Exhibit 10.1
Execution Version
*** indicates material has been omitted pursuant to a Confidential Treatment Request filed with the Securities and Exchange Commission. A complete copy of this agreement has been filed separately with the Securities and Exchange Commission.
LUMP SUM TURNKEY AGREEMENT
for the
ENGINEERING, PROCUREMENT AND CONSTRUCTION
of the
SABINE PASS LNG LIQUEFACTION FACILITY
by and between
SABINE PASS LIQUEFACTION, LLC
as Owner
and
BECHTEL OIL, GAS AND CHEMICALS, INC.
as Contractor
Dated as of the 11th Day of November 2011
TABLE OF CONTENTS
RECITALS |
1 | |||||
ARTICLE 1 |
DEFINITIONS | 1 | ||||
ARTICLE 2 |
RELATIONSHIP OF OWNER, CONTRACTOR AND SUBCONTRACTORS | 18 | ||||
2.1 |
Status of Contractor | 18 | ||||
2.2 |
Key Personnel, Organization Chart and Contractor Representative | 19 | ||||
2.3 |
Subcontractors and Sub-subcontractors | 19 | ||||
2.4 |
Subcontracts and Sub-subcontracts | 20 | ||||
2.5 |
Contractor Acknowledgements | 21 | ||||
ARTICLE 3 |
CONTRACTORS RESPONSIBILITIES | 23 | ||||
3.1 |
Scope of Work | 23 | ||||
3.2 |
Specific Obligations | 23 | ||||
3.3 |
Design and Engineering Work | 24 | ||||
3.4 |
Spare Parts | 26 | ||||
3.5 |
Training Program in General | 26 | ||||
3.6 |
Environmental Regulations and Environmental Compliance | 27 | ||||
3.7 |
Construction Equipment | 27 | ||||
3.8 |
Employment of Personnel | 27 | ||||
3.9 |
Clean-Up | 28 | ||||
3.10 |
HSE Plan; Security | 29 | ||||
3.11 |
Emergencies | 30 | ||||
3.12 |
Contractor Permits | 30 | ||||
3.13 |
Books, Records and Audits | 30 | ||||
3.14 |
Tax Accounting | 31 | ||||
3.15 |
Temporary Utilities, Roads, Facilities and Storage | 31 | ||||
3.16 |
Subordination of Liens | 32 | ||||
3.17 |
Hazardous Materials | 32 | ||||
3.18 |
Quality Assurance | 32 | ||||
3.19 |
Reports | 33 | ||||
3.20 |
Payment | 33 | ||||
3.21 |
Commercial Activities | 33 | ||||
3.22 |
Title to Materials Found | 33 | ||||
3.23 |
Survey Control Points and Layout | 33 | ||||
3.24 |
Cooperation with Others at the Site | 34 | ||||
3.25 |
Integration with Existing Facility and Subproject 1 After Substantial Completion of Subproject 1 | 34 | ||||
3.26 |
Responsibility for Property | 36 | ||||
3.27 |
Explosives | 36 | ||||
3.28 |
Taxes | 37 | ||||
3.29 |
Equipment Quality | 37 |
ARTICLE 4 |
OWNERS RESPONSIBILITIES | 37 | ||||
4.1 |
Payment and Financing | 37 | ||||
4.2 |
Owner Permits | 38 | ||||
4.3 |
Access to the Site and Off-Site Rights of Way and Easements | 38 | ||||
4.4 |
Operation Personnel | 39 | ||||
4.5 |
Sales and Use Tax Matters | 39 | ||||
4.6 |
Legal Description and Survey | 41 | ||||
4.7 |
Hazardous Materials | 41 | ||||
4.8 |
Owner-Provided Items | 41 | ||||
4.9 |
Owner Representative | 42 | ||||
ARTICLE 5 |
COMMENCEMENT OF WORK, PROJECT SCHEDULE, AND SCHEDULING OBLIGATIONS | 42 | ||||
5.1 |
Commencement of Work | 42 | ||||
5.2 |
Limited Notice to Proceed/Notice to Proceed | 42 | ||||
5.3 |
Project Schedule | 44 | ||||
5.4 |
CPM Schedule Submissions | 45 | ||||
5.5 |
Recovery and Recovery Schedule | 45 | ||||
5.6 |
Acceleration and Acceleration Schedule | 46 | ||||
ARTICLE 6 |
CHANGES; FORCE MAJEURE; AND OWNER-CAUSED DELAY | 47 | ||||
6.1 |
Change Orders Requested by Owner | 47 | ||||
6.2 |
Change Orders Requested by Contractor | 49 | ||||
6.3 |
Contract Price Adjustment; Contractor Documentation | 52 | ||||
6.4 |
Change Orders Act as Accord and Satisfaction | 52 | ||||
6.5 |
Timing Requirements for Notifications and Change Order Requests by Contractor | 53 | ||||
6.6 |
Evidence of Funds | 53 | ||||
6.7 |
Adjustment Only Through Change Order | 54 | ||||
6.8 |
Force Majeure | 54 | ||||
6.9 |
Extensions of Time and Adjustment of Compensation | 55 | ||||
6.10 |
Delay | 56 | ||||
6.11 |
Contractor Obligation to Mitigate Delay | 56 | ||||
ARTICLE 7 |
CONTRACT PRICE AND PAYMENTS TO CONTRACTOR | 56 | ||||
7.1 |
Contract Price | 56 | ||||
7.2 |
Interim Payments | 57 | ||||
7.3 |
Final Completion and Final Payment | 59 | ||||
7.4 |
Payments Not Acceptance of Work | 60 | ||||
7.5 |
Payments Withheld | 60 | ||||
7.6 |
Interest on Late Payments and Improper Collection | 61 | ||||
7.7 |
Offset | 61 | ||||
7.8 |
Procedure for Withholding, Offset and Collection on the Letter of Credit | 61 | ||||
7.9 |
Payment Error | 62 |
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ARTICLE 8 |
TITLE AND RISK OF LOSS | 62 | ||||
8.1 |
Title | 62 | ||||
8.2 |
Risk of Loss | 63 | ||||
ARTICLE 9 |
INSURANCE AND LETTER OF CREDIT | 64 | ||||
9.1 |
Insurance | 64 | ||||
9.2 |
Irrevocable Standby Letter of Credit | 65 | ||||
ARTICLE 10 |
OWNERSHIP OF DOCUMENTATION | 68 | ||||
10.1 |
Work Product | 68 | ||||
10.2 |
Owner Provided Documents | 70 | ||||
ARTICLE 11 |
COMPLETION | 71 | ||||
11.1 |
Notice of RFSU, Delivery of Feed Gas for Commissioning, Start-Up and Performance Testing and Scheduling of LNG Tanker | 71 | ||||
11.2 |
Notice and Requirements for Substantial Completion | 74 | ||||
11.3 |
Owner Acceptance of RFSU and Substantial Completion | 75 | ||||
11.4 |
Performance Guarantee Not Achieved | 76 | ||||
11.5 |
Punchlist | 78 | ||||
11.6 |
Notice and Requirements for Final Completion | 79 | ||||
11.7 |
Operations Activities | 79 | ||||
ARTICLE 12 |
WARRANTY AND CORRECTION OF WORK | 80 | ||||
12.1 |
Warranty | 80 | ||||
12.2 |
Correction of Work Prior to Substantial Completion | 81 | ||||
12.3 |
Correction of Work After Substantial Completion | 82 | ||||
12.4 |
Assignability of Warranties | 83 | ||||
12.5 |
Waiver of Implied Warranties | 84 | ||||
ARTICLE 13 |
DELAY LIQUIDATED DAMAGES AND SCHEDULE BONUS | 84 | ||||
13.1 |
Delay Liquidated Damages | 84 | ||||
13.2 |
Schedule Bonus | 84 | ||||
ARTICLE 14 |
CONTRACTORS REPRESENTATIONS | 85 | ||||
14.1 |
Corporate Standing | 85 | ||||
14.2 |
No Violation of Law; Litigation | 85 | ||||
14.3 |
Licenses | 85 | ||||
14.4 |
No Breach | 86 | ||||
14.5 |
Corporate Action | 86 | ||||
14.6 |
Financial Solvency | 86 | ||||
ARTICLE 15 |
OWNERS REPRESENTATIONS | 86 | ||||
15.1 |
Standing | 86 | ||||
15.2 |
No Violation of Law; Litigation | 86 | ||||
15.3 |
Licenses | 86 | ||||
15.4 |
No Breach | 87 | ||||
15.5 |
Corporate Action | 87 | ||||
15.6 |
Financial Solvency | 87 |
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ARTICLE 16 |
DEFAULT, TERMINATION AND SUSPENSION | 87 | ||||
16.1 |
Default by Contractor | 87 | ||||
16.2 |
Termination for Convenience by Owner | 89 | ||||
16.3 |
Suspension of Work | 90 | ||||
16.4 |
Suspension by Contractor | 91 | ||||
16.5 |
Termination by Contractor | 92 | ||||
16.6 |
Termination in the Event of an Extended Force Majeure | 92 | ||||
16.7 |
Termination in the Event of Delayed Notice to Proceed | 92 | ||||
16.8 |
Contractors Right to Terminate | 93 | ||||
ARTICLE 17 |
INDEMNITIES | 93 | ||||
17.1 |
General Indemnification | 93 | ||||
17.2 |
Injuries to Contractors Employees and Damage to Contractors Property | 94 | ||||
17.3 |
Injuries to Owners Employees and Damage to Owners Property | 95 | ||||
17.4 |
Patent and Copyright Indemnification Procedure | 96 | ||||
17.5 |
Lien Indemnification | 96 | ||||
17.6 |
Owners Failure to Comply with Applicable Law | 96 | ||||
17.7 |
Landowner Claims | 97 | ||||
17.8 |
Legal Defense | 97 | ||||
17.9 |
Enforceability | 98 | ||||
ARTICLE 18 |
DISPUTE RESOLUTION | 98 | ||||
18.1 |
Negotiation | 98 | ||||
18.2 |
Arbitration | 99 | ||||
18.3 |
Continuation of Work During Dispute | 100 | ||||
18.4 |
Escrow of Certain Disputed Amounts By Owner | 100 | ||||
ARTICLE 19 |
CONFIDENTIALITY | 100 | ||||
19.1 |
Contractors Obligations | 100 | ||||
19.2 |
Owners Obligations | 101 | ||||
19.3 |
Definitions | 101 | ||||
19.4 |
Exceptions | 101 | ||||
19.5 |
Equitable Relief | 101 | ||||
19.6 |
Term | 102 | ||||
ARTICLE 20 |
LIMITATION OF LIABILITY | 102 | ||||
20.1 |
Contractor Aggregate Liability | 102 | ||||
20.2 |
Limitation on Contractors Liability for Liquidated Damages | 104 | ||||
20.3 |
Liquidated Damages In General | 105 | ||||
20.4 |
Consequential Damages | 105 | ||||
20.5 |
Exclusive Remedies | 106 | ||||
20.6 |
Applicability | 106 | ||||
20.7 |
Term Limit | 106 | ||||
ARTICLE 21 |
MISCELLANEOUS PROVISIONS | 106 | ||||
21.1 |
Entire Agreement | 106 |
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21.2 |
Amendments | 107 | ||||
21.3 |
Joint Effort | 107 | ||||
21.4 |
Captions | 107 | ||||
21.5 |
Notice | 107 | ||||
21.6 |
Severability | 108 | ||||
21.7 |
Assignment | 108 | ||||
21.8 |
No Waiver | 108 | ||||
21.9 |
Governing Law | 109 | ||||
21.10 |
Successors and Assigns | 109 | ||||
21.11 |
Attachments and Schedules | 109 | ||||
21.12 |
Obligations | 109 | ||||
21.13 |
Further Assurances | 109 | ||||
21.14 |
Priority | 109 | ||||
21.15 |
Restrictions on Public Announcements | 109 | ||||
21.16 |
Potential Lenders, Potential Equity Investors and Equity Participants | 110 | ||||
21.17 |
Foreign Corrupt Practices Act | 111 | ||||
21.18 |
Parent Guarantee | 111 | ||||
21.19 |
Language | 111 | ||||
21.20 |
Counterparts | 111 | ||||
21.21 |
Federal Energy Regulatory Commission Approval | 111 | ||||
21.22 |
Owners Lender | 111 | ||||
21.23 |
Independent Engineer | 111 | ||||
21.24 |
Survival | 112 |
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LIST OF ATTACHMENTS AND SCHEDULES
ATTACHMENT A |
Scope of Work and Basis of Design | |
ATTACHMENT B |
Contractor Deliverables | |
ATTACHMENT C |
Payment Schedule | |
SCHEDULE C-1 |
Milestone Payment Schedule | |
SCHEDULE C-2 |
Monthly Payment Schedule | |
ATTACHMENT D |
Form of Change Order | |
SCHEDULE D-1 |
Change Order Form | |
SCHEDULE D-2 |
Unilateral Change Order Form | |
SCHEDULE D-3 |
Contractors Change Order Request Form/Contractors Response to a Change Order Proposed by Owner | |
SCHEDULE D-4 |
Unit Rates for Change Orders Performed on a Time and Material Basis | |
SCHEDULE D-5 |
Existing Facility Labor Unit Rates | |
ATTACHMENT E |
Project Schedule | |
ATTACHMENT F |
Key Personnel and Contractors Organization | |
ATTACHMENT G |
Approved Subcontractors and Sub-subcontractors and List of Major Equipment | |
ATTACHMENT H |
Form of Limited Notice to Proceed and Notice to Proceed | |
SCHEDULE H-1 |
Form of Limited Notice to Proceed | |
SCHEDULE H-2 |
Form of Notice to Proceed | |
ATTACHMENT I |
Form of Contractors Invoices | |
SCHEDULE I-1 |
Form of Contractors Interim Invoice | |
SCHEDULE I-2 |
Form of Contractors Final Invoice | |
ATTACHMENT J |
HSE Plan Requirements |
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ATTACHMENT K |
Form of Lien and Claim Waivers | |
SCHEDULE K-1 |
Contractors Interim Conditional Lien Waiver | |
SCHEDULE K-2 |
Contractors Interim Unconditional Lien Waiver | |
SCHEDULE K-3 |
Subcontractors Interim Conditional Lien Waiver | |
SCHEDULE K-4 |
Subcontractors Interim Unconditional Lien Waiver | |
SCHEDULE K-5 |
Contractors Final Conditional Lien and Claim Waiver | |
SCHEDULE K-6 |
Contractors Final Unconditional Lien and Claim Waiver | |
SCHEDULE K-7 |
Subcontractors Final Conditional Lien and Claim Waiver | |
SCHEDULE K-8 |
Subcontractors Final Unconditional Lien and Claim Waiver | |
ATTACHMENT L |
Form of RFSU Completion Certificate | |
ATTACHMENT M |
Form of Substantial Completion Certificate | |
ATTACHMENT N |
Form of Final Completion Certificate | |
ATTACHMENT O |
Insurance Requirements | |
ATTACHMENT P |
Contractor Permits | |
ATTACHMENT Q |
Owner Permits | |
ATTACHMENT R |
Form of Irrevocable, Standby Letter of Credit | |
ATTACHMENT S |
Performance Tests and Commissioning Tests | |
ATTACHMENT T |
Performance Guarantee, Performance Liquidated Damages, Minimum Acceptance Criteria, and Delay Liquidated Damages | |
ATTACHMENT U |
Owner Provided Items and Responsibility | |
ATTACHMENT V |
Pre-Commissioning, Commissioning, Start-Up, and Training | |
ATTACHMENT W |
Spare Parts | |
SCHEDULE W-1 |
Form of Operating Spare Parts List | |
SCHEDULE W-2 |
Capital Spare Parts List |
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ATTACHMENT X |
Work in Existing Facility | |
ATTACHMENT Y |
Site and Off-Site Rights of Way and Easements | |
ATTACHMENT Z |
Landowner Access | |
ATTACHMENT AA |
Form of Acknowledgement and Consent Agreement with Lender | |
ATTACHMENT BB |
Form of Owner Confirmations | |
SCHEDULE BB-1 |
Form of Owner Monthly Confirmation | |
SCHEDULE BB-2 |
Form of Owner Quarterly Confirmation | |
ATTACHMENT CC |
Independent Engineer Activities | |
ATTACHMENT DD |
Form of Escrow Agreement | |
ATTACHMENT EE |
Provisional Sums | |
ATTACHMENT FF |
Form of Parent Guarantee |
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SABINE PASS LNG LIQUEFACTION FACILITY
ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT
THIS ENGINEERING, PROCUREMENT AND CONSTRUCTION AGREEMENT (this Agreement), dated as of the 11th Day of November, 2011 (the Contract Date), is entered into by and between SABINE PASS LIQUEFACTION, LLC, a Delaware limited liability company, having its principal place of business at 700 Milam, Suite 800, Houston, Texas 77002 (Owner), and BECHTEL OIL, GAS AND CHEMICALS, INC., a Delaware corporation, having an address at 3000 Post Oak Boulevard, Houston, Texas 77056 (Contractor and, together with Owner, each a Party and together the Parties).
RECITALS
WHEREAS, Owner desires to enter into an agreement with Contractor to provide services for the engineering, procurement and construction of (a) a turnkey LNG liquefaction facility comprised of two LNG trains each with a nominal production capacity of approximately 4.5 mtpa to be owned by Owner, located at the Liquefaction Facility Site (as defined below), and all related appurtenances thereto (as more fully described below, the Liquefaction Facility), and (b) certain modifications and improvements to the existing LNG receiving, storage and regasification facilities (as more fully described below, the Existing Facility) located at the Existing Facility Site (as defined below), and to commission, start-up and test the Liquefaction Facility, all as further described herein (collectively, the Project); and
WHEREAS, Contractor, itself or through its vendors, suppliers, and subcontractors, desires to provide the foregoing engineering, procurement, construction, commissioning, start-up and testing services on a turnkey lump sum basis;
NOW THEREFORE, in consideration of the mutual covenants herein contained and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 In addition to other defined terms used throughout this Agreement, when used herein, the following capitalized terms have the meanings specified in this Section 1.1.
AAA has the meaning set forth in Section 18.2.
AAA Rules has the meaning set forth in Section 18.2.
Acceleration Schedule has the meaning set forth in Section 5.6A.
Affiliate means any Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with a Party. For purposes of this definition, control (including, with correlative meanings, the terms controlled by and under common control with) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or otherwise.
Aggregate Cap has the meaning set forth in Section 20.1A.
Aggregate Provisional Sum has the meaning set forth in Section 7.1A.
Agreement means this Agreement for the performance of the Work (including all Attachments and Schedules attached hereto), as it may be amended from time to time in accordance with this Agreement.
Applicable Codes and Standards means any and all codes, standards or requirements applicable to the Work set forth or listed in Attachment A, in any Applicable Law (subject to an adjustment by Change Order in accordance with Section 6.2A.1), or which are set forth or listed in any document or Drawing listed in Attachment A, which codes, standards and requirements shall govern Contractors performance of the Work, as provided herein, provided that, with respect to Applicable Codes and Standards which are not set forth in any Applicable Law, any reference herein to such Applicable Codes and Standards shall refer to those Applicable Codes and Standards set forth or listed in any document or Drawing listed in Attachment A.
Applicable Law means all laws, statutes, ordinances, orders, decrees, injunctions, licenses, Permits, approvals, rules and regulations, including any conditions thereto, of any Governmental Instrumentality having jurisdiction over all or any portion of the Site or the Project or performance of all or any portion of the Work or the operation of the Project, or other legislative or administrative action of a Governmental Instrumentality, or a final decree, judgment or order of a court which relates to the performance of Work hereunder.
Books and Records has the meaning set forth in Section 3.13A.
Business Day means every Day other than a Saturday, a Sunday or a Day that is an official holiday for employees of the federal government of the United States of America.
CAD has the meaning set forth in Section 3.3E.
Carve-Outs has the meaning set forth in Section 20.1.
Change in Law means any amendment, modification, superseding act, deletion, addition or change in or to Applicable Law (excluding changes to tax laws where such taxes are based upon Contractors income or profits/losses) that occurs and takes effect after May 15, 2011. A Change in Law shall include any official change in the interpretation or application of Applicable Law (including Applicable Codes and Standards set forth in Applicable Law), provided that such change is expressed in writing by the applicable Governmental Instrumentality.
Change Order means, after the execution of this Agreement, any of the following: (i) a written order issued by Owner to Contractor, in the form of Schedule D-2, (ii) a written instrument signed by both Parties in the form of Schedule D-1, in each case executed pursuant to the applicable provisions of Article 6, or (iii) a determination issued pursuant to Article 18, that authorizes an addition to, deletion from, suspension of, or any other modification or adjustment to the requirements of this Agreement, including the Work or any Changed Criteria.
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Changed Criteria has the meaning set forth in Section 6.1A.
Cheniere means Cheniere Energy, Inc.
Collateral Agent means the collateral agent under the credit agreement for the financing of the Project.
Commissioning Feed Gas has the meaning set forth in Section 4.8C.
Commissioning LNG has the meaning set forth in Section 11.1C.
Commissioning Period has the meaning set forth in Attachment T.
Confidential Information has the meaning set forth in Section 19.3.
Confirmed Acceleration Directive has the meaning set forth in Section 5.6A.
ConocoPhillips Intellectual Property has the meaning set forth in Section 10.1D.
ConocoPhillips License Agreement means the license agreement between ConocoPhillips Company and Owner relating to the Optimized Cascade Process.
ConocoPhillips Work Product has the meaning set forth in Section 10.1D.
Consequential Damages has the meaning set forth in Section 20.4.
Construction Equipment means the equipment, machinery, structures, scaffolding, materials, tools, supplies and systems owned, rented or leased by Contractor or its Subcontractors or Sub-subcontractors for use in accomplishing the Work, but not intended for incorporation into the Project.
Construction Equipment Lessor means the Subcontractor or Sub-subcontractor, as the case may be, who rents or leases Construction Equipment.
Contract Date has the meaning set forth in the preamble.
Contract Price has the meaning set forth in Section 7.1, as may be adjusted by Change Order in accordance with the terms of this Agreement.
Contractor has the meaning set forth in the preamble hereto.
Contractor Existing Intellectual Assets has the meaning set forth in Section 10.1A.
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Contractor Group means (i) Contractor and its Affiliates and (ii) the respective directors, officers, agents, employees, representatives of each Person specified in clause (i) above.
Contractor Permits means the Permits listed in Attachment P and any other Permits (not listed in either Attachment P or Attachment Q) necessary for performance of the Work which are required to be obtained in Contractors name pursuant to Applicable Law.
Contractor Representative means that Person or Persons designated by Contractor in a written notice to Owner specifying any and all limitations of such Persons authority, and acceptable to Owner, who shall have complete authority to act on behalf of Contractor on all matters pertaining to this Agreement or the Work including giving instructions and making changes in the Work. The Contractor Representative as of the Contract Date is designated in Section 2.2B.
Contractors Confidential Information has the meaning set forth in Section 19.2.
Cool Down means the controlled process by which a process system is taken from its ambient condition (purged and cleaned of air, moisture and debris, etc.) and cooled down to its cryogenic temperature (at or below - 260°F) through the use of LNG, which shall be set forth in the Project Commissioning Plan. A system has achieved Cool Down when it has reached its cryogenic temperature in a stable condition.
Corrective Work has the meaning set forth in Section 12.3.
CPM Schedule has the meaning set forth in Section 5.4.
Currency Provisional Sum has the meaning set forth in Attachment EE.
Day means a calendar day.
Daily Quantities has the meaning set forth in Section 11.1B.
Default has the meaning set forth in Section 16.1A.
Defect or Defective has the meaning set forth in Section 12.1A.
Defect Correction Period means, with respect to each Subproject, the period commencing upon Substantial Completion thereof and ending eighteen (18) months thereafter, provided that the Defect Correction Period for certain portions of the Work may commence earlier in accordance with Section 8.2C. For the avoidance of doubt, there shall be a separate Defect Correction Period for each of Subproject 1 and Subproject 2.
Delay Liquidated Damages has the meaning set forth in Section 13.1.
Design Basis means the basis of design and technical limits and parameters of the Liquefaction Facility and the modifications and improvements to the Existing Facility as set forth in Attachment A.
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Disclosing Party has the meaning set forth in Section 19.3.
Dispute has the meaning set forth in Section 18.1.
Dispute Notice has the meaning set forth in Section 18.1.
Drawings means the graphic and pictorial documents showing the design, location and dimensions of the Liquefaction Facility and the modifications and improvements to the Existing Facility, generally including plans, elevations, sections, details, schedules and diagrams, which are prepared as a part of and during the performance of the Work.
Effective Date means the date on which Owner issues the Limited Notice to Proceed in accordance with Section 5.2A.
Equipment means all equipment, materials, supplies, software, licenses and systems required for the completion of and incorporation into the Liquefaction Facility and the Existing Facility.
Escrow Agent means the escrow agent under the Escrow Agreement.
Escrow Agreement means the escrow agreement between Owner, Escrow Agent and Contractor, which shall be in the form attached hereto as Attachment DD.
Escrowed Amounts has the meaning set forth in Section 18.4.
Excessive Monthly Precipitation means that the total precipitation measured at the Site for the Month that the event in question occurred has exceeded the following selected probability levels for such Month for Weather Station 417174 BPT, Port Arthur AP Beaumont TX, as specified in the National Oceanic and Atmospheric Administration publication titled Climatography of the U.S. No. 81, Supplement No. 1, Monthly Precipitation Probabilities and Quintiles, 1971-2000:
(1) | For the period from Contractors mobilization to the Site until twenty-one (21) Months after NTP with respect to Subproject 1 and for the period from Contractors mobilization to the Site until twenty-nine (29) Months after NTP with respect to Subproject 2, the selected probability level of 0.6 shall apply; and |
(2) | For all other periods after Contractors mobilization to the Site, the selected probability level of 0.8 shall apply. |
The Parties recognize that the assessment as to whether or not total precipitation measured at the Site for a given Month constitutes Excessive Monthly Precipitation can only be made after the end of the Month in question.
Existing Facility means the existing LNG receiving, storage and regasification facilities located at the Existing Facility Site which is adjacent to the Liquefaction Facility Site.
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Existing Facility Labor Provisional Sum has the meaning set forth in Attachment EE.
Existing Facility Site means those areas where the Existing Facility is located as shown in greater detail in Attachment Y.
Feed Document has the meaning set forth in Attachment A.
Feed Gas means the Natural Gas that is to be used as feed stock for the Liquefaction Facility.
FERC means the Federal Energy Regulatory Commission.
FERC Authorization means the authorization by the FERC granting to Owner the approvals requested in that certain application filed by Owner with the FERC on January 31, 2011, in Docket No. CP11-72-000 (as may be amended from time to time) pursuant to Section 3(a) of the Natural Gas Act and the corresponding regulations of the FERC.
FERC Authorization for Commissioning has the meaning set forth in Section 11.1A.
Final Completion means that all Work and all other obligations under this Agreement (except for that Work and obligations that survive the termination or expiration of this Agreement, including obligations for Warranties and correction of Defective Work pursuant to Section 12.3 and any other obligations covered under Section 11.6), are fully and completely performed in accordance with the terms of this Agreement, including: (i) the achievement of Substantial Completion of all Subprojects; (ii) the completion of all Punchlist items; (iii) delivery by Contractor to Owner of a fully executed Final Conditional Lien and Claim Waiver in the form of Schedule K-5; (iv) delivery by Contractor to Owner of all documentation required to be delivered under this Agreement as a prerequisite of achievement of Final Completion, including Record Drawings; (v) removal from the Site of all of Contractors, Subcontractors and Sub-subcontractors personnel, supplies, waste, materials, rubbish, and temporary facilities; (vi) delivery by Contractor to Owner of fully executed Final Conditional Lien and Claim Waivers from all Major Subcontractors in the form in Attachment K-7; (vii) fully executed Final Conditional Lien and Claim Waivers from Major Sub-subcontractors in a form substantially similar to the form in Attachment K-7; (viii) delivery by Contractor to Owner of a Final Completion Certificate in the form of Attachment N and as required under Section 11.6; (ix) Contractor has, pursuant to Section 3.4, delivered to the Project all Operating Spare Parts required by the Operating Spare Parts List to be delivered to the Project prior to Final Completion; and (x) if pursuant to Section 11.4A Substantial Completion was achieved without Contractor having achieved the Performance Guarantee, Contractor has achieved the Performance Guarantee or has paid the applicable Performance Liquidated Damages.
Final Completion Certificate has the meaning set forth in Section 11.6.
Final Conditional Lien and Claim Waiver means the waiver and release provided to Owner by Contractor, Major Subcontractors and Major Sub-subcontractors in accordance with the requirements of Section 7.3, which shall be in the form of Attachment K, Schedules K-5 and K-7.
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Final Unconditional Lien and Claim Waiver means the waiver and release provided to Owner by Contractor, Major Subcontractors and Major Sub-subcontractors in accordance with the requirements of Section 7.3, which shall be in the form of Attachment K, Schedules K-6 and K-8.
First Draw has the meaning set forth in Section 4.1A.
Force Majeure means any act or event that (i) prevents or delays the affected Partys performance of its obligations in accordance with the terms of this Agreement, (ii) is beyond the reasonable control of the affected Party, not due to its fault or negligence and (iii) could not have been prevented or avoided by the affected Party through the exercise of due diligence. Force Majeure may include catastrophic storms or floods, Excessive Monthly Precipitation, lightning, tornadoes, hurricanes, a named tropical storm, earthquakes and other acts of God, wars, civil disturbances, revolution, acts of public enemy, acts of terrorism, credible threats of terrorism, revolts, insurrections, sabotage, riot, plague, epidemic, commercial embargoes, expropriation or confiscation of the Project, epidemics, fires, explosions, industrial action or strike (except as excluded below), and actions of a Governmental Instrumentality that were not requested, promoted, or caused by the affected Party. For avoidance of doubt, Force Majeure shall not include any of the following: (i) economic hardship unless such economic hardship was otherwise caused by Force Majeure; (ii) changes in market conditions unless any such change in market conditions was otherwise caused by Force Majeure; (iii) industrial actions and strikes involving only the employees of Contractor or any of its Subcontractors; or (iv) nonperformance or delay by Contractor or its Subcontractors or Sub-subcontractors, unless such nonperformance or delay was otherwise caused by Force Majeure.
Fuel Provisional Sum has the meaning set forth in Attachment EE.
GAAP means generally accepted accounting principles in the United States of America.
Geotechnical Reports means the following reports, each prepared by Tolunay-Wong Engineers, Inc. and provided by Owner to Contractor prior to the Contract Date: (i) Geotechnical Data Report Cheniere Liquefaction Expansion Project Trains 1 And 2 Cameron Parish, Louisiana - Prepared for Cheniere Energy Houston, Texas - April, 2011 - Project No. 10.14.071; and (ii) Geotechnical Recommendations Report Cheniere Liquefaction Expansion Project Trains 1 And 2 Cameron Parish, Louisiana - Prepared for Cheniere Energy Houston, Texas - April, 2011 - Project No. 10.14.071.
Good Engineering and Construction Practices or GECP means the generally accepted practices, skill, care, methods, techniques and standards employed by the international LNG industry at the time of the Contract Date that are commonly used in prudent engineering, procurement and construction to safely design, construct, pre-commission, commission, start-up and test LNG export, liquefaction and send-out terminal facilities of similar size and type as the Project, in accordance with Applicable Law and Applicable Codes and Standards.
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Governmental Instrumentality means any federal, state or local department, office, instrumentality, agency, board or commission having jurisdiction over a Party or any portion of the Work, the Project or the Site.
Guarantee Conditions means the LNG Production Rate Guarantee Conditions.
Guaranteed Substantial Completion Date or Guaranteed Substantial Completion Dates has the meaning set forth in Section 5.3B.
Guaranteed Substantial Completion Date for Subproject 1 has the meaning set forth in Section 5.3B as may be adjusted by Change Order in accordance with the terms of this Agreement.
Guaranteed Substantial Completion Date for Subproject 2 has the meaning set forth in Section 5.3B as may be adjusted by Change Order in accordance with the terms of this Agreement.
Guarantor means Bechtel Global Energy, Inc., a Delaware corporation.
Hazardous Materials means any substance that under Applicable Law is considered to be hazardous or toxic or is or may be required to be remediated, including (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing polychlorinated biphenyls and processes and certain cooling systems that use chlorofluorocarbons, (ii) any chemicals, materials or substances which are now or hereafter become defined as or included in the definition of hazardous substances, hazardous wastes, hazardous materials, extremely hazardous wastes, restricted hazardous wastes, toxic substances, toxic pollutants, or any words of similar import pursuant to Applicable Law, or (iii) any other chemical, material, substance or waste, exposure to which is now or hereafter prohibited, limited or regulated by any Governmental Instrumentality, or which may be the subject of liability for damages, costs or remediation.
Heavies Removal Unit Provisional Sum has the meaning set forth in Attachment EE.
HSE Plan has the meaning set forth in Section 3.10A.
Indemnified Party means any member of the Owner Group or the Contractor Group, as the context requires.
Indemnifying Party means Owner or Contractor, as the context requires.
Independent Engineer means the engineer(s) employed by Lender.
Insolvency Event in relation to any Party or Guarantor means the bankruptcy, insolvency, liquidation, administration, administrative or other receivership or dissolution of such Party or Guarantor, and any equivalent or analogous proceedings by whatever name known and in whatever jurisdiction, and any step taken (including the presentation of a petition or the passing of a resolution or making a general assignment or filing for the benefit of its creditors) for or with a view toward any of the foregoing.
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Insurance Provisional Sum has the meaning set forth in Attachment EE.
Intellectual Property has the meaning set forth in Section 10.1A.
Interim Conditional Lien Waiver means the conditional waiver and release provided to Owner by Contractor, Major Subcontractors and Major Sub-subcontractors in accordance with the requirements of Section 7.2D, which shall be in the form of Attachment K, Schedules K-1 and K-3.
Interim Unconditional Lien Waiver means the unconditional waiver and release provided to Owner by Contractor, Major Subcontractors and Major Sub-subcontractors in accordance with the requirements of Section 7.2D, which shall be in the form of Attachment K, Schedules K-2 and K-4.
Invoice means Contractors request for a payment pursuant to Section 7.2, which invoice shall be in the form of Attachment I.
Key Personnel or Key Persons has the meaning set forth in Section 2.2A.
Landowner means any landowner that has leased land or provided a right of way or easement to Owner in connection with the Project.
Lender means any entity or entities providing temporary or permanent debt financing to Owner for the Project.
Letter of Credit has the meaning set forth in Section 9.2.
Level II means a level of detail in the CPM Schedule that has three hundred (300) to four hundred (400) activities and has logical relationships at a summary level. The work breakdown structure in the Level II CPM Schedule is by Project phase (engineering, procurement, construction, startup and commissioning) and discipline/commodity (process engineering, mechanical engineering, etc. for engineering disciplines and Site work, concrete, steel, piping, etc. for construction). Critical Major Equipment (including bulk material requirements) and Subcontract procurement and deliveries are captured in the Level II CPM Schedule. All major schedule milestones are shown. The Level II CPM Schedule may be resource loaded to check staffing levels or installation rates.
Level III means a level of detail in the CPM Schedule which is an implementation (control) schedule used to direct the Work by providing schedule parameters to the more detailed implementation level, identify and resolve schedule problems, status progress in terms of Milestones, measure the impact of scope changes and delays, develop recovery plans, and support schedule-related contractual action. The work breakdown structure in the Level III CPM Schedule is at an area level, and shall involve over two thousand (2,000) activities. The Level III CPM Schedule is developed with the assistance of and accepted by Contractors Key Personnel. All Major Equipment (including bulk material requirements) are scheduled at area level and detailed construction activities at each commodity level follow the same area concept. The Subcontract schedules are similarly developed for each area, as applicable.
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Limited Notice to Proceed or LNTP has the meaning set forth in Section 5.1.
