Exhibit 10.2
*PORTIONS OF THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION
SERVICES FIXED PRICE
CONTRACT HAVE BEEN OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL TREATMENT
WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION.
ENGINEERING, PROCUREMENT AND CONSTRUCTION SERVICES
FIXED PRICE CONTRACT
BETWEEN
DELTA-T CORPORATION
AND
NEDAK Ethanol LLC
August 9, 2006
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Page 1
INDEX
SECTION
PAGE NUMBER
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1. DEFINITIONS
2. DELTA-T'S SCOPE OF WORK
3. INFORMATION, GOODS AND SERVICES TO BE PROVIDED BY OWNER
4. INTERFACE AND SITE CONDITIONS
5. SCHEDULE
6. CHANGES
7. FINAL ACCEPTANCE
8. PAYMENT
9. RIGHT OF OWNER AND DELTA-T TO SUSPEND WORK OR TERMINATE
10. SAFETY AND SECURITY
11. PROJECT EXECUTION
12. WARRANTY
13. TRANSFER OF TITLE AND RISK OF LOSS
14. INSURANCE
15. INDEMNITIES
16. LIMITATIONS OF LIABILITY
17. CONFIDENTIALITY
18. DISPUTE RESOLUTION
19. FORCE MAJEURE
20. GENERAL PROVISIONS
21. RIGHT TO TERMINATE/LIMITED OBLIGATION TO PROCEED PRIOR TO
FINANCIAL CLOSING
List of Exhibits
A. Scope of Work
B. Commercial Terms
C. Performance Test Protocol
D. Performance Guarantees
E. Mechanical Completion, Comissioning, Startup
F. Project Schedule
G. Insurance
H. Non-Disclosure Agreement
I. List of Competitors
J. Work Prior to Financial Closing
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Engineering, Procurement and Construction Services
FIXED PRICE CONTRACT
GENERAL CONDITIONS
THIS CONTRACT, IS made effective the 9th day of August, 2006
by and between
NEDAK Ethanol LLC a limited liability company organized and
acting under and
pursuant to the laws of Nebraska and having its main place of
business at 87590
Hillcrest Road, P.O. Box 391, Atkinson, Nebraska 68713
(hereinafter called the
"Owner") and Delta-T Corporation, a corporation organized and
acting under and
pursuant to the laws of the Commonwealth of Virginia and having
its main place
of business at 323 Alexander Lee Parkway, Williamsburg, VA 23185,
(hereinafter
called "Delta-T"). Owner and Delta-T may sometimes be
referred to herein
individually as a "Party" or jointly as the "Parties."
W I T N E S S E T H:
WHEREAS, Delta-T is engaged in the performance of engineering,
procurement
and construction services; and, WHEREAS, Owner desires Delta-T
to furnish and
perform certain engineering, procurement and construction
services in the
design, development, construction, commissioning, and start-up
of a 44 MGY
ethanol production facility in Nebraska. NOW, THEREFORE, in
consideration of the
premises and the mutual covenants and conditions herein contained,
it is agreed
as follows:
1. Defined Terms and Order of Precedence
1.1 Defined Terms:
The following words, when capitalized, shall have the
meanings set forth below:
1.1.1 Commissioning:
"Commissioning" means checking and preparation of
the Plant for operation, functional control loop
checking, interlock
testing, system purging and utility system startups to
confirm that
the Plant is ready for Startup, as described in Exhibit
E.
1.1.2 Confidential Information:
"Confidential Information" means all
of the following information delivered by Delta-T to
Owner under this
Contract: (a) all of the provisions of this Contract and
its Exhibits,
especially but not limited to the provisions concerning
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pricing and guarantees, financial information, vendor
lists, price
lists, cost data, and other business and
commercially sensitive
information, and (b) all technical information,
including without
limitation, drawings, designs, methodology,
processes, models,
inventions, specifications, plant or equipment test
and operating
data, improvements, processes, and other technical
information of any
kind, whether or not patented or patentable and whether
embodied in a
drawing or in equipment or any other physical thing.
Notwithstanding
the foregoing, Confidential Information does not
include information
which the Owner can demonstrate by documentary
evidence: (a) was in
its possession prior to receipt from Delta-T; (b)
appears in issued
patents or printed publications in integrated form or
is in general
use in the trade without violation by Owner of this
Agreement, or
violation by any other party of an obligation not to
disclose it; or
(c) is disclosed to Owner by a third party who is under
no obligation
not to disclose it.
1.1.3 Contract:
"Contract" means these General Conditions, the
attached Exhibits A through I, and all additions or
modifications
thereto made in accordance with Section 20.2 below.
1.1.4 Contract Sum:
"Contract Sum" means the sum set forth in Section
8.1 below, or such greater or lesser amount as may be
determined in
accordance with Section 6 below.
1.1.5 Delta-T's Project Manager:
"Delta-T's Project Manager" means the
individual designated from time to time by Delta-T in
writing as
having the responsibilities described at Section 11.1
below.
1.1.6 Date of Commencement:
"Date of Commencement" means the date of
commencement of this Contract, which shall be the
later of the date
that it has been executed by both Parties, or the date
that Delta-T
has received the payment due at the Date of Commencement
according to
the payment schedule set forth in Exhibit B.
1.1.7 Day:
"Day" means calendar day.
1.1.8 Delta-T Technology:
"Delta-T Technology" means all Confidential
Information included in the information, designs and
information
embodied in all drawings, software
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or other documents delivered by Delta-T to Owner under
this Contract,
or embodied in the Plant or, Equipment.
1.1.9 Equipment:
"Equipment" means the equipment described at Exhibit
A.
1.1.10 Final Completion:
"Final Completion" means that (i) Delta-T has
completed its obligations under the Performance
Test protocol
described at Exhibit C and any right to cure that it
may choose to
exercise under Exhibit D, or that completion of such
obligations has
been waived by Owner in writing or by passage of time as
provided at
Section 7.5 below, (ii) all of the items on the Punch
List signed by
both Owner and Delta-T have been corrected and (iii) all
lien waivers,
or affidavits, required under Section 8.5 have been
delivered and (iv)
all drawings and other documents identified on Exhibit A
as documents
to be delivered by Delta-T to Owner have been delivered.
1.1.11 General Conditions:
"General Conditions" means all portions of
this Contract other than the attached Exhibits.
1.1.12 Mechanical Completion:
"Mechanical Completion" means that the
Plant has satisfied all of the conditions to Mechanical
Completion set
forth at Exhibit E.
1.1.13 Owner's Representative:
"Owner's Representative" means the
individual designated from time to time by Owner in
writing as having
the responsibilities described at Section 11.2 below.
1.1.14 Performance Test:
"Performance Test" means the test defined in
Exhibits C and D.
1.1.15 Plant:
"Plant" means the ethanol plant to be constructed for
Owner under this Contract.
1.1.16 Punch List:
"Punch List" means a list of all portions of the
Work, if any, which are incomplete or do not conform to
the Contract.
1.1.17 Schedule:
"Schedule" means the schedule set forth in Exhibit F,
as amended from time to time by mutual agreement of
the Parties in
accordance with this Contract.
1.1.18 Intentionally Left Blank.
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1.1.19 Site Manager:
"Site Manager" means the individual designated
from time to time in writing by Delta-T under Section
11.1 below.
1.1.20 Startup:
"Startup" means the commencement of operation of the
Plant for the purposes of either commencing the
Performance Test or
for commercial purposes, as described in Exhibit E.
