EXHIBIT 10.9
AGREEMENT BETWEEN
WESTERN MESQUITE MINES, INC.
(a Nevada Corporation)
AND
XXXXXXXX WESTERN CONSTRUCTION CORPORATION
(a Colorado Corporation)
--------------------------------------------------------------------------------
AGREEMENT
Made as of the 1st day of September in the year of 2003
BETWEEN the Owner:
Western Mesquite Mines, Inc.
0000 Xxxxxxxxxxxx Xxxxxxx
Xxxxx 000, #000
Xxxxx, Xxxxx 00000
and the Operations Manager:
Xxxxxxxx Western Construction Corporation
0000 Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
The Owner and Operations Manager agree as set forth below.
The Project is:
Name: Mesquite Mine
Location: Imperial County, California
Description: Scope of Work
1. Western Mesquite Mines, Inc. (the Owner) is entering into a contract
with Xxxxxxxx Western Construction Corporation (the Operations
Contractor) for contract operation of the Mesquite Mine located in
Imperial County, California.
2. The contract will have an initial term of six (6)months from the date
hereof and shall be automatically renewed until terminated. The
contract can be terminated by either party by giving three (3) months
notice to the other party after the initial term.
3. The functions and responsibilities of the Operations Contractor are
generally as follows:
a. Provide the necessary expertise in the technical disciplines of
heap leaching operations including leaching, carbon handling,
carbon stripping, carbon regeneration, and gold refining as well
as general gold metallurgy to continue to meet the gold
production goals established by the Owner.
b. Provide the engineering, mining, metallurgical, mechanical,
electrical, administrative, supervisory, and managerial expertise
to set up the operation for Owner's take over of the operating
responsibilities at the end of the contract.
4. The Operations Contractor will provide the technical, administrative,
and operational services to operate and maintain the Mesquite xxxxx
facility.
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5. The Operations Contactor will consult with Newmont personnel as
required to affect the transition from Newmont and develop and
implement other production support functions as may be required.
6. Concurrent with the operations and maintenance of the plant, the
Operations Contractor will provide Technical Services to Owner in the
following areas to allow a smooth transition from contract operations
to Owner operations with minimal production interruptions:
a. Evaluate and report on the on-site production equipment,
ancillary support equipment, spares, production practices and
procedures, labor requirements, and other services required to
create an operation capable of meeting the production
requirements established by Owner.
b. Develop gold accounting, sampling and assaying procedures to
enable the accounting of gold from the heaps and through the
carbon strip circuit and refinery.
c. Implement the necessary procedures to continue compliance with
the environmental and operating permits including gathering
samples and taking necessary readings and measurements.
7. The Operations Contractor will perform the scope of work described
above on a cost reimbursable basis plus a fee. The cost shall be
actual costs and the fee shall be 10% of the reimbursable costs.
8. An imprest fund of approximately one month's operating costs will be
established and funded and all payments will be sourced from that
fund. The Operations Contactor will forecast cash requirements and
Owner will place funds into the account two times per month to
accomplish the production plan and maintain the one month balance.
9. Invoices will be submitted two times per month and payment shall be
due within 5 days of the date of invoice.
10. In addition to the 10% fee that is due to the Operations Contractor
from the Site Operations, Owner agrees to pay Operations Contractor a
Management Fee of $10,000.00 per month to cover home office support
such as Executive Management oversight, as well as communications
systems and software support at the home office level. This fee
eliminates the need to track and xxxx for copying, phone charges, and
other incidental charges that occur when managing an operation.
11. Travel to site or on behalf of the operation would, however, be
additional and would be billed at cost.
12. All costs of insurance directly attributable to the Project, including
xxxxxxx'x compensation, will be billed to Owner.
13. Payroll related costs and all other clerical and administrative costs
directly related to the Mesquite operations will be billed on a cost
plus a fee basis per the attached rate schedule.
14. The contract to provide the design, engineering, procurement and
construction services for the carbon stripping plant and gold refinery
are to be billed separately.
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The 1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction is referred to herein (a copy is attached).
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TABLE OF CONTENTS
ARTICLE 1 GENERAL PROVISIONS
1.1 Relationship to Parties
1.2 General Conditions
1.3 Contract Sum, Contract Time and Changes in the Work
ARTICLE 2 OPERATIONS CONTRACTOR'S RESPONSIBILITIES
2.1 Preconstruction Phase
2.2 Control Estimate and Contract Time
2.3 Construction Phase
2.4 Professional Services
2.5 Unsafe Materials
ARTICLE 3 OWNERS'S RESPONSIBLITIES
3.1 Information and Services
3.2 Owner's Designated
ARTICLE 4 COMPENSATION AND PAYMENTS FOR PRECONSTRUCTION PHASE SERVICES
4.1 Compensation
4.2 Payments
ARTICLE 5 COMPENSATION FOR CONSTRUCTION PHASE SERVICES
5.1 Compensation
5.2 Changes in the Work
ARTICLE 6 COST OF WORK FOR CONSTRUCTION PHASE
6.1 Costs To Be Reimbursed
6.2 Costs Not To Be Reimbursed
6.3 Discounts, Rebates and Refunds
6.4 Accounting Records
ARTICLE 7 CONSTRUCTION PHASE PAYMENTS
7.1 Progress Payments
7.2 Final Payment
ARTICLE 8 INSURANCE AND BONDS
8.1 Insurance Required of the Operations Contractor
8.2 Insurance Required of the Owner
8.3 Performance Bond and Payment Bond
ARTICLE 9 MISCELLANEOUS PROVISIONS
9.1 Dispute Resolution for the Preconstruction Phase
9.2 Dispute Resolution for the Construction Phase
9.3 Other Provisions
ARTICLE 10 TERMINATION OR SUSPENSION
10.1 Termination Prior to the Owner's Approval of the Control Estimate
10.2 Termination Subsequent to the Owner's Approval of the Control
Estimate
10.3 Notice of Termination
10.4 Suspension
ARTICLE 11 OTHER CONDITIONS AND
SERVICES
EXHIBIT A PERSONNEL RATE SCHEDULE
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ARTICLE 1
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GENERAL PROVISIONS
1.1 RELATIONSHIP OF PARTIES
The Operations Contractor accepts the relationship of trust and confidence
established with the Owner by this Agreement, and covenants with the Owner to
furnish the Operations Contractor's reasonable skill and judgment in furthering
the interests of the Owner. The Operations Contractor shall furnish construction
administration and management services and use the Operations Contractor's best
efforts to perform the Project in an expeditious and economical manner
consistent with the interests of the Owner. The Owner shall endeavor to promote
harmony and cooperation among the Owner, Operations Contractor and other persons
or entities employed by the Owner for the Project.
