Document:

EXHIBIT 10.5

 

CONFIDENTIALITY AND NON-COMPETITION AGREEMENT

 

This
Confidentiality and Non-Competition Agreement is entered into on this 17th
day of February, 2006 (“Effective Date”), by and between BioSource America,
Inc., a Texas corporation (hereinafter “Buyer”) and Resodyn Corporation, a
Delaware corporation (hereinafter “Resodyn”)

 

WHEREAS, Buyer on
even date of this Confidentiality and Non-Competition Agreement, is entering
into Asset Purchase Agreement with BIOsource Fuels, LLC, a Wisconsin limited liability
company (hereafter “Seller”) to purchase and acquire all of the assets of
Seller related to and used in connection with the synthesis of biodiesel and
other bio-fuels from animal and vegetable based fats, oils and greases (“the
Business”); and

 

NOW, THEREFORE,
for and in consideration of ten dollars paid in hand by Buyer to Resodyn, and
other good and valuable consideration paid by Buyer, the receipt and
sufficiency of which is hereby acknowledged, Resodyn and its principals enter
into this Confidentiality and Non-Competition Agreement and agree to the
covenants and agreements set forth herein as follows:

 

I.                              Covenant Not to Compete.

 

Neither Resodyn,
nor any principal of Resodyn, at any time from and after the Effective Date of
Asset Purchase Agreement and through the fifth anniversary of such Effective
Date, without the prior written consent of Buyer, will (i) directly or
indirectly engage in, manage, operate, control or participate in or be
connected in any manner with the ownership, management, operation or control of
any person or entity which is or proposes to be, directly or indirectly,
engaged or involved in Business; or (ii) acquire control of or assist or render
services (whether or not for compensation, or as an agent, advisor, consultant or
lender) to or for, any entity or individual involved in Business.

 

Nothing in this
Agreement shall prohibit Resodyn from working directly or indirectly with,
assisting, or providing services or products to any person or entity in the
Business that synthesizes or markets bio-fuel or biodiesel from animal and
vegetable based fats, oils, and greases as long as Resodyn’s work, assistance,
or services are not involved in the synthesis of biodiesel and other bio-fuels
as an end product from animal and vegetable based fats, oils, and greases.

 

Nothing in this
Agreement shall prohibit Resodyn from researching, developing, marketing,
selling, and engaging in the business of biochemical and chemical processes
involving chemistries, products or processes that use non-petroleum feedstock,
biodiesel or other bio-fuels from animal and vegetable based fats, oils and
greases in order to synthesize products, provided only that the end product of
Resodyn’s activities cannot be biodiesel or bio-fuel from animal and vegetable
based fats, oils, and greases.

 

1

 

Resodyn
agrees that at any time from the Effective Date and through the fifth anniversary thereof, it will not
directly or indirectly through its actions or through the actions of a third
party, whether for its own benefit or for that of the third parry, take any
action, or advise or assist in taking any action, that impairs the goodwill of
Buyer, including but not limited to, actions that interfere with or damage the
relationships between Buyer and employees, customers, contractors, licensees
and suppliers of Buyer.

 

The
foregoing paragraphs:

 

shall
not prohibit Resodyn from owning in the aggregate less than two percent (2%) of
an entity which is engaged in the Business provided such entity is subject to
the reporting obligations of the Securities Exchange Act of 1934, as amended,
and provided any such investment has a value no greater than One Hundred
Thousand Dollars ($100,000.00).

 

None
of the foregoing paragraphs of this Section I shall prohibit Resodyn from:

 

(a.)          selling animal and vegetable based
fats, oil and greases for synthesis of bio-fuel or biodiesel;

 

(b.)          engaging in the design and
construction of a plant or plants for the synthesis of bio-fuel or biodiesel
pursuant to a license granted by Buyer;

 

(c.)          owning or operating a plant for the
synthesis of bio-fuel or biodiesel which has been designed and constructed by
Buyer;

 

(d.)          any activity that constitutes the
Business when such activity has been specifically authorized in a written
agreement with Buyer or performed at the written request of and on behalf of
Buyer; nor

 

(e.)          marketing or selling Biodiesel,
glycerin or any other product or by-product used in or resulting from the
synthesis of bio-fuel or biodiesel.

 

(f.)           using enzymes as catalysts for
esterification, using solid acid catalysts for esterification, or using solid
acid catalysts to dry methanol.

 

(g.)          working on and completing any
government funded research and development contracts dealing with new methods for biodiesel synthesis that do not include glycerolysis.

 

Resodyn is
expressly prohibited from:

 

(a)                                  representing
Biosource Fuels, LLC as a commercial viable entity actively engaged in the
business lines outlined in paragraphs (a.) through (e.) above;

 

(b)                                 any
representations on websites, in trade magazines, promotional brochures, company
literature or verbally that it can or will engage in any activities as defined
in paragraphs (a.) through (e.) above;

 

2

 

(c)                                  any
representation, technology development, research, development, or business
arrangements that infringe upon any biodiesel or biofuels production technology
identified in:

 

(i)                                     U.S.
Patent Application Serial Number 10/776,740 filed 1/26/2004

 

(ii)                                  U.S.
Provisional Patent Application Serial Number 60,537,251 filed 1/15/2004

 

(iii)                               U.S.
Provisional Patent Application Serial Number 60,443,049 filed 1/27/2003

 

Seller agrees that
all existing Employee Non-Compete Agreements for past employees of any of the
Members of the Seller are declared null and void with respect to biodiesel or
biofuels production, production technology as it relates to this Agreement.

 

II.                            Confidential
Information.

 

Resodyn and Buyer
acknowledge that Seller has developed highly specialized and technical
knowledge with respect to the Business, including, but not limited to, (i)
information and technology relating to applications used to manufacture
biodiesel and other biofuels from animal and vegetable-based fats, oils and
greases including, but not limited, patent applications pending before the U.S.
Patent and Trademark Office; (ii) information relating to chemistry, process
methods, processing steps, processing times and conditions, costs of
processing, licensing fees, royalties and other technical or business sensitive
information relating to the Business; (iii) formulations, test results,
manufacturing and engineering specifications, production and manufacturing
information and know-how and other technical information relating to the
formulation or production of products or services of the Business; (iv)
information concerning products or services of the Business but not yet offered
for sale or license or offered for sale or license only on condition of
confidentiality; (v) information concerning pricing policies for the Business,
the prices charged in the Business to customers, the volume or order of such
customers, and other information concerning business transactions with
customers or proposed customers; (vi) customer lists for the Business; (vii)
financial information concerning the Business; (viii) information concerning
the marketing programs or strategies of the Business; and (ix) all other
confidential and proprietary information relating to the Business (“Confidential
Information”).  Confidential Information
shall not include information which is publicly available on Effective Date or
which becomes publicly available through no fault of Resodyn after Effective
Date (but only after such information becomes- publicly available).

 

Resodyn recognizes
that the integrity and value of the assets sold by Seller under the Asset
Purchase Agreement are dependent upon the confidentiality of the Confidential
Information and that the protection of the Confidential Information against unauthorized
disclosure or use is of critical importance to Buyer.  Resodyn agrees that it will not, without
the prior written authorization of Buyer, divulge to any person or entity,
directly or indirectly, any of the Confidential Information.

 

3

 

If
Resodyn is subpoenaed, or is otherwise required by law to testify concerning
any Confidential Information, Resodyn agrees to promptly notify Buyer upon
receipt of a subpoena, or upon reasonable belief that such testimony shall be required
so that Buyer may seek a protective order or other appropriate remedy and/or
waive compliance with the provisions of this Agreement.  In any event, Resodyn shall furnish only that
portion of the Confidential Information that it is advised by legal advisers to
be legally required and shall exercise reasonable best efforts to obtain
reliable assurance that confidential treatment shall be accorded the
Confidential Information.  Further,
Resodyn agrees not to oppose action by Buyer to obtain an appropriate
protective order or other reliable assurance that confidential treatment shall
be accorded the Confidential Information.

 

III.                           Acknowledgement
of Reasonableness and Enforcement.

 

Buyer and Resodyn
agree and stipulate that the agreements and covenants contained in this
Confidentiality and Non-Competition Agreement are fair and reasonable in light
of all of the facts and circumstances of the relationship between Buyer and
Seller including the consideration recited in the Asset Purchase Agreement.

 

Buyer and Resodyn
are aware that in certain circumstances courts have refused to enforce certain
agreements not to compete.  Therefore, in
furtherance of, and not in derogation of the provisions of this Confidentiality
and Non-Competition Agreement, Buyer and Resodyn agree that in the event a
court should decline to enforce any provision of this Confidentiality and
Non-Competition Agreement, then the provisions of this Confidentiality and
Non-Competition Agreement shall be modified or reformed in a manner which will
restrict Resodyn’s competition with Buyer to the maximum extent, as to time,
geography and business scope, consistent with the remaining terms of this
Agreement.

 

The parties agree
that if Resodyn violates the provisions of this Confidentiality and
Non-Competition Agreement, Buyer shall be entitled to recover any actual
damages that may be awarded at trial or in arbitration, as applicable, and not
reversed on appeal It is further agreed that Buyer, in addition to and without
limiting any other remedy or right that it may have, will have the right to an
injunction issued by a court of competent jurisdiction against any breach or
threatened breach of this Confidentiality and Non-Competition Agreement in
order to enjoin such breach.

 

IV.                           Miscellaneous

 

Resodyn
acknowledges that Buyer is granting to Seller, a collateral
assignment of this Confidentiality and Non-Competition Agreement to secure the
obligations of Buyer under the Asset Purchase Agreement and a promissory note
delivered thereunder, and Resodyn irrevocably consents to such assignment.

 

4

 

This Agreement shall be governed by and construed in accordance with the laws of the State of Texas.

 

The parties have caused this Agreement to be executed on this 17th day of February,
2006 as set forth below.

 

	
  RESODYN
  CORPORATION,

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Lawrence C. Farrar

  	
   

  
	
   

  	
  Lawrence C. Farrar

  
	
   

  	
  President

  
	
   

  
	
   

  
	
  Biosource America, Inc.,

  
	
   

  
	
   

  
	
  By:

  	
  /s/ J.D.
  McGraw

  	
   

  
	
   

  	
  J.D. McGraw

  
	
   

  	
  President

  

 

5Exhibit 10.6

 

BETWEEN CLINTON COUNTY BIO ENERGY, LLC

AND

BIOSOURCE FUELS, LLC

 

 

 

This
Agreement has been prepared for use with the Standard General Conditions of the
Contract Between Owner and
Design/Builder.  Their provisions are
interrelated and a change in one may necessitate a change in the other.

 

 

Confidential and Proprietary Information

 

1

 

AGREEMENT

BETWEEN OWNER AND
DESIGN/BUILDER

 

THIS
AGREEMENT is by and between Clinton County
BioEnergy, LLC of 1571 Main Avenue, Clinton,
Iowa 52732 (Owner) and BIOSOURCE FUELS, LLC of 600 Dewey Boulevard, Butte, Montana 59701(Design/Builder).

Owner and Design/Builder, in consideration of
the mutual covenants hereinafter set forth, agree as follows:

 

ARTICLE 1 - THE WORK

 

1.01.        Design/Builder shall complete all Work as specified or
indicated in the Contract Scope of Work known as Exhibit A of this Agreement
dated October 14th, 2005.  The
Work is generally described as follows:

 

A.            Project Management – provide programmatic oversight to aid in the
execution of the project, provide a communication link with the Owner and
provide direction and guidance to subcontractors during the execution of the
project.

 

B.            Professional Design Services – provide professional engineering process
development and design phase services to develop and assemble fabrication
drawings, equipment specifications and project requirements as well as provide
construction phase professional support services.

 

C.            Fabrication and Installation – provide procurement,
purchasing, fabrication and construction services for the creation, assembly
and installation of various process equipment, including piping, wiring,
instrumentation and controls, and other various mechanical, structural, and
electrical construction services.

 

D.            Plant Commissioning and Startup – provide
professional services to direct and oversee the commissioning and startup of
the various plant process units as well as their integrated process operations
and operate the plant during an initial startup period until the various
process warranties and objectives are met.

 

E.             Training and Technical Support – provide
training to the Owner’s selected operators during the commissioning and startup
phase of the plant.

 

F.             The Design/Builder is not responsible for the
final design and construction of the tank farm, load out facilities, process
building, site development, permitting.

 

ARTICLE 2 - THE PROJECT

 

2.01.       The Project for which the Work under the Contract Documents may be the
whole or only a part is generally described as follows:

 

Clinton
County BioEnergy, LLC has
contracted the services of BIOSOURCE
FUELS, LLC under a design build
agreement to design, build, deliver, startup and commission a biodiesel production
facility to be located near Camanche, Iowa. 
This biodiesel production facility will utilize a virgin soy bean oil
feedstock for conversion to fuel quality methyl esters and a co-product
glycerin.    The feedstock for the
biodiesel synthesis process will be variable lipid feedstocks with a Free Fatty
Acid content of less than 1% with an MIU concentration not to exceed 1.5% by
mass.

 

The plant must be a
continuous process capable of producing 10-million gallons per year of the B100
product.  The process and plant must be
robust, safe and be designed to operate as a continuous process based on a
24-hour day, 350-day per year operation.

 

2

 

ARTICLE 3 - CONTRACT TIMES

 

3.01.       Time
of the Essence

 

All time limits for
Milestones, if any, Substantial Completion, and completion and readiness for
final payment as stated in the Contract Documents are of the essence of the
Contract.

 

3.02.       Days to Achieve Substantial Completion
and Final Payment

 

The Work is targeted for Substantial Completion as
defined in Article 13.05 of the General Conditions on July 21st,
2006 and is to be completed and ready for final payment in accordance with
paragraph 13.08 of the General Conditions within 30 calendar days after the
date of Substantial Completion.  This
date of Substantial Completion is predicated on CCBE providing Notice to
Proceed to BIOSOURCE FUELS no later than October 17th, 2005
and that CCBE has acquired all required permits and has reached Substantial
Completion on all CCBE-furnished improvements including the site development,
tank farm and load out facilities and the process building prior to March 1st,
2006.

 

The Design/Builder and Owner
agree and acknowledge that the Plant will be ready for Partial Utilization as
defined in Articles 1.01.30 and 13.06 of the General Conditions and that the
Owner will be capable of producing product for sale prior to the Substantial
Completion date.  This is because both
the Design/Builder and Owner acknowledge and agree that this is the first
commercial scale facility that has been constructed using the Design/Builder’s
technology and additional time may be required to optimize the final operations
with respect to product throughput and yield, however biodiesel and glycerin
product will be produced for sale in advance of the optimization efforts
thereby permitting the Owner to begin commercial operations.

 

The Partial Utilization has
been defined as the plant being capable of producing at a flow rate of 600
gallons per hour of ASTM D 6751-03 Grade S15 biodiesel.  The Partial Utilization date has been
established at June 5th, 2006.

 

The incentive for both the
Owner and Design/Builder to achieve the target dates for Partial Utilization
and Substantial Completion is provided through the payment schedule in which
30% of the Contract Value will be withheld by the Owner until such time as the
Design/Builder achieves Substantial Completion.

3.03        Definition of Substantial
Completion

 

Design/Builder and Owner
have agreed to the following standards as a measure of the Project’s
Substantial Completion and acceptance. Articles 1.01.43 and 13.05 of the
General Conditions shall be amended to include the following elements to define
Substantial Completion:

 

3.03.01  Feedstock Specification Requirements

 

The feedstock for the
biodiesel synthesis process will be crude degummed soybean oil with a Free
Fatty Acid content of less than 1% with an MIU concentration not to exceed 1.5%
by mass.   Moreover, the crude degummed soybean
oil feedstock shall possess a triglyceride content of not less than 99%.

 

3.03.02  Product Specifications

 

To achieve Substantial
Completion, the Project must demonstrate that the final biodiesel product shall
be in conformance with ASTM D 6751-03 Grade S15

 

3

 

To achieve Substantial
Completion, the Project must demonstrate that
the final Glycerin will meet 97%
purity.

 

3.03.03  Process Throughput

 

To achieve
Substantial Completion, the Project must demonstrate that the plant must be a
continuous process capable of producing 10-million gallons per year of the biodiesel
product.  The plant will be designed to
operate as a continuous process based on a 24-hour day, 350-day per year
operation.  The process warranty will be
for 1,200 gallons per hour as measured in the transfer line to the final biodiesel
inventory tankage.

 

3.03.04  Product Yield

 

Yield shall be defined as
pounds of feedstock as defined in Article 3.03.01 required to yield one U.S
gallon of ASTM D 6751-03 quality biodiesel as measured during steady state
operating conditions.  Based upon
analytical testing, pilot plant operations and completed mass balances, this
feedstock is expected to yield between 7.80 and 8.00 pounds of feedstock per
gallon of biodiesel, however, BSF will make all reasonable efforts to improve
this yield during plant commissioning. 
To achieve Substantial Completion, the Project must demonstrate that the
plant can achieve the minimum yield value of 8.00 pounds per gallon.

 

3.04.        Liquidated Damages

 

Design/Builder and Owner recognize that time is of the essence of this
Agreement.   Owner and Design/Builder
agree that as liquidated damages for delay (but not as a penalty), except as
outlined is 3.04.01, Design/Builder shall only receive 70% of the Contract
Value until Substantial Completion as defined in Article 3.03 is achieved. Upon
issuance of the Substantial Completion Certificate, Design/Builder shall
receive 95% of the Contract Value.

 

After Substantial Completion, Design/Builder shall complete the
remaining Work within the time specified in paragraph 3.02 for completion and
readiness for final payment or any proper extension thereof granted by Owner,
Design/Builder in order to receive the final 100% of the Contract Value.

 

3.04.01  Feedstock Yield Liquidated
Damages

 

In addition, the
Design/Builder and Owner have agreed to liquidated damages for feedstock
yield.  Based upon pilot plant trials
conducted in August of 2005 using the model feedstock defined in 3.03.01, the
feedstock yield is expected to be 7.80 pounds of raw feedstock to produce one
gallon of biodiesel.  During plant
commissioning, if the plant yields one gallon of biodiesel per 7.80 to 8.00
pounds of feedstock, then the warranty has been satisfied, however, if the
measured yield values are greater than the limits of the accepted range, Design/Builder
will invest additional plant capital equipment required to achieve the
warranted yields at no charge to Owner. 
If the feedstock is physically and chemically the same as the model
feedstock and Design/Builder is incapable of correcting the problem to achieve
the warranted yield values, then the solution is to change feedstocks or accept
the performance of the feedstock in question. 
In this latter case, Design/Builder will accept that penalties be
imposed as liquidated damages based upon the following schedule of values:

 

	
  7.80 to 8.00 pounds per gallon

  	
  —

  	
  The liquidated damages
  shall be $0 payable to Owner

  
	
  8.01 to 8.20 pounds per
  gallon

  	
  —

  	
  The liquidated damages
  shall be $250,000 payable to Owner

  
	
  8.20 or greater pounds per
  gallon

  	
  —

  	
  The liquidated damages
  shall be $500,000 payable to Owner

  

 

4

 

ARTICLE 4 - CONTRACT PRICE

 

4.01        Contract Price or Design/Build Cost is the
cost to Owner to design and construct the Work. 
Design/Build Cost is limited to Design Professional Services and
Construction to be furnished by Design/Builder, and does not include costs of
items not provided by Design/Builder including but not limited to cost of land
and rights of way, compensation for damages to properties, interest and
financing charges, and charges for services to be provided to Owner by
others.  Owner shall pay Design/Builder
for completion of the Work in accordance with the Contract Documents an amount
equal to the Guaranteed Maximum Price as defined below

 

4.02        Guaranteed Maximum Price

 

Design/Builder guarantees
that the maximum obligation of Owner for the sum of the Cost of the Work will
not exceed Five million seven hundred fifty five thousand
six hundred thirty three dollars ($5,755,633).  “Guaranteed Maximum Price” is subject to
increases or decreases for changes in the Work as provided in paragraph 10.01
of the General Conditions.

 

4.03        Contingency Account

 

In addition, a contingency
account in the amount of Two hundred fifty two
thousand seven hundred eight two dollars ($252,782), has been
established to be held in account by the Owner. 
During the course of the project, should unforeseen cost increases be
encountered by the Design/Builder, the Design/Builder will submit documentation
supporting the cost increase to the Owner for review and approval as an
increase to the Guaranteed Maximum Price.