1.1.21 Work:
"Work" means the obligations of Delta-T to be performed
under this contract prior to Final Completion.
1.2 Order of Precedence:
In the event of any conflict between these General
Conditions and the Exhibits hereto, these General
Conditions shall be
controlling.
2. Delta-T's Scope of Work
2.1 Description of Work:
Delta-T shall, in addition to its obligations
under these General Conditions, provide the Equipment
and services
described at Exhibit A, all in accordance with these General
Conditions and
the specifications set out in Exhibit A.
2.2 Permits:
Delta-T shall, at its expense, secure all permits identified
as permits to be procured by it in Exhibit A. All other
permits required by
applicable law or regulation, including without limitation,
permits related
to environmental protection, to operation of the plant
at which the
Equipment is installed, or activities of Owner or any of its
contractors,
if any, other than Delta-T, shall be secured by Owner at
Owner's expense.
2.3 Performance and Payment Bonds:
Delta-T shall require its construction
subcontractor to furnish bonds covering the construction of
the Plant in
accordance with the contract between Delta-T and its
construction
subcontractor and payment of all obligations arising under
such contract in
the full amount of such contract but in any event
not less than
$30,000,000. The bonds shall be written by a Surety
satisfactory to the
Owner ("Surety") and shall name NEDAK Ethanol LLC and NEDAK's
construction
lender , as obligees, as well as any other entity reasonably
required by
Owner. The bonds shall be written on a form acceptable to
Owner and Owner's
construction lender. Delta-T shall also require payment and
performance
bonds or irrevocable letters of credit for all
equipment suppliers
providing
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equipment costing in excess of $250,000.00. Any other bonds
required by
Owner's or Owner's construction lender shall be provided
at the Owner's
expense.
2.4 Drawings:
Delta-T shall, upon completion of the Work, deliver to Owner
a complete set of appropriately stamped or sealed ready for
construction
plans, specifications or drawings ("Ready for
Construction Design
Drawings") required to perform the Work, as set forth under
the applicable
rules and regulations related to the practice of professional
engineering.
Delta-T shall have no responsibility to provide Owner with any
other plans,
specifications or drawings for work performed by Owner or its
contractors
or subcontractors. In the event that Delta-T is required,
pursuant to
Exhibit A, to provide Owner or any of Owner's contractors or
subcontractors
with electronic copies of plans, specifications or drawings
("Electronic
Drawings"), during execution of the Work, Delta-T expressly
disclaims any
and all liability associated with any changes made to
such Electronic
Drawings. Owner acknowledges and agrees that should a
dispute arise with
respect to the accuracy of the Electronic Drawings and
the Ready for
Construction Design Drawings to be submitted under this
Section 2.3, the
Ready for Construction Design Drawings shall be considered
prima facie
evidence in any dispute resolution proceedings as set forth
in Section 18
below.
2.5 License of Certain Documents and Drawings:
Delta-T shall retain
ownership of the copyright in, and any and all inventions and
trade secrets
embodied in, the documents and drawings delivered to
Owner under this
Contract and in all of the Delta-T Technology, and Owner's
rights therein
shall be governed by Section 17.2 below.
2.6 Or Equal:
Whenever in any of the Contract documents, any Section,
materials, or equipment is defined by describing a
proprietary product or
by using the name of a manufacturer or vendor, the term, "or
equal" if not
inserted, will be implied. The specific Section, material
or equipment
mentioned will be understood as indicating the type,
function, minimum
standard of design, efficiency, and quality desired and
will not be
construed in such a manner as to exclude manufacturer's
products of
comparable quality, design, and efficiency. Where a product is
mentioned by
the name of a manufacturer or vendor in the Contract, Delta-T
will identify
to Owner the names of any products to be used in lieu of the
ones named in
the documents prior to awarding a purchase order. Owner
shall have the
right to reject any substituted product upon ten (10) business
days written
notice to Delta-T,
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unless such product is critical to the successful completion
of the Work,
or is the only product available that is suitable for the
purpose for which
it is intended.
3. Information, Goods and Services to Be Provided by Owner
3.1 Specific Goods and Services:
Owner shall provide the following prior to
commencement of any Work by Delta-T: (a) a Plant site
suitable for
construction of the Plant, complete with adequate space
for office and
storage needs of Delta-T during construction, (b) suitable
access of the
Plant site, (c) utilities to the Plant boundary as necessary
for Delta-T's
performance of the Work, (d) all permits and licenses
necessary for
construction and operation of the Plant other than those to
be provided by
Delta-T as listed on Exhibit A, and (e) evidence reasonably
satisfactory to
Delta-T that it has secured financing sufficient to permit
Owner to pay all
its financial obligations in connection with building
of the Plant,
including payment of all amounts due to Delta-T. Owner shall
provide the
following prior to commencement of the Performance Test:
(i) personnel
required to be trained by Delta-T, at the time(s)
needed to meet the
training plan described at Exhibit A and (ii) supplies
and utilities
required to perform Owner's obligations under Exhibits C and
D.
3.2 Other Goods and Services:
Owner shall also furnish to Delta-T, at
Owner's expense, all documents, drawings, specifications,
information and
services showing all existing structures, foundations and
undergrounds in
or adjacent to the Plant site that may be relevant to
performance of the
Work, if any; coordinates, bench marks and base lines for the
land area and
locations where all associated items of equipment, if
any, are to be
installed; the existence and location of subsurface
obstructions and
conditions; soil data and subsurface information for
Delta-T's use for
foundation design relevant to the Work; adequate
arrangement drawings,
utility requirements and process connections of all those
existing items of
machinery and equipment of existing facilities, if any, with
which the Work
must interconnect or accommodate, sufficient for Delta-T's
performance of
the Work; and the specific emission, effluent and
environmental criteria
and requirements for the Work; and all other
documents, drawings,
specifications, information and services, if any, identified
as within the
Owner's Scope of Services in Exhibit A. Delta-T shall be
entitled to rely
upon such data and design criteria in the performance of the
Work. Owner
shall provide all such items within the times prescribed in
the Schedule,
or if no time is prescribed, within the time reasonably
required to allow
Delta-T to perform its obligations under this contract.
If no
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time is prescribed for Owner to provide such items, Delta-T
shall provide
reasonable written notice to Owner setting forth the date
such item(s) are
required. Furthermore, Delta-T shall have the right to
receive from Owner
reasonable written assurance, and evidence reasonably
acceptable to
Delta-T, that Owner is not aware of any physical,
financial or legal
matters that would prevent Owner from fulfilling its
obligations hereunder
or impede performance of the Parties obligations under
this Contract in
accordance with the Schedule. If Delta-T becomes aware of
any error in a
document, drawing, specification or other information
supplied by Owner it
will promptly notify Owner of the same. Delta-T shall,
however, have no
liability of any kind with respect to any error of which it is
not actually
aware. In addition, Owner shall be fully responsible for
providing all
goods and services, if any, that become necessary as a
result of the
discovery of hazardous materials (unless such material were
brought onto
the Site by Delta-T or its subcontractors) or materials with
archeological
significance.