1.2 GENERAL CONDITIONS
For any Construction Phase, the General Conditions of the Contract shall be the
1987 Edition of AIA Document A201, General Conditions of the Contract for
Construction, which is incorporated herein by reference and which shall apply
except as specifically noted in this Agreement. For the Pre construction Phase,
including Preconstruction Phase activities which proceed concurrently with the
Construction Phase, AIA Document A201 shall not apply except as specifically
provided in this Agreement. If anything in AIA Document A201 is inconsistent
with or is modified by this Agreement, this Agreement shall govern.
Modifications of AIA Document A201 by this Agreement shall not apply to Sub
contractors except as provided in Paragraph 2.5 of this Agreement. The term
"Contractor" as used in AIA Document A201 shall mean the Operations Contractor.
1.3 CONTRACT SUM, CONTRACT TIME AND
CHANGES IN THE WORK
[Deleted]
ARTICLE 2
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OPERATIONS CONTRACTOR'S RESPONSIBILITIES
The Operations Contractor shall perform the services described in this Contract.
The service to be provided under Paragraphs 2.1 and 2.2 constitute the
Preconstruction Phase services. If the Owner and Operations Contractor agree,
the Construction Phase may commence before the Preconstruction Phase is
completed, in which case both phases will proceed concurrently.
2.1 PRECONSTRUCTION PHASE
2.1.1 PRELIMINARY EVALUATION
[Deleted]
2.1.2 CONSULTATION
The Operations Contractor shall schedule and attend regular meetings with the
Owner. The Operations Contractor shall consult with the Owner regarding site
use and improvements, and the selection of materials, building systems and
equipment. The Operations Contractor shall provide recommendations on
construction feasibility; actions designed to minimize adverse effects of labor
or material shortages; time requirements for procurement, installation and
construction completion; and factors related to construction cost including
estimates of alternative designs or materials, preliminary budgets and possible
economies.
2.1.3 PRELIMINARY PROJECT SCHEDULE
When Project requirements described in Subparagraph 3.1.1 have been sufficiently
identified, the Operations Contractor shall prepare, and periodically update, a
preliminary Project schedule for the Owner's approval. The Operations Contractor
shall coordinate and integrate the preliminary Project schedule with the
services and activities of the Owner and Operations Contractor. As design
proceeds, the preliminary Project schedule shall be updated to indicate proposed
activity sequences and durations, milestone dates for receipt and approval of
pertinent information, submittal of the Control Estimate, preparation and
processing of shop drawings and samples, delivery of materials or equipment
requiring long-lead time procurement, Owner's occupancy requirements showing
portions of the Project having occupancy priority, and estimated date of
Substantial Completion. If preliminary Project schedule updates indicate that
previously approved schedules may not be met, the Operations Contractor shall
make appropriate recommendations to the Owner.
2.1.4 PHASED CONSTRUCTION
[Deleted]
2.1.5 PRELIMINARY COST ESTIMATES
2.1.5.1 When the Owner has sufficiently identified the Project requirements, the
Operations Contractor shall prepare, for the review and approval of the Owner, a
preliminary cost estimate utilizing area, volume or similar conceptual
estimating techniques.
2.1.5.2 When Schematic Design Documents have been prepared and approved by the
Owner, the Operations
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Contractor shall prepare for the review and approval of the Owner, a more
detailed estimate with supporting data. During the preparation of the Design
Development Documents, the Operations Contractor shall update and refine this
estimate at appropriate intervals agreed to by the Owner and Operations
Contractor.
2.1.5.3 When Design Development Documents have been prepared and approved by the
Owner, the Operations Contractor shall prepare a detailed estimate with
supporting data for review and approval by the Owner. During the preparation of
the Construction Documents, the Operations Contractor shall update and refine
this estimate at appropriate intervals agreed to by the Owner and Operations
Contractor.
2.1.5.4 If any estimate submitted to the Owner exceeds previously approved
estimates or the Owner's budget, the Operations Contractor shall make
appropriate recommendations to the Owner.
2.1.6 SUBCONTRACTORS AND SUPPLIERS
If required, Operations Contractor shall develop subcontractor interest in the
Project and shall furnish to the Owner for their information a list of possible
subcontractors, including suppliers who are to furnish materials or equipment
fabricated to a special design, from whom proposals may be requested for that
specific portion of the Work.