 

ARTICLE 5 - COST OF THE WORK

 

5.01        Cost
of the Work shall be determined as provided in paragraph 10.01 of the General
Conditions, but, in addition to any limitations therein set forth, it shall not
include costs in excess of any Guaranteed Maximum Contract Price as set forth
in Article 4.02 hereof.

 

ARTICLE 6 - CHANGES IN THE CONTRACT PRICE

 

6.01        The amount of any increases or decreases in
the Guaranteed Maximum Price which results from a Change Order shall be set
forth in the applicable Change Order subject to the following:

 

1.             In the case
of net additions in the Work, the amount of any increase in the Guaranteed
Maximum Price shall be determined in accordance with paragraph 10.01 and 10.02
of the General Conditions.

2.             In the case
of net deletions in the Work, the amount of any such decrease shall be
determined in accordance with paragraph 10.02.C of the General Conditions, and
any Guaranteed Maximum Price shall be reduced by mutual agreement.

 

3.             The total of
any and all Owner approved cost increases to the Guaranteed Maximum Price shall
be applied against the contingency account as stated in Article 4.02.  If the total of all Owner approved cost
increases is less than the contingency amount, the balance shall revert to the
Owner upon completion of the Project and will not be included in the request
for Final Payment by Design-Builder.

 

5

 

ARTICLE 7 - PAYMENT PROCEDURES

 

7.01.       Submittal
and Processing of Payments

 

A.            Design/Builder shall submit, and Owner will
process, Applications for Payment in accordance with Article 13 of the General
Conditions and the Schedule of Values established in paragraph 2.06.A.3 of the
General Conditions and shown in Exhibit B to this Agreement.  Applications for Payment will indicate the
amount of the Contract Price then payable.

 

7.02.       Progress
Payments

 

A.            Owner shall make progress payments on account
of the Contract Price on the basis of Design/Builder’s Applications for Payment
that are to be submitted in accordance with the Schedule of Values – Exhibit B
to this Agreement.  All such payments
will be defined by the Schedule of Values established in paragraph 2.06.A.3 of
the General Conditions and shown in Exhibit B to this Agreement.

 

7.03.       Final Payment

 

A.            Upon final completion and acceptance of the
Work in accordance with paragraph 13.08 of the General Conditions, Owner shall
pay the remainder of the Contract Price.

 

ARTICLE 8 - INTEREST

 

All moneys not paid when due as provided in Article 13 of the General
Conditions shall bear interest at the rate of 1-1/2% percent per annum.

 

ARTICLE 9 - REPRESENTATIONS

 

9.01        Design/Builder’s Representations

 

In addition to those
representations and responsibilities as outlined in Article 6.0 of the General
Conditions, and to induce Owner to enter into this Agreement, Design/Builder
makes the following representations:

 

A.            Design/Builder has examined and carefully
studied the Contract Documents listed in paragraphs 11.01.A through D of this
Agreement.

 

B.            Design/Builder has visited the Site and
become familiar with and is satisfied as to the general, local, and Site
conditions that may affect cost, progress, and performance of the Work.

 

C.            Design/Builder is familiar with and is
satisfied as to all federal, state, and local Laws and Regulations that may
affect cost, progress, and performance of the Work.

 

D.            Design/Builder is aware of the general nature
of work to be performed by Owner and others at the Site that relates to the
Work as indicated in the Contract Documents.

 

E.             Design/Builder has correlated the information
known to Design/Builder, information and observations obtained from visits to
the Site, reports and drawings identified in the Contract Documents, and all
additional examinations, investigations, explorations, tests, studies and data
with the Contract Documents.

 

6

 

F.             Design/Builder has given Owner written notice
of all conflicts, errors, ambiguities, or discrepancies that Design/Builder has
discovered in the Contract Documents and the written resolution thereof by
Owner is acceptable to Design/Builder.

 

G.            The Contract Documents are generally
sufficient to indicate and convey understanding of all terms and conditions for
performance and furnishing of the Work.

 

9.02.       Owner’s Representations

 

In addition to those
representations and responsibilities as outlined in Article 8.0 of the General
Conditions, and to induce Design/Builder to enter into this Agreement, Owner
makes the following representations:

 

A.            Owner will secure a Site zoned for industrial
use with road access, water, sewage, electric, and natural gas utilities and of
adequate size and nature for the construction of the proposed facility.

 

B.            Owner will secure a Site with soil capable of
supporting a minimum of 850 pounds per square foot or Owner will pay additional
costs for foundations.

 

C.            Site will be free of hazardous waste or Owner
will pay the costs of any required environmental remediation.

 

D.            Owner will provide Design/Builder with all
criteria and full information as to Owner’s requirements for the Project,
including design objectives and constraints, space, capacity and performance
requirements, flexibility and expandability, and any budgetary limitations.

 

E.             Owner will furnish copies of all design and
construction standards which Owner will require to be included in the Contract
Documents.

 

F.             Owner will furnish to Design/Builder any
other available information pertinent to the Project including reports and data
relative to previous designs, or investigation at or adjacent to the Site.

 

G.            Owner will give prompt written notice to
Design/Builder whenever Owner observes or otherwise becomes aware of any
development that affects the scope or time of performance or furnishing of
Design/Builder’s services, or any defect or nonconformance in Design/Builder’s
services.

 

H.            Owner will arrange for safe access to and
make all provisions for Design/Builder and Design/Builder’s subcontractors to
enter upon public and private property as may reasonably be required for
Design/Builder to perform services under the Agreement.

 

I.              Owner will examine all alternate solutions,
studies, reports, sketches, drawings, specifications, proposals, and other
documents presented by Design/Builder (including obtaining advice of an
attorney, insurance counselor, and other consultants as Owner deems appropriate
with respect to such examination) and render decisions pertaining thereto
within a reasonable time after receipt of documents.

 

J.             Owner will obtain
reviews, approvals, and permits as well as being responsible for payment for
such permits from all governmental authorities having jurisdiction over the
Project or from such others as may be necessary for completion of each Phase of
the services in this Agreement.

 

K.            Owner will provide, as required for the
Project, accounting, bond, financial advisory, legal and insurance counseling
services as needed by Owner, or as Design/Builder reasonably requests

 

7

 

ARTICLE 10 –  DISPUTE RESOLUTION

 

10.01      Prompt Notice

 

The
parties agree that prompt notice is an essential component of effective and
fair dispute resolution.  The parties
will provide within fifteen (15) days notice of any condition or circumstance
which the party should reasonably believe may lead to a claim.  Failure to provide notice as required under
this Agreement shall be deemed to be a waiver of any related claim subsequently
brought.

 

10.02      Mediation

 

The
parties shall endeavor to resolve all claims, disputes or other matters arising
out of or relating or this Agreement by good faith discussions.   If such effort is not successful, any claim,
dispute or other matter arising out of or relating or this Agreement which
remains unresolved shall be subject to mediation as a condition precedent to
arbitration or the institution of legal proceedings.  Requests for mediation shall be filed with
the American Arbitration Association and the location of any mediation shall be
in the state where the Project is located. 
The parties shall share the mediator’s fee and any filing fee
equally.   The mediation shall be
conducted in accordance with the Construction Industry Mediation Rules of the
American Arbitration Association.

 

10.03      Arbitration

 

Claims,
disputes or other matters arising out of or relating or this Agreement which
are not resolved by mediation may 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.  The demand for arbitration shall be filed on
the other party.  Within ten (10) days
thereafter the parties shall file the demand with a mutually acceptable
arbitration services organization, which may include the American Arbitration
Association or Judicial Arbitration and Mediation Services.   Any arbitration shall be conducted in the
state where the Project is located.

 

The
demand for arbitration shall be provided to the other party within a reasonable
time after the claim, dispute or other matter in question has arisen.   The arbitration will be conducted by a
single arbitrator unless the parties cannot agree, in which case the Construction
Industry Arbitration Rules of the American Arbitration Association will
control.  The award entered by the
arbitrator or arbitrators shall be final, and judgment may be entered in
accordance with the laws of the state where the Project is located.

 

ARTICLE 11 – TECHNICAL SUPPORT SERVICES

 

11.01      Technical Support

 

Design/Builder shall provide
technical support services at the option of the Owner.  If Owner desires to have technical support
via 24 hour telephone access and periodic updates to control system
architecture, programmable ladder logic, process condition set points,
operating values and service updates for the Biodiesel Plant, Owner shall make
an annual payment of $25,000 per year payable within 30 days at the beginning
of each year.

 

11.02      On-Site Support

 

Design Builder can provide
on-site technical support, plant visits, and/or process audits at Owner’s
requests.  These services will be billed
by Design/Builder to Owner for a rate of $1000 per day including travel time
plus expenses for travel, lodging and per diem.

 

8

 

ARTICLE 12 - CONTRACT DOCUMENTS

 

12.01      The Contract Documents consist of the
following:

 

A.            This Agreement (pages 1 to 13, inclusive);

 

B.            Standard General Conditions of the Contract
Between Owner and Design/Builder (pages 1 to 58, inclusive);

 

C.            Exhibits A through C to this Agreement (pages
1 to 9 for Exhibit A, 1 to 1 for Exhibit B and 1 to 1 for Exhibit C,
inclusive);

 

D.            The following, which may be delivered,
prepared, or issued after the Effective Date of this Agreement and are not
attached hereto:

 

1.             Notice to
Proceed;

 

2.             All Work
Change Directives, and Change Orders amending, modifying or supplementing the
Contract Documents pursuant to paragraph 3.04.A of the General Conditions;

 

3.             Specifications
as defined in Paragraph 1.01.A.40 of the General Conditions; and

 

4.             Drawings as
defined in Paragraph 1.01.A.18 of the General Conditions.

 

12.02      The documents listed in paragraph 12.01 above
are attached to this Agreement (except as expressly noted otherwise above).

 

12.03      There are no Contract Documents other than
those listed above in this Article 12.01.

 

12.04      The Contract Documents may only be amended,
modified, or supplemented as provided in paragraph 3.03.A of the General
Conditions.

 

ARTICLE 13 - MISCELLANEOUS

 

13.01      The Standard General Conditions of the
Contract Between Owner and Design/Builder are referred to herein as the General
Conditions.

 

13.02      Terms used in this Agreement will have the
meanings indicated in the General Conditions.

 

13.03      The Design/Builder is currently undergoing a
transfer of ownership and expects to assign the rights, conditions and
responsibilities of this contract during the course of conduct of this
contract.  No assignment by a party
hereto of any rights under or interests in the Contract Documents will be
binding on another party hereto without the written consent of the party sought
to be bound; moreover, consent shall not be unreasonably withheld by either the
Owner or Design/Builder, and, specifically but without limitation, moneys that
may become due and moneys that are due may not be assigned without such consent
(except to the extent that the effect of this restriction may be limited by
law), and unless specifically stated to the contrary in any written consent to
an assignment no assignment will release or discharge the assignor from any
duty or responsibility under the Contract Documents.

 

13.04      Owner and Design/Builder each binds itself,
its partners, successors, assigns and legal representatives to the other party
hereto, its partners, successors, assigns, and legal representatives in respect
to all covenants, agreements, and obligations contained in the Contract
Documents.

 

9

 

13.05      Any provision or part of the Contract Documents
held to be void or unenforceable under any Law or Regulation shall be deemed
stricken, and all remaining provisions shall continue to be valid and binding
upon Owner and Design/Builder, who agree that the Contract Documents shall be
reformed to replace such stricken provision or part thereof with a valid and
enforceable provision that comes as close as possible to expressing the
intention of the stricken provision.

 

13.06      In lieu of providing the required Performance
and Payment bonds provided under this Agreement and as defined in Articles 2.01
and 5.01.A, B and C of the Standard General Conditions of the Contract Between
Owner and Design/Builder, the Design Builder shall enter into an escrow
agreement in the form attached hereto.

 

13.07      By entering into this contract, the
Design/Builder and Owner have agreed to a one time license of the technology
for use at the facility proposed near Camanche, Iowa.  It is expressly understood that all documents
including Drawings and Specifications prepared or furnished by Design/Builder
pursuant to this Agreement are for Design/Builder’s own use, and Design/Builder
shall retain an ownership and property interest therein whether or not the
Project is completed.  Owner may make and
retain copies for information and reference in connection with the use and
occupancy of the Project by Owner and others. 
However, such documents are not intended or represented to be suitable
for reuse by Owner or others on extensions of the Project or on any other
project.

 

13.08      Any reuse or any continued use after any
termination without written verification or adaptation by Design/Builder for
the specific purpose intended is strictly forbidden.  Owner is not allowed to utilize the
technology to construct any other biodiesel production facilities without the
written permission of the Design/Builder.

 

13.09      The Design/Builder shall comply with
Executive Order 11246 (3 CFR, 1966 Comp., p 339), entitled “Equal Employment
Opportunity” as amended by Executive Order 11375 (3 CFR, 1968 Comp., p. 321 and
as supplemented by Department of Labor regulation 41 CFR Chapter 60.

 

13.10      The Design/Builder shall comply with all
applicable standards, orders or requirements issued under Section 306 of the
Clean Air Act (42 U.S.C. 1857(h)), Section 508 of the Clean Water Act (33
U.S.C. 1368, Executive Order 11738 (3CFR, 1974 Comp., p. 209), and
Environmental Protection Agency (EPA) regulations 40 CFR Part 15, which
prohibit the use under non-exempt Federal contracts, grants or loans of
facilities on the EPA List of Violating Facilities.  The provision shall require reporting of violations
to the Agency and to the U.S. Environmental Protection Agency, Assistant
Administrator for Enforcement. 
Solicitations and contract provisions shall include the requirements of
4 CFR 15.4 (c) as set forth in RUS Bulletin 1780-14.

 

13.11      The Design/Builder shall comply with the
Copeland “Anti-Kickback” Act (18 U.S.C. 874) and shall be prohibited from
inducing, by any means, any person employed in the construction, completion, or
repair of public work, to give up any part of the compensation to which they
are otherwise entitled.

 

10

 

IN WITNESS WHEREOF, Owner and
Design/Builder have signed this Agreement in duplicate.  One counterpart each has been delivered to
Owner and Design/Builder.  All portions
of the Contract Documents have been signed, initialed, or identified by Owner
and Design/Builder.

 

This Agreement will be effective on October 7th, 2005 (which
is the Effective Date of the Agreement).

 

	
  OWNER: 

  	
  CLINTON COUNTY BIOENERGY, LLC

  	
   

  	
   

  	
  DESIGN/BUILDER: 

  	
  BIOSOURCE FUELS, LLC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  BY:

  	
    /s/ D.A.

  	
   

  	
   

  	
  BY:

  	
    /s/ Jerome King

  	
   

  
	
   

  	
    Vice
  President

  	
   

  	
   

  	
   

  	
    Kenosha Beef Chief Financial
  Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  CORPORATE SEAL:

  	
   

  	
  CORPORATE SEAL:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ATTEST:

  	
   

  	
   

  	
   

  	
  ATTEST:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address for giving notices:

  	
   

  	
   

  	
  Address for giving notices:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Clinton County BioEnergy, LLC

  	
   

  	
  BIOSOURCE FUELS, LLC

  	
   

  
	
  1571 Main Avenue

  	
   

  	
  600 Dewey Boulevard, Suite B

  	
   

  
	
  Clinton, Iowa 52732

  	
   

  	
  Butte, Montana 59701

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  If Owner is a corporation, attach evidence of authority

  	
   

  	
  If Design/Builder is a corporation, attach evidence of

  	
   

  
	
  to sign.

  	
   

  	
  authority to sign.

  	
   

  
	
  If Owner is a public body, attach evidence of authority

  	
   

  	
   

  	
   

  
	
  to sign and resolution or other documents authorizing

  	
   

  	
   

  	
   

  
	
  execution of this Agreement.

  	
   

  	
   

  	
   

  
													

 

	
  DESIGNATED REPRESENTATIVE:

  	
   

  	
  DESIGNATED REPRESENTATIVE:

  	
   

  
	
  NAME:

  	
  Dan Holesinger

  	
   

  	
  NAME:

  	
  Dick Talley

  	
   

  
	
  TITLE:

  	
  Project Manager

  	
   

  	
  TITLE:

  	
  Project Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ADDRESS:

  	
   

  	
  ADDRESS:

  	
   

  
	
  Clinton County BioEnergy, LLC

  	
   

  	
  BIOSOURCE FUELS, LLC

  	
   

  
	
  1571 Main Avenue

  	
   

  	
  600 Dewey Boulevard, Suite B

  	
   

  
	
  Clinton, Iowa 52732

  	
   

  	
  Butte, Montana 59701

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TELEPHONE:

  	
  563-249-4216

  	
  TELEPHONE:

  	
  406-494-6644

  
	
   

  	
   

  	
   

  	
   

  
	
  FACSIMILE:

  	
   

  	
   

  	
  FACSIMILE: 

  	
  406-494-6645

  	
   

  
																

 

 

As lender of funds to defray the costs of this contract, and without
liability for any payments thereunder, the USDA Rural Development Office hereby
concurs in the award of the contract to BIOSOURCE FUELS, LLC.  This
contract shall not be effective unless and until concurred in by the Iowa State
Office of the Rural Development, U.S. Department of Agriculture or a delegated
representative.

