Exhibit 10.8
ENGINEERING, PROCUREMENT, AND
CONSTRUCTION CONTRACT
BETWEEN
CE CASECNAN WATER AND ENERGY COMPANY, INC.,
Owner,
AND
CP CASECNAN-CONSORTIUM, a limited liability consortium
with external activities under Italian law,
Contractor
EXHIBITS
A Statement of the Work
B Applicable Permits
C Progress Payment Schedule
D Acceptance and Performance Tests
E Milestone Schedule
F Critical Path Schedule
G Change in the Work Form
H Form of Progress Report
I Insurance Coverages
J Spare Parts to Be Provided by Contractor
K Warranty Procedures
L Form of Contractor Lien Waiver
L-1 Form of Final Contractor Lien Waiver
M Form of Subcontractor and Vendor Lien Waiver
M-1 Form of Final Subcontractor and Vendor Lien Waiver
N Form of Contractor's Invoice
O Form of Assignment Clause for Subcontracts
P Turbine Guarantee
Q Project Performance Guarantee
Q-1 Project Performance Output at 250M Gross Head
R Description of the Site
S Environmental Compliance Certificate
T NPC Interface Conditions
U Major Existing Site Assets
V Electro-Mechanical Subcontract
W Electro-Mechanical Specification
X Form of Demand Bank Security
Y Form of Retention Security
THIS ENGINEERING, PROCUREMENT, AND CONSTRUCTION
CONTRACT (the "Contract") is made and entered into as of
this 7th day of May, 1997, by and between CE CASECNAN WATER
AND ENERGY COMPANY, INC., a Philippine corporation
(hereinafter "Owner"), and CP CASECNAN, a limited liability
consortium with external activities under Italian law
(the "Contractor"). Each entity is sometimes individually
referred to herein as a "Party" and both entities are
sometimes collectively referred to herein as the "Parties".
W I T N E S S E T H
A. Owner desires to develop, finance, construct,
own, and operate a combined irrigation and power generation
project to be located on the island of Luzon, Republic of
the Philippines, commonly known as the Casecnan Multipurpose
Project.
B. A portion of the work on such project has
been performed by Hanbo Engineering & Construction Co., Ltd.
and Hanbo Corporation (collectively, "Hanbo") pursuant to
that certain Engineering, Procurement and Construction
Contract, dated October 10, 1995 (the "Hanbo Contract")
between Owner and Hanbo.
C. Owner desires Contractor to provide all
engineering, procurement, and construction services with
respect to such project, and Contractor desires to provide
such services, all in accordance with the terms and
conditions set forth in this Contract.
NOW, THEREFORE, in consideration of the sums to be
paid to Contractor by Owner and of the covenants and
agreements set forth herein, the Parties agree as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION
1.1 As used herein, the following terms shall
have the indicated definitions:
"Applicable Laws": All laws (including building
codes), treaties, ordinances, judgments, decrees,
injunctions, writs, orders, and stipulations of any court,
arbitrator, or governmental agency or authority and
statutes, rules, regulations, orders, and interpretations
thereof of any national, municipal, regional, environmental,
or other governmental body, instrumentality, agency,
authority, court, or other body, in each case to the extent
the same has jurisdiction over Contractor, the Site, or
performance of the Work.
"Applicable Permits": Those permits identified in
Exhibit B, together with all other valid waivers,
exemptions, variances, franchises, permits, authorizations,
approvals, licenses, or similar orders of or from any
national, municipal, regional, environmental, or other
governmental body, instrumentality, agency, authority,
court, or other body, in each case to the extent the same
has jurisdiction over Contractor, the Site, or performance
of the Work.
"Authorities": The Government of the Republic of
the Philippines, all provincial, regional, local, and
municipal government bodies thereunder, and all political
subdivisions, agencies, and instrumentalities of the
foregoing.
"Balance of Scope": The Work to be performed
hereunder other than the Work included in the Electro-
Mechanical Scope.
"Balance of Scope Contract Price Component": The
portion of the overall Contract Price attributable to the
Work included in the Balance of Scope. Initially, the
Balance of Scope Contract Price Component equals
US$205,350,000. Increases to the Contract Price shall act
to increase the Balance of Scope Contract Price Component,
except to the extent such increase in the Contract Price is
attributable to the Electro-Mechanical Scope (in which case
such increase shall act to increase the Electro-Mechanical
Scope Contract Price Component).
"Balance of Scope Liquidated Damages": All
amounts (other than Electro-Mechanical Liquidated Damages)
payable to Owner pursuant to Article 14 of this Contract.
"Balance of Scope Payments": All amounts (other
than Electro-Mechanical Payments) payable by Contractor to
or for the benefit of Owner under this Contract.
"Business Day": A Day, other than a Saturday or
Sunday or Holiday, on which banks are generally open for
business in Manila and New York City.
"Buy Down Amount": The amount payable as damages
pursuant to Section 14.2 for the failure of the Project to
achieve the Project Performance Guarantee.
"Change in Law": The enactment, adoption,
promulgation, modification, or repeal after the date of this
Contract of any Applicable Law or the modification after the
date of this Contract of any Applicable Permit that
establishes requirements adversely affecting Contractor's
costs or schedule for performing the Work, provided that a
change in national or any other income tax law or any other
law imposing a tax, duty, levy, impost, fee, royalty, or
charge for which Contractor is responsible hereunder shall
not be a Change in Law pursuant to this Contract.
"Change in the Work": A change in the Work as
defined in Section 15.1.
"CMC": Cooperativa Muratori & Cementisti-C.M.C.-
di Ravenna s.r.l.
"CMC\Pizzarotti Corporate Guaranty": The joint
and several guaranty to be issued by CMC and Pizzarotti in
favor of Owner, in form and substance mutually satisfactory
to CMC, Pizzarotti, Owner and the Financing Entities,
guarantying Contractor's obligations under this Contract
with respect to the Balance of Scope (including all Balance
of Scope Payments).
"CMC\Pizzarotti Demand Bank Security": The demand
bank guaranty, in substantially the form of Exhibit X, to be
issued to Owner by a bank satisfactory to Owner, and
otherwise in form and substance mutually satisfactory to
Contractor, Owner and the Financing Entities, guarantying
Contractor's obligations under this Contract and in an
amount equal to 35% of the Balance of Scope Contract Price
Component.
"Consulting Engineer": The consulting engineer (or
engineers) selected and designated by the Financing
Entities.
"Contract": This Engineering, Procurement, and
Construction Contract, including all exhibits hereto, as the
same may be modified, amended, or supplemented from time to
time in accordance with Section 37.5.
"Contract Price": The fixed amount for performing
the Work that is payable to Contractor as set forth in
Section 6.1 hereof.
"Contractor": CP Casecnan-Consortium, a limited
liability consortium with external activities under Italian
law.
"Contractor's Invoice": An invoice from Contractor
to Owner in accordance with Section 7.1(a) and in the form
of Exhibit N hereto.
"Contractor's Permits": Those permits identified
on Part II of Exhibit B, together with all other valid
waivers, exemptions, variances, franchises, permits,
authorizations, approvals, licenses, or similar orders of or
from any national, municipal, regional, environmental, or
other governmental body, instrumentality, agency, authority,
court, or other body, in each case to the extent the same
has jurisdiction over Contractor, the Site, or performance
of the Work; provided, however, that Contractor's Permits
shall not include Owner's Permits.
"Critical Path Item(s)": The items identified as
critical path items on the Critical Path Schedule prepared
by Contractor.
"Critical Path Schedule": A critical path schedule
prepared by Contractor and meeting the requirements set
forth in Exhibit F describing the estimated time of
completion of Critical Path Items for completion of the Work
by Contractor.
"Day" or "day": A calendar day, unless otherwise
specified.
"Dollar" or "$": Dollars in lawful currency of
the United States.
"Electro-Mechanical Liquidated Damages": All
amounts payable to Owner pursuant to Article 14 of this
Contract and which arise within or are due to Work required
to be performed under the Electro-Mechanical Scope.
"Electro-Mechanical Payments": All amounts
payable by Contractor to or for the benefit of Owner under
this Contract and which arise within or are due to Work
required to be performed under the Electro-Mechanical Scope
(including Electro-Mechanical Liquidated Damages and other
damages payable hereunder in connection with the Electro-
Mechanical Scope).
"Electro-Mechanical Scope": All work to be
performed under the Electro-Mechanical Subcontract.
"Electro-Mechanical Scope Contract Price
Component": The portion of the overall Contract Price
attributable to the Work included in the Electro-Mechanical
Scope. Initially, the Electro-Mechanical Scope Contract
Price Component equals US$34,650,000. Increases to the
Contract Price shall act to increase the Electro-Mechanical
Contract Price Component, except to the extent such increase
in the Contract Price is attributable to the Balance of
Scope (in which case such increase shall act to increase the
Balance of Scope Contract Price Component).
"Electro-Mechanical Specification": The
specification for the Electro-Mechanical Scope, which
specification is attached as Exhibit W to this Contract
(subject to such further modification thereto as may be
mutually agreed upon in writing by Owner, Contractor and
Electro-Mechanical Subcontractor).
"Electro-Mechanical Subcontract": The subcontract
with the Electro-Mechanical Subcontractor, to be entered
into by Contractor pursuant to Section 8.4. Upon entering
into of such Electro-Mechanical Subcontract, such Electro-
Mechanical Subcontract shall be incorporated herein as
Exhibit V.
"Electro-Mechanical Subcontractor":
Sulzer/Siemens, as Subcontractor with responsibility for the
Electro-Mechanical Scope or any replacement Subcontractor
with responsibility for the Electro-Mechanical Scope, which
Electro-Mechanical Subcontractor has been approved by Owner;
provided, however, that Sulzer/Siemens shall not be removed
as the Electro-Mechanical Subcontractor, nor shall any
replacement Electro-Mechanical Subcontractor be designated,
in either case without the prior written consent of Owner.
"Environmental Compliance Certificate": The
Environmental Compliance Certificate attached to this
Contract as Exhibit S.
"Existing Site Assets": The assets identified in
Exhibit U or otherwise available to Contractor at the Site
on the Notice to Proceed Date.
"Final Acceptance": Satisfaction or waiver by
Owner of all of the conditions set forth in Section 13.5.
"Final Acceptance Date": The date on which Final
Acceptance of the Project occurs.
"Financial Closing": The date on which the
Financing Entities made the first disbursement to Owner from
the construction loan for the Project, which occurred in
November 1995.
"Financing Entities": The holders of, the agent(s)
or trustee(s) representing the holders of, or the financial
institutions or other Person or Persons providing a letter
or letters of credit or other guarantees or insurance in
support of, any debt or equity financing for the Project,
but excluding equity funds of Owner or shareholders of
Owner.
"Force Majeure": The events of Force Majeure set
forth in Section 22.1.
"Guaranteed Substantial Completion Date": Subject
to any extensions specifically provided for in this
Contract, the date that is thirty-six (36) months after the
Notice to Proceed Date.
"Hanbo-Related Event": Any event or circumstance
materially and adversely affecting Contractor's prosecution
of the Work (including by interfering with Contractor's use
and quiet enjoyment of the Major Existing Site Assets) which
event or circumstance is (i) unrelated to the physical
condition of such Major Existing Site Assets and (ii)
directly related to Hanbo or any successor in interest to
Hanbo or to Hanbo's prior involvement in the Project.
"kW": Electrical output expressed in kilowatts.
"kWh": Kilowatt hours.
"Labor Payment Bond": A payment bond or bonds
guaranteeing the full cost of labor under this Contract
(including labor to be provided by Subcontractors) and
otherwise meeting the terms and conditions set forth in
Section 4.1(ad) hereof.
"LIBOR": The London inter-bank offered rate for
six-month United States dollar deposits, as published in The
Financial Times.
"Major Existing Site Assets": The assets
identified in Exhibit U, as such Exhibit U may be agreed to
by Owner and Contractor pursuant to Section 8.4.
"Materials Warranty": The warranty of Contractor
under Section 17.2.
"Mechanical Completion": Satisfaction of all of
the conditions set forth in Section 12.2.
"Milestone Schedule": The milestone schedule to be
prepared by Contractor and approved by Owner pursuant to
Section 8.4 hereof and, upon such approval, incorporated
herein as Exhibit E describing the estimated time of
completion of project milestones for completion of the Work
by Contractor.
"NIA": The National Irrigation Administration of
the Republic of the Philippines and any other authority of
the Republic of the Philippines appointed or assigned the
rights as the Republic's Project sponsor.
"Notice" or "notice": A written communication
between the Parties required or permitted by this Contract
and conforming to the requirements of Article 33.
"Notice of Final Acceptance": A Notice from Owner
to Contractor in accordance with Section 13.5(i) that the
Project has satisfied the requirements for Final Acceptance.
"Notice of Substantial Completion": A Notice from
Owner to Contractor in accordance with Section 13.4 that the
Project has satisfied the requirements for Substantial
Completion.
"Notice to Proceed": A written Notice signed by a
duly authorized officer of Owner to Contractor directing
Contractor to commence and complete all Work under this
Contract.
"Notice to Proceed Date": The Notice to Proceed
Date set forth in Section 8.1, which shall not be later than
June 30, 1997.
"NPC": The National Power Corporation of the
Republic of the Philippines.
"Operating Consumables": Chemicals, lubricants,
filters, lamps, light bulbs, and other consumable equipment
and materials necessary for the operation and maintenance of
the Project.
"Operating Personnel": The operating personnel
hired by Owner to operate and maintain the Project.
"Owner": CE Casecnan Water and Energy Company,
Inc., a Philippine corporation.
"Owner's Engineer": Knight Pi?sold Ltd. or other
engineer (or engineers) selected and designated by Owner.
"Owner's Permits": Those Permits identified on
Part I of Exhibit B.
"Performance Guarantees": The Project Performance
Guarantee and the Reliability Guarantee.
"Performance Security": Collectively, (i) the
CMC\Pizzarotti Corporate Guaranty, (ii) the Sulzer Corporate
Guaranty, (iii) the Siemens Corporate Guaranty, (iv) the
CMC\Pizzarotti Demand Bank Security, (v) the Sulzer Demand
Bank Security and (vi) the Siemens Demand Bank Security.
"Person": Any individual, corporation, company,
voluntary association, partnership, incorporated
organization, or government (or any agency, instrumentality,
or political subdivision thereof).
"Pizzarotti": Impresa Pizzarotti & C. Spa.
"Point of Interconnection": The point at the
electrical interconnection facilities with NPC's Luzon grid
at the Project's switchyard where the transfer and metering
of electrical energy delivered from the Project to NPC take
place.
"Progress Payment Schedule": The Progress Payment
Schedule attached as Exhibit C setting forth payments to
Contractor for completion of various elements of the Work.
"Project": The in-stream dam/diversion structures
in the Casecnan and Denip rivers, a tunnel from Casecnan to
the Pantabangan Reservoir, an underground hydroelectric
powerhouse and surface switchyard near the discharge end of
the tunnel, and a tailwaters discharge tunnel into the
Pantabangan Reservoir, together with ancillary facilities,
to be designed, engineered, and constructed by Contractor
for Owner consistent with all the requirements of this
Contract, as more fully described in Exhibit A and Exhibit W
(subject to changes to said Exhibit W as contemplated by the
definition of Electro-Mechanical Specification; and provided
that, in the event of any inconsistency between the terms of
Exhibit A and Exhibit W, the terms of Exhibit A shall
govern).
"Project Manager": The Project Manager designated
by Contractor pursuant to Section 4.1(w).
"Project Performance Guarantee": The guaranteed
output of the Project at various water flows as set forth on
Exhibit Q.
"Project Performance Test": The Project output
test described in Exhibit D.
"Project Reliability": The percentage of a
specified time period that the Project is available and
capable of operating over its full range of design
conditions.
"Project Representative": The Project
Representative designated by Owner pursuant to Section
3.1(a).
"Project Warranties": The warranties of Contractor
under Section 17.1.
"Protective Apparatus": The equipment and
apparatus installed by Contractor, NIA, or NPC to protect
NPC's facilities from damage in the event of a malfunction
of or accident at the Project.
"Punchlist": A list, prepared by Contractor, of
administrative items or other items of work, the omission of
which would not adversely affect the safe start-up and
testing or commercial operation of the Project, which list
must be reasonably satisfactory to the Consulting Engineer
and Owner, and delivered to Owner pursuant to Section
13.3(f); provided, however, notwithstanding the foregoing,
the Punchlist shall include Taan Xxxx Work which is not
complete at the time of preparation of the Punchlist.
"Reliability Guarantee": A Project availability of
ninety-six percent (96%) during a continuous ninety-day
period and fulfillment of the Reliability Test in Exhibit D.
Availability is defined as the number of hours the Project
is capable of being operated, regardless of whether or not
it is in fact being operated, divided by the total number of
hours during the ninety-day period.
"Reliability Test": The reliability test described
in Exhibit D.
"Retainage": The amount referred to in Section
7.1(d).
"Retention Security": Cash or demand instruments,
issued by a bank or banks located outside of the Philippines
and substantially in the form of Exhibit Y and otherwise
satisfactory in form and substance to Owner and the
Financing Entities, and posted and available to be drawn
upon from and after the Notice to Proceed Date in lieu of a
cash retainage.
"Siemens": Siemens Aktiengesellschaft
"Siemens Corporate Guaranty": The guaranty to be
issued by Siemens in favor of Owner, in form and substance
mutually satisfactory to Siemens, Owner and the Financing
Entities, guarantying Contractor's obligations under this
Contract with respect to the Electro-Mechanical Scope
(including the Electro-Mechanical Payments).
"Siemens Demand Bank Security": The demand bank
guaranty in substantially the form of Exhibit X, to be
issued to Owner by a bank satisfactory to Owner, and
otherwise in form and substance satisfactory to Siemens,
Owner and the Financing Entities, guarantying (i)
Contractor's obligations under this Contract with respect to
the Electro-Mechanical Scope (including all Electro-
Mechanical Payments) and (ii) a portion of Contractor's
obligations under this Contract with respect to the Balance
of Scope, and in an amount equal to 10% of the Electro-
Mechanical Scope Contract Price Component.
"Site": The site for the Project generally shown
on Exhibit R.
"Subcontractor": Any Person performing the Work on
behalf of Contractor or any of such Person's subcontractors
performing the Work in furtherance of Contractor's
obligations under this Contract, including Sulzer/Siemens as
to the Electro-Mechanical Scope.
"Substantial Completion": Satisfaction or waiver
of all of the conditions set forth in Section 13.3;
provided, however, except for purposes of Section 19.1(g)
hereof, Substantial Completion shall be determined without
regard to the status, at the time, of the Taan Xxxx Work.
"Substantial Completion Date": The date on which
Substantial Completion of the Project occurs.
"Sulzer": Xx Xxxxxx-Xxxxxx Xxxx.
"Sulzer Corporate Guaranty": The guaranty to be
issued by Sulzer Corp. in favor of Owner, in the form and
substance mutually satisfactory to Sulzer Corp., Owner and
the Financing Entities, guarantying Contractor's obligations
under this Contract with respect to the Electro-Mechanical
Scope (including the Electro-Mechanical Payments).
"Sulzer Demand Bank Security": The demand bank
guaranty, in substantially the form of Exhibit X, to be
issued to Owner by a bank satisfactory to Owner, and
otherwise in form and substance, satisfactory to Sulzer,
Owner and the Financing Entities, guarantying (i)
Contractor's obligations under this Contract with respect to
the Electro-Mechanical Scope (including all Electro-
Mechanical Payments) and (ii) a portion of Contractor's
obligations under this Contract with respect to the Balance
of Scope, and in an amount equal to 10% of the Electro-
Mechanical Scope Contract Price Components.
"Sulzer\Siemens": Sulzer and Siemens acting
jointly and severally as the Electro-Mechanical
Subcontractor.
"Taan Xxxx Work": That portion of the Work
relating to the diversion xxxx and intake structure in the
Taan River and the Taan\Casecnan interconnection tunnel.
"Turbine Guarantee": The turbine guarantee as set
forth in Exhibit P.
"Unforeseen Underground Condition": An unusually
severe condition related to the underground site conditions,
which was not anticipated by the Contractor and would not
have been reasonably foreseeable in a project such as the
Project, encountered by the Contractor during the course of
the prosecution of the Work, which is confirmed as such in
writing by an independent technical consultant to be agreed
upon by Owner and Contractor prior to the Notice to Proceed
Date (or such other independent technical consultant
mutually agreed to in writing by Owner and Contractor).