2.1.7 LONG-LEAD TIME ITEMS
The Operations Contractor shall recommend to the Owner a schedule for
procurement of long-lead time items which will constitute part of the Work as
required to meet the Project Schedule. If such long-lead time items are
procured by the Owner, they shall be procured on terms and conditions acceptable
to the Operations Contractor. Upon the Owner's approval of the Control
Estimate, all contracts for such items shall be assigned by the Owner to the
Construction Manger, who shall accept responsibility for such items as if
procured by the Operations Contractor. The Operations Contractor shall expedite
the delivery of long-lead time items.
2.1.8 EXTENT OF RESPONSIBILTY
The Operations Contractor agrees to exercise reasonable skill and judgment in
the preparation of schedules and estimates, but does not warrant or guarantee
any schedules or estimates or line items within such estimates, even though
approved by the Owner, including the Control Estimate and the estimated date of
Substantial Completion, except as otherwise provided under Clause 2.2.4.5. The
recommendations and advice of the Operations Contractor concerning design
alternatives shall be subject to the review and approval of the Owner and the
Owner's professional consultants. It is not the Operations Contractor's
responsibility to ascertain that the Drawings and Specifications are in
accordance with applicable laws, statutes, ordinances, building codes, rules and
regulations. However, if the Operations Contractor recognizes that portions of
the Drawings and Specifications are at variance, the Operations Contractor shall
promptly notify the Owner in writing.
2.1.9 EQUAL EMPLOYMENT OPPORTUNITY AND AFFIRMATIVE ACTION
The Operations Contractor shall comply with applicable laws, regulations and
special requirements of the Contract Documents regarding equal employment
opportunity and affirmative action programs.
2.2 CONTROL ESTIMATE AND CONTRACT TIME
2.2.1 In accordance with the preliminary Project schedule established in
Subparagraph 2.l.3, the Operations Contractor shall prepare and submit to the
Owner in writing a Control Estimate using current information to update the most
recently prepared Preliminary Estimate. The Control Estimate shall be the sum of
the then-estimated Cost of the Work and the Operations Contractor's Fee, and is
the estimate against which actual costs will be measured.
2.2.2 The Operations Contractor shall develop and implement a detailed system of
cost control that will provide the Owner with timely information as to the
anticipated total Cost of the Work. The cost control system shall compare the
Control Estimate with the actual cost for activities in progress and estimates
for uncompleted tasks and proposed changes. This information shall be reported
to the Owner in writing at mutually agreeable intervals.
2.2.3 As the Drawings and Specifications may not be finished at the time the
Control Estimate is prepared, the Operations Contractor shall provide in the
Control Estimate for further development of the Drawings and Specifications that
is consistent with the Contract Documents and reasonably inferable therefrom.
Such further development does not include such things as change in scope,
systems, kinds and quality of materials, finishes or equipment.
2.2.4 The Control Estimate shall include:
.1 A list of the Drawings and Specifications, including all addenda
thereto and the Conditions of the Contract.
.2 A list of the clarifications and assumptions made by the Operations
Contractor in the preparation of
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the Control Estimate to supplement the information contained in the
Drawings and Specifications.
.3 A statement of the estimated Cost of the Work organized by trade
categories or systems, and the Operations Contractor's fee.
.4 A statement of the actual or estimated date of commencement of the
Construction Phase and the estimated date of Substantial Completion,
with a schedule of the construction documents issuance dates upon
which the estimated date of Substantial Completion is based.
.5 A statement as to whether or not the duration from the stated date of
commencement of the Construction Phase to the estimated date of
Substantial Completion shall become the Contract Time and be subject
to the provisions of Article 8 of AIA Document A201.
2.2.5 The Operations Contractor shall meet with the Owner to review the Control
Estimate. In the event that the Owner discovers any inconsistencies or
inaccuracies in the information presented, they shall promptly notify the
Operations Contractor, who shall make appropriate adjustments to the Control
Estimate. When the Control Estimate is acceptable to the Owner, the Owner shall
approve it in writing.
2.2.6 Upon the Owner's approval of the Control Estimate, the Contract Documents
shall consist of (1) this Agreement, (2) AIA Document A201 and other documents
referred to in this Agreement, (3) the documents enumerated in Clause 2.2.4 with
the adjustments described in Clause 2.2.5, and (4) Modifications issued
subsequent to the Owner's approval of the Control Estimate. If anything in the
other Contract Documents is inconsistent with this Agreement, this Agreement
shall govern.
2.2.7 The Owner shall authorize and cause the revision the Drawings and
Specifications to the extent necessary to reflect the agreed upon assumptions
and clarifications on which the Control Estimate is based. Such revised Drawings
and Specifications shall be furnished to the Operations Contractor in accordance
with schedules agreed to by the Owner Operations Contractor. The Operations
Contractor shall promptly notify the Owner if such revised Drawings and
Specifications are inconsistent with the agreed upon assumptions and
clarifications.
2.3 CONSTRUCTION PHASE
2.3.1 GENERAL
2.3.1.1 The Construction Phase shall commence on the earlier of:
.1 the Owner's approval of the Control Estimate and issuance of a Notice
to Proceed; or
.2 the Owner's first authorization to the Operations Contractor to award
a subcontract, or to undertake a portion of the Work with the
Operations Contractor's own forces, or to issue a purchase order for
materials or equipment required for the Work.
2.3.1.2 For purposes of Subparagraph 8.1.2 of AIA Document A201, the date of
commencement of the Work shall mean the date of commencement of the Construction
Phase.