 

U.S. Department of Agriculture Rural Development

 

	
  By:

  	
  Attached Letter

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  
							

 

11

 

STANDARD
GENERAL CONDITIONS OF THE

CONTRACT
BETWEEN

OWNER AND
DESIGN/BUILDER

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  TABLE OF CONTENTS

  	
   

  	
  i

  
	
  ARTICLE 1 – DEFINITIONS
  AND TERMINOLOGY

  	
   

  	
  1

  
	
  1.01

  	
   

  	
  Defined Terms

  	
   

  	
  4

  
	
  1.02

  	
   

  	
  Terminology

  	
   

  	
  6

  
	
  ARTICLE 2 – PRELIMINARY
  MATTERS

  	
   

  	
  6

  
	
  2.01

  	
   

  	
  Delivery of Bonds

  	
   

  	
  6

  
	
  2.02

  	
   

  	
  Commencement of
  Contract Times; Notice to Proceed

  	
   

  	
  6

  
	
  2.03

  	
   

  	
  Starting the Work

  	
   

  	
  6

  
	
  2.04

  	
   

  	
  Before Starting the
  Work

  	
   

  	
  6

  
	
  2.05

  	
   

  	
  Initial Conference

  	
   

  	
  7

  
	
  2.06

  	
   

  	
  Initial Acceptance of
  Schedules

  	
   

  	
  7

  
	
  ARTICLE 3 – CONTRACT
  DOCUMENTS: INTENT, AMENDING, REUSE

  	
   

  	
  7

  
	
  3.01

  	
   

  	
  Intent

  	
   

  	
  7

  
	
  3.02

  	
   

  	
  Reference Standards

  	
   

  	
  7

  
	
  3.03

  	
   

  	
  Resolving Discrepancies

  	
   

  	
  8

  
	
  3.04

  	
   

  	
  Amending and
  Supplementing Contract Documents

  	
   

  	
  8

  
	
  3.05

  	
   

  	
  Reuse
  of Documents

  	
   

  	
  8

  
	
  3.06

  	
   

  	
  Electronic Data

  	
   

  	
  9

  
	
  ARTICLE 4 –
  AVAILABILITY OF LANDS; DIFFERING SITE CONDITIONS; REFERENCE POINTS; HAZARDOUS
  ENVIRONMENTAL CONDITIONS

  	
   

  	
  9

  
	
  4.01

  	
   

  	
  Availability of Lands

  	
   

  	
  9

  
	
  4.02

  	
   

  	
  Differing Site
  Conditions

  	
   

  	
  9

  
	
  4.03

  	
   

  	
  Reference Points

  	
   

  	
  10

  
	
  4.04

  	
   

  	
  Hazardous Environmental
  Condition at Site

  	
   

  	
  10

  
	
  ARTICLE 5 – BONDS AND
  INSURANCE

  	
   

  	
  11

  
	
  5.01

  	
   

  	
  Performance, Payment
  and Other Bonds

  	
   

  	
  11

  
	
  5.02

  	
   

  	
  Licensed Sureties and
  Insurers

  	
   

  	
  11

  
	
  5.03

  	
   

  	
  Certificates of
  Insurance

  	
   

  	
  11

  
	
  5.04

  	
   

  	
  Design/Builder’s
  Liability Insurance

  	
   

  	
  12

  
	
  5.05

  	
   

  	
  Owner’s Liability
  Insurance

  	
   

  	
  13

  
	
  5.06

  	
   

  	
  Property Insurance

  	
   

  	
  13

  
	
  5.07

  	
   

  	
  Waiver of Rights

  	
   

  	
  14

  
	
  5.08

  	
   

  	
  Receipt and Application
  of Insurance Proceeds

  	
   

  	
  15

  
	
  5.09

  	
   

  	
  Acceptance of Bonds and
  Insurance; Option to Replace

  	
   

  	
  16

  
	
  5.10

  	
   

  	
  Partial Utilization,
  Acknowledgment of Property Insurance

  	
   

  	
  16

  
	
  ARTICLE 6 –
  DESIGN/BUILDER’S RESPONSIBILITIES

  	
   

  	
  16

  
	
  6.01

  	
   

  	
  Design Professional
  Services

  	
   

  	
  16

  
	
  6.02

  	
   

  	
  Supervision and
  Superintendence of Construction

  	
   

  	
  17

  
	
  6.03

  	
   

  	
  Labor, Working Hours

  	
   

  	
  17

  
	
  6.04

  	
   

  	
  Services, Materials,
  and Equipment

  	
   

  	
  18

  
	
  6.05

  	
   

  	
  Progress Schedule

  	
   

  	
  18

  
	
  6.06

  	
   

  	
  Concerning
  Subcontractors, Suppliers, and Others

  	
   

  	
  18

  
	
  6.07

  	
   

  	
  Patent Fees and
  Royalties

  	
   

  	
  19

  
	
  6.08

  	
   

  	
  Permits

  	
   

  	
  20

  
	
  6.09

  	
   

  	
  Laws or Regulations

  	
   

  	
  20

  
	
  6.10

  	
   

  	
  Taxes

  	
   

  	
  20

  
	
  6.11

  	
   

  	
  Use of Site and Other
  Areas

  	
   

  	
  20

  
	
  6.12

  	
   

  	
  Record Documents

  	
   

  	
  21

  
	
  6.13

  	
   

  	
  Safety and Protection

  	
   

  	
  21

  
	
  6.14

  	
   

  	
  Safety Representative

  	
   

  	
  22

  
	
  6.15

  	
   

  	
  Hazard Communication
  Programs

  	
   

  	
  22

  
	
  6.16

  	
   

  	
  Emergencies

  	
   

  	
  22

  
	
  6.17

  	
   

  	
  Submittals

  	
   

  	
  22

  
	
  6.18

  	
   

  	
  Continuing the Work

  	
   

  	
  23

  
	
  6.19

  	
   

  	
  Post-Construction Phase

  	
   

  	
  23

  
	
  6.20

  	
   

  	
  Design/Builder’s
  General Warranty and Guarantee

  	
   

  	
  23

  

 

 

	
  6.21

  	
   

  	
  Indemnification

  	
   

  	
  24

  
	
  ARTICLE 7 – OTHER
  CONSTRUCTION

  	
   

  	
  24

  
	
  7.01

  	
   

  	
  Related Work at Site

  	
   

  	
  24

  
	
  7.02

  	
   

  	
  Coordination

  	
   

  	
  25

  
	
  ARTICLE 8 – OWNER’S
  RESPONSIBILITIES

  	
   

  	
  25

  
	
  8.01

  	
   

  	
  General

  	
   

  	
  25

  
	
  8.02

  	
   

  	
  Insurance

  	
   

  	
  26

  
	
  8.03

  	
   

  	
  Limitations on Owner’s
  Responsibilities

  	
   

  	
  26

  
	
  8.04

  	
   

  	
  Undisclosed Hazardous
  Environmental Condition

  	
   

  	
  27

  
	
  8.05

  	
   

  	
  Resident Project
  Representation

  	
   

  	
  27

  
	
  8.06

  	
   

  	
  Owner’s Consultant

  	
   

  	
  27

  
	
  ARTICLE 9 – CHANGES IN
  THE WORK; CLAIMS

  	
   

  	
  27

  
	
  9.01

  	
   

  	
  Authorized Changes in
  the Work

  	
   

  	
  27

  
	
  9.02

  	
   

  	
  Unauthorized Changes in
  the Work

  	
   

  	
  27

  
	
  9.03

  	
   

  	
  Claims

  	
   

  	
  27

  
	
  9.04

  	
   

  	
  Execution of Change
  Orders

  	
   

  	
  28

  
	
  9.05

  	
   

  	
  Notice to Sureties

  	
   

  	
  28

  
	
  ARTICLE 10 – COST OF
  THE WORK; CASH ALLOWANCES; UNIT PRICE WORK

  	
   

  	
  28

  
	
  10.01

  	
   

  	
  Cost of the Work

  	
   

  	
  28

  
	
  10.02

  	
   

  	
  Cash Allowances

  	
   

  	
  31

  
	
  10.03

  	
   

  	
  Unit Prices

  	
   

  	
  31

  
	
  ARTICLE 11 – CHANGE OF
  CONTRACT PRICE; CHANGE OF CONTRACT TIMES

  	
   

  	
  32

  
	
  11.01

  	
   

  	
  Change of Contract
  Price

  	
   

  	
  32

  
	
  11.02

  	
   

  	
  Change of Contract
  Times

  	
   

  	
  33

  
	
  ARTICLE 12 – TESTS AND
  INSPECTIONS; CORRECTION, REMOVAL OR ACCEPTANCE OF DEFECTIVE CONSTRUCTION

  	
   

  	
  34

  
	
  12.01

  	
   

  	
  Notice of Defects

  	
   

  	
  34

  
	
  12.02

  	
   

  	
  Access to Construction

  	
   

  	
  34

  
	
  12.03

  	
   

  	
  Tests and Inspections

  	
   

  	
  34

  
	
  12.04

  	
   

  	
  Uncovering Construction

  	
   

  	
  34

  
	
  12.05

  	
   

  	
  Owner May Stop
  Construction

  	
   

  	
  35

  
	
  12.06

  	
   

  	
  Correction or Removal
  of Defective Construction

  	
   

  	
  35

  
	
  12.07

  	
   

  	
  Correction Period

  	
   

  	
  35

  
	
  12.08

  	
   

  	
  Acceptance of Defective
  Construction

  	
   

  	
  36

  
	
  12.09

  	
   

  	
  Owner
  May Correct Defective Construction

  	
   

  	
  36

  
	
  ARTICLE 13 – PAYMENTS
  TO DESIGN/BUILDER AND COMPLETION

  	
   

  	
  37

  
	
  13.01

  	
   

  	
  Schedule
  of Values

  	
   

  	
  37

  
	
  13.02

  	
   

  	
  Application
  for Progress Payment

  	
   

  	
  37

  
	
  13.03

  	
   

  	
  Progress
  Payments

  	
   

  	
  37

  
	
  13.04

  	
   

  	
  Design/Builder’s
  Warranty of Title

  	
   

  	
  38

  
	
  13.05

  	
   

  	
  Substantial
  Completion

  	
   

  	
  38

  
	
  13.06

  	
   

  	
  Partial
  Utilization

  	
   

  	
  39

  
	
  13.07

  	
   

  	
  Final
  Inspection

  	
   

  	
  39

  
	
  13.08

  	
   

  	
  Final
  Payment

  	
   

  	
  39

  
	
  13.09

  	
   

  	
  Final
  Completion Delayed

  	
   

  	
  40

  
	
  13.10

  	
   

  	
  Waiver
  of Claims

  	
   

  	
  40

  
	
  ARTICLE 14 – SUSPENSION
  OF WORK AND TERMINATION

  	
   

  	
  41

  
	
  14.01

  	
   

  	
  Owner
  May Suspend Work

  	
   

  	
  41

  
	
  14.02

  	
   

  	
  Owner
  May Terminate for Cause

  	
   

  	
  41

  
	
  14.03

  	
   

  	
  Owner
  May Terminate for Convenience

  	
   

  	
  42

  
	
  14.04

  	
   

  	
  Design/Builder
  May Stop Work or Terminate

  	
   

  	
  42

  
	
  ARTICLE 15 – DISPUTE
  RESOLUTION

  	
   

  	
  43

  
	
  15.01

  	
   

  	
  Prompt Notice

  	
   

  	
  43

  
	
  15.02

  	
   

  	
  Mediation

  	
   

  	
  43

  
	
  15.03

  	
   

  	
  Arbitration

  	
   

  	
  43

  
	
  ARTICLE 16 –
  MISCELLANEOUS

  	
   

  	
  43

  
	
  16.01

  	
   

  	
  Giving
  Notice

  	
   

  	
  43

  
	
  16.02

  	
   

  	
  Computation
  of Times

  	
   

  	
  43

  
	
  16.03

  	
   

  	
  Cumulative
  Remedies

  	
   

  	
  44

  

 

 

	
  16.04

  	
   

  	
  Survival
  of Obligations

  	
   

  	
  44

  
	
  16.05

  	
   

  	
  Controlling
  Law

  	
   

  	
  44

  

 

 

STANDARD
GENERAL CONDITIONS OF THE

CONTRACT
BETWEEN

OWNER AND
DESIGN/BUILDER

 

ARTICLE 1 – DEFINITIONS AND TERMINOLOGY

 

1.01        Defined Terms

 

A.            Wherever
used in the Contract Documents and printed with initial or all capital letters,
the following terms have the meanings indicated which are applicable to both
the singular and plural thereof:

 

1.             Addenda – Written or graphic instruments
issued prior to the opening of Proposals which clarify, correct or change the
Request for Proposals or the Contract Documents.

 

2.             Agreement – The written instrument which
is evidence of the agreement between Owner and Design/Builder covering the
Work.

 

3.             Application for Payment – The form which
is to be used by Design/Builder in requesting progress or final payments and
which is to be accompanied by such supporting documentation as is required by
the Contract Documents.

 

4.             Asbestos – Any material that contains more
than one percent asbestos and is friable or is releasing asbestos fibers into
the air above current action levels established by the United States Occupational
Safety and Health Administration.

 

5.             Bonds – Performance and payment bonds and
other instruments of security.

 

6.             Change Order – A written order which is
signed by Design/Builder and Owner which authorizes an addition, deletion or
revision in the Work, or an adjustment in the Contract Price or the Contract
Times, issued on or after the Effective Date of the Agreement.

 

7.             Claim – A demand or assertion by Owner or
Design/Builder seeking an adjustment of Contract Price or Contract Times, or
both, or other relief with respect to the terms of the Contract. A demand for
money or services by a third party is not a claim.

 

8.             Conceptual Documents – The drawings and
specifications and/or other graphic or written materials, criteria and
information concerning Owner’s requirements for the Project, such as design
objectives and constraints, space, capacity and performance requirements,
flexibility and expandability, including those items enumerated in the Request
for Proposals which show or describe the character and scope of, or relate to,
the Work to be performed or furnished and which have been prepared by or for
Owner.

 

9.             Construction – The result of performing or
furnishing of labor, the furnishing and incorporating of materials and
equipment into the Work and the furnishing of services (other than Design
Professional Services) and documents, all as required by the Contract
Documents.

 

10.           Construction Subagreement – A written
agreement between Design/Builder and a construction Subcontractor for provision
of Construction.

 

1

 

11.           Contract
– The entire and integrated written agreement between Owner and Design/Builder
concerning the Work. The Contract supersedes prior negotiations,
representations, or agreements, whether written or oral.

 

12.           Contract Documents – Those items so
designated in the Agreement. Only printed or hard copies of the items listed in
the Agreement are Contract Documents.

 

13.           Contract Price – The moneys payable by
Owner to Design/Builder for completion of the Work in accordance with the
Contract Documents.

 

14.           Contract Times – The numbers of days or
the dates stated in the Agreement to (i) achieve Substantial Completion,
and (ii) complete the Work so that it is ready for final payment in accordance
with paragraph 13.08.

 

15.           Design/Builder – The individual or entity
with whom Owner has entered into the Agreement.

 

16.           Design Subagreement – A written agreement
between Design/Builder and a design professional for provision of Design
Professional Services.

 

17.           Design Professional Services – Services
related to the preparation of Drawings, Specifications, and other design
submittals specified by the Contract Documents and required to be performed by
licensed design professionals, as well as other services provided by or for
licensed design professionals during Bidding/Negotiating, Construction, or
Operational phases.

 

18.           Drawings – Those portions of the Contract
Documents prepared by or for Design/Builder and approved by Owner consisting of
drawings, diagrams, illustrations, schedules and other data which show the
scope, extent, and character of the Work.

 

19.           Effective Date of the Agreement – The date
indicated in the Agreement on which it becomes effective, but if no such date
is indicated it means the date on which the Agreement is signed and delivered
by the last of the two parties to sign and deliver.

 

20.           Field Order – A written order issued by
Owner which orders minor changes in the Work but which does not involve a
change in the Contract Price or the Contract Times.

 

21.           Hazardous Environmental Condition – The
presence at the Site of Asbestos, Hazardous Waste, PCB’s, Petroleum Products or
Radioactive Materials in such quantities or circumstances that may present a
substantial danger to persons or property exposed thereto on connection with
the Work.

 

22.           Hazardous Waste – The term Hazardous Waste
shall have the meaning provided in Section 1004 of the Solid Waste Disposal Act
(42 USC Section 6903) as amended from time to time.

 

23.           Laws or Regulations – Any and all
applicable laws, rules, regulations, ordinances, codes, and orders of any and
all governmental bodies, agencies, authorities and courts having jurisdiction.

 

24.           Liens – Charges, security interests or
encum- brances upon real property or personal property.

 

25.           Milestone – A principal event specified
in the Contract Documents relating to an intermediate completion date or time
prior to Substantial Completion of all the Work.

 

2

 

26.           Notice of Award – The written notice by
Owner to the successful proposer stating that upon compliance by the successful
proposer with the conditions precedent included therein, within the time
specified, Owner will sign and deliver the Agreement.

 

27.           Notice to Proceed – A written notice
given by Owner to Design/Builder fixing the date on which the Contract Times
will commence to run and on which Design/Builder shall start to perform the
Work.

 

28.           Owner – The individual or entity with whom
Design/Builder has entered into the Agreement and for whom the Work is to be
performed.

 

29.           Owner’s Consultant – An individual or
entity with whom the Owner may contract to furnish services to Owner with
respect to the Project and who is identified as such in the Supplementary
Conditions.

 

30.           Partial Utilization – Use by Owner of a
substantially completed part of the Work for the purpose for which it is
intended (or a related purpose) prior to Substantial Completion of all the
Work.

 

31.           PCBs – Polychlorinated biphenyls.

 

32.           Petroleum – Petroleum, including crude
oil or any fraction thereof which is liquid at standard conditions of
temperature and pressure (60 degrees Fahrenheit and 14.7 pounds per square inch
absolute), such as oil, petroleum, fuel oil, oil sludge, oil refuse, gasoline,
kerosene, and oil mixed with other non-Hazardous Wastes and crude oils.

 

33.           Project – The total construction of which
the Work to be provided under the Contract Documents may be the whole, or a
part as indicated elsewhere in the Contract Documents.

 

34.           Proposal – The documents submitted by
Design/Builder in response to the Request for Proposals setting forth the
design concepts, proposed prices, and other conditions for the Work to be
performed.

 

35.           Radioactive Material – Source, special
nuclear, or byproduct material as defined by the Atomic Energy Act of 1954 (42
USC Section 2011 et seq.) as amended from time to time.

 

36.           Request for Proposals – The document
prepared by or for Owner specifying and describing Owner’s objectives and the
procedure to be followed in preparing and submitting a Proposal and awarding a
contract.

 

37.           Resident Project Representative – The
authorized representative of Owner who may be assigned to the Site or any part
thereof.

 

38.           Schedule of Values – A schedule prepared
by Design/Builder and acceptable to Owner indicating that portion of the
Contract Price to be paid for each major component of the Work.

 

39.           Site – Lands or other areas designated in
the Contract Documents as being furnished by Owner upon which Construction is
to be performed, including rights-of-way and easements for access thereto, and
such other lands furnished by Owner which are designated for use of
Design/Builder.

 

40.           Specifications – The part of the Contract
Documents prepared by or for Design/Builder and approved by Owner consisting of
written technical descriptions of materials,

 

3

 

equipment, construction
systems, standards and workmanship as applied to the Work and certain
administrative details applicable thereto.

 

41.           Subcontractor – An individual or entity
other than a Supplier having a direct contract with Design/Builder or with any
other Subcontractor for the performance of a part of the Work.

 

42.           Submittal – A written or graphic document
prepared by or for Design/Builder which is required by the Contract Documents
to be submitted to Owner by Design/Builder. Submittals may include Drawings,
Specifications, progress schedules, shop drawings, samples, cash flow
projections, and Schedules of Values. Submittals other than Drawings and
Specifications are not Contract Documents.

 

43.           Substantial Completion – The time at which
the Work (or a specified part) has progressed to the point where it is
sufficiently complete, in accordance with the Contract Documents, so that the
Work (or a specified part) can be utilized for the purposes for which it is
intended. The terms “substantially complete” and “substantially completed” as
applied to all or part of the Work refer to Substantial Completion thereof.

 

44.           Supplementary Conditions – The part of the
Contract Documents which amends or supplements these General Conditions.

 

45.           Supplier – A manufacturer, fabricator,
supplier, distributor, material man or vendor having a direct contract with
Design/Builder or with any Subcontractor to furnish materials or equipment to
be incorporated in the Work by Design/Builder or any Subcontractor.

 

46.           Unit Price Work – Work to be paid for on
the basis of unit prices.

 

47.           Work – The entire construction or the
various separately identifiable parts thereof required to be performed or
furnished under the Contract Documents. Work includes and is the result of
performing or furnishing Design Professional Services and Construction required
by the Contract Documents.

 

48.           Work Change Directive – A written
directive to Design/Builder, issued on or after the Effective Date of the
Agreement and signed by Owner ordering an addition, deletion or revision in the
Work, or responding to differing site conditions under which the Work is to be
performed or to emergencies. A Work Change Directive will not change the
Contract Price or the Contract Times, but is evidence that the parties expect
that the change directed or documented by a Work Change Directive will be
incorporated in a subsequently issued Change Order following negotiations by
the parties as to its effect, if any, on the Contract Price or Contract Times.

 

1.02        Terminology

 

A.            Intent
of Certain Terms or Adjectives:

 

1.             The
word “day” shall constitute a calendar day of 24 hours measured from midnight
to the next midnight.

 

2.             The
word “defective,” when modifying the word “Construction” refers to Construction
that is unsatisfactory, faulty, or deficient in that it does not conform to the
Contract Documents, or does not meet the requirements of any inspection,
reference standard, test or approval referred to in the Contract Documents, or
has been damaged prior to Owner’s final payment (unless responsibility for the
protection thereof has been assumed by Owner at Substantial Completion)
provided that the defect was not caused by Owner.

 

4

 

3.             The
word “furnish,” when used in connection with services, materials, or equipment,
shall mean to supply and deliver said services, materials or equipment to the
Site (or some other specified location) ready for use or installation and in
usable or operable condition.

 

4              The
word “install,” when used in connection with services, materials, or equipment,
shall mean to put into use or place in final position said services, materials
or equipment or equipment complete and ready for intended use.

 

5.             The
words “perform” or “provide” when used in connection with services, materials,
or equipment, shall mean to furnish and install said services, materials, or
equipment complete and ready for intended use.

 

6.             When
“furnish,” “install,” “perform,” or “provide” is not used in connection with
services, materials, or equipment in a context clearly requiring an obligation
of Design/Builder, “provide” is implied.

 

7.             Unless
stated otherwise in the Contract Documents, words or phrases which have a
well-known technical or construction industry or trade meaning are used in the
Contract Documents in accordance with that meaning.

 

5

 

ARTICLE 2 – PRELIMINARY MATTERS

 

2.01        Delivery of Bonds

 

A.            When
Design/Builder delivers the executed Agreements to Owner, Design/Builder shall
also deliver to Owner such Bonds as Design/Builder may be required to furnish
in accordance with paragraph 5.01.A.

