AMENDED AND RESTATED DESIGN-BUILD AGREEMENT

Exhibit 10.5

 

AMENDED AND RESTATED DESIGN-BUILD AGREEMENT

 

FOR

 

GUARANTEED MAXIMUM PRICE

ARCHITECTURAL, ENGINEERING AND

CONSTRUCTION SERVICES

 

BETWEEN

 

WYNN RESORTS (MACAU) S.A.

(“Owner”)

 

AND

 

LEIGHTON CONTRACTORS (ASIA) LIMITED,

 

CHINA STATE CONSTRUCTION ENGINEERING

(HONG KONG) LIMITED,

 

AND

 

CHINA CONSTRUCTION ENGINEERING

(MACAU) COMPANY LIMITED

 

(jointly and severally, “Contractor”)

 

FOR

LUXURY RESORT CASINO COMPLEX IN MACAU

 

As of September 14, 2005

AMENDED AND RESTATED DESIGN-BUILD AGREEMENT

FOR

GUARANTEED MAXIMUM PRICE

ARCHITECTURAL, ENGINEERING AND

CONSTRUCTION SERVICES

 

LUXURY RESORT CASINO COMPLEX IN MACAU

 

This Amended and Restated Design-Build Agreement for Guaranteed Maximum Price Architectural, Engineering and Construction Services (this “ Agreement ”), which amends and restates the Original Agreement (defined below), made as a Deed effective as of September 14, 2005 (the “ Effective Date ”), is entered into between WYNN RESORTS (MACAU) S.A., a company incorporated in the Macau Special Administrative Region having its registered office at 335-341, Alameda Dr. Carlos d’Assumpção, 9 ^th Floor, Hotline Center, Macau (“ Owner ”), and LEIGHTON CONTRACTORS (ASIA) LIMITED, a private limited company incorporated in the Hong Kong Special Administrative Region, having its registered office at 39 ^th Floor, Sun Hung Kai Centre, 30 Harbour Road, North Wanchai, Hong Kong (“ Leighton ”), CHINA STATE CONSTRUCTION ENGINEERING (HONG KONG) LIMITED, a private limited company incorporated in the Hong Kong Special Administrative Region, having a registered office at 29 ^th Floor, China Overseas Building, 139 Hennessy Road, Hong Kong (“ China/HK ”), and CHINA CONSTRUCTION ENGINEERING (MACAU) COMPANY LIMITED, a private limited company incorporated in the Macau Special Administrative Region, having a registered office at Rua do Campo, No 78, Edificio Commercial Zhang Kian, 18 andar, Macau (“ China/Macau ”; Leighton, China/HK, and China/Macau being jointly and severally referred to as the “ Contractor ”).

 

RECITALS

 

A. Owner has been granted a concession to operate a casino and resort complex in Macau pursuant to a certain Concession Contract for the Operation of Games of Chance or Other Games in Casinos in the Macau Special Administrative Region dated June 24, 2002, between the Macau Special Administrative Region (the “ Macau SAR ”) and Owner (the “ Gaming Concession Agreement ”).

 

B. Owner has been granted a leasehold interest in the real property described in Exhibit A hereto (the “ Site ”) pursuant to a certain Land Concession Contract dated June 4, 2004, between the Macau SAR and Owner (the “ Land Concession Agreement ”).

 

C. Owner desires to construct on the Site a “five-star”, first-class, Las Vegas-style luxury resort and casino, including high-rise hotel space and low rise space comprised of casino and gaming areas, restaurants, retail, spa, convention and meeting areas, together

 

1

with all exterior features, and all on-Site and off-Site improvements and infrastructure related thereto, all in accordance with the Contract Documents (as defined below).

 

D. The Contractor has commenced the design and construction of a high-rise hotel and low rise space comprised of casino and gaming areas and restaurants, retail, spa, convention and meeting areas, (as more fully described in this Agreement, the “ Original Project ”) in accordance with the Original Agreement (as defined below). Owner desires to engage Contractor to design and construct a new front feature, a theatre, additional casino and gaming areas and additional retail and restaurant areas (as more fully described in this Agreement, the “ Expansion Project ”; the Original Project and Expansion Project, together, the “ Project ”).

 

E. Owner and Contractor entered into that certain Design-Build Agreement for Guaranteed Maximum Price Architectural, Engineering and Construction Services (the “ Original Agreement ”), made as a Deed effective as of May 10, 2004, pursuant to which the Contractor commenced construction of the Original Project on or about June 28, 2004.

 

F. In order to document the Expansion Project, Owner and Contractor desire to amend and restate the Original Agreement to set forth the terms and conditions governing both the Original Project and the Expansion Contract.

 

G. Owner desires (i) to engage Contractor to design and construct the Expansion Project and (ii) for Contractor to continue its design and construction of the Original Project, as more fully described in this Agreement, and Contractor desires to accept such engagement with respect to the Expansion Project and continue its engagement and construction with respect to the Original Project, upon the terms and conditions contained in this Agreement.

 

AGREEMENT

 

In consideration of the mutual covenants and agreements set forth below, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Contractor and Owner hereby adopt and incorporate the foregoing Recitals and agree as follows:

 

ARTICLE I.

CERTAIN DEFINITIONS

 

As used in this Agreement, the following terms shall have the meanings respectively set forth in this Article 1 :

 

“Actions” has the meaning given to it in Section 14.1 .

 

“Agreement” has the meaning given to it in the introductory paragraph.

 

2

“Anticipated Cost Report” has the meaning given to it in Section 7.5.4 .

 

“Applications For Final Payment” has the meaning given to it in Section 5.8 .

 

“Architect/Engineer” for the Project means Wong & Ouyang (HK) Limited pursuant to the Architect/Engineer Agreement.

 

“Architect/Engineer Agreement” means that certain Designer Professional Services Agreement among Wynn Design and Development, LLC and Wong & Ouyang (HK) Limited, dated as of February 28, 2003, which agreement was transferred to the Contractor pursuant to that certain Novation Agreement, dated June 3, 2005, among Wynn Design and Development, LLC, Wong & Ouyang (HK) Limited and Contractor.

 

“As Built” has the meaning given to it in Section 12.2.1.7 .

 

“Auditable Subcontractors” has the meaning given to it in Section 19.1 .

 

“Bases for Withholding” has the meaning given to it in Section 5.4 .

 

“Casino Area 4” means that portion of the Expansion Project Casino depicted on Attachment 4 of Exhibit B as “Area 4” on the ground floor, including all associated support and external features.

 

“Casino Area 5” means that portion of the Expansion Project Casino depicted on Attachment 4 of Exhibit B as “Area 5” on the ground floor, including all associated support and external features.

 

“Change” has the meaning given to it in Section 18.1 .

 

“Change Order” has the meaning given to it in Section 18.2 .

 

“Change Proposal” has the meaning given to it in Section 18.3.1 .

 

“Change Proposal Request” has the meaning given to it in Section 18.3 .

 

“Claim” has the meaning given to it in Section 20.1 .

 

“Consequential Damages” has the meaning given to it in Section 14.7 .

 

“Construction Change Directive” has the meaning given to it in Section 18.4.1 .

 

“Contract” means the Contract Documents, collectively.

 

3

“Contract Documents” means, collectively, the following documents which are hereby incorporated herein by this reference:

 

a)

this Agreement;

 

b)

the description of the Site attached hereto as Exhibit A ;

 

c)

Drawings;

 

d)

Specifications;

 

e)

the Original Project Schedule attached hereto as Exhibit B-1 ;

 

f)

the Expansion Project Schedule attached hereto as Exhibit B-4 ;

 

g)

the preliminary list of construction machinery and equipment to be rented or purchased by Contractor for use in the Work pursuant to Section 3.2.6 of this Agreement, attached hereto as Exhibit D ;

 

h)

the Original Project Schedule of Approved Values;

 

i)

Expansion Project Schedule of Values;

 

j)

the Original Project Guaranteed Maximum Price Premises and Assumptions attached hereto as Exhibit G ;

 

k)

the Expansion Project Guaranteed Maximum Price Premises and Assumptions attached hereto as Exhibit G ;

 

l)

all other exhibits to this Agreement, as set forth on the list of exhibits appearing at the end of this Agreement; and

 

m)

all supplements, addenda, modifications and amendments to any of the foregoing documents described in (a) through and including (i), from time to time approved by Owner (and Contractor, to the extent required by the terms of this Agreement) in writing, including, but not limited to, any Change Orders and Construction Change Directives, and such other documents expressly referred to in the foregoing documents as being a part of the Contract Documents. The Contract Documents do not include other documents such as bidding requirements (advertisement or invitation to bid, instructions to bidders, sample forms, and Contractor’s bid or portion of addenda relating to bidding requirements).

 

“Contract Time” has the meaning given to it in Section 4.1.5 .

 

“Contractor” has the meaning given to it in the introductory paragraph.

 

“Contractor’s Certificate” has the meaning given to it in Section 5.2.5 .

 

4

“Cost of the Work” has the meaning given to it in Section 3.2 .

 

“day” has the meaning given to it in Section 4.1.1 .

 

“Defects Liability Retainage” has the meaning given to it in Section 5.6.2 .

 

“Design Documents” has the meaning given to it in Section 8.2.8 .

 

“Design Information” has the meaning given to it in Section 8.2.1 .

 

“Dispute” has the meaning given to it in Section 22.1 .

 

“Dispute Date” has the meaning given to it in Section 22.1 .

 

“Drawings” means the graphic and pictorial portions of the Contract Documents, in both digital and paper form, wherever located and whenever issued, which are approved for use during construction and show the design, location and dimensions of the Work and Project including plans, elevations, sections, diagrams and other details. Owner and Contractor acknowledge that as of the Effective Date the Drawings with respect to the Expansion Project are not complete. The Drawings include, but are not limited to, those listed on Exhibit E attached hereto and incorporated herein by this reference.

 

“Effective Date” has the meaning given to it in the preamble.

 

“Excepted Risks” has the meaning given to it in Section 5.10 .

 

“Entry Feature” means the collective components of the Feature as depicted on Attachment 3 of Exhibit E (including the dome, tree, lifts and other features described therein), and associated support and external features.

 

“Expansion Project” has the meaning given to it in preamble.

 

“Expansion Project Casino” means, collectively, those portions of the Expansion Project comprising the casino and support facilities located in the lowrise podium, and associated support and external features. The footprint of the Expansion Project Casino on the Site is generally depicted on Attachment 4 of Exhibit B .

 

“Expansion Project Certificate of Final Completion” has the meaning given to it in Section 12.2.2.4 .

 

“Expansion Project Certificate of Substantial Completion” has the meaning given to it in Section 12.1.2.7 .

 

5

“Expansion Project Construction Contingency” has the meaning given to it in Section 3.1.8.2 .

 

“Expansion Project Contractor’s Fee” has the meaning given to it in Section 3.1.3.2 .

 

“Expansion Project Cost Control Incentive” has the meaning given to it in Section 3.2 .

 

“Expansion Project Date of Commencement” means the “Expansion Project Date of Commencement” specified in Section 4.1.3 with respect to the Expansion Project Work.

 

“Expansion Project Defects Liability Period” has the meaning given to it in Section 10.2 .

 

“Expansion Project Final Completion” has the meaning given to it in Section 12.2.1 .

 

“Expansion Project Final Payment” has the meaning given to it in Section 5.8.2 .

 

“Expansion Project Guaranteed Maximum Price” has the meaning given to it in Section 3.1 .

 

“Expansion Project Guaranteed Maximum Price Premises and Assumptions” means the contents of Exhibit G attached hereto, which describe Owner’s requirements for the Expansion Project.

 

“Expansion Project Interim Milestone Dates” has the meaning given to it in Section 4.1.4 .

 

“Expansion Project Interim Milestones” has the meaning given to it in Section 4.1.4 .

 

“Expansion Project Liquidated Damages” has the meaning given to it in Section 4.4.1 .

 

“Expansion Project Owner Contingency” has the meaning given to it in Section 3.1.7.2 .

 

“Expansion Project Punch List Items” has the meaning given to it in Section 12.1.2.5 .

 

6

“Expansion Project Schedule” has the meaning given to it in Section 4.1.4 .

 

“Expansion Project Schedule of Values” has the meaning given to it in Section 5.1.1 .

 

“Expansion Project Substantial Completion” has the meaning given to it in Section 12.1.1 .

 

“Expansion Project Work” means those portions of the Work to be executed by Contractor with respect to the Expansion Project.

 

“FCPA” has the meaning given to it in Section 27.1.1 .

 

“Fill Materials” has the meaning given to it in Section 7.1.11.1 .

 

“Force Majeure” has the meaning given to it in Section 11.4 .

 

“Force Majeure Delay” has the meaning given to it in Section 11.4 .

 

“Gaming Concession Agreement” has the meaning given to it in the preamble.

 

“Guarantee” means the Amended and Restated Parent Completion Guarantee in the form of Exhibit K attached hereto, whereby the Guarantors absolutely and unconditionally guarantee to Owner each and all of Contractor’s obligations and liabilities under this Agreement.

 

“Guaranteed Date of Expansion Project Final Completion” has the meaning given to it in Section 4.1.8 .

 

“Guaranteed Date of Expansion Project Substantial Completion” has the meaning given to it in Section 4.1.9 .

 

“Guaranteed Date of Original Project Final Completion” has the meaning given to it in Section 4.1.6 .

 

“Guaranteed Date of Original Project Substantial Completion” has the meaning given to it in Section 4.1.7 .

 

“Guaranteed Maximum Price” means, collectively, the Expansion Project Guaranteed Maximum Price and the Original Project Guaranteed Maximum Price.

 

“Guarantor” and “Guarantors” have the meaning given to them in Section 4.6.1 .

 

“Hotel” means collectively those portions of the Project comprising the hotel guestrooms and suites as well as the sky casino, and ancillary facilities. The footprint of the Hotel on the Site is generally depicted on Attachment 2 of Exhibit B.

 

7

“ICC” has the meaning given to it in Section 22.1 .

 

“ICC Rules” has the meaning given to it in Section 22.1 .

 

“Independent Expert” has the meaning given to it in Section 7.18.1.2 .

 

“Land Concession Agreement” has the meaning given to it in the preamble.

 

“Laws” has the meaning given to it in Section 7.2 .

 

“Lender Liens” has the meaning given to it in Section 24.2 .

 

“Lender’s Notification” has the meaning given to it in Section 21.2 .

 

“Liquidated Damages” has the meaning given to it in Section 4.4.1 .

 

“Minor Changes” has the meaning given to it in Section 18.9 .

 

“Modification” means any of the following:

 

(a)

a written amendment to the Contract identified as such and signed by both parties;

 

(b)

a Change Order;

 

(c)

a Construction Change Directive; or

 

(d)

a Minor Change.

 

“Non-Allowable Cost of the Work” has the meaning given to it in Section 3.3 .

 

“Notice to Proceed” has the meaning given to it in Section 4.1.2 .

 

“Notices” has the meaning given to it in Section 25.1 .

 

“Official” has the meaning given to it in Section 27.1.3 .

 

“On-Site Property” has the meaning given to it in Section 7.8 .

 

“Original Agreement” has the meaning given to it in the preamble.

 

“Original Agreement Guaranteed Maximum Price” means Two Hundred Fifty-Five Million Five Hundred Thousand United States Dollars (US$255,500,000).

 

“Original Project” has the meaning given to it in the preamble.

 

8

“Original Project Casino” means, collectively, those portions of the Original Project comprising the casino and support facilities located in the lowrise podium, and associated support and external features. The footprint of the Casino on the Site is generally depicted on Attachment 2 of Exhibit B .

 

“Original Project Certificate of Final Completion” has the meaning given to it in Section 12.2.2.4 .

 

“Original Project Certificate of Substantial Completion” has the meaning given to it in Section 12.1.2.7 .

 

“Original Project Construction Contingency” has the meaning given to it in Section 3.1.8.1 .

 

“Original Project Contractor’s Fee” has the meaning given to it in Section 3.1.2.2 .

 

“Original Project Cost Control Incentive” has the meaning given to it in Section 3.2 .

 

“Original Project Date of Commencement” means June 28, 2004.

