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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ______________
Commission File Number 0-22879
BIORELIANCE CORPORATION
(Exact name of the registrant as specified in its charter)
DELAWARE 52-1541583
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14920 BROSCHART ROAD
ROCKVILLE, MARYLAND 20850
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(301) 738-1000
- --------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
As of November 1, 1999, 7,928,523 shares of registrant's Common Stock, par value
$.01 per share, were outstanding.
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BIORELIANCE CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
PART I FINANCIAL INFORMATION
Item 1 - Financial Statements:
<S> <C>
Consolidated Balance Sheets as of December 31, 1998 and
September 30, 1999.................................................. 3
Consolidated Statements of Income for the Three Months and
Nine Months Ended September 30, 1998 and 1999....................... 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1999................................... 5
Notes to Consolidated Financial Statements.......................... 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations.................................. 9
Item 3 - Quantitative and Qualitative Disclosures About Market Risks.. 20
PART II OTHER INFORMATION.................................................... 21
SIGNATURES........................................................................ 22
EXHIBIT INDEX....................................................................... 23
</TABLE>
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PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIORELIANCE CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30,
DECEMBER 31, 1999
1998 (UNAUDITED)
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents................................................... $ 8,847 $ 14,419
Marketable securities....................................................... 18,250 7,928
Accounts receivable, net.................................................... 21,399 19,037
Other current assets........................................................ 2,506 1,706
------------ ------------
Total current assets................................................... 51,002 43,090
Property and equipment, net..................................................... 25,371 33,714
Deposits and other assets....................................................... 572 979
------------ ------------
Total assets......................................................... $ 76,945 $ 77,783
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt........................................... $ 4,628 $ 4,065
Accounts payable............................................................ 2,685 2,796
Accrued employee compensation and benefits.................................. 1,955 2,085
Other accrued liabilities................................................... 1,732 2,298
Customer advances........................................................... 2,632 1,987
Deferred income taxes....................................................... 1,551 1,790
------------ ------------
Total current liabilities........................................ 15,183 15,021
Deferred taxes.............................................................. 25 0
Long-term debt.................................................................. 7,914 10,390
------------ ------------
Total liabilities................................................ 23,122 25,411
------------ ------------
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $.01 par value: 6,900,000 shares
authorized; no shares issued and outstanding............................. --- ---
Common stock, $.01 par value: 15,000,000 shares authorized;
7,821,344 and 7,928,503 shares issued and outstanding..................... 78 79
Additional paid-in capital.................................................. 52,586 52,763
Retained earnings (deficit)................................................. 1,449 201
Accumulated other comprehensive income...................................... (290) (671)
------------ ------------
Total stockholders' equity............................................. 53,823 52,372
------------ ------------
Total liabilities and stockholders' equity.............................$ 76,945 $ 77,783
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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BIORELIANCE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- -----------------------------
1998 1999 1998 1999
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenue........................................ $ 12,977 $ 12,424 $ 37,625 $ 34,556
----------- ----------- ------------ -----------
Expenses:
Cost of sales............................ 8,085 7,705 21,842 22,880
Selling, general and administrative...... 2,927 3,919 9,631 12,340
Research and development................. 312 330 1,045 995
----------- ----------- ------------ -----------
11,324 11,954 32,518 36,215
----------- ----------- ------------ -----------
Income (loss) from operations.................. 1,653 470 5,107 (1,659)
----------- ----------- ------------ -----------
Other (income) expense:
Interest income.......................... (436) (193) (1,356) (979)
Interest expense......................... 149 227 381 611
Other expense............................ 138 22 409 265
----------- ----------- ------------ -----------
(149) 56 (566) (103)
----------- ----------- ------------ -----------
Income (loss) before income taxes.............. 1,802 414 5,673 (1,556)
Income tax provision (benefit)................. 675 188 2,222 (308)
----------- ----------- ------------ -----------
Net income (loss).............................. $ 1,127 $ 226 $ 3,451 $ (1,248)
=========== =========== ============ ===========
Net income (loss) per share:
Basic.................................... $ 0.14 $ 0.03 $ 0.44 $ (0.16)
=========== =========== ============ ===========
Diluted.................................. $ 0.14 $ 0.03 $ 0.42 $ (0.16)
=========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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BIORELIANCE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1998 1999
--------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss). .................................................................. $ 3,451 $ (1,248)
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation..................................................................... 2,436 3,314
Amortization expense............................................................. 162 196
Amortization of bond premiums and discounts...................................... (115) (390)
Loss on disposal................................................................. 24 6
Deferred income taxes, net....................................................... 1,024 214
Changes in current assets and liabilities:
Accounts receivable, net..................................................... (5,858) 2,539
Other current assets......................................................... 118 743
Accounts payable............................................................. (290) 63
Accrued employee compensation and benefits................................... (158) 131
Other accrued liabilities.................................................... (782) 613
Customer advances............................................................ (462) (631)
Increase in deposits and other assets............................................ (63) (643)
-------- ------------
Net cash provided by (used in) operating activities.......................... (513) 4,907
-------- ------------
Cash flows from investing activities:
Purchases of marketable securities................................................. (28,358) (10,288)
Proceeds from the maturities of marketable securities.............................. 38,150 21,000
Purchases of property and equipment................................................ (3,880) (11,586)
-------- ------------
Net cash provided by (used in) investing activities..................... 5,912 (874)
-------- ------------
Cash flows from financing activities:
Proceeds from exercise of stock options............................................ 260 178
Proceeds from loan................................................................. --- 3,000
Payments on debt................................................................... (675) (556)
Payments on capital lease obligations.............................................. (493) (654)
Repurchase and cancellation of treasury stock...................................... (139) ---
-------- ------------
Net cash provided by (used in) financing activities...................... (1,047) 1,968
-------- ------------
Effect of exchange rate changes on cash and cash equivalents............................ 470 (429)
-------- ------------
Net increase in cash and cash equivalents............................................... 4,822 5,572
Cash and cash equivalents, beginning of period.......................................... 6,227 8,847
-------- ------------
Cash and cash equivalents, end of period................................................ $ 11,049 $ 14,419
======== ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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BIORELIANCE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) DESCRIPTION OF THE BUSINESS
BioReliance Corporation (the "Corporation" or "BioReliance") is a contract
service organization providing nonclinical testing and contract manufacturing
services for biologics to biotechnology and pharmaceutical companies worldwide.
(2) INTERIM FINANCIAL STATEMENTS PRESENTATION
The accompanying interim financial statements are unaudited and have been
prepared by the Corporation pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC") regarding interim financial
reporting. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements, and therefore these consolidated financial statements should be read
in conjunction with the audited consolidated financial statements, and the notes
thereto, included in the Corporation's Annual Report on Form 10-K. In the
opinion of management, the unaudited consolidated financial statements for the
three-month and nine-month periods ended September 30, 1998 and 1999 include all
normal and recurring adjustments which are necessary for a fair presentation of
the results of the interim period. The results of operations for the three-month
and nine-month periods ended September 30, 1998 and 1999 may not necessarily be
indicative of the results for the entire year ending December 31, 1999.
(3) NET INCOME (LOSS) PER SHARE
The Corporation calculates earnings per share ("EPS") on both a basic and
diluted basis. Dilutive securities are excluded from the computation in periods
which they have an anti-dilutive effect. Net income (loss) available to common
stockholders and common equivalent stockholders is equal to net income (loss)
for all periods presented.
The following table represents reconciliations between the weighted average
common stock outstanding used in basic EPS and the weighted average common and
common equivalent shares outstanding used in diluted EPS for each of the periods
presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1999 1998 1999
---- ---- --------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Weighted average common stock outstanding........ 7,815 7,926 7,782 7,873
Stock options, as if converted.................. 409 228 468 ---
------ ------ ------ -------
Weighted average common and common equivalent
shares outstanding............................... 8,224 8,154 8,250 7,873
====== ====== ====== ======
</TABLE>
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(4) SEGMENT INFORMATION
Summarized financial information concerning the Corporation's reportable
segments, for the three months and nine months ended September 30, is shown in
the following table:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1999 1998 1999
---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue:
Testing and Development $11,444 $11,227 $33,466 $31,378
Manufacturing 1,533 1,197 4,159 3,178
------- ------- ------- -------
Total $12,977 $12,424 $37,625 $34,556
======= ======= ======= =======
Gross Profit:
Testing and Development $ 4,868 $ 4,728 $15,999 $12,412
Manufacturing 24 (9) (216) (736)
------- ------- ------- -------
Total $ 4,892 $ 4,719 $15,783 $11,676
======= ======= ======= =======
</TABLE>
The following table outlines the Corporation's revenue and gross profit by
geographic region for the three months and nine months ended September 30:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1999 1998 1999
---- ---- ---- ----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Revenue:
United States $10,950 $10,973 $32,137 $29,517
Europe 2,027 1,451 5,488 5,039
------- ------- ------- -------
Total $12,977 $12,424 $37,625 $34,556
======= ======= ======= =======
Gross Profit:
United States $ 4,356 $ 4,340 $14,109 $10,284
Europe 536 379 1,674 1,392
------- ------- ------- -------
Total $ 4,892 $ 4,719 $15,783 $11,676
======= ======= ======= =======
</TABLE>
(5) NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivatives Instruments and for Hedging
Activities." SFAS No. 133 requires all derivatives to be recorded on the balance
sheet at fair value and establishes "special accounting" for the following three
different types of hedges: hedges of changes in the fair value of assets,
liabilities or firm commitments; hedges of the variable cash flows of forecasted
transactions; and hedges of foreign currency exposures of net investments in
foreign operations. SFAS No. 133 is effective for years beginning after June 15,
1999, with earlier adoption permitted. On July 8, 1999, the FASB issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the Effective Date of FASB Statement No. 133." SFAS No. 137 defers the effective
date of SFAS No. 133 until fiscal years beginning after
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June 15, 2000. The Corporation believes that the effect of adoption of SFAS No.
133 will not be material.
(6) BORROWINGS
On July 1, 1999, the Corporation received the proceeds of a $3,000,000 loan
from the Department of Business and Economic Development, a department of the
State of Maryland. The Corporation is required to use the proceeds in connection
with the Corporation's expansion and relocation activities in Rockville,
Maryland. The loan requires quarterly principal payments of $107,143 plus
accrued interest and matures on June 30, 2006. The loan bears interest at rates
from 0% to 7.5% based on the Corporation achieving specific employment levels
over the next six years. The terms of the loan contain annual reporting
requirements, including the periodic reporting of employment data. At September
30, 1999, approximately $2.9 million was outstanding on the loan.
(7) CONTINGENCIES
The Corporation is involved in various claims and legal proceedings arising
in the ordinary course of business. The Corporation does not believe that such
claims or proceedings, individually or in the aggregate, will have a material
adverse effect on the Corporation's consolidated financial position or results
of operations.
The Corporation has been identified by the U.S. Environmental Protection
Agency ("EPA") as one of several hundred potentially responsible parties
("PRPs") under CERCLA with respect to the Ramp Industries, Inc., site in Denver,
Colorado. Although the Corporation believes that it sent only a small quantity
of waste to this site, liability under CERCLA can exceed a PRP's pro rata share
of cleanup costs. The EPA has incurred approximately $5 million to date to
remove wastes from this site and expects to incur approximately an additional
$1.3 million to remove the remaining wastes. However, the estimated total
cleanup costs have not been determined. A joint settlement proposal was
developed in October 1997 and submitted to EPA Region VIII representatives, who
have agreed to support the proposal to Senior EPA management and the Department
of Justice. There can be no assurance at this time that the joint settlement
proposal will be accepted by the Department of Justice. The Corporation believes
that the outcome of this matter will not have a material adverse effect on the
Corporation's financial position or results of operations.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Certain statements made in this Report are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any statement that may
predict, forecast, indicate, or imply future results, performance, or
achievements, and may contain the words "believe," "anticipate," "expect,"
"estimate," "project," "will be," "will continue," "will likely result," or
similar words or phrases. Forward-looking statements involve risks and
uncertainties that may cause actual results to differ materially from the
forward-looking statements. The risks and uncertainties are detailed from time
to time in reports filed by BioReliance with the Securities and Exchange
Commission, including in its Prospectus, dated July 28, 1997, and its Forms 10-K
and 10-Q, and include, among others, the following: general economic and market
conditions; the size and growth of the overall markets for biopharmaceuticals,
including the amounts spent on research and development by biotechnology and
pharmaceutical companies; changes in government regulations; the size, timing
and mix of contracts for the Corporation's products and services; the ability of
BioReliance to attract and retain qualified technical and management personnel;
seasonal demand for the Corporation's products and services; fluctuations and
difficulty in forecasting operating results; the ability of BioReliance to
sustain, manage or forecast its growth and utilize its facilities; the loss of
significant contracts or customers; business disruptions and other factors
referenced in the above reports. New risk factors emerge from time to time and
it is not possible for management to predict all such risk factors, nor can it
assess the impact of all such risk factors on the Corporation's business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking statements.
Given these risks and uncertainties, investors should not place undue reliance
on forward-looking statements as a prediction of actual results.
While BioReliance does, from time to time, communicate with securities
analysts, it is against BioReliance's policy to disclose to them any material
non-public information or other confidential information. Accordingly,
shareholders should not assume that BioReliance agrees with any statement or
report issued by any analyst irrespective of the content of the statement or
report. Furthermore, BioReliance has a policy against issuing or confirming
financial forecasts or projections issued by others. Thus, to the extent that
reports issued by securities analysts contain any projections, forecasts or
opinions, such reports are not the responsibility of BioReliance.
The following discussion and analysis of the Corporation's financial
condition and results of operations should be read in conjunction with the
Corporation's consolidated financial statements and related notes thereto
included elsewhere in this Form 10-Q.
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RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1998
Revenue was $12.4 million in the three months ended September 30, 1999, a
decrease of 4.6% from revenue of $13.0 million in the three months ended
September 30, 1998. The decrease was attributable to decreases in U.S. testing
and development revenue and European manufacturing revenue partially offset by
an increase in U.S. manufacturing revenue. Testing and development services
generated revenue of $11.2 million for the three months ended September 30,
1999, a decrease of 2.6% from revenue of $11.5 million for the three months
ended September 30, 1998. Manufacturing services generated revenue of $1.2
million for the three months ended September 30, 1999, a decrease of 20.0% from
revenue of $1.5 million for the three months ended September 30, 1998. The
decrease in testing and development revenue can be attributed to decreases in
testing services. The decrease is partially offset by increased
revenue associated with development services resulting primarily from a new
contract in the third quarter of 1999. Manufacturing revenue decreased as a
result of decreases in European manufacturing revenue resulting from client
delays in planned projects and continuing delays in obtaining new manufacturing
clients in Germany. U.S. manufacturing revenue in the third quarter 1999
reflected an increase in Phase I/II production revenue. Testing and development
services and manufacturing services accounted for 90.3% and 9.7%, respectively,
of the Corporation's revenue for the three months ended September 30, 1999 and
88.5% and 11.5%, respectively, of the Corporation's revenue for the three months
ended September 30, 1998. Revenue generated in Europe decreased to $1.5 million
for the three months ended September 30, 1999, a 25.0% decrease from $2.0
million for the three months ended September 30, 1998.
Cost of sales was $7.7 million for the three months ended September 30,
1999, a decrease of 4.9% from cost of sales of $8.1 million in the three months
ended September 30, 1998. The decrease is related to decreases in both testing
and development costs and manufacturing costs. As a percentage of total revenue,
cost of sales decreased to 62.1% for the three months ended September 30, 1999
from 62.3% for the three months ended September 30, 1998. These decreases are
attributable to decreases in indirect expenses such as subcontractor costs,
partially offset by an increase in direct expenses such as direct labor and
fringe. Gross profit for testing and development services was $4.7 million for
the three months ended September 30, 1999, a decrease from gross profit of $4.9
million for the three months ended September 30, 1998. Gross profit (loss) for
manufacturing services reflected a loss of $9,000 for the three months ended
September 30, 1999, while manufacturing services generated a profit of $24,000
for the three months ended September 30, 1998. Gross profit for Europe decreased
to $.4 million for the three months ended September 30, 1999, from $.5 million
for the three months ended September 30, 1998, a decline of 20.0%.
Selling, general and administrative expense was $3.9 million for the
three months ended September 30, 1999, an increase of 34.5% over selling,
general and administrative expense of $2.9 million in the three months ended
September 30, 1998. As a percentage of revenue, selling,
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general and administrative expenses increased to 31.5% for the three months
ended September 30, 1999 from 22.3% for the three months ended September 30,
1998. The increase is a result of an increase in facilities costs as the
Corporation moved to a new combined headquarters and laboratory facility in the
second half of 1998, as well as increased depreciation and other expenses
related to both the Corporation's investment in an enterprise information system
and expansion of the U.K. facility capacity. Costs of approximately $0.46
million, previously included in selling, general and administrative expenses for
the six months ended June 30, 1998 were reclassified to cost of sales for the
three months ended September 30, 1998.
Research and development expense remained constant at $.3 million for
the three months ended September 30, 1999 and September 30, 1998. These expenses
represent the investment of internal resources to develop new methods and tests
to support the Corporation's services.
The Corporation generated income from operations of $.5 million for the
three months ended September 30, 1999, as compared to income from operations of
$1.7 million for the three months ended September 30, 1998. The decrease can be
attributed to a decrease in revenue and an increase in operating expenses.
The Corporation incurred a net expense of $56,000 for interest and other
(income) expense for the three months ended September 30, 1999, a decrease of
62.4% compared to net interest and other income of $149,000 in the three months
ended September 30, 1998. The net expense is a result of the Corporation's
investment in facilities and information systems which resulted in a decrease in
cash and cash equivalents and marketable securities. Interest income was $.2
million for the three months ended September 30, 1999 and $.4 million for the
three months ended September 30, 1998. Interest expense was $.1 million for the
three months ended September 30, 1999 and $.1 million for the three months ended
September 30, 1998.
The provision for income taxes was $.2 million for the three months ended
September 30, 1999, compared to a provision for income taxes of $.7 million for
the three months ended September 30, 1998. The decrease is a result of the
decrease in the income before income taxes for the three months ended September
30, 1999. The Corporation's effective tax rate was 45.4% for the three months
ended September 30, 1999 and 37.5% for the three months ended September 30,
1998. The increase in the effective tax rate is primarily attributable to an
increased incidence of higher rate European taxes.
The Corporation reported net income of $.2 million for the three months
ended September 30, 1999, as compared to net income of $1.1 million for the
three months ended September 30, 1998. The decrease can be attributed to a
decrease in revenue and an increase in operating expenses.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1998
Revenue was $34.6 million in the nine months ended September 30, 1999, a
decrease of 8.0% from revenue of $37.6 million in the nine months ended
September 30, 1998, reflecting decreases in testing and development services and
manufacturing services in both the U.S. and Europe. Testing and development
services generated revenue of $31.4 million for the nine months ended September
30, 1999, a decrease of 6.3% from revenue of $33.5 million for the nine months
ended September 30, 1998. Manufacturing services generated revenue of $3.2
million for the nine months ended September 30, 1999 and $4.1 million for the
nine months
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ended September 30, 1998. U.S. testing and development services were adversely
affected by decreases in the testing services which were only partially offset
by an increase in development services. The decrease in European testing and
development revenue is primarily the result of a decrease in the U.K. testing
services. European testing and development services were adversely affected by
client delays and some softness in new orders. In manufacturing services, the
Corporation's results reflect a decrease in both U.S. and European manufacturing
revenue. U.S. manufacturing revenue decreases occur principally in the first six
months of the year as the Corporation focused on the development of new client
relationships and operational improvements. The decrease in revenue generated by
European manufacturing operations is attributable to decreases in Germany from
client project delays and delays in obtaining new manufacturing clients. Testing
and development services and manufacturing services accounted for 90.8% and
9.2%, respectively, of the Corporation's revenue for the nine months ended
September 30, 1999 and 89.1% and 10.9%, respectively, of the Corporation's
revenue for the nine months ended September 30, 1998. Revenue generated in
Europe decreased from $5.5 million for the nine months ended September 30, 1998
to $5.0 million for the nine months ended September 30, 1999, a 9.1% decline.
Cost of sales was $22.9 million for the nine months ended September 30,
1999, an increase of 5.0% over cost of sales of $21.8 million for the nine
months ended September 30, 1998. As a percentage of total revenue, cost of sales
increased to 66.2% for the nine months ended September 30, 1999 from 58.0% for
the nine months ended September 30, 1998. The increase in cost of sales related
to the testing and development segment is tied to increases in direct expenses
such as materials, labor and fringe. Gross profit (loss) for testing and
development services was $12.4 million for the nine months ended September 30,
1999, a decrease from a gross profit of $16.0 million for the nine months ended
September 30, 1998. Gross profit (loss) for manufacturing services reflected a
loss of $.7 million for the nine months ended September 30, 1999, compared with
a loss of $.2 million for the nine months ended September 30, 1998. Gross profit
for Europe decreased from $1.7 million for the nine months ended September 30,
1998 to $1.4 million for the nine months ended September 30, 1999, a decrease of
17.6%.
Selling, general and administrative expense was $12.3 million for the
nine months ended September 30, 1999, an increase of 28.1% over selling, general
and administrative expense of $9.6 million in the nine months ended September
30, 1998. As a percentage of revenue, selling, general and administrative
expenses increased to 35.5% for the nine months ended September 30, 1999 from
25.5% for the nine months ended September 30, 1998. The increase is a result of
greater facilities costs as the Corporation moved to a new combined headquarters
and laboratory facility in the latter half of 1998, as well as increased
depreciation and other expenses related to the Corporation's investment in an
enterprise information system, and an increase in the bad debt allowance. The
increase in the bad debt allowance was primarily the result of ongoing reviews
of customer projects and trade receivables.
Research and development expense remained constant at approximately $1.0
million for the nine months ended September 30, 1999, and the nine months ended
September 30, 1998.
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These expenses represent the investment of internal resources to develop new
methods and tests to support the Corporation's services.
The Corporation reported a loss from operations of $1.7 million for the
nine months ended September 30, 1999, as compared to income from operations of
$5.1 million for the nine months ended September 30, 1998. The change can be
attributed to a decrease in revenue and an increase in operating expenses.
The Corporation earned net interest and other income of $.1 million for
the nine months ended September 30, 1999 and $.6 million for the nine months
ended September 30, 1998. Interest income was $1.0 million for the nine months
ended September 30, 1999 and $1.4 million for the nine months ended September
30, 1998. Interest expense was $.6 million for the nine months ended September
30, 1999 and $.4 million for the nine months ended September 30, 1998.
The benefit from income taxes was $.3 million for the nine months ended
September 30, 1999, compared to a provision for income taxes of $2.2 million for
the nine months ended September 30, 1998. The benefit is the result of the
Corporation's loss before income taxes for the nine months ended September 30,
1999.
The Corporation reported a net loss of $1.2 million for the nine months
ended September 30, 1999, as compared to net income of $3.5 million for the nine
months ended September 30, 1998. The change can be attributed to decreased
revenue and increased operating expenses, which were partially offset by an
income tax benefit for the nine months ended September 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation has funded its business through existing cash, cash
flows from operations, long-term bank loans and capital leases. At September 30,
1999, the Corporation had cash, cash equivalents and marketable securities of
$22.3 million, compared to cash, cash equivalents and marketable securities of
$27.1 million at December 31, 1998.
The Corporation generated cash flows from operations of $4.9 million for
the nine months ended September 30, 1999, compared to using net cash from
operations of $.5 million in the nine months ended September 30, 1998. Net
income (loss), as adjusted for depreciation and amortization, and deferred
income taxes, provided $2.1 million and $7.0 million of cash for the nine months
ended September 30, 1999 and 1998, respectively. This decrease in adjusted net
income (loss) was due primarily to the Corporation's net loss for the nine
months ended September 30, 1999 and an increase in depreciation, offset by a
decrease in deferred income taxes. Changes in other assets and liabilities
provided cash of $2.8 million for the nine months ended September 30, 1999
primarily due to decreases in accounts receivable and other current
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<PAGE> 14
assets, an increase in other accrued liabilities, partially offset by a decrease
in customer advances and an increase in deposits and other assets. Changes in
other assets and liabilities used cash of $7.5 million for the nine months ended
September 30, 1998 primarily due to an increase in accounts receivable and
decreases in accounts payable, accrued liabilities and customer advances.
Working capital decreased to $28.1 million at September 30, 1999,
compared to $35.8 million at December 31, 1998. The net decrease in working
capital primarily was due to a decrease in current assets. This decrease in
current assets resulted from decreases in cash and cash equivalents, marketable
securities, accounts receivable and other assets. The decrease in current assets
was partially offset by a decrease in current liabilities, resulting primarily
from repayments on debt obligations and a decrease in customer advances.
The Corporation made capital expenditures of $11.6 million for the nine
months ended September 30, 1999 and $3.9 million for the nine months ended
September 30, 1998. The increase in capital expenditures for the nine months
ended September 30, 1999 was primarily related to continued investment in
facilities primarily in the new manufacturing facility and continued investment
in information systems.
The Corporation's corporate headquarters facility in Rockville, Maryland,
constructed under a build-to-lease agreement, was completed in August 1998. The
headquarters facility consolidated existing research and development, other
laboratory and administrative activities and expanded the Corporation's
laboratory and other capacity for operations. The lease agreement requires the
Corporation to make noncancelable lease payments totaling approximately $11.4
million over the remaining 14 years.
In April 1998, the Corporation entered into third-party leasing and
subleasing arrangements with Montgomery County, Maryland and a developer
providing for the construction of the exterior shell of a new manufacturing
facility in Rockville, Maryland. These arrangements require the Corporation to
make certain net noncancelable lease payments totaling approximately $13.3
million over the next twenty years and to guarantee indebtedness of
approximately $4.5 million incurred by the developer to construct the exterior
shell of the facility.
At September 30, 1999, the Corporation had commitments to make capital
expenditures of approximately $9.2 million including leasehold improvements and
laboratory equipment during the remainder of 1999 and the first quarter of 2000
related to this new manufacturing facility in Rockville, Maryland. The
Corporation accounts for the leases and subleases of the manufacturing facility
as capital leases. The assets underlying the capital leases are included with
the Corporation's owned property and equipment as of September 30, 1999.
Property and equipment at September 30, 1999 includes approximately $4.7 million
related to these capital leases, of which $.1 million is capitalized interest.
The related obligation is included in the Corporation's liabilities at September
30, 1999.
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<PAGE> 15
A portion of the Corporation's capital expenditures during the first nine
months of 1999 included an investment in an enterprise information system. The
Corporation expects to spend an additional $.1 million on information systems
during the remainder of 1999. The Corporation believes that its information
systems will maximize compatibility and integration internally and with the
Corporation's clients.
In addition, at September 30, 1999, the Corporation had commitments to
spend approximately $357,000 for furniture and building fixtures and
approximately $68,000 for laboratory equipment.
The Corporation expects to continue expanding its operations through
internal growth, geographic expansion and possible strategic acquisitions. The
Corporation expects to fund its growth from existing cash, cash flows from
operations, bank borrowings and lease financing. Although the Corporation has no
agreements or arrangements in place with respect to any future acquisition,
there may be acquisition or other growth opportunities that require additional
external financing, and the Corporation may, from time to time, seek to obtain
funds from public or private issuances of equity or debt securities on a
strategic basis. There can be no assurances that such financing will be
available on terms acceptable to the Corporation.
Based on its current operating plan, the Corporation believes that
available liquid resources are sufficient to meet its foreseeable cash needs.
BORROWINGS AND CREDIT FACILITIES
In 1994, the Corporation obtained a loan of $4,300,000 from Bank of
America with a maturity date of November 30, 1999 (the "Mortgage Loan"). In
addition to a principal payment of $30,000 per month, the note bears interest at
the London Inter-Bank Offering Rate ("LIBOR") plus the applicable LIBOR Rate
Additional Percentage ("LIBOR Rate Option"). The LIBOR Rate Option ranges from
0.85% to 2.1% depending on the Corporation achieving certain funded debt to
EBITDA ratios. At September 30, 1999 the applicable interest rate was 7.6% and
the LIBOR Rate Option was 2.1%. At September 30, 1999, approximately $2.6
million was outstanding on the Mortgage Loan. Management intends to renew the
Mortgage Loan.
In May 1995, the Corporation entered into an interest rate swap agreement
whereby the variable interest rate of the Mortgage Loan was effectively
converted into debt with a fixed rate of 6.55% per annum. This agreement expires
on November 30, 1999. Amounts to be paid or received under the interest rate
swap agreement are recognized as interest income or expense in the periods in
which they accrue and are recorded in the same category as that arising from the
Mortgage Loan. The swap agreement is a standard contract that has no imbedded
options or other terms involving a higher level of complexity or risk. The
interest rate swap agreement and the LIBOR Rate Option resulted in an 8.7%
effective interest rate at September 30, 1999. The effect of the interest rate
swap agreement on interest expense was not material in the quarters ended
September 30, 1998 and 1999.
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<PAGE> 16
The Corporation has available borrowings up to $1,000,000 under the
terms of a revolving loan agreement with Bank of America. The revolving loan
agreement requires monthly interest payments on the unpaid principal. The unpaid
principal and all unpaid accrued interest is payable in full on May 31, 2001.
Amounts borrowed under the revolving loan agreement bear interest at the same
rate as the Mortgage Loan. At September 30, 1999, no amounts were outstanding
under the facility. This line of credit expires in May 2001.
The Corporation financed the acquisition of BIOMEVA in July 1996 and
obtained additional funds for working capital and expansion of its business
through a promissory note with Bank of America in the amount of $1.8 million
with an original maturity of June 30, 1999. The note requires monthly principal
payments of $30,000, and bears interest at the same rate as the Mortgage Loan.
At September 30, 1999, $.7 million was outstanding on the note. The interest
rate on the note was 7.6% at September 30, 1999. The note was amended on June
30, 1999 to extend the maturity date to June 30, 2001. The amendment requires
the Corporation to continue making monthly principal payments of $30,000 plus
interest through June 30, 2001.
All of the Corporation's agreements with Bank of America are cross
collateralized and are secured by a deed of trust on one of the Corporation's
laboratory facilities in Rockville, Maryland. The agreements require the
Corporation to meet certain financial and restrictive covenants, including
maintaining profitability, certain tangible net worth levels and funded debt to
EBITDA ratios. The Bank of America waived the Corporation's non-compliance of
the funded debt to EBITDA Covenant which occurred in the third quarter 1999.
On July 1, 1999, the Corporation received the proceeds of a $3,000,000
loan from the Department of Business and Economic Development, a department of
the State of Maryland. The Corporation is required to use the proceeds in
connection with the Corporation's expansion and relocation activities in
Rockville, Maryland. The loan requires quarterly principal payments of $107,143
plus accrued interest and matures on June 30, 2006. The loan bears interest at
rates from 0% to 7.5% based on the Corporation's achieving specific employment
levels over the next six years. The terms of the loan contain annual reporting
requirements, including the reporting of employment data. At September 30, 1999,
approximately $2.9 million was outstanding on the loan.
FOREIGN CURRENCY
The accounts of the Corporation's international subsidiaries are measured
using local currency as the functional currency. Assets and liabilities of these
subsidiaries are translated into United States dollars at period-end exchange
rates, and revenue and expense accounts are translated at average monthly
exchange rates. Net exchange gains and losses resulting from such translations
are excluded from net income and are accumulated in a separate component of
stockholders' equity.
Since the revenue and expenses of the Corporation's international
operations generally are denominated in local currencies, exchange rate
fluctuations between such local currencies and
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<PAGE> 17
the United States dollar will subject the Corporation to currency translation
risk with respect to the reported results of its international operations as
well as to risks sometimes associated with international operations. The
Corporation derived 12.1% of its revenue for the three months ended September
30, 1999 and 15.4% of its revenue for the three months ended September 30, 1998
from services performed outside of the United States. The Corporation derived
14.4% of its revenue for the nine months ended September 30, 1999 and 14.6% of
its revenue for the nine months ended September 30, 1998 from services performed
outside of the United States. In addition, the Corporation may be subject to
currency risk when the Corporation's service contracts are denominated in a
currency other than the currency in which the Corporation incurs expenses
related to such contracts.
There can be no assurance that the Corporation will not experience
fluctuations in financial results from the Corporation's operations outside the
United States, and there can be no assurance the Corporation will be able,
contractually or otherwise, to reduce the currency risks associated with its
operations. Although at the present time the Corporation does not use derivative
financial instruments to manage or control foreign currency risk, there can be
no assurance that the Corporation will not use such financial instruments in the
future or that any such use will be successful in managing or controlling
foreign currency risk.
EUROPEAN MONETARY UNION
Within Europe, the European Economic and Monetary Union (the "EMU")
introduced a new currency, the Euro, on January 1, 1999. The new currency is in
response to the EMU's policy of economic convergence to harmonize trade policy,
eliminate business costs associated with currency exchange and to promote the
free flow of capital, goods and services.
On January 1, 1999, the participating countries adopted the Euro as their
local currency, initially available for currency trading on currency exchanges
and non cash (banking) transactions. The existing local currencies, or legacy
currencies, are planned to remain legal tender through January 1, 2002.
Beginning on January 1, 2002, Euro-denominated bills and coins are planned to be
issued for cash transactions. For a period of six months from this date, both
legacy currencies and the Euro are planned to be legal tender. On or before July
1, 2002, the participating countries are planned to withdraw all legacy currency
and use the Euro exclusively.
The introduction of the Euro may have potential implications for the
Corporation's existing operations. Currently, Germany is the only participating
country in the EMU in which the Corporation has operations. While one cannot
predict such events, many authorities expect non-participating European Union
countries, such as Great Britain, to eventually join the EMU. The Corporation
does not currently expect to experience any operational disruptions or to incur
any costs as a result of the introduction of the Euro that would materially
affect the Corporation's liquidity or capital resources.
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<PAGE> 18
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 requires all
derivatives to be recorded on the balance sheet at fair value and establishes
"special accounting" for the following three different types of hedges: hedges
of changes in the fair value of assets, liabilities or firm commitments; hedges
of the variable cash flows of forecasted transaction; and hedges of foreign
currency exposures of net investments in foreign operations. SFAS 133 is
effective for years beginning after June 15, 1999, with earlier adoption
permitted. On July 8, 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133." SFAS No. 137 defers the effective date of SFAS No.
133 until fiscal years beginning after June 15, 2000. The Corporation believes
that the effect of adoption of SFAS 133 will not be material.
YEAR 2000 READINESS
The Corporation uses a significant number of information technology
("IT") and non-IT computer systems in its operations. The IT systems include the
Corporation's accounting systems, office and administrative systems,
communications systems and other corporate systems. The non-IT systems include
embedded microprocessors that control laboratory equipment and facilities
equipment.
The year 2000 ("Y2K") issue is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Corporation's computer programs or hardware that have date-sensitive
software or embedded chips may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.
The Corporation's task force has implemented a three-phase approach to
address the year 2000 issue. The first phase, which has been completed,
consisted of an inventory of all IT and non-IT systems. The second phase, which
has also been completed, consisted of setting priorities and developing a test
plan. The third phase, testing and remediation, began during the fourth quarter
of 1998 and is substantially complete. Still remaining to be completed are the
following items: an upgrade of the Oracle databases (the "Oracle Upgrade") and
the installation of five software applications to replace noncompliant systems
(the "Software Applications").
The Corporation depends on various suppliers to continue its operations.
The Corporation is working with its suppliers to determine whether they and
their products are or will be year 2000 compliant. The Corporation has received
compliance certifications from all of its mission critical suppliers and many of
its other suppliers. It is following up with its other suppliers to obtain such
certificates. However, the Corporation does not control its suppliers, and
cannot fully audit their year 2000 compliance, and for some suppliers the
Corporation may have
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<PAGE> 19
no feasible alternative supplier available. The failure of such suppliers to
remediate year 2000 problems in a timely manner could have a material adverse
effect on the Corporation.