 

2.02        Commencement of Contract Times; Notice to
Proceed

 

A.            The
Contract Times will commence to run on the thirtieth day after the Effective
Date of the Agreement, or, if a Notice to Proceed is given, on the day
indicated in the Notice to Proceed. A Notice to Proceed may be given at any
time within thirty days after the Effective Date of the Agreement. Unless
agreed to in writing by Owner and Design/Builder, the Contract Times will
commence to run no later than the thirtieth day after the Effective Date of the
Agreement, whichever date is earlier.

 

2.03        Starting the Work

 

A.            Design/Builder
shall start to perform the Work on the date when the Contract Times commence to
run. No Work shall be done prior to the date on which the Contract Times commence
to run.

 

2.04        Before Starting the Work

 

A.            Design/Builder’s Review of Contract Documents:
Before undertaking each part of the Work, Design/Builder shall carefully study
and compare those Contract Documents prepared by Owner and check and verify
pertinent figures therein and all applicable field measurements. Design/Builder
shall promptly report in writing to Owner any conflict, error, ambiguity, or
discrepancy which Design/Builder may discover and shall obtain a written
interpretation or clarification from Owner before proceeding with any Work
affected thereby; however, Design/Builder shall not be liable to Owner for
failure to report any conflict, error, ambiguity, or discrepancy in the
Contract Documents unless Design/Builder knew or reasonably should have known
thereof.

 

B.            Preliminary Schedules:  Within 10 days after commencement of the
Contract Times (unless otherwise specified in the Contract Documents),
Design/Builder shall submit the following to Owner for its timely review:

 

1.             A
preliminary progress schedule indicating the times (numbers of days or dates)
for starting and completing the various stages of the Work, including any
Milestones specified in the Contract Documents;

 

2.             A
preliminary schedule of Submittals which will list each required Submittal and
the times for submitting, reviewing and processing each Submittal;

 

3.             A
preliminary Schedule of Values for all of the Work which will include
quantities and prices of items which when added together equal the Contract
Price and subdivides the Work into component parts in sufficient detail to
serve as the basis for progress payments during performance of the Work. Such
prices will include an appropriate amount of overhead and profit applicable to
each item of Work; and

 

4.             A
preliminary cash flow projection estimating that portion of the Contract Price
to be due during each month of performance.

 

6

 

C.            Evidence of Insurance:  Before any Work at the Site is started,
Design/Builder and Owner shall each deliver to the other, certificates of
insurance as required by paragraph 5.03 which Design/Builder and Owner
respectively are required to purchase and maintain in accordance with Article
5.

 

2.05        Initial Conference

 

A.            Within
twenty days after the Contract Times start to run, Design/Builder will arrange
a conference attended by Owner and Design/Builder and others as appropriate to
establish a working understanding among the parties as to the Work and to
discuss the design concepts, schedules referred to in paragraph 2.04.B,
procedures for handling Submittals, processing Applications for Payment,
maintaining required records, items required pursuant to paragraph 8.01.A.6 and
other matters.

 

2.06        Initial Acceptance of Schedules

 

A.            At
least ten days before submission of the first Application for Payment (unless
otherwise provided in the Contract Documents), Design/Builder will arrange a
conference attended by Design/Builder, Owner and others as appropriate to
review for acceptability the schedules submitted in accordance with paragraph
2.04.B. Design/Builder shall have an additional ten days to make corrections
and adjustments and to complete and resubmit the schedules. No progress payment
shall be made to Design/Builder until the acceptable schedules are submitted to
Owner.

 

1.             The
progress schedule will be acceptable to Owner if it provides an orderly
progression of the Work to completion within any specified Milestones and the
Contract Times. Such acceptance will not impose on Owner responsibility for the
progress schedule, for sequencing, scheduling or progress of the Work nor
interfere with nor relieve Design/Builder from Design/Builder’s full
responsibility therefore.

 

2.             Design/Builder’s
schedule of Submittals will be acceptable to Owner if it provides a workable
arrangement for reviewing and processing the required Submittals.

 

3.             Design/Builder’s
Schedule of Values will be acceptable to Owner as to form and substance if it
provides a reasonable allocation of the Contract Price to component parts of the
work.

 

ARTICLE 3 – CONTRACT DOCUMENTS:  INTENT, AMENDING, REUSE

 

3.01        Intent

 

A.            The
Contract Documents are complementary; what is called for by one is as binding
as if called for by all.

 

B.            It
is the intent of the Contract Documents to describe a functionally complete
Project (or part thereof) to be designed and constructed in accordance with the
Contract Documents. Any labor, documentation, services, materials, or equipment
that may reasonably be inferred from the Contract Documents or from prevailing custom
or trade usage as being required to produce the intended result will be
furnished and performed whether or not specifically called for at no additional
cost to Owner.

 

3.02        Reference Standards

 

A.            Standards,
Specifications, Codes, Laws or Regulations.

 

7

 

1.             Reference
to standards, specifications, manuals or codes of any technical society,
organization or association, or to Laws or Regulations, whether such reference
be specific or by implication, shall mean the standard, specification, manual,
code, or Laws or Regulations in effect as of the Effective Date of Agreement
except as may be otherwise specifically stated in the Contract Documents.

 

2.             No
provision of any such standard, specification, manual, code, or instruction of
a Supplier shall be effective to change the duties and responsibilities of
Owner, Design/Builder, or any of their subcontractors, consultants, agents, or
employees from those set forth in the Contract Documents, nor shall it be effective
to assign to Owner any duty or authority to supervise or direct the furnishing
or performance of the Work or any duty or authority to undertake responsibility
inconsistent with the provisions of the Contract Documents.

 

3.03        Resolving Discrepancies

 

A.            Except
as otherwise specifically stated in the Contract Documents, the provisions of
the Contract Documents shall take precedence in resolving any conflict, error,
ambiguity, or discrepancy between the provisions of the Contract Documents and:

 

1.             The
provisions of any such standard, specification, manual, code, or instruction
(whether or not specifically incorporated by reference in the Contract
Documents); or

 

2.             The
provisions of any such Laws or Regulations applicable to the performance of the
Work (unless such an interpretation of the provisions of the Contract Documents
would result in violation of such Law or Regulation).

 

3.04        Amending and Supplementing Contract Documents

 

A.            The
Contract Documents may be amended to provide for additions, deletions, and
revisions in the Work or to modify the terms and conditions thereof in one or
more of the following ways:

 

1.             Owner’s
approval of required Submittals (pursuant to paragraph 6.17.B);

 

2.             A
Work Change Directive;

 

3.             A
Change Order;

 

4.             A
Field Order.

 

3.05        Reuse of Documents

 

A.            All
documents including Drawings and Specifications prepared or furnished by
Design/Builder pursuant to this Agreement are for Design/Builder’s own use, and
Design/Builder shall retain an ownership and property interest therein whether
or not the Project is completed. Owner may make and retain copies for
information and reference in connection with the use and occupancy of the
Project by Owner and others. However, such documents are not intended or
represented to be suitable for reuse by Owner or others on extensions of the
Project or on any other project. If the Design/Builder defaults on any of its
obligations under this Agreement, Owner may use the documents without written
verification or adaptation by Design/Builder for the specific purpose intended
provided the use will be at Owner’s sole risk and without liability or legal
exposure to

 

8

 

Design/Builder and Owner
shall indemnify and hold harmless Design/Builder and Subcontractors from all
claims, damages, losses and expenses including attorneys’ fees arising out of
or resulting there from. Any such verification or adaptation will entitle
Design/Builder to further compensation at rates to be agreed upon by Owner and
Design/Builder.

 

3.06        Electronic Data

 

A.            Copies
of data furnished by Owner to Design/Builder or Design/Builder to Owner that
may be relied upon are limited to the printed copies (also known as hard
copies). Files in electronic media format of text, data, graphics, or other
types are furnished only for the convenience of the receiving party. Any
conclusion or information obtained or derived from such electronic files will
be at the user’s sole risk. If there is a discrepancy between the electronic
files and the hard copies, the hard copies govern.

 

B.            Because
data stored in electronic media format can deteriorate or be modified
inadvertently or otherwise without authorization of the data’s creator, the
party receiving electronic files agrees that it will perform acceptance tests
or procedures within 60 days, after which the receiving party shall be deemed
to have accepted the data thus transferred. Any errors detected within the
60-day acceptance period will be corrected by the transferring party.

 

C.            When
transferring documents in electronic media format, the transferring party makes
no representations as to long term compatibility, usability, or readability of
documents resulting from the use of software application packages, operating
systems, or computer hardware differing from those used by the data’s creator.

 

ARTICLE 4 – AVAILABILITY OF LANDS; DIFFERING SITE
CONDITIONS; REFERENCE POINTS; HAZARDOUS ENVIRONMENTAL CONDITIONS

 

4.01        Availability of Lands

 

A.            Owner
shall furnish the Site. Owner shall notify Design/Builder of any encumbrances
or restrictions not of general application but specifically related to use of
the Site which Design/Builder will have to comply in performing the Work. Unless
otherwise provided in the Contract Documents, Owner will obtain in a timely
manner and pay for easements for permanent structures or permanent changes in
existing facilities. If Design/Builder and Owner are unable to agree on
entitlement to or the amount or extent of any adjustments in the Contract Price
or the Contract Times as a result of any delay in Owner’s furnishing the Site,
Design/Builder may make a Claim therefore as provided in Article 9.

 

B.            Upon
reasonable written request, Owner shall furnish Design/Builder with a current
statement of record legal title and legal description of the lands upon which
the Construction is to be performed and Owner’s interest therein as necessary
for giving notice of or filing a mechanic’s lien against such lands in
accordance with applicable Laws or Regulations.

 

C.            Design/Builder
shall provide for all additional lands and access thereto that may be required
for temporary construction facilities or storage of materials and equipment.

 

4.02        Differing Site Conditions

 

A.            Design/Builder
shall promptly, and before the conditions are disturbed, give a written notice
to Owner of (i) subsurface or latent physical conditions at the Site which
differ materially from those indicated in the Contract Documents, or (ii)
unknown physical

 

9

 

conditions at the Site,
of an unusual nature, which differ materially from those ordinarily encountered
and generally recognized as inhering in work of the character called for by the
Contract Documents.

 

B.            Owner
will investigate the Site conditions promptly after receiving the notice. If
the conditions do materially so differ and cause an increase or decrease in the
Design/Builder’s cost of, or the time required for, performing any part of the
Work, whether or not changed as a result of the conditions, an equitable adjustment
shall be made under this clause and the Contract Price or Times modified in
writing by Change Order in accordance with Article 9.

 

C.            No
request by Design/Builder for an equitable adjustment under paragraph 4.02
shall be allowed unless Design/Builder has given the written notice required;
provided that the time prescribed in 9.03.A for giving written notice may be
extended by Owner.

 

D.            The
provisions of this paragraph 4.02 are not intended to apply to a Hazardous
Environmental Condition uncovered or revealed at the Site.

 

4.03        Reference Points

 

A.            Design/Builder
shall be responsible for laying out the Work and shall protect and preserve the
reference points and property monuments that may be established by Owner
pursuant to paragraph 8.01.A.6.e, and shall make no changes or relocations
without the prior written approval of Owner. Design/Builder shall report to
Owner whenever any reference point or property monument is lost or destroyed or
requires relocation because of necessary changes in grades or locations, and
shall be responsible for the accurate replacement or relocation of such
reference points or property monuments by professionally qualified personnel.

 

4.04        Hazardous Environmental Condition at Site

 

A.            Design/Builder
will not be responsible for any Hazardous Environmental Condition encountered
at the Site which was not identified in the Contract Documents to be within the
scope of the Work. Design/Builder shall be responsible for materials creating a
Hazardous Environmental Condition created by any materials brought to the Site
by Design/Builder, Subcontractors, Suppliers or anyone else for whom
Design/Builder is responsible.

 

B.            If
Design/Builder encounters a Hazardous Environmental Condition, Design/Builder
shall immediately: (i) secure or otherwise isolate such condition; (ii) stop
all Construction in connection with such condition and in any area affected
thereby (except in an emergency as required by paragraph 6.16); and (iii)
notify Owner (and thereafter confirm such notice in writing). Owner shall
promptly determine the necessity of retaining a qualified expert to evaluate
such condition or take corrective action, if any.

 

C.            Design/Builder
shall not be required to resume Construction in connection with such Hazardous
Environmental Condition or in any such affected area until after Owner has
obtained any required permits related thereto and delivered to Design/Builder
written notice (i) specifying that such condition and any affected area is or
has been rendered safe for the resumption of Construction, or (ii) specifying
any special conditions under which such Construction may be resumed safely. If
Owner and Design/Builder cannot agree as to entitlement to or the amount or
extent of an adjustment, if any, in Contract Price or Contract Times as a
result of such Construction stoppage or such special conditions under which
Construction is agreed to be resumed by Design/Builder, either party may make a
Claim therefore as provided in Article 9.

 

10

 

D.            If
after receipt of such special written notice Design/Builder does not agree to
resume Construction based on a reasonable belief it is unsafe, or does not
agree to resume such Construction under such special conditions, then Owner may
order such portion of the Work that is related to such Hazardous Environmental
Condition to be deleted from the Work. If Owner and Design/Builder cannot agree
as to entitlement to or the amount or extent of an adjustment, if any, in
Contract Price or Contract Times as a result of deleting such portion of the
Work, then either party may make a Claim therefore as provided in Article 9. Owner
may have such deleted portion of the Work performed by Owner’s own forces or
others in accordance with Article 7.

 

E.             To
the fullest extent permitted by Laws or Regulations, Owner shall indemnify and
hold harmless Design/Builder, Subcontractors, Suppliers and the officers,
directors, partners, employees, agents, other consultants and subcontractors of
each and any of them from and against all claims, costs, losses and damages
(including but not limited to all fees and charges of engineers, architects,
attorneys and other professionals and all court or arbitration or other dispute
resolution costs) arising out of or resulting from such Hazardous Environmental
Condition, provided that such Hazardous Environmental Condition: (i) was not
shown or indicated in the Contract Documents to be included in the scope of the
Work and (ii) was not created by Design/Builder or by anyone for whom
Design/Builder is responsible. Nothing in this paragraph 4.04.E shall obligate
Owner to indemnify any individual or entity from and against the consequences
of that individual’s or entity’s own negligence.

 

F.             To
the fullest extent permitted by Laws or Regulations, Design/Builder shall
indemnify and hold harmless Owner, Owner’s Consultant and the officers,
directors, partners, employees, agents, other consultants and subcontractors of
each and any of them from and against all claims, costs, losses and damages
(including but not limited to all fees and charges of engineers, architects,
attorneys and other professionals and all court or arbitration or other dispute
resolution costs) arising out of or resulting from such Hazardous Environmental
Condition created by Design/Builder or anyone for whom Design/Builder is
responsible. Nothing in this paragraph 4.04.F shall obligate Design/Builder to
indemnify any individual or entity from and against the consequences of that
individual’s or entity’ own negligence.

 

ARTICLE 5 – BONDS AND INSURANCE

 

5.01        Performance, Payment and Other Bonds

 

[This
section intentionally left blank]

 

5.02        Licensed Sureties and Insurers

 

A.            All
Bonds and insurance required by the Contract Documents to be purchased and
maintained by Owner or Design/Builder shall be obtained from surety or
insurance companies that are duly licensed or authorized in the jurisdiction in
which the Project is located to issue Bonds or insurance policies for the
limits and coverages so required. Such surety and insurance companies shall
also meet such additional requirements and qualifications as may be provided in
the Supplementary Conditions.

 

5.03        Certificates of Insurance

 

A.            Design/Builder
shall deliver to Owner certificates of insurance (and other evidence of
insurance requested by Owner or any other additional insured) which
Design/Builder is required to purchase and maintain. Owner shall deliver to
Design/Builder certificates of insurance (and other evidence of insurance
requested by Design/Builder or any other additional insured) which Owner is
required to purchase and maintain.

 

11

 

5.04        Design/Builder’s Liability Insurance

 

A.            Design/Builder
shall purchase and maintain such liability and other insurance as is
appropriate for the Work being performed and as will provide protection from
claims set forth below which may arise out of or result from Design/Builder’s
performance of the Work and Design/Builder’s other obligations under the
Contract Documents, whether it is to be performed by Design/Builder, any
Subcontractor or Supplier or by anyone directly or indirectly employed by any
of them to perform any of the Work, or by anyone for whose acts any of them may
be liable:

 

1.             Claims
under workers’ compensation, disability benefits and other similar employee
benefit acts;

 

a.             $1,000,000
per accident

 

2.             Claims
for damages because of bodily injury, occupational sickness or disease,

 

or
death of Design/Builder’s employees;

 

a.             $1,000,000
per accident

 

3.             Claims
for damages because of bodily injury, sickness or disease, or death of any
person other than Design/Builder’s employees;

 

a.             $1,000,000
per accident

 

4.             Claims
for damages insured by reasonably available personal injury liability coverage
that are sustained (i) by any person as a result of an offense directly or
indirectly related to the employment of such person by Design/Builder, or (ii)
by any other person for any other reason;

 

a.             $10,000,000
per occurrence for excess/umbrella liability

 

5.             Claims
for damages, other than to the Work itself, because of injury to or destruction
of tangible property wherever located, including loss of use resulting
therefrom; and

 

a.             $10,000,000
per occurrence for excess/umbrella liability

 

6.             Claims
for damages because of bodily injury or death of any person or property damage
arising out of the ownership, maintenance or use of any motor vehicle.

 

a.             $1,000,000
combined single limit

 

B.            The
policies of insurance required by paragraph 5.04.A shall:

 

1.             With
respect to insurance required by paragraphs 5.04.A.3 through 5.04.A.6
inclusive, (subject to any customary exclusion in respect of professional
liability) include as additional insureds Owner and Owner’s Consultants and any
other persons or entities, all of whom shall be listed as additional insureds,
and include coverage for the respective officers, directors, partners, and
employees, agents, and other consultants and subcontractors of each and any of
all such additional insureds, and the insurance afforded to these additional
insureds shall provide primary coverage for all claims covered thereby;

 

12

 

2.             Include
at least the specific overages and be written for not less than the limits of
liability provided in the Agreement or required by Laws or Regulations,
whichever is greater;

 

3.             Include
completed operations insurance;

 

4.             Include
contractual liability insurance covering Design/Builder’s indemnity obligations
under paragraphs 6.11.A.3 and 6.21;

 

5.             Contain
a provision or endorsement that the coverage afforded will not be canceled,
materially changed or renewal refused until at least thirty days’ prior written
notice has been given to Owner and each other additional insured indicated in
the Supplementary Conditions to whom a certificate of insurance has been issued
(and the certificates of insurance furnished by the Design/Builder pursuant to
paragraph 5.03 will so provide);

 

6.             Remain
in effect at least until final payment and at all times thereafter when
Design/Builder may be correcting, removing or replacing defective Construction
in accordance with paragraphs 12.06 and 12.07; and

 

7.             With
respect to completed operations insurance, and any other insurance coverage
written on a claims-made basis, remain in effect for at least two years after
final payment (and Design/Builder shall furnish Owner and each other additional
insured indicated in the Supplementary Conditions to whom a certificate of
insurance has been issued evidence satisfactory to Owner and any such
additional insured of continuation of such insurance at final payment and one
year thereafter).

 

5.05        Owner’s Liability Insurance

 

A.            In
addition to the insurance required to be provided by Design/Builder under
paragraph 5.04, Owner, at Owner’s option, may purchase and maintain at Owner’s
expense Owner’s own liability insurance as will protect Owner against claims
which may arise from operations under the Contract Documents.

