CONTRACT
BETWEEN
LURGI LENTJES AG
Hansa Allee 305, D-40549 Dusseldorf
with
LURGI ENERGIE UND ENTSORGUNG GMBH
Berliner Str. 93, D-40880 Ratingen
AND
The nominated subcontracting CONSORTIUM
Heinrich Holter GmbH
D-45964 Gladbeck
as CONSORTIUM Leader
and
Stramproy Projects & Systems B.V.
NL-6039 AP Stramproy
concerning the Project Lot 2 Dryer for
OPEN-END JOINT STOCK COMPANY DONBASSENERGO,
acting under the law of STATUS and having its
principle placo of business at 11, Lenin Prospect
GORLOVKA 338 001 UKRAINE
I
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CONTENTS
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1. PREAMBLE ................................................................................................1
2. DEFINITIONS..............................................................................................2
3. RELATIONSHIP OF THE PARTIES..............................................................................4
4. SCOPES OF WORK AND PRICE.................................................................................6
5. PAYMENT..................................................................................................7
6. CONTRACT PERFORMANCE PHASE
6.1 SCHEDULE.................................................................................................8
6.2 not used.................................................................................................9
6.3 LIQUIDATED DAMAGES (OR "PENALTIES") DUE TO DELAY AND/OR
PERFORMANCE..............................................................................................9
6.4 TAXES....................................................................................................9
6.5 DELAYS AND COSTS DUE TO DELAYS..........................................................................10
6.6 PATENTS.................................................................................................10
6.7 CHANGES.................................................................................................10
6.8 BANKRUPTCY, INSOLVENCY, DISSOLUTION, READJUSTMENT
OF DEBT, LIQUIDATION, REORGANIZATION, ETC...............................................................11
6.9 INSURANCE...............................................................................................12
6.10 WARRANTY AND GUARANTEE CLAIMS...........................................................................12
6.11 FINANCIAL CAPABILITIES..................................................................................12
7 BREACH-DEFAULT..........................................................................................13
8 LIABILITY AND INDEMNIFICATION
8.1 LIABILITY AND INDEMNIFICATION WITH RESPECT TO CLAIMS
OF THE CUSTOMER AND THIRD PARTIES.......................................................................14
8.2 LIABILITY FOR CLAIMS BETWEEN THE PARTIES................................................................15
9 DISPUTES................................................................................................16
10 GENERAL PROVISIONS
10.1 CONFIDENTIALITY OF THIS CONTRACT CORRESPONDENCE,
DATA, DOCUMENTS AND DRAWINGS............................................................................17
10.2 PARTIES TO KEEP EACH OTHER INFORMED.....................................................................17
10.3 CORRESPONDENCE AND NOTICES..............................................................................18
10.4 WAIVER..................................................................................................18
10.5 ASSIGNMENT/SUBCONTRACTING...............................................................................18
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II
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10.6 TERM OF CONTRACT........................................................................................19
10.7 EXPULSION...............................................................................................19
10.8 ENTIRE CONTRACT.........................................................................................20
10.9 AMENDMENTS..............................................................................................20
10.10 TITLES..................................................................................................20
10.11 NUMBER OF ORIGINALS.....................................................................................20
10.12 PUBLICITY...............................................................................................20
10.13 REVIEW AND VERIFICATION.................................................................................21
10.14 not used................................................................................................21
APPENDICES:
0 CONTRACT AGREEMENT with CUSTOMER of LLAG/LEE
1 EQUIPMENT AND SERVICES SCOPE OF WORK
1.1 CONSORTIUM SCOPE OF SUPPLY
1.2 CONSORTIUM SCOPE OF SERVICES
1.3 TIME SCHEDULE FOR DATA AND DOCUMENTATION EXCHANGE
2 CONSORTIUM PRICE
3 PROJECT SCHEDULE AND DRAW DOWN SCHEDULE
4 GUARANTEED PLANT PERFORMANCE
5 not used
6 not used
7 COORDINATION OF THE SITE REQUIREMENTS
8 MECHANICAL ERECTION
9 SUPERVISORY SERVICES DURING WARRANTY PERIOD
10 TRAINING OF CUSTOMER'S STAFF/SUPERVISION OF OPERATION
11 TRANSPORT OF EQUIPMENT
12 not used
13 GENERAL PROCEDURE FOR PROOF OF PROGRESS/INVOICING/PAYMENTS/
SECURITIES TO LLAG/LEE, GENERAL PROCEDURE FOR PAYMENTS/
SECURITIES TO LLAG/LEE
14 not used
15 INSURANCE
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III
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PART 1 - PREAMBLE This Contract is made on July 3rd (degree), 2000 by and
between
LURGI LENTJES AG, a corporation organized and existing under the law of Germany,
with offices at Hansa Allee 305, D-40549 Dusseldorf, Germany (herein "LLAG")
with
LURGI ENERGIE und Entsorgung GmbH (hereinafter LEE") a
corporation organized and existing under the law of Germany
and having a place of business at Berliner Str 93, D-40880
Ratingen, Germany
and the CONSORTIUM
Heinrich Holter GmbH a corporation organized and existing under
the law of Germany with offices at Beisenstr. 39-41, D-45964 Gladbeck /
Stramproy Projects & Systems B V organized and existing under the law of the
Netherlands and having a place of business al Industrieweg 20. NL-6039 AP
Stramproy
with the consortial leaderships of Heinrich Holter GmbH
(hereinafter "the CONSORTIUM")
WHEREAS, OPEN-END JOINT STOCK COMPANY DONBASSENERGO (short "DONBAS"), (herein
"CUSTOMER", has awarded a contract for the Starobeshevo Power Plant
Modernization "turn-key" Project, Lot 2, Dryer (herein the "PROJECT") to LLAG;
1
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WHEREAS, LLAG including LEE and the CONSORTIUM as nominated subcontractor desire
to enter into a Contract on an exclusive basis solely for the limited purpose
for the execution and performance of a CONTRACT AGREEMENT with and for the final
CUSTOMER of LLAG for the design, supply, installation, erection, commissioning
and warranty of the PROJECT to an extent as specified in Appendix 1.
