections or approvals required by the Contract
Documents, the Architect will do so promptly and, where practicable, at the normal place of
testing.

§ 13.5.6 Tests or inspections conducted pursuant to the Contract Documents shall be made promptly
to avoid unreasonable delay in the Work.

§ 13.6 INTEREST

§ 13.6.1 Payments due and unpaid under the Contract Documents shall bear interest from the date
payment is due at such rate as the parties may agree upon in writing or, in the absence thereof, at
the legal rate prevailing from time to time at the place where the Project is located.

(Paragraphs deleted)

ARTICLE
14 TERMINATION OR SUSPENSION OF THE CONTRACT

§ 14.1 TERMINATION BY THE CONTRACTOR

§ 14.1.1 The Contractor may terminate the Contract if the Work is stopped for a period of 30
consecutive days through no act or fault of the Contractor or a Subcontractor, Sub-subcontractor or
their agents or employees or any other persons or entities performing portions of the Work under
direct or indirect contract with the Contractor, for any of the following reasons:

	 	.1	 	issuance of an order of a court or other public authority having
jurisdiction which requires all Work to be stopped;
	 
	 	.2	 	an act of government, such as a declaration of national emergency which
requires all Work to be stopped;
	 
	 	.3	 	because the Architect has not issued a Certificate for Payment and has not
notified the Contractor of the reason for withholding certification as provided in
Section 9.4.1, or because the Owner has not made payment on a Certificate for
Payment within the time stated in the Contract Documents; or
	 
	 	.4	 	the Owner has failed to furnish to the Contractor promptly, upon the
Contractor’s request, reasonable evidence as required by Section 2.2.1.

§ 14.1.2 The Contractor may terminate the Contract if, through no act or fault of the Contractor or
a Subcontractor, Sub-subcontractor or their agents or employees or any other persons or entities
performing portions of the Work under direct or indirect contract with the Contractor, repeated
suspensions, delays or interruptions of the entire Work by the Owner as described in Section 14.3
constitute in the aggregate more than 100 percent of the total number of days scheduled for
completion, or 120 days in any 365-day period, whichever is less.

§ 14.1.3 If one of the reasons described in Section 14.1.1 or 14.1.2 exists, the Contractor may,
upon seven days’ written notice to the Owner and Architect, terminate the Contract and recover from
the Owner payment for Work executed and for proven loss with respect to materials, equipment,
tools, and construction equipment and machinery, including reasonable overhead, profit and damages.

§ 14.1.4 If all or a portion of the Work is stopped for a period of 60 consecutive days through no
act or fault of the Contractor or a Subcontractor or their agents or employees or any other persons
performing portions of the Work under contract with the Contractor because the Owner has
persistently failed to fulfill the Owner’s obligations under the Contract Documents with respect to
matters important to the progress of the Work, the Contractor may, upon seven additional days’
written notice to the Owner and the Architect, terminate the Contract and recover from the Owner as
provided in Section 14.1.3.

§ 14.2 TERMINATION BY THE OWNER FOR CAUSE

§ 14.2.1 The Owner may terminate the Contract if the Contractor:

	 	.1	 	persistently or repeatedly refuses or fails to supply enough properly skilled workers or proper materials;

38

 

	 	.2	 	fails to make payment to Subcontractors for materials or labor in accordance
with the respective agreements between the Contractor and the Subcontractors;
	 
	 	.3	 	persistently disregards laws, ordinances, or rules, regulations or orders of
a public authority having jurisdiction; or
	 
	 	.4	 	otherwise is guilty of substantial breach of a provision of the Contract
Documents.

§ 14.2.2 When any of the above reasons exist, the Owner, upon certification by the Architect that
sufficient cause exists to justify such action, may without prejudice to any other rights or
remedies of the Owner and after giving the Contractor and the Contractor’s surety, if any, seven
days’ written notice, terminate employment of the Contractor and may, subject to any prior rights
of the surety:

	 	.1	 	take possession of the site and of all materials, equipment, tools, and
construction equipment and machinery thereon owned by the Contractor;
	 
	 	.2	 	accept assignment of subcontracts pursuant to Section 5.4; and
	 
	 	.3	 	finish the Work by whatever reasonable method the Owner may deem expedient.
Upon request of the Contractor, the Owner shall furnish to the Contractor a detailed
accounting of the costs incurred by the Owner in finishing the Work.