 

5.06        Property Insurance

 

A.            Unless
otherwise provided in the Supplementary Conditions, Owner shall purchase and maintain
property insurance upon the Construction at the Site in the amount of the full
replacement cost thereof (subject to such deductible amounts or required by
Laws or Regulations). This insurance will:

 

1.             Include
the interests of Owner, Owner’s Consultant, Design/Builder, Subcontractors, and
any other individuals or entities indicated in the Supplementary Conditions,
and the officers, directors, partners, employees, agents, and other consultants
and subcontractors of each and any of them, each of whom is deemed to have an
insurable interest and shall be listed as an insured or additional insured;

 

2.             Be
written on a Builder’s Risk “all-risk” or open peril or special causes of loss
policy form that shall at least include insurance for physical loss and damage
to the Construction, temporary buildings, false work and all materials and
equipment in transit, and shall insure against at least the following perils or
causes of loss:  fire, lightning,
extended coverage, theft, vandalism and malicious mischief, earthquake,
collapse, debris removal, demolition occasioned

 

13

 

by enforcement of Laws or
Regulations, water damage, and such other perils or causes of loss;

 

3.             Include
expenses incurred in the repair or replacement of any insured property
(including but not limited to fees and charges of engineers and architects);

 

4.             Cover
materials and equipment stored at the Site or at another location that was
agreed to in writing by Owner prior to being incorporated in the Construction,
provided that such materials and equipment have been included in an Application
for Payment approved by Owner;

 

5.             Allow
partial utilization in accordance with paragraph 13.06;

 

6.             Include
testing and startup; and

 

7.             Be
maintained in effect until final payment is made unless otherwise agreed to in
writing by Owner and Design/Builder with thirty days’ written notice to each
other additional insured to whom a certificate of insurance has been issued.

 

B.            Owner
shall purchase and maintain such boiler and machinery insurance or additional
property insurance as may be required by the Supplementary Conditions or Laws
or Regulations which will include the interests of Owner, Owner’s Consultants,
Design/Builder, Subcontractors, and any other individuals or entities, each of
whom is deemed to have an insurable interest and shall be listed as an insured
or additional insured.

 

C.            All
the policies of insurance (and the certificates or other evidence thereof)
required to be purchased and maintained by Owner in accordance with paragraph
5.06 will contain a provision or endorsement that the coverage afforded will
not be canceled or materially changed or renewal refused until at least 30
days’ prior written notice has been given to Design/Builder and to each other
additional insured to whom a certificate of insurance has been issued and will
contain waiver provisions in accordance with paragraph 5.07.

 

D.            Owner
shall not be responsible for purchasing and maintaining any property insurance
to protect the interests of Design/Builder, Subcontractors, Suppliers, or
others in the Work to the extent of any deductible amounts. The risk of loss
within such identified deductible amount, will be borne by Design/Builder,
Subcontractor or others suffering any such loss and if any of them wishes
property insurance coverage within the limits of such amounts, each may
purchase and maintain it at the purchaser’s own expense.

 

E.             If
Design/Builder requests in writing that other special insurance be included in
the property insurance policies provided under paragraph 5.06, Owner shall, if
possible, include such insurance, and the cost thereof will be charged to
Design/Builder by appropriate Change Order. Prior to commencement of the Work
at the Site, Owner shall in writing advise Design/Builder whether or not such
other insurance has been procured by Owner.

 

5.07        Waiver of Rights

 

A.            Owner
and Design/Builder intend that all policies purchased in accordance with
paragraph 5.06 will protect Owner, Owner’s Consultant, Design/Builder,
Subcontractors, Suppliers, and all other individuals or entities indicated in
the Supplementary Conditions to be listed as insureds or additional insureds
(and the officers, directors, partners, employees, agents, and other
consultants and subcontractors of each and any of them) in such policies and
will provide primary coverage for all losses and damages caused by the perils
or causes of loss covered thereby. All such policies shall contain provisions
to the

 

14

 

effect that in the event
of payment of any loss or damage the insurers will have no rights of recovery
against any of the insureds or additional insureds thereunder. Owner and
Design/Builder waive all rights against each other and their respective
officers, directors, partners, employees, agents, and other consultants and
subcontractors of each and any of them for all losses and damages caused by,
arising out of or resulting from any of the perils or causes of loss covered by
such policies and any other property insurance applicable to the Work; and, in
addition, waive all such rights against Owner’s Consultant, Subcontractors,
Suppliers, and all other individuals or entities indicated in the Supplementary
Conditions to be listed as insureds or additional insureds under such policies
for losses and damages so caused. None of the above waivers shall extend to the
rights that any party making such waiver may have to the proceeds of insurance
held by Owner as trustee or otherwise payable under any policy so issued.

 

B.            Owner
waives all rights against Design/Builder, Subcontractors, and Suppliers and the
officers, directors, employees and agents of any of them for:

 

1.             Loss
due to business interruption, loss of use, or other consequential loss
extending beyond direct physical loss or damage to Owner’s property caused by,
arising out of or resulting from fire or other peril whether or not insured by
Owner; and

 

2.             Loss
or damage to the completed Project or any part thereof caused by, arising out
of or resulting from fire or other insured peril or cause or loss covered by
any property insurance maintained on the completed Project or part thereof by
Owner during partial utilization pursuant to paragraph 13.06, after Substantial
Completion pursuant to paragraph 13.05, or after final payment pursuant to
paragraph 13.08.

 

C.            Any
insurance policy maintained by Owner covering any loss, damage or consequential
loss referred to in paragraph 5.07.B shall contain provisions to the effect
that in the event of payment of any such loss, damage, or consequential loss,
the insurers will have no rights of recovery against Design/Builder,
Subcontractors, Owner’s Consultant, and the officers, directors, partners,
employees, agents, and other consultants and subcontractors of each and any of
them.

 

5.08        Receipt and Application of Insurance Proceeds

 

A.            Any
insured loss under the policies of insurance required by paragraph 5.06 will be
adjusted with Owner and made payable to Owner as fiduciary for the insureds, as
their interests may appear, subject to the requirements of any applicable
mortgage clause and of paragraph 5.08.B. Owner shall deposit in a separate
account any money so received, and shall distribute it in accordance with such
agreement as the parties in interest may reach. If no other special agreement
is reached the damaged Construction shall be repaired or replaced, the moneys
so received applied on account thereof and the Work and the cost thereof
covered by an appropriate Change Order.

 

B.            Owner
as fiduciary shall have power to adjust and settle any loss with the insurers
unless one of the parties in interest shall object in writing within 15 days
after the occurrence of loss to Owner’s exercise of this power. If such
objection be made, Owner as fiduciary shall make settlement with the insurers
in accordance with such agreement as the parties in interest may reach. If no
such agreement among the parties in interest is reached, Owner as fiduciary
shall adjust and settle the loss with the insurers and, if required in writing
by any party in interest, Owner as fiduciary shall give bond for the proper
performance of such duties.

 

15

 

5.09        Acceptance of Bonds and Insurance; Option to
Replace

 

A.            If
either Owner or Design/Builder has any objection to the coverage afforded by or
other provisions of the Bonds or insurance required to be purchased and
maintained by the other party in accordance with Article 5 on the basis of
their not complying with the Contract Documents, the objecting party shall so
notify the other party in writing within ten days after receipt of the
certificates (or other evidence requested) required by paragraph 2.04.C. Owner
and Design/Builder shall each provide to the other such additional information
in respect of insurance provided as the other may reasonably request. If
neither party does not purchase or maintain all of the Bonds and insurance
required of such party by the Contract Documents, such party shall notify the
other party in writing of such failure to purchase prior to the start of the
Work, or of such failure to maintain prior to any change in the required
coverage. Without prejudice to any other right or remedy, the other party may
elect to obtain equivalent Bonds or insurance to protect such other party’s
interests at the expense of the party who was supposed to provide such
coverage, and a Change Order shall be issued to adjust the Contract Price
accordingly.

 

5.10        Partial Utilization, Acknowledgment of Property
Insurance

 

A.            If
Owner finds it necessary to occupy or use a portion or portions of the Work
prior to Substantial Completion of all the Work as provided in paragraph 13.06,
no such use or occupancy shall commence before the insurers providing the
property insurance pursuant to paragraph 5.06 have acknowledged notice thereof
and in writing effected any changes in coverage necessitated thereby. The
insurers providing the property insurance shall consent by endorsement on the
policy or policies, but the property insurance shall not be canceled or
permitted to lapse on account of any such partial use or occupancy.

 

ARTICLE 6 – DESIGN/BUILDER’S RESPONSIBILITIES

 

6.01        Design Professional Services

 

A.            Standard of Care. The standard of care for
Design Professional Services performed or furnished under this Agreement will
be the care and skill ordinarily used by members of the engineering profession
practicing under similar conditions at the same time and locality.

 

B.            Preliminary Design Phase. After the
Contract Times commence to run, Design/Builder shall:

 

1.             Consult
with Owner to understand Owner’s requirements for the Project and review
available data;

 

2.             Advise
Owner as to the necessity of Owner’s providing or obtaining from others
additional reports, data, or services of the types provided in paragraph
8.01.A.6.a-g and assist Owner in obtaining such reports, data, or services;

 

3.             Identify
and analyze requirements of governmental authorities having jurisdiction to
approve the portions of the Project designed or specified by Design/Builder
with whom consultation is to be undertaken in connection with the Project;

 

4.             Obtain
such additional geotechnical and related information which it deems necessary
for performance of the Work;

 

16

 

5.             On
the basis of the Conceptual Documents and Design/Builder’s Proposal, prepare
preliminary design documents consisting of final design criteria, preliminary
drawings, outline specifications, and written descriptions of the Project;

 

6.             Furnish
the preliminary design documents to and review them with Owner within the times
indicated in the schedules described in paragraphs 2.06.A.1 and 2.06.A.2; and

 

7.             Identify
any variations in the preliminary design documents from the Contract Documents
in accordance with 6.17.B.

 

C.            Final Design Phase. After written
acceptance by Owner of the preliminary design phase documents Design/Builder
shall:

 

1.             On
the basis of the accepted Preliminary Design Phase documents, prepare final
Drawings showing the scope, extent, and character of the Construction to be
performed and furnished by Design/Builder and Specifications (which will be
prepared, where appropriate, in general conformance with the sixteen division
format of the Construction Specifications Institute);

 

2.             Provide
technical criteria, written descriptions and design data required for obtaining
approvals of such governmental authorities as have jurisdiction to review or
approve the final design of the Project, and assist Owner in consultations with
appropriate authorities;

 

3.             Furnish
the above documents, Drawings, and Specifications to and review them with Owner
within the times indicated in the schedules described in paragraphs 2.06.A.1
and 2.06.A.2; and

 

4.             Identify
any deviations from other Contract Documents in accordance with paragraph
6.17.B.

 

6.02        Supervision and Superintendence of Construction

 

A.            Design/Builder
shall supervise, inspect and direct the Construction competently and
efficiently, devoting such attention thereto and applying such skills and
expertise as may be necessary to provide the Construction in accordance with
the Contract Documents. Design/Builder shall be solely responsible for the
means, methods, techniques, sequences and procedures of Construction. Design/Builder
shall be responsible to see that the completed Construction complies accurately
with the Contract Documents and shall keep Owner advised as to the quality and
progress of the Construction.

 

B.            At
all times during the progress of Construction, the Design/Builder shall assign
a competent resident superintendent thereto, who shall not be replaced without
written notice to Owner except under extraordinary circumstances. The
superintendent will be Design/Builder’s representative at the Site and shall
have authority to act on behalf of Design/Builder. All communications given to
or received from the superintendent shall be binding on Design/Builder.

 

6.03        Labor, Working Hours

 

A.            Design/Builder
shall provide competent, suitably qualified personnel to perform the Work as
required by the Contract Documents. Design/Builder shall at all times maintain
good discipline and order at the Site.

 

17

 

B.            Except
as otherwise required for the safety or protection of persons or the Work or
property at the Site or adjacent thereto, and except as otherwise indicated in
the Contract Documents, all Construction at the Site shall be performed during
regular working hours, and Design/Builder will not permit overtime work or the
performance of Construction on Saturday, Sunday or any legal holiday without
Owner’s written consent, which will not be unreasonably withheld.

 

6.04        Services, Materials, and Equipment

 

A.            Unless
otherwise specified in the Contract Documents, Design/Builder shall furnish or
cause to be furnished and assume full responsibility for materials, equipment,
labor, transportation, construction equipment and machinery, tools, appliances,
fuel, power, light, heat, telephone, water, sanitary facilities, temporary
facilities, and all other facilities and incidentals necessary for the Work.

 

B.            All
materials and equipment incorporated into the Work shall be of good quality and
new, except as otherwise provided in the Contract Documents. All warranties and
guarantees specifically called for by the Contract Documents shall expressly
run to the benefit of Owner. If reasonably required by Owner, Design/Builder
shall furnish satisfactory evidence (including reports of required tests) as to
the source, kind, and quality of materials and equipment. All materials and
equipment shall be applied, installed, connected, erected, used, cleaned, and
conditioned in accordance with instructions of the applicable Supplier, except
as otherwise provided in the Contract Documents.

 

6.05        Progress Schedule

 

A.            Design/Builder
shall adhere to the progress schedule established in accordance with paragraph
2.06.A as it may be adjusted from time to time as provided below:

 

1.             Design/Builder
shall submit to Owner for acceptance proposed adjustments in the progress
schedule that will not change the Contract Times (or Milestones). Such
adjustments will conform generally to the progress schedule then in effect.

 

2.             Proposed
adjustments in the progress schedule that will change the Contract Times (or
Milestones) shall be submitted in accordance with the requirements of Article
11.02. Such adjustments may only be made by a Change Order or Work Change
Directive.

 

6.06        Concerning Subcontractors, Suppliers, and
Others

 

A.            Design/Builder
shall not employ any Subcontractor, Supplier, or other individual or entity against
whom Owner may have reasonable objection. Design/Builder shall not be required
to employ any Subcontractor, Supplier or other individual or entity to furnish
or perform any of the Work against whom Design/Builder has reasonable
objection.

 

B.            Design/Builder
shall be fully responsible to Owner for all acts and omissions of the
Subcontractors, Suppliers and other individuals or entities performing or
furnishing any of the Work just as Design/Builder is responsible for
Design/Builder’s own acts and omissions. Nothing in the Contract Documents
shall create for the benefit of any such Subcontractor, Supplier, or other
individual or entity any contractual relationship between Owner and any such
Subcontractor, Supplier, or other individual or entity, nor shall it create any
obligation on the part of Owner to pay or to see to the payment of any moneys
due any such Subcontractor, Supplier, or other individual or entity except as
may otherwise be required by Laws or Regulations.

 

18

 

C.            Design/Builder
shall be solely responsible for scheduling and coordinating Subcontractors,
Suppliers and other individuals and entities performing or furnishing any of
the Work under a direct or indirect contract with Design/Builder.

 

D.            Design/Builder
shall require all Subcontractors, Suppliers and such other individuals and
entities performing or furnishing any of the Work to communicate with the Owner
through Design/Builder.

 

E.             All
Work performed for Design/Builder by a Subcontractor or Supplier will be
pursuant to an appropriate Design Subagreement or Construction Subagreement
between Design/Builder and the Subcontractor or Supplier which specifically
binds the Subcontractor or Supplier to the applicable terms and conditions of the
Contract Documents for the benefit of Owner. Whenever any such agreement is
with a Subcontractor or Supplier who is listed as an additional insured on the
property insurance provided in paragraph 5.06, the agreement between the
Design/Builder and the Subcontractor or Supplier will contain provisions
whereby the Subcontractor or Supplier waives all rights against Owner,
Design/Builder, Owner’s Consultant, and all other additional insureds (and
their officers, directors, partners, employees, agents, and other consultants
and subcontractors of each and any of them) for all losses and damages caused
by any of the perils or causes of loss covered by such policies and any other
property insurance applicable to the Work. If the insurers on any such policies
require separate waiver forms to be signed by any Subcontractor or Supplier,
Design/Builder will obtain the same.

 

6.07        Patent Fees and Royalties

 

A.            Design/Builder
shall pay all license fees and royalties and assume all costs incident to the
use in the performance of the Work or the incorporation in the Work of any
invention, design, process, product or device which is the subject of patent
rights or copyrights held by others. If a particular invention, design,
process, product, or device is specified in the Conceptual Documents for use in
the performance of the Construction and if to the actual knowledge of Owner its
use is subject to patent rights or copyrights calling for the payment of any
license fee or royalty to others, the existence of such rights shall be
disclosed by Owner in the Conceptual Documents.

 

B.            To
the fullest extent permitted by Laws or Regulations, Design/Builder shall
indemnify and hold harmless Owner and Owner’s Consultant, and the officers,
directors, partners, employees or agents, and other consultants of each and any
of them from and against all claims, costs, losses and damages (including but
not limited to all fees and charges of engineers, architects, attorneys and
other professionals and all court or arbitration or other dispute resolution
costs) arising out of or resulting from any infringement of patent rights or
copyrights incident to the use in the performance of the Work or resulting from
the incorporation in the Work of any invention, design, process, product or
device not identified in the Conceptual Documents.

 

C.            To
the fullest extent permitted by Laws or Regulations, Owner shall indemnify and
hold harmless Design/Builder and its officers, directors, partners, employees
or agents, Subcontractors and Suppliers from and against all claims, costs,
losses and damages (including but not limited to all fees and charges of
engineers, architects, attorneys and other professionals and all court or
arbitration or other dispute resolution costs) arising out of or resulting from
any infringement of patent rights or copyrights incident to the use in the
performance of the Work or resulting from the incorporation in the Work of any
invention, design, process, product or device required by the Conceptual
Documents.

 

19

 

6.08        Permits

 

A.            Unless
otherwise provided in the Contract Documents, Design/Builder shall obtain and
pay for all necessary permits, licenses, and approvals of governmental
authorities having jurisdiction over the Work. Owner shall assist
Design/Builder, when necessary, in obtaining such permits, licenses and
approvals. Design/Builder shall pay all governmental charges and inspection
fees necessary for the performance of the Work. Design/Builder shall pay all
charges of utility owners for connections to the Work, and Owner shall pay all
charges of such utility owners for capital costs related thereto.

 

6.09        Laws or Regulations

 

A.            Design/Builder
shall give all notices required by and comply with all Laws or Regulations
applicable to the performance of the Work. Except where otherwise expressly
required by applicable Laws and Regulations, Owner shall not be responsible for
monitoring Design/Builder’s compliance with any Laws or Regulations.

 

B.            If
Design/Builder performs any Work knowing or having reason to know that it is
contrary to Laws or Regulations, Design/Builder shall bear all costs arising
therefrom.

 

C.            Changes
in Laws or Regulations not known on the date of Agreement having an effect on
the cost or time of performance may be the subject of a change in Contract
Price or Contract Times.

 

6.10        Taxes

 

A.            Design/Builder
shall pay all sales, consumer, use, and other similar taxes required to be paid
by Design/Builder in accordance with the Laws or Regulations of the place of
the Project which are applicable during the performance of the Work.

 

6.11        Use of Site and Other Areas

 

A.            Limitation
on Use of Site and Other Areas.

 

1.             Design/Builder
shall confine construction equipment, the storage of materials and equipment,
and the operations of construction workers to the Site and other areas
permitted by Laws or Regulations, and shall not unreasonably encumber the Site
and other areas with construction equipment or other materials or equipment. Design/Builder
shall assume full responsibility for any damage to any such land or area, or to
the owner or occupant thereof or of any adjacent land or areas, resulting from
the performance of the Work.

 

2.             Should
any claim be made by any such owner or occupant because of the performance of
Work, Design/Builder shall promptly settle with such other party by negotiation
or otherwise resolve the claim by arbitration or other dispute resolution
proceeding or at law.

 

3.             To
the fullest extent permitted by Laws or Regulations, Design/Builder shall
indemnify and hold harmless Owner, Owner’s Consultants and anyone directly or
indirectly employed by any of them from and against all claims, costs, losses
and damages (including, but not limited to, fees of engineers, architects,
attorneys and other professionals and court and arbitration or other dispute
resolution costs) arising out of or resulting from any claim brought by any
such owner or occupant against Owner, or any other party indemnified hereunder
to the extent caused by or based upon Design/Builder’s performance of the
Construction.

 

20

 

B.            Removal of Debris. During the performance
of the Construction, Design/Builder shall keep the premises free from
accumulations of waste materials, rubbish, and other debris resulting from the
Construction. Removal and disposal of such waste materials, rubbish, and other
debris shall conform to applicable Laws or Regulations.