WHEREAS, LLAG including LEE and the CONSORTIUM desire to enter into a Contract
whereby with respect to the internal relationship among LLAG including LEE and
the CONSORTIUM this CONTACT will define their respective rights and obligations
and their respective SCOPES OF WORK; and
NOW THEREFORE, in consideration of the premises and mutual covenants set forth
herein, the PARTIES hereto hereby agree as follows:
PART 2 - DEFINITIONS
For the purpose of this CONTRACT, the following words and phrases shall have the
following meanings:
2.1 CONTRACT - shall mean this document and all of its appendices.
2.2 COST - when used throughout this CONTRACT in reference to circumstances
where costs may be incurred by one PARTY that may be borne, in whole or
in part, by the other PARTY, cost shall mean any additional direct
costs, exclusive of profit and other consequential and/or indirect
costs, which are incurred related to the specific circumstance.
Excluded from this definition are prices negotiated between the PARTIES
for specific services as provided for in the CONTRACT.
2.3 CONTRACT AGREEMENT shall mean the document or documents (including all
amendments thereto) entered into between LLAG and the final CUSTOMER of
LLAG on April 13th, 2000 and executed by LLAG and the CONSORTIUM as
nominated subcontractor which defines the rights and obligations
thereto with respect to the PROJECT.
2.4 CONSORTIUM shall mean the nominated subcontractor Heinrich Holter GmbH
/ Stramproy Projects & Systems B.V.
2.5 not used
2.6 DRAW DOWN SCHEDULE shall mean the schedules of monthly invoicing
substantiated by the supplies, transportation and performance of
services according to the SCHEDULE.
2.7 LEADING PROJECT MANAGER shall mean be a person nominated cy LLAG, to
fulfll the duties set forth in this CONTRACT
2.8 not used
2.9 PARTIES shall mean the parties executing this CONTRACT, that is, LLAG
including LEE on the first part and the CONSORTIUM on the second pan
(and its governed entities and affiliated companies which are involved
in this PROJECT), and their permitted assigns.
2.10 PARTY shall mean one of the PARTIES.
2
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2.11 PROJECT shall mean the design, supply, construction, installation,
erection, commissioning and warranty of the dryer plant and all
associated services and works to be provided under the CONTRACT
AGREEMENT.
2.12 PLANT PERFORMANCE GUARANTEES shall mean those performance guarantees
agreed to in the CONTRACT AGREEMENT.
2.13 PROPOSAL shall mean the formal offer signed by LLAG to the final
CUSTOMER which consists of the first Stage Tender submitted on July 1,
1997 and the Second Stage Tender submitted on January 21, 1993.
2.14 SCHEDULE shall mean the PROJECT SCHEDULES as set forth in Appendix 3
to this CONTRACT or any amendments hereto.
2.15 SCOPE OF WORK shall mean, the sum total of the CONSORTIUM'S supply of
equipment and services as set forth in Appendix 1 to this CONTRACT.
2.16 TENDER DOCUMENTS shall mean the Invitation for Bids, with its integral
parts, if any, issued by the CUSTOMER and any further amendments
thereto including the official correspondence with the CUSTOMER and
protocols of meetings.
2.17 THIRD PARTY shall mean any party, person or other entity other than the
PARTIES and the CUSTOMER.
2.18 PRICE shall mean the amount of moneys for the SCOPE OF WORK of the
CONSORTIUM as agreed in Appendix 2, including all amendments hereto.
3
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PART 3 - RELATIONSHIP OF THE PARTIES
3.0 The PARTIES hereby enter into a CONTACT for the sole and limited
purpose of (1) performing the CONTRACT AGREEMENT and (2) defining the
rights and obligations between the PARTIES in connection with the
performance of the CONTRACT AGREEMENT, and for no other purpose.
3.1 not used
3.2 not used
3.3 Upon the signing of this CONTRACT, each PARTY will appoint by a written
notice to the other PARTY a "representative" fully authorized by such
PARTY to act on its behalf in connection with all matters arising under
this CONTRACT. A PARTY may at any time and from time to time change its
"representative" by written notice to the other PARTY. Each PARTY shall
appoint an alternate representative to act in the absence of its
"representative". Any representative not an employee of a PARTY shall
be subject to approval by the other PARTY
3.4 not used
4
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3.5 Nothing contained in this CONTRACT is intended nor shall it be
construed as creating a partnership or joint venture among the PARTIES
nor as creating or requiring any ongoing or continuing relationship or
commitment among the PARTIES, beyond that relationship specifically
created by this CONTRACT.