 

“Original Project Defects Liability Period” has the meaning given to it in Section 10.2 .

 

“Original Project Early Completion Component” has the meaning given to it in Section 3.2 .

 

“Original Project Final Completion” has the meaning given to it in Section 12.2.1 .

 

“Original Project Final Payment” has the meaning given to it in Section 5.8.1 .

 

“Original Project Guaranteed Maximum Price” has the meaning given to it in Section 3.1 .

 

“Original Project Guaranteed Maximum Price Premises and Assumptions” means the contents of Exhibit G attached hereto, which describe Owner’s requirements for the Original Project.

 

“Original Project Interim Milestone Dates” has the meaning given to it in Section 4.1.4 .

 

“Original Project Interim Milestones” has the meaning given to it in Section 4.1.4 .

 

“Original Project Liquidated Damages” has the meaning given to it in Section 4.4.1 .

 

9

“Original Project Owner Contingency” has the meaning given to it in Section 3.1.7.1 .

 

“Original Project Punch List Items” has the meaning given to it in Section 12.1.2.5 .

 

“Original Project Schedule” has the meaning given to it in Section 4.1.4 .

 

“Original Project Approved Schedule of Values” means the Schedule of Values delivered by Contractor to Owner on July 27, 2004.

 

“Original Project Substantial Completion” has the meaning given to it in Section 12.1.1 .

 

“Original Project Work” means those portions of the Work to be executed by Contractor with respect to the Original Project.

 

“Owner Delay” has the meaning given to it in Section 11.5 .

 

“Owner Indemnitees” has the meaning given to it in Section 14.1 .

 

“Owner Recovery Plan” has the meaning given to it in Section 11.8.6 .

 

“Owner’s Consultants” means the Principal Interior Designer together with the additional interior design and other consultants retained by Owner to perform the Owner’s Design and other services as set out in the Guaranteed Maximum Price Premises and Assumptions.

 

“Owner’s Contractors” means the contractors, vendors and suppliers (other than Owner’s Consultants) retained by Owner in connection with the Project. The Contractor shall be responsible for managing and coordinating the activities of the Owner’s Consultants and Owner’s Contractors with the Work.

 

“Owner’s Design” means those design services related to the Project prepared by Owner or the Owner’s Consultants, which shall, as may be required, be included in Contractor’s Work.

 

“Owner’s Lenders” has the meaning given to it in Section 21.1 .

 

“Owner’s Pre-Opening Work” has the meaning given to it in Section 11.8.6 .

 

“Owner’s Representative” has the meaning given to it in Section 6.3 .

 

“Permissible Delay” means any Owner Delay, Force Majeure Delay, any other delay for circumstances specified in this Agreement as providing for an extension of the

 

10

Contract Time and/or an increase in the Guaranteed Maximum Price, and any other delay for causes which Owner and Contractor agree may justify delay.

 

“Personnel” has the meaning given to it in Section 3.2.1 .

 

“Plant” has the meaning given to it in Section 7.27.1 .

 

“pre-existing hazardous materials” has the meaning given to it in Section 7.26.1 .

 

“Principal Interior Designer” means Wynn Design and Development, LLC, which in turn shall be retaining additional interior design consultants for the Project.

 

“Product Data” has the meaning given to it in Section 7.13.2 .

 

“Project” has the meaning given to it in the preamble.

 

“Recovery Plan” has the meaning given to it in Section 11.8 .

 

“Recovery Plan Liabilities” has the meaning given to it in Section 4.2 .

 

“Reimbursable Taxes” means all those Taxes described on Exhibit N attached hereto as being reimbursable to Contractor as a Cost of the Work.

 

“Related Entities” has the meaning given to it in Section 27.1.1 .

 

“Request” has the meaning given to it in Section 22.1 .

 

“Retention” has the meaning given to it in Section 5.6.1 .

 

“RFI” has the meaning given to it in Section 7.3.3 .

 

“Right to Audit” has the meaning given to it in Section 19.5 .

 

“Samples” has the meaning given to it in Section 7.13.3 .

 

“Schedule Update” has the meaning given to it in Section 11.3 .

 

“Schedule Update No. 1” has the meaning given to it in Section 11.3 .

 

“Shop Drawings” has the meaning given to it in Section 7.13.1 .

 

“Site” has the meaning given to it in the preamble.

 

“Specifications” means that portion of the Contract Documents, in both digital and paper form, wherever located and whenever issued, which are approved by Owner for use during construction and set forth the written requirements for materials, equipment,

 

11

construction systems, standards and workmanship for the Work. Owner and Contractor acknowledge that as of the Effective Date the Specifications are not complete. The Specifications include, without limitation, those listed on Attachment 2 to Exhibit E attached hereto and incorporated herein by this reference.

 

“Subcontractor” means any person or entity (including employees, agents and representatives thereof) who has a contract with or is engaged by Contractor, or with any other Subcontractor, at any tier to construct or perform a portion of the Work and/or provide construction related services for the Work at the Site, and includes any party any of them are responsible or liable for at law or under the Contract Documents.

 

“Substitution” means the substitution of any materials or equipment specified in the Contract Documents, or any design change, initiated by the Contractor and approved by Owner in advance and in writing pursuant to Section 7.10 of this Agreement after the Effective Date.

 

“Tax” or “Taxes” mean all taxes, charges, fees, duties, levies, penalties or other assessments imposed by any governmental authority, including income, gross receipts, excise, property, sales, gain, use, license, custom duty, unemployment, capital stock, transfer, franchise, payroll, withholding, social security, minimum estimated, profit, gift, severance, value added, disability, premium, recapture, credit, occupation, service, leasing, employment, stamp and other taxes.

 

“TCO” has the meaning given to it in Section 12.1.2.2 .

 

“Theatre” means collectively those portions of the Project comprising the theatre and its ancillary facilities. The footprint of the theatre on the Site is generally depicted on Attachment 4 of Exhibit B .

 

“TPL” has the meaning given to it in Section 15.1.6 .

 

“Vendor” means any person or entity (including employees, agents and representatives thereof) which has a purchase order or other agreement to provide materials, supplies, equipment and/or related services for the Work and/or provide installation services at the Site for the Work, through a contract, purchase order or other arrangement with Contractor or any Subcontractor at any tier, and includes any party any of them are responsible or liable for at law or under the Contract Documents.

 

“Work” means the totality of the obligations imposed upon Contractor by the Contract Documents with respect to each of the Original Project and the Expansion Project, including, but not limited to, (a) the design, supply and performance by Contractor, directly and through Architect/Engineer, Subcontractors and Vendors, of all things (labor, services, materials, equipment, tools, machinery, fabrication, etc.) necessary and/or reasonably inferable from the Contract Documents (including those prepared by Owner) as being required or necessary to fully complete the tasks and improvements described as

 

12

Contractor’s Work with respect to each of the Original Project and the Expansion Project in the Contract Documents (b) the management of Owner’s Consultants and the coordination of the Owner’s Design with the Architect/Engineer as may be required, and (c) the management of Owner’s Contractors, all in accordance with the requirements of the Original Project Guaranteed Maximum Price Premises and Assumptions, the Expansion Project Guaranteed Maximum Price Premises and Assumptions and the other Contract Documents. The term “Work” includes the Original Project Work and the Expansion Project Work. The term “Work” does not include the exclusions or Owner’s separate work as identified in Attachment 1 to Exhibit G .

 

ARTICLE II.

INTENT, INTERPRETATION AND CORRELATION

 

2.1 Intent of the Contract Documents. The intent of the Contract Documents is for the Contractor to perform, supply and complete, and Owner hereby engages Contractor to and Contractor hereby agrees to perform, supply and complete, the Work. Contractor’s obligation to perform, supply, complete and commission the Work shall include, without limitation, providing all necessary architectural design (except for the Owner’s Design); engineering; scheduling, procurement, supervision, construction, and construction management services; the management and coordination of Owner’s Consultants and Owner’s Contractors and Owner’s Vendors with the Work; and the supplying of all necessary labor, materials, equipment and related work and services, including all things reasonably inferable from the Contract Documents as being necessary to fully complete the Work and obtain the intended results described in the Original Project Guaranteed Maximum Price Premises and Assumptions, and the Expansion Project Guaranteed Maximum Price Premises and Assumptions, all in accordance with the requirements of the Contract Documents (including, but not limited to, the requirements of the Original Project Schedule, the Expansion Project Schedule, the Original Project Guaranteed Maximum Price requirements set forth in Article 3 below and Expansion Project Guaranteed Maximum Price requirements set forth in Article 3 below). Contractor shall be solely responsible for the preparation of the Drawings and Specifications (other than those to be prepared by Owner’s Consultants with respect to Owner’s Design); for the means, methods, techniques and sequences of construction; and for the finished construction fully complying with the Project requirements established pursuant to the Contract Documents and with applicable Laws. Contractor recognizes that Owner is not retaining its own architect or engineer on the Project and Contractor acknowledges that it is solely responsible for Project Site analysis and for the design (except for the Owner’s Design) and construction of the Work, including coordinating the Owner’s Design with the Architect/Engineer’s design, and that Owner is relying upon Contractor for such services. Contractor accepts the relationship of trust and confidence thus imposed and shall efficiently design, administer, construct and supervise the Work in a professional manner, timely delivering the completed Original Project and completed Expansion Project to Owner with all applicable mechanical, electrical, plumbing, fire safety and other building systems fully operational. The enumeration of particular items in the Specifications and/or Drawings and/or other Contract Documents shall not be

 

13

construed to exclude other items reasonably inferable from the Contract Documents or being necessary to fully complete the Work. The Contract Documents are complementary, and what is required by or reasonably inferable from any one of the Contract Documents (including either a Drawing or Specification) as being necessary to produce the intended results shall be binding and required as a part of the Work as if required by all Contract Documents. Notwithstanding that Exhibit F attached hereto sets forth Contractor’s estimated breakdown of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price into line items and categories and that Contractor’s acceptance of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price may have been based on such estimates, Contractor agrees that the scope of the Work to be performed by Contractor shall be determined by the Original Project Guaranteed Maximum Price Premises and Assumptions, the Expansion Project Guaranteed Maximum Price Premises and Assumptions and the other Contract Documents. Contractor further agrees that in the event of any discrepancy between (a) the Original Project Guaranteed Maximum Price Premises and Assumptions, the Expansion Project Guaranteed Maximum Price Premises and Assumptions and the other Contract Documents (other than Exhibit F ) and (b)  Exhibit F , the Original Project Guaranteed Maximum Price Premises and Assumptions, the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable) and the other Contract Documents (other than Exhibit F ) shall control, and no adjustment to the Original Project Guaranteed Maximum Price, the Expansion Project Guaranteed Maximum Price or the Contract Time shall be made as a result thereof.

 

2.2 Order of Precedence. Subject to the provisions of Section 2.3 and the last two sentences of Section 2.1 hereof, in the event of any conflicts or inconsistencies which cannot be resolved by reading the Contract Documents as a whole, the provisions of the Contract Documents shall be controlling in accordance with the following order of precedence:

 

2.2.1 this Agreement;

 

2.2.2 the Original Project Guaranteed Maximum Price Premises and Assumptions and the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable);

 

2.2.3 the Drawings;

 

2.2.4 Specifications; and

 

2.2.5 the other Contract Documents.

 

2.3 Contractor’s Compliance with Contract Documents. Contractor hereby agrees and accepts that Contractor has a duty to refer all questions with respect to any doubts or concerns over the intent or appropriate interpretation of the Contract Documents to Owner for Owner’s decision. Contractor agrees, accepts and assumes that Owner’s decision will require implementation of the most stringent requirements among any conflicting

 

14

provisions of the Contract Documents as being part of the Work. Contractor agrees to be bound by all decisions by Owner to implement the most stringent of any conflicting requirements within the Contract Documents. Any failure by Contractor to seek such clarifications shall in no way limit Owner’s ability to require such implementation, including replacement by Contractor of installed Work at a later date (as a Cost of the Work, subject to the provisions of Section 3.3 , and without increase in the Original Project Guaranteed Maximum Price or Expansion Project Guaranteed Maximum Price (as applicable)), to achieve compliance with the standard required pursuant to this Section 2.3.

 

2.3.1 The failure of Owner to insist in any one or more instances upon a strict compliance with any provision of this Contract, or to exercise any option herein conferred, shall not be construed as a waiver or relinquishment of Owner’s right thereafter to require compliance with such provision of this Contract, or as being a waiver of Owner’s right thereafter to exercise such option, and such provision or option will remain in full force and effect.

 

2.3.2 If there is any inconsistency in the Drawings or any conflict between the Drawings and Specifications, Contractor shall provide the better quality or greater quantity of Work or materials, as applicable, unless Owner directs otherwise in writing.

 

2.3.3 Contractor shall be responsible for dividing the Work among the appropriate qualified Subcontractors and Vendors. No claim will be entertained by Owner based upon the organization or arrangement of the Specifications and/or the Drawings into areas, sections, subsections or trade disciplines.

 

2.3.4 Detail drawings shall take precedence over scale drawings, and figured dimensions on the Drawings shall govern the setting out of the Work.

 

2.3.5 Unless the Specifications expressly state otherwise, references to documents and standards of professional organizations shall mean the latest editions published prior to the Effective Date.

 

2.3.6 Technical words, abbreviations and acronyms in the Contract Documents not defined therein shall be used and interpreted in accordance with customary usage in the construction industry.

 

2.3.7 Whenever consent, permission or approval is required from any party pursuant to the provisions of the Contract Documents, such consent, permission or approval shall, unless expressly provided otherwise in this Agreement, be given or obtained, as applicable, in writing and shall not be unreasonably withheld or delayed.

 

2.4 Joint and Several Liability. Leighton, China/HK and China/Macau shall be jointly and severally liable to Owner for the fulfillment by Contractor of the terms of this Agreement. All references to Contractor in the Contract Documents shall be deemed to include references to Leighton, China/HK and China/Macau jointly and severally. Each of

 

15

Leighton, China/HK and China/Macau shall be fully responsible for the proper performance of the obligations of Contractor under the Contract Documents. Leighton, China/HK and China/Macau shall be liable to Owner and the Owner Indemnities on a joint and several basis for any and all acts or omissions of Contractor, whether under this Agreement or pursuant to the Contract Documents. The composition of the joint venture formed by Leighton, China/HK and China/Macau, as well as the terms and conditions of the written joint venture agreement among such parties, shall be subject to Owner’s prior written consent and shall not be materially altered without Owner’s prior written consent, which consent shall not be unreasonably withheld or delayed; and any direct or indirect transfers of interests in the joint venture by or among any of such parties shall be subject to Owner’s prior written consent. Contractor’s Representative shall have the authority to bind the joint venture constituting Contractor and each of its members. The Contractor’s Representative is authorized to act on behalf of Contractor with regard to the Work and the Contract Documents and his decisions will be binding upon Contractor. Owner may rely on, and Contractor shall be bound by, any notice or correspondence delivered by Contractor’s Representative in connection with the Contract Documents.

 

ARTICLE III.

GUARANTEED MAXIMUM PRICE

 

3.1 Guaranteed Maximum Price. Subject to additions and deductions which may be made only in accordance with the Contract Documents, Contractor represents, warrants and guarantees to Owner that the total maximum cost to be paid by Owner for Contractor’s complete performance under the Contract Documents, including, but not limited to, Original Project Final Completion and Expansion Project Final Completion (as applicable) of all Work, all services of Contractor under the Contract, and all fees, compensation and reimbursements to Contractor, shall not exceed the total amount of:

 

(a) with respect to the Original Project, Three Hundred Million Four Hundred Sixty-Four Thousand Six Hundred Fifty-Eight United States Dollars (US$300,464,658) (“ Original Project Guaranteed Maximum Price ”); and

 

(b) with respect to the Expansion Project, One Hundred Fifty-Six Million Seven Hundred Fifty-Nine Thousand Three Hundred Twenty-Six United States Dollars (US$156,759,326) (“ Expansion Project Guaranteed Maximum Price ”).