 

C.            Cleaning. Prior to Substantial Completion,
Design/Builder shall clean the Site and make it ready for utilization by Owner.
At completion of Construction, Design/Builder shall remove all tools,
appliances, construction equipment, temporary construction and machinery, and
surplus materials and shall restore to original condition all property not designated
for alteration by the Contract Documents.

 

D.            Loading Structures. Design/Builder shall
not load nor permit any part of any structure to be loaded in any manner that
will endanger the structure, nor shall Design/Builder subject any part of the
Construction or adjacent property to stresses or pressures that will endanger
it.

 

6.12        Record Documents

 

A.            Design/Builder
shall maintain in a safe place at the Site one record copy of all Drawings,
Specifications, Addenda, Change Orders, Field Orders and Work Change Directives
in good order and annotated to show all changes made during performance of the
Work. These record documents together with all approved Submittals will be
available to Owner for reference. Upon completion of the Work, these record
documents and Submittals, including a reproducible set of record drawings, will
be delivered to Owner.

 

6.13        Safety and Protection

 

A.            Design/Builder
shall be solely responsible for initiating, maintaining and supervising all
safety precautions and programs in connection with the Work. Design/Builder
shall take all necessary precautions for the safety of, and shall provide the
necessary protection to prevent damage, injury, or loss to:

 

1.             All
persons on the Site or who may be affected by the Work;

 

2.             All
Work and materials and equipment to be incorporated therein, whether in storage
on or off the Site; and

 

3.             Other
property at the Site or adjacent thereto, including trees, shrubs, lawns,
walks, pavements, roadways, structures, utilities and underground facilities
not designated for removal, relocation, or replacement in the course of
construction.

 

B.            Design/Builder
shall comply with applicable Laws or Regulations relating to the safety of
persons or property, or to the protection of persons or property from damage,
injury, or loss; and shall erect and maintain all necessary safeguards for such
safety and protection. Design/Builder shall notify owners of adjacent property
and of underground facilities and utility owners when prosecution of the Work
may affect them, and shall cooperate with them in the protection, removal,
relocation, and replacement of their property.

 

C.            All
damage, injury, or loss to any property referred to in paragraph 6.13.A.2 or
6.13.A.3 caused, directly or indirectly, in whole or in part, by Design/Builder,
any Subcontractor, Supplier, or any other individual or entity directly or
indirectly employed by any of them to perform any of the Work, or anyone for
whose acts any of them may be liable, shall be remedied by Design/Builder.

 

21

 

D.            Design/Builder’s
duties and responsibilities for safety and for protection of the construction
shall continue until such time as all the Work is completed and Owner has
issued a notice to Design/Builder in accordance with paragraph 13.08.B that the
Work is acceptable (except as otherwise expressly provided in connection with
Substantial Completion).

 

6.14        Safety Representative

 

A.            Design/Builder
shall designate a qualified and experienced safety representative at the Site
whose duties and responsibilities shall be the prevention of accidents and the
maintaining and supervising of safety precautions and programs.

 

6.15        Hazard Communication Programs

 

A.            Design/Builder
shall be responsible for coordinating any exchange of material safety data
sheets or other hazard communication information required to be made available
to or exchanged between or among employers at the Site in accordance with Laws
or Regulations.

 

6.16        Emergencies

 

A.            In
emergencies affecting the safety or protection of persons or the Work or
property at the Site or adjacent thereto, Design/Builder is obligated to act to
prevent threatened damage, injury or loss. Design/Builder shall give Owner
prompt written notice if Design/Builder believes that any significant changes
in the Work or variations from the Contract Documents have been caused thereby
or are required as a result thereof. If a change in the Contract Documents is
required because of the action taken by Design/Builder in response to such an
emergency, a Work Change Directive or Change Order will be issued.

 

6.17        Submittals

 

A.            Owner
will review and approve Submittals in accordance with the schedule of required
Submittals accepted by Owner as required by paragraph 2.06.A. Owner’s review
and approval will be only to determine if the items covered by the Submittals
will, after installation or incorporation in the construction, conform to the
information given in the Contract Documents and be compatible with the design
concept of the completed Project as a functioning whole as indicated by the
Contract Documents. Owner’s review and approval will not extend to means,
methods, techniques, sequences, or procedures of construction (except where a
particular means, method, technique, sequence, or procedure of construction is
specifically and expressly called for by the Contract Documents) or to safety
precautions or programs incident thereto. The review and approval of a separate
item as such will not indicate approval of the assembly in which the item functions.

 

B.            Owner’s
review and approval of Submittals shall not relieve Design/Builder from
responsibility for any variation from the requirements of the Contract
Documents unless Design/Builder has in a separate written communication at the
time of submission called Owner’s attention to each such variation and Owner
has given written approval.

 

C.            Construction
prior to Owner’s review and approval of any required Submittal will be at the
sole risk of Design/Builder.

 

22

 

6.18        Continuing
the Work 

 

A.            Design/Builder
shall continue the Work and adhere to the progress schedule during all disputes
or disagreements with Owner.  No Work
shall be delayed or postponed pending resolution of any disputes or
disagreements, except as Design/Builder and Owner may otherwise agree in
writing.

 

6.19        Post-Construction
Phase 

 

A.            Design/Builder
shall:

 

1.             Provide
assistance in connection with the start-up, testing, refining and adjusting of
any equipment or system.

 

2.             Assist
Owner in training staff to operate and maintain the Work.

 

3.             Assist
Owner in developing systems and procedures for control of the operation and
maintenance of and record keeping for the Work.

 

6.20        Design/Builder’s
General Warranty and Guarantee 

 

A.            Design/Builder
warrants and guarantees to Owner that all Construction will be in accordance
with the Contract Documents and will not be defective.  Design/Builder’s warranty and guarantee
hereunder excludes defects or damage caused by:

 

1.             Abuse,
modification or improper maintenance or operation by persons other than
Design/Builder, Subcontractors, or Suppliers or any other individual for whom
Design/Builder is responsible; or

 

2.             Normal
wear and tear under normal usage.

 

B.            Design/Builder’s
obligation to perform and complete the Work in accordance with the Contract
Documents shall be absolute.  None of the
following will constitute an acceptance of Work that is not in accordance with
the Contract Documents or a release of Design/Builder’s obligation to perform
the Work in accordance with the Contract Documents:

 

1.             Observations
by Owner;

 

2.             The
making of any progress or final payment;

 

3.             The
issuance of a certificate of Substantial Completion;

 

4.             Use or
occupancy of the Work or any part thereof by Owner;

 

5.             Any
acceptance by Owner or any failure to do so;

 

6.             Any
review and approval of a Submittal;

 

7.             Any
inspection, test or approval by others; or

 

8.             Any
correction of defective Construction by Owner.

 

23

 

6.21        Indemnification

 

A.            To the
fullest extent permitted by Laws or Regulations, Design/Builder shall indemnify
and hold harmless Owner, Owner’s Consultants, and the officers, directors,
partners, employees, agents, other consultants and subcontractors of each from
and against all claims, costs, losses, and damages (including but not limited
to all fees and charges of engineers, architects, attorneys and other
professionals and all court or arbitration or other dispute resolution costs)
arising out of or resulting from the performance of Construction, provided that
any such claim, cost, loss, or damage is attributable to bodily injury,
sickness, disease, or death, or to injury to or destruction of tangible
property (other than the Work itself), including the loss of use resulting
there from) but only to the extent caused by any negligent act or omission of
Design/Builder, any Subcontractor, any Supplier, or any individual or entity
directly or indirectly employed by any of them to perform or furnish any of the
Work.

 

B.            In any
and all claims against Owner, Owner’s Consultant or any of their respective
consultants, agents, officers, directors, partners or employees by any employee
(or the survivor or personal representative of such employee) of
Design/Builder, any Subcontractor, any Supplier, any individual or entity
directly or indirectly employed by any of them to perform any of the Work or
anyone for whose acts any of them may be liable, the indemnification obligation
under paragraph 6.21.A shall not be limited in any way by any limitation on the
amount or type of damages, compensation or benefits payable by or for
Design/Builder or any such Subcontractor, Supplier, or other individual or
entity under workers’ compensation acts, disability benefit acts or other
employee benefit acts.

 

C.            The
indemnification obligations of Design/Builder under paragraph 6.21.A shall not
extend to the liability of Owner’s Consultant, and their officers, directors,
partners, employees, agents, other consultants, and subcontractors arising out
of the preparation or approval of maps, drawings, opinions, reports, surveys,
designs, or specifications.

 

 

ARTICLE 7 – OTHER
CONSTRUCTION

 

7.01        Related
Work at Site 

 

A.            Owner may
perform other Work related to the Project at the Site by Owner’s employees, or
let other direct contracts therefore or have other work performed by utility
owners.  If such other work is not noted
in the Contract Documents, then:

 

1.             Written
notice thereof will be given to Design/Builder prior to starting any such other
work; and

 

2.             Design/Builder
may make a Claim therefore as provided in Article 9 if Design/Builder believes
that such performance will involve additional expense to Design/Builder or
requires additional time and the parties are unable to agree as to the amount
or extent thereof.

 

B.            Design/Builder
shall afford each other contractor who is a party to such a direct contract and
each utility owner (and Owner, if Owner is performing the additional work with
Owner’s employees) proper and safe access to the Site and a reasonable
opportunity for the introduction and storage of materials and equipment and the
execution of such other work and shall properly connect and coordinate the Work
with theirs.  Unless otherwise provided
in the Contract Documents, Design/Builder shall do all cutting, fitting, and
patching of the Work that may be required to make its several parts come
together properly and integrate with such other work.  Design/Builder shall not endanger any work

 

24

 

of others by cutting, excavating, or otherwise
altering their work and will only cut or alter their work with the written
consent of Owner and the others whose work will be affected.  The duties and responsibilities of Design/Builder
under this paragraph are for the benefit of such utility owners and other
contractors to the extent that there are comparable provisions for the benefit
of Design/Builder in said direct contracts between Owner and such utility
owners and other contractors.

 

C.            If the
proper execution or results of any part of Design/Builder’s Work depends upon
work performed or services provided by others under this Article 7,
Design/Builder shall inspect such other work and appropriate instruments of
service and promptly report to Owner in writing any delays, defects or
deficiencies in such other work or services that render it unavailable or
unsuitable for the proper execution and results of Design/Builder’s Work.  Design/Builder’s failure so to report will
constitute an acceptance of such other work as fit and proper for integration
with Design/Builder’s Work except for latent or non-apparent defects and
deficiencies in such other work.

 

7.02        Coordination

 

A.            If Owner
intends to contract with others for the performance of other work on the
Project at the Site, the following will be set forth in Supplementary
Conditions:

 

1.             The
individual or entity that has authority and responsibility for coordination of
the activities among the various prime contractors will be identified;

 

2.             The
specific matters to be covered by such authority and responsibility will be
itemized; and

 

3.             The
extent of such authority and responsibilities will be provided.

 

B.            Unless
otherwise provided in the Supplementary Conditions, Owner shall have sole
authority and responsibility in respect of such coordination.

 

 

ARTICLE 8 – OWNER’S
RESPONSIBILITIES

 

8.01        General

 

A.            Owner
shall do the following in a timely manner so as not to delay the services of
Design/Builder:

 

1.             Designate
in writing a person to act as Owner’s Representative with respect to the
services to be rendered under this Agreement. 
Such person shall have complete authority to transmit instructions,
receive information, interpret and define Owner’s policies, make decisions with
respect to performance of the Work, and shall provide such other services as
may be agreed upon;

 

2.             Provide
such legal services as Owner may require with regard to legal issues pertaining
to the Project including any that may be raised by Design/Builder;

 

3.             If
requested in writing by Design/Builder, furnish reasonable evidence
satisfactory to Design/Builder that sufficient funds are available and
committed for the entire cost of the Project. 
Unless such reasonable evidence is furnished, Design/Builder is not
required to commence or continue any Work, or may, if such evidence is not
presented within a reasonable time, stop Work upon 15 days notice to the Owner;

 

25

 

4.             Make
payments to Design/Builder promptly when they are due as provided in paragraph
13.03 and 13.08;

 

5.             Furnish
the Site as set forth in paragraph 4.01.A;

 

6.             Furnish
to Design/Builder, as required for performance of Design/Builder’s Services the
following, all of which Design/Builder may use and rely upon in performing
services under this Agreement:

 

a.             Environmental
assessment and impact statements;

 

b.             Property,
boundary, easement, right-of-way, topographic, and utility surveys;

 

c.             Property
descriptions;

 

d.             Zoning,
deed, and other land use restrictions;

 

e.             Engineering
surveys to establish reference points for design and construction which in
Owner’s judgment are necessary to enable Design/Builder to proceed with the
Work;

 

f.              Assistance
to Design/Builder in filing documents required to obtain necessary permits,
licenses, and approvals of governmental authorities having jurisdiction over
the Project;

 

g.             Permits,
licenses, and approvals of government authorities Owner is specifically
required to obtain by the Contract Documents; and

 

h.             All
subsurface data at or contiguous to the Site which Owner may have obtained.

 

7.             Review
Submittals subject to Owner review pursuant to paragraph 6.17.A; and

 

8.             Provide
information known to or in the possession of Owner relating to the presence of
materials and substances at the Site which could create a Hazardous
Environmental Condition.

 

8.02        Insurance

 

A.            Owner’s
responsibilities in respect of purchasing and maintaining liability and
property insurance are set forth in Article 5.

 

8.03        Limitations
on Owner’s Responsibilities 

 

A.            The Owner
shall not supervise, direct, or have control or authority over, nor be
responsible for, Design/Builder’s means, methods, techniques, sequences, or
procedures of construction or the safety precautions and programs incident
thereto, or for any failure of Design/Builder to comply with Laws or
Regulations applicable to the furnishing or performance of the Work.  Owner will not be responsible for
Design/Builder’s failure to perform the Work in accordance with the Contract
Documents.

 

26

 

8.04        Undisclosed
Hazardous Environmental Condition 

 

A.            Owner’s
responsibility in respect of undisclosed Asbestos, PCBs, Petroleum, Hazardous
Waste, or Radioactive Materials uncovered or revealed at the Site is set forth
in paragraph 4.04.

 

8.05        Resident
Project Representation 

 

A.            Owner may
furnish a Resident Project Representative to observe the performance of
Construction.  The duties,
responsibilities and limitations of authority of any such Resident Project
Representative and assistants will be as provided in the Supplementary
Conditions.

 

8.06        Owner’s
Consultant 

 

A.            Owner’s
Consultant, if any, has no duties, responsibilities, or authorities with
respect to Design/Builder, unless so provided in the Supplementary Conditions.

 

 

ARTICLE 9 – CHANGES IN
THE WORK; CLAIMS

 

9.01        Authorized
Changes in the Work 

 

A.            Without
invalidating the Agreement and without notice to any surety, Owner may, at any
time or from time to time, order additions, deletions, or revisions in the Work
within the general scope of the Contract by a Change Order or a Work Change
Directive.  Upon receipt of any such
document, Design/Builder shall promptly proceed with the Work involved which
will be performed under the applicable conditions of the Contract Documents
(except as otherwise specifically provided).

 

9.02        Unauthorized
Changes in the Work 

 

A.            Design/Builder
shall not be entitled to an increase in the Contract Price or an extension of
the Contract Times with respect to any Work performed that is not required by
the Contract Documents as amended, modified and supplemented as provided in
paragraph 3.04, except in the case of an emergency as provided in paragraph
6.16 or in the case of uncovering Construction as provided in paragraph 12.04.

 

9.03        Claims

 

A.            Notice. 
If Owner and Design/Builder are unable to agree on entitlement to, or on
the amount or extent, if any, of an adjustment in the Contract Price or an
adjustment of the Contract Times that should be allowed as a result of any
order of Owner pursuant to paragraph 9.01.A or other occurrence for which the
Contract Documents provide that such adjustment(s) may be made, a Claim may be
made therefore.  Written notice of intent
to make such a Claim shall be submitted to the other party promptly and in no
event more than 15 days after the start of the occurrence or event giving rise
to the Claim.

 

B.            Documentation.  Substantiating documentation shall be
submitted by the claiming party within 30 days after delivery of the notice
required by paragraph 9.03.A.

 

C.            Decision. 
The other
party shall render a decision on the Claim no more than 30 days after the
receipt of the substantiating documentation required by paragraph 9.03.B.  This decision will be final and binding
unless the claiming party gives notice of intention to exercise its rights
under Article 15 within 30 days of receipt of the decision and exercises such
rights within 30 days of giving the notice of intent.

 

27

 

D.            Time Limit Extension.  The time limits of paragraphs 9.03.B and
9.03.C may be extended by mutual agreement.

 

9.04        Execution
of Change Orders 

 

A.            Owner and
Design/Builder shall execute appropriate Change Orders covering:

 

1.             Changes
in the Work which are (i) ordered by Owner pursuant to paragraph 9.01, (ii)
required because of acceptance of defective Construction under paragraph 12.08
or Owner’s correction of defective Work under paragraph 12.09 or (iii) agreed
to by the parties; and

 

2.             Changes
in the Contract Price or Contract Times which are agreed to by the parties,
including any undisputed sum or amount of time for Work actually performed in
accordance with a Work Change Directive.

 

9.05        Notice
to Sureties 

 

A.            If notice
of any change affecting the general scope of the Work or the provisions of the
Contract Documents (including, but not limited to, Contract Price or Contract
Times) is required by the provisions of any Bond to be given to a surety, the
giving of any such notice will be Design/Builder’s responsibility.  The amount of each applicable Bond will be
adjusted to reflect the effect of any such change.

 

 

ARTICLE 10 – COST OF THE
WORK; CASH ALLOWANCES; UNIT PRICE WORK

 

10.01      Cost
of the Work 

 

A.            Costs Included. 
The term Cost of the Work means the sum of all costs necessarily
incurred and paid by Design/Builder in the proper performance of the Work.  When the value of Work covered by a Change
Order or when a Claim for an adjustment in Contract Price is determined on the
basis of Cost of the Work, the costs to be reimbursed to Design/Builder will be
only those additional or incremental costs required because of the change of
the Work or because of the event giving rise to the Claim.  Except as otherwise may be agreed to in
writing by Owner, such costs shall be in amounts no higher than those
prevailing in the locality of the Project, shall include only the following
items, and shall not include any of the costs itemized in paragraph 10.01.B:

 

1.             Payroll
costs for employees in the direct employ of Design/Builder in the performance
of the Work under schedules of job classifications agreed upon by Owner and
Design/Builder.

 

a.             Such
employees shall include without limitation superintendents, foremen, and other
personnel employed full-time at the Site. 
Payroll costs for employees not employed full time on the Work shall be
apportioned on the basis of their time spent on the Work.  Payroll costs shall include, but not be
limited to, salaries and wages plus the cost of fringe benefits which shall
include social security contributions, unemployment, excise and payroll taxes,
workers’ compensation, health and retirement benefits, bonuses, sick leave,
vacation and holiday pay applicable thereto. 
The expenses of performing Work after regular working hours, on
Saturday, Sunday or legal holidays, shall be included in the above to the
extent authorized by Owner.

 

28

 

b.             Such
employees shall also include engineers, engineering technicians, architects,
and others providing Design Professional Services.  For purposes of this paragraph 10.01.A.1,
Design/Builder shall be entitled to payment for such employees an amount equal
to salary costs times a factor, both as designated in the Agreement, for all
services performed or furnished by such employees engaged on the Project.

 

2.             Cost of
all materials and equipment furnished and incorporated in the Work, including
costs of transportation and storage thereof, and Suppliers’ field services
required in connection therewith.  All
cash discounts shall accrue to Design/Builder unless Owner deposits funds with
Design/Builder with which to make payments, in which case the cash discounts
shall accrue to Owner.  All trade
discounts, rebates and refunds and returns from sale of surplus materials and
equipment shall accrue to Owner, and Design/Builder shall make provisions so
that they may be obtained.

 

3.             Payments
made by Design/Builder to Subcontractors (excluding payments for Design
Professional Services pursuant to paragraph 10.01.A.4) for Work performed or
furnished by Subcontractors.  If any
subcontract provides that the Subcontractor is to be paid on the basis of Cost
of the Work plus a fee, the Subcontractor’s Cost of the Work and fee shall be
determined in the same manner as Design/Builder’s Cost of the Work and fee.

