INSTRUCTIONS FOR COMPLETION OF AGC DOCUMENT 410 STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS BETWEEN OWNER AND CONTRACTOR

 

                                                                      Exhibit 10

 

 

                  THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA

 

 

 

                         INSTRUCTIONS FOR COMPLETION OF

                                AGC DOCUMENT 410

                          STANDARD FORM OF DESIGN-BUILD

                        AGREEMENT AND GENERAL CONDITIONS

                          BETWEEN OWNER AND CONTRACTOR

           (Where the Basis of Payment is the Actual Cost Plus a Fee,

                     with a Guaranteed Maximum Price Option)

 

1993 EDITION

         The Standard  Form of  Design-Build  Agreement  and General  Conditions

between  Owner and  Contractor  (Cost Plus a Fee with GMP Option),  AGC Document

410, is a very  substantial  revision of the 1982 edition.  It is designed to be

used as a follow-on  document to AGC 400,  Preliminary  Design- Build  Agreement

Between Owner and  Contractor,  or as a stand-alone  document that addresses the

entire design-build process, including the services otherwise provided under AGC

400. The revision to AGC 410 is in response to new circumstances, e.g. hazardous

materials and more options for dispute  resolution.  The revision also is in the

interest  of  creating  a  document  clearly  stating  the  parties'  rights and

responsibilities,  reducing the  potential  for disputes and guiding  those less

experienced in the design-build method of project delivery.

 

GENERAL INSTRUCTIONS

 

Standard Form

 

         These instructions are for the information and convenience of the users

of AGC 410, 1993 Edition. They are not part of the agreement nor a commentary on

or  interpretation  of the contract  form.  It is the intent of the parties to a

particular  agreement  that controls its meaning and not that of the writers and

publishers of the standard  form. As a standard  form,  this  agreement has been

designed to establish the relationship of the parties in the standard situation.

Recognizing that every project is unique, modifications may be required. See the

recommendations for modifications, below.

 

Insurance and Legal Counsel

 

         This  agreement  has  important   legal  and  insurance   consequences.

Consultation  with an  attorney  and an  insurance  adviser is  encouraged  with

respect to its completion or modification.

 

DESIGN-BUILD FAMILY OF DOCUMENTS

 

         In the design-build  project delivery method,  the owner and contractor

enter  into  a  single   contract   wherein  the   contractor   undertakes   the

responsibility to provide for both the design and construction of the project in

conformance  with  basic  requirements  which  have been set forth by the owner.

Design may be  performed  within  the  contractor's  organization,  or it may be

performed  by  design  professionals  under  a  separate  contract  between  the

architect/engineer and contractor (AGC 420).

 

         The AGC  family  of  design-build  standard  forms  has been  carefully

coordinated  (See  diagram).  Use of other  forms or AGC  forms  with  different

publication  dates with any of this series of contract  documents  would require

extensive modification and is not recommended.

 

                   USE OF AGC DESIGN-BUILD SERIES OF DOCUMENTS

 

LICENSING LAWS

 

         State  architect/engineer  licensing  laws must be  considered by firms

interested in  design-build.  In addition to the requirement for licensed design

professionals  to perform  those  services  regulated  by the  licensing  law, a

corporate professional license may be required.  This may be true whether design

is provided  by in-house  architect/engineers  or design  professionals  who are

independent  contractors.  (This  family of  documents  is written to be used in

either  situation.)  There is a growing body of state law in this area that must

be reviewed to ensure that design-build contracts are valid and enforceable.

 

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COMPLETING THE AGREEMENT

 

Completing Blanks

 

         Diamonds in the margins indicate  provisions  requiring parties to fill

in blanks with information.

 

Modifications

 

         Supplemental conditions, provisions added to the printed agreement, may

be adopted by reference. It is always best for supplements to be attached to the

agreement.