3.6 not used
3.7 No PARTY shall be deemed to be a representative, agent or employee of
any other PARTY, by contract, by employment or for any purpose
whatsoever.
3.8 No PARTY shall have the authority or right nor shall any PARTY hold
itself out as having the authority or right to assume, create or
undertake any obligation of any kind whatsoever, expressed or implied,
nor accept service of any legal process on behalf of or in the name of
any other PARTY without the express prior written consent of the other
PARTY.
3.9 not used
3.10 not used
3.11 This CONTRACT contains all of the obligations of the PARTIES to each
other with respect to the PROJECT. Except as stated herein the PARTIES
shall have no other obligations, excluding those implied by mandatory
law, to each other.
3.12 LLAG / LEE shall consult with the other PARTY on all issues affecting
implementation and performance of the CONTRACT AGREEMENT, and LLAG /
LEE shall communicate to the CUSTOMER any decisions involving the
CUSTOMER reached by the PARTIES after such consultation
3.13 not used
5
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PART 4 - SCOPES OF WORK AND PRICE
4.1 Generally it is agreed that the SCOPE of WORK of the CONSORTIUM shall
be complete and that any incompleteness has to be settled inbetween the
CONSORTIUM without any responsibility for LLAG / LEE
The members of the CONSORTIUM shall be jointly and severally liable for
the performance of the SCOPE OF WORK.
4.2 It is expressly understood and agreed that the CONSORTIUM'S SCOPE OF
WORK is subject to and to be performed strictly in accordance with the
terms and conditions of the CONTRACT AGREEMENT signed with the
CUSTOMER. Each PARTY shall be responsible for all costs associated with
CONTRACT AGREEMENT requirements for completion of its SCOPE OF WORK.
4.3 PRICE
4.3.1 The price for the SCOPE OF WORK of the CONSORTIUM shall be recorded in
Appendix 2, which is attached hereto and deemed to be an integral part
of this CONTRACT.
4.3.2 In case of substantial changes in the technical concept agreed upon
between the PARTIES and proposed by LLAG / LEE during Project execution
to the CUSTOMER and subject to amendment of the CONTRACT AGREEMENT both
PARTIES are prepared to negotiate the respective price.
4.3.3 A final recalculation shall be made at the end of the execution of the
CONTRACT respectively of the CONTRACT AGREEMENT to reflect all changes
in the SCOPE OF WORK the CONSORTIUM if these are agreed before between
the Parties or related to change orders of the CUSTOMER.
4.4 The CONSORTIUM is solely responsible for the performance of its SCOPE
OF WORK and any and all expenses and liabilities that may arise in
connection therewith unless otherwise provided for herein. The
CONSORTIUM is responsible for maintaining its own financial accounting
records related to its SCOPE OF WORK. Any loss or profit sustained by
the CONSORTIUM in connection with Its SCOPE OF WORK shall be solely the
responsibility of and for the account of the CONSORTIUM unless
otherwise provided for herein.
4.5 Each PARTY will be under the obligation to pay reasonable attention to
mitigate its damages in the event of the other PARTY's default under
this CONTRACT or the CONTRACT AGREEMENT. If one PARTY becomes aware of
a situation in which the other PARTY may be damaged by its default
under this CONTRACT or the CONTRACT AGREEMENT, the PARTY with such
knowledge will contact the other PARTY and will attempt to come to a
understanding on the best way to mitigate or avoid such damages
including the possibility of doing extra work (at the expense of the
defaulting PARTY)
4.6 The CONSORTIUM shall provide and bear the costs for any bonds and
financial guarantees as back up for LIAG / LEE for its SCOPE OF WORK as
required by the CONTRACT AGREEMENT or as reasonably required by the
other PARTY. Such bonds and financial guarantees are to be provided
based on the price as per Appendix 2
6
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PART 5 - PAYMENT
5.1 The PRICE as per Appendix 2 fully covers the CONSORTIUM's SCOPE OF WORK
and the contractual obligations specified hereunder.
5.2 Payment will be in accordance with the CONTRACT AGREEMENT and the
agreed payment schedule (Draw Down Schedule as per Article 6.1.2) as
per Appendix 3 of This CONTRACT.
5.3 The CONSORTIUM shall assume all risks for the payment by the CUSTOMER
of its portion of the CONTRACT AGREEMENT price corresponding to its
SCOPE OF WORK under the CONTRACT AGREEMENT as per Appendix 2 such as
payment delay, non-payment or any other loss or damage that may be
incurred under the CONTRACT AGREEMENT, unless the PARTIES agree to a
different arrangement. The CONSORTIUM shall not be entitled to make any
claims against the other PARTY for any losses or damages whatsoever
incurred by means of the above payment arrangements
7
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PART 6 - CONTRACT PERFORMANCE PHASE
6.1 SCHEDULE
LLAG / LEE will prepare the overall PROJECT SCHEDULE's involving the
PARTIES. It is essential for effective CONTRACT AGREEMENT performance
that the PARTIES remain aware, at all times, of the time interfaces and
interactions of their respcctrve SCOPES OF WORK. These interfaces and
interactions may change as a result of delays (unexcused or otherwise)
or changes to a PARTY's SCOPE OE WORK. The SCHEDULE's will be attached
hereto as Appendix 3 and will be updated as required during the course
of the PROJECT and such updates shall be deemed to be an integral part
of this CONTRACT
6 1.1 PROJECT SCHEDULES
LLAG / LEE will prepare the PLANT PERFORMANCE GUARANTEES involving all
PARTIES (unit power consumption) based on information from the
CONSORTIUM. The CONSORTIUM input will be based on its SCOPE OF WORK. It
is essential for effective CONTRACT AGREEMENT performance that the
CONSORTIUM fully realizes the importance of its respective input into
the guaranteed plant performance. The listing of the CONSORTIUM
supplied equipment performance requirements will be attached hereto as
Appendix 4 and shall be deemed to be an integral part of this CONTRACT.