 

Costs which would cause either the Original Project Guaranteed Maximum Price or Expansion Project Guaranteed Maximum Price (as each may be adjusted pursuant to the Contract Documents) to be exceeded shall be paid by the Contractor without reimbursement by Owner. Contractor acknowledges that each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price is stated and is payable in United States dollars, and that no adjustment will be made thereto on account of change in any exchange rate relevant to the performance of the Work, including, but not

 

16

limited to, any changes in exchange rates of the United States dollar, Hong Kong dollar, Macau pataca and People’s Republic of China renminbi. Each of the Original Project Guaranteed Maximum Price and Expansion Project Guaranteed Maximum Price is inclusive of all Taxes assessed in any jurisdiction for the performance by Contractor (including Subcontractors and Vendors at any tier) of its obligations under the Contract Documents. Further, Contractor shall be deemed to have satisfied itself before entering into this Agreement as to (a) all of the conditions and circumstances which may affect each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price, including the nature and character of the Work to be executed, the prevailing geotechnical, environmental and ambient conditions, local uses, the existing installations (if any), the general circumstances at the Site, the general labor position at the Site and in the region generally and the coordination and interrelation of the execution of the Original Project Work and the Expansion Project Work; and (b) the correctness and sufficiency of the each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price to cover all of its obligations under the Contract Documents. Contractor shall be responsible for obtaining all information necessary for the Work and shall be deemed to have included and accounted for in each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price all risks, contingencies, Taxes, local and national conditions, laws, customs, policies and practices and other conditions affecting the Work, the Project or the performance thereof, in each case whether known or unknown, or foreseeable or unforeseeable (subject to the provisions of this Agreement relating to Permissible Delay and Excepted Risks). Contractor shall be responsible for all errors made and for any misunderstanding or incorrect information provided by any person or entity or relied upon by Contractor, except to the extent otherwise provided for in the Contract Documents. Notwithstanding the preceding sentence, Contractor shall not be responsible for errors made or for any incorrect information provided by any of Owner’s Consultants or Owner’s Contractors, except to the extent that Contractor has failed in its duty of coordination, supervision and management with respect to Owner’s Consultants and Owner’s Contractors, as set forth in this Agreement.

 

3.1.2 Original Project Guaranteed Maximum Price Components. The Original Project Guaranteed Maximum Price is comprised of the maximum amount payable by Owner for:

 

3.1.2.1 the Cost of the Work listed in Section 3.2 hereof for full and complete performance of the Work in strict accordance with Contract Documents, and

 

3.1.2.2 a fixed fee to Contractor in the amount of Twenty Million Five Hundred Forty-One Thousand Nine-Hundred Sixty-Seven United States Dollars (US$20,541,967) (“ Original Project Contractor’s Fee ”).

 

The Original Project Contractor’s Fee shall be the Contractor’s sole and exclusive compensation for all costs described as Non-Allowable Costs of the Work in Section 3.3

 

17

hereof and is inclusive of all overhead and profit arising out of or relating to the Contractor’s Work. The Original Project Guaranteed Maximum Price is further broken down into line items and categories on Exhibit F attached hereto.

 

3.1.3 Expansion Project Guaranteed Maximum Price Components. The Expansion Project Guaranteed Maximum Price is comprised of the maximum amount payable by Owner for:

 

3.1.3.1 the Cost of the Work listed in Section 3.2 hereof for full and complete performance of the Work in strict accordance with Contract Documents, and

 

3.1.3.2 a fixed fee to Contractor in the amount of Eleven Million Five Hundred Eighteen Thousand Three Hundred Fifty-Eight United States Dollars (US$11,518,358) (“ Expansion Project Contractor’s Fee ”).

 

The Expansion Project Contractor’s Fee shall be the Contractor’s sole and exclusive compensation for all costs described as Non-Allowable Costs of the Work in Section 3.3 hereof and is inclusive of all overhead and profit arising out of or relating to the Contractor’s Work. The Expansion Project Guaranteed Maximum Price is further broken down into line items and categories on Exhibit F attached hereto.

 

3.1.4 Cost Overruns. Subject to any adjustment to each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price (as applicable) which may be made in accordance with the Contract Documents, Contractor shall be solely liable and responsible for and shall pay any and all costs, fees and other expenditures in excess of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price (as applicable) for and/or relating to the Original Project Work and Expansion Project Work (as applicable), without entitlement to reimbursement from Owner.

 

3.1.5 Proof of Funds. The Contractor shall, within five (5) days of receipt of any request by Owner or Owner’s Lenders therefor, provide Owner and Owner’s Lenders with evidence satisfactory to Owner’s Lenders that (i) based on the progress of the Work and Cost of the Work already incurred, the remaining Work can be completed for the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price, or (ii) sufficient funds are available to Contractor (directly, or through any of the Guarantors) to pay any anticipated overage.

 

3.1.6 Inferable Work. Contractor agrees that the scope of each of the Original Project Guaranteed Maximum Price and the Expansion Project Guaranteed Maximum Price includes Work not expressly indicated on the Contract Documents, but which is reasonably inferable from the Contract Documents, or consistent therewith, and such Work shall be performed by Contractor without any increase in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable). The intent of the Contract Documents is described in Section 2.1 and shall

 

18

include all additional items reasonably inferable from the Contract Documents as being necessary to conform with this Contract and applicable Laws. Contractor acknowledges that it bears responsibility for consequences resulting from its design and construction processes and acknowledges its responsibility to manage and coordinate all of the design and construction processes for the Project so that the requirements of the Contract are achieved.

 

3.1.7 Owner Contingency.

 

3.1.7.1 The Original Project Guaranteed Maximum Price includes an Owner contingency in the amount of Three Million Twelve Thousand Eight Hundred Twenty-One United States Dollars (US$3,012,821) (“ Original Project Owner Contingency ”).

 

3.1.7.2 The Expansion Project Guaranteed Maximum Price includes an Owner contingency in the amount of Two Million Five Hundred Thousand United States Dollars (US$2,500,000) (“ Expansion Project Owner Contingency ”).

 

To allocate a portion of the Original Project Owner Contingency or the Expansion Project Owner Contingency (as applicable) to a portion of the Original Project Work or Expansion Project Work, respectively, for any purpose, Owner shall submit a Construction Change Directive to Contractor with respect to such allocation. Contractor and Owner will then follow the procedure described in Article 18 of this Agreement. Each allocation of either the Original Project Owner Contingency or the Expansion Project Owner Contingency shall be reflected on the respective Application for Progress Payment for the period during which Owner makes such approved allocation. Any portion of either of the Original Project Owner Contingency or the Expansion Project Owner Contingency remaining unallocated at Original Project Final Completion and Expansion Project Final Completion, respectively, shall revert to the Owner as provided for in Section 3.2 . Contractor shall have the right to propose to Owner at any time an allocation of either of the Original Project Owner Contingency or the Expansion Project Owner Contingency (as applicable), setting forth in reasonable detail why Contractor considers such an allocation to be appropriate, but Owner may in its sole discretion agree or disagree to such use or allocation of the Original Project Owner Contingency or the Expansion Project Owner Contingency (as applicable),.

 

3.1.8 Construction Contingency.

 

3.1.8.1 The Original Project Guaranteed Maximum Price includes a construction contingency in the amount of Thirteen Million Three Hundred Fifty-Two Thousand Eight Hundred Twenty-Two United States Dollars (US$13,352,822) (“ Original Project Construction Contingency ”).

 

3.1.8.2 The Expansion Project Guaranteed Maximum Price includes a construction contingency in the amount of Twelve Million Seven Hundred Forty-Five Thousand Five Hundred Forty-Six United States Dollars (US$12,745,546) (“ Expansion Project Construction Contingency ”).

 

19

Subject to the terms of the Contract Documents, Contractor shall be entitled to allocate from and apply against the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) Costs of the Work for the following, and no other, purposes relating to the Original Project Work or Expansion Project Work (as applicable): (a) implementation of any Recovery Plan, (b) cost overruns, (c) Minor Changes in the Original Work or Expansion Project Work (as applicable), (d) warranty costs prior to Original Project Final Completion and Expansion Project Final Completion (as applicable), (e) those circumstances where the actual cost of an item exceeds the amount allocated to such item in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) (pursuant to Section 3.1.9.2 or 3.1.9.3 of this Agreement), (f) the costs described in Sections 3.2.13.7 , 3.2.13.10 , 3.3.6 , 3.3.9 , 3.3.13 , 3.3.15 , 3.3.17 or 7.17 , (g) any other purpose expressly authorized in this Agreement, and (h) concealed conditions; provided, however, that Contractor may not apply, use or allocate from the Original Project Construction Contingency or the Expansion Project Construction Contingency any amounts for any of the foregoing purposes that are the result of, relate to or arise from any gross negligence, willful misconduct, fraud, material breach or material failure to perform by, Contractor, any Subcontractor or Vendor (except as necessary to replace any Subcontractor or Vendor because of the bankruptcy or failure to perform of such Subcontractor or Vendor), or any party for which any of them are liable or responsible at law or under the Contract Documents, or for any Non-Allowable Costs of the Work except as provided above. Each use of the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) by Contractor shall be reflected (with a narrative explanation) on the respective Application for Progress Payment for the period during which Contractor makes such use and application. Any portion of the Original Project Construction Contingency or the Expansion Project Construction Contingency remaining unused at Original Project Final Completion and Expansion Project Final Completion, respectively, shall be allocated as provided in Section 3.2 .

 

3.1.9 Subcontractor Bids. As Drawings and Specifications are deemed sufficient to call for tenders for a particular portion of the Work, Contractor shall propose and obtain bona fide bids from a minimum of three Subcontractors and/or Vendors for such portion of the Work and, in accordance with Section 9.2 hereof, make a recommendation to Owner in writing as to which bid Owner should select.

 

3.1.9.1 If the amount of the bid selected by Owner exceeds the amount budgeted in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) for that item or portion of the Work and the increase in cost is due to the failure of the Drawings and Specifications to substantially conform to the Original Project Guaranteed Maximum Price Premises and Assumptions or the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable), then to the extent that the applicable Drawings and Specifications were not prepared by any of Owner’s Consultants, there shall be no adjustment to the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) and, at Owner’s option, (a) Contractor shall cause Architect/Engineer to rework

 

20

the Drawings and Specifications to cause the Work depicted therein to conform to the Original Project Guaranteed Maximum Price Premises and Assumptions or the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable); or (b) Contractor shall allocate a portion of the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) to such increased cost pursuant to Section 3.1.8 ; or (c) Owner may require Contractor to cause some revisions to be made to such Drawings and Specifications to bring down the cost while allocating a portion of the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) to any remaining increased cost.

 

3.1.9.2 If the amount of the bid selected by Owner exceeds the amount budgeted in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) for that item or portion of the Work and the increase in cost is due to the failure of the Drawings and Specifications to substantially conform to the Original Project Guaranteed Maximum Price Premises and Assumptions or the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable), then to the extent any of the applicable Drawings and Specifications were prepared by any of Owner’s Consultants, Owner shall, at its option, (a) increase the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) by the amount of such increase in cost; or (b) cause such Owner’s Consultant(s) to rework such Drawings and Specifications to cause the Work depicted therein to conform to the Original Project Guaranteed Maximum Price Premises and Assumptions or the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable); or (c) allocate a portion of the Original Project Owner Contingency or the Expansion Owner Contingency (as applicable) to such increased cost pursuant to Section 3.1.7 ; or (d) do any combination of the foregoing as necessary to cover such increase in cost.

 

3.1.9.3 If the amount of the bid recommended by Contractor and accepted by Owner exceeds the amount allocated or budgeted in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) for that item or portion of the Work, and the Drawings and Specifications substantially conform to the Original Project Guaranteed Maximum Price Premises and Assumptions or the Expansion Project Guaranteed Maximum Price Premises and Assumptions (as applicable), then Contractor shall perform such Work and such increase in costs shall be solely Contractor’s responsibility, except that Contractor shall be entitled to use a portion of the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) to cover such cost increase to the extent permitted under Section 3.1.8 hereof (provided, however, if no funds remain in the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable), Contractor shall still be responsible for the increased cost of the Work), and Contractor shall not be entitled to, and will not seek, any increase in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) with regard thereto.

 

21

3.1.9.4 Notwithstanding the provisions of Sections 3.1.9.1 through 3.1.9.3 above, if Contractor failed to comply with its obligations under Section 7.3 of this Agreement and, as a result, the amount of the bid selected by Owner exceeds the amount allocated or budgeted in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) for that item or portion of the Work, Contractor shall perform such Work and such increase in costs shall be solely Contractor’s responsibility, except that Contractor may use a portion of the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) to cover such increased costs to the extent permitted under Section 3.1.8 hereof (provided, however, if no funds remain in the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable), Contractor shall still be responsible for the increased costs of such Work), and Contractor shall not be entitled to, and will not seek, any increase in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) with regard thereto.

 

3.1.9.5 If the amount of the bid selected by Owner plus the additional and customary cost to complete the bid Work (if such additional and customary amount is so required as mutually determined between Owner and Contractor) is less than the amount budgeted in the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) for that item or portion of the Work, then the savings shall remain within the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) and be made available to pay for the Cost of the Work, but shall not be allocated to the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable) until Original Project Substantial Completion or the Expansion Project Substantial Completion (as applicable) of the applicable portion of the Work.

 

3.1.9.6 Notwithstanding the foregoing provisions of this Section 3.1.9 , if Owner elects in accordance with the terms of this Agreement to have a party other than the Contractor perform a portion of the Work, or otherwise eliminates or reduces the scope of a portion of the Work to be performed by the Contractor, the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable)e shall be reduced in accordance with Article 18 .

 

3.2 Cost of the Work. “ Cost of the Work ” means those elements of costs described in this Section 3.2 up to the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable) (subject to change only as provided in this Agreement) which are chargeable to Owner and payable to Contractor when reasonably, actually and necessarily incurred by the Contractor during or in connection with performance of the Work, without mark-up or add on of any kind by or at the request of Contractor. Such costs shall be actual costs paid or to be paid by Contractor during the applicable billing period and agreed upon by Owner, less all discounts, rebates and salvages taken by Contractor. All amounts paid or payable as Costs of the Work shall be subject to verification by audit pursuant to Article 19 of this Agreement. Contractor covenants and

 

22

agrees to use reasonable efforts to achieve the lowest price or cost available and consistent with the Contract Documents, for all Cost of the Work items. Upon Original Project Substantial Completion or the Expansion Project Substantial Completion (as applicable) of the Original Project Work and the Expansion Project Work (as applicable), all savings on any and all components of the Cost of the Work, including, but not limited to, all savings on labor costs and other general conditions costs, as well as any savings resulting from early delivery of the completed Project, shall be allocated to and included within the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable). Upon Original Project Final Payment, any unused amounts in the Original Project Owner’s Contingency and sixty percent (60%) of any unused amounts in the Original Project Construction Contingency shall revert to the Owner, and forty percent (40%) of any unused amounts in the Original Project Construction Contingency shall be paid to Contractor as a “Original Project Cost Control Incentive” at the time of payment by the Owner of the Original Project Final Payment; provided, however, that if (a) Original Project Substantial Completion is achieved at least fifteen (15) calendar days prior to the Guaranteed Date of Original Project Substantial Completion, and (b) Contractor provides Owner with a written notice accurately confirming to Owner the date of Original Project Substantial Completion of the Original Project Work not less than one hundred fifty-two (152) calendar days prior to such date, then upon Original Project Final Payment a portion of the One Million Two Hundred Eighty-Two Thousand Fifty-One United States Dollars (US$1,282,051) component of the Original Project Construction Contingency representing the cost of anticipated project preliminaries associated with the twenty-sixth month of the Work (such US$1,282,051 component, the “ Original Project Early Completion Component ”) shall be paid to Contractor as part of the “ Original Project Cost Control Incentive ”, which portion shall be calculated as follows: (i) if Original Project Substantial Completion of the entire Original Project Work is achieved between fifteen (15) and thirty (30) calendar days prior to the Guaranteed Date of Original Project Substantial Completion, then a percentage of the Original Project Early Completion Component shall be so paid to Contractor equal to (A) the number of calendar days by which Original Project Substantial Completion of the entire Original Project Work is achieved prior to the Guaranteed Date of Original Project Substantial Completion, divided by (B) thirty (30) for example, if Original Project Substantial Completion of the entire Original Project Work is achieved twenty-four (24) calendar days prior to the Guaranteed Date of Original Project Substantial Completion, then Contractor would be paid eighty percent (80%) (24 / 30 = 80%) of the Original Project Early Completion Component; and (ii) if Original Project Substantial Completion of the entire Work is achieved more than thirty (30) calendar days prior to the Guaranteed Date of Original Project Substantial Completion, then one hundred percent (100%) of the Original Project Early Completion Component shall be so paid to Contractor. In no event shall the total payment to Contractor of any unused amounts in the Original Project Construction Contingency, excluding any payment to Contractor of any portion of the Original Project Early Completion Component, exceed the sum of Four Million United States Dollars (US$4,000,000). Upon Expansion Project Final Payment, any unused amounts in the Expansion Project Owner’s Contingency and sixty percent (60%) of any unused amounts in the Expansion Project Construction Contingency shall revert to the Owner, and forty percent