"Vendor(s)": Persons that supply machinery,
equipment, or materials to Contractor or any Subcontractor
in connection with the performance of the Work and the
construction of the Project.
"Warranty Periods": The periods of duration of
Contractor's Project Warranties and Materials Warranty as
set forth in Sections 17.1(a) and (b) and 17.2 and as deemed
extended with respect to any given item of equipment,
material, or device by any rewarranty period specified by
Section 17.3.
"Withheld Amount": Has the meaning given thereto
in Section 7.1(e).
"Work": All obligations, duties, and
responsibilities assigned to or undertaken by Contractor
under this Contract with respect to the Project, housing for
the construction work force, workshops, and warehouses,
including all engineering and design, procurement,
manufacturing, construction and erection, installation,
training, start-up (including calibration, inspection, and
start-up operation), and testing. Where this Contract
describes a portion of the Work in general, but not in
complete detail, the Parties acknowledge and agree that the
Work includes any incidental work that within the
engineering industry and the construction industry is
customarily included in projects of the type contemplated by
this Contract. Without limiting the foregoing, Work
consists of the work related to the Electro-Mechanical Scope
and the Balance of Scope.
1.2. Terms defined in a given number, tense, or
form shall have the corresponding meaning when used in this
Contract with initial capitals in another number, tense, or
form. Except as otherwise expressly noted, reference to
specific Sections, subsections, and exhibits are references
to such provisions of or attachments to this Contract.
References containing terms such as "hereof", "herein"
"hereto", "hereinafter", and other terms of like import are
not limited in applicability to the specific provision
within which such references are set forth but instead refer
to this Contract taken as a whole. "Includes" or "including"
shall not be deemed limited by the specific enumeration of
items, but shall be deemed without limitation.
1.3. If there is an express conflict between the
provisions of this Contract and any exhibit hereto, the
terms of this Contract shall take precedence over the
conflicting provisions of the exhibit.
2. INTERACTION WITH NIA AND NPC
2.1. Without limiting Contractor's obligations
under this Contract, Owner recognizes that there may be
contact in the field between NIA and/or NPC and Contractor
and hereby authorizes Contractor to communicate and
coordinate directly with NIA's and NPC's field
representatives subject to the limitations of this Article
2.
2.2. Contractor shall provide to Owner (i) copies
of all written communications sent by Contractor or its
affiliates to or received by Contractor or its affiliates
from NIA and/or NPC relating to the Project, such copies to
be provided promptly after being sent or received, as the
case may be, (ii) reasonable prior notice of all proposed
meetings, whether face-to-face or otherwise, with NIA and/or
NPC (other than routine day-to-day communications at the
Site) relating to the Project, and (iii) an opportunity for
Owner's site representative to be present at and to
participate in any such meetings; provided, however, that
Owner shall have no obligation to attend or to participate
in any such meetings. Contractor shall provide Owner with
written minutes of all material verbal communications
respecting the Project between Contractor and NIA and/or
NPC. Neither NPC nor NIA shall have any authority to modify
this Contract or otherwise bind or obligate Owner, and
Contractor shall not have the authority to bind or obligate
Owner.
3. RESPONSIBILITIES OF OWNER
3.1. Owner shall, at Owner's cost and expense:
(a) Designate (by a Notice delivered to
Contractor) a Project Representative, who shall act as a
single point of contact for Contractor with respect to the
prosecution of the Work (but who shall not be authorized to
execute or make any amendments to, or provide waivers under,
this Contract), and the Owner's Engineer it has selected for
itself and the Consulting Engineer selected by the Financing
Entities.
(b) Commencing four (4) months prior to the
anticipated Substantial Completion Date (as determined by
Owner based on the circumstances existing at the time of
determination), provide a reasonably sufficient number of
Operating Personnel for training by Contractor as provided
pursuant to Section 4.1(u) and for testing, start up,
operation, commissioning, and maintenance of the Project.
(c) Provide such ministerial assistance, such as
executing applications, as Contractor may reasonably request
in connection with obtaining any Contractor's Permits.
Contractor shall indemnify, defend, and hold harmless Owner
from and against any and all claims, damages, losses, and
expenses (including attorney's fees and expenses) that Owner
may incur as a result of executing any such applications at
Contractor's request.
(d) Except to the extent assessed for reasons
attributable to action or inaction of Contractor, or any
Subcontractor, Vendor, or other party acting or purporting
to act as Contractor's agent, and subject to Contractor's
compliance with Section 4.1(k), and provided Owner shall
have title thereto in accordance with Section 18.2(c)
hereof, Owner shall be responsible for any Philippine import
duties and value added taxes assessed upon any machinery,
equipment, and spare parts to be incorporated into the
Project and being imported by Contractor from outside of the
Philippines pursuant to this Contract. Owner agrees to
cooperate reasonably with Contractor to minimize the
assessment of Philippine value-added taxes and import duties
on any machinery, equipment, materials, supplies, tools,
spare parts, and other items being provided by Contractor
under this Contract, including taking all steps necessary to
ensure compliance with the requirements of any applicable
exemptions from such Philippine import duties and value-
added taxes. The responsibility of Owner hereunder for such
Philippine import duties and value-added taxes shall not
otherwise limit Contractor's responsibilities to perform the
Work and its obligations as described herein, including the
importation of all machinery, equipment, materials, spare
parts, supplies, tools, and other items furnished to Owner
under this Contract or otherwise necessary to develop,
construct, start up, test, commission, and complete the
Project and all ancillary facilities and to process all such
machinery, equipment, materials, spare parts, supplies,
tools, and other items through customs. To the extent
necessary to ensure compliance with the requirements of any
applicable exemptions from such Philippine import duties and
value-added taxes, Owner hereby grants Contractor the right
to act as Owner's agent, including executing documents on
Owner's behalf, for purposes of accomplishing the
importation of the above-mentioned items for the Project
into the Philippines and the processing of such machinery,
equipment, spare parts, materials, supplies, tools, and
other items through customs. Contractor's authority to take
action on behalf of Owner under this Section 3.1(d) is
strictly limited to the execution of such documents and
forms as are necessary to accomplish such importation and
the clearance of such items through customs, and in no event
shall Contractor have the right to take any action on behalf
of Owner that would commit Owner to any obligation or cause
Owner to incur any liability, except to the extent such
obligation or liability is included in the Work or otherwise
within the express scope of Contractor's responsibilities
under this Contract. Contractor shall indemnify, defend, and
hold harmless Owner from and against any and all claims,
damages, losses, and expenses (including attorneys' fees and
expenses) that Owner may incur as a result of Contractor
acting as Owner's agent or otherwise taking action on behalf
of Owner under this Section 3.1(d) and that would not have
been incurred by a reasonably prudent person properly acting
within the scope of the agency granted pursuant to this
Section 3.1(d).
(e) Obtain all Owner's Permits.
(f) Consistent with the terms of Owner's property
rights as granted to it by NIA or other applicable
Authorities, provide the Site and assure the right to
ingress and egress to and from the Site for Contractor for
performance of the Work; provided, however, that Contractor
shall coordinate with Owner regarding initial entry onto the
Site and contact with the local residents on the Site.
(g) Make available on the Notice to Proceed Date
the Existing Site Assets on an as-is basis. OWNER DOES NOT
MAKE ANY OTHER EXPRESS WARRANTIES OR REPRESENTATIONS, OR ANY
IMPLIED WARRANTIES OR REPRESENTATIONS, OF ANY KIND WHATEVER
RELATING TO THE EXISTING SITE ASSETS, OR ANY DESIGN
MATERIALS OR OTHER EQUIPMENT OR MATERIALS TO BE SUPPLIED BY
OWNER OR OTHERWISE AVAILABLE AT THE SITE, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. Owner hereby expressly disclaims any
warranty or representation, either express or implied, as to
(i) the Owner's title to any of the Existing Site Assets or
any design materials or other equipment or materials to be
supplied by Owner or otherwise available at the Site, or
rights to use any thereof, (ii) Contractor's right to the
quiet enjoyment thereof, or (iii) any other matter
whatsoever.
4. RESPONSIBILITIES OF CONTRACTOR
4.1. In order for Contractor to complete the Work,
Contractor shall:
(a) Furnish, be responsible for, and pay the cost
of all of the Work, on a turnkey basis, including labor,
materials, tools, equipment and supervision necessary to
engineer, deliver, receive, off-load, store, construct,
inspect, start-up, commission and test the Project in
accordance with the provisions of this Contract, including
all site work, footings, foundations, tunnel boring,
construction materials, equipment, and auxiliaries.
(b) Provide all communication facilities,
electricity and sanitary facilities to be used by Contractor
and Subcontractors through Substantial Completion.
(c) Maintain at the Site a qualified and
competent organization with adequate capacity and numbers of
construction and start-up personnel, equipment, and
facilities to execute the Work in a safe, efficient,
environmentally sound, and professional manner at a rate of
progress in accordance with the Milestone Schedule and the
Critical Path Schedule.
(d) Provide a permanent on-site construction
manager and staff to supervise and coordinate the Work of
Contractor, Subcontractors and Vendors on the Site.
(e) Obtain all Contractor's Permits.
(f) Perform all inspection, expediting, quality
surveillance, and other like services required for
performance of the Work, including inspecting all materials
and equipment that comprise the Project that are to be used
in the performance of the Work.
(g) Maintain the Site clear of debris, waste
material, and rubbish.
(h) Provide a price allocation schedule for the
Work and other information reasonably necessary for Owner to
maintain segregated accounts for its tax records and fixed
asset records.
(i) In the event of a claim under this Contract
involving an amount in excess of US$10,000, grant to Owner
audit rights with respect to all relevant documentation
pertaining to such claim.
(j) Provide all necessary and reasonably
appropriate safeguards at the Site for the protection of the
Work, the Project, and all persons and other property
related thereto, including lights and barriers, guard
service, controlled access, and other measures developed or
required pursuant to Exhibit A or otherwise reasonably
required to prevent vandalism, theft, and danger to the
Project and personnel. It is expressly understood and
acknowledged that Contractor is responsible for all Site
security from and after the Notice to Proceed Date,
notwithstanding any steps related to security that may have
been or may in the future be undertaken by Owner, Owner's
obligation with respect to the Site being limited to
granting rights of ingress and egress to the overall Site,
as described in Section 3.1(f).
(k) Arrange for complete handling of all
materials, supplies, tools, spare parts, equipment, and
construction equipment, including inspection, expediting,
shipping, loading, unloading, customs clearance, receiving,
storage, and claims.
(l) Provide all temporary construction materials,
equipment, supplies, construction utilities and facilities,
special tools, and commissioning supplies reasonably
necessary or appropriate for, and replace any spare parts
used during the construction, start-up, testing,
commissioning, and operation and maintenance of the Project
until achievement of Substantial Completion. By delivery of
a Notice to Owner prior to the disposition of such items,
Contractor shall give Owner the option to purchase any
surplus construction materials and supplies remaining on the
Site on the Substantial Completion Date (other than
materials and supplies necessary to achieve Final
Acceptance) at a price not exceeding Contractor's cost
therefor. Owner shall exercise such right, if it so elects,
within thirty (30) days after receipt of such Notice.
(m) Provide all Operating Consumables necessary
or appropriate for the construction, start-up, testing,
commissioning, operation and maintenance of the Project
until achievement of Substantial Completion.
(n) Comply in all respects with all Applicable
Laws and Applicable Permits relating to the Project, the
Site, and the performance of the Work, and perform the Work
so that, upon Substantial Completion, the Project meets, and
will be capable of being operated in compliance with all
requirements of, Applicable Laws and Applicable Permits as
then in effect and using methods and equipment that are
accepted as prudent electrical, mechanical, and civil
engineering practice. Contractor shall be responsible for
all damages, fines, and penalties that may arise (including
those that Owner pays or becomes liable to pay) because of
non-compliance with such requirements to the extent due to
acts or omissions of Contractor or any Subcontractor or
Vendor, other than any damages, fines, and penalties to the
extent due to the acts or omissions of Owner or third
parties other than Subcontractors and Vendors, and shall
assume responsibility for any costs and liabilities arising
from any adverse environmental damage or health impacts that
may be caused by Contractor's negligence or willful
misconduct in constructing or failing to construct the
Project or performing or failing to perform the Work.
(o) Take appropriate action in response to
Owner's requests to replace any of Contractor's personnel
performing the Work whom Owner reasonably believes to be
creating a risk of either non-achievement of Final
Acceptance or material non-performance by Contractor in
accordance with this Contract.
(p) Use effective quality assurance programs,
acceptable to Owner, in performing the Work. Within thirty
(30) days after the Notice to Proceed Date, Contractor shall
provide to Owner a Notice describing such programs to be
used by Contractor in the performance of the Work. Owner
shall have the right to promptly review and comment on such
programs as described in Contractor's Notice hereunder;
provided, however, that Contractor shall remain solely
responsible for performing the Work in accordance with this
Contract. If Owner fails to comment within ten (10) Business
Days after receipt of such Notice, Owner shall be deemed to
have accepted such programs.
(q) Use only the entrance(s) to the Site
specified by Owner for ingress and egress of all personnel,
equipment, vehicles, and materials.
(r) On or before October 31, 1997, prepare a
draft of the NPC Interface Criteria in the form of Exhibit T
with all information completed for review and approval by
Owner, NIA, and NPC. All parties shall work together to
complete and finalize the NPC Interface Criteria on or
before December 31, 1997, and the final NPC Criteria shall
be attached to this Contract as Exhibit T and the
requirements thereof incorporated into Exhibit A. Contractor
shall interconnect the Project with the facilities of NPC in
accordance with the interconnection requirements agreed to
in Exhibit T. Without limiting the foregoing, Contractor
shall also be responsible for installing, but not
purchasing, the metering and telemetering equipment provided
by NPC and/or NIA.
(s) Prior to Final Acceptance, (i) provide such
assistance as is reasonably requested by Owner in dealing
with NPC, NIA, other governmental entities, and the
Financing Entities in any and all matters relating to the
Work (including any interconnection facilities) and
(ii) cooperate to the extent necessary to enable Owner to
perform its obligations under Owner's agreement with the
Financing Entities that are related to the Work.
(t) Provide all operating data and preliminary
and final as-built drawings necessary to safely and
efficiently test, operate, and maintain the Project.
(u) Commencing on the date that is four (4)
months prior to the anticipated Substantial Completion Date
(as determined by Owner based on the circumstances existing
at the time of determination), provide training of the
designated Operating Personnel in the requirements for the
operation and maintenance of the Project and all sub-
systems. The training program shall consist of two phases:
(i) classroom phase and (ii) start-up/testing/operational
phase. The classroom phase will consist of at least two (2)
consecutive weeks of instruction in the Project design,
capabilities, component operation, and procedures and will
include a program for certifying Operating Personnel,
including classroom training for the Operating Personnel,
conduct of tests sufficient to allow Contractor to accept or
reject individuals for employment during the testing (making
the results available to Owner), start-up and commissioning
program, and use of that program as on-the-job training.
Until Substantial Completion, the Operating Personnel
provided by Owner pursuant to Section 3.1(b) shall work
under the management, supervision, and direction of
Contractor; provided, however, that such Operating Personnel
shall not be deemed employees or Subcontractors of
Contractor. Contractor will design such training program and
submit it to Owner by no later than the date that is six (6)
months prior to the anticipated Substantial Completion Date.
Owner will review, comment on, and approve or disapprove
such program in writing within forty-five (45) days after
such submission by Contractor. If Owner conditions its
approval on reasonable changes in the program submitted by
Contractor, Contractor will effect such changes at no
additional cost to Owner and resubmit the program to Owner
within ten (10) days after receipt from Owner of such
conditional approval. Owner will have ten (10) days after
such resubmission to review, comment on, and approve or
disapprove the program resubmitted by Contractor. Such
procedure shall continue with the same ten (10) day time
periods until a program is approved by Owner; provided,
however, that if the Parties cannot reach agreement after
the third submittal by Contractor, the differences of the
Parties shall be resolved in accordance with the expedited
payment dispute procedures provided in Section 36. If Owner
fails to respond within any of the applicable periods
specified above, Owner shall be deemed to have approved the
latest such program submitted by Contractor.
(v) Coordinate with Owner with respect to and
provide advance copies to Owner for review of the text of
any announcement or publication that includes any non-public
information concerning the Work prior to the dissemination
thereof to the public or to any Person other than
Subcontractors, Vendors, lenders, or advisors of Contractor
who agree to keep such information confidential; provided,
however, that Contractor may disseminate or release such
information in response to requirements of governmental or
other regulatory authorities, including NIA. Notwithstanding
the foregoing, the parties agree that Contractor may include
in its sale or other promotional literature and provide
prospective customers, investors, lenders, and other Persons
with information specifying (i) Contractor's role in
constructing the Project, (ii) the capacity of the Project,
and (iii) those types of Contractor's equipment and products
being used in the Project, provided that Contractor shall
deliver copies of all such literature to Owner promptly upon
distribution thereof.
(w) Designate an English-speaking Project Manager
acceptable to Owner who will have full responsibility for
the prosecution of the Work (but who shall not be authorized
to execute or make any amendments to, or provide waivers
under, this Contract) and will act as a single point of
contact in all matters on behalf of Contractor. Any
replacement of the Project Manager shall be subject to the
prior written consent of Owner. If Owner fails to respond to
a request for consent within five (5) Business Days after
Contractor's request, Owner shall be deemed to have
consented to the proposed individual.
(x) Provide such data, reports, certifications,
opinions of counsel, and other documents, up to a maximum of
ten (10) copies each, or assistance related to the Work or
this Contract as may be reasonably requested by the
Financing Entities with respect to the financing of the
Project; provided, however, that the provision of this
information shall not in any manner modify Contractor's
rights or obligations under any other provision of this
Contract.
(y) Provide, at or near the contractor's main
Project office, office space for Owner's sole use including
a private secure meeting room suitable for and furnished for
use by 10 people, four (4) office spaces, electricity, air
conditioning, office furniture suitable for four (4) persons
(consisting of four (4) desks, a reference/drawing table,
four (4) lockable four (4) drawer file cabinets, four (4)
desk chairs, six (6) side chairs, two telephones, and,
subject to availability from the local telephone company,
two (2) telephone lines (toll calls are for Owner's
account)), and the use of Contractor's copying machines,
drinking water, sanitary facilities, and secretarial service
(not to exceed one (1) secretary) to be used by Owner at the
Site.
(z) Assign to the Site English-speaking
personnel. Any interpreters required shall be provided by
Contractor at its expense. If design work for any part of
the Work is performed in non-English-speaking countries,
English-speaking interpreter(s) acceptable to Owner shall be
made available by Contractor at Contractor's cost during all
telephone conversations and meetings involving Owner and
such non-English-speaking persons performing the Work.
(aa) Within thirty (30) days after the Notice to
Proceed Date, Contractor shall provide Owner with a Critical
Path Schedule meeting the requirements set forth in Exhibit
F. Thereafter, Contractor shall advise Owner of any proposed
Critical Path Schedule changes of more than fifteen (15)
days and promptly provide Owner with any revisions and
reasons therefor. In connection therewith, Contractor shall
employ a project management system able to provide schedule
monitoring and analysis which shall include a comparison of
the Critical Path Schedule with the actual progress for each
time period with all variances noted. Schedule analysis
shall include a determination of the impact of such
variance, if material, on the Critical Path Schedule and any
action necessary to correct the variance. Utilizing the
critical path method, Contractor shall continually be aware
of factors that are delaying or that could delay the
Milestone Schedule and shall take remedial actions
reasonably within its control to eliminate or minimize
schedule delays including, without limitation, the
assignment of additional personnel and/or other resources.
During construction, the Contractor will update its critical
path method network to reflect the current status of the
Work. At a minimum, the updates will be performed and
provided to the Owner on a monthly basis.
(ab) Following the Notice to Proceed, prepare and
submit to Owner within ten (10) days after the end of each
calendar month and as part of the Contractor's Invoice
submitted pursuant to Section 7.1, a written monthly
progress report in form and content generally in accordance
with Exhibit H. In addition, Contractor shall keep, and
furnish to Owner at Owner's request, such information as may
be reasonably necessary to determine that the Work is
progressing according to schedule and for the purpose of
confirming that progress payments are due hereunder.
Contractor also shall keep daily logs at the Site and shall
provide to Owner copies of weekly reports of actual
construction progress as compared with scheduled progress.