4. Interface and Site Conditions
4.1 Site Conditions:
Delta-T has visited the Work site and had an
opportunity to become familiar with the condition of the site
as it applies
to performance of the Work. If conditions are encountered at
the site which
were not readily observable by visual inspection of the
site on February
21, 2006 or a review of the available subsurface
information, or (2) are
unknown physical conditions of an unusual nature, which
differ materially
from those ordinarily found to exist and generally
recognized as inherent
in construction activities of the character provided for in
this Contract,
or (3) differ from conditions shown in any drawing,
document or other
information, if any, that Owner is required to deliver to
Delta-T under
Section 3 above, then notice by the observing Party shall be
given to the
other Party promptly before such conditions are further
disturbed and in no
event later than 21 days after first observance of the
conditions. If any
such condition causes any increase or decrease in Delta-T's
cost of, or
time required for, performance of any part of the Work, or
any increase or
decrease in any other obligation of Delta-T, Owner shall
within 21 days of
issuance or receipt of notice, as the case may be, under this
Section 4.1,
issue a change order in accordance with Section 6 below.
4.2 Cooperation with Others:
Delta-T will cooperate with Owner's other
contractors, if any, to facilitate coordination of the Work
with the work
of others, but any changes to the Work or
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the Schedule required to do so shall be treated as a change
under Section 6
below. Notwithstanding the foregoing, Delta-T shall not
be required to
check the quality or quantity of work performed by
Owner or Owner's
contractors or subcontractors, provided, however, Delta-T
shall confirm
that any predecessor work shall be sufficient for Delta-T's
Work. Delta-T
shall not have control over or responsibility for the
construction,
methods, techniques, sequences or procedures, or for safety
precautions and
programs used by Owner or Owner's contractors or
subcontractors in
connection with the Work and shall have no liability thereon.
5. Schedule
5.1 Schedule:
Delta-T shall use its best reasonable efforts to perform the
Work in accordance with the Schedule, but it does not
guarantee that the
Work will be completed according to such Schedule. In case
of any delay
other than a delay caused by Delta-T, its employees,
subcontractor's or
vendors for reasons other than force majeure (which shall
be treated in
accordance with Section 19 below), the Schedule for completion
of the Work,
or any part of it, shall be extended by a number of days
equal to the
actual number of days of such delay, plus the number of
days reasonably
required for demobilization and remobilization. Delta-T
shall use all
reasonable efforts to comply with Owner's wishes with respect
to changes in
Schedule, but any adjustment requested by Owner to the
Schedule shall be
deemed a change and Delta-T shall have no obligation to
slow down or
accelerate its performance of the Work except in accordance
with Section 6
below.
5.2 Compensation to Delta-T for Delay:
In the event of any delay caused by
Owner, its employees, subcontractor's or vendors for
reasons other than
force majeure exceeds, individually or in the aggregate,
fourteen (14)
days, Delta-T shall be entitled to compensation for its
unavoidable direct
costs resulting from such delay, including in particular,
but without
limitation, the costs, if any, of extended site overhead and
those itemized
at Exhibit B.
6. Changes
6.1 Issuance of Change Orders by Owner:
Owner may by its written order
require changes in the Work within the general scope of
the Contract
consisting of additions,
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deletions or other revisions which do not result in any
material change in
the Work, provided that the Contract Sum and payment schedule
are adjusted
to reflect the change in Delta-T's direct costs
resulting from such
changes, plus a reasonable amount for profit, and that the
time allowed for
completion, warranty obligations, and any other
obligations of Delta-T
affected by the changes are adjusted to cover the
consequences to Delta-T
resulting from such change. Furthermore, Owner shall issue a
change order
providing for all such adjustments when required to do so
under Section 4.1
above. The amount to be paid to Delta-T, the effect on
Schedule, if any,
and any other adjustments to the Contract will be made by
mutual agreement.
If the change, in Delta-T's judgment, would have a
detrimental impact on
performance of the Plant, or if the amount of the cost of the
change order
in dispute exceeds 1% of the Contract Sum, then Delta-T
shall have no
obligation to proceed with any change until such agreement
is reached.
Furthermore, Delta-T shall in no case be required to agree
to any change
requiring the handling of PCBs, asbestos or any other
hazardous material.
In all other cases, if Owner and Delta-T are unable to
reach agreement
within fifteen (15) days of the date of Delta-T's notice to
Owner provided
in accordance with Section 6.2 below, then Delta-T shall
proceed with the
change and the matter shall be resolved as provided at Section
18 below.
6.2 Notice of Instruction Constituting a Change; Notice of Impact
of Change
Order:
If Delta-T receives instructions from Owner, which in
Delta-T's
opinion constitute a change in the Work, Delta-T shall so
advise Owner
within five (5) business days of receipt of such
instruction. If Delta-T
receives a change order under Section 6.1 above or
becomes aware of a
constructive change order of the type described at Section
6.3 below, or
gives Owner a notice that an instruction of Owner
constitutes a change,
then Delta-T shall within ten (10) business days thereafter
submit to Owner
a statement of the impact of such change on Contract Sum,
payment schedule,
Schedule, warranties, and any other provisions of the
Contract affected
thereby. Delta-T shall not delay prosecution of the Work
not affected by
the change.
6.3 Constructive Change Orders:
Any of the following shall be deemed
constructive change orders: (a) a modification of applicable
law, ordinance
or regulation resulting in any increase in taxes or insurance
premiums, or
any other cost, payable by Delta-T or in any government
regulated costs
that was not or should not have been reasonably anticipated by
Delta-T, (b)
any increase in Delta-T's costs due to force majeure,
but only to the
extent (i) such costs are not compensated by insurance, and
(ii) the actual
delay caused by the force
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majeure event is more than five (5) days, and (iii) such
costs include the
direct costs of the force majeure event plus fifty percent of
any extended
general condition costs, or (c) unknown or differing site
conditions of the
type described at Section 4.1 above.
7. Commissioning, Startup, Training of Owner's Personnel, and
Final Acceptance
7.1 Mechanical Completion and Commissioning:
Delta-T shall give Owner at
least five calendar days notice when Delta-T believes that
the Work has
reached Mechanical Completion. Owner and Delta-T shall,
within seven
calendar days jointly inspect the Work and prepare a proposed
Punch List.
Such Punch List shall clearly designate which items, if
any, need to be
completed in order to reach Mechanical Completion. Delta-T
shall within
three (3) calendar days of receipt of the jointly prepared
Punch List mark
the list to show Delta-T's disagreement, if any, with any
of the items
listed by Owner, and return a copy of the list so marked
and signed by
Delta-T to Owner. In the event that Parties do not agree on
the items that
should be included on the Punch List within three (3)
calendar days
thereafter, then either Party may submit the matter to
disputes resolution
under Section 18 below. Owner and Delta-T shall commence
Commissioning upon
achievement of Mechanical Completion of the Plant.
7.2 Performance Test:
Owner and Delta-T shall Startup the Plant and begin
the Performance Test as soon as the conditions to Startup
described in
Exhibit C have been completed. If for any reason the
Performance Test is
not completed on the first attempt, then Owner shall
allow Delta-T
reasonable access to the Plant to do all things required
to be done to
achieve Final Completion for a period of at least six (6)
months after
Startup, as provided at Exhibit D.
7.3 Training of Owner's Personnel:
Delta-T shall provide the training
described in Exhibit A. Except as provided otherwise in
Exhibit A, Owner
shall provide appropriate personnel, and Delta-T shall
provide such
training, at times mutually agreed by them,
commencing prior to
Commissioning in sufficient time to prepare Owner's
employees to perform
Commissioning and Startup and to perform their obligations
with respect to
the Performance Test.
7.4 Use of Plant Prior to Final Acceptance:
Owner may use the Plant for
commercial purposes on or after the achievement of Mechanical
Completion.