 

4.             Payments
made by Design/Builder for Design Professional Services provided or furnished
under a Design Subagreement.

 

5.             Costs of
special consultants (including but not limited to testing laboratories,
surveyors, attorneys, and accountants) employed for services specifically
related to the Work.

 

6.             Supplemental
costs including the following items:

 

a.             The
proportion of necessary transportation, travel and subsistence expenses of
Design/Builder’s employees incurred in discharge of duties connected with the
Work.

 

b.             Cost,
including transportation and maintenance, of all materials, supplies,
equipment, machinery, appliances, office and temporary facilities at the Site
and hand tools not owned by the workers, which are consumed in the performance
of the Work, and cost, less market value, of such items used but not consumed
which remain the property of Design/Builder.

 

c.             Rentals of
all construction or engineering equipment and machinery and the parts thereof
whether rented from Design/Builder or others in accordance with rental
agreements approved by Owner, and the costs of transportation, loading,
unloading, installation, dismantling and removal thereof.  All such costs shall be in accordance with
the terms of said rental agreements.  The
rental of any such equipment, machinery or parts shall cease when the use
thereof is no longer necessary for the Work.

 

d.             Sales,
consumer, use, and other similar taxes related to the Work, and for which
Design/Builder is liable, imposed by Laws or Regulations.

 

29

 

e.             Deposits
lost for causes other than negligence of Design/Builder, any Subcontractor or
anyone directly or indirectly employed by any of them or for whose acts any of
them may be liable, and royalty payments and fees for permits and licenses.

 

f.              Losses,
damages, and related expenses caused by damage to the Work not compensated by
insurance or otherwise, sustained by Design/Builder in connection with the
furnishing and performance of the Work provided they have resulted from causes
other than the negligence of Design/Builder, any Subcontractor, or anyone
directly or indirectly employed by any of them or for whose acts any of them
may be liable.  Such losses shall include
settlements made with the written consent and approval of Owner.  No such losses, damages, and expenses shall
be included in the Cost of the Work for the purpose of determining
Design/Builder’s fee.

 

g.             The cost of
utilities, fuel, and sanitary facilities at the Site.

 

h.             Minor
expenses such as telegrams, long distance telephone calls, telephone service at
the Site, expressage, and similar petty cash items in connection with the Work.

 

i.              Cost of
premiums for all Bonds and insurance Design/Builder is required by the Contract
Documents to purchase and maintain.

 

B.            Costs Excluded. 
The term Cost of the Work shall not include any of the following items:

 

1.             Payroll
costs and other compensation of Design/Builder’s officers, executives,
principals (of partnerships and sole proprietorships), general managers, engineers,
architects, estimators, attorneys, auditors, accountants, purchasing and
contracting agents, expediters, timekeepers, clerks and other personnel
employed by Design/Builder whether at the Site or in Design/Builder’s principal
or a branch office for general administration of the Work and not specifically
included in the agreed upon schedule of job classifications referred to in
paragraph 10.01.A.1, all of which are to be considered administrative costs
covered by the Design/Builder’s fee.

 

2.             Expenses
of Design/Builder’s principal and branch offices other than Design/Builder’s
office at the Site.

 

3.             Any part
of Design/Builder’s capital expenses, including interest on Design/Builder’s
capital employed for the Work and charges against Design/Builder for delinquent
payments.

 

4.             Costs
due to the negligence of Design/Builder, any Subcontractor, or anyone directly
or indirectly employed by any of them or for whose acts any of them may be
liable, including but not limited to the correction of defective Work, disposal
of materials or equipment wrongly supplied, and making good any damage to
property.

 

5.             Other
overhead or general expense costs of any kind and the costs of any item not
specifically and expressly included in paragraph 10.01.A.

 

C.            Design/Builder’s Fee. 
When all the Work is performed on the basis of cost-plus, Design/Builder’s
fee shall be as set forth in the Agreement. 
When the value of the Work

 

30

 

covered by a Change
Order is determined on the basis of Cost of the Work, Design/Builder’s fee
shall be determined as set forth in paragraph 11.01.C.

 

D.            Documentation. 
Whenever the cost of any Work is to be determined pursuant to paragraph
10.01.A and 10.01.B, Design/Builder will establish and maintain records thereof
in accordance with generally accepted accounting practices and submit in a form
acceptable to Owner an itemized cost breakdown together with supporting data.

 

10.02      Cash
Allowances 

 

A.            The
Contract Price includes all allowances so named in the Contract Documents.  Design/Builder shall cause the Work so
covered to be performed for such sums as may be acceptable to Owner.  Design/Builder agrees that:

 

1.             The
allowances include the cost to Design/Builder (less any applicable trade
discounts) of materials and equipment required by the allowances to be
delivered at the Site, and all applicable taxes; and

 

2.             Except
as set forth in the Contract Documents, Design/Builder’s costs for unloading
and handling on the Site, labor, installation costs, overhead, profit, and
other expenses contemplated for the allowances have been included in the
Contract Price and not in the allowances, and no demand for additional payment
on account of any of the foregoing will be valid.

 

B.            Prior to
final payment, an appropriate Change Order will be issued to reflect actual
amounts due Design/Builder on account of Work covered by allowances, and the
Contract Price shall be correspondingly adjusted.

 

10.03      Unit
Prices 

 

A.            Where the
Contract Documents provide that all or part of the Work is to be Unit Price
Work, initially the Contract Price will be deemed to include for all of Unit
Price Work an amount equal to the sum of the established unit prices for each
separately identified item of Unit Price Work times the estimated quantity of
each item as indicated in the Agreement. 
The estimated quantities of items of Unit Price Work are not guaranteed
and are solely for the purpose of comparison of Bids and determining an initial
Contract Price.  Determinations of the
actual quantities and classifications of Unit Price Work performed by
Design/Builder will be made by Owner.

 

B.            Each unit
price will be deemed to include an amount considered by Design/Builder to be
adequate to cover Design/Builder’s overhead and profit for each separately
identified item.

 

C.            Design/Builder
or Owner may make a Claim for an adjustment in the Contract Price in accordance
with Article 9 if:

 

1.             the
quantity of any item of Unit Price Work performed by Design/Builder differs
materially and significantly from the estimated quantity of such item indicated
in the Contract Documents;

 

2.             there is
no corresponding adjustment with respect to any other item of Work; and

 

3.             Design/Builder
believes that it is entitled to an increase in Contract Price as a result of
having incurred additional expense or Owner believes it is entitled to a

 

31

 

decrease in Contract Price and the parties are unable
to agree as to the amount of any such increase or decrease.

 

ARTICLE 11 – CHANGE OF
CONTRACT PRICE; CHANGE OF CONTRACT TIMES     

 

11.01      Change
of Contract Price 

 

A.            The
Contract Price may only be changed by a Change Order.  Any Claim for an adjustment in the Contract
Price shall be based on written notice delivered by the party making the Claim
to the other party promptly in accordance with paragraph 9.03.A.

 

B.            The value
of any Work covered by a Change Order or of any Claim for an adjustment in the
Contract Price will be determined as follows:

 

1.             Where
the Work involved is covered by unit prices contained in the Contract
Documents, by application of such unit prices to the quantities of the items
involved (subject to the provisions of paragraph 10.03); or

 

2.             Where
the Work involved is not covered by unit prices contained in the Contract
Documents, by a mutually agreed lump sum (which may include an allowance for
overhead and profit not necessarily in accordance with paragraph 11.01.C.2); or

 

3.             Where
the Work involved is not covered by unit prices contained in the Contract Documents
and agreement to a lump sum is not reached under paragraph 11.01.B.2, on the
basis of the Cost of the Work (determined as provided in paragraph 10.01) plus
a Design/Builder’s Fee for overhead and profit (determined as provided in
paragraph 11.01.C).

 

C.            Design/Builder’s
Fee:  The Design/Builder’s fee for
overhead and profit on Change Orders shall be determined as follows:

 

1.             A
mutually acceptable fixed fee; or

 

2.             If a
fixed fee is not agreed upon, then a fee based on the following percentages of
the various portions of the Cost of the Work:

 

a.             For costs
incurred under paragraphs 10.01.A.1.a and 10.01.A.2, the Design/Builder’s fee
shall be 15 percent;

 

b.             For costs
incurred under paragraph 10.01.A.3 10.01.A.4, 10.01.A.5 and 10.01.A.6, the
Design/Builder’s fee shall be five percent;

 

c.             Where one or
more tiers of subcontracts are on the basis of Cost of the Work plus a fee and
no fixed fee is agreed upon, the intent of paragraphs 11.01.C.1 and 11.01.C.2.a
is that the Subcontractor who actually performs or furnishes Work, at whatever
tier, will be paid a fee of 15 percent of the costs incurred by such
Subcontractor under paragraphs 10.01.A.1 and 10.01.A.2 and that any higher tier
Subcontractor and Design/Builder will each be paid a fee of five percent of the
amount paid to the next lower tier Subcontractor;

 

32

 

d.             The amount
of credit to be allowed by Design/Builder to Owner for any change which results
in a net decrease in cost will be the amount of the actual net decrease in cost
plus a deduction in Design/Builder’s fee by an amount equal to five percent of
such net decrease; and

 

e.             When both
additions and credits are involved in any one change, the adjustment in
Design/Builder’s fee shall be computed on the basis of the net change in
accordance with paragraphs 11.01.C.2.a through 11.01.C.2.d, inclusive.

 

11.02      Change
of Contract Times 

 

A.            The
Contract Times (or Milestones) may only be changed by a Change Order.  Any Claim for an adjustment of the Contract
Times (or Milestones) shall be based on written notice pursuant to paragraph
9.03.A.

 

B.            Delays Beyond Design/Builder’s Control. 
Where Design/Builder is prevented from completing any part of the Work
within the Contract Times (or Milestones) due to delay beyond the control of
Design/Builder, the Contract Times (or Milestones) will be extended in an
amount equal to the time lost due to such delay if a Claim is made therefore as
provided in paragraph 11.02.A.  Delays
beyond the control of Design/Builder shall include, but not be limited to, acts
or neglect by Owner, governmental agencies, acts or neglect of utility owners
or other contractors performing other construction work as contemplated by
Article 7, fires, floods, epidemics, abnormal weather conditions, or acts of
God.

 

C.            If Owner
or other contractor or utility owners performing other work for Owner as
contemplated by Article 7, or anyone for whom Owner is responsible,
delays, disrupts, or interferes with the performance or progress of the Work,
then Design/Builder shall be entitled to an equitable adjustment in the
Contract Price or the Contract Times, or both. 
Design/Builder’s entitlement to an adjustment of the Contract Times is
conditioned on such adjustment being essential to Design/Builder’s ability to
complete the Work within the Contract Times.

 

D.            If
Design/Builder is delayed in the performance or progress of the Work by fire,
flood, epidemic, abnormal weather conditions, acts of God, acts or failures to
act of utility owners not under the control of Owner, or other causes not the
fault of and beyond control of Owner and Design/Builder, then Design/Builder
shall be entitled to an equitable adjustment in Contract Times, if such
adjustment is essential to Design/Builder’s ability to complete the Work within
the Contract Times.  Such an adjustment
shall be Design/Builder’s sole and exclusive remedy for the delays described in
this Paragraph 11.02.C.

 

E.             Owner
and Owner’s Consultant shall not be liable to Design/Builder for any claims,
costs, losses, or damages (including but not limited to all fees and charges of
engineers, architects, attorneys, and other professionals and all court or
arbitration or other dispute resolution costs) sustained by Design/Builder on
or in connection with any other project or anticipated project.

 

F.             Design/Builder
shall not be entitled to an adjustment in Contract Price or Contract Times for
delays within the control of Design/Builder. 
Delays attributable to and within the control of a Subcontractor or
Supplier shall be deemed to be delays within the control of Design/Builder.

 

33

 

ARTICLE 12 – TESTS AND
INSPECTIONS; CORRECTION, REMOVAL OR ACCEPTANCE OF DEFECTIVE CONSTRUCTION

 

12.01      Notice
of Defects 

 

A.            Owner
shall give Design/Builder prompt written notice of all defective Construction
of which Owner has actual knowledge.  All
defective Construction may be rejected, corrected or accepted as provided in
this Article 12.

 

12.02      Access
to Construction 

 

A.            Owner,
Owner’s Consultants, other representatives and personnel of Owner, independent
testing laboratories and governmental agencies with jurisdictional interests
will have access to the Site and the Construction at reasonable times for their
observation, inspecting, and testing. 
Design/Builder shall provide them proper and safe conditions for such
access and advise them of Design/Builder’s Site safety procedures and programs
so that they may comply therewith as applicable.

 

12.03      Tests
and Inspections 

 

A.            If the
Contract Documents or Laws or Regulations of any public body having
jurisdiction require any part of the Construction specifically to be inspected,
tested or approved, Design/Builder shall assume full responsibility for
arranging and obtaining such inspections, tests or approvals, pay all costs in
connection therewith, and furnish Owner the required certificates of inspection
or approval.  Design/ Builder shall also
be responsible for arranging and obtaining and shall pay all costs in
connection with any inspections, tests, or approvals required for Owner’s
acceptance of materials or equipment to be incorporated in the Work or of
materials, mix designs, or equipment submitted for approval prior to
Design/Builder’s purchase thereof for incorporation in the Work.

 

B.            Design/Builder
shall give Owner reasonable notice of the planned schedule for all required
inspections, tests, or approvals.

 

C.            If any
Construction (or the construction work of others) that is required to be
inspected, tested, or approved is covered by Design/Builder without written
concurrence of Owner, it must, if requested by Owner, be uncovered for
observation at Design/Builder’s expense unless Design/ Builder has given Owner
timely notice of Design/Builder’s intention to cover the same and Owner has not
acted with reasonable promptness in response to such notice.

 

12.04      Uncovering
Construction 

 

A.            If any
Construction is covered contrary to the written request of Owner, it must, if
requested by Owner, be uncovered for Owner’s observation and recovered at
Design/Builder’s expense.

 

B.            If Owner
considers it necessary or advisable that covered Construction be observed by
Owner or inspected or tested by others, Design/Builder, at Owner’s request,
shall uncover, expose or otherwise make available for observation, inspection
or testing as Owner may require, that portion of the Construction in question,
furnishing all necessary labor, material and equipment.  If it is found that such Construction is
defective, Design/Builder shall pay all costs and damages caused by or
resulting from such uncovering, exposure, observation, inspection and testing
and of satisfactory replacement or reconstruction, (including but not limited
to all fees and charges of engineers, architects, attorneys and other
professionals, all court or arbitration or other dispute resolution costs, and
all costs of repair or replacement of work of others);  and Owner

 

34

 

shall be entitled to an appropriate decrease in the
Contract Price, and, if the parties are unable to agree as to the amount
thereof, Owner may make a Claim therefore as provided in Article 9.  If, however, such Construction is not found
to be defective, Design/Builder shall be allowed an increase in the Contract
Price or an extension of the Contract Times (or Milestones), or both, directly
attributable to such uncovering, exposure, observation, inspection, testing,
replacement and reconstruction.  If the
parties are unable to agree as to the amount or extent thereof, Design/Builder may
make a Claim therefore as provided in Article 9.

 

12.05      Owner
May Stop Construction 

 

A.            If
Construction is defective, or Design/Builder fails to supply sufficient skilled
workers or suitable materials or equipment, or fails to furnish or perform
Construction in such a way that the completed Construction will conform to the
Contract Documents, Owner may order Design/Builder to stop Construction or any
portion thereof, until the cause for such order has been eliminated; however,
this right of Owner to stop Construction will not give rise to any duty on the
part of Owner to exercise this right for the benefit of Design/Builder or any
other party.

 

12.06      Correction
or Removal of Defective Construction 

 

A.            Owner
will have authority to disapprove or reject defective Construction and will
have authority to require special inspection or testing of the Construction
whether or not the Construction is fabricated, installed or completed.  If required by Owner, Design/Builder shall
promptly, as directed, either correct all defective Construction, whether or
not fabricated, installed or completed, or, if the Construction has been
rejected by Owner, remove it from the Site and replace it with non-defective
Construction.  Design/Builder shall bear
all direct, indirect, and consequential costs of such correction or removal
(including but not limited to fees and charges of engineers, architects,
attorneys and other professionals and all court, arbitration, or other dispute
resolution costs) arising out of or relating to such correction or removal.

 

12.07      Correction
Period 

 

A.            If within
one year after the date of Substantial Completion of the entire Work or such
longer period of time as may be prescribed by Laws or Regulations or by the
terms of any applicable special guarantee required by the Contract Documents or
by any specific provision of the Contract Documents, any Construction is found
to be defective, Design/Builder shall promptly, without cost to Owner and in
accordance with Owner’s written instructions, (i) correct such defective
Construction, or, if it has been rejected by Owner, remove it from the Site and
replace it with Construction that is not defective, and (ii) satisfactorily
correct or remove and replace any damage to other Construction or the work of
others resulting there from.  If
Design/Builder does not promptly comply with the terms of such instructions, or
in an emergency where delay would cause serious risk of loss or damage, Owner
may have the defective Construction corrected or the rejected Construction
removed and replaced, and all costs, losses, and damages caused by or resulting
from such removal and replacement (including but not limited to all fees and
charges of engineers, architects, attorneys and other professionals, all court
or arbitration or other dispute resolution costs, and all costs of repair or
replacement of work of others) will be paid by Design/Builder.

 

B.            In
special circumstances where a particular item of equipment is placed in
continuous service before Substantial Completion of all the Work, the
correction period for that item may start to run from an earlier date if so
provided in the Conceptual Documents.

 

35

 

C.            Where
defective Construction (and damage to other Construction resulting there from)
has been corrected, removed or replaced under this paragraph 12.07, the
correction period hereunder with respect to such Construction will be extended
for an additional period of one year after such correction or removal and
replacement has been satisfactorily completed.

 

12.08      Acceptance
of Defective Construction 

 

A.            If,
instead of requiring correction or removal and replacement of defective
Construction, Owner prefers to accept it, Owner may do so.  Design/Builder shall pay all costs, losses,
and damages (including but not limited to all fees and charges of engineers,
architects, attorneys and other professionals and all court or arbitration or
other dispute resolution costs) attributable to Owner’s evaluation of and
determination to accept such defective Construction.  If any such acceptance occurs prior to final
payment, a Change Order will be issued incorporating the necessary revisions in
the Contract Documents, and Owner shall be entitled to an appropriate decrease
in the Contract Price reflecting the diminished value of the Construction so
accepted.  If the parties are unable to
agree as to the amount thereof, Owner may make a Claim therefore as provided in
Article 9.  If the acceptance occurs
after final payment, an appropriate amount will be paid by Design/Builder to
Owner.

 

12.09      Owner May Correct Defective
Construction 

 

A.            If
Design/Builder fails within a reasonable time after written notice from Owner
to correct defective Construction or to remove and replace rejected
Construction as required by Owner in accordance with paragraphs 12.06.A or
12.07.A, or if Design/Builder fails to perform the Construction in accordance
with the Contract Documents, or if Design/Builder fails to comply with any
other provision of the Contract Documents, Owner may, after seven days’ written
notice to Design/Builder, correct and remedy any such deficiency.

 

B.            In
exercising the rights and remedies under this paragraph 12.09 Owner shall
proceed expeditiously.  In connection
with such corrective and remedial action, Owner may exclude Design/Builder from
all or part of the Site, take possession of all or part of the Construction,
and suspend Design/Builder’s services related thereto, take possession of
Design/Builder’s tools, appliances, construction equipment and machinery at the
Site, and incorporate in the Construction all materials and equipment stored at
the Site or for which Owner has paid Design/Builder but which are stored
elsewhere.  Design/Builder shall allow Owner,
Owner’s Consultant, Owner’s representatives, agents, employees, and other
contractors access to the Site to enable Owner to exercise the rights and
remedies under this paragraph.

 

C.            All
costs, losses, and damages (included but not limited to fees and charges of
engineers, architects, attorneys and other professionals, all court or
arbitration or other dispute resolution costs and all costs of repair or
replacement of work of others) incurred or sustained by Owner in exercising
such rights and remedies under this paragraph 12.09 will be charged against
Design/Builder and a Change Order will be issued incorporating the necessary
revisions in the Contract Documents, and Owner shall be entitled to an
appropriate decrease in the Contract Price. 
If the parties are unable to agree as to the amount thereof, Owner may
make a Claim therefore as provided in Article 9.