(ac) Provide Owner with copies of all notices to
and other written communications with Authorities and
insurance companies with respect to accidents that occur at
the Site, and thereafter provide such written reports
relating thereto as may be reasonably requested by Owner.
(ad) Obtain a Labor Payment Bond in favor of
Contractor and Owner from each Subcontractor directly
contracting with Contractor carrying on any construction or
other Work in the Philippines in a sum equivalent to the
cost of labor for such Work and take care not to pay such
Subcontractor the final payment such Subcontractor is
entitled to receive until such Subcontractor has shown that
it first paid the wages of the laborers employed in said
work, by means of an affidavit made and subscribed by said
Subcontractor before a notary public or other office
authorized by law to administer oaths.
(ae) On a bi-weekly basis after Substantial
Completion, revise and update the Punchlist and schedule and
budget therefor as initially prepared in accordance with
Section 13.3(f).
(af) Take all steps required under Applicable Law
and provide such ministerial assistance as Owner may
reasonably request such that Owner may utilize input value-
added tax credits in an amount equal to the aggregate value-
added tax paid by Owner to Contractor for performance of the
Work. Contractor shall also provide such evidence of payment
by Contractor to the Philippine Bureau of Internal Revenue
of such value-added tax as Owner may reasonably request.
(ag) Exclusively use metric (S.I.) units of
measurement in the design process and in all specifications,
drawings, and other documents, with the exception that
documents required under the terms of a purchase order to be
submitted by Vendors may be in English units if that is the
common measurement system used by the Vendor.
(ah) Schedule and conduct periodic meetings at
Contractor's office before mobilization and at the Site
after mobilization with Owner for the purpose of reviewing
the progress of the Work and adherence to the Milestone
Schedule and the Critical Path Schedule. The frequency of
such meetings shall be established and modified, from time
to time, by mutual agreement of Owner and Contractor.
(ai) Deliver the spare parts identified on Exhibit
J so that they arrive in the Philippines at least three (3)
months prior to the anticipated Substantial Completion Date
(as determined by Owner based on the circumstances existing
at the time of the determination).
5. COVENANTS, WARRANTIES AND REPRESENTATIONS
5.1. Contractor covenants, represents, and
warrants to Owner that:
(a) It is a limited liability consortium with
external activities, duly organized, validly existing, and
in good standing under the laws of Italy (as more
particularly described in Article 2612 et seq. of the
Italian Civil Code), and has, or will have by the date it
commences performance hereunder, full power to engage in the
business it presently conducts and contemplates conducting,
and is and will be duly licensed or qualified and in good
standing under the laws of the Philippines and in each other
jurisdiction wherein the nature of the business transacted
by it makes such licensing or qualification necessary and
where the failure to be licensed or qualified would have a
material adverse effect on its ability to perform its
obligations hereunder. It will at all times during the
performance of the Work maintain its status as a "VAT
registered Person" in accordance with Section 107 of the
National Internal Revenue Code of the Philippines and will
comply with all Applicable Laws related thereto.
(b) It has the required authority, ability,
skills, and capacity to perform, and shall perform, the Work
in a manner consistent with prudent utility practice
utilizing sound engineering principles, project management
procedures, and supervisory procedures.
(c) This Contract has been duly authorized,
executed, and delivered by Contractor and constitutes the
legal, valid, and binding obligation of Contractor,
enforceable against Contractor in accordance with its terms.
(d) The execution, delivery, and performance by
Contractor of this Contract will not violate or conflict
with (i) any Applicable Laws, (ii) any covenant, agreement,
or understanding to which it is a party or by which it or
any of its properties or assets is bound or affected, or
(iii) its organizational documents.
(e) It is satisfied with and accepts all
conditions relating to (i) subject to Section 8.4, access to
the Site, (ii) subject to Section 15.1(d) hereof, the
availability of equipment (including, subject to Section
8.4, the Existing Site Assets and all other materials,
equipment and other property located at the Site on the
Notice to Proceed Date), (iii) the availability of
electricity and water (other than the availability of water
for diversion to the Project), (iv) the availability of
adequate means of communication, and (v) similar matters
that may impact upon the performance by Contractor of the
Work.
(f) No authorization, approval, exemption, or
consent by any governmental or public body or authority
(other than the Applicable Permits) is required in
connection with the authorization, execution, delivery, and
performance of this Contract by Contractor. The Contractor's
Permits either have been obtained by Contractor and are in
full force and effect on the date hereof or will be obtained
by Contractor and will be in full force and effect on or
prior to the date on which they are required, under
Applicable Law, to be in full force and effect so as to
permit Contractor to commence and prosecute the Work to
completion in accordance with the Milestone Schedule and the
Critical Path Schedule.
(g) There are no actions, suits, proceedings, or
investigations pending or, to Contractor's knowledge,
threatened against it at law or in equity before any court
(Philippine or otherwise) or before any federal, state,
municipal, or other governmental department, commission,
board, agency, or instrumentality (whether or not covered by
insurance) that individually or in the aggregate could
result in any materially adverse effect on the business,
properties, or assets or the condition, financial or
otherwise, of Contractor or in any impairment of its ability
to perform its obligations under this Contract. It has no
knowledge of any violation or default with respect to any
order, writ, injunction, or decree of any court or any
federal, state, municipal, or other governmental department,
commission, board, agency, or instrumentality that may
result in any such materially adverse effect or such
impairment.
(h) It owns or has the right to use all patents,
trademarks, service marks, tradenames, copyrights, licenses,
franchises, and permits necessary to perform the Work
without conflict with the rights of others.
(i) The Project can and shall be built in
conformity with Applicable Laws and Applicable Permits.
(j) It and its representatives have not made any
payment or given anything of value, and (ii) it will not,
and it will direct its employees, agents, and Subcontractors
directly contracting with Contractor, and their employees or
agents to not, make any payment or give anything of value,
in either case to any government official (including any
officer or employee of any government department, agency, or
instrumentality) to influence his, her, or its decision or
to gain any other advantage for Owner or Contractor in
connection with the Work to be performed hereunder. None of
Contractor, its Subcontractors or Vendors, or any of their
employees or agents shall take any action that in any way
violates the United States Foreign Corrupt Practices Act or
any similar applicable law. Contractor shall immediately
notify Owner of any violation of this covenant (or of the
direction described in the immediately preceding sentence)
and shall indemnify and hold Owner harmless for all losses,
expenses, damages, and liabilities arising out of such
violation.
(k) Intentionally omitted.
(l) It acknowledges that this Contract
constitutes a fixed price obligation to engineer, design,
procure, construct, and test a turnkey Project, complete in
every detail, within the time and for the purpose designated
herein by Owner. References to the obligations of Contractor
under this Contract as being "turnkey" and performing the
Work on a "turnkey basis" means that Contractor is obligated
to supply all of the materials and equipment and to supply
and perform all of the Work, in each case as may reasonably
be required, necessary, or appropriate (whether or not
specifically set forth in this Contract) to complete the
Work such that the Project satisfies the applicable terms
and conditions set forth in this Contract, all for the
Contract Price.
5.2. Owner covenants, represents, and warrants to
Contractor that:
(a) It is a corporation duly organized, validly
existing, and in good standing under the laws of the
Republic of the Philippines, has full power to engage in the
business it presently conducts and contemplates conducting,
and is and will be duly licensed or qualified and in good
standing in each jurisdiction wherein the nature of the
business transacted by it makes such licensing or
qualification necessary and where the failure to be licensed
or qualified would have a material adverse effect on its
ability to perform its obligations hereunder.
(b) This Contract has been duly authorized,
executed, and delivered by Owner and constitutes the legal,
valid, and binding obligation of Owner, enforceable against
Owner in accordance with its terms.
(c) The execution, delivery, and performance by
Owner of this Contract will not conflict with (i) any
Applicable Laws, (ii) any covenant, agreement, or
understanding to which it is a party or by which it or any
of its properties or assets is bound or affected, or (iii)
its Certificate of Incorporation or By-laws.
(d) No authorization, approval, exemption, or
consent by any governmental or public body or authority,
except such authorizations, approvals, exemptions, or
consents as have been obtained or will, in Owner's opinion,
be obtained in the ordinary course of business, is required
in connection with the execution, delivery, and performance
of this Contract by Owner.
(e) There are no material actions, suits,
proceedings, or investigations pending or, to its knowledge,
threatened against it at law or in equity before any United
States or Philippine court or before any United States
federal, state, municipal, or other governmental department,
commission, board, agency, or instrumentality (whether or
not covered by insurance) or before any Philippine national,
regional, municipal, or other governmental department,
commission, board, agency, or instrumentality (whether or
not covered by insurance) that individually or in the
aggregate could result in any materially adverse effect on
the business, properties, or assets or the condition,
financial or otherwise, of Owner or in any impairment of its
ability to perform its obligations under this Contract. It
has no knowledge of any violation or default with respect to
any order, writ, injunction, or any decree of any United
States or Philippine court or any United States federal,
state, municipal, or other governmental department,
commission, board, agency, or instrumentality or any
Philippine national, regional, local, or other governmental
department, commission, board, agency, or instrumentality
that may result in any such materially adverse effect or
such impairment.
(f) It will not, and it will direct its
employees, agents, and subcontractors, and their employees
and agents to not, make any payment or give anything of
value to any government official (including any officer or
employee of any government department, agency, or
instrumentality) to influence his, her, or its decision or
to gain any other advantage for Owner or Contractor in
connection with the Work to be performed hereunder. Neither
Owner nor any of its employees or agents shall take any
action that violates the United States Foreign Corrupt
Practices Act or any similar applicable law. Owner shall
immediately notify Contractor of any violation of this
covenant (or of the direction described in the immediately
preceding sentence) and shall indemnify and hold Contractor
harmless for all losses, expenses, damages, and liabilities
arising out of such violation.
5.3. Contractor further covenants, represents, and
warrants to Owner that:
(a) It recognizes, understands, and acknowledges
that Owner is providing no representation or warranty
regarding, and specifically disclaims any responsibility
for, the usefulness, accuracy, completeness, validity, or
propriety of any or all reports, data, inferences,
conclusions, and other information provided by, or to be
provided by, Owner, NPC, or NIA. Contractor further
represents and warrants that it is not relying on Owner,
NPC, or NIA for any information, data, inferences,
conclusions, or other information as respects the Work at
the Site and surrounding areas.
(b) It is familiar with the physical requirements
of the Work and has inspected and examined the Site and
surrounding locations to the extent it deems necessary in
accordance with prudent engineering and construction
practices for performing its obligations under this
Contract. Contractor further represents and warrants that it
is satisfied with and accepts all conditions that exist at
the Site or that may exist at the Site or in surrounding
areas during the period of construction, in any case whether
seen or unseen, discovered or undiscovered, unknown or
unusual, including climatic, hydrological (other than the
availability of water for diversion to the Project),
geologic, seismic, and all other conditions at the Site
(natural or otherwise), the form and nature of the Site and
the soil and subsoil, rock, and subsurface conditions, and
the nature of the material (natural or otherwise) to be
excavated. No information that Owner, NPC, or NIA may, as a
convenience, have previously provided or may in the future
provide to Contractor shall affect this representation of
Contractor.
Notwithstanding the foregoing, if Contractor
encounters what it considers to be an Unforeseen Underground
Condition, the Contractor shall be entitled to request in
writing to Owner an extension of the Guaranteed Substantial
Completion Date for a period of time necessary to address
such Unforeseen Underground Condition, but in no event more
than ninety (90) days for all such requests in the
aggregate. Owner shall promptly forward any such request to
the independent technical consultant (referenced in the
definition of "Unforeseen Underground Condition"). Within
60 days of receipt of any such request, such independent
technical consultant, applying reasonable, prudent and sound
engineering judgment, shall advise Contractor and Owner in
writing as to whether such request has been granted and the
number of days that the Guaranteed Substantial Completion
Date has been extended, if any.
(c) Other than as the result of the occurrence of
an unusually severe event of the type described in Section
22.1 (and subject to the immediately preceding paragraph),
which shall in no event include a pre-existing condition at
the Site or in surrounding areas, it acknowledges and agrees
that it will not be entitled to, and shall not request, any
Change in the Work or claim the occurrence of any Force
Majeure event with respect to any of the conditions, or any
change in any conditions, as set forth in this Section 5.3.
6. COST OF WORK
6.1. As full compensation for the Work, Owner
shall pay to Contractor a fixed price amount of
US$240,000,000 (the "Contract Price"), plus Philippines
value added taxes invoiced in accordance with Section 6.2.
The Contract Price shall be changed only by Changes in the
Work approved in accordance with Section 15. The Contract
Price shall be paid in accordance with Section 7. Payments
made by Owner directly to the Electro-Mechanical
Subcontractor shall be deemed to constitute payments to
Contractor of the Contract Price.
6.2. The Contract Price includes payment for (i)
all costs of equipment, materials, labor, and services
relating to Contractor's performance of its obligations
under this Contract and the Work (including any intellectual
property rights licensed under this Contract, expressly or
by implication) provided by Contractor or such
Subcontractors or Vendors, (ii) all Philippine national,
regional, and local taxes effective or enacted as of the
date of execution of this Contract or thereafter, each as
imposed on Contractor or its Subcontractors or Vendors or
the Work, (iii) subject to the last sentence of this Section
6.2, all other taxes, duties, levies, imposts, fees, or
charges of any kind (whether in the Republic of the
Philippines or elsewhere) arising out of Contractor's or any
such Subcontractor's or Vendor's performance of the Work,
including any increases thereof that may occur during the
term of this Contract, and (iv) subject to the last sentence
of this Section 6.2, any duties, levies, imposts, fees,
charges, and royalties imposed on Contractor or its
Subcontractors or Vendors with respect to any such
equipment, materials, labor, or services provided under this
Contract. The taxes covered hereby include occupational,
excise, unemployment, ownership, value-added, gross
receipts, and income taxes and any and all other taxes and
duties on any item or service that is part of the Work,
whether such tax is normally included in the price of such
item or service or is normally stated separately, all of
which shall be for the account of Contractor.
Notwithstanding the foregoing, (a) Contractor shall not be
liable for, and the Contract Price shall not include, (i)
any real estate taxes or other ad valorem or ownership taxes
on the Site or the Project, or (ii) any Philippine value-
added tax or Philippine import duties for which Owner is
responsible pursuant to Section 3.1(d), and (b) Owner shall
pay to Contractor, in addition to the Contract Price, any
amount in respect of Philippine value-added taxes on that
portion of the Work performed from time to time in the
Philippines and which is of a nature that is subject to
value-added tax in the Philippines; provided that Contractor
shall use its best efforts to minimize the imposition of
Philippine value-added tax on the cost of the Work.
7. TERMS OF PAYMENT
7.1. Payments to Contractor shall be made as
follows:
(a) Within two (2) Business Days after the Notice
to Proceed Date, Owner shall pay (i) Contractor the amount
shown as payable directly to the Contractor on Exhibit C and
(ii) Electro-Mechanical Subcontractor the amount shown as
payable directly to Electro-Mechanical Subcontractor on
Exhibit C, in each case as the first payment. Contractor
agrees to utilize, and to cause Electro-Mechanical
Subcontractor to utilize, the proceeds of such first payment
solely to pay costs relating to their respective Work
hereunder. Contractor agrees to maintain the proceeds of
such first payment in a segregated bank account, and to
provide to Owner, upon the written request of Owner from
time to time, an accounting of the use of such proceeds, and
the balances then on deposit in such bank account.
Thereafter, on or about the tenth (10th) day of each month
after receipt of the Notice to Proceed, Contractor shall
submit a Contractor's Invoice in the form of Exhibit N-1
(with such additional information as may be prescribed
pursuant to Section 108 of the National Internal Revenue
Code of the Philippines and Applicable Law such that each
Contractor's invoice, as required under and pursuant to
Philippines law, qualifies as a "VAT Invoice") to Owner for
the Work performed thereunder in the then immediately
preceding month; provided, however, that Contractor shall
have the option to submit separate Contractor's Invoices for
work performed in the Republic of the Philippines and Work
performed outside of the Republic of the Philippines. Such
Contractor's Invoice shall describe the completion of
project milestones as described in the Progress Payment
Schedule, the related progress payments that are then due as
of the end of the immediately preceding calendar month, and
any other amounts then payable by Owner to Contractor under
Section 3.1 or 15 and, without limiting Owner's right to
dispute any amounts requested for payment, shall include
documentary evidence of the completion of each milestone
described in such Contractor's Invoice sufficient for Owner
to verify that such milestone has been completed, it being
understood and agreed by Contractor that any Contractor's
Invoice that is inaccurate or incomplete or that lacks
detail, specificity, or supporting documentation required by
this Article 7 shall not, to the extent of such deficiency,
constitute a valid request for payment. Each respective
monthly portion of the Contract Price set forth on the
Progress Payment Schedule shall be due and payable only to
the extent it is supported by individual payment milestones.
If any or all of such milestones have not been satisfied,
Contractor shall only be paid with respect to the milestones
that were completed during such month, it being acknowledged
and understood that no payment shall be made for partially
completed milestones or for Work still subject to Owner's
review in accordance with Section 11.3. With respect to
milestones set forth on the Progress Payment Schedule that
are not completed on a timely basis, Contractor shall be
paid the portion of the Contract Price applicable thereto
following completion of such milestones, and no interest
shall be payable with respect to payment of such delinquent
Work. Notwithstanding the foregoing, Contractor shall have
the right to accelerate completion of and be paid for
milestones actually completed which are set forth on the
Progress Payment Schedule without revising the Progress
Payment Schedule; provided, however, that the aggregate
amount of the Contract Price paid for any month shall not
result in exceeding the cumulative amount of the Contract
Price payable up to and including such month pursuant to the
Progress Payment Schedule.
(b) Accompanying each Contractor's Invoice,
Contractor shall submit (i) a conditional lien waiver from
Contractor, in the form attached as Exhibit L, for all Work
for which payment is sought in such invoice and (ii) a
conditional lien waiver from each Subcontractor or Vendor
(including the Electro-Mechanical Subcontractor) contracting
directly with Contractor where the applicable subcontract
price or purchase order value exceeds US$150,000, in
substantially the form attached as Exhibit M, for all Work
for which such Subcontractors and Vendors seek payment, in
each case for which lien waivers have not been previously
submitted to Owner.
(c) Without limiting Owner's rights of review
under Section 9.1 and Article 11, within twenty (20) days
after receipt by Owner of a Contractor's Invoice and all
accompanying documentation required by subsection (b) of
this Section 7.1, Owner and the Financing Entities shall, in
consultation with their respective Consulting Engineers,
(i) determine whether the Work covered thereby has been done
as described by Contractor; (ii) determine whether the Work
performed conforms with the requirements of this Contract;
(iii) determine whether the Contractor's Invoice has been
properly submitted; and (iv) determine and notify Contractor
(and the Electro-Mechanical Subcontractor with respect to
invoiced amounts on behalf of the Electro-Mechanical
Subcontractor) concerning any invoiced amount that is in
dispute and the basis for such dispute. Owner will pay
Contractor, within thirty (30) days after receipt by Owner
of Contractor's Invoice, all amounts then payable and not in
dispute; provided, however, that Owner may offset against
such payment any amount then due from Contractor to Owner
pursuant to Section 14.1 or 14.2; provided, further, that
proper items included in Contractor's Invoice specifying
payments to be made to the Electro-Mechanical Subcontractor
shall be paid directly to Electro-Mechanical Subcontractor
by Owner, with such direct payments being deemed to
constitute payments of the Contract Price as though paid
directly to Contractor. Failure by Owner to pay any amount
in dispute and identified pursuant to clause (iv) above
until resolution of such dispute pursuant to Section 7.1(h)
shall not alleviate, diminish, or modify in any respect
Contractor's obligations to perform hereunder, including
Contractor's obligation to meet the Scheduled Completion
Date. Upon receipt of payment from Owner, Contractor shall
promptly pay each Subcontractor and Vendor directly
contracting with Contractor the amount to which said
Subcontractor or Vendor is entitled under its agreement with
Contractor with respect to the Work covered by such payment
by Owner (other than the Electro-Mechanical Subcontractor,
who shall receive payment directly from Owner). Contractor
shall, by an appropriate agreement with each Subcontractor
and Vendor directly contracting with Contractor where the
applicable subcontract price or purchase order value exceeds
US$150,000, contractually require each such Subcontractor
and Vendor to make payments to its Subcontractors and
Vendors in a similar manner.