The CONSORTIUM will be solely responsible for all performance
guarantees, availability guarantees and all other technical guarartees
related to Its respective SCOPE OF WORK.
6.1.2 DRAW DOWN SCHEDULE
The schedules 1 to 5 and 7 of the PROPOSAL (Spreading out of Payments)
shall be detailed and revised accordingly by the PARTIES.
The new schedules shall be the basis for a consolidated DRAW DOWN
SCHEDULE. This DRAW DOWN SCHEDULE shall be used for the monthly
invoices. Such consolidated DRAW DOWN SCHEDULE was elaborated by
LLAG/LEE in consultation with the CONSORTIUM and submitted for approval
to the CUSTOMER. Work progress and deliveries shall be verified by the
Monthly Progress Measuring System as means for the CUSTOMER's approval
of the monthly invoices. This DRAW DOWN SCHEDULE shall become an
integral part of this CONTRACT and shall be attached hereto as Appendix
3 in such revision as agreed upon between LLAG/LEE and the CUSTOMER.
Until and unless otherwise agreed with the CUSTOMER the Schedules 1 to
7 as submitted in the PROPOSAL shall be binding to the PARTIES.
8
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6.2 not used
6.3 LIQUIDATED DAMAGES AND/OR "PENALTIES" DUE TO DELAY AND/OR PERFORMANCE
Notwithstanding any stipulations to the contrary set forth in the
CONTACT AGREEMENT, the internal responsibility and liability between
the PARTIES are mutually agreed as follows:
6.3.1 a) In the event that "Completion of Facilities" as defined in the
CONTRACT AGREEMENT is not achieved within the time stipulated in the
Project Schedule and this delay is not due to reasons attributable to
LLAG/LEE or the CUSTOMER or not otherwise excused under the CONTRACT or
the CONTRACT AGREEMENT, the CONSORTIUM shall bear and pay the following
liquidated damages: for each full week of delay an amount of 1% of the
PRICE up to a maximum of 14%.
It is understood by the PARTIES that in no event liquidated damages for
delay attributable to the CONSORTIUM will be in excess of liquidated
damages as stipulated in the CONTRACT AGREEMENT.
b) In the event that the technical performance guarantees under the
CONTRACT AGREEMENT are not achieved and this is not due to reasons
attributable to LLAG/LEE, the CUSTOMER or is otherwise excused under
the CONTRACT AGREEMENT; any Liquidated damages and/or penalties for
performance, availability and/or all other technical ouarantees due to
the CUSTOMER under the CONTRACT AGREEMENT shall be borne and paid by
the CONSORTIUM.
6.3.2. It is agreed that the sole basis for determining responsibility between
or among the PARTIES for any liquidated damages and/or Penalties
described in Paragraph 6.3.1 of this Part will be the Appendices 3 and
4 hereto and as specifed in the CONTRACT AGREEMENT. In determining who
is responsible for a delay (or part thereof) the SCHEDULES (Appendix 3
hereto) shall be used. Deviations from the SCHEDULES shall be evaluated
and delays not affecting the completion shall not be considered.
Instances of concurrent delay to completion shall be treated as being
of undetermined responsibility. In such case penalties will be split
among the PARTIES such that the CONSORTIUM shall be responsible to the
extent as defined by the PRICE versus the price of the CONTRACT
AGREEMENT.
6.4 TAXES
The CONSORTIUM shall have full and sole responsibility to bear the
expense of and effect the payment of any taxes, duties, including
customs duties, fees or assessments of any nature whatsoever including
penalties and interest, if any, provided for in the CONTRACT AGREEMENT
and levied in connection with its SCOPE OF WORK and any subcontracts
entered by it (including any personal income taxes levied or imposed on
any of its employees or personnel or any of its subcontractor's or
assignees' employees or personnel).
9
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6.5 DELAYS AND COSTS DUE TO DELAYS
In the event the CONSORTIUM for any reason whatsoever foresees any
delay or default in the performance of its SCOPE OF WORK in accordance
with the SCHEDULE (Appendix, 3), it shall notify the other PARTY
accordingly.
6.5.1 not used
6.5.2 EXCLUSION
In no event will a PARTY be liable to the other PARTY for loss of
profit and other indirect or consequential loss or damage, unless such
damage or loss are the result of the gross negligence / willful
misconduct of such PARTY. It is understood that claims resulting from
the CUSTOMER or third parties will not be considered as indirect or
consequential damage or loss.