The Corporation believes its most reasonably likely worst case Y2K
scenarios are the following: the Corporation is unable to complete the Oracle
Upgrade before December 31, 1999 and it encounters an unexpected Y2K problem;
the Corporation is unable to complete the installations of the Applications
Software by December 31, 1999; channels of distribution, such as delivery or
courier services, are delayed, resulting in delays of shipments of materials or
client materials; or its customers or its mission critical vendors are not Y2K
ready, resulting delays of projects addressing Y2K issues or delays in shipment
or delivery of test articles or materials. The Corporation has investigated
these scenarios and is finalizing its contingency plans to reduce or avoid harm
to the Corporation's business and operations in any of these events. With
respect to the Oracle Upgrade, the Corporation has tested the current Oracle
databases and believes they are Y2K compliant; however, if the upgrade does not
occur prior to January 1, 2000, and a problem is encountered, Oracle has advised
that Oracle will not support the problem. Contingency plans for the Oracle
Upgrade include internal and external technical support and manual processing
and auditing of data. The Corporation has developed contingency plans in the
event the Corporation is unable to install the Software Applications prior to
January 1, 2000. The Corporation is also planning to purchase additional mission
critical supplies and materials where appropriate to address the potential issue
of noncompliant mission critical vendors or delays attributable to noncompliant
distribution channels.
The Corporation's historical costs for remediation are not material and
the Corporation does not anticipate that its future remediation costs will be
material. Starting in 1997, the Corporation began implementation of an
enterprise information system that is year 2000 compliant. The Corporation does
expect to have to replace certain application software to be year 2000
compliant. Estimates of these costs are preliminary, but could be as much as $.5
million, of which approximately $.2 million has been expended to date. The
Corporation has not delayed any material projects as a result of the year 2000
issue.
The Corporation plans to be Y2K ready are based on management's best
estimates, which were derived utilizing assumptions of future events including
the continued availability of certain resources and other factors. Estimates on
the status of completion and the expected completion dates are based on costs
incurred to date compared to total expected costs. However, there can be no
guarantee that these estimates will be achieved and actual results could differ
materially from those plans. Failure by the Corporation or its customers or
suppliers to complete year 2000 remediation in a timely manner could have a
material adverse effect on the Corporation. Specific factors that might cause
such material differences include, but are not limited to, the cooperation of
third party suppliers, the availability and cost of personnel trained in this
area, the ability to locate and correct all relevant computer codes, and similar
uncertainties.
19
<PAGE> 20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISK
The Corporation is exposed to market risk from adverse changes in
interest rates and foreign currency exchange rates.
INTEREST RATE RISKS
The Corporation is exposed to interest rate risk primarily through its
investments in short-term marketable securities and cash equivalents and its
debt agreements. The Corporation's investment policy calls for investment in
short-term, low risk instruments. At September 30, 1999, the Corporation had
$7.9 million invested in government and governmental agency securities. A rise
in interest rates would have an adverse impact on the fair market value of fixed
rate securities. If interest rates fall, floating rate securities may generate
less interest income. The Corporation manages its exposure to interest rate
risks through investing in securities with maturities of one year or less.
Additionally, the Corporation is exposed to risk from changes in interest
rates as a result of its borrowing activities. At September 30, 1999, the
Corporation had total debt of $14.5 million. The Corporation's debt consists of
the Mortgage Loan with approximately $2.6 million outstanding; a promissory note
with approximately $.7 million outstanding; a State of Maryland loan with
approximately $2.9 million outstanding; and capital lease obligations of
approximately $8.3 million outstanding. In the past the Corporation has
partially managed its exposure to losses through an interest rate swap agreement
related to the Mortgage Loan. The Corporation is considering alternatives to
manage its interest rate exposure after the expiration of the current interest
rate swap agreement.
FOREIGN CURRENCY EXCHANGE RISK
The Corporation's international operations are subject to foreign
exchange rate fluctuations. The Corporation derived 11.3% and 15.4% of its
revenue for the three months ended September 30, 1999 and 1998, respectively,
from services performed in the United Kingdom and Germany. The Corporation
derived 14.4% and 14.6% of its revenue for the nine months ended September 30,
1999 and 1998, respectively, from services performed in the United Kingdom and
Germany. Since the revenue and expenses of the Corporation's international
operations generally are denominated in local currencies, exchange rate
fluctuations between such local currencies and the United States dollar will
subject the Corporation to currency translation risk with respect to the
reported results of its foreign operations as well as to risks sometimes
associated with international operations. In addition, the Corporation may be
subject to currency risk when the Corporation's service contracts are
denominated in a currency other than the currency in which the Corporation
incurs expenses related to such contracts. The United Kingdom and Germany have
traditionally had relatively stable currencies. The Corporation currently does
not hedge its foreign currency exposure. Management does not believe that the
Corporation's exposure to foreign currency rate fluctuations is material.
20
<PAGE> 21
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
As of September 30, 1999 the Corporation had used approximately $16.8
million of the net proceeds from the Corporation's initial public offering
toward debt repayment and purchases of laboratory equipment, information systems
hardware and software, and construction and furnishings of the Corporation's new
facilities.
At September 30, 1999, approximately $7.9 million of the net proceeds of
the initial public offering were invested in short-term United States government
securities, and the balance was invested in money market funds pending the
purchase of additional United States government securities or in other operating
accounts of the Corporation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The documents required to be filed as exhibits to this report
under Item 601 of Regulation S-K are listed in the Exhibit Index included
elsewhere in this report, which list is incorporated herein by reference.
(b) Reports on Form 8-K
None
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 15, 1999
BioReliance Corporation
(Registrant)
By /s/ Capers W. McDonald
----------------------
Capers W. McDonald
President and Chief Executive Officer
By /s/ Patrick J. Spratt
---------------------
Patrick J. Spratt
Vice President, Chief Financial Officer and
Treasurer
(Principal Financial and Accounting Officer)
22
<PAGE> 23
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
10.38 Contractor Agreement, dated June 30, 1999, by and between The
Whiting-Turner Contracting Company and BioReliance Corporation.
23
<PAGE> 1
EXHIBIT 10-38
Standard Form of Agreement Between Owner and
Contractor where the basis for payment is the COST OF THE
WORK PLUS A FEE with a negotiated Guaranteed Maximum Price
AIA Document Al11 - 1997
1997 Edition - Electronic Format
- --------------------------------------------------------------------------------
This document has important legal consequences. Consultation with an attorney is
encouraged with respect to its completion or modification. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT D401.
This document is not intended for use in competitive bidding.
AIA Document A201-1997, General Conditions of the Contract for Construction, is
adopted in this document by reference.
This document has been approved and endorsed by The Associated General
Contractors of America.
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, 1987, (C)1997 by
The American Institute of Architects. Reproduction of the material herein or
substantial quotation of its provisions without written permission of the AIA
violates the copyright laws of the United States and will subject the violator
to legal
- --------------------------------------------------------------------------------
AGREEMENT made as of the thirtieth day of June in the year nineteen hundred
ninety-nine (6/30/99)
(In words, indicate day, month and year)
BETWEEN the Owner:
(Name, address and other information)
BioReliance Corporation
14920 Broschart Road
Rockville, MD 20850-3349
and the Contractor:
(Name, address and other information)
The Whiting-Turner Contracting Company
300 East Joppa Road
Baltimore, MD 21286-3048
The Project is:
(Name and location)
BioReliance Production Facility
Building No. 7
9920 Medical Center Drive
Rockville, MD 20850
The Architect is:
(Name, address and other information)
Kling Lindquist
1211 Connecticut Avenue, NW
Suite 600
Washington, DC 20036
- ------------------------------------------------------------
AIA DOCUMENT A111-OWNER-CONTRACTOR AGREEMENT - 1997 EDITION - AIA - COPYRIGHT
1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE N.W.,
WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying violates U.S.
copyright laws and will subject the violator to legal prosecution. This
document was electronically produced with permission of the AIA and can be
reproduced without violation until the date of expiration as noted below.
Electronic Format 111-1997
User document: 97A111.CON -- 6/29/1999. AIA Licence Number 106277, which expires
on 10/1/1999 -- Page #__
<PAGE> 2
The Owner and Contractor agree as follows.
ARTICLE 1 THE CONTRACT DOCUMENTS
The Contract Documents consist of this Agreement, Conditions of the
Contract (General, Supplementary and other Conditions), Drawings,
Specifications, Addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution
of this Agreement; these form the Contract, and are as fully a part of the
Contract as if attached to this Agreement or repeated herein. The Contract
represents the entire and integrated agreement between the parties hereto
and supersedes prior negotiations, representations or agreements, either
written or oral. An enumeration of the Contract Documents, other than
Modifications, appears in Article 15. If anything in the other Contract
Documents is inconsistent with this Agreement, this Agreement shall govern.
ARTICLE 2 THE WORK OF THIS CONTRACT
The Contractor shall fully execute the Work described in the Contract
Documents, except to the extent specifically indicated in the Contract
Documents to be the responsibility of others.
ARTICLE 3 RELATIONSHIP OF THE PARTIES
The Contractor accepts the relationship of trust and confidence established
by this Agreement and covenants with the Owner to cooperate with the
Architect and exercise the Contractor's skill and judgment in furthering
the interests of the Owner; to furnish efficient business administration
and supervision; to furnish at all times an adequate supply of workers and
materials; and to perform the Work in an expeditious and economical manner
consistent with the Owner's interests. The Owner agrees to furnish and
approve, in a timely manner, information required by the Contractor and to
make payments to the Contractor in accordance with the requirements of the
Contract Documents.
ARTICLE 4 DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement of the Work shall be the date of this
Agreement unless a different date is stated below or provision is made for
the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement, if it differs from the date of this
Agreement or, if applicable, state that the date will be fixed in a notice
to proceed.)
Notice to proceed previously given on February 24, 1999
If, prior to commencement of the Work, the Owner requires time to file
mortgages, mechanic's liens and other security interests, the Owner's time
requirement shall be as follows:
4.2 The Contract Time shall be measured from the date of commencement.
4.3 The Contractor shall achieve Substantial Completion of the entire Work
not later than (see below) days from the date of commencement, or as
follows:
(Insert number of calendar days. Alternatively, a calendar date may be used
when coordinated with the date of commencement. Unless stated elsewhere in
the Contract Documents, insert any requirements for earlier Substantial
Completion of certain portions of the Work)
See attached Exhibit "A" - Construction Schedule
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time, or for bonus payments for early completion of the Work.)
n/a
ARTICLE 5 BASIS FOR PAYMENT
5.1 CONTRACT SUM
<PAGE> 3
5.1.1 The Owner shall pay the Contractor the Contract Sum in current funds
for the Contractor's performance of the Contract. The Contract Sum is the
Cost of the Work as defined in Article 7 plus the Contractor's Fee.
Contractor's Fee for changes in the Work)
See Exhibit "B" - Guaranteed Maximum Price/Exhibit "C" - Change Order
Matrix
5.2 GUARANTEED MAXIMUM PRICE
5.2.1 The sum of the Cost of the Work and the Contractor's Fee is
guaranteed by the Contractor not to exceed (see Exhibit B) Dollars ($ ),
subject to additions and deductions by Change Order as provided in the
Contract Documents. Such maximum sum is referred to in the Contract
Documents as the Guaranteed Maximum Price. Costs which would cause the
Guaranteed Maximum Price to be exceeded shall be paid by the Contractor
without reimbursement by the Owner.
(Insert specific provisions if the Contractor is to participate in any
savings)
At project completion any savings under the Guaranteed Maximum Price shall
accrue 50% to Owner and 50% to Contractor,
5.2.2 The Guaranteed Maximum Price is based on the following alternates, if
any, which are described in the Contract Documents and are hereby accepted
by the Owner:
(State the numbers or other identification of accepted alternates. If
decisions on other alternates are to be made by the Owner subsequent to the
execution of this Agreement, attach a schedule of such other alternates
showing the amount for each and the date when the amount expires.)
5.2.3 Unit prices, if any, are as follows:
n/a
5.2.4 Allowances, if any, are as follows:
(Identify and state the amounts of any allowances, and state whether they
include labor, materials, or both)
See Exhibit "B" - Guaranteed Maximum Price
5.2.5 Assumptions, if any, on which the Guaranteed Maximum Price is based
are as follows:
See Exhibit "D" - Notes, Qualifications and Exclusions
5.2.6 To the extent that the Drawings and Specifications are anticipated to
require further development by the Architect, the Contractor has provided
in the Guaranteed Maximum Price for such further development consistent
with the Contract Documents and reasonably inferable therefrom. Such
further development does not include such things as changes in scope,
systems, kinds and quality of materials, finishes or equipment, all of
which, if required, shall be incorporated by Change Order.
ARTICLE 6 CHANGES IN THE WORK
6.1 Adjustments to the Guaranteed Maximum Price on account of changes in
the Work may be determined by any of the methods listed in Subparagraph
7.3.3 of AIA Document A201-1997.
6.2 In calculating adjustments to subcontracts (except those awarded with
the Owner's prior consent on the basis of cost plus a fee), the terms
"cost" and "fee" as used in Clause 7.3.3.3 of AIA Document A201-1997 and
the terms "costs" and "a reasonable allowance for overhead and profit" as
used in Subparagraph 7.3.6 of AIA Document A201-1997 shall have the
meanings assigned to them in AIA Document A201-1997 and shall not be
modified by Articles 5, 7 and 8 of this Agreement. Adjustments to
subcontracts awarded with the Owner's prior consent on the basis of cost
plus a fee shall be calculated in accordance with the terms of those
subcontracts.
<PAGE> 4
6.3 In calculating adjustments to the Guaranteed Maximum Price, the terms
"cost" and "costs" as used in the above-referenced provisions of AIA
Document A201-1997 shall mean the Cost of the Work as defined in Article 7
of this Agreement and the terms "fee" and "a reasonable allowance for
overhead and profit" shall mean the Contractor's Fee as defined in
Subparagraph 5.1.2 of this Agreement.
6.4 If no specific provision is made in Paragraph 5.1 for adjustment of the
Contractor's Fee in the case of changes in the Work, or if the extent of
such changes is such, in the aggregate, that application of the adjustment
provisions of Paragraph 5.1 will cause substantial inequity to the Owner or
Contractor, the Contractor's Fee shall be equitably adjusted on the basis
of the Fee
ARTICLE 7 COSTS TO BE REIMBURSED
7.1 COST OF THE WORK
The term Cost of the Work shall mean costs necessarily incurred by the
Contractor in the proper performance of the Work. Such costs shall be at
rates not higher than the standard paid at the place of the Project except
with prior consent of the Owner. The Cost of the Work shall include only
the items set forth in this Article 7.
7.2 LABOR COSTS
7.2.1 Wages of construction workers directly employed by the Contractor to
perform the construction of the Work at the site or, with the Owner's
approval, at off-site workshops.
7.2.2 Wages or salaries of the Contractor's supervisory and administrative
personnel when stationed at the site with the Owner's approval. General
Conditions shall be fixed at six percent (6%) of the total construction
cost and shall be included as such in the Guaranteed Maximum Price,
(If it is intended that the wages or salaries of certain personnel
stationed at the Contractor's principal or other offices shall be included
in the Cost of the Work, identify in Article 14 the personnel to be
included and whether for all or only part of their time, and the rates at
which their time will be charged to the Work)
7.2.3 Wages and salaries of the Contractor's supervisory or administrative
personnel engaged, at factories, workshops or on the road, in expediting
the production or transportation of materials or equipment required for the
Work, but only for that portion of their time required for the Work.
7.2.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective
bargaining agreements and, for personnel not covered by such agreements,
customary benefits such as sick leave, medical and health benefits,
holidays, vacations and pensions, provided such costs are based on wages
and salaries included in the Cost of the Work under Subparagraphs 7.2.1
through 7.2.3.
7.3 SUBCONTRACT COSTS
7.3.1 Payments made by the Contractor to Subcontractors in accordance with
the requirements of the subcontracts.
7.4 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.4.1 Costs, including transportation and storage, of materials and
equipment incorporated or to be incorporated in the completed construction.
7.4.2 Costs of materials described in the preceding Subparagraph 7.4.1 in
excess of those actually installed to allow for reasonable waste and
spoilage. Unused excess materials, if any, shall become the Owner's
property at the completion of the Work or, at the Owner's option, shall be
sold by the Contractor. Any amounts realized from such sales shall be
credited to the Owner as a deduction from the Cost of the Work.
<PAGE> 5
7.5 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES AND
RELATED ITEMS
7.5.1 Costs, including transportation and storage, installation,
maintenance, dismantling and removal of materials, supplies, temporary
facilities, machinery, equipment, and hand tools not customarily owned by
construction workers, that are provided by the Contractor at the site and
fully consumed in the performance of the Work; and cost (less salvage
value) of such items if not fully consumed, whether sold to others or
retained by the Contractor. Cost for items previously used by the
Contractor shall mean fair market value.
7.5.2 Rental charges for temporary facilities, machinery, equipment, and
hand tools not customarily owned by construction workers that are provided
by the Contractor at the site, whether rented from the Contractor or
others, and costs of transportation, installation, minor repairs and
replacements, dismantling and removal thereof. Rates and quantities of
equipment rented shall be subject to the Owner's prior approval.
7.5.3 Costs of removal of debris from the site.
7.5.4 Costs of document reproductions, facsimile transmissions and
long-distance telephone calls, postage and parcel delivery charges,
telephone service at the site and reasonable petty cash expenses of the
site office.
7.5.5 That portion of the reasonable expenses of the Contractor's personnel
incurred while traveling in discharge of duties connected with the Work.
7.5.6 Costs of materials and equipment suitably stored off the site at a
mutually acceptable location, if approved in advance by the Owner.
7.6 MISCELLANEOUS COSTS
7.6.1 That portion of insurance and bond premiums that can be directly
attributed to this Contract:
7.6.2 Sales, use or similar taxes imposed by a governmental authority that
are related to the Work.
7.6.3 Fees and assessments for the building permit and for other permits,
licenses and inspections for which the Contractor is required by the
Contract Documents to pay.
7.6.4 Fees of laboratories for tests required by the Contract Documents,
except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of AIA Document A201-1997
or other provisions of the Contract Documents, and which do not fall within
the scope of Subparagraph 7.7.3.
7.6.5 Royalties and license fees paid for the use of a particular design,
process or product required by the Contract Documents; the cost of
defending suits or claims for infringement of patent rights arising from
such requirement of the Contract Documents; and payments made in accordance
with legal judgments against the Contractor resulting from such suits or
claims and payments of settlements made with the Owner's consent. However,
such costs of legal defenses, judgments and settlements shall not be
included in the calculation of the Contractor's Fee or subject to the
Guaranteed Maximum Price. If such royalties, fees and costs are excluded by
the last sentence of Subparagraph 3.17.1 of AIA Document A201-1997 or other
provisions of the Contract Documents, then they shall not be included in
the Cost of the Work.
7.6.6 Data processing costs related to the Work.
7.6.7 Deposits lost for causes other than the Contractor's negligence or
failure to fulfill a specific responsibility to the Owner as set forth in
the Contract Documents.
7.6.8 Legal, mediation and arbitration costs, including attorneys' fees,
other than those arising from disputes between the Owner and Contractor,
reasonably incurred by the Contractor in the performance of the Work and
with the Owner's prior written approval; which approval shall not be
unreasonably withheld.
<PAGE> 6
7.6.9 Expenses incurred in accordance with the Contractor's standard
personnel policy for relocation and temporary living allowances of
personnel required for the Work, if approved by the Owner.
7.7 OTHER COSTS AND EMERGENCIES
7.7.1 Other costs incurred in the performance of the Work if and to the
extent approved in advance in writing by the Owner.
7.7.2 Costs due to emergencies incurred in taking action to prevent
threatened damage, injury or loss in case of an emergency affecting the
safety of persons and property, as provided in Paragraph 10.6 of AIA
Document A201-1997.
7.7.3 Costs of repairing or correcting damaged or nonconforming Work
executed by the Contractor, Subcontractors or suppliers, provided that such
damaged or nonconforming Work was not caused by negligence or failure to
fulfill a specific responsibility of the Contractor and only to the extent
that the cost of repair or correction is not recoverable by the Contractor
from insurance, sureties, Subcontractors or suppliers.
ARTICLE 8 COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel
stationed at the Contractors principal office or offices other than the
site office, except as specifically provided in Subparagraphs 7.2.2 and
7.2.3 or as may be provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other than
the site office.
8.1.3 Overhead and general expenses, except as may be expressly included in
Article 7.
8.1.4 The Contractor's capital expenses, including interest on the
Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically
provided in Subparagraph 7.5.2.
8.1.6 Except as provided in Subparagraph 7.7.3 of this Agreement, costs due
to the negligence or failure to fulfill a specific responsibility of the
Contractor, Subcontractors and suppliers or anyone directly or indirectly
employed by any of them or for whose acts any of them may be liable.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs, other than costs included in Change Orders approved by the
Owner, that would cause the Guaranteed Maximum Price to be exceeded.
ARTICLE 9 DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall accrue
to the Owner if (1) before making the payment, the Contractor included them
in an Application for Payment and received payment therefor from the Owner,
or (2) the Owner has deposited funds with the Contractor with which to make
payments; otherwise, cash discounts shall accrue to the Contractor. Trade
discounts, rebates, refunds and amounts received from sales of surplus
materials and equipment shall accrue to the Owner, and the Contractor shall
make provisions so that they can be secured.
9.2 Amounts that accrue to the Owner in accordance with the provisions of
Paragraph 9.1 shall be credited to the Owner as a deduction from the Cost
of the Work.
ARTICLE 10 SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not customarily
perform with the Contractor's own personnel shall be performed under
subcontracts or by other appropriate agreements with the Contractor. The
Owner may
<PAGE> 7
designate specific persons or entities from whom the Contractor shall
obtain bids. The Contractor shall obtain bids from Subcontractors and from
suppliers of materials or equipment fabricated especially for the Work and
shall deliver such bids to the Architect. The Owner shall then determine,
with the advice of the Contractor and the Architect, which bids will be
accepted. The Contractor shall not be required to contract with anyone to
whom the Contractor has reasonable objection.
10.2 If a specific bidder among those whose bids are delivered by the
Contractor to the Architect (1) is recommended to the Owner by the
Contractor; (2) is qualified to perform that portion of the Work; and (3)
has submitted a bid that conforms to the requirements of the Contract
Documents without reservations or exceptions, but the Owner requires that
another bid be accepted, then the Contractor may require that a Change
Order be issued to adjust the Guaranteed Maximum Price by the difference
between the bid of the person or entity recommended to the Owner by the
Contractor and the amount of the subcontract or other agreement actually
signed with the person or entity designated by the Owner.
10.3 Subcontracts or other agreements shall conform to the applicable
payment provisions of this Agreement, and shall not be awarded on the basis
of cost plus a fee without the prior consent of the Owner.
ARTICLE 11 ACCOUNTING RECORDS
The Contractor shall keep full and detailed accounts and exercise such
controls as may be necessary for proper financial management under this
Contract, and the accounting and control systems shall be satisfactory to
the Owner. The Owner and the Owner's accountants shall be afforded access
to, and shall be permitted to audit and copy, the Contractor's records,
books, correspondence, instructions, drawings, receipts, subcontracts,
purchase orders, vouchers, memoranda and other data relating to this
Contract, and the Contractor shall preserve these for a period of three
years after final payment, or for such longer period as may be required by
law.
ARTICLE 12 PAYMENTS
12.1 PROGRESS PAYMENTS
12.1.1 Based upon Applications for Payment submitted to the Architect by
the Contractor and Certificates for Payment issued by the Architect, the
Owner shall make progress payments on account of the Contract Sum to the
Contractor as provided below and elsewhere in the Contract Documents.
12.1.2 The period covered by each Application for Payment shall be one
calendar month ending on the last day of the month, or as follows:
12.1.3 Provided that an Application for Payment is received by the
Architect not later than the * day of a month, the Owner shall make payment
to the Contractor not later than the * day of the * month. If an
Application for Payment is received by the Architect after the application
date fixed above, payment shall be made by the Owner not later than * days
after the Architect receives the Application for Payment. *See attached
inserts to AIA A-111 *See attached inserts to AlA A-201
12.1.4 With each Application for Payment, the Contractor shall submit
payrolls, petty cash accounts, receipted invoices or invoices with check
vouchers attached, and any other evidence required by the Owner or
Architect to demonstrate that cash disbursements already made by the
Contractor on account of the Cost of the Work equal or exceed (1) progress
payments already received by the Contractor; less (2) that portion of those
payments attributable to the Contractor's Fee; plus (3) payrolls for the
period covered by the present Application for Payment.
12.1.5 Each Application for Payment shall be based on the most recent
schedule of values submitted by the Contractor in accordance with the
Contract Documents. The schedule of values shall allocate the entire
Guaranteed Maximum Price among the various portions of the Work, except
that the Contractor's Fee shall be shown as a single separate item. The
schedule of values shall be prepared in such form and supported by such
data to substantiate its accuracy as the Architect may require. This
schedule, unless objected to by the Architect, shall be used as a basis for
reviewing the Contractor's Applications for Payment.
12.1.6 Applications for Payment shall show the percentage of completion of
each portion of the Work as of the end of the period covered by the
Application for Payment. The percentage of completion shall be the lesser
of (1) the
<PAGE> 8
percentage of that portion of the Work which has actually been completed;
or (2) the percentage obtained by dividing (a) the expense that has
actually been incurred by the Contractor on account of that portion of the
Work for which the Contractor has made or intends to make actual payment
prior to the next Application for Payment by (b) the share of the
Guaranteed Maximum Price allocated to that portion of the Work in the
schedule of values.
12.1.7 Subject to other provisions of the Contract Documents, the amount of
each progress payment shall be computed as follows:
.1 take that portion of the Guaranteed Maximum Price properly
allocable to completed Work as determined by multiplying the
percentage of completion of each portion of the Work by the
share of the Guaranteed Maximum Price allocated to that
portion of the Work in the schedule of values. Pending final
determination of cost to the Owner of changes in the Work,
amounts not in dispute shall be included as provided in
Subparagraph 7.3.8 of AIA Document A201-1997;
.2 add that portion of the Guaranteed Maximum Price properly
allocable to materials and equipment delivered and suitably
stored at the site for subsequent incorporation in the Work,
or if approved in advance by the Owner, suitably stored off
the site at a location agreed upon in writing;
.3 add the Contractor's Fee, less retainage of (See
Modification #31 to AIA A-111) percent ( %). The
Contractor's Fee shall be computed upon the Cost of the Work
described in the two preceding Clauses at the rate stated in
Subparagraph 5.1.2 or, if the Contractor's Fee is stated as
a fixed sum in that Subparagraph, shall be an amount that
bears the same ratio to that fixed-sum fee as the Cost of
the Work in the two preceding Clauses bears to a reasonable
estimate of the probable Cost of the Work upon its
completion;
.4 subtract the aggregate of previous payments made by the
Owner;
.5 subtract the shortfall, if any, indicated by the Contractor
in the documentation required by Paragraph 12.1.4 to
substantiate prior Applications for Payment, or resulting
from errors subsequently discovered by the Owner's
accountants in such documentation; and
.6 subtract amounts, if any, for which the Architect has
withheld or nullified a Certificate for Payment as provided
in Paragraph 9.5 of AIA Document A201-1997.
12.1.8 Except with the Owner's prior approval, payments to Subcontractors
shall be subject to retainage of not less than (See Modification #31 to AIA
A-111) percent ( %). The Owner and the Contractor shall agree upon a
mutually acceptable procedure for review and approval of payments and
retention for Subcontractors.
12.1.9 In taking action on the Contractor's Applications for Payment, the
Architect shall be entitled to rely on the accuracy and completeness of the
information furnished by the Contractor and shall not be deemed to
represent that the Architect has made a detailed examination, audit or
arithmetic verification of the documentation submitted in accordance with
Subparagraph 12.1.4 or other supporting data; that the Architect has made
exhaustive or continuous on-site inspections or that the Architect has made
examinations to ascertain how or for what purposes the Contractor has used
amounts previously paid on account of the Contract. Such examinations,
audits and verifications, if required by the Owner, will be performed by
the Owner's accountants acting in the sole interest of the Owner.
12.2 FINAL PAYMENT
12.2.1 Final payment, constituting the entire unpaid balance of the
Contract Sum, shall be made by the Owner to the Contractor when:
.1 the Contractor has fully performed the Contract except for
the Contractor's responsibility to correct Work as provided
in Subparagraph 12.2.2 of AIA Document A201-1997, and to
satisfy other requirements, if any, which extend beyond
final payment; and
.2 a final Certificate for Payment has been issued by the
Architect.
<PAGE> 9
12.2.2 The Owner's final payment to the Contractor shall be made no later
than 30 days after the issuance of the Architect's final Certificate for
Payment, or as follows:
12.2.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the
Work as the Owner's accountants report to be substantiated by the
Contractor's final accounting, and provided the other conditions of
Subparagraph 12.2.1 have been met, the Architect will, within seven days
after receipt of the Written report of the Owner's accountants, either
issue to the Owner a final Certificate for Payment with a copy to the
Contractor, or notify the Contractor and Owner in writing of the
Architect's reasons for withholding a certificate as provided in
Subparagraph 9.5.1 of the AIA Document A201-1997. The time periods stated
in this Subparagraph 12.2.3 supersede those stated in Subparagraph 9.4.1 of
the AIA Document A201-1997.
12.2.4 If the Owner's accountants report the Cost of the Work as
substantiated by the Contractors final accounting to be less than claimed
by the Contractor, the Contractor shall be entitled to demand arbitration
of the disputed amount without a further decision of the Architect. Such
demand for arbitration shall be made by the Contractor within 30 days after
the Contractor's receipt of a copy of the Architect's final Certificate for
Payment; failure to demand arbitration within this 30-day period shall
result in the substantiated amount reported by the Owner's accountants
becoming binding on the Contractor. Pending a final resolution by
arbitration, the Owner shall pay the Contractor the amount certified in the
Architect's final Certificate for Payment.
12.2.5 If, subsequent to final payment and at the Owner's request, the
Contractor incurs costs described in Article 7 and not excluded by Article
8 to correct defective or nonconforming Work, the Owner shall reimburse the
Contractor such costs and the Contractor's Fee applicable thereto on the
same basis as if such costs had been incurred prior to final payment, but
not in excess of the Guaranteed Maximum Price. If the Contractor has
participated in savings as provided in Paragraph 5.2, the amount of such
savings shall be recalculated and appropriate credit given to the Owner in
determining the net amount to be paid by the Owner to the Contractor.
ARTICLE 13 TERMINATION OR SUSPENSION
13.1 The Contract may be terminated by the Contractor, or by the Owner for
convenience, as provided in Article 14 of AIA Document A201-1997. However,
the amount to be paid to the Contractor under Subparagraph 14.1.3 of AIA
Document A201-1997 shall not exceed the amount the Contractor would be
entitled to receive under Paragraph 13.2 below, except that the
Contractor's Fee shall be calculated as if the Work had been fully
completed by the Contractor, including a reasonable estimate of the Cost of
the Work for Work not actually completed.
13.2 The Contract may be terminated by the Owner for cause as provided in
Article 14 of AIA Document A201-1997. The amount, if any, to be paid to the
Contractor under Subparagraph 14.2.4 of AIA Document A201-1997 shall not
cause the Guaranteed Maximum Price to be exceeded, nor shall it exceed an
amount calculated as follows:
13.2.1 Take the Cost of the Work incurred by the Contractor to the date of
termination;
13.2.2 Add; the Contractor's Fee computed upon the Cost of the Work to the
date of termination at the rate stated in Subparagraph 5.1.2 or, if the
Contractor's Fee is stated as a fixed sum in that Subparagraph, an amount
that bears the same ratio to that fixed-sum Fee as the Cost of the Work at
the time of termination bears to a reasonable estimate of the probable Cost
of the Work upon its completion; and
13.2.3 Subtract the aggregate of previous payments made by the Owner.
13.3 The Owner shall also pay the Contractor fair compensation, either by
purchase or rental at the election of the Owner, for any equipment owned by
the Contractor that the Owner elects to retain and that is not otherwise
included in the Cost of the Work under Subparagraph 13.2.1. To the extent
that the Owner elects to take legal assignment of subcontracts and purchase
orders (including rental agreements), the Contractor shall, as a condition
of receiving the payments referred to in this Article 13, execute and
deliver all such papers and take all such steps, including the legal
assignment of such subcontracts and other contractual rights of the
Contractor, as the Owner may require for the purpose of fully vesting in
the Owner the rights and benefits of the Contractor under such subcontracts
or purchase orders.
<PAGE> 10
13.4 The Work may be suspended by the Owner as provided in Article 14 of
AIA Document A201-1997; in such case, the Guaranteed Maximum Price and
Contract Time shall be increased as provided in Subparagraph 14.3.2 of AIA
Document A201-1997 except that the term "profit" shall be understood to
mean the Contractor's Fee as described in Subparagraphs 5.1.2 and Paragraph
6.4 of this Agreement.
ARTICLE 14 MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision AIA Document
A201-1997 or another Contract Document, the reference refers to that
provision as amended or supplemented by other provisions of the Contract
Documents.
14.2 Payments due and unpaid under the Contract shall bear interest from
the date payment is due at the rate stated below, or in the absence
thereof, at the legal rate prevailing from time to time at the place where
the Project is located.
(Insert rate of interest agreed upon, if any.)
1 1/2% per month
(Usury laws and requirements under the Federal Truth in Lending Act,
similar state and local consumer credit laws and other regulations at the
Owner's and Contractor's principal places of business, the location of the
Project and elsewhere may affect the validity of this provision. Legal
advice should be obtained with respect to deletions or modifications, and
also regarding requirements such as written disclosures or waivers.)
14.3 The Owner's representative is:
(Name, address and other information.)
George Robertson
14920 Broschart Road
Rockville, MD 20850
(301) 610-2834
14.4 The Contractor's representative is:
(Name, address and other information)
Timothy J. Regan
300 E. Joppa Road
Baltimore, MD 21286
(410) 337-5880
14.5 Neither the Owner's nor the Contractor's representative shall be
changed without ten days' written notice to the other party.
14.6 Other provisions:
See Attached Modifications to AIA A-111
See Attached Modifications to AIA A-201
ARTICLE 15 ENUMERATION OF CONTRACT DOCUMENTS
15.1 The Contract Documents, except for Modifications issued after
execution of this Agreement, are enumerated as follows:
15.1.1 The Agreement is this executed 1997 edition of the Standard Form of
Agreement Between Owner and Contractor, AIA Document A111-1997.
15.1.2 The General Conditions are the 1997 edition of the General
Conditions of the Contract for Construction, AIA Document A201-1997.
15.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated, and are as follows:
<PAGE> 11
Document Title Pages
n/a
15.1.4 The Specifications are those contained in the Project Manual dated
as in Subparagraph l5.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to
this Agreement.)
Section Title Pages
See Exhibit "F"
15.1.5 The Drawings are as follows, and are dated unless a different date
is shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
Number Title Date
See Exhibit "E"
15.1.6 The Addenda, if any, are as follows:
Number Date Pages
n/a
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in
this Article 15.
15.1.7 Other Documents, if any, forming part of the Contract Documents are
as follows:
(List here any additional documents, such as a list of alternates that are
intended to form part of the Contract Documents. AIA Document A201-1997
provides that bidding requirements such as advertisement or invitation to
bid, Instructions to Bidders, sample forms and the Contractor's bid are not
part of the Contract Documents unless enumerated in this Agreement. They
should be listed here only if intended to be part of the Contract
Documents.)
