Sample EPC Contract in P M

7/27/2019 Sample EPC Contract in P M

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1.1.a Authorization. Any license, permit, approval, clearance, entitlement,allowance, franchise, notification, consent, registration, qualification, declaration, filing orother authorization, whether private, governmental or otherwise; or any zoning,subdivision, or similar land use ordinance of any governmental authority.

1.2 Bonds. The Performance and Payment Bonds required pursuant to DakotaState Law Section 3247-3248 and Section 16 hereinafter.

1.2.a DEQA. The Dakota Environmental Quality Act, Public Resources LawSection 21000 Seq.

1.3 Change Order. A written document signed by City's AuthorizedRepresentative, which authorizes an addition, deletion, or revision in the Work or anadjustment in the Completion Date or Contract Price, issued on or after the Effective Dateof this Agreement.

1.4 The City of Dreams, Dakota, a Dakota municipal corporation, acting by andthrough its Electric Department.

1.5 City's Representative. A person designated in writing to act as City's agentwith respect to Developer's performance of the Work and who will be available to consultwith Developer regarding matters arising under the Agreement and the ContractDocuments at all times during the term of this Agreement. Such person shall havecomplete authority to transmit instructions, receive information, and make bindingdecisions with respect to performance of the Work, and execute Change Orders on behalfof the City. The City hereby designates its Utility Director as the City's Representative.

1.6 Construction. The performing or furnishing of labor, the furnishing andincorporating of materials and equipment into the Work and the furnishing of services anddocuments for the Work, all as required by the Contract Documents.

1.7 Construction Phase. The phase of the Work including Construction.

1.8 Intentionally Left Blank.

1.9 Contract Documents. This Agreement, Exhibits A through I inclusive, theapproved Plans and Specifications, Standard Specifications, the Bonds, Change Orders.

1.10 Contract Price. The aggregate amount payable by City to Developer underthis Agreement, i.e. the sum of the separate prices for the Engineering, Procurement andConstruction Phases.

1.11 Days. Unless otherwise specified shall mean calendar days.

1.12 Developer. Wombat Construction LLC, a Delaware limited liabilitycompany.


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1.13 Developer's Representative. A person designated in writing to act asDeveloper's agent with respect to this Agreement. Such person shall have completeauthority to transmit instructions, receive information and execute Change Orders onbehalf of Developer. Developer hereby designates it's Senior Vice President of EnergyInfrastructure as Developer's Representative.

1.14 Developer's Taxes Those taxes described as Developer's Taxes in Section5.9.

1.15 Effective Date. The date identified in the caption to this Agreement.

1.16 Engineering Phase. The phase of the Work including EngineeringServices, Environmental Services, and Project Management Services.

1.17 Engineering Services. Services of Developer related to the preparation ofPlans and Specifications, and other design submittal specified by the Contract Documentsand required to be performed by licensed design professionals describing and detailing

the Project and providing criteria for the detailed design by suppers of equipment,materials and systems to be incorporated into the Project, as set forth in DakotaGovernment Law 4525(d).

1.18 Environment shall mean soil, surface waters, ground waters, land, streamsediments, surface or subsurface strata, ambient air, and/or any environmental medium.

1.19 Environmental Condition shall mean any condition with respect to theEnvironment on or off the Project Site, whether or not ret discovered, which results orcould result in the imposition of any cost, expense, damage, fine, penalty, liability or otherloss on Developer or the City by any governmental authority or other third party, including

the presence of polychlorinated biphenyls or substances containing polychlorinatedbiphenyls on the Project Site, and including any condition resulting from or attributable toany other property in the vicinity of the Project Site and/or any activity or operationformerly conducted by any person or entity on or off the Project Site.

1.20 Environmental Services. Services of Developer performed in connectionwith project development and Authorization processing in order to comply with federal andstate environmental laws, as set forth in Dakota Government Law 4525(f).

1.21 Excluded Cost. A cost, expense or liability associated with the Project,which is not included in the Contract Price and for which Developer and Subcontractors

are not entitled to payment, reimbursement or any form of compensation, from Citypursuant to the Contract Documents.

1.22 Final Completion. The date on which the following have occurred: (a)Mechanical Completion, (b) Substantial Completion, and (c) completion of Developer'sobligations with regard to the Punch List created pursuant to the Scope of Work and (d)institution of functional automatic generation control with Dakota Independent SystemOperator (or its successor).


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1.22.a Final DEQA Compliance. The process mandated by DEQA shall have beenfilly complied with, in a manner reasonably satisfactory to Developer, and either (A) allappeals or other challenges of such permit have been resolved to Developer'ssatisfaction, or (B) the time for filing appeals or other challenges to such permit hasexpired with no appeal or other challenge having been filed.

1.22.b Final Validation Decision. A decision in the Validation Action reasonablysatisfactory to Developer has been issued and either (A) all appeals or other challengesof such decision have been resolved to Developer's satisfaction, or (B) the time for filingappeals or other challenges to such decision has expired with no appeal or otherchallenge having been filed.

1.23 Force Majeure Event. The occurrence of: labor disputes or problems,including, but not limited to, strikes, slowdowns, job actions, picketing, and secondaryboycotts; delay in transportation; fire or other casualty loss; severe weather; acts of God;acts of declared or undeclared war or public disorder, riot, or civil commotion; epidemics;or any other event beyond the reasonable control of the Party asserting the Force

Majeure Event. Solely with respect to Developer, Force Majeure shall also include thefollowing:

(i) the receipt of a Final Validation Decision after the anticipated date for suchreceipt as set forth in the Schedule of Values, to the extent that such delay is not the faultof Developer;

(ii) the completion of the issuance of the Municipal Bonds, and the availabilityof the proceeds thereof for payments pursuant to this Agreement, after the anticipateddate therefor as set forth in the Schedule of Values, to the extent that such delay is notthe fault of Developer;

(iii) the delivery of Major Equipment after the date on which such equipment wasexpected to be delivered, as set forth n the Progress Schedule, to the extent that suchdelay is not due to delay in ordering Major Equipment by Developer or other fault ofDeveloper; and

(iv) delay in achieving an interconnection between the Project and the City'selectrical system, water system, or other utility systems, and delay in achieving aninterconnection between the Project and Southern Dakota Gas Company's system,sufficient to permit Construction, testing, operation and maintenance of the Project,beyond the date specified in the Progress Schedule, to the extent that such delay is notattributable to actions or failure to act by Developer.

1.24 Gas Turbine Generator Unit. The gas turbine generator described in theScope of Work.

1.25 Grant Deed. The grant deed conveying all of Developer's right, title andinterest in the Work, the Project, and the Project Site to City.

1.26 Hazardous Condition. Hazardous, dangerous, or toxic materials,


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substances, conditions, elements, pollutants, irritants or contaminants of any kind,including without limitation smoke, vapor, soot, fumes, acids, alkalis, chemicals andwaste, including but not limited to those so defined in any law, ordinance, rule, orregulation.

1.27 Laws and Regulations; Laws or Regulations. Any and all applicable laws,rules, regulations, ordinances, codes and orders of any and all governmental entities,bodies, agencies, and authorities (including without limitation, all federal state, local, andCity laws, rules, regulations, ordinances, codes, resolutions and orders), and courtshaving jurisdiction.

1.28 Major Equipment. The following major equipment components of theProject: the Gas Turbine Generator Unit, electrical switchgear, transformers, emissionscontrol equipment, exhaust silencers, and supervisory control and data acquisition("SCADA") equipment.

1.29 Mechanical Completion. The date when all materials and equipment for the

Project (except for minor portions of the Work not affecting the operability or safety of theProject) have been installed substantially in accordance with the Plans and Specificationsand all systems necessary for power generation are ready to Commence performancetesting required by the Scope of Work.

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

1.30.a Municipal Bonds. Bonds issued by the City the proceeds of which will beused to pay for the Project.

1.31 Option Agreement. That certain Option Agreement between the City andJames and Frances Beckett that permits the City to purchase the Project Site.

1.32 Plans. The drawings, profile, cross sections, working drawings, andsupplemental drawings, or reproductions thereof, provided by Developer to City, whichshow the location, character, dimensions, or details of the Work.

1.33 Procurement Phase. The phase of the Work including ProcurementServices.

1.34 Procurement Services. Services of Developer related to ordering, tracking,expediting delivery of, receiving and storing Major Equipment (i.e., the Gas TurbineGenerator Unit, electrical switchgear, transformer$, emissions control equipment, exhaustsilencers, SCADA) and any other long lead time equipment and materials.

1.35 Progress Schedule. A tabulation, chart or graph submitted by Developerand approved by City, that subdivides the Work into phases and component parts andserves as the basis for establishing Milestones for submitting, reviewing processing andapproving Submittals, for performance of the Work, and for depicting the chronologicalrelationship of principal activities of the Project. The initial Progress Schedule is attached


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hereto as Exhibit D.