6.6 PATENTS
The CONSORTIUM will be solely responsible for any claims or damages due
to patent infringement which arise out of or are connected with its
SCOPE OF WORK and agrees to indemnify, defend and hold harmless the
other PARTY against any loss or damage that may result from such
claims.
6.7 CHANGES
The CONSORTIUM may submit claims to the CUSTOMER for additional or
changed work which are not part of the CONTRACT AGREEMENT, in
consultation with and through LLAG / LEE only.
In the event that a claim to the CUSTOMER has been submitted, but is
not successful in gaining additional or sufficient payments and/or
SCHEDULE extensions, from the CUSTOMER in connection with claims for
changes in the CONTRACT AGREEMENT work or extra work thereto, then
except as otherwise provided in this CONTRACT, any additional costs and
liabilities that may result shall be borne by the CONSORTIUM.
10
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6.8 BANKRUPTCY INSOLVENCY, DISSOLUTION READJUSTMENT OF DEBT, LIQUIDATION,
REORGANIZATION, ETC.
The following provisions shall, in any event, be given effect solely in
accordance with the relevant legislation of the country of residence of
the affected PARTY. Subject to the provisions of the CONTRACT
AGREEMENT, in the event that the CONSORTIUM
(1) Makes an assignment for the benefit of creditors, or petitions or
applies for or arranges for the appointment of a trustee, liquidator or
receiver, or commences any proceeding relating to itself under any
bankruptcy, reorganization for the benetit of creditors, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law of any jurisdiction, now or hereafter in effect or otherwise, or
shall be adjudicated bankrupt or insolvent; or
(ii) If any petition or application for the appointment of a trustee,
liquidator or receiver of the CONSORTIUM is filed against the
CONSORTIUM or any proceeding relating to the CONSORTIUM under any
bankruptcy, reorganization for the benefit of creditors, arrangement,
insolvency, readjustment of debt, dissolution or liquidated or similar
law of any jurisdiction now or hereafter in effect is commenced against
the CONSORTIUM and the CONSORTIUM indicates its approval thereof,
consent thereto or acquiescence therein, or an order is entered
appointing any such trustee, liquidator or receiver;
then and in any such event.
(a) not used
(b) LLAG /LEE may take over and complete the CONSORTIUM'S SCOPE OF WORK
and in so doing, LLAG / LEE shall be entitled to have assigned to them
all of the CONSORTIUM'S accounts receivable and related payments from
the CUSTOMER in connection with the PROJECT.
(c) LLAG / LEE shall have the exausive use and possession and a
preferred lien on all the CONSORTIUM's equipment (excluding
manufacturing facilities), temporary works, materials and all other
things used or supplied by the CONSORTIUM in connection with the
PROJECT. It is agreed that the CONSORTIUM will take whatever actions or
measures as may be required to establish this preferred lien.
(d) The CONSORTIUM shall be fully responsible for and shall remain
liable for all additional COSTS incurred in the completion of its SCOPE
OF WORK.
11
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6.9 INSURANCE
6.9 The CONSORTIUM shall be responsible for arranging insurance policies as
described in Appendix 15, to cover the SCOPE OF WORK for this PROJECT.
6.9.2 not used
6.10 WARRANTY AND GUARANTEE CLAIMS
The following procedure will apply to CUSTOMER complaints related to
warranty deficiencies under the CONTRACT AGREEMENT:
6.10.1 If the alleged deficiencies are in the CONSORTIUM's SCOPE OF WORK, the
CONSORTIUM shall correct the deficiency at its expense.
6.10.2 If the CUSTOMER alleges deficiencies in any equipment or services
supplied under the CONTRACT AGREEMENT and the CONSORTIUM disputes the
allegation, LLAG / LEE shall convey the CONSORTIUM'S response to the
CUSTOMER regarding such alleged deficiencies.
6.10.3 If the CUSTOMER claims a warranty deficiency within the SCOPE OF WORK
of the CONSORTIUM and cannot be convinced that the deficiency does not
exist or is beyond the scope of the CONTRACT AGREEMENT, then, provided
that LLAG insists on correction, the CONSORTIUM shall he obligated to
correct the claimed deficiency.
6.10.4 not used
6.11 FINANCIAL CAPABILITIES
6.11.1 not used
6 11.2 The CONSORTIUM agrees that it Will, if requested to do so, demonstrate,
in a manner reasonably acceptable to LILAC/LEE, its financial
capability to assume the risks associated with its respective SCOPE OF
WORK. LLAG/LEE agrees that such request for financial capability
information shall not be made witnout reasonable cause.
12
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PART 7 - BREACH - DEFAULT
7.1 In the event there is a breach of the CONTRACT AGREEMENT by the
CUSTOMER, the PARTIES shall expeditiously meet to consider the most
equitable method of proceeding, but no PARTY shall abandon (or
otherwise cease or delay performance of) the CONTRACT AGREEMENT without
the consent of the other PARTY.