 

23

(40%) of any unused amounts in the Expansion Project Construction Contingency shall be paid to Contractor as an “Expansion Project Cost Control Incentive” at the time of payment by the Owner of the Expansion Project Final Payment. In no event shall the total payment to Contractor of any unused amounts in the Expansion Project Construction Contingency exceed the sum of Two Million Two Hundred Fifty Thousand United States Dollars (US$2,250,000). Costs of the Work shall be strictly limited to and include only the following items, unless otherwise agreed by the Owner in writing:

 

3.2.1 Contractor’s Salaried Employees. Direct cost of amounts actually paid by Contractor for the salaries paid to Contractor’s employees (excluding craft labor) while and only to the extent they are performing Work at the Site, except to the extent approved otherwise by Owner, and except for those off-Site personnel listed in Exhibit C attached hereto (all such on-Site and off-Site personnel collectively being “ Personnel ”). Such direct costs include Contractor’s actual costs of statutory payroll taxes and payroll burden and customary employee benefits (including vacation) to the extent stated in this Section 3.2.1 , pro-rated for the time they are performing Work. Such employee benefits shall include the Chinese New Year bonus, if applicable, and any reasonable and customary costs considered a normal part of the employee’s salary and not a bonus (other than the Chinese New Year bonus). Contractor shall submit to Owner all documentation necessary to support the referenced rate and benefits. Costs for Contractor’s staff shall exclude any elements of overhead or profit. Any changes to the Personnel listed in Exhibit C during the course of the Work must be approved in advance and in writing by Owner, which approval shall not be unreasonably withheld or delayed. The Contractor shall submit a rate schedule for each of its Personnel for Owner’s audit and approval, including any increases other than increases solely for annual standard cost of living adjustments and merit raises in Contractor’s normal and customary practice, but not to exceed three percent (3%) of an employee’s direct annual salary (excluding benefits) per year, unless approved otherwise by Owner. Costs included in such proposed rates shall, however, be strictly limited to actual payroll costs including actual labor burden, and excluding any element for overhead or profit. Items covered by or included within the labor burden shall not be separately or otherwise included in Costs of the Work or billed to Owner.

 

3.2.2 Contractor’s Site Craft Labor. Direct cost of amounts actually paid for Contractor’s craft labor, including actual labor burden and any Chinese New Year bonus paid to such workers. Contractor shall submit daily rates for regular time and hourly rates for premium time hours for Owner’s review and approval, which approval shall not be unreasonably withheld or delayed. In no event shall such rates exceed the lesser of (a) those daily or hourly rates, as applicable, specified in collective bargaining agreements applicable to such labor, including stated increases, or (b) the amount actually paid by Contractor for such craft labor, unless approved in writing in advance by Owner.

 

3.2.3 Subcontractor and Vendor Costs. Direct cost of amounts actually paid or payable during the applicable billing period by Contractor to its Subcontractors and Vendors for Work performed pursuant to subcontracts and purchase orders (including any

 

24

change orders or other modifications thereto) which have been reviewed and approved in advance and in writing by Owner (except to the extent Owner’s prior written consent is not required pursuant to Section 9.3 of this Agreement).

 

3.2.4 Materials and Equipment Incorporated in the Work. Direct cost of amounts actually paid or to be paid during the applicable billing period by Contractor and approved by Owner for all materials and equipment incorporated or to be incorporated into the Work by Contractor, including the actual direct costs of transportation, insurance and temporary storage (including any materials stored off-Site so long as the requirements of Section 5.13 of this Agreement are fulfilled to Owner’s satisfaction). Contractor shall promptly disclose to Owner all relevant details regarding any such materials, equipment and other items if any of the foregoing is being provided for purchase by Contractor or any company which is a subsidiary or otherwise affiliated with Contractor or its parent company. Said costs shall be invoiced at actual prices, net of any available trade and quantity discounts. Contractor shall use reasonable efforts to achieve the lowest cost or price available and consistent with the Contract Documents. Any salvage value received by Contractor for any excess items, materials or equipment paid for by Owner, to be determined prior to the Original Project Final Payment or the Expansion Project Final Payment (as applicable) upon Original Project Final Completion or Expansion Project Final Completion (as applicable), shall reduce the Cost of the Work and be a credit to Owner.

 

3.2.5 Materials and Equipment Consumed at the Site. Direct cost of amounts actually paid or to be paid during the applicable billing period by Contractor for all materials, equipment, supplies and small tools which are provided by Contractor, its Subcontractors or Vendors at the Site and fully consumed at the Site during performance of the Work, including, but not limited to, the actual direct costs of transportation and related insurance costs and temporary storage on-Site or pursuant to Section 5.13 hereof. Contractor shall promptly disclose to Owner all relevant details regarding any such materials, equipment and other items if any of the foregoing is being provided for purchase by Contractor or any company which is a subsidiary or otherwise affiliated with Contractor or its parent company. Said costs shall be at lowest rates reasonably available and consistent with the Contract Documents and shall be invoiced at actual prices, net of any available trade and quantity discounts. Contractor shall use reasonable efforts to achieve the lowest cost or price available and consistent with the Contract Documents. Any salvage value received by the Contractor for any excess items paid for by Owner, to be determined prior to the Original Project Final Payment or the Expansion Project Final Payment (as applicable) upon Original Project Final Completion or Expansion Project Final Completion (as applicable), shall reduce the Cost of the Work and be a credit to Owner.

 

3.2.6 Rental Equipment. Direct cost of amounts actually paid or to be paid during the applicable billing period by Contractor for rental charges for all necessary construction machinery and equipment utilized at the Site (exclusive of small tools), including, but not limited to, the direct costs of transportation, delivery, installation, dismantling, removal, maintenance, and insurance. Contractor shall use reasonable efforts

 

25

to achieve the lowest cost or price available and which is consistent with the Contract Documents. Contractor shall promptly disclose to Owner all relevant details regarding any such construction machinery or equipment that is being provided, either for purchase or rental, by Contractor or any company which is a subsidiary or otherwise affiliated with Contractor or its parent company. The rental rates for any machinery and equipment owned by Contractor or an affiliated entity shall be agreed upon by Owner and Contractor in advance; provided that the aggregate amount of rental costs charged for any individual piece of Contractor or affiliate-owned machinery or equipment shall not exceed 75% of its actual acquisition cost. The preliminary list of machinery and equipment to be rented or purchased by the Contractor for use in the Work is set out on Exhibit D attached hereto.

 

3.2.7 Site Office Costs. Direct cost of amounts actually paid or to be paid during the applicable billing period by Contractor for Site office facilities and Site office general expenses, telephone services, long distance telephone calls, photocopying, postage, reasonable and customary petty cash expenses not to exceed US$250 monthly, facsimile transmissions, office supplies, standard printing required by the Contract Documents, express and air courier mail delivery services, Site office equipment such as computers, telephones, copiers, facsimile machines, typewriters and similar items used in connection with the Work. Contractor shall use reasonable efforts to achieve the lowest cost or price available and consistent with the Contract Documents, provided, however, such costs shall be expressly limited to such of the foregoing items as are not otherwise made available or provided by Owner to Contractor at the Site to the Contractor’s reasonable satisfaction. Contractor shall promptly advise Owner of any such Site office equipment which is charged to the Work and provide Owner with all purchase and rental agreements pertaining thereto for Owner’s approval. Contractor shall promptly disclose to Owner all relevant details if any such Site office equipment is being provided, either for purchase or rental, by Contractor or any company which is a subsidiary or otherwise affiliated with the Contractor or its parent company. Any salvage value received by Contractor for any excess items paid for by Owner, to be determined prior to the Original Project Final Payment or the Expansion Project Final Payment (as applicable) upon Original Project Final Completion or Expansion Project Final Completion (as applicable), shall reduce the Cost of the Work and be a credit to Owner.

 

3.2.8 Reimbursable Taxes. Direct cost of amounts properly and actually paid by Contractor for Reimbursable Taxes arising from or payable in connection with the execution of the Work.

 

3.2.9 Bond Premiums. Direct cost of amounts actually paid or to be paid during the applicable billing period by Contractor for premiums solely attributable to the Work for Contractor’s On-Demand Bonds to the extent required by Owner, and direct cost of amounts paid or to be paid during the applicable billing period for Subcontractor bond premiums.

 

26

3.2.10 Course of Constructions Repairs. Actual and reasonable costs incurred and paid by Contractor in repairing minor damage to trade Work caused as a normal by-product during the course of construction and not otherwise a Non-Allowable Cost of the Work.

 

3.2.11 Royalties. Royalties and license fees necessarily and reasonably paid or to be paid during the applicable billing period by Contractor for an express design, process or product required by the Contract Documents in accordance with Section 7.20 hereof.

 

3.2.12 Cost of Hedging Exchange Rate. Reasonable costs incurred and paid by Contractor in connection with hedging the exchange rate risk under this Contract, provided that such costs shall not exceed, in the aggregate, Fifty Thousand United States Dollars (US$50,000).

 

3.2.13 Miscellaneous Costs. Miscellaneous costs are chargeable as a Cost of the Work only as follows:

 

3.2.13.1 Direct costs actually incurred or paid by Contractor for clean-up and removal of debris;

 

3.2.13.2 Direct costs actually incurred or paid to respond to an emergency affecting the safety of persons and property, and not otherwise a Non-Allowable Cost of the Work;

 

3.2.13.3 Direct costs actually incurred or paid by Contractor and approved by Owner for Site security services for protection of the Work;

 

3.2.13.4 Direct costs actually incurred or paid by Contractor for blueprinting of Drawings as required by the Contract Documents and required postage, express mail and long distance costs in the performance of the Work;

 

3.2.13.5 Direct costs actually incurred or paid for building permit fees, including plan check fees, licenses and other authorizations which are required by governmental authorities to be taken out in Owner’s or Contractor’s name for construction and completion of the Work, including, but not limited to, temporary and final certificates of occupancy, and licenses (such as the kitchen license) required by governmental authorities strictly for the operation of the completed Project;

 

3.2.13.6 Direct costs actually and reasonably incurred and paid or to be paid during the applicable billing period by Contractor’s Personnel and required for travel or while traveling in the performance of the Work, all in accordance with travel policies agreed upon in advance by Owner and Contractor;

 

27

3.2.13.7 Losses and expenses from property damage not compensated by insurance and incurred by Contractor directly relating to the performance of the Work and not relating to or arising from the failure of Contractor to comply with the Contract Documents or otherwise a Non-Allowable Cost of the Work;

 

3.2.13.8 The costs of insurance required to be carried by Contractor and Subcontractors relating to the Work pursuant to Section 15.1.1 hereof;

 

3.2.13.9 Direct costs actually incurred or paid by the Contractor for the purpose of correcting minor defects in the Work, subject to the provisions of Section 3.3.6 , prior to or during the Original Project Defects Liability Period or the Expansion Project Defects Liability Period (as applicable) and not otherwise a Non-Allowable Cost of the Work and provided that any such costs shall only be payable to Contractor from amounts available in the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable), if any;

 

3.2.13.10 The cost of an insurance policy obtained by Contractor in its name (but naming Owner as an additional insured) relating to the Project and providing coverage for the difference between Contractor’s normal and customary insurance coverage and the insurance required to be maintained by Owner pursuant to Section 15.1 of this Agreement; provided, however, that any portion of the cost of such policy in excess of Two Hundred Thousand United States Dollars (US$200,000) shall only be payable to Contractor from amounts available in the Original Project Construction Contingency or the Expansion Project Construction Contingency (as applicable), if any;

 

3.2.13.11 Other actual direct costs specifically stated in this Agreement as being payable to Contractor as a Cost of the Work; and

 

3.2.13.12 Other actual direct costs incurred in the performance of the Work, but limited solely to those costs which are approved in writing by Owner in advance.

 

3.3 Non-Allowable Cost of the Work. “ Non-Allowable Cost of the Work ” means the direct and/or indirect costs described in this Section 3.3 and all similar costs and all other costs not included within the Cost of the Work, which are paid or incurred by Contractor during or in connection with the performance of the Work. All such Non-Allowable Costs of the Work are included in the Original Project Contractor’s Fee and the Expansion Project Contractor’s Fee set forth in Sections 3.1.2 and 3.1.3 above, regardless of whether they exceed the amount of the Original Project Contractor’s Fee or the Expansion Project Contractor’s Fee (as applicable). Notwithstanding any provision of this Contract to the contrary, (a) an item of cost which would otherwise be included in the Cost of the Work shall be deemed a Non-Allowable Cost of the Work if any of the provisions of Sections 3.3.1 through 3.3.26 below shall apply to such item of cost, and (b) Contractor shall not be entitled to receive any additional reimbursement for Non-Allowable Costs of the Work, including, but not limited to, any of the types of cost items described as follows:

 

3.3.1 The cost of any item not specifically and expressly included as a Cost of the Work in Section 3.2 above;

 

28

3.3.2 Costs in excess of the Original Project Guaranteed Maximum Price or the Expansion Project Guaranteed Maximum Price (as applicable);

 

3.3.3 Salaries and all other compensation of the Contractor’s personnel and representatives performing any function at any location other than at the Site, except for those Personnel individually named as approved in Exhibit C attached hereto, and to the extent described therein;

 

3.3.4 All direct and indirect operating, maintenance and overhead costs of any nature whatsoever arising out of or in any way relating to any of the Contractor’s principal or branch offices, including, but not limited to: office space; furniture and equipment which is dedicated to or reserved for use for the Work; leasing and rental costs; maintenance; local telephone; utilities; depreciation; security; office supplies; property taxes; the development of engineering and construction manuals, standards or computer programs; personnel training of any kind; and janitorial services; excepting only those actual and direct costs incurred and permitted to the extent described in Sections 3.2.7 and 3.2.13 above;

 

3.3.5 Any expenses relating to Contractor’s operating capital, including interest on the Contractor’s capital employed in support of the Work (provided, however, as to interest, only so long as Owner timely pays amounts properly due and owing to Contractor in accordance with and subject to the Contract Documents);

 

3.3.6 All direct and indirect costs arising out of the fault or negligence of, or failure to comply with the terms of the Contract Documents or any subcontracts by, the Contractor, any Subcontractor or Vendor, Architect/Engineer, or anyone directly or indirectly employed by any of them, or for whose acts or omissions any of them are responsible or liable at law or under the Contract Documents;

 

3.3.7 Except to the extent provided in Section 7.2 , all direct and indirect costs arising out of the failure of any portion of the Work to comply with applicable Laws; all direct and indirect costs of any nature relating to work arising during the Original Project Defects Liability Period or the Expansion Project Defects Liability Period defined in Section 10.2 of this Agreement, for correction, removal, replacement or disposal of any non-conforming Work, materials or equipment to the extent defined in Article 10 of this Agreement

 

3.3.8 All costs incurred by Contractor for bonuses (other than the Chinese New Year bonus, as applicable), stock options, profits sharing arrangements and similar incentive programs;

 

29

3.3.9 All direct and indirect costs of any nature resulting from or attributable to either delays, disruptions or interferences, excepting only for those costs which are expressly identified and permitted in accordance with Article 11 of this Agreement;

 