If Owner elects to use any
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portion of the Work for commercial purposes prior to Final
Completion,
however, then it shall allow Delta-T free access to the
Plant to do all
things required to be done to achieve Final Completion,
including without
limitation, shut downs of the Plant, as reasonably
necessary including,
without limitation, preparation for and execution of
one or more
Performance Tests.
7.5 Failure to Reach Final Completion for Reasons Beyond
Delta-T's Control:
Subject to the provisions of Section 19 below, if for any
reason Owner
fails to permit Delta-T access to the Plant after the date
of Mechanical
Completion in order to permit Delta-T to do all things
necessary to achieve
Final Completion, or Delta-T is prevented from achieving
Final Completion
for reasons beyond Delta-T's control and such failure to
permit access or
prevention of performance continues for an aggregate of
sixty (60) days,
then Final Completion shall be deemed to occur on the
sixtieth day (in the
aggregate) that such access is denied or performance prevented
for purposes
of payment only in accordance with Section 8 below. Delta-T
shall complete
the Performance Testing in accordance with Exhibit C.
8. Payment
8.1 Contract Sum:
Owner will pay Delta-T for the full and satisfactory
completion of the Work the Contract Sum of $61,800,000.00,
or such other
sum as may be determined in accordance with Section 6. In
addition to the
sum of $61,800,000.00, Owner will pay Delta-T the sum of
$10,600,000.00 for
the cost of the dryer, field-fab tanks, shop-fab tanks,
bulk piping and
electrical wiring *. * OMITTED PURSUANT TO A REQUEST FOR
CONFIDENTIAL
TREATMENT WHICH HAS BEEN FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE
COMMISSION.
The Contract Sum does not include any sales or other tax.
If Delta-T is,
now or in the future, required to collect from Owner or pay
any federal,
state, local or other tax with respect to all or any part of
the Work, then
that amount shall be paid by Owner at Delta-T's request, in
addition to the
Contract sum. The Contract Sum listed in this paragraph 8.1
is contingent
on the Owner making the first payment to Delta-T in
the amount of
$8,000,000.00 (equipment deposits) on or before August 9,
2006. In the
event that the Owner fails to make this
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payment, a constructive change order shall be issued to cover
any increase
in equipment costs.
8.2 Payment Terms:
Owner shall make payment in accordance with Exhibit B
and this Section 8. Delta-T shall submit Applications for
Payment in the
form set forth at Exhibit B. Owner shall, through Owner's
Representative,
sign the Certificate for Payment set forth on the
Application for Payment
for the full payment applied for, unless it believes that
all or any part
of such amount is not then due. If Owner believes all or part
of the amount
requested in the Application for Payment is not then due,
Owner shall amend
the Certificate for Payment contained therein by indicating
the amount, if
any, that it believes to be due, and shall sign the
certificate as amended
and deliver the certificate, together with written
notice of Owner's
reasons for certifying less than the whole amount of applied
for. Owner or
Owner's construction lender shall wire transfer, in
immediately available
funds, all amounts for which it has issued certificates,
within the time
set forth in Exhibit B, and if no time is indicated thereon,
within thirty
(30) days of the date of its receipt of the Application for
Payment, to a
bank account to be selected by Delta-T, at its sole
discretion. Owner's
payment shall constitute a Certificate for Payment if the
Certificate for
Payment form is not executed by Owner. If Owner does not
certify payment in
the amount of the Application, and Delta-T and Owner
cannot agree on a
revised amount within fifteen (15) days of the date of the
Certificate for
Payment for less than the full amount, then either Party
may request a
demand for arbitration in accordance with Section 18. In any
case, when the
reasons stated by Owner for withholding payment of any amount
for which an
application has been made are removed, in whole or in part,
Owner shall
immediately issue a Certificate for Payment for the amount
withheld and
make payment, via wire transfer as described in this
Section 8.2, of the
amount so certified. .
8.3 Late Payment:
Owner shall pay the lesser of 1.0% per month or the
highest amount permitted by law on all sums more than 10
calendar days past
due.
8.4 Mechanic's Lien Waivers and Indemnity:
Delta-T shall pay promptly for
all valid amounts due for all materials, labor and equipment
used in or in
connection with the performance of this Contract, including
those of its
subcontractor's and vendors, when bills or claims become
due, and shall
indemnify and hold harmless Owner from and against all
claims of its
subcontractors and vendors for amounts due arising from
Delta-T's failure
to
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Page 14
make any such payments, provided that Owner gives Delta-T
prompt notice of
such claim and cooperates with Delta-T in defense of such
claim.
8.5 Mechanic's Liens:
Delta-T shall keep the real property upon which the
Plant is to be located free and clear of laborer's,
materialmen's and
mechanic's liens arising out of the performance of the Work
for which Owner
has made payment. Owner shall promptly notify Delta-T in
writing of any
lien so arising of which it has notice or knowledge. Delta-T
shall obtain
and timely provide to Owner a partial release of lien with
respect to any
partial or progress payment made to relevant subcontractors
and shall also
obtain and timely provide a complete release of lien and
general release
with respect to any subcontract for which full and final
payment is made.
In each case, the release of lien may be for an amount less
amounts that
will be paid from the payment for which such release of lien
is requested.
Delta-T shall promptly pay each subcontractor upon receipt of
payment from
Owner of the amount invoiced that is due to such
subcontractor.
8.6 Final Payment:
Delta-T shall invoice Owner for the final amount due to
it in accordance with Exhibit B.
8.7 Construction Lender.
Delta-T understands that Owner is obtaining
construction financing and that the financial institution
providing such
construction financing may have certain requirements and
procedures for
making progress and other payments to Delta-T. Delta-T agrees
to cooperate
with any and all reasonable requirements and procedures
imposed by Owner's
construction lender.
8.8 Withholding Payments.
Owner shall be entitled to deduct from any
amounts due or owing by Owner to Contractor any
amounts as may be
reasonably necessary to protect owner from losses due to:
(a) Work that is damaged, defective or not in
conformance with this
Agreement and has not been remedied by Contractor after
having written
notice from Owner of such damage, defect or nonconformity
and Contractor
having not corrected such damage, defect or nonconformity
within thirty
(30) calendar days of receiving such notice; or
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Page 15
(b) Failure of Contractor to pay Subcontractors, or for labor,
materials or
Equipment unless a Payment Default has occurred and is
continuing and then
only to the extent such Work was part of the Invoice which
forms the basis
of the Default Payment; or
(c) claims filed by third parties relating to or arising
out of the Work
against the Owner or its Construction Lender and damage to
the Owner or
another person or entity caused by Delta-T, its subcontractor,
or material
suppliers that arise out of the Work, provided such claim or
damage has not
been resolved by Delta-T after having written notice from
Owner of such
claim or damage and Delta-T not having corrected or resolved
such claim or
damage within thirty (30) days of receiving such notice.
9. Rights of Owner and Delta-T to Suspend Work or Terminate
9.1 Owner's Right to Terminate For Cause:
Owner may terminate this Contract if:
a. a petition in bankruptcy is filed by Delta-T, and
such filing
materially impacts Delta-T's ability to perform its
obligations under
this Contract, or such a petition is filed against
Delta-T and it is
not dismissed within 45 days, or
b. Delta-T commits a material breach of a material
obligation under
this Contract, or fails to make reasonable progress
toward completion
of the Work, and fails to cure such breach or failure
within the longer
of 45 days of its receipt of written notice of such
breach or such
longer time as is reasonably required to cure such breach.