 

         Provisions  in the printed  document that are not to be included in the

agreement may be deleted by striking through the word,  sentence or paragraph to

be omitted.  It is  recommended  that unwanted  provisions not be blocked out so

that the deleted materials are illegible. The parties should be clearly aware of

the material deleted from the standard form.

 

         It  is  a  good  practice  for  both  parties  to  sign  and  date  all

modifications and supplements.

 

AGC 410

 

         If AGC 410 is  executed  after  AGC  400  has  been  entered  into  and

completed, then the work product of AGC 400 (normally schematic design documents

plus a  preliminary  estimate and  schedule) is simply  referenced in AGC 410 as

part of the Owner's  Program  and other  relevant  information  that is provided

under Subparagraph 4.1.1, and need not be duplicated.

 

Article 2

 

         In paragraph 2.2 the parties  identify the  Architect/Engineer  for the

Project.

 

         Subparagraph 2.4.1 details the Contract Documents and provides an order

of priority in case of conflicts.  If a GMP is prepared,  the documents  forming

its basis  are to be  listed  in  Amendment  No.  1,  which is  attached  to the

Agreement.

 

Article 3

 

         The GMP  provisions in Paragraph 3.2 are optional.  The  particulars of

the GMP (its  basis,  the  concept  of  including  a  contingency  sum under the

contractor's control, etc.) are clearly delineated. The GMP will be prepared (if

the Owner  requests)  when the  drawings  and  specifications  are  sufficiently

complete,   thus  not  tieing  the  Contractor  to  a  specific,   and  possibly

inappropriate,  moment in time when the GMP must be prepared.  Further,  the GMP

(and date of Substantial Completion) are added later via Amendment No. 1.

 

         Paragraph 3.4 addresses the risk of hazardous materials.

 

         The  additional  services set forth in Paragraph  3.8 have been greatly

expanded   and   match   the    Additional    Services    provisions    of   the

Contractor-Architect/Engineer agreement, AGC 420.

 

Article 4

 

         A new provision relates to the Owner's Representative in Paragraph 4.4.

The Owner is to name its  representative,  who must  meet with the  Contractor's

approval. There is a description of the Representative's duties.

 

Article 5

 

         Paragraph 5.4 provides for the contingent assignment of subcontracts to

the Owner should the Contractor default.

 

Article 6

 

         A date  of  Substantial  Completion  may  be  established  in  the  GMP

Amendment.  If no GMP is  established,  the  parties  may  establish  a date  of

Substantial  Completion  in  Amendment  No. 1 and  proceed  on a cost plus a fee

basis.

 

 

<PAGE>

 

Article 7

 

         An initial payment by the Owner is introduced in Paragraph 7.1.

 

         Payment for the  Contractor's  services is split into two parts -- that

due  in  the   preconstruction   phase  (Paragraph  7.2),  and  that  due  after

construction commences (Paragraph 7.3).

 

Article 11

 

         Contractual  indemnification  is  governed  by state law and the states

differ as to the types of  indemnification  agreements  that they will  enforce.

Consultation with insurance and legal counsel with knowledge of the jurisdiction

is recommended.

 

         Paragraph  11.3  requires  the  statement  of the  Architect/Engineer's

professional  liability insurance coverage.  The rationale is that this coverage

is at least as  important as the other  coverages to be provided,  and gives the

Owner the opportunity to participate in setting the minimum liability limits for

all major policies.

 

Article 12

 

         New  provisions  have been added for the  Contractor  to  recover  lost

opportunity  costs if the  Contractor  terminates  the contract for cause or the

Owner terminates for convenience.

 

Article 13

 

         A few state laws may  require a  prominent  notice on the first page of

the contract  stating that the agreement is subject to  arbitration  (e.g.  Tex.

Bus. & Com. Code Ann. ss.35.53 (West 1987)).

 

         Dispute  resolution   provisions  have  been  revised  to  make  direct

discussions and then mediation preconditions of the demand for arbitration.