Liquefaction Facility means the facilities contemplated in this Agreement (including the Scope of Work) at the Liquefaction Facility Site, including LNG Train 1, LNG Train 2 and related facilities to be engineered, procured, constructed, pre-commissioned, commissioned and tested by Contactor under this Agreement.
Liquefaction Facility Site means those areas where the Liquefaction Facility will be located as shown in greater detail in Attachment Y.
Liquidated Damages means Performance Liquidated Damages and Delay Liquidated Damages.
LNG means liquefied Natural Gas.
LNG Production Rate has the meaning set forth in Attachment T.
LNG Production Rate Guarantee Conditions has the meaning set forth in Attachment S.
LNG Production Rate MAC has the meaning set forth in Attachment T.
LNG Production Rate Performance Guarantee has the meaning set forth in Attachment T.
LNG Production Rate Performance Test has the meaning set forth in Attachment T.
LNG Tanker means any ocean-going vessel used by Owner or its designee for the transportation of LNG produced at the Liquefaction Facility.
LNG Train means either LNG Train 1 or LNG Train 2, and LNG Trains means LNG Train 1 and LNG Train 2.
LNG Train 1 is a portion of Subproject 1 and has the meaning set forth in Attachment A. LNG Train 1 is the first of the LNG Trains to achieve Substantial Completion.
LNG Train 2 is a portion of Subproject 2 and has the meaning set forth in Attachment A. LNG Train 2 is the second of the LNG Trains to achieve Substantial Completion.
LNTP Work means the Work, if any, defined by the Parties by Change Order which shall be performed upon issuance of the LNTP.
Louisiana Sales and Use Tax means Louisiana state, parish and local-option sales and use tax.
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Louisiana Sales and Use Tax Provisional Sum has the meaning set forth in Attachment EE.
Major Equipment means the items of Equipment listed as such in Attachment G.
Major Subcontract means any Subcontract with a Subcontractor listed in Attachment G.
Major Subcontractor means the Subcontractors listed as such in Attachment G.
Major Sub-subcontract means any Sub-subcontract with a Sub-subcontractor listed in Attachment G.
Major Sub-subcontractor means the Sub-subcontractors listed as such in Attachment G.
Milestone means a designated portion of the Work, as shown in Attachment C, Schedule C-1.
Minimum Acceptance Criteria or MAC means the LNG Production Rate MAC.
Minimum Acceptance Criteria Correction Period has the meaning set forth in Section 11.4B.
MMBtu means million British thermal units.
MMSCF means million SCF.
MMSCFD means million SCFD.
Mobilization Payment has the meaning set forth in Section 7.2A.
Month means a Gregorian calendar month; month means any period of thirty (30) consecutive Days.
Monthly means an event occurring or an action taken once every Month.
Monthly Payments has the meaning set forth in Section 7.2B.
Monthly Progress Reports has the meaning set forth in Section 3.19A.3.
Month N has the meaning set forth in Section 7.2C.
Month N-1 means the Month prior to Month N.
Month N-2 means the Month prior to Month N-1.
Month N-3 mean the Month prior to Month N-2.
Month N+1 has the meaning set forth in Section 7.2C.1.
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Natural Gas means combustible gas consisting primarily of methane.
Notice to Proceed or NTP has the meaning set forth in Section 5.2B.
Off-Site Rights of Way and Easements has the meaning set forth in Section 4.3B.
Operating Spare Part Provisional Sum has the meaning set forth in Attachment EE.
Operating Spare Parts has the meaning set forth in Section 3.4.
Operating Spare Parts List has the meaning set forth in Section 3.4.
Operations Activity or Operations Activities has the meaning set forth in Section 11.7.
Optimized Cascade Process means ConocoPhillips Companys natural gas cascade liquefaction process for transforming a methane-rich gas stream from the gas state to the liquid state wherein refrigerative cooling is provided by three cascaded refrigeration cycles which employ predominantly pure refrigerants and wherein the final refrigerant is either methane or predominantly methane in an open or closed cycle configuration.
OSBL Facilities has the meaning specified in the Scope of Facilities.
Owner has the meaning set forth in the preamble hereto.
Owner Default has the meaning set forth in Section 16.5.
Owner Group means (i) Owner, its parent, Lender, and each of their respective Affiliates and (ii) the respective directors, officers, agents, employees and representatives of each Person specified in clause (i) above.
Owner Monthly Confirmation has the meaning set forth in Section 4.1A.
Owner Permits means the Permits listed in Attachment Q and any other Permits (not listed in either Attachment P or Attachment Q) necessary for performance of the Work or the operation of the Liquefaction Facility and which are required to be obtained in Owners name pursuant to Applicable Law.
Owner Quarterly Confirmation has the meaning set forth in Section 4.1B.
Owner Representative means that Person or Persons designated by Owner in a written notice to Contractor who shall have complete authority to act on behalf of Owner on all matters pertaining to the Work, including giving instructions and making changes in the Work. The Owner Representative as of the Contract Date is designated in Section 4.9.
Owners Confidential Information has the meaning set forth in Section 19.1.
Outstanding Claims has the meaning set forth in Section 20.1B.
Outstanding Claims Amount has the meaning set forth in Section 20.1B.
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P&IDs means piping and instrumentation diagrams.
Parent Guarantee has the meaning set forth in Section 21.18.
Party or Parties means Owner and/or Contractor and their successors and permitted assigns.
Payment Schedule means the schedule of Milestone payments as set forth in Attachment C, Schedule C-1, and the schedule of Monthly Payments set forth in Attachment C, Schedule C-2.
Performance Guarantee means the LNG Production Rate Performance Guarantee.
Performance LD Exposure has the meaning set forth in Section 20.1B.
Performance Liquidated Damages has the meaning set forth in Attachment T.
Performance Test Procedures has the meaning set forth in Section 11.2.
Performance Tests means the tests performed (including any repetition thereof) to determine whether the Project meets the Performance Guarantee and/or Minimum Acceptance Criteria set forth in Attachment T, which tests shall be as specified in and consistent with Attachment S.
Permit means any valid waiver, certificate, approval, consent, license, exemption, variance, franchise, permit, authorization or similar order or authorization from any Governmental Instrumentality required to be obtained or maintained in connection with the Project, the Site or the Work, including any condition or requirement imposed under any of the foregoing.
Person means any individual, company, joint venture, corporation, partnership, association, joint stock company, limited liability company, trust, estate, unincorporated organization, Governmental Instrumentality or other entity having legal capacity.
Potential Lender has the meaning set forth in Section 21.16A.
Pre-Subproject 1 Substantial Completion Liabilities has the meaning set forth in Section 20.1B.
Project has the meaning set forth in the recitals hereto.
Project Commissioning Plan means the detailed plan which shall be provided by Contractor to Owner in accordance with Attachment V.
Project Insurances has the meaning set forth in Attachment EE.
Project Schedule means the schedule for performance of the Work, including the date for NTP, Target Substantial Completion Dates and the Guaranteed Substantial Completion Dates, as more particularly described in Attachment E.
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Provisional Sum means, collectively or individually, the Louisiana Sales and Use Tax Provisional Sum, the Insurance Provisional Sum, the Operating Spare Part Provisional Sum, the Soils Preparation Provisional Sum, the Existing Facility Labor Provisional Sum, the Heavies Removal Unit Provisional Sum, the Currency Provisional Sum and the Fuel Provisional Sum.
PSIG means pounds per square inch, gauge.
Punchlist means a list of those finishing items required to complete the Work, the completion of which shall not materially interrupt nor affect the safe operation of all or any part of the Project after Substantial Completion of a Subproject, as more fully described in Section 11.5 of this Agreement.
Qualified Research Expenditures means the costs funded by Owner under this Agreement that are incurred in connection with Work performed by Contractor, its Subcontractors and Sub-subcontractors which meet all of the requirements of Section 41(d)(1) of the Internal Revenue Code of 1986, as amended, and which are related to the development or improvement of a business component of the Project.
Ready for Performance Testing means that all of the following have occurred with respect to a Subproject: (i) the Subproject has started operation and successfully produced LNG; (ii) all OSBL Facilities and modifications and improvements to the Existing Facility required for the Subproject to start operation and successfully produce LNG are operational sufficiently to start the Performance Test; (iii) Contractor has completed all procurement, fabrication, assembly, erection, installation and pre-commissioning checks and tests of the Project to ensure that the entire Work, and each component thereof, of such Subproject was sufficiently fabricated, assembled, erected and installed so as to be capable of being operated safely within the requirements contained in this Agreement; and (iv) all portions of the Project have attained the state of completion necessary for commencement of the LNG Production Rate Performance Test for such Subproject.
Ready for Start Up or RFSU means that, with respect to each Subproject, all of the following have occurred: (i) Contractor has completed all applicable Work in accordance with the requirements contained in this Agreement to ensure that the applicable Subproject is ready for use to receive Natural Gas; and (ii) Contractor has delivered to Owner a RFSU Completion Certificate for such Subproject in the form of Attachment L as required under Section 11.1A.
Rebatable Louisiana Sales and Use Tax has the meaning set forth in Section 4.5A.
Receiving Party has the meaning set forth in Section 19.3.
Record Drawings and Specifications means final, record Drawings and Specifications of the Project showing the as-built conditions of the completed Project, as required under Attachment B. The foregoing record Drawings are also referred to herein as Record Drawings.
Recovery Schedule has the meaning set forth in Section 5.5.
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Reduction has the meaning set forth in Section 20.1B.
Reduction Date has the meaning set forth in Section 20.1B.
RFSU Completion Certificate has the meaning set forth in Section 11.1A.
Safety Standards has the meaning set forth in Section 3.10A.
SCF means standard cubic feet.
SCFD means standard cubic feet per Day.
Schedule Bonus has the meaning specified in Section 13.2B.
Schedule Bonus for SP1 has the meaning specified in Section 13.2A.
Schedule Bonus for SP2 has the meaning specified in Section 13.2B.
Schedule Bonus Date has the meaning specified in Section 13.2B.
Schedule Bonus Date for SP1 has the meaning specified in Section 13.2A.
Schedule Bonus Date for SP2 has the meaning specified in Section 13.2B.
Scope of Facilities has the meaning set forth in Attachment A.
Scope of Work means the description of Work to be performed by Contractor as set forth in this Agreement, including as more specifically set forth in Attachment A.
SEC means the Securities and Exchange Commission or any successor entity thereto.
Ship Loading Time Test means the commissioning test performed to measure LNG Tanker loading time, which test shall be as specified in and consistent with Attachment S.
Site means the Liquefaction Facility Site and the Existing Facility Site together.
Soils Preparation Provisional Sum has the meaning set forth in Attachment EE.
Specifications means those documents consisting of the written requirements for Equipment, standards and workmanship for the Work, which are prepared as a part of and during the performance of the Work.
Start Up means the start-up of a Subproject or portion thereof as described in Attachment V.
Subcontract means an agreement by Contractor with a Subcontractor for the performance of any portion of the Work.
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Subcontractor means any Person, including an Equipment supplier or vendor, who has a direct contract with Contractor to manufacture or supply Equipment which is a portion of the Work, to lease Construction Equipment to Contractor in connection with the Work, or to otherwise perform a portion of the Work.
Subproject means individually Subproject 1 or Subproject 2 which together shall compose the entire Project.
Subproject 1 is comprised of LNG Train 1 of the Liquefaction Facility and all OSBL Facilities and modifications and improvements to the Existing Facility required for LNG Train 1 to receive Natural Gas, produce LNG, transfer LNG to all existing Tanks and load LNG Tankers from all existing Tanks.
Subproject 2 is comprised of LNG Train 2 of the Liquefaction Facility and all OSBL Facilities and modifications and improvements to the Existing Facility required for LNG Train 2 to receive Natural Gas, produce LNG and transfer LNG to all Tanks.
Substantial Completion means that all of the following have occurred with respect to a Subproject: (i) the Minimum Acceptance Criteria for such Subproject has been achieved; (ii) the Performance Guarantee for such Subproject has been achieved, or if the Performance Guarantee has not been achieved but the MAC has been achieved, Contractor either (A) has paid the applicable Performance Liquidated Damages or (B) elects or is directed to take corrective actions to achieve the Performance Guarantee pursuant to Section 11.4A(ii); (iii) the Work (including training in accordance with Section 3.5 and the delivery of all documentation required as a condition of Substantial Completion under this Agreement (including documentation required for operation, including test reports)) for such Subproject has been completed in accordance with the requirements of this Agreement other than any Work for such Subproject which meets the definition of Punchlist; (iv) Contractor has delivered to Owner the Substantial Completion Certificate in the form of Attachment M, as required under Section 11.2; (v) Contractor has obtained all Contractor Permits for such Subproject; and (vi) Contractor has, pursuant to Section 3.4, delivered to the Site all Operating Spare Parts required by the Operating Spare Parts List to be delivered to the Site prior to Substantial Completion of the applicable Subproject.
Substantial Completion Certificate has the meaning set forth in Section 11.2.
Sub-subcontract means any agreement by a Subcontractor with a Sub-subcontractor or by a Sub-subcontractor with another Sub-subcontractor for the performance of any portion of the Work.
Sub-subcontractor means any Person, including an Equipment supplier or vendor, who has a direct or indirect contract with a Subcontractor or another Sub-subcontractor to manufacture or supply Equipment which comprises a portion of the Work, to lease Construction Equipment to Subcontractor or another Sub-subcontractor in connection with the Work, to perform a portion of the Work or to otherwise furnish labor or materials.
Subsurface Soil Conditions means subsurface conditions at the Site.
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Tank means any of the existing LNG tanks S101, S102, S103, S104 or S105 of the Existing Facility and located at the Existing Facility Site.
Target Substantial Completion Date means each of the Target Substantial Completion Date for Subproject 1 and the Target Substantial Completion Date for Subproject 2 and Target Substantial Completion Dates means collectively the Target Substantial Completion Date for Subproject 1 and Target Substantial Completion Date for Subproject 2.
Target Substantial Completion Date for Subproject 1 means the date specified in Attachment E, which represents the target date for achieving Substantial Completion for Subproject 1.
Target Substantial Completion Date for Subproject 2 means the date specified in Attachment E, which represents the target date for achieving Substantial Completion for Subproject 2.
Taxes means any and all taxes, assessments, levies, duties, fees, charges and withholdings of any kind or nature whatsoever and howsoever described, including Louisiana Sales and Use Taxes, value-added, sales, use, gross receipts, license, payroll, federal, state, local or foreign income, environmental, profits, premium, franchise, property, excise, capital stock, import, stamp, transfer, employment, occupation, generation, privilege, utility, regulatory, energy, consumption, lease, filing, recording and activity taxes, levies, duties, fees, charges, imposts and withholding, together with any and all penalties, interest and additions thereto.
Technical Services Agreement means the Technical Services Agreement between Cheniere LNG, Inc. and Contractor, dated June 7, 2010.
Third Party means any Person other than a member of (i) the Contractor Group, (ii) the Owner Group, or (iii) any Subcontractor or Sub-subcontractor or any employee, officer or director of such Subcontractor or Sub-subcontractor.
Unit Rates has the meaning set forth in Section 6.1C.
USACE means the United States Army Corps of Engineers.
U.S. Dollars or U.S.$ means the legal tender of the United States of America.
Warranty or Warranties has the meaning set forth in Section 12.1A.
Windstorms has the meaning set forth in Section 8.2.
Work means the work obligations, duties and responsibilities to be performed by or on behalf of Contractor in connection with the procurement, engineering, design, fabrication, erection, installation, manufacture, inspection, repair (including Corrective Work), testing (including Performance Tests), training, pre-commissioning, commissioning and placing into service of the Liquefaction Facility and the related component Equipment and
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Subprojects (including the modifications and improvements to the Existing Facility), and the required related labor and materials, all in accordance with the terms of this Agreement and the various Attachments, including Attachment A. The Work for this Project is broken into two (2) distinct subprojects, Subproject 1 and Subproject 2, as set forth in greater detail in Attachment A.
Work Product has the meaning set forth in Section 10.1A.
1.2 The meanings specified in this Article 1 are applicable to both the singular and plural. As used in this Agreement, the terms herein, herewith, hereunder and hereof are references to this Agreement taken as a whole, and the terms include, includes and including mean including, without limitation, or variant thereof. Reference in this Agreement to an Article or Section shall be a reference to an Article or Section contained in this Agreement (and not in any Attachments or Schedules to this Agreement) unless expressly stated otherwise, and a reference in this Agreement to an Attachment or Schedule shall be a reference to an Attachment or Schedule attached to this Agreement unless expressly stated otherwise.
ARTICLE 2
RELATIONSHIP OF OWNER, CONTRACTOR AND SUBCONTRACTORS
2.1 Status of Contractor. The relationship of Contractor to Owner shall be that of an independent contractor. Any provisions of this Agreement which may appear to give Owner or the Owner Representative the right to direct or control Contractor as to details of performing the Work, or to exercise any measure of control over the Work, shall be deemed to mean that Contractor shall follow the desires of Owner or the Owner Representative in the results of the Work only and not in the means by which the Work is to be accomplished, and Contractor shall have the complete right, obligation and authoritative control over the Work as to the manner, means or details as to how to perform the Work. Nothing herein shall be interpreted to create a master-servant or principal-agent relationship between Contractor, or any of its Subcontractors or Sub-subcontractors, and Owner. Nevertheless, Contractor shall comply with all provisions, terms and conditions of this Agreement, and the fact that Contractor is an independent contractor does not relieve it from its responsibility to fully, completely, timely and safely perform the Work in compliance with this Agreement. Except to the extent set forth in this Agreement, including Sections 6.1C, 6.2D, 11.7 and 16.3, and subject at all times to Section 6.7, Owner shall not be entitled to issue any instruction or directive to Contractor or any of its Subcontractors or Sub-subcontractors in connection with performance of the Work. Owner shall provide a copy to Contractor of any written communication from Owner to any Subcontractor or Sub-subcontractor that relates to Contractors performance of the Work.
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2.2 Key Personnel, Organization Chart and Contractor Representative.
A. Key Personnel and Organization Chart. Attachment F sets forth Contractors organizational chart to be implemented for the Work and also contains a list of key personnel (Key Personnel or Key Persons) from Contractors organization who will be assigned to the Work. Key Personnel shall, unless otherwise expressly stated in Attachment F, be devoted full-time to the Work until Substantial Completion of Subproject 2, and Key Personnel shall not be removed or reassigned without Owners prior written approval (such approval not to be unreasonably withheld); provided, however, Owners prior written approval shall not be required in the event Contractor removes or reassigns a Key Person at any time prior to Owners issuance of the NTP. All requests for the substitution of Key Personnel shall include a detailed explanation and reason for the request and the resumes of professional education and experience for a minimum of two (2) candidates of equal or greater qualifications and experience. Should Owner approve of the replacement of a Key Person, Contractor shall, so far as reasonably practicable, allow for an overlap of at least one (1) week during which both the Key Person to be replaced and the Owner-approved new Key Person shall work together full time. The additional cost of any replacement of such Key Personnel and overlap time shall be entirely at Contractors expense. Owner shall have the right, but not the obligation, at any time to reasonably request that Contractor replace any Key Person with another employee acceptable to Owner. In such event, Contractor shall reasonably consider Owners request that Contractor replace such Key Person.
B. Contractor Representative. Contractor designates *** as the Contractor Representative. Notification of a change in Contractor Representative shall be provided in advance, in writing, to Owner. The Contractor Representative is a Key Person.
2.3 Subcontractors and Sub-subcontractors. Owner acknowledges and agrees that Contractor intends to have portions of the Work accomplished by Subcontractors pursuant to written Subcontracts between Contractor and such Subcontractors, and that such Subcontractors may have certain portions of the Work performed by Sub-subcontractors. All Subcontracts shall, so far as reasonably practicable, be consistent with the terms or provisions of this Agreement. No Subcontractor or Sub-subcontractor is intended to be or shall be deemed a third-party beneficiary of this Agreement. Contractor shall be fully responsible to Owner for the acts and omissions of Subcontractors and Sub-subcontractors and of Persons directly or indirectly employed by either of them in the performance of the Work, as it is for the acts or omissions of Persons directly employed by Contractor. The work of any Subcontractor or Sub-subcontractor shall be subject to inspection by Owner to the same extent as the Work of Contractor. All Subcontractors and Sub-subcontractors and their respective personnel on Site or who may come on the Site or the Off-Site Rights of Way and Easements are to be instructed by Contractor in the terms and requirements of Contractors safety and environmental protection regulations and policies and shall be expected to comply with such regulations. In the event that any personnel are not adhering to such regulations and policies, such personnel shall be removed by Contractor. In no event shall Contractor be entitled to any adjustment of the Contract Price or Project Schedule as a result of compliance with such regulations and policies set forth in the HSE Plan, or any removal of personnel necessitated by non-compliance. Nothing contained herein shall (i) create any contractual relationship between any Subcontractor and Owner, or between any Sub-subcontractor and Owner, or (ii) obligate Owner to pay or cause the payment of any amounts to Subcontractor or Sub-subcontractor.
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2.4 Subcontracts and Sub-subcontracts.
A. Approved List. Attachment G sets forth a list of contractors and suppliers that Contractor and Owner have agreed are approved for selection as Subcontractors for the performance of that portion of the Work specified in Attachment G. Approval by Owner of any Subcontractors or Sub-subcontractors does not relieve Contractor of any responsibilities under this Agreement.
B. Additional Proposed Major Subcontractors. In the event that Contractor is considering the selection of a Subcontractor not listed on Attachment G that would qualify as a Major Subcontractor, Contractor shall (i) notify Owner of its proposed Major Subcontractor as soon as reasonably practicable during the selection process and furnish to Owner all information reasonably requested by Owner with respect to Contractors selection criteria, and (ii) notify Owner no less than ten (10) Business Days prior to the execution of a Major Subcontract with a Major Subcontractor not listed on Attachment G. Owner shall have the discretion, not to be unreasonably exercised, to reject any proposed Major Subcontractor not listed on Attachment G for a Major Subcontract. Contractor shall not enter into any Major Subcontract with a proposed Major Subcontractor that is rejected by Owner in accordance with the preceding sentence. Owner shall undertake in good faith to review the information provided by Contractor pursuant to this Section 2.4B expeditiously and shall notify Contractor of its decision to accept or reject a proposed Major Subcontractor as soon as practicable after such decision is made. Failure of Owner to accept or reject a proposed Major Subcontractor within ten (10) Business Days shall be deemed to be an acceptance of such Major Subcontractor, but Owners acceptance of a proposed Major Subcontractor shall in no way relieve Contractor of its responsibility for performing the Work in compliance with this Agreement.
C. Other Additional Proposed Subcontractors. For any Subcontractor not covered by Section 2.4A or 2.4B and having a Subcontract value in excess of One Million U.S. Dollars (U.S.$1,000,000), Contractor shall, within fifteen (15) Business Days after the execution of any such Subcontract, notify Owner in writing of the selection of such Subcontractor and inform Owner generally what portion of the Work such Subcontractor is performing.
D. Delivery of Subcontracts. Within ten (10) Days of Owners request, Contractor shall furnish Owner with a copy of any Subcontract, excluding provisions regarding pricing, discount or credit information, payment terms, payment schedules, retention, performance security, bid or proposal data, and any other information which Contractor or any Subcontractor reasonably considers to be commercially sensitive information.
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E. Terms of Major Subcontracts and Sub-subcontracts. In addition to the requirements in Section 2.3 and without in any way relieving Contractor of its full responsibility to Owner for the acts and omissions of Subcontractors and Sub-subcontractors, each Major Subcontract and each Major Sub-subcontract shall contain the following provisions:
1. the Major Subcontract and the Major Sub-subcontract may be assigned to Owner without the consent of the respective Major Subcontractor or Major Sub-subcontractor; provided, however, with respect to each Construction Equipment rental or lease agreement that falls within the definition of Major Subcontract or Major Sub-subcontract, Contractor shall only be obligated to use its best efforts to include a provision that such agreement may be assigned to Owner without the consent of the respective Construction Equipment Lessor; and
2. so far as reasonably practicable, the Major Subcontractor and the Major Sub-subcontractor shall comply with all requirements and obligations of Contractor to Owner under this Agreement, as such requirements and obligations are applicable to the performance of the work under the respective Major Subcontract or Major Sub-subcontract.
2.5 Contractor Acknowledgements.
A. The Agreement. Prior to the execution of this Agreement, under the Technical Services Agreement, Contractor performed engineering, cost estimating and related services and developed, provided or verified all of the information that forms the Scope of Work and Design Basis (subject to Section 4.8) listed in Attachment A, for the purpose of determining that such information is adequate and sufficiently complete for Contractor to engineer, procure, construct, pre-commission, commission, start-up and test a fully operational LNG export, liquefaction and send-out terminal facility and to engineer, procure and construct certain improvements and modifications to the Existing Facility for the Contract Price, within the required times set forth in the Project Schedule, and in accordance with all requirements of this Agreement, including Applicable Codes and Standards, Applicable Law, Warranties, Minimum Acceptance Criteria and Performance Guarantee. Further, Contractor and its Affiliates originally engineered and constructed the Existing Facility pursuant to separate agreements entered into with Owners Affiliates. Accordingly, subject to Section 4.8 and Section 3.1 of Attachment A, Contractor (i) hereby agrees that it shall have no right to claim or seek an increase in the Contract Price or an adjustment to the Project Schedule with respect to any incomplete, inaccurate or inadequate information that may be contained or referenced in Attachment A, (ii) hereby waives and releases Owner from and against any such claims, and (iii) shall not be relieved of its responsibility to achieve all requirements under this Agreement (including meeting Applicable Codes and Standards, Applicable Law, Minimum Acceptance Criteria and Performance Guarantee) due to any such incomplete, inaccurate or inadequate information. Subject to Section 4.8, Owner makes no guaranty or warranty, express or implied, as to the accuracy, adequacy or completeness of any information that is contained in or referenced in Attachment A.
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B. Conditions of the Site.
1. Subject to adjustment as appropriate pursuant to Section 4.3, Contractor agrees and acknowledges that it is sufficiently familiar with the Liquefaction Site, the Existing Facility Site (to the extent related to the Work) and the Off-Site Rights of Way and Easements to perform the Work in accordance with the Project Schedule, and understands the climate, terrain, logistics, and other difficulties that it may encounter in performing the Work in accordance with the Project Schedule. Except as otherwise provided in this Agreement, including Contractors rights pursuant to Section 6.8A, Contractor waives any right to claim an adjustment in the Contract Price or the Project Schedule in respect of any failure to timely perform the Work in accordance with the Project Schedule as a result of any of the following conditions at the Site: (i) river levels, topography; (ii) climatic conditions, tides, and seasons; (iii) availability of laborers, Subcontractors, Sub-subcontractors, Construction Equipment or any other items or supplies; (iv) adequate availability and transportation of Equipment; and (v) breakdown or other failure of Construction Equipment; provided, however, that Contractor does not assume the risk or waive its rights with respect to those conditions in Section 2.5B.2. This Section 2.5B.1 shall not affect the rights of Contractor with respect to Change Orders in accordance with Section 4.3.
2. If Contractor encounters Subsurface Soil Conditions that (i) are materially different from the information regarding such Subsurface Soil Conditions as provided in the Geotechnical Reports (including the encountering of Subsurface Soil Conditions that could not be reasonably be anticipated by Contractor using GECP based on the information provided in the Geotechnical Reports) and (ii) adversely affects (a) Contractors costs of performance of the Work, (b) Contractors ability to perform the Work in accordance with the Project Schedule or (c) Contractors ability to perform any material obligation under this Agreement, Contractor shall be entitled to a Change Order; provided that Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9.
C. Applicable Law and Applicable Codes and Standards. Contractor has investigated to its satisfaction Applicable Law in existence as of May 15, 2011 and Applicable Codes and Standards set forth or listed in any document or Drawing listed in Attachment A, and warrants that it can perform the Work at the Contract Price and within the Project Schedule in accordance with such Applicable Law and such Applicable Codes and Standards. Contractor shall perform the Work in accordance with Applicable Law and such Applicable Codes and Standards; provided, however, Contractor shall be entitled to a Change Order for any Change in Law to the extent allowed under Section 6.2A.1. Contractor shall advise Owner of any change in Applicable Codes and Standards which does not constitute a Change in Law and, upon such advisement, Owner may elect, at its sole option, to implement a change in accordance with Section 6.1D.
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ARTICLE 3
CONTRACTORS RESPONSIBILITIES
3.1 Scope of Work.
A. Generally. Subject to Section 3.1B, the Work shall be performed on a turnkey basis and shall include all of the Work required to achieve RFSU of each Subproject, Substantial Completion of each Subproject and Final Completion in accordance with the requirements of this Agreement, including achieving the Minimum Acceptance Criteria and Performance Guarantee. Contractor shall be required to integrate and use Owners operations personnel in its pre-commissioning, commissioning, testing, and start-up efforts, subject to Owners obligations under Section 4.4. Contractor shall perform the Work in accordance with GECP, Applicable Law, Applicable Codes and Standards, and all other terms and provisions of this Agreement, with the explicit understanding that the Liquefaction Facility will operate as an LNG export, liquefaction and send-out terminal facility meeting all requirements and specifications of this Agreement and that the Existing Facility will continue to operate as an LNG receiving, storage and regasification facility. It is understood and agreed that the Work shall include any incidental work that can reasonably be inferred as necessary to complete the Project in accordance with GECP, Applicable Law, Applicable Codes and Standards, and all other terms and provisions of this Agreement, excluding only those items which Owner has specifically agreed to provide under the terms of this Agreement. Without limiting the generality of the foregoing, the Work is more specifically described in Attachment A.
B. Exception to Scope of Work. Contractor shall not be responsible for providing (i) the Owner Permits; (ii) LNG; (iii) those requirements set forth under Sections 4.3, 4.4 and 4.8; (iv) legal description of the Site and a survey of the Site showing the boundaries of the Site and one survey control point pursuant to Section 4.6; and (v) any other obligations or requirements set forth in this Agreement as required to be performed by Owner.
3.2 Specific Obligations. Without limiting the generality of Section 3.1 or the requirements of any other provision of this Agreement, Contractor shall:
A. procure, supply, transport, handle, properly store, assemble, erect and install all Equipment;
B. provide construction, construction management (including the furnishing of all Construction Equipment used in the field, and all Site supervision and craft labor), inspection and quality control services required to ensure that the Work is performed in accordance herewith;
C. negotiate all guarantees, warranties, delivery schedules and performance requirements with all Subcontractors so that all Subcontracts are, so far as reasonably practicable, consistent with this Agreement, as set forth in Sections 2.3 and 2.4;
D. perform shop and other inspections of the work of Subcontractors and Sub-subcontractors as required by Contractor to ensure that such work meets all of the requirements of this Agreement;
E. ensure that the Work is performed in accordance with the Project Schedule;
F. until Substantial Completion of the applicable Subproject, conduct and manage all pre-commissioning, start-up, operations, commissioning, Performance Testing of such Subproject, while supervising and directing operating personnel provided by Owner;
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G. obtain all Contractor Permits;
H. provide assistance, information and documentation as reasonably requested by Owner to enable Owner to obtain the Owner Permits; provided that such assistance, information and documentation shall not include Contractors provision of information, testimony, documents or data by Contractors employees under oath (unless specifically authorized by Contractor) and activities outside the field of Contractors expertise, training or experience of personnel assigned to the performance of the Work under this Agreement (expect to the extent provided for by Change Order issued pursuant to Section 6.1 and agreed by Contractor);
I. provide training for Owners operating and maintenance personnel per Section 3.5;
J. cooperate with and respond promptly to reasonable inquiries from Owner; provided that such cooperation shall not include Contractors provision of information, testimony, documents or data by Contractors employees under oath (unless specifically authorized by Contractor) and activities outside the field of Contractors expertise, training or experience of personnel assigned to the performance of the Work under this Agreement (expect to the extent provided for by Change Order issued pursuant to Section 6.1 and agreed by Contractor);
K. be responsible for connecting the Liquefaction Facility to the permanent utilities to the extent set forth in Attachment A;
L. supply all initial fills, excluding LNG and Feed Gas; and
M. perform all design and engineering Work in accordance with this Agreement, including that specified in Section 3.3.
3.3 Design and Engineering Work.
A. General. Contractor shall, as part of the Work, perform all design and engineering Work in accordance with this Agreement and cause the Work to meet and achieve the requirements of this Agreement, including achieving the Minimum Acceptance Criteria and Performance Guarantee.
B. Drawings and Specifications. Upon receipt of the Limited Notice to Proceed or Notice to Proceed issued in accordance with Sections 5.1 and 5.2, Contractor shall commence the preparation of the Drawings and Specifications for all Work relating to such LNTP or NTP. The Drawings and Specifications shall be based on the requirements of this Agreement, including the Scope of Work, Design Basis, GECP, Applicable Codes and Standards and Applicable Law.
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C. Review Process.
1. Submission by Contractor. Contractor shall submit copies of the Drawings and Specifications specified in Attachment B to Owner for formal review, comment or disapproval in accordance with Attachment B.
2. Review Periods. Owner shall have up to ten (10) Business Days from its receipt of Drawings and Specifications submitted in accordance with Section 3.3C.1 to issue to Contractor written comments, proposed changes and/or written disapprovals of the submission of such Drawings and Specifications to Contractor.
If Owner does not issue any comments, proposed changes or written disapprovals within such time periods, Contractor may proceed with the development of such Drawings and Specifications and any construction relating thereto, but Owners lack of comments or disapproval, if applicable, shall in no event constitute an approval of the matters received by Owner.
In the event that Owner disapproves the Drawings or Specifications submitted in accordance with Section 3.3C.1 (which disapproval shall not be unreasonably issued), Owner shall provide Contractor with a written statement of the reasons for such rejection within the time period required for Owners response, and Contractor shall provide Owner with revised and corrected Drawings and Specifications as soon as possible thereafter. In the event Owner unreasonably disapproves such Drawings and Specifications and such unreasonable disapproval adversely impacts Contractors costs or ability to perform the Work in accordance with the Project Schedule, Contractor shall be entitled to a Change Order; provided that Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9.
Provided that Owner has not disapproved of the Drawings and Specifications submitted in accordance with Section 3.3C.1, such Drawings and Specifications shall be the Drawings and Specifications that Contractor shall use to construct the Work; provided that Owners lack of disapproval of or comments on, or any approval by Owner of, any Drawings and Specifications shall not in any way be deemed to limit or in any way alter Contractors responsibility to perform and complete the Work in accordance with the requirements of this Agreement.
D. Design Licenses. Contractor shall perform all design and engineering Work in accordance with Applicable Law, and all Drawings and Specifications shall be signed and stamped by design professionals licensed in accordance with Applicable Law.
E. CAD Drawings. Those Drawings and Record Drawings specified in Attachment A and Attachment B and prepared by Contractor or its Subcontractors or Sub-subcontractors under this Agreement shall be prepared using computer aided design (CAD). Contractor shall provide Drawings, including Record Drawings, in their native formats as set forth in Attachment B along with six (6) hard copies.
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F. Progress P&IDs. During the Project, Contractor shall maintain and provide Owner with access to a marked, up-to-date set of P&IDs maintained for and by Contractor.
G. Record Drawings and Specifications. As a condition precedent to Final Completion, Contractor shall deliver to Owner the Record Drawings and Specifications in accordance with Attachment A and Attachment B.
H. Other Information. Contractor shall deliver copies of all other documents required to be delivered pursuant to Attachment B within and in accordance with the requirements and timing set forth in Attachment B.