See Attached Modifications to AIA A-111
See Attached Modifications to AIA A-201
ARTICLE 16 INSURANCE AND BONDS
(List required limits of liability for insurance and bonds. AIA Document
A201-1997 gives other specific requirements for insurance and bonds.)
See Exhibit "G"
This Agreement is entered into as of the day and year first written above and is
executed in at least three original copies, of which one is to be delivered to
the Contractor, one to the Architect for use in the administration of the
Contract, and the remainder to the Owner.
<TABLE>
<S> <C>
/s/ Capers W. McDonald /s/ W. Daniel White
- -------------------------------------- --------------------------------------
OWNER (Signature) CONTRACTOR (Signature)
BioReliance Corporation The Whiting-Turner Contracting Company
Capers McDonald, President W. Daniel White, Sr. Vice President
- -------------------------------------- --------------------------------------
(Printed name and title) (Printed name and title)
</TABLE>
<PAGE> 12
MODIFICATIONS TO AIA A-111 STANDARD FORM OF AGREEMENT BETWEEN BIORELIANCE
CORPORATION AS OWNER AND THE WHITING-TURNER CONTRACTING COMPANY AS GENERAL
CONTRACTOR, DATED JUNE 30, 1999, FOR BIORELIANCE PRODUCTION FACILITY - BUILDING
NO. 7, 9920 MEDICAL CENTER DRIVE, ROCKVILLE, MARYLAND 20850.
1. Insert the words "Article 15 of" after the words "listed in" in the third
line of Article 1.
2. Add the following paragraph at the end of Article 1:
To the extent of any direct conflict or inconsistency between any of the
Contract Documents, the Contractor shall immediately seek clarification
from the Architect and notify the Owner that clarification has been
requested. In the event that the Architect fails to clarify such
discrepancy, within a reasonable time under the circumstances, the
Contractor shall proceed with the Work and give precedence to the Contract
Documents in the following order of priority:
(i) Modifications issued after execution of the Owner-Contractor
Agreement;
(ii) The Owner-Contractor Agreement;
(iii) Addenda issued prior to the execution of the
Owner-Contractor Agreement, with the Addenda bearing the
latest date taking precedence;
(iv) The Schedule of Contractor's Qualifications, Clarifications,
and Assumptions;
(v) The supplementary conditions;
(vi) The General Conditions of the Contract for Construction;
(vii) The Final Drawings and Specifications; and
(viii) The Preliminary Drawings and Specifications.
3. Insert the following language after the word "Documents" in the first line
of Article 2:
and reasonably inferable by the Contractor as necessary to produce the
results intended by the Contract Documents.
4. Add the following new Paragraphs 2.1 through 2.4:
2.1 The Owner and the Contractor acknowledge that as of the date of this
Agreement, not all of the Drawings and Specifications are finalized.
Subsequent to execution of this Agreement, the Owner shall cause the
Architect to complete further detailing of various aspects of the Work so
that all Drawings and Specifications necessary for the Contractor to
perform the Work are completed on or before December 2, 1999. An index of
Drawings and Specifications that have been furnished to the Contractor as
of the date of this Agreement (the "Preliminary Documents") are set forth
in Exhibits E and F respectively attached hereto and made a part hereof.
<PAGE> 13
2.2 The Contractor shall not be entitled to any adjustments in the
Guaranteed Maximum Price or the Contract Time as a result of any action, or
failure to act, in connection with any work or other services performed by
the Contractor, or any entity affiliated with the Contractor, for portions
of the Project other than the Work, whether such work or other services are
performed under contract with the Owner or an independent third party.
2.3 The Contractor shall assist the Owner and the Architect in expediting
the development of the final Drawings and Specifications by furnishing
recommendations to the Owner and the Architect and performing value
engineering services, which will cause the final Drawings and
Specifications prepared from the Preliminary Documents and Supplemental
Documents (as defined in Paragraph 5.3) to assist in achieving all of the
Owner's design objectives, including, without limitation, the time of
construction, cost of construction, functional performance, and aesthetic
goals. Factors that the Contractor shall consider include, without
limitation, site use, selection of building materials and systems,
availability of labor, methods of construction, and any other similar items
benefiting from evaluation prior to the completion of the Drawings and
Specifications. Particular attention shall be given to alternative design
proposals, possible economies, and identification of options that will
maximize the benefits that the Owner will derive from the completion of the
Work. As requested by the Owner, the Contractor shall prepare a specific
analysis of the cost-effectiveness and performance capabilities of any
building system or component under consideration or specified for the Work,
recommendations on field logistics, and any other studies that are required
to complete the Work successfully.
2.3.1 The Owner shall cause the Architect to furnish the Contractor
with design documents, information, and materials as reasonably
necessary for the Contractor to perform the services described under
this Paragraph 2.3. If requested by the Owner, the Contractor shall
compile value engineering analyses, advice, and recommendations in a
written summary to be submitted to both the Owner and the Architect
for review and consideration. If requested by the Owner, an initial
value engineering summary will be completed within thirty (30) days
following the execution of this Agreement and updated thereafter every
two (2) weeks until final completion of the Drawings and
Specifications.
2.3.2 Each value engineering proposal submitted by the Contractor, as
may be requested by the Owner, shall include, without limitation, the
following: (i) a detailed description of the difference between the
requirements of the Contract Documents and the proposed changes and
the comparative advantages and disadvantages of each; (ii) an
itemization of
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aspects of the Contract Documents affected by enactment of the
proposal; (iii) the impact of the proposal upon both cost and the
Construction Schedule; (iv) a list of the projects to the extent
known, where the proposal or similar proposal was used and the results
experienced; (v) other information reasonably necessary to fully
evaluate the proposal; and (vi) the date by which the Owner must
accept the proposal in order for the Contractor's cost and time
estimates to remain valid.
2.4 The Contractor shall furnish only skilled and properly trained staff
for the performance of the Work. The key members of the Contractor's staff
shall be persons agreed upon with the Owner and identified in the "Schedule
of Key Personnel" attached hereto and incorporated herein as Exhibit H.
2.4.1 Such key members of the Contractor's staff shall not be changed
without the written consent of the Owner, unless such person becomes
unable to perform any required duties due to death, disability,
transfer, or termination of employment with the Contractor. If a key
member is no longer capable of performing in the capacity described in
Exhibit H, the Owner and the Contractor shall agree on a mutually
acceptable substitute.
2.4.2 During the performance of the Work, the Contractor shall keep a
competent superintendent at the Project site, fully authorized to act
on behalf of the Contractor. Notice from the Owner or the Architect to
such superintendent in connection with defective Work, instructions
for performance of the Work, or otherwise shall be considered notice
of such issues to the Contractor.
5. Add the following at the end of Paragraph 4.1:
A Notice to Proceed was issued by the Owner to the Contractor on February
24, 1999.
6. Add the following at the end of Subparagraph 5.2.1:
The Guaranteed Maximum Price is subject to adjustment for (i) scope
changes, as described in Paragraph 5.3, and (ii) change orders, authorized
in accordance with the requirements of the Contract Documents. The
difference, as of the date of final completion, between (i) the total
aggregate sum of the Cost of the Work plus the Contractor's Fee and (ii)
the Guaranteed Maximum Price upon final completion of the Work (such
difference equals the "Savings") shall be shared by the Owner and the
Contractor as follows: fifty percent (50%) of such Savings shall inure to
the benefit of the Owner, and the remainder shall be paid to the Contractor
as an additional fee; provided, however, that the Contractor shall not
3
<PAGE> 15
be entitled to receive any Savings until the date of final payment.
7. [Intentionally omitted].
8. Add the following new Paragraph 5.3:
5.3 A formal Guaranteed Maximum Price proposal shall be submitted by the
Contractor to the Owner by June 30, 1999, for the review and approval by
the Owner.
9. [Intentionally omitted]
10. Add the following new subparagraphs to Paragraph 7.1:
7.1.1 Costs as defined herein shall be actual costs paid by the Contractor,
less all discounts, rebates, and salvages that shall be taken by the
Contractor, subject to Article 9 of the Agreement. All payments made by the
Owner pursuant to this Article 7, whether those payments are actually made
before or after the execution of the Contract, are included within the
Guaranteed Maximum Price specified in Paragraph 5.2 above; provided,
however, that in no event shall the Owner be required to reimburse the
Contractor for any portion of the Cost of the Work incurred prior to the
Commencement Date unless the Contractor has received the Owner's written
consent prior to incurring such cost.
7.1.2 Notwithstanding the breakdown or categorization of any costs to be
reimbursed in this Article 7 or elsewhere in the Contract Documents, there
shall be no duplication of payment in the event any particular items for
which payment is requested can be characterized as falling into more than
one of the types of compensable or reimbursable categories.
11. Insert the words "but not merit bonuses" after the word "pensions" in the
fourth line of Subparagraph 7.2.4.
12. Add the following at the end of Subparagraph 7.3.1: "properly entered into
under this Agreement."
13. Insert the following after the word "Work" in the third line of
Subparagraph 7.4.2:
and shall be properly stored at the Project site in accordance with the
Owner's instructions.
14. Replace Subparagraph 7.5.1 in its entirety with the following:
4
<PAGE> 16
7.5.1 Costs, including transportation and maintenance, of all materials,
supplies, equipment, temporary facilities, and hand tools (not owned by the
workers) consumed in the performance of the Work. Any such items used but
not consumed, which are paid for by the Owner, shall become the property of
the Owner and shall be delivered to the Owner upon completion of the Work
in accordance with instructions furnished by the Owner. If the Owner
elects, however, the Contractor shall purchase any such items from the
Owner at a purchase price equal to the original cost charged to the Owner,
less the reduction in fair market value resulting directly from use of any
such item in connection with the Work or such other price that is mutually
acceptable to the Owner and the Contractor. Upon demand by the Owner, the
Contractor shall furnish the Owner with any information and documentation
necessary to verify the period of time for which such items were used in
connection with the Work.
15. Replace Subparagraph 7.5.2 in its entirety with the following:
7.5.2 Rental charges of all necessary machinery and equipment, exclusive of
hand tools, used at the site of the Work, whether rented from the
Contractor or others, including installation, minor repairs, and
replacements, dismantling, removal, transportation, and delivery costs
thereof. Such rental charges shall not exceed the amount set forth in the
Schedule of Rental Values attached hereto and made part hereof as Exhibit
I. In the absence of any appropriate rental amount set forth in Exhibit I,
rental charges shall be consistent with those generally prevailing in the
location of the Project. The Contractor shall obtain bids for all machinery
and equipment to be rented from no less than two (2) responsible suppliers
other than the Contractor itself, or an Affiliated Entity (as defined in
Paragraph 10.4). The Owner shall, with the advice of the Contractor,
determine which bid is to be accepted. In no event shall the Contractor be
entitled to reimbursement for any cumulative total of rental charges in
connection with any single piece of machinery or equipment in excess of
ninety percent (90%) of its fair market value as of the date that such
machinery or equipment is first put into service in connection with the
Work. The Contractor shall pay any excess rental charges.
16. [Intentionally omitted]
17. Delete the words "insurance and" from Subparagraph 7.6.1. Add the following
at the end of Subparagraph 7.6.1:
and required by the Contract; provided, however, that such costs shall not
be included in the Cost of the Work for purposes of calculating the
Contractor's Fee.
18. Delete the words in the second and third lines of Subparagraph 7.6.5.:
5
<PAGE> 17
the cost of defending suits or claims for infringement of patent rights
arising from such requirement by the Contract Documents
19. Add the following at the end of Subparagraph 7.7.1:
, to the extent not (i) caused by the negligence of the Contractor, (ii) a
Subcontractor, or anyone for whom either is responsible or (iii) capable of
being prevented through timely notice of an unsafe condition to the Owner.
20. Add the following at the end of Subparagraph 7.7.3:
provided that any absence of collectible insurance is not due to the
Contractor's breach of a contract for insurance.
21. Add the following at the end of Paragraph 9.1:
The Contractor shall not obtain for its own benefit any discounts, rebates,
or refunds in connection with the Work prior to providing the Owner with
seven (7) days' prior written notice of the potential discount, rebate, or
refund and an opportunity to furnish funds necessary to obtain such
discount, rebate, or refund on behalf of the Owner in accordance with the
requirements of this Paragraph 9.1.
22. Replace all language after the word "amount" beginning in the fifth line of
paragraph 10.2 with the following:
attributable to such subcontract or other agreement in the original
Schedule of Values submitted by the Contractor and accepted by the Owner.
23. Add the following new Paragraph to 10.4:
10.4 Except as otherwise agreed in writing by both parties hereto, the
Contractor must competitively bid any trade Work that the Contractor wishes
to perform with the Contractor's own forces, or through an Affiliate as
defined in Paragraph 10.5, and shall obtain no less than two (2) additional
responsive bids from responsible Subcontractors acceptable to the Owner.
The Contractor, or an Affiliate, shall be permitted to perform such trade
Work only if (i) the Owner consents thereto in writing after full
disclosure in writing by the Contractor to the Owner of the affiliation or
relationship of Affiliate to the Contractor, (ii) the Owner approves in
writing any subcontract, contract, purchase order, agreement, or other
arrangement between the Contractor and such Affiliate in form and
substance, and (iii) the Contractor has given due consideration to any
applicable MBE/WBE and EEO requirements. In no event will the Contractor be
permitted to charge any
6
<PAGE> 18
overhead, profit, or other form of markup or fee as a general contractor
for trade Work performed with its own forces or an Affiliate, including,
without limitation, the Contractor's Fee under Paragraph 5.1 of this
Agreement, except by Change Order. Any trade Work performed by the
Contractor's own forces or by an Affiliate, if required by the Owner, shall
be covered in a separate agreement between the Owner and the Contractor or
the Affiliate. Such agreement shall, without limitation, satisfy all
requirements for subcontracts as set forth in Subparagraph 5.3.1 of the
General Conditions. The term "Affiliate" is hereby deemed to mean any
entity related to or affiliated with the Contractor or in which the
Contractor has direct or indirect ownership or control, including, without
limitation, (i) any entity owned in whole or in part by the Contractor,
(ii) any entity with more than a twenty percent (20%) interest in the
Contractor; and (iii) any entity in which any officer, director, employee,
partner, or shareholder of the Contractor, or any Affiliate, has a direct
or indirect interest.
24. Add the following at the end of Article 11:
All records shall be maintained in accordance with generally acceptable
accounting procedures, consistently applied. Subcontractors retained by the
Contractor on a "cost-plus" basis shall have the same obligations to retain
records and cooperate with audits as are required of the Contractor under
this Article 11. If any inspection by the Owner of the Contractor's
records, books, correspondence, instructions, drawings, receipts, vouchers,
memoranda, and any other data relating to the Contract Documents reveals an
overcharge, including, without limitation, any untimely request for payment
as described in Paragraph 13.3, the Contractor shall pay the Owner upon
demand an amount equal to one hundred percent (100%) of such overcharge, as
reimbursement for said overcharge and the administrative expenses incurred
in determining the overcharge. The requirements of this Article 11 shall
not apply to any portion of an overcharge that is the subject of a
good-faith dispute between the Owner and the Contractor.
25. Insert the words ", including all supporting documentation" after the word
"Payment" in the first line of Subparagraph 12.1.1. Insert the words "the
Owner and" after the words "submitted to" in the first line of Subparagraph
12.1.1.
26. Add the following at the end of Subparagraph 12.1.2:
On or before the twenty-fifth (25th) day of the month immediately preceding
a month in which the Contractor will submit an Application for Payment, the
Owner, the Architect, and the Contractor shall meet to review a preliminary
draft of such Application for Payment (hereinafter referred to as a "Pencil
Draw") prepared by the Contractor. The Contractor shall revise the Pencil
Draw in
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<PAGE> 19
accordance with any objection or recommendation of either the Owner or the
Architect that is consistent with the requirements of the Contract
Documents. Such revised Pencil Draw shall be resubmitted by the Contractor
to the Owner as the Application for Payment due on the fifth (5th) day of
the month immediately following the month in which the Pencil Draw was
first submitted. The Contractor shall also submit with each Application for
Payment a written narrative describing the basis for any item set forth in
the Application for Payment that does not conform to instructions of the
Owner or the Architect in connection with any applicable Pencil Draw.
27. Insert the words "the Owner and" after the words "received by" in the first
line of Subparagraph 12.1.3.
28. Add the following at the end of Subparagraph 12.1.4:
In addition to other required items, each Application for Payment shall be
accompanied by the following, all in form and substance satisfactory to the
Owner and in compliance with applicable statutes of the State of Maryland:
(i) A duly executed and acknowledged Contractor's Sworn
Statement showing all Subcontractors with whom the
Contractor has entered into subcontracts, the amount of
each such subcontract, the amount requested for any
Subcontractor in the Application for Payment, and the
amount to be paid to the Contractor from such progress
payment, together with similar sworn statements from all
Subcontractors and, where appropriate, from lower tier
subcontractors;
(ii) Duly executed waivers of mechanics' and material
suppliers' liens from the Contractor and all such
Subcontractors, establishing payment or satisfaction of
the payment requested by the Contractor in the
Application for Payment; and
(iii) Such other information, documentation, and materials as
the Owner or the Architect may require.
29. Insert the words "or the Owner" after the words "the Architect" in the
sixth line of Subparagraph 12.1.5.
30. Add the following at the end of Subparagraph 12.1.7.6:
and other amounts properly held by the Owner at the time of each progress
payment.
31. Add the following new Subparagraph 12.1.10:
8
<PAGE> 20
12.1.10 Notwithstanding anything to the contrary contained in this
Paragraph 12.1, the Owner shall be entitled to withhold as retainage ten
percent (10%) of all Cost of the Work items included in each Application
for Payment. The Owner shall not withhold any retainage (i) on the
Contractor's general conditions portion of any payment application or (ii)
relative to any subcontracts that the Contractor has certified to the Owner
have been fully and completely performed. The Owner shall have the option,
but not the obligation, to reduce the retainage requirements of this
Agreement or release any portion of retainage prior to the date specified
in the Contract Documents. Any exercise of this option, however, shall not
be a waiver of (i) any of the Owner's rights to retainage in connection
with other payments to the Contractor or (ii) any other right or remedy
that the Owner has under the Contract Documents, at law or in equity.
32. Delete all text appearing after the words "claimed by the Contractor" in
the second line of Paragraph 12.2.4, and insert the following language
after the words "claimed by the Contractor" in the second line of Paragraph
12.2.4:
the undisputed portion of such final accounting shall be paid.
33. Delete all text appearing after the words "under Paragraph 13.2 below" in
Paragraph 13.1.
34. Add the following new Paragraph 13.5:
13.5 The Contractor shall not be entitled to any portion of the Savings if
the Owner terminates this contract for cause or if the Contractor
terminates this Agreement for any reason prior to Substantial Completion.
35. Add the following new subparagraphs to Paragraph 14.6:
14.6.1 The Contractor represents and warrants the following to the Owner
(in addition to any other representations and warranties contained in the
Contract Documents), as a material inducement to the Owner to execute this
Agreement, which representations and warranties shall survive the execution
and delivery of this Agreement, any termination of this Agreement, and the
final completion of the Work:
.1 The Contractor and its Subcontractors are
financially solvent, able to pay all debts
as they mature, and possessed of sufficient
working capital to complete the Work and
perform all obligations hereunder;
.2 The Contractor is able to furnish the plant,
tools, materials, supplies, equipment, and
labor required to complete the Work and
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<PAGE> 21
perform its obligations hereunder and has
sufficient experience and competence to do
so;
.3 The Contractor is authorized to do business
in the State of Maryland and is properly
licensed by all necessary governmental and
public and quasi-public authorities having
jurisdiction over the Contractor and over
the Work and the Project;
.4 The Contractor's execution of this Agreement
and performance thereof is within the
Contractor's duly authorized powers;
.5 The Contractor's duly authorized
representative has visited the site of the
Project, is familiar with the local
conditions under which the Work is to be
performed, and has correlated observations
with the requirements of the Contract
Documents; and
.6 The Contractor is a large, sophisticated
contractor who possesses a high level of
experience and expertise in the business
administration, construction, construction
management, and superintendence of projects
of the size, complexity, and nature of this
particular Project and will perform the Work
with the care, skill, and diligence of such
a contractor.
14.6.2 Notwithstanding anything to the contrary contained in this Agreement
or in any of the other Contract Documents, no officer, director,
shareholder, employee or any person or entity holding any interest in the
Owner shall be personally liable, whether directly or indirectly, by reason
of any default by the Owner in the performance of any of the obligations of
the Owner under this Agreement, including, without limitation, the Owner's
failure to pay the Contractor as required hereunder. From time to time,
however, the Owner may elect to sell, lease, mortgage, or otherwise
transfer any of the Owner's interest in any portion of the Project site,
not including any part of the Project site covered by the Building ("Site
Conveyance"). In connection with any Site Conveyance, the Contractor shall
execute and deliver to the Owner and shall cause any Subcontractors to
execute and deliver to the Owner such documents for the benefit of the
Owner, any purchaser, and any title insurance company issuing title
insurance a full and complete release of all mechanics' and material
suppliers' liens and rights to the extent payment has been made by the
Owner, with respect to the property that is the subject of such Site
Conveyance, together with such other documents as a title company may
require to induce it to issue its policy of title insurance with respect to
the Site Conveyance without requiring the Owner's indemnity against
mechanics' and material suppliers' liens.
<PAGE> 22
GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION
AIA Document A201 - 1997
1997 Edition - Electronic Format
- --------------------------------------------------------------------------------
This document has important legal consequences. Consultation with an attorney is
encouraged with respect to its completion or modification. AUTHENTICATION OF
THIS ELECTRONICALLY DRAFTED AIA DOCUMENT MAY BE MADE BY USING AIA DOCUMENT
D401.
This document has been approved and endorsed by The Associated General
Contractors of America.
Copyright 1911, 1915, 1918, 1925, 1937, 1951, 1958, 1961, 1963, 1966, 1967,
1970, 1976, 1987, (C) 1997 by The American Institute of Architects. Fifteenth
Edition. Reproduction of the material herein or substantial quotation of its
provisions without written permission of the AIA violates the copyright laws of
the United States and will subject the violator to legal prosecution.
- --------------------------------------------------------------------------------
TABLE OF ARTICLES
1. GENERAL PROVISIONS
2. OWNER
3. CONTRACTOR
4. ADMINISTRATION OF THE CONTRACT
5. SUBCONTRACTORS
6. CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
7. CHANGES IN THE WORK
8. TIME
9. PAYMENTS AND COMPLETION
10. PROTECTION OF PERSONS AND PROPERTY
11. INSURANCE AND BONDS
12. UNCOVERING AND CORRECTION OF WORK
13. MISCELLANEOUS PROVISIONS
14. TERMINATION OR SUSPENSION OF THE CONTRACT
- ------------------------------------------------------------
AIA DOCUMENT A201-GENERAL CONDITIONS OF THE CONTRACT FOR CONSTRUCTION - 1997
EDITION - AIA - COPYRIGHT 1997 - THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW
YORK AVENUE N.W., WASHINGTON, D.C. 20006-5292. WARNING: Unlicensed photocopying
violates U.S. copyright laws and will subject the violator to legal
prosecution. This document was electronically produced with permission of the
AIA and can be reproduced without violation until the date of expiration as
noted below.
Electronic Format A201-1997
User document: 97A201.CON -- 4/30/1999. AIA Licence Number 106277, which expires
on 10/1/1999 -- Page #__
<PAGE> 23
INDEX
Acceptance of Nonconforming Work
9.6.6, 9.9.3, 12.3
Acceptance of Work
9.6.6, 9.8.2, 9.9.3, 9.10.1, 9.10.3, 12.3
Access to Work
3.16, 6.2.1, 12.1
Accident Prevention
4.2.3, 10
Acts and Omissions
3.2, 3.3.2, 3.12.8, 3.18, 4.2.3, 4.3.8, 4.4.1, 8.3.1,
9.5. 1, 10.2.5, 13.4.2, 13.7, 14.1
Addenda
1.1.1, 3.11
Additional Costs, Claims for
4.3.4, 4.3.5, 4.3.6, 6.1.1, 10.3
Additional Inspections and Testing
9.8.3, 12.2.1, 13.5
Additional Time, Claims for
4.3.4, 4.3.7, 8.3.2
ADMINISTRATION OF THE CONTRACT
3.1.3, 4, 9.4, 9.5
Advertisement or Invitation to Bid
1.1.1
Aesthetic Effect
4.2.13, 4.5.1
Allowances
3.8
All-risk Insurance
11.4.1.1
Applications for Payment
4.2.5, 7.3.8, 9.2, 9.3, 9.4, 9.5.1, 9.6.3, 9.7.1, 9.8.5, 9. 10, 11.1.3,
14.2.4, 14.4.3
Approvals
2.4, 3.1.3, 3.5, 3.10.2, 3.12, 4.2.7, 9.3.2, 13.4.2, 13.5
Arbitration
4.3.3, 4.4, 4.5.1, 4.5.2, 4.6, 8.3.1, 9.7.1, 11.4.9, 11.4.10
Architect
4.1
Architect, Definition of
4.1.1
Architect, Extent of Authority
2.4, 3.12.7, 4.2, 4.3.6, 4.4, 5.2, 6.3, 7.1.2, 7.3.6, 7.4, 9.2, 9.3.1, 9.4,
9.5, 9.8.3, 9.10.1, 9.10.3, 12.1, 12.2.1, 13.5.1, 13.5.2, 14.2.2, 14.2.4
Architect, Limitations of Authority and Responsibility
2.1.1, 3.3.3, 3.12.4, 3.12.8, 3.12.10, 4.1.2, 4.2.1, 4.2.2, 4.2.3, 4.2.6,
4.2.7, 4.2.10, 4.2.12, 4.2.13, 4.4, 5.2.1, 7.4, 9.4.2, 9.6.4, 9.6.6
Architect's Additional Services and Expenses
2.4, 11.4.1.1, 12.2.1, 13.5.2, 13.5.3, 14.2.4
Architect's Administration of the Contract
3.1.3, 4.2, 4.3.4, 4.4, 9.4, 9.5
Architect's Approvals
2.4, 3.1.3, 3.5.1, 3.10.2, 4.2.7
Architect's Authority to Reject Work
3.5.1, 4.2.6, 12.1.2, 12.2.1
Architect's Copyright
1.6
Architect' s Decisions
4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.4, 4.4.1, 4.4.5, 4.4.6, 4.5,
6.3, 7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.4, 9.9. 1, 13.5.2,
14.2.2, 14.2.4
Architect's Inspections
4.2.2, 4.2.9, 4.3.4, 9.4.2, 9.8.3, 9.9.2, 9.10.1, 13.5
Architect's Instructions
3.2.3, 3.3.1, 4.2.6, 4.2.7, 4.2.8, 7.4.1, 12.1, 13.5.2
Architect's Interpretations
4.2.11, 4.2.12, 4.3.6
Architect's Project Representative
4.2.10
Architect's Relationship with Contractor
1.1.2, 1.6, 3.1.3, 3.2.1, 3.2.2, 3.2.3, 3.3.1, 3.4.2, 3.5.1, 3.7.3,
3.10, 3.11, 3.12, 3.16, 3.18, 4.1.2, 4.1.3, 4.2, 4.3.4, 4.4.1, 4.4.7,
5.2, 6.2.2, 7, 8.3.1, 9.2, 9.3, 9.4, 9.5, 9.7, 9.8, 9.9, 10.2.6, 10.3,
11.3, 11.4.7, 12, 13.4.2, 13.5
Architect's Relationship with Subcontractors
1.2, 4.2.3, 4.2.4, 4.2.6, 9.6.3, 9.6.4, 11.4.7
Architect's Representations
9.4.2, 9.5.1, 9.10.1
Architect's Site Visits
4.2.2, 4.2.5, 4.2.9, 4.3.4, 9.4.2, 9.5.1. 9.9.2, 9.10.1, 13.5
Asbestos
10.3.1
Attorneys' Fees
3.18.1, 9.10.2, 10.3.3
Award of Separate Contracts
6.1.1, 6.1.2
Award of Subcontracts and Other Contracts for Portions of the Work
5.2
Basic Definitions
1.1
Bidding Requirements
1.1.1, 1.1.7, 5.2.1, 11.5.1
Boiler and Machinery Insurance
11.4.2
Bonds, Lien
9.10.2
Bonds, Performance, and Payment
7.3.6.4, 9.6.7, 9.10.3, 11.4.9, 11.5
Building Permit
3.7.1
Capitalization
1.3
Certificate of Substantial Completion
9.8.3, 9.8.4, 9.8.5
Certificates for Payment
4.2.5, 4.2.9, 9.3.3, 9.4, 9.5, 9.6.1, 9.6.6, 9.7.1,
9.10. 1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Certificates of Inspection, Testing or Approval
<PAGE> 24
13.5.4
Certificates of Insurance
9.10.2, 11.1.3
Change Orders
1.1.1, 2.4.1, 3.4.2, 3.8.2.3, 3.11.1, 3.12.8, 4.2.8, 4.3.4, 4.3.9, 5.2.3,
7.1, 7.2, 7.3, 8.3.1, 9.3.1.1, 9.10.3, 11.4.1.2, 11.4.4, 11.4.9, 12.1.2
Change Orders, Definition of
7.2.1
CHANGES IN THE WORK
3.11, 4.2.8, 7, 8.3.1, 9.3.1.1, 11.4.9
Claim, Definition of
4.3.1
Claims and Disputes
3.2.3, 4.3, 4.4, 4.5, 4.6, 6.1.1, 6.3, 7.3.8, 9.3.3, 9.10.4, 10.3.3