(d) Prior to the payment of each invoice (other
than the invoice in respect of the payment made pursuant to
Section 7.1(e)), Contractor shall confirm that the Retention
Security shall have been increased in accordance with its or
their respective terms in an aggregate amount equal to ten
percent (10%) of such payment and shall instruct the
issuer(s) of the Retention Security to so deliver a Notice
to Owner of such increase, such that at all times the
aggregate amount available to be drawn under the Retention
Security equals ten percent (10%) of the aggregate amount of
all payments made to Contractor (including payments made
directly to the Electro-Mechanical Subcontractor) pursuant
to Section 7.1(c) (the "Retainage"). If Contractor so
elects in writing, 10% of each invoice may be withheld from
each payment to Contractor pursuant to customary cash
retention provisions and otherwise as agreed to in writing
by Contractor and Owner. Any such cash retention amounts
shall be held and released in a manner consistent with
Section 7.1(e).
(e) Upon Substantial Completion of the Project,
Contractor shall submit an invoice for any remaining amounts
due to Contractor (including with respect to the Electro-
Mechanical Scope, less an amount equal to 200% of the value
of the items remaining on the Punchlist delivered pursuant
to Section 13.3(f) (the "Withheld Amount"). In addition,
Owner shall, in response thereto, release or otherwise
accept a reduction of the Retention Security by an amount
equal to the lesser of (i) 90% thereof or (ii) an amount
such that, upon reduction of such Retention Security, the
sum of the unpaid Contract Price plus the remaining amount
of such Retention Security equals 200% of the value of the
items remaining on the Punchlist. If Owner is holding more
than one instrument of Retention Security, Owner shall
allocate such release or reduction as instructed in writing
by Contractor (or, if not so instructed, pro rata among all
instruments of Retention Security).
(f) Upon the delivery of the Notice of Final
Acceptance in accordance with Section 13.5, Owner shall
promptly surrender to Contractor the Retention Security.
Upon the issuance of the Notice of Final Acceptance by
Owner, Contractor may submit an invoice for the Withheld
Amount, such invoice to be accompanied by executed final
conditional lien waiver forms from Contractor, in the form
attached as Exhibit L-1, for all Work performed pursuant to
this Contract and from each Subcontractor and Vendor
contracting directly with Contractor (including the Electro-
Mechanical Subcontractor), substantially in the form
attached as Exhibit M-1, for all Work performed and
materials furnished by each such Subcontractor or Vendor
pursuant to an executed subcontract or purchase order with
Contractor where the applicable subcontract price or
purchase order value exceeds US$150,000, as the case may be.
Such invoice shall be paid by Owner in the form of (i) final
release of the Retention Security and/or (ii) cash.
(g) Contractor's or Electro-Mechanical
Subcontractor's acceptance of any payment shall not be
deemed to constitute a waiver of amounts that are then in
dispute.
(h) Contractor and Owner shall use their
reasonable efforts to resolve all disputed amounts as
expeditiously as possible in accordance with the provisions
of Section 36.
(i) All payments to be made to Contractor under
this Contract shall be paid in United States Dollars and
shall be wire transferred in immediately available funds on
the date due or, if such date is not a banking day in the
United States, on the immediately succeeding banking day to
such account as may be designated by Contractor (or, in the
case of payments to be made hereunder directly to Electro-
Mechanical Subcontractor, as may be designated by Electro-
Mechanical Subcontractor) from time to time by Notice to
Owner in accordance with Section 33.
(j) Contractor hereby acknowledges that Owner
will be required to withhold one percent (1%) of each
payment to be made to Contractor hereunder to the extent
required under Applicable Law and remit such amount to the
Philippine Bureau of Internal Revenue in accordance with
Section 51 of the National Internal Revenue Code of the
Philippines, as amended and Revenue Regulations No. 6-85, as
amended. Contractor acknowledges that no amount payable
hereunder shall be increased as a result of such withholding
or any other withholding required under Applicable Law, and
all payments hereunder shall be made net of any such
amounts.
8. COMMENCEMENT AND PROSECUTION OF THE WORK
8.1. The date on which Owner provides Contractor
with a Notice to Proceed shall be the Notice to Proceed
Date. On the Notice to Proceed Date, Contractor shall
commence and shall thereafter diligently pursue the Work
assigning to it a priority that should reasonably permit the
attainment of Substantial Completion on or before the
Guaranteed Substantial Completion Date. Contractor shall
proceed with the performance of the Work in accordance with
the Milestone Schedule.
8.2. If a Notice to Proceed has not been issued by
June 30, 1997, either party shall have the right to
terminate this Contract upon notice to the other (which
right shall terminate upon the issuance of the Notice to
Proceed), in which event neither party shall have any
further rights or obligations hereunder (other than such
rights and obligations that by their express terms survive
the expiration or earlier termination of this Contract).
8.3. Contractor shall prosecute the Work in
accordance with the Critical Path Schedule. If Contractor
fails, other than by reasons not attributable to Contractor
to stay within sixty (60) days of the schedule for achieving
Substantial Completion on or before the Guaranteed
Substantial Completion Date (as determined from the Critical
Path Schedule), Contractor shall, within ten (10) days after
Contractor becomes aware of such delay, submit for approval
by Owner and the Consulting Engineer, a written plan (the
"Plan") to complete all necessary Work to achieve
Substantial Completion not later than sixty (60) days after
the Guaranteed Substantial Completion Date, including a
revised Critical Path Schedule. Owner and the Consulting
Engineer shall provide Contractor within fifteen (15) days
after receipt of the Plan written approval or disapproval of
the Plan, the approval thereof not to be unreasonably
withheld. If Owner or the Consulting Engineer disapproves
all or any portion of the Plan, Owner or the Consulting
Engineer, as the case may be, shall approve those portions
of the Plan that are acceptable and provide modifications to
those portions of the Plan that have been disapproved.
Contractor shall then resubmit a revised Plan addressing
such modifications as shall have been provided by Owner or
the Consulting Engineer, as the case may be, within five (5)
additional days and, upon approval by Owner and the
Consulting Engineer, promptly proceed with such additional
Work as may be required under the Plan. Approval by Owner
and the Consulting Engineer of a Plan shall not be deemed in
any way to have relieved Contractor of its obligations under
this Contract relating to the failure to achieve Substantial
Completion by the Guaranteed Substantial Completion Date, be
a basis for an increase in the Contract Price, or limit the
rights of Owner under Section 14.1.
8.4 (a) On or prior to May 12, 1997:
(i) Owner and Contractor shall have mutually
agreed upon Exhibits C, E, I, J, P, U and W, and the final
text of each of such Exhibits shall have been incorporated
herein. [COMPLETE AND INSERTED]
(ii) Contractor and Electro-Mechanical
Subcontractor each shall have executed and delivered the
Electro-Mechanical Subcontract, which shall have been
incorporated herein as Exhibit V. [COMPLETE AND INSERTED]
(iii) Owner, Contractor and Electro-Mechanical
Subcontractor shall have agreed upon the final text of
Article 23. [COMPLETE AND INSERTED]
(iv) Owner, Contractor and Electro-Mechanical
Subcontractor shall have agreed on the final form of each
item of Performance Security, and Contractor shall have
provided Owner with evidence reasonably satisfactory to
Owner of the commitment, by each issuer of such Performance
Security, to so issue such Performance Security on or prior
to the then anticipated date for issuance of the Notice to
Proceed. [FORM IS COMPLETE AND INSERTED]
(v) Owner shall deliver a Notice granting
Contractor access to the Site.
(vi) Within 10 days of the date on which the
Notice referred to in paragraph (a)(v) above is received by
Contractor, (A) Contractor shall have delivered a Notice to
Owner indicating Contractor's approval of the condition of
the Major Existing Site Assets, or a Notice to Owner
identifying any such Major Existing Site Assets that, in
Contractor's opinion, is no longer located at the Site or is
not capable, in all material respects and taking into
account (x) the used nature of such equipment, (y) usual and
customary maintenance and tune-up of all such equipment, and
(z) the required reconfiguration of the tunnel boring
machine, of being utilized for the functional purpose for
which it is designed and describing in detail the problems
with such equipment causing it to not be capable of such
operation, and (B) Contractor and Owner shall have agreed
upon appropriate and mutually satisfactory modifications to
this Contract, if any, to address such problems.
(b) If all of the foregoing events have not occurred
on or prior to the relevant date specified above (subject to
extension in the sole discretion of Owner), either
Contractor or Owner shall have the right to terminate this
Contract by Notice to the other party, whereupon neither
party shall have any liability to the other or to the
Electro-Mechanical Subcontractor.
9. SUBCONTRACTORS
9.1. Within thirty (30) days after the Notice to
Proceed Date, Contractor shall provide Owner with a list of
potential Subcontractors and Vendors, other than the Electro-
Mechanical Subcontractor, that would be directly contracting
with Contractor for all material components and services in
connection with the Work, broken down by component and
service. Within thirty (30) Business Days after receipt of
such list, Owner shall have the right to advise Contractor
of any such potential suppliers to which it objects,
together with the reasons for objection. Contractor shall
remove from the list any potential supplier to which Owner
objects (other than the Electro-Mechanical Subcontractor).
If Owner fails to respond within such thirty (30) working
day period, Owner shall be deemed not to have objected to
any potential Subcontractor or Vendor on the list.
Contractor shall have the right to add potential
Subcontractors and Vendors to the list subject to the
procedures set forth above; provided, however, that the
review period for Owner shall be reduced to fifteen (15)
Business Days after physical construction of the Project has
commenced. No Subcontractor or Vendor (other than the
Electro-Mechanical Subcontractor) for any material component
or service in connection with the Work covered by this
Section 9.1 shall be engaged by Contractor prior to
completion of the review process set forth in this Section
9.1.
9.2. Neither the review by Owner of any
Subcontractor or Vendor under Section 9.1 nor the approval
by Owner of the Electro-Mechanical Subcontractor shall (i)
constitute any approval of the Work undertaken by any such
Person, (ii) cause Owner to have any responsibility for the
actions, the Work, or payment of such Person or to be deemed
to be in an employer-employee relationship with any such
Subcontractor or Vendor, or (iii) in any way relieve
Contractor of its responsibilities and obligations under
this Contract. Notwithstanding anything in Article 7 to the
contrary, in no event shall Contractor submit or Owner be
obligated to review any invoice with respect to work
performed by any Subcontractor or Vendor (other than the
Electro-Mechanical Subcontractor) prior to the expiration of
the review period provided in Section 9.1.
9.3. No subcontract or purchase order shall bind
or purport to bind Owner, but each subcontract and purchase
order entered into by Contractor with respect to the Work
where the applicable subcontract price or purchase order
value exceeds US$150,000 shall contain a provision in the
form of Exhibit O permitting its assignment to Owner or the
Financing Entities upon Owner's written request following
default by Contractor or termination or expiration of this
Contract.
9.4. Contractor shall furnish such information and
access relative to its Subcontractors and Vendors as Owner
may reasonably request.
10. LABOR RELATIONS
10.1. Subject to Section 4.1(o), and
notwithstanding the provisions of Section 10.2, Contractor
shall preserve its rights to exercise and shall exercise its
management rights in performing the Work. Such management
rights shall include the rights to hire, discharge, promote,
and transfer employees; to select and remove foremen or
other persons at other levels of supervision; to establish
and enforce reasonable standards of production; to
introduce, to the extent feasible, labor saving equipment
and materials; to determine the number of craftsmen
necessary to perform a task, job, or project; and to
establish, maintain, and enforce rules and regulations
conducive to efficient and productive operations.
10.2. Contractor shall use its reasonable
efforts to minimize the risk of labor related delays.
Contractor shall promptly take any and all reasonable steps
that may be available in connection with the resolution of
violations of collective bargaining agreements and labor
jurisdictional disputes, including the filing of appropriate
processes with any court or administrative agency having
jurisdiction to settle, enjoin, or award damages resulting
from violations of collective bargaining agreements or labor
jurisdictional disputes.
10.3. Contractor shall advise Owner promptly,
in writing, of any actual or threatened labor dispute of
which Contractor has knowledge that might materially affect
the performance of the Work by Contractor or by any of its
Subcontractors.
11. INSPECTION; EFFECT OF REVIEW AND COMMENT
11.1. (a) Owner shall have the right to
inspect any item of equipment, material, design,
engineering, service, or workmanship to be provided
hereunder, and Contractor shall submit for review by Owner
all design criteria, system descriptions, plans, drawings,
calculations, technical specifications, quality assurance
reports, and other documents relating to the Work as
required by this Contract, and, to the extent reasonably
feasible, arrange for inspection of equipment or material at
the point of fabrication if requested by Owner. Owner shall
be responsible for the costs of its personnel and their
transportation with respect to such inspections.
(b) Regardless of whether payment has been made
therefor, Owner shall have the right to reject any portion
of the Work that does not conform to this Contract. Upon
such rejection, Contractor shall promptly remedy, at its
sole cost and expense, any Work that does not conform to the
requirements of this Contract that is identified by Owner as
giving rise to such rejection.
11.2. Contractor understands that Owner and
the Financing Entities and their respective representatives
have the right to observe and inspect the Work, any item of
equipment (including equipment under fabrication), material,
design, engineering, service, or workmanship to be provided
hereunder and to observe all tests of the Work and the
Project. Upon reasonable Notice to Contractor by Owner,
Contractor shall allow Owner, NPC, NIA, and the Financing
Entities and their respective representatives reasonable
access to the Work (including equipment under fabrication)
and the Project. Owner and the Financing Entities also shall
be entitled to Contractor's technical details pertaining
thereto as reasonably requested by either Owner, or the
Financing Entities, or their respective representatives.
Contractor shall incorporate such inspection rights in all
equipment purchase orders and subcontracts. To facilitate
such observations and inspections, Contractor shall maintain
at the Site a complete set of all plans and specifications
and a current Critical Path Schedule and Milestone Schedule.
11.3. Contractor shall submit for review to
Owner (which shall have the right to make them available to
NIA and NPC) copies of all drawings, plans, calculations,
operating and maintenance instructions, and, in general, all
material documents relating to the Project in accordance
with the requirements of Article 3 of Exhibit A. Within
thirty (30) days after receipt of any such document for
Level 1 or Level 2 (each as defined in Exhibit A) review,
Owner shall have the right to describe any flaws in the
design identified in such document. Failure by Owner to
describe any flaws within such time period shall be deemed a
waiver of Owner's rights to describe such flaws.
Notwithstanding anything in Article 7 to the contrary, in no
event shall Contractor submit any Contractor's Invoice with
respect to work performed pursuant to any such documents
prior to the expiration of the review period set forth in
this Section 11.3. In no event shall Contractor issue any
purchase orders based on any such drawings, plans,
calculations, operating and maintenance instructions, or
other material documents until Owner has completed its
review.
11.4. If Owner identifies any flaws in the
design with respect to any document submitted for review
(which shall include any flaws identified by NIA or NPC),
Contractor shall incorporate changes into such documents
addressing and remedying the flaws and resubmit the same to
Owner, and such incorporation of changes to address Owner's
comments shall not be considered a Change in the Work. No
document subject to this Section 11.4 shall be released for
use in connection with the Work prior to completion of the
review process set forth in Section 11.3.
11.5. Inspection, review, or comment by Owner
with respect to any subcontract or purchase order or any
plans, specifications, drawings, shop drawings, samples, and
other documents, or any other work or services performed by
Contractor or any Subcontractor or Vendor, is solely at the
discretion of Owner and shall not in any way affect or
reduce Contractor's obligations to complete the Work in
accordance with the provisions of this Contract or be deemed
to be a warranty or acceptance by Owner with respect to such
Work.
12. MECHANICAL COMPLETION OF THE WORK
12.1. Contractor shall (i) provide for Owner's
review and acceptance detailed test procedures and a test
schedule in accordance with the requirements of Exhibit D
not less than one hundred fifty (150) days prior to the
start of testing, which procedures must be agreed upon by
Contractor and Owner at least ninety days prior to the
commencement of testing, with the schedule clearly
indicating when in the test schedule the Contractor will
require electrical connection for output to the NPC Luzon
grid; and (ii) provide Owner, NIA, and NPC not less than
twenty (20) days prior Notice of all testing of protective
apparatus and of the proposed date for initial
synchronization of the Project with NPC's grid. Contractor
shall keep the Project Representative continuously apprised
of the specified schedule and changes thereto for the
commencement and performance of such activities.
12.2. Contractor shall provide written Notice
to Owner and the Financing Entities' Consulting Engineer
that Contractor deems Mechanical Completion of the Work
(other than the Taan Xxxx Work) to have occurred when
(i) Contractor has completed all such Work except painting,
final clean-up, final grading, and any portion of such Work
not affecting the operability or safety or the mechanical,
electrical, or structural integrity of the Project; (ii) the
Project is mechanically, electrically, and structurally
constructed in accordance with the requirements of this
Contract, including completion of those tests identified in
Exhibit D as "Tests Required for Mechanical Completion";
(iii) the Project may be operated without damage to the
facilities of NPC or any other property on or off the Site,
and without injury to any Person; (iv) the Project is ready
for initial operation, adjustment, performance, and testing;
and (v) the Performance Test procedures shall have been
approved in accordance with Section 16.1. If not included
in the foregoing Notice to Owner, Contractor shall provide a
similar Notice to Owner promptly upon mechanical completion
of the subject matter of the Taan Xxxx Work.
12.3. Within twenty (20) days after receipt of
any Notice pursuant to Section 12.2 hereof, Owner shall have
the right to advise Contractor in writing of any defects or
deficiencies in the installed equipment, materials, and
workmanship that deviate from the drawings and
specifications approved by Owner pursuant to this Contract
and that could adversely affect the operability or safety,
or the mechanical, electrical, or structural integrity, of
the Project. Contractor shall then perform, at Contractor's
sole cost and expense, corrective measures to remove such
defects or deficiencies and shall again notify Owner, in
accordance with Section 12.2 hereof, when Mechanical
Completion of the Work has occurred. Within five (5) days
after receipt of each subsequent notification, Owner shall
have the right to advise Contractor, in writing, of any
additional or remaining defects or deficiencies that must be
corrected by Contractor as a condition to Mechanical
Completion of such Work. Any disputes regarding the
existence or correction of any such alleged defects or
deficiencies shall be resolved pursuant to Section 16.2.
12.4. Mechanical Completion shall be deemed to
have occurred when Contractor has corrected all defects and
deficiencies identified in the subject Work (other than the
Taan Xxxx Work) by Owner pursuant to the provisions of
Section 12.3 and Owner has noted such corrections in writing
or the engineering firm identified pursuant to Section 16.2
determines that no such defects or deficiencies exist. Owner
shall be deemed to have given such notice unless Owner has
identified in writing any additional or remaining defects or
deficiencies within the applicable period specified in
Section 12.3.
13. SUBSTANTIAL COMPLETION AND FINAL
ACCEPTANCE OF THE PROJECT
13.1. (a) Contractor shall perform all Work
necessary for the conduct of the Project Performance Test,
shall start-up the Project and conduct the Project
Performance Test, and shall satisfy all of its other
obligations under this Contract to ensure that the Project
has been completed and that all components have been
properly adjusted and tested.
(b) Contractor and Owner shall agree on test
schedules for the Project taking into consideration the
operational requirements of NIA and NPC. Contractor shall
give Owner and NIA written notice at least ninety (90) days
before it anticipates conducting the Project Performance
Test. When Contractor establishes the scheduled dates(s) for
the tests required pursuant to this Contract, it shall give
Owner at least twenty (20) days' prior notice thereof.
Contractor shall keep the Project Representative
continuously apprised of the specified schedule, and changes
therein, for the commencement and performance of Project
Performance Test, and shall give the Project Representative
at least eight (8) days' prior notice of the re-performance
of the Project Performance Test. A Project Performance Test
conducted without the required notice to Owner and NIA shall
not be valid for the purposes of this Contract.
(c) The representatives of NIA and NPC shall have
the right to be present during any test performed by
Contractor under this Section 13.
13.2. At any time during and promptly after
completion (whether or not successful) of the Project
Performance Test under Section 13.1 (or any re-performance
of such test under this Section 13.2), Owner shall advise
Contractor and Contractor shall advise Owner in writing of
any Work that does not conform to this Contract that was
discovered during the Project Performance Test. If
Contractor is notified of or discovers any such non-
conforming Work, Contractor shall, at Contractor's sole cost
and expense, correct such Work and promptly provide Notice
to Owner in writing that such corrective measures have been
completed. Any dispute regarding the existence or correction
of any such non-conforming Work shall be resolved pursuant
to Section 16.2.