3.4 Spare Parts.
A. Operating Spare Parts. Not later than three hundred sixty-five (365) Days prior to the Guaranteed Substantial Completion Date for Subproject 1, Contractor shall deliver to Owner a detailed list of all manufacturer and Contractor-recommended spare parts and special tools necessary for operating and maintaining all Equipment (including components and systems of such Equipment) for two (2) years following Substantial Completion of each Subproject (Operating Spare Parts). Within thirty (30) Days thereafter, Owner shall specify in writing which items on the list it wishes Contractor to purchase and whether such items are requested to be delivered to the Site prior to Substantial Completion of Subproject 1, Substantial Completion of Subproject 2 or Final Completion. Within a further thirty (30) Days, Contractor shall confirm the extent to which it is able to comply with Owners request and shall submit to Owner the final list of Operating Spare Parts to be purchased. The list of Operating Spare Parts to be procured by Contractor and delivered to Owner (Operating Spare Parts List) shall be mutually agreed upon via a Change Order. Prior to and as a condition precedent to Substantial Completion of each Subproject, Contractor shall deliver to the Site all Operating Spare Parts required by the above referenced Change Order to be delivered to the Site prior to Substantial Completion of such Subproject as set forth in the Operating Spare Parts List. Prior to and as a condition to achieving Final Completion, Contractor shall deliver to the Site all Operating Spare Parts required to be delivered to the Site prior to Final Completion as set forth in the Operating Spare Parts List. The Operating Spare Parts List shall include all information specified in Schedule W-1. A Provisional Sum for the cost of Operating Spare Parts is included in the Contract Price as set forth in Section 7.1 and Attachment EE.
B. Capital Spare Parts. Prior to and as a condition precedent to Substantial Completion of each Subproject, Contractor shall deliver to the Site all capital spare parts listed in Schedule W-2, and the cost associated with all Work related to such capital spare parts is included in the Contract Price, including the actual out-of-pocket purchase price of such spare parts, plus profit and markup.
3.5 Training Program in General. As part of the Work, a reasonable number of personnel designated by Owner in its sole discretion (but not to exceed the number of Persons listed in Attachment V) shall be given a training course designed and administered by Contractor, which shall be based on the outline of the
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program contained in Attachment V and shall cover at a minimum the following topics: (i) the testing of each item of Equipment; (ii) the start-up, operation and shut-down of each item of Equipment; (iii) the performance of routine, preventative and emergency maintenance for each item of Equipment; and (iv) spare parts to be maintained for each item of Equipment, and their installation and removal. Training shall be provided by personnel selected by Contractor who, in Contractors and the Equipment Subcontractors or Sub-subcontractors judgment, are qualified to provide such training, and shall take place at such locations and at such times as agreed upon by the Parties. Contractor shall provide trainees with materials described in Attachment V. Contractor shall also provide to Owner all training materials and aids developed to conduct such training in order to facilitate future training by Owner of additional personnel.
3.6 Environmental Regulations and Environmental Compliance. Without limitation of Section 3.1, Contractor shall perform the Work and shall design, construct, pre-commission, commission, start-up and test the Liquefaction Facility and, as applicable, the Existing Facility, in compliance with Contractors HSE Plan. Contractor shall dispose of all non-hazardous wastes and Hazardous Materials brought onto the Site by Contractor or any of its Subcontractors or Sub-subcontractors or generated during performance of the Work, all of which shall be disposed in off-Site locations permitted to receive such non-hazardous wastes and Hazardous Materials. Contractor shall deliver to Owner (i) notice of any pending or threatened material environmental claim with respect to the Project, and (ii) promptly upon their becoming available, copies of written communications with any Governmental Instrumentality relating to any such material environmental claim.
3.7 Construction Equipment. Contractor shall furnish all Construction Equipment necessary and appropriate for the timely and safe completion of the Work in compliance with this Agreement. Notwithstanding anything to the contrary contained in this Agreement, Contractor shall be responsible for damage to or destruction or loss of, from any cause whatsoever, all such Construction Equipment. Contractor shall require all insurance policies (including policies of Contractor and all Subcontractors and Sub-subcontractors) in any way relating to such Construction Equipment to include clauses stating that each underwriter will waive all rights of recovery, under subrogation or otherwise, against Owner, Lender and any Owner Affiliates.
3.8 Employment of Personnel.
A. Contractor shall not employ, or permit any Subcontractor or Sub-subcontractor to employ, at the Site, in connection with its performance under this Agreement, any Person who is demonstrably not skilled or qualified in the work assigned to such Person. Contractor agrees to promptly remove (or to require any Subcontractor to remove) from its services in connection with the Work any Person who does not meet the foregoing requirements. In addition, Contractor agrees that, after receipt of written notice from Owner, it shall promptly remove from the Work any employee or agent of Contractor or of Contractors Subcontractors or Sub-subcontractors who, in Owners reasonable opinion, is unsafe, incompetent, careless, unqualified to perform the Work assigned to such Person, creates an unsafe work environment, disregards the terms and conditions of this Agreement, or is interrupting, interfering with or impeding the timely and proper
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completion of the Work. Notwithstanding the foregoing, Owner shall have no liability and Contractor agrees to release, indemnify, defend and hold harmless the Owner Group from and against any and all claims, causes of action, damages, losses, cost and expenses (including all reasonable attorneys fees and litigation or arbitration expenses) and liabilities, of whatsoever kind or nature, which may directly or indirectly arise or result from Contractor or any Subcontractor or Sub-subcontractor choosing to terminate the employment of any such employee (including any Key Person) or remove such employee from the Project who fails to meet the foregoing requirements following a request by Owner to have such employee removed from the Work. Any such employee shall be replaced at the cost and expense of Contractor or the relevant Subcontractor, as appropriate; provided, however, that should (i) Contractor disagree with Owners identification of an individual for removal from the performance of services under this Section 3.8A, (ii) Owner not retract its request for removal upon being advised of such disagreement, and (iii) such individual does not in fact conform to the foregoing criteria for removal, Contractor shall be entitled to a reciprocal indemnity from Owner in respect to any claims, causes of action, damages, losses, cost and expenses (including all reasonable attorneys fees and litigation or arbitration expenses) and liabilities of whatever kind or nature, which may directly or indirectly arise from Contractors removal of any such employee (including any Key Person) from the Project.
B. Contractor is responsible for maintaining labor relations in such manner that, so far as reasonably practicable, there is harmony among workers. Contractor and its Subcontractors and Sub-subcontractors shall conduct their labor relations in accordance with the recognized prevailing local area practices. Contractor shall inform Owner promptly of any labor dispute, anticipated labor dispute, request or demand by a labor organization, its representatives or members which may reasonably be expected to affect the Work. Contractor further agrees to inform Owner, before any commitments are made, during the negotiations of any agreements or understandings with local or national labor organizations.
3.9 Clean-Up. Contractor shall, to Owners reasonable satisfaction, at all reasonable times keep the Site free from all waste materials or rubbish caused by the activities of Contractor or any of its Subcontractors or Sub-subcontractors. As soon as practicable after the completion of all Punchlist items, Contractor shall remove, at its own cost, all of its Construction Equipment and remove from the Site all waste material and rubbish that was generated or brought on to the Site by Contractor or any of its Subcontractors or Sub-subcontractors. The Site shall be restored to the extent, if any, required by Attachment A. In the event of Contractors failure to comply with any of the foregoing, Owner may accomplish the same; provided, however, that Contractor shall be responsible for all reasonable costs associated with such removal and/or restoration, including costs associated with permitting and transportation.
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3.10 HSE Plan; Security.
A. Contractor recognizes and agrees that safety and physical security are of paramount importance in the performance of the Work and that Contractor is responsible for performing the Work in a safe and physically secure manner. No later than sixty (60) Days after Owners issuance of the earlier of LNTP or NTP, Contractor shall submit to Owner for its review a health, safety and environmental plan (including a drug testing program) meeting the requirements set forth in Attachment J (the HSE Plan). Contractor further agrees to perform the Work in accordance with the health, safety and environmental rules and standards of Applicable Law, GECP and the HSE Plan (collectively, the Safety Standards), and Contractor shall assume all costs associated with compliance therewith. Owners review of the HSE Plan shall not in any way relieve Contractor of its obligations under this Agreement (including Contractors obligations to conduct the Work in accordance with the health, safety and environmental rules of Applicable Law and GECP). Contractor shall appoint one or more (as appropriate) safety representative(s) reasonably acceptable to Owner who shall be resident at the Liquefaction Site, have responsibility to correct unsafe conditions or unsafe acts associated with the Work and the Project, act on behalf of Contractor on health, safety and environmental matters, and participate in periodic safety meetings with Owner. Contractor further agrees to provide or cause to be provided necessary training and safety equipment to its employees, Subcontractors and Sub-subcontractors and to Owner personnel temporarily visiting the Site to ensure their compliance with the foregoing Safety Standards and enforce the use of such training and safety equipment. Contractor shall maintain all accident, injury and any other records required by Applicable Law or by Permit and shall furnish Owner a Monthly summary of injuries and labor hours lost due to injuries. Should Owner at any time observe Contractor, or any of its Subcontractors or Sub-subcontractors, performing the Work at the Site in violation of the Safety Standards or in an unsafe manner, or in a manner that would, if continued, violate the Safety Standards or become unsafe, then Owner shall have the right (but not the obligation) to require Contractor to stop the affected Work until such time as the manner of performing such Work has been rendered safe; provided, however, that at no time shall Contractor be entitled to an adjustment of the Contract Price or Project Schedule based on such Work stoppage. Contractor shall be responsible for the security, fencing, guarding, lighting, and supervision of the Liquefaction Facility until all of the requirements of Substantial Completion of Subproject 2 have been satisfied. With respect to all Work within the Existing Facility Site, Contractor shall comply, and cause its Subcontractors and Sub-subcontractors to comply, with Owners health, safety, security and environmental policies governing the Existing Facility.
B. All Work performed hereunder, as applicable, shall comply with the minimum federal safety standards for the design, installation, inspection, testing, construction, extension, operation, replacement, and maintenance of facilities contained in Title 49, Code of Federal Regulations, Parts 192 (to the extent applicable) and 193 and in Title 33 C.F.R. Part 127. Contractor shall comply with requirements of the Operator Qualification Program that are outlined in Sub-Part H of 49 C.F.R. Part 193 and Sub-Part G of C.F.R. Part 195, where applicable, in connection with the Work. The term pipeline facilities shall include new and existing pipe, rights-of-way, and any equipment, facility, or building used in the transportation of gas, including LNG, or treatment of gas during the course of transportation. The term transportation of gas shall include the gathering, transmission, or distribution of gas by pipeline or the storage of gas.
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3.11 Emergencies. In the event of any emergency endangering life or property in any way relating to the Work, whether on the Site or otherwise, Contractor shall take such action as may be reasonable and necessary to prevent, avoid or mitigate injury, damage, or loss and shall, as soon as reasonably possible, report any such incidents, including Contractors response thereto, to Owner. If Contractor fails to take such action and the emergency requires immediate action, then Owner, with or without notice to Contractor may, but shall be under no obligation to, take reasonable action as required to address such emergency. The taking of any such action by Owner, or Owners failure to take any action, shall not limit Contractors liability. Contractor shall reimburse Owner in an amount equal to the reasonable costs incurred by Owner in taking such action.
3.12 Contractor Permits. Contractor shall be responsible for obtaining the Contractor Permits. Contractor shall provide Owner with copies of such Contractor Permits as soon as reasonably practicable after they are obtained. Contractor shall provide information, assistance and documentation to Owner as reasonably requested in connection with the Owner Permits; provided that such information, assistance and documentation shall not include Contractors provision of information, testimony, documents or data by Contractors employees under oath (unless specifically authorized by Contractor) and activities outside the field of Contractors expertise, training or experience of personnel assigned to the performance of the Work under this Agreement (expect to the extent provided for by Change Order issued pursuant to Section 6.1 and agreed by Contractor).
3.13 Books, Records and Audits.
A. Contractor shall keep full and detailed books, construction logs, records, daily reports, schedules, accounts, payroll records, receipts, statements, electronic files, correspondence and other pertinent documents as may be necessary for proper management under this Agreement, as required under Applicable Law or this Agreement, and in any way relating to this Agreement (Books and Records). Contractor shall maintain all such Books and Records in accordance with GAAP and shall retain all such Books and Records for a minimum period of three (3) years after Final Completion, or such greater period of time as may be required under Applicable Law.
B. Upon reasonable notice, Owner shall have the right to have audited Contractors Books and Records by Owners third party auditors but only to the extent necessary to validate payments made to Contractor or invoiced by Contractor for any Change Orders based on a time and materials basis, for any costs paid with respect to any Provisional Sums and as permitted under Section 4.5; except that these rights shall not extend to lump sums, or the composition of fixed unit rates or percentages. When requested by Owner, Contractor shall provide Owners third party auditors with reasonable access to all such relevant Books and Records, and Contractors personnel shall cooperate with such third party auditors to effectuate the audit or audits hereunder. Owner shall have the right upon consent of Contractor (such consent not to be unreasonably withheld or delayed) to have the third party auditors copy all such Books and Records. Contractor shall bear all costs incurred by it in assisting with audits performed pursuant to this Section 3.13 except that copying of Contractors Books and Records shall be at Owners expense.
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Contractor shall include audit provisions identical to this Section 3.13 in all Major Subcontracts. No access to Books and Records shall be granted to any of Owners third party auditors until such third party auditor has signed a confidentiality agreement with Contractor in accordance with the standard practice in the auditing industry for audits of this kind. The restrictions in this Section 3.13B to the audit rights of Owner shall not be used by Contractor to avoid any obligations Contractor might have to produce documents under Applicable Law or in any litigation or arbitration against Contractor or against Guarantor under the Parent Guarantee.
C. Contractor shall not, and shall provide that its Subcontractors, Sub-subcontractors and agents or employees of any of them shall not, without Owners prior written approval, (i) pay any commissions or fees, or grant any rebates, to any employee or officer of Owner or its Affiliates, (ii) favor employees or officers of same with gifts or entertainment of a significant cost or value, or (iii) enter into any business arrangements with employees or officers of same.
3.14 Tax Accounting. Within a reasonable period of time following a request thereof by Owner, subject to Section 4.5C, Contractor shall provide Owners tax consultant with any information (including Books and Records) regarding quantities and descriptions of any Equipment installed on or ordered for the Project and any other information as Owners tax consultant may deem reasonably necessary in connection with the preparation of Owners tax returns (including information reasonably required to determine the amount of Qualified Research Expenditures incurred in connection with the Work) or other tax documentation in connection with the Project; provided, however, if, in connection with such preparation, Owners tax consultant requests information relating to the actual cost for any item of Work and such item of Work is included in the Contract Price or in any lump sum Change Order, Contractor shall provide such information to Owners tax consultant as provided in Section 4.5C. No access to the aforementioned information (including Books and Records) shall be granted to Owners tax consultant until such tax consultant has signed a confidentiality agreement with Contractor in accordance with the standard practice in the auditing industry for audits of this kind.
3.15 Temporary Utilities, Roads, Facilities and Storage. Until Substantial Completion of Subproject 2, Contractor shall provide and pay for all temporary utilities (i.e., electricity, water (other than the water provided by Owner for the hydrotest in accordance with Attachment U), communication, cable, telephone, waste and sewer) necessary for the performance of the Work, including installation and usage costs. Subject to Section 4.3, Contractor shall construct and maintain temporary access and haul roads as may be necessary for the proper performance of this Agreement. Contractor shall provide Owner with sufficient office space at the time of Contractors mobilization at the Site to accommodate Owners Site representative and support staff at the Site. Contractor shall provide Owner with all office space, construction trailers, utilities, storage and warehousing, security, telephones, furnishings, and other temporary facilities required for their oversight of the Work, as set forth in more detail in Attachment A. Once title to Equipment has passed to Owner as set forth in Section 8.1B, such Equipment shall, if stored at a location other than on the Site, be segregated from other goods, and shall be clearly marked as Property of Sabine Pass Liquefaction, LLC.
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3.16 Subordination of Liens. Contractor hereby subordinates any mechanics and materialmens liens or other claims or encumbrances that may be brought by Contractor against any or all of the Work, the Site or the Project to any liens granted in favor of Lender, whether such lien in favor of Lender is created, attached or perfected prior to or after any such liens, claims or encumbrances, and shall require its Subcontractors and Sub-subcontractors to similarly subordinate their lien, claim and encumbrance rights. Contractor agrees to comply with reasonable requests of Owner for supporting documentation required by Lender in connection with such subordination, including any necessary lien subordination agreements. Nothing in this Section 3.16 shall be construed as a limitation on or waiver by Contractor of any of its rights under Applicable Law to file a lien or claim or otherwise encumber the Project as security for any undisputed payments owed to it by Owner hereunder which are past due; provided that such lien, claim or encumbrance shall be subordinate to any liens granted in favor of Lenders.
3.17 Hazardous Materials. Contractor shall not, nor shall it permit or allow any Subcontractor or Sub-subcontractor to, bring any Hazardous Materials on the Site or the Off-Site Rights of Way and Easements and shall bear all responsibility and liability for such materials; provided, however, that Contractor may bring onto the Site or the Off-Site Rights of Way and Easements such Hazardous Materials as are necessary to perform the Work so long as the same is done in compliance with Applicable Law, Applicable Codes and Standards, and the HSE Plan, and Contractor shall remain responsible and liable for all such Hazardous Materials. If Contractor or any Subcontractor or Sub-subcontractor encounter pre-existing Hazardous Materials at the Site or the Off-Site Rights of Way and Easements, and Contractor or any Subcontractor or Sub-subcontractor knows or suspects that such material is Hazardous Material, Contractor and its Subcontractors and Sub-subcontractors shall promptly stop Work in the affected area and notify Owner. If under such circumstances Contractor or any of its Subcontractors or Sub-subcontractors fail to stop Work and notify Owner, Contractor shall be responsible and liable to Owner for all damages, costs, losses and expenses to the extent such failure increases the damages, costs, losses and expenses with respect to such pre-existing Hazardous Materials at the Site; provided that Contractors liability to Owner for such failure shall not exceed Twenty-Five Million U.S. Dollars (U.S.$25,000,000) in the aggregate.
3.18 Quality Control. No later than sixty (60) Days after the date Owner issues the NTP, Contractor shall submit to Owner for its written approval (which approval shall not be unreasonably withheld), a Project-specific quality control plan and an inspection plan, including witness points, but excluding tests and inspections relating to commissioning. No later than one hundred twenty (120) Days after the date Owner issues the NTP, Contractor shall submit to Owner for its review detailed inspection procedures. Contractors quality control plan shall provide for a quality control individual to be present at the Site to supervise the implementation of the quality control plan, the inspection plan, and the inspection procedures. Owners review and/or approval of Contractors quality control plan, inspection plan and inspection procedure shall in no way relieve Contractor of its responsibility for performing the Work in compliance with this Agreement.
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3.19 Reports.
A. Contractor shall provide Owner with an electronic copy of the following reports and other documentation:
1. minutes for all weekly status and other Project-related meetings with Owner within five (5) Business Days following such meeting;
2. safety incident reports within three (3) Business Days of the occurrence of any such incident; except for any safety incident involving a significant non-scheduled event such as LNG or Natural Gas releases, fires, explosions, mechanical failures, unusual over-pressurizations or major injuries which shall be provided to Owner within eight (8) hours of the occurrence of such incident; provided, however, notification shall be provided to Owner immediately if the incident is of significant magnitude to threaten public or employee safety, cause significant property damage or interrupt the Work; and
3. Monthly progress reports (Monthly Progress Reports) with the information specified in Attachment A.
3.20 Payment. Contractor shall timely make all payments required to be paid to Owner pursuant to the terms of this Agreement.
3.21 Commercial Activities. Neither Contractor nor its employees shall establish any commercial activity or issue concessions or permits of any kind to Third Parties for establishing commercial activities on the Site or any other lands owned or controlled by Owner.
3.22 Title to Materials Found. As between Owner and Contractor, the title to water, soil, rock, gravel, sand, minerals, timber, and any other materials developed or obtained in the excavation or other operations of Contractor, any Subcontractor or Sub-subcontractor and the right to use said materials or dispose of same is hereby expressly reserved by Owner. Notwithstanding the foregoing, Contractor shall be permitted, without charge, to use in the Work any such materials that comply with the requirements of this Agreement.
3.23 Survey Control Points and Layout. Contractor shall establish all survey control points and layout the entire Work in accordance with the requirements of this Agreement, which shall be based on the survey control point established by Owner pursuant to this Agreement. If Contractor or any of its Subcontractors, Sub-subcontractors or any of the representatives or employees of any of them move or destroy or render inaccurate the survey control point provided by Owner, such control point shall be replaced by Contractor at Contractors own expense.
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3.24 Cooperation with Others at the Site.
A. Subject to the provisions of this Agreement, including Section 4.3, Contractor acknowledges that Landowners, Owner and Owners other contractors or subcontractors may be performing certain activities at the Site, including those activities described in Attachment Z to be performed by Landowners or their representatives, during the performance of this Agreement and Contractors Work or use of certain facilities may be interfered with as a result of such concurrent activities. Owner shall provide Contractor with reasonable notice of any request for access to the Liquefaction Facility Site by (i) any of Owners other contractors or subcontractors seeking to perform work at the Liquefaction Facility Site or (ii) any Landowner. Subject to Section 4.3, Contractor agrees to use reasonable efforts to accommodate such request and to coordinate the performance of the Work with those certain activities to be performed by Landowners or any of Owners other contractors or subcontractors at the Liquefaction Facility Site so as not to materially interfere with the performance of such activities at the Liquefaction Facility Site. Contractor shall provide Owner access to the Liquefaction Facility Site at all times.
B. Cooperation Within the Off-Site Rights of Way and Easements. Owner shall provide Contractor with reasonable prior notice of access to the Off-Site Rights of Way and Easements by (i) any of Owners other contractors or subcontractors seeking to perform work within such Off-Site Rights of Way and Easements and (ii) any Landowner. Likewise, Contractor shall provide Owner with reasonable prior notice of any access to the Off-Site Rights of Way and Easements by Contractor or any of its Subcontractors or Sub-subcontractors. Subject to the provisions of this Agreement, including Section 4.3, Contractor acknowledges that Owner or Owners other contractors or subcontractors may be working within the Off-Site Rights of Way and Easements and that other Persons (including any Landowner) may be on or using the Off-Site Rights of Way and Easements during the performance of this Agreement and Contractors Work or use of certain facilities may be interfered with as a result of such concurrent activities. Subject to Section 4.3, Contractor agrees to use reasonable efforts to coordinate the performance of the Work with such other contractors or subcontractors performing work within the Off-Site Rights of Way and Easements so as not to materially interfere with any of Owners other contractors or subcontractors performing work within the Off-Site Rights of Way and Easements; provided, however, Contractor shall in all cases coordinate the Work with any Persons (other than Owner or Owners other contractors or subcontractors) on or using the Off-Site Rights of Way or Easements pursuant to Attachment Z. All coordination required of Contractor in this Section 3.24B with other Persons shall be done through Owner.
3.25 Integration with Existing Facility and Subproject 1 After Substantial Completion of Subproject 1.
A. No Interference with Existing Facility or Subproject 1 After Substantial Completion of Subproject 1. Performance of the Work shall at no time cause the suspension of operation of the Existing Facility (or any portion thereof) or of Subproject 1 (or any portion thereof) after Substantial Completion of Subproject 1 except to the extent permitted under Section 3.25B or agreed by the Owner Representative in writing. Notwithstanding the foregoing, under no circumstance shall any Work that is permitted to interfere with the operation of the Existing Facility or Subproject 1 as described in the immediately preceding sentence be scheduled or performed by Contractor where: (i) more than one (1) marine berth is unavailable at any given time; (ii) more than one (1) Tank is unavailable at any given time; or (iii) the time to perform any individual service outage
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required to accommodate tie-ins of the modified facilities for the Existing Facility or Subproject 1 exceeds 48 consecutive hours, or the cumulative time to perform any combination of service outages during any given calendar year exceeds ten (10) Days aggregate in such given calendar year. For purposes of this Section 3.25, individual service outage means that by action of the Contractor, any of the following are not possible: (a) berthing, loading, and unloading LNG from an LNG tanker at one or both marine berths; (b) loading, storing, and sending out LNG from at least three Tanks; (c) with respect to the Existing Facility, vaporizing LNG at a constant rate of 2000 MMSCFD and sending the resultant Natural Gas to the export pipeline; (d) with respect to Subproject 1 of after Substantial Completion of Subproject 1, producing LNG at a rate of at least 50% of capacity; or (e) providing sufficient electrical power, control systems, safety systems, utilities, and other equipment, infrastructure, facilities, and systems needed for any of the above actions.
B. Scheduled Activities. No later than thirty (30) Days prior to performing any Work that may interfere with the operation of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1 (whether specified in Attachment X or agreed by Owner Representative in writing), Contractor shall provide Owner with a written integration plan listing the scheduled, interfering Work and proposing in detail how Contractor intends that such Work will be performed to minimize, to the greatest extent reasonably possible, interference with the operation of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1. Such proposed plan shall (i) comply with the requirements of Section 3.25A, (ii) be scheduled so that it is not on the critical path, and (iii) at a minimum, address each of the activities identified in Attachment X and list (a) the component of the Existing Facility or Subproject 1 that will be impacted by such activity, (b) how such component will be impacted, and (c) and the duration of such impact. If the plan proposed by Contractor does not meet any of the requirements in the immediately preceding sentence, or if Owner reasonably believes that the plan proposed by Contractor has not been developed to reasonably minimize the impact on the operations of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1, then Owner may, not later than fourteen (14) Days following receipt of the proposed plan, instruct Contractor in writing to modify the proposed plan. If Owners instruction restricts the duration or extent of the Work covered in the plan more than what is required by Section 3.25A(i)-(iii), then Contractor shall be entitled to a Change Order to the extent permitted under Section 6.9. Contractor shall proceed to execute such Work in accordance with the mutually agreed plan; provided that, if Owner does not respond and comment upon the Contractors proposed plan within fourteen (14) Days following receipt of Contractors proposed plan, then Contractor shall proceed to execute such Work in accordance with Contractors proposed plan as long as it complies with the limitations specified in Section 3.25A. Notwithstanding Owners agreement (or failure to agree) to the schedule and the plan for the performance of such Work, Owner may, in its sole discretion, subsequently prohibit the performance of such Work occurring on the scheduled date, but in such case Contractor shall be entitled to a Change Order to the extent permitted under Section 6.9. If Owner fails to provide Contractor with access when and for the duration required by Contractor for the Work, other than for non-compliance with Section 3.25A(i)-(iii), Applicable Law, Owner Permits relating to safety, or Owners reasonable security requirements, then Contractor shall be entitled to a Change Order to the extent permitted under Section 6.9.
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C. Unscheduled Activities. It is the Parties intent that, except for the activities (if any) listed in Attachment X, the performance of the Work and Contractors other obligations under this Agreement will not interfere with the operation of the Existing Facility or Subproject 1 (or any portion thereof) after Substantial Completion of Subproject 1. During the performance of the Work, should a situation arise that Contractor reasonably believes has the potential of interfering with the operation of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1, Contractor shall, except in an emergency endangering property or any Persons, give Owner written notice as soon as possible but no later than fourteen (14) Days prior to the time that Contractor plans to perform such Work, detailing a plan that is least disruptive, to the greatest extent reasonably possible, to operations of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1. Emergency actions are governed by Section 3.11. Prior to performing such Work, Owner and Contractor shall mutually agree on a proposed plan for Contractor to execute such Work; provided that, if Owner fails to provide Contractor with access when and for the duration required by Contractor for the Work, other than for non-compliance with Section 3.25A(i)-(iii), Applicable Law, Owner Permits relating to safety, or Owners reasonable security requirements, then Contractor shall be entitled to a Change Order to the extent permitted under Section 6.9. Notwithstanding Owners agreement to the schedule and the plan for the performance of such Work, Owner may, in its sole discretion, subsequently prohibit the performance of such Work on such scheduled date, and Contractor shall work with Owner to develop a new plan and date for performing such Work in accordance with this Section 3.25C, and in such case Contractor shall be entitled to a Change Order to the extent permitted under Section 6.2A.2.
3.26 Responsibility for Property. Except as expressly set forth in Section 3.25, Contractor shall limit its operations to the Liquefaction Facility Site. Contractor shall plan and conduct its operations so that neither Contractor nor any of its Subcontractors or Sub-subcontractors shall (i) enter upon lands (other than the Site and Off-Site Rights of Way and Easements) or waterbodies in their natural state unless authorized by the appropriate owner or entity; (ii) close or obstruct any utility installation, highway, waterway, harbor, road or other property unless Permits are obtained and authorized by the appropriate entity or authority; or (iii) disrupt or otherwise interfere with the operation of any portion of any pipeline, telephone, conduit or electric transmission line, ditch, navigational aid, dock or structure unless otherwise specifically authorized by the appropriate entity or authority. The foregoing includes damage arising from performance of the Work through operation of Construction Equipment or stockpiling of materials. If damage occurs to the Existing Facility, Contractors liability for such damage shall be limited as specified in Section 17.1G.
3.27 Explosives. Explosives shall be transported to the Site only when required to perform the Work under this Agreement and with abundant, prior notice to and written approval of Owner. Contractor shall be responsible for properly purchasing, transporting, storing, safeguarding, handling and using explosives required to perform the Work under this Agreement. Contractor shall employ competent and qualified personnel for the use of explosives and, notwithstanding any other provision in this Agreement to the contrary, shall
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assume full responsibility for damages claimed by any Third Party to the extent caused by the improper use of explosives by Contractor or any Subcontractor or Sub-subcontractor. Residual surplus explosives shall be promptly removed from the Site and properly disposed of by Contractor.
3.28 Taxes. Subject to Section 7.1, the Contract Price includes all Taxes imposed on or payable by Contractor, its Subcontractors and Sub-subcontractors in connection with the Work. Contractor shall be responsible for the payment of all Taxes imposed on or payable by Contractor, its Subcontractors and Sub-subcontractors in connection with the Work.
3.29 Equipment Quality. Contractor shall furnish reasonable evidence as to the kind, quality, and quantity of all Major Equipment. Without prior written approval by Owner which specifically waives the requirements of this Agreement, where this Agreement specifies certain Major Equipment be incorporated into the Project, Contractor shall not use any Major Equipment other than as specified in this Agreement. If Contractor wishes to modify the requirements contained herein with respect to Major Equipment, then it shall make written application to Owner for Owners approval (such approval not to be unreasonably withheld), prior to performing any such Work. Such application shall (i) identify the requirements being modified, (ii) certify that the quality of the proposed substitute is equal to or better than that currently specified, and (iii) certify that the substitute is suited to the same use and capable of performing the same function as that specified. If the preceding requirements are not followed, then any substitution shall constitute a material failure by Contractor to comply with its obligations under this Agreement. All Major Equipment shall be fabricated, applied, installed, connected, operated (during start-up and testing), cleaned and conditioned in accordance with the instructions of the applicable Subcontractor or Sub-subcontractor.
3.30 Loss of LNG or Natural Gas. Contractor shall use safe and commercially reasonable efforts during commissioning, testing, and operation of the Liquefaction Facility to minimize the loss of LNG or Natural Gas due to venting, flaring, or unnecessary operation of the refrigerant compressors in recycle.
ARTICLE 4
OWNERS RESPONSIBILITIES
Owner shall comply with the following provisions in a timely manner in accordance with the Project Schedule at no cost to Contractor:
4.1 Payment and Financing. Owner shall timely pay the Contract Price in accordance with the provisions of Article 7 hereof. As a condition of NTP, Owner shall obtain and maintain financing for the Project sufficient to make payments to Contractor in accordance with the terms of this Agreement.
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A. Owner Monthly Confirmation. Beginning with Owners issuance of the NTP and continuing monthly thereafter until the first draw is made under the financing (the First Draw), Owner shall deliver to Contractor a statement in the form of Schedule BB-1 (Owner Monthly Confirmation) confirming that Owner has sufficient funds to continue to fulfill its payment obligations up to the date of the First Draw and confirming that no event has come to the attention of Owner which would materially and adversely affect the continued availability of such funding. Each Owner Confirmation shall be signed by an appropriate senior officer of Owner.
B. Owner Quarterly Confirmation. After the First Draw, and continuing quarterly thereafter, Owner shall deliver to Contractor a statement in the form of Schedule BB-2 (Owner Quarterly Confirmation) confirming that Owner has sufficient funds through itself or financing to continue to fulfill its payment obligations under this Agreement and confirming that no event has come to the attention of Owner which would materially and adversely affect the continued availability of such funding. Such Owner Quarterly Confirmation shall be signed by an appropriate senior officer of Owner.
4.2 Owner Permits. Owner shall be responsible for obtaining the Owner Permits. Owner shall maintain and, to the extent applicable, renew such Owner Permits. To the extent Owner has already obtained any of the Owner Permits as of the Effective Date of this Agreement, Owner shall provide copies of such Owner Permits to Contractor on or before the Effective Date. To the extent Owner has not obtained any Owner Permits prior to the Effective Date, Owner shall obtain such Owner Permits in accordance with the schedule contained in Attachment Q and Owner shall provide Contractor with complete copies of such Owner Permits within five (5) Business Days after obtaining them. The terms of all such Permits shall be compatible with Contractors performance of the Work, and Owner shall promptly notify Contractor of any changes to the terms of any such Owner Permit that impacts Contractors performance of the Work under this Agreement. Owner shall provide information, assistance and documentation to Contractor as reasonably requested in connection with the Contractor Permits.
4.3 Access to the Site and Off-Site Rights of Way and Easements.
A. Subject to the terms of this Agreement, including Section 3.24, Owner shall provide Contractor with access to and care and custody of the Liquefaction Facility Site. Such access shall be sufficient to permit Contractor to progress with construction on a continuous basis without material interruption or interference by others. To the extent that (i) any of Owners other contractors or subcontractors working at the Liquefaction Facility Site prior to Substantial Completion of a Subproject or (ii) any Landowner accessing the Liquefaction Facility Site prior to Substantial Completion of a Subproject (except as described in Attachment Z), in either case materially interrupts or interferes with Contractors performance of the Work applicable to such Subproject and such interruption or interference adversely affects Contractors ability to perform the Work applicable to such Subproject in accordance with the Project Schedule or Contractors cost of performance of the Work for such Subproject, Contractor shall be entitled to a Change Order; provided that, subject to Section 3.25, Contractor complies with the requirements in Sections 6.2, 6.5 and 6.9. In addition, Owner shall provide Contractor with reasonable access to the Existing Facility Site necessary for the performance of the Work and in accordance with Section 3.25. For the avoidance of doubt, Contractor shall not be entitled to a Change Order pursuant to this Section 4.3 as a result of a Landowner or its representatives accessing the Site to perform any of those activities described in Attachment Z.
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B. The Contract Price is based on Owner providing Contractor with access to the off-Site rights of way and easements listed in Attachment Y (the Off-Site Rights of Way and Easements) sufficient to permit Contractor to progress with construction without material interruption or interference by others while adhering to the requirements in Attachment Z. To the extent Contractor is not provided with sufficient access to such Off-Site Rights of Ways and Easements to progress with construction without material interruption or interference by others, and such interruption or interference adversely affects Contractors cost of performance of the Work or Contractors ability to perform the Work in accordance with the Project Schedule, Contractor shall be entitled to a Change Order; provided that (i) Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9, and (ii) at or prior to the Contract Date, Contractor did not know (based on information described in Attachment Z) that its access was or would be restricted.
C. Owner shall maintain care, custody and control at all times of the Existing Facility Site, Existing Facility and, upon transfer of risk of loss from Contractor to Owner under Section 8.2C, the modifications and improvements to the Existing Facility. Owner shall be responsible for the security, fencing, guarding and lighting of the Existing Facility.