Upon such termination Owner may take possession of the Work
completed by
Delta-T or delivered to the Plant site and all materials and
Equipment at
the site acquired for incorporation into the Work and
owned by Owner or
Delta-T, take assignment of all purchase orders and
subcontracts related to
the Work and complete the Work by whatever reasonable method
Owner may deem
expedient. Owner shall permit Delta-T access to the Plant
site after such
termination as reasonably required by Delta-T to remove
any equipment,
trailers, supplies, goods and materials maintained by Delta-T
in connection
with the Work but not intended to be incorporated into the
Plant, or owned
or used by any of its subcontractors under subcontracts not
to be assigned
to Owner. In the event of termination for any of the
reasons set forth
above, Delta-T will be liable to Owner for any reasonable
costs incurred by
Owner to complete the Work in excess of the Contract Sum
remaining
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Page 16
unpaid to Delta-T, up to a maximum of 10% of the Contract
Sum. In case of
such termination, the license granted under Section 17.2 below
with respect
to the Delta-T Technology delivered prior to the date of
termination shall
become effective, no further payments will be made to
Delta-T after
termination until the Work is completed and upon completion
of the Work,
Owner shall pay Delta-T the balance due under this
Contract, less the
amounts required to be paid by Owner to third parties to
complete the Work,
and if the unpaid balance of the Contract Sum is less
than the cost of
finishing the Work, Delta-T shall then pay such excess, up to
a maximum of
the amount set forth in the preceding sentence.
9.2 Delta-T's Right to Stop Work:
If Owner does not pay Delta-T amounts
that Owner has certified for payment within five (5) Days
after the date
such payment is due, then Delta-T may, upon ten (10) Days
written notice to
Owner, stop the Work until payment of the amount owing has
been received.;
provided, however, Delta-T may not stop the Work if there is a
good faith
dispute regarding the amount of payment due Delta-T. If
Delta-T suspends
the Work under this Section 9.2, then the time allowed for
completion of
any of the Work shall be extended as provided at Section 5.1
above.
9.3 Delta-T's Right to Terminate:
Delta-T may terminate the Contract on
seven (7) Days written notice if the Work is stopped, without
fault on the
part of the Delta-T or, any of its vendors or subcontractors,
for more than
twenty-one Days, for any of the following reasons:
a. a petition in bankruptcy is filed by Owner, and
such filing
materially impacts Owner's ability to perform its
obligations under
this Contract, or such a petition is filed against Owner
and it is not
dismissed within forty-five (45) Days.
b. Owner has not made payment within sixty (60) Days of
the date due;
or
c. Owner commits any other material breach of a
material obligation
under this Contract, and fails to cure such breach within
the longer of
45 Days of its receipt of written notice of such breach
or such longer
time as is reasonably required to cure such breach.
Delta-T may terminate the Contract on seven (7) Days written
notice if the
Work is stopped, without fault on the part of the Delta-T
or, any of its
vendors or subcontractors, for more than ninety (90) Days
because of the
issuance of any order of a court or other public
authority having
jurisdiction over the Site or project.
Upon such termination Owner shall pay Delta-T (a) all
amounts then due to
it under this
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Page 17
Contract as of the date of termination, including all amounts
completed but
not yet invoiced, and including the portions, if any, of such
amounts that
would have been held as retainage in accordance with
Exhibit B, (b) all
unavoidable costs payable to subcontractors at any tier
and all other
vendors related to the work, including reasonable fees for
cancellation,
and (c) a termination fee calculated as set forth in
Exhibit B. For this
purpose, the amounts then due to Delta-T shall be deemed to
be all amounts
billed in accordance with Exhibit B up to the date of
termination, plus the
value of all goods delivered and services performed under this
Contract and
not billed as of the date of termination. In the event that
the Parties
cannot agree on the total amount due within thirty (30) Days
of the date of
Delta-T's demand for payment hereunder, either Party
may initiate
arbitration under Section 18.2 below.
10. Safety and Security
10.1 Premises:
Delta-T will keep the premises clean and free from rubbish
caused by performance of the Work and will insure that its
subcontractors
do likewise. At completion of the Work, Delta-T shall leave
the premises
clean of all debris resulting from performance of the Work.
Owner shall
provide dumpsters for disposal or recycling of materials and
Delta-T shall
be responsible to insure that the proper material is
placed in the
appropriate dumpster. Owner shall receive the proceeds
of the sale or
recycling of any salvage items or scrap from the project.
10.2 Security:
During construction and installation of the Work, Delta-T
will use reasonable means to protect the Work and all
Equipment and
materials to be used in connection with the Work and
located on the Work
site safe from injury or defacement, within the defined
battery limits, and
all equipment owned or leased by Delta-T or any of its
subcontractors, and
all other equipment and goods of any kind located at the Plant
site for the
purpose of performing the Work.
10.3 Safety:
Delta-T will insure all its labor and other authorized
personnel comply with all appropriate safety and security
regulations,
procedures or standards. Delta-T shall furnish and maintain
all necessary
safety equipment and training for its employees and shall
maintain a safe
work site at all times. All Work shall be performed in
accordance with
Delta-T and its primary subcontractor's safety plan.
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Page 18
10.4 Compliance with OSHA and Similar Laws and Regulations:
Owner shall at
all times be solely responsible for compliance with the
Occupational Safety
and Health Act ("OSHA"), and any similar state laws or
regulations, with
respect to its own employees. In particular, but without
limitation, Owner
shall be responsible for claims made by any of its employees,
by reason of
any personal injury or death which results from a violation of
any such law
or regulation. Delta-T shall be solely responsible for
compliance with
OSHA, and any similar state laws or regulations, with
respect to its own
employees and will require the same of its subcontractors.
In particular,
but without limitation, Delta-T shall be responsible for
claims made by any
of its employees, whether against Owner or Delta-T by
reason of any
personal injury or death which results from a violation of
any such law or
regulation. The Schedule shall be extended as necessary to
allow for cure
of any unsafe condition, which results in a suspension of
the Work, which
is caused by anyone other than Delta-T, its agents,
employees or
sub-subcontractors.
11. Project Execution
11.1 Delta-T Representatives:
Delta-T will keep a Project Manager
("Delta-T's Project Manager") assigned to the Work at all
times during its
progress, and shall keep a Site Manager on the Work site on
a daily basis
during the construction phase of the Work. Delta-T's Project
Manager shall
represent Delta-T, and written communications given to
Delta-T's Project
Manager or Delta-T's Site Manager shall be as binding
as if given to
Delta-T itself. All communications to Delta-T's Project
Manager or Site
Manager by Owner shall be confirmed in writing upon request by
Delta-T.
11.2 Owner Representative:
Owner will have at all times during the progress
of the Work, a competent representative ("Owner's
Representative") assigned
to the Work. Owner's Representative shall represent Owner,
and written
communications given to Owner's Representative shall be as
binding as if
given to Owner itself. Owner shall have its Owner's
Representative on site,
or available within 24 hours, at all times during the progress
of the Work.
11.3 Project Reviews and Approvals:
11.3.1 Reviews:
Delta-T will, as appropriate, and additionally upon
Owner's request, issue a project progress schedule to
Owner. Delta-T
shall provide Owner each week a
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Page 19
two-week look ahead schedule. Delta-T shall
participate in weekly
meetings to review the progress of the Work at the
Work site at
Owner's request as set forth in Exhibit A. . Owner
may review and
comment on any plan, drawing or specification, that
Delta-T delivers
to Owner. No review or comment made by Owner shall
result in Owner's
being deemed to have assumed any responsibility for any
of the Work.