7.2 In the event that the CONSORTIUM is in breach or default under this
CONTRACT or there is a breach or default under the CONTRACT AGREEMENT
with the CUSTOMER attributable to the performance of the CONSORTIUM,
and such breach or default is not cured or reasonable action to cure
has not been initiated within thirty (30) days after written notice
thereof, or within the time period prescribed in the CONTRACT
AGREEMENT, as the case may be, LLAG / LEE shall take over and complete
the CONSORTIUM's SCOPE OF WORK, provided such completion is permissible
under the CONTRACT AGREEMENT or by the CUSTOMER. Such decision shall be
subject to PART 9 (Disputes) of this CONTRACT, but in any event
proceedings under PART 9 shall not prevent the implementation of the
steps described herein
In such event, LLAG / LEE shall automatically have the right to receive
any and all payment due to the CONSORTIUM from the CUSTOMER and apply
the proceeds thereof (i) to cover all expenses incurred by the other
PARTY in taking over and completing (by subcontracting or otherwise)
the CONSORTIUM's SCOPE OF WORK, and (ii) to establish a contingency
fund to cover any and all outstanding warranties or other obligations
of the CONSORTIUM in completing the CONSORTIUM's SCOPE OF WORK. In
addition, LLAG / LEE (i) shall have the exclusive use and possession of
all the CONSORTIUM's equipment, temporary works, materials and all
other things used or supplied by the CONSORTIUM in connection with the
PROJECT, at the site of the PROJECT and (ii) shall have a preferred
lien on all such equipment, temporary works, materials and all other
things used or supplied by the CONSORTIUM in connection with the
PROJECT at the site of the PROJECT in order to satisfy any expenses
incurred by LLAG / LEE in completing the CONSORTIUM's SCOPE OF WORK.
7.3 In the event of a breach or default as describe above, the CONSORTIUM
agrees to indemnify, defend and hold LLAG / LEE harmless from any and
all liability (including but not limited to liquidated damages, fines
or penalties of whatever nature and to excess COSTS and expenses
associated with the CONSORTIUM's SCOPE OF WORK) incurred by the LLAG/
LEE as a result of such breach or default.
13
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PART 8 - LIABILITY AND INDEMNIFICATION
8.1 LIABILITY AND INULMNIFICATTION WITH RESPECT TO CLAIMS OF THE CUSTOMER
AND THIRD PARTIES
8.1.1 During the life of this CONTRACT and the CONTRACT AGREEMENT, the
CONSORTIUM accepts full responsibility for the performance of its SCOPE
OF WORK and (except as expressly provided otherwise herein or in the
CONTRACT AGREEMENT with the CUSTOMER) agrees to indemnify and hold
harmless the other PARTY from any claim made against the other PARTY by
the CUSTOMER or other THIRD PARTY to the extent that such claim arises
in connection with said indemnifying PARTY's SCOPE OF WORK for any
breach or default of the CONTRACT or the CONTRACT AGREEMENT or is due
to the indemnifying PARTY's fault or negligence.
Such responsibility includes but is not limited to,
1. Claims by the CUSTOMER for damages (including but not limited to
liquidated damages and penalties as set forth in PART 6.3) and
claims of other THIRD PARTIES for damages, arising in connection
with the performance or non-performance of the indemnifying PARTY's
SCOPE OF WORK;
2. Claims of subcontractors or suppliers of the indemnifying PARTY for
work performed or materials or equipment sold or furnished in
connection with the PROJECT;
3. Claims for wages, worker's compensation (or equivalent) and
non-payment of social charges, income taxes, and payroll taxes for
employees of the indemnifying PARTY (including subcontractor
employees) engaged in connection with the PROJECT;
4. Claims or payments made with respect to any bonds furnished;
5. Claims for taxes, license fees, duties, tariffs, imports and the
like in connection with the PROJECT; and
6. Claims for damages arising from personal injury (including death)
and property damage.
8.1.2 not used
8.1.3 In the event of a dispute which PARTY may be responsible for any claim
under the CONTRACT AGREEMENT or otherwise, both PARTIES shall have a
duty to investigate to determine who is responsible and to take all
reasonable means of remedying the situation and resolving such dispute.
Meanwhile, each PARTY shall continue performance of its respective
SCOPE OF WORK.
8.1.4 not used
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8.2 LIABILITY FOR CLAIMS BETWEEN THE PARTIES
8.2.11 Except as otherwise stated in this CONTRACT, all risks (including
political risks) and costs (including any loss of profit) arising out
of the performance of its SCOPE OF WORK and the CONSORTIUM'S
participation in this CONTRACT shall be solely the responsibility of
the CONSORTIUM.
8.2.2 During the life of this CONTRACT and the CONTRACT AGREEMENT, each PARTY
shall be liable for and shall indemnify and hold harmless the other
PARTY against its own default.
8.2.3 If, as a result of defects in the CONSORTIUM'S SCOPE OF WORK, the other
PARTY reasonably concludes that changes should be made to its own SCOPE
OF WORK, the CONSORTIUM shall reimburse the other PARTY for the
additional COSTS demonstrably incurred by the PARTY not at fault in
implementing the said changes in its SCOPE OF WORK.
8.2.4 not used
8 2.5 not used
8.2 6 Loss or damage which is suffered by a PARTY, and which is fully covered
by insurance payable to that PARTY, or which is recovered from the
CUSTOMER, shall not serve as the basis for any claim against any other
PARTY.