 

         A very  important  new concept is the  multi-party  dispute  resolution

procedure  in which all parties  necessary to resolve a claim will be parties to

the same arbitration proceeding (Paragraph 13.6).

 

         In  addition,  the cost of dispute  resolution  is  recoverable  by the

prevailing party from the other party (Paragraph 13.7).

 

Amendment No. 1

 

         This amendment  establishes a Guaranteed  Maximum Price for the project

and/or the date of Substantial Completion.

 

 

 

 

 

 

 

 

<PAGE>

 

                  THE ASSOCIATED GENERAL CONTRACTORS OF AMERICA

 

                          STANDARD FORM OF DESIGN-BUILD

                        AGREEMENT AND GENERAL CONDITIONS

                          BETWEEN OWNER AND CONTRACTOR

         (Where the Basis of Payment is the Cost of the Work Plus a Fee,

                     with a Guaranteed Maximum Price Option)

 

                                TABLE OF ARTICLES

 

          1.   AGREEMENT

          2.   GENERAL PROVISIONS

          3.   CONTRACTOR'S RESPONSIBILITIES

          4.   OWNER'S RESPONSIBILITIES

          5.   SUBCONTRACTS

          6.   CONTRACT TIME

          7.   COMPENSATION

          8.   COST OF THE WORK

          9.   CHANGES IN THE WORK

          10.  PAYMENT FOR CONSTRUCTION PHASE SERVICES

          11.  INDEMNITY, INSURANCE AND WAIVER OF SUBROGATION

          12.  TERMINATION  OF  THE  AGREEMENT  AND  OWNER'S  RIGHT  TO  PERFORM

               CONTRACTOR'S RESPONSIBILITIES

          13.  DISPUTE RESOLUTION

          14.  MISCELLANEOUS PROVISIONS

          15.  EXISTING CONTRACT DOCUMENTS

 

          AMENDMENT NO.1

 

 

 

 

 

 

 

 

 

 

 

 

 

This Agreement has important legal and insurance consequences. Consultation with

an  attorney  and  insurance  consultant  is  encouraged  with  respect  to  its

completion or modification.

 

 

 

<PAGE>

 

 

         STANDARD FORM OF DESIGN-BUILD AGREEMENT AND GENERAL CONDITIONS

                          BETWEEN OWNER AND CONTRACTOR

 

(Where  the  Basis  of  Payment  is the  Cost  of the  Work  Plus a Fee,  with a

Guaranteed Maximum Price Option)

 

                                    ARTICLE 1

 

                                    AGREEMENT

 

This  Agreement is made this 27th day of April in the year 2005,  by and between

the

 

OWNER                      Community First Bank

(Name and Address)         3685 Blue Ridge Blvd.

                           Walhalla, SC 29691

 

and the

 

CONTRACTOR                 Trehel Corporation

(Name and Address)         P.O. Box 1707

                           Clemson, SC 29633-1707

 

 

for services in connection with the following

 

PROJECT                    A New Financial Institution for Community First Bank.

 

 

          Notice to the parties shall be given at the above addresses.

 

                                    ARTICLE 2

 

                               GENERAL PROVISIONS

 

2.1 TEAM  RELATIONSHIP  The Owner and the  Contractor  agree to proceed with the

Project on the basis of trust,  good faith and fair dealing,  and shall take all

actions  reasonably  necessary to perform this  Agreement in an  economical  and

timely manner,  including  consideration of design modifications and alternative

materials or equipment  that will permit the Work to be  constructed  within the

Guaranteed  Maximum Price (GMP) and by the date of  Substantial  Completion,  if

they are  established by Amendment No. 1. The  Contractor  agrees to procure the

architectural  and  engineering   services  set  forth  below,  and  to  furnish

construction and administration of the Work.