4.4 Operation Personnel. Owner shall provide to Contractor a minimum of fifty (50) qualified and competent operating and maintenance personnel sufficient to commission and test the Project under the supervision of Contractor as set forth in Attachment V. Until Substantial Completion of Subproject 2, such personnel shall be under the direction and control of and supervised by Contractor. Such operating and maintenance personnel shall be available for training as required pursuant to Section 3.5. To the extent not set forth in Attachment V, Contractor shall prepare for Owners review a Project Commissioning Plan regarding the utilization of Owners operation and maintenance personnel and Contractors personnel during commissioning and for the conduct of Performance Tests. Such Project Commissioning Plan shall be mutually agreed-upon by the Parties, each acting reasonably, no later than forty-five (45) Days after Owners receipt of Contractors proposed Project Commissioning Plan. Without in any way limiting Contractors obligation to provide forces and labor during commissioning and Performance Testing, Contractor agrees that if any activity during commissioning and Performance Testing requires direct supervision by Contractor, such supervision shall be performed by Contractor or a Subcontractor or Sub-subcontractor. Owner shall remain responsible for all costs associated with Owners operation and maintenance personnel, including salaries, travel and expenses.
4.5 Sales and Use Tax Matters.
A. Owner shall participate in the Louisiana Enterprise Zone Program or Louisiana Quality Jobs Program, which shall allow Owner to receive a rebate directly from the State of Louisiana Department of Revenue of the rebatable portion of Louisiana state, parish and local-option sales and use tax (Rebatable Louisiana Sales and Use Tax)
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incurred and paid by Contractor and its Subcontractors or Sub-subcontractors in connection with performance of the Work. Contractor shall provide to Owner, for itself and its Subcontractors and Sub-subcontractors, all documentation as may be reasonably requested by Owner or Owners tax consultant and available to Contractor and its Subcontractors and Sub-subcontractors in order to allow Owner to secure such rebate. Such documentation shall include submitted and signed Forms R-1029 (Louisiana Department of Revenue Sales Tax Return) and invoice documentation supporting all Louisiana Sales and Use Taxes paid by Contractor and its Subcontractors and Sub-subcontractors for the purchase of Equipment, including purchases of Equipment made under lump sum contract agreements. Such Forms R-1029 (Louisiana Department of Revenue Sales Tax Return) shall be provided to Owner within thirty (30) Days after submission, by the Contractor or its Subcontractor or Sub-subcontractors, of the Form R-1029 (Louisiana Department of Revenue Sales Tax Return) to the Governmental Instrumentality. Such invoice documentation shall be provided to Owner within ninety (90) Days after receipt of such invoice documentation by Contractor or its Subcontractors or Sub-subcontractors. The invoice documentation shall clearly identify (i) the item of Equipment purchased, (ii) the amounts of itemized Louisiana Sales and Use Tax paid, and (iii) all information (including Owners name, the taxpayers name, the Project name and the Project address) to properly establish that the Equipment was used in connection with or incorporated into the Facility. If the Equipment was taken from Contractors, Subcontractors or Sub-subcontractors inventory, subject to Section 4.5C, Contractor shall provide Owner with an invoice, journal vouchers or other similar documentation as may be required to evidence that the applicable Louisiana Sales and Use Tax was paid by Contractor, Subcontractor or Sub-subcontractor on such inventory. Owners tax consultant (as notified by Owner to Contractor) shall assist Owner to secure all available rebates of Rebatable Louisiana Sales and Use Taxes and is authorized to request and receive information directly from Contractor and its Subcontractors and Sub-subcontractors on behalf of Owner. No information shall be provided to Owners tax consultant until such tax consultant has signed a confidentiality agreement with Contractor and any applicable Subcontractor and Sub-subcontractor with terms customary in the audit industry for audits of this kind.
B. Contractor and Owner shall reasonably cooperate with each other to minimize any and all Taxes relating to the Project. If Contractor or any Subcontractor or Sub-subcontractor incurs any sales and use taxes on any items of Equipment for which Owner has previously provided Contractor with an applicable sales and use tax exemption certificate, Contractor shall be responsible for the payment of such sales and use taxes without any reimbursement from Owner; provided, however, the foregoing provision shall not affect Contractors right to a Change Order in accordance with Section 7.1.
C. Pursuant to Section 3.14 and Section 7.1, Owner shall have the right to have its tax consultant audit the Books and Records of Contractor and its Sub-contractors or Sub-subcontractors to confirm that all Louisiana Sales and Use Taxes paid by Contractor and its Subcontractors and Sub-subcontractors in connection with the Work are properly owed under Applicable Law; provided, however, if the determination of the proper amount of such Louisiana Sales and Use Tax assessed on any one or more items of Equipment is dependent upon knowing the actual cost incurred by Contractor or its Sub-contractors or
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Sub-subcontractors for such item of Equipment and the compensation of such item of Equipment is included in the Contract Price or in any lump sum Change Order, that portion of the audit devoted to reviewing the actual cost incurred by Contractor or its Sub-contractors or Sub-subcontractors for such item of Equipment shall be performed by Owners tax consultant, which shall be retained by Owner at Owners sole expense. The Parties agree that (unless the amount of Louisiana Sales and Use Tax properly payable for an item of Equipment is subject to audit, litigation, arbitration, subpoena or summons issued by a Governmental Instrumentality ) such tax consultant shall not disclose to Owner the actual cost incurred by Contractor or its Sub-contractors or Sub-subcontractors for any item of Equipment included in the Contract Price, but the Parties agree that such tax consultant may report to Owner the proper Louisiana Sales and Use Taxes properly payable under Applicable Law. No access to Books and Records shall be granted to Owners tax consultant until such tax consultant has signed a confidentiality agreement with Contractor and any applicable Subcontractor or Sub-subcontractor with terms customary in the audit industry for audits of this kind.
4.6 Legal Description and Survey. Prior to NTP (or prior to any LNTP Work where applicable), Owner shall provide to Contractor (i) the legal description of the Site as set forth in Attachment Y and (ii) a survey of the Site showing the boundaries of the Site and one survey control point. Contractor shall be entitled to rely upon the accuracy of this information. To the extent any existing structures or utilities are shown in the survey, Contractor shall independently verify the locations of such existing structures and utilities.
4.7 Hazardous Materials. Owner shall remove, transport and, as appropriate, dispose of any Hazardous Materials discovered or released at the Site, including any Hazardous Materials brought on the Site or generated by Third Parties, but excluding any Hazardous Materials brought on to the Site or generated by Contractor or any of its Subcontractors or Sub-subcontractors. In addition, as between Owner and Contractor, Owner shall be responsible for any Hazardous Materials discovered or released within the Off-Site Rights of Way and Easements, including any Hazardous Materials brought on the Off-Site Rights of Way and Easements or generated by Third Parties but excluding any Hazardous Materials brought on the Off-Site Rights of Way and Easements by Contractor or any of its Subcontractors or Sub-subcontractors. Owner shall defend, indemnify and hold harmless Contractor Group and its Subcontractors and Sub-subcontractors from and against all damages, losses, costs and expenses (including all reasonable attorneys fees and litigation or arbitration expenses) incurred by Contractor Group or its Subcontractors and Sub-subcontractors to the extent arising from any contamination or pollution resulting from any Hazardous Materials for which Owner is responsible under this Section 4.7.
4.8 Owner-Provided Items.
A. Owner shall be responsible for those items of information so identified in Attachment A, including information defined as Rely Upon in the Design Basis included in Attachment A, and for providing to Contractor the information specified in Attachment U. Contractor shall not be required to examine or be deemed to have examined any such information and Owner shall remain fully responsible for the accuracy, completeness and
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sufficiency of such information. If Owner makes a change to any such information, or if Contractor discovers an error in such information or non-compliance of such information with Applicable Law or Applicable Codes and Standards, Contractor shall be entitled to a Change Order; provided that Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9. All other information in the Design Basis shall be the responsibility of Contractor.
B. Owner shall provide those items in Attachment A which are expressly listed as being the obligation of Owner and the items listed in Attachment U (within the times listed in Attachment U). The items already provided by Owner are listed in Attachment U.
C. Owner shall supply Feed Gas for use during commissioning, Start Up and Performance Tests and as necessary to demonstrate achievement of RFSU and Substantial Completion (Commissioning Feed Gas) in accordance with the notice procedures specified in Section 11.1.
D. Owner shall provide storage, through Tanks, tankers or otherwise, for Commissioning LNG in accordance with the notice procedures specified in Section 11.1.
4.9 Owner Representative. Owner designates *** as the Owner Representative. Notification of a change in Owner Representative shall be provided in advance, in writing, to Contractor.
ARTICLE 5
COMMENCEMENT OF WORK, PROJECT SCHEDULE, AND SCHEDULING OBLIGATIONS
5.1 Commencement of Work. Upon Contractors receipt from Owner of the limited notice to proceed (Limited Notice to Proceed or LNTP), Contractor shall promptly commence with the performance of the portion of the Work specified in such LNTP; provided that the Parties have executed a Change Order defining the LNTP Work. The LNTP shall be issued in the form attached hereto as Attachment H, Schedule H-1. Contractor shall not, and shall not be obligated to, commence performance of such Work until receipt from Owner of such LNTP.
5.2 Limited Notice to Proceed/Notice to Proceed.
A. Limited Notice to Proceed. The portion of the Contract Price payable for the LNTP Work shall be made in accordance with the Payment Schedule set forth in Attachment C (as may be amended by Change Order) and the applicable provisions of Article 7. Owner shall not issue the LNTP until the following conditions have been met:
1. Owner has furnished to Contractor documentation which demonstrates that Owner has sufficient funds to fulfill its payment obligations, including all cancellation costs associated with LNTP Work, in connection with Contractors performance of the LNTP Work, or that Owner has obtained financing from one or more Lenders to fulfill its payment obligations in connection with such LNTP Work;
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2. Owner has obtained all Owner Permits that are necessary for performance of the LNTP Work, or if Owner has not obtained all such Owner Permits at the commencement of such LNTP Work, by issuance of the LNTP, Owner commits to obtain any such remaining Owner Permits in such time so as to not delay the performance of such LNTP Work; and
3. Owner shall be in compliance with its other obligations set forth in Article 4 as necessary for the performance of the LNTP Work.
B. Notice to Proceed. Contractor shall not, and shall not be obligated to, commence performance of the Work (other than the LNTP Work) until Owner issues the full notice to proceed (Notice to Proceed or NTP) authorizing the same pursuant to the terms and conditions of this Agreement. Upon Contractors receipt from Owner of the NTP, Contractor shall promptly commence with the performance of the Work. The NTP shall be issued in the form attached hereto as Attachment H, Schedule H-2. Contractor shall timely file in the required superior court and post at the Site a notice of commencement as required under La. Rev. Stat. §9:4801, et. seq. and shall provide copies of such notice of commencement to Subcontractors and Sub-subcontractors as required under La. Rev. Stat. §9:4801, et. seq. Owner shall not issue an NTP until the following conditions have been met:
1. Owner has furnished to Contractor reasonable documentation which demonstrates that Owner (i) has sufficient funds to fulfill its payment obligations under this Agreement, or (ii) has obtained financing from one or more Lenders to fulfill its payment obligations under this Agreement, including (a) satisfaction, or waiver by Lenders, of all applicable conditions precedent to the occurrence of the closing date of the financing, which shall be prior to or contemporaneous with the issuance of the Notice to Proceed, and (b) evidence of the execution of the credit agreement with respect to such financing by Owner and Lenders (including a copy of such executed credit agreement);
2. Owner has obtained all Owner Permits (including the FERC Authorization) which are shown in Attachment Q as required to be obtained prior to the issuance of the NTP;
3. Owner has made payment to Contractor of all undisputed amounts owed as of the date of the NTP that were earned in connection with Contractors performance of the LNTP Work;
4. the Mobilization Payment has been received by Contractor in cleared funds;
5. Owner shall be in compliance with its other obligations set forth in Article 4 as necessary for the commencement of the Work;
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6. Owner has executed the ConocoPhillips License Agreement; and
7. Owner has delivered to Contractor a release from Sabine Pass LNG- GP, LLC releasing Contractor Group and its Subcontractors and Sub-subcontractors: (a) from and against all damages, losses, costs and expenses (including all reasonable attorneys fees, and litigation or arbitration expenses) resulting from or related to damage to or destruction of the Existing Facility (excluding the Work related thereto) but only to the extent such damages, losses, costs and expenses exceed the lesser of (i) *** U.S. Dollars (U.S.$***) per occurrence or (ii) the actual amounts of insurance proceeds paid per such occurrence under the policies of insurance required to be provided by Contractor under this Agreement, however caused and even if caused by Contractor Group or its Subcontractors or Sub-subcontractors; and (b) Consequential Damages for which Contractor is released under Section 20.4 and arising out of relating to such damage to or destruction of the Existing Facility. Such release shall be binding on and extend to any Affiliate of Owner that takes equity ownership in the Existing Facility.
C. Delayed NTP. In the event Owner fails to issue the NTP in accordance with Section 5.2B by March 31, 2012, then Contractor shall, at the end of every three Month period thereafter until NTP (if any) is issued by Owner, notify Owner in writing of any impacts such delay has on Contractors costs of performance of the Work, including Subcontractor prices, and Contractors ability to perform the Work in accordance with the Agreement, including the Project Schedule and other Changed Criteria. Contractor shall not be entitled to the relief in this Section 5.2C to the extent the reason for Owner failing to issue NTP is because Contractor failed to provide the Letter of Credit in accordance with Section 9.2A.
5.3 Project Schedule. Contractor shall perform the Work in accordance with the Project Schedule.
A. Target Substantial Completion Dates. Listed in Attachment E are Target Substantial Completion Dates for each Subproject. The Target Substantial Completion Dates shall only be adjusted by Change Order as provided under this Agreement
B. Guaranteed Substantial Completion Dates. Contractor shall achieve Substantial Completion of Subproject 1 no later than the date specified in Attachment E (Guaranteed Substantial Completion Date for Subproject 1) and Substantial Completion of Subproject 2 no later than the date specified in Attachment E (Guaranteed Substantial Completion Date for Subproject 2), (each a Guaranteed Substantial Completion Date and collectively, the Guaranteed Substantial Completion Dates). The Guaranteed Substantial Completion Dates shall only be adjusted by Change Order as provided under this Agreement.
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C. Final Completion. Contractor shall achieve Final Completion no later than one hundred eighty (180) Days after achieving Substantial Completion of Subproject 2 or as soon as reasonably practicable thereafter if the Parties mutually agree (both acting reasonably).
5.4 CPM Schedule Submissions. Within fifteen (15) Days after NTP is issued in accordance with Section 5.2B, Contractor shall prepare and submit to Owner for its review a critical path method schedule (CPM Schedule) for the Work identifying a critical path for each of the two (2) Subprojects, which shall be detailed at a Level II for all activities for the Project (including engineering, procurement, construction, pre-commissioning, commissioning, testing and startup). In addition, no later than one hundred and twenty (120) Days after NTP is issued in accordance with Section 5.2B, Contractor shall submit to Owner for its review a revised CPM Schedule, which shall be detailed at a Level III for all activities for the Project (including engineering, procurement, construction, pre-commissioning, commissioning, testing and startup). The initial CPM Schedule shall govern Contractors Work until the revised CPM Schedule is prepared and reviewed by Owner. Each of the initial and revised CPM Schedules shall be referred to as the CPM Schedule, and each shall comply with the requirements of this Section 5.4 and shall be provided to Owner in its native electronic format. The CPM Schedule shall be prepared by Contractor using Primavera Project Planner. Without limitation of the foregoing, the CPM Schedule shall include the information and meet the requirements set forth in Section 9.4 of Attachment A.
5.5 Recovery and Recovery Schedule. If, at any time during the prosecution of the Work, (i) should the Monthly Progress Report show that any activity on the critical path is forty-five (45) or more Days behind schedule, or should Contractor fail to provide a Monthly Progress Report in compliance with the requirements of this Agreement and Owner reasonably determines that any activity on the critical path is forty-five (45) or more Days behind schedule and (ii) Contractor or any of its Subcontractors or Sub-subcontractors are in Owners reasonable judgment responsible for such delay, Owner may, in addition to any other remedies that it may have under this Agreement, require that Contractor prepare a schedule to explain and display how it intends to regain compliance with the CPM Schedule (Recovery Schedule). Within ten (10) Business Days after the determination by Owner of the requirement for a Recovery Schedule, Contractor shall prepare the Recovery Schedule and submit it to Owner for its review. The Recovery Schedule shall (i) represent Contractors best judgment as to how it shall regain compliance with the CPM Schedule, (ii) be prepared in accordance with GECP, (iii) have a level of detail sufficient for Contractor to direct, manage and perform the Work, and (iv) have a maximum duration of sixty (60) Days unless recovery cannot be reasonably achieved in such time, in which case the duration of the Recovery Schedule shall be for that period of time reasonably necessary to regain compliance with the CPM Schedule. Contractor shall address all comments received from Owner during Owners review of the Recovery Schedule, and Contractor shall provide a written statement describing why any of Owners comments or proposed changes to the Recovery Schedule were not implemented by Contractor. Any of Owners comments or proposed changes to the Recovery Schedule that Contractor implements should be reflected in the revised Recovery Schedule. The revised Recovery Schedule shall then be the schedule which Contractor shall use in planning, organizing, directing, coordinating, performing, and executing the Work (including all activities of Subcontractors and Sub-subcontractors) to regain compliance with the CPM Schedule. The cost
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of preparing and executing the Recovery Schedule shall be at Contractors sole cost and expense; provided, however, if the preparation of a Recovery Schedule is combined with a request by Owner for a Change Order and the cost of preparing the Change Order for such request (excluding any costs associated with recovery) exceeds Thirty Thousand U.S. Dollars (U.S.$30,000), then Contractor is entitled to reimbursement for such preparation costs in accordance with Section 6.1A. Owners review and comments regarding the Recovery Schedule shall not relieve Contractor of any obligations for performance of the Work, change the Target Substantial Completion Dates or Guaranteed Substantial Completion Dates or be construed to establish the reasonableness of the Recovery Schedule.
A. If, at any time prior to the applicable Guaranteed Substantial Completion Date, Contractors performance of the Work is delayed such that Substantial Completion of a Subproject is projected to achieve Substantial Completion beyond the applicable Guaranteed Substantial Completion Date (as may be adjusted by Change Order) to such an extent that the Delay Liquidated Damages cap in Section 20.2A would apply, and Contractor fails to provide a Recovery Schedule in accordance with this Section 5.5 or Contractor provides a Recovery Schedule but Contractor fails to materially comply with such Recovery Schedule, then Contractor shall be in Default and Owner shall have the right, prior to the applicable Guaranteed Substantial Completion Date, to terminate Contractors performance of the Work in accordance with Section 16.1A. If Owner so terminates, Owner shall have all of the rights under Section 16.1 (including recovering all amounts under Section 16.1A), except that in the case of a termination by Owner pursuant to this Section 5.5A solely for Contractors failure to provide a Recovery Schedule and materially comply therewith, Contractors liability under Section 16.1 arising out of such termination shall be limited to the applicable cap or caps in Section 20.2A and no Performance Liquidated Damages would be owed.
5.6 Acceleration and Acceleration Schedule.
A. Even if the Work is otherwise in compliance with the CPM Schedule, Owner may, at any time, direct Contractor in writing to advance one or all of the Target Substantial Completion Dates and Guaranteed Substantial Completion Dates; provided, however, such directive shall be reasonable and Contractor shall have agreed in writing that such acceleration is commercially and technically feasible. In the event of such agreement, the directive shall be termed herein a Confirmed Acceleration Directive and shall be set forth in a Change Order. In no event shall Owner have the right to issue a unilateral acceleration directive requiring Contractor to achieve Substantial Completion of Subproject 1 or Substantial Completion of Subproject 2 prior to the original Guaranteed Substantial Completion Dates specified in this Agreement as of the Contract Date, as applicable. In the event of a Confirmed Acceleration Directive, Owner shall pay Contractor for the documented costs plus fees attributable to such acceleration and appropriate incentives, if any, shall be mutually agreed upon by the Parties with respect to such early proposed completion and set forth in the Change Order. Such costs may include any shift differential, premium, or overtime payments to workers or field supervisors and other employees of Contractor dedicated to the Work on a full-time basis actually incurred over and above Contractors normal rates, and overtime charges for Construction
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Equipment. Any adjustment to the Contract Price or any other Changed Criteria necessitated by such acceleration of the Work shall be implemented by Change Order. Upon execution of the Change Order, Contractor shall immediately commence and diligently perform the acceleration of the Work, and shall prepare a schedule to explain and display how it intends to accelerate the Work and how that acceleration will affect the critical path of the CPM Schedule (the Acceleration Schedule). With respect to the Acceleration Schedule, Contractor shall do the following:
1. No later than the tenth (10th) Business Day after execution of the Change Order with respect to the Confirmed Acceleration Directive, Contractor shall prepare the Acceleration Schedule and submit it to Owner for its review. The Acceleration Schedule shall represent Contractors best judgment as to how it shall satisfy the Confirmed Acceleration Directive. The Acceleration Schedule shall be prepared using GECP and to a similar level of detail as the CPM Schedule.
2. On the tenth (10th) Business Day after execution of the Change Order with respect to the Confirmed Acceleration Directive (or such longer time as specified in writing by Owner), Contractor shall participate in a conference with Owner, and with any other Person (including Subcontractors and Sub-subcontractors) whom Owner reasonably designates to participate, to review and evaluate the Acceleration Schedule. Any revisions to the Acceleration Schedule necessary as a result of this review shall be resubmitted for review by Owner as soon as reasonably practicable or as mutually agreed by the Parties. The revised Acceleration Schedule shall then be the schedule which Contractor shall use in planning, organizing, directing, coordinating, performing, and executing that portion of the Work that is affected by such acceleration, with the CPM Schedule governing the performance of all other Work.
Owners review of the Acceleration Schedule shall not constitute an independent evaluation or determination by Owner of the workability, feasibility, or reasonableness of that schedule.
ARTICLE 6
CHANGES; FORCE MAJEURE; AND OWNER-CAUSED DELAY
6.1 Change Orders Requested by Owner. Until Substantial Completion of Subproject 2, Owner shall be entitled to a Change Order upon request in accordance with this Section 6.1.
A. If Owner submits to Contractor in writing a duly signed proposed Change Order, Contractor must respond to Owner, to the extent practicable, within thirty (30) Days with a written statement setting forth the effect, if any, which such proposed Change Order would have on the Contract Price, the Project Schedule, the Design Basis, the Payment
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Schedule, any of the Minimum Acceptance Criteria, Performance Guarantee or Guarantee Conditions, and/or any other obligation or potential liability of Contractor hereunder (collectively or individually, the Changed Criteria). The written statement shall be in the form of Schedule D-3, and shall include, to the extent practicable, all information required by Section 6.5B. Owner shall respond to Contractors written statement within fourteen (14) Business Days of receipt, responding to Contractors statement as to the effects of the proposed Change Order on the Changed Criteria. If it is not practicable for Contractor to provide all of the information required under this Section 6.1A to be submitted with such written statement within such thirty (30) Day period, Contractor shall provide Owner with as much information as practicable as well as a written explanation of the reason additional time is required. To the extent Contractor incurs costs exceeding Thirty Thousand U.S. Dollars (U.S.$30,000) (which costs shall be adequately documented and supported by Contractor) in responding to any one proposed Change Order, Contractor shall be reimbursed for such excess costs in responding to such Change Order within twenty-five (25) Days after Owners receipt of Contractors invoice therefor; provided that Contractor first gives Owner written notice of the estimate of the cost of such preparation before preparing the response, such estimate is in excess of Thirty Thousand U.S. Dollars (U.S.$30,000), Owner approves in writing the preparation of the response, and such proposed Change Order is not implemented.
B. If the Parties agree on such Changed Criteria of the proposed Change Order (or modify such proposed Change Order so that the Parties agree on such Changed Criteria), the Parties shall execute such Change Order incorporating the Changed Criteria, which shall be in the form of Schedule D-1, and such Change Order shall become binding on the Parties, as part of this Agreement.
C. If the Parties cannot agree on such Changed Criteria of the proposed Change Order within ten (10) Days of Contractors receipt of Owners response to Contractors written statement, or if Owner desires that the proposed changed Work set forth in the proposed Change Order commence immediately without the requirement of a written statement by Contractor as required under Section 6.1A, Owner may (subject to this Section 6.1C), by issuance of a unilateral Change Order in the form attached hereto as Schedule D-2, require Contractor to commence and perform the changed Work specified in the unilateral Change Order on a time and material basis as set forth in Schedule D-4 with the effect of such unilateral Change Order on the Changed Criteria (or if the Parties agree on the effect of such unilateral Change Order for some but not all of the Changed Criteria, the impact of each of the components of the Changed Criteria on which the Parties disagree) to be determined as soon as possible but without prejudice to Contractors right to refer any Dispute for resolution in accordance with Article 18. The rates specified in Schedule D-4 are Unit Rates, and the Unit Rates shall be used to the extent applicable to the changed Work. The Parties acknowledge and agree that unilateral Change Orders submitted by Owner in accordance with this Section 6.1C shall be limited to additions or modifications to, or deductions from the Work and that Owner shall not have the unilateral right to change, amend or modify any of the other Changed Criteria or the terms of this Agreement. Pending resolution of the Dispute, Contractor shall perform the Work as specified in such unilateral Change Order and Owner shall continue to pay Contractor in accordance with the terms of this Agreement and any previously agreed Change Orders.
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When Owner and Contractor agree on the effect of such unilateral Change Order on all of the Changed Criteria, such agreement shall be recorded by execution by the Parties of a Change Order in the form attached hereto as Schedule D-1, which shall supersede the unilateral Change Order previously issued and relating to such changed Work. With the exception of any Contract Price adjustment contemplated under Attachment EE, in no event shall Owner be entitled to issue any unilateral Change Order in accordance with this Section 6.1C where such unilateral Change Order (i) would result in an increase equal to or exceeding Twenty Million U.S. Dollars (U.S.$20,000,000), or (ii) in conjunction with other unilateral Change Orders issued by Owner (other than any Contract Price adjustment contemplated under Attachment EE), would in themselves result in an increase equal to or exceeding an amount equal to Sixty Million U.S. Dollars (U.S.$60,000,000); provided that, with respect to unilateral Change Orders requiring Contractor to conduct or develop engineering studies, Contractor shall not be required to incur costs (a) greater than Thirty Thousand U.S. Dollars (U.S.$30,000) for any single Change Order for engineering studies, or (b) in conjunction with other unilateral Change Orders, greater than Three Hundred Thousand (U.S.$300,000) in the aggregate for engineering studies. Notwithstanding the foregoing, in no event shall Owner be entitled to issue any unilateral Change Order directing performance of Work under an LNTP. For the avoidance of doubt, the Parties agree that the adjustments contemplated under Attachment EE do not constitute unilateral Change Orders.
D. In the event of a change in any Applicable Code and Standard which does not constitute a Change in Law, Contractor shall provide written notice to Owner regarding such change. Upon receipt of such notice from Contractor, Owner may submit a proposed Change Order to Contractor in accordance with this Section 6.1 in the event Owner, at its sole option, elects for Contractor to implement such change in Applicable Code and Standard. In the event Owner does not, at its sole option, elect for Contractor to implement such change in Applicable Code and Standard, Contractor shall not be required to perform in accordance with such Applicable Code and Standard. In the event, however, that compliance with such Applicable Code and Standard is mandatory for Contractor to comply with GECP and Owner does not, at its sole option, after receipt of written notice from Contractor regarding same, elect for Contractor to implement such change in Applicable Code and Standard, then Owner waives its rights to claim a breach of GECP with respect to such change in Applicable Code and Standard.
6.2 Change Orders Requested by Contractor.
A. Contractor shall have the right to a Change Order in the event of any of the following occurrences:
1. Any Change in Law that adversely affects (i) Contractors costs of performance of the Work, (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any material obligation under this Agreement;
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2. Acts or omissions of any member of Owner Group or any other Person for whom Owner is responsible, including in the case of Owner any failure to perform any obligation under this Agreement, that adversely affects (i) Contractors costs of performance of the Work, (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any material obligation under this Agreement; provided that Contractor shall not be entitled to a Change Order to the extent that such acts or omissions of Owner are caused, directly or indirectly, by Contractors failure to perform its obligations under this Agreement;
3. Force Majeure to the extent allowed under Section 6.8A;
4. Acceleration of the Work directed by Owner pursuant to Section 5.6, provided that a Change Order has been issued;
5. Owners request for an increase in coverage under the Letter of Credit pursuant to Section 9.2 to cover any increase in the Contract Price as a result of Change Orders to the extent set forth in Section 9.2;
6. To the extent expressly permitted under Sections 3.3C, 3.4A, 3.25, 4.3, 4.8A, 5.6A, 7.1, 8.2A, 8.2D, 11.1A, 11.1B.6, 11.1D, 12.2A, 16.3, 16.4 and Attachment EE;
7. Delay beyond the permissible times specified in Section 1A.9(g)(i) or Section 1A.11(ii) of Attachment O for the delivery by Owner to Contractor of builders risk or marine cargo insurance proceeds received by the Collateral Agent shall relieve Contractor of any obligation under this Agreement to effect repairs or other restoration of the Work affected by the insured occurrence for any costs of repairs or restoration exceeding the sum of the deductible under such insurance and any amounts previously paid to Contractor under such insurance and shall entitle Contractor to a Change Order adjusting the Contract Price and Project Schedule, but only to the extent such delay adversely affects (i) Contractors cost of performance of the Work, (ii) Contractors ability to perform the Work in accordance with the Project Schedule, or (iii) or Contractors ability to perform any material obligation under this Agreement; provided that, notwithstanding the foregoing, in no event shall this Section 6.2A.7 in any way relieve Contractor from any obligation to perform any work necessary to maintain the builders risk and marine cargo insurance in full force and effect;
8. Suspension in Work ordered by Owner pursuant to Section 16.3;
9. Subsurface Soil Conditions to the extent allowed under Section 2.5B.2;
10. Discovery of Hazardous Materials at the Site or on the Off-Site Rights of Way and Easements for which Owner is responsible under Section 4.7 that adversely affects (i) Contractors costs of performance of the Work, (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any material obligation under this Agreement;
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11. Owners issuance of NTP in accordance with Section 5.2B after March 31, 2012, but only to the extent that such delay adversely affects (i) Contractors costs of performance of the Work, (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any material obligation under this Agreement; and
12. Performance of the Work under the Soils Preparation Provisional Sum or Existing Facility Labor Provisional Sum is beyond the quantities or hours for such provisional sum item as described in Attachment EE, and such overages result in a delay in the Work, then Contractor will be entitled to a Change Order extending the Target Substantial Completion Dates and Guaranteed Substantial Completion Dates to the extent permitted in Section 6.9. Notwithstanding the foregoing, Owner may, at any time, instruct Contractor to (i) increase Existing Facility Labor (through additional crews, shifts, etc.) in the case of the Work for the Existing Facility Provisional Sum or (ii) take commercially and technically reasonable efforts (through additional labor, equipment, shifts, etc.), in each case to overcome the delay, in which case Contractor shall not be entitled to a Change Order adjusting the applicable Target Substantial Completion Dates and Guaranteed Substantial Completion Dates to the extent such efforts mitigate or eliminate such delay.
B. Should Contractor desire to request a Change Order under this Section 6.2, Contractor shall, pursuant to Section 6.5, notify Owner in writing and issue to Owner, at Contractors expense, a request for a proposed Change Order in the form attached hereto as Schedule D-3, a detailed explanation of the proposed change and Contractors reasons for proposing the change, documentation necessary to verify the effects of the change on the Changed Criteria, and all other information required by Section 6.5. Any adjustments to the Contract Price shall (unless otherwise agreed) be requested on a lump sum basis and shall be based on the requirements in Schedule D-4 and the Unit Rates specified therein to the extent applicable to the Change Order.
C. Owner shall respond to Contractors request for a Change Order within thirty (30) Days of receipt, stating (i) whether Owner agrees that Contractor is entitled to a Change Order and (ii) the extent, if any, to which Owner agrees with Contractors statement regarding the effect of the proposed Change Order on the Changed Criteria, including any adjustment to the Contract Price and the estimated costs for each item making up the adjustment to the Contract Price. If Owner agrees that a Change Order is necessary and agrees with Contractors statement regarding the effect of the proposed Change Order on the Changed Criteria, including mutual agreement on the costs, then Owner shall issue such Change Order, which shall be in the form of Schedule D-1, and such Change Order shall become binding on the Parties as part of this Agreement upon execution thereof by the Parties. Owner shall be entitled to decline a Change Order with respect to any request by Contractor for a Change Order if the Change Order request, when submitted, is not adequately documented and supported by Contractor as required under this Agreement.
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D. If the Parties agree that Contractor is entitled to a Change Order but cannot agree on the effect of the proposed Change Order on the Changed Criteria within thirty (30) Days of Owners receipt of Contractors written notice and proposed Change Order and all other required information, or if Owner desires that the proposed changed Work set forth in the proposed Change Order commence immediately, the rights, obligations and procedures set forth in Section 6.1C are applicable.
E. If the Parties cannot agree upon whether Contractor is entitled to a Change Order within thirty (30) Business Days of Owners receipt of Contractors written notice and proposed Change Order, then the Dispute shall be resolved as provided in Article 18. Pending resolution of the Dispute, Contractor shall continue to perform the Work required under this Agreement, and Owner shall continue to pay Contractor in accordance with the terms of this Agreement, any Change Orders and any previously agreed or unilateral Change Orders.
6.3 Contract Price Adjustment; Contractor Documentation. If a Change Order is executed on a time and material basis pursuant to Section 6.1C or 6.2D, then the Contract Price shall be adjusted as set forth in Schedule D-4. Contractor shall use reasonable efforts to minimize such costs (consistent with the requirements of this Agreement).
6.4 Change Orders Act as Accord and Satisfaction. Unless otherwise expressly stated in the Change Order, Change Orders agreed pursuant to Section 6.1B or 6.2C by the Parties shall constitute a full and final settlement and accord and satisfaction of all effects of the change reflected in the subject Change Order and shall be deemed to compensate Contractor fully for such change. Accordingly, unless otherwise expressly stated in such Change Order, Contractor expressly waives and releases any and all right to make a claim or demand or to take any action or proceeding against Owner for any consequences arising out of, relating to or resulting from such change reflected in the subject Change Order. If Contractor expressly reserves its right in a Change Order to maintain a claim arising out of the change in the Change Order, then Contractor shall provide Owner with notice every ninety (90) Days setting forth the then known impact of the reserved claim in the Change Order.
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6.5 Timing Requirements for Notifications and Change Order Requests by Contractor. Should Contractor desire to seek an adjustment to the Contract Price, the Project Schedule, the Payment Schedule, any of the Minimum Acceptance Criteria or Performance Guarantee or any other modification to any other obligation of Contractor under this Agreement for any circumstance that Contractor has reason to believe may give rise to a right to request the issuance of a Change Order, Contractor shall, with respect to each such circumstance:
A. notify Owner in writing of the existence of such circumstance within twenty (20) Days of the date that Contractor knew of the first occurrence or beginning of such circumstance; provided, however, if such circumstance is an emergency, notice shall be given as soon as reasonably practicable. In such notice, Contractor shall state in detail all known and presumed facts upon which its claim is based, including the character, duration and extent of such circumstance, the date Contractor first knew of such circumstance, any activities impacted by such circumstance, a good faith estimate of the cost (which such costs shall be adequately documented and supported by Contractor) and time consequences of such circumstance (including showing a good faith estimate of the impact of such circumstance, if any, on the critical path of the CPM Schedule) and any other details or information that are expressly required under this Agreement. Contractor shall only be required to comply with the notice requirements of this Section 6.5A once for continuing circumstances, provided that the notice expressly states that the circumstance is continuing and includes Contractors best estimate of the time and cost consequences of such circumstance; and
B. submit to Owner a request for a Change Order as soon as reasonably practicable after giving Owner written notice but in no event later than forty-five (45) Days after the completion of each such circumstance, together with a written statement with all information currently available (i) detailing why Contractor believes that a Change Order should be issued, plus all documentation reasonably requested by Owner, including information and details expressly required under this Agreement (including the information required by Schedule D-4, applicable detailed estimates and cost records and a graphic demonstration using the CPM Schedule and Monthly Progress Reports showing Contractors entitlement to a time extension to the Project Schedule pursuant to the terms of this Agreement); and (ii) setting forth the effect, if any, which such proposed Change Order has or would have for the Work on any of the Changed Criteria. Contractor shall promptly supplement its request for Change Order with additional information as such additional information (if any) becomes available.