2.3.1.3 Prior to the Owner's approval of the Operations Contractor's Control
Estimate and issuance of a Notice to Proceed, the Operations Contractor shall
not incur any cost to be reimbursed as part of the Cost of the Work, except as
the Owner may specifically authorize in writing.
2.3.2 ADMINISTRAT1ON
2.3.2.1 Those portions of the Work that the Operations Contractor does not
customarily perform with the Operations Contractor's own personnel shall be
performed under subcontracts or by other appropriate agreements with the
Operations Contractor. The Operations Contractor shall obtain bids from
Subcontractors and from suppliers of materials or equipment fabricated to a
special design for the Work from the list previously reviewed and, after
analyzing such bids, shall deliver such bids to the Owner. The Owner will then
determine, with the advice of the Operations Contractor which bids will be
accepted. The Owner may designate specific persons or entities from whom the
Operations Contractor shall obtain bids. The Operations Contractor shall not be
required to contract with anyone to whom the Operations Contractor has
reasonable objection.
2.3.2.2 Subcontracts and agreements with suppliers furnishing materials or
equipment fabricated to a special design shall not be awarded on the basis of
cost plus a fee without the prior consent of the Owner.
2.3.2.3 The Operations Contractor shall schedule and conduct meetings at which
the Owner, Operations Contractor and appropriate Subcontractors can discuss the
status of the Work. The Operations Contractor shall prepare and promptly
distribute meeting minutes.
2.3.2.4 Promptly after the Owner's approval of the Control Estimate, the
Operations Contractor shall prepare a schedule in accordance with Paragraph 3.10
of AIA Document A201, including the Owner's occupancy requirements.
2.3.2.5 The Operations Contractor shall provide monthly written reports to the
Owner on the progress of the entire Work. The Operations Contractor shall
maintain a daily log containing a record of weather, Subcontractors
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working on the site, number of workers, Work accomplished, problems encountered
and other similar relevant data as the Owner may reasonably require. The log
shall be available to the Owner.
2.4 PROFESSIONAL SERVICES
The Operations Contractor shall not be required to provide professional services
which constitute the practice of architecture or engineering, unless such
services are specifically required by the Contract Documents for a portion of
the Work or unless the Operations Contractor has specifically agreed in writing
to provide such services. In such event, the Operations Contractor shall cause
such services to be performed by appropriately licensed professionals.
2.5 UNSAFE MATERIALS
In addition to the provisions of Paragraph 10.1 in AIA Document A201 if
reasonable precautions will be inadequate to prevent foreseeable bodily injury
or death to persons resulting from a material or substance encountered but not
created on the site by the Operations Contractor, the Operations Contractor
shall, upon recognizing the condition, immediately stop work in the affected
area and report the condition to the Owner in writing. The Owner, Operations
Contractor shall then proceed in the same manner described in Subparagraph
10.1.2 of AIA Document A201. The Owner shall be responsible for obtaining the
services of a licensed laboratory to verify the presence or absence of the
material or substance reported by the Operations Contractor and, in the event
such material or substance is found to be present, to verify that it has been
rendered harmless. Unless other wise required by the Contract Documents, the
Owner shall furnish in writing to the Operations Contractor the names and
qualifications of persons or entities who are to perform tests verifying the
presence or absence of such material or substance or who are to perform the task
of removal or safe containment of such material or substance. The Operations
Contractor will promptly reply to the Owner in writing stating whether or not
either has reasonable objection to the persons or entities proposed by the
Owner. If either the Operations Contractor has an objection to a person or
entity proposed by the Owner, the Owner shall propose another to whom the
Operations Contractor has no reasonable objection.
ARTICLE 3
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OWNER'S RESPONSIBILITIES
3.1 INFORMATION AND SERVICES
3.1.1 The Owner shall provide full information in a timely manner regarding the
requirements of the Project, including a program which sets forth the Owner's
objectives, constraints and criteria, including space requirements and
relationships, flexibility and expandability requirements, special equipment and
systems, and site requirements.
3.1.2 The Owner, upon written request from the Operations Contractor, shall
furnish evidence of Project financing prior to the start of the Construction
Phase and from time to time thereafter as the Operations Contractor may request.
Furnishing of such evidence shall be a condition precedent to commencement or
continuation of the Work.
3.1.3 The Owner shall establish and update an overall budget for the Project,
based on consultation with the Operations Contractor, which shall include
contingencies for changes in the Work and other costs which are the
responsibility of the Owner.
3.1.4 STRUCTURAL AND ENVIRONMENTAL
TESTS, SURVEYS AND REPORTS
The Owner shall furnish the following with reasonable promptness and at the
Owner's expense:
3.1.4.1 Reports, surveys, drawings and tests concerning the conditions of the
site which are required by law.
3.1.4.2 Surveys describing physical characteristics, legal limitations and
utility locations for the site of the Project, and a written legal description
of the site. The surveys and legal information shall include, as applicable,
grades and lines of streets, alleys, pavements and adjoining property and
structures; adjacent drainage; rights-of-way, restrictions, easements,
encroachments, zoning, deed restrictions, boundaries and contours of the site;
locations, dimensions and necessary data pertaining to existing buildings, other
improvements and trees; and information concerning available utility services
and lines, both public and private, above and below grade, including inverts and
depths. All information on the survey shall be referenced to a project
benchmark.
3.1.4.3 The services of a geotechnical engineer when such services are requested
by the Operations Contractor. Such services may include but are not limited to
test borings, test pits, determinations of soil bearing values, percolation
tests, evaluations of hazardous materials, ground corrosion and resistivity
tests, including necessary operations for anticipating subsoil conditions, with
reports and appropriate professional recommendations.