 

2.2  ARCHITECTIENGINEER Architectural and engineering services shall be procured

from licensed,  independent design  professionals  retained by the Contractor or

furnished by licensed employees of the Contractor, or as permitted by the law of

the  state  where the  Project  is  located.  The  person  or  entity  providing

architectural   and   engineering   services   shall  be   referred  to  as  the

Architect/Engineer.   If  the   Architect/Engineer   is  an  independent  design

professional,  the  architectural  and  engineering  services  shall be procured

pursuant   to  a   separate   agreement   between   the   Contractor   and   the

Architect/Engineer.   The   Architect/Engineer  for  the  Project  is  Signature

Architects (Clemson, SC); Britt, Peters & Associates, Inc. (Greenville, SC)

 

2.3 EXTENT OF AGREEMENT This Agreement is solely for the benefit of the parties,

represents  the  entire  and  integrated  agreement  between  the  parties,  and

supersedes all prior negotiations, representations or agreements, either written

or oral.

 

2.4      DEFINITIONS

        .1The Contract Documents consist of:

          a.   Change Orders and written  amendments to this Agreement signed by

               both the  Owner  and  Contractor,  including  Amendment  No. 1 if

               executed;

          b.   this  Agreement  except for the existing  Contract  Documents set

               forth in item e below;

<PAGE>

 

          c.   the most  current  Documents  approved  by the Owner  pursuant to

               Subparagraphs 3.1.4, 3.1.5 or 3.1.6;

          d.   the information provided by the Owner pursuant to Clause 4.1.2.1;

          e.   the  Contract  Documents in existence at the time of execution of

               this Agreement which arc set forth in Article 15;

          f.   the Owner's Program provided pursuant to Subparagraph 4.1.1.

 

In  case  of  any  inconsistency,  conflict  or  ambiguity  among  the  Contract

Documents,  the  Documents  shall  govern in the order in which  they are listed

above.

 

     .2   The Work is the Design  Phase  Services  procured in  accordance  with

          Paragraph 3.1, the GMP Proposal  provided in accordance with Paragraph

          3.2, the  Construction  Phase  Services  provided in  accordance  with

          Paragraph 3.3,  Additional Services that may be provided in accordance

          with  Paragraph  3.8,  and  other  services  which are  neccessary  to

          complete the Project in accordance with and reasonably  inferable from

          the Contract Documents.

 

     .3   The term Day shall mean calendar day.

 

     .4   A  Subcontractor  is a person or entity who has an agreement  with the

          Contractor to perform any portion of the Work. The term  Subcontractor

          does not include the  Architect/Engineer  or any  separate  contractor

          employed by the Owner or any separate contractor's subcontractors.

 

     .5   A  Subsubcontractor  is a person or entity who has an agreement with a

          Subcontractor to perform any portion of the Subcontractor's work.

 

     .6   Substantial Completion of the Work, or of a designated portion, occurs

          on the date when  construction is sufficiently  complete in accordance

          with the  Contract  Documents  so that the Owner can occupy or utilize

          the  Project,  or a  designated  portion,  for the use for which it is

          intended. This date shall be confirmed by a certificate of Substantial

          Completion  signed by the Owner and Contractor.  The certificate shall

          state the respective  responsibilities of the Owner and Contractor for

          security,  maintenance,  heat,  utilities,  damage  to the  Work,  and

          insurance.  The certificate  shall also list the items to be completed

          or  corrected,  and  establish  the  time  for  their  completion  and

          correction.

 

     .7   The  Owner's  Program  is  an  initial   description  of  the  Owner's

          objectives,  including budgetary and time criteria, space requirements

          and relationships, flexibility and expendability requirements, special

          equipment and systems, and site requirements.

 

                                    ARTICLE 3

 

                          CONTRACTOR'S RESPONSIBILITIES

 

         The Contractor  shall be  responsible  for procuring the design and for

the  construction  of the Work  consistent  with the  Owner's  Program,  as such

Program  may be  modified  by the Owner  during  the  course  of the  Work.  The

Contractor  shall exercise  reasonable  skill and judgment in the performance of

its services,  but does not warrant or guarantee  schedules and estimates  other

than those that are part of the GMP proposal.