Claims and Timely Assertion of Claims
4.6.5
Claims for Additional Cost
3.2.3, 4.3.4, 4.3.5, 4.3.6, 6.1.1, 7.3.8, 10.3.2
Claims for Additional Time
3.2.3, 4.3.4, 4.3.7, 6.1.1, 8.3.2, 10.3.2
Claims for Concealed or Unknown Conditions
4.3.4
Claims for Damages
3.2.3, 3.18, 4.3.10, 6.1.1, 8.3.3, 9.5.1, 9.6.7, 10.3.3, 11.1.1, 11.4.5,
11.4.7, 14.1.3, 14.2.4
Claims Subject to Arbitration
4.4.1, 4.5.1, 4.6.1
Cleaning Up
3.15, 6.3
Commencement of Statutory Limitation Period
13.7
Commencement of the Work, Conditions Relating to
2.2.1, 3.2.1, 3.4.1, 3.7.1, 3.10.1, 3.12.6, 4.3.5, 5.2.1, 5.2.3, 6.2.2,
8.1.2, 8.2.2, 8.3.1, 11.1, 11.4.1, 11.4.6, 11.5.1
Commencement of the Work, Definition of
8.1.2
Communications Facilitating Contract Administration
3.9.1, 4.2.4
Completion, Conditions Relating to
1.6.1, 3.4.1, 3.11, 3.15, 4.2.2, 4.2.9, 8.2, 9.4.2, 9.8, 9.9.1, 9.10,
12.2, 13.7, 14.1.2
COMPLETION, PAYMENTS AND
9
Completion, Substantial
4.2.9, 8.1.1, 8.1.3, 8.2.3, 9.4.2, 9.8, 9.9.1, 9.10.3, 9.10.4.2, 12.2,
13.7
Compliance with Laws
1.6.1, 3.2.2, 3.6, 3.7, 3.12.10, 3.13, 4.1.1, 4.4.8, 4.6.4, 4.6.6,
9.6.4, 10.2.2, 11.1, 11.4, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14.1.1,
14.2.1.3
Concealed or Unknown Conditions
4.3.4, 8.3.1, 10.3
Conditions of the Contract
1.1.1, 1.1.7, 6.1.1, 6.1.4
Consent, Written
1.6, 3.4.2, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.6.4, 9.3.2. 9.8.5. 9.9.1,
9.10.2, 9.10.3, 11.4.1, 13.2, 13.4.2
CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
1.1.4, 6
Construction Change Directive, Definition of
7.3.1
Construction Change Directives
1.1.1, 3.12.8, 4.2.8, 4.3.9, 7.1, 7.3, 9.3. 1.1
Construction Schedules, Contractor's
1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3
Contingent Assignment of Subcontracts
5.4, 14.2.2.2
Continuing Contract Performance
4.3.3
Contract Definition of
1.1.2
CONTRACT, TERMINATION OR SUSPENSION OF THE
5.4.1.1, 11.4.9, 14
Contract Administration
3.1.3, 4, 9.4, 9.5
Contract Award and Execution, Conditions Relating to
3.7.1, 3.10, 5.2, 6.1, 11.1.3, 11.4.6, 11.5.1
Contract Documents, The
1.1, 1.2
Contract Documents, Copies Furnished and Use of
1.6, 2.2.5, 5.3
Contract Documents, Definition of
1.1.1
Contract Sum
3.8, 4.3.4, 4.3.5, 4.4.5, 5.2.3, 7.2, 7.3, 7.4, 9.1, 9.4.2, 9.5.1.4,
9.6.7, 9.7, 10.3.2, 11.4.1, 14.2.4, 14.3.2
Contract Sum, Definition of
9.1
Contract Time
4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1.3, 7.3, 7.4, 8.1.1, 8.2, 8.3.1, 9.5.1,
9.7, 10.3.2, 12.1.1, 14.3.2
Contract Time, Definition of
8.1.1
CONTRACTOR
3
Contractor, Definition of
3.1, 6.1.2
Contractor's Construction Schedules
1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3
Contractor's Employees
3.3.2, 3.4.3, 3.8.1, 3.9, 3.18.2, 4.2.3, 4.2.6, 10.2, 10.3, 11.1.1,
11.4.7, 14.1, 14.2.1.1,
Contractor's Liability Insurance
11.1
Contractor's Relationship with Separate Contractors and Owner's Forces
3.12.5, 3.14.2, 4.2.4, 6, 11.4.7, 12.1.2, 12.2.4
Contractor's Relationship with Subcontractors
<PAGE> 25
1.2.2, 3.3.2, 3.18.1, 3.18.2, 5, 9.6.2, 9.6.7, 9.10.2, 11.4.1.2, 11.4.7,
11.4.8
Contractor's Relationship with the Architect
1.1.2, 1.6, 3.1.3, 3.2.1, 3.2.2, 3.2.3, 3.3.1, 3.4.2, 3.5.1, 3.7.3,
3.10, 3.11, 3.12, 3.16, 3.18, 4.1.2, 4.1.3, 4.2, 4.3.4, 4.4.1, 4.4.7,
5.2, 6.2.2, 7, 8.3.1, 9.2, 9.3, 9.4, .5, 9.7, 9.8, 9.9, 10.2.6, 10.3,
11.3, 11.4.7, 12, 13.4.2, 13.5
Contractor's Representations
1.5.2, 3.5.1, 3.12.6, 6.2.2, 8.2.1, 9.3.3, 9.8.2
Contractor's Responsibility for Those Performing the Work
3.3.2, 3.18, 4.2.3, 4.3.8, 5.3.1, 6.1.3, 6.2, 6.3, 9.5. 1,
10
Contractor's Review of Contract Documents
1.5.2, 3.2, 3.7.3
Contractor's Right to Stop the Work
9.7
Contractor's Right to Terminate the Contract
4.3.10, 14.1
Contractor's Submittals
3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3, 7.3.6, 9.2, 9.3, 9.8.2, 9.8.3,
9.9.1, 9.10.2, 9.10.3, 11.1.3, 11.5.2
Contractor's Superintendent
3.9, 10.2.6
Contractor's Supervision and Construction Procedures
1.2.2, 3.3, 3.4, 3.12.10, 4.2.2, 4.2.7, 4.3.3, 6.1.3, 6.2.4, 7.1.3,
7.3.4, 7.3.6, 8.2, 10, 12, 14
Contractual Liability Insurance
11.1.1.8, 11.2, 11.3
Coordination and Correlation
1.2, 1.5.2, 3.3.1, 3.10, 3.12.6, 6.1.3, 6.2.1
Copies Furnished of Drawings and Specifications
1.6, 2.2.5, 3.11
Copyrights
1.6, 3.17
Correction of Work
2.3, 2.4, 3.7.4, 4.2.1, 9.4.2, 9.8.2, 9.8.3, 9.9.1, 12.1.2, 12.2,
13.7.1.3
Correlation and Intent of the Contract Documents
1.2
Cost, Definition of
7.3.6
Costs
2.4, 3.2.3, 3.7.4, 3.8.2, 3.15.2, 4.3, 5.4.2, 6.1.1, 6.2.3, 7.3.3.3,
7.3.6, 7.3.7, 7.3.8, 9.10.2, 10.3.2, 10.5, 11.3, 11.4, 12.1, 12.2.1,
12.2.4, 13.5, 14
Cutting and Patching
6.2.5, 3.14
Damage to Construction of Owner or Separate Contractors
3.14.2, 6.2.4, 9.2.1.5, 10.2.1.2, 10.2.5, 10.6, 11.1,
11,4, 12.2.4
Damage to the Work
3.14.2, 9.9.1, 10.2.1.2, 10.2.5, 10.6, 11.4, 12.2.4
Damages, Claims for
3.2.3, 3.18, 4.3.10, 6.1.1, 8.3.3, 9.5.1, 9.6.7, 10.3.3, 11.1.1, 11.4.5,
11.4.7, 14.1.3, 14.2.4
Damages for Delay
6.1.1, 8.3.3, 9.5.1.6, 9.7, 10.3.2
Date of Commencement of the Work, Definition of
8.1.2
Date of Substantial Completion, Definition of
8.1.3
Day, Definition of
8.1.4
Decisions of the Architect
4.2.6, 4.2.7, 4.2.11, 4.2.12, 4.2.13, 4.3.4, 4.4.1, 4.4.5, 4.4.6, 4.5,
6.3, 7.3.6, 7.3.8, 8.1.3, 8.3.1, 9.2, 9.4, 9.5.1, 9.8.4, 9.9. 1, 13.5.2,
14.2.2, 14.2.4
Decisions to Withhold Certification
9.4.1, 9.5, 9.7, 14.1.1.3
Defective or Nonconforming Work, Acceptance, Rejection and Correction of
2.3, 2.4, 3.5.1, 4.2.6, 6.2.5, 9.5.1, 9.5.2, 9.6.6, 9.8.2, 9.9.3,
9.10.4, 12.2.1, 13.7.1.3
Defective Work, Definition of
3.5.1
Definitions
1.1, 2.1.1, 3.1, 3.5.1, 3.12.1, 3.12.2, 3.12.3, 4.1.1, 4.3.1, 5.1,
6.1.2, 7.2.1, 7.3.1, 7.3.6, 8.1, 9.1, 9.8.1
Delays and Extensions of Time
3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, 7.3.1, 7.4. 1, 7.5.1,
8.3, 9.5.1, 9.7.1, 10.3.2, 10.6.1, 14.3.2
Disputes
4.1.4, 4.3, 4.4, 4.5, 4.6, 6.3, 7.3.8
Documents and Samples at the Site
3.11
Drawings, Definition of
1.1.5
Drawings and Specifications, Use and Ownership of
1.1.1, 1.3, 2.2.5, 3.11, 5.3
Effective Date of Insurance
8.2.2, 11.1.2
Emergencies
4.3.5, 10.6, 14.1.1.2
Employees, Contractor's
3.3.2, 3.4.3, 3.8.1, 3.9, 3.18.2, 4.2.3, 4.2.6, 10.2, 10.3, 11.1.1,
11.4.7, 14.1, 14.2.1.1
Equipment, Labor, Materials and
1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2, 3.8.3, 3.12, 3.13, 3.15.1, 4.2.6,
4.2.7, 5.2.1, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 9.5.1.3, 9.10.2, 10.2.1,
10.2.4, 14.2.1.2
Execution and Progress of the Work
1.1.3, 1.2.1, 1.2.2, 2.2.3, 2.2.5, 3.1, 3.3, 3.4, 3.5, 3.7, 3.10, 3.12,
3.14, 4.2.2, 4.2.3, 4.3.3, 6.2.2, 7.1.3, 7.3.4, 8.2, 9.5, 9.9.1, 10.2,
10.3, 12.2, 14.2, 14.3
Extensions of Time
3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, 7.3, 7.4.1, 9.5.1,
9.7.1, 10.3.2, 10.6.1, 14.3.2
Failure of Payment
4.3.6, 9.5.1.3, 9.7, 9.10.2, 14.1.1.3, 14.2.1.2, 13.6
Faulty Work
(See Defective or Nonconforming Work)
Final Completion and Final Payment
<PAGE> 26
4.2.1, 4.2.9, 4.3.2, 9.8.2, 9.10, 11.1.2, 11.1.3, 11.4.1, 11.4.5,
12.3.1, 13.7, 14.2.4, 14.4.3
Financial Arrangements, Owner's
2.2.1, 13.2.2, 14.1.1.5
Fire and Extended Coverage Insurance
11.4
GENERAL PROVISIONS
1
Governing Law
13.1
Guarantees
(See Warranty)
Hazardous Materials
10.2.4, 10.3, 10.5
Identification of Contract Documents
1.5.1
Identification of Subcontractors and Suppliers
5.2.1
Indemnification
3.17, 3.18, 9.10.2, 10.3.3, 10.5, 11.4.1.2, 11.4.7
Information and Services Required of the Owner
2.1.2, 2.2, 3.2.1, 3.12.4, 3.12.10, 4.2.7, 4.3.3, 6.1.3, 6.1.4, 6.2.5,
9.3.2, 9.6.1, 9.6.4, 9.9.2, 9.10.3, 10.3.3, 11.2, 11.4, 13.5.1, 13.5.2,
14.1.1.4, 14.1.4
Injury or Damage to Person or Property
4.3.8, 10.2, 10.6
Inspections
3.1.3, 3.3.3, 3.7.1, 4.2.2, 4.2.6, 4.2.9, 9.4.2, 9.8.2, 9.8.3, 9.9.2,
9.10.1, 12.2.1, 13.5
Instructions to Bidders
1.1.1
Instructions to the Contractor
3.2.3, 3.3.1, 3.8.1, 4.2.8, 5.2.1, 7, 12, 8.2.2, 13.5.2
Insurance
3.18.1, 6.1.1, 7.3.6, 8.2.1, 9.3.2, 9.8.4, 9.9.1, 9.10.2, 9.10.5, 11
Insurance, Boiler and Machinery
11.4.2
Insurance, Contractor's Liability
11.1
Insurance, Effective Date of
8.2.2, 11.1.2
Insurance, Loss of Use
11.4.3
Insurance, Owner's Liability
11.2
Insurance, Project Management Protective Liability
11.3
Insurance, Property
10.2.5, 11.4
Insurance, Stored Materials
9.3.2, 11.4.1.4
INSURANCE AND BONDS
11
Insurance Companies, Consent to Partial Occupancy
9.9.1, 11.4.1.5
Insurance Companies, Settlement with
11.4.10
Intent of the Contract Documents
1.2.1, 4.2.7, 4.2.12, 4.2.13, 7.4
Interest
13.6
Interpretation
1.2.3, 1.4, 4.1.1, 4.3.1, 5.1, 6.1.2, 8.1.4
Interpretations, Written
4.2.11, 4.2.12, 4.3.6
Joinder and Consolidation of Claims Required
4.6.4
Judgment on Final Award
4.6.6
Labor and Materials, Equipment
1.1.3, 1.1.6, 3.4, 3.5.1, 3.8.2, 3.8.3, 3.12, 3.13, 3.15.1, 42.6, 4.2.7,
5.2.1, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 9.5.1.3, 9.10.2, 10.2. 1, 10.2.4,
14.2.1.2
Labor Disputes
8.3.1
Laws and Regulations
1.6, 3.2.2, 3.6, 3.7, 3.12.10, 3.13, 4.1.1, 4.4.8, 4.6, 9.6.4, 9.9.1,
10.2.2, 11.1, 11.4, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14
Liens
2.1.2, 4.4.8, 8.2.2, 9.3.3, 9.1 0
Limitation on Consolidation or Joinder
4.6.4
Limitations, Statutes of
4.6.3, 12.2.6, 13.7
Limitations of Liability
2.3, 3.2.1, 3.5.1, 3.7.3, 3.12.8, 3.12.10, 3.17, 3.18, 4.2.6, 4.2.7,
4.2.12, 6.2.2, 9.4.2, 9.6.4, 9.6.7, 9.10.4, 10.3.3, 10.2.5, 11.1.2,
11.2.1, 11.4.7, 12.2.5, 13.4.2
Limitations of Time
2.1.2, 2.2, 2.4, 3.2.1, 3.7.3, 3.10, 3.11, 3.12.5, 3.15.1, 4.2.7, 4.3,
4.4, 4.5, 4.6, 5.2, 5.3, 5.4, 6.2.4, 7.3, 7.4, 8.2, 9.2, 9.3.1, 9.3.3,
9.4.1, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 11.1.3, 11.4.1.5, 11.4.6, 11.4.10,
12.2, 13.5, 13.7, 14
Loss of Use Insurance
11.4.3
Material Suppliers
1.6, 3.12.1, 4.2.4, 4.2.6, 5.2.1, 9.3, 9.4.2, 9.6, 9.10.5
Materials, Hazardous
10.2.4, 10.3, 10.5
Materials, Labor, Equipment and
1.1.3, 1.1.6, 1.6.1, 3.4, 3.5.1, 3.8.2, 3.8.23, 3.12, 3.13, 3.15.1,
4.2.6, 4.2.7, 5.2.1, 6.2.1, 7.3.6, 9.3.2, 9.3.3, 9.5.1.3, 9.10.2,
10.2.1, 10.2.4, 14.2.1.2
Means, Methods, Techniques, Sequences and Procedures
of Construction
3.3.1, 3.12.10, 4.2.2, 4.2.7, 9.4.2
Mechanic's Lien
4.4.8
Mediation
4.4.1, 4.4.5, 4.4.6, 4.4.8, 4.5, 4.6.1, 4.6.2, 8.3.1, 10.5
Minor Changes in the Work
<PAGE> 27
1.1.1, 3.12.8, 4.2.8, 4.3.6, 7.1, 7.4
MISCELLANEOUS PROVISIONS
13
Modifications, Definition of
1.1.1
Modifications to the Contract
1.1.1, 1.1.2, 3.7.3, 3.11, 4.1.2, 4.2.1, 5.2.3, 7, 8.3.1, 9.7, 10.3.2,
11.4.1
Mutual Responsibility
6.2
Nonconforming Work, Acceptance of
9.6.6, 9.9.3, 12.3
Nonconforming Work, Rejection and Correction of
2.3, 2.4, 3.5.1, 4.2.6, 6.2.5, 9.5.1, 9.8.2, 9.9.3, 9.10.4, 12.2.1,
13.7.1.3
Notice
2.2.1, 2.3, 2.4, 3.2.3, 3.3.1, 3.7.2, 3.7.4, 3.12.9, 4.3, 4.4.8, 4.6.5,
5.2.1, 8.2.2, 9.7, 9.10, 10.2.2, 11.1.3, 11.4.6, 12.2.2, 12.2.4, 13.3,
13.5.1, 13.5.2, 14.1, 14.2
Notice, Written
2.3, 2.4, 3.3.1, 3.9, 3.12.9, 3.12.10, 4.3, 4.4.8, 4.6.5, 5.2.1, 8.2.2,
9.7, 9.10, 10.2.2, 10.3, 11.1.3, 11.4.6, 12.2.2, 12.2.4, 13.3, 14
Notice of Testing and Inspections
13.5.1, 13.5.2
Notice to Proceed
8.2.2
Notices, Permits, Fees and
2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2
Observations, Contractor's
1.5.2, 3.2, 3.7.3, 4.3.4
Occupancy
2.2.2, 9.6.6, 9.8, 11.4.1.5
Orders, Written
1.1.1, 2.3, 3.9, 4.3.6, 7, 8.2.2, 11.4.9, 12.1, 12.2, 13.5.2, 14.3.1
OWNER
2
Owner, Definition of
2.1
Owner, Information and Services Required of the
2.1.2, 2.2, 3.2.1, 3.12.4,
3.12.10, 4.2.7, 4.3.3, 6.1.3, 6.1.4, 6.2.5, 9.3.2, 9.6.1, 9.6.4,
9.9.2, 9.10.3, 10.3.3, 11.2, 11.4, 13.5.1, 13.5.2, 14.1.1.4, 14.1.4
Owner's Authority
1.6, 2.1.1, 2.3, 2.4, 3.4.2, 3.8.1, 3.12.10, 3.14.2, 4.1.2, 4.1.3,
4.2.4, 4.2.9, 4.3.6, 4.4.7, 5.2.1, 5.2.4, 5.4.1, 6.1, 6.3, 7.2. 1,
7.3.1, 8.2.2, 8.3.1, 9.3.1, 9.3.2, 9.5.1, 9.9.1, 9,10.2, 10.3.2, 11.1.3,
11.3.1, 11.4.3, 11.4.10, 12.2.2, 12.3.1, 13.2.2, 14.3, 14.4
Owner's Financial Capability
2.2.1, 13.2.2, 14.1.1.5
Owner's Liability Insurance
11.2
Owner's Loss of Use Insurance
11.4.3
Owner's Relationship with Subcontractors
1.2, 5.2, 5.3, 5.4, 9.6.4, 9.10.2, 14.2.2
Owner's Right to Carry Out the Work
2.4, 12.2.4, 14.2.2.2
Owner's Right to Clean Up
6.3
Owner's Right to Perform Construction and to Award Separate Contracts
6.1
Owner's Right to Stop the Work
2.3
Owner's Right to Suspend the Work
14.3
Owner's Right to Terminate the Contract
14.2
Ownership and Use of Drawings, Specifications and Other
Instruments of Service
1.1.1, 1.6, 2.2.5, 3.2.1, 3.11.1, 3.17.1, 4.2.12, 5.3
Partial Occupancy or Use
9.6.6, 9.9, 11.4.1.5
Patching, Cutting and
3.14, 6.2.5
Patents
3.17
Payment, Applications for
4.2.5, 7.3.8, 9.2, 9.3, 9.4, 9.5.1, 9.6.3, 9.7.1, 9.8.5, 9.10.1, 9.10.3,
9.10.5, 11.1.3, 14.2.4, 14.4.3
Payment, Certificates for
4.2.5, 4.2.9, 9.3.3, 9.4, 9.5, 9.6.1, 9.6.6, 9.7.1,
9.10. 1, 9.10.3, 13.7, 14.1.1.3, 14.2.4
Payment, Failure of
4.3.6, 9.5.1.3, 9.7, 9.10.2, 14.1.1.3, 14.2.1.2, 13.6
Payment, Final
4.2.1, 4.2.9, 4.3.2, 9.8.2, 9.10, 11.1.2, 11.1.3, 11.4.1, 11.4.5,
12.3.1, 13.7, 14.2.4, 14.4.3
Payment Bond, Performance Bond and
7.3.6.4, 9.6.7, 9.10.3, 11.4.9, 11.5
Payments, Progress
4.3.3, 9.3, 9.6, 9.8.5, 9.10.3, 13.6, 14.2.3
PAYMENTS AND COMPLETION
9
Payments to Subcontractors
5.4.2, 9.5.1.3, 9.6.2, 9.6.3, 9.6.4, 9.6.7, 11.4.8,
14.2.1.2
PCB
10.3.1
Performance Bond and Payment Bond
7.3.6.4, 9.6.7, 9.10.3, 11.4.9,11.5
Permits, Fees and Notices
2.2.2, 3.7, 3.13, 7.3.6.4, 10.2.2
PERSONS AND PROPERTY, PROTECTION OF
10
Polychlorinated Biphenyl
10.3.1
Product Data, Definition of
3.12.2
Product Data and Samples, Shop Drawings
<PAGE> 28
3.11, 3.12, 4.2.7
Progress and Completion
4.2.2, 4.3.3, 8.2, 9.8, 9.9.1, 14.1.4
Progress Payments
4.3.3, 9.3, 9.6, 9.8.5, 9.10.3, 13.6, 14.2.3
Project, Definition of the
1.1.4
Project Management Protective Liability Insurance
11.3
Project Manual, Definition of the
1.1.7
Project Manuals
2.2.5
Project Representatives
4.2.10
Property Insurance
10.2.5, 11.4
PROTECTION OF PERSONS AND PROPERTY
10
Regulations and Laws
1.6, 3.2.2, 3.6, 3.7, 3.12.10, 3.13, 4.1.1, 4.4.8, 4.6, 9.6.4, 9.9.1,
10.2.2, 11.1, 11.4, 13.1, 13.4, 13.5.1, 13.5.2, 13.6, 14
Rejection of Work
3.5.1, 4.2.6, 12.2.1
Releases and Waivers of Liens
9.10.2
Representations
1.5.2, 3.5.1, 3.12.6, 6.2.2, 8.2.1, 9.3.3, 9.4.2, 9.5.1, 9.8.2, 9.10.1
Representatives
2.1.1, 3.1.1, 3.9, 4.1.1, 4.2.1, 4.2.10, 5.1.1, 5.1.2, 13.2.1
Resolution of Claims and Disputes
4.4, 4.5,4.6
Responsibility for Those Performing the Work
3.3.2, 3.18, 4.2.3, 4.3.8, 5.3.1, 6.1.3, 6.2, 6.3,
9.5. 1, 10
Retainage
9.3.1, 9.6.2, 9.8.5, 9.9.1, 9.10.2, 9.10.3
Review of Contract Documents and Field Conditions by
Contractor
1.5.2, 3.2, 3.7.3, 3.12.7, 6.1.3
Review of Contractor's Submittals by Owner and Architect
3.10.1, 3.10.2, 3.11, 3.12, 4.2, 5.2, 6.1.3, 9.2, 9.8.2
Review of Shop Drawings, Product Data and Samples by Contractor
3.12
Rights and Remedies
1.1.2, 2.3, 2.4, 3.5.1, 3.15.2, 4.2.6, 4.3.4, 4.5, 4.6, 5.3, 5.4, 6.1,
6.3, 7.3.1, 8.3, 9.5.1, 9.7, 10.2.5, 10.3, 12.2.2, 12.2.4, 13.4, 14
Royalties, Patents and Copyrights
3.17
Rules and Notices for Arbitration
4.6.2
Safety of Persons and Property
10.2, 10.6
Safety Precautions and Programs
3.3.1, 4.2.2, 4.2.7, 5.3.1, 10.1, 10.2, 10.6
Samples, Definition of
3.12.3
Samples, Shop Drawings, Product Data and
3.11, 3.12, 4.2.7
Samples at the Site, Documents and
3.11
Schedule of Values
9.2, 9.3.1
Schedules, Construction
1.4.1.2, 3.10, 3.12.1, 3.12.2, 4.3.7.2, 6.1.3
Separate Contracts and Contractors
1.1.4, 3.12.5, 3.14.2, 4.2.4, 4.2.7, 4.6.4, 6, 8.3.1, 11.4.7, 12.1.2,
12.2.5
Shop Drawings, Definition of
3.12.1
Shop Drawings, Product Data and Samples
3.11, 3.12, 4.2.7
Site, Use of
3.13, 6.1.1, 6.2.1
Site Inspections
1.2.2, 3.2.1, 3.3.3, 3.7.1, 4.2, 4.3.4, 9.4.2, 9.10.1, 13.5
Site Visits, Architect's
4.2.2, 4.2.9, 4.3.4, 9.4.2, 9.5.1, 9.9.2, 9.10.1, 13.5
Special Inspections and Testing
4.2.6, 12.2.1, 13.5
Specifications, Definition of the
1.1.6
Specifications, The
1.1.1, 1.1.6, 1.1.7, 1.2.2, 1.6, 3.11, 3.12.10, 3.17
Statute of Limitations
4.6.3, 12.2.6, 13.7
Stopping the Work
2.3, 4.3.6, 9.7, 10.3, 14.1
Stored Materials
6.2.1, 9.3.2, 10.2.1.2, 10.2.4, 11.4.1.4
Subcontractor, Definition of
5.1.1
SUBCONTRACTORS
5
Subcontractors, Work by
1.2.2, 3.3.2, 3.12.1, 4.2.3, 5.2.3, 5.3, 5.4, 9.3.1.2,
9.6.7
Subcontractual Relations
5.3, 5.4, 9.3.1.2, 9.6, 9.10, 10.2.1, 11.4.7, 11.4.8, 14.1, 14.2.1,
14.3.2
Submittals
1.6, 3.10, 3.11, 3.12, 4.2.7, 5.2.1, 5.2.3, 7.3.6, 9.2, 9.3, 9.8, 9.9.1,
9.10.2, 9.10.3, 11.1.3
Subrogation, Waivers of
6.1.1, 11.4.5, l1.4.7
Substantial Completion
4.2.9, 8.1.1, 8.1.3, 8.2.3, 9.4.2, 9.8, 9.9.1, 9.10.3,
<PAGE> 29
9.10.4.2, 12.2, 13.7
Substantial Completion, Definition of
9.8.1
Substitution of Subcontractors
5.2.3, 5.2.4
Substitution of Architect
4.1.3
Substitutions of Materials
3.4.2, 3.5.1, 7.3.7
Sub-subcontractor, Definition of
5.1.2
Subsurface Conditions
4.3.4
Successors and Assigns
13.2
Superintendent
3.9, 10.2.6
Supervision and Construction Procedures
1.2.2, 3.3, 3.4, 3.12.10, 4.2.2, 4.2.7, 4.3.3, 6.1.3, 6.2.4, 7.1.3,
7.3.6, 8.2, 8.3.1, 9.4.2, 10, 12, 14
Surety
4.4.7, 5.4.1.2, 9.8.5, 9.10.2, 9.10.3, 14.2.2
Surety, Consent of
9.10.2, 9.10.3
Surveys
2.2.3
Suspension by the Owner for Convenience
14.4
Suspension of the Work
5.4.2, 14.3
Suspension or Termination of the Contract
4.3.6, 5.4.1.1, 11.4.9, 14
Taxes
3.6, 3.8.2.1, 7.3.6.4
Termination by the Contractor
4.3.10, 14.1
Termination by the Owner for Cause
4.3.10, 5.4.1.1, 14.2
Termination of the Architect
4.1.3
Termination of the Contractor
14.2.2
TERMINATION OR SUSPENSION OF THE CONTRACT
14
Tests and Inspections
3.1.3, 3.3.3, 4.2.2, 4.2.6, 4.2.9, 9.4.2, 9.8.3, 9.9.2, 9.10.1, 10.3.2,
11.4.1.1, 12.2.1,13.5
TIME
8
Time, Delays and Extensions of
3.2.3, 4.3.1, 4.3.4, 4.3.7, 4.4.5, 5.2.3, 7.2.1, 7.3.1, 7.4.1, 7.5.1,
8.3, 9.5.1, 9.7.1, 10.3.2, 10.6.1, 14.3.2
Time Limits
2.1.2, 2.2, 2.4, 3.2.1, 3.7.3, 3.10, 3.11, 3.12.5, 3.15.1, 4.2, 4.3,
4.4, 4.5, 4.6, 5.2, 5.3, 5.4, 6.2.4, 7.3, 7.4, 8.2, 9.2, 9.3. 1, 9.3.3,
9.4.1, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 11.1.3, 11.4.1.5, 11.4.6, 11.4.10,
12.2, 13.5, 13.7, 14
Time Limits on Claims
4.3.2, 4.3.4, 4.3.8, 4.4, 4.5, 4.6
Title to Work
9.3.2, 9.3.3
UNCOVERING AND CORRECTION OF WORK
12
Uncovering of Work
12.1
Unforeseen Conditions
4.3.4, 8.3.1, 10.3
Unit Prices
4.3.9, 7.3.3.2
Use of Documents
1.1.1, 1.6, 2.2.5, 3.12.6, 5.3
Use of Site
3.13, 6.1.1, 6.2.1
Values, Schedule of
9.2, 9.3.1
Waiver of Claims by the Architect
13.4.2
Waiver of Claims by the Contractor
4.3.10, 9.10.5, 11.4.7, 13.4.2
Waiver of Claims by the Owner
4.3.10, 9.9.3, 9.10.3, 9.10.4, 11.4.3, 11.4.5, 11.4.7, 12.2.2.1, 13.4.2,
14.2.4
Waiver of Consequential Damages
4.3.10, 14.2.4
Waiver of Liens
9.10.2, 9.10.4
Waivers of Subrogation
6.1.1, 11.4.5,11.4.7
Warranty
3.5, 4.2.9, 4.3.5.3, 9.3.3, 9.8.4, 9.9.1, 9.10.4, 12.2.2,
13.7.1.3
Weather Delays
4.3.7.2
Work, Definition of
1.1.3
Written Consent
1.6, 3.4.2, 3.12.8, 3.14.2, 4.1.2, 4.3.4, 4.6.4, 9.3.2, 9.8.5, 9.9.1,
9.10.2, 9.10.3, 11.4.1, 13.2, 13.4.2
Written Interpretations
4.2.11, 4.2.12, 4.3.6
Written Notice
2.3, 2.4, 3.3.1, 3.9, 3.12.9, 3.12.10, 4.3, 4.4.8, 4.6.5, 5.2. 1, 8.2.2,
9.7, 9.10, 10.2.2, 10.3, 11.1.3, 11.4.6, 12.2.2, 12.2.4, 13.3, 14
Written Orders
1.1.1, 2.3, 3.9, 4.3.6, 7, 8.2.2, 11.4.9, 12.1, 12.2, 13.5.2, 14.3.1
<PAGE> 30
ARTICLE 1 GENERAL PROVISIONS
1.1 BASIC DEFINITIONS
1.1.1 THE CONTRACT DOCUMENTS
The Contract Documents consist of the Agreement between Owner and
Contractor (hereinafter the Agreement), Conditions of the Contract
(General, Supplementary and other Conditions), Drawings, Specifications,
Addenda issued prior to execution of the Contract, other documents listed
in the Agreement and Modifications issued after execution of the Contract.
A Modification is (1) a written amendment to the Contract signed by both
parties, (2) a Change Order, (3) a Construction Change Directive or (4) a
written order for a minor change in the Work issued by the Architect.
Unless specifically enumerated in the Agreement, the Contract Documents do
not include other documents such as bidding requirements (advertisement or
invitation to bid, Instructions to Bidders, sample forms, the Contractor's
bid or portions of Addenda relating to bidding requirements) .
1.1.2 THE CONTRACT
The Contract Documents form the Contract for Construction. The Contract
represents the entire and integrated agreement between the parties hereto
and supersedes prior negotiations, representations or agreements, either
written or oral. The Contract may be amended or modified only by a
Modification. The Contract Documents shall not be construed to create a
contractual relationship of any kind (1) between the Architect and
Contractor, (2) between the Owner and a Subcontractor or Sub-subcontractor,
(3) between the Owner and Architect or (4) between any persons or entities
other than the Owner and Contractor. The Architect shall, however, be
entitled to performance and enforcement of obligations under the Contract
intended to facilitate performance of the Architect's duties.
1.1.3 THE WORK
The term "Work" means the construction and services required by the
Contract Documents, whether completed or partially completed, and includes
all other labor, materials, equipment and services provided or to be
provided by the Contractor to fulfill the Contractor's obligations. The
Work may constitute the whole or a part of the Project.
1.1.4 THE PROJECT
The Project is the total construction of which the Work performed under the
Contract Documents may be the whole or a part and which may include
construction by the Owner or by separate contractors.
1.1.5 THE DRAWINGS
The Drawings are the graphic and pictorial portions of the Contract
Documents showing the design, location and dimensions of the Work,
generally including plans, elevations, sections, details, schedules and
diagrams.
1.1.6 THE SPECIFICATIONS
The Specifications are that portion of the Contract Documents consisting of
the written requirements for materials, equipment, systems, standards and
workmanship for the Work, and performance of related services.
1.1.7 THE PROJECT MANUAL
The Project Manual is a volume assembled for the Work which may include the
bidding requirements, sample forms, Conditions of the Contract and
Specifications.
1.2 CORRELATION AND INTENT OF THE CONTRACT DOCUMENTS
1.2.1 The intent of the Contract Documents is to include all items
necessary for the proper execution and completion of the Work by the
Contractor. The Contract Documents are complementary, and what is required
by one shall be as binding as if required by all; performance by the
Contractor shall be required only to the extent consistent with the
Contract Documents and reasonably inferable from them as being necessary to
produce the indicated results.
1.2.2 Organization of the Specifications into divisions, sections and
articles, and arrangement of Drawings shall not control the Contractor in
dividing the Work among Subcontractors or in establishing the extent of
Work to be performed by any trade.
1.2.3 Unless otherwise stated in the Contract Documents, words which have
well-known technical or construction industry meanings are used in the
Contract Documents in accordance with such recognized meanings.
<PAGE> 31
1.3 CAPITALIZATION
1.3.1 Terms capitalized in these General Conditions include those which are
(1) specifically defined, (2) the titles of numbered articles and
identified references to Paragraphs, Subparagraphs and Clauses in the
document or (3) the titles of other documents published by the American
Institute of Architects.
1.4 INTERPRETATION
1.4.1 In the interest of brevity the Contract Documents frequently omit
modifying words such as "all" and "any" and articles such as "the" and
"an," but the fact that a modifier or an article is absent from one
statement and appears in another is not intended to affect the
interpretation of either statement.
1.5 EXECUTION OF CONTRACT DOCUMENTS
1.5.1 The Contract Documents shall be signed by the Owner and Contractor.
If either the Owner or Contractor or both do not sign all the Contract
Documents, the Architect shall identify such unsigned Documents upon
request.
1.5.2 Execution of the Contract by the Contractor is a representation that
the Contractor has visited the site, become generally familiar with local
conditions under which the Work is to be performed and correlated personal
observations with requirements of the Contract Documents.
1.6 OWNERSHIP AND USE OF DRAWINGS, SPECIFICATIONS AND OTHER INSTRUMENTS OF
SERVICE
1.6.1 The Drawings, Specifications and other documents, including those in
electronic form, prepared by the Architect and the Architect's consultants
are Instruments of Service through which the Work to be executed by the
Contractor is described. The Contractor may retain one record set. Neither
the Contractor nor any Subcontractor, Sub-subcontractor or material or
equipment supplier shall own or claim a copyright in the Drawings,
Specifications and other documents prepared by the Architect or the
Architect's consultants, and unless otherwise indicated the Architect and
the Architect's consultants shall be deemed the authors of them and will
retain all common law, statutory and other reserved rights, in addition to
the copyrights. All copies of Instruments of Service, except the
Contractor's record set, shall be returned or suitably accounted for to the
Architect, on request, upon completion of the Work. The Drawings,
Specifications and other documents prepared by the Architect and the
Architect's consultants, and copies thereof furnished to the Contractor,
are for use solely with respect to this Project. They are not to be used by
the Contractor or any Subcontractor, Sub-subcontractor or material or
equipment supplier on other projects or for additions to this Project
outside the scope of the Work without the specific written consent of the
Owner, Architect and the Architect's consultants. The Contractor,
Subcontractors, Sub-subcontractors and material or equipment suppliers are
authorized to use and reproduce applicable portions of the Drawings,
Specifications and other documents prepared by the Architect and the
Architect's consultants appropriate to and for use in the execution of
their Work under the Contract Documents. All copies made under this
authorization shall bear the statutory copyright notice, if any, shown on
the Drawings, Specifications and other documents prepared by the Architect
and the Architect's consultants. Submittal or distribution to meet official
regulatory requirements or for other purposes in connection with this
Project is not to be construed as publication in derogation of the
Architect's or Architect's consultants' copyrights or other reserved
rights.
ARTICLE 2 OWNER
2.1 GENERAL
2.1.1 The Owner is the person or entity identified as such in the Agreement
and is referred to throughout the Contract Documents as if singular in
number. The Owner shall designate in writing a representative who shall
have express authority to bind the Owner with respect to all matters
requiring the Owner's approval or authorization. Except as
<PAGE> 32
otherwise provided in Subparagraph 4.2.1, the Architect does not have such
authority. The term "Owner" means the Owner or the Owner's authorized
representative.
2.1.2 The Owner shall furnish to the Contractor within fifteen days after
receipt of a written request, information necessary and relevant for the
Contractor to evaluate, give notice of or enforce mechanic's lien rights.
Such information shall include a correct statement of the record legal
title to the property on which the Project is located, usually referred to
as the site, and the Owner's interest therein.
2.2 INFORMATION AND SERVICES REQUIRED OF THE OWNER
2.2.1 The Owner shall, at the written request of the Contractor, prior to
commencement of the Work and thereafter, furnish to the Contractor
reasonable evidence that financial arrangements have been made to fulfill
the Owner's obligations under the Contract. Furnishing of such evidence
shall be a condition precedent to commencement or continuation of the Work.
After such evidence has been furnished, the Owner shall not materially vary
such financial arrangements without prior notice to the Contractor.
2.2.2 Except for permits and fees, including those required under
Subparagraph 3.7.1, which are the responsibility of the Contractor under
the Contract Documents, the Owner shall secure and pay for necessary
approvals, easements, assessments and charges required for construction,
use or occupancy of permanent structures or for permanent changes in
existing facilities.
2.2.3 The Owner shall furnish surveys describing physical characteristics,
legal limitations and utility locations for the site of the Project, and a
legal description of the site. The Contractor shall be entitled to rely on
the accuracy of information furnished by the Owner but shall exercise
proper precautions relating to the safe performance of the Work.
2.2.4 Information or services required of the Owner by the Contract
Documents shall be furnished by the Owner with reasonable promptness. Any
other information or services relevant to the Contractor's performance of
the Work under the Owner's control shall be furnished by the Owner after
receipt from the Contractor of a written request for such information or
services.
2.2.5 Unless otherwise provided in the Contract Documents, the Contractor
will be furnished, free of charge, such copies of Drawings and Project
Manuals as are reasonably necessary for execution of the Work.
2.3 OWNER'S RIGHT TO STOP THE WORK
2.3.1 If the Contractor fails to correct Work which is not in accordance
with the requirements of the Contract Documents as required by Paragraph
12.2 or persistently fails to carry out Work in accordance with the
Contract Documents, the Owner may issue a written order to the Contractor
to stop the Work, or any portion thereof, until the cause for such order
has been eliminated; however, the right of the Owner to stop the Work shall
not give rise to a duty on the part of the Owner to exercise this right for
the benefit of the Contractor or any other person or entity, except to the
extent required by Subparagraph 6.1.3.
2.4 OWNER'S RIGHT TO CARRY OUT THE WORK
2.4.1 If the Contractor defaults or neglects to carry out the Work in
accordance with the Contract Documents and fails within a seven-day period
after receipt of written notice from the Owner to commence and continue
correction of such default or neglect with diligence and promptness, the
Owner may after such seven-day period give the Contractor a second written
notice to correct such deficiencies within a three-day period. If the
Contractor within such three-day period after receipt of such second notice
fails to commence and continue to correct any deficiencies, the Owner may,
without prejudice to other remedies the Owner may have, correct such
deficiencies. In such case an appropriate Change Order shall be issued
deducting from payments then or thereafter due the Contractor the
reasonable cost of correcting such deficiencies, including Owner's expenses
and compensation for the Architect's additional services made necessary
<PAGE> 33
by such default, neglect or failure. Such action by the Owner and amounts
charged to the Contractor are both subject to prior approval of the
Architect. If payments then or thereafter due the Contractor are not
sufficient to cover such amounts, the Contractor shall pay the difference
to the Owner.