§ 14.2.3 When the Owner terminates the Contract for one of the reasons stated in Section 14.2.1,
the Contractor shall not be entitled to receive further payment until the Work is finished.

§ 14.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing the Work, including
compensation for the Architect’s services and expenses made necessary thereby, and other damages
incurred by the Owner and not expressly waived, such excess shall be paid to the Contractor. If
such costs and damages exceed the unpaid balance, the Contractor shall pay the difference to the
Owner. The amount to be paid to the Contractor or Owner, as the case may be, shall be certified by
the Architect, upon application, and this obligation for payment shall survive termination of the
Contract.

§ 14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE

§ 14.3.1 The Owner may, without cause, order the Contractor in writing to suspend, delay or
interrupt the Work in whole or in part for such period of time as the Owner may determine.

§ 14.3.2 The Contract Sum and Contract Time shall be adjusted for increases in the cost and time
caused by suspension, delay or interruption as described in Section 14.3.1. Adjustment of the
Contract Sum shall include profit. No adjustment shall be made to the extent:

	 	.1	 	that performance is, was or would have been so suspended, delayed or
interrupted by another cause for which the Contractor is responsible; or
	 
	 	.2	 	that an equitable adjustment is made or denied under another provision of
the Contract.

§ 14.4 TERMINATION BY THE OWNER FOR CONVENIENCE

§ 14.4.1 The Owner may, at any time, terminate the Contract for the Owner’s convenience and without
cause.

§ 14.4.2 Upon receipt of written notice from the Owner of such termination for the Owner’s
convenience, the Contractor shall:

	 	.1	 	cease operations as directed by the Owner in the notice;
	 
	 	.2	 	take actions necessary, or that the Owner may direct, for the protection and
preservation of the Work; and
	 
	 	.3	 	except for Work directed to be performed prior to the effective date of
termination stated in the notice, terminate all existing subcontracts and purchase
orders and enter into no further subcontracts and purchase orders.

39

 

§ 14.4.3 In case of such termination for the Owner’s convenience, the Contractor shall be entitled
to receive payment for Work executed, and costs incurred by reason of such termination, along with
reasonable overhead and profit on the Work not executed.

ARTICLE 15. MISCELLANEOUS PROVISIONS:

15.1 The time allowed for Owner to make payment to the Contractor shall be (30) thirty days from
receipt of the approved invoice from the Architect unless the Contract documents specify otherwise.

15.2 Progress Payments under this contract which are not paid within (30) thirty days following the
date on which such payments are due are subject to and will be charged a late fee of two percent
(2%) per month on the unpaid amount. See California Civil Section 3260.

15.3 If the Final Payment under this Contract is not paid within forty-five (45) days following the
date of completion the unpaid amount will be subject to a late fee of two percent (2%0 per month on
the unpaid amount. See California Code 3260.

15.4 Should any litigation be commenced by any party hereto with respect to this Contract the
prevailing party shall be entitled to recover its reasonable attorney’s fees and all cost of suit.

40

 

Certification of Document’s Authenticity

AIA® Document D401TM -2003

I, David A. Nevens, Jr., hereby certify, to the best of my knowledge, information and belief, that
I created the attached final document simultaneously with its associated Additions and Deletions
Report and this certification at 15:43:52 on 11/13/2007 under Order
No. 1000328416_1 from AlA
Contract Documents software and that in preparing the final document I made no changes to the
original text of AIA® Document A201TM-1997 General Conditions of the Contract for Construction, as
published by the AIA in its software, other than those additions and deletions shown in the
associated Additions and Deletions Report.

	 	 	 
	/s/ David A. Nevens, Jr.
	 	 
	 

(Signed)

	 	 
	 
	 	 
	Vice President
	 	 
	 

(Title)

	 	 
	 
	 	 
	4/29/08
	 	 
	 

(Dated)

	 	 

1

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