 

3.1      DESIGN PHASE SERVICES

 

3.1.1  PRELIMINARY   EVALUATION  The  Contractor  shall  provide  a  preliminary

evaluation of the Project's  feasibility  based on the Owner's Program and other

relevant information.

 

3.1.2 PRELIMINARY  SCHEDULE The Contractor shall prepare a preliminary  schedule

of the Work for the  Owner's  written  approval.  The  schedule  shall  show the

activities of the Owner, Architect/Engineer and Contractor necessary to meet the

Owner's completion requirements. The schedule shall be updated periodically with

the level of detail for each schedule  update  reflecting the  information  then

available.  If an update indicates that a previously  approved schedule will not

be met,  the  Contractor  shall  recommend  corrective  action  to the  Owner in

writing.

<PAGE>

 

3.1.3  PRELIMINARY   ESTIMATE  When  sufficient  Project  information  has  been

identified,  the  Contractor  shall prepare for the Owner's  written  approval a

preliminary  estimate  utilizing area, volume or similar  conceptual  estimating

techniques.  The estimate shall be updated periodically with the level of detail

for each estimate  update  reflecting the  information  then  available.  If the

preliminary  estimate or any update exceeds the Owner's  budget,  the Contractor

shall make written recommendations to the Owner.

 

3.1.4  SCHEMATIC  DESIGN  DOCUMENTS The Contractor  shall submit for the Owner's

written approval  Schematic Design  Documents,  based on the Owner's Program and

other relevant  information.  Schematic Design Documents shall include drawings,

outline specifications and other conceptual documents illustrating the Project's

basic  elements,  scale,  and their  relationship  to the site. One set of these

documents  shall be  furnished  to the Owner.  The  Contractor  shall update the

preliminary schedule and estimate based on the Schematic Design Documents.

 

3.1.5 DESIGN  DEVELOPMENT  DOCUMENTS The Contractor shall submit for the Owner's

written approval Design  Development  Documents based on the approved  Schematic

Design  Documents.  The Design  Development  Documents  shall further define the

Project including drawings and outline  specifications fixing and describing the

Project size and character,  and other  appropriate  elements  incorporating the

structural,  architectural,  mechanical and electrical systems. One set of these

documents  shall be  furnished  to the Owner.  The  Contractor  shall update the

schedule and estimate based on the Design Development Documents.

 

3.1.6 CONSTRUCTION DOCUMENTS The Contractor shall submit for the Owner's written

approval  Construction  Documents  based  on  the  approved  Design  Development

Documents. The Construction Documents shall set forth in detail the requirements

for  construction of the Work, and shall consist of drawings and  specifications

based upon codes, laws or regulations  enacted at the time of their preparation.

Construction shall be in accordance with these approved Construction  Documents.

One set of these documents shall be furnished to the Owner prior to commencement

of construction. If a GMP has not been established, the Contractor shall prepare

a further update of the schedule and estimate.

 

3.1.7  OWNERSHIP OF  DOCUMENTS  All  Documents  shall remain the property of the

Contractor  and are not to be used by the Owner  without the written  consent of

the Contractor.

 

3.2  GUARANTEED MAXIMUM PRICE (GMP) PROPOSAL

 

3.2.1 When the  drawings  and  specifications  are  sufficiently  complete,  the

Contractor  shall, if requested by the Owner,  propose a GMP, which shall be the

sum  of the  estimated  Cost  of the  Work  as  defined  in  Article  8 and  the

Contractor's  Fee as defined in Article 7. The GMP is subject to modification as

provided in Article 9.

 

3.2.2 If a GMP is not  established,  all references in this Agreement to the GMP

shall  not be  applicable,  and  the  parties  shall  proceed  on the  basis  of

reimbursement  as provided in Articles 7 and 8. In the absence of a GMP however,

the parties may establish a date of Substantial Completion.