3.1.4.4 Structural, mechanical, chemical, air and water pollution tests, tests
for hazardous materials, and other laboratory and environmental tests,
inspections and reports which are required by law.
3.1.4.5 The services of other consultants when such services are reasonably
required by the scope of the Project and are requested by the Operations
Contractor.
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The Operations Contractor shall be entitled to rely upon the accuracy of any
such information, reports, surveys, drawings and tests described in Clauses
3.1.4.1 through 3.1.4.5, except to the extent that the Operations Contractor
knows of any inaccuracy.
3.2 OWNER'S DESIGNATED
REPRESENTATIVE
The Owner shall designate in writing a representative who shall have express
authority to bind the Owner with respect to all matters requiring the Owner's
approval or authorization. This representative shall have the authority to make
decisions on behalf of the Owner concerning estimates and schedules,
construction budgets, and changes in the Work, and shall render such decisions
promptly and furnish information expeditiously, so as to avoid unreasonable
delay in the services or Work of the Operations Contractor.
3.3 LEGAL REQUIREMENTS
The Owner shall determine and advise the Operations Contractor of any special
legal requirements relating specifically to the Project which differ from those
generally applicable to construction in the jurisdiction of the Project. The
Owner shall furnish such legal services as are necessary to provide the
information and services required under Paragraph 3.1.
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ARTICLE 4
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COMPENSATION AND PAYMENTS FOR PRECONSTRUCTION PHASE SERVICES
The Owner shall compensate and make payments to the Operations Contractor for
Preconstruction Phase services as follows:
4.1 COMPENSATION
4.1.1 For the services described in Paragraphs 2.1 and 2.2, the Operations
Contractor's compensation shall be calculated in accordance with Exhibit A Rate
Schedule.
4.1.2 [Deleted]
4.1.3 If compensation is based on a multiple of Direct Personnel Expense, Direct
Personnel Expense is defined as the direct salaries of the Operations
Contractor's personnel engaged in the Project and the portion of the cost of
their mandatory and customary contributions and benefits related thereto, such
as employment taxes and other statutory employee benefits, insurance, sick
leave, holidays, vacations, pensions and similar contributions and benefits.
4.2 PAYMENTS
4.2.1 Payments shall be made two times per month following presentation of the
Operations Contractor's invoice and, where applicable, shall be in proportion to
services performed.
4.2.2 Payments are due and payable five (5) days from the date the Operations
Contractor's invoice. Amounts unpaid after the date on which payment is due
shall bear interest at the rate entered below, or in the absence thereof, at the
legal rate prevailing from time to time at the place where the Project is
located.
ARTICLE 5
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COMPENSATION FOR CONSTRUCTION PHASE SERVICES
The Owner shall compensate the Operations Contractor for Construction Phase
services as follows:
5.1 COMPENSATION
5.1.1 [Deleted]
5.2 CHANGES IN THE WORK
5.2.1 The Owner may, without invalidating the Contract, order changes in the
Work within the general scope of the Contract consisting of additions, deletions
or other revisions.
5.2.2 Increased costs for the items set forth in Article 6 which result from
changes in the Work shall become part of the Cost of the Work, and the
Operations Contractor's Fee shall be adjusted if provided in Paragraph 5.1.
5.2.3 If the Operations Contractor receives any drawings, specifications,
interpretations or instructions from the Owner which are inconsistent with the
Contract Documents, or encounters unanticipated conditions, any of which will
result in a significant change in the cost, scope or estimated date of
Substantial Completion in comparison with the Control Estimate, the Operations
Contractor shall promptly notify the Owner in writing and shall not proceed with
the affected Work until further written instructions are received from the
Owner.
5.2.4 If no specific provision is made in Subparagraph 5.1.1 for adjustment of
the Operations Contractor's Fee in the case of changes in the Work, or if the
extent of such changes is such that, in the aggregate, application of the
adjustment provisions of Subparagraph 5.1.1 will cause substantial inequity to
the Owner or Operations Contractor, the Operations Contractor's Fee shall be
equitably adjusted on the basis of the Fee established for the original Work.
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ARTICLE 6
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COST OF THE WORK FOR CONSTRUCTION PHASE
6.1 COSTS TO BE REIMBURSED
6.1.1 The term "Cost of the Work" shall mean costs necessarily incurred by the
Operations Contractor in the proper performance of the Work. Such costs shall be
at rates not higher than those customarily paid at the place of the Project
except with prior consent of the Owner. The Cost of the Work shall include only
the items set forth in this Article 6.
6.1.2 LABOR COSTS
.1 Wages of construction workers directly employed by the Operations
Contractor to perform the construction of the Work at the site or,
with the Owner's agreement, at off-site workshops.
.2 Wages or salaries of the Operations Contractor's supervisory and
administrative personnel when stationed at the site with the Owner's
agreement. Personnel stationed at the Operations Contractor's
principal office will be included in the Cost of the Work in
accordance with the schedule provided in Exhibit A with the Owner's
agreement.
.3 Wages and salaries of the Operations Contractor's supervisory or
administrative personnel engaged, at factories, work shops or on the
road, in expediting the production or transportation of materials or
equipment required for the Work, but only for that portion of their
time required for the Work.