8.2.7 not used
8.2.8 Notwithstanding anything to the contrary in this CONTRACT or the
CONTRACT AGREEMENT with the CUSTOMER, the PARTIES' total responsibility
and liability, including but not limited to any liability whether by
contract, tort, negligence, warranty or otherwise and under PART 6.3
dealing with liquidated damages and/or penalties and any liability
under PART 8 above, to the other PARTY, the CUSTOMER and THIRD PARTIES,
is limited to the maximum liability therefore provided in the CONTRACT
AGREEMENT as enforced.
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PART 9 - DISPUTES
9.1 Any differences or disputes arising from this CONTRACT or from
arrangements regarding its performance shall be settled by an amicable
effort of the PARTIES. Such effort shall be deemed to have failed when
one of the PARTIES so notifies the other PARTY in writing.
9.2 If the effort of an amicable settlement has failed, the dispute shall
be finally settled under the Rules of Conciliation and Arbitration of
the International Chamber of Commerce, 38 cours Albert ler, 75008
Paris, by three arbitrators appointed in accordance with the said
Rules. This Contract shall in all respects be construed and interpreted
in accordance with German Law.
9.3 The place of arbitration shall be Dusseldorf, Germany. The language of
proceedings shall be English.
9.4 The arbitral award shall be substantiated in writing and shall be final
and binding on all PARTIES who undertake to carry it out immediately
without raising any condition, exception or objection whatsoever
especially in their own country. The arbitral tribunal shall also
decide on the matter of costs of the arbitration.
9.5 In case of dispute on a technical matter, the PARTIES agree to have
recourse as occasion requires to the International Chamber for
Technical Expertise of the International Chamber of Commerce in
accordance with the Rules of expertise of the said Chamber which are
well known to the PARTIES.
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PART 10 GENERAL PROVISIONS
10.1 CONFIDENTIALITY OF THIS CONTRACT CORRESPONDENCE DATA, DOCUMENTS AND
DRAWINGS
10.1.1 No PARTY shall use this CONTRACT or the information supplied by any
other PARTY for any purpose other than that intended, nor transmit any
written information or documents or this CONTRACT, to any THIRD PARTY
for any purpose not intended by this CONTRACT without the express
permission in writing to do so by the other PARTY. The PARTIES will
maintain the confidential nature of any information or documents
received from another PARTY.
10.1.2 Notwithstanding the foregoing, the obligation of confidentiality shall
not apply to information which:
a) is within or later falls within the public domain through no fault
of the receiving PARTY;
b) is or become available to the receiving PARTY from THIRD PARTIES
without breach of any confidential Contract;
c) was already known to a PARTY at the time of its disclosure;
d) is disclosed to ECA's and other financial institutes for the purpose
of arranging the financial support to the PROJECT subject to
confidentiality Contract equivalent to this Part or
e) is required to disclose by any law or by the direction of any court
of competent jurisdiction acting in pursuance of its powers
The obligation of confidentiality under this Part shall survive any
termination of this CONTRACT for a period of five (5) years after
such termination.
10.2 PARTIES TO KEEP EACH OTHER INFORMED
Each PARTY shall keep the other PARTY fully and promptly informed of
all progress, events and matters affecting or relating to the other
PARTY's SCOPE OF WORK and shall, without delay, give all relevant
information and cooperation properly requested by the other PARTY. This
actively shall be coordinated by LLAG/LEE.
Such information shall include the furnishing on a timely, periodic
basis conceptual or basic design, detailed design, quantities,
schedules and status reports covering activities such as engineering,
major procurements, major manufacturing, factory shipments,
transportation to site, erection, installation and testing
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10.3 CORRESPONDENCE AND NOTICES
Notices required under this CONTRACT shall be signed by a duly
authorized representative of the PARTY initiating such notice and shall
be either delivered to an officer or authorized representative of the
PARTY to whom it is directed or sent by mail postage prepaid, telefax
or by courier, to the following addresses (which may be changed by
written notice from the PARTY in question.
for LLAG / LEE
ATTENTION. Mr. GeBner
LURGI ENERGIE UND ENTSORGUNG GMBH
Berliner Str 93
D-40880 Ratingen, Germany Telephone +49 2101 92-2147
for the CONSORTIUM
ATTENTION: Mr. Wolter
Heinrich Holter GmbH
Beisenstr 39-41, D-45964 Gladbeck
Telephone: +49 2043 978-135
10.4 WAIVER
No PARTY hereto shall be deemed to have waived any provision of this
CONTRACT unless such waiver will be in writing and signed by the other
PARTY and specifying the extent and nature of such waiver. No waiver
shall be deemed to be a continuing waiver unless so stated in writing
and signed by the PARTIES.
10.5 ASSIGNMENT/SUBCONTRACTING
The CONSORTIUM may not assign, subcontract or delegate this CONTRACT or
any of its rights or obligations under this CONTRACT or the CONTRACT
AGREEMENT without the prior written consent of LLAG / LEE, which
consent shall not be unreasonably withheld. Nothing herein shall
prevent the CONSORTIUM from placing or permitting the placing of orders
on others for the supply of goods or services within CONSORTIUM's SCOPE
OF WORK. Such assignment and the placing of such orders shall not in
any way relieve the CONSORTIUM from any of its obligations under this
CONTRACT or the CONTRACT AGREEMENT.