 

3.2.3 The estimated Cost of the Work may include the Contractor's contingency, a

sum  established  by the Contractor  for use at the  Contractor's  discretion to

cover costs which are  properly  reimbursable  as a Cost of the Work but are not

the basis for a Change Order.

 

3.2.4 BASIS OF GUARANTEED  MAXIMUM PRICE The  Contractor  shall include with the

GMP proposal a written statement of its basis, which shall include:

     .1   a list of the  drawings  and  specifications,  including  all addenda,

          which were used in preparation of the GMP proposal;

     .2   a list of allowances and a statement of their basis;

     .3   a list of the assumptions and clarifications made by the Contractor in

          the  preparation  of the GMP proposal to  supplement  the  information

          contained in the drawings and specifications;

 

<PAGE>

 

     .4   the date of  Substantial  Completion  upon which the  proposed  GMP is

          based,  and the  Schedule  of Work upon which the date of  Substantial

          Completion is based;

     .5   schedule of applicable alternate prices;

     .6   schedule of applicable unit prices;

     .7   statement of Additional Services included, if any; and

     .8   the time limit for acceptance of the GMP proposal.

 

3.2.5 The  Contractor  shall meet with the Owner to review the GMP proposal.  In

the event that the Owner  discovers any  inconsistencies  or inaccuracies in the

information  presented,  the Owner shall  promptly  give  written  notice to the

Contractor,  who shall make  appropriate  adjustments  to the GMP,  its basis or

both.

 

3.2.6 Unless the Owner accepts the GMP proposal in writing on or before the date

specified in the proposal for such  acceptance  and so notifies the  Contractor,

the GMP  proposal  shall not be  effective  without  written  acceptance  by the

Contractor.

 

3.2.7 Prior to the Owner's  acceptance of the  Contractor's  GMP  proposal,  the

Contractor  shall not incur any cost to be reimbursed as part of the Cost of the

Work,  except as provided  in this  Agreement  or as the Owner may  specifically

authorize in writing.

 

3.2.8 Upon  acceptance by the Owner of the GMP  proposal,  the GMP and its basis

shall  be set  forth in  Amendment  No.  I. The GMP and the date of  Substantial

Completion  shall be subject to  modification by changes in the Work as provided

in Articles 6 and 9.

 

3.2.9  The GMP  shall  include  in the Cost of the Work  those  taxes  which are

applicable at the time the GMP is established. If in accordance with the Owner's

direction  an exemption  is claimed for taxes,  the Owner  agrees to  indemnify,

defend and hold the Contractor  harmless for any liability,  penalty,  interest,

fine,  tax  assessment,  attorneys fees or other expense or cost incurred by the

Contractor as a result of any action taken by the Contractor in accordance  with

the Owner's direction.

 

3.3      CONSTRUCTION PHASE SERVICES

 

3.3.1 The  Construction  Phase will commence upon the issuance by the Owner of a

written notice to proceed with construction.  If construction commences prior to

execution of Amendment No. 1, the Owner's  written  notice to proceed shall list

the  documents  that are  applicable to the part of the Work which the Owner has

authorized.

 

3.3.2 In order to complete the Work, the Contractor  shall provide all necessary

construction supervision,  inspection, construction equipment, labor, materials,

tools, and subcontracted items.

 

 

3.3.3  The  Contractor  shall  give all  notices  and  comply  with all laws and

ordinances  legally  enacted at the date of  execution  of the  Agreement  which

govern the proper performance of the Work.

 

3.3.4 The Contractor shall prepare and submit a Schedule of Work for the Owner's

written  approval.  This  schedule  shall  indicate  the dates for the start and

completion of the various  stages of the  construction  including the dates when

information  and approvals  are required from the Owner.  It shall be revised as

required by the conditions of the Work.

 

3.3.5 The  Contractor  shall assist the Owner in securing  the building  permits

necessary for the construction of the Project.