3.3.10 All direct and indirect costs of any nature resulting from or attributable to terminations, cancellations for convenience or suspensions, excepting only for those costs which are expressly identified and permitted in accordance with Article 17 of this Agreement;

 

3.3.11 Rental costs of Contractor or affiliate owned machinery and equipment, except as specifically provided in Section 3.2.6 of this Agreement;

 

3.3.12 All costs and fees relating to business and/or operating permits, licenses and taxes, required by any governmental authorities (except as provided in Sections 3.2.8 and 3.2.13.5 , and other than work visas and/or work permits, which shall be included in the Cost of the Work) or by labor agreements to enable the Contractor, its Subcontractors or Vendors of any tier to be qualified to do business and/or perform trade activities and/or any Work pursuant to the Contract Documents;

 

3.3.13 Costs incurred by Contractor in satisfying its indemnification obligations pursuant to Article 14 of this Agreement or any other Contractor indemnification provision of the Contract Documents;

 

3.3.14 Payments on account of materials, supplies, and equipment until delivered and suitably stored at the Site for subsequent incorporation or consumption in the Work, except as specifically provided in Sections 3.2.4 , 5.11 and  5.13 of this Agreement or as otherwise approved by Owner on a case-by-case basis (if, however, in Owner’s reasonable opinion, such warehousing and storage costs are due to Contractor caused delays and/or poor sequencing of the Work by Contractor, these costs shall not be considered a Cost of the Work and will be at Contractor’s sole cost and expense);

 

3.3.15 Payments made to Subcontractors or Vendors in violation of the provisions of this Agreement;

 

3.3.16 Legal costs incurred by Contractor relating to the preparation, response to or defense of any Claim, or of any claims by third parties for copyright or patent infringement, for which Contractor or any Subcontractor or Vendor are liable or responsible at law or under the Contract Documents;

 

3.3.17 Any cost incurred by Contractor relating to a Change in the Work without a Change Order or Construction Change Directive (other than a Minor Change or unless approved otherwise in writing by Owner and Owner’s Lenders);

 

30

3.3.18 Costs reimbursed by insurance to Contractor or any Subcontractor or Vendor;

 

3.3.19 The costs of any insurance premiums for insurance coverage, and the amounts of any insurance deductibles, beyond that required or permitted, respectively, by Section 15.1 hereof, except to the extent provided in Section 3.2.13.10 hereof or as otherwise provided for in this Agreement;

 

3.3.20 Costs that Owner has already paid;

 

3.3.21 All direct and indirect costs of any nature relating to work arising during the Original Project Defects Liability Period or the Expansion Project Defects Liability Period defined in Section 10.2 of this Agreement, for correction, removal, replacement or disposal of any non-conforming Work, materials or equipment, except to the extent provided in Section 3.2.13.9 hereof;

 

3.3.22 Costs incurred for the purpose of correcting any defects in the Work after the Original Project Defects Liability Period and the Expansion Project Defects Liability Period;

 

3.3.23 Costs of repairing defective or non-conforming Work or Work damaged by Contractor, any Subcontractor or Vendor, anyone directly or indirectly employed by any of them, or for those acts or omissions any of them are responsible or liable at law or under the Contract Documents, except to the extent provided in Section 3.2.10 hereof;

 

3.3.24 Costs that are incurred or are submitted to Owner for payment after Original Project Final Payment or Expansion Project Final Payment (as applicable) has been made, except for the specific dollar amounts of any unresolved claims specifically identified in its Application for Original Project Final Payment or Expansion Project Final Payment (as applicable);

 

3.3.25 Any cost specifically stated in this Agreement as not reimbursable to the Contractor or not includable in the Cost of the Work; and

 

3.3.26 All other direct, indirect and/or overhead costs of any nature whatsoever, except as otherwise expressly provided to the contrary in the Contract Documents.

 

3.4 Contractor’s Responsibility For Taxes. Other than as provided in Section 3.2.8 , Exhibit N or elsewhere in this Agreement, it is expressly understood that no Taxes of any nature whatsoever are considered a Cost of the Work and that Contractor will not be separately reimbursed for any Taxes. Contractor shall be responsible for and shall timely pay, all Taxes relating to or arising out of the performance of the Work or Contractor’s obligations under the Contract.

 

31

3.5 Discounts, Rebates and Refunds. All cash discounts (so long as Owner has made payment to Contractor to the extent advance or timely payment is necessary to obtain such cash discount), trade discounts, rebates and refunds obtained by Contractor during the course of the Work shall be credited to the Original Project Construction Contingency or the Expansion Project Construction Contingency based on whether such trade discount, rebate or refund arises out of the Original Project Work or the Expansion Project Work, and allocated in accordance with Section 3.2 . Contractor shall take all necessary steps to obtain, secure and pass on such credits to Owner and all such discounts, rebates and refunds shall be fully reflected in Contractor’s monthly Applications for Progress Payment submitted pursuant to Article 5 of this Agreement. Title to all materials, tools, and equipment paid for by Owner shall be vested in Owner. At the completion of the Work and when no longer required, such tools, equipment and materials as remain and have been or shall be paid for by the Owner shall belong to Owner and be, as Owner may direct (a) sold at the direction of Owner and all sums and allowances realized and received by Contractor shall be credited against the Cost of the Work for all purposes under this Agreement or (b) delivered to Owner, all as Owner shall direct.

 

3.6 No Duplication. Notwithstanding the breakdown or categorization of any costs in this Article 3 or elsewhere in the Contract Documents, there shall be no duplication of payment in the event any particular items for which payment is requested can be characterized as falling into more than one of the types of compensable or reimbursable categories.

 

ARTICLE IV.

CONTRACT TIME AND INTERIM MILESTONE DATES

 

4.1 Definitions.

 

4.1.1 The term “ day ” means any calendar day including public holidays.

 

4.1.2 The term “ Notice to Proceed ” means the written notice from Owner to Contractor providing Contractor with a “Date of Commencement” for the Work, which Date of Commencement shall not be earlier than thirty (30) days after the date on which the Notice to Proceed is delivered to Contractor. At Owner’s option, the Notice to Proceed may specify a Date of Commencement with respect to only a specific portion or aspect of the Work or may specify varying Dates of Commencement for different portions or aspects of the Work. Contractor will not commence or perform any Work or portion thereof, or enter upon the Site except with the prior written consent of Owner, prior to the Date of Commencement for such Work in Owner’s Notice to Proceed.

 

4.1.3 The Contractor and the Owner hereby agree (i) that the Notice to Proceed given by the Owner to the Contractor with respect to the Original Project Work was properly provided in accordance with the terms and conditions of this Agreement on June 11, 2004 and (ii) with respect to the Expansion Project, July 15, 2005 shall be the Expansion

 

32

Project Date of Commencement, and no Notice to Proceed with respect to the Expansion Project Work is required.

 

4.1.4 The term “ Original Project Interim Milestone Dates ” means either the fixed dates, or the fixed number of calendar days, available to Contractor to achieve the key schedule “ Original Project Interim Milestones ” identified in Attachment 2 to Exhibit B (as it may be updated or revised from time to time in accordance with Section 11.2, the “ Original Project Schedule ”). The term “ Expansion Project Interim Milestone Dates ” means either the fixed dates, or the fixed number of calendar days, available to Contractor to achieve the key schedule “ Expansion Project Interim Milestones ” identified in Attachment 5 to Exhibit B (as it may be updated or revised from time to time in accordance with Section 11.2, the “ Expansion Project Schedule ”).

 

4.1.5 The term “ Contract Time ” means (a) with respect to Original Project Substantial Completion, the period of time between the Original Project Date of Commencement and Guaranteed Date of Original Project Substantial Completion, (b) with respect to Original Project Final Completion, the period of time between the Guaranteed Date of Original Project Substantial Completion and the Guaranteed Date of Original Project Final Completion, (c) with respect to Expansion Project Substantial Completion, the period of time between the Expansion Project Date of Commencement and Guaranteed Date of Expansion Project Substantial Completion and (d) with respect to Expansion Project Final Completion, the period of time between the Guaranteed Date of Expansion Project Substantial Completion and the Guaranteed Date of Expansion Project Final Completion.

 

4.1.6 The term “ Guaranteed Date of Original Project Final Completion ” means the date which is sixty (60) calendar days after the date of Original Project Substantial Completion or such longer period as is permitted pursuant to Section 12.2 .

 

4.1.7 The term “ Guaranteed Date of Original Project Substantial Completion ” means the date which is seven hundred ninety-one (791) calendar days from and after the Original Project Date of Commencement.

 

4.1.8 The term “ Guaranteed Date of Expansion Project Final Completion ” means the date which is sixty (60) calendar days after the date of Expansion Project Substantial Completion or such longer period as is permitted pursuant to Section 12.2 .

 

4.1.9 The term “ Guaranteed Date of Expansion Project Substantial Completion ” means the date which is seven hundred twenty-six (726) calendar days from and after the Expansion Project Date of Commencement.

 

4.2 Time of the Essence. Contractor hereby accepts and confirms that, subject to the terms of this Agreement, the Contract Time is reasonable for completing the Work and hereby agrees to dedicate such personnel and other resources as are necessary to assure that the Work is continuously managed and performed in a diligent, skilled and workmanlike manner to achieve the Original Project Interim Milestone Dates, the Expansion Project

 

33

Interim Milestone Dates, the Guaranteed Date of Original Project Substantial Completion and the Guaranteed Date of Expansion Project Substantial Completion. Contractor and Owner acknowledge that TIME IS OF THE ESSENCE with respect to their respective obligations under the Contract Documents, and that Owner’s business interests will suffer substantial losses in the event that any Original Project Interim Milestone or Expansion Project Interim Milestone is not achieved by the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date and/or Original Project Substantial Completion or Expansion Project Substantial Completion is not achieved by the Guaranteed Date of Original Project Substantial Completion or Guaranteed Date of Expansion Project Substantial Completion (as applicable) in accordance with and subject to the terms of this Agreement. Notwithstanding the foregoing, the liability of Contractor due solely to the failure to achieve one or more of the Original Project Interim Milestones or the Expansion Project Interim Milestones by the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date shall be limited to (a) the cost of preparing and implementing an acceptable Recovery Plan with respect to the applicable milestone(s) in accordance with Section 11.8 to address such failure, (b) all costs and expenses incurred by Owner in preparing and implementing an Owner Recovery Plan to address such failure as described in and subject to any limitation set forth in Section 11.8.6 (any such amounts described under clauses (a) and (b), collectively, “ Recovery Plan Liabilities ”), and (c) the Original Project Liquidated Damages or the Expansion Project Liquidated Damages (as applicable) provided for under Section  4.4.1.1 with respect to each such milestone. Contractor’s liability with respect to the failure to achieve Original Project Substantial Completion by the Guaranteed Date of Original Project Substantial Completion is covered under Section 4.4 . Contractor’s liability with respect to the failure to achieve Expansion Project Substantial Completion by the Guaranteed Date of Expansion Project Substantial Completion is covered under Section 4.4 . Notwithstanding anything to the contrary contained herein, the aggregate liability of Contractor with respect to Original Project Work for (i) Recovery Plan Liabilities, as provided in this Section 4.2 , and (ii) Original Project Liquidated Damages, as provided in Section 4.4.1 , shall not exceed the sum of Twenty Million United States Dollars (US$20,000,000) and the aggregate liability of Contractor with respect to Expansion Project Work for (i) Recovery Plan Liabilities, as provided in this Section 4.2 , and (ii) Expansion Project Liquidated Damages, as provided in Section 4.4.1 , shall not exceed the sum of Ten Million United States Dollars (US$10,000,000).

 

4.3 Completion Guarantees. Contractor and Owner agree that the Original Project Work commenced on the Original Project Date of Commencement. Subject to changes in the Contract Time which are mutually agreed to in accordance with the Contract Documents, Contractor hereby guarantees to cause the Expansion Project Work to be commenced on the Expansion Project Date of Commencement as provided in Section 4.1.2 hereof, and (a) to timely achieve each of the Original Project Interim Milestones and the Expansion Project Interim Milestones on or before the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date, and (b) to timely achieve Original Project Substantial Completion and Expansion Project Substantial Completion in

 

34

accordance with the requirements of Section 12.1 of this Agreement on or before the Guaranteed Date of Original Project Substantial Completion and the Guaranteed Date of Expansion Project Substantial Completion (as applicable). Contractor shall and hereby agrees to indemnify Owner from and against any and all costs, damages, expenses, losses, liabilities and obligations relating to and/or arising out of Contractor’s failure to achieve either of Original Project Substantial Completion or Expansion Project Substantial Completion by the Guaranteed Date of Original Project Substantial Completion or the Guaranteed Date of Expansion Project Substantial Completion (as applicable), except pursuant to schedule extensions which are set forth in Change Orders in accordance with the Contract Documents.

 

4.4 Liquidated Damages With Respect to Delays.

 

4.4.1 If any Original Project Interim Milestone or Expansion Project Interim Milestone is not achieved by the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date and/or Original Project Substantial Completion or Expansion Project Substantial Completion is not achieved by the Guaranteed Date of Original Project Substantial Completion or the Guaranteed Date of Expansion Project Substantial Completion (as applicable), as such time periods may be adjusted pursuant to the Contract Documents, Contractor acknowledges and agrees that Owner will suffer significant damages. Accordingly, if any Original Project Interim Milestone or Expansion Project Interim Milestone is not achieved by the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date and/or Original Project Substantial Completion or Expansion Project Substantial Completion is not achieved by the Guaranteed Date of Original Project Substantial Completion or the Guaranteed Date of Expansion Project Substantial Completion (as applicable), Contractor shall pay to Owner on demand (or, at Owner’s option Owner may deduct, withhold and/or set off the whole or any portion of the following liquidated damages amounts from or against any amounts then or thereafter payable or due to Contractor from Owner), as liquidated damages for such delay and not as a penalty, the following amounts:

 

4.4.1.1 If any Original Project Interim Milestone is not achieved by the applicable Original Project Interim Milestone Date, the amount identified in Attachment 2 to Exhibit B with respect to such Original Project Interim Milestone per day for each day of delay from and after such Original Project Interim Milestone Date until such Original Project Interim Milestone is achieved;

 

4.4.1.2 If Original Project Substantial Completion is not achieved by the Guaranteed Date of Original Project Substantial Completion, Three Hundred Thousand United States Dollars (US$300,000) per day for each day of delay from and after the Guaranteed Date of Original Project Substantial Completion until Original Project Substantial Completion is achieved;

 

35

4.4.1.3 If any Expansion Project Interim Milestone is not achieved by the applicable Expansion Project Interim Milestone Date, the amount identified in Attachment 5 to Exhibit B with respect to such Expansion Project Interim Milestone per day for each day of delay from and after such Expansion Project Interim Milestone Date until such Expansion Project Interim Milestone is achieved; and

 

4.4.1.4 If Expansion Project Substantial Completion is not achieved by the Guaranteed Date of Expansion Project Substantial Completion, One Hundred Fifty Thousand United States Dollars (US$150,000) per day for each day of delay from and after the Guaranteed Date of Expansion Project Substantial Completion until Expansion Project Substantial Completion is achieved;

 

The liquidated damages payable by Contractor pursuant to this Section 4.4.1 are referred to herein as “ Liquidated Damages ”. The Liquidated Damages payable by Contractor with respect to Original Project Work are referred to herein as “ Original Project Liquidated Damages ”. The Liquidated Damages payable by Contractor with respect to Expansion Project Work are referred to herein as “ Expansion Project Liquidated Damages ”. Notwithstanding anything to the contrary contained herein, the aggregate liability of Contractor with respect to Original Project Work for (i) Recovery Plan Liabilities, as provided in Section 4.2 , and (ii) Original Project Liquidated Damages, as provided in this Section 4.4.1 , shall not exceed the sum of Twenty Million United States Dollars (US$20,000,000) and the aggregate liability of Contractor with respect to Expansion Project Work for (i) Recovery Plan Liabilities, as provided in Section 4.2 , and (ii) Expansion Project Liquidated Damages, as provided in this Section 4.4.1 , shall not exceed the sum of Ten Million United States Dollars (US$10,000,000).