1.36 Project. The electrical generating facility consisting of one individualgenerator unit and appurtenant facilities, to be engineered, procured and constructed byDeveloper, at the Project Site in Dreams, Dakota, as required by the Contract Documentsand more fully described in Exhibit E.

1.36a Project Management Services. Services of the Developer related to projectdesign review and evaluation, construction mobilization and supervision, bid evaluation,project scheduling, cost benefit analysis, claims review and negotiation, and generalmanagement and administration of a construction project, as set forth in DakotaGovernment Law 4525(e) and 4529.5.

1.37 Project Site. The property to be acquired by Developer, generally locatedeast of Aqua Mini Road and south of the City's wastewater facility in Dreams, Dakota andmore particularly described in Exhibit P.

1.38 Project Taxes Those taxes described as Project Taxes in Section 5.9.

1.39 Punch List. The list of items of defective or incomplete work to be correctedby Developer following Substantial Completion in order to achieve Final Completion.

1.40 Retention. Those sums described in Section 7.4.

1.41 Schedule of Values. The schedule attached hereto as Exhibit G.

1.42 Scope of Work. The document entitled "Scope of Work" which is attachedhereto as Exhibit F!.

1.43 Specifications. Those portions of the Contract Documents prepared by orfor Developer and approved by City consisting of written technical descriptions ofmaterials, equipment, construction systems, standards and workmanship as applied to theConstruction and certain administrative details applicable thereto.

1.44 Standard Specifications. The following sections of the 1997 Edition of the"STANDARD SPECIFICATIONS FOR PUBLIC WORKS CONSTRUCTION": 1.1 Terms;1.2 Definitions (except as such definitions are modified herein), 1.3 Abbreviations, 1.4Metric International System, 25.3 Shop Drawings and Submittals, 26 Work to be Done, 27Subsurface Data, 28 Right of Way, 29 Surveying, 211 Inspection, 31 Changes Requestedby the Contractor, 33 Extra Work, 34 Changed Conditions, 35 Disputed Work, 41Materials and Workmanship, 52 (Utilities) Projection, 55 Delays, 56 Cooperation, 63Suspension of Work, 61 General, 62 Archeological and Paleontological Discoveries, 64Default by Contractor, 65 Termination of Contract, 66 delays and Extensions of Time,66.1 General (except no delay damages except for those delay damages that are set forthin this Agreement), 66.2 Extensions of Time, 67 Time of Completion, 67.1 General, 62.1Labor General, 79 Protection and Restoration of Existing Improvements, and 710 PublicConvenience and Safety.


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1.45 Subcontractor. Any person or entity with whom Developer has entered intoany subcontract, purchase order, or other agreement for such person or entity to performany part of the Work or to provide any materials, equipment or supplies on behalf ofDeveloper (including any person or entity at any tier with whom any Subcontractor hasfurther subcontracted any part of the Work).

1.46 Submittal. A writing or graphic prepared by or for Developer that is requiredby the Scope of Work as a deliverable or in the Contract Documents to be submitted toCity by Developer. Submittals may include without limitation Plans, drawings,Specifications, revisions to the Progress Schedule or the Scope of Work, shop drawings,reports and samples.

1.47 Substantial Completion. The date that all of the following have occurred:(a) Mechanical Completion, (b) the Project is substantially complete in accordance withthe Scope of Work and can be safely operated for Its intended purpose, and (c) all of theperformance tests required by the Scope of Work have been successfully completed, asestablished pursuant to Section 9.

1.48 Substantial Completion Target Date. The date of Substantial Completiondetermined in accordance with Section 9.1 of this Agreement.

1.49 Turnover. The conveyance of the Project Site and the completed Work tothe City.

1.50 Validation Action. The proceeding described in Section 6.10.

1.51 Work. The engineering, procurement, construction and other servicesrequired by the Contract Documents.

1.52 Rules of Interpretation. The following rules of interpretation of thisAgreement shall apply unless otherwise specified in this Agreement or unless the contextotherwise requires:

(i) Words of any gender include each other gender.

(ii) Using the singular or plural number also includes the plural or singular number,respectively.

(iii) Any reference to any person in any capacity includes a reference to itssuccessors and permitted assigns in such capacity and in the case of any governmentalauthority, any person succeeding to its functions and capacities.

(iv) The terms "hereof," "herein," "hereto," "hereunder" and words of similar or likeimport refer to this entire Agreement and not to any particular Article, Section, Exhibit, orother subdivision of this Agreement.

(v) References to a particular "Article," "Section," or "Exhibit" are, unless otherwisenoted, references to that Article or Section of, or Exhibit to, this Agreement.


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2.5 In the event that Developer commences procurement of any Projectcomponents prior to the issuance of the Municipal Bonds, and in the event that theMunicipal Bonds are not subsequently issued by the City, Developer shall be entitled toretain any such component for which Developer is not actually reimbursed by the City.

3 Commencing the Work.

3.1 Subject to Section 3.2, Developer shall begin performing the EngineeringPhase of the Work as soon as practicable after the Effective Date.

3.2 Notwithstanding the foregoing, Developer's obligations under thisAgreement are expressly subject to the fulfillment of the conditions listed below, in formand substance satisfactory to Developer in Developer's reasonable discretion; providedthat Developer may waive any such condition or may extend the date for fulfillment of anysuch condition. In the event that any such condition shall not have been fulfilled by thedate indicated (as such date may be extended), Developer may, but shall not be obligated

to, terminate this Agreement, or one or more phases of this Agreement, at its option,without further obligation:

i. No later than thirty (30) days after the Effective Date, Developer and the Cityshall have entered into a mutually agreeable Operation and Maintenance Agreementpursuant to which Developer will operate and maintain the Project on behalf of the City.

ii. No later than thirty (30) days after the Effective Date, Developer shall haveentered into an option to purchase the Project Site directly from James and FrancesBeckett meeting the requirements of Section 5.2.

3.3 Developer shall notify the City of the satisfaction, extension, or waiver of eachof the conditions precedent listed in Section 3.2. Developer's obligations hereunder shallcommence upon the satisfaction or waiver of the last such condition precedent.

4 Contract Documents, Intent, Amending Use.

4.1 Intent.

4.1.1 The Contract Documents are complementary; what is called for by one is asbinding as if called for by all. The Contract Documents will be construed in accordancewith the laws of the State of Dakota.

4.1.2 It is the intent of the Contract Documents to describe a functionally completeProject to be engineered, procured and constructed in accordance with the ContractDocuments. Any Work, materials or equipment that may reasonably be inferred from theContract Documents or from prevailing custom or trade usage and that is necessary tocomplete the Work will be furnished and performed by Developer.

4.1.3 In the event there are any conflicting provisions or requirements in thecomponent parts of the Agreement and the Contract Documents, the Contract Documents


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and Agreement components shall take precedence in the following order:

Amendments to the Agreement and Change Orders, in reverse chronological order.The Agreement

Appendices and Exhibits to AgreementStandard Specifications

4.2 References.

4.2.1 Reference to standards, specifications (except the Standard Specifications),manuals or codes of any technical society, organization or association, or to the Laws orRegulations of any governmental authority, whether such reference be specific or byimplication, shall mean the latest standard, specification, manual, code or Laws orRegulations in effect at the time of the Effective Date of the Agreement except as may beotherwise specifically stated in the Contract Documents.

4.2.2 No provision of any such standard, specification, manual, code or instruction

shall be effective to change the duties and responsibilities of City, Developer or any oftheir Subcontractors, consultants, agents, or employees from those set forth in theContract Documents, nor shall it be effective to assign to City any duty or authority tosupervise or direct the furnishing or performance of the Work or any duty or authority toundertake responsibility inconsistent with the provisions of the Contract Documents.

5 Developer's Responsibilities.

5.1 General. As set forth in the Scope of Work and in conformity with theContract Documents, Developer shall render or cause to be rendered, the engineering,permitting, procurement, construction, delivery, erection, commissioning, startup, and

testing of the complete Work for the Project consisting of the performance of allEngineering Services, Environmental Services, Procurement Services, ProjectManagement Services and Construction Services required by the Contract Documents,including without limitation all necessary services, materials, equipment, machinery, tools,labor, supervision, supplies, chemicals, transportation and structures, and including thosethings reasonably inferable from the Contract Documents and necessary to complete theWork even though no mention thereof is expressly made in the Contract Documents.

5.2 Purchase of Project Site.

5.2.1 Developer shall obtain title to the Project Site directly from James andFrances Beckett, the present owners of the Project Site.

5.2.2 Developer shall not under any circumstances be required to purchase theProject Site prior to the later of (i) the date that the proceeds of the Municipal Bondsbecome available to Developer for such purpose, (ii) the date that a Final ValidationDecision is received, and (iii) the date that Final DEQA Compliance is completed.