Delta-T shall attempt to incorporate Owner's comments
where it can do
so without increasing Delta-T's cost, the time
required for
performance, or any of its other obligations, but
Delta-T shall have
no obligation to suspend work to allow time for review
and comment
except as provided in the Schedule, or to incorporate
any of Owner's
comments except as required in order to comply
with Delta-T`s
obligations under the Contract, or as agreed under
Section 6 above.
11.3.2 Approval Process:
If Exhibit A or the Schedule provides for
approval by Owner of any portion of the Work or any
document, then
Owner shall be deemed to have given its approval
unless it delivers
written notice of its disapproval, and the specific
reasons for its
disapproval within the time allowed according to the
Exhibit or
Schedule.In the event that the reason for disapproval by
the reviewing
Party results from failure of the other Party
("submitting Party") to
fulfill any of its obligations under this
Contract, then the
submitting Party shall correct the work or
document requiring
correction and resubmit it for review. The reviewing
Party shall have
five (5) business days, or one-half the time allowed
according to the
applicable Exhibit or Schedule if such time is
prescribed, for the
initial review to approve or disapprove the
resubmitted work or
document, and it shall be deemed to have given its
approval unless it
delivers written notice of its disapproval, and the
specific reasons
for its disapproval, within that time. The review and
resubmittal
process shall continue in like manner until the
submitted Work is
approved. In the event that any disapproval results from
a cause other
than failure of the submitting Party to fulfill any of
its obligations
under this Contract, the Schedule shall automatically
be extended as
provided at Section 5.1 above.
11.4 Subcontractors and Vendors:
11.4.1 Notice of Subcontractor Selection:
Delta-T shall, as soon as
practicable after award of the Contract, furnish in
writing to Owner
the names of persons or entities (including those who
are to furnish
materials or equipment fabricated to a special design)
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Page 20
proposed for major portions of the Work. Owner
acknowledges that
Delta-T, particularly on large or fast-track projects,
may not make
final selection of some subcontractor or vendors until
later in the
project, and that Delta-T has the right to select
subcontractors and
vendors as long as the selection would not result in
failure to
satisfy the requirements of this Contract. The
subcontracting of any
portion of the Work, as described in Exhibit A, shall
not relieve
Delta-T of responsibility for performance of the Work
as provided
therein. Notwithstanding the foregoing, Delta-T shall
have the right
to subcontract such portions of the Work as it shall
determine to be
necessary to others which, in turn, shall have
the right to
subcontract such portions of the Work assigned to
them, if any, as
they shall deem necessary.
12. Warranty
12.1 Equipment Warranties:
Delta-T shall, for the protection of Owner,
assign to Owner all warranties and guarantees supplied by
all vendors and
subcontractors from who it procured goods or services
incorporated into the
Project. In addition, Delta-T warrants to Owner that the
Equipment will be
free from mechanical defects, structural defects and
defects in material
and workmanship until twelve (12) months from completion of
the Performance
Test,. OWNER'S SOLE AND EXCLUSIVE REMEDY IN CASE OF BREACH OF
THIS WARRANTY
SHALL BE REPAIR OR REPLACEMENT AS PROVIDED IN THIS SECTION
12.1. If any
defect covered by the above warranties is discovered within
the warranty
period, Delta-T shall, subject to the provisions set forth
below, repair or
replace the defective material or Equipment. The decision
to repair or
replace shall be made by Owner. If Owner and Delta-T do
not agree on
whether repair or replacement is the most appropriate
remedy, and if the
remedy recommended by Delta-T would not impair the
performance of the Work
or otherwise materially diminish the value of the Work, then
Delta-T shall
not be required to perform the remedy elected by Owner
unless Owner pays
Delta-T the excess cost of performing such remedy over and
above the cost
of performing the remedy recommended by Delta-T. Delta-T
shall in no case
have any liability, under this warranty or otherwise, for
any defect or
deterioration which results from failure of Owner to provide
any feedstock,
utilities, or other supplies, services or conditions
specified in Exhibit
C, force majeure, improper operation or maintenance including
damage caused
by freezing, foreign substance or impurity introduced into
the equipment,
or any other matter not within Delta-T's control.
12.2 Desiccant Material:
Delta-T warrants that the molecular sieve
desiccant will not
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Page 21
deteriorate due to mechanical abrasion to such an extent as
to reduce the
dehydration capacity of the molecular sieve below the level
specified in
the Performance Guarantee set forth at Exhibit D for a period
of five years
from twelve (12) months from the completion of the
Performance Test.
OWNER'S SOLE AND EXCLUSIVE REMEDY UNDER THIS WARRANTY SHALL
BE REPLACEMENT
OF THE DESICCANT MATERIAL AS PROVIDED IN THIS SECTION 12.2.
Replacement
shall be made at no cost to Owner in the event of a claim
under this
warranty within one year after Final Acceptance. With respect
to any claim
made thereafter, the desiccant replacement cost to Owner
shall be pro
rated, on a daily basis, on the basis of the number of days
remaining in
the last four (4) years of the warranty period. As an example,
Owner would
pay 50% of the cost of replacement desiccant if the original
desiccant had
to be replaced exactly three (3) years from the
commencement of the
warranty period (100% x 730th day/ 1460 total Days).
12.3 Professional Services:
Delta-T warrants, for a period ending one year
after Final Acceptance, or the last date on which Delta-T
performed work
under this Contract if this Contract is terminated for any
reason prior to
Final Acceptance, that the services provided by it
hereunder will be
provided with reasonable skill and care of the type normally
exercised by
other design professionals under similar circumstances.
Delta-T shall not
have any obligation or liability for failures or defects
due to ordinary
wear and tear, corrosion or erosion, or as a result of
improper operation,
improper maintenance or operating conditions more severe than,
or different
from, those contemplated in the original design of the Work.
12.4 Labor:
Delta-T warrants to Owner that the labor performed and
materials supplied will be free from defects in workmanship
and will be of
good quality until twelve (12) months from completion of the
Performance
Test. OWNER'S SOLE AND EXLCUSIVE REMEDY IN CASE OF BREACH OF
THIS WARRANTY
SHALL BE REPAIR OR REPLACEMENT AS PROVIDED IN THIS SECTION
12.4. If any
defect covered by the above warranties is discovered within
the warranty
period, Delta-T shall, subject to the provisions set forth
below, repair or
replace the defective workmanship. The decision to repair or
replace shall
be made by Owner. If Owner and Delta-T do not agree on
whether repair or
replacement is the most appropriate remedy, and if the
remedy recommended
by Delta-T would not impair the performance of the Work
or otherwise
materially diminish the value of the Work, then Delta-T
shall not be
required to perform the remedy elected by Owner unless Owner
pays Delta-T
the excess cost of performing such remedy over and
above the cost of
performing the remedy recommended by Delta-T. Delta-T shall in
no case have
any liability, under this
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Page 22
warranty or otherwise, for any defect or deterioration which
results from
failure of Owner to provide any feedstock, utilities, or
other supplies,
services or conditions specified in Exhibit C, force
majeure, improper
operation or maintenance including damage caused by
freezing, foreign
substance or impurity introduced into the equipment, or any
other matter
not within Delta-T's control
12.5 Process Warranty:
Delta-T warrants that the Plant will perform as set
forth in Exhibit D during the Performance Test. Delta-T shall
not have any
obligation or liability for failures or defects due to
ordinary wear and
tear, corrosion or erosion, or as a result of improper
operation, improper
maintenance or operating conditions more severe than, or
different from,
those contemplated in the original design of the Work.