If Contractor fails to provide the notice as required under this Section 6.5, and if Owner demonstrates that it has been prejudiced on account of such failure to provide notice, then, to the extent that Owner is so prejudiced, Contractor waives its right for, and releases Owner from and against any claims for, adjustments in the Contract Price, the Project Schedule, Payment Schedule, any Work, any of the Minimum Acceptance Criteria or Performance Guarantee or any other modification to any other obligation of Contractor under this Agreement. Oral notice, shortness of time, or Owners actual knowledge of a particular circumstance shall not waive, satisfy, discharge or otherwise excuse Contractors strict compliance with this Section 6.5. Contractor shall have the burden of proof with respect to any claim made by it.
6.6 Evidence of Funds. With the exception of any Contract Price adjustment contemplated under Attachment EE, Contractor shall not be obligated to proceed with any Change Order that, alone or in conjunction with other Change Orders, would result in an increase in the Contract Price, as of the Contract Date, in excess of Fifty Million U.S. Dollars (U.S.$50,000,000) and thereafter would result in an increase in the Contract Price in excess of additional Five Million U.S. Dollars (U.S.$5,000,000) increments, unless Owner furnishes, to Contractors reasonable satisfaction, documentation which demonstrates either that Owner has (i) sufficient funds to pay for such Change Order, or (ii) obtained financing from one or more Lenders in sufficient funds to pay for such Change Order.
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6.7 Adjustment Only Through Change Order. Unless otherwise provided in this Agreement, no change in the requirements of this Agreement, whether an addition to, deletion from, suspension of or modification to this Agreement, including any Work, shall be the basis for an adjustment for any change in the Contract Price, the Project Schedule, Payment Schedule, any Work, any of the Minimum Acceptance Criteria or Performance Guarantee or any other obligations of Contractor or right of Owner under this Agreement unless and until such addition, deletion, suspension or modification has been authorized by a Change Order executed and issued in accordance with and in strict compliance with the requirements of this Section 6.7. Contractor shall not perform any change in the Work unless and until such change is authorized pursuant to this Section 6.7, and should Contractor perform or claim to perform any changes in the Work prior to authorization by Change Order, all such costs and expenses incurred by Contractor shall be for Contractors account. No course of conduct or dealings between the Parties, nor implied acceptance of additions, deletions, suspensions or modifications to this Agreement, including any Work, and no claim that Owner has been unjustly enriched by any such addition, deletion, suspension or modification to this Agreement, whether or not there is in fact any such unjust enrichment, shall be the basis for any claim for an adjustment in the Contract Price, the Project Schedule, the Payment Schedule, any Work, any of the Minimum Acceptance Criteria or Performance Guarantee or any other obligations of Contractor under this Agreement.
6.8 Force Majeure.
A. Contractor Relief. If the commencement, prosecution or completion of the Work is prevented or delayed by Force Majeure (including the effects of such Force Majeure), then Contractor shall be entitled to an extension to the Target Substantial Completion Dates and/or Guaranteed Substantial Completion Dates to the extent, if any, permitted under Section 6.8A.1 and an adjustment to the Contract Price to the extent, if any, permitted under Section 6.8A.2, provided that Contractor has complied with the notice and Change Order requirements in Section 6.5 and the mitigation requirements in Section 6.11. In addition, if Force Majeure (including the effects of such Force Majeure) prevents Contractors performance with respect to any portion of the Work, Contractor shall, subject to Section 6.11, be relieved from performance of such portion of the Work for the time period that such Force Majeure, or the effects of such Force Majeure, are continuing. All time extensions to the Project Schedule and adjustments to the Contract Price for such delays or preventions shall be by Change Order implemented and documented as required under this Article 6.
1. Time Extension. Contractor shall be entitled to an extension to the applicable Target Substantial Completion Dates and/or Guaranteed Substantial Completion Dates for delay or prevention that meets the requirements of this Section 6.8A, if and to the extent such delay or prevention causes a delay in the critical path of the Work. Contractor shall demonstrate to Owner its entitlement to relief under this Section by providing to Owner an updated CPM Schedule using Primavera Project Planner in its native electronic format with actual durations
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entered for all activities on the critical path and re-forecasted clearly to indicate Contractors entitlement to a time extension under this Section 6.8A. Notwithstanding the foregoing, any adjustment to the Target Substantial Completion Date(s) shall extend the Guaranteed Substantial Completion Dates in the same amounts so that the Guaranteed Substantial Completion Date for Subproject 1 is always one hundred five (105) Days after the Target Substantial Completion Date for Subproject 1 and the Guaranteed Substantial Completion Date for Subproject 2 is always one hundred five (105) Days after the Target Substantial Completion Date for Subproject 2, regardless of whether the delay impacts only the critical path of the Work to achieve the applicable Target Substantial Completion Date and not the applicable Guaranteed Substantial Completion Date.
2. Compensation. Contractor shall be entitled to an adjustment to the Contract Price for any delay or prevention that meets the requirements of this Section 6.8A, if such delay or prevention, alone or in conjunction with other Force Majeure Events, continues for a period of at least thirty (30) Days, in the aggregate. Any such Contract Price adjustment shall be for reasonable costs necessarily incurred by Contractor for delay or prevention occurring after the expiration of such thirty (30) Day period; provided that Owners total liability under this Agreement for any such Contract Price adjustment(s) for all such events occurring during the term of this Agreement shall not exceed Fifty Million U.S. Dollars (U.S.$50,000,000) in the aggregate.
B. Owner Relief. Subject to Section 6.8C, Owners obligations under this Agreement shall be suspended to the extent that performance of such obligations is delayed or prevented by Force Majeure, but without prejudice to Contractors entitlement to a Change Order to the extent set forth in Section 6.2A.
C. Payment Obligations. No obligation of a Party to pay moneys under or pursuant to this Agreement shall be excused by reason of Force Majeure.
6.9 Extensions of Time and Adjustment of Compensation. With respect to any of the circumstances set forth in Section 6.2A which cause delay of the commencement, prosecution or completion of the Work for which Contractor is entitled to a Change Order (with the exception of delay resulting from an event of Force Majeure, which shall be governed in accordance with Section 6.8), Contractor shall be entitled to an extension to the applicable Target Substantial Completion Dates and Guaranteed Substantial Completion Dates if and to the extent: (i) such delay causes a delay in the critical path of the Work; (ii) Contractor has complied with the notice and Change Order requirements in Section 6.5 and the mitigation requirements of Section 6.11; and (iii) such delay is not attributable to Contractor or any of its Subcontractors or Sub-subcontractors. Contractor shall demonstrate to Owner its entitlement to relief under this Section by providing to Owner an updated CPM Schedule using Primavera Project Planner in its native electronic format with actual durations entered for all activities on the critical path and re-forecasted clearly to indicate Contractors entitlement to a time extension under this Section 6.9. Notwithstanding the foregoing, any adjustment to the Target Substantial Completion Date(s) shall extend the Guaranteed Substantial Completion Dates in the same amounts so that the Guaranteed Substantial
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Completion Date for Subproject 1 is always one hundred five (105) Days after the Target Substantial Completion Date for Subproject 1 and the Guaranteed Substantial Completion Date for Subproject 2 is always one hundred five (105) Days after the Target Substantial Completion Date for Subproject 2, regardless of whether the delay impacts only the critical path of the Work to achieve the applicable Target Substantial Completion Date and not the applicable Guaranteed Substantial Completion Date. Contractor shall be entitled to an adjustment to the Contract Price for reasonable, additional costs incurred by Contractor for delay or in mitigation or avoidance of a delay which would otherwise meet such requirements of this Section 6.9. For the avoidance of doubt, this Section 6.9 shall govern the determination of any right of Contractor to an adjustment to the applicable Target Substantial Completion Dates and Guaranteed Substantial Completion Dates for delay unless such delay is caused by Force Majeure.
6.10 Delay. For the purposes of this Agreement, the term delay shall include hindrances, disruptions or obstructions, or any other similar term in the industry and the resulting impact from such hindrances, disruptions or obstructions, including inefficiency, impact, ripple or lost production.
6.11 Contractor Obligation to Mitigate Delay. Contractor shall not be entitled to any adjustment to the Project Schedule or adjustment to the Contract Price for any portion of delay to the extent Contractor could have taken, but failed to take, reasonable actions to mitigate such delay.
ARTICLE 7
CONTRACT PRICE AND PAYMENTS TO CONTRACTOR
7.1 Contract Price. As compensation in full to Contractor for the full and complete performance of the Work and all of Contractors other obligations under this Agreement, Owner shall pay and Contractor shall accept Three Billion Nine Hundred Million U.S. Dollars (U.S.$3,900,000,000) (the Contract Price). The Contract Price is subject to adjustment only by Change Order as provided in Article 6, and includes all Taxes payable by Contractor and its Subcontractors and Sub-subcontractors in connection with the Work, the Louisiana Sales and Use Tax Provisional Sum, the Insurance Provisional Sum, the Operating Spare Part Provisional Sum, the Soils Preparation Provisional Sum, the Existing Facility Labor Provisional Sum and the Heavies Removal Unit Provisional Sum, the Currency Provisional Sum and the Fuel Provisional Sum and all costs, charges, and expenses of whatever nature necessary for performance of the Work.
A. Aggregate Provisional Sum. The Contract Price includes an aggregate amount of Eight Hundred Sixty Two Million Thirty Two Thousand Six Hundred Fifty U.S. Dollars (U.S.$862,032,650) (the Aggregate Provisional Sum) for the Provisional Sums. The scope and values of each Provisional Sum comprising the Aggregate Provisional Sum amount are included in Attachment EE.
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7.2 Interim Payments.
A. Mobilization Payment. On or before and as a condition precedent to the issuance of the Notice to Proceed in accordance with Section 5.2B and upon Owners receipt of an Invoice from Contractor, Owner shall pay Contractor a lump sum equal to ten percent (10%) of the Contract Price (the Mobilization Payment).
B. Payments. Subject to Section 5.2A, with the exception of the Mobilization Payment, payments shall be made by Owner to Contractor in accordance with the Payment Schedule set forth in Attachment C (as may be amended by Change Order), which allocates seventy percent (70%) of the Contract Price to be paid based on completion of the Milestones set forth in Attachment C, Schedule C-1, and (ii) thirty percent (30%) of the Contract Price to be paid based on the Monthly payments set forth in Attachment C, Schedule C-2 (the Monthly Payments), as adjusted pursuant to Section 7.2F. Owner shall also make payments to Contractor for Work performed in accordance with Change Orders to be paid on a time and material basis and any unilateral Change Orders issued in accordance with Section 6.1C or 6.2D. Each payment shall be subject to Owners right to withhold payments under this Agreement as set forth in Section 7.5 and Section 20.3. Payments shall be made in U.S. Dollars to an account designated by Contractor. The Payment Schedule, including Milestones and Monthly Payments, shall be amended only by Change Order pursuant to this Agreement.
C. Invoices. On the first (1st) Day of each Month (Month N), Contractor shall submit to Owner an Invoice, supported by information and documentation required under this Agreement, for the following:
1. amounts for Milestones Contractor plans to fully complete during the next Month (Month N+1), as supported by the sixty (60) Day look-ahead schedule submitted with such Invoice. Contractor shall not include any amounts for any Milestones that will only be partially completed at the end of Month N+1;
2. plus the Monthly Payment for Month N+1;
3. plus (i) allowable costs and expenses Contractor plans to incur during Month N+1 for Work performed in accordance with Change Orders to be paid on a time and material basis, and (ii) allowable costs and expenses Contractor plans to incur during Month N+1 for Work covered by a Provisional Sum, all as supported by the sixty (60) Day look-ahead schedule and other information required herein;
4. less amounts for any Milestones Invoiced in Month N-2 that Contractor did not complete during Month N-1; and
5. less amounts Invoiced in Month N-3 for (i) time and material Change Orders, and (ii) Provisional Sums that Contractor did not incur in Month N-2.
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If Owner pays Contractor for the completion of a Milestone in Month N+1, but Contractor does not complete such Milestone during such Month N+1, and Owner exercises its right to withhold payment in accordance with Section 7.2 for such uncompleted Milestone, Contractor shall not be entitled to Invoice for the amount withheld by Owner for such Milestone until the Month after Contractor completes such Milestone.
Contractor shall include with such Invoice a sixty (60) Day look-ahead schedule, prepared by Contractor, for such Month N and Month N+1 that shows, among other requirements, Contractors schedule for (i) completing such Milestones in Month N+1 and (ii) incurring such allowable costs and expenses for time and materials Change Orders and Provisional Sums during such Month N+1. All Invoices, other than the Invoice for final payment under this Agreement, shall be in the form of Schedule I-1.
D. Interim Lien Waivers. As a condition of payment, each Invoice received by Owner prior to Final Completion shall be accompanied by a fully executed (i) Interim Conditional Lien Waiver from Contractor in the form of Schedule K-1 for all Work performed through the end of the Month preceding the Month of the date of the Invoice (i.e., Month N-1) and (ii) Interim Unconditional Lien Waiver from Contractor in the form of Schedule K-2 for all Work performed through the end of the Month preceding the Month of the date of the last Invoice submitted by Contractor of the Invoice (i.e., Month N-2). In addition, as a condition of payment, Contractor shall also provide (i) fully executed Interim Conditional Lien Waivers in the form of Schedule K-3 from each Major Subcontractor whose invoice is received by Contractor in the Month covered by Contractors Invoice (with each such Interim Conditional Lien Waiver covering all Work performed by each such Major Subcontractor through the end of the Month preceding the Month of the date of such Major Subcontractors invoice (i.e., Month N-1)), together with fully executed Interim Unconditional Lien Waivers from each Major Subcontractor for all Work performed by such Major Subcontractor through the end of the Month preceding the Month of the date of each such Major Subcontractors preceding invoice (i.e., Month N-2); (ii) fully executed Interim Conditional Lien Waivers in substantially the form of Schedule K-3 from each Major Sub-subcontractor whose invoice is received by Contractor in the Month covered by Contractors Invoice (with each such Interim Conditional Lien Waiver covering all Work performed by each such Major Sub-subcontractor through the end of the Month preceding the Month of the date of such Major Sub-subcontractors invoice (i.e., Month N-1)), together with fully executed Interim Unconditional Lien Waivers from each Major Sub-subcontractor in substantially the form set forth in Schedule K-4 for all Work performed by such Major Sub-subcontractor through the end of the Month preceding the Month of the date of each such Major Sub-subcontractors preceding invoice (i.e., Month N-2); provided that if Contractor fails to provide to Owner an Interim Conditional Lien Waiver or Interim Unconditional Lien Waiver from a Major Subcontractor or Major Sub-subcontractor as required in this Section 7.2D, Owners right to withhold payment for the failure to provide any such Interim Conditional Lien Waiver or Interim Unconditional Lien Waiver shall be limited to the amount that should have been reflected in such Interim Conditional Lien Waiver or Interim Unconditional Lien Waiver.
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E. Review and Payment. Each Invoice shall be reviewed by Owner and, upon Owners reasonable request, Contractor shall furnish such supporting documentation and certificates and provide such further information as may be reasonably requested by Owner. Within thirty (30) Days after receipt of any Invoice, Owner shall provide notice to Contractor of any disputed amount set forth in such Invoice, including an explanation of why such amount is disputed. Unless so disputed by Owner, each Invoice (less any withholdings allowed under this Agreement) shall be due and paid no later than thirty (30) Days after it, and all applicable documentation required under this Agreement, including Attachment I, is received by Owner. If an Invoice is disputed by Owner, then payment shall be made within the thirty (30) Day period for all undisputed amounts and the dispute shall be resolved pursuant to Article 18. Payment on disputed amounts shall be made as soon as such dispute is resolved. Without limiting the foregoing, Owner shall not be required to pay, and shall be entitled to withhold payment from Contractor for any amounts otherwise due Contractor, for:
1. any amounts for (i) Milestones Invoiced in Month N-2 that Contractor did not complete during Month N-1, (ii) Milestones Invoiced in Month N-1 that Contractor did not complete in Month N, (iii) Milestones Invoiced in Month N that Contractor did not complete prior to payment by Owner or is not projected (in accordance with the current sixty (60) Day look-ahead schedule) to complete in Month N+1;
2. any amounts Invoiced in Month N-3 for (i) time and material Change Orders, and (ii) Provisional Sums that Contractor did not incur in Month N-2; and
3. any amounts Invoiced in Month N for (i) time and material Change Orders, and (ii) Provisional Sums that Contractor has not incurred prior to payment by Owner or is not projected to incur (in accordance with the current sixty (60) Day look-ahead schedule and other required documentation) in Month N+1.
F. Reconciliation of Monthly Payments. If at any time during the course of the Project: (i) the Monthly Progress Reports show that any activity on the critical path is ninety (90) Days or more behind schedule; and (ii) Contractor or any of its Subcontractors or Sub-subcontractors are not excused under the terms of this Agreement for such delay, then the date for payment of the last Monthly Payment as shown in the Payment Schedule shall be revised to a later date according to the number of Days that the activity is behind schedule and the remaining Monthly Payments not yet disbursed to Contractor under this Agreement shall be readjusted and spread out proportionately through the remainder of the period, ending upon the revised date for payment of the last Monthly Payment; provided that, in the event that Contractor recovers the delay such that the activity in question ceases to be behind schedule, the Monthly Payments shall be recalculated so that such Monthly Payments shall be due in accordance with the original Payment Schedule as of the Contract Date.
7.3 Final Completion and Final Payment. Upon Final Completion, Contractor shall, in addition to any other requirements in this Agreement for achieving Final Completion, including those requirements set forth in Section 1.1 for the definition of Final Completion, submit a fully executed final Invoice in
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the form attached hereto as Schedule I-2, along with (i) a statement summarizing and reconciling all previous Invoices, payments and Change Orders; (ii) an affidavit that all payrolls, Taxes, bills for Equipment, and any other indebtedness connected with the Work for which Contractor and its Subcontractors and Sub-subcontractors are liable (excluding Corrective Work) have been paid; (iii) fully executed Final Conditional Lien and Claim Waiver from Contractor in the form of Schedule K-5, (iv) fully executed Final Conditional Lien and Claim Waivers from each Major Subcontractor in the form set forth in Schedule K-7; and (v) fully executed Final Conditional Lien and Claim Waivers from each Major Sub-subcontractor in substantially the form set forth in Schedule K-7. No later than twenty-five (25) Days after receipt by Owner of such final Invoice and all reasonably requested documentation and achieving Final Completion, Owner shall, subject to its rights to withhold payment under this Agreement, pay Contractor the balance of the Contract Price, provided that Contractor provides to Owner at or before the time of such payment the following: (x) fully executed Final Unconditional Lien and Claim Waiver from Contractor in the form of Schedule K-6; and (y) fully executed Final Unconditional Lien and Claim Waivers from each Major Subcontractor and Major Sub-subcontractor in substantially the form of Schedule K-8; provided that the Parties agree that substantially means that the same protections shall be provided to Owner as set forth in Schedule K-8.
7.4 Payments Not Acceptance of Work. No payment made hereunder by Owner shall be considered as approval or acceptance of any Work by Owner or a waiver of any claim or right Owner may have hereunder. All payments shall be subject to correction in subsequent payments.
7.5 Payments Withheld. In addition to disputed amounts set forth in an Invoice, Owner may, in addition to any other rights under this Agreement, and upon giving Contractor ten (10) Days prior written notice referenced in Section 7.8, withhold payment on an Invoice or a portion thereof, or collect on the Letter of Credit, in an amount and to such extent as may be reasonably necessary to protect Owner from loss due to:
A. Defective Work that Contractor is required to correct under Section 12.2A or 12.3, unless Contractor has, within fourteen (14) Days of a separate written notice given prior to the ten (10) Day notice referenced in Section 7.8, either (i) remedied, or commenced to remedy, as applicable, such Defective Work in accordance with Section 12.2A or 12.3 or (ii) if such Defective Work cannot be remedied in accordance with Section 12.2A or 12.3 by the exercise of reasonable diligence within such fourteen (14) Day period, provided Owner with a written plan, reasonably acceptable to Owner, to remedy such Defective Work and commenced the remedy of such Defective Work;
B. liens or other encumbrances on all or a portion of the Site, the Work or the Project, which are filed by any Subcontractor, any Sub-subcontractor or any other Person acting through or under any of them unless Contractor has, within fourteen (14) Days of a separate written notice given prior to the ten (10) Day notice referenced in Section 7.8, taken any of the following actions: (i) paid, satisfied or discharged the applicable liability, (ii) removed the lien or other encumbrance, or (iii) provided Owner with a bank guarantee or bond reasonably satisfactory to Owner and Lender in the applicable amount;
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C. any material breach by Contractor of any term or provision of this Agreement; unless Contractor has, within fourteen (14) Days of a separate written notice given prior to the ten (10) Day notice referenced in Section 7.8, either (i) cured such breach or (ii) if such breach cannot be cured by the exercise of reasonable diligence within such fourteen (14) Day period, Contractor has commenced corrective action and is diligently exercising all commercially practicable efforts to cure such breach;
D. the assessment of any fines or penalties against Owner as a result of Contractors failure to comply with Applicable Law or Applicable Codes and Standards;
E. amounts paid by Owner to Contractor in a preceding Month incorrectly (in which case, Section 7.9 shall apply);
F. Liquidated Damages which Contractor owes under the terms of this Agreement; or
G. any other costs or liabilities which Owner has incurred for which Contractor is responsible under this Agreement.
Owner shall pay Contractor the amount withheld or collected on the Letter of Credit as soon as practicable, but in no event later than fifteen (15) Business Days after Owners receipt of an Invoice from Contractor, if Contractor, as appropriate, (i) pays, satisfies or discharges the applicable liability and provides Owner with reasonable evidence of such payment, satisfaction or discharge, (ii) removes the lien or other encumbrance, (iii) cures the breach in question, (iv) remedies the Defective Work in question, or (v) provides Owner with a letter of credit reasonably satisfactory to Owner and Lender in the amount of the withheld payment.
7.6 Interest on Late Payments and Improper Collection. Any amounts due but not paid hereunder, any amounts withheld from Contractor but later finally determined in accordance with the dispute resolution procedure set forth in Article 18 to have been improperly withheld, or any amounts collected by Owner on the Letter of Credit but later finally determined in accordance with the dispute resolution procedure set forth in Article 18 to have been improperly collected, shall bear interest at the lesser of (i) an annual rate equal to the prime rate set from time to time by Citibank, N.A. plus three percent (3%), or (ii) the maximum rate permitted under Applicable Law.
7.7 Offset. Owner may, in accordance with Section 7.8B, offset any amount due and payable from Contractor to Owner under this Agreement against any amount due and payable to Contractor hereunder.
7.8 Procedure for Withholding, Offset and Collection on the Letter of Credit. Except as provided in Sections 16.1B and 20.3C (in which case, Owner shall follow the procedure set forth in Section 16.1B or Section 20.3C, as applicable), Owner shall:
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A. prior to exercising its right to withhold payment in accordance with this Agreement, provide Contractor with ten (10) Days written notice stating Owners intent to withhold and the amount to be withheld;
B. prior to exercising its right to offset in accordance with this Agreement, provide Contractor with ten (10) Days prior written notice stating Owners intent to offset and the amount to be offset; and
C. prior to exercising its right to collect on the Letter of Credit in accordance with this Agreement, provide Contractor with ten (10) Days written notice (i) specifying the nature of Contractors breach and the liabilities, damages, losses, costs or expenses owed to Owner; (ii) stating Owners intent to draw against the Letter of Credit; and (iii) specifying the amount to be drawn.
Notwithstanding the foregoing, should any payment under any Invoice become due before the expiration of any notice period specified in this Section 7.8, Owner shall nevertheless be entitled to withhold from such Invoice amounts equal to the amounts specified in Owners notice, but Owner shall promptly pay such withheld amounts to Contractor if Contractor cures the cause for such withholding or offset.
7.9 Payment Error. If an error is made in connection with a payment, and such payment is an overpayment, the Party receiving the payment in error shall immediately refund the mistaken amount to the paying Party. Without limiting the preceding sentence, and in addition to any other remedy available to Owner under this Agreement, if Owner discovers that any amount paid by it to Contractor in a preceding Month was incorrect, then Owner may, at its sole discretion, upon giving Contractor ten (10) Days prior written notice in accordance with Section 7.8, either: (i) offset such amount against future payments, or (ii) in the event that (A) the amount in question exceeds Thirty Million U.S. Dollars (U.S.$30,000,000) or (B) less than Thirty Million U.S. Dollars (U.S.$30,000,000) remains payable to Contractor under this Agreement, or amounts are due to Owner in connection with the final Invoice issued in accordance with Section 7.3, collect on the Letter of Credit for such amounts until sufficient and accurate supporting information is provided pursuant to Section 7.2. The foregoing provision shall not apply during the Defect Correction Period applicable to Substantial Completion of Subproject 2.
ARTICLE 8
TITLE AND RISK OF LOSS
8.1 Title.
A. Clear Title.
1. Contractor warrants and guarantees that Owner shall have legal title to and ownership of all or any portion of the Work (other than Work Product) and the Project upon payment therefor.
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2. Contractor warrants and guarantees that legal title to and ownership of the Work and the Project shall be free and clear of any and all liens, claims, security interests or other encumbrances arising out of the Work when title thereto passes to Owner, and if any such warranty or guarantee is breached, Contractor shall have the liability and obligations set forth in Section 17.5.
B. Title to Work. Title to all or any portion of the Work (other than Work Product) shall pass to Owner upon payment by Owner therefor. Transfer of title to Work shall be without prejudice to Owners right to reject Defective Work, or any other right in this Agreement.
8.2 Risk of Loss.
A. Notwithstanding passage of title as provided in Section 8.1 of this Agreement, Contractor shall bear the risk of physical loss and damage with respect to each Subproject until the earlier of Substantial Completion of such Subproject or termination of this Agreement; provided that Owner shall at all times bear the risk of physical loss and damage if and to the extent arising from (i) war (whether declared or undeclared), civil war, act of terrorism, sabotage, blockade, insurrection; or (ii) ionizing radiation, or contamination by radioactivity from nuclear fuel, or from any nuclear waste from the combustion of nuclear fuel properties of any explosive nuclear assembly or nuclear component thereof; or (iii) an atmospheric disturbance marked by high winds, with or without precipitation, including such events as hurricane, typhoon, monsoon, cyclone, rainstorm, tempest, hailstorm, tornado, or any combination of the foregoing events, including any resulting flood, tidal or wave action (such clause (iii) events collectively, Windstorms) to the extent that Windstorms result in loss or damage in excess of Five Hundred Million U.S. Dollars (U.S.$500,000,000) in the cumulative, aggregate with respect to the Work or the Project (including the Subprojects, collectively). In the event that any physical loss or damage to the Liquefaction Facility or the Work arises from one or more of the events set forth in the preceding sentence, and Owner elects to rebuild such physical loss or damage, Contractor shall be entitled to a Change Order to the extent such event adversely affects (i) Contractors costs of performance of the Work; (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any material obligation under this Agreement; provided that Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9.
B. Subject to Section 8.2C, upon and from the earlier of termination of this Agreement or the occurrence of Substantial Completion of a Subproject, Owner shall assume care, custody and control of such Subproject and shall bear the full risk of physical loss and damage to such Subproject; provided, however, notwithstanding the foregoing, Contractor shall remain fully responsible and liable to Owner for its Warranty and Corrective Work obligations under this Agreement.
C. Subject at all times to Section 3.25A and Section 4.3C, upon successful completion of the applicable commissioning test(s) (in accordance with the Project Commissioning Plan and Attachments S and V) for modification or improvement Work to the Existing Facility performed pursuant to this Agreement, Contractor shall certify to
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Owner in writing that the applicable modification or improvement is complete and has successfully completed the applicable commissioning test and Owner shall notify Contractor whether it accepts or rejects the certification within seventy-two (72) hours following Owners receipt thereof. Upon Owners acceptance of the applicable modification or improvement, Owner shall bear the full risk of physical loss and damage to the modifications or improvements to the Existing Facility specified in the notice, the Defect Correction Period shall commence for such Work, and Contractor shall remain fully responsible and liable to Owner for its Warranty and Corrective Work obligations under this Agreement. Owners acceptance of the applicable modification or improvement Work shall not relieve Contractor of any of its obligations to perform the Work in accordance with the requirements of this Agreement, including achievement of Substantial Completion.
D. With respect to any physical loss or physical damage to a Subproject caused by (i) Force Majeure, (ii) any member of Owner Group or any other Person for whom Owner is responsible, or (iii) any Third Party over whom neither Contractor nor Owner are responsible and such Third Party is beyond the reasonable control of Contractor and such loss or damage was not due to Contractors fault or negligence and could not have been prevented or avoided by Contractor through the exercise of due diligence, Contractor shall be entitled to a Change Order adjusting the applicable Guaranteed Substantial Completion Date if and to the extent permitted under (a) Section 6.8A.1 if caused by Force Majeure or such Third Party meeting the requirements set forth herein and (b) Section 6.9 if caused by any member of Owner Group or any other person for whom Owner is responsible.
ARTICLE 9
INSURANCE AND LETTER OF CREDIT
9.1 Insurance.
A. Provision of Insurance. The Parties shall provide the insurance as specified in Attachment O on terms and conditions stated therein.
B. No Cancellation. All policies providing coverage hereunder shall contain a provision that at least thirty (30) Days prior written notice shall be given to the non-procuring Parties and additional insureds prior to cancellation, non-renewal or material change in the coverage.
C. Obligations Not Relieved. Anything in this Agreement to the contrary notwithstanding, the occurrence of any of the following shall in no way relieve Contractor from any of its obligations under this Agreement: (i) failure by Contractor to secure or maintain the insurance coverage required hereunder; (ii) failure by Contractor to comply fully with any of the insurance provisions of this Agreement; (iii) failure by Contractor to secure such endorsements on the policies as may be necessary to carry out the terms and provisions of this Agreement; (iv) the insolvency, bankruptcy or failure of any insurance company providing insurance to Contractor; or (v) failure of any insurance company to pay any claim accruing under its policy.
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D. Failure to Provide Insurance. If any Party fails to provide or maintain insurance as required herein, and fails to cure such failure within fourteen (14) Days of receiving notice of such failure (provided that such fourteen (14) Day cure period falls within the applicable sixty (60) Day notice period required under Section 2 of Attachment O), the other Party shall have the right but not the obligation to purchase such insurance and shall be entitled to recover the insurance premium reasonably paid in respect of such insurance from the other Party in accordance with this Agreement; provided that, prior to execution of a Change Order in accordance with Attachment EE for any additional amounts owed for the Project Insurances, Owner shall not be entitled to recover from Contractor any insurance premiums paid by Owner with respect to any amounts in excess of the Insurance Provisional Sum for Project Insurances.
E. Unavailable Insurance. If any insurance (including the limits or deductibles thereof) hereby required to be maintained, other than insurance required by Applicable Law to be maintained, shall not be reasonably available in the commercial insurance market, Owner and Contractor shall not unreasonably withhold their agreement to waive such requirement to the extent that maintenance thereof is not so available; provided, however, that the Party shall first request any such waiver in writing from the other Party, which request shall be accompanied by written reports prepared by two (2) independent advisers, including insurance brokers, of recognized international standing certifying that such insurance is not reasonably available in the commercial insurance market (and, in any case where the required amount is not so available, explaining in detail the basis for such conclusions), such insurance advisers and the form and substance of such reports to be reasonably acceptable to the other Party. Any such waiver shall be effective only so long as such insurance shall not be available and commercially feasible in the commercial insurance market.
9.2 Irrevocable Standby Letter of Credit.
A. On or before the issuance of the Notice to Proceed in accordance with Section 5.2B, Contractor shall deliver to Owner an irrevocable standby letter of credit in the amount of ten percent (10%) of the Contract Price (Letter of Credit). The Letter of Credit shall name Owner as beneficiary, shall be issued and confirmed by a commercial bank in the United States of America with a long-term rating of at least A- by Standard & Poors and at least A3 by Moodys Investors Service, and shall be in the relevant form set forth in Attachment R; provided, however, if the issuing bank requires certain changes to the Letter of Credit form, such changes shall be subject to Owners written approval (not to be unreasonably withheld). If at any time the rating of the commercial bank that issued the applicable Letter of Credit falls below either of such ratings, Contractor shall replace such Letter of Credit within ten (10) Days with an equivalent instrument issued by a commercial bank in the United States of America meeting such rating requirements. Owner shall have the right to draw down on or collect against the Letter of Credit upon Owners demand in the event of the following: (i) the owing by Contractor to Owner under this Agreement for Liquidated Damages or any other liabilities, damages, losses, costs or expenses for which Contractor is liable under this Agreement; and (ii) Owner has provided notice to Contractor in accordance with Section 7.8C, except such notice is not required where Contractor does
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not pay Liquidated Damages as set forth in Section 20.3C. The amount drawn on the Letter of Credit shall not be greater than the amount that Owner, at the time of the drawing, reasonably estimates is owed it under this Agreement for Liquidated Damages, liabilities, damages, losses, costs or expenses or is necessary to remedy the breach of this Agreement. In addition, should the issuing commercial bank notify Owner and Contractor pursuant to the terms of the Letter of Credit that it has decided not to extend the Letter of Credit beyond the then current expiration date, Owner shall also have the right to draw down on or collect against the Letter of Credit for all remaining funds available under such Letter of Credit upon Owners demand if Contractor has not, prior to thirty (30) Days before the then current expiration date, delivered to Owner a replacement letter of credit substantially identical to the Letter of Credit and from a commercial bank meeting the requirements in this Section 9.2.
B. The amount of the Letter of Credit shall decrease to an aggregate amount of:
1. seven percent (7%) of the Contract Price within thirty (30) Days after the issuing commercial banks receipt from Owner of a written notice that (i) Substantial Completion of Subproject 1 has occurred, (ii) Contractor has paid all Delay Liquidated Damages due and owing under the Agreement for Subproject 1, and (iii) Contractor has achieved the Performance Guarantee for Subproject 1 or paid all Performance Liquidated Damages due and owing under the Agreement for Subproject 1;
2. four percent (4%) of the Contract Price within thirty (30) Days after the issuing commercial banks receipt from Owner of a written notice that (i) Substantial Completion of Subproject 2 has occurred, (ii) Contractor has paid all Delay Liquidated Damages due and owing under the Agreement for Subproject 2, and (iii) Contractor has achieved the Performance Guarantee for Subproject 2 or paid all Performance Liquidated Damages due and owing under the Agreement for Subproject 2;
3. two percent (2%) of the Contract Price within thirty (30) Days after the issuing commercials bank receipt from Owner of written notice of the expiration of the Defect Correction Period for Subproject 1; provided that if the expiration of such Defect Correction Period occurs before Substantial Completion of Subproject 2, such decrease shall not occur until after the conditions for decreasing the Letter of Credit for Substantial Completion of Subproject 2 occurs; and
4. zero percent (0%) of the Contract Price within thirty (30) Days after the issuing commercial banks receipt from Owner of a written notice of the expiration of the Defect Correction Period for Subproject 2.