.4 Costs paid or incurred by the Operations Contractor for taxes,
insurance, contributions, assessments and benefits required by law or
collective bargaining agreements, and, for personnel not covered by
such agreements, customary benefits such as sick leave, medical and
health benefits, holidays, vacations and pensions, provided that such
costs are based on wages and salaries included in the Cost of the Work
under Clauses 6.1.2.1 through 6.1.2.3.
6.1.3 SUBCONTRACT COSTS
Payments made by the Operations Contractor to Subcontractors in accordance with
the requirements of the subcontracts.
6.1.4 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
.1 Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed construction.
.2 Costs of materials described in the preceding Clause 6.1.4.1 in excess
of those actually installed but required to provide reasonable
allowance for waste and for spoilage. Unused excess materials, if any,
shall be handed over to the Owner at the completion of the Work or, at
the Owner's option, shall he sold by the Operations Contractor;
amounts realized, if any, from such sales shall be credited to the
Owner as a deduction from the Cost of the Work.
6.1.5 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
.1 Costs, including transportation, installation, maintenance,
dismantling and removal of materials, supplies, temporary facilities,
machinery, equipment, and hand tools not customarily owned by the
construction workers, which are provided by the Operations Contractor
at the site and fully consumed in the performance of the Work; and
cost less salvage value on such items if not fully consumed, whether
sold to others or retained by the Operations Contractor. Cost for
items previously used by the Operations Contractor shall mean fair
market value.
.2 Rental charges for temporary facilities, machinery, equipment, and
hand tools not customarily owned by the construction workers, which
are provided by the Operations Contractor at the site, whether rented
from the Operations Contractor or others, and costs of transportation,
installation, minor repairs and replacements, dismantling and removal
thereof. Rates and quantities of equipment rented shall be subject to
the Owner's prior approval.
.3 Costs of removal of debris from the site.
.4 Reproduction costs, costs of telegrams, facsimile transmissions and
long-distance telephone calls, postage and express delivery charges,
telephone at the site and reasonable xxxxx cash expenses of the site
office.
.5 That portion of the reasonable travel and subsistence expenses of the
Operations Contractor's personnel incurred while traveling in
discharge of duties connected with the Work.
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6.1.6 MISCELLANEOUS COSTS
.1 That portion directly attributable to this Contract of premiums for
insurance and bonds.
.2 Sales, use or similar taxes imposed by a governmental authority which
are related to the Work and for which the Operations Contractor is
liable.
.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Operations Contractor is
required by the Contract Documents to pay.
.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to nonconforming Work other than that
for which payment is permitted by Clause 6.1.8.2.
.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of
defending suits or claims for infringement of patent or other
intellectual property rights arising from such requirement by the
Contract Documents; payments made in accordance with legal judgments
against the Operations Contractor resulting from such suits or claims
and payments of settlements made with the Owner's consent; provided,
however, that such costs of legal defenses, judgment and settlements
shall not be included in the calculation of the Operations
Contractor's Fee and provided that such royalties, fees and costs are
not excluded by the last sentence of Subparagraph 3.17.1 of AIA
Document A201 or other provisions of the Contract Documents.
.6 Data processing costs related to the Work.
.7 Deposits lost for causes other than the Operations Contractor's
negligence or failure to fulfill a specific responsibility to the
Owner set forth in this Agreement.
.8 With the Owner's prior written permission, legal, mediation and
arbitration costs, other than those arising from disputes between the
Owner and Operations Contractor, reasonably incurred by the Operations
Contractor in the performance of the Work.
.9 Expenses incurred in accordance with the Operations Contractor's
standard personnel policy for relocation and temporary living
allowances of personnel required for the Work, in case it is necessary
to relocate such personnel from distant locations.
6.1.7 OTHER COSTS
.1 Other costs incurred in the performance of the Work if and to the
extent approved in advance in writing by the Owner.
.2 [Deleted]
6.1.8 EMERGENCIES AND REPAIRS TO DAMAGED OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Subparagraph 6.1.1
which are incurred by the Operations Contractor:
.1 In taking action to prevent threatened damage, injury or loss in case
of an emergency affecting the safety of persons and property, as
provided in Paragraph 10.3 of AIA Document A201.
.2 In repairing or correcting damaged or nonconforming Work executed by
the Operations Contractor or the Operations Contractor's
Subcontractors or suppliers, provided that such damaged or
nonconforming Work was not caused by the negligence or failure to
fulfill a specific responsibility to the Owner set forth in this
Agreement of the Operations Contractor or the Operations Contractor's
foremen, engineers or superintendents, or other supervisory,
administrative or managerial personnel of the Operations Contractor,
or the failure of the Operations Contractor's personnel to supervise
adequately the Work of the Subcontractors or suppliers, and only to
the extent that the cost of repair or correction is not recover able
by the Operations Contractor from insurance, Subcontractors or
suppliers.
6.1.9 The costs described in Subparagraphs 6.1.1 through 6.1.8 shall be included
in the Cost of the Work, notwithstanding any provision of AIA Document A201 or
other Conditions of the Contract which may require the Operations Contractor to
pay such costs, unless such costs are excluded by the provisions of Paragraph
6.2.
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6.2 COSTS NOT TO BE REIMBURSED
6.2.1 The Cost of the Work shall not include:
.1 Salaries and other compensation of the Operations Contractor's
personnel stationed at the Operations Contractor's principal office or
offices other than the site office, except as specifically provided in
Clauses 6.1.2.1 through 6.1.2.3.
.2 Expenses of the Operations Contractor's principal office and offices
other than the site office except as specifically provided herein.
.3 Overhead and general expenses, except as may be expressly included
herein.
.4 The Operations Contractor's capital expenses, including interest on
the Operations Contractor's capital employed for the Work.