13.3. The following are conditions precedent
to Substantial Completion:
(a) All liquidated delay damages due pursuant to
Section 14.1 have been paid.
(b) Contractor has completed the Project
Performance Test and the other tests provided for in
Exhibit D (other than the Reliability Test) and either
(i) the Project shall have achieved 100% of the Project
Performance Guarantee or (ii) all Buy Down Amounts due
pursuant to Section 14.2 shall have been paid and all of the
other requirements set forth in Section 14.2 shall have been
satisfied, as applicable.
(c) Owner has received copies of all Contractor's
Permits required to be obtained by Contractor pursuant to
Section 4.1(e).
(d) Owner has received all submissions in
accordance with the provisions of Exhibit A, including all
operations, maintenance, and spare parts lists and manuals
and all instruction books necessary to operate the Project
in a safe, efficient, and reliable manner and has received
five (5) copies of preliminary as-built drawings of the
Project, one (1) Mylar reproducible copy thereof, and, if
the drawings are electronically prepared, one (1) copy of
the computer data files as prepared by Contractor for a
software program available to Owner.
(e) Contractor has certified by a Notice to Owner
that all training of Operating Personnel is complete.
(f) A Punchlist and a schedule and budget for
completion of the Punchlist items, in each case reasonably
satisfactory to Owner and the Consulting Engineer, has been
developed by Contractor and delivered to Owner, and all Work
other than those items shown on the Punchlist shall have
been completed.
(g) All spare parts described on Exhibit J have
been received by Owner at the Site.
13.4. When Contractor believes that it has
satisfied the provisions of Section 13.3(a) through (f), it
shall deliver to Owner and the Financing Entities'
Consulting Engineer a Notice of Substantial Completion. Such
Notice shall contain a report of results of the Performance
Tests and the Work completed with sufficient detail to
enable Owner and the Financing Entities' Consulting Engineer
to determine whether Substantial Completion has been
achieved. The Substantial Completion Date shall be the date
on which the conditions of Section 13.3 were satisfied or,
in the sole discretion of Owner, waived. Promptly after
Substantial Completion has been achieved as provided above,
Owner shall issue a Notice of Substantial Completion dated
to reflect the Substantial Completion Date.
13.5. Final Acceptance of the Work shall be
deemed to have occurred only if all of the following have
occurred:
(a) Substantial Completion and successful
completion of the Reliability Test demonstrating the
Project's ability to achieve the Reliability Guarantee and
successful completion of the Taan Xxxx Work.
(b) Owner has received all drawings (including
five (5) copies of final as-built drawings of the Work, one
(1) Mylar reproducible copy thereof, and, if the drawings
are electronically prepared, one (1) copy of the computer
data files as prepared by Contractor for a software program
available to Owner), specifications, calculations, test
data, performance data (including turbine efficiency
curves), equipment descriptions, equipment and system
installation instruction manuals, integrated and coordinated
operation and maintenance manuals, training aids, spare
parts lists, and other technical information each as
required hereunder for Owner to start up, operate,
commission, and maintain the Project.
(c) All tools and spare parts purchased by
Contractor to replace those used by Contractor during start-
up have been purchased for delivery to Owner free and clear
of liens.
(d) All Contractor's and Subcontractors'
personnel, supplies, equipment, waste materials, rubbish,
and temporary facilities have been removed from the Site,
and any permanent facilities used by Contractor have been
restored to like new condition.
(e) Owner has received from Contractor all
information requested by Owner and required for Owner's
final fixed asset records with respect to the Project in
accordance with Section 4.1(h).
(f) Contractor has delivered to Owner a
certification identifying all outstanding claims of
Contractor under this Contract with documentation sufficient
to support such claims.
(g) Contractor has assigned or provided Owner
with all warranties or guarantees that Contractor received
from Subcontractors or Vendors to the extent Contractor is
obligated to do so pursuant to Section 17.5.
(h) Contractor has delivered a conditional final
lien waiver in accordance with Section 7.1(f) and has
delivered such other documents and certificates as Owner has
reasonably requested to insure compliance with all
applicable labor laws and regulations of the Republic of the
Philippines..
(i) Owner has delivered to Contractor a Notice of
Final Acceptance evidencing that, to the best of Owner's
knowledge, the Punchlist items have been completed to the
reasonable satisfaction of Owner and all of Contractor's
other construction obligations under this Contract have been
satisfied in full, which Notice of Final Acceptance Owner
shall deliver as soon as possible, and in no event more than
ten (10) days after satisfaction in full by Contractor of
all of its obligations under the provisions of Section 13.5
(a) through (h). If Owner fails to notify Contractor of any
alleged non-satisfaction of Contractor's obligations under
Sections 13.5(a) through (h) within ten (10) days after the
date Contractor gives Notice to Owner that Contractor
believes it has satisfied the provisions of Section 13.5(a)
through (h), Contractor shall be deemed to have satisfied
such conditions; provided, however, that failure to so
notify Contractor shall not void the Plant Warranties or
Materials Warranty.
14. DELAY DAMAGES AND BUY DOWN AMOUNTS
14.1. Contractor understands that if the
Substantial Completion Date does not occur on or before the
Guaranteed Substantial Completion Date, Owner will suffer
substantial damages, including additional interest and
financing charges on funds obtained by Owner to finance the
Work, reduction of the return on Owner's equity investment
in the Project, and other operating and construction costs
and charges. Therefore, Contractor agrees that if
Substantial Completion is not achieved by the Guaranteed
Substantial Completion Date (unless and to the extent such
failure is due to Owner's breach of its obligations under
this Contract or, without duplication, the occurrence of
Force Majeure), Contractor shall pay to Owner liquidated
damages in the amount of US$25,000 per day for each day by
which the Substantial Completion Date is delayed beyond the
Guaranteed Substantial Completion Date for the first ninety
(90) days of such delay, US$45,000 per day for each day of
delay beyond such ninetieth (90th) day but prior to the
180th day after the Guaranteed Substantial Completion Date,
and US$65,000 per day for each day of delay thereafter;
provided, however, in no event shall Electro-Mechanical
Liquidated Damages payable under this Section 14.1 exceed
such amount thereof as would accrue over a period of 365
days.
14.2. (a) If the Project Performance Guarantee
shall not have been fully satisfied on or before the date on
which Contractor desires to declare Substantial Completion
pursuant to Section 13.4, as determined pursuant to the
Project Performance Test conducted pursuant to Section 16.1
(whether by virtue of the results of the Project Performance
Test or failure to perform the Project Performance Test),
Contractor shall, as a condition to Substantial Completion,
pay to Owner a one time Buy Down Amount equal to US$2,878
per kW for each kW that the net Project performance output
shall have been below the Project Performance Guarantee, as
demonstrated during the conduct of the Project Performance
Test and calculated in accordance with the method set forth
on Exhibits Q and Q-1.
(b) Subject to Section 35.3 but notwithstanding
anything else to the contrary contained herein, if
Contractor is in default under Section 19.1(g) and Owner has
elected to terminate this Contract, Contractor shall, in
addition to any other remedies to which Owner may be
entitled, pay a Buy Down Amount computed based on the
Project Performance Test most recently completed prior to
termination or, if the Project Performance Test has not been
completed prior to termination, the Project Performance Test
completed after termination (no Buy Down Amount being
payable hereunder unless based on such a Project Performance
Test).
14.3. Any amount Contractor is obligated to
pay to Owner under Section 14.1 or 14.2 shall be due and
payable thirty (30) days after receipt of a request therefor
from Owner. If Contractor is obligated to pay any amount to
Owner pursuant to Section 14.1 or 14.2 and such amount is
not paid within the time period referred to above, Owner
shall have the right to offset any such amount against any
amount then or thereafter due from Owner to Contractor under
this Contract and to exercise its rights against any
security provided by or for the benefit of Contractor in
such order as Owner may elect in its sole discretion.
14.4 The amounts payable under Sections 14.1 and
14.2, as limited by Article 35, and the other remedies
provided for in Section 14.3 shall be Owner's sole remedies
for delays in achieving Substantial Completion by Contractor
and for failure of the Project to meet the Performance
Guarantees during the Performance Tests. Contractor and
Owner agree that Owner's actual damages in the event of such
delays and failures would be extremely difficult or
impracticable to determine and that, after negotiation,
Owner and Contractor have agreed that the liquidated damages
set forth in Sections 14.1 and 14.2 are a reasonable
estimate of the damages that Owner would incur as a result
of such delays or failures.
14.5 Contractor shall be entitled to an early
completion bonus in an amount equal to US$50,000 per day for
each day prior to the date that is 36 months after the
Notice to Proceed Date that the Substantial Completion Date
shall have occurred. Such early completion bonus shall be
paid by Owner within thirty (30) days after the Substantial
Completion Date.
15. CHANGES IN THE WORK
15.1. A Change in the Work may result only
from any of the following:
(a) Changes in the Work required by Owner in
writing in accordance with Section 15.2;
(b) The occurrence of an event of Force Majeure;
(c) A Change in Law; or
(d) The occurrence of a Hanbo-Related Event
(provided Contractor has provided prompt written notice to
Owner of the occurrence thereof and has taken reasonable
steps to mitigate the adverse effects of such Hanbo-Related
Event).
15.2. (a) Owner shall have the right to make
changes in the Work, within the general scope thereof,
whether such changes are modifications, alterations,
additions, or deletions, in accordance with this Article 15.
All such changes shall be made in accordance with this
Article 15 and shall be considered, for all purposes of this
Agreement, as part of the Work.
(b) Notwithstanding the foregoing, unless
Contractor and Owner shall have agreed upon a "Change in the
Work" form in accordance with the provisions of Section 15.4
hereof, Contractor shall have no obligation to perform or
comply with any modification, alteration, addition, or
deletion by Owner to the Work after execution of this
Contract that (i) conflicts with this Contract, (ii)
accelerates the Milestone Schedule, (iii) may affect the
performance of the Project under the Performance Guarantees,
or (iv) may increase the costs of the Contractor.
15.3. Upon the occurrence of a Change in Law,
an event of Force Majeure or the occurrence of a Hanbo-
Related Event, Contractor may request a Change in the Work
under which (i) the Critical Path Schedule and the Milestone
Schedule (and each date referenced therein, including the
Guaranteed Substantial Completion Date) shall be extended as
set forth in the Change in the Work form accepted by Owner,
(ii) the Contract Price shall be increased by the amount of
the increased costs, if any, set forth in the "Change in the
Work" form so accepted by Owner, and (iii) the Work shall be
modified to reflect additions, deletions, or substitutions
to the Work previously approved by Owner, as set forth in
the "Change in the Work" form so accepted by Owner.
15.4. If Contractor is notified of or becomes
aware of a Change in the Work required by Owner pursuant to
Section 15.1 or as the result of the occurrence of an event
of Force Majeure, a Change in Law or the occurrence of a
Hanbo-Related Event, Contractor shall, as soon as
practicable after notification or becoming aware of such an
event, prepare a detailed estimate of the increase, if any,
in the cost and time required to complete the Work on the
"Change in the Work" form attached as Exhibit G, together
with an explanation of the basis therefor, and shall inform
Owner whether and to what extent, in Contractor's opinion,
there should be a change in the Work, the Contract Price,
the Milestone Schedule, the Critical Path Schedule, or the
Progress Payment Schedule. Contractor shall not charge Owner
for the costs of making such estimates in response to
reasonable requests therefor.
15.5 (a) If Contractor and Owner reach agreement
on the matters listed in the "Change in the Work" form
submitted by Contractor, Contractor shall execute such form
in accordance with Section 37.5, and Owner shall sign
"Accepted by Owner" on such form and execute such form in
accordance with Section 37.5, as amended to reflect the
agreement of the Parties. For any Change in the Work
resulting in additional costs to Contractor, Contractor
agrees that any changes shall be performed on the basis of
reimbursement of its direct costs (without overhead) less
savings or costs not incurred due to such change, plus, for
profit and overhead, a fee of ten percent (10%) of such
costs, but expressly waives any other compensation therefor.
(b) If a Change in the Work involves a decrease
in the Work or in the use of less labor resulting in reduced
labor costs, there shall be a lump-sum deduction from the
Contract Price, which deduction will be based on the amount
that Contractor has in its budget for the Work involved,
inclusive of direct and indirect costs, overhead, margins,
contingencies, fees, and profit.
(c) If there is a dispute between the Parties
about a request for a Change in the Work by either Party
under this Section 15, such dispute shall be resolved in
accordance with the expedited dispute resolution procedures
set forth in Section 36 for payment disputes, and,
notwithstanding any provision of this Section 15 to the
contrary, the arbitrators shall decide the appropriate
Contract Price change, schedule change, and related matters,
if any, such decision shall be treated as a Change in the
Work, and this Contract shall be deemed to have been amended
to reflect such terms.
(d) If necessary and specified on the Change in
the Work form accepted by Owner or as decided by the
arbitrators, Owner shall promptly adjust the Contract Price
and the Milestone Schedule, the Critical Path Schedule, the
Progress Payment Schedule and any other Exhibits and
schedules requiring adjustment to reflect the accepted
Change in the Work. IN NO EVENT SHALL CONTRACTOR BE ENTITLED
TO UNDERTAKE OR BE OBLIGATED TO UNDERTAKE A CHANGE IN THE
WORK UNTIL CONTRACTOR HAS RECEIVED A CHANGE IN THE WORK FORM
SUBMITTED BY CONTRACTOR AND ACCEPTED BY OWNER OR DECIDED BY
THE ARBITRATORS, AND, IN THE ABSENCE OF SUCH SIGNED CHANGE
IN THE WORK FORM, IF CONTRACTOR UNDERTAKES ANY CHANGES IN
THE WORK, IT SHALL MAKE ANY SUCH CHANGES AT ITS SOLE RISK
AND EXPENSE AND SHALL NOT BE ENTITLED TO ANY PAYMENT
HEREUNDER FOR UNDERTAKING SUCH CHANGES.
15.6. Contractor shall not suspend the Work
pending resolution of any proposed Change in the Work unless
directed by Owner in writing in accordance with Section 21.
16. PERFORMANCE GUARANTEES AND TESTS
16.1. Contractor shall perform all tests of
the Project in accordance with the provisions of Exhibit D.
Contractor shall provide Owner with proposed test and
commissioning procedures, standards, protective settings,
and the testing and commissioning program to be followed by
Contractor not less than one hundred fifty (150) days prior
to the date on which Contractor anticipates the commencement
of the Performance Tests. Contractor and Owner shall
cooperate reasonably to reach agreement on such test and
commissioning procedures, standards, protective settings,
and test and commissioning program to be followed by
Contractor not less than ninety (90) days prior to the date
on which Contractor anticipates commencing the Performance
Tests.
16.2. Upon completion of any test, Contractor
and Owner shall jointly issue a certificate that testing has
been done on the Project and that the agreed testing
procedures have been followed. If there is a difference of
opinion about any test results or the existence or
correction of any defects or deficiencies claimed by Owner
pursuant to Section 12.2 or 13.2 that cannot be resolved by
the Parties within seven (7) days, the controversy shall be
resolved by a reputable engineering firm. The Parties will
cooperate in jointly deciding on such engineering firm not
later than six (6) months prior to the anticipated date of
Mechanical Completion. As to any difference of opinion
between Contractor and Owner, each Party shall bear its own
costs in connection with such procedure and shall share
equally any costs of the engineering firm. Any determination
of such engineering firm shall be non-binding, and either
Party shall have the right following such a determination to
avail itself of its rights under Article 36.
16.3. Any revenues generated by the Project
during the performance of any tests or otherwise shall be
paid to and for the benefit of Owner.
17. WARRANTIES CONCERNING THE WORK
17.1. Contractor warrants and guarantees with
respect to the Project (the "Project Warranties"),
commencing on the Substantial Completion Date, as follows:
(a) The Work performed hereunder and all
equipment, materials, supplies, tools, and other items
provided in connection therewith shall meet all of the
requirements set forth in this Contract. Owner's rights
under this Section 17.1(a) shall expire two (2) years from
the date of successful completion of the Reliability Test,
except for the Turbine Guarantee as set forth in Exhibit P
which shall expire on the date set forth therein; except in
each case with respect to any matters for which a claim has
been made during such period; and
(b) The Work performed hereunder and all
equipment, materials, supplies, tools, and other items
provided in connection therewith shall be of a quality
consistent with prudent utility practice and the prevailing
industry standards, and free from defects and deficiencies
in design, engineering, materials, construction, and
workmanship. Owner's rights under this Section 17.1(b) shall
expire two (2) years from the date of successful completion
of the Reliability Test, except for the Turbine Guarantee as
set forth in Exhibit P which shall expire on the date set
forth therein, except in each case with respect to any
matters for which a claim has been made during such period.
17.2. Contractor further warrants that all
materials, equipment, tools, supplies, and other items
furnished by Contractor and any Subcontractors and Vendors
hereunder shall be new and of good and suitable quality when
installed (the "Materials Warranty"). Owner's rights under
this Section 17.2 shall expire two (2) years from the date
of successful completion of the Reliability Test, except for
the Turbine Guarantee as set forth in Exhibit P which shall
expire on the date set forth therein, except in each case
with respect to any matters for which a claim has been made
during such period.
17.3. If any warranty claim is made pursuant
to this Article 17 and any Work is re-performed,
Contractor's Project Warranties and its Materials Warranty
shall apply to any such re-performed Work and shall last as
to the re-performed Work until the later of (a) the
expiration of the relevant original Warranty Period and (b)
six (6) months after completion of any re-performed Work. In
no event shall Contractor's warranty for re-performed Work
extend longer than six (6) months after the original
expiration date of the Project Warranties and Materials
Warranty set forth in Sections 17.1 and 17.2. Contractor's
Project Warranties and its Materials Warranty (including re-
warranties under this Section 17.3) shall be assignable to
the Financing Entities without additional approval by
Contractor.
17.4. The Project Warranties and Materials
Warranty set forth in Sections 17.1 and 17.2 shall not apply
to:
(a) Damage to materials, equipment, tools,
supplies, and other items furnished for the Project to the
extent such damage is caused by:
(i) Owner's failure to operate and maintain such
equipment, materials, tools, supplies, and other items in
accordance with the recommendations set forth in the
Project's operations and maintenance manual;
(ii) Owner's operation of such equipment,
materials, tools, supplies, and other items in excess of
operating specifications for such equipment as set forth in
the Project's operations and maintenance manual;
(iii) The use of spare parts and normal
consumables in the repair or maintenance of such equipment,
materials, tools, supplies, and other items that are not in
accordance with specifications and recommendations set forth
in the Project's operations and maintenance manual;
(iv) Any changes or modifications made to such
equipment, materials, tools, supplies, and other items by
any Person other than a representative of Contractor without
having obtained Contractor's express written consent prior
to such changes or modifications; or
(v) An event of Force Majeure (which excludes
warranty failure hereunder)).
Notwithstanding the foregoing, damage caused by
Operating Personnel while operating under the direction of
Contractor shall be the responsibility of Contractor.
(b) Normal consumables or items that require
replacement due to normal wear and tear or casualty loss
(other than a warranty failure).
17.5. Without in any way derogating from
Contractor's own representations and warranties and its
Performance Guarantees with respect to all of the Work,
Contractor shall:
(a) Obtain a Turbine Guarantee in the form of
Exhibit P from the turbine vendor effective from the
Substantial Completion Date and otherwise on terms and
conditions acceptable to Owner, and,
(b) Use reasonable efforts to obtain from all
Subcontractors and Vendors any representations, warranties,
guarantees, and obligations offered by such Subcontractors
and Vendors at no additional cost with respect to design,
materials, workmanship, equipment, tools, supplies, and
other items furnished by such Subcontractors and Vendors.
All representations, warranties, guarantees, and
obligations of such Subcontractors and Vendors shall, at the
request and direction of Owner, and without recourse to
Contractor, be assigned to Owner or any Financing Entity
upon default by Contractor or termination or expiration of
this Contract; provided, however, that, notwithstanding such
assignment, Contractor shall be entitled to enforce each
such representation, warranty, guarantee, and obligation
through the end of the Warranty periods. Contractor shall
deliver to Owner promptly following execution thereof duly
executed copies of all contracts containing such
representations, warranties, guarantees, and obligations.