 

3.3.6 The  Contractor  shall take  necessary  precautions  for the safety of its

employees on the Project,  and shall comply with all  applicable  provisions  of

federal,  state and  municipal  safety  laws to prevent  accidents  or injury to

persons on, about or adjacent to the Project site. The  Contractor,  directly or

through its  Subcontractors,  shall erect and properly maintain at all times, as

required by the  conditions and progress of the Work,  necessary  safeguards for

 

<PAGE>

 

the protection of workers and the public. The Contractor,  however, shall not be

responsible  for the  elimination  or  abatement  of safety  hazards  created or

otherwise resulting from work at the Project site carried on by the Owner or its

employees,  agents,  separate  contractors or tenants. The Owner agrees to cause

its employees,  agents,  separate  contractors and tenants to abide by and fully

adhere to all applicable provisions of federal,  state and municipal safety laws

and regulations.  The above provision shall not relieve  Subcontractors of their

responsibility for the safety of persons or property in the performance of their

work, nor for compliance with all applicable provisions of relevant laws.

 

3.3.7  The  Contractor  shall  keep such full and  detailed  accounts  as may be

necessary for proper financial management under this Agreement.  The Owner shall

be  afforded  access to all the  Contractor's  records,  books,  correspondence,

instructions,  drawings, receipts, vouchers, memoranda and similar data relating

to this Agreement.  The Contractor  shall preserve all such records for a period

of three years after the final payment or longer where required by law.

 

3.3.8 The Contractor  shall provide periodic written reports to the Owner on the

progress of the Work as agreed to by the Owner and Contractor.

 

3.3.9 The  Contractor  shall  develop a system of cost  reporting  for the Work,

including  regular  monitoring  of actual costs for  activities  in progress and

estimates for  uncompleted  tasks and proposed  changes in the Work. The reports

shall be presented to the Owner at mutually agreeable intervals.

 

3.3.10 At all times the Contractor shall maintain the site of the Work free from

debris and waste  materials  resulting  from the Work. At the  completion of the

Work, the Contractor shall remove from the premises all construction  equipment,

tools, surplus materials, waste materials and debris.

 

3.4      HAZARDOUS MATERIAL

 

3.4.1A hazardous Material is any substance or material  identified now or in the

future as hazardous under any federal, state or local law or regulation,  or any

other  substance  or material  which may be  considered  hazardous  or otherwise

subject to statutory or regulatory  requirements  governing  handling,  disposal

and/or  clean-up.  The Contractor shall not be obligated to commence or continue

Work until any known or suspected  Hazardous Material  discovered at the Project

site has been  removed,  rendered or  determined  to be harmless by the Owner as

certified by an independent  testing  laboratory and approved by the appropriate

government agency.

 

3.4.2 If after  the  commencement  of the  Work,  known or  suspected  Hazardous

Material is discovered at the Project site, the Contractor  shall be entitled to

immediately  stop Work in the affected area, and the Contractor shall report the

condition  to  the  Owner  and,  if  required,   the   government   agency  with

jurisdiction.

 

3.4.3 The Contractor shall not be required to perform any Work relating to or in

the  area of  known or  suspected  Hazardous  Material  without  written  mutual

agreement.

 

3.4.4 The Owner  shall be  responsible  for  retaining  an  independent  testing

laboratory to determine the nature of the material encountered and whether it is

a Hazardous Material requiring  corrective measures and/or remedial action. Such

measures shall be the sole  responsibility  of the Owner, and shall be performed

in a manner  minimizing any adverse effect upon the Work of the Contractor.  The

Contractor shall resume Work in the area affected by any Hazardous Material only

upon written agreement between the parties after the Hazardous Material has been

removed or rendered harmless.

 

3.4.5 If the  Contractor  incurs  additional  costs and/or is delayed due to the

presence of known or  suspected  Hazardous  Material,  the  Contractor  shall be

entitled to an equitable  adjustment  in the GMP and/or the date of  Substantial

Completion.