.5 [Deleted]
.6 Except as provided in Clause 6.1.8.2, costs due to the negligence of
the Operations Contractor or to the failure of the Operations
Contractor to fulfill a specific responsibility to the Owner set forth
in this Agreement.
.7 [Deleted]
.8 Except as provided in Clause 6.1.7.1, any cost not specifically and
expressly described herein.
6.3 DISCOUNTS, REBATES AND REFUNDS
6.3.1 Cash discounts obtained on payments made by the Operations Contractor
shall accrue to the Owner if (1) before making the payment, the Operations
Contractor included them in an Application for Payment and received payment
therefor from the Owner, or (2) the Owner has deposited funds with the
Operations Contractor with which to make payments; otherwise, cash dis counts
shall accrue to the Operations Contractor. Trade discounts, rebates, refunds and
amounts received from sales of surplus materials and equipment shall accrue to
the Owner, and the Operations Contractor shall make provisions so that they can
be secured.
6.3.2 Amounts which accrue to the Owner in accordance with the provisions of
Subparagraph 6.3.1 shall be credited to the Owner as a deduction from the Cost
of the Work.
6.4 ACCOUNTING RECORDS
6.4.1 The Operations Contractor shall keep full and detailed accounts and
exercise such controls as may be necessary for proper financial management under
this Contract; the accounting and control systems shall be satisfactory to the
Owner. The Owner and the Owner's accountants shall be afforded access to the
Operations Contractor's records, books, correspondence, instructions, drawings,
receipts, subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Project, and the Operations Contractor shall preserve these for
a period of three years after final payment, or for such longer period as may be
required by law.
ARTICLE 7
---------
CONSTRUCTION PHASE PAYMENTS
7.1 ADVANCE OF FUNDS
On or before the 20th day of each calendar month during the performance of Work
hereunder, Contractor will furnish Owner with its estimate of the expenditures
to be incurred by Contractor in the next succeeding calendar month. The
estimate shall be reviewed and approved by Owner, and upon such approval Owner
shall, by the end of the month during which such estimate is forwarded, pay to
Contractor the amount stated therein, adjusted as hereinafter set forth,
together with Contractor's fee provided for by Article 5.1.1 for the next
succeeding calendar month.
Not later than the 20th day of each calendar month after the effective date of
this Contract, Contractor shall prepare and submit to Owner invoices for that
portion of the Work performed by Contractor during the preceding month. Should
the total amount, including all amounts reimbursable under Article 6 set forth
in such invoices be greater than the estimated amount advanced to Contractor for
such month, Owner shall pay to Contractor the difference promptly after the
receipt of such invoices. Should such total amount set forth on such invoices
(with the exception above provided) be less than the estimated
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amount advanced to Contractor for such month, the difference shall be deducted
from the next estimate to be forwarded to Owner. The invoices submitted by
Contractor to Owner pursuant to this provision shall be certified and
accompanied by such information as Owner may reasonably request.
ARTICLE 8
---------
INSURANCE AND BONDS
8.1 INSURANCE REQUIRED OF THE OPERATIONS CONTRACTOR
During both phases of the Project, the Operations Contractor shall purchase and
maintain insurance as set forth in Paragraph 11.1 of AIA Document A201. Such
insurance shall be written for not less than the following limits, or greater if
required by law:
8.1.1 Workers' Compensation and Employers' Liability meeting statutory limits
mandated by State and Federal laws. If (1) limits in excess of those required by
statute are to be provided, or (2) the employer is not statutorily bound to
obtain such insurance coverage, or (3) additional coverages are required,
additional coverages and limits for such insurance shall be as follows:
8.1.2 Commercial General Liability, including coverage for Premises-Operations,
Independent Contractors' Protective, Products-Completed Operations, Contractual
Liability, Personal Injury, and Broad Form Property Damage (including coverage
for Explosion, Collapse and Underground hazards):
$1,000,000 Each Occurrence
$2,000,000 General Aggregate
$1,000,000 Personal and
Advertising Injury
$1,000,000 Products-Completed
Operations Aggregate
.1 The policy shall be endorsed to have the General Aggregate apply to
this Project only.
.2 Products and Completed Operations insurance shall be maintained for a
minimum period of at least one (1) year after either 90 days following
Substantial Completion or final payment, whichever is earlier.
.3 The Contractual Liability insurance shall include coverage sufficient
to meet the obligations in AIA Document A201 under Paragraph 3.18.
8.1.3 Automobile Liability (owned, non-owned and hired vehicles) for bodily
injury and property damage:
$1,000,000 Each Accident
8.1.4 Other coverage:
Umbrella Liability: $4,000,000 Each occurrence
$4,000,000 Annual Aggregate
8.2 INSURANCE REQUIRED OF THE OWNER
During both phases of the Project, the Owner shall purchase and maintain
liability and property insurance, including waivers of subrogation, as set forth
in Paragraphs 11.2 and 11.3 of AIA Document A201. Such insurance shall be
written for not less than the following limits, or greater if required by law:
8.2.1 Property Insurance:
$ As required by RMB Capital
$
8.2.2 Boiler and Machinery insurance with a limit of: $
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8.2.3 The insurance coverages required shall be maintained in full force and
effect at all times that the Work defined herein is in effect.
All policies, whether specifically mentioned above or not, shall name
Operations Contractor as additional insureds.