17.6. Commencing on the expiration of each of
the respective Project Warranties and Materials Warranty, or
such later date as is provided in Section 17.3 with respect
to re-performed Work, Owner shall be responsible for
enforcing all representations, warranties, and guarantees
from Subcontractors and Vendors, and Contractor shall
provide reasonable assistance to Owner, on a reimbursable
basis, in enforcing such representations, warranties, and
guarantees, when and as reasonably requested by Owner. In
addition, prior to the expiration of each of the respective
Project Warranties and Materials Warranty, or such later
date as is provided in Section 17.3 with respect to re-
performed Work, Owner, at its option and upon prior written
Notice to Contractor, may enforce any such warranty against
any Subcontractor or Vendor if (i) Owner determines that
Contractor has not enforced such warranty against the
Subcontractor or Vendor in a timely and diligent manner or
performed the warranty work itself, or (ii) Contractor is in
default pursuant to Article 19 and the cure period for such
default has expired.
17.7. (a) Owner shall promptly notify
Contractor in writing upon discovery of any failure of any
of the Work to satisfy the Project Warranties or the
Materials Warranty during the applicable Warranty Periods.
In the event of any such failure under circumstances in
which there is an immediate need as defined in Exhibit K,
then Owner shall perform such warranty work for Contractor's
account in accordance with the procedures set forth on
Exhibit K; provided, however, that the failure to comply
with such procedures shall not void the Project Warranties
or the Materials Warranty. In all other cases, Contractor
shall, at its own cost and expense (except to the extent of
insurance proceeds actually received), re-perform any
necessary engineering and purchasing relating to such
equipment, material, labor, and shipping, as well as the
cost of removing any defect and the cost of replacement
thereof, including any damage to the surrounding Work, as
shall be necessary to cause the Work and the Project to
conform to the Project Warranties or Materials Warranty.
Within five (5) days after receipt by Contractor of a notice
from Owner specifying a failure of any of the Work to
satisfy Contractor's Project Warranties or the Materials
Warranty and requesting Contractor to correct the violation,
Contractor and Owner shall mutually agree when and how
Contractor shall remedy said violation. If Contractor does
not use its best efforts to proceed to complete said remedy
within the time agreed to, or should Contractor and Owner
fail to reach such an agreement within such five (5) day
period, Owner shall have the right to perform or have
performed by third parties the necessary remedy in
accordance with the procedures set forth in Exhibit K;
provided, however, that the failure to comply with such
procedures shall not void the Project Warranties or the
Materials Warranty, and the costs as established pursuant to
Exhibit K shall be borne by Contractor.
(b) Notwithstanding the foregoing, Contractor
shall have the right to request Owner to perform all or any
portion of Contractor's obligations with respect to any
warranty claim, and, if Owner determines that it has the
capability and expertise to perform such obligations, Owner
shall perform such obligations for Contractor's account in
accordance with the procedures set forth in Exhibit K;
provided, however, that the failure to comply with such
procedures shall not void the Project Warranties or the
Materials Warranty.
17.8. In connection with the performance by
Contractor of any warranty work, Owner shall supply all
normal Operating Consumables. In addition, Owner shall, to
the extent the same would not materially interfere with the
operations of the Project not affected by the warranty work,
allow Contractor the use of any special rigging, cranes,
heavy equipment, the workshop and workshop tools, and
equipment located at the Site.
17.9. EXCEPT FOR THE EXPRESS WARRANTIES AND
REPRESENTATIONS SET FORTH IN THIS CONTRACT, CONTRACTOR DOES
NOT MAKE ANY OTHER EXPRESS WARRANTIES OR REPRESENTATIONS, OR
ANY IMPLIED WARRANTIES OR REPRESENTATIONS, OF ANY KIND
WHATEVER RELATING TO THIS CONTRACT, THE WORK, OR DESIGN,
EQUIPMENT, OR MATERIALS TO BE SUPPLIED BY CONTRACTOR UNDER
THIS CONTRACT OR TO THE PROJECT, INCLUDING ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE.
18. EQUIPMENT IMPORTATION; TITLE
18.1. Contractor, at its own cost and expense,
shall make all arrangements, including the processing of all
documentation, necessary for Owner to apply for Certificates
of Authority from the Board of Investments of the Republic
of the Philippines to import into the Philippines the
capital equipment to be incorporated into the Project and
any other equipment, materials, spare parts, supplies,
tools, and other items necessary to perform the Work and
shall coordinate with the applicable Authorities in
achieving clearance of Philippine customs for all such
equipment, materials, spare parts, supplies, tools, and
other items and, to the extent available under Philippine
law, achieving such importation duty- and tax-free. Except
to the extent attributable solely to non-performance by
Owner of its obligations under Section 3.1(d) in a timely
fashion, in no event shall Owner be responsible for any
delays in customs clearance or any resulting delays in
performance of the Work.
18.2. (a) Contractor warrants good title, free
and clear of all liens, claims, charges, security interests,
and encumbrances whatsoever, to all equipment, materials,
spare parts, supplies, tools, and other items furnished by
it or any of its Subcontractors or Vendors that become part
of the Project or that are to be used for the operation,
maintenance, or repair thereof.
(b) Title to all domestically obtained equipment,
materials, spare parts, supplies, tools, and other items
shall pass to Owner, free and clear of all liens, claims,
charges, security interests, and encumbrances whatsoever,
upon the earlier of payment in full therefor or
incorporation into the Project.
(c) Title to all equipment, materials, spare
parts, supplies, tools, and other items imported into the
Philippines shall pass to Owner, free and clear of all
liens, claims, charges, security interests, and encumbrances
whatsoever, when delivered over the ship's rail at the named
port of shipment.
(d) The transfer of title shall in no way affect
Owner's rights as set forth in any other provision of this
Contract. Contractor shall have care, custody, and control
of all equipment, materials, spare parts, supplies, tools,
and other items (including equipment, materials, spare
parts, supplies, tools, and other items imported into the
Philippines) and exercise due care with respect thereto
until the earlier of the Substantial Completion Date and the
termination of this Contract.
18.3. For the purpose of protecting Owner's
interest in all equipment, materials, spare parts, supplies,
tools, and other items with respect to which title has
passed to Owner pursuant to Section 18.2 but that remain in
possession of another party, Contractor shall take or cause
to be taken all steps necessary under the laws of the
appropriate jurisdiction(s) to protect Owner's title and to
protect Owner against claims by other parties with respect
thereto.
18.4. On the Substantial Completion Date,
Owner shall take complete possession and control of the
Project and assume responsibility for the daily operation
and maintenance of the Project. Contractor's access to and
continued presence at the Site thereafter shall be for the
sole purpose of achieving Final Acceptance pursuant to
Section 13.5 and completing its obligations under Section
17.
19. DEFAULT
19.1. Contractor shall be immediately in
default of its obligations pursuant to this Contract upon
the occurrence of any one or more events of default below:
(a) Contractor becomes insolvent, generally does
not pay its debts as they become due, admits in writing its
inability to pay its debts, or makes an assignment for the
benefit of creditors, or insolvency, receivership,
reorganization, or bankruptcy proceedings are commenced by
Contractor;
(b) Insolvency, receivership, reorganization, or
bankruptcy proceedings are commenced against Contractor and
such proceeding shall remain undismissed or unstayed for a
period of thirty (30) days;
(c) Any representation or warranty made by
Contractor herein was false or materially misleading when
made and Contractor fails to remedy such false or misleading
representation or warranty, and to make Owner whole for any
consequences thereof, within thirty (30) days after
Contractor receives a Notice from Owner with respect
thereto;
(d) Contractor assigns or transfers this Contract
or any right or interest herein, except as expressly
permitted under Article 30;
(e) Contractor fails to maintain any insurance
coverages required of it in accordance with Article 23;
(f) Contractor fails to perform or observe in any
respect any provision of this Contract providing for the
payment of money to Owner or any other material provision of
this Contract not otherwise addressed in this Section 19.1,
and such failure continues for five (5) days in the case of
such a payment obligation and thirty (30) days in the case
of any other obligation, in each case after Contractor
receives a Notice from Owner with respect thereto;
(g) The Substantial Completion Date (including,
for purposes of this Section 19.1(g), Substantial Completion
of the Taan Xxxx Work) has not occurred on or before the
date that is 365 days after the Guaranteed Substantial
Completion Date, as such date may be extended pursuant to
Article 15, or, following approval of a Plan pursuant to
Section 8.3, Contractor fails, other than for reasons not
attributable to Contractor, to meet the schedule set forth
in the Plan (as determined from the revised Critical Path
Schedule established by the Plan); or
(h) Contractor suspends or abandons the Work.
Suspension for the purposes of this Section 19.1(h) shall
mean that Contractor has not accomplished any progress
toward any of the field related payment milestones for a
period of sixty (60) or more days. Abandonment for the
purposes of this Section 19.1(h) shall mean that Contractor
has substantially reduced personnel or removed further
required equipment from the Site such that, in the opinion
of an experienced construction manager, Contractor would not
be capable of maintaining progress in accordance with
Contractor's Critical Path Schedule.
19.2. If Contractor is in default pursuant to
Section 19.1, Owner or its assignee shall have the following
rights and remedies, in addition to any other rights and
remedies that may be available to Owner, or its assignee,
under this Contract, and Contractor shall have the following
obligations:
(a) Owner, without prejudice to any of its other
rights or remedies, may terminate this Contract forthwith by
delivery of a written Notice of termination to Contractor;
(b) If requested by Owner, Contractor shall
withdraw from the Site, shall assign to Owner (without
recourse to Contractor) such of Contractor's subcontracts as
Owner may request, and shall deliver and make available to
Owner all proprietary information, patents, and licenses of
Contractor related to the Work reasonably necessary to
permit Owner to complete or cause the completion of the
Work, and in connection therewith Contractor authorizes
Owner and its agents to use such information in completing
the Work, shall remove such materials, equipment, tools, and
instruments used by and any debris or waste materials
generated by Contractor in the performance of the Work as
Owner may direct, and Owner may take possession of any or
all designs, drawings, and Site facilities of Contractor
related to the Work necessary for completion of the Work;
(c) Owner, without incurring any liability to
Contractor, shall have the right (either with or without the
use of Contractor's materials, equipment, tools, and
instruments) to have the Work finished whether by enforcing
any security given by or for the benefit of Contractor for
its performance under this Contract or otherwise, in which
case Owner shall have the right to take possession of and
use all equipment, materials, tools, and instruments of
Contractor necessary for completion of the Work, and
Contractor shall have no right to remove such items from the
Site until such completion;
(d) Owner may seek equitable relief to cause
Contractor to take action or to refrain from taking action
pursuant to this Contract, or to make restitution of amounts
improperly received under this Contract;
(e) Owner may, but is not obligated to, make such
payments or perform such obligations as are required to cure
Contractor's default and offset the cost of such payment or
performance against payments otherwise due to Contractor
under this Contract; and
(f) Owner may seek damages as provided in Section
19.3, including proceeding against any bond, guaranty,
letter of credit, or other security given by or for the
benefit of Contractor for its performance under this
Contract.
19.3. In the event of a default by Contractor
under Section 19.1, and subject to Article 35, Contractor
shall be liable to Owner for any and all actual damages to
Owner as a result of such default, it being understood that,
to the extent that the actual costs of completing the Work,
including compensation for obtaining a replacement
contractor or for obtaining additional professional services
required as a consequence of Contractor's default, exceed
those costs that would have been payable to Contractor but
for Contractor's default, Contractor shall be obligated to
pay the difference to Owner. In addition, in the event of a
default by Contractor under Section 19.1, Owner shall be
entitled to withhold further payments to Contractor for the
Work performed prior to termination of this Contract until
Owner determines the liability of Contractor, if any, under
this Section 19.3. Upon determination of the total cost of
the Work, Owner shall notify Contractor in writing of the
amount, if any, that Contractor shall pay Owner or Owner
shall pay Contractor.
19.4. Owner shall be immediately in default of
its obligations pursuant to this Contract upon the
occurrence of any one or more events of default below:
(a) Owner becomes insolvent, generally does not
pay its debts as they become due, admits in writing its
inability to pay its debts, or makes an assignment for the
benefit of creditors, or insolvency, receivership,
reorganization, or bankruptcy proceedings are commenced by
Owner;
(b) Insolvency, receivership, reorganization, or
bankruptcy proceedings are commenced against Owner and such
proceedings remain undismissed or unstayed for a period of
thirty (30) days;
(c) Any representation or warranty made by Owner
herein was false or materially misleading when made and
Owner fails to remedy such false or misleading
representation or warranty, and to make Contractor whole for
any consequences thereof, within thirty (30) days after
Owner receives a Notice from the Contractor with respect
thereto;
(d) Owner assigns or transfers this Contract or
any right or interest herein, except as expressly permitted
under Article 29 hereof; or
(e) Owner fails to perform or observe in any
respect any provision of this Contract providing for the
payment of money to Contractor or any other material
provision of this Contract not otherwise addressed in this
Section 19.4, and such failure continues for five (5) days
in the case of such a payment obligation and thirty (30)
days in the case of any other obligation, in each case after
Owner receives a Notice from Contractor with respect
thereto.
19.5. If Owner is in default pursuant to
Section 19.4, and subject to Section 19.6 and Article 35,
Contractor shall have all rights and remedies that may be
available under law against Owner with respect to this
Contract, including the right to suspend performance of the
Work or to terminate this Contract.
19.6. Contractor's sole recourse for any
damages or liabilities due to Contractor by Owner pursuant
to this Contract shall be limited to the assets of Owner
(which include the Project) without recourse individually or
collectively to the assets of the shareholders of Owner.
20. EARLY TERMINATION
20.1. Owner, in its sole discretion, shall
have the right to terminate this Contract for convenience
and without cause by giving Notice of termination to
Contractor, which termination shall be effective as of the
date of receipt.
20.2. If the Contract is terminated by Owner
pursuant to Section 20.1, Contractor shall receive as
compensation for the Work performed and expenses incurred
through the date of termination an amount equal to the sum
of (i) the unpaid price for the Work performed as of such
termination calculated by multiplying the percentage of the
relevant Work completed by the applicable milestone payment
set forth in the Progress Payment Schedule, (ii) the
reasonable cost of demobilization incurred by Contractor
(including reasonable demobilization costs paid by
Contractor to its Subcontractors and Vendors), and (iii) all
reasonable cancellation charges incurred by Contractor as a
result of such termination. Notwithstanding the foregoing,
if this Contract is terminated prior to the date the Notice
to Proceed is given, Contractor shall not be entitled to any
compensation upon termination.
21. SUSPENSION
21.1. If at any time (i) Owner, in its sole
discretion, elects to suspend performance of the Work for
reasons related to the safe and proper conduct of the
Project and the construction thereof, or (ii) the Financing
Entities shall have ceased to disburse funds or shall have
given notice of their intent to do so, Owner may suspend
performance of the Work by giving Notice to Contractor. Such
suspension shall continue for the period specified in the
suspension Notice. The Contract Price shall be adjusted as
provided in subsections (i), (ii), (iii), and (iv) of this
Section 21.1 to reflect any additional increased costs of
Contractor resulting from any such suspension, as
demonstrated by Contractor to Owner's reasonable
satisfaction. No adjustment shall be made to the extent that
performance is suspended, delayed, or interrupted for any
cause due to Contractor's negligence, willful misconduct, or
noncompliance with the terms of this Contract. At any time
after the effective date of the suspension, Owner may
require Contractor to resume performance of the Work on five
(5) days' Notice. If, at the end of the specified suspension
period, Owner has not requested a resumption of the Work or
has not notified Contractor of any extension of the
suspension period (but in no event beyond 365 days in the
aggregate for all such suspensions, other than suspensions
for any reason due to Contractor's negligence, willful
misconduct, or noncompliance with the terms of this
Contract) at Contractor's option the Work shall be deemed
terminated as of the commencement date of the suspension
period, and Owner shall promptly pay Contractor for the Work
performed pursuant to Section 20.2. In addition, in the
event of any such suspension, Owner shall pay Contractor
within thirty (30) days after receipt of Contractor's
invoice for those costs incurred during the suspension
period that are documented by Contractor to the reasonable
satisfaction of Owner, to the extent attributable to the
suspension, and that are:
(i) For the purpose of safeguarding and/or
storing the Work and the materials and equipment at the
point of fabrication, in transit, or at the Site;
(ii) For personnel, Subcontractors, Vendors, or
rented equipment, the payments for which, with Owner's prior
written concurrence, are continued during the suspension
period;
(iii) For reasonable costs of demobilization
and remobilization; or
(iv) For rescheduling the Work (including
penalties or additional payments to Subcontractors and
Vendors for the same).
21.2. In the case of any suspension under this
Section 21, other than from a cause due to Contractor's
negligence, willful misconduct, or noncompliance with the
terms of this Contract, the Guaranteed Substantial
Completion Date shall be extended by a period equal to the
suspension period, plus a reasonable period for
demobilization and remobilization approved by Owner, and the
Critical Path Schedule, the Milestone Schedule, and the
Progress Payment Schedule shall be adjusted to account for
same.
21.3. All claims by Contractor for
compensation under this Article 21 must be made within sixty
(60) days after the suspension period has ended and the Work
has been either terminated or resumed. Failure of Contractor
to make such claim within said period shall be deemed a
waiver by Contractor of any such claims.
22. FORCE MAJEURE
22.1. No failure or omission to carry out or
observe any of the terms, provisions, or conditions of this
Contract shall give rise to any claim by any Party against
any other Party hereto, or be deemed to be a breach or
default of this Contract if the same shall be caused by or
arise out of any war, declared or not, hostilities,
belligerence, blockade, revolution, insurrection, riot, or
public disorder; expropriation, requisition, confiscation,
or nationalization; export or import restrictions by any
Authorities; closing of harbors, docks, canals, or other
assistances to or adjuncts of the shipping or navigation of
or within any place; rationing or allocation, whether
imposed by law, decree, or regulation, or by compliance of
industry at the insistence of any Authorities; unusually
severe fire, flood, earthquake, volcano, tide, tidal wave,
or perils of the sea; unusually severe storms and other
weather conditions, including typhoons, lightning, and
drought; accidents of navigation or breakdown or injury of
vessels, accidents to harbors, docks, canals, or other
assistances to or adjuncts of the shipping or navigation;
epidemic or quarantine; strikes or combination of workmen,
lockouts, or other labor disturbances; or any other event,
matter, or thing, wherever occurring, that is not within the
reasonable control of the Party affected thereby, each of
the foregoing events, matters, or things being called "Force
Majeure" in this Contract. Force Majeure shall in no event
include a pre-existing condition at the Site or in the
surrounding areas.
22.2. If either Party's ability to perform its
obligations under this Contract is affected by an event of
Force Majeure described above, such Party shall promptly
(but in any event within forty-eight (48) hours), upon
learning of such event and ascertaining that it will affect
its performance hereunder, give written Notice to the other
Party stating the nature of the event, its anticipated
duration and effect upon the performance of such Party's
obligations, and any action being taken to avoid or minimize
its effect. The burden of proof shall be on the Party
claiming Force Majeure pursuant to this Section 22.2.
22.3. The suspension of performance due to an
event of Force Majeure shall be of no greater scope and no
longer duration than is required by the event of Force
Majeure. The excused Party shall use its reasonable efforts
to continue to perform its obligations hereunder and to
remedy its inability to perform. When the affected Party is
able to resume performance of its obligation under this
Contract, that Party shall give the other Party written
Notice to that effect.
22.4. No obligations of either Party that
arose before the occurrence of an event of Force Majeure
causing the suspension of performance shall be excused as a
result of such occurrence. The obligation to pay money in a
timely manner for obligations and liabilities that matured
prior to the occurrence of an event of Force Majeure shall
not be subject to the Force Majeure provisions.
22.5. If, within a reasonable time after a
Force Majeure occurrence that has caused Contractor to
suspend or delay performance of the Work, action to be
undertaken at the expense of Owner has been identified and
recommended to Contractor, and Contractor has failed within
five (5) days after receipt of Notice thereof from Owner to
take such action as Contractor could lawfully and reasonably
initiate to remove or relieve either the Force Majeure
occurrence or its direct or indirect effects, Owner may, in
its sole discretion and after written Notice to Contractor,
initiate such reasonable measures as will be designed to
remove or relieve such Force Majeure occurrence or its
direct or indirect effects and thereafter require Contractor
to resume full or partial performance of the Work. To the
extent Contractor's failure to take such measures results in
expense in addition to what Owner would have paid to
Contractor (whether as part of the original Contract Price
or as additional compensation to the extent the requested
measures constituted an Owner requested change in the scope
of Contractor's Work) had Contractor taken such measures,
such additional expense shall be for Contractor's account.