OWNER'S SOLE AND
EXCLUSIVE REMEDY FOR BREACH OF THIS WARRANTY IS PAYMENT
BY DELTA-T OF
LIQUIDATED DAMAGES AS SET FORTH AT EXHIBIT D.
12.6 No Other Warranties:
Delta-T's sole warranties to Owner under this
Contract are the warranties set forth in this Section 12 and
in Exhibit D.
OWNER HEREBY ACKNOWLEDGES AND AGREES THAT DELTA-T MAKES NO
OTHER WARRANTY
UNDER OR BY VIRTUE OF THIS CONTRACT, WHETHER EXPRESS OR
IMPLIED, AND
WHETHER RELATED TO GOODS OR SERVICES, AND THAT DELTA-T MAKES
NO WARRANTY OF
ANY KIND TO ANYONE OTHER THAN TO OWNER.
12.7 Notice of Warranty Claim:
Owner shall notify Delta-T of any defect
covered by the warranty set forth in Section 12.5 and Exhibit
D as provided
at Exhibit D, and shall notify Delta-T in writing of any
defect covered by
any other warranty within thirty (30) Days after discovering
such defect,
and in no case later than thirty (30) Days after
expiration of the
applicable warranty period.
12.8 Performance in Excess of Guarantees:
Performance of the Plant in
excess of the performance guarantees shall in no way be
construed to void
the warranties set forth herein.
13. Transfer of title and Risk of Loss
Title to, and risk of loss of, the Equipment or any part
thereof and all
materials and components used, or to be used in the Plant, shall
pass to Owner
upon delivery to the Work site. This provision, however, shall
in no case be
deemed to alter any of the rights or obligations of any
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Page 23
party under any insurance policy provided under Exhibit G, or
any waiver of
subrogation set forth in Section 14 below.
14. Insurance
14.1 Required Insurance:
Each Party shall carry the insurance coverage
described in Exhibit G as insurance to be carried by it.
14.2 Adjustment of Loss:
Any loss insured under property or builders risk
insurance required under this Section 14 shall be adjusted by
the insurance
carrier with the insured as fiduciary for the other party or
parties whose
interests are insured thereunder as their interests may
appear, and the
insured shall pay the proceeds due to them promptly. The
insured shall bear
the costs of the deductible, if any, under such policy.
14.3 Waiver of Subrogation:
Owner and Delta-T intend that all builder's
risk policies purchased, or required to be purchased, in
accordance with
Exhibit G will protect Owner, Delta-T and all subcontractors
at any tier,
and will provide primary coverage for all losses and damages
caused by the
perils or causes of loss covered thereby. Owner and
Delta-T waive all
rights against each other and their respective
subcontractors, officers,
directors, agents and employees of the other arising out of
or resulting
from any of the perils or causes of loss covered by such
policies and any
other property insurance during the period prior to Final
Completion and
payment of all amounts due to Delta-T under this Contact. None
of the above
waivers shall extend to the rights that any Party making
such waiver may
have to the proceeds of insurance held by Owner as trustee
or otherwise
payable under any policy so issued. In addition, Owner
waives all rights
against Delta-T, its subcontractors at any tier and the
officers, directors
and employees and agents of any of them for business
interruption and any
other consequential damages caused by, arising out of or
resulting from any
such insured perils or causes of loss or any other peril or
cause of loss
whether or not insured. All policies required under the
Contract shall be
endorsed to include such waivers of subrogation, or
confirmation of such
waivers shall appear on the certificates of insurance
required to be
delivered under Section 14.4 below. Owner and the Delta-T
shall require
from each of their contractors and subcontractors who
do work on the
Project similar waivers, each in favor of the other parties
enumerated in
this Section.
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Page 24
14.4 Certificates of Insurance:
Before commencing the Work, Delta-T and
Owner shall each furnish the other with certificates
evidencing the
coverage required under Exhibit G from the insurance company
or companies
carrying the aforesaid coverage. These certificates will
provide that the
policies may not be amended or terminated unless at least
thirty (30) days
prior written notice is given to Owner and Delta-T. Failure of
either Party
to demand any such certificate prior to commencement of the
Work shall not,
however, be deemed to relieve any Party of its obligation
to carry such
insurance.
15. Indemnity
15.1 Indemnity by Delta-T for Personal Injury and Property
Damage:
Delta-T
shall indemnify and hold harmless Owner and its agents and
employees from
and against all claims made by a third party for any,
damages, losses and
expenses, including, but not limited to attorney's fees,
arising out of or
resulting from Delta-T's performance of the Work, provided
that any such
damage, loss or expense: (1) is attributable to bodily
injury, sickness,
disease or death, or to injury to or destruction of
tangible property
(other than the Plant, Equipment or the Work itself) and (2)
is caused in
whole or in part by any negligent act or omission of
Delta-T, its
subcontractors, or anyone for whose acts Delta-T is liable.
In the event
that any such damage, loss or expense was caused in part by
Owner or by any
other person or entity, however, then Delta-T shall be
obliged to pay only
the portion of the damage, loss or expense, including
reasonable attorney's
fees as is attributable to its relative share of the
negligence or omission
which caused such damage, loss or expense.
15.2 Indemnity by Delta-T for Intellectual Property:
Notwithstanding
anything to the contrary herein, Delta-T hereby warrants
that the Plant,
and the use thereof in an application described in the
process description
set forth at Exhibit A, as delivered by Delta-T under this
Contract, when
operated in accordance with Delta-T's operating
instructions, will not
infringe any United States patent, copyright, any trade
secret, or any
other intellectual property right held by others. Delta-T
further agrees,
upon receipt of notification from Owner of a lawsuit or claim
against Owner
for such an infringement, to promptly defend such claim
with competent
counsel of its own choosing. Delta-T further agrees, to
indemnify Owner
against any royalties, damages, orders, and court costs,
awarded by a
final, non-appealable judgment resulting from a finding of an
infringement
covered by this indemnity, or the settlement of a claim
indemnifiable
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Page 25
under this Section 15.2.
15.3 Conditions to Indemnity:
The indemnities set forth in Sections 15.1
and 15.2 above all shall not apply to any design, process or
product of a
particular manufacturer or manufacturers, which is
specified by Owner.
These indemnities are valid only if (a) Owner gives notice of
any claim or
lawsuit for which it claims indemnity within time sufficient
for Delta-T to
contest such claim, (b) Owner cooperates fully and promptly
with Delta-T in
the defense thereof at Owner's expense for all items
related to such
defense for time of witnesses who are employees of Owner,
costs related to
travel, production of documents, fees for any counsel it
elects to assist
it in addition to counsel appointed by Delta-T for defense
of the claim,
and (c) Delta-T has full authority in defense of such lawsuit
or claim and
to settle such claim, provided that, it pays to Owner the
cost, if any, of
any change in operations resulting from such settlement. In
no case shall
Delta-T be liable under Sections 15.1 or 15.2 for any
amount, including
costs and attorney's fees, in excess of the limit set forth
at Section 16
below.