5.2.3 Developer shall be responsible for the payment of all property taxes for theProject Site related to the period during which Developer owns the Project Site.


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5.2.4 In the event that this Agreement terminates for any reason prior toSubstantial Completion, then, in addition to any amounts payable to Developer pursuantto Section 17, Developer shall have the right to require the City to repurchase the ProjectSite for the same amount paid by Developer, plus any document fee or similar chargespaid in connection with the purchase of the Project Site and any property or other taxes,and any interest and other carrying charges incurred by Developer as a result of itsownership of the Project Site.

5.3 Developer's Expertise. Developer represents that it has the requisiteexpertise and skill to undertake the performance of the Work.

5.4 Engineering Services.

5.4.1 General. Developer shall render or cause to be rendered the EngineeringServices set forth in the Scope of Work in accordance with the terms and conditions ofthe Contract Documents and the Progress Schedule.

5.4.2 Standard of Care. The standard of care for Engineering Services shall bethe care and skill ordinarily used by members of the engineering or architecturalprofession practicing under similar conditions at the same time and locality.

5.4.3 Developer Responsibility. As between the Parties, Developer shall besolely and totally responsible for the engineering of the Project, the professional quality,technical accuracy, feasibility, and the coordination of all designs, Drawings, Plans,Specifications, and other Engineering Services required by the Contract Documents;provided, however, that Developer shall not be responsible for the design, technicalaccuracy, feasibility or coordination of any element incorporated into the Project pursuant

to Section 12.4. City has furnished and may continue to furnish Developer with writtentechnical information regarding the City's existing electric system as necessary to provideDeveloper the references needed to properly integrate the Project into the existing electricfacilities. Developer shall have no liability for defects in the Work attributable toDeveloper's reasonable reliance upon or use of such written data, design criteria,drawings, specifications, or other written information furnished by City or City's authorizedagents.

5.5 Environmental Services.

5.5.1 General. Developer shall render or cause to be rendered theEnvironmental Services required to obtain the Authorizations necessary foraccomplishment of the Project.

5.5.2 Standard of Care. The standard of care for Environmental Services shall bethe care and skill ordinarily used by members of the environmental consultant professionpracticing under similar conditions at the same time and locality.

5.6 Procurement Services. Developer shall order in its name and not as agentfor City, the Gas Turbine Generator Unit and other Major Equipment (i.e., electrical


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switchgear, transformers, emissions control equipment, exhaust silencers, SCADA) andother long lead time equipment and materials required for the Project. Developer shalltrack, expedite, receive, store and pay for said equipment.

5.7 Project Management Services.

5.7.1 General. Developer shall perform or cause to be performed ProjectManagement Services, including design review and evaluation, construction mobilizationand supervision, bid evaluation, project scheduling, cost benefit analysis, claims reviewand negotiation, and general management and administration of a construction project, asset forth in Exhibit H and in conformity with the Contract Documents.

5.7.2 Supervision of Construction.

5.7.2.1 Developer shall supervise, inspect and direct the Constructioncompetently and efficiently, devoting such attention thereto and applying such skills andexpertise as may be necessary to perform the Construction in accordance with the

Contract Documents. Developer shall be solely responsible for the means, methods,techniques, sequences and procedures employed for the Construction. Developer shallbe responsible to see that the complete Construction complies accurately with theContract Documents and shall keep City advised as to the quality and progress of theConstruction.

5.7.2.2 Developer shall keep on the Project Site at all times duringConstruction a competent resident superintendent, who shall not be replaced withoutwritten notice to City except under extraordinary circumstances. All communications tothe superintendent shall be as binding as if given by Developer.

5.8 Construction.

5.8.1 Developer shall provide, or cause to be provided, competent, suitablyqualified labor to survey and layout the Construction and perform Construction asrequired by the Contract Documents. Developer shall provide sufficient labor to maintainthe prosecution of the Work in accordance with the Progress Schedule and ContractDocuments. Developer shall at all times maintain good discipline and order at the ProjectSite. Except as otherwise required for the safety or protection of persons or the Work orproperty at the Project Site or adjacent thereto, and except as otherwise indicated in theContract Documents, authorized by the City, or specified by Developer in a prior writtennotice to the City, all Construction at the Project Site shall be performed between thehours of 5:00 am. and 7:00 p.m., Monday through Saturday unless directed otherwise bythe City.

5.8.2 Except as otherwise specified in the Contract Documents, Developer shallfurnish or cause to be furnished and assume full responsibility for materials, equipment,labor, transportation, construction equipment and machinery, tools, appliances, heat,telephone, water, sanitary facilities, temporary facilities and all other facilities, incidentals,and all other things necessary for the furnishing, performance, testing, startup andcompletion of the Work.


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5.8.3 All materials and equipment incorporated into the Work shall be of goodquality and new, except as otherwise provided in the Contract Documents. All warrantiesand guarantees specifically called for by the Contract Documents shall expressly run tothe benefit of City. If required by City, Developer shall furnish reasonably satisfactoryevidence (including reports of required tests) as to the kind and quality of materials andequipment. All materials and equipment shall be applied, installed, connected, erected,used, cleaned and conditioned in accordance with the instructions of the applicablesupplier, except as otherwise provided in the Contract Documents.

5.9 Taxes. Developer understands that its performance of the Work willconstitute doing business in the City of Dreams, and it shall, therefore, obtain a CityBusiness License pursuant to Chapter 5.02 of the Dreams Municipal Law. Developershall pay all payroll and other related employment compensation taxes for Developer'semployees, federal, state and other taxes which may be assessed on Developer's Incomefrom the Project, engineering and business license costs, and property taxes onDeveloper's construction equipment (collectively, the "Developer's Taxes"). The

Developer's Taxes shall be Excluded Costs. Developer shall administer and pay, orcause to be paid all sales, use, gross receipts and excise taxes directly related toDeveloper's Work; transfer taxes associated with Developer's acquisition and transfer tothe City of the Project Site, and Property Taxes on the Project Site applicable to theperiod when Developer owns the Project Site (collectively, the "Project Taxes"). ContractPrice, which shall be paid by City, includes Project Taxes and excludes Developer'sTaxes.

5.10 Progress Schedule.

5.10.1 Time is a material element in the performance of this Agreement.

Developer shall at all times adhere to and diligently prosecute the Work in accordancewith the Progress Schedule and complete the Work within the designated Milestones andany deadlines in the Contract Documents.

5.10.2 Developer shall be responsible for the preparation, maintenance, andupdating of the Progress Schedule and other scheduling information in accordance withthe Progress Schedule requirements set forth in Section 9.

5.10.3 Proposed adjustments in the Progress Schedule that will delay theCompletion Date shall only be made by a Change Order.

5.11 Subcontracting.

5.11.1 Developer may subcontract any portion of the Work required by thisAgreement, without prior written approval of City. Subcontracts, if any, shall contain aprovision making them subject to all applicable provisions in this Agreement.

5.11.2 Developer shall be fully responsible to City for all acts or omissions of theSubcontractors and other individuals or entities performing or furnishing any of the Workunder a direct or indirect contract with Developer. Nothing in the Contract Documents


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shall create, for the benefit of any such Subcontractor or other individual or entity, anycontractual relationship between City and any such Subcontractor or other individual orentity, nor shall it create any obligation on the part of City to pay or to see to the paymentof any moneys due any such Subcontractor or other individual or entity except as mayotherwise be required by Laws and Regulations. Developer shall be solely responsiblefor all payments and compensation due to any Subcontractor. As further set forth in this

Agreement, Developer shall take all action necessary to prevent and/or release any liens,stop notices or other encumbrances that may be imposed or threatened against theProject or Project Site by subcontractors.

5.11.3 Developer shall be solely responsible for scheduling and coordinatingSubcontractors and other individuals aid entities performing or furnishing any of the Workunder contract with Developer. Developer shall require all Subcontractors and such otherindividuals and entities performing or furnishing any of the Work to communicate with Citythrough Developer.

5.11.4 All services performed or provided to and material and equipment supplied

to Developer by a Subcontractor will be pursuant to an appropriate agreement betweenDeveloper and the Subcontractor, or supplier. Each such agreement for an amount inexcess of $10,000 in any year shall incorporate the terms of the Contract Documents tothe extent applicable to the Work to be performed by the Subcontractor and shallspecifically bind the Subcontractor to the agreement, shall expressly preserve and protectthe rights of City under the Contract Documents and shall include a provision grantingCity the right to succeed to the interest of, or otherwise accept an assignment of suchagreement in the event of a termination of this Agreement by City due to a default byDeveloper.

5.11.5 Developer shall require that all Subcontractors for Construction of the

Project shall comply with the Subletting and Subcontracting Fair Practices Act (Sections4100 through 4114 of the Dakota Public Contracts Law) where applicable.

5.12 Work Force and Equipment. Developer shall maintain and shall cause anySubcontractors to maintain, at all times, a work force and equipment capable ofperforming the Work that is the subject the relevant Subcontracts.

5.13 Laws and Regulations.

5.13.1 Developer shall give all notices and comply with all Laws and Regulationswhich are applicable to the performance of the Work. Except where otherwise expresslyrequired by applicable Laws and Regulations, City shall not be responsible for monitoringDeveloper's compliance with any Laws and Regulations.

5.13.2 If Developer performs any Work that is contrary to Laws or Regulations,Developer shall bear all costs arising therefrom and such costs shall be deemedExcluded Costs.

5.14 Record Documents. Developer shall maintain or cause to be maintained ina safe place at the Project Site one record copy of all Plans, Drawings, Specifications,


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Addenda, and, within a reasonable time after their preparation, Change Orders, in goodorder and annotated to show all changes made during Construction. These recorddocuments together with all approved Submittals will be available to City for reference.Upon completion of the Work, these record documents and Submittals, including areproducible set of record drawings, will be delivered to City.

5.15 Safety and Protection.

5.15.1 Developer shall be solely responsible for initiating, maintaining andsupervising all safety precautions and programs in connection with the Construction.Developer shall take all necessary precautions for the safety of, and shall provide thenecessary protection to prevent damage, injury or loss to:

5.15.1.1 All persons on the Project Site or who may be affected by theConstruction;

5.15.1.2 All Work and materials and equipment to be incorporated therein,

whether in storage, on or off the Project Site; and

5.15.1.3 Other property at the Project Site or adjacent thereto, including trees,shrubs, lawns, walks, pavements, roadways, structures, utilities and underground facilitiesnot designated for removal, relocation or replacement in the course of Construction.

5.15.2 Developer shall comply with all applicable Laws and Regulations relating toworker health and safety in performing the Work. Developer shall require itsSubcontractors to comply with all such Laws and Regulations during the performance ofthe Work.

5.15.3 Developer shall notify owners of adjacent property and of undergroundfacilities and utility owners, with the exception of City for facilities within the Project Site,when prosecution of the Work may affect them, and shall cooperate with them in theprotection, removal, relocation and replacement of their property. All damage, injury orloss to any property caused, directly or indirectly, in whole or in part, by Developer, anySubcontractor or any other individual or entity directly or indirectly employed by any ofthem to perform or furnish any of the Work or anyone for whose acts any of them may beliable, shall be remedied by Developer. Developer's duties and responsibilities for safetyand for protection of the Construction shall continue until recordation of the Grant Deed,except with respect to any Punch List item, as to which Developer's duties andresponsibilities for safety and for protection of the Construction shall continue untilcompletion of such item.

5.16 Safety Representative. Developer shall designate a qualified andexperienced safety representative at the Project Site whose duties and responsibilitiesshall be the prevention of accidents and the maintaining and supervising of safetyprecautions and programs. The Developer's Representative may serve in the role ofsafety representative without the necessity of additional individual to the Project Site.

5.17 Hazard Communication Programs. Developer shall be responsible for


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coordinating any exchange of material safety data sheets or other hazard communicationinformation required to be made available to or exchanged between or among employersat the Project Site in accordance with Laws and Regulations.

5.18 Hazardous Conditions. Except as provided in Sections 11.4, 13.4.2 or13.4.3, Developer shall be responsible for any Hazardous Condition at the Project Sitethat is caused, in any way, by any action or inaction of Developer, its Subcontractors oranyone else acting on behalf of Developer or for whom Developer is responsible.

5.19 Emergencies. In emergencies affecting the safety or protection of personsor the Construction or property at the Project Site or adjacent thereto, Developer, withoutspecial instruction or authorization from City, shall be obligated to act to preventthreatened damage, injury or loss. Developer shall give City prompt written notice ifDeveloper believes that any significant changes in the Construction or variations from theContract Documents have been caused thereby. In the event that any such changeresults in a change to the Project that increases Developer's costs (including interest orother carrying charges), Developer shall be entitled to a Change Order pursuant to

Section 10.3 to compensate it for such increased costs.

5.20 Prosecution of the Work. Developer shall diligently carry on the Work andadhere to the Progress Schedule during all disputes, claims, and/or disagreements withCity. Developer agrees that no Work shall be delayed or postponed pending resolution ofany such disputes, claims and/or disagreements, which claims, disputes and/ordisagreements shall be resolved in accordance with Section 27 of this Agreement,provided that all amounts that are not subject to a good faith claim, dispute ordisagreement are paid in full in a timely manner.

5.21 Submittals.

5.21.1 Developer shall provide City with the Submittals for City's review andapproval. Within ten (10) Days of the date Developer provides any Submittal, City shallapprove and return the Submittal to Developer, or shall return the Submittal withcomments identifying the specific reasons the Submittal has not been approved. In theevent a Submittal is returned with comments to Developer within the ten-Day period,Developer and the City shall meet to discuss in good faith the City's comments on theSubmittal. In the event that any such comments result in a change to the Project thatincreases Developer's costs (including interest or other carrying charges) or increases thetime required to perform the Work, Developer shall be entitled to a Change Orderpursuant to Section 11.3 to compensate it for such increased costs. Failure of the City toreturn any Submittal with comments within ten Days of its submission will result in theSubmittal being deemed approved. City's review and approval will be only to determine ifthe terms covered by the Submittals will conform to the information given in the ContractDocuments and be compatible with the design concept of the completed Project as afunctioning whole as indicated by the Contract Documents. City's review and approvalwill not extend to means, methods, techniques, sequences or procedures of constructionor to safety precautions or programs incident thereto, except as specifically provided for inthis Agreement.


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5.21.2 City's review and approval of required Submittals shall not relieveDeveloper from responsibility for any variation from the requirements of the ContractDocuments unless Developer has in writing called City's attention to each such variationat the time of submission and City has given written approval of each such variation byspecific written notation thereof incorporated in or accompanying the Submittal.

5.22 Subject to the precedence clause at Section 1.3, Developer shall complywith all other applicable terms and conditions of the Contract Documents

5.23 Subject to the precedence clause at Section 1.3, Developer shall complywith and perform the Work in accordance with the Standard Specifications applicable tothe Work pursuant to this Agreement.

5.24 Subject to the terms of Exhibit A, Developer shall secure and maintain at alltimes all Authorizations necessary to perform the Work, including, but not limited to, airquality permits. Authorizations shall be obtained in the City's name, except where by lawor practice, an Authorization is required to be in the name of the City and the Developer.

Developer shall be responsible for the payment of all fees for such Authorizations To theextent that any Authorization acquired in Developer's name will be required in connectionwith the ownership, operation or maintenance of the Project following SubstantialCompletion, Developer shall transfer such Authorization to the City upon SubstantialCompletion.

5.25 As soon as practicable after Final Completion, Developer will provide Citywith a complete set of as built drawings, including, at a minimum, general arrangementdrawings, loop flow diagrams, instrumentation and control schematics, electrical singleline drawings, and underground structures and piping layouts.

6 City's Responsibilities

6.1. City shall pay Developer the Contract Price, in accordance with the Scheduleof Values attached as Exhibit G to this Agreement.

6.2 The City presently has an option to purchase the Project Site pursuant tothe Option Agreement. City shall ensure that, upon the expiration of the Option

Agreement, James and Frances Beckett, the present owners of the Project Site, grantDeveloper an option to purchase the Project Site on the same terms set forth in theOption Agreement (except as otherwise set forth in this Section 6.2), which option will notexpire prior to the later of (i) the time when the proceeds of the Municipal Bonds becomeavailable to Developer, (ii) the receipt of a Final Validation Decision, (iii) the completion ofFinal DEQA Compliance, and (iv) the groundbreaking at the Project Site. The option tobe provided to Developer (x) shall provide for a credit against the purchase price for alloption consideration paid by Developer, (y) shall require that the Project Site be conveyedto the Developer, upon exercise of the option, free and clear of all liens, encumbrancesand title exceptions, except for easements existing on the date that the Option Agreementwas entered into and liens for taxes not due and payable at the time the Project Site istransferred to Developer, and (z) shall not provide for the leaseback of any portion of theProject Site to the present owners of the Project Site.


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6.3 Communications. City shall communicate with Subcontractors only throughDeveloper.

6.4 Taxes and Duties. Where applicable, City shall furnish to Developer, withinthirty (30) Days of the Effective Date, a certificate complying with state and localgovernmental law, regulations and ordinances identifying any components of the Work tobe considered exempt from the Project Taxes. Developer shall cooperate with City toestablish appropriate procedures and minimize the amount of such taxes to the extentreasonable and practical.

6.5 Safety Responsibilities. City shall not supervise, direct or have control orauthority over, nor be responsible for, Developer's means, methods, techniques,sequences or procedures of Construction or the safety precautions and programs incidentthereof, or for any failure of Developer to comply with Laws and Regulations applicable tothe furnishing or performance of the Work. City will not be responsible for Developer'sfailure to perform or furnish the Work in accordance with the Contract Documents.

6.7 Utilities. City shall furnish or have furnished, at no cost to Developer,electricity, natural gas, communications, and water for Construction to a single point onthe Project Site and Developer shall be responsible for further routing of electricity,natural gas, communications, and water for Construction of the Power Generation Facilityfrom the point furnished by City. The City shall furnish fuel for testing, and any revenuesattributable to electricity generated during testing shall be for the account of the City.

6.8 Leases and Easements. City shall secure all leases and easementsnecessary for the design, permitting, Construction, operation or maintenance of theProject. The City shall also secure the release or modification of all easements on the

Project Site, when, as and to the extent necessary to avoid interference with the design,permitting, Construction, operation or maintenance of the Project. Developer shallprovide reasonable assistance to City in connection with actions necessary to determineand obtain the necessary leases and easements

6.9 Interconnection. City shall take all steps necessary to enable Developer tointerconnect with the City's electrical system and water system and with Southern DakotaGas Company's gas system in accordance with the Scope of Work.

6.10 Validation Action; DEQA Permit. As soon as practicable after the approvalof this Agreement by the City Council, the City shall institute a validation action pursuantto Dakota State Law 860 et seq. (the "Validation Action"). Developer shall provideassistance to City in drafting said validation action, at Developer's expense. Developershall not be obligated to commence performance of the Procurement or Constructionphases until the Final Validation Decision and Final DEQA Compliance have occurred.

6.11 Water Supply Agreement. The City shall secure an agreement with thewater department for the supply of reclaimed water and process water dischargenecessary for the Construction, testing, operation and maintenance of the Project onterms which are mutually satisfactory to the department, the City, and Developer. As and


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to the extent requested by the City, Developer shall manage the negotiations with thedepartment and provide all legal and technical support required in connection therewith.

7 Compensation and Payments.

7.1 Contract Price. Developer agrees to perform the Work and City agrees tocompensate Developer for the costs of such Work, as modified by approved ChangeOrders, as follows:

Engineering Phase: $7,656,000Procurement Phase:$28,450,000Construction Phase: $7,515,000Contract Price: $43,621,000

7.2 Payment The Contract Price shall be paid in accordance with the Scheduleof Values attached hereto as Exhibit G, which is calculated to compensate Developer

according to progress in completion of the Work, measured against the ProgressSchedule. The Schedule of Values and Progress Schedule are subject to adjustment byChange Order.

7.2.1 On or before the fifth (5th) Day of each calendar month during theperformance of the Work, Developer shall submit to City an invoice for payment of anappropriate portion of the Contract Price for the period ending on the last Day of thecalendar month preceding such month ("Invoice Period"), setting out the progressachieved by the Developer as of the end of such Invoice Period, according to theSchedule of Values, reconciling such invoice with previous invoices, payments, Retentionand other withholdings, and Change Orders. Developer's invoice shall be accompanied

by a Payment Certificate in the form attached hereto as Exhibit C.

7.2.2 City shall promptly review such invoice and documentation and Developer'sprogress during the Invoice Period. In the event that City reasonably determines thatDeveloper has not provided adequate documentation to accompany such invoice, Citymay request additional documentation from Developer. Any dispute regarding thesufficiency of such documentation shall be resolved in accordance with Section 27 of this

Agreement.

7.2.3 Within twenty-five (25) Days following City's receipt of an invoice pursuant toSection 7.2.1, City shall pay to Developer the undisputed amount of the invoice, less anyRetention. Retention shall be released in accordance with Section 7.4 of this Agreement.

7.2.4 In the event City reasonably determines that Developer has not achieved theprogress claimed during the Invoice Period, City shall estimate Developer's progressduring the Invoice Period and shall pay Developer for the level of progress estimated byCity. Any dispute regarding the amount of such progress shall be resolved in accordancewith Section 27 of this Agreement.

7.23 If there is any dispute about any amount invoiced by Developer, the amount


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not in dispute shall be promptly paid in accordance with this Section 7.2, and anydisputed amount which is ultimately determined to have been payable with that invoiceshall be paid with interest, computed at an annual rate equal to the lesser of ten percent(10%), compounded monthly, or the highest rate allowed by law, from the date paymentwould originally have been due pursuant to this Agreement is there had been no dispute.

7.3 Source of Funds. City shall pay Developer for the Engineering Phase out ofcurrently available general obligation funds. City shall pay Developer for the Procurementand Construction Phases out of proceeds from the issuance and sale of the MunicipalBonds. City shall be entitled to defer payment of amounts otherwise due under theProcurement and Construction Phases of this Agreement to the time the proceeds fromthe Municipal Bonds become available, only in accordance with this Section 7.

7.3.1 All invoices for payment shall be submitted, reviewed and approved inaccordance with Section 7.2.

7.3.2 In lieu of the payment required by Section 7.2.3, City may, within twenty-five

(25) Days of the date it receives an invoice, provide Developer with a written notice that ithas approved all or a portion of the invoice, but that it intends to defer payment inaccordance with the terms of this Section 7.3 to the time Municipal Bond proceedsbecome available to it.

7.33 Amounts approved by City pursuant to this Section 7.3 shall bear interest,computed at an annual rate equal to the lesser of ten percent (10%), compoundedmonthly, or the highest rate allowed by law, from the date of approval until the date paid infull.

7.3.4 All amounts deferred pursuant to this Section 7.3, together with accrued

interest, shall be paid on the first invoice payment date pursuant to Section 7.2.3occurring after the date on which Municipal Bond proceeds become available to the Cityto pay such amounts.

7.3.5 If, either because the Municipal Bonds have not been issued or sold, orMunicipal Bond proceeds have not been made available to City, or for any other reason,Developer has not been paid all amounts deferred pursuant to this Section 7.3, togetherwith all accrued interest, on or before September 1, 2002, Developer may, in its solediscretion, elect to terminate this deferred payment provision. In accordance with theapplicable Constitutional debt limitation, all sums then due Developer shall be deemedgeneral obligations of City, and City shall pay Developer all such sums immediately.

7.4 Retention.

7.4.1 General. From each approved payment of the Contract Price pursuant toSection 7.2, ten percent (10%) will be deducted and retained by the City ("Retention"),and the remainder will be paid to Developer.

7.4.2 Payment of Retention. The Retention, and any unpaid portion of theContract Price remaining to be paid to Developer, shall be released and paid to


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Developer and subcontractors pursuant to Dakota Public Contract Law Section 7107.

7.4.3 Other Retentions. In addition to the Retention, the City may deduct fromeach payment under this Agreement an amount necessary to protect City from loss("Other Retention") because of: (D liquidated damages which have accrued as of the dateof the application for payment; (2) any sums expended by the City in performing any ofDeveloper's obligations under the Contract Documents which Developer has failed toperform or has performed inadequately; (3) defective Work not remedied; (4) stop notices,liens or an\ applicable encumbrances as allowed by state law: (5) unauthorized deviationsfrom this Agreement; (6) any sums representing expenses, losses or damages asreasonably determined h the City, incurred by the City for which Developer is liable underthis Agreement: and any other sums which the City is entitled to recover from Developerunder the terms of this Agreement or pursuant to state law, including Section 1727 of theDakota Labor Law In no case shall Other Retention pursuant to this paragraph exceed5% of the Contract Price. The failure by the City to deduct any of these sums from apayment hereunder shall not constitute a waiver of the City's right to such sums. Prior todeducting any amount pursuant to this Section City shall first notify Developer in writing of

its intention to withhold sums and the specific reasons therefor. Disputes regardingamounts deducted pursuant to this Section shall be resolved in accordance with Section27 of this Agreement.

7.4.4 Substitutions for Contract Retentions. In accordance with Dakota PublicContract Law Section 22300, the City will permit the substitution of for any monieswithheld by the City to ensure performance under this Agreement. At the request andexpense of the Developer, securities equivalent to the amount withheld shall be placedwith the City, or with a state or federally chartered bank in Dakota as the escrow agent.Thereafter the City shall then pay such monies to the Developer as they become due forthe reasonably satisfactory completion of this Agreement and the securities shall he

returned the Developer. For purposes of this Section and Section 22300 of the PublicContracts Law the term "satisfactory completion of the contract" shall mean the time theCity has issued notices of final acceptance of the Work and filed a Notice of Completionas required by this Contract, which final acceptance shall not be unreasonably withheld ordelayed. The Developer shall he the beneficial owner of any securities substituted orwithheld and shall receive any interest thereon. The escrow agreement used for thepurposes of this Section 7.4.4 shall be in the form provided by the City.

7.5 Prompt Payment to Subcontractors. As required by Dakota State LawSection 3262.5, Developer shall pay each Subcontractor undisputed amounts due forsatisfactory performance of its contract no later than 15 working days from the receipt ofeach payment the Developer receives from the City for that Subcontractor's work. Anydelay or postponement of payment from the above referenced time frame may occur onlyfor good cause following written approval of the City.

7.6 Stop Notice. If, within the time fixed by law, a properly executed notice tostop payment is filed with City, due to Developer's or Developer's Subcontractor's failureto pay for labor or materials used in the Work, all money due for such labor or materialswill be withheld from payment to Developer in accordance with applicable laws.


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7.7 City performed Work. Whenever any portion of the Work is performed byCity at Developer's request, the cost thereof shall be charged against Developer and maybe deducted from any amount due or becoming due from City.

7.8 Precautionary Work. Whenever immediate action is required to preventinjury, death, or property damage, and precautions which are the Developer'sresponsibility have not been taken and are not reasonably expected to be taken, Citymay, after a reasonable attempt to notify Developer, cause such precautions to be takenand shall charge the cost thereof against Developer, or may deduct such cost from anyamount due or becoming due from City. City action or inaction under such circumstancesshall not be construed as relieving Developer or its Surety from liability.

7.9 Payments Not Relief from Developer's Obligations. Payment shall notrelieve Developer from its obligations under the Contract Documents, nor shall suchpayment be construed to be acceptance of any of the Work. Payment shall not beconstrued as the transfer of ownership of any equipment or materials to City.Responsibility of ownership shall remain with Developer who shall be obligated to store

any fully or partially completed work or structure for which payment has been made; orreplace any materials or equipment required to be provided under the ContractDocuments which may be damaged, lost, stolen or otherwise degraded in any way prior torecordation of the Grant Deed, or, with respect to any Punch List item, prior to thecompletion of such item.

7.10 Warranty/Guarantee Periods Not Affected. Warranty and guaranteeperiods shall not be affected by any payment but shall commence on the date set forth inSection 12, Warranties and Guarantees.

7.11 No Liquidated Damages Waiver. No payment made to Developer or its

sureties will constitute a waiver of the liquidated damages under Section 10.

7.12 Waiver by Developer. Acceptance of final payment of the Contract Pricepursuant to Section 7.4.2 shall constitute a waiver of all claims for payment by Developer,except (i) those claims previously made in writing and identified as unsettled at the time ofsubmission of the final payment request; and (ii) indemnification claims, includingindemnification pursuant to Section 14.

8 Title and Risk of Loss.

8.1 Conditioned upon payment by City of the amounts owing under thisAgreement, Developer shall warrant and shall cause any Subcontractors to warrant thattitle to all Work will pass to City free and clear of all liens, claims, security interests, orencumbrances, other than (i) liens for taxes of Developer either not yet due or beingcontested in good faith by appropriate proceedings so long as such proceedings do notinvolve material risk of the sale, forfeiture or loss of the Project or the Project Site or anyinterest therein, (ii) materialmen's, mechanic's, workmen's, repairmen's or other like liensarising in the ordinary course of business securing obligations that are not overdue bymore than 180 days or are being contested in good faith by appropriate proceedings solong as such proceedings do not involve any material risk of the sale, forfeiture or loss of


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any of the Project or tie Project Site or any interest therein, and provided further thatDeveloper shall provide a bond or other security in connection with any such liens orencumbrances, as may be reasonably required by City, and (iii) liens, claims, securityinterests, or encumbrances existing on the date that the Project Site was acquired byDeveloper.

8.2 Passage of Title. Conditioned upon payment by City of the amounts owingunder this Agreement, title to the Work shall pass to City at the time of recordation of theGrant Deed. Developer shall execute and deliver to City all appropriate instrumentsnecessary to transfer title to City, and the City shall record the Grant Deed within thirty(30) days after such execution and delivery.

8.3 Risk of Loss. Notwithstanding which Party has title, the risk of damage to orloss of any material, equipment, supplies or other property, whether stored on or off theProject Site shall remain with Developer until the date of recordation of the Grant Deed.

9 Substantial Completion.

9.1 Substantial Completion Target Date.

i. The Substantial Completion Target Date is March 31, 2003, unlessextended by Change Order or in accordance with Clause (ii) or Exhibit A.

ii. The Substantial Completion Target Date shall be extended on a day for daybasis for any delay described herein, to the extent that such delay is not the fault ofDeveloper; provided, however, that no individual Day shall be counted twice indetermining the length of any such extension:

(a) The receipt of a Final Validation Decision after the anticipated date for suchreceipt, as set forth in the Schedule of Values.

(b) The completion of the issuance of the Municipal Bonds, and the availabilityof the proceeds thereof for payments pursuant to this Agreement, after the anticipateddate therefor, as set forth in the Schedule of Values.

(c) The delivery of Major Equipment after the date on which such equipmentwas expected to be delivered, as set forth in the Progress Schedule, to the extent thatsuch delay is not due to delay in ordering Major Equipment by Developer or other fault ofDeveloper.

(d) Delay in achieving an interconnection between the Project and the City'selectrical system, water system, or other utility systems, and delay in achieving aninterconnection between the Project and Southern Dakota Gas Company's system,sufficient to permit Construction, testing, operation and maintenance of the Project,beyond the date specified in the Progress Schedule.

9.2 Notice of Substantial Completion by Developer. Promptly after all of theconditions required by the definition of Substantial Completion have been satisfied,


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Developer shall issue to City a Notice of Substantial Completion, which shall includecopies of any test reports required by the Scope of Work and set forth the date uponwhich the conditions for Substantial Completion were satisfied. Within ten (10) Days afterreceipt of the Notice of Substantial Completion, City shall respond to Developer in writingand shall either accept or reject such Notice. City shall not unreasonably withhold,condition or delay its acceptance of Developer's Notice. If the Notice is rejected by City,City shall identify with specificity any deficiencies, which deficiencies shall be promptlycorrected by Developer. Developer shall thereafter resubmit a Notice of SubstantialCompletion to City. Failure of the City to reject the Notice of Substantial Completion, witha list of deficiencies, within ten (10) Days of its submission, will result in the Notice ofSubstantial Completion being deemed approved. Disputes regarding the achievement ofSubstantial Completion shall be resolved in accordance with Section 27 of this

Agreement.

10 Liquidated Damages.

10.1 General. Developer shall achieve Substantial Completion on or before the

Substantial Completion Target Date. In recognition of the financial issues associated withDeveloper's failure to achieve Substantial Completion by the Substantial CompletionTarget Date, City and Developer agree to certain Schedule Damages.

10.2 Schedule Damages. Failure of Developer to achieve SubstantialCompletion by the Substantial Completion Target Dale will result in damages beingsustained by City. Such damages are, and will continue to be, impracticable andextremely difficult to determine. Developer agrees that if Substantial Completion has notbeen achieved by the Substantial Completion Target Date, it is understood,acknowledged and agreed that the Developer shall pay to the City as fixed and liquidateddamages, and not as a penalty, an amount per Day determined in accordance with the

following schedule of monthly damage levels, prorated for the number of Days during themonth prior to Substantial Completion:

Month Monthly Damage LevelFirst month of delay prior to July 2003 $50,000Second month of delay prior to July 2003 $100,000Third month of delay prior to July 2003 $150,000

Any month starting with July 2003 $500,000

Execution of this Agreement shall constitute agreement by City and Developer that saidsum is the value of the costs and actual damage caused by the failure of Developer toachieve Substantial Completion by the Substantial Completion Target Date. Such sum isliquidated damages and shall not be construed as a penalty, and may be deducted frompayments due Developer if such delay occurs. The Parties acknowledge and agree thatthe provisions of this Section 10.2 are reasonable under the circumstances existing onthe Effective Date Schedule Damages pursuant to this Section shall be the City's sole andexclusive remedy for any delay in achieving Substantial Completion by the SubstantialCompletion Target Date. The aggregate total of the Schedule Damages assessedagainst Developer under this Agreement shall not exceed ten percent (10%) of theContract Price.


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10.3 No Liquidated Damages During Payment Delay. Notwithstanding theforegoing, no liquidated damages shall be due with respect to any Day if, on such Day,there are any amounts due and payable hereunder which have not been paid by the Cityand which are not then subject to a good faith dispute with the City and not otherwisebeing challenged in good faith by the City.

11 Changes.

11.1 Changes for Developer's Convenience. Developer may make any changeto the Project that enhances or does not detract from the Project. Developer shall notmake a material change to the Project without the prior written consent of City. Materialchanges shall be authorized by Change Order. City shall accept or dispute a materialchange within twenty (20) Days of receiving notice of such proposed change. Suchchanges may require an adjustment to the Contract Price or Completion Date. Disputesregarding the impact of any change shall be resolved in accordance with Section 27 ofthis Agreement.

11.2 Changes for City's Convenience. City may order additions, deletions, orrevisions in the Work. Such changes shall be authorized by Change Order. If suchchange increases Developer's costs (including interest or other carrying charges),adversely affects Developer's ability to meet the Completion Date, Developer shall beentitled to a change to the Work, and an equitable adjustment in the Contract Price, andCompletion Date, as appropriate. Developer shall propose in writing an estimatedequitable adjustment in the Contract Price and Completion Date due to any such change.City shall accept or dispute such proposal in writing within twenty (20) Days of receivingnotice of such proposed change. Disputes regarding the impact of any change shall beresolved in accordance with Section 27 of this Agreement.

11.3 Other Changes. In the event and to the extent that any act or omission ofCity, or any error or change in City provided information, a change in the law, or a ForceMajeure Event affects the Work, increases Developer's costs (including interest or othercarrying charges), adversely affects Developer's ability to meet the Completion Date,Developer shall be entitled to a change to the Work and an equitable adjustment in theContract Price, and Completion Date, as appropriate. Developer shall propose in writinga change to the Work and an equitable adjustment in the Contract Price, and CompletionDate due to any such change, and City shall accept or dispute such proposal in writingwithin thirty (30) Days of receipt of Developer's proposal. Disputes regarding the impactof any change shall be resolved in accordance with Section 27 of this Agreement.

11.4 Differing Conditions. In the event and to the extent that discovery on theProject Site of (i) conditions that Developer could not have reasonable foreseen, (ii)historically significant artifacts, or (iii) Hazardous Conditions, affects the Work, increasesDeveloper's costs (including interest or other carrying charges), or adversely affectsDeveloper's ability to meet the Completion Date, Developer shall be entitled to change tothe Work and an equitable adjustment in the Contract Price, and Completion Date, asappropriate. Developer shall propose in writing a change to the Work and an equitableadjustment in the Contract Price, and Completion Date due to any such differing


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conditions City shall accept or dispute such proposal in writing within twenty (20) Days ofreceipt of Developer's proposal. Disputes regarding the impact of any change shall beresolved in accordance With Section 27 of this Agreement.

11.5 Supporting Documentation. All claims by Developer for adjustments toContract Price, Completion Date, or Milestones under this Section 11.5 shall besupported by reasonable documentation.

11.6 Changes Beyond the Scope of the Work. In the event that either Partydesires a change to the Project that is in an area not covered by 'the present Scope ofWork, the Parties will meet in good faith to discuss the requested change; provided,however, that neither Party shall be obligated to agree to such a change.

12 Warranties and Guarantees.

12.1 Developer's Guarantee. Subject to Section 13.6, Developer guaranteesand shall have any Subcontractors guarantee, subject to the other provisions of this

Agreement, that the Work shall be performed in a skillful and workmanlike manner, freefrom defects in workmanship, and in conformance with the Contract Documents.

12.2 Assignment of Subcontractor Warranties. Developer shall cause allSubcontractor and Supplier warranties to be assignable to City or City's designee.Developer shall assign to City all unexpired Subcontractor warranties upon andconcurrently with Developer's submission to the City of the Grant Deed.

12.3 Warranty/Guarantee Periods Commencement. All warranties andguarantees under this Agreement shall commence upon Substantial Completion.

12.4 City Required Materials, Supplies and Equipment. Developer does notguarantee or warrant, either expressly or impliedly, the materials in or workmanship ofmaterials, supplies and equipment manufactured by third parties and furnished andinstalled by any Subcontractors in the performance of the Work where such materials,supplies and equipment are chosen or required by City, contrary to the recommendationof Developer.

12.5 DISCLAIMER OF WARRANTIES. EXCEPT AS SET FORTH IN THISAGREEMENT, THERE ARE NO REPRESENTATIONS OR WARRANTIES, EXPRESSOR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR APARTICULAR PURPOSE, WITH RESPECT TO THE PROJECT.

13 Tests and Inspections: Correction, Removal or Acceptance of DefectiveConstruction.

13.1 Notice of Nonconformance. Upon actual discovery, City shall give promptwritten notice to Developer of any fault or defect in the Construction within ten (10)working days after City has actual knowledge of any such defective Construction. Alldefective Construction may be rejected, corrected or accepted a provided in this Section13.


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13.2 Access to Construction. City, City's consultants, other representatives andpersonnel of City, independent testing laboratories and governmental agencies with

jurisdictional interests will have access to the Construction at the Project Site atreasonable times for their observation, inspection and testing. Developer shall providethem proper and safe conditions for such access and advise them of Developer's Projectsite safety procedures and programs so that they may comply therewith as applicable.

13.3 Inspections.

13.3.1 Developer shall (i) maintain an adequate inspection system and performsuch inspections as will assure that the Work performed conforms to Contract Documentsand all applicable Laws and Regulations, and (ii) maintain and make available to Cityadequate records of such inspections. Developer shall provide and maintain a qualitycontrol system acceptable to City.

13.3.2 If any Construction (01 the construction work of others) that is required by

the Scope of Work or any applicable Laws and Regulations to be inspected, tested orapproved is covered by Developer without having been inspected, tested or approved byDeveloper and without written concurrence of City, it must, if requested by City, beuncovered for observation at Developer's expense as an Excluded Cost, unlessDeveloper has given City timely notice of Developer's intention to cover the same andCity has not acted with reasonable promptness in response to such notice.

13.4 Uncovering Construction.

13.4.1 If any Construction is covered contrary to the written request of City, it must,if requested by City, be uncovered for City's observation and recovered at Developer's

expense as an Excluded Cost.

13.4.2 If City considers it necessary or advisable that covered Construction beobserved by City or inspected or tested by others, Developer, at City's request, shalluncover, expose or otherwise make available for observation, inspection or testing as Citymay require, that portion of the Construction in question, furnishing all necessary labor,material and equipment. If it is found that such Construction is defective, Developer shallpay all costs and damages as an Excluded Cost caused by or resulting from suchuncovering, exposure, observation, inspection and testing and of reasonably satisfactoryreplacement or rework, (including but not limited to all fees and charges of engineers,architects, attorneys and other professionals, all court or arbitration or other disputeresolution costs, and all costs of repair or replacement of work of others). If it is foundthat such Construction is not defective, City shall pay all costs and damages caused by orresulting from such uncovering, exposure, observation, inspection and testing and ofreasonably satisfactory replacement or rework, (including but not limited to all fees andcharges of engineers, architects, attorneys and other professionals, all court or arbitrationor other dispute resolution costs, and all costs of repair or replacement of work of others)and shall adjust the schedule Milestones and Substantial Completion Target Date toaccount for the delay caused by the uncovering, exposure and observation of the work.


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13.5 Correction or Removal of Defective Construction. City will have authority todisapprove or reject defective Construction and will have authority to require specialinspection or testing of the Construction whether or not the Construction is fabricated,installed or completed. If required by City, Developer shall promptly, as directed, eithercorrect all defective Construction, whether or not fabricated, installed or completed, or, ifthe Construction has been rejected by City, remove it from the Project Site and replace itwith non defective Construction. Developer shall bear all direct costs of such correctionor removal as Excluded Costs made necessary thereby.

13.6 Corrective Period. If within one (D year after the date of SubstantialCompletion, or such longer period of time as may be prescribed by Laws or Regulationsor by the terms of any applicable special guarantee or warranty required by the ContractDocuments or by any specific provision of the Contract Documents, any Construction isfound to be defective, Developer shall promptly, without cost to City and in accordancewith City's written instructions, (i) correct such defective Construction, or, if it has beenrejected by City, remove it from the Project Site and replace it with Construction that is notdefective, and (ii) satisfactorily correct or remove and replace any damage to other

Construction or the work of others resulting therefrom. If Developer does not promptlycomply with the terms of such instructions, or in an emergency where delay would causeserious risk of loss or damage, City may have the defective Construction corrected or therejected Construction removed and replaced, and all costs and damages caused by orresulting from such removal and replacement (including but not limited to all fees andcharges of engineers, architects, attorneys and other professionals, all court or arbitrationor other dispute resolution costs, and all costs of repair or replacement of work of others)will be paid by Developer as an Excluded Cost. Notwithstanding the foregoing, to theextent that any deficiency identified pursuant to this Section involves a defect ordeficiency in a piece of the Major Equipment, such defect or deficiency is to be addressedexclusively pursuant to the warranty provided by the equipment supplier. Developer's

obligation in that circumstance will be limited to notifying the supplier of such MajorEquipment, and City's remedy shall be limited to the remedy available pursuant to thesupplier's warranties or guarantees.

13.7 Acceptance of Defective Construction. If instead of requiring correction orremoval and replacement of defective Construction, City prefers to accept such defectiveConstruction, City may do so. City shall provide Developer with a written summary of allcosts attributable to City's evaluation of whether to accept such defective Construction(such costs to include but not be limited to all fees and charges of engineers, architects,attorneys and other professionals and all court or arbitration or other dispute resolutioncosts) and Developer shall pay such costs as Excluded Costs. If any such acceptanceoccurs prior to final payment of the Contract Price pursuant to Section 6.2.5, a ChangeOrder will be issued incorporating the necessary revisions in the Contract Documents withrespect to the Construction; and City shall be entitled to net such Excluded Costs againstany amounts otherwise owing to Developer. If the acceptance occurs after final paymentof the Contact Price pursuant to Section 6.2.5, the appropriate amount will be paid byDeveloper to City Disputes regarding the reasonableness of City's costs shall be resolvedin accordance with Section 27 of this Agreement.

14 Indemnities.


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14.1 Developer's Indemnity. Developer shall defend, indemnify and hold City, itsdirectors, officials, officers, employees and gents free and harmless from any and allclaims, demands, causes of action, costs, expenses, liability, loss, damage or injury ofany kind, in law or equity, attributable to injury to or death of persons, including wrongfuldeath, or attributable to the destruction of or damage to property , in any manner arisingout of or incident to any intentional or negligent acts, errors or omissions of Developer, itsofficials, officers, employees, subcontractors, consultants or agents in the performance ofthis Agreement, including without limitation the payment of all consequential damages(other than lost profits) and reasonable attorneys fees, expert witness fees and otherrelated costs and expenses of defense. Developer shall defend, with counsel approvedby the City (which approval shall not be unreasonably withheld, conditioned or delayed)and at Developer's own cost, expense and risk, any and all such aforesaid suits, actionsor other legal proceedings of every kind that may be brought or instituted against City, itsdirectors, officials, officers, employees and agents. Developer shall pay and satisfy any

judgment, award or decree that may be rendered against City, its directors, officials,officers, employees and agents in any such suits, actions or other legal proceedings.

Developer shall also reimburse City for the cost of any settlement paid by City arising outof any such claims, demands, causes of action, costs, expenses, liabilities, loses,damages, injuries, suits, actions, or other legal proceedings. Such reimbursement shallinclude payment for City's attorney's fees and costs, including expert witness fees.Developer shall reimburse City, its directors, officials, officers, employees and agents forany and all legal expenses and costs, including expert witness fees, incurred by each ofthem in connection therewith or in enforcing the indemnity herein provided. Developer'sobligation to indemnify shall not be reduced by insurance proceeds, if any, received bythe City, its directors, officials, officers, employees and agents.

14.2 City's Indemnity. City shall defend, indemnify and hold Developer, its

directors, officials, officers, employees and agents free and harmless from any and allclaims, demands, causes of action, costs, expenses, liability, loss, damage or injury ofany kind, in law or equity, attributable to injury to or death of persons, including wrongfuldeath, or attributable to the destruction of or damage to property , in any manner arisingout of or incident to any intentional or negligent acts, errors or omissions of City, itsofficials, officers, employees, subcontractors, consultants or agents in the performance ofthis Agreement, including without limitation the payment of all consequential damages(other than lost profits) and reasonable attorneys fees, expert witness fees and otherrelated costs and expenses of defense. City shall defend, with counsel approved by theDeveloper (which approval shall not be unreasonably withheld, conditioned or delayed)and at City's own cost, expense and risk, any and all such aforesaid suits, actions or otherlegal proceedings of every kind that may be brought or instituted against Developer, itsdirectors, officials, officers, employees and agents. City shall pay and satisfy any

judgment, award or decree that may be rendered against Developer, its directors, officials,officers, employees and agents in any such suits, actions or other legal proceedings. Cityshall also reimburse Developer for the cost of any settlement paid by Developer arisingout of any such claims, demands, causes of action, costs, expenses, liabilities, loses,damages, injuries, suits, actions, or other legal proceedings. Such reimbursement shallinclude payment for Developer's attorney's fees and costs, including expert witness fees.City shall reimburse Developer, its directors, officials, officers, employees and agents for


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any and all legal expenses and costs, including expert witness fees, incurred by each ofthem in connection therewith or in enforcing the indemnity herein provided. City'sobligation to indemnify shall not be reduced by insurance proceeds, if any, received bythe Developer, its directors, officials, officers, employees and agents.

14.3 Intellectual Property Infringement.

14.3.1 License Fees and Royalties. Developer shall pay all license fees androyalties and assume all costs incident to the performance of the Work or theincorporation in the Work of any invention, design process, product or device which is thesubject of patent rights or copyrights held by others. If a particular invention, design,process, product or device is specified in writing by City for use in the performance of theConstruction and if to the actual knowledge of City its use is subject to patent rights orcopyrights calling for the payment of any license fee or royalty to others, the existence ofsuch rights shall be disclosed to Developer by City.

14.3.2 Indemnity Against Intellectual Property Infringement. To the fullest extent

permitted by Laws and Regulations, Developer shall defend, indemnify and hold harmlessCity, its officers, agents and employees, from and against all claims, costs, losses anddamages (including but not limited to all fees and charges of engineers, architects,attorneys and other professional and all court or arbitration or other dispute resolutioncosts) arising out of or resulting from any infringement of patent rights or copyrightsincident to the use in the performance of the Work or resulting from the incorporation inthe Work of any invention, design, process, product or device not specified in writing byCity.

14.3.3 Injunction. If City is enjoined from completion of the Project or any partthereof or from the use, operation or enjoyment of the Project or any part thereof as a

result of such claim as set forth in Section 14.3.2 or legal action or any litigation basedthereon, Developer shall promptly arrange to have such injunction removed at no cost toCity.

14.3.4 Developer's Continuing Obligation. City's acceptance of Developer'sengineering design and or proposed or supplied materials and equipment shall not beconstrued to relieve Developer of any obligation hereunder.

14.3.5 Limitations and Conditions. In the event of any claim or legal action forinfringement, Developer shall have the right, at its option, and at its expense, either toprocure for City the rights alleged to have been infringed or to modify the infringing item ina way reasonably satisfactory to City, in the reasonable exercise of its judgment, so that itbecomes noninfringing.

14.3.6 Notwithstanding the foregoing, to the extent that any infringement oralleged infringement involves only a piece of Major Equipment, such infringement oralleged infringement shall be addressed exclusively pursuant to the warranty provided bythe equipment supplier. Developer's obligation in that circumstance will be limited tonotifying the supplier of such Major Equipment, and City's remedy shall be limited to theremedy available pursuant to the supplier's warranties or guarantees.


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14.4 Environmental Indemnities.

14.4.1 The City shall indemnify and hold harmless Developer and its directors.officials, officers, employees and agents against and from any claims, demands, causesof action, costs, expenses, liability, loss, damage or injury of any kind, in law or equity.attributable to (a) any Environmental Condition. relevant to the Project Site or anyactivities conducted thereon, existing as of and/or prior to the date that Developer takespossession of the Project Site, even if not discovered until after the date that Developertakes possession of the Project Site (h) any violation of an Environmental Law withrespect to the Project Site or activities conducted thereon, existing as of and/or prior tothe date that Developer takes possession of the Project Site, even if not discovered untilafter the date that Developer takes possession of the Project Site or (c) anyEnvironmental Condition and/or violation of Environmental Law existing after the date thatDeveloper takes possession of the Project Site, relating to or originating from property\adjacent to the Project Site (each a "Claim") except, in each case, to the extent suchEnvironmental Condition and/or violation of Environmental Law is caused by the gross

negligence or willful misconduct of Developer.

14.4.2 The City shall indemnify and hold harmless Developer and its directors,officials, officers, employees and agents against and from any claims, demands. cause ofaction, costs, expenses, liability, loss, damage or injury of any kind, in law or equityattributable to (a) any Environmental Condition, relevant to the Project Site or an\ activityconducted thereon. arising after the Developer transfers the Project and the Project Siteto the (h) any violation of an Environmental Law with respect to the Project Site oractivities conducted thereon, arising after the Developer transfers the Project and theProject Site to the ('its: 01 ( Environmental Condition and/or violation of EnvironmentalLaw arising after the Developer transfers the Project and the Project Site to the City.

relating to or originating from property adjacent to the Project Site (each a "Claim") except.in each case, to the extent such Environmental Condition and/or violation ofEnvironmental Law is caused by the gross negligence or willful misconduct of Developer.

14.4.3 Notwithstanding Section 5.18, the Parties acknowledge that the activities ofDeveloper to prepare the Project Site and construct the Project may result in themovement or excavation of contaminated soils and groundwater, and could cause existingcontamination to be relocated or released into previously unaff