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10.6 TERM OF CONTRACT
This CONTRACT shall commence upon coming into force (effective date) of
the CONTRACT AGREEMENT with the CUSTOMER of LLAG signed April 13th,
2000 and shall terminate upon occurrence of any of the events listed
below,
a The CONTRACT AGREEMENT with the CUSTOMER has been
fully performed in accordance with its terms and
conditions, full and complete payment has been made
thereon and all rights and liabilities with respect
to the CUSTOMER have terminated or expired and there
are no liabilities to be adjusted among the PARTIES;
or
b. The CONTRACT AGREEMENT has been terminated, provided
there are no liabilities to be adjusted between the
PARTIES, in which event, upon completion of such
adjustments between the PARTIES, and after full
payment has been made pursuant thereto; or
c. The PARTIES agree in writing to terminate this
CONTRACT.
Any termination of this CONTRACT for whatever cause shall not affect or
be deemed to affect any right or obligation of the PARTIES which arose
prior to such termination.
10.7 EXPULSION
10.7.1 The CONSORTIUM may be expelled from this CONTRACT if it becomes
unreasonable to expect LLAG / LEE to continue the CONTRACT with the
CONSORTIUM, taking into account all relevant facts and circumstances
a) The CUSTOMER demands LLAG / LEE the CONSORTIUM to be
expelled.
b) During the execution of the PROJECT, in case of an
interruption of supplies or services by the CONSORTIUM
which substantially and adversely affects the timely
performance of the work according to the overall
PROJECT SCHEDULE (Appendix 3).
c) A material breach of this CONTRACT or the CONTRACT
AGREEMENT by the CONSORTIUM, despite written notice
and reasonable opportunity to remedy the breach, as
per PART 7.
d) In cases of Bankruptcy, Insolvency, Dissolution,
Readjustment of debt, Liquidation, Reorganization,
etc. as per PART 6.8. of this CONTRACT.
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10.7.2 Expulsion shall be effected by a corresponding written notice to the
CONSORTIUM. Expulsion shall become final if the CONSORTIUM has not,
within 30 calendar days of receipt of notice of the resolution,
initiated arbitration proceedings hereunder. Expulsion shall not affect
any other existing rights or obligations or the CONSORTIUM or any
claims against it. If the CONSORTIUM has been expelled due to causes
within its control, the LLAG / LEE may enforce claims for damages
incurred by them as a result of the expulsion (e.g additional
expenditure with respect to the CONSORTIUM's SCOPE OF WORK)
10.8 ENTIRE CONTRACT
10.8.1 This CONTRACT contains the entire Contract among the PARTIES with
respect to the subject matter hereof and supersedes any and all prior
understanding, correspondence or contracts (oral or written) among the
PARTIES. The technical documentation and correspondence during the
PROPOSAL preparation period shall be used as reference for items which
need clarification. The rights and remedies of the PARTIES as stated in
this CONTRACT are to the exclusion of any other rights or remedies that
may be available at law or in equity.
10.8.2 If any provision of this CONTRACT is or becomes invalid, such
invalidity shall not affect the other provisions of this CONTRACT. If
the invalidity of one or more provisions or any other circumstance
concerning the performance of this CONTRACT reveals a situation not
provided for in this CONTRACT, the PARTIES shall jointly seek an
arrangement having a valid legal and economic effect which will be as
similar as possible to the ineffective provision and will cover the
scope of any missing provision in a manner reasonably direct to the
purpose of this CONTRACT.
10.9 AMENDMENTS
No change, amendment or modification of this CONTRACT shall be valid or
binding upon the PARTIES unless such change, amendment or modifcation
shall be in writing and duly executed by the PARTIES.
10.10 TITLES
Heading titles contained herein shall in no way be construed as
limiting the extent of the subject matter they introduce and shall not
be used in construing this CONTRACT
10.11 NUMBER OF ORIGINALS
This CONTRACT shall be executed in two versions, only these shall be
deemed the originals. Each PARTY will receive one of the originals.
10.12 PUBLICITY
The PARTIES shall agree upon arrangements for prior reviews, approvals
and consultations with respect to publicity releases or advertising
regarding the CONTRACT AGREEMENT, this CONTRACT or the work being
performed.
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10.13 REVIEW AND VERIFICATION
The CONSORTIUM shall provide to LLAG / LEE reasonable rights of review
and verification of the status and progress of its respective work,
reasonable information regarding its quality and safety programs and
shall comply with other reasonable requests for similar information and
rights. Any such information, review and/or verification to be provided
by the Consortium to LLAG / LEE under this provision shall take place
within a reasonable time so as not to interfere with the progress of
the Work under the CONTRACT AGREEMENT. However, in no event shall such
review and verification relieve the CONSORTIUM of the responsibility to
complete their SCOPE OF WORK in accordance with this CONTRACT and the
CONTRACT AGREEMENT.
10.14 not used
IN WITNESS WHEREOF, the PARTIES hereto have caused this CONTRACT to
be executed by their respective authorized representatives.
Ratingen, July 3rd, 2000
/s/ /s/Heinrich Holter
---------------- ------------------
LURGI LENTJES AG The CONSORTIUM
Heinrich Holter GmbH/Stramproy
Projects & System B.V.
IN W1TNESS HERETO
/s/
----------------
LURGI ENERGIE UND ENTSORGUNG GMBH
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