ARTICLE 3 CONTRACTOR
3.1 GENERAL
3.1.1 The Contractor is the person or entity identified as such in the
Agreement and is referred to throughout the Contract Documents as if
singular in number. The term "Contractor" means the Contractor or the
Contractor's authorized representative.
3.1.2 The Contractor shall perform the Work in accordance with the Contract
Documents.
3.1.3 The Contractor shall not be relieved of obligations to perform the
Work in accordance with the Contract Documents either by activities or
duties of the Architect in the Architect's administration of the Contract,
or by tests, inspections or approvals required or performed by persons
other than the Contractor.
3.2 REVIEW OF CONTRACT DOCUMENTS AND FIELD CONDITIONS BY CONTRACTOR
3.2.1 Since the Contract Documents are complementary, before starting each
portion of the Work, the Contractor shall carefully study and compare the
various Drawings and other Contract Documents relative to that portion of
the Work, as well as the information furnished by the Owner pursuant to
Subparagraph 2.2.3, shall take field measurements of any existing
conditions related to that portion of the Work and shall observe any
conditions at the site affecting it. These obligations are for the purpose
of facilitating construction by the Contractor and are not for the purpose
of discovering errors, omissions, or inconsistencies in the Contract
Documents; however, any errors, inconsistencies or omissions discovered by
the Contractor shall be reported promptly to the Architect as a request for
information in such form as the Architect may require.
3.2.2 Any design errors or omissions noted by the Contractor during this
review shall be reported promptly to the Architect, but it is recognized
that the Contractor's review is made in the Contractor's capacity as a
contractor and not as a licensed design professional unless otherwise
specifically provided in the Contract Documents. The Contractor is not
required to ascertain that the Contract Documents are in accordance with
applicable laws, statutes, ordinances, building codes, and rules and
regulations, but any nonconformity discovered by or made known to the
Contractor shall be reported promptly to the Architect.
3.2.3 If the Contractor believes that additional cost or time is involved
because of clarifications or instructions issued by the Architect in
response to the Contractor's notices or requests for information pursuant
to Subparagraphs 3.2.1 and 3.2.2, the Contractor shall make Claims as
provided in Subparagraphs 4.3.6 and 4.3.7. If the Contractor fails to
perform the obligations of Subparagraphs 3.2.1 and 3.2.2, the Contractor
shall pay such costs and damages to the Owner as would have been avoided if
the Contractor had performed such obligations. The Contractor shall not be
liable to the Owner or Architect for damages resulting from errors,
inconsistencies or omissions in the Contract Documents or for differences
between field measurements or conditions and the Contract Documents unless
the Contractor recognized such error, inconsistency, omission or difference
and knowingly failed to report it to the Architect.
3.3 SUPERVISION AND CONSTRUCTION PROCEDURES
3.3.1 The Contractor shall supervise and direct the Work, using the
Contractor's best skill and attention. The Contractor shall be solely
responsible for and have control over construction means, methods,
techniques, sequences and procedures and for coordinating all portions of
the Work under the Contract unless the Contract Documents give other
specific instructions concerning these matters. If the Contract Documents
give specific instructions concerning construction means, methods,
techniques, sequences or procedures, the Contractor shall evaluate the
jobsite safety
<PAGE> 34
thereof and, except as stated below, shall be fully and solely responsible
for the jobsite safety of such means, methods, techniques, sequences or
procedures. If the Contractor determines that such means, methods,
techniques, sequences or procedures may not be safe, the Contractor shall
give timely written notice to the Owner and Architect and shall not proceed
with that portion of the Work without further written instructions from the
Architect. If the Contractor is then instructed to proceed with the
required means, methods, techniques, sequences or procedures without
acceptance of changes proposed by the Contractor, the Owner shall be solely
responsible for any resulting loss or damage.
3.3.2 The Contractor shall be responsible to the Owner for acts and
omissions of the Contractor's employees, Subcontractors and their agents
and employees, and other persons or entities performing portions of the
Work for or on behalf of the Contractor or any of its Subcontractors.
3.3.3 The Contractor shall be responsible for inspection of portions of
Work already performed to determine that such portions are in proper
condition to receive subsequent Work.
3.4 LABOR AND MATERIALS
3.4.1 Unless otherwise provided in the Contract Documents, the Contractor
shall provide and pay for labor, materials, equipment, tools, construction
equipment and machinery, water, heat, utilities, transportation, and other
facilities and services necessary for proper execution and completion of
the Work, whether temporary or permanent and whether or not incorporated or
to be incorporated in the Work.
3.4.2 The Contractor may make substitutions only with the consent of the
Owner, after evaluation by the Architect and in accordance with a Change
Order.
3.4.3 The Contractor shall enforce strict discipline and good order among
the Contractor's employees and other persons carrying out the Contract. The
Contractor shall not permit employment of unfit persons or persons not
skilled in tasks assigned to them.
3.5 WARRANTY
3.5.1 The Contractor warrants to the Owner and Architect that materials and
equipment furnished under the Contract will be of good quality and new
unless otherwise required or permitted by the Contract Documents, that the
Work will be free from defects not inherent in the quality required or
permitted, and that the Work will conform to the requirements of the
Contract Documents. Work not conforming to these requirements, including
substitutions not properly approved and authorized, may be considered
defective. The Contractor's warranty excludes remedy for damage or defect
caused by abuse, modifications not executed by the Contractor, improper or
insufficient maintenance, improper operation, or normal wear and tear and
normal usage. If required by the Architect, the Contractor shall furnish
satisfactory evidence as to the kind and quality of materials and
equipment.
3.6 TAXES
3.6.1 The Contractor shall pay sales, consumer, use and similar taxes for
the Work provided by the Contractor which are legally enacted when bids are
received or negotiations concluded, whether or not yet effective or merely
scheduled to go into effect.
3.7 PERMITS, FEES AND NOTICES
3.7.1 Unless otherwise provided in the Contract Documents, the Contractor
shall secure and pay for the building permit and other permits and
governmental fees, licenses and inspections necessary for proper execution
and completion of the Work which are customarily secured after execution of
the Contract and which are legally required when bids are received or
negotiations concluded.
<PAGE> 35
3.7.2 The Contractor shall comply with and give notices required by laws,
ordinances, rules, regulations and lawful orders of public authorities
applicable to performance of the Work.
3.7.3 It is not the Contractor's responsibility to ascertain that the
Contract Documents are in accordance with applicable laws, statutes,
ordinances, building codes, and rules and regulations. However, if the
Contractor observes that portions of the Contract Documents are at variance
therewith, the Contractor shall promptly notify the Architect and Owner in
writing, and necessary changes shall be accomplished by appropriate
Modification.
3.7.4 If the Contractor performs Work knowing it to be contrary to laws,
statutes, ordinances, building codes, and rules and regulations without
such notice to the Architect and Owner, the Contractor shall assume
appropriate responsibility for such Work and shall bear the costs
attributable to correction.
3.8 ALLOWANCES
3.8.1 The Contractor shall include in the Contract Sum all allowances
stated in the Contract Documents. Items covered by allowances shall be
supplied for such amounts and by such persons or entities as the Owner may
direct, but the Contractor shall not be required to employ persons or
entities to whom the Contractor has reasonable objection.
3.8.2 Unless otherwise provided in the Contract Documents:
.1 allowances shall cover the cost to the Contractor of materials
and equipment delivered at the site and all required taxes, less
applicable trade discounts;
.2 Contractor's costs for unloading and handling at the site,
labor, installation costs, overhead, profit and other expenses
contemplated for stated allowance amounts shall be included in
the Contract Sum but not in the allowances;
.3 whenever costs are more than or less than allowances, the
Contract Sum shall be adjusted accordingly by Change Order. The
amount of the Change Order shall reflect (1) the difference
between actual costs and the allowances under Clause 3.8.2.1 and
(2) changes in Contractor's costs under Clause 3.8.2.2.
3.8.3 Materials and equipment under an allowance shall be selected by the
Owner in sufficient time to avoid delay in the Work.
3.9 SUPERINTENDENT
3.9.1 The Contractor shall employ a competent superintendent and necessary
assistants who shall be in attendance at the Project site during
performance of the Work. The superintendent shall represent the Contractor,
and communications given to the superintendent shall be as binding as if
given to the Contractor. Important communications shall be confirmed in
writing. Other communications shall be similarly confirmed on written
request in each case.
3.10 CONTRACTOR'S CONSTRUCTION SCHEDULES
3.10.1 The Contractor, promptly after being awarded the Contract, shall
prepare and submit for the Owner's and Architect's information a
Contractor's construction schedule for the Work. The schedule shall not
exceed time limits current under the Contract Documents, shall be revised
at appropriate intervals as required by the conditions of the Work and
Project, shall be related to the entire Project to the extent required by
the Contract Documents, and shall provide for expeditious and practicable
execution of the Work.
3.10.2 The Contractor shall prepare and keep current, for the Architect's
approval, a schedule of submittals which is coordinated with the
Contractor's construction schedule and allows the Architect reasonable time
to review submittals.
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3.10.3 The Contractor shall perform the Work in general accordance with the
most recent schedules submitted to the Owner and Architect.
3.11 DOCUMENTS AND SAMPLES AT THE SITE
3.11.1 The Contractor shall maintain at the site for the Owner one record
copy of the Drawings, Specifications, Addenda, Change Orders and other
Modifications, in good order and marked currently to record field changes
and selections made during construction, and one record copy of approved
Shop Drawings, Product Data, Samples and similar required submittals. These
shall be available to the Architect and shall be delivered to the Architect
for submittal to the Owner upon completion of the Work.
3.12 SHOP DRAWINGS, PRODUCT DATA AND SAMPLES
3.12.1 Shop Drawings are drawings, diagrams, schedules and other data
specially prepared for the Work by the Contractor or a Subcontractor,
Sub-subcontractor, manufacturer, supplier or distributor to illustrate some
portion of the Work.
3.12.2 Product Data are illustrations, standard schedules, performance
charts, instructions, brochures, diagrams and other information furnished
by the Contractor to illustrate materials or equipment for some portion of
the Work.
3.12.3 Samples are physical examples which illustrate materials, equipment
or workmanship and establish standards by which the Work will be judged.
3.12.4 Shop Drawings, Product Data, Samples and similar submittals are not
Contract Documents. The purpose of their submittal is to demonstrate for
those portions of the Work for which submittals are required by the
Contract Documents the way by which the Contractor proposes to conform to
the information given and the design concept expressed in the Contract
Documents. Review by the Architect is subject to the limitations of
Subparagraph 4.2.7. Informational submittals upon which the Architect is
not expected to take responsive action may be so identified in the Contract
Documents. Submittals which are not required by the Contract Documents may
be returned by the Architect without action.
3.12.5 The Contractor shall review for compliance with the Contract
Documents, approve and submit to the Architect Shop Drawings, Product Data,
Samples and similar submittals required by the Contract Documents with
reasonable promptness and in such sequence as to cause no delay in the Work
or in the activities of the Owner or of separate contractors. Submittals
which are not marked as reviewed for compliance with the Contract Documents
and approved by the Contractor may be returned by the Architect without
action.
3.12.6 By approving and submitting Shop Drawings, Product Data, Samples and
similar submittals, the Contractor represents that the Contractor has
determined and verified materials, field measurements and field
construction criteria related thereto, or will do so, and has checked and
coordinated the information contained within such submittals with the
requirements of the Work and of the Contract Documents.
3.12.7 The Contractor shall perform no portion of the Work for which the
Contract Documents require submittal and review of Shop Drawings, Product
Data, Samples or similar submittals until the respective submittal has been
approved by the Architect.
3.12.8 The Work shall be in accordance with approved submittals except that
the Contractor shall not be relieved of responsibility for deviations from
requirements of the Contract Documents by the Architect's approval of Shop
Drawings, Product Data, Samples or similar submittals unless the Contractor
has specifically informed the Architect in writing of such deviation at the
time of submittal and (1) the Architect has given written approval to the
specific deviation as a minor change in the Work, or (2) a Change Order or
Construction Change Directive has been issued
<PAGE> 37
authorizing the deviation. The Contractor shall not be relieved of
responsibility for errors or omissions in Shop Drawings, Product Data,
Samples or similar submittals by the Architect's approval thereof.
3.12.9 The Contractor shall direct specific attention, in writing or on
resubmitted Shop Drawings, Product Data, Samples or similar submittals, to
revisions other than those requested by the Architect on previous
submittals. In the absence of such written notice the Architect's approval
of a resubmission shall not apply to such revisions.
3.12.10 The Contractor shall not be required to provide professional
services which constitute the practice of architecture or engineering
unless such services are specifically required by the Contract Documents
for a portion of the Work or unless the Contractor needs to provide such
services in order to carry out the Contractor's responsibilities for
construction means, methods, techniques, sequences and procedures. The
Contractor shall not be required to provide professional services in
violation of applicable law. If professional design services or
certifications by a design professional related to systems, materials or
equipment are specifically required of the Contractor by the Contract
Documents, the Owner and the Architect will specify all performance and
design criteria that such services must satisfy. The Contractor shall cause
such services or certifications to be provided by a properly licensed
design professional, whose signature and seal shall appear on all drawings,
calculations, specifications, certifications, Shop Drawings and other
submittals prepared by such professional. Shop Drawings and other
submittals related to the Work designed or certified by such professional,
if prepared by others, shall bear such professional's written approval when
submitted to the Architect. The Owner and the Architect shall be entitled
to rely upon the adequacy, accuracy and completeness of the services,
certifications or approvals performed by such design professionals,
provided the Owner and Architect have specified to the Contractor all
performance and design criteria that such services must satisfy. Pursuant
to this Subparagraph 3.12.10, the Architect will review, approve or take
other appropriate action on submittals only for the limited purpose of
checking for conformance with information given and the design concept
expressed in the Contract Documents. The Contractor shall not be
responsible for the adequacy of the performance or design criteria required
by the Contract Documents.
3.13 USE OF SITE
3.13.1 The Contractor shall confine operations at the site to areas
permitted by law, ordinances, permits and the Contract Documents and shall
not unreasonably encumber the site with materials or equipment.
3.14 CUTTING AND PATCHING
3.14.1 The Contractor shall be responsible for cutting, fitting or patching
required to complete the Work or to make its parts fit together properly.
3.14.2 The Contractor shall not damage or endanger a portion of the Work or
fully or partially completed construction of the Owner or separate
contractors by cutting, patching or otherwise altering such construction,
or by excavation. The Contractor shall not cut or otherwise alter such
construction by the Owner or a separate contractor except with written
consent of the Owner and of such separate contractor; such consent shall
not be unreasonably withheld. The Contractor shall not unreasonably
withhold from the Owner or a separate contractor the Contractor's consent
to cutting or otherwise altering the Work.
3.15 CLEANING UP
3.15.1 The Contractor shall keep the premises and surrounding area free
from accumulation of waste materials or rubbish caused by operations under
the Contract. At completion of the Work, the Contractor shall remove from
and about the Project waste materials, rubbish, the Contractor's tools,
construction equipment, machinery and surplus materials.
3.15.2 If the Contractor fails to clean up as provided in the Contract
Documents, the Owner may do so and the cost thereof shall be charged to the
Contractor.
<PAGE> 38
3.16 ACCESS TO WORK
3.16.1 The Contractor shall provide the Owner and Architect access to the
Work in preparation and progress wherever located.
3.17 ROYALTIES, PATENTS AND COPYRIGHTS
3.17.1 The Contractor shall pay all royalties and license fees. The
Contractor shall defend suits or claims for infringement of copyrights and
patent rights and shall hold the Owner and Architect harmless from loss on
account thereof, but shall not be responsible for such defense or loss when
a particular design, process or product of a particular manufacturer or
manufacturers is required by the Contract Documents or where the copyright
violations are contained in Drawings, Specifications or other documents
prepared by the Owner or Architect. However, if the Contractor has reason
to believe that the required design, process or product is an infringement
of a copyright or a patent, the Contractor shall be responsible for such
loss unless such information is promptly furnished to the Architect.
3.18 INDEMNIFICATION
3.18.1 To the fullest extent permitted by law and to the extent claims,
damages, losses or expenses are not covered by Project Management
Protective Liability insurance purchased by the Contractor in accordance
with Paragraph 11.3, the Contractor shall indemnify and hold harmless the
Owner, Architect, Architect's consultants, and agents and employees of any
of them from and against claims, damages, losses and expenses, including
but not limited to attorneys' fees, arising out of or resulting from
performance of the Work, provided that such claim, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury
to or destruction of tangible property (other than the Work itself), but
only to the extent caused by the negligent acts or omissions of the
Contractor, a Subcontractor, anyone directly or indirectly employed by them
or anyone for whose acts they may be liable, regardless of whether or not
such claim, damage, loss or expense is caused in part by a party
indemnified hereunder. Such obligation shall not be construed to negate,
abridge, or reduce other rights or obligations of indemnity which would
otherwise exist as to a party or person described in this Paragraph 3.18.
3.18.2 In claims against any person or entity indemnified under this
Paragraph 3.18 by an employee of the Contractor, a Subcontractor, anyone
directly or indirectly employed by them or anyone for whose acts they may
be liable, the indemnification obligation under Subparagraph 3.18.1 shall
not be limited by a limitation on amount or type of damages, compensation
or benefits payable by or for the Contractor or a Subcontractor under
workers' compensation acts, disability benefit acts or other employee
benefit acts.
ARTICLE 4 ADMINISTRATION OF THE CONTRACT
4.1 ARCHITECT
4.1.1 The Architect is the person lawfully licensed to practice
architecture or an entity lawfully practicing architecture identified as
such in the Agreement and is referred to throughout the Contract Documents
as if singular in number. The term "Architect" means the Architect or the
Architect's authorized representative.
4.1.2 Duties, responsibilities and limitations of authority of the
Architect as set forth in the Contract Documents shall not be restricted,
modified or extended without written consent of the Owner, Contractor and
Architect. Consent shall not be unreasonably withheld.
4.1.3 If the employment of the Architect is terminated, the Owner shall
employ a new Architect against whom the Contractor has no reasonable
objection and whose status under the Contract Documents shall be that of
the former Architect.
<PAGE> 39
4.2 ARCHITECT'S ADMINISTRATION OF THE CONTRACT
4.2.1 The Architect will provide administration of the Contract as
described in the Contract Documents, and will be an Owner's representative
(1) during construction, (2) until final payment is due and (3) with the
Owner's concurrence, from time to time during the one-year period for
correction of Work described in Paragraph 12.2. The Architect will have
authority to act on behalf of the Owner only to the extent provided in the
Contract Documents, unless otherwise modified in writing in accordance with
other provisions of the Contract.
4.2.2 The Architect, as a representative of the Owner, will visit the site
at intervals appropriate to the stage of the Contractor's operations (1) to
become generally familiar with and to keep the Owner informed about the
progress and quality of the portion of the Work completed, (2) to endeavor
to guard the Owner against defects and deficiencies in the Work, and (3) to
determine in general if the Work is being performed in a manner indicating
that the Work, when fully completed, will be in accordance with the
Contract Documents. However, the Architect will not be required to make
exhaustive or continuous on-site inspections to check the quality or
quantity of the Work. The Architect will neither have control over or
charge of, nor be responsible for, the construction means, methods,
techniques, sequences or procedures, or for the safety precautions and
programs in connection with the Work, since these are solely the
Contractor's rights and responsibilities under the Contract Documents,
except as provided in Subparagraph 3.3.1.
4.2.3 The Architect will not be responsible for the Contractor's failure to
perform the Work in accordance with the requirements of the Contract
Documents. The Architect will not have control over or charge of and will
not be responsible for acts or omissions of the Contractor, Subcontractors,
or their agents or employees, or any other persons or entities performing
portions of the Work.
4.2.4 COMMUNICATIONS FACILITATING CONTRACT ADMINISTRATION. Except as
otherwise provided in the Contract Documents or when direct communications
have been specially authorized, the Owner and Contractor shall endeavor to
communicate with each other through the Architect about matters arising out
of or relating to the Contract. Communications by and with the Architect's
consultants shall be through the Architect. Communications by and with
Subcontractors and material suppliers shall be through the Contractor.
Communications by and with separate contractors shall be through the Owner.
4.2.5 Based on the Architect's evaluations of the Contractor's Applications
for Payment, the Architect will review and certify the amounts due the
Contractor and will issue Certificates for Payment in such amounts.
4.2.6 The Architect will have authority to reject Work that does not
conform to the Contract Documents. Whenever the Architect considers it
necessary or advisable, the Architect will have authority to require
inspection or testing of the Work in accordance with Subparagraphs 13.5.2
and 13.5.3, whether or not such Work is fabricated, installed or completed.
However, neither this authority of the Architect nor a decision made in
good faith either to exercise or not to exercise such authority shall give
rise to a duty or responsibility of the Architect to the Contractor,
Subcontractors, material and equipment suppliers, their agents or
employees, or other persons or entities performing portions of the Work.
4.2.7 The Architect will review and approve or take other appropriate
action upon the Contractor's submittals such as Shop Drawings, Product Data
and Samples, but only for the limited purpose of checking for conformance
with information given and the design concept expressed in the Contract
Documents. The Architect's action will be taken with such reasonable
promptness as to cause no delay in the Work or in the activities of the
Owner, Contractor or separate contractors, while allowing sufficient time
in the Architect's professional judgment to permit adequate review. Review
of such submittals is not conducted for the purpose of determining the
accuracy and completeness of other details such as dimensions and
quantities, or for substantiating instructions for installation or
performance of equipment or systems, all of which remain the responsibility
of the Contractor as required by the Contract Documents. The Architect's
review of the Contractor's submittals shall not relieve the Contractor of
the obligations under Paragraphs 3.3, 3.5 and 3.12. The Architect's review
shall not constitute approval of safety precautions or, unless otherwise
specifically
<PAGE> 40
stated by the Architect, of any construction means, methods, techniques,
sequences or procedures. The Architect's approval of a specific item shall
not indicate approval of an assembly of which the item is a component.
4.2.8 The Architect will prepare Change Orders and Construction Change
Directives, and may authorize minor changes in the Work as provided in
Paragraph 7.4.
4.2.9 The Architect will conduct inspections to determine the date or dates
of Substantial Completion and the date of final completion, will receive
and forward to the Owner, for the Owner's review and records, written
warranties and related documents required by the Contract and assembled by
the Contractor, and will issue a final Certificate for Payment upon
compliance with the requirements of the Contract Documents.
4.2.10 If the Owner and Architect agree, the Architect will provide one or
more project representatives to assist in carrying out the Architect's
responsibilities at the site. The duties, responsibilities and limitations
of authority of such project representatives shall be as set forth in an
exhibit to be incorporated in the Contract Documents.
4.2.11 The Architect will interpret and decide matters concerning
performance under, and requirements of, the Contract Documents on written
request of either the Owner or Contractor. The Architect's response to such
requests will be made in writing within any time limits agreed upon or
otherwise with reasonable promptness. If no agreement is made concerning
the time within which interpretations required of the Architect shall be
furnished in compliance with this Paragraph 4.2, then delay shall not be
recognized on account of failure by the Architect to furnish such
interpretations until 15 days after written request is made for them.
4.2.12 Interpretations and decisions of the Architect will be consistent
with the intent of and reasonably inferable from the Contract Documents and
will be in writing or in the form of drawings. When making such
interpretations and initial decisions, the Architect will endeavor to
secure faithful performance by both Owner and Contractor, will not show
partiality to either and will not be liable for results of interpretations
or decisions so rendered in good faith.
4.2.13 The Architect's decisions on matters relating to aesthetic effect
will be final if consistent with the intent expressed in the Contract
Documents.
4.3 CLAIMS AND DISPUTES
4.3.1 DEFINITION. A Claim is a demand or assertion by one of the parties
seeking, as a matter of right, adjustment or interpretation of Contract
terms, payment of money, extension of time or other relief with respect to
the terms of the Contract. The term "Claim" also includes other disputes
and matters in question between the Owner and Contractor arising out of or
relating to the Contract. Claims must be initiated by written notice. The
responsibility to substantiate Claims shall rest with the party making the
Claim.
4.3.2 Time Limits on Claims. Claims by either party must be initiated
within 21 days after occurrence of the event giving rise to such Claim or
within 21 days after the claimant first recognizes the condition giving
rise to the Claim, whichever is later. Claims must be initiated by written
notice to the Architect and the other party.
4.3.3 CONTINUING CONTRACT PERFORMANCE. Pending final resolution of a Claim
except as otherwise agreed in writing or as provided in Subparagraph 9.7.1
and Article 14, the Contractor shall proceed diligently with performance of
the Contract and the Owner shall continue to make payments in accordance
with the Contract Documents.
4.3.4 CLAIMS FOR CONCEALED OR UNKNOWN CONDITIONS. If conditions are
encountered at the site which are (1) subsurface or otherwise concealed
physical conditions which differ materially from those indicated in the
Contract Documents or (2) 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 the Contract Documents, then notice by the observing party shall be
given to the other party promptly before conditions are disturbed and in no
event later than 21 days after first observance of the conditions. The
Architect will promptly investigate such
<PAGE> 41
conditions and, if they differ materially and cause an increase or decrease
in the Contractor's cost of, or time required for, performance of any part
of the Work, will recommend an equitable adjustment in the Contract Sum or
Contract Time, or both. If the Architect determines that the conditions at
the site are not materially different from those indicated in the Contract
Documents and that no change in the terms of the Contract is justified, the
Architect shall so notify the Owner and Contractor in writing, stating the
reasons. Claims by either party in opposition to such determination must be
made within 21 days after the Architect has given notice of the decision.
If the conditions encountered are materially different, the Contract Sum
and Contract Time shall be equitably adjusted, but if the Owner and
Contractor cannot agree on an adjustment in the Contract Sum or Contract
Time, the adjustment shall be referred to the Architect for initial
determination, subject to further proceedings pursuant to Paragraph 4.4.
4.3.5 CLAIMS FOR ADDITIONAL COST. If the Contractor wishes to make Claim
for an increase in the Contract Sum, written notice as provided herein
shall be given before proceeding to execute the Work. Prior notice is not
required for Claims relating to an emergency endangering life or property
arising under Paragraph 10.6.
4.3.6 If the Contractor believes additional cost is involved for reasons
including but not limited to (1) a written interpretation from the
Architect, (2) an order by the Owner to stop the Work where the Contractor
was not at fault, (3) a written order for a minor change in the Work issued
by the Architect, (4) failure of payment by the Owner, (5) termination of
the Contract by the Owner, (6) Owner's suspension or (7) other reasonable
grounds, Claim shall be filed in accordance with this Paragraph 4.3.
4.3.7 CLAIMS FOR ADDITIONAL TIME
4.3.7.1 If the Contractor wishes to make Claim for an increase in the
Contract Time, written notice as provided herein shall be given. The
Contractor's Claim shall include an estimate of cost and of probable effect
of delay on progress of the Work. In the case of a continuing delay only
one Claim is necessary.
4.3.7.2 If adverse weather conditions are the basis for a Claim for
additional time, such Claim shall be documented by data substantiating that
weather conditions were abnormal for the period of time, could not have
been reasonably anticipated and had an adverse effect on the scheduled
construction.
4.3.8 INJURY OR DAMAGE TO PERSON OR PROPERTY. If either party to the
Contract suffers injury or damage to person or property because of an act
or omission of the other party, or of others for whose acts such party is
legally responsible, written notice of such injury or damage, whether or
not insured, shall be given to the other party within a reasonable time not
exceeding 21 days after discovery. The notice shall provide sufficient
detail to enable the other party to investigate the matter.
4.3.9 If unit prices are stated in the Contract Documents or subsequently
agreed upon, and if quantities originally contemplated are materially
changed in a proposed Change Order or Construction Change Directive so that
application of such unit prices to quantities of Work proposed will cause
substantial inequity to the Owner or Contractor, the applicable unit prices
shall be equitably adjusted
4.3.10 CLAIMS FOR CONSEQUENTIAL DAMAGES. The Contractor and Owner waive
Claims against each other for consequential damages arising out of or
relating to this Contract. This mutual waiver includes:
.1 damages incurred by the Owner for rental expenses, for losses of
use, income, profit, financing, business and reputation, and for loss
of management or employee productivity or of the services of such
persons; and
.2 damages incurred by the Contractor for principal office expenses
including the compensation of personnel stationed there, for losses of
financing, business and reputation, and for loss of profit except
anticipated profit arising directly from the Work.
<PAGE> 42
This mutual waiver is applicable, without limitation, to all consequential
damages due to either party's termination in accordance with Article 14.
Nothing contained in this Subparagraph 4.3.10 shall be deemed to preclude
an award of liquidated direct damages, when applicable, in accordance with
the requirements of the Contract Documents.
4.4 RESOLUTION OF CLAIMS AND DISPUTES
4.4.1 DECISION OF ARCHITECT. Claims, including those alleging an error or
omission by the Architect but excluding those arising under Paragraphs 10.3
through 10.5, shall be referred initially to the Architect for decision. An
initial decision by the Architect shall be required as a condition
precedent to mediation, arbitration or litigation of all Claims between the
Contractor and Owner arising prior to the date final payment is due, unless
30 days have passed after the Claim has been referred to the Architect with
no decision having been rendered by the Architect. The Architect will not
decide disputes between the Contractor and persons or entities other than
the Owner.
4.4.2 The Architect will review Claims and within ten days of the receipt
of the Claim take one or more of the following actions: (1) request
additional supporting data from the claimant or a response with supporting
data from the other party, (2) reject the Claim in whole or in part, (3)
approve the Claim, (4) suggest a compromise, or (5) advise the parties that
the Architect is unable to resolve the Claim if the Architect lacks
sufficient information to evaluate the merits of the Claim or if the
Architect concludes that, in the Architect's sole discretion, it would be
inappropriate for the Architect to resolve the Claim.
4.4.3 In evaluating Claims, the Architect may, but shall not be obligated
to, consult with or seek information from either party or from persons with
special knowledge or expertise who may assist the Architect in rendering a
decision. The Architect may request the Owner to authorize retention of
such persons at the Owner's expense.
4.4.4 If the Architect requests a party to provide a response to a Claim or
to furnish additional supporting data, such party shall respond, within ten
days after receipt of such request, and shall either provide a response on
the requested supporting data, advise the Architect when the response or
supporting data will be furnished or advise the Architect that no
supporting data will be furnished. Upon receipt of the response or
supporting data, if any, the Architect will either reject or approve the
Claim in whole or in part.
4.4.5 The Architect will approve or reject Claims by written decision,
which shall state the reasons therefor and which shall notify the parties
of any change in the Contract Sum or Contract Time or both. The approval or
rejection of a Claim by the Architect shall be final and binding on the
parties but subject to mediation and arbitration.
4.4.6 When a written decision of the Architect states that (1) the decision
is final but subject to mediation and arbitration and (2) a demand for
arbitration of a Claim covered by such decision must be made within 30 days
after the date on which the party making the demand receives the final
written decision, then failure to demand arbitration within said 30 days'
period shall result in the Architect's decision becoming final and binding
upon the Owner and Contractor. If the Architect renders a decision after
arbitration proceedings have been initiated, such decision may be entered
as evidence, but shall not supersede arbitration proceedings unless the
decision is acceptable to all parties concerned.
4.4.7 Upon receipt of a Claim against the Contractor or at any time
thereafter, the Architect or the Owner may, but is not obligated to, notify
the surety, if any, of the nature and amount of the Claim. If the Claim
relates to a possibility of a Contractor's default, the Architect or the
Owner may, but is not obligated to, notify the surety and request the
surety's assistance in resolving the controversy.
4.4.8 If a Claim relates to or is the subject of a mechanic's lien, the
party asserting such Claim may proceed in accordance with applicable law to
comply with the lien notice or filing deadlines prior to resolution of the
Claim by the Architect, by mediation or by arbitration.
4.5 MEDIATION
<PAGE> 43
4.5.1 Any Claim arising out of or related to the Contract, except Claims
relating to aesthetic effect and except those waived as provided for in
Subparagraphs 4.3.10, 9.10.4 and 9.10.5 shall, after initial decision by
the Architect or 30 days after submission of the Claim to the Architect, be
subject to mediation as a condition precedent to arbitration or the
institution of legal or equitable proceedings by either party.
4.5.2 The parties shall endeavor to resolve their Claims by mediation
which, unless the parties mutually agree otherwise, shall be in accordance
with the Construction Industry Mediation Rules of the American Arbitration
Association currently in effect. Request for mediation shall be filed in
writing with the other party to the Contract and with the American
Arbitration Association. The request may be made concurrently with the
filing of a demand for arbitration but, in such event, mediation shall
proceed in advance of arbitration or legal or equitable proceedings, which
shall be stayed pending mediation for a period of 60 days from the date of
filing, unless stayed for a longer period by agreement of the parties or
court order.
4.5.3 The parties shall share the mediator's fee and any filing fees
equally. The mediation shall be held in the place where the Project is
located, unless another location is mutually agreed upon. Agreements
reached in mediation shall be enforceable as settlement agreements in any
court having jurisdiction thereof
4.6 ARBITRATION
4.6.1 Any Claim arising out of or related to the Contract, except Claims
relating to aesthetic effect and except those waived as provided for in
Subparagraphs 4.3.10, 9.10.4 and 9.10.5, shall, after decision by the
Architect or 30 days after submission of the Claim to the Architect, be
subject to arbitration. Prior to arbitration, the parties shall endeavor to
resolve disputes by mediation in accordance with the provisions of
Paragraph 4.5.
4.6.2 Claims not resolved by mediation shall be decided by arbitration
which, unless the parties mutually agree otherwise, shall be in accordance
with the Construction Industry Arbitration Rules of the American
Arbitration Association currently in effect. The demand for arbitration
shall be filed in writing with the other party to the Contract and with the
American Arbitration Association, and a copy shall be filed with the
Architect.
4.6.3 A demand for arbitration shall be made within the time limits
specified in Subparagraphs 4.4.6 and 4.6.1 as applicable, and in other
cases within a reasonable time after the Claim has arisen, and in no event
shall it be made after the date when institution of legal or equitable
proceedings based on such Claim would be barred by the applicable statute
of limitations as determined pursuant to Paragraph 13.7.
4.6.4 LIMITATION ON CONSOLIDATION OR JOINDER. No arbitration arising out of
or relating to the Contract shall include, by consolidation or joinder or
in any other manner, the Architect, the Architect's employees or
consultants, except by written consent containing specific reference to the
Agreement and signed by the Architect, Owner, Contractor and any other
person or entity sought to be joined. No arbitration shall include, by
consolidation or joinder or in any other manner, parties other than the
Owner, Contractor, a separate contractor as described in Article 6 and
other persons substantially involved in a common question of fact or law
whose presence is required if complete relief is to be accorded in
arbitration. No person or entity other than the Owner, Contractor or a
separate contractor as described in Article 6 shall be included as an
original third party or additional third party to arbitration whose
interest or responsibility is insubstantial. Consent to arbitration
involving an additional person or entity shall not constitute consent to
arbitration of a Claim not described therein or with a person or entity not
named or described therein. The foregoing agreement to arbitrate and other
agreements to arbitrate with an additional person or entity duly consented
to by parties to the Agreement shall be specifically enforceable under
applicable law in any court having jurisdiction thereof.
4.6.5 CLAIMS AND TIMELY ASSERTION OF CLAIMS. The party filing a notice of
demand for arbitration must assert in the demand all Claims then known to
that party on which arbitration is permitted to be demanded.
4.6.6 JUDGMENT ON FINAL AWARD. The award rendered by the arbitrator or
arbitrators shall be final, and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof.