With respect to each Subproject, no later than thirty (30) Days after the latest of (i) Owners acceptance of the Substantial Completion Certificate for such Subproject, (ii) Contractor has paid all Delay Liquidated Damages due and owing under the Agreement for such Subproject, and (iii) Contractor has achieved the Performance Guarantee for such
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Subproject or paid all Performance Liquidated Damages due and owing under the Agreement for such Subproject, Owner shall provide the commercial bank that issued the Letter of Credit with the written notice for such Subproject as specified in Section 9.2B.1 (in the case of Subproject 1) or Section 9.2B.2 (in the case of Subproject 2). No later than thirty (30) Days after expiration of the applicable Defect Correction Period, Owner shall provide the commercial bank that issued the Letter of Credit with written notice of the expiration of such period, provided that if the expiration of such Defect Correction Period for Subproject 1 occurs before Substantial Completion of Subproject 2, Owner shall not be required to provide such notice until after the conditions for decreasing the Letter of Credit for Substantial Completion of Subproject 2 occurs. The Letter of Credit shall remain in full force and effect from the issuance of such Letter of Credit through the expiration of the Defect Correction Period for Subproject 2, at which time the Letter of Credit will be returned to Contractor. Partial drawings are permitted under the Letter of Credit.
C. In the event the Contract Price is increased by one or more Change Orders in accordance with the terms of this Agreement, by a cumulative amount of five percent (5%) of the Contract Price or more, Contractor shall, upon Owners request, increase the amount of the Letter of Credit to reflect the corresponding increase in such Contract Price by ten percent (10%) of such increase. Such increase in the Letter of Credit shall be reflected in a Change Order mutually agreed upon by the Parties.
9.3 DSU Insurance.
A. If an event or events occur that may be covered by the Builders Risk Delayed Startup Insurance or Marine Cargo Delayed Startup Insurance described in Attachment O, it shall be Owners sole option to decide whether or not a claim under such Delayed Startup Insurance is filed. If Owner gives notice to Contractor to file a claim under such Delayed Startup Insurance, Contractor shall promptly file and diligently pursue the collection of such claim on behalf of Owner, and in such case Owner shall provide to Contractor such information and assistance reasonably required for Contractor to file and pursue such claim. Contractor shall not be relieved of any Delay Liquidated Damages owed by Contractor to Owner if Owner does not elect to file a claim on such Delayed Startup Insurance, if Owner does not provide the information or assistance referenced above, or the prosecution of such claim is unsuccessful.
B. Regardless whether an event or events occur that may be covered by such Delayed Startup Insurance, Contractor shall pay any Delay Liquidated Damages owed by Contractor to Owner within the time required in Section 20.3C, even if a claim has been asserted under such Delayed Startup Insurance.
C. If Owner or any Lender receive proceeds under such Delayed Startup Insurance in respect to any event or events which give rise to Contractors delay in achieving Substantial Completion of Subproject 1 or Subproject 2 by the applicable Guaranteed Substantial Completion Dates, Owner shall pay back to Contractor Delay Liquidated Damages previously paid by Contractor to Owner for such event or events (or in the case that the Delay Liquidated Damages have not yet been paid at the time of receipt of such proceeds, Owner shall reduce Contractors liability for Delay Liquidated Damages
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for such event or events), but only to the extent that such recovery of insurance proceeds and Delay Liquidated Damages would result in a double recovery of amounts for the same loss and same time period. If any such Delay Liquidated Damages are paid back to Contractor, the amount of such Delay Liquidated Damages paid back to Contractor shall not be counted against the cap on Delay Liquidated Damages in Section 20.2.
ARTICLE 10
OWNERSHIP OF DOCUMENTATION
10.1 Work Product.
A. Ownership of Work Product. Owner and Contractor acknowledge that during the course of, and as a result of, the performance of the Work, Contractor or its Subcontractors or Sub-subcontractors will create for this Project and will deliver to Owner, certain written materials, plans, Drawings (including P&IDs), Specifications, or other tangible results of performance of the Work under this Agreement or performance of work under the Technical Services Agreement (hereinafter individually or collectively referred to as Work Product). Subject to this Section 10.1, as between Contractor and Owner, Contractor shall own all rights, title and interest to the Work Product and any and all Intellectual Property embedded in the Work Product (including all patents and applications therefor, all inventions, trade secrets, know-how, technology, technical data, customer lists, copyrights and all registrations and applications therefor, and all industrial designs (Intellectual Property)). Notwithstanding anything to the contrary in this Agreement, all Contractor Existing Intellectual Assets, including Intellectual Property embedded therein, remains vested in Contractor. For the purposes of this Agreement, Contractor Existing Intellectual Assets means Intellectual Property and written materials, plans, drafts, specifications, or computer files or other documents, owned by Contractor or its Affiliates prior to the Contract Date or developed or acquired by Contractor or its Affiliates independently of this Agreement, but Owner receives a license in accordance with Section 10.1B to such Contractor Existing Intellectual Assets, including Intellectual Property embedded therein, to the extent same is incorporated into the Work Product.
B. License and Use of the Work Product. Subject to Section 10.1D, Owner shall be entitled to use the Work Product and Contractor hereby grants Owner a fully-paid up, irrevocable (subject to Section 10.1E), non-exclusive and royalty-free license to use the Work Product and the Intellectual Property embedded in the Work Product and (subject to Section 10.1C) modify the Work Product, in each case solely for the purpose of: (i) operating and maintaining the Liquefaction Facility or the Existing Facility (to the extent the Work Product is for the Scope of Work for the Existing Facility under this Agreement), (ii) training operators for the Liquefaction Facility or the Existing Facility (to the extent the Work Product is for the Scope of Work for the Existing Facility under this Agreement); and (iii) repairing, replacing, expanding, completing or modifying any part of the Liquefaction Facility (provided that such repair, replacement, expansion, completion or modification shall not include the addition of an additional liquefaction train (e.g., a train other than LNG Train 1 or LNG Train 2) or the Existing Facility (to the extent the Work Product is for the Scope of Work for the Existing Facility under this Agreement). Owner
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shall be entitled to assign its rights in the Work Product and in such license; provided that such assignee shall only be entitled to use the Work Product and Intellectual Property which is embedded in the Work Product for the purposes specified in clauses (i) through (iii) above, which licenses shall in all respects remain limited by and subject to the terms of this Agreement and as agreed to in writing by Owner and any such assignees. Notwithstanding anything to the contrary in this Agreement, no license is granted to Owner with respect to the use of any of Contractors proprietary software or systems.
C. Modification of Work Product or Intellectual Property. Subject to Sections 10.1D and 10.1E, after Substantial Completion of a Subproject or earlier termination of this Agreement, Owner or its contractors shall be entitled to modify the Work Product licensed to Owner in accordance with Section 10.1B for the purposes set forth in clauses (i) through (iii) in Section 10.1B; provided that Owner shall first remove, or cause to be removed, all references to Contractor from the Work Product. OWNER SHALL DEFEND, INDEMNIFY AND HOLD THE CONTRACTOR GROUP HARMLESS FROM AND AGAINST ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES AND LITIGATION OR ARBITRATION EXPENSES) INCURRED BY ANY MEMBER OF THE CONTRACTOR GROUP OR A SUBCONTRACTOR OR SUB-SUBCONTRACTOR AND CAUSED BY (I) ANY MODIFICATIONS TO THE WORK PRODUCT OR INTELLECTUAL PROPERTY, OR (II) USE OF ANY WORK PRODUCT OR INTELLECTUAL PROPERTY EMBEDDED IN THE WORK PRODUCT, TO THE EXTENT SUCH MODIFICATIONS OR USE TAKES PLACE WITHOUT THE PRIOR WRITTEN CONSENT OR INVOLVEMENT OF ANY MEMBER OF CONTRACTOR GROUP OR SUBCONTRACTOR OR SUB-SUBCONTRACTOR, INCLUDING USE OF THE WORK PRODUCT OR ANY INTELLECTUAL PROPERTY EMBEDDED IN THE WORK PRODUCT ON ANY PROJECT OTHER THAN THE PROJECT.
D. ConocoPhillips Work Product and ConocoPhillips Intellectual Property. Notwithstanding anything to the contrary herein, the ConocoPhillips License Agreement is the exclusive document governing the licensing to Owner of Intellectual Property concerning the Optimized Cascade Process. All Work Product directly related to the liquefaction units employing Optimized Cascade Process and the Optimized Cascade Process that is generated by or for Contractor in the performance of the Work (the ConocoPhillips Work Product) shall vest, as between ConocoPhillips and Owner, in accordance with and be exclusively governed by the ConocoPhillips License Agreement. All Intellectual Property rights in and resulting from the ConocoPhillips Work Product (hereinafter ConocoPhillips Intellectual Property) shall vest, as between ConocoPhillips and Owner, in accordance with and be exclusively governed by the ConocoPhillips License Agreement. Access to and any use of the ConocoPhillips Work Product and ConocoPhillips Intellectual Property shall be subject to the terms and conditions set forth in the ConocoPhillips License Agreement. Owner acknowledges that license and use of the Optimized Cascade Process is not authorized by this Agreement.
E. Revocation of License to Use the Work Product. If the Agreement is terminated by the Contractor under Section 16.5 (but only if the termination under Section 16.5 is for the failure to pay undisputed amounts exceeding One Hundred Million U.S. Dollars (U.S.$100,000,000) or Section 16.7 or by Owner under Section 16.2, 16.6 or 16.7, then the license granted under Section 10.1B to Owner to modify the Work Product and use the Work Product and Intellectual Property embedded in the Work Product shall be deemed
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revoked and Owner shall return the Work Product to Contractor, except that under no circumstances shall the license to the Work Product (and Intellectual Property embedded in such Work Product) be revoked or be required to be returned by Owner: (i) for Work in connection with the Existing Facility; or (ii) for the OSBL Facilities if Contractor terminates under Section 16.5. After such termination, if Owner requests, then Owner and Contractor will with respect to such Work Product revoked (and the Intellectual Property embedded in such Work Product) meet to negotiate in good faith to agree to the terms of a contract to complete the Work that remains incomplete after termination.
10.2 Owner Provided Documents. Notwithstanding anything to the contrary in this Agreement, all written materials, plans, drafts, specifications, computer files or other documents (if any) furnished by Owner or any of Owners other consultants or contractors to Contractor under this Agreement shall at all times remain the property of Owner, and Contractor shall not make use of any such documents or other media for any other project or for any other purpose than required to perform Contractors obligations under this Agreement. All such documents and other media, including all copies thereof, shall be returned to Owner upon the earlier of expiration of the Defect Correction Period for Subproject 2 and termination of this Agreement, except that Contractor may, subject to its confidentiality obligations as set forth in Article 19, retain one record set of such documents or other media. Owner hereby grants to Contractor Group and Subcontractors and Sub-subcontractors of any of the foregoing with respect to the Work a non-exclusive, royalty-free, revocable, non-transferable license to use and modify Owner Proprietary Work Product (and all Intellectual Property existing or referenced therein) to the extent required to perform Contractors obligations under this Agreement. For the purposes of this Agreement, Owner Proprietary Work Product means Intellectual Property and written materials, plans, drafts, specifications, or computer files or other documents, owned by Owner or its Affiliates prior to the Contract Date or developed or acquired by Owner or its Affiliates independently of this Agreement.
10.3 License to Use Liquefaction Facility. Subject to Section 10.1D, and to the extent not covered by Section 10.1B or a separate sub-license between Owner and Contractor, Contractor shall obtain and provide to Owner a fully-paid up, irrevocable, non-exclusive and royalty-free license (including process licenses other than the Optimized Cascade Process license) from its Subcontractors and Sub-subcontractors to allow Owner to operate and maintain the Liquefaction Facility and the Existing Facility (to the extent necessary to operate and maintain the Liquefaction Facility) for the purposes intended under this Agreement, including producing LNG. Upon Substantial Completion of each Subproject or earlier termination, Contractor shall, to the extent not covered by Section 10.1B or a separate sub-license between Owner and Contractor, assign to Owner all licenses provided by any Subcontractor or Sub-subcontractor to Contractor (other than any license provided by ConocoPhillips). Owner shall be entitled to assign its rights in the licenses; provided that such assignee shall only be entitled to use such licenses for the purposes specified herein, which licenses shall in all respects remain limited by and subject to the terms of this Agreement.
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ARTICLE 11
COMPLETION
11.1 Notice of RFSU, Delivery of Feed Gas for Commissioning, Start Up and Performance Testing, LNG Production and Ready for Ship Loading Time Test.
A. Notice of RFSU.
1. Without limitation of any scheduling requirements contained in this Agreement, Contractor shall give Owner one hundred twenty (120) Days prior written notice with respect to each Subproject of the thirty (30) Day period during which Contractor expects to achieve RFSU of each Subproject. Sixty (60) Days after such initial notice, Contractor shall give Owner a second written notice specifying the seven (7) Day period during which Contractor expects to achieve RFSU of each Subproject.
2. Owner shall notify FERC within three (3) Days of the second written notice issued in accordance with Section 11.1A.1 that RFSU is scheduled to occur during the period specified in the second written notice so that a letter authorizing Owner to introduce Natural Gas for commissioning of the Subproject (FERC Authorization for Commissioning) can be obtained from FERC.
3. At such time as the applicable Subproject has achieved RFSU, Contractor shall certify to Owner in the form of Attachment L (RFSU Completion Certificate) that all requirements under this Agreement for RFSU for such Subproject have occurred. The RFSU Completion Certificate shall be accompanied by other supporting documentation as may be required under the Agreement to establish that the requirements for RFSU for the applicable Subproject have been met.
4. If Contractor achieves RFSU during the period specified in the second notice issued in accordance with Section 11.1A.1, Owner shall provide the FERC Authorization for Commissioning of the Subproject within seven (7) Days after the date that RFSU is achieved. In the event Owner fails to provide the FERC Authorization for Commissioning within the period specified in the preceding sentence, Contractor shall be entitled to a Change Order to the extent allowed under Section 6.9 of the Agreement.
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B. Notice of Delivery of Feed Gas for Commissioning, Start Up and Performance Testing. Contractor shall provide to Owner a schedule of the quantities of Commissioning Feed Gas, in MMbtu, that Contractor anticipates it will need for each applicable Subproject in accordance with the following Commissioning Feed Gas forward plan:
1. No later than the twentieth (20th) Day of the Month occurring three (3) Months prior to the Month Contractor first needs Commissioning Feed Gas for each Subproject, Contractor shall give written notice to Owner of the total quantity of Commissioning Feed Gas required for the Month Commissioning Feed Gas is first needed and for each of the following two (2) Months (e.g., if the Contractors first need of Commissioning Feed Gas for a Subproject is anticipated to be in June, Contractor shall give written notice to Owner by March 20th of the anticipated total quantity of Commissioning Feed Gas required in the Months of June, July and August).
2. No later than the twentieth (20th) Day of the Month occurring two (2) Months prior to the Month Contractor first needs Commissioning Feed Gas for each Subproject, Contractor shall give written notice to Owner of (i) the quantities of Commissioning Feed Gas for each twenty-four (24) hour period between the hours of 9:00 AM of one Day to 9:00 AM the next Day, (Daily Quantities) for the Month Commissioning Feed Gas is first needed and (ii) any revisions to the total Months quantities required for each of the following two (2) Months (e.g., if the Contractors first need of Commissioning Feed Gas for a Subproject is anticipated to be in June, Contractor shall give notice to Owner by April 20th of the Daily Quantities for June, and revisions, if any, to the total quantity of Commissioning Feed Gas required in the Months of July and August).
3. No later than the twentieth (20th) Day of the Month prior to the Month Contractor first needs Commissioning Feed Gas for each Subproject and no later than the twentieth 20th Day of each following Month, Contractor shall give written notice to Owner of the Daily Quantities for the next three (3) Months.
4. During each Month that Contractor requires Commissioning Feed Gas, Contractor will give Owner written notice of Daily Quantities as follows: (i) every Thursday by 5:00 PM of the Daily Quantities Contractor anticipates requiring for each Day between and including the following Tuesday through Monday, and (ii) every Day by 3:00 PM of the Daily Quantity for the next two (2) Days.
5. In the event that Contractor at any time becomes aware or has reason to believe that Contractor will require materially less than the previously noticed Daily Quantity for that Day, Contractor shall immediately give Owner written notice of such fact and of the revised Daily Quantity.
6. If, following the twentieth (20th) day of each Month, Contractors need for Daily Quantities changes materially from the previously noticed Daily Quantities, then Owner shall use commercially reasonable efforts to reschedule the delivery of the Commissioning Feed Gas so as to accommodate the revised Daily
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Quantities notified by Contractor in writing. Notwithstanding the foregoing, any failure by Owner to supply Commissioning Feed Gas at such time as such Feed Gas is needed in accordance with the periods set forth in the notices delivered during the Month prior to such need, shall entitle Contractor to a Change Order, provided that Contractor complies with the requirements set forth in Sections 6.2, 6.5 and 6.9.
C. Notice of Scheduling of LNG Production Requirement. Contractor shall provide to Owner a schedule of the quantities of LNG Contractor expects to produce from the Commissioning Feed Gas (Commissioning LNG) in accordance with the following Commissioning LNG forward plan:
1. In coordination with the Commissioning Feed Gas forward plan in 11.1B, no later than the twentieth (20th) Day of the Month occurring three (3) Months prior to the Month Contractor first expects to produce Commissioning LNG for each Subproject, Contractor shall give written notice to Owner of the quantity, in MMbtu, of the Commissioning LNG expected to be produced in the Month Contractor first expects to produce Commissioning LNG and for each of the following two (2) Months.
2. No later than the twentieth (20th) Day of the Month occurring two (2) Months prior to the Month Contractor first expects to produce Commissioning LNG for each Subproject, Contractor shall give written notice to Owner of (i) Commissioning LNG expected to be produced for each Day for the Month Contractor first expects to produce Commissioning LNG and (ii) any revisions to the total Months quantities of Commissioning LNG expected in the following two (2) Months.
3. No later than the twentieth (20th) Day of the Month prior to the Month Contractor will first produce Commissioning LNG for each Subproject and no later than the twentieth 20th Day of each following Month, Contractor shall give written notice to Owner of the Commissioning LNG to be produced for each Day for the next three (3) Months.
4. If, following the twentieth (20th) day of each Month, Contractors daily plan for Commissioning LNG production changes materially from the previously noticed daily plan, then Owner shall use commercially reasonable efforts to provide storage for the Commissioning LNG to accommodate the revised plan for Commissioning LNG production as notified by Contractor in writing.
D. Notice of Ready for Ship Loading Time Test. Without limitation of the foregoing or any other scheduling requirements contained in this Agreement, Contractor shall give Owner one hundred twenty (120) Days prior written notice of the date on which Contractor expects to be ready for the Ship Loading Time Test. Contractor shall give Owner a second written notice specifying the date on which Contractor expects to be ready for the Ship Loading Time Test, which such notices shall be given no later than sixty (60) Days prior to such date. Owner shall provide for an LNG Tanker after the date in such second written notice; provided that Owner is not required to schedule such LNG Tanker
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until (i) there is sufficient LNG in storage in the Tanks to perform the Ship Loading Time Test and (ii) Owner has an economic reason to export such LNG. Owner shall give Contractor fourteen (14) Days prior written notice of a five (5) Day period in which the LNG Tanker will be available for the Ship Loading Time Test. In the event that Contractor at any time becomes aware or has reason to believe that its ability to be ready for the Ship Loading Time Test will be delayed beyond the last date specified in the second written notice given pursuant to this Section 11.1D or the date(s) specified in Owners notice of LNG Tanker availability, Contractor shall immediately give Owner written notice of such fact and of the revised date on which Contractor then expects that it will be ready for the Ship Loading Time Test. Owner shall use commercially reasonable efforts to reschedule the arrival of the LNG Tanker for the Ship Loading Time Test. If the LNG Tanker is not provided within thirty (30) Days after the date requested in Contractors second notice, Contractor shall be entitled to a Change Order to the extent permitted under Section 6.9.
11.2 Notice and Requirements for Substantial Completion. Contractor shall give Owner not less than ninety (90) Days prior written notice of its intention to commence the Performance Tests, and, on the sixtieth (60th) Day and thirtieth (30th) Day immediately prior to Contractors intention to commence such testing activities, Contractor shall provide written notices to Owner. The Parties shall, no later than twenty-four (24) months after Owners issuance of the Notice to Proceed, mutually agree upon final test procedures for the conduct of the Performance Tests as specified in and consistent with Attachment S (these test procedures and the test parameters specified in Attachment S hereinafter referred to as Performance Test Procedures). Contractor shall provide all labor, equipment, supplies, and all other items necessary for the conduct of the Performance Tests; provided, however, that Owner shall provide operating personnel for supervision by Contractor in accordance with Section 4.4 and the Commissioning Feed Gas in accordance with Section 11.1B. Contractor shall analyze the data obtained during all Performance Tests, and ensure that such data reflects the performance standards required hereunder. A complete copy of all raw performance data and a detailed listing of all testing instrumentation utilized shall be provided to Owner at the completion of testing. Upon achieving all requirements under this Agreement for Substantial Completion of a Subproject, Contractor shall certify to Owner in the form of Attachment M (Substantial Completion Certificate) that all of the requirements under this Agreement for Substantial Completion of such Subproject have occurred and shall provide with such Substantial Completion Certificate a Performance Test report and analysis to Owner. At a minimum, the Performance Test report shall include (i) the raw data, (ii) the instrumentation utilized for the Performance Tests, (iii) the procedures utilized during the Performance Tests, (iv) calculations and information, and a full explanation concerning same, for adjustments to the Guarantee Conditions, as and to the extent specified in the Performance Test Procedures, and (v) any other reasonable supporting information used to demonstrate that the Work has met the Minimum Acceptance Criteria or Performance Guarantee, as the case may be. The Substantial Completion Certificate shall be accompanied by all other supporting documentation as may be reasonably required to establish that the requirements for Substantial Completion of the Subproject have been met.
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11.3 Owner Acceptance of RFSU and Substantial Completion.
A. Owner Acceptance of RFSU. Owner shall notify Contractor whether it accepts or rejects the RFSU Completion Certificate within seventy-two (72) hours following Owners receipt thereof. All Work shall continue during pendency of Owners review. Acceptance of RFSU (which such acceptance shall not be unreasonably withheld) shall be evidenced by Owners signature on such RFSU Completion Certificate. The date of RFSU shall be based upon, and the date of Owners acceptance of RFSU shall be deemed to have occurred on, the date listed on the RFSU Completion Certificate; provided that all requirements under this Agreement for RFSU were achieved on such date listed on the RFSU Completion Certificate except for the payment of any and all Liquidated Damages due and owing to Owner and provided further that the payment to Owner of such Liquidated Damages shall have been made within the time and in accordance with Section 20.3C in order for RFSU to have occurred on the date listed in the RFSU Completion Certificate. If Owner does not agree that RFSU has occurred, then Owner shall state the basis for its rejection in reasonable detail in such notice. If the Parties do not mutually agree on when and if RFSU has occurred, the Parties shall thereupon promptly and in good faith confer and make all reasonable efforts to resolve such issue. In the event such issue is not resolved within forty-eight (48) hours of the delivery by Owner of its notice to Contractor, the Parties shall resolve such dispute in accordance with Section 18.1A. Owners acceptance of RFSU shall not relieve Contractor of any of its obligations to perform the Work in accordance with the requirements of this Agreement. As used in this Section 11.3A, unreasonably withheld means that Owner fails to accept the RFSU Completion Certificate even if all of the requirements under this Agreement for the achievement of RFSU of a Subproject have been achieved. For the avoidance of doubt, unreasonably withheld, as used in this Section 11.3A, means that Owner cannot fail to accept the RFSU Completion Certificate if all the requirements under this Agreement for the achievement of RFSU have been achieved.
B. Owner Acceptance of Substantial Completion. Owner shall notify Contractor whether it accepts or rejects a Substantial Completion Certificate within ten (10) Days following Owners receipt thereof. All Work shall continue during pendency of Owners review. Acceptance of such Substantial Completion (which such acceptance shall not be unreasonably withheld) shall be evidenced by Owners signature on such Substantial Completion Certificate. The date of Substantial Completion of a Subproject shall be based upon, and the date of Owners acceptance of Substantial Completion of a Subproject shall be deemed to have occurred on, the date listed on the applicable Substantial Completion Certificate, provided that all requirements under this Agreement for Substantial Completion of such Subproject were achieved on such date listed on the Substantial Completion Certificate except for the payment of any and all Liquidated Damages due and owing to Owner and provided further that the payment to Owner of such Liquidated Damages shall have been made within the time and in accordance with Section 20.3C in order for Substantial Completion of such Subproject to have occurred on the date listed in the applicable Substantial Completion Certificate. If Owner does not agree that Substantial Completion of a Subproject has occurred, then Owner shall state the basis for its rejection in reasonable detail in such notice. If the Parties do not mutually agree on when and if Substantial Completion of a Subproject has occurred, the Parties shall thereupon promptly and in good faith confer and make all reasonable efforts to resolve such issue. In the event such issue is not resolved within ten (10) Days of the delivery by
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Owner of its notice to Contractor, the Parties shall resolve such dispute in accordance with Section 18.1A. Owners acceptance of Substantial Completion of a Subproject shall not relieve Contractor of any of its obligations to perform the Work in accordance with the requirements of this Agreement. Notwithstanding anything to the contrary in this Section, Owner shall not be required to accept a Substantial Completion Certificate if the requirements under this Agreement for the achievement of Substantial Completion of a Subproject have not been achieved. As used in this Section 11.3B, unreasonably withheld means that Owner fails to accept a Substantial Completion Certificate even if all of the requirements under this Agreement for the achievement of Substantial Completion of a Subproject have been achieved. For the avoidance of doubt, unreasonably withheld, as used in this Section 11.3B, means that Owner cannot fail to accept the applicable Substantial Completion Certificate if all the requirements under this Agreement for the achievement of Substantial Completion of a Subproject have been achieved.
11.4 Minimum Acceptance Criteria and Performance Liquidated Damages.
A. Minimum Acceptance Criteria Achieved. In the event that a Subproject fails to achieve the Performance Guarantee by the applicable Guaranteed Substantial Completion Date, as evidenced by the Performance Test results, but meets the Minimum Acceptance Criteria and all other requirements for Substantial Completion of such Subproject, then Contractor shall have the right, upon written notice to Owner, to elect one of the following options; provided, however, if the Performance Tests results evidence that the LNG Production Rate does not exceed ninety eight percent (98%) of the Performance Guarantee, then Owner shall have the right, upon written notice, to elect and direct Contractor, within thirty (30) Days after receipt of a notice from Contractor specifying the Performance Test results and requesting Owners election, to proceed with one of the following options:
(i) Contractor shall transfer care, custody and control of the applicable Subproject to Owner. Upon such transfer and satisfaction of all other requirements of Substantial Completion, Substantial Completion of such Subproject shall be achieved, and Owner shall sign the applicable Substantial Completion Certificate submitted by Contractor. Contractor shall only be responsible for the payment of applicable Delay Liquidated Damages owing up to the date of Substantial Completion of such Subproject, which shall be paid in accordance with Section 20.3C. Contractor shall pay, as a condition of Substantial Completion, Performance Liquidated Damages to Owner in accordance with Section 20.3C based on the results of the last Performance Test conducted by Contractor prior to issuance of a notice of election by Owner or Contractor pursuant to this Section 11.4; or
(ii) Contractor shall transfer care, custody and control of the applicable Subproject to Owner and take corrective actions to achieve such Performance Guarantee. Upon such transfer and satisfaction of all other requirements of Substantial Completion, Substantial Completion of such Subproject shall be achieved, and Owner shall sign the applicable Substantial Completion Certificate
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submitted by Contractor. Contractor shall only be responsible for the payment of applicable Delay Liquidated Damages owing up to the date of Substantial Completion of such Subproject, which shall be paid in accordance with Section 20.3C. The correction actions required to be performed by Contractor shall be performed in accordance with Owners operation and maintenance schedule so as to not interfere with operation of such Subproject and subject to any security or safety requirements. For the period of time that Contractor is taking corrective action to achieve the Performance Guarantee(s) pursuant to this Section 11.4A(ii), Owner shall provide safe, reasonable access to Contractor for performance of such corrective actions, but at all times performing such Work so as not to interfere with the operation of such Subproject. Prior to the election of the option under this Section 11.4A(ii), Contractor shall deliver to Owner a detailed corrective action plan and schedule to achieve the Performance Guarantee. If the Subproject has not achieved the Performance Guarantee within one hundred and eighty (180) Days after the Guaranteed Substantial Completion Date (or such later date as may be mutually agreed in writing), then Contractor shall cease taking corrective actions to achieve the Performance Guarantee, and in that event, Contractor shall pay to Owner the applicable Performance Liquidated Damages for such Performance Guarantee in accordance with Section 20.3C based on the results of the last Performance Test conducted by Contractor. On the other hand, if such Performance Guarantee is achieved within the prescribed period, Contractor shall owe no Performance Liquidated Damages for such Subproject. Notwithstanding the foregoing, in the event that the Owner directed Contractor or Contractor elected to proceed with the option under this Section 11.4A(ii) and Contractor achieves an LNG Production Rate that exceeds ninety eight percent (98%) of the Performance Guarantee, Contractor shall have the right to cease taking corrective actions to achieve the Performance Guarantee, and Contractor shall pay to Owner the applicable Performance Liquidated Damages for such Performance Guarantee in accordance with Section 20.3C based on the results of the last Performance Test conducted by Contractor.
B. Minimum Acceptance Criteria Not Achieved. In the event that a Subproject fails to achieve the Minimum Acceptance Criteria, as evidenced by the Performance Test results, by the applicable Guaranteed Substantial Completion Date, as such date may be extended by Change Order as provided herein, then (i) Substantial Completion of such Subproject shall not occur and (ii) the provisions of Section 13.1 shall apply. In addition to the foregoing, Contractor shall attempt for a period of ten (10) months after the applicable Guaranteed Substantial Completion Date (Minimum Acceptance Criteria Correction Period) to correct the Work to enable the Subproject to achieve the Minimum Acceptance Criteria and otherwise achieve Substantial Completion of such Subproject. If the Subproject has not achieved the Minimum Acceptance Criteria and Substantial Completion upon the termination of the Minimum Acceptance Criteria Correction Period, then Owner shall have, in its sole discretion, the option of either (a) granting Contractor up to an additional ten (10) month Minimum Acceptance Criteria Correction Period under the same terms and conditions as the first, including the application of Section 13.1 (subject to Section 20.2A); or (b) declaring Contractor Default pursuant to Article 16, in which case Owner shall be entitled to immediately (and without
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any cure period allowed) terminate Contractors performance of the Work in accordance with Section 16.1A, and Owner shall have all of the rights under Section 16.1, including all Delay Liquidated Damages owed but subject to Section 20.2A, provided that Owner shall not be entitled to any Performance Liquidated Damages for a termination under this Section 11.4B with respect to the Subproject that did not achieve the Minimum Acceptance Criteria. If, on the other hand, the Subproject has achieved the Minimum Acceptance Criteria and Substantial Completion during the Minimum Acceptance Criteria Correction Period (or during the second ten (10) month period, should Owner elect that option), then Contractor shall be liable to Owner for applicable Delay Liquidated Damages up to the date of Substantial Completion of the applicable Subproject (subject to Section 20.2A) and all Performance Liquidated Damages owed (subject to Section 20.2B).
11.5 Punchlist. Upon completion of the Performance Tests and prior to Substantial Completion of a Subproject, Owner and Contractor shall inspect the Subproject, and Contractor shall prepare a proposed Punchlist of items identified as needing to be completed or corrected as a result of such inspection. Contractor shall promptly provide the proposed Punchlist to Owner for its review, together with an estimate of the time and cost necessary to complete or correct each Punchlist item. Contractor shall add to the proposed Punchlist any Punchlist items that are identified by Owner within ten (10) Days after Owners receipt of the proposed Punchlist from Contractor, and Contractor shall immediately initiate measures to complete or correct, as appropriate, any item on Contractors proposed Punchlist (including those items identified by Owner during Owners review) that are not of a Punchlist nature. Notwithstanding anything to the contrary in this Agreement, Contractor and Owner are not required as a condition of Substantial Completion of a Subproject to agree upon and identify every Punchlist item and include it on the Punchlist, but Contractor is required to complete as a condition of Substantial Completion of such Subproject that does not meet the definition of Punchlist as provided in Section 1.1. In the event of a dispute regarding whether a specific item of Work meets the definition of Punchlist under Section 1.1, the Parties shall resolve such dispute in accordance with Section 18.1A. Owner shall provide Contractor with access to the Work after Substantial Completion of a Subproject sufficient to enable Contractor to complete all Punchlist items, so long as such access does not unreasonably interfere with operation of a Subproject after Substantial Completion of the Subproject or the Existing Facility and subject to any reasonable security or safety requirements of Owner. Upon Contractors completion or correction of any items necessary to achieve Substantial Completion of a Subproject, as modified by any Owner additions, such Punchlist shall govern Contractors performance of the Punchlist items up to Final Completion. All Work on the Punchlist shall be completed by the date required for Final Completion, as specified in Section 5.3C, or Owner may, in addition to any other rights that it may have under this Agreement, complete such Punchlist Work at the expense of Contractor. In the event Owner elects to complete such Punchlist Work, Contractor shall pay Owner, within ten (10) Days after receipt of written notice from Owner, all reasonable costs and expenses incurred by Owner in performing such Punchlist Work, or, at Owners sole discretion, Owner may withhold or offset amounts owed to Contractor or collect on the Letter of Credit in accordance with Section 7.8 in the amount of such costs and expenses. Any Defective Work identified after agreement between the Parties of the Punchlist shall be corrected by Contractor as a Warranty item under Article 12.
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11.6 Notice and Requirements for Final Completion. Final Completion shall be achieved when all requirements for Final Completion set forth in the definition of Final Completion under Section 1.1 have been satisfied. Upon Final Completion, Contractor shall certify to Owner in the form of Attachment N (Final Completion Certificate) that all of such requirements have occurred. Owner shall notify Contractor whether it accepts or rejects the Final Completion Certificate within ten (10) Days following Owners receipt thereof. Acceptance of Final Completion (which such acceptance shall not be unreasonably withheld) shall be evidenced by Owners signature on such certificate, which shall be forwarded to Contractor with such notice. The date of Final Completion shall be based upon, and the date of Owners acceptance of Final Completion shall be deemed to have occurred on, the date listed on the Final Completion Certificate; provided that all requirements under this Agreement for Final Completion were achieved on such date listed on the Final Completion Certificate. If Owner does not agree that Final Completion has occurred, then Owner shall state the basis for its rejection in such notice. If the Parties do not mutually agree on when and if Final Completion has occurred, the Parties shall thereupon promptly and in good faith confer and make all reasonable efforts to resolve such issue. In the event such issue is not resolved within ten (10) Days of the delivery by Owner of its notice, the Parties shall resolve such dispute in accordance with Section 18.1A. Owners acceptance of Final Completion shall not relieve Contractor of any of its remaining obligations in accordance with the requirements of this Agreement. Notwithstanding anything to the contrary in this Section, Owner shall not be required to accept the Final Completion Certificate if the requirements under this Agreement for the achievement of Final Completion have not been achieved. As used in this Section 11.6, unreasonably withheld means that Owner fails to accept the Final Completion Certificate even if all of the requirements under this Agreement for the achievement of Final Completion have been achieved. For the avoidance of doubt, unreasonably withheld, as used in this Section 11.6, means that Owner cannot fail to accept the Final Completion Certificate if all the requirements under this Agreement for the achievement of Final Completion have been achieved.
11.7 Operations Activities.
A. Operation by Contractor. Prior to Substantial Completion of a Subproject and after RFSU of such Subproject, to the extent Contractor has care, custody and control of the Liquefaction Facility, Contractor shall, to the extent reasonably possible, operate the Liquefaction Facility in accordance with Owners reasonable instructions and all Permits (Operations Activity or collectively Operations Activities). Contractor shall not have the obligation to follow Owners instructions for any Operations Activity if such Operations Activity in Contractors reasonable opinion has more than a minimal impact on Contractors cost of performance of the Work or Contractors ability to perform the Work in accordance with the Project Schedule or Contractors ability to perform any other obligation under this Agreement, the intent of this Section 11.7A being that Contractors performance of the Work shall have priority over the operation of the Liquefaction Facility; provided, however, notwithstanding the foregoing, Owner shall be entitled to direct Contractor to stop, or cause to be stopped, all or any portion of the Work if the continuance of such Work would, in Owners reasonable opinion, be unsafe or cause damage to the Project or the Liquefaction Facility. Within twelve (12) hours of receipt of Owners instructions regarding such Operations Activity, Contractor shall provide notice to Owner informing Owner whether it can comply with Owners instructions and the reason if it cannot so comply. Contractors performance of the Operations Activities shall not in any way release Contractor or any surety of Contractor from any obligations or liabilities pursuant to this Agreement.