22.6. Damages or injuries to persons or
properties resulting from a Force Majeure event during the
performance of the obligations provided for in the Contract
shall not relieve the Contractor of the responsibility to
bear the cost of the damage or injuries caused by
Contractor's negligence or misconduct to the extent such
costs are not covered by the insurance described in Article
23.
22.7. Contractor's sole remedies for the
occurrence of an event of Force Majeure shall be an
extension of the Milestone Schedule, including the
Guaranteed Substantial Completion Date, pursuant to Article
15.
23. INSURANCE
23.1. (a) Contractor shall procure or cause to
be procured at its own expense and maintain or cause to be
maintained in full force and effect at all times during the
period commencing at such times as required by Owner and the
Financing Entities through the expiration of the Warranty
Periods all insurance coverages specified in Exhibit I. All
insurance coverage shall be in accordance with the indicated
limits identified in Exhibit I, using companies, if required
under Applicable Law, authorized to do business in the
Republic of the Philippines, and in accordance with the
terms of this Article 23.
(b) Owner shall maintain, at such Owner's cost
and expense, such insurance coverages with respect to the
Project as are normally and customarily carried by owners of
projects similar to the Project and as required by the
Financing Entities, including (i) contractor's all risk
insurance naming Contractor as an additional insured and
covering loss or damage to the Project works during
construction and testing periods, which insurance shall
include a third-party liability section with a minimum limit
of US$10,000,000 and having a deductible amount of not
greater than US$500,000, (ii) ocean freight insurance naming
Contractor as an additional insured and covering loss or
damage to the equipment to be incorporated into the Project
and construction equipment during ocean transit to the Site,
and (iii) insurance against all loss or damage from
whatsoever cause arising in respect of construction
equipment, if any, financed from project sources brought
onto or destined for the Site for use in execution of the
Work, to the full replacement value of such equipment. All
insurance coverages maintained by Owner shall be with
companies authorized to do business in the Republic of the
Philippines to the extent required by Applicable Law and, to
the extent of the Contractor's interest in the assets
covered thereby, shall name Contractor as an additional
insured. The insurance coverages maintained by Owner
pursuant to clauses 23.1(b)(i), (ii) and (iii) shall, to the
extent permitted under Applicable Law and to the extent of
claims payable with respect to actions of Contractor,
provide for a waiver of subrogation rights against
Contractor and its assigns, subsidiaries, affiliates,
employees, insurers and underwriters, and of any right of
the insurers to any set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of
any liability of any such person insured under any such
policy. Owner shall provide to Contractor copies of all
policies, endorsements and other instruments required to be
maintained under this Section 23.1(b) to the extent relating
to risks of or coverages afforded Contractor, showing terms,
conditions and effectiveness of such policies, endorsements
and other instruments. Owner shall reasonably assist
Contractor in submitting and processing Contractor claims
thereunder.
23.2. To the extent permitted under Applicable
Law, all policies shall provide for a waiver of subrogation
rights against Owner and the Financing Entities, and their
assigns, subsidiaries, affiliates, employees, insurers, and
underwriters, and of any right of the insurers to any set-
off or counterclaim or any other deduction, whether by
attachment or otherwise, in respect of any liability of any
such person insured under any such policy. Contractor
releases, assigns, and waives any and all rights of recovery
against Owner, NIA, the Financing Entities, and all their
affiliates, subsidiaries, employees, successors, permitted
assigns, insurers, and underwriters that Contractor may
otherwise have or acquire in or from or in any way connected
with any loss covered by policies of insurance maintained or
required to be maintained by Contractor pursuant to this
Contract or because of deductible clauses in or inadequacy
of limits of any such policies of insurance.
23.3. Evidence of insurance required
hereunder, in the form required to be delivered by Owner
pursuant to the Financing Entities' loan documentation, but
in any event in the form of certificates of insurance or
copies of the forms of policies and, where appropriate,
endorsements (showing, where necessary, Owner, NIA, and the
Financing Entities as additional insureds, as their
interests may appear) certified by Contractor's insurance
brokers, shall be furnished by Contractor when required to
be delivered by Owner pursuant to the Financing Entities'
loan documentation, but in any event no later than the date
on which coverage is required to be in effect pursuant to
Section 23.1. Copies of the actual insurance policies or
other evidence of insurance coverage reasonably acceptable
to Owner shall be provided to Owner within the time required
by the Financing Entities after the coverage effective date.
Such policies of insurance shall be subject to review and
approval by Owner, which approval shall not be unreasonably
withheld, and shall, at a minimum, but to the extent
permitted under Applicable Law, provide a severability of
interests or cross-liability clause; provided, however, that
the insurance shall be primary and not excess to or
contributing with any insurance or self-insurance maintained
by Owner, NIA, and the Financing Entities and contain a
provision that the policies may not be canceled or changed
except (i) as provided in Exhibit I or (ii) if not therein
provided, without sixty (60) days' or, in the case of
nonpayment of premium, ten (10) days' prior written Notice
given by certified mail to Owner, NIA, and the Financing
Entities. Not later than the one-year anniversary of the
date of delivery of the policies of insurance hereunder or
the expiration date of the policy if for a term of more than
one year, and not later than each one-year anniversary or
policy renewal date thereafter, Contractor shall deliver
copies of the renewal insurance policies certified as
aforesaid. All property policies required hereunder shall
provide for the assignment by Contractor of any insurance
proceeds paid thereunder to Owner, NIA, and the Financing
Entities as their interests may appear.
23.4. All amounts of insurance coverage under
this Contract specified in Exhibit I are required minimums.
Contractor shall be solely responsible for determining the
appropriate amount of insurance. The required minimum
amounts of insurance shall not operate as limits on
recoveries available under this Contract.
23.5. If at any time the insurance to be
provided by Contractor hereunder shall be reduced or cease
to be maintained, then (without limiting the rights of Owner
hereunder in respect of any default that arises as a result
of such failure) Owner may at its option maintain the
insurance required hereby, and, in such event, but subject
to Section 23.6, Owner may withhold the cost of insurance
premiums expended for such insurance from any payments to
Contractor.
23.6. With respect to any insurance coverages
described in Exhibit I that are expressly subject to this
Section 23.6, if such insurance (including the limits or
deductibles thereof) is not available and commercially
feasible in the commercial insurance market, Owner shall not
unreasonably withhold its agreement to waive such
requirement to the extent the maintenance thereof is not so
available; provided, however, that (i) Contractor shall
first request any such waiver in writing, which request
shall be accompanied by a written report prepared by an
independent insurance adviser of recognized national
standing and acceptable to Owner certifying that such
insurance is not reasonably available and commercially
feasible in the commercial insurance market for projects of
similar type and electrical generating capacity (and, in any
case where the required amount is not so available,
certifying as to the maximum amount that is so available)
and explaining in detail the basis for such conclusions,
such insurance adviser and the form and substance of such
reports to be acceptable to Owner; (ii) at any time after
the granting of any such waiver, Owner may request, and
Contractor shall furnish to Owner within fifteen (15) days
after such request, supplemental reports acceptable to Owner
from such insurance adviser updating its prior report and
reaffirming such conclusion; (iii) any such waiver shall be
effective only so long as such insurance shall not be
available and commercially feasible in the commercial
insurance market, it being understood that the failure of
Contractor to timely furnish any requested supplemental
report shall be presumptive evidence that such waiver is no
longer effective because such condition no longer exists;
and (iv) it shall not be unreasonable for Owner to withhold
its agreement to waive any such requirement to the extent
the Financing Entities have not waived any such requirement.
The failure at any time to satisfy the conditions to any
waiver of an insurance requirement set forth in the
provision to the preceding sentence shall not impair or be
construed as a relinquishment of Contractor's ability to
obtain a waiver of an insurance requirement pursuant to the
preceding sentence at any other time upon satisfaction of
such conditions.
23.7. Contractor shall require such liability
insurance of its Subcontractors contracting directly with
Contractor and performing services at the Site as shall be
reasonable and in accordance with Philippine construction
industry practices in relation to the work or other items
being provided by each such Subcontractor.
24. LOSS OR DAMAGE
24.1. Owner shall bear the risk of physical
loss or destruction of or damage to the Work (including all
materials, equipment, tools, supplies, and other items that
are purchased for permanent installation in or for use
during construction of the Project) commencing from the time
Owner acquired title thereto pursuant to Article 18.
24.2. Contractor shall be responsible for the
safe delivery to the Site of all materials, equipment, spare
parts, tools, supplies, and other items to the Site related
to the Work.
24.3. Except for uninsured losses (including
deductible amounts) caused by the negligence or willful
misconduct of Contractor, Contractor's total liability for
loss or damage to the Work shall be limited to the
recoveries from Owner provided insurance, if any. In the
event any insurance is provided by Owner, Contractor's
liability for property damage up to the amount of the above-
referenced deductibles shall accrue in full before Owner
shall become liable for any such property damage.
25. INDEMNIFICATION
25.1. Owner shall defend, indemnify, and hold
harmless Contractor, its Subcontractors and Vendors, and all
their respective employees, affiliates, agents, officers,
partners, and directors from and against all third party
claims, damages, losses, and expenses (including reasonable
attorneys' fees and expenses) that arise out of or result
from, but only to the extent of, the negligent, reckless, or
tortious acts or omissions (including strict liability) of
Owner or anyone directly or indirectly employed by Owner
(other than Contractor, any affiliate of Contractor, or any
Subcontractor or Vendor).
25.2. Contractor shall defend, indemnify, and
hold harmless Owner and the Financing Entities and their
respective employees, agents, partners, affiliates,
shareholders, directors, officers, and assigns, from and
against all third party claims, damages, losses, and
expenses (including reasonable attorneys' fees and expenses)
that directly or indirectly:
(a) Arise out of or result from, but only to the
extent of, (i) any negligent, reckless, or otherwise
tortious act or omission (including strict liability) during
the performance of the Work, or any curative action under
any warranty following performance of the Work, of
Contractor or any affiliate thereof, any Subcontractor or
Vendor, or anyone directly or indirectly employed by any of
them, or anyone for whose acts such Person may be liable, or
(ii) any claims asserted against or losses incurred by Owner
or any of the Financing Entities or such employee, agent,
partner, affiliate, shareholder, director, officer, or
assign as a result of employer's liability or worker's
compensation claims filed by any employees of Contractor or
any of its Subcontractors or Vendors; or
(b) Arise out of or result from the failure of
Contractor to comply with Applicable Laws or the conditions
or provisions of Applicable Permits.
25.3. Contractor shall defend, indemnify, and
hold Owner and the Financing Entities and their respective
employees, agents, partners, affiliates, shareholders,
directors, officers, and assigns harmless from and against
all claims by any governmental or taxing authority claiming
taxes based on gross receipts or on income of Contractor,
any of its Subcontractors or Vendors, or any of their
respective agents or employees with respect to any payment
for the Work made to or earned by Contractor, any of its
Subcontractors or Vendors, or any of their respective agents
or employees under this Contract
25.4. Nothing contained in this Contract shall
obligate either Party to indemnify or hold harmless the
other Party or any of their respective employees, agents,
partners, affiliates, shareholders, directors, officers, and
assigns from any claims to the extent of the negligent,
reckless, or otherwise tortious conduct of the Party seeking
indemnification. It is the intent of the Parties that, where
negligence is determined to have been contributory,
principles of comparative negligence will apply, and each
Party shall bear the proportionate cost of any loss, damage,
expense, and liability attributable to that Party's
negligence.
25.5. An indemnitee under this Article 25 or
any other indemnification provision set forth in the
Contract shall, within ten (10) Business Days after the
receipt of notice of the commencement of any legal action or
of any claims against such indemnitee in respect of which
indemnification will be sought, notify the indemnitor with a
Notice thereof. Failure of the indemnitor to give such
Notice will reduce the liability of the indemnitor by the
amount of damages attributable to the failure of the
indemnitee to give such Notice to the indemnitor, but the
failure so to notify shall not relieve the indemnitor from
any liability that it may have to such indemnitee otherwise
than under the indemnity agreements contained in this
Article 25. In case any such claim or legal action shall be
made or brought against an indemnitee and such indemnitee
shall notify the indemnitor thereof, the indemnitor may, or
if so requested by such indemnitee shall, assume the defense
thereof, without any reservation of rights. After notice
from the indemnitor to such indemnitee of an election to
assume the defense thereof and approval by the indemnitee of
counsel selected by the indemnitor, the indemnitor will not
be liable to such indemnitee under this Article 25 for any
legal fees or expenses subsequently incurred by such
indemnitee in connection with the defense thereof. No
indemnitee shall settle any indemnified claim over which the
indemnitor has not been afforded the opportunity to assume
the defense without the indemnitor's approval. The
indemnitor shall control the settlement of all claims over
which it has assumed the defense; provided, however, that
the indemnitor shall not conclude any settlement that
requires any action or forbearance from action by the
indemnitee or any of its affiliates without the prior
approval of the indemnitee. The indemnitee shall provide
reasonable assistance to the indemnitor, at the indemnitor's
expense, in connection with such legal action or claim. If
the indemnitor assumes the defense of any such claim or
legal action, any indemnitee shall have the right to employ
separate counsel in such claim or legal action and
participate therein, and the reasonable fees and expenses of
such counsel shall be at the expense of such indemnitee,
except that such fees and expenses shall be for the account
of the indemnitor if (i) the employment of such counsel has
been specifically authorized by the indemnitor, or (ii) the
named parties to such action (including any impleaded
parties) include both such indemnitee and the indemnitor and
representation of such indemnitee and the indemnitor by the
same counsel would, in the reasonable opinion of the
indemnitee, be inappropriate under applicable standards of
professional conduct due to actual or potential conflicting
interests between them. Notwithstanding anything to the
contrary in this Section 25.5, the indemnitee shall have the
right, at its expense, to retain counsel to monitor and
consult with indemnitor's counsel in connection with any
such legal action or claim.
26. PATENT INFRINGEMENT AND OTHER
INDEMNIFICATION RIGHTS
26.1. Contractor shall defend, indemnify, and
hold harmless Owner and the Financing Entities and their
respective employees, partners, directors, officers and
assigns against all loss, damage, and expense (including
reasonable attorneys' fees and expenses) arising from any
claim or legal action for unauthorized disclosure or use of
any trade secrets, or of patent, copyright, or trademark
infringement arising from Contractor's performance (or that
of its affiliates, Subcontractors, or Vendors) under this
Contract or otherwise asserted against Owner that either (a)
concerns any equipment, materials, supplies, or other items
provided by Contractor, any of its affiliates, or any
Subcontractor or Vendor under this Contract; (b) is based
upon or arises out of the performance of the Work by
Contractor, any of its affiliates, or any Subcontractor or
Vendor, including the use of any tools or other implements
of construction by Contractor, any of its affiliates, or any
Subcontractor or Vendor; or (c) is based upon or arises out
of the design or construction of any item or unit specified
by Contractor under this Contract or the operation of any
item or unit according to directions embodied in
Contractor's final process design, or any revision thereof,
prepared or approved by Contractor.
26.2. If such claim or legal action for such
infringement results in a suit against Owner, the provisions
of Section 25.5 shall apply.
26.3. If Owner is enjoined from completion of
the Project or any part thereof, or from the use, operation,
or enjoyment of the Project or any part thereof, as a result
of such claim or legal action or any litigation based
thereon, Contractor shall promptly use its best efforts to
have such injunction removed at no cost to Owner.
26.4. Owner's acceptance of Contractor's
engineering design or proposed or supplied materials and
equipment shall not be construed to relieve Contractor of
any obligation hereunder.
27. TREATMENT OF PROPRIETARY INFORMATION
27.1. (a) Any information disclosed by one
Party (the "transferor") to the other Party, and/or its
agents, employees, or affiliates (the "transferee") incident
to the performance of the Work pursuant to this Contract
that is designated in writing as proprietary is disclosed in
confidence, and the transferee shall restrict its use of
such information solely to uses related to the Project or
performance of this Contract. Neither the transferee nor any
consultant or other person to whom any confidential or
proprietary information is provided in connection with the
Project or performance of this Contract shall publish or
otherwise disclose such information to others or use such
information for any purpose except as expressly provided
above without the written approval of the transferor;
provided, however, that nothing herein shall limit (i) the
right of Owner to provide any information regarding
Contractor, any Subcontractor, any Vendor, this Contract, or
the Work to any Financing Entity (or advisors retained on
their behalf) or their successors and assigns, (ii) the
right of either Party to supply such information to any
governmental authority having jurisdiction and asserting a
right to such information, or as may be required by law, or
(iii) the right of Owner to reproduce as many copies of any
specifications, drawings, or other documents provided to
Owner as Owner in its sole discretion considers necessary
for the furtherance of the Work, regardless of any notices,
legends, or disclaimers on such specifications, drawings, or
other documents.
(b) Notwithstanding the designation of any
information as proprietary by a transferor, such information
shall not be deemed proprietary or confidential if it (i)
was furnished by such Party prior to the execution of this
Contract without restrictions, (ii) becomes knowledge
available within the public domain, (iii) is received by
either Party from a third party without restriction and
without breach of this Contract, or (iv) is or becomes
generally available to, or is independently known to or has
been or is developed by, either Party or any of its
affiliates other than solely as a result of any disclosure
of proprietary information by the transferor to the
transferee.
27.2. Contractor and Owner agree to comply
with United States Department of Commerce Export
Administration regulations regarding the export to foreign
countries of technical data or information or any product
based thereon and shall not knowingly ship or otherwise
communicate or allow to be shipped or communicated, either
directly or indirectly, any technical data information or
any product based thereon in connection with the Work to any
country to which such shipment or communication is
prohibited by said regulations, unless prior written
authorization is obtained from the office of Export
Administration, United States Department of Commerce, either
directly or through Owner.
28. INVENTIONS AND LICENSES
28.1. Contractor shall grant to Owner an
irrevocable, nonexclusive, royalty-free license for use in
connection with the operation, maintenance, repair, or
alteration of the Project, with respect to any invention
related thereto based wholly or in material part on or
derived from proprietary information received from Owner and
conceived or first reduced to practice by Contractor, its
employees, or agents during the course of the Work.
28.2. Contractor further agrees to grant and
hereby grants to Owner, for use solely in connection with
the Project, an irrevocable, royalty-free, nonexclusive
license under all patents and other proprietary information
of Contractor related to the Work now or hereafter owned or
controlled by Contractor to the extent reasonably necessary
for the operation, maintenance, repair, or alteration of the
Project or any unit or component thereof designed,
specified, or constructed by Contractor under this Contract.
No other license in such patents and proprietary information
is granted pursuant to this Contract.
29. ASSIGNMENT BY OWNER
29.1. Without the prior consent of Contractor,
Owner may, upon reasonable advance written notice, assign
all or part of its right, title, and interest in this
Contract to any Financing Entity. Any Financing Entity may,
in connection with any default under any financing document
related to the Project, assign any rights assigned to it
hereunder to any Person. In addition, Owner may assign all
or part of its right, title, and interest in this Contract
to any other Person with the prior written approval of
Contractor, which approval shall not be unreasonably
withheld. Contractor agrees that, upon receipt of written
notice of such assignment, it shall deliver all documents,
data, Notices, and other communications required to be
delivered to Owner hereunder to the Financing Entities at
such address as they shall designate to Contractor in
writing.
30. ASSIGNMENT BY CONTRACTOR
30.1. It is expressly understood that this
Contract is personal to Contractor and that Contractor shall
have no right, power, or authority to assign or delegate
this Contract or any portion thereof, either voluntarily or
involuntarily, or by operation of law. Contractor's
attempted assignment or delegation of any of its Work
hereunder shall be null and void and shall be ineffective to
relieve Contractor of its responsibility for the Work
assigned or delegated.
31. INDEPENDENT CONTRACTOR
31.1. Contractor is an independent contractor,
and nothing contained herein shall be construed as
constituting any relationship with Owner other than that of
owner and independent contractor, or as creating any
relationship whatsoever between Owner and Contractor's
employees. Neither Contractor nor any of its employees is or
shall be deemed to be an employee of Owner.