 

D.            Design/Builder
shall not be allowed an extension of the Contract Times (or Milestones) because
of any delay in the performance of the Work attributable to the exercise by
Owner of Owner’s rights and remedies under this paragraph 12.09.

 

36

 

ARTICLE 13 – PAYMENTS TO
DESIGN/BUILDER AND COMPLETION

 

13.01      Schedule of Values 

 

A.            The
Schedule of Values established as provided in paragraph 2.06.A will serve as
the basis for progress payments. 
Progress payments on account of Unit Price Work will be based on the
number of units completed.

 

13.02      Application for Progress Payment 

 

A.            On or
about the date established in the Agreement for submission of each application
for progress payment (but not more often than once a month), Design/Builder
shall submit to Owner for review an Application for Payment filled out and
signed by Design/Builder covering the Work completed as of the date indicated
on the Application and accompanied by supporting documentation as required by
the Contract Documents.  If payment is
requested on the basis of materials and equipment not incorporated in the Work
but delivered and suitably stored at the Site or at another location agreed to
in writing, the Application for Payment shall also be accompanied by a bill of
sale, invoice or other documentation warranting that Owner has received the
materials and equipment free and clear of all Liens and evidence that the
materials and equipment are covered by appropriate property insurance and other
arrangements to protect Owner’s interest therein, all of which will be
satisfactory to Owner.

 

B.            Beginning
with the second Application for Payment, each Application shall include an
affidavit of Design/Builder stating that all previous progress payments
received on account of the Work have been applied on account to discharge
Design/Builder’s legitimate obligations associated with prior Applications for
Payment.

 

C.            The
amount of retainage with respect to progress payments will be as stipulated in
the Agreement.

 

13.03      Progress Payments 

 

A.            Procedure. 
Unless otherwise agreed by the Owner and Design/Builder, Progress
payments shall be made by the Owner to the Design/Builder according to the
following procedure:

 

1.             Owner
will, within ten days of receipt of each Application for Payment, either
indicate in writing its acceptance of the Application and state that the
Application is being processed for payment, or return the Application to Design/Builder
indicating in writing its reasons for refusing to accept the Application.  Not more than ten days after accepting such
Application the amount will become due and when due will be paid by Owner to
Design/Builder.

 

2.             If Owner
should fail to pay Design/Builder at the time the payment of any amount becomes
due, then Design/Builder may, at any time thereafter, upon serving written
notice that he will stop the Work within seven days after receipt of the notice
by Owner, and after such seven day period, stop the Work until payment of the
amount owing has been received.  Written
notice shall be deemed to have been duly served if sent by certified mail to
the last known business address of Owner.

 

3.             Payments
due but unpaid shall bear interest at the rate specified in the Agreement.

 

37

 

4.             No
Progress Payment nor any partial or entire use or occupancy of the Project by
Owner shall constitute an acceptance of any Work not in accordance with the
Contract Documents.

 

B.            Reduction in or Refusal to Make Payment. 
Owner may refuse to make the whole or any part of any such payment, or
because of subsequently discovered evidence or the results of subsequent
inspections or tests, nullify any previous payment, to the extent that is
reasonably necessary to protect Owner from loss because:

 

1.             the
Construction is defective, or completed Construction has been damaged requiring
correction or replacement; or

 

2.             the
Contract Price has been reduced by Change Order; or

 

3.             Owner
has been required to correct defective Construction or complete Work in
accordance with paragraph 12.09.A; or

 

4.             Owner
has actual knowledge of the occurrence of any of the events enumerated in
paragraphs 14.02.A; or

 

5.             Claims
have been made against Owner on account of Design/Builder’s performance or
furnishing of the Work; or

 

6.             Liens
have been filed in connection with the Work, except where Design/Builder has
delivered a specific Bond satisfactory to Owner to secure the satisfaction and
discharge of such Liens; or

 

7.             There
are other items entitling Owner to a set off against the amount for which
application is made.

 

C.            If Owner
refuses to make payment of the full amount requested by Design/Builder, Owner
must give Design/Builder immediate written notice stating the reasons for such
action and promptly pay Design/Builder any amount remaining after deduction of
the amount withheld.  Owner shall
promptly pay Design/Builder the amount withheld or any adjustment thereto
agreed to when Design/Builder corrects to Owner’s satisfaction the reason for
such action.

 

13.04      Design/Builder’s Warranty of
Title 

 

A.            Design/Builder
warrants and guarantees that title to all Construction, materials, and
equipment covered by any Application for Payment, whether incorporated in the
Project or not, will pass to Owner no later than the time of payment free and
clear of all Liens.

 

13.05      Substantial Completion 

 

A.            When
Design/Builder considers the Work ready for its intended use, including
satisfying each of the process warranties set forth in Article 9 of the
Agreement, Design/Builder shall notify Owner in writing that the Work is
substantially complete (except for items specifically listed by Design/Builder
as incomplete) and request that Owner issue a certificate of Substantial
Completion.  Promptly thereafter, Owner
and Design/Builder shall make an inspection of the Work to determine the status
of completion.  If Owner does not
consider the Work substantially complete, Owner will notify Design/Builder in
writing giving the reasons therefore.  If
Owner considers the Work substantially complete, Owner will prepare and deliver
to Design/Builder a certificate of Substantial Completion which shall fix the
date of Substantial Completion.  There
shall be attached to the certificate a list of items to be completed or
corrected before final payment.  At the

 

38

 

time of delivery of the certificate of Substantial
Completion, Owner will deliver to Design/Builder a written determination as to
division of responsibilities pending final payment between Owner and
Design/Builder with respect to security, operation, safety, protection of
Construction, maintenance, heat, utilities, insurance and warranties and
guarantees.

 

B.            Owner
will have the right to exclude Design/Builder from the Site after the date of
Substantial Completion, but Owner will allow Design/Builder reasonable access
to complete or correct items on the list of items to be completed.

 

13.06      Partial Utilization 

 

A.            Prior to
Substantial Completion of all the Work, Owner may use or occupy any
substantially completed part of the Construction which (i) has specifically
been identified in the Contract Documents, or (ii) Owner and Design/Builder
agree constitute a separately functioning and usable part of the Construction
that can be used by Owner for its intended purpose without significant
interference with Design/ Builder’s performance of the remainder of the
Construction, subject to the following:

 

1.             Owner at
any time may request Design/Builder in writing to permit Owner to use or occupy
any such part of the Construction which Owner believes to be ready for its
intended use and substantially complete. 
If Design/Builder agrees that such part of the Work is substantially
complete, Design/Builder will certify to Owner that such part of the
Construction is substantially complete and request Owner to issue a certificate
of Substantial Completion for that part of the Construction.  Design/Builder at any time may notify Owner
in writing that Design/Builder considers any such part of the Work ready for
its intended use and substantially complete and request Owner to issue a
certificate of Substantial Completion for that part of the Work.  Within a reasonable time after either such
request, Owner and Design/Builder shall make an inspection of that part of the
Work to determine its status of completion. 
If Owner does not consider that part of the Work to be substantially
complete, Owner will notify Design/Builder in writing giving the reasons therefore.  If Owner considers that part of the Work to
be substantially complete, the provisions of paragraph 13.05 will apply with
respect to certification of Substantial Completion of that part of the Work and
the division of responsibility in respect thereof and access thereto.

 

2.             No use
or occupancy of part of the Construction will be accomplished prior to
compliance with the requirements of paragraph 5.10 regarding property
insurance.

 

13.07      Final Inspection 

 

A.            Upon
written notice from Design/Builder that the entire Work or an agreed portion
thereof is complete, Owner will make a final inspection with Design/Builder and
will notify Design/Builder in writing of all particulars in which this
inspection reveals that the Work is incomplete or defective.  Design/Builder shall immediately take such
measures as are necessary to complete such Work or remedy such deficiencies.

 

13.08      Final Payment 

 

A.            Application
for Payment.

 

1.             After
Design/Builder has completed all such corrections to the satisfaction of Owner
and delivered in accordance with the Contract Documents all maintenance and
operating instructions, schedules, guarantees, Bonds, certificates or other
evidence of insurance,

 

39

 

certificates of inspection, record documents (as
provided in paragraph 6.12) and other documents, Design/Builder may make
application for final payment following the procedure for progress payments.

 

2.             The
final Application for Payment shall be accompanied (unless previously delivered)
by:  (i) all documentation called for in
the Contract Documents, including but not limited to the evidence of insurance
required by paragraph 5.04.B.7; (ii) consent of the surety, if any, to final
payment; and (iii) complete and legally effective releases or waivers
(satisfactory to Owner) of all Liens arising out of or filed in connection with
the Work.

 

3.             In lieu
of such releases or waivers of Liens specified in paragraph 13.08.A.2 and as
approved by Owner, Design/Builder may furnish receipts or releases in full and
an affidavit of Design/Builder that: (i) the releases and receipts include
all labor, services, material and equipment for which a Lien could be filed,
and (ii) all payrolls, material and equipment bills and other indebtedness
connected with the Work for which Owner or Owner’s property might in any way be
responsible have been paid or otherwise satisfied.  If any Subcontractor or Supplier fails to
furnish such a release or receipt in full, Design/Builder may furnish a Bond or
other collateral satisfactory to Owner to indemnify Owner against any Lien.

 

B.            Final Payment and Acceptance. 
If Owner is satisfied that the Work has been completed and
Design/Builder’s other obligations under the Contract Documents have been
fulfilled, Owner will, within ten days after receipt of the final Application
for Payment, give written notice to Design/Builder that the Work is
acceptable.  Otherwise, Owner will return
the Application to Design/Builder, indicating in writing the reasons for
refusing to process final payment, in which case Design/Builder shall make the
necessary corrections and resubmit the Application.

 

C.            Payment Becomes Due. 
Thirty days after the presentation to Owner of the acceptable
Application and accompanying documentation, in appropriate form and substance
and with Owner’s notice of acceptability, the amount will become due and will
be paid by Owner to Design/Builder.

 

13.09      Final Completion Delayed 

 

A.            If,
through no fault of Design/Builder, final completion of the Work is significantly
delayed, Owner shall, upon receipt of Design/Builder’s final Application for
Payment, and without terminating the Agreement, make payment of the balance due
for that portion of the Work fully completed and accepted.  If the remaining balance to be held by Owner
for Work not fully completed or corrected is less than the retainage stipulated
in the Agreement, and if Bonds have been furnished as required in paragraph
5.01.A, the written consent of the surety to the payment of the balance due for
that portion of the Work fully completed and accepted shall be submitted by
Design/Builder to Owner with the Application for such payment.  Such payment shall be made under the terms
and conditions governing final payment, except that it shall not constitute a
waiver of Claims.

 

13.10      Waiver of Claims 

 

A.            The
making and acceptance of final payment will constitute:

 

1.             A waiver
of all Claims by Owner against Design/Builder, except Claims arising from
unsettled Liens, from defective Construction appearing after final inspection
pursuant to paragraph 13.07, from failure to comply with the Contract Documents
or the terms of any special guarantees specified therein, or from
Design/Builder’s continuing obligations under the Contract Documents; and

 

2.             A waiver
of all Claims by Design/Builder against Owner other than those previously made
in writing and still unsettled.

 

40

 

ARTICLE 14 – SUSPENSION
OF WORK AND TERMINATION

 

14.01      Owner May Suspend Work 

 

A.            At any
time and without cause, Owner may suspend the Work or any portion thereof for a
period of not more than 90 days by notice in writing to Design/Builder which
will fix the date on which Work will be resumed.  Design/Builder shall resume the Work on the
date so fixed.  Design/Builder shall be
allowed an adjustment in the Contract Price or an extension of the Contract
Times, or both, directly attributable to any such suspension if Design/Builder
makes a Claim therefore as provided in Article 9.

 

14.02      Owner May Terminate for Cause 

 

A.            The
occurrence of any one or more of the following events justifies termination for
cause:

 

1.             Design/Builder’s
persistent failure to perform the Work in accordance with the Contract
Documents (including, but not limited to, failure to supply sufficient skilled
workers or suitable materials or equipment or failure to adhere to the progress
schedule established under paragraph 2.06.A as adjusted from time to time
pursuant to paragraph 6.05).

 

2.             Design/Builder’s
disregard of Laws or Regulations of any public body having jurisdiction.

 

3.             Design/Builder’s
violation in any substantial way of provisions of the Contract Documents.

 

B.            If one or
more of the events identified in paragraph 14.02.A occur, Owner may, after
giving Design/Builder (and the surety, if any) seven days’ written notice,
terminate the services of Design/Builder, take possession of any completed
Drawings and Specifications prepared by or for Design/Builder (subject to the
indemnification provisions of paragraph 3.05.A), exclude Design/Builder from
the Site, and take possession of the Work and of all Design/Builder’s tools,
appliances, construction equipment and machinery at the Site and use the same
to the full extent they could be used by Design/Builder (without liability to
Design/Builder for trespass or conversion), incorporate in the Work all
materials and equipment stored at the Site or for which Owner has paid
Design/Builder but which are stored elsewhere, and finish the Work as Owner may
deem expedient.  In such case Design/Builder
shall not be entitled to receive any further payment until the Work is
finished.  If the unpaid balance of the
Contract Price exceeds all costs, losses and damages sustained by Owner arising
out of or resulting from completing the Work (including but not limited to all
fees and charges of engineers, architects, attorneys and other professionals
and all court or arbitration or other dispute resolution costs) such excess
will be paid to Design/Builder.  If such
costs, losses and damages exceed such unpaid balance, Design/Builder shall pay
the difference to Owner.  Such costs,
losses and damages incurred by Owner will be incorporated in a Change
Order.  When exercising any rights or
remedies under this paragraph Owner shall not be required to obtain the lowest
price for the Work performed.

 

C.            Notwithstanding
paragraph 14.02.B, Design/ Builder’s services will not be terminated if
Design/Builder begins, within seven days of receipt of notice of intent to
terminate, to correct its failure to perform and proceeds diligently to cure
such failure within no more than 30 days of receipt of said notice.

 

D.            Where
Design/Builder’s services have been so terminated by Owner, the termination
will not affect any rights or remedies of Owner against Design/Builder then existing
or which may thereafter accrue.  Any
retention or payment of moneys due Design/Builder by Owner will not release
Design/Builder from liability.

 

41

 

14.03      Owner May Terminate for
Convenience 

 

A.            Upon seven
days’ written notice to Design/Builder, Owner may, without cause and without
prejudice to any other right or remedy of Owner, elect to terminate the
Contract.  In such case, Design/Builder
shall be paid (without duplication of any items) for:

 

1.             Completed
and acceptable Work executed in accordance with the Contract Documents prior to
the effective date of termination, including fair and reasonable sums for
overhead and profit on such Work;

 

2.             Expenses
sustained prior to the effective date of termination in performing services and
furnishing labor, materials or equipment as required by the Contract Documents
in connection with uncompleted Work, plus fair and reasonable sums for overhead
and profit on such expenses;

 

3.             Amounts
paid in settlement of terminated contracts with Subcontractors, Suppliers and
others (including but not limited to all fees and charges of engineers,
architects, attorneys and other professionals and all court or arbitration or
other dispute resolution costs incurred in connection with termination of
contracts with Subcontractors, Suppliers and others); and

 

4.             Reasonable
expenses directly attributable to termination.

 

B.            Except as
provided in paragraph 14.03.C, Design/Builder shall not be paid on account of
loss of anticipated profits or revenue or other economic loss arising out of or
resulting from such termination.

 

14.04      Design/Builder May Stop Work or
Terminate 

 

A.            If,
through no act or fault of Design/Builder, the Work is suspended for a period
of more than 90 days by Owner or under an order of court or other public
authority, or Owner fails to act on any Application for Payment within thirty
days after it is submitted or Owner fails for thirty days to pay Design/Builder
any sum finally determined to be due, then Design/Builder may, upon seven days’
written notice to Owner, and provided Owner does not remedy such suspension or
failure within that time, terminate the Agreement and recover from Owner
payment on the same terms as provided in paragraph 14.03.A.  In lieu of terminating the Agreement and
without prejudice to any other right or remedy, if Owner has failed for 30 days
to pay Design/Builder any sum finally determined to be due, Design/Builder may
upon seven days’ written notice to Owner stop the Work until payment is made of
all such amounts due Design/Builder, including interest thereon.  The provisions of this paragraph 14.04.A are
not intended to preclude Design/Builder from making Claim under Article 9 for
an increase in Contract Price or Contract Times or otherwise for expenses or
damage directly attributable to Design/Builder’s stopping Work as permitted by
this paragraph.

 

42

 

ARTICLE 15 – DISPUTE
RESOLUTION

 

15.01      Prompt Notice

 

A.            The parties
agree that prompt notice is an essential component of effective and fair
dispute resolution.  The parties will
provide within fifteen (15) days notice of any condition or circumstance which
the party should reasonably believe may lead to a claim.  Failure to provide notice as required under
this Agreement shall be deemed to be a waiver of any related claim subsequently
brought.

 

15.02      Mediation

 

A.            The parties shall
endeavor to resolve all claims, disputes or other matters arising out of or
relating or this Agreement by good faith discussions.   If such effort is not successful, any claim,
dispute or other matter arising out of or relating or this Agreement which
remains unresolved shall be subject to mediation as a condition precedent to
arbitration or the institution of legal proceedings.  Requests for mediation shall be filed with
the American Arbitration Association and the location of any mediation shall be
in the state where the Project is located. 
The parties shall share the mediator’s fee and any filing fee
equally.   The mediation shall be
conducted in accordance with the Construction Industry Mediation Rules of the
American Arbitration Association.

 

15.03      Arbitration

 

A.            Claims, disputes or
other matters arising out of or relating or this Agreement which are not resolved
by mediation may 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.  The demand for arbitration shall be filed on
the other party.  Within ten (10) days
thereafter the parties shall file the demand with a mutually acceptable
arbitration services organization, which may include the American Arbitration
Association or Judicial Arbitration and Mediation Services.   Any arbitration shall be conducted in the
state where the Project is located.

 

B.            The demand for
arbitration shall be provided to the other party within a reasonable time after
the claim, dispute or other matter in question has arisen.   The arbitration will be conducted by a
single arbitrator unless the parties cannot agree, in which case the
Construction Industry Arbitration Rules of the American Arbitration Association
will control.  The award entered by the
arbitrator or arbitrators shall be final, and judgment may be entered in
accordance with the laws of the state where the Project is located.

 

ARTICLE 16 –
MISCELLANEOUS

 

16.01      Giving Notice 

 

A.            Whenever
any provision of the Contract Documents requires the giving of written notice,
it will be deemed to have been validly given if delivered in person to the
individual or to a member of the firm or to an officer of the corporation for
whom it is intended, or if delivered at or sent by certified mail, postage
prepaid, to the last business address known to the giver of the notice.

 

16.02      Computation of Times 

 

A.            When any
period of time is referred to in the Contract Documents by days, it will be
computed to exclude the first and include the last day of such period.  If the last day of any such period falls on a
Saturday or Sunday or on a day made a legal holiday by the law of the
applicable jurisdiction, such day will be omitted from the computation.

 

43

 

16.03      Cumulative Remedies 

 

A.            The
duties and obligations imposed by these General Conditions and the rights and
remedies available hereunder to the parties hereto are in addition to, and are
not to be construed in any way as a limitation of, any rights and remedies
available to any or all of them which are otherwise imposed or available by:

 

1.             Laws or
Regulations; or

 

2.             any
special warranty or guarantee; or

 

3.             other
provisions of the Contract Documents.

 

B.            The
provisions of paragraph 16.03.A will be as effective as if repeated
specifically in the Contract Documents in connection with each particular duty,
obligation, right and remedy to which they apply.

 

16.04      Survival of Obligations 

 

A.            All
representations, indemnifications, warranties and guarantees made in, required
by or given in accordance with the Contract Documents, as well as all
continuing obligations indicated in the Contract Documents, will survive final
payment, completion and acceptance of the Work and termination or completion of
the Contract.

 

16.05      Controlling Law 

 

A.            The
Contract Documents will be construed in accordance with the law of the place of
the Project.

 

44

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