<PAGE> 44
ARTICLE 5 SUBCONTRACTORS
5.1 DEFINITIONS
5.1.1 A Subcontractor is a person or entity who has a direct contract with
the Contractor to perform a portion of the Work at the site. The term
"Subcontractor" is referred to throughout the Contract Documents as if
singular in number and means a Subcontractor or an authorized
representative of the Subcontractor. The term "Subcontractor" does not
include a separate contractor or subcontractors of a separate contractor.
5.1.2 A Sub-subcontractor is a person or entity who has a direct or
indirect contract with a Subcontractor to perform a portion of the Work at
the site. The term "Sub-subcontractor" is referred to throughout the
Contract Documents as if singular in number and means a Sub-subcontractor
or an authorized representative of the Sub-subcontractor.
5.2 AWARD OF SUBCONTRACTS AND OTHER CONTRACTS FOR PORTIONS OF THE WORK
5.2.1 Unless otherwise stated in the Contract Documents or the bidding
requirements, the Contractor, as soon as practicable after award of the
Contract, shall furnish in writing to the Owner through the Architect the
names of persons or entities (including those who are to furnish materials
or equipment fabricated to a special design) proposed for each principal
portion of the Work. The Architect will promptly reply to the Contractor in
writing stating whether or not the Owner or the Architect, after due
investigation, has reasonable objection to any such proposed person or
entity. Failure of the Owner or Architect to reply promptly shall
constitute notice of no reasonable objection.
5.2.2 The Contractor shall not contract with a proposed person or entity to
whom the Owner or Architect has made reasonable and timely objection. The
Contractor shall not be required to contract with anyone to whom the
Contractor has made reasonable objection.
5.2.3 If the Owner or Architect has reasonable objection to a person or
entity proposed by the Contractor, the Contractor shall propose another to
whom the Owner or Architect has no reasonable objection. If the proposed
but rejected Subcontractor was reasonably capable of performing the Work,
the Contract Sum and Contract Time shall be increased or decreased by the
difference, if any, occasioned by such change, and an appropriate Change
Order shall be issued before commencement of the substitute Subcontractor's
Work. However, no increase in the Contract Sum or Contract Time shall be
allowed for such change unless the Contractor has acted promptly and
responsively in submitting names as required.
5.2.4 The Contractor shall not change a Subcontractor, person or entity
previously selected if the Owner or Architect makes reasonable objection to
such substitute.
5.3 SUBCONTRACTUAL RELATIONS
5.3.1 By appropriate agreement, Written where legally required for
validity, the Contractor shall require each Subcontractor, to the extent of
the Work to be performed by the Subcontractor, to be bound to the
Contractor by terms of the Contract Documents, and to assume toward the
Contractor all the obligations and responsibilities, including the
responsibility for safety of the Subcontractor's Work, which the
Contractor, by these Documents, assumes toward the Owner and Architect.
Each subcontract agreement shall preserve and protect the rights of the
Owner and Architect under the Contract Documents with respect to the Work
to be performed by the Subcontractor so that subcontracting thereof will
not prejudice such rights, and shall allow to the Subcontractor, unless
specifically provided otherwise in the subcontract agreement, the benefit
of all rights, remedies and redress against the Contractor that the
Contractor, by the Contract Documents, has against the Owner. Where
appropriate, the Contractor shall require each Subcontractor to enter into
similar agreements with Sub-subcontractors. The Contractor shall make
available to each proposed Subcontractor, prior to the execution of the
subcontract agreement, copies of the Contract Documents to which the
Subcontractor will be bound, and, upon written request of the
Subcontractor, identify to the Subcontractor terms and conditions of the
<PAGE> 45
proposed subcontract agreement which may be at variance with the Contract
Documents. Subcontractors will similarly make copies of applicable portions
of such documents available to their respective proposed
Sub-subcontractors.
5.4 CONTINGENT ASSIGNMENT OF SUBCONTRACTS
5.4.1 Each subcontract agreement for a portion of the Work is assigned by
the Contractor to the Owner provided that:
.1 assignment is effective only after termination of the Contract by
the Owner for cause pursuant to Paragraph 14.2 and only for those
subcontract agreements which the Owner accepts by notifying the
Subcontractor and Contractor in writing; and
.2 assignment is subject to the prior rights of the surety, if any,
obligated under bond relating to the Contract.
5.4.2 Upon such assignment, if the Work has been suspended for more than 30
days, the Subcontractor's compensation shall be equitably adjusted for
increases in cost resulting from the suspension.
ARTICLE 6 CONSTRUCTION BY OWNER OR BY SEPARATE CONTRACTORS
6.1 OWNER'S RIGHT TO PERFORM CONSTRUCTION AND TO AWARD SEPARATE CONTRACTS
6.1.1 The Owner reserves the right to perform construction or operations
related to the Project with the Owner's own forces, and to award separate
contracts in connection with other portions of the Project or other
construction or operations on the site under Conditions of the Contract
identical or substantially similar to these including those portions
related to insurance and waiver of subrogation. If the Contractor claims
that delay or additional cost is involved because of such action by the
Owner, the Contractor shall make such Claim as provided in Paragraph 4.3.
6.1.2 When separate contracts are awarded for different portions of the
Project or other construction or operations on the site, the term
"Contractor" in the Contract Documents in each case shall mean the
Contractor who executes each separate Owner-Contractor Agreement.
6.1.3 The Owner shall provide for coordination of the activities of the
Owner's own forces and of each separate contractor with the Work of the
Contractor, who shall cooperate with them. The Contractor shall participate
with other separate contractors and the Owner in reviewing their
construction schedules when directed to do so. The Contractor shall make
any revisions to the construction schedule deemed necessary after a joint
review and mutual agreement. The construction schedules shall then
constitute the schedules to be used by the Contractor, separate contractors
and the Other until subsequently revised.
6.1.4 Unless otherwise provided in the Contract Documents, when the Owner
performs construction or operations related to the Project with the Owner's
own forces, the Owner shall be deemed to be subject to the same obligations
and to have the same rights which apply to the Contractor under the
Conditions of the Contract, including, without excluding others, those
stated in Article 3, this Article 6 and Articles 10, 11 and 12.
6.2 MUTUAL RESPONSIBILITY
6.2.1 The Contractor shall afford the Owner and separate contractors
reasonable opportunity for introduction and storage of their materials and
equipment and performance of their activities, and shall connect and
coordinate the Contractor's construction and operations with theirs as
required by the Contract Documents.
6.2.2 If part of the Contractor's Work depends for proper execution or
results upon construction or operations by the Owner or a separate
contractor, the Contractor shall, prior to proceeding with that portion of
the Work, promptly report to the Architect apparent discrepancies or
defects in such other construction that would render it unsuitable for such
proper execution and results. Failure of the Contractor so to report shall
constitute an acknowledgment that the Owner's
<PAGE> 46
or separate contractor's completed or partially completed construction is
fit and proper to receive the Contractor's Work, except as to defects not
then reasonably discoverable.
6.2.3 The Owner shall be reimbursed by the Contractor for costs incurred by
the Owner which are payable to a separate contractor because of delays,
improperly timed activities or defective construction of the Contractor.
The Owner shall be responsible to the Contractor for costs incurred by the
Contractor because of delays, improperly timed activities, damage to the
Work or defective construction of a separate contractor.
6.2.4 The Contractor shall promptly remedy damage wrongfully caused by the
Contractor to completed or partially completed construction or to property
of the Owner or separate contractors as provided in Subparagraph 10.2.5.
6.2.5 The Owner and each separate contractor shall have the same
responsibilities for cutting and patching as are described for the
Contractor in Subparagraph 3.14.
6.3 OWNER'S RIGHT TO CLEAN UP
6.3.1 If a dispute arises among the Contractor, separate contractors and
the Owner as to the responsibility under their respective contracts for
maintaining the premises and surrounding area free from waste materials and
rubbish, the Owner may clean up and the Architect will allocate the cost
among those responsible.
ARTICLE 7 CHANGES IN THE WORK
7.1 GENERAL
7.1.1 Changes in the Work may be accomplished after execution of the
Contract, and without invalidating the Contract, by Change Order,
Construction Change Directive or order for a minor change in the Work,
subject to the limitations stated in this Article 7 and elsewhere in the
Contract Documents.
7.1.2 A Change Order shall be based upon agreement among the Owner,
Contractor and Architect; a Construction Change Directive requires
agreement by the Owner and Architect and may or may not be agreed to by the
Contractor; an order for a minor change in the Work may be issued by the
Architect alone.
7.1.3 Changes in the Work shall be performed under applicable provisions of
the Contract Documents, and the Contractor shall proceed promptly, unless
otherwise provided in the Change Order, Construction Change Directive or
order for a minor change in the Work.
7.2 CHANGE ORDERS
7.2.1 A Change Order is a written instrument prepared by the Architect and
signed by the Owner, Contractor and Architect, stating their agreement upon
all of the following:
.1 change in the Work;
.2 the amount of the adjustment, if any, in the Contract Sum; and
.3 the extent of the adjustment, if any, in the Contract Time.
7.2.2 Methods used in determining adjustments to the Contract Sum may
include those listed in Subparagraph 7.3.3.
7.3 CONSTRUCTION CHANGE DIRECTIVES
<PAGE> 47
7.3.1 A Construction Change Directive is a written order prepared by the
Architect and signed by the Owner and Architect, directing a change in the
Work prior to agreement on adjustment, if any, in the Contract Sum or
Contract Time, or both. The Owner may by Construction Change Directive,
without invalidating the Contract, order changes in the Work within the
general scope of the Contract consisting of additions, deletions or other
revisions, the Contract Sum and Contract Time being adjusted accordingly.
7.3.2 A Construction Change Directive shall be used in the absence of total
agreement on the terms of a Change Order.
7.3.3 If the Construction Change Directive provides for an adjustment to
the Contract Sum, the adjustment shall be based on one of the following
methods:
.1 mutual acceptance of a lump sum properly itemized and supported by
sufficient substantiating data to permit evaluation;
.2 unit prices stated in the Contract Documents or subsequently agreed
upon;
.3 cost to be determined in a manner agreed upon by the parties and a
mutually acceptable fixed or percentage fee;
or
.4 as provided in Subparagraph 7.3.6.
7.3.4 Upon receipt of a Construction Change Directive, the Contractor shall
promptly proceed with the change in the Work involved and advise the
Architect of the Contractor's agreement or disagreement with the method, if
any, provided in the Construction Change Directive for determining the
proposed adjustment in the Contract Sum or Contract Time.
7.3.5 A Construction Change Directive signed by the Contractor indicates
the agreement of the Contractor therewith, including adjustment in Contract
Sum and Contract Time or the method for determining them. Such agreement
shall be effective immediately and shall be recorded as a Change Order.
7.3.6 If the Contractor does not respond promptly or disagrees with the
method for adjustment in the Contract Sum, the method and the adjustment
shall be determined by the Architect on the basis of reasonable
expenditures and savings of those performing the Work attributable to the
change, including, in case of an increase in the Contract Sum, a reasonable
allowance for overhead and profit. In such case, and also under Clause
7.3.3.3, the Contractor shall keep and present, in such form as the
Architect may prescribe, an itemized accounting together with appropriate
supporting data. Unless otherwise provided in the Contract Documents, costs
for the purposes of this Subparagraph 7.3.6 shall be limited to the
following:
.1 costs of labor, including social security, old age and
unemployment insurance, fringe benefits required by agreement or
custom, and workers' compensation insurance;
.2 costs of materials, supplies and equipment, including cost of
transportation, whether incorporated or consumed;
.3 rental costs of machinery and equipment, exclusive of hand
tools, whether rented from the Contractor or others;
.4 costs of premiums for all bonds and insurance, permit fees,
and sales, use or similar taxes related to the Work; and
.5 additional costs of supervision and field office personnel
directly attributable to the change.
7.3.7 The amount of credit to be allowed by the Contractor to the Owner for
a deletion or change which results in a net
<PAGE> 48
decrease in the Contract Sum shall be actual net cost as confirmed by the
Architect. When both additions and credits covering related Work or
substitutions are involved in a change, the allowance for overhead and
profit shall be figured on the basis of net increase, if any, with respect
to that change.
7.3.8 Pending final determination of the total cost of a Construction
Change Directive to the Owner, amounts not in dispute for such changes in
the Work shall be included in Applications for Payment accompanied by a
Change Order indicating the parties' agreement with part or all of such
costs. For any portion of such cost that remains in dispute, the Architect
will make an interim determination for purposes of monthly certification
for payment for those costs. That determination of cost shall adjust the
Contract Sum on the same basis as a Change Order, subject to the right of
either party to disagree and assert a claim in accordance with Article 4.
7.3.9 When the Owner and Contractor agree with the determination made by
the Architect concerning the adjustments in the Contract Sum and Contract
Time, or otherwise reach agreement upon the adjustments, such agreement
shall be effective immediately and shall be recorded by preparation and
execution of an appropriate Change Order.
7.4 MINOR CHANGES IN THE WORK
7.4.1 The Architect will have authority to order minor changes in the Work
not involving adjustment in the Contract Sum or extension of the Contract
Time and not inconsistent with the intent of the Contract Documents. Such
changes shall be effected by written order and shall be binding on the
Owner and Contractor. The Contractor shall carry out such written orders
promptly.
ARTICLE 8 TIME
8.1 DEFINITIONS
8.1.1 Unless otherwise provided, Contract Time is the period of time,
including authorized adjustments, allotted in the Contract Documents for
Substantial Completion of the Work.
8.1.2 The date of commencement of the Work is the date established in the
Agreement.
8.1.3 The date of Substantial Completion is the date certified by the
Architect in accordance with Paragraph 9.8.
8.1.4 The term "day" as used in the Contract Documents shall mean calendar
day unless otherwise specifically defined.
8.2 PROGRESS AND COMPLETION
8.2.1 Time limits stated in the Contract Documents are of the essence of
the Contract. By executing the Agreement the Contractor confirms that the
Contract Time is a reasonable period for performing the Work.
8.2.2 The Contractor shall not knowingly, except by agreement or
instruction of the Owner in writing, prematurely commence operations on the
site or elsewhere prior to the effective date of insurance required by
Article 11 to be furnished by the Contractor and Owner. The date of
commencement of the Work shall not be changed by the effective date of such
insurance. Unless the date of commencement is established by the Contract
Documents or a notice to proceed given by the Owner, the Contractor shall
notify the Owner in writing not less than five days or other agreed period
before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
8.2.3 The Contractor shall proceed expeditiously with adequate forces and
shall achieve Substantial Completion within the Contract Time.
8.3 DELAYS AND EXTENSIONS OF TIME
<PAGE> 49
8.3.1 If the Contractor is delayed at any time in the commencement or
progress of the Work by an act or neglect of the Owner or Architect, or of
an employee of either, or of a separate contractor employed by the Owner,
or by changes ordered in the Work, or by labor disputes, fire, unusual
delay in deliveries, unavoidable casualties or other causes beyond the
Contractor's control, or by delay authorized by the Owner pending mediation
and arbitration, or by other causes which the Architect determines may
justify delay, then the Contract Time shall be extended by Change Order for
such reasonable time as the Architect may determine.
8.3.2 Claims relating to time shall be made in accordance with applicable
provisions of Paragraph 4.3.
8.3.3 This Paragraph 8.3 does not preclude recovery of damages for delay by
either party under other provisions of the Contract Documents.
ARTICLE 9 PAYMENTS AND COMPLETION
9.1 CONTRACT SUM
9.1.1 The Contract Sum is stated in the Agreement and, including authorized
adjustments, is the total amount payable by the Owner to the Contractor for
performance of the Work under the Contract Documents.
9.2 SCHEDULE OF VALUES
9.2.1 Before the first Application for Payment, the Contractor shall submit
to the Architect a schedule of values allocated to various portions of the
Work, prepared in such form and supported by such data to substantiate its
accuracy as the Architect may require. This schedule, unless objected to by
the Architect, shall be used as a basis for reviewing the Contractor's
Applications for Payment.
9.3 APPLICATIONS FOR PAYMENT
9.3.1 At least ten days before the date established for each progress
payment, the Contractor shall submit to the Architect an itemized
Application for Payment for operations completed in accordance with the
schedule of values. Such application shall be notarized, if required, and
supported by such data substantiating the Contractor's right to payment as
the Owner or Architect may require, such as copies of requisitions from
Subcontractors and material suppliers, and reflecting retainage if provided
for in the Contract Documents.
9.3.1.1 As provided in Subparagraph 7.3.8, such applications may include
requests for payment on account of changes in the Work which have been
properly authorized by Construction Change Directives, or by interim
determinations of the Architect, but not yet included in Change Orders.
9.3.1.2 Such applications may not include requests for payment for portions
of the Work for which the Contractor does not intend to pay to a
Subcontractor or material supplier, unless such Work has been performed by
others whom the Contractor intends to pay.
9.3.2 Unless otherwise provided in the Contract Documents, payments shall
be made on account of materials and equipment delivered and suitably stored
at the site for subsequent incorporation in the Work. If approved in
advance by the Owner, payment may similarly be made for materials and
equipment suitably stored off the site at a location agreed upon in
writing. Payment for materials and equipment stored on or off the site
shall be conditioned upon compliance by the Contractor with procedures
satisfactory to the Owner to establish the Owner's title to such materials
and equipment or otherwise protect the Owner's interest, and shall include
the costs of applicable insurance, storage and transportation to the site
for such materials and equipment stored off the site.
<PAGE> 50
9.3.3 The Contractor warrants that title to all Work covered by an
Application for Payment will pass to the Owner no later than the time of
payment. The Contractor further warrants that upon submittal of an
Application for Payment all Work for which Certificates for Payment have
been previously issued and payments received from the Owner shall, to the
best of the Contractor's knowledge, information and belief, be free and
clear of liens, claims, security interests or encumbrances in favor of the
Contractor, Subcontractors, material suppliers, or other persons or
entities making a claim by reason of having provided labor, materials and
equipment relating to the Work.
9.4 CERTIFICATES FOR PAYMENT
9.4.1 The Architect will, within seven days after receipt of the
Contractor's Application for Payment, either issue to the Owner a
Certificate for Payment, with a copy to the Contractor, for such amount as
the Architect determines is properly due, or notify the Contractor and
Owner in Writing of the Architect's reasons for withholding certification
in whole or in part as provided in Subparagraph 9.5.1.
9.4.2 The issuance of a Certificate for Payment will constitute a
representation by the Architect to the Owner, based on the Architect's
evaluation of the Work and the data comprising the Application for Payment,
that the Work has progressed to the point indicated and that, to the best
of the Architect's knowledge, information and belief, the quality of the
Work is in accordance with the Contract Documents. The foregoing
representations are subject to an evaluation of the Work for conformance
with the Contract Documents upon Substantial Completion, to results of
subsequent tests and inspections, to correction of minor deviations from
the Contract Documents prior to completion and to specific qualifications
expressed by the Architect. The issuance of a Certificate for Payment will
further constitute a representation that the Contractor is entitled to
payment in the amount certified. However, the issuance of a Certificate for
Payment will not be a representation that the Architect has (1) made
exhaustive or, Continuous on-site inspections to check the quality or
quantity of the Work, (2) reviewed constriction means, methods, techniques,
sequences or procedures, (3) reviewed copies of requisitions received from
Subcontractors and material suppliers and other data requested by the Owner
to substantiate the Contractor's right to payment, or (4) made examination
to ascertain how or for what purpose the Contractor has used money
previously paid on account of the Contract Sum.
9.5 DECISIONS TO WITHHOLD CERTIFICATION
9.5.1 The Architect may withhold a Certificate for Payment in whole or in
part, to the extent reasonably necessary to protect the Owner, if in the
Architect's opinion the representations to the Owner required by
Subparagraph 9.4.2 cannot be made. If the Architect is unable to certify
payment in the amount of the Application, the Architect will notify the
Contractor and Owner as provided in Subparagraph 9.4.1. If the Contractor
and Architect cannot agree on a revised amount, the Architect will promptly
issue a Certificate for Payment for the amount for which the Architect is
able to make such representations to the Owner. The Architect may also
withhold a Certificate for Payment or, because of subsequently discovered
evidence, may nullify the whole or a part of a Certificate for Payment
previously issued, to such extent as may be necessary in the Architect's
opinion to protect the Owner from loss for which the Contractor is
responsible, including loss resulting from acts and omissions described in
Subparagraph 3.3.2, because of:
.1 defective Work not remedied;
.2 third party claims filed or reasonable evidence indicating
probable filing of such claims unless security acceptable to the
Owner is provided by the Contractor;
.3 failure of the Contractor to make payments properly to
Subcontractors or for labor, materials or equipment;
.4 reasonable evidence that the Work cannot be completed for the
unpaid balance of the Contract Sum;
.5 damage to the Owner or another contractor;
<PAGE> 51
.6 reasonable evidence that the Work will not be completed within
the Contract Time, and that the unpaid balance would not be
adequate to cover actual or liquidated damages for the
anticipated delay; or
.7 persistent failure to carry out the Work in accordance with
the Contract Documents.
9.5.2 When the above reasons for withholding certification are removed,
certification will be made for amounts previously withheld.
9.6 PROGRESS PAYMENTS
9.6.1 After the Architect has issued a Certificate for Payment, the Owner
shall make payment in the manner and within the time provided in the
Contract Documents, and shall so notify the Architect.
9.6.2 The Contractor shall promptly pay each Subcontractor, upon receipt of
payment from the Owner, out of the amount paid to the Contractor on account
of such Subcontractor's portion of the Work, the amount to which said
Subcontractor is entitled, reflecting percentages actually retained from
payments to the Contractor on account of such Subcontractor's portion of
the Work. The Contractor shall, by appropriate agreement with each
Subcontractor, require each Subcontractor to make payments to
Sub-subcontractors in a similar manner.
9.6.3 The Architect will, on request, furnish to a Subcontractor, if
practicable, information regarding percentages of completion or amounts
applied for by the Contractor and action taken thereon by the Architect and
Owner on account of portions of the Work done by such Subcontractor.
9.6.4 Neither the Owner nor Architect shall have an obligation to pay or to
see to the payment of money to a Subcontractor except as may otherwise be
required by law.
9.6.5 Payment to material suppliers shall be treated in a manner similar to
that provided in Subparagraphs 9.6.2, 9.6.3 and 9.6.4.
9.6.6 A Certificate for Payment, a progress payment, or partial or entire
use or occupancy of the Project by the Owner shall not constitute
acceptance of Work not in accordance with the Contract Documents.
9.6.7 Unless the Contractor provides the Owner with a payment bond in the
full penal sum of the Contract Sum, payments received by the Contractor for
Work properly performed by Subcontractors and suppliers shall be held by
the Contractor for those Subcontractors or suppliers who performed Work or
furnished materials, or both, under contract with the Contractor for which
payment was made by the Owner. Nothing contained herein shall require money
to be placed in a separate account and not commingled with money of the
Contractor, shall create any fiduciary liability or tort liability on the
part of the Contractor for breach of trust or shall entitle any person or
entity to an award of punitive damages against the Contractor for breach of
the requirements of this provision.
9.7 FAILURE OF PAYMENT
9.7.1 If the Architect does not issue a Certificate for Payment, through no
fault of the Contractor, within seven days after receipt of the
Contractor's Application for Payment, or if the Owner does not pay the
Contractor within seven days after the date established in the Contract
Documents the amount certified by the Architect or awarded by arbitration,
then the Contractor may, upon seven additional days' written notice to the
Owner and Architect, stop the Work until payment of the amount owing has
been received. The Contract Time shall be extended appropriately and the
Contract Sum shall be increased by the amount of the Contractor's
reasonable costs of shut-down, delay and start-up, plus interest as
provided for in the Contract Documents.
9.8 SUBSTANTIAL COMPLETION
<PAGE> 52
9.8.1 Substantial Completion is the stage in the progress of the Work when
the Work or designated portion thereof is sufficiently complete in
accordance with the Contract Documents so that the Owner can occupy or
utilize the Work for its intended use.
9.8.2 When the Contractor considers that the Work, or a portion thereof
which the Owner agrees to accept separately, is substantially complete, the
Contractor shall prepare and submit to the Architect a comprehensive list
of items to be completed or corrected prior to final payment. Failure to
include an item on such list does not alter the responsibility of the
Contractor to complete all Work in accordance with the Contract Documents.
9.8.3 Upon receipt of the Contractor's list, the Architect will make an
inspection to determine whether the Work or designated portion thereof is
substantially complete. If the Architect's inspection discloses any item,
whether or not included on the Contractor's list, which is not sufficiently
complete in accordance with the Contract Documents so that the Owner can
occupy or utilize the Work or designated portion thereof for its intended
use, the Contractor shall, before issuance of the Certificate of
Substantial Completion, complete or correct such item upon notification by
the Architect. In such case, the Contractor shall then submit a request for
another inspection by the Architect to determine Substantial Completion.
9.8.4 When the Work or designated portion thereof is substantially
complete, the Architect will prepare a Certificate of Substantial
Completion which shall establish the date of Substantial Completion, shall
establish responsibilities of the Owner and Contractor for security,
maintenance, heat, utilities, damage to the Work and insurance, and shall
fix the time within which the Contractor shall finish all items on the list
accompanying the Certificate. Warranties required by the Contract Documents
shall commence on the date of Substantial Completion of the Work or
designated portion thereof unless otherwise provided in the Certificate of
Substantial Completion.
9.8.5 The Certificate of Substantial Completion shall be submitted to the
Owner and Contractor for their written acceptance of responsibilities
assigned to them in such Certificate. Upon such acceptance and consent of
surety, if any, the Owner shall make payment of retainage applying to such
Work or designated portion thereof. Such payment shall be adjusted for Work
that is incomplete or not in accordance with the requirements of the
Contract Documents.
9.9 PARTIAL OCCUPANCY OR USE
9.9.1 The Owner may occupy or use any completed or partially completed
portion of the Work at any stage when such portion is designated by
separate agreement with the Contractor, provided such occupancy or use is
consented to by the insurer as required under Clause 11.4.1.5 and
authorized by public authorities having jurisdiction over the Work. Such
partial occupancy or use may commence whether or not the portion is
substantially complete, provided the Owner and Contractor have accepted in
writing the responsibilities assigned to each of them for payments,
retainage, if any, security, maintenance, heat, utilities, damage to the
Work and insurance, and have agreed in writing concerning the period for
correction of the Work and commencement of warranties required by the
Contract Documents. When the Contractor considers a portion substantially
complete, the Contractor shall prepare and submit a list to the Architect
as provided under Subparagraph 9.8.2. Consent of the Contractor to partial
occupancy or use shall not be unreasonably withheld. The stage of the
progress of the Work shall be determined by written agreement between the
Owner and Contractor or, if no agreement is reached, by decision of the
Architect.
9.9.2 Immediately prior to such partial occupancy or use, the Owner,
Contractor and Architect shall jointly inspect the area to be occupied or
portion of the Work to be used in order to determine and record the
condition of the Work.
9.9.3 Unless otherwise agreed upon, partial occupancy or use of a portion
or portions of the Work shall not constitute acceptance of Work not
complying with the requirements of the Contract Documents.
9.10 FINAL COMPLETION AND FINAL PAYMENT
<PAGE> 53
9.10.1 Upon receipt of written notice that the Work is ready for final
inspection and acceptance and upon receipt of a final Application for
Payment, the Architect will promptly make such inspection and, when the
Architect finds the Work acceptable under the Contract Documents and the
Contract fully performed, the Architect will promptly issue a final
Certificate for Payment stating that to the best of the Architect's
knowledge, information and belief, and on the basis of the Architect's
on-site visits and inspections, the Work has been completed in accordance
with terms and conditions of the Contract Documents and that the entire
balance found to be due the Contractor and noted in the final Certificate
is due and payable. The Architect's final Certificate for Payment will
constitute a further representation that conditions listed in Subparagraph
9.10.2 as precedent to the Contractor's being entitled to final payment
have been fulfilled.
9.10.2 Neither final payment nor any remaining retained percentage shall
become due until the Contractor submits to the Architect (1) an affidavit
that payrolls, bills for materials and equipment, and other indebtedness
connected with the Work for which the Owner or the Owner's property might
be responsible or encumbered (less amounts withheld by Owner) have been
paid or otherwise satisfied, (2) a certificate evidencing that insurance
required by the Contract Documents to remain in force after final payment
is currently in effect and will not be canceled or allowed to expire until
at least 30 days' prior written notice has been given to the Owner, (3) a
written statement that the Contractor knows of no substantial reason that
the insurance will not be renewable to cover the period required by the
Contract Documents, (4) consent of surety, if any, to final payment and
(5), if required by the Owner, other data establishing payment or
satisfaction of obligations, such as receipts, releases and waivers of
liens, claims, security interests or encumbrances arising out of the
Contract, to the extent and in such form as may be designated by the Owner.
If a Subcontractor refuses to furnish a release or waiver required by the
Owner, the Contractor may furnish a bond satisfactory to the Owner to
indemnify the Owner against such lien. If such lien remains unsatisfied
after payments are made, the Contractor shall refund to the Owner all money
that the Owner may be compelled to pay in discharging such lien, including
all costs and reasonable attorneys' fees.
9.10.3 If, after Substantial Completion of the Work, final completion
thereof is materially delayed through no fault of the Contractor or by
issuance of Change Orders affecting final completion, and the Architect so
confirms, the Owner shall, upon application by the Contractor and
certification by the Architect, and without terminating the Contract, make
payment of the balance due for that portion of the Work fully completed and
accepted. If the remaining balance for Work not fully completed or
corrected is less than retainage stipulated in the Contract Documents, and
if bonds have been furnished, the written consent of surety to payment of
the balance due for that portion of the Work fully completed and accepted
shall be submitted by the Contractor to the Architect prior to
certification of such payment. Such payment shall be made under terms and
conditions governing final payment, except that it shall not constitute a
waiver of claims.
9.10.4 The making of final payment shall constitute a waiver of Claims by
the Owner except those arising from:
.1 liens, Claims, security interests or encumbrances arising out of
the Contract and unsettled;
.2 failure of the Work to comply with the requirements of the Contract
Documents; or
.3 terms of special warranties required by the Contract Documents.
9.10.5 Acceptance of final payment by the Contractor, a Subcontractor or
material supplier shall constitute a waiver of claims by that payee except
those previously made in writing and identified by that payee as unsettled
at the time of final Application for Payment.
ARTICLE 10 PROTECTION OF PERSONS AND PROPERTY
10.1 SAFETY PRECAUTIONS AND PROGRAMS
10.1.1 The Contractor shall be responsible for initiating, maintaining and
supervising all safety precautions and programs in connection with the
performance of the Contract.
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10.2 SAFETY OF PERSONS AND PROPERTY
10.2.1 The Contractor shall take reasonable precautions for safety of, and
shall provide reasonable protection to prevent damage, injury or loss to:
.1 employees on the Work and other persons who may be affected
thereby;
.2 the Work and materials and equipment to be incorporated therein,
whether in storage on or off the site, under care, custody or control
of the Contractor or the Contractor's Subcontractors or
Sub-subcontractors; and
.3 other property at the site or adjacent thereto, such as trees,
shrubs, lawns, walks, pavements, roadways, structures and utilities
not designated for removal, relocation or replacement in the course of
construction.
10.2.2 The Contractor shall give notices and comply with applicable laws,
ordinances, rules, regulations and lawful orders of public authorities
bearing on safety of persons or property or their protection from damage,
injury or loss.
10.2.3 The Contractor shall erect and maintain, as required by existing
conditions and performance of the Contract, reasonable safeguards for
safety and protection, including posting danger signs and other warnings
against hazards, promulgating safety regulations and notifying owners and
users of adjacent sites and utilities.
10.2.4 When use or storage of explosives or other hazardous materials or
equipment or unusual methods are necessary for execution of the Work, the
Contractor shall exercise utmost care and carry on such activities under
supervision of properly qualified personnel.
10.2.5 The Contractor shall promptly remedy damage and loss (other than
damage or loss insured under property insurance required by the Contract
Documents) to property referred to in Clauses 10.2.1.2 and 10.2.1.3 caused
in whole or in part by the Contractor, a Subcontractor, a
Sub-subcontractor, or anyone directly or indirectly employed by any of
them, or by anyone for whose acts they may be liable and for which the
Contractor is responsible under Clauses 10.2.1.2 and 10.2.1.3, except
damage or loss attributable to acts or omissions of the Owner or Architect
or anyone directly or indirectly employed by either of them, or by anyone
for whose acts either of them may be liable, and not attributable to the
fault or negligence of the Contractor. The foregoing obligations of the
Contractor are in addition to the Contractor's obligations under Paragraph
3.18.
10.2.6 The Contractor shall designate a responsible member of the
Contractor's organization at the site whose duty shall be the prevention of
accidents. This person shall be the Contractor's superintendent unless
otherwise designated by the Contractor in writing to the Owner and
Architect.
10.2.7 The Contractor shall not load or permit any part of the construction
or site to be loaded so as to endanger its safety.
10.3 HAZARDOUS MATERIALS
10.3.1 If reasonable precautions will be inadequate to prevent foreseeable
bodily injury or death to persons resulting from a material or substance,
including but not limited to asbestos or polychlorinated biphenyl (PCB),
encountered on the site by the Contractor, the Contractor shall, upon
recognizing the condition, immediately stop Work in the affected area and
report the condition to the Owner and Architect in writing.
10.3.2 The Owner shall obtain the services of a licensed laboratory to
verify the presence or absence of the material or substance reported by the
Contractor and, in the event such material or substance is found to be
present, to verify that it has been rendered harmless. Unless otherwise
required by the Contract Documents, the Owner shall furnish in writing to
the Contractor and Architect the names and qualifications of persons or
entities who are to perform tests
<PAGE> 55
verifying the presence or absence of such material or substance or who are
to perform the task of removal or safe containment of such material or
substance. The Contractor and the Architect will promptly reply to the
Owner in writing stating whether or not either has reasonable objection to
the persons or entities proposed by the Owner. If either the Contractor or
Architect has an objection to a person or entity proposed by the Owner, the
Owner shall propose another to whom the Contractor and the Architect have
no reasonable objection. When the material or substance has been rendered
harmless, Work in the affected area shall resume upon written agreement of
the Owner and Contractor. The Contract Time shall be extended appropriately
and the Contract Sum shall be increased in the amount of the Contractor's
reasonable additional costs of shut-down, delay and start-up, which
adjustments shall be accomplished as provided in Article 7.
10.3.3 To the fullest extent permitted by law, the Owner shall indemnify
and hold harmless the Contractor, Subcontractors, Architect, Architect's
consultants and agents and employees of any of them from and against
claims, damages, losses and expenses, including but not limited to
attorneys' fees, arising out of or resulting from performance of the Work
in the affected area if in fact the material or substance presents the risk
of bodily injury or death as described in Subparagraph 10.3.1 and has not
been rendered harmless, provided that such claim, damage, loss or expense
is attributable to bodily injury, sickness, disease or death, or to injury
to or destruction of tangible property (other than the Work itself) and
provided that such damage, loss or expense is not due to the sole
negligence of a party seeking indemnity.
10.4 The Owner shall not be responsible under Paragraph 10.3 for materials
and substances brought to the site by the Contractor unless such materials
or substances were required by the Contract Documents.
10.5 If, without negligence on the part of the Contractor, the Contractor
is held liable for the cost of remediation of a hazardous material or
substance solely by reason of performing Work as required by the Contract
Documents, the Owner shall indemnify the Contractor for all cost and
expense thereby incurred.
10.6 EMERGENCIES
10.6.1 In an emergency affecting safety of persons or property, the
Contractor shall act, at the Contractor's discretion, to prevent threatened
damage, injury or loss. Additional compensation or extension of time
claimed by the Contractor on account of an emergency shall be determined as
provided in Paragraph 4.3 and Article 7.