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B. Operation by Owner. Upon Owners election to take care, custody and control of a Subproject in accordance with Section 11.4, Owner has the right to operate such Subproject. Owner shall bear the risk of physical loss and damage to the Work and the Project as provided in Article 8.
ARTICLE 12
WARRANTY AND CORRECTION OF WORK
12.1 Warranty.
A. General. The warranties set forth in this Article 12 (collectively, the Warranty or Warranties) are in addition to any of the Minimum Acceptance Criteria or the Performance Guarantee set forth in this Agreement. Any Work, or component thereof, that is not in conformity with any Warranty is defective (Defective) and contains a defect (Defect).
B. Warranty of Work. Contractor hereby warrants that:
1. the Equipment, and each component thereof, shall be new (unless otherwise specified in this Agreement) and of good quality;
2. the Work (including the Equipment) shall be in accordance with all of the requirements of this Agreement, including in accordance with GECP, Applicable Law and Applicable Codes and Standards; and
3. the Work (including the Equipment) shall be free from encumbrances to title, as set forth in greater detail in Section 8.1.
C. Documentation Warranty. Contractor warrants that the written instructions regarding the use of Equipment, including those instructions in operation and maintenance manuals, shall conform to this Agreement and GECP as of the time such instructions are prepared. If any non-conformance with the Warranty specified in this Section 12.1C occurs or is discovered at any time prior to or during the applicable Defect Correction Period, Contractor shall, at its sole expense, furnish Owner with corrected instructions.
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D. Assignment and Enforcement of Subcontractor Warranties. Contractor shall be fully responsible and liable to Owner for its Warranty and Corrective Work obligations and liability under this Agreement for all Work. All such warranties shall run to the benefit of Contractor but shall permit Contractor, prior to assignment to Owner, the right (upon mutual agreement of the Parties), to authorize Owner to deal with Subcontractor on Contractors behalf. Such warranties, with duly executed instruments assigning the warranties shall be delivered to Owner concurrent with the end of the applicable Defect Correction Period. This Section 12.1D shall not in any way be construed to limit Contractors liability under this Agreement for the entire Work or its obligation to enforce Subcontractor warranties.
E. Exceptions to Warranty. The Warranty excludes remedy, and Contractor shall have no liability to Owner, for any damage or defect to the extent caused by: (i) improper repairs or alterations, misuse, neglect or accident by Owner; (ii) operation, maintenance or use of the Project, Work or any component thereof in a manner not in compliance with a material requirement of operation and maintenance manuals delivered by Contractor to Owner; (iii) normal wear and tear; (iv) normal corrosion or (v) an event of Force Majeure (but only, with respect to obligations under this Article 12, to the extent such event of Force Majeure occurs after Substantial Completion of the Subproject).
12.2 Correction of Work Prior to Substantial Completion.
A. General Rights. All Work shall be subject to inspection by Owner at all reasonable times to determine whether the Work conforms to the requirements of this Agreement. Upon Owner giving reasonable prior notice, Contractor shall furnish Owner with access to all locations where Work is in progress on the Site and at the offices of Contractor and its Major Subcontractors. Owner shall be entitled to provide Contractor with written notice of any Work which Owner believes does not conform to the requirements of this Agreement. After Contractor becomes aware of a Defect in the Work prior to Substantial Completion of the Subproject containing the Defect, Contractor will provide Owner with a general plan that provides for Contractor to investigate and, if necessary, correct (whether by repair, replacement or otherwise) the Defect (having regard to the nature of the Defect, the Project Schedule, safety, insurance and any adverse impact on the operation of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1), which plan may need to be updated based upon the Contractors investigation or further development or implementation of the plan. Contractor will carry out and complete the necessary work at its own cost and expense in order to remedy the Defect prior to Substantial Completion of the Subproject containing the Defect, unless: (i) otherwise provided in the plan for earlier correction; or (ii) such Defect materially impacts the operation of the Existing Facility or Subproject 1 after Substantial Completion of Subproject 1, in which case Contractor shall immediately commence to correct the Defect and complete the remedy as expeditiously as possible. The cost of disassembling, dismantling or making safe finished Work for the purpose of inspection, and reassembling such portions (and any delay associated therewith) shall be borne by (i) Contractor, if such Work is found not to conform with the requirements of this Agreement, and (ii) by Owner, if such Work is found to conform with the requirements of this Agreement, and Contractor shall be entitled to a Change Order in such event; provided that Contractor complies with the requirements set forth in Sections 6.2 and 6.5.
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B. Witness Points. Contractor shall provide Owner with a list of witness points for all Major Equipment no later than thirty (30) Days after execution of the relevant Subcontract and Owner shall notify Contractor which of the witness points it wishes its personnel to witness. Contractor shall provide Owner with at least fifteen (15) Days prior written notice of the actual scheduled date of each of the tests Owner has indicated it wishes to witness. Contractor shall cooperate with Owner if Owner elects to witness any additional tests, and Contractor acknowledges that Owner shall have the right to witness all tests being performed in connection with the Work. Notwithstanding Owners rights to witness tests, Owner shall not interrupt or interfere with any test or require changes while witnessing such tests; provided however, if Owner observes testing that, in Owners reasonable opinion, raises a safety concern or could cause damage to Major Equipment, then Owner has the right (but not the obligation) to notify Contractor and Contractor shall promptly respond after such notification to rectify any issues.
C. No Obligation to Inspect. Owners right to conduct inspections under Sections 12.2A and 12.2B shall not obligate Owner to do so. Neither the exercise of Owner of any such right, nor any failure on the part of Owner to discover or reject Defective Work shall be construed to imply an acceptance of such Defective Work or a waiver of such Defect. In addition, Owners acceptance of any Work which is later determined to be Defective shall not in any way relieve Contractor from its obligations under this Article 12.
12.3 Correction of Work After Substantial Completion. If, during the applicable Defect Correction Period, any Work or component thereof is found to be Defective, and Owner provides written notice to Contractor within such Defect Correction Period regarding such Defect, Contractor shall, at its sole cost and expense, promptly correct (whether by repair, replacement or otherwise) such Defective Work, including all obligations in connection with such correction, such as in and out costs, storage, labor, Taxes, transportation and expediting costs and any other costs necessary to fully correct the Work (such correction of the Defective Work is hereby defined as the Corrective Work). Any such notice from Owner shall state with reasonable specificity the date of occurrence or observation of the alleged Defect and the reasons supporting Owners belief that Contractor is responsible for performing Corrective Work. Owner shall provide Contractor with access to the Liquefaction Facility and/or the Existing Facility sufficient to perform its Corrective Work, so long as such access does not unreasonably interfere with operation of the Liquefaction Facility or the Existing Facility and subject to any reasonable security or safety requirements of Owner. In the event Contractor utilizes spare parts owned by Owner in the course of performing the Corrective Work, Contractor shall supply Owner free of charge with new spare parts equivalent in quality and quantity to all such spare parts used by Contractor as soon as possible following the utilization of such spare parts.
A. Owner Right to Perform Corrective Work. If Contractor fails to commence the Corrective Work during the Defect Correction Period within a reasonable period of time not to exceed ten (10) Business Days, or does not complete such Corrective Work promptly (and provided that Owner provides Contractor access to the Liquefaction Facility and/or the Existing Facility in accordance with this Section 12.3), then Owner, as its sole and exclusive remedy for the Defect (except for its right to enforce the indemnification, defense and hold harmless obligations of Contractor pursuant to Sections 17.1A, 17.1F,
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17.1G and 17.2), upon providing prior written notice to Contractor, may perform such Corrective Work, and Contractor shall be liable to Owner for the reasonable costs incurred by Owner in connection with performing such Corrective Work, and shall pay Owner, within ten (10) Days after receipt of written notice from Owner, an amount equal to such costs (or, at Owners sole discretion, Owner may withhold or offset amounts owed to Contractor or collect on the Letter of Credit in accordance with Section 7.8 in the amount of such costs and expenses); provided, however, if Defective Work discovered during the Defect Correction Period presents an imminent threat to the safety or health of any Person and Owner knows of such Defective Work, Owner may perform such Corrective Work in order to correct such Defective Work without giving prior written notice to Contractor. In such event, Contractor shall be liable to Owner for the reasonable costs incurred by Owner in connection with performing such Corrective Work, and shall pay Owner, after receipt of written notice from Owner, an amount equal to such costs (or, at Owners sole discretion, Owner may withhold or offset amounts owed to Contractor or collect on the Letter of Credit in accordance with Section 7.8 in the amount of such costs). To the extent any Corrective Work is performed by or on behalf of Owner, Contractors obligations with respect to such Defective Work that is corrected by on or behalf of Owner shall be relieved, with the exception of Contractors obligation to pay Owner the reasonable costs incurred by Owner in connection with performing such Corrective Work.
B. Extended Defect Correction Period for Corrective Work. With respect to any Corrective Work performed by Contractor, the Defect Correction Period for such Corrective Work shall be extended for an additional one (1) year from the date of the completion of such Corrective Work; provided, however, in no event shall the Defect Correction Period for any Work (including Corrective Work) be less than the original Defect Correction Period or extend beyond thirty-six (36) Months after Contractors achievement of Substantial Completion for such Subproject.
C. Standards for Corrective Work. All Corrective Work shall be performed subject to the same terms and conditions under this Agreement as the original Work is required to be performed. In connection with the Corrective Work, any change to Equipment that would alter the requirements of this Agreement may be made only with prior written approval of Owner in accordance with Section 3.29.
D. Expiration of Defect Correction Period. Contractor shall not be liable to Owner for any Defective Work discovered after the expiration of the applicable Defect Correction Period (as may be extended pursuant to Section 12.3B), except for any liability of Contractor pursuant to its indemnification, defense and hold harmless obligations under this Agreement.
12.4 Assignability of Warranties. The Warranties made in this Agreement shall be for the benefit of Owner and its successors and permitted assigns and the respective successors and permitted assigns of any of them, and are fully transferable and assignable.
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12.5 Waiver of Implied Warranties. The express warranties set forth in this Agreement (including Warranties) are exclusive and the Parties hereby disclaim, and Owner hereby waives any and all warranties implied under Applicable Law (including the governing law specified in Section 21.9), including the implied warranty of merchantability and implied warranty of fitness for a particular purpose.
ARTICLE 13
DELAY LIQUIDATED DAMAGES AND SCHEDULE BONUS
13.1 Delay Liquidated Damages. If Substantial Completion of an applicable Subproject occurs after the applicable Guaranteed Substantial Completion Date, Contractor shall pay to Owner the amounts listed in Attachment T per Day for each Day, or portion thereof, of delay until Substantial Completion of such Subproject occurs (the Delay Liquidated Damages).
13.2 Schedule Bonus.
A. If Substantial Completion of Subproject 1 occurs before the date falling *** (***) Days after issuance of NTP (Schedule Bonus Date for SP1), Owner shall pay Contractor a bonus in the amount of ***
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(U.S.$***) per MMBtu of the LNG that is both (i) produced by Subproject 1 between the period of first production of LNG from Subproject 1 and the Schedule Bonus Date for SP1 and (ii) sold by Owner to one of its customers prior to the Schedule Bonus Date for SP1 (Schedule Bonus for SP1).
B. If Substantial Completion of Subproject 2 occurs before the date falling *** (***) Days after issuance of NTP (Schedule Bonus Date for SP2), Owner shall pay Contractor a bonus in the amount of *** (U.S.$***) per MMBtu of the LNG that is both (i) produced by Subproject 2 between the period of first production of LNG from Subproject 2 and the Schedule Bonus Date for SP2 and (ii) sold by Owner to one of its customers prior to the Schedule Bonus Date for SP1 (Schedule Bonus for SP2). Schedule Bonus Date means each of the Schedule Bonus Date for SP1 and the Schedule Bonus Date for SP2. Schedule Bonus means each of the Schedule Bonus for SP1 and the Schedule Bonus for SP2.
C. For avoidance of doubt, Contractor shall not be entitled to a Schedule Bonus for any LNG that boils-off or is vaporized and sold into the U.S. market as Natural Gas. The Schedule Bonus Date for SP1 and Schedule Bonus Date for SP2 shall be subject to adjustment solely at the discretion of the Chairman of Cheniere and any such adjustment shall be implemented by Change Order. Contractor acknowledges that this Section 13.2 does not impose any obligation whatsoever on Owner to sell any LNG to any customers.
ARTICLE 14
CONTRACTORS REPRESENTATIONS
Contractor represents and warrants as of the Contract Date that:
14.1 Corporate Standing. It is a corporation duly organized, validly existing and in good standing under the laws of Delaware, is authorized and qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a material adverse effect on its financial condition, operations, prospects, taxes or business.
14.2 No Violation of Law; Litigation. It is not in violation of any Applicable Law or judgment entered by any Governmental Instrumentality, which violations, individually or in the aggregate, would affect its performance of any obligations under this Agreement. There are no legal or arbitration proceedings or any proceeding by or before any Governmental Instrumentality, now pending or (to the best knowledge of Contractor) threatened against Contractor that, if adversely determined, could reasonably be expected to have a material adverse effect on the financial condition, operations, prospects or business, as a whole, of Contractor, or its ability to perform under this Agreement.
14.3 Licenses. It is the holder of all licenses required to permit it to operate or conduct its business in Louisiana now and as contemplated by this Agreement.
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14.4 No Breach. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, the charter or by-laws of Contractor, or any Applicable Law or regulation, or any order, writ, injunction or decree of any court, or any agreement or instrument to which Contractor is a party or by which it is bound or to which it or any of its property or assets is subject, or constitute a default under any such agreement or instrument.
14.5 Corporate Action. It has all necessary power and authority to execute, deliver and perform its obligations under this Agreement; the execution, delivery and performance by Contractor of this Agreement has been duly authorized by all necessary action on its part; and this Agreement has been duly and validly executed and delivered by Contractor and constitutes a legal, valid and binding obligation of Contractor enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or moratorium or other similar laws relating to the enforcement of creditors rights generally.
14.6 Financial Solvency. It is financially solvent, able to pay all debts as they mature and possesses sufficient working capital to complete the Work and perform its obligations hereunder.
ARTICLE 15
OWNERS REPRESENTATIONS
Owner represents and warrants as of the Contract Date that:
15.1 Standing. It is a limited liability company duly organized, validly existing and in good standing under the laws of Delaware, is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would have a material adverse effect on its financial condition, operations, prospects or business.
15.2 No Violation of Law; Litigation. It is not in violation of any Applicable Law, or judgment entered by any Governmental Instrumentality, which violations, individually or in the aggregate, would affect its performance of any obligations under this Agreement. There are no legal or arbitration proceedings or any proceeding by or before any Governmental Instrumentality, now pending or (to the best knowledge of Owner) threatened against Owner that, if adversely determined, could reasonably be expected to have a material adverse effect on the financial condition, operations, prospects or business, as a whole, of Owner, or its ability to perform under this Agreement.
15.3 Licenses. It is the holder of or will take the necessary action to obtain all Owner Permits under Attachment Q.
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15.4 No Breach. Neither the execution and delivery of this Agreement, nor the consummation of the transactions herein contemplated or compliance with the terms and provisions hereof and thereof will conflict with or result in a breach of, or require any consent under, the constituent documents of Owner, any Applicable Law, any order, writ, injunction or decree of any court, or any agreement or instrument to which Owner is a party or by which it is bound or to which it or any of its property or assets is subject, or constitute a default under any such agreement or instrument.
15.5 Corporate Action. It has all necessary power and authority to execute, deliver and perform its obligations under this Agreement; the execution, delivery and performance by Owner of this Agreement has been duly authorized by all necessary action on its part; and this Agreement has been duly and validly executed and delivered by Owner and constitutes a legal, valid and binding obligation of Owner enforceable in accordance with its terms, except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or moratorium or other similar laws relating to the enforcement of creditors rights generally.
15.6 Financial Solvency. Owner intends to obtain financing from one or more Lenders to enable it to fulfill its payment obligations under this Agreement.
ARTICLE 16
DEFAULT, TERMINATION AND SUSPENSION
16.1 Default by Contractor.
A. Owner Rights Upon Contractor Default. If Contractor shall at any time: (i) fail to commence the Work in accordance with the provisions of this Agreement; (ii) abandon the Work; (iii) repudiate or fail to materially comply with any of its material obligations under this Agreement; (iv) be in Default pursuant to Section 21.7; (v) fail to maintain insurance required under this Agreement; (vi) materially disregard Applicable Law or Applicable Standards and Codes; or (vii) itself or the Guarantor experience an Insolvency Event (each of the foregoing being a Default) then, Owner has the right (without prejudice to any other rights under the Agreement) to provide written notice to Contractor specifying the nature of the Default and demanding that such Default be cured. If: (a) with respect to any clause above (with the exception of clause (vii), which shall have no cure period in the event of a Contractor Insolvency Event, and with respect to an Insolvency Event for Guarantor, shall have the cure period specified below) (1) Contractor fails to cure such Default within thirty (30) Days after receipt of such notice or, (2) if the Default cannot be cured within such thirty (30) Day period through the diligent exercise of all commercially practicable efforts, Contractor fails to diligently exercise all commercially practicable efforts to cure such condition or fails to cure such condition within ninety (90) Days after receipt of such notice to cure such Default; or (b) Contractor experiences an Insolvency Event, Owner, in the event of (a) or (b), at its sole option and, without prejudice to any other rights that it has under this Agreement and, upon notice to Contractor, may (y) take such steps as are reasonably necessary to overcome the Default condition, in which case Contractor shall be liable to Owner for any and all reasonable costs and expenses incurred by Owner in connection therewith, or (z) terminate for Default
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Contractors performance of all of the Work. If Guarantor experiences an Insolvency Event, Contractor shall within thirty (30) Days after receipt of Owners notice provide either (A) a replacement Parent Guarantee by an Affiliate of Contractor, which such form Parent Guarantee shall be in the same form as set forth in Attachment FF and the Affiliate of Contractor being subject to the approval of Owner and Owners Lender(s), or (B) security in the form of a surety bond, letter of credit or bank guarantee in a form and amount reasonably required by Lender(s) and Owner, taking into consideration the status of the Project at the time of the Insolvency Event and providing sufficient protection to complete the Work and satisfy all liabilities and obligations of Contractor under this Agreement.
B. Additional Rights of Owner Upon Termination. In the event that Owner terminates this Agreement for Default in accordance with Section 16.1A, then Owner may, at its sole option, (i) enter onto the Site and, for the purpose of completing the Work, take possession of the Project, Equipment, Construction Equipment, Work Product (subject to Section 10.1D), Books and Records and other items thereon owned or rented by Contractor (subject to the relevant Construction Equipment lease or rental agreements), (ii) take assignment of any or all of the Subcontracts, and/or (iii) either itself or through others complete the Work. If the unpaid balance of the Contract Price shall exceed all actual costs and expenses incurred by Owner on account of the termination for Default (including all costs incurred to complete the Work in accordance with the Project Schedule), then such excess shall be paid by Owner to Contractor, but such amount shall not be paid until after Final Completion has been achieved. If such amount incurred by Owner shall exceed the unpaid balance of the Contract Price, then, at Owners sole option, Contractor shall pay Owner the difference within ten (10) Days after receipt of written notice from Owner, or, after the expiration of such ten (10) Day period, Owner shall have the right and authority to offset or draw down on the Letter of Credit in the amount of such difference. For the avoidance of doubt, prior to exercising such right to offset or collect on the Letter of Credit, Owner shall not be required to provide the notice as set forth in Section 7.8. Contractors liability under this Section 16.1B is in addition to any other liability provided for under this Agreement and Owner shall have the right and authority to set off against and deduct from any such excess due Contractor by Owner any other liability of Contractor to Owner under this Agreement. Owner agrees to act reasonably to mitigate any costs it might incur in connection with any termination for Default. Subject to the limitation of liability set forth in Section 20.1, in addition to the amounts recoverable above in this Section 16.1B, Owner shall be entitled to delay damages under this Section 16.1B which, for this purpose, means (i) Delay Liquidated Damages owed by Contractor to Owner under this Agreement up to the date of termination, and (ii) during the period commencing after termination and ending on the date Substantial Completion of each Subproject is achieved by a substitute contractor, the costs incurred during this period by such substitute contractor to accelerate the work in order to achieve the Guaranteed Substantial Completion Dates (as may have been adjusted by Change Order) contemplated by this Agreement.
C. Obligations Upon Termination. Upon termination for Default in accordance with Section 16.1A, Contractor shall (i) immediately discontinue Work on the date specified in the notice; (ii) place no further orders for Subcontracts, Equipment, or any other items or services; (iii) inventory, maintain and turn over to Owner all Construction
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Equipment owned by Contractor and (subject to the relevant Construction Equipment lease or rental agreements) all Construction Equipment rented by Contractor and, in each case, present on the Site prior to Contractors receipt of the termination notice or provided by Owner for performance of the terminated Work; (iv) promptly make every reasonable effort to procure assignment or cancellation upon terms satisfactory to Owner of all Subcontracts, including rental agreements; (v) cooperate with Owner in the transfer of Work Product (subject to Section 10.1D), including Drawings and Specifications, Permits and any other items or information and disposition of Work in progress so as to mitigate damages; (vi) comply with other reasonable requests from Owner regarding the terminated Work; (vii) thereafter preserve and protect Work already in progress and to protect Equipment at the Site or in transit thereto, and to comply with any Applicable Law and any Applicable Codes and Standards; and (viii) perform all other obligations under Section 16.1B.
16.2 Termination for Convenience by Owner. Owner shall have the right to terminate this Agreement for its convenience by providing Contractor with a written notice of termination, to be effective upon receipt by Contractor. Upon termination for convenience, Contractor shall (i) immediately discontinue the Work on the date of the notice; (ii) place no further orders for Subcontracts, Equipment, or any other items or services; (iii) promptly make every reasonable effort to procure cancellation upon terms satisfactory to Owner and Contractor of all Subcontracts, including rental agreements, unless Owner elects to take assignment of any such Subcontracts; (iv) assist Owner in the maintenance, protection, and disposition of Work in progress, including Equipment at the Site or in transit to the Site; (v) cooperate with Owner for the efficient transition of the Work; and (vi) cooperate with Owner in the transfer of Work Product (subject to Section 10.1D), including Drawings and Specifications, Permits and any other items or information and disposition of Work in progress and Owner may, at its sole option, take assignment of any or all of the Subcontracts. Contractor shall be paid the following amounts no later than twenty-five (25) Days after submission of Contractors invoice(s) therefor:
A. the portion of the Contract Price for the Work performed prior to termination, less that portion of the Contract Price previously paid to Contractor;
B. actual costs reasonably incurred by Contractor on account of such termination (which costs shall be adequately documented and supported by Contractor), including cancellation charges owed by Contractor to Subcontractors (provided that Owner does not take assignment of such Subcontracts) and costs associated with demobilization of Contractors and Subcontractors personnel and Construction Equipment; and
C. in respect of loss of profit, Owner shall pay Contractor a lump sum amount in accordance with the following:
1. If the Agreement is terminated (a) prior to issuance of NTP and (b) prior to March 31, 2012, One Million U.S. Dollars (U.S.$1,000,000);
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2. If the Agreement is terminated (a) prior to issuance of NTP and (b) after March 31, 2012 and on or before December 31, 2012, Two Million Five Hundred Thousand U.S. Dollars (U.S.$2,500,000); and
3. If the Agreement is terminated after issuance of NTP, a percentage of the unpaid portion of the Contract Price in accordance with the following schedule; provided that such amount shall not exceed Thirty Million U.S. Dollars (U.S.$30,000,000):
Date of Termination |
Amount Based on Unpaid Portion of the Contract Price | |
1 to 365 Days after issuance of NTP |
One percent (1%) | |
366 to 730 Days after issuance of NTP |
Two percent (2%) | |
731 to 1095 after issuance of NTP |
Three percent (3%) | |
1096 to 1460 Days after issuance of NTP |
Four percent (4%) | |
1461 Days after issuance of NTP and thereafter |
Five percent (5%) |
16.3 Suspension of Work. Owner may, for any reason, at any time and from time to time, by giving thirty (30) Days prior written notice to Contractor, suspend the carrying out of the Work or any part thereof, whereupon Contractor shall suspend the carrying out of such suspended Work for such time or times as Owner may require and shall take reasonable steps to minimize any costs associated with such suspension. During any such suspension, Contractor shall properly protect and secure such suspended Work in such manner as Owner may reasonably require. Unless otherwise instructed by Owner, Contractor shall during any such suspension maintain its staff and labor on or near the Site and otherwise be ready to proceed expeditiously with the Work as soon as reasonably practicable after receipt of Owners further instructions. Except where such suspension ordered by Owner is the result of or due to the fault or negligence of Contractor or any Subcontractor or Sub-subcontractor, Contractor shall be entitled to a Change Order to recover the reasonable costs of such suspension, including demobilization and remobilization costs, if necessary, and a time extension to the Project Schedule if and to the extent permitted under Section 6.9. As soon as reasonably practicable after receipt of notice to resume suspended Work, Contractor shall promptly resume performance of the Work to the extent required in the notice. In no event shall Contractor be entitled to any additional profits or damages due to such suspension. After issuance of NTP, in the event that Owner suspends all of the Work and such suspension (i) continues for an individual period exceeding ninety (90) consecutive Days, or (ii) in the event that one or more suspension periods continue for more than one hundred and twenty (120) Days in the cumulative aggregate, and provided that such suspension is not due to the fault or negligence of Contractor or any Subcontractor or Sub-subcontractor or an event of Force Majeure, then Contractor shall have the right to terminate this Agreement by providing fourteen (14) Days written notice to Owner. In the event of such termination, Contractor shall have the rights (and Owner shall make the payments) provided for in Section 16.2.
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16.4 Suspension by Contractor.
A. Suspension by Contractor for Owners Failure to Pay Undisputed Amounts Before the First Draw.
Prior to the First Draw, if:
(i) Owner fails to deliver the Owner Monthly Confirmation in accordance with Section 4.1A or an Owner Monthly Confirmation indicates that either (A) Owner does not have sufficient funds to continue to fulfill its payment obligations up to the date of the First Draw or (B) an event has come to the attention of Owner which would materially and adversely affect the continued availability of such funding; and
(ii) Owner fails to pay any undisputed amount due and owing to Contractor,
then, provided that Owners failure to pay any undisputed amount is not for a reason attributable to Contractor or any of its Subcontractors or Sub-subcontractors, Contractor may, upon providing written notice to Owner, suspend performance of the Work until Contractor receives such undisputed amounts and Owner delivers to Contractor an Owner Monthly Confirmation meeting the criteria set forth in Section 4.1. Contractor shall be entitled to a Change Order on account of any suspension in accordance with this Section 16.4A; provided that Contractor complies with the requirements in Sections 6.2, 6.5 and 6.9.
B. Suspension by Contractor for Owners Failure to Pay Undisputed Amounts. If Owner fails to pay any undisputed amount due and owing to Contractor and such failure continues for more than fifteen (15) Days after the due date for such payment, then Contractor may suspend performance of the Work until Contractor receives such undisputed amounts. Prior to any such suspension, Contractor shall provide Owner with at least fourteen (14) Days prior written notice of its intent to suspend performance of the Work, which notice may be given before expiration of the above fifteen (15) Day window for non-payment. Contractor shall be entitled to a Change Order on account of any suspension in accordance with this Section 16.4B; provided that Contractor complies with the requirements in Sections 6.2, 6.5 and 6.9.
C. Suspension by Contractor for Owners Failure to Fund Escrow Account. If Owner fails, in accordance with Section 18.4, to escrow disputed and unpaid amounts in excess of Ten Million U.S. Dollars (U.S.$10,000,000) and such failure continues for more than fifteen (15) Days after the time by which Owner is required to escrow amounts in accordance with Section 18.4 for such disputed and unpaid amounts, then Contractor may suspend performance of the Work until Owner escrows any disputed and unpaid amounts exceeding Ten Million U.S. Dollars (U.S.$10,000,000). Prior to any such suspension,
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Contractor shall provide Owner with at least ten (10) Days prior written notice of its intent to suspend performance of the Work. Contractor shall be entitled to a Change Order on account of any suspension in accordance with this Section 16.4C; provided that Contractor complies with the requirements in Sections 6.2, 6.5 and 6.9.
D. Undisputed Amounts. An amount shall be considered undisputed under Sections 16.4A, 16.4B and 16.5 if the amount invoiced by Contractor is contested in bad faith by Owner or if Owner has failed to give notice of a disputed amount in accordance with Section 7.2E by the due date for payment of the applicable invoiced amount.
16.5 Termination by Contractor. If Owner shall at any time: (i) fail to pay any undisputed amount; (ii) fail to materially comply with any of its material obligations under this Agreement (but only to the extent such material failure and the impact thereof is not subject to adjustment by Change Order as set forth in Section 6.2); or (iii) experience an Insolvency Event (each of the foregoing being an Owner Default) then, Contractor has the right (without prejudice to any other rights under the Agreement) to provide written notice to Owner specifying the nature of the Owner Default and demanding that such Owner Default be cured. If: (a) with respect to clause (i) Owner fails to cure such Owner Default within thirty (30) Days after receipt of such notice; (b) with respect to clause (ii), (1) Owner fails to cure such Owner Default within forty-five (45) Days after receipt of such notice or, (2) if the Owner Default cannot be cured within such forty five (45) Day period through the diligent exercise of all commercially practicable efforts, Owner fails to diligently exercise all commercially practicable efforts to cure such condition or fails to cure such condition within ninety (90) Days after receipt of such notice to cure such Owner Default; or (c) Owner experiences an Insolvency Event, Contractor may, in the event of (a), (b) or (c), at its sole option and without prejudice to any other rights that it has under this Agreement, and upon notice to Owner, terminate this Agreement. In the event of such termination under this Section 16.5, Contractor shall have the rights (and Owner shall make the payments) provided for in Section 16.2 in the event of an Owner termination for convenience.
16.6 Termination in the Event of an Extended Force Majeure. After issuance of NTP, in the event (i) any one Force Majeure event or the effects thereof causes suspension of a substantial portion of the Work for a period exceeding one hundred (100) consecutive Days or (ii) any one or more Force Majeure events or the effects thereof causes suspension of a substantial portion of the Work for a period exceeding one hundred and eighty (180) Days in the aggregate during any continuous twenty-four (24) month period, then either Party shall have the right to terminate this Agreement by providing fourteen (14) Days written notice of termination to the other Party, to be effective upon receipt by such other Party. In the event of such termination, Contractor shall have the rights (and Owner shall make the payments) provided for in Section 16.2.
16.7 Termination in the Event of Delayed Notice to Proceed. In the event Owner fails to issue the NTP in accordance with Section 5.2B by December 31, 2012 (as may be extended by mutual agreement by the Parties), then either Party shall have the right to terminate this Agreement by providing written notice of termination to the other Party, to be effective upon
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receipt by the other Party. In the event of such termination, Contractor shall have the rights (and Owner shall make the payments) provided for in Section 16.2, except that, in respect of loss of profit, Contractor shall only be entitled to a lump sum equal to Five Million U.S. Dollars (U.S.$ 5,000,000).
16.8 Contractors Right to Terminate. Contractors sole right to terminate this Agreement is specified in Sections 16.3, 16.5, 16.6 and 16.7.
ARTICLE 17
INDEMNITIES
17.1 General Indemnification. IN ADDITION TO ITS INDEMNIFICATION, DEFENSE AND HOLD HARMLESS OBLIGATIONS CONTAINED ELSEWHERE IN THIS AGREEMENT, CONTRACTOR SHALL INDEMNIFY, HOLD HARMLESS AND DEFEND THE OWNER GROUP FROM ANY AND ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES AND LITIGATION OR ARBITRATION EXPENSES) TO THE EXTENT THAT SUCH DAMAGES, LOSSES, COSTS AND EXPENSES RESULT FROM ANY OF THE FOLLOWING:
A. FAILURE OF CONTRACTOR OR ITS SUBCONTRACTORS OR SUB-SUBCONTRACTORS TO COMPLY WITH APPLICABLE LAW; PROVIDED THAT THIS INDEMNITY SHALL BE LIMITED TO FINES AND PENALTIES IMPOSED ON OWNER GROUP AND RESULTING FROM THE FAILURE OF CONTRACTOR OR ITS SUBCONTRACTORS OR SUB-SUBCONTRACTORS TO COMPLY WITH APPLICABLE LAW EXCEPT ANY PORTION OF THE AMOUNT OF SUCH FINES AND PENALTIES ATTRIBUTABLE TO PRIOR VIOLATIONS BY OWNER OF APPLICABLE LAWS RELATING TO HAZARDOUS MATERIALS FOR WHICH OWNER IS RESPONSIBLE UNDER SECTION 4.7;
B. ANY AND ALL DAMAGES, LOSSES, COSTS AND EXPENSES SUFFERED BY A THIRD PARTY AND RESULTING FROM ACTUAL OR ASSERTED VIOLATION OR INFRINGEMENT OF ANY DOMESTIC OR FOREIGN PATENTS, COPYRIGHTS OR TRADEMARKS OR OTHER INTELLECTUAL PROPERTY OWNED BY A THIRD PARTY TO THE EXTENT THAT SUCH VIOLATION OR INFRINGEMENT RESULTS FROM PERFORMANCE OF THE WORK BY CONTRACTOR OR ANY OF ITS SUBCONTRACTORS OR SUB-SUBCONTRACTORS, OR ANY IMPROPER USE OF THIRD PARTY CONFIDENTIAL INFORMATION OR OTHER THIRD PARTY PROPRIETARY RIGHTS THAT MAY BE ATTRIBUTABLE TO CONTRACTOR OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR IN CONNECTION WITH THE WORK (BUT EXCLUDING INFRINGEMENT BASED UPON ANY WORK OR DESIGNS RELATING TO THE OPERATION OF THE OPTIMIZED CASCADE PROCESS);
C. CONTAMINATION OR POLLUTION SUFFERED BY A THIRD PARTY TO THE EXTENT RESULTING FROM CONTRACTORS OR ANY SUBCONTRACTORS OR SUB-SUBCONTRACTORS USE, HANDLING OR DISPOSAL OF HAZARDOUS MATERIALS BROUGHT ON THE SITE OR ON THE OFF-SITE RIGHTS OF WAYS AND EASEMENTS BY CONTRACTOR OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR;
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D. FAILURE BY CONTRACTOR OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR TO PAY TAXES FOR WHICH SUCH PERSON IS LIABLE;
E. FAILURE OF CONTRACTOR TO MAKE PAYMENTS TO ANY SUBCONTRACTOR IN ACCORDANCE WITH THE RESPECTIVE SUBCONTRACT, BUT NOT EXTENDING TO ANY SETTLEMENT PAYMENT MADE BY OWNER TO ANY SUBCONTRACTOR AGAINST WHICH CONTRACTOR HAS PENDING OR PROSPECTIVE CLAIMS, UNLESS SUCH SETTLEMENT IS MADE WITH CONTRACTORS CONSENT, EXCEPT AFTER ASSUMPTION OF SUCH SUBCONTRACT BY OWNER IN ACCORDANCE WITH SECTION 16.1B;
F. PERSONAL INJURY TO OR DEATH OF ANY PERSON (OTHER THAN EMPLOYEES OF ANY MEMBER OF THE CONTRACTOR GROUP, THE OWNER GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR), AND DAMAGE TO OR DESTRUCTION OF PROPERTY OF THIRD PARTIES TO THE EXTENT ARISING OUT OF OR RESULTING FROM THE NEGLIGENCE, IN CONNECTION WITH THE WORK, OF ANY MEMBER OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR OR ANYONE DIRECTLY OR INDIRECTLY EMPLOYED BY THEM; OR
G. DAMAGE TO OR DESTRUCTION OF THE EXISTING FACILITY (EXCLUDING THE WORK RELATED THERETO) OR SUBPROJECT 1 OR SUBPROJECT 2 (AFTER THE EARLIER OF SUBSTANTIAL COMPLETION OF EACH SUBPROJECT OR TERMINATION OF THIS AGREEMENT ) TO THE EXTENT ARISING OUT OF OR RESULTING FROM THE NEGLIGENCE, IN CONNECTION WITH THE WORK, OF ANY MEMBER OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR OR ANYONE DIRECTLY OR INDIRECTLY EMPLOYED BY THEM, PROVIDED THAT CONTRACTORS LIABILITY HEREUNDER FOR DAMAGE TO OR DESTRUCTION OF (I) THE EXISTING FACILITY (EXCLUDING THE WORK RELATED THERETO) SHALL NOT EXCEED *** U.S. DOLLARS (U.S. $***) PER OCCURRENCE (PROVIDED, HOWEVER, CONTRACTORS AND ITS SUBCONTRACTORS AND SUB-SUBCONTRACTORS LIABILITY FOR SUCH DAMAGE OR DESTRUCTION TO THE EXISTING FACILITY SHALL BE LIMITED TO THE ACTUAL AMOUNTS OF INSURANCE PROCEEDS PAID FOR SUCH OCCURRENCE UNDER THE POLICIES OF INSURANCE REQUIRED TO BE PROVIDED BY CONTRACTOR UNDER THIS AGREEMENT) OR (II) A SUBPROJECT (AFTER THE EARLIER OF SUBSTANTIAL COMPLETION OF SUCH SUBPROJECT OR TERMINATION OF THIS AGREEMENT) SHALL NOT EXCEED ONE MILLION U.S. DOLLARS (U.S.$1,000,000) PER OCCURRENCE.