 

4.4.2 Owner and Contractor hereby agree that it would be impractical or impossible to ascertain at the outset of the Project the exact amount of damages in the case of Contractor’s failure to cause any Original Project Interim Milestone or Expansion Project Interim Milestone to be achieved by the applicable Original Project Interim Milestone Date or Expansion Project Interim Milestone Date or Original Project Substantial Completion or Expansion Project Substantial Completion to be achieved by the Guaranteed Date of Original Project Substantial Completion or Guaranteed Date of Expansion Project Substantial Completion (as applicable) and agree to stipulate that Owner’s loss in the case of any such failure will be deemed equal to the amounts set forth herein as liquidated damages for the specific periods set forth in Section 4.4.1 above, which amounts both parties agree represent the parties’ best efforts at the outset in making a genuine pre-estimate of Owner’s actual damages in such event, and which amount shall be the only monies due from the Contractor for such failure and which the parties agree shall be the Owner’s sole remedy for delay in the execution of the Work, except as set forth in Section 4.2 . Other than with respect to Owner’s right to claim damages for delay in the execution of the Work, the imposition or payment of Original Project Liquidated Damages or Expansion Project Liquidated Damages (as applicable) under Section 4.4.1 shall not in any way limit Contractor’s liability for any other act or omission, or for any breach or default of

 

36

Contractor, Subcontractor or any Vendor under any of the Contract Documents, other than for delay in the execution of the Work, or any way limit Owner’s other rights and remedies under this Agreement, including, but not limited to, Owner’s right to terminate Contractor as the contractor with respect to the Work and to retain a different contractor to complete the Work.

 

4.4.3 Notwithstanding the provisions of this Section 4.4 , the foregoing Original Project Liquidated Damages and Expansion Project Liquidated Damages shall not apply to or limit in any way any of Contractor’s obligations and covenants under Section 11.8 hereof, including, but not limited to, Contractor’s obligation to provide and implement any Recovery Plan and/or take all available steps to overcome or mitigate against the adverse effects of all delays identified by Owner; provided, however, that the aggregate liability of Contractor with respect to Original Project Work for (i) Recovery Plan Liabilities, as provided in Section 4.2 , and (ii) Original Project Liquidated Damages, as provided in this Section 4.4.3 , shall not exceed the sum of Twenty Million United States Dollars (US$20,000,000) and the aggregate liability of Contractor with respect to Expansion Project Work for (i) Recovery Plan Liabilities, as provided in Section 4.2 , and (ii) Expansion Project Liquidated Damages, as provided in this Section 4.4.3 , shall not exceed the sum of Ten Million United States Dollars (US$10,000,000).

 

4.5 Early Completion.

 

4.5.1 If Original Project Substantial Completion is achieved by Contractor prior to the Guaranteed Date of Original Project Substantial Completion, as may be adjusted pursuant to the Contract Documents, and Contractor has fully and timely performed all of its obligations under the Contract Documents and is not in default or breach thereunder, Contractor shall be entitled to an early completion bonus payment (in addition to the Original Project Contractor’s Fee), to be paid to Contractor concurrently with the Original Project Final Payment, in the amount of Fifty Thousand United States Dollars (US$50,000) per day for each day, up to but not to exceed a maximum total early completion bonus payment of One Million United States Dollars (US$1,000,000), that the Contractor achieves Original Project Substantial Completion in advance of the Guaranteed Date of Original Project Substantial Completion. The early completion bonus will only be owed to Contractor if (a) Contractor is able to accelerate Original Project Substantial Completion without the use of excessive overtime labor funded as a Cost of the Work or other increase in the Cost of the Work which is incurred or arranged with the intent to achieve Original Project Substantial Completion prior to the Guaranteed Date of Original Project Substantial Completion and (b) the amount of the early completion bonus exceeds the cost of any recovery plan under Section 11.8.

 

4.5.2 If Casino Area 4 is completed by Contractor prior to its applicable Expansion Project Interim Milestone identified in Attachment 5 to Exhibit B, as may be adjusted pursuant to the Contract Documents, and Contractor has fully and timely performed all of its obligations under the Contract Documents and is not in default or breach

 

37

thereunder, Contractor shall be entitled to an early completion bonus payment (in addition to the Expansion Project Contractor’s Fee), to be paid to Contractor concurrently with the Expansion Project Final Payment, in the amount of Twenty-Five Thousand United States Dollars (US$25,000) per day for each day, up to but not to exceed a maximum total early completion bonus payment, when aggregated with the early completion bonus payment under Section 4.5.3, of Five Hundred Thousand United States Dollars (US$500,000), that the Contractor completes Casino Area 4 in advance of its applicable Expansion Project Interim Milestone. The early completion bonus will only be owed to Contractor if (a) Contractor is able to accelerate the completion of Casino Area 4 without the use of excessive overtime labor funded as a Cost of the Work or other increase in the Cost of the Work which is incurred or arranged with the intent to completes Casino Area 4 in advance of its applicable Expansion Project Interim Milestone and (b) the amount of the early completion bonus exceeds the cost of any recovery plan under Section 11.8. The determination of whether Casino Area 4 has been completed for purposes of this Section 4.5.2 shall be made in accordance with the provisions in Section 12.1 governing substantial completion, as if Casino Area 4 is the “Expansion Project” thereunder.

 

4.5.3 If Casino Area 5 is completed by Contractor prior to its applicable Expansion Project Interim Milestone identified in Attachment 5 to Exhibit B, as may be adjusted pursuant to the Contract Documents, and Contractor has fully and timely performed all of its obligations under the Contract Documents and is not in default or breach thereunder, Contractor shall be entitled to an early completion bonus payment (in addition to the Expansion Project Contractor’s Fee), to be paid to Contractor concurrently with the Expansion Project Final Payment, in the amount of Twenty-Five Thousand United States Dollars (US$25,000) per day for each day, up to but not to exceed a maximum total early completion bonus payment, when aggregated with the early completion bonus payment under Section 4.5.2, of Five Hundred Thousand United States Dollars (US$500,000), that the Contractor completes Casino Area 5 in advance of its applicable Expansion Project Interim Milestone. The early completion bonus will only be owed to Contractor if (a) Contractor is able to accelerate the completion of Casino Area 5 without the use of excessive overtime labor funded as a Cost of the Work or other increase in the Cost of the Work which is incurred or arranged with the intent to completes Casino Area 5 in advance of its applicable Expansion Project Interim Milestone and (b) the amount of the early completion bonus exceeds the cost of any recovery plan under Section 11.8. The determination of whether Casino Area 5 has been completed for purposes of this Section 4.5.3 shall be made in accordance with the provisions in Section 12.1 governing substantial completion, as if Casino Area 5 is the “Expansion Project” thereunder.

 

4.6 Guarantees of Completion and Performance.

 

4.6.1 Parent Completion Guarantee. Contractor shall cause Leighton Holdings Limited and China Overseas Holdings Limited (each, a “ Guarantor ”, and jointly and severally, the “ Guarantors ”) to execute and deliver to Owner, on or before the date that is the earlier of (A) thirty days following the execution of this Agreement and (B) the consummation of Owner’s refinancing of

 

38

the Project (currently scheduled to be on or about August 15, 2005), (i) the Guarantee and (ii) a consent to the assignment of the Guarantee by Owner to Owner’s Lenders.

 

ARTICLE V.

PAYMENTS TO CONTRACTOR

 

In consideration of Contractor’s performance of the Work in full compliance with the Contract Documents, Owner shall pay Contractor as follows:

 

5.1 Schedule of Values.

 

5.1.1 Upon execution of this Agreement, Contractor shall submit to Owner and Owner’s Lenders an initial “ Expansion Project Schedule of Values ” for the Expansion Project Work, allocating values among all categories or portions of the Expansion Project Work. the Expansion Project Schedule of Values shall be prepared in such form and supported by data to substantiate its accuracy to the extent as Owner may reasonably require, shall be based upon the latest cost information available to Contractor, and shall be subject to Owner’s approval which approval shall not be unreasonably withheld or delayed. By way of example and not by limitation, the Expansion Project Schedule of Values should include and delineate: (a) each trade subcontract and major component thereof; (b) each significant purchase order and the installation costs for all procured materials and equipment, so that logical and realistic cost breakdowns are established and set forth for all facilities, phases, areas, trade disciplines, utility and electrical systems, FF&E items and major components of each of the foregoing. The Owner accepted Expansion Project Schedule of Values together with the payment terms of subcontracts and purchase orders approved by Owner (as Work is performed pursuant to such subcontracts and purchase orders) shall be used as a basis for the Contractor’s Applications For Progress Payments described in Section 5.2 below. Owner shall have the right to reject all or any portion of the Expansion Project Schedule of Values which Owner determines does not accurately define the Work in reasonable detail, or if the detail provided does not accurately reflect an appropriate cost, allocation or proportion of the Work. At any time and from time to time if it reasonably appears to Owner or Contractor that any aspect of the Expansion Project Schedule of Values is incomplete or inaccurate, and following any Change Order or Construction Change Directive, the Expansion Project Schedule of Values shall be adjusted by Contractor, in each case subject to Owner’s written approval, to reflect accurately the values of the various portions of the Expansion Project Work.

 

5.1.2 The Original Project Schedule of Approved Values was delivered by Contractor to Owner on or about July 27, 2004.

 

39

5.2 Applications For Progress Payments.

 

5.2.1 Format of Applications

 

5.2.1.1 On or before the first (1 ^st ) day of each month, Contractor shall submit to Owner and Owner’s Lenders an initial draft of a Contractor’s Application for Progress Payment for the previous month itemized with respect to Original Project Work and Expansion Project Work.

 

5.2.1.2 On or before the fifth (5 ^th ) day of each month, Contractor shall submit to Owner and Owner’s Lenders fully completed Applications For Progress Payment for Original Project Work and Expansion Project Work for the previous month in a format reasonably satisfactory to Owner and supported by such documentation to verify entitlement as Owner and Owner’s Lenders may reasonably require, and certified by Contractor as correct. Each Application for Progress Payment, identified as a Original Project Work application or a Expansion Project Work application, shall be separately and sequentially numbered by Original Project Work or Expansion Project Work, and shall clearly identify, itemize and attribute all Costs of the Work in a manner which facilitates review by Owner. Such Applications for Progress Payment may only request payment for Cost of the Work actually incurred prior to the date of such Application for Progress Payment and that the Contractor has paid or intends to pay to a Subcontractor or Vendor promptly after receipt by the Contractor of the corresponding payment from the Owner, and may not include requests for payment of amounts Contractor does not intend to pay promptly to a Subcontractor or Vendor because of a dispute or other reason. Contractor shall not submit more than one Application for Progress Payment per Original Project Work or Expansion Project Work per month, unless otherwise requested by Owner. In addition, each Application for Progress Payment shall separately identify and itemize the following:

 

(a) Work performed during such preceding calendar month, together with a statement indicating what portion of such Work relates to the Hotel or the Casino, respectively.

 

(b) Amounts due for Contractor’s initial scope of Work satisfactorily completed during the preceding month as measured by the Contractor’s direct and actual costs incurred in accordance with the Cost of the Work described in Section 3.2 of this Agreement, a list of all bills for supplies, materials, equipment, and fixtures incorporated or to be incorporated in the Work (in detail reasonably sufficient to allow Owner to determine where each item is incorporated or to be incorporated) and labor performed (in detail reasonably sufficient to allow Owner to determine where and on what portion of the Work the labor was performed, including, but not limited to, labor payrolls with names, dates, hours and rates) in connection with the Work, together with copies of the actual bills payable to Subcontractors and Vendors under lump sum agreements or otherwise as they relate to such Application for Payment.

 

(c) For each category and portion of the Work as shown on the Original Project Schedule of Approved Values or Expansion Project

 

40

Schedule of Values (as applicable): (1) the amount requested on all previous Applications for Progress Payment, (2) the amount requested on the current Application for Progress Payment, and (3) the amount allocated to the Work yet to be completed.

 

(d) The percentage completion of each portion of the Work as of the end of the period covered by the Application for Progress Payment, shown as the percentage obtained by dividing (a) the expense which has actually been incurred by Contractor on account of that portion of the Work for which Contractor has made or intends to make actual payment prior to the next Application for Progress Payment, by (b) the amount allocated to that portion of the Work in the Original Project Schedule of Approved Values or Expansion Project Schedule of Values (as applicable).

 

(e) Amounts due which are attributable to the Original Project Contractor’s Fee or Expansion Project Contractor’s Fee (as applicable) earned as a result of the completion of Contractor’s scope of Work during such period covered by and included in the Application for Progress Payment and approved by Owner. Under no circumstances shall Contractor include in any Application for Progress Payment, nor shall Owner be required to pay, an Application for Progress Payment for funds to pay an amount in excess of the then applicable pro rata portion of the Original Project Contractor’s Fee or Expansion Project Contractor’s Fee (as applicable), using the ratio that the portion of the Work then completed bears to the total Work (as determined by the total Costs of the Work disbursed to date for the Original Project Work or Expansion Project Work (as applicable) compared to the total approved Costs of the Work amount on the Original Project Schedule of Approved Values or Expansion Project Schedule of Values (as applicable)).

 

(f) For all amounts due as the result of Change Orders and Construction Change Directives, the Contractor shall make submittals for each Change Order and Construction Change Directive.

 

(g) Reflect Retention in the amount provided for pursuant to Section 5.6 of this Agreement.

 

(h) Such additional information and documentation regarding the progress of the Work as Owner or Owner’s Lenders may reasonably require.

 

5.2.2 Substantiation of Costs. Contractor shall support its Applications for Progress Payment with relevant documentary evidence for cost verification purposes as Owner and Owner’s Lenders may reasonably require. This obligation shall include providing Owner with such supporting documentation as necessary to enable Owner to verify Costs of the Work submitted pursuant to Section 3.2 of this Agreement, including any

 

41

Costs of the Work attributable to Change Orders or Construction Change Directives. To the extent requested by Owner, this shall include providing audit access to Contractor’s books and records to the extent described in Article 19 of this Agreement. All blanks and columns in the Application for Progress Payment must be completed. With respect to all costs associated with deposits, advance payments or materials stored off-Site, Contractor must comply with the provisions of Sections 5.11 and 5.13 of this Agreement.

 

5.2.3 Additional Costs For Change Orders and Claims. Except for Construction Change Directives or pursuant to an Owner signed Change Order, Owner shall not have any obligation to pay any amounts to Contractor or any Subcontractor or Vendor for work outside the scope of Contractor’s Work.

 

5.2.4 Lien Waivers. Each Application for Progress Payment shall include signed (along with company seal or chop, at Contractor’s option) Waiver and Release of Lien Upon Progress Payment in the form attached hereto as Exhibit H from Contractor with regard to Work that is covered on the Application for Progress Payment. Owner’s receipt of such executed waiver shall be a condition precedent to Owner’s obligation to pay any amounts pertaining thereto. In addition, Owner may at any time direct Contractor to submit a certificate that all payrolls, invoices for material and equipment, and other indebtedness connected with the Work and associated with an Application For Progress Payment have been paid.

 

5.2.5 Contractor Statements. Each Application for Progress Payment (and for Original Project Final Payment and Expansion Project Final Payment) shall include a “ Contractor’s Certificate ,” in form and substance identical to Exhibit I attached to this Agreement, signed by Contractor. Further, unless otherwise stated by Contractor in the Contractor’s Certificate and accepted by Owner, the issuance of an Application for Payment by Contractor will constitute a representation by Contractor to Owner that (a) the Work has progressed in accordance with the Original Project Schedule or Expansion Project Schedule (as applicable), (b) the quality of the Work performed up to the date of such Application for Payment is in compliance with the requirements set forth in the Contract Documents, (c) Contractor is not in breach of any of the provisions of the Contract Documents, and (d) Contractor is entitled to payment in the amount certified. The payment by Owner of any amount requested in an Application for Progress Payment shall not be deemed to represent in any way that (i) Owner has inspected the quality or quantity of the Work, (ii) Owner has reviewed the construction means, methods, techniques, sequences or procedures used by Contractor, or (iii) Owner has made any examination to ascertain how Contractor has used the progress payments previously made to it.