ARTICLE 11 INSURANCE AND BONDS
11.1 CONTRACTOR'S LIABILITY INSURANCE
11.1.1 The Contractor shall purchase from and maintain in a company or
companies lawfully authorized to do business in the jurisdiction in which
the Project is located such insurance as will protect the Contractor from
claims set forth below which may arise out of or result from the
Contractor's operations under the Contract and for which the Contractor may
be legally liable, whether such operations be by the Contractor or by a
Subcontractor or by anyone directly or indirectly employed by any of them,
or by anyone for whose acts any of them may be liable:
.1 claims under workers' compensation, disability benefit and other
similar employee benefit acts which are applicable to the Work to be
performed;
.2 claims for damages because of bodily injury, occupational sickness
or disease, or death of the Contractor's employees;
.3 claims for damages because of bodily injury, sickness or disease,
or death of any person other than the Contractor's employees;
.4 claims for damages insured by usual personal injury liability
coverage;
<PAGE> 56
.5 claims for damages, other than to the Work itself, because of
injury to or destruction of tangible property, including loss of use
resulting therefrom;
.6 claims for damages because of bodily injury, death of a person or
property damage arising out of ownership, maintenance or use of a
motor vehicle;
.7 claims for bodily injury or property damage arising out of
completed operations; and
.8 claims involving contractual liability insurance applicable to the
Contractor's obligations under Paragraph 3.18.
11.1.2 The insurance required by Subparagraph 11.1.1 shall be written for
not less than limits of liability specified in the Contract Documents or
required by law, whichever coverage is greater. Coverages, whether written
on an occurrence or claims-made basis, shall be maintained without
interruption from date of commencement of the Work until date of final
payment and termination of any coverage required to be maintained after
final payment.
11.1.3 Certificates of insurance acceptable to the Owner shall be filed
with the Owner prior to commencement of the Work. These certificates and
the insurance policies required by this Paragraph 11.1 shall contain a
provision that coverages afforded under the policies will not be canceled
or allowed to expire until at least 30 days' prior written notice has been
given to the Owner. If any of the foregoing insurance coverages are
required to remain in force after final payment and are reasonably
available, an additional certificate evidencing continuation of such
coverage shall be submitted with the final Application for Payment as
required by Subparagraph 9.10.2. Information concerning reduction of
coverage on account of revised limits or claims paid under the General
Aggregate, or both, shall be furnished by the Contractor with reasonable
promptness in accordance with the Contractor's information and belief.
11.2 OWNER'S LIABILITY INSURANCE
11.2.1 The Owner shall be responsible for purchasing and maintaining the
Owner's usual liability insurance.
11.3 PROJECT MANAGEMENT PROTECTIVE LIABILITY INSURANCE
11.3.1 Optionally, the Owner may require the Contractor to purchase and
maintain Project Management Protective Liability insurance from the
Contractor's usual sources as primary coverage for the Owner's,
Contractor's and Architect's vicarious liability for construction
operations under the Contract. Unless otherwise required by the Contract
Documents, the Owner shall reimburse the Contractor by increasing the
Contract Sum to pay the cost of purchasing and maintaining such optional
insurance coverage, and the Contractor shall not be responsible for
purchasing any other liability insurance on behalf of the Owner. The
minimum limits of liability purchased with such coverage shall be equal to
the aggregate of the limits required for Contractor's Liability Insurance
under Clauses 11.1.1.2 through 11.1.1.5.
11.3.2 To the extent damages are covered by Project Management Protective
Liability insurance, the Owner, Contractor and Architect waive all rights
against each other for damages, except such rights as they may have to the
proceeds of such insurance. The policy shall provide for such waivers of
subrogation by endorsement or otherwise.
11.3.3 The Owner shall not require the Contractor to include the Owner,
Architect or other persons or entities as additional insureds on the
Contractor's Liability Insurance coverage under Paragraph 11.1.
11.4 PROPERTY INSURANCE
11.4.1 Unless otherwise provided, the Owner shall purchase and maintain, in
a company or companies lawfully authorized to do business in the
jurisdiction in which the Project is located, property insurance written on
a builder's
<PAGE> 57
risk "all-risk" or equivalent policy form in the amount of the initial
Contract Sum, plus value of subsequent Contract modifications and cost of
materials supplied or installed by others, comprising total value for the
entire Project at the site on a replacement cost basis without optional
deductibles. Such property insurance shall be maintained, unless otherwise
provided in the Contract Documents or otherwise agreed in writing by all
persons and entities who are beneficiaries of such insurance, until final
payment has been made as provided in Paragraph 9.10 or until no person or
entity other than the Owner has an insurable interest in the property
required by this Paragraph 11.4 to be covered, whichever is later. This
insurance shall include interests of the Owner, the Contractor,
Subcontractors and Sub-subcontractors in the Project.
11.4.1.1 Property insurance shall be on an "all-risk" or equivalent policy
form and shall include, without limitation, insurance against the perils of
fire (with extended coverage) and physical loss or damage including,
without duplication of coverage, theft, vandalism, malicious mischief,
collapse, earthquake, flood, windstorm, falsework, testing and startup,
temporary buildings and debris removal including demolition occasioned by
enforcement of any applicable legal requirements, and shall cover
reasonable compensation for Architect's and Contractor's services and
expenses required as a result of such insured loss.
11.4.1.2 If the Owner does not intend to purchase such property insurance
required by the Contract and with all of the coverages in the amount
described above, the Owner shall so inform the Contractor in writing prior
to commencement of the Work. The Contractor may then effect insurance which
will protect the interests of the Contractor, Subcontractors and
Sub-subcontractors in the Work, and by appropriate Change Order the cost
thereof shall be charged to the Owner. If the Contractor is damaged by the
failure or neglect of the Owner to purchase or maintain insurance as
described above, without so notifying the Contractor in writing, then the
Owner shall bear all reasonable costs properly attributable thereto.
11.4.1.3 If the property insurance requires deductibles, the Owner shall
pay costs not covered because of such deductibles.
11.4.1.4 This property insurance shall cover portions of the Work stored
off the site, and also portions of the Work in transit.
11.4.1.5 Partial occupancy or use in accordance with Paragraph 9.9 shall
not commence until the insurance company or companies providing property
insurance have consented to such partial occupancy or use by endorsement or
otherwise. The Owner and the Contractor shall take reasonable steps to
obtain consent of the insurance company or companies and shall, without
mutual written consent, take no action with respect to partial occupancy or
use that would cause cancellation, lapse or reduction of insurance.
11.4.2 BOILER AND MACHINERY INSURANCE. The Owner shall purchase and
maintain boiler and machinery insurance required by the Contract Documents
or by law, which shall specifically cover such insured objects during
installation and until final acceptance by the Owner; this insurance shall
include interests of the Owner, Contractor, Subcontractors and
Sub-subcontractors in the Work, and the Owner and Contractor shall be named
insureds.
11.4.3 LOSS OF USE INSURANCE. The Owner, at the Owner's option, may
purchase and maintain such insurance as will insure the Owner against loss
of use of the Owner's property due to fire or other hazards, however
caused. The Owner waives all rights of action against the Contractor for
loss of use of the Owner's property, including consequential losses due to
fire or other hazards however caused.
11.4.4 If the Contractor requests in writing that insurance for risks other
than those described herein or other special causes of loss be included in
the property insurance policy, the Owner shall, if possible, include such
insurance, and the cost thereof shall be charged to the Contractor by
appropriate Change Order.
11.4.5 If during the Project construction period the Owner insures
properties, real or personal or both, at or adjacent to the site by
property insurance under policies separate from those insuring the Project
or if after final payment
<PAGE> 58
property insurance is to be provided on the completed Project through a
policy or policies other than those insuring the Project during the
construction period, the Owner shall waive all rights in accordance with
the terms of Subparagraph 11.4.7 for damages caused by fire or other causes
of loss covered by this separate property insurance. All separate policies
shall provide this waiver of subrogation by endorsement or otherwise.
11.4.6 Before an exposure to loss may occur, the Owner shall file with the
Contractor a copy of each policy that includes insurance coverages required
by this Paragraph 11.4. Each policy shall contain all generally applicable
conditions, definitions, exclusions and endorsements related to this
Project. Each policy shall contain a provision that the policy will not be
canceled or allowed to expire, and that its limits will not be reduced,
until at least 30 days' prior written notice has been given to the
Contractor.
11.4.7 WAIVERS OF SUBROGATION. The Owner and Contractor waive all rights
against (1) each other and any of their subcontractors, sub-subcontractors,
agents and employees, each of the other, and (2) the Architect, Architect's
consultants, separate contractors described in Article 6, if any, and any
of their subcontractors, sub-subcontractors, agents and employees, for
damages caused by fire or other causes of loss to the extent covered by
property insurance obtained pursuant to this Paragraph 11.4 or other
property insurance applicable to the Work, except such rights as they have
to proceeds of such insurance held by the Owner as fiduciary. The Owner or
Contractor, as appropriate, shall require of the Architect, Architect's
consultants, separate contractors described in Article 6, if any, and the
subcontractors, sub-subcontractors, agents and employees of any of them, by
appropriate agreements, written where legally required for validity,
similar waivers each in favor of other parties enumerated herein. The
policies shall provide such waivers of subrogation by endorsement or
otherwise. A waiver of subrogation shall be effective as to a person or
entity even though that person or entity would otherwise have a duty of
indemnification, contractual or otherwise, did not pay the insurance
premium directly or indirectly, and whether or not the person or entity had
an insurable interest in the property damaged.
11.4.8 A loss insured under Owner's property insurance shall be adjusted by
the Owner as fiduciary and made payable to the Owner as fiduciary for the
insureds, as their interests may appear, subject to requirements of any
applicable mortgagee clause and of Subparagraph 11.4.10. The Contractor
shall pay Subcontractors their just shares of insurance proceeds received
by the Contractor, and by appropriate agreements, written where legally
required for validity, shall require Subcontractors to make payments to
their Sub-subcontractors in similar manner.
11.4.9 If required in writing by a party in interest, the Owner as
fiduciary shall, upon occurrence of an insured loss, give bond for proper
performance of the Owner's duties. The cost of required bonds shall be
charged against proceeds received as fiduciary. The Owner shall deposit in
a separate account proceeds so received, which the Owner shall distribute
in accordance with such agreement as the parties in interest may reach, or
in accordance with an arbitration award in which case the procedure shall
be as provided in Paragraph 4.6. If after such loss no other special
agreement is made and unless the Owner terminates the Contract for
convenience, replacement of damaged property shall be performed by the
Contractor after notification of a Change in the Work in accordance with
Article 7.
11.4.10 The Owner as fiduciary shall have power to adjust and settle a loss
with insurers unless one of the parties in interest shall object in writing
within five days after occurrence of loss to the Owner's exercise of this
power; if such objection is made, the dispute shall be resolved as provided
in Paragraphs 4.5 and 4.6. The Owner as fiduciary shall, in the case of
arbitration, make settlement with insurers in accordance with directions of
the arbitrators. If distribution of insurance proceeds by arbitration is
required, the arbitrators will direct such distribution.
11.5 PERFORMANCE BOND AND PAYMENT BOND
11.5.1 The Owner shall have the right to require the Contractor to furnish
bonds covering faithful performance of the Contract and payment of
obligations arising thereunder as stipulated in bidding requirements or
specifically required in the Contract Documents on the date of execution of
the Contract.
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11.5.2 Upon the request of any person or entity appearing to be a potential
beneficiary of bonds covering payment of obligations arising under the
Contract, the Contractor shall promptly furnish a copy of the bonds or
shall permit a copy to be made.
ARTICLE 12 UNCOVERING AND CORRECTION OF WORK
12.1 UNCOVERING OF WORK
12.1.1 If a portion of the Work is covered contrary to the Architect's
request or to requirements specifically expressed in the Contract
Documents, it must, if required in writing by the Architect, be uncovered
for the Architect's examination and be replaced at the Contractor's expense
without change in the Contract Time.
12.1.2 If a portion of the Work has been covered which the Architect has
not specifically requested to examine prior to its being covered, the
Architect may request to see such Work and it shall be uncovered by the
Contractor. If such Work is in accordance with the Contract Documents,
costs of uncovering and replacement shall, by appropriate Change Order, be
at the Owner's expense. If such Work is not in accordance with the Contract
Documents, correction shall be at the Contractor's expense unless the
condition was caused by the Owner or a separate contractor in which event
the Owner shall be responsible for payment of such costs.
12.2 CORRECTION OF WORK
12.2.1 BEFORE OR AFTER SUBSTANTIAL COMPLETION
12.2.1.1 The Contractor shall promptly correct Work rejected by the
Architect or failing to conform to the requirements of the Contract
Documents, whether discovered before or after Substantial Completion and
whether or not fabricated, installed or completed. Costs of correcting such
rejected Work, including additional testing and inspections and
compensation for the Architect's services and expenses made necessary
thereby, shall be at the Contractor's expense.
12.2.2 AFTER SUBSTANTIAL COMPLETION
12.2.2.1 In addition to the Contractor's obligations under Paragraph 3.5,
if, within one year after the date of Substantial Completion of the Work or
designated portion thereof or after the date for commencement of warranties
established under Subparagraph 9.9.1, or by terms of an applicable special
warranty required by the Contract Documents, any of the Work is found to be
not in accordance with the requirements of the Contract Documents, the
Contractor shall correct it promptly after receipt of written notice from
the Owner to do so unless the Owner has previously given the Contractor a
written acceptance of such condition. The Owner shall give such notice
promptly after discovery of the condition. During the one-year period for
correction of Work, if the Owner fails to notify the Contractor and give
the Contractor an opportunity to make the correction, the Owner waives the
rights to require correction by the Contractor and to make a claim for
breach of warranty. If the Contractor fails to correct nonconforming Work
within a reasonable time during that period after receipt of notice from
the Owner or Architect, the Owner may correct it in accordance with
Paragraph 2.4.
12.2.2.2 The one-year period for correction of Work shall be extended with
respect to portions of Work first performed after Substantial Completion by
the period of time between Substantial Completion and the actual
performance of the Work.
12.2.2.3 The one-year period for correction of Work shall not be extended
by corrective Work performed by the Contractor pursuant to this Paragraph
12.2.
12.2.3 The Contractor shall remove from the site portions of the Work which
are not in accordance with the requirements of the Contract Documents and
are neither corrected by the Contractor nor accepted by the Owner.
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12.2.4 The Contractor shall bear the cost of correcting destroyed or
damaged construction, whether completed or partially completed, of the
Owner or separate contractors caused by the Contractor's correction or
removal of Work which is not in accordance with the requirements of the
Contract Documents.
12.2.5 Nothing contained in this Paragraph 12.2 shall be construed to
establish a period of limitation with respect to other obligations which
the Contractor might have under the Contract Documents. Establishment of
the one-year period for correction of Work as described in Subparagraph
12.2.2 relates only to the specific obligation of the Contractor to correct
the Work, and has no relationship to the time within which the obligation
to comply with the Contract Documents may be sought to be enforced, nor to
the time within which proceedings may be commenced to establish the
Contractor's liability with respect to the Contractor's obligations other
than specifically to correct the Work.
12.3 ACCEPTANCE OF NONCONFORMING WORK
12.3.1 If the Owner prefers to accept Work which is not in accordance with
the requirements of the Contract Documents, the Owner may do so instead of
requiring its removal and correction, in which case the Contract Sum will
be reduced as appropriate and equitable. Such adjustment shall be effected
whether or not final payment has been made.
ARTICLE 13 MISCELLANEOUS PROVISIONS
13.1 GOVERNING LAW
13.1.1 The Contract shall be governed by the law of the place where the
Project is located.
13.2 SUCCESSORS AND ASSIGNS
13.2.1 The Owner and Contractor respectively bind themselves, their
partners, successors, assigns and legal representatives to the other party
hereto and to partners, successors, assigns and legal representatives of
such other party in respect to covenants, agreements and obligations
contained in the Contract Documents. Except as provided in Subparagraph
13.2.2, neither party to the Contract shall assign the Contract as a whole
without written consent of the other. If either party attempts to make such
an assignment without such consent, that party shall nevertheless remain
legally responsible for all obligations under the Contract.
13.2.2 The Owner may, without consent of the Contractor, assign the
Contract to an institutional lender providing construction financing for
the Project. In such event, the lender shall assume the Owner's rights and
obligations under the Contract Documents. The Contractor shall execute all
consents reasonably required to facilitate such assignment.
13.3 WRITTEN NOTICE
13.3.1 Written notice shall be deemed to have been duly served if delivered
in person to the individual or a member of the firm or entity or to an
officer of the corporation for which it was intended, or if delivered at or
sent by registered or certified mail to the last business address known to
the party giving notice.
13.4 RIGHTS AND REMEDIES
13.4.1 Duties and obligations imposed by the Contract Documents and rights
and remedies available thereunder shall be in addition to and not a
limitation of duties, obligations, rights and remedies otherwise imposed or
available by law.
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13.4.2 No action or failure to act by the Owner, Architect or Contractor
shall constitute a waiver of a right or duty afforded them under the
Contract, nor shall such action or failure to act constitute approval of or
acquiescence in a breach thereunder, except as may be specifically agreed
in writing.
13.5 TESTS AND INSPECTIONS
13.5.1 Tests, inspections and approvals of portions of the Work required by
the Contract Documents or by laws, ordinances, rules, regulations or orders
of public authorities having jurisdiction shall be made at an appropriate
time. Unless otherwise provided, the Contractor shall make arrangements for
such tests, inspections and approvals with an independent testing
laboratory or entity acceptable to the Owner, or with the appropriate
public authority, and shall bear all related costs of tests, inspections
and approvals. The Contractor shall give the Architect timely notice of
when and where tests and inspections are to be made so that the Architect
may be present for such procedures. The Owner shall bear costs of tests,
inspections or approvals which do not become requirements until after bids
are received or negotiations concluded.
13.5.2 If the Architect, Owner or public authorities having jurisdiction
determine that portions of the Work require additional testing, inspection
or approval not included under Subparagraph 13.5.1, the Architect will,
upon written authorization from the Owner, instruct the Contractor to make
arrangements for such additional testing, inspection or approval by an
entity acceptable to the Owner, and the Contractor shall give timely notice
to the Architect of when and where tests and inspections are to be made so
that the Architect may be present for such procedures. Such costs, except
as provided in Subparagraph 13.5.3, shall be at the Owner's expense.
13.5.3 If such procedures for testing, inspection or approval under
Subparagraphs 13.5.1 and 13.5.2 reveal failure of the portions of the Work
to comply with requirements established by the Contract Documents, all
costs made necessary by such failure including those of repeated procedures
and compensation for the Architect's services and expenses shall be at the
Contractor's expense.
13.5.4 Required certificates of testing, inspection or approval shall,
unless otherwise required by the Contract Documents, be secured by the
Contractor and promptly delivered to the Architect.
13.5.5 If the Architect is to observe tests, inspections or approvals
required by the Contract Documents, the Architect will do so promptly and,
where practicable, at the normal place of testing.
13.5.6 Tests, or inspections conducted pursuant to the Contract Documents
shall be made promptly to avoid unreasonable delay in the Work.
13.6 INTEREST
13.6.1 Payments due and unpaid under the Contract Documents shall bear
interest from the date payment is due at such rate as the parties may agree
upon in writing or, in the absence thereof, at the legal rate prevailing
from time to time at the place where the Project is located.
13.7 COMMENCEMENT OF STATUTORY LIMITATION PERIOD
13.7.1 As between the Owner and Contractor:
.1 BEFORE SUBSTANTIAL COMPLETION. As to acts or failures to act
occurring prior to the relevant date of Substantial Completion, any
applicable statute of limitations shall commence to run and any
alleged cause of action shall be deemed to have accrued in any and all
events not later than such date of Substantial Completion;
<PAGE> 62
.2 BETWEEN SUBSTANTIAL COMPLETION AND FINAL CERTIFICATE FOR PAYMENT.
As to acts or failures to act occurring subsequent to the relevant
date of Substantial Completion and prior to issuance of the final
Certificate for Payment, any applicable statute of limitations shall
commence to run and any alleged cause of action shall be deemed to
have accrued in any and all events not later than the date of issuance
of the final Certificate for Payment; and
.3 AFTER FINAL CERTIFICATE FOR PAYMENT. As to acts or failures to act
occurring after the relevant date of issuance of the final Certificate
for Payment, any applicable statute of limitations shall commence to
run and any alleged cause of action shall be deemed to have accrued in
any and all events not later than the date of any act or failure to
act by the Contractor pursuant to any Warranty provided under
Paragraph 3.5, the date of any correction of the Work or failure to
correct the Work by the Contractor under Paragraph 12.2, or the date
of actual commission of any other act or failure to perform any duty
or obligation by the Contractor or Owner, whichever occurs last.
ARTICLE 14 TERMINATION OR SUSPENSION OF THE CONTRACT
14.1 TERMINATION BY THE CONTRACTOR
14.1.1 The Contractor may terminate the Contract if the Work is stopped for
a period of 30 consecutive days through no act or fault of the Contractor
or a Subcontractor, Sub-subcontractor or their agents or employees or any
other persons or entities performing portions of the Work under direct or
indirect contract with the Contractor, for any of the following reasons:
.1 issuance of an order of a court or other public authority having
jurisdiction which requires all Work to be stopped;
.2 an act of government, such as a declaration of national emergency
which requires all Work to be stopped;
.3 because the Architect has not issued a Certificate for Payment and
has not notified the Contractor of the reason for withholding
certification as provided in Subparagraph 9.4.1, or because the Owner
has not made payment on a Certificate for Payment within the time
stated in the Contract Documents; or
.4 the Owner has failed to furnish to the Contractor promptly, upon
the Contractor's request, reasonable evidence as required by
Subparagraph 2.2.1.
14.1.2 The Contractor may terminate the Contract if, through no act or
fault of the Contractor or a Subcontractor, Sub-subcontractor or their
agents or employees or any other persons or entities performing portions of
the Work under direct or indirect contract with the Contractor, repeated
suspensions, delays or interruptions of the entire Work by the Owner as
described in Paragraph 14.3 constitute in the aggregate more than 100
percent of the total number of days scheduled for completion, or 120 days
in any 365-day period, whichever is less.
14.1.3 If one of the reasons described in Subparagraph 14.1.1 or 14.1.2
exists, the Contractor may, upon seven days' written notice to the Owner
and Architect, terminate the Contract and recover from the Owner payment
for Work executed and for proven loss with respect to materials, equipment,
tools, and construction equipment and machinery, including reasonable
overhead, profit and damages.
14.1.4 If the Work is stopped for a period of 60 consecutive days through
no act or fault of the Contractor or a Subcontractor or their agents or
employees or any other persons performing portions of the Work under
contract with the Contractor because the Owner has persistently failed to
fulfill the Owner's obligations under the Contract Documents with respect
to matters important to the progress of the Work, the Contractor may, upon
seven additional
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days' written notice to the Owner and the Architect, terminate the Contract
and recover from the Owner as provided in Subparagraph 14.1.3.
14.2 TERMINATION BY THE OWNER FOR CAUSE
14.2.1 The Owner may terminate the Contract if the Contractor:
.1 persistently or repeatedly refuses or fails to supply enough
properly skilled workers or proper materials;
.2 fails to make payment to Subcontractors for materials or labor in
accordance with the respective agreements between the Contractor and
the Subcontractors;
.3 persistently disregards laws, ordinances, or rules, regulations or
orders of a public authority having jurisdiction; or
.4 otherwise is guilty of substantial breach of a provision of the
Contract Documents.
14.2.2 When any of the above reasons exist, the Owner, upon certification
by the Architect that sufficient cause exists to justify such action, may
without prejudice to any other rights or remedies of the Owner and after
giving the Contractor and the Contractor's surety, if any, seven days'
written notice, terminate employment of the Contractor and may, subject to
any prior rights of the surety:
.1 take possession of the site and of all materials, equipment, tools,
and construction equipment and machinery thereon owned by the
Contractor;
.2 accept assignment of subcontracts pursuant to Paragraph 5.4; and
.3 finish the Work by whatever reasonable method the Owner may deem
expedient. Upon request of the Contractor, the Owner shall furnish to
the Contractor a detailed accounting of the costs incurred by the
Owner in finishing the Work.
14.2.3 When the Owner terminates the Contract for one of the reasons stated
in Subparagraph 14.2.1, the Contractor shall not be entitled to receive
further payment until the Work is finished.
14.2.4 If the unpaid balance of the Contract Sum exceeds costs of finishing
the Work, including compensation for the Architect's services and expenses
made necessary thereby, and other damages incurred by the Owner and not
expressly waived, such excess shall be paid to the Contractor. If such
costs and damages exceed the unpaid balance, the Contractor shall pay the
difference to the Owner. The amount to be paid to the Contractor or Owner,
as the case may be, shall be certified by the Architect, upon application,
and this obligation for payment shall survive termination of the Contract.
14.3 SUSPENSION BY THE OWNER FOR CONVENIENCE
14.3.1 The Owner may, without cause, order the Contractor in writing to
suspend, delay or interrupt the Work in whole or in part for such period of
time as the Owner may determine.
14.3.2 The Contract Sum and Contract Time shall be adjusted for increases
in the cost and time caused by suspension, delay or interruption as
described in Subparagraph 14.3.1. Adjustment of the Contract Sum shall
include profit. No adjustment shall be made to the extent:
.1 that performance is, was or would have been so suspended, delayed
or interrupted by another cause for which the Contractor is
responsible; or
.2 that an equitable adjustment is made or denied under another
provision of the Contract.
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14.4 TERMINATION BY THE OWNER FOR CONVENIENCE
14.4.1 The Owner may, at any time, terminate the Contract for the Owner's
convenience and without cause.
14.4.2 Upon receipt of written notice from the Owner of such termination
for the Owner's convenience, the Contractor shall:
.1 cease operations as directed by the Owner in the notice;
.2 take actions necessary, or that the Owner may direct, for the
protection and preservation of the Work; and
.3 except for Work directed to be performed prior to the effective
date of termination stated in the notice, terminate all existing
subcontracts and purchase orders and enter into no further
subcontracts and purchase orders.
14.4.3 In case of such termination for the Owner's convenience, the
Contractor shall be entitled to receive payment for Work executed, and
costs incurred by reason of such termination, along with reasonable
overhead and profit on the Work not executed.
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MODIFICATIONS TO AIA A-201 GENERAL CONDITIONS TO A-111 STANDARD FORM OF
AGREEMENT BETWEEN BIORELIANCE CORPORATION AS OWNER AND THE WHITING-TURNER
CONTRACTING COMPANY AS GENERAL CONTRACTOR, DATED JUNE 30, 1999, FOR BIORELIANCE
PRODUCTION FACILITY - BUILDING NO. 7, 9920 MEDICAL CENTER DRIVE, ROCKVILLE,
MARYLAND 20850.
1. Insert the following after the word "Sub-subcontractor" in the sixth line
of Subparagraph 1.1.2:
except as set forth in Paragraph 5.3 and Paragraph 5.4,
2. Add the following new Subparagraph 1.1.8:
1.1.8 KNOWLEDGE The terms "knowledge," "recognize," and "discover," their
respective derivatives, and similar terms in the Contract Documents, as
used in reference to the Contractor, shall be interpreted to mean that
which the Contractor knows (or should know), recognizes (or should
recognize), and discovers (or should discover) in exercising the care,
skill, and diligence required by the Contract Documents. Analogously, the
expression "reasonably inferable" and similar terms in the Contract
Documents shall be interpreted to mean reasonably inferable by a contractor
familiar with the Project and exercising the care, skill, and diligence
required of the Contractor by the Contract Documents.
3. Add the following at the end of Subparagraph 1.2.1:
In the event of inconsistencies within or between parts of the Contract
Documents, or between the Contract Documents and applicable standards,
codes, and ordinances, the Contractor shall be governed by the provisions
of Article 1 of the Contract. The terms and conditions of this Subparagraph
1.2.1, however, shall not relieve the Contractor of any of the obligations
set forth in Subparagraphs 3.2 and 3.7.
4. Add the following at the end of Subparagraph 1.2.2:
Instructions and other information furnished in the Specifications,
including, without limitation, items in connection with prefabricated or
pre-finished items, are not intended to supersede work agreements between
employers and employees. Should the Specifications conflict with such work
agreements, the work agreements shall be followed, provided such items are
provided and finished as specified. If necessary, such Work shall be
performed on the Project site, instead of at the shop, by appropriate labor
and in accordance with the requirements of the Drawings and Specifications.
5. Add the following clauses at the end of Subparagraph 1.2.3:
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.1 Whenever a product is specified in accordance with a Federal
Specification, an ASTM Standard, an American National Standards Institute
Specification, or other Association Standard, the Contractor shall present
an affidavit from the manufacturer when requested by the Architect or
required in the Specifications, certifying that the product complies with
the particular Standard or Specification. When requested by the Architect
or specified, support test data shall be submitted to substantiate
compliance.
.2 Whenever a product is specified or shown by describing proprietary
items, model numbers, catalog numbers, manufacturer, trade names, or
similar reference, and not specified in the Contract Documents or equal, no
substitutions may be made unless accepted prior to execution of the
Contract or if accepted as a Change in the Work in accordance with
Subparagraph 3.4.4-3.4.6. Where two or more products are shown or
specified, the Contractor has the option to use either of those shown or
specified.
6. Add the following at the end of Subparagraph 1.5.2:
Prior to execution of the Agreement, the Contractor and each Subcontractor
evaluated and satisfied themselves as to the conditions and limitations
under which the Work is to be performed, including, without limitation, (i)
the location, condition, layout, and nature of the Project site and
surrounding areas, (ii) generally prevailing climatic conditions, (iii)
anticipated labor supply and costs, (iv) availability and cost of
materials, tools, and equipment, and (v) other similar issues, saving and
excepting market conditions not reasonably foreseeable by the parties at
the execution of the Contract. The Owner assumes no responsibility or
liability for the physical condition or safety of the Project site or any
improvements located on the Project site. Except as set forth in Paragraph
10.3, the Contractor shall be solely responsible for providing a safe place
for the performance of the Work. The Owner shall not be required to make
any adjustment in either the Contract Sum or the Contract Time in
connection with any failure by the Contractor or any Subcontractor to have
complied with the requirements of this Subparagraph 1.5.2.
7. Add the following new Paragraph 1.7:
1.7 CONFIDENTIALITY
1.7.1 The Contractor warrants and represents that the Contractor shall not
knowingly or negligently communicate or disclose at any time to any person
or entity any information in connection with the Work or the Project,
except (i) with prior written consent of the Owner, (ii) information that
was in the public domain prior to the date of this Agreement, (iii)
information that becomes part of the
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public domain by publication or otherwise not due to any unauthorized act
or omission of the Contractor, or (iv) as may be required to perform the
Work or by any applicable law.
1.7.2 The Contractor, at any time upon the request of the Owner, shall
immediately return and surrender to the Owner all copies of any materials,
records, notices, memoranda, recordings, drawings, specifications, and
mock-ups and any other documents furnished by the Owner or the Architect to
the Contractor.
1.7.3 The Contractor shall cause all Subcontractors or any other person or
entity performing any services, or furnishing any materials or equipment,
for the Work to warrant and represent all items set forth in this Paragraph
1.7.
1.7.4 The representations and warranties contained in this Paragraph 1.7
shall survive the complete performance of the Work or earlier termination
of this Agreement.
8. Replace the last sentence of Subparagraph 2.1.1 with the following:
The term "Owner" refers to BioReliance Corporation, a Delaware Corporation.
George Robertson and John A. Gilly are hereby designated by the Owner as
its representatives and are authorized to act on behalf of the Owner,
unless a new representative is subsequently designated in writing by the
Owner.
9. Replace Subparagraph 2.2.5 in its entirety with the following:
2.2.5 The Contractor will be furnished, free of charge,
one (1) copy of the Drawings and Project Manuals. The Contractor will be
furnished, at its sole cost and expense, any additional copies.
10. Delete language in the third through the fifth lines of Subparagraph 2.4.1,
beginning with the words "the Owner may after such seven-day period" and
ending with the words "commence and continue to correct any deficiencies."
11. Add the following new Paragraph 2.5:
2.5 EXTENT OF OWNER RIGHTS
2.5.1 The rights stated in this Article 2 and elsewhere in the Contract
Documents are cumulative and not in limitation of any rights of the Owner
(i) granted in the Contract Documents, (ii) at law or (iii) in equity.
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2.5.2 In no event shall the Owner have control over, charge of, or any
responsibility for construction means, methods, techniques, sequences, or
procedures or for safety precautions and programs in connection with the
Work, notwithstanding any of the rights and authority granted the Owner in
the Contract Documents.
12. Insert the words "the design information contained in" after the word "in"
in the fifth line of Subparagraph 3.2.1
Add the following clauses to Subparagraph 3.2.1:
.1 [Intentionally omitted]
.2 The Contractor shall, therefore, satisfy itself as to the accuracy
of all grades, elevations, dimensions, and locations. In all cases of
interconnection of its Work with existing or other work, it shall
verify at the site all dimensions relating to such existing or other
work. Any errors due to the Contractor's failure to so verify all such
grades, elevations, dimensions, or locations shall be promptly
rectified by the Contractor without any additional cost to the Owner.
13. Delete the last sentence from Subparagraph 3.3.1.
14. Add the following at the end of Subparagraph 3.4.2:
Material and/or equipment totally meeting a non-proprietary or equal
specification shall not be considered a "substitution" under the Contract
Documents. If, the Contractor desires to submit an alternate product or
method in lieu of what has been specified or shown in the Contract
Documents, the following provisions apply:
.1 The Contractor must submit to the Architect and the Owner (i)
a full explanation of the proposed substitution and submittal of
all supporting data, including technical information, catalog cuts,
warranties, test results, installation instructions, operating
procedures, and other like information necessary for a complete
evaluation of the substitution; (ii) a written explanation of the
reasons the substitution is advantageous and necessary, including the
benefits to the Owner and the Work in the event the substitution is
acceptable; (iii) the adjustment, if any, in the Contract Sum, in the
event the substitution is acceptable; (iv) the adjustment, if any, in
the time of completion of the Contract and the construction schedule
in the event the substitution is acceptable; and (v) an affidavit
stating that (a) the proposed substitution conforms to and meets all
the requirements of
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<PAGE> 69
\
the pertinent Specifications and the requirements shown on the
Drawings, and (b) the Contractor accepts the warranty and correction
obligations in connection with the proposed substitution as if
originally specified by the Architect. Proposals for substitutions
shall be submitted in triplicate to the Architect in sufficient time
to allow the Architect no less than ten (10) working days for review.
No substitutions will be considered or allowed without the
Contractor's submittal of complete substantiating data and information
as stated hereinbefore.
.2 Substitutions and alternates may be rejected without
explanation and will be considered only under one or more of the
following conditions: (i) the proposal is required for compliance with
interpretation of code requirements or insurance regulations then
existing; (ii) specified products are unavailable through no fault of
the Contractor; (iii) subsequent information discloses the inability
of specified products to perform properly or to fit in the designated
space; (iv) the manufacturer/fabricator refuses to certify or
guarantee the performance of the specified product as required; and
(v) when in the judgment of the Owner or the Architect, a substitution
would be substantially in the Owner's best interests, in terms of
cost, time, or other considerations.
.3 Whether or not any proposed substitution is accepted by the
Owner or the Architect, the Contractor shall reimburse the Owner for
any reasonable fees charged by the Architect or other consultants for
evaluating each proposed substitute.
15. Add the following new Subparagraph 3.4.4:
3.4.4 The Contractor shall only employ or use labor in connection with the
Work capable of working harmoniously with all trades, crafts, and any other
individuals associated with the Project. The Contractor shall also use best
efforts to minimize the likelihood of any strike, work stoppage, or other
labor disturbance.