15.4 Indemnity by Owner:
Owner shall indemnify and hold harmless Delta-T
and its agents and employees from and against all
damages, losses and
expenses, including but not limited to attorney's fees,
and arising or
resulting from a claim, order, requirement or charge made or
brought by a
third party or by the federal, state or local
government, or any
department, agency or subdivision thereof, based, in whole or
in part, on:
(a) defects in title; (b) Owner's negligence; (c)
hazardous materials,
unless such materials were brought on the Site by
Delta-T or its
subcontractors; (d) the existence of any substance located on
or under the
Work site, unless such substance was brought on the Site by
Delta-T or its
subcontractors; (e) a condition of the Work site subject
to any law or
regulation related to protection of the environment; or
(f) any other
matters for which Owner shall have responsibility
pursuant to this
Contract. This indemnification is valid only if (a) Delta-T
gives notice of
any claim or lawsuit for which it claims indemnity within
time sufficient
for Owner to contest such claim, (b) Delta-T cooperates fully
and promptly
with Owner in the defense thereof at its expense for all
items related to
such defense for time of witnesses who are employees of
Delta-T, costs
related to travel, production of documents, fees for any
counsel it elects
to assist it in addition to counsel appointed by Owner for
defense of the
claim, and (c) Owner has full authority in defense of such
lawsuit or claim
and to settle such claim, provided that such settlement
requires payment of
monetary damages only and that Owner can, and does, pay the
full cost of
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any such settlement.
16. Limitation of Liability
In no case shall Delta-T or Owner have any liability to the
other under or
arising from any performance, delay in performance, or breach of
this Contract
for any indirect, incidental, reliance, punitive, exemplary, or
consequential
damages (including, without limitation, lost profits, increase in
costs of goods
or services resulting from delay, cost of capital or losses
due to business
interruption) whether based on contract, tort or other legal
theory, whether or
not Delta-T had knowledge of the damages that might result, except
as expressly
provided otherwise under these General Conditions and except in
case of breach
of Section 17 below, to which this limitation shall not apply.
Subject to the
limitations set forth in this paragraph, nothing shall preclude
Delta-T or Owner
from recovering direct damages. Furthermore, Delta-T's
maximum cumulative
liability for any and all direct damages under this Contract,
including without
limitation liquidated damages payable Exhibit D, shall be as
follows:
1. 100% of the Contract Sum as set forth in paragraph 8.1
beginning at
commencement of the Project. (For purposes of paragraph 16 only,
the computation
of the Contract Sum shall not include any Change Orders as
provided for in this
Agreement.) The 100% of Contract Sum maximum liability shall
be reduced in
amounts equal to the payments made by Owner to Delta-T under
this Agreement.
Once the Owner has paid Delta-T 50% of the Contract Sum,
Delta-T's maximum
liability shall remain fixed at 50% of the Contract Sum until
such time as the
Plant reaches Mechanical Completion.
2. Once the Plant reaches Mechanical Completion,
Delta-T's maximum
cumulative liability shall be reduced to Thirteen
Million Dollars
($13,000,000.00), inclusive of the Retainage provided for under
this Agreement.
Delta-T's maximum liability shall remain fixed at $13,000,000.00
until such time
as the Plant reaches 90% of the Performance Guaranty values set
forth in this
Agreement.
3. Upon reaching 90% of the Performance Guaranty
amounts, Delta-T's
maximum cumulative liability shall be reduced to the amount of
the Retainage
which shall be released pursuant to Exhibit B.
The limitations set forth in this Section shall not
apply to limit or
restrict available insurance nor shall it effect warranty or
indemnification
obligations hereunder.
17. Confidentiality
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17.1 Confidential Information:
Owner shall not use any Confidential
Information for any purpose other than the purposes
permitted under this
Contract and shall not use any Delta-T Technology except as
permitted under
Section 17.2. Furthermore, Owner shall not disclose any
Delta-T Technology
or other Confidential Information to, or permit the visual
inspection of
the Equipment, Plant or Work embodying any Confidential
Information by, any
person or entity other than its employees who need to have
access to such
data in order to operate the Plant, any consulting engineers
retained by
Owner, or representatives of the construction lender unless
(a) such access
is required by local, state or federal regulatory authorities,
or (b) it is
necessary to do so in order to maintain or repair the
Plant or to
facilitate interface of connection of the Equipment to other
equipment or
facilities of Owner, and Owner has complied with the first
right of refusal
requirements of Section 17.3 below; and (c) Owner first
obtains a signed
confidentiality agreement from such person in the form
attached hereto as
Exhibit H and provided a copy of the same to Delta-T. In
addition to the
foregoing, Delta-T shall have the right to reasonably
object to Owner's
request to disclose Confidential Information to third parties.
Furthermore,
Owner shall not disclose any Confidential Information
to any of its
employees other than those who have been made aware of and
agreed to comply
with the non-disclosure provisions of this Section 17.1.
Owner shall not
disclose any Confidential Information pursuant to court
order or other
legal process unless it is advised by its legal counsel that
it is legally
required to do so; it has promptly given Delta-T notice of
such order or
process so that Delta-T can seek to obtain a secrecy order;
and, it uses
all other reasonable means to ensure the confidential
treatment of such
information. In particular, but without limitation, in no
event will Owner
knowingly allow an entity that is a competitor of Delta-T
to tour the
Plant, or to provide maintenance or other services that would
expose it to
Delta-T Technology, as long as there is a reasonably feasible
alternative
to complete the maintenance through Delta-T or a
non-competitor of Delta-T.
A "competitor" for this purpose shall mean entities listed
on Exhibit I,
and such other entities as Delta-T may advise Owner from
time to time in
writing. Owner shall maintain a log of each individual
(other than its
employees and contractors) who has access to the Delta-T
Technology, and
the date and purpose for such access. Owner shall provide a
copy of such
log to Delta-T upon request.
17.2 License of Delta-T Technology:
Owner acknowledges that Delta-T is and
shall remain the sole owner of the Delta-T Technology,
and of the
copyrights in all the drawings, manuals and other documents
provided by
Delta-T under this Agreement. Delta-T grants to
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Owner, subject to the conditions of this Agreement, a
non-exclusive,
paid-up, non-transferable right to use in perpetuity
the Delta-T
TECHNOLOGY, without right to grant such rights to others,
solely for the
purposes of:
a. Use and operation of the Plant.
b. Maintenance, repair, and optimization or enhancement
of the Plant.
Optimization and enhancement, for this purpose,
shall include
de-bottlenecking, but shall not include expanding the
physical dimensions
of the distillation columns and molsieve vessels specified
in the design,
or adding to the original number of distillation columns
and molsieve
vessels delivered by Delta-T under this Contract. Delta-T
agrees that if
Owner wishes to expand or add distillation columns or
molsieve vessels in
order to increase the production capacity of the Plant,
Delta-T shall
negotiate in good faith with Owner to agree to a grant of
rights, and
corresponding technology fee, to allow for such expansion or
addition. The
right granted under this Section 17.2 shall become
effective only upon
payment in full of the entire amount due to Delta-T under
Section 8 above,
and Owner shall have no right to use any such Delta-T
Technology, for any
purpose other than Plant Startup and conducting the
Performance Test until
the payment of all such amounts is made per the terms of this
Contract.
17.3 First Right of Refusal:
Owner shall not disclose any Delta-T
Technology for the purpose of maintenance or repair of the
Plant to anyone
other than its employees or other entities who need to
have access for
those purposes unless (a) Owner first obtains a
fully executed
Non-Disclosure Agreement in a form identical to Exhibit H
from each such
person or entity who may be exposed in any way to Delta-T's
Technology and
(b) Owner provides Delta-T with a copy of such
fully executed
Non-Disclosure Agreement.
18. Dispute Resolution
18.1 Executive Conference or Mediation:
In the event of any controversy or
claim arising out of or related to this Contract, or the
interpretation,
termination or breach hereof, other than default in
payment due under
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