 

5.3 Time of Payments. Subject to the terms of the Contract Documents, Owner shall make to Contractor progress payments properly due and undisputed based on an approved Application for Progress Payment within twenty-five (25) calendar days after receipt of such fully completed Applications for Progress Payment which are submitted along with all requirements under Section 5.2 above, and substantiated in accordance with

 

42

Section 5.2.2 above, and otherwise reasonably satisfactory to and approved by Owner and Owner’s Lenders, less any amounts that may be retained or withheld pursuant to the Contract Documents. Contractor recognizes that (i) any payment to it by the Owner is conditional upon the approval by Owner’s Lenders of the related Application for Progress Payment, and that (ii) Owner’s Lenders are entitled to request that the Contractor deliver further documents or substantiation of costs before approving any Application for Progress Payment. Owner shall promptly inform Contractor if Owner becomes aware that any of Owner’s Lenders will not be funding all or any portion of a particular Application for Progress Payment, notwithstanding that Owner shall have approved such Application for Progress Payment.

 

5.4 Owner’s Right To Withhold. Notwithstanding anything to the contrary herein, and in addition to Retention, Owner may, upon written notice to Contractor, together with a written explanation of all such withholding and the calculation of the amounts withheld, withhold from any payments otherwise due to the Contractor (including Final Payment), up to one hundred percent (100%) of the amount which, in Owner’s reasonable opinion, is necessary to protect Owner against or compensate Owner for any and all damages, costs, lawsuits claims, overpayments, expenses and losses, including, but not limited to, for the cure of any breach, default or failure to perform, or to assure the payment of claims of third persons, in each case attributable to any of the items or circumstances listed below in this Section 5.4 (such items or circumstances, the “ Bases for Withholding ”). Owner, at its option, may apply such sums in such manner as Owner may in good faith deem necessary or proper to secure protection from or to satisfy such claims, and Owner shall not be deemed in default by reason of withholding payment under this Agreement in good faith. Contractor shall not be entitled to receive payment with respect to any portion of an Application for Progress Payment that is inaccurate or incomplete or that contains any misrepresentation. If Owner becomes aware of any problems developing with respect to the Contractor or the Work which could form the basis for withholding, Owner shall notify Contractor thereof (provided, however, that any failure by Owner to so notify Contractor shall in no way limit Owner’s right to withhold funds as provided in this Section 5.4 ). The rights and remedies of Owner under this Section 5.4 shall be non-exclusive and shall be in addition to all other remedies available to Owner under this Agreement or at law, in equity or otherwise. The Bases for Withholding shall be limited to the following:

 

5.4.1 The overall percentage of Original Project Work or Expansion Project Work (as applicable) satisfactorily completed by Contractor and each relevant Subcontractor and/or Vendor (determined by comparing the amount of Original Project Work or Expansion Project Work (as applicable) satisfactorily completed to the total amount of Original Project Work or Expansion Project Work (as applicable) to be completed), is less than the overall percentage of payments determined by comparing (i) the sum of (a) all amounts previously paid by Owner with respect to the Original Project Work or Expansion Project Work (as applicable); and (b) the pending invoice to be paid, to (ii) the total amount of the Cost of Work for the Original Project Work or Expansion Project Work (as applicable) within the Original Project Guaranteed Maximum Price or Expansion Project

 

43

Guaranteed Maximum Price (as applicable); provided, however, that Owner shall not be entitled to withhold on such basis to the extent that Contractor is otherwise entitled to receive the applicable payment from amounts available in the Original Project Construction Contingency or Expansion Project Construction Contingency (as applicable).

 

5.4.2 Contractor’s failure to perform any Original Project Work or Expansion Project Work (as applicable) and its other obligations hereunder in accordance with the Contract Documents, including, but not limited to, failing to comply with any applicable Laws, failure to submit or carry out Recovery Plans in accordance with Section 11.8 of this Agreement, and/or failure to maintain insurance in compliance with the requirements of this Agreement; provided, however, that Owner shall not be entitled to withhold on such basis to the extent that Contractor is otherwise entitled to receive the applicable payment from amounts available in the Original Project Construction Contingency or Expansion Project Construction Contingency (as applicable).

 

5.4.3 Defective Work not remedied in a timely manner after receipt of notice from Owner during the course of the Work, during the Original Project Defects Liability Period or during the Expansion Project Defects Liability Period (as applicable). If any Work inspected by Owner is not to Owner’s reasonable satisfaction in accordance with the Contract Documents, a condition of any additional payments to Contractor shall be the correction of any such unsatisfactory Work to Owner’s reasonable satisfaction in accordance with the Contract Documents.

 

5.4.4 Failure by Contractor to make timely or properly due payments to Subcontractors or Vendors in the amounts for which Contractor has received payments from Owner.

 

5.4.5 Contractor’s failure to submit lien waivers as required pursuant to Section 5.2.4 above.

 

5.4.6 The exercising by Contractor or any Subcontractor or Vendor of mechanic’s lien rights or other claims relating to the Work against Owner, the premises of Owner, the Project and/or the Site, or the making of any claim against the same by any other party arising out of or relating to the Work or acts or omissions of Contractor, any Subcontractor or any other person for whose acts Contractor is responsible or liable at law or under the Contract Documents, except for those lien rights exercised as a result of Owner’s failure to make payment when due to Contractor under the Contract.

 

5.4.7 Contractor’s failure to expeditiously remove or release mechanic’s or similar liens made against the premises of Owner and/or the Site, except for those liens made as a result of Owner’s failure to make payment when due to Contractor under the Contract.

 

44

5.4.8 Any failure by the Contractor to provide timely access to the Contractor’s books and records for audit purposes to the extent described in Article 19 of this Agreement.

 

5.4.9 Any failure by Contractor to provide the Schedule Updates as required by Article 11 of this Agreement.

 

5.4.10 Any failure by Contractor to satisfy any of its obligations under this Agreement to provide certificates or other information requested by Owner’s Lenders.

 

5.4.11 Any failure by Contractor to satisfy its obligations under Section 3.1.5 of this Agreement.

 

5.4.12 Regarding any particular portion of the Original Project Work or Expansion Project Work (as applicable) as shown on the Original Project Schedule of Approved Values or Expansion Project Schedule of Values, respectively, any amount requested is attributable to a portion of the Work not actually completed; provided, however, that Owner shall not be entitled to withhold on such basis to the extent that the applicable payment to be made to Contractor is in respect of a deposit or advance payment to be made by Contractor to a Subcontractor or Vendor and Contractor is otherwise entitled to receive such payment in accordance with the terms of this Agreement.

 

5.4.13 Owner’s or Owner’s Lenders’ good faith belief based on reasonable evidence that any Work will not be completed within the applicable Contract Time, provided that Contractor has been notified of such belief and fails to provide within seven (7) days either satisfactory evidence to the contrary or an acceptable Recovery Plan pursuant to Section 11.8 .

 

5.4.14 Damage to property or Work or injury to persons attributable to the acts or omissions of Contractor, any Subcontractor or any person for whose acts or omissions Contractor is responsible or liable at law or under the Contract Documents.

 

5.4.15 Deviations from the Contract Documents other than those approved or permitted in accordance with the Agreement without an applicable Change Order or Construction Change Directive.

 

5.4.16 Any material breach or default or failure to perform by Contractor under the Contract Documents, including, but not limited to, failure to maintain any required insurance, or any material inaccuracy in any of Contractor’s representations or warranties.

 

5.4.17 A determination by Owner to nullify in whole or in part a prior approval of an Application for Progress Payment and/or prior payment made, because of subsequently discovered evidence or subsequent observations which otherwise would allow Owner to withhold pursuant to this Section 5.4 or elsewhere in the Contract Documents.

 

45

5.4.18 Contractor’s failure to obtain, comply with and keep valid and in full force, and deliver copies to Owner of, all approvals, permits, certifications, consents and licenses of governmental authorities or other parties having jurisdiction over the Site, the Project or the Work or contractual rights to approve or inspect any of the foregoing which are necessary at the stage of construction and/or otherwise existing and required to be complied with or satisfied when such disbursement to Contractor is to be made to enable Original Project Final Completion or Expansion Project Final Completion on or before the applicable Contract Time.

 

5.4.19 Except as contemplated by the Contract Documents or otherwise approved by Owner, encroachments by any part of the Work being constructed on property located outside the boundaries of the Site.

 

5.4.20 An order or statement shall have been made by or received from any governmental, administrative or regulatory authority or agency stating that the whole or any part of the Work, and/or any proposed change thereto, for which Contractor or any Subcontractor is responsible or which relates to Contractor’s or any Subcontractor’s activities is in violation of any Laws, unless such order or statement has been timely corrected to the satisfaction of both the applicable governmental agency and Owner and evidence of such timely correction shall have been provided to Owner in form and substance satisfactory to Owner.

 

5.4.21 Contractor’s failure to comply with the requirements of Section 5.13 of this Agreement relating to off-Site materials.

 

5.5 Joint Payee Checks. Owner shall have the right at any time and from time to time upon notice to Contractor, to issue one or more checks for portions of a progress payment, Original Project Final Payment or Expansion Project Final Payment which are payable jointly to Contractor and its Subcontractors or Vendors of any tier or the parties owed. This right includes, but is not limited to, issuing jointly payable checks in circumstances where a dispute exists between Owner and Contractor with respect to the value of any partially or fully completed Work, including disputed Change Proposal Requests and Claims, and circumstances where Contractor has failed to provide lien waiver documents as required herein. Any such checks shall be forwarded to Contractor for further handling. Without limiting the generality of the foregoing, if Contractor fails, neglects, or refuses to pay for labor or services performed or materials or equipment supplied in connection with the Work for which Contractor has been paid by Owner, Owner shall have the right (but not the obligation), after giving Contractor written notice thereof, and provided that Contractor fails within fifteen (15) days after such notice to cure such situation or to put forward satisfactory reasons to justify such non-payment, to make payments directly for any and all such labor, materials, or equipment and to deduct the amount of such payment from any payments otherwise due to Contractor and from the Original Project Guaranteed Maximum Price or Expansion Project Guaranteed Maximum Price (as applicable).

 

46

5.6 Retention.

 

5.6.1 From each Progress Payment made by Owner on an approved Application for Progress Payment, Owner shall retain and withhold “ Retention ” in an amount equal to ten percent (10%) of the approved amounts to be paid with respect to the Work performed directly by Contractor (as distinguished from Work performed by Subcontractors, Vendors or any other third party). Upon Original Project Substantial Completion, fifty percent (50%) of the Retention withheld with respect to the Original Project Work shall be released on the next regularly scheduled payment date. Subject to Section 5.6.2 , all remaining Retention withheld with respect to the Original Project Work shall be released on the first (1 ^st ) anniversary of the date of Original Project Substantial Completion. Upon Expansion Project Substantial Completion, fifty percent (50%) of the Retention withheld with respect to the Expansion Project Work shall be released on the next regularly scheduled payment date. Subject to Section 5.6.2 , all remaining Retention withheld with respect to the Expansion Project Work shall be released on the first (1 ^st ) anniversary of the date of Expansion Project Substantial Completion.

 

5.6.2 With respect to any portions of the Work for which the Original Project Defects Liability Period or the Expansion Project Defects Liability Period has been extended pursuant to Section 10.2 of this Agreement, Owner shall retain and withhold from the Retention an amount (the “ Defects Liability Retainage ”) equal to three times the Owner’s reasonable estimate of the cost to correct, repair or replace such portions of the Work; thereafter, at the expiration of the Original Project Defects Liability Period or Expansion Project Defects Liability Period (as extended) for such Work, the Defects Liability Retainage shall be either (i) retained by Owner in the event the Owner exercised its right to correct such Work in accordance with Section 10.7 hereof prior to the expiration of the Original Project Defects Liability Period or Expansion Project Defects Liability Period (as extended)or (ii) released to Contractor.

 

5.6.3 Except as may otherwise be agreed to by Owner pursuant to Section 9.3 , Contractor shall retain and withhold from payments due to Subcontractors and Vendors a retention as follows: (i) in the case of Work performed by Subcontractors providing labor and materials, ten percent (10%) on the approved amounts to be paid, provided that after retaining an aggregate amount equal to five percent (5%) of the total contract price of the applicable subcontract or purchase order, Contractor is not required to withhold further retention with respect to such Work; (ii) in the case of Work performed by Subcontractors providing only labor, an amount equal to two and one-half percent (2-1/2%) on the approved amounts to be paid; and (iii) in the case of materials or equipment to be supplied by Vendors, ten percent (10%) on the approved amounts to be paid, provided that Owner in its sole discretion may agree to reduce such amount in the case of certain Vendors. Except as may otherwise be agreed to by Owner pursuant to Section 9.3 , Contractor shall not request in any Application for Progress Payment, and Owner shall have no obligation to include in any Progress Payment made pursuant thereto, any retention amounts that Contractor is required to withhold pursuant to the foregoing, until such time as the retention is required to

 

47

be released to the Subcontractor or Vendor in accordance with the applicable approved subcontract or purchase order. For purposes of clarity, as used in this Section 5.6.3 , “approved amounts to be paid” means the approved amounts payable to the applicable Subcontractor or Vendor without subtraction of the required retention.

 

5.7 Substantial Completion Payments.

 

5.7.1 Payment by Owner of the first half of the Retention withheld with respect to Original Project Work upon Original Project Substantial Completion shall be in consideration of Contractor’s unconditional covenant and agreement to complete all final Original Project Punch List Items. At Owner’s option, upon Original Project Substantial Completion, Owner may elect to release any Retention withheld with respect to Original Project Work then being held by Owner, less a sum equal to one hundred percent (100%) of the costs reasonably estimated by Owner to be necessary to complete any such Original Project Punch List Items, which sum shall be retained by Owner until such Original Project Punch List Items are completed. Thereafter, Owner shall pay to the Contractor monthly the amounts retained for such Original Project Punch List Items to the extent that each Original Project Punch List Item is satisfactorily completed by Contractor and accepted by Owner. It shall be a condition precedent to payment to Contractor of the first half of the Retention withheld with respect to Original Project Work related to Original Project Substantial Completion that Contractor obtain and deliver to Owner all certificates of occupancy (or any other equivalent permits required for occupancy and use) as may be required by Owner. Contractor shall obtain all such certificates of occupancy and other permits as soon as practicable after they are first available to be obtained (unless due to the fault of Owner such certificates are not obtainable).

 

5.7.2 Payment by Owner of the first half of the Retention withheld with respect to Expansion Project Work upon Expansion Project Substantial Completion shall be in consideration of Contractor’s unconditional covenant and agreement to complete all final Expansion Project Punch List Items. At Owner’s option, upon Expansion Project Substantial Completion, Owner may elect to release any Retention withheld with respect to Expansion Project Work then being held by Owner, less a sum equal to one hundred percent (100%) of the costs reasonably estimated by Owner to be necessary to complete any such Expansion Project Punch List Items, which sum shall be retained by Owner until such Expansion Project Punch List Items are completed. Thereafter, Owner shall pay to the Contractor monthly the amounts retained for such Expansion Project Punch List Items to the extent that each Expansion Project Punch List Item is satisfactorily completed by Contractor and accepted by Owner. It shall be a condition precedent to payment to Contractor of the first half of the Retention withheld with respect to Expansion Project Work related to Expansion Project Substantial Completion that Contractor obtain and deliver to Owner all certificates of occupancy (or any other equivalent permits required for occupancy and use) as may be required by Owner. Contractor shall obtain all such certificates of occupancy and other permits as soon as practicable after they are first available to be obtained (unless due to the fault of Owner such certificates are not obtainable).

 

48

5.8 Final Payment. Contractor’s “ Applications For Final Payment ” shall be submitted in accordance with the following:

 

5.8.1 “ Original Project Final Payment ” means the payment to Contractor of all amounts due and owing and remaining to be paid to Contractor under the Contract Documents with respect to Original Project Work, including any Retention, based on Contractor’s Application for Original Project Final Payment and Owner’s Original Project Certificate of Final Completion. Original Project Final Payment shall not be due, and Contractor’s Application for Original Project Final Payment shall not be considered, until (i) the Contractor completes all of the Original Project Work in accordance with the Contract Documents, including the requirements set forth in this Section 5.8.1 and the prerequisites for a Original Project Certificate of Final Completion set forth in Section 12.2 of this Agreement, and (ii) the first (1 ^st ) anniversary of the date of Original Project Substantial Completion has occurred.