.1 If the Work is to be performed by trade unions, the
Contractor shall use its best efforts to make all necessary
arrangements to reconcile, without delay, damage, or cost to the Owner
and without recourse to the Architect or the Owner, any conflict
between the Contract Documents and any agreements or regulations of
any kind at any time in force among members or councils that regulate
or distinguish the activities that shall not be included in the work
of any particular trade.
.2 In case the progress of the Work is affected by any undue
delay in furnishing or installing any items or materials or equipment
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required under the Contract Documents because of such conflict
involving any such labor agreement or regulation, the Owner may
require that other material or equipment of equal kind and quality be
provided pursuant to a Change Order or Construction Change Directive.
16. Replace the word "may" with the word "shall" in the fourth line of
Subparagraph 3.5.1.
17. Add the following new Subparagraph 3.5.2:
3.5.2 The Contractor agrees to assign to the Owner at the time of final
completion of the Work any and all manufacturer's warranties relating to
materials and labor used in the Work and further agrees to perform the Work
in such manner so as to preserve any and all such manufacturer's
warranties.
18. Replace Subparagraph 3.7.1 with the following:
3.7.1 Except as set forth in Subparagraph 2.2.2, the Contractor shall
secure, pay for, and, as soon as practicable, furnish the Owner with copies
or certificates of all permits and fees, licenses, and inspections
necessary for the proper execution and completion of the Work.
19. Insert the words "and all other requirements" between the words "orders"
and "of" in the first line of Subparagraph 3.7.2.
Add the following language at the end of Subparagraph 3.7.2:
The Contractor shall procure and obtain all bonds required of the
Contractor by the municipality in which the Project is located or any other
public or private body with jurisdiction over the Project. In connection
with such bonds, the Contractor shall prepare all applications, supply all
necessary backup material, and furnish the surety with any required
personal undertakings. The Contractor shall also obtain and pay all charges
for all approvals for street closings, parking meter removal, and other
similar matters as may be necessary or appropriate from time to time for
the performance of the Work.
20. [Intentionally omitted]
21. Add the following subparagraphs to Paragraph 3.10:
3.10.4 The construction schedule shall be in a detailed precedence-style
critical path management ("CPM") or primavera-type format satisfactory to
the Owner and the Architect that shall also (i) provide a graphic
representation of all activities and events that will occur during
performance of the Work; (ii) identify
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each phase of construction and occupancy; and (iii) set forth dates that
are critical in ensuring the timely and orderly completion of the Work in
accordance with the requirements of the Contract Documents (hereinafter
referred to as "Milestone Dates"). Upon review and acceptance by the Owner
and the Architect of the Milestone Dates, the construction schedule shall
be deemed part of the Contract Documents and attached to the Agreement as
Exhibit A. If not accepted, the construction schedule shall be promptly
revised by the Contractor in accordance with the recommendations of the
Owner and the Architect and resubmitted for acceptance. The Contractor
shall monitor the progress of the Work for conformance with the
requirements of the construction schedule and shall promptly advise the
Owner of any delays or potential delays. The accepted construction schedule
shall be updated to reflect actual conditions (sometimes referred to in
these Supplementary Conditions as "progress reports") as set forth in
Subparagraph 3.10.1 or if requested by either the Owner or the Architect.
In the event any progress report indicates any delays, the Contractor shall
propose an affirmative plan to correct the delay, including overtime and/or
additional labor, if necessary. In no event shall any progress report
constitute an adjustment in the Contract Time, any Milestone Date, or the
Contract Sum unless any such adjustment is agreed to by the Owner and
authorized pursuant to Change Order.
3.10.5 In the event the Owner determines that the performance of the Work,
as of a Milestone Date, has not progressed or reached the level of
completion required by the Contract Documents, and any such delay is not
solely the result of (i) owner-caused delays or (ii) events not within the
control of and/or reasonably forseeable by the Contractor, the Owner shall
have the right to order the Contractor to take corrective measures
necessary to expedite the progress of construction, including, without
limitation, (i) working additional shifts or overtime, (ii) supplying
additional manpower, equipment, and facilities, and (iii) other similar
measures (hereinafter referred to collectively as "Extraordinary
Measures"). Such Extraordinary Measures shall continue until the progress
of the Work complies with the stage of completion required by the Contract
Documents. The Owner's right to require Extraordinary Measures is solely
for the purpose of ensuring the Contractor's compliance with the
construction schedule.
.1 The Contractor shall not be entitled to an adjustment in the
Contract Sum in connection with Extraordinary Measures required by the
Owner under or pursuant to this Subparagraph 3.10.5.
.2 The Owner may exercise the rights furnished the Owner
under or pursuant to this Subparagraph 3.10.5 as frequently as the
Owner deems necessary to ensure that the Contractor's performance of
the Work will comply with any Milestone Date or completion date set
forth in the Contract Documents.
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3.10.6 The Owner shall have the right to direct a postponement or
rescheduling of any date or time for the performance of any part of the
Work that may interfere with the operation of the Owner's premises or any
tenants or invitees thereof. The Contractor shall, upon the Owner's
request, reschedule any portion of the Work affecting operation of the
premises during hours when the premises are not in operation. Any
postponement, rescheduling, or performance of the Work under this
Subparagraph 3.10.6 may be grounds for an extension of the Contract Time,
if permitted under Subparagraph 8.3.1, and an equitable adjustment in the
Contract Sum if (i) the performance of the Work was properly scheduled by
the Contractor in compliance with the requirements of the Contract
Documents, and (ii) such rescheduling or postponement is required for the
convenience of the Owner.
22. Insert the following after the word "professional" in the ninth line of
Subparagraph 3.12.10:
and who shall comply with reasonable requirements of the Owner regarding
qualifications and insurance.
23. Add the following subparagraphs to Paragraph 3.13:
3.13.2 Only materials and equipment that are to be used directly in the
Work shall be brought to and stored on the Project site by the Contractor.
After equipment is no longer required for the Work, it shall be promptly
removed from the Project site. Protection of construction materials and
equipment stored at the Project site from weather, theft, damage, and all
other adversity is solely the responsibility of the Contractor. The
Contractor shall ensure that the Work, at all times, is performed in a
manner that affords reasonable access, both vehicular and pedestrian, to
the site of the Work and all adjacent areas. The Work shall be performed,
to the fullest extent reasonably possible, in such a manner that public
areas adjacent to the site of the Work shall be free from all debris,
building materials, and equipment likely to cause hazardous conditions.
3.13.3 The Contractor and any entity for whom the Contractor is responsible
shall not erect any sign on the Project site without the prior written
consent of the Owner, which may be withheld in the sole discretion of the
Owner.
3.13.4 Without limitation of any other provision of the Contract Documents,
the Contractor shall use best efforts to minimize any interference with the
occupancy or beneficial use of (i) any areas and buildings adjacent to the
site of the Work and (ii) the Building in the event of partial occupancy,
as more specifically described in Paragraph 9.9. Without prior approval of
the Owner, the Contractor shall not
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permit any workers to use any existing facilities at the Project site,
including, without limitation, lavatories, toilets, entrances, and parking
areas other than those designated by the Owner.
.1 Without limitation of any other provision of the
Contract Documents, the Contractor shall use its best efforts to
comply with all rules and regulations promulgated by the Owner in
connection with the use and occupancy of the Project site and the
Building, as amended from time to time. The Contractor shall
immediately notify the Owner in writing if during the performance of
the Work, the Contractor finds compliance of any portion of such rules
and regulations to be impracticable, setting forth the problems of
such compliance and suggesting alternatives through which the same
results intended by such portions of the rules and regulations can be
achieved. The Owner may, in the Owner's sole discretion, adopt such
suggestions, develop new alternatives, or require compliance with the
existing requirements of the rules and regulations.
.2 The Contractor shall also comply with all insurance
requirements and collective bargaining agreements applicable to use
and occupancy of the Project site and the Building.
24. Delete all language beginning with the words "and to the extent" beginning
in the first line of Subparagraph 3.18.1 and continuing through the
cross-reference to "Paragraph 11.3" in the second line.
25. Add the following new Subparagraphs 3.18.3 and 3.18.4:
3.18.3 The Contractor's indemnity obligations under the Paragraph 3.18
shall also specifically include, without limitation, all fines, penalties,
damages, liability, costs, expenses (including, without limitation,
reasonable attorneys' fees), and punitive damages (if any) arising out of,
or in connection with, any (i) violation of or failure to comply with any
law, statute, ordinance, rule, regulation, code, or requirement of a public
authority that bears upon the performance of the Work by the Contractor, a
Subcontractor, or any person or entity for whom either is responsible, (ii)
means, methods, procedures, techniques, or sequences of execution or
performance of the Work, and (iii) failure to secure and pay for permits,
fees, approvals, licenses, and inspections as required under the Contract
Documents, or any violation of any permit or other approval of a public
authority applicable to the Work, by the Contractor, a Subcontractor, or
any person or entity for whom either is responsible.
3.18.4 The Contractor shall indemnify and hold harmless all of the
Indemnitees
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from and against any costs and expenses (including reasonable attorneys'
fees) incurred by any of the Indemnitees in enforcing any of the
Contractor's defense, indemnity, and hold-harmless obligations under this
Contract.
26. Add the following at the end of Subparagraph 4.1.1:
The term Architect refers to the firm of Kling-Lindquist. Any reference in
the Contract Documents to the Architect's taking action or rendering a
decision within a "reasonable time" is understood to mean no more than two
(2) weeks.
27. Insert the words ", in connection with administration of the Contract,"
after the word "effect," in the first line of Subparagraph 4.2.13.
28. Add the following at the end of the first sentence in Subparagraph 4.3.2:
; provided, however, that the claimant shall use its best efforts to
furnish the Architect and the other party, as expeditiously as possible,
with notice of any Claim including, without limitation, those in connection
with concealed or unknown conditions, once such claim is recognized, and
shall cooperate with the Architect and the party against whom the claim is
made in any effort to mitigate the alleged or potential damages, delay, or
other adverse consequences arising out of the condition that is the cause
of such a Claim.
Add the following at the end of Subparagraph 4.3.2:
Claims may also be reserved in writing within the time limits set forth in
this Subparagraph 4.3.2. If a Claim is reserved, the Resolution of Claims
and Disputes procedures described in Paragraph 4.4 shall not commence until
a written notice from the claimant is received by the Architect. Any notice
of Claim or reservation of Claim must clearly identify the alleged cause
and the nature of the Claim and include data and information then available
to the claimant that will facilitate prompt verification and evaluation of
the Claim.
29. Add the following at the end of Subparagraph 4.3.4:
No adjustment in the Contract Time or Contract Sum shall be permitted,
however, in connection with a concealed or unknown condition that does not
differ materially from those conditions disclosed or that reasonably should
have been disclosed by the Contractor's (i) prior inspections, tests,
reviews, and preconstruction services for the Project, or (ii) inspections,
tests, reviews, and preconstruction services that a reasonably-prudent
Contractor would make or should have made under the same or similar
circumstances.
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30. [Intentionally omitted]
31. Add the following at the end of the first sentence in Subparagraph 4.4.1:
if the claimant first recognizes the claim prior to the date of final
payment.
32. Delete Paragraph 4.5 in its entirety.
33. Delete Paragraph 4.6 in its entirety.
34. Replace the first sentence of Subparagraph 5.2.1 with the following:
No later than thirty (30) days subsequent to the full execution of the
Agreement, the Contractor shall furnish the Owner and the Architect, in
writing, with (i) the name, trade, and subcontract amount for each
Subcontractor and (ii) the names of all persons or entities proposed as
manufacturers of the products identified in the Specifications (including
those who are to furnish materials or equipment fabricated to a special
design) and, where applicable, the name of the installing Subcontractor.
35. Add the following new Subparagraph 5.3.2:
5.3.2 All subcontracts shall be in writing in form and substance
substantially similar to the Contractor's standard form subcontract,
attached to the Agreement and made a part thereof as Exhibit J, and shall
specifically provide that the Owner is an intended third-party beneficiary
of such subcontract.
36. Replace Subparagraph 5.4.2 in its entirety with the following:
5.4.2 If the Work in connection with a subcontract has been suspended for
more than thirty (30) days after termination of the Contract by the Owner
pursuant to paragraph 14.2 and the Owner accepts assignment of such
subcontract, the Subcontractor's compensation shall be equitably adjusted
for any increase in direct costs incurred by such Subcontractor as a result
of the suspension.
37. Add the following new Subparagraph 5.4.3:
5.4.3 Each subcontract shall specifically provide that the Owner shall only
be responsible to the Subcontractor for those obligations of the Contractor
that accrue subsequent to the Owner's exercise of any rights under this
conditional assignment.
38. Add the following new Subparagraph 6.1.5:
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6.1.5 The Contractor accepts assignment of, and liability for, all purchase
orders and other agreements for procurement of materials and equipment that
are identified as part of the Contract Documents, except for materials and
equipment that may be purchased by the Owner. The Contractor shall be
responsible for such prepurchased items, if any, as if the Contractor were
the original purchaser. The Contract Sum includes, without limitation, all
costs and expenses in connection with delivery, storage, insurance,
installation, and testing of items covered in any assigned purchase orders
or agreements. All warranty and correction of the Work obligations under
the Contract Documents shall also apply to any prepurchased items, unless
the Contract Documents specifically provide otherwise.
39. Add the following at the end of Subparagraph 7.1.3:
Except as permitted in Paragraph 7.3 and Subparagraph 9.7.2, a change in
the Contract Sum or the Contract Time shall be accomplished only by Change
Order. Accordingly, no course of conduct or dealings between the parties,
nor express or implied acceptance of alterations or additions to the Work,
and no claim that Owner has been unjustly enriched by any alteration of or
addition to the Work, whether or not there is, in fact, any unjust
enrichment to the Work, shall be the basis of any claim to an increase in
any amounts due under the Contract Documents or a change in any time period
provided for in the Contract Documents.
40. Add the following new Subparagraph 7.2.3:
7.2.3 Agreement on any Change Order shall constitute a final settlement of
all materials relating to the change in the Work that is the subject of the
Change Order, including, but not limited to, all direct and indirect costs
associated with such change and any and all adjustments to the Contract Sum
and the construction schedule.
41. Add the following at the end of Clause 7.3.6.3:
Unless otherwise established in the Contract, (i) the rental value of the
Contractor's own equipment shall be not more than one hundred percent
(100%) of the rates in the current edition of "Compilation of Rental Rates
for Construction Equipment," prepared by Associated Equipment Distributors,
Oak Brook, Illinois, and (ii) the aggregate amounts charged to the owner
for such equipment shall not exceed ninety percent (90%) of the fair market
value.
42. Replace all language in Subparagraph 8.3.1 after the word "Order" in the
fifth line with the following:
12
<PAGE> 77
to the extent such delay will prevent the Contractor from achieving
Substantial Completion within the Contract Time and if the performance of
the Work is not, was not, or would not have been delayed by any other cause
for which the Contractor is not entitled to an extension in the Contract
Time under the Contract Documents. The Contractor further acknowledges and
agrees that adjustments in the Contract Time will be permitted for a delay
only to the extent such delay (i) is not caused by the Contractor, (ii)
could not be limited or avoided by the Contractor's timely notice to the
Owner of the delay, and (iii) is of a duration not less than one (1) day.
43. Replace Subparagraph 8.3.3 in its entirety with the following:
8.3.3 Notwithstanding anything to the contrary in the Contract Documents,
an extension in the Contract Time, to the extent permitted under
Subparagraph 8.3.1, shall be the sole remedy of the Contractor for any (i)
delay in the commencement, prosecution, or completion of the Work, (ii)
hindrance or obstruction in the performance of the Work, (iii) loss of
productivity, or (iv) other similar claims (collectively referred to in
this Subparagraph 8.3.3 as "Delays") whether or not such Delays are
foreseeable, unless a Delay is caused by acts of the Owner or Architect
constituting active interference with the Contractor's performance of the
Work, and only to the extent such acts continue after the Contractor
furnishes the Owner with notice of such interference. In no event shall the
Contractor be entitled to, in connection with any Delay, recovery of
consequential damages, lost opportunity costs, impact damages, or other
similar remuneration.
8.3.4 If the Contractor submits a progress report indicating, or otherwise
expresses an intention to achieve, completion of the Work prior to any
completion date required by the Contract Documents or expiration of the
Contract Time, no liability of the Owner to the Contractor for any failure
of the Contractor to so complete the Work shall be created or implied.
44. Replace the words "Before the first Application for Payment" in the first
line of Subparagraph 9.2.1 with the following:
Upon full execution of the Agreement.
45. Add the following new Subparagraph 9.2.2:
9.2.2 The Contractor and each Subcontractor shall prepare a trade payment
breakdown for the Work for which each is responsible, such breakdown being
submitted on a uniform standardized form approved by the Architect and
Owner. The form shall be divided in detail sufficient to exhibit areas,
floors, and/or
13
<PAGE> 78
sections of the Work, and/or by convenient units and shall be updated as
required by either the Owner or the Architect as necessary to reflect (i)
description of Work (listing labor and material separately), (ii) total
value, (iii) percent of the Work completed to date, (iv) value of Work
completed to date, (v) percent of previous amount billed, (vi) previous
amount billed, (vii) current percent completed, and (viii) value of Work
completed to date. Any trade breakdown that fails to include sufficient
detail, is unbalanced, or exhibits "front-loading" of the value of the Work
shall be rejected. If trade breakdown had been initially approved and
subsequently used but later was found improper for any reason, sufficient
funds shall be withheld from future Applications for Payment to ensure an
adequate reserve (exclusive of normal retainage) to complete the Work.
46. Insert the following after the word "payment" in the first line of
Subparagraph 9.3.1:
, unless otherwise required by the Agreement,
Add the following clause at the end of Subparagraph 9.3.1:
.3 Each Application for Payment shall be accompanied by the following,
all in form and substance satisfactory to the Owner: (i) a current
Contractor's lien waiver and duly executed and acknowledged sworn statement
showing all Subcontractors and material suppliers with whom the Contractor
has entered into subcontracts, the amount of each such subcontract, the
amount requested for any Subcontractor and material supplier in the
requested progress payment, and the amount to be paid to the Contractor
from such progress payment, together with similar sworn statements from all
such Subcontractors and material suppliers; (ii) duly executed waivers of
mechanics' and material suppliers' liens from all Subcontractors and, when
appropriate, from material suppliers and lower tier Subcontractors
establishing payment or satisfaction of payment of all amounts requested by
the Contractor on behalf of such entities or persons in any previous
Application for Payment; and (iii) all information and materials required
to comply with the requirements of the Contract Documents or reasonably
requested by the Owner or the Architect.
47. Add the following at the end of Subparagraph 9.3.2:
The Contractor shall also comply with the following specific requirements:
.1 The aggregate cost of materials stored off site shall not exceed
One Hundred Thousand and 00/100 Dollars ($100,000.00) at any time without
written approval of the Owner.
.2 Title to such materials shall be vested in the Owner, as
evidenced by documentation satisfactory in form and substance to the Owner
and the Owner's Construction Lender, including, without limitation,
recorded financing
14
<PAGE> 79
statements, UCC filings, and UCC searches.
.3 With each Application for Payment, the Contractor shall submit to
the Owner a written list identifying each location where materials are
stored off the Project site and the value of materials at each location.
The Contractor shall procure insurance satisfactory to the Owner for
materials stored off the Project site in an amount not less than the total
value thereof.
.4 The consent of any surety shall be obtained to the extent
required prior to payment for any materials stored off the Project site.
.5 Representatives of the Owner and the Lender shall have the right
to make inspections of the storage areas at any time.
.6 Such materials shall be (i) protected from diversion,
destruction, theft, and damage to the satisfaction of the Owner and the
Lender, (ii) specifically marked for use on the Project, and (iii)
segregated from other materials at the storage facility.
48. Add the following clauses at the end of Subparagraph 9.3.3:
.1 The Contractor further expressly undertakes to defend the
Indemnitees, at the Contractor's sole expense, against any actions,
lawsuits, or proceedings brought against the Indemnitees as a result of
liens filed against the Work, the site of any of the Work, the Project site
and any improvements thereon, payments due the Contractor, or any portion
of the property of any of the Indemnitees (referred to collectively as
"liens" in this Subparagraph 9.3.3). The Contractor hereby agrees to
indemnify and hold the Indemnitees harmless against any such liens or
claims of lien and agrees to pay any judgment or lien resulting from any
such actions, lawsuits, or proceedings.
.2 The Owner shall release any payments withheld due to a lien or
claim of lien if the Contractor obtains security acceptable to the Owner or
a lien bond that is (i) issued by a surety acceptable to the Owner, (ii) in
form and substance satisfactory to the Owner, and (iii) in an amount not
less than One Hundred percent (100%) of such lien claim. By posting a lien
bond or other acceptable security, however, the Contractor shall not be
relieved of any responsibilities or obligations under this Subparagraph
9.3.3, including, without limitation, the duty to defend and indemnify the
Indemnitees. The cost of any premiums incurred in connection with such
bonds and security shall be the responsibility of the Contractor and shall
not be part of, or cause any adjustment to the Contract Sum.
15
<PAGE> 80
.3 Notwithstanding the foregoing, Owner reserves the right to settle
any disputed mechanic's or material supplier's lien claim by payments to
the lien claimant or by such other means as the Owner, in the Owner's sole
discretion, determines is the most economical or advantageous method of
settling the dispute. The Contractor shall promptly reimburse the Owner,
upon demand, for any payments so made.
49. Add the following at the end of Subparagraph 9.6.2:
Notwithstanding anything in this Subparagraph 9.6.2 to the contrary, the
Owner may elect, in the Owner's sole discretion and after fifteen (15) days
written notice to the Contractor, to make any payment requested by the
Contractor on behalf of a subcontractor of any tier jointly payable to the
Contractor and such subcontractor. The Contractor and such subcontractor
shall be responsible for the allocation and disbursement of funds included
as part of any such joint payment. In no event shall any joint payment be
construed to create any (i) contract between the Owner and a subcontractor
of any tier, (ii) obligations from the Owner to such subcontractor, or
(iii) rights in such subcontractor against the Owner.
50. Add the following new Subparagraph 9.7.2:
9.7.2 If the Owner is entitled to reimbursement or payment from the
Contractor under or pursuant to the Contract Documents, such payment shall
be made promptly upon demand by the Owner. Notwithstanding anything
contained in the Contract Documents to the contrary, if the Contractor
fails to promptly make any payment due the Owner, or if the Owner incurs
any costs and expenses to cure any default of the Contractor or to correct
defective Work, the Owner shall have an absolute right to offset such
amount against the Contract Sum and may, in the Owner's sole discretion,
elect either to (i) deduct an amount equal to that which the Owner is
entitled from any payment then or thereafter due the Contractor from the
Owner, or (ii) issue a written notice to the Contractor reducing the
Contract Sum by an amount equal to that which the Owner is entitled.
51. Add the following at the end of Subparagraph 9.8.1:
; provided, however, that as a condition precedent to Substantial
Completion, the Owner has received all certificates of occupancy and any
other permits, approvals, licenses, and other documents from any
governmental authority having jurisdiction thereof necessary for the
beneficial occupancy of the Project, excepting any such certificates of
occupancy and any other permits, approvals, licenses, and other documents
withheld by any governmental authority through no fault of the Contractor.
16
<PAGE> 81
52. Add the following at the end of Subparagraph 9.10.1:
All warranties and guarantees required under or pursuant to the Contract
Documents shall be assembled and delivered by the Contractor to the
Architect as part of the final Application for Payment. The final
Certificate for Payment will not be issued by the Architect until all
warranties and guarantees have been received and accepted by the Owner.
53. Add the following at the end of Subparagraph 10.2.3:
The Contractor shall also be responsible, at the Contractor's sole cost and
expense, for all measures necessary to protect any property adjacent to the
Project and improvements therein. Any damage to such property or
improvements shall be promptly repaired by the Contractor.
54. Add the following at the end of Subparagraph 10.2.4:
When use or storage of explosives or other hazardous materials or equipment
or unusual construction methods are necessary, the Contractor shall give
the Owner and the Architect reasonable advance notice.
55. Add the following new Subparagraph 10.2.8 and 10.2.9:
10.2.8 When all or a portion of the Work is suspended for any reason, the
Contractor shall securely fasten down all coverings and protect the Work,
as necessary, from injury by any cause.
10.2.9 The Contractor shall promptly report in writing to the Owner and
Architect all accidents arising out of or in connection with the Work that
cause death, personal injury, or property damage, giving full details and
statements of any witnesses. In addition, if death, serious personal
injuries, or serious damages are caused, the accident shall be reported
immediately by telephone or messenger to the Owner and the Architect.
56. Replace the words "material or substance" in the second line of
Subparagraph 10.3.1 with the following:
concealed and undisclosed hazardous material or substance
57. Add the following at the end of Subparagraph 10.3.2:
The term "rendered harmless" shall be interpreted to mean that levels of
asbestos and polychlorinated biphenyls are less than any applicable
exposure standards set forth in OSHA regulations. In no event, however,
shall the Owner have any
17
<PAGE> 82
responsibility for any substance or material that is brought to the Project
site by the Contractor, any Subcontractor, any material supplier, or any
entity for whom any of them is responsible. The Contractor agrees not to
use any fill or other materials to be incorporated into the Work that are
hazardous, toxic, or made up of any items that are hazardous or toxic.
58. [Intentionally omitted]
59. Add the following language to the end of Clause .7 in Subparagraph 11.1.1:
, which coverage shall be maintained for no less than two (2) years
following final payment.
60. Replace Subparagraphs 11.1.2 and 11.1.3 with the following:
11.1.2 The Contractor shall, for the protection and benefit of the
Indemnitees and the Contractor and as part of the Contractor's efforts to
satisfy the obligations set forth in Subparagraph 11.1.1, procure, pay for,
and maintain in full force and effect, at all times during the performance
of the Work until final acceptance of the Work or for such duration as
required, policies of insurance issued by a responsible carrier or carriers
acceptable to the Owner, and in form and substance reasonably satisfactory
to the Owner, which afford the coverages set forth in the Schedule of
Insurance, attached to the Agreement and made a part thereof as Exhibit G.
All such insurance shall be written on an occurrence basis. Information
concerning reduction of coverage shall be furnished by the Contractor
promptly.
11.1.3 The Contractor hereby agrees to deliver to the Owner, within ten
(10) days of the date of the Owner-Contractor Agreement and prior to
bringing any equipment or personnel onto the site of the Work or the
Project site, certified copies of all insurance policies procured by the
Contractor under or pursuant to this Paragraph 11.1 or, with consent of the
Owner, Certificates of Insurance in form and substance satisfactory to the
Owner evidencing the required coverages with limits not less than those
specified in Exhibit G to the Agreement. The coverage afforded under any
insurance policy obtained under or pursuant to this Paragraph 11.1 shall be
primary to any valid and collectible insurance carried separately by any of
the Indemnitees. Furthermore, all policies and Certificates of Insurance
shall expressly provide that no less than thirty (30) days' prior written
notice shall be given the Owner in the event of material alteration,
cancellation, non-renewal, or expiration of the coverage contained in such
policy or evidenced by such certified copy or Certificate of Insurance.
11.1.4 In no event shall any failure of the Owner to receive certified
copies or
18
<PAGE> 83
certificates of policies required under Paragraph 11.1 or to demand receipt
of such certified copies or certificates prior to the Contractor's
commencing the Work be construed as a waiver by the Owner or the Architect
of the Contractor's obligations to obtain insurance pursuant to this
Article 11. The obligation to procure and maintain any insurance required
by this Article 11 is a separate responsibility of the Contractor and
independent of the duty to furnish a certified copy or certificate of such
insurance policies.
11.1.5 If the Contractor fails to purchase and maintain, or require to be
purchased and maintained, any insurance required under this Paragraph 11.1,
the Owner may, but shall not be obligated to, upon five (5) days' written
notice to the Contractor, purchase such insurance on behalf of the
Contractor and shall be entitled to be reimbursed by the Contractor upon
demand.
11.1.6 When any required insurance, due to the attainment of a normal
expiration date or renewal date, shall expire, the Contractor shall supply
the Owner with Certificates of Insurance and amendatory riders or
endorsements that clearly evidence the continuation of all coverage in the
same manner, limits of protection, and scope of coverage as was provided by
the previous policy. In the event any renewal or replacement policy, for
whatever reason obtained or required, is written by a carrier other than
that with whom the coverage was previously placed, or the subsequent policy
differs in any way from the previous policy, the Contractor shall also
furnish the Owner with a certified copy of the renewal or replacement
policy unless the Owner provides the Contractor with prior written consent
to submit only a Certificate of Insurance for any such policy. All renewal
and replacement policies shall be in form and substance satisfactory to the
Owner and written by carriers acceptable to the Owner.
11.1.7 Any aggregate limit under the Contractor's liability insurance
shall, by endorsement, apply to this project separately.
11.1.8 The Contractor shall cause each Subcontractor to (i) procure
insurance reasonably satisfactory to the Owner and (ii) name the
Indemnitees as additional insureds under the Subcontractor's comprehensive
general liability policy. The additional insured endorsement included on
the Subcontractor's comprehensive general liability policy shall state that
coverage is afforded the additional insureds with respect to claims arising
out of operations performed by or on behalf of the Contractor. If the
additional insureds have other insurance that is applicable to the loss,
such other insurance shall be on an excess or contingent basis. The amount
of the insurer's liability under this insurance policy shall not be reduced
by the existence of such other insurance.
61. Delete Paragraph 11.3 in its entirety.
19
<PAGE> 84
62. Replace any reference to the words "as fiduciary" in paragraph 11.4 with
the words "in good faith."
63. Add the following at the end of Clause 11.4.1.1:
Property insurance provided by the Owner shall not cover any tools,
apparatus, machinery, scaffolding, hoists, forms, staging, shoring, and
other similar items commonly referred to as construction equipment that may
be on the site and the capital value of which is not included in the Work.
The Contractor shall make its own arrangements for any insurance it may
require on such construction equipment. Any such policy obtained by the
Contractor under this Subparagraph 11.4.1 shall include a waiver of
subrogation in accordance with the requirements of Subparagraph 11.4.7.
64. Add the following at the end of Clause 11.4.1.3:
Notwithstanding, if the cause of any loss payment under such insurance is
the negligence of the Contractor, then the Contractor shall pay such
deductible.
65. Add the following at the end of the last sentence of Subparagraph 11.4.3:
to the extent (i) of actual recovery of any insurance proceeds under
policies obtained pursuant to this Subparagraph 11.4.3 and (ii) permitted
by the applicable policies of insurance.
66. Replace the words "copy of each policy that includes" beginning in the
first line of Subparagraph 11.4.6 with the words "certificate of insurance
evidencing such."
67. Begin Subparagraph 11.4.7 with the following words:
If permitted by the Owner's and Contractor's insurance companies, without
penalties,
Delete language in the second line beginning with the words "(2) the
Architect" and ending with the words "agents and employees" in the third
line.
Replace the words "covered by" in the fourth line of Subparagraph 11.4.7
with the following words:
of actual recovery of any insurance proceeds under any
68. Delete Paragraph 11.5 in its entirety.
20
<PAGE> 85
69. [Intentionally omitted]
70. Add the following new Paragraph 11.6:
11.6 GENERAL REQUIREMENTS
11.6.1 All insurance coverage procured by the Contractor shall be provided
by insurance companies having policy holder ratings no lower than "A" and
financial ratings not lower than "XII" in the Best's Insurance Guide,
latest edition in effect as of the date of the Contract, and subsequently
in effect at the time of renewal of any policies required by the Contract
Documents.
11.6.2 If the Owner or the Contractor is damaged by the failure of the
other party to purchase or maintain insurance required under Article 11,
then the party who failed to purchase or maintain the insurance shall bear
all reasonable costs (including attorneys' fees and court and settlement
expenses) properly attributable thereto.
71. [Intentionally omitted]
72. Delete all language beginning with the words "and to" in the eighth line of
Clause 12.2.2.1, and continuing through the word "warranty."
73. Replace Clause 12.2.2.3 with the following:
Upon completion of any Work under or pursuant to this Paragraph 12.2 to
correct recurring and/or repetitive failures of any portion of the Work,
the one (1)-year correction period in connection with the Work requiring
correction shall be renewed and recommence relative to that Work only.
74. Insert the following after the phrase "Subparagraph 13.2.2," in the fourth
line of Subparagraph 13.2.1:
or set forth elsewhere in the Contract Documents,
75. [Intentionally omitted]
76. Add the following at the beginning of Subparagraph 13.4.1:
Except as expressly provided in the Contract Documents,
77. Add the following at the end of Subparagraph 13.5.3:
21
<PAGE> 86
The Contractor also agrees that the cost of testing services required of
the Contractor under this Paragraph 13.5, if any, in his scheduling and
performance of the Work, and the cost of testing services related to
remedial operations performed to correct deficiencies in the Work, shall be
borne by the Contractor.
78. Delete Paragraph 13.7 in its entirety:
79. Add the following new Paragraph 13.8 to Article 13:
13.8 GENERAL PROVISIONS
13.8.1 All personal pronouns used in this Contract, whether used in the
masculine, feminine, or neuter gender, shall include all other genders; and
the singular shall include the plural and vice versa. Titles of articles,
paragraphs, and subparagraphs are for convenience only and neither limit
nor amplify the provisions of this Contract in itself. The use herein of
the word "including," when following any general statement, term, or
matter, shall not be construed to limit such statement, term, or matter to
the specific items or matters set forth immediately following such word or
to similar items or matters, whether or not non-limiting language (such
words as "without limitation," or "but not limited to," or words of similar
import) is used with reference thereto, but rather shall be deemed to refer
to all other items or matters that could reasonably fall within the
broadest possible scope of such general statement, term, or matter.
13.8.2 Wherever possible, each provision of this Agreement shall be
interpreted in a manner as to be effective and valid under applicable law.
If, however, any provision of this Agreement, or portion thereof, is
prohibited by law or found invalid under any law, only such provision or
portion thereof shall be ineffective, without in any manner invalidating or
affecting the remaining provisions of this Agreement or valid portions of
such provision, which are hereby deemed severable.
13.8.3 Each party hereto agrees to do all acts and things and to make,
execute and deliver such written instruments, as shall from time to time be
reasonably required to carry out the terms and provisions of the Contract
Documents.
13.8.4 Any specific requirement in this Contract that the responsibilities
or obligations of the Contractor also apply to a Subcontractor is added for
emphasis and is also hereby deemed to include a Subcontractor of any tier.
The omission of a reference to a Subcontractor in connection with any of
the Contractor's responsibilities or obligations shall not be construed to
diminish, abrogate, or limit any responsibilities or obligations of a
Subcontractor of any tier under the
22
<PAGE> 87
Contract Documents or the applicable subcontract.
80. [Intentionally omitted]
81. Delete the word "shall" in the first line of Subparagraph 14.3.2 and
replace it with the word "may".
82. Replace Subparagraph 14.4.3 with the following:
14.4.3 Upon such termination, the Contractor shall recover as its sole
remedy payment (1) for Work properly performed in connection with the
terminated portion of the Work prior to the effective date of termination,
(2) Cost of Work, the Contractor's general conditions and the Contractor's
Fee through the date of termination, (3) for items properly and timely
fabricated off the Project site, delivered and stored in accordance with
the Owner's instructions and (4) reasonable costs incurred by reason of
such termination. The Contractor hereby waives and forfeits all other
claims for payment and damages, including, without limitation, anticipated
profits. The Owner shall be credited for (i) payments previously made to
the Contractor for the terminated portion of the Work, (ii) claims that the
Owner has against the Contractor under the Contract, and (iii) the value of
the materials, supplies, equipment, or other items that are to be disposed
of by the Contractor that are part of the Contract Sum.
23
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