17.2 INJURIES TO CONTRACTORS EMPLOYEES AND DAMAGE TO CONTRACTORS PROPERTY. NOTWITHSTANDING THE PROVISIONS OF SECTION 17.1F, AND EXCEPT AS OTHERWISE PROVIDED IN SECTION 4.7, CONTRACTOR SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE OWNER GROUP FROM AND AGAINST ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) ARISING OUT OF OR RESULTING FROM OR RELATED TO (I) INJURY TO OR DEATH OF EMPLOYEES, OFFICERS OR DIRECTORS OF ANY MEMBER OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR OR (II) DAMAGE TO OR DESTRUCTION OF PROPERTY OF ANY MEMBER OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR OCCURRING IN CONNECTION WITH THE WORK OR THE PROJECT, REGARDLESS OF THE CAUSE OF SUCH INJURY, DEATH, DAMAGE OR DESTRUCTION, INCLUDING THE SOLE OR JOINT NEGLIGENCE, BREACH OF CONTRACT OR OTHER BASIS OF LIABILITY OF ANY MEMBER OF THE OWNER GROUP.
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17.3 Injuries to Owners Employees and Damage to Owners Property.
A. EXCEPT AS OTHERWISE PROVIDED IN SECTIONS 3.17 AND 17.1C, OWNER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE CONTRACTOR GROUP AND SUBCONTRACTORS AND SUB-SUBCONTRACTORS FROM AND AGAINST ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) RESULTING FROM OR RELATED TO (I) INJURY TO OR DEATH OF ANY MEMBER OF THE OWNER GROUP OR EMPLOYEES OF OWNERS OTHER CONTRACTORS OR (II) DAMAGE TO OR DESTRUCTION OF PROPERTY OF OWNER GROUP (EXCLUDING THE WORK, THE LIQUEFACTION FACILITY, THE EXISTING FACILITY AND THE PROJECT) OR OF OWNERS OTHER CONTRACTORS OCCURRING IN CONNECTION WITH THE PROJECT, REGARDLESS OF THE CAUSE OF SUCH INJURY, DEATH, DAMAGE OR DESTRUCTION, INCLUDING THE SOLE OR JOINT NEGLIGENCE, BREACH OF CONTRACT OR OTHER BASIS OF LIABILITY OF ANY MEMBER OF THE CONTRACTOR GROUP.
B. IN ADDITION TO, AND NOT IN LIEU OF THE FOREGOING, AND REGARDLESS OF THE CAUSE OF ANY SUCH DAMAGE OR DESTRUCTION, INCLUDING THE SOLE OR JOINT NEGLIGENCE, BREACH OF CONTRACT OR OTHER BASIS OF LIABILITY OF ANY MEMBER OF THE CONTRACTOR GROUP, SUBCONTRACTOR OR SUB-SUBCONTRACTOR, OWNER SHALL RELEASE, DEFEND, INDEMNIFY AND HOLD HARMLESS THE CONTRACTOR GROUP AND ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR FROM AND AGAINST ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) RESULTING FROM OR RELATED TO: (A) DAMAGE TO OR DESTRUCTION OF THE EXISTING FACILITY (EXCLUDING THE WORK RELATED THERETO) TO THE EXTENT THAT SUCH DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) EXCEED THE LESSER OF (I) *** U.S. DOLLARS (U.S.$***) PER OCCURRENCE OR (II) THE ACTUAL AMOUNTS OF INSURANCE PROCEEDS PAID PER SUCH OCCURRENCE UNDER THE POLICIES OF INSURANCE REQUIRED TO BE PROVIDED BY CONTRACTOR UNDER THIS AGREEMENT; (B) DAMAGE TO OR DESTRUCTION OF A SUBPROJECT (AFTER THE EARLIER OF SUBSTANTIAL COMPLETION OF SUCH SUBPROJECT OR TERMINATION OF THIS AGREEMENT) TO THE EXTENT THAT SUCH DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) EXCEED ONE MILLION U.S. DOLLARS (U.S.$1,000,000) PER OCCURRENCE; OR (C) DAMAGE TO OR DESTRUCTION OF PROPERTY CONSTITUTING, OR TO BE INCORPORATED INTO OR BECOME A PART OF, THE LIQUEFACTION FACILITY FOR WHICH THE OWNER BEARS THE RISK OF PHYSICAL LOSS OR DAMAGE PURSUANT TO SECTION 8.2A; PROVIDED, HOWEVER, THIS SECTION 17.3B SHALL NOT RELIEVE CONTRACTOR OF ANY OF ITS OBLIGATIONS UNDER SECTION 12.3.
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17.4 Patent and Copyright Indemnification Procedure. IN THE EVENT THAT ANY VIOLATION OR INFRINGEMENT FOR WHICH CONTRACTOR IS RESPONSIBLE TO INDEMNIFY THE OWNER GROUP AS SET FORTH IN SECTION 17.1B RESULTS IN ANY SUIT, CLAIM, TEMPORARY RESTRAINING ORDER OR PRELIMINARY INJUNCTION CONTRACTOR SHALL, IN ADDITION TO ITS OBLIGATIONS UNDER SECTION 17.1B, MAKE EVERY REASONABLE EFFORT, BY GIVING A SATISFACTORY BOND OR OTHERWISE, TO SECURE THE SUSPENSION OF THE INJUNCTION OR RESTRAINING ORDER. IF, IN ANY SUCH SUIT OR CLAIM, THE WORK, THE PROJECT, OR ANY PART, COMBINATION OR PROCESS THEREOF, IS HELD TO CONSTITUTE AN INFRINGEMENT AND ITS USE IS PRELIMINARILY OR PERMANENTLY ENJOINED, CONTRACTOR SHALL PROMPTLY MAKE EVERY REASONABLE EFFORT TO SECURE FOR OWNER A LICENSE, AT NO COST TO OWNER, AUTHORIZING CONTINUED USE OF THE INFRINGING WORK. IF CONTRACTOR IS UNABLE TO SECURE SUCH A LICENSE WITHIN A REASONABLE TIME, CONTRACTOR SHALL, AT ITS OWN EXPENSE AND WITHOUT IMPAIRING PERFORMANCE REQUIREMENTS, EITHER REPLACE THE AFFECTED WORK, IN WHOLE OR PART, WITH NON-INFRINGING COMPONENTS OR PARTS OR MODIFY THE SAME SO THAT THEY BECOME NON-INFRINGING.
17.5 Lien Indemnification. SHOULD CONTRACTOR OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR OR ANY OTHER PERSON, INCLUDING ANY CONSTRUCTION EQUIPMENT LESSOR, ACTING THROUGH OR UNDER ANY OF THEM FILE A LIEN OR OTHER ENCUMBRANCE AGAINST ALL OR ANY PORTION OF THE WORK, THE SITE OR THE PROJECT, CONTRACTOR SHALL, AT ITS SOLE COST AND EXPENSE, REMOVE OR DISCHARGE, BY PAYMENT, BOND OR OTHERWISE, SUCH LIEN OR ENCUMBRANCE WITHIN TWENTY-ONE (21) DAYS OF CONTRACTORS RECEIPT OF WRITTEN NOTICE FROM OWNER NOTIFYING CONTRACTOR OF SUCH LIEN OR ENCUMBRANCE; PROVIDED THAT OWNER SHALL HAVE MADE PAYMENT OF ALL AMOUNTS PROPERLY DUE AND OWING TO CONTRACTOR UNDER THIS AGREEMENT, OTHER THAN AMOUNTS DISPUTED IN ACCORDANCE WITH SECTION 7.2E. IF CONTRACTOR FAILS TO REMOVE OR DISCHARGE ANY SUCH LIEN OR ENCUMBRANCE WITHIN SUCH TWENTY-ONE (21) DAY PERIOD IN CIRCUMSTANCES WHERE OWNER HAS MADE PAYMENT OF ALL AMOUNTS PROPERLY DUE AND OWING TO CONTRACTOR UNDER THIS AGREEMENT, OTHER THAN AMOUNTS DISPUTED IN ACCORDANCE WITH SECTION 7.2E, THEN OWNER MAY, IN ITS SOLE DISCRETION AND IN ADDITION TO ANY OTHER RIGHTS THAT IT HAS UNDER THIS AGREEMENT, REMOVE OR DISCHARGE SUCH LIEN AND ENCUMBRANCE USING WHATEVER MEANS THAT OWNER, IN ITS SOLE DISCRETION, DEEMS APPROPRIATE, INCLUDING THE PAYMENT OF SETTLEMENT AMOUNTS THAT IT DETERMINES IN ITS SOLE DISCRETION AS BEING NECESSARY TO REMOVE OR DISCHARGE SUCH LIEN OR ENCUMBRANCE. IN SUCH CIRCUMSTANCE, CONTRACTOR SHALL BE LIABLE TO OWNER FOR ALL DAMAGES, COSTS, LOSSES AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, CONSULTANT FEES AND ARBITRATION EXPENSES, AND SETTLEMENT PAYMENTS) INCURRED BY OWNER ARISING OUT OF OR RELATING TO SUCH REMOVAL OR DISCHARGE. ALL SUCH DAMAGES, COSTS, LOSSES AND EXPENSES SHALL BE PAID BY CONTRACTOR NO LATER THAN THIRTY (30) DAYS AFTER RECEIPT OF EACH INVOICE FROM OWNER.
17.6 Owners Failure to Comply With Applicable Law. OWNER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE CONTRACTOR GROUP FROM ANY AND ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES AND LITIGATION OR ARBITRATION EXPENSES) ARISING OUT OF OR RESULTING FROM THE FAILURE OF ANY MEMBER OF OWNER GROUP TO COMPLY WITH APPLICABLE LAW; PROVIDED THAT THIS INDEMNITY SHALL BE LIMITED TO FINES AND PENALTIES IMPOSED ON CONTRACTOR GROUP AND RESULTING FROM OWNERS FAILURE TO COMPLY WITH APPLICABLE LAW.
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17.7 Landowner Claims. SUBJECT TO CONTRACTORS INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTIONS 17.1A AND 17.1C, OWNER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS THE CONTRACTOR GROUP FROM AND AGAINST ANY AND ALL DAMAGES, LOSSES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES) ARISING OUT OF OR RESULTING FROM CLAIMS OCCURRING IN CONNECTION WITH THE WORK AND THE PROJECT AND BROUGHT BY ANY LANDOWNER ON WHOSE LAND, RIGHT OR WAY OR EASEMENT CONTRACTOR OR ANY OF ITS SUBCONTRACTORS OR SUB-SUBCONTRACTORS ARE PERFORMING THE WORK, INCLUDING ANY CLAIM FROM SUCH LANDOWNER RELATED TO DAMAGE TO OR DESTRUCTION OF PROPERTY. SUCH INDEMNITY SHALL APPLY REGARDLESS OF THE CAUSE OF SUCH DAMAGES, LOSSES, COSTS AND EXPENSES, INCLUDING NEGLIGENCE, BREACH OF CONTRACT OR OTHER BASIS OF LIABILITY OF ANY MEMBER OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTOR OR SUB-SUBCONTRACTOR.
17.8 Legal Defense. NOT LATER THAN FIFTEEN (15) DAYS AFTER RECEIPT OF WRITTEN NOTICE FROM THE INDEMNIFIED PARTY TO THE INDEMNIFYING PARTY OF ANY CLAIMS, DEMANDS, ACTIONS OR CAUSES OF ACTION ASSERTED AGAINST SUCH INDEMNIFIED PARTY FOR WHICH THE INDEMNIFYING PARTY HAS INDEMNIFICATION, DEFENSE AND HOLD HARMLESS OBLIGATIONS UNDER THIS AGREEMENT, WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS ASSERTED IN A LEGAL, JUDICIAL, ARBITRAL OR ADMINISTRATIVE PROCEEDING OR ACTION OR BY NOTICE WITHOUT INSTITUTION OF SUCH LEGAL, JUDICIAL, ARBITRAL OR ADMINISTRATIVE PROCEEDING OR ACTION, THE INDEMNIFYING PARTY SHALL AFFIRM IN WRITING BY NOTICE TO SUCH INDEMNIFIED PARTY THAT THE INDEMNIFYING PARTY WILL INDEMNIFY, DEFEND AND HOLD HARMLESS SUCH INDEMNIFIED PARTY AND SHALL, AT THE INDEMNIFYING PARTYS OWN COST AND EXPENSE, ASSUME ON BEHALF OF THE INDEMNIFIED PARTY AND CONDUCT WITH DUE DILIGENCE AND IN GOOD FAITH THE DEFENSE THEREOF WITH COUNSEL SELECTED BY THE INDEMNIFYING PARTY AND REASONABLY SATISFACTORY TO SUCH INDEMNIFIED PARTY; PROVIDED, HOWEVER, THAT SUCH INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO BE REPRESENTED THEREIN BY ADVISORY COUNSEL OF ITS OWN SELECTION, AND AT ITS OWN EXPENSE; AND PROVIDED FURTHER THAT IF THE DEFENDANTS IN ANY SUCH ACTION OR PROCEEDING INCLUDE THE INDEMNIFYING PARTY AND AN INDEMNIFIED PARTY AND THE INDEMNIFIED PARTY SHALL HAVE REASONABLY CONCLUDED THAT THERE MAY BE LEGAL DEFENSES AVAILABLE TO IT WHICH ARE DIFFERENT FROM OR ADDITIONAL TO, OR INCONSISTENT WITH, THOSE AVAILABLE TO THE INDEMNIFYING PARTY, SUCH INDEMNIFIED PARTY SHALL HAVE THE RIGHT TO SELECT UP TO ONE SEPARATE COUNSEL TO PARTICIPATE IN THE DEFENSE OF SUCH ACTION OR PROCEEDING ON ITS OWN BEHALF AT THE REASONABLE EXPENSE OF THE INDEMNIFYING PARTY. IN THE EVENT OF THE FAILURE OF THE INDEMNIFYING PARTY TO PERFORM FULLY IN ACCORDANCE WITH THE DEFENSE OBLIGATIONS UNDER THIS SECTION 17.8, SUCH INDEMNIFIED PARTY MAY, AT ITS OPTION, AND WITHOUT RELIEVING THE INDEMNIFYING PARTY OF ITS OBLIGATIONS HEREUNDER, SO PERFORM, BUT ALL DAMAGES, COSTS AND EXPENSES (INCLUDING ALL REASONABLE ATTORNEYS FEES, AND LITIGATION OR ARBITRATION EXPENSES, SETTLEMENT PAYMENTS AND JUDGMENTS) SO INCURRED BY SUCH INDEMNIFIED PARTY IN THAT EVENT SHALL BE REIMBURSED BY THE INDEMNIFYING PARTY TO SUCH INDEMNIFIED PARTY, TOGETHER WITH INTEREST ON SAME FROM THE DATE ANY SUCH COST AND EXPENSE WAS PAID BY SUCH INDEMNIFIED PARTY UNTIL REIMBURSED BY THE INDEMNIFYING PARTY AT THE INTEREST RATE SET FORTH IN SECTION 7.6 OF THIS AGREEMENT.
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17.9 Enforceability.
A. EXCEPT AS OTHERWISE SET FORTH IN SECTIONS 17.2 AND 17.3, THE INDEMNITY, DEFENSE AND HOLD HARMLESS OBLIGATIONS FOR PERSONAL INJURY OR DEATH OR PROPERTY DAMAGE UNDER THIS AGREEMENT SHALL APPLY REGARDLESS OF WHETHER THE INDEMNIFIED PARTY WAS CONCURRENTLY NEGLIGENT (WHETHER ACTIVELY OR PASSIVELY), IT BEING AGREED BY THE PARTIES THAT IN THIS EVENT, THE PARTIES RESPECTIVE LIABILITY OR RESPONSIBILITY FOR SUCH DAMAGES, LOSSES, COSTS AND EXPENSES UNDER THIS ARTICLE 17 SHALL BE DETERMINED IN ACCORDANCE WITH PRINCIPLES OF COMPARATIVE NEGLIGENCE.
B. OWNER AND CONTRACTOR AGREE THAT THE LOUISIANA OILFIELD ANTI-INDEMNITY ACT, LA. REV. STAT. §9:2780, ET. SEQ., IS INAPPLICABLE TO THIS AGREEMENT AND THE PERFORMANCE OF THE WORK. APPLICATION OF THESE CODE SECTIONS TO THIS AGREEMENT WOULD BE CONTRARY TO THE INTENT OF THE PARTIES, AND EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CONTENTION THAT THESE CODE SECTIONS ARE APPLICABLE TO THIS AGREEMENT OR THE WORK. IN ADDITION, IT IS THE INTENT OF THE PARTIES IN THE EVENT THAT THE AFOREMENTIONED ACT WERE TO APPLY THAT EACH PARTY SHALL PROVIDE INSURANCE TO COVER THE LOSSES CONTEMPLATED BY SUCH CODE SECTIONS AND ASSUMED BY EACH SUCH PARTY UNDER THE INDEMNIFICATION PROVISIONS OF THIS AGREEMENT, AND CONTRACTOR AGREES THAT THE CONTRACT PRICE (AS MAY BE ADJUSTED BY CHANGE ORDER IN ACCORDANCE WITH ATTACHMENT EE) COMPENSATES CONTRACTOR FOR THE COST OF PREMIUMS FOR THE INSURANCE PROVIDED BY IT UNDER THIS AGREEMENT. THE PARTIES AGREE THAT EACH PARTYS AGREEMENT TO SUPPORT THEIR INDEMNIFICATION OBLIGATIONS BY INSURANCE SHALL IN NO RESPECT IMPAIR THEIR INDEMNIFICATION OBLIGATIONS.
C. IN THE EVENT THAT ANY INDEMNITY PROVISIONS IN THIS AGREEMENT ARE CONTRARY TO THE LAW GOVERNING THIS AGREEMENT, THEN THE INDEMNITY OBLIGATIONS APPLICABLE HEREUNDER SHALL BE APPLIED TO THE MAXIMUM EXTENT ALLOWED BY APPLICABLE LAW.
ARTICLE 18
DISPUTE RESOLUTION
18.1 Negotiation. In the event that any claim, dispute or controversy arising out of or relating to this Agreement (including the breach, termination or invalidity thereof, and whether arising out of tort or contract) (Dispute) cannot be resolved informally within thirty (30) Days after the Dispute arises, either Party may give written notice of the Dispute (Dispute Notice) to the other Party requesting that a representative of Owners senior management and Contractors senior management meet in an attempt to resolve the Dispute. Each such management representative shall have full authority to resolve the Dispute and shall meet at a mutually agreeable time and place within thirty (30) Days after receipt by the non-notifying Party of such Dispute Notice, and thereafter as often as they deem reasonably necessary to exchange relevant information and to attempt to resolve the Dispute. In no event shall this Section 18.1 be construed to limit either Partys right to take any action under this Agreement,
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including Owners rights under Section 16.1. The Parties agree that if any Dispute is not resolved within ninety (90) Days after receipt of the Dispute Notice given in this Section 18.1, then either Party may by notice to the other Party refer the Dispute to be decided by final and binding arbitration in accordance with Section 18.2.
A. Notwithstanding the foregoing, in the event of a Dispute regarding (i) whether a specific item of Work meets the definition of Punchlist under Section 1.1 in connection with Section 11.5 or (ii) if and when RFSU of a Subproject, Substantial Completion of a Subproject or Final Completion has occurred, as applicable, in accordance with Section 11.3A, 11.3B or 11.6, representatives of Owners senior management and Contractors senior management shall meet immediately upon request of either Party to attempt to resolve such Dispute. Each such management representative shall have full authority to resolve such Dispute and shall meet in person at a mutually agreeable time and place. The Parties agree that if any such Dispute is not resolved within five (5) Business Days after either Partys request for such meeting between management representatives, then either Party may by notice to the other Party refer the Dispute to be decided by final and binding arbitration in accordance with Section 18.2.
18.2 Arbitration. Any arbitration held under this Agreement shall be held in Houston, Texas, unless otherwise agreed by the Parties, shall be administered by the Dallas, Texas office of the American Arbitration Association (AAA) and shall, except as otherwise modified by this Section 18.2, be governed by the AAAs Construction Industry Arbitration Rules and Mediation Procedures (including Procedures for Large, Complex Construction Disputes) (the AAA Rules). The number of arbitrators required for the arbitration hearing shall be determined in accordance with the AAA Rules. The arbitrator(s) shall determine the rights and obligations of the Parties according to the substantive law of the state of Texas, excluding its conflict of law principles, as would a court for the state of Texas; provided, however, the law applicable to the validity of the arbitration clause, the conduct of the arbitration, including resort to a court for provisional remedies, the enforcement of any award and any other question of arbitration law or procedure shall be the Federal Arbitration Act, 9 U.S.C.A. § 2. Issues concerning the arbitrability of a matter in dispute shall be decided by a court with proper jurisdiction. The Parties shall be entitled to engage in reasonable discovery, including the right to production of relevant and material documents by the opposing Party and the right to take depositions reasonably limited in number, time and place; provided that in no event shall any Party be entitled to refuse to produce relevant and non-privileged documents or copies thereof requested by the other Party within the time limit set and to the extent required by order of the arbitrator(s). All disputes regarding discovery shall be promptly resolved by the arbitrator(s). This agreement to arbitrate is binding upon the Parties, Contractors surety (if any) and the successors and permitted assigns of any of them. At either Partys option, any other Person may be joined as an additional party to any arbitration conducted under this Section 18.2, provided that the party to be joined is or may be liable to either Party in connection with all or any part of any dispute between the Parties. Contractor agrees, upon Owners election, to the joinder in any arbitration between Owner and Guarantor arising out of or relating to the Project. The arbitration award shall be final and binding, in writing, signed by all arbitrators, and shall state the reasons upon which the award thereof is based. The Parties agree that judgment on the arbitration award may be entered by any court having jurisdiction thereof.
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18.3 Continuation of Work During Dispute. Notwithstanding any Dispute, it shall be the responsibility of each Party to continue to perform its obligations under this Agreement pending resolution of Disputes. Owner shall, subject to its right to withhold or offset amounts pursuant to this Agreement, continue to pay Contractor undisputed amounts in accordance with this Agreement and, except as provided in this Agreement, continue to perform all of its obligations under this Agreement; provided, however, in no event shall the occurrence of any negotiation or arbitration prevent or affect Owner from exercising its rights under this Agreement, including Owners right to terminate pursuant to Article 16.
18.4 Escrow of Certain Disputed Amounts By Owner. At any time when the total amounts invoiced by Contractor pursuant to Section 7.2C of the Agreement for Milestone payments and Monthly Payments (as such amounts may be adjusted by Change Order in accordance with Sections 6.1B or 6.2C) which are disputed and unpaid by Owner exceed Ten Million U.S. Dollars (U.S.$10,000,000) in the cumulative aggregate, Owner shall escrow any such disputed and unpaid amounts in excess of the aforesaid amount (Escrowed Amounts); provided, however, the Parties acknowledge and agree that such Escrowed Amounts shall not include any claims by Contractor for compensation in addition to the original Contract Price (as adjusted by Change Order pursuant to Sections 6.1B or 6.2C). For the purposes of determining the date when Owner must deposit the Escrowed Amounts with the Escrow Agent, amounts are unpaid on the date that Owner is required to make payment of an Invoice under Section 7.2E of this Agreement. The Escrowed Amounts will be deposited with the Escrow Agent pursuant to the Escrow Agreement (which provides, among other things, that the Escrowed Amounts shall be held in an interest bearing account and disbursed upon the instructions of both Parties or pursuant to an arbitration award). Prior to issuance of the NTP, (i) the Escrow Agent shall be selected by mutual agreement of the Parties and (ii) the Escrow Agreement shall be in final form and executed by the Escrow Agent and each Party. The Parties shall each pay fifty percent (50%) of the cost of the Escrow Agreement including without limitation the fees and expenses of the Escrow Agent.
ARTICLE 19
CONFIDENTIALITY
19.1 Contractors Obligations. Contractor hereby covenants and warrants that Contractor and its employees and agents shall not (without in each instance obtaining Owners prior written consent) disclose, make commercial or other use of, or give or sell to any Person, other than to members of the Contractor Group and Subcontractors or Sub-subcontractors as necessary to perform the Work, any information conspicuously marked and identified in writing as confidential and relating to the business, products, services, research or development, clients or customers of Owner or any Owner Affiliate, or relating to similar information of a Third Party who has entrusted such information to Owner or any Owner Affiliate (hereinafter individually or collectively, Owners Confidential Information). Prior to disclosing any such information to any Subcontractor or Sub-subcontractor as necessary to perform the Work, Contractor shall bind such Subcontractor or Sub-subcontractor to the confidentiality obligations contained in this Section 19.1. Nothing in this Section 19.1 or this Agreement shall in any way prohibit Contractor or any of its Subcontractors or Sub-subcontractors from making commercial or other use of, selling, or disclosing any of the Intellectual Property or Contractor Existing Intellectual Assets.
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19.2 Owners Obligations. Owner hereby covenants and warrants that Owner and its employees and agents shall not (without in each instance obtaining Contractors prior written consent) disclose, make commercial or other use of, or give or sell to any Person any of the following information: (i) any estimating, technical or pricing methodologies, techniques, know-how or information relating to the business, products, services, research or development of Contractor conspicuously marked and identified in writing as confidential by Contractor; or (ii) any Intellectual Property or Contractors Existing Intellectual Property Assets which is conspicuously marked and identified in writing as confidential (hereinafter individually or collectively, Contractors Confidential Information). The Parties agree that (y) notwithstanding the foregoing, Owner shall not be restricted from the use or disclosure of Work Product except as expressly set forth in Article 10; and (z) Owner shall be entitled to disclose that portion of the Intellectual Property and Contractors Existing Intellectual Property Assets for which Owner has a license in, and which is to be used by Owner for the purpose for which such license is granted pursuant to Section 10.1, provided that, with respect to such Intellectual Property and Contractors Existing Intellectual Property Assets, Owner binds such disclosee to the confidentiality obligations contained in this Section 19.2.
19.3 Definitions. The term Confidential Information shall mean one or both of Contractors Confidential Information and Owners Confidential Information, as the context requires. The Party having the confidentiality obligations with respect to such Confidential Information shall be referred to as the Receiving Party, and the Party to whom such confidentiality obligations are owed shall be referred to as the Disclosing Party.
19.4 Exceptions. Notwithstanding Sections 19.1 and 19.2, Confidential Information shall not include: (i) information which at the time of disclosure or acquisition is in the public domain, or which after disclosure or acquisition becomes part of the public domain without violation of this Article 19; (ii) information which at the time of disclosure or acquisition was already in the possession of the Receiving Party or its employees or agents and was not previously acquired from the Disclosing Party or any of its employees or agents directly or indirectly; (iii) information which the Receiving Party can show was acquired by such entity after the time of disclosure or acquisition hereunder from a Third Party without any confidentiality commitment, if, to the best of Receiving Partys or its employees or agents knowledge, such Third Party did not acquire it, directly or indirectly, from the Disclosing Party or any of its employees or agents; (iv) information independently developed by the Receiving Party without benefit of the Confidential Information; and (v) information which a Party believes in good faith is required to be disclosed in connection with the Project by Applicable Law, any Governmental Instrumentality (including the FERC), applicable securities laws or the rules of any stock exchange; provided, however, that prior to such disclosure, the Receiving Party gives reasonable notice to the Disclosing Party of the information required to be disclosed.
19.5 Equitable Relief. The Parties acknowledge that in the event of a breach of any of the terms contained in this Article 19, the Disclosing Party would suffer irreparable harm for which remedies at law, including damages, would be inadequate, and that the Disclosing Party shall be entitled to seek equitable relief therefor by injunction, without the requirement of posting a bond.
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19.6 Term. The confidentiality obligations of this Article 19 shall expire upon the earlier of a period of ten (10) years following (i) the termination of this Agreement or (ii) Final Completion.
ARTICLE 20
LIMITATION OF LIABILITY
20.1 Contractor Aggregate Liability. Notwithstanding any other provisions of this Agreement to the contrary, Contractor Group shall not be liable to Owner Group under this Agreement or under any cause of action related to the subject matter of this Agreement, whether in contract, warranty, tort (including negligence), strict liability, products liability, professional liability, indemnity, contribution or any other cause of action, in excess of a cumulative aggregate amount equal to the Aggregate Cap, and Owner shall release Contractor Group from any liability in excess thereof; provided that, notwithstanding the foregoing, the limitation of liability set forth in this Section 20.1 shall not (i) apply to (A) Contractors indemnification obligations under Sections 17.1B, 17.1E, 17.1F, 17.1G, 17.2 and 17.5 or (B) Contractors obligations under 8.1A.1; or (ii) include the proceeds paid under any insurance policy that Contractor or its Subcontractors is required to obtain pursuant to this Agreement or Subcontract, as the case may be (collectively, provisions (i) and (ii) being the Carve-Outs). In no event shall the limitation of liability set forth in this Section 20.1 be in any way deemed to limit Contractors obligation to perform all Work required to achieve Ready for Performance Testing for any Subproject.
A. The Aggregate Cap means *** U.S. Dollars (U.S.$***).
B. However, immediately after the later of Substantial Completion of Subproject 1 and payment of any Delay Liquidated Damages due and owing under this Agreement for Subproject 1 (Reduction Date), the Aggregate Cap shall reduce to an amount calculated as follows:
Aggregate Cap |
= | U.S.$*** | - | Reduction | + | Outstanding Claims Amount |
+ | Performance LD Exposure |
where:
1. Reduction means the amount equal to the greater of: (i) *** U.S. Dollars (U.S.$***); or (ii) Contractor Groups aggregate liability to Owner Group under this Agreement, for acts or omissions occurring prior to Substantial Completion of Subproject 1 (the clause (ii) liabilities hereinafter called Pre-Subproject 1 Substantial Completion Liabilities).
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a. In calculating the Reduction, the Pre-Subproject 1 Substantial Completion Liabilities shall exclude amounts that fall within the Carve-Outs. In addition, for the purposes of calculating the Reduction immediately after the Reduction Date, only those Pre-Subproject 1 Substantial Completion Liabilities actually paid by Contractor Group to Owner Group on or prior to the Reduction Date shall be used, but if other Pre-Subproject 1 Substantial Completion Liabilities are subsequently paid by Contractor Group to Owner Group, the Reduction shall be recalculated in accordance with Section 20.1C. For clarity, Delay Liquidated Damage amounts owed for Subproject 1 shall be applied against the Pre-Subproject 1 Substantial Completion Liabilities, as well as Performance Liquidated Damages where the option in Section 11.4A(i) is used.
2. Outstanding Claims Amount means the aggregate amount of Outstanding Claims; provided that, if such aggregate amount is less than Twenty-Five Million U.S. Dollars (U.S.$25,000,000), the Outstanding Claims Amount shall be Zero U.S. Dollars for purposes of calculating the Aggregate Cap. Outstanding Claims means good faith claims asserted by Owner Group against any member of Contractor Group, arising out of acts or omissions occurring before Substantial Completion of Subproject 1, which remain outstanding as of the date of Substantial Completion of Subproject 1. Outstanding Claims shall not include any claims that fall within the Carve-Outs.
3. Performance LD Exposure means either:
a. Zero U.S. Dollars, if Owner or Contractor elect the option in Section 11.4A(i) for Subproject 1; or
b. if Owner or Contractor elect the option in Section 11.4A(ii) for Subproject 1, the amount of Performance Liquidated Damages that would be due to Owner if Contractor were to pay the Performance Liquidated Damages for Subproject 1 based on the results of the last Performance Test conducted by Contractor prior to Substantial Completion of Subproject 1.
4. Notwithstanding the foregoing Aggregate Cap calculation (or any recalculation of the Aggregate Cap pursuant to 20.1C), the Aggregate Cap shall not exceed *** U.S. Dollars (U.S.$***) under any circumstances.
C. Upon resolution of any (i) Outstanding Claims, (ii) Pre-Subproject 1 Substantial Completion Liabilities that were not included in the original Reduction calculation performed in Section 20.1B.1, or (iii) amounts for Performance LD Exposure, the Aggregate Cap shall be recalculated using the formula in Section 20.1B and the adjusted variables shall be determined as follows:
1. The amount used for the Pre-Subproject 1 Substantial Completion Liabilities shall be the total amount paid by Contractor Group to Owner Group on account of Pre-Subproject 1 Substantial Completion Liabilities, whether paid before or after Substantial Completion of Subproject 1;
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2. The Reduction shall be recalculated in accordance with Section 20.1B.1 based on the Pre-Subproject 1 Substantial Completion Liabilities adjustment under Section 20.1C.1;
3. The amount used for the Outstanding Claims Amount shall be the amounts of those Outstanding Claims not yet resolved;
4. The amount used for the Performance LD Exposure shall be the amount of Performance Liquidated Damages owed (and not paid) by Contractor to Owner, as determined by the last Performance Test performed in conjunction with Section 11.4A(ii); and
5. The Aggregate Cap shall be recalculated in accordance with Section 20.1B based on the Reduction recalculated in Section 20.1C.2, the Outstanding Claims Amount adjustment under Section 20.1C.3 and the Performance LD Exposure recalculated under Section 20.1C.4.
20.2 Limitation on Contractors Liability for Liquidated Damages.
A. Delay Liquidated Damages. Subject to Section 20.2C, Contractors maximum liability to Owner for (i) Delay Liquidated Damages for Subproject 1 is *** U.S. Dollars (U.S.$***), in the aggregate, and (ii) Delay Liquidated Damages for Subproject 2 is *** U.S. Dollars (U.S.$***), in the aggregate.
B. Performance Liquidated Damages. Subject to Section 20.2C, Contractors maximum liability to Owner for (i) Performance Liquidated Damages for Subproject 1 is *** US Dollars (U.S.$***), in the aggregate, and (ii) Performance Liquidated Damages for Subproject 2 is *** US Dollars ($***), in the aggregate.
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C. Exceptions to Limitations of Liability Under Section 20.