 

5.8.2 “ Expansion Project Final Payment ” means the payment to Contractor of all amounts due and owing and remaining to be paid to Contractor under the Contract Documents with respect to Expansion Project Work, including any Retention, based on Contractor’s Application for Expansion Project Final Payment and Owner’s Certificate of Expansion Project Final Completion. Expansion Project Final Payment shall not be due, and Contractor’s Application for Expansion Project Final Payment shall not be considered, until (i) the Contractor completes all of the Expansion Project Work in accordance with the Contract Documents, including the requirements set forth in this Section 5.8.2 and the prerequisites for a Certificate of Expansion Project Final Completion set forth in Section 12.2 of this Agreement, and (ii) the first (1 ^st ) anniversary of the date of Expansion Project Substantial Completion has occurred.

 

5.8.3 It shall be a condition to each of Original Project Final Payment and Expansion Project Final Payment that Contractor deliver to Owner the following:

 

5.8.3.1 A certificate that all payrolls (including all union dues, health, welfare, pension plan and other labor associated contributions), invoices for all labor, materials and equipment and all other indebtedness connected with the Original Project Work or Expansion Project Work (as applicable) for which Owner or its property might in any way be responsible, and for which Owner has paid the Contractor, have been paid or otherwise satisfied.

 

5.8.3.2 Final Waivers in a form acceptable to Owner from Contractor and all Subcontractors and Vendors and all other persons providing any services, labor, materials or equipment in relation to the Original Project Work or Expansion Project Work (as applicable), including certified copies of waivers of all lien rights exercised during the course of the Original Project Work or Expansion Project Work (as applicable) and not previously provided to Owner, and no lien rights have been exercised, or other claims or encumbrances have been filed or are outstanding, with respect to the whole or any part of or

 

49

interest in either the Site or the Original Project Work or Expansion Project Work (as applicable).

 

5.8.3.3 A certificate that Contractor has timely paid all applicable Taxes due and payable prior to Original Project Final Payment or Expansion Project Final Completion (as applicable) and arising out of the Original Project Work or Expansion Project Work (as applicable) in a form satisfactory to Owner.

 

5.8.3.4 An accounting of the credits due to Owner for the value of any excess items paid for by Owner and a complete detailed statement of the Cost of the Original Project Work or Expansion Project Work (as applicable) showing, without limitation, all expenditures for which tax credits or deductions may be allowed (if applicable).

 

5.8.3.5 Any documents, instruments, releases, certificates and indemnitees reasonably required and that Contractor is able to obtain using its best efforts in order to establish that no mechanics or materialmen’s lien rights have been exercised, that all Lender Liens are of first priority (including prior to any other liens or lien rights) as it relates to Contractor’s obligations under the Contract, and that there are no encroachments or violations of any covenants, conditions or restrictions affecting the Site.

 

5.8.3.6 If required by Owner or Owner’s Lenders, other data establishing payment or satisfaction of obligations, such as receipts, releases and waivers of liens, claims, security interests or encumbrances arising out of the Contract, the Original Project Work or the Expansion Project Work which may then or in the future affect Owner, Owner’s property, the Original Project, the Expansion Project or the Site, and to the extent and in such form as may reasonably be designated by Owner or Owner’s Lenders. If a Subcontractor or Vendor refuses to furnish a release or waiver required by Owner, Contractor shall within such time as set forth in Section 7.19 hereof furnish a bond satisfactory to Owner to indemnify Owner against such lien and cause it to be paid and released; if such lien remains unsatisfied after payments are made, Contractor shall immediately refund to Owner and indemnify Owner against all money that Owner may be compelled to pay in releasing Owner, Owner’s property, the Original Project, the Expansion Project or the Site from such lien, including all costs and reasonable attorneys’ fees.

 

5.8.3.7 Such other certificates and instruments relating to the Original Project Work or Expansion Project Work (as applicable) as Owner’s Lenders may reasonably require.

 

5.8.4 Owner will have no obligation to make either of the Original Project Final Payment or the Expansion Project Final Payment as long as any unresolved mechanic’s liens or claims exist relating to Owner, Owner’s property, the Site, the Original Project and/or the Expansion Project, regardless of whether such liens are exercised or claims are made by Contractor, any Subcontractor or Vendor or any other party relating to the Work;

 

50

unless and until Contractor releases or causes the release of Owner, Owner’s property, the Site, the Original Project or the Expansion Project, as applicable, from such liens and claims or, as directed by Owner, Contractor provides Owner and Owner’s Lenders with indemnitees acceptable to Owner and Owner’s Lenders and/or bonds around any mechanic’s lien or claim in a manner acceptable to Owner and Owner’s Lenders, all in accordance with Section 7.19 hereof.

 

5.8.5 The Applications For Final Payment shall include a statement of all unresolved Claims (and for which payment has been and/or shall be withheld by Owner). Contractor shall separately list by Claim number the specific dollar amounts which have previously been submitted as Claims by Contractor in good faith and in full compliance by Contractor with this Agreement.

 

5.8.6 Except for such unresolved Claims stated in specific dollar amounts which have been previously filed by Contractor in good faith and in full compliance with this Agreement, the submittal by Contractor of an Application For Final Payment shall constitute a final and irrevocable release and waiver by Contractor of any and all other Claims and causes of action for additional costs allowable under the Contract Documents with respect to Original Project Work or Expansion Project Work (as applicable). This release and waiver shall include, without limitation, any and all claims for amounts in addition to the specific dollar amounts relating to the unresolved Claims so identified by Contractor, and all other Claims or potential claims of Subcontractors and Vendors arising out of this Contract, whether or not any such Claims or potential Claims arise in contract or in tort or were known or unknown at the time of submittal of an Application For Final Payment. Contractor shall evidence such release and waiver by delivering a fully executed release and waiver with respect to the Original Project Work and the Expansion Project Work, as applicable, in the form attached hereto as Exhibit J .

 

5.8.7 Upon Owner’s concurrence that all conditions listed in Section 12.2 of this Agreement with respect to the Original Project Work or the Expansion Project Work have been fulfilled and that the balance set forth in the relevant Application For Final Payment is due and payable, and subject to the approval of Owner’s Lenders, Owner shall make the Original Project Final Payment or Expansion Project Final Payment (as applicable) to Contractor in accordance with this Agreement.

 

5.8.8 Original Project Final Payment or Expansion Project Final Payment (as applicable) shall not relieve Contractor of any warranty obligations (including, but not limited to, warranty obligations contained in the Contract Documents or at law).

 

5.9 Disputed Payments. When the reason(s) for withholding a particular payment are removed to Owner’s reasonable satisfaction, Owner will pay such previously withheld amounts for such matters (less amounts properly withheld or retained) with the next regularly scheduled payment. In the event of a dispute with respect to amounts payable under an Application for Progress Payment, the Original Project Final Payment or the

 

51

Expansion Project Final Payment, Owner shall pay all undisputed amounts. If Contractor disputes any determination by Owner with regard to any Application for Progress Payment or any withheld amounts, Contractor shall nevertheless expeditiously continue to execute the Work. Any amounts in dispute and withheld by Owner shall be promptly paid after the earlier of: (a) settlement of the dispute by execution of a final Change Order document; or (b) final resolution of the dispute pursuant to Section 22.1 of this Agreement. The payment of any undisputed amounts shall not waive or otherwise limit Owner’s rights as set forth in this Agreement, including, but not limited to, in Article 19 below.

 

5.10 Ownership of Materials. All material and work covered by progress payments made shall upon such payment become the sole property of Owner, however the Contractor shall not be relieved from the risk of loss and responsibility for all material and Work upon which payments have been made or the restoration of any damaged Work. Contractor represents and warrants to Owner that (i) title to all of the Work, materials and equipment covered by any Application for Progress Payment will pass to Owner upon the earlier of incorporation in the Work or receipt of payment by Contractor, and such title shall be free and clear of all liens, claims, security interests or encumbrances; (ii) the vesting of such title shall not impose any obligations on Owner or relieve Contractor of any of its obligations under the Contract Documents; (iii) Contractor shall remain responsible for damage to or loss of the Work, whether completed or under construction, except for Excepted Risks, until responsibility for the Work has been accepted by Owner in the manner set forth in Article 12 of this Agreement; and (iv) no Work covered by an Application for Progress Payment and no material or equipment incorporated in the Work will have been acquired or incorporated into the Work, subject to an agreement under which an interest in the Work or an encumbrance on the Work is retained by the seller or otherwise imposed by Contractor or any other person. “ Excepted Risks ” means all events listed in Section 11.4 as events of Force Majeure, except to the extent that any damage to or loss of the Work is caused by Contractor’s failure to comply with the provisions of Section 7.2.7 .

 

5.11 Deposits and Advance Payments. If any deposits or advance payments are required in connection with the execution of the Work, such deposits or advance payments will be specifically identified by category and credited against amounts as billed in that category. Contractor shall provide Owner with a monthly statement of the total amount of all such deposits and advance payments then outstanding. In addition, Contractor will, promptly upon written request from Owner, account for any and all funds theretofore received by Contractor from Owner. Contractor agrees to arrange to purchase such materials or equipment in advance of the time for installation in the Project as are deemed advisable by Owner or Contractor, provided such purchases in excess of US$25,000 are approved by Owner and Owner’s Lenders. Upon Owner’s request, Contractor shall provide Owner with an assignment of Contractor’s rights relating to such deposit made and agreement for purchase of such item.

 

5.12 Waiver. Any waiver by Owner of the requirement that Contractor provide lien waivers with respect to any Application for Progress Payment, the Application for

 

52

Original Project Final Payment or the Application for Expansion Project Final Payment shall not constitute a waiver of the obligation of Contractor to remove or satisfy any and all liens exercised against Owner, Owner’s property, the Site, the Original Project or the Expansion Project, which obligation shall at all times remain the responsibility of Contractor hereunder. Owner’s allowance or payment of any item pursuant to any Application for Progress Payment or otherwise shall not constitute approval of the Work or the Application for Progress Payment, or result in Owner’s waiver of any claims, all of Owner’s rights being specifically reserved, and no such payments shall operate as an admission on the part of Owner as to the propriety or accuracy of any amounts on such Application for Progress, Original Project Final Payment or Expansion Project Final Payment. A progress payment or partial or entire use or occupancy of the Original Project or the Expansion Project by Owner shall not constitute acceptance of Work not in accordance with the Contract Documents. Owner shall not be bound by any entries in previous Applications for Progress Payment and shall be permitted to make corrections for errors therein. Owner’s final Original Project Contractor’s Fee installment payment, final Expansion Project Contractor’s Fee installment payment, Original Project Final Payment and Expansion Project Final Payment shall in no way relieve Contractor of any obligations or responsibilities under the Contract Documents which extend beyond the date of such payment.

 

5.13 Materials Off-Site. Subject to Section 5.11 and except as otherwise approved by Owner pursuant to Article 9 , all materials which are the subject of an Application for Progress Payment (or an application for Original Project Final Payment or Expansion Project Final Payment, if applicable) shall be stored at all times at the Project, in a bonded warehouse or such other secured facility satisfactory to Owner and Owner’s Lenders, or at the premises of the manufacturer or fabricator (in which event the materials shall be appropriately marked and identified with the applicable purchase contract and physically segregated in an area with access to a public street), until the materials are incorporated into the Project; provided that if the materials are stored with the manufacturer or fabricator, Owner must receive evidence satisfactory to Owner of the creditworthiness of the manufacturer or fabricator and/or Contractor shall procure and deliver or cause to be procured and delivered to Owner such dual obligee performance and labor and material payment bond or bonds, in form, substance and amount satisfactory to Owner and Owner’s Lenders, as Owner and Owner’s Lenders may require. All materials that are stored off-Site shall be marked and identified as the property of Owner, and Owner shall have the right to access all materials stored off-Site and to remove them from such off-Site location(s). Furthermore, Contractor shall:

 

5.13.1.1 use the materials only for construction of the Project, and not make any transfer thereof or permit any lien to attach thereto which could materially impair the ability of Owner to use the materials for such purpose;

 

5.13.1.2 take or cause to be taken all actions necessary to insure, maintain, preserve and protect the materials and keep them in good condition and repair, and

 

53

to comply with all laws, regulations and ordinances relating to the ownership, storage or use of the materials;

 

5.13.1.3 cause to be delivered to Owner any applicable bailee waivers where such bailee rights exists, and the original warehouse receipt covering any stored materials, and ensure that such stored materials have been stored in such a way as to eliminate the possibility that they will be commingled with other materials or projects; and

 

5.13.1.4 if Contractor shall fail to perform any of its obligations under this Section 5.13 after Owner has made payment to Contractor for the materials, Owner or Owner’s Lender may, but shall not be obligated to, take such actions and expend such sums as either may deem necessary to protect and preserve Owner’s and/or Owner’s Lenders’ security interest in such materials, and all such expenditures so incurred (including, but not limited to, attorneys’ fees and disbursements) shall be reimbursed by Contractor promptly on demand and shall be Non-Allowable Costs of the Work.

 

ARTICLE VI.

OWNER’S RESPONSIBILITIES

 

6.1 Information and Services. Owner shall, at such times as are reasonably required for the successful and expeditious completion of the Work, provide Contractor with the following information and services at Owner’s expense and/or perform the following obligations:

 

6.1.1 Purchase and deliver to Contractor in accordance with the Original Project Schedule and the Expansion Project Schedule (as applicable), the material and equipment to be provided by Owner for installation by the Contractor, if any;

 

6.1.2 Pay any real property taxes assessed against the Work, to the extent applicable (Owner acknowledging that such taxes shall not be included in the Original Project Guaranteed Maximum Price or Expansion Project Guaranteed Maximum Price);

 

6.1.3 Prepare the Owner’s Design or cause the Owner’s Design to be prepared in accordance with the Original Project Schedule and Expansion Project Schedule (as applicable) in order not to delay the execution of the Work, provided that Contractor agrees to use all reasonable efforts to mitigate the effect of any delay in the performance of the Owner’s Design (provided, however, that the foregoing shall in no way alter the definition of what constitutes an Owner Delay or the application of the provisions of this Agreement relating to any Owner Delay);

 

6.1.4 Generally perform in a timely manner all of Owner’s obligations under the Contract Documents;

 

6.1.5 Prior to the Original Project Date of Commencement, obtain all licenses, approvals, consents, permits and authorizations required to be obtained by Owner

 

54

under the Contract Documents to allow the commencement of the Original Project Work, all of which Contractor acknowledges that, to the best of its knowledge, have been obtained; provided, however, that upon Owner’s request, Contractor shall use commercially reasonable efforts to assist Owner in obtaining any remaining licenses, approvals, consents, permits and authorizations necessary for the orderly prosecution of the Original Project Work;

 

6.1.6 Prior to the Expansion Project Date of Commencement, obtain all licenses, approvals, consents, permits and authorizations required to be obtained by Owner under the Contract Documents to allow the commencement of the Expansion Project Work; provided, however, that upon Owner’s request, Contractor shall use commercially reasonable efforts to assist Owner in obtaining all licenses, approvals, consents, permits and authorizations necessary for the orderly prosecution of the Expansion Project Work; and

 

6.1.7 Include in all subcontracts, purchase orders and other agreements entered into with any of Owner’s Contractors or Owner’s Consultants a requirement that such Owner’s Contractor or Owner’s Consultant must comply with the direction of Contractor in connection with the execution of the Work.

 

6.2 Limitations. Information on the Site and local conditions affecting the Site and any and all other information, reports, studies, surveys and materials provided by, or on behalf of, Owner is furnished solely for the convenience of Contractor only, and without any representation, warranty or guarantee of accuracy, adequacy, correctness or completeness by Owner and Owner hereby disclaims all such warranties, guarantees and representations. Except to the extent set forth in Article 13 below, and except to the extent the