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ARTICLE 9
---------
MISCELLANEOUS PROVISIONS
9.1 DISPUTE RESOLUTION FOR THE PRECONSTRUCTION PHASE
9.1.1 Claims, disputes or other matters in question between the parties to this
Agreement which arise prior to the commencement of the Construction Phase or
which relate solely to the Preconstruction Phase services of the Operations
Contractor or to the Owner's obligations to the Operations Contractor during the
Preconstruction Phase, shall be resolved by mediation or by arbitration. Prior
to arbitration, the parties shall endeavor to reach settlement by mediation.
9.1.2 Any mediation conducted pursuant to this Paragraph 9.1 shall be held in
accordance with the Construction Industry Mediation Rules of the American
Arbitration Association currently in effect, unless the parties mutually agree
other wise. Demand for mediation shall be filed in writing with the other party
to this Agreement and with the American Arbitration Association. Any demand for
mediation shall be made within a reasonable time after the claim, dispute or
other matter in question has arisen. In no event shall the demand for mediation
be made after the date when institution of legal or equitable proceedings based
upon such claim, dispute or other matter in question would be barred by the
applicable statute of limitations.
9.1.3 Any claim, dispute or other matter in question not resolved by mediation
shall be decided by arbitration in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association currently in effect,
unless the parties mutually agree otherwise.
9.1.4 Demand for shall be filed in writing with the other party to this
Agreement and with the American Arbitration Association. A demand for
arbitration may be made concurrent with a demand for mediation and shall be made
within a reasonable time after the claim, dispute or other matter in question
has arisen, In no event shall the demand for arbitration be made after the date
when institution of legal or equitable proceedings based upon such claim,
dispute or other matter in question would be barred by the applicable statute of
limitations.
9.1.5 No arbitration shall include, by consolidation or joinder or in any other
manner, parties other than the Owner, Operations Contractor, a separate
contractor as described in Article 6 of AIA Document A201 and other persons
substantially involved in a common question of fact or law whose presence is
required if complete relief is to be accorded in arbitration. No person or
entity other than the Owner or Operations Contractor or a separate contractor as
described in Article 6 of AIA Document A201 shall be included as an original
third party or additional third party to an arbitration whose interest or
responsibility is insubstantial. Consent to arbitration involving an additional
person or entity shall not constitute agreement to arbitration of a dispute not
described in such consent or with a person or entity not named or described
therein. The foregoing agreement to arbitrate and other agreements to arbitrate
with an additional person or entity duly consented to by parties to this
Agreement shall be specifically enforceable under applicable law in any court
having jurisdiction thereof.
9.1.6 The award rendered by the arbitrator or arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law in any court
having jurisdiction thereof.
9.2 DISPUTE RESOLUTION FOR THE
CONSTRUCTION PHASE
9.2.1 Any other claim, dispute or other matter in question arising out of or
related to this Agreement or breach thereof shall be settled in accordance with
Article 4 of AIA Document A201, except that in addition to and prior to
arbitration, the parties shall endeavor to reach settlement by mediation in
accordance with the Construction Industry Mediation Rules of the American
Arbitration Association currently in effect, unless the parties mutually agree
otherwise. Any mediation arising under this Paragraph shall be conducted in
accordance with the provisions of Subparagraphs 9.1.2 and 9.1.3.
9.3 OTHER PROVISIONS
9.3.1 Unless otherwise noted, the terms used in this Agreement shall have the
same meaning as those in the 1987 edition of AIA Document A201, General
Conditions of the Contract for Construction.
9.3.2 EXTENT OF CONTRACT
This Contract, which includes this Agreement and the other documents
incorporated herein by reference, represents the entire and integrated agreement
between the Owner and the Operations Contractor and supersedes all prior
negotiations, representations or agreements, either written or oral. This
Agreement may be amended only by written instrument signed by both the Owner and
Operations Contractor. If any thing in any document incorporated into this
Agreement is inconsistent with this Agreement, this Agreement shall govern.
9.3.3 OWNERSHIP AND USE OF DOCUMENTS
The Drawings, Specifications and other documents are for use solely with respect
to this Project. They are not to be used by the Operations Contractor,
Subcontractors, Sub-subcontractors or suppliers on other projects, or for
additions to this Project outside the scope of the Work, without the specific
written consent of the Owner.
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9.3.4 GOVERNING LAW
The Contract shall be governed by the law of the State of Colorado.
9.3.5 ASSIGNMENT
The Owner and Operations Contractor respectively bind them selves, their
partners, successors, assigns and legal representatives to the other party
hereto and to partners, successors, assigns and legal representatives of such
other party in respect to covenants, agreements and obligations contained in the
Contract Documents. Neither party to the Contract shall assign the Contract as a
whole without written consent of the other. If either party attempts to make
such an assignment without such consent, that party shall nevertheless remain
legally responsible for all obligations under the Contract.
ARTICLE 10
----------
TERMINATION OR SUSPENSION
[Deleted]
17
ARTICLE
-------
OTHER CONDITIONS AND SERVICES
None included.
This Agreement entered into as of the day and year first written above.
Western Mesquite Mines, Inc., OWNER: Xxxxxxxx Western Construction Corporation,
OPERATIONS CONTRACTOR:
By: /s/ Xxxx Xxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------------- ------------------------------------------
Xxxx Xxxx, Vice President Xxxxxxx X. Xxxxx, President and Chief
Executive Officer
Date: Nov. 7, 2003 Date: Nov. 7, 2003
-------------------------- -----------------------------------------
ATTEST: /s/ Xxxxxx Xxxxxxxxxx ATTEST: /s/ Xxxx X. Xxxxxxx
------------------------ --------------------------------------
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