<PAGE>

 

3.4.6 To the  extent  not  caused  by the  negligent  acts or  omissions  of the

Contractor,  its Subcontractors and Sub-subcontractors and the agents of each of

them, the Owner shall defend,  indemnify and hold harmless the  Contractor,  its

Subcontractors or anyone employed directly or indirectly by any of them from all

claims, damages,  losses, costs and expenses including any related to or arising

from the repair,  replacement or  re-performance or Work, and also including but

not limited to attorney's fees, costs and expenses  incurred in connections with

any testing, site remediation,  or dispute resolution process, arising out of or

relating  to the  performance  of the Work in any  area  affected  by  Hazardous

Material,  which  includes  mold,  mildew,  fungi  or  other  similar  microbial

conditions.  To the fullest extent permitted by law, such indemnification  shall

apply regardless of fault, negligence, breach of warranty or contract, or strict

liability of the Owner.

 

3.4.7 The terms of this  Paragraph 3.4 shall survive the  completion of the Work

under this Agreement and/or any termination of this Agreement.

 

3.4.8 To the fullest extent permitted by law, the Owner shall defend,  indemnify

and hold harmless the Contractor, its Subcontractors or anyone employed directly

or  indirectly  by any of them from all claims for  bodily  injury and  property

damage that may arise by virtue of the existence, development or growth of mold,

mildew,  fungi or other similar  microbial  conditions during the performance of

the Work,  to the extent  that such  conditions  are  attributable  to the acts,

omissions or breaches of performance  under this Contract by Owner,  the Owner's

other contractors or anyone for whose acts the Owner may be liable.

 

3.5 ROYALTIES, PATENTS AND COPYRIGHTS The Contractor shall pay all royalties and

license fees which may be due on the  inclusion  of any patented or  copyrighted

materials, methods or systems selected by the Contractor and incorporated in the

Work.  The Contractor  shall defend,  indemnify and hold the Owner harmless from

all suits or claims for infringement of any patent rights or copyrights  arising

out of such  selection.  The Owner  agrees  to  defend,  indemnify  and hold the

Contractor  harmless  from any  suits or claims of  infringement  of any  patent

rights or  copyrights  arising  out of any  patented or  copyrighted  materials,

methods or systems specified by the Owner.

 

3.6 TAX  EXEMPTION If in accordance  with the Owner's  direction an exemption is

claimed for taxes, the Owner agrees to defend, indemnify and hold the Contractor

harmless from any liability, penalty, interest, fine, tax assessment,  attorneys

fees or other  expense or cost  incurred  by the  Contractor  as a result of any

action taken by the Contractor in accordance with the Owner's direction.

 

3.7      WARRANTIES AND COMPLETION

 

3.7.1 The Contractor  warrants that all materials and equipment  furnished under

the Construction Phase of this Agreement will be new unless otherwise specified,

of good  quality,  in  conformance  with the Contract  Documents,  and free from

defective  workmanship and materials.  Warranties  shall commence on the date of

Substantial  Completion of the Work or of a designated  portion.  The Contractor

agrees to correct all  construction  performed under this Agreement which proves

to be defective in  workmanship  and materials  within a period of one year from

the date of Substantial  Completion or for such longer periods of time as may be

set  forth  with  respect  to  specific  warranties  required  by  the  Contract

Documents.

 

3.7.2 Those products,  equipment,  systems or materials incorporated in the Work

at the  direction of or upon the specific  request of the Owner shall be covered

exclusively by the warranty of the  manufacturer.  There are no warranties which

extend  beyond  the  description  on the  face  thereof.  All  other  warranties

expressed or implied including the warranty of merchantability  and the warranty

of fitness for a particular purpose are expressly disclaimed.

 

3.7.3 The Contractor shall secure required  certificates of inspection,  testing

or approval and deliver them to the Owner.