31.2. Subject to Sections 4.1(o) and 9.1,
Contractor has sole authority and responsibility to employ,
discharge, and otherwise control its employees,
Subcontractors, and Vendors.
32. CLAIMS
32.1. Contractor shall indemnify and hold
harmless Owner and the Financing Entities (collectively, the
"Lien Indemnitees") and defend each of them from and against
any and all loss, costs, damages, and expense arising out of
any and all claims for payment, whether or not reduced to a
lien, filed by Contractor or any Subcontractors, Vendors, or
other Persons performing any portion of the Work for which
Contractor has received full payment under this Contract,
including reasonable attorneys' fees and expenses incurred
by any Lien Indemnitee in discharging any such liens or
similar encumbrances. If Contractor shall fail to discharge
promptly any such lien or claim filed against the Project or
any interest therein, upon any materials, equipment, or
structures encompassed therein, or upon the premises upon
which they are located, any Lien Indemnitee may so notify
Contractor in writing, and Contractor shall then satisfy or
defend any such liens or claims. If Contractor does not
promptly satisfy such liens or claims, give such Lien
Indemnitee reasons in writing satisfactory to such Lien
Indemnitee for not causing the release of such liens or
paying such claims, or contest such liens or claims in
accordance with the provisions of the last sentence of this
Section 32.1, any Lien Indemnitee shall have the right, at
its option, after written notification to Contractor, to
cause the release of, pay, or settle such liens or claims,
and Owner at its sole option may (i) require Contractor to
pay, within five (5) days after request by Owner, or (ii)
offset against any Retainage or other amounts due or to
become due to Contractor (in which case Owner shall, if it
is not the applicable Lien Indemnitee, pay such amounts
directly to the Lien Indemnitee causing the release,
payment, or settlement of such liens or claims) all costs
and expenses incurred by the Lien Indemnitee in causing the
release of, paying, or settling such liens or claims,
including administrative costs, attorneys' fees, and other
expenses. Contractor shall have the right to contest any
such lien, provided it first provides to Owner a bond or
other assurances of payment reasonably satisfactory to Owner
in the amount of such lien and in form and substance
reasonably satisfactory to Owner.
33. NOTICES AND COMMUNICATIONS
33.1. Any Notice pursuant to the terms and
conditions of this Contract shall be in writing and (i)
delivered personally, (ii) sent by certified mail, return
receipt requested, (iii) sent by a recognized overnight mail
or courier service, with delivery receipt requested, or (iv)
sent by confirmed facsimile transmission with telephonic
confirmation, to the following addresses:
If to CP Casecnan-Consortium
Contractor: xxx Xxxxxxx 00
00000 Xxxxxxx Xxxxx
Facsimile: 011-39-544-428186
Attention: Xx. Xxxxxx Xxxxxxxx
If to Owner: CE Casecnan Water and Energy
Company, Inc.
c/o California Energy
International, Ltd.
00xx Xxxxx, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxx,
Xxxxxxxxxxx
Facsimile: 000-000-0000
Attention: Xxxxxx X. X'Xxxx, Xx.
With a copy California Energy Company, Inc.
to: 000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, XX 00000
Facsimile: 0-000-000-0000
Attention: Vice President,
Construction
And with a Attention: General Counsel
copy of any notices Facsimile: 0-000-000-0000
relating to a dispute
to:
33.2. Notices shall be effective when received
by the other Party.
33.3. Any technical or other communications
pertaining to the Work shall be with the Parties' designated
representative. Each Party shall notify the other in writing
of the name of such representatives. The Project Manager
shall be satisfactory to Owner, the Project Representative
shall be satisfactory to Contractor, and each shall have
knowledge of the Work and be available at all reasonable
times for consultation. Each Party's representative shall be
authorized on behalf of such Party to administer this
Contract, agree upon procedures for coordinating the efforts
of Owner and Contractor, and, when appropriate, to furnish
information to or receive information from the other party
in matters concerning the Work.
34. CONDITIONS PRECEDENT
34.1. All rights, obligations, and liabilities
of the Parties hereunder shall be subject to:
(i) the termination of the Hanbo Contract;
(ii) the approval of this Contract by the
Board of Directors of Owner; and
(iii) the written approval of this Contract by
the Consulting Engineer.
35. SECURITY FOR PERFORMANCE; LIMITATIONS OF
LIABILITY AND REMEDIES
35.1. Except for the damages and obligations
specified under Sections 14.1 and 14.2, and notwithstanding
anything else in this Contract to the contrary, neither
Party shall be liable to the other for any consequential or
special damages (including lost profits, lost revenue, or
loss of use of the Project) arising from a failure to
perform any obligation under this Contract, whether such
liability arises in contract, tort (including negligence or
strict liability), or otherwise.
35.2. (a) Contractor's obligations under this
Contract shall be secured by the Performance Security.
(b) Simultaneously with the delivery to
Contractor of the Notice to Proceed, Contractor shall
deliver to Owner each item constituting the Performance
Security.
(c) The Performance Security to be provided by a
bank or banks shall be from a bank or banks located outside
of the Philippines and satisfactory to Owner and the
Financing Entities. Without limiting the foregoing, the
Performance Security shall have an expiration date not
earlier than the date on which the Performance Security is
to be released according to the terms of this Contract or,
if earlier, the Performance Security shall provide Owner the
right to draw the full amount of the Performance Security
within thirty (30) days before the stated expiration date
unless the Performance Security is extended for a period of
time and upon such conditions as are acceptable to Owner.
(d) Upon the earlier to occur of (i) the payment
in full of all amounts payable by Contractor pursuant to
Sections 14.1 and 14.2 of this Contract and (ii) Substantial
Completion, Owner shall release the Performance Security.
35.3. (a) In no event shall Contractor's
liability pursuant to this Contract, whether arising in
contract, tort (including negligence or strict liability),
warranty, or otherwise, be greater in the aggregate than an
amount equal to one hundred percent (100%) of the Contract
Price (as the same may increase from time to time in
accordance with the terms of this Contract), provided that
nothing contained in this Section 35.3 or in any other
provision of this Contract shall be construed to limit
Contractor's obligations (i) with respect to Section 5.1(j)
of the Contract or (ii) with respect to any fraud on the
part of Contractor.
(b) Notwithstanding the provisions of Section
35.3(a) (except for the proviso thereto), (i) in no event
shall the actual amount payable by or collectable from or on
behalf of Contractor either directly or pursuant to the
CMC\Pizzarotti Corporate Guaranty and the CMC\Pizzarotti
Demand Bank Security exceed, in the aggregate, the Balance
of Scope Contract Price Component, (ii) in no event shall
the actual amount payable by or collectable on account of
obligations within the Electro-Mechanical Scope from or on
behalf of Contractor either directly or pursuant to the
Performance Security exceed, in the aggregate, the Electro-
Mechanical Scope Contract Price Component, (iii) in no event
shall the actual amount collectable under the Sulzer
Corporate Guaranty, the Sulzer Demand Bank Security, the
Siemens Corporate Guaranty and the Siemens Demand Bank
Security exceed, in the aggregate, the Electro-Mechanical
Scope Contract Price Component, and (iv) the actual amount
collectable under the Sulzer Corporate Guaranty, the Sulzer
Demand Bank Security, the Siemens Corporate Guaranty and the
Siemens Demand Bank Security on account of obligations
within the Balance of Scope shall not exceed twenty percent
(20%) of the Electro-Mechanical Scope Contract Price
Component. Subject to the foregoing limitations, Owner
shall be entitled to draw on any item of Performance
Security irrespective of whether drawn on account of
obligations within the Electro-Mechanical Scope or
obligations within the Balance of Scope.
(c) Notwithstanding anything herein to the
contrary, no (i) liabilities of Contractor to Owner covered
by insurance carried by Contractor pursuant to Article 21 of
this Contract or by Owner (except deductibles paid by
Contractor) or (ii) amounts paid by Contractor to or on
behalf of Owner in respect of third party claims arising out
of the negligence or willful misconduct of Contractor (other
than claims of the Financing Entities) shall be included in
Contractor's aggregate liability for purposes of determining
the limit on Contractor's liability pursuant to this
Contract. The cost of warranty work performed by any
Subcontractor at such Subcontractor's expense and the cost
of any warranty work paid for by any Subcontractor or
recovered by Contractor from any Subcontractor shall be
included in Contractor's aggregate liability pursuant to
this Contract.
(d) Contractor acknowledges that Owner will be
collaterally assigning each item of Performance Security to
the Financing Entities. In addition and subject to Section
29.1, such Performance Security shall be assignable by Owner
to any successor-in-interest to Owner with respect to the
Project. Subject to the terms of this Contract, the
Financing Entities and any such successors-in-interest shall
be entitled to draw on the Performance Security as though
such Financing Entities or successors-in-interest were the
Owner hereunder.
(e) Owner shall only draw on the Performance
Security and on the Retention Security to satisfy
Contractor's obligations hereunder. Each demand by Owner
under the Performance Security shall be accompanied by an
acknowledgment signature by the Financing Entities. Owner
acknowledges that Contractor will be assigning to
Sulzer\Siemens Contractor's right to enforce this Section
35.3(e) with respect to draws on the Sulzer Corporate
Guaranty, the Siemens Corporate Guaranty, the Sulzer Demand
Bank Security and the Siemens Demand Bank Security.
(f) Owner agrees to endeavor to (i) with respect
to the collection of Balance of Scope Payments, make demand
on the CMC\Pizzarotti Demand Bank Security before making
such a demand on the Sulzer Demand Bank Security or the
Siemens Demand Bank Security and (ii) with respect to the
collection of Electro-Mechanical Payments, make demand on
the Sulzer Demand Bank Security and the Siemens Demand Bank
Security before making such a demand on the CMC\Pizzarotti
Demand Bank Security; provided that Owner shall not be
deemed in breach of this obligation where Owner in good
faith believes that payment under any such security may not
be timely available.
35.4. The remedies available to Contractor or
Owner in connection with this Contract, whether arising in
contract, in tort (including negligence or strict
liability), in warranty, or otherwise shall be exclusively
those expressly set forth in this Contract. Releases,
indemnities, or limitations on liability expressed in this
Contract shall apply in accordance with the terms of this
Contract, notwithstanding other legal bases of
responsibility such as negligence, strict liability, fault,
or breach of contract of the party indemnified or whose
liability is released or limited. Without limiting the
foregoing, Owner shall have no right to proceed with the
remedies specified elsewhere in this Contract with respect
to a claim under the Materials Warranty or the Project
Warranties unless Contractor has failed to perform its
obligations with respect to such claim as provided in
Section 17.
36. DISPUTES
36.1. Any disputes arising pursuant to this
Contract that cannot be resolved between Owner's Project
Representative and Contractor's Project Manager within
fourteen (14) days or, in the case of payment disputes,
three (3) days after receipt by each thereof of Notice of
such dispute (specifically referencing this Section 36.1)
shall be referred, by Notice signed by Owner's Project
Representative and Contractor's Project Manager, to the
executive officers of the Parties designated in Section 37.5
as their designated representatives (which shall not be the
Owner's Project Representative or the Contractor's Project
Manager) for resolution. If the Parties, negotiating in good
faith, fail to reach an agreement within a reasonable period
of time, not exceeding thirty (30) days or, in the case of
payment disputes, ten (10) days after such referral, then
Owner and Contractor shall enter into binding arbitration as
set forth in Sections 36.2 through 36.5.
36.2. All disputes arising pursuant to this
Contract that are not settled pursuant to Section 36.1 shall
be decided by binding arbitration in accordance with the
rules of the International Chamber of Commerce (the "ICC")
then pertaining, unless the Parties mutually agree
otherwise. The Parties hereto agree that, notwithstanding
such rules of the ICC, the arbitrators in any such
arbitration shall apply the governing law specified in
Article 37 of this Contract and, where the ICC does not
otherwise provide procedural rules, the procedural rules
provided for by such governing law. This agreement to
arbitrate shall be specifically enforceable. Any award
rendered by the arbitrators shall be final, and judgment may
be entered upon it in accordance with applicable law in any
court having jurisdiction thereof.
36.3. Notice of the demand for arbitration
shall be filed with the other Party and with the ICC. Any
demand for arbitration shall be made within the time beyond
which legal or equitable proceedings based on such claim,
dispute, or controversy would be barred by the applicable
statute of limitations.
36.4. Each Party shall have the right to
designate an arbitrator of its choice, who need not be from
the ICC's panel of arbitrators but who (i) shall be an
expert in the construction and power generation field and
(ii) shall not be employed by or otherwise affiliated with
such Party. Such designation shall be made by Notice to the
other Party and to the ICC within ten (10) Business Days or,
in the case of payment disputes, five (5) Business Days
following the giving of Notice of the demand for
arbitration. The arbitrators designated by the Parties shall
designate a third arbitrator, who shall have a background in
legal and judicial matters, within ten business (10) days
or, in the case of payment disputes, five (5) Business Days
after the date of the designation of the last of the
arbitrators to be designated by the Parties, and the
arbitration shall be decided by the three arbitrators. If
the two arbitrators cannot or do not select a third
independent arbitrator within such period, either Party may
apply to the ICC for the purpose of appointing any person
listed with the Association as the third independent
arbitrator.
36.5. The Parties shall proceed with the
arbitration expeditiously and shall conclude all proceedings
thereunder, including any hearing, in order that a decision
may be rendered within 120 days or, in the case of a payment
dispute, forty-five (45) days after the filing of the demand
for arbitration by the filing Party. Each Party shall bear
its own expenses in connection with any arbitration,
including reasonable attorneys' fees, and all joint expenses
of any arbitration shall be apportioned in the award of the
arbitrators based upon the respective merits of the
positions of the Parties. Unless the Parties agree
otherwise, the arbitration of all disputes shall be held in
Singapore and shall be conducted solely in the English
language.
36.6. Unless otherwise agreed in writing,
Contractor shall diligently carry on the Work during the
pendency of any disputes or arbitration proceedings so long
as all undisputed amounts payable to Contractor hereunder
have been paid. If it shall be determined, either by
agreement of the Parties or through arbitration, that any
payment of the Contract Price or other amount payable to
Contractor hereunder shall have been unduly paid by Owner to
Contractor, Contractor shall promptly refund the amount of
such excess payment together with interest thereon at the
lesser of LIBOR in effect from time to time plus three
percent (3%) per annum and the highest rate permitted by
Applicable Law, from the day following the date of such
payment until the date of full refund to Owner. If it shall
be determined, either by agreement of the Parties or through
arbitration, that any payment of the Contract Price or other
amount payable to Contractor hereunder shall have been
unduly withheld by Owner, Owner shall pay or cause to be
paid to Contractor within thirty (30) days after the final
arbitration decision is made such withheld amount together
with interest thereon at the lesser of the LIBOR in effect
from time to time plus three percent (3%) per annum and the
highest rate permitted by Applicable Law, from the day
following the date on which such payment is determined to
have been unduly withheld (as so determined) until the date
of payment in full to Contractor.
36.7. Notwithstanding anything to the contrary
set forth in this Article 36, if any arbitration proceeding
is initiated between NIA and Owner, the subject matter of
which relates to any of Contractor's rights or obligations
under this Contract, then subject to NIA's consent, Owner
shall have the right to require Contractor to participate in
and become a party to any such arbitration, regardless of
whether dispute resolution proceedings have been initiated
between Contractor and Owner with respect to such subject
matter. In such event, the dispute resolution procedures
specified in Sections 36.2 and 36.3 and the second and third
sentences of Section 36.5 shall apply and Contractor shall
accept the arbitrators chosen for the arbitration by Owner
and NIA.
37. MISCELLANEOUS
37.1. The invalidity or unenforceability of
any portion or provision of this Contract shall in no way
affect the validity or enforceability of any other portion
or provision hereof. Any invalid or unenforceable portion or
provision shall be deemed severed from this Contract and the
balance of the Contract shall be construed and enforced as
if the Contract did not contain such invalid or
unenforceable portion or provision. If any such provision of
this Contract is so declared invalid, the Parties shall
promptly negotiate in good faith new provisions to eliminate
such invalidity and to restore this Contract as near as
possible to its original intent and effect.
37.2. This Contract shall be governed by the
internal laws of the State of New York, United States of
America.
37.3. The provisions of Articles 5, 17, 18,
25, 26, 27, 28, 32, 35, 36, and 37 and Sections 14.2(b) and
23.2 shall survive the termination (whether by completion of
the Work or otherwise) of this Contract.
37.4. This Contract constitutes the entire
agreement between the Parties with respect to the matters
dealt with herein, and there are no oral or written
understandings, representations, or commitments of any kind,
express or implied, that are not expressly set forth
therein.
37.5. No oral or written amendment or
modification of this Contract (including a Change in the
Work form accepted under Article 15) by any officer, agent,
or employee of Contractor or Owner, either before or after
execution of this Contract, shall be of any force or effect
unless such amendment or modification is in writing and is
signed by an executive officer of the Party to be bound
thereby. Owner hereby initially designates Xxxxxx X. X'Xxxx,
Xx., and Contractor hereby initially designates Xx. Xxxxxx
Xxxxxxxx for such purpose.
37.6. Either Party's waiver of any breach or
failure to enforce any of the terms, covenants, conditions,
or other provisions of this Contract at any time shall not
in any way affect, limit, modify, or waive that Party's
right thereafter to enforce or compel strict compliance with
every term, covenant, condition, or other provision hereof,
any course of dealing or custom of the trade
notwithstanding. All waivers must be in writing and signed
on behalf of Owner and Contractor by the individuals
identified in Section 37.5.
37.7. Except as otherwise expressly provided
herein, time is of the essence of each provision of this
Contract.
37.8. Overdue payment obligations of the Owner
and the Contractor hereunder shall bear interest from the
date due until the date paid at a rate per annum equal to
the lesser of (i) LIBOR in effect from time to time plus
three percent (3%), and (ii) the highest rate permitted by
Applicable Law.
37.9. The headings contained herein are not
part of this Contract and are included solely for the
convenience of the Parties.
37.10. The provisions of this Contract are
intended for the sole benefit of Owner and Contractor and
there are no third party beneficiaries hereof, except the
Financing Entities where expressly provided, other than
assignees contemplated by the terms herein. Without limiting
the foregoing, neither NPC nor NIA is a third party
beneficiary of this Agreement and shall have no direct
rights hereunder against either Party.
37.11. The language of this Contract is the
English language, which shall be the ruling language in
which the Contract shall be construed and interpreted. All
correspondence, drawings, design data, test reports,
notices, certificates, specifications, and other information
shall be entirely in the English language.
37.12. Owner contemplates obtaining financing
for the Project consisting of one or more construction or
permanent loans, to be secured by all or a portion of the
Project and its rights under this Agreement. In connection
therewith and the assignment to the Financing Entities
contemplated by Section 29.1, Contractor shall agree to and
execute any amendments and modifications hereto reasonably
requested by the Financing Entities, and shall also promptly
execute or consent to other documents to the extent
reasonably required by the Financing Entities, and shall
cause to be delivered customary legal opinions of counsel to
Contractor. Without limiting the foregoing, Contractor
shall enter into such arrangements as Owner or the Financing
Entities may reasonably request to ensure the continued
availability of the Contractor's equipment at the Site and
the right to use the equipment (whether by Contractor,
Owner, or Owner's nominees) in the prosecution of the Work
as contemplated by this Contract until the Work is
completed, including the granting of security interests in
such equipment or entering into lease/leaseback or similar
arrangements, and shall keep such equipment free and clear
of any liens or encumbrances that could materially affect
Contractor's, Owner's, or Owner's nominee's rights with
respect to such equipment. Contractor shall respond
promptly to requests for information regarding the
qualifications, experience, past performance and financial
condition of Contractor and other matters pertaining to
Contractor's obligations hereunder.
IN WITNESS WHEREOF, the Parties hereto have caused
this Construction Contract to be executed as of the date and
the year first above written.
Owner: CE CASECNAN WATER AND ENERGY
COMPANY, INC., a Philippine corporation
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Chairman
By: /s/ Xxxxxx X. X'Xxxx, Xx.
Name: Xxxxxx X. X'Xxxx, Xx.
Title: President
Contractor: CP CASECNAN-CONSORTIUM
a limited liability consortium with
external activities under Italian law
By: /s/ Xxxxxx Xxxxxxxx
Name: Xxxxxx Xxxxxxxx
Title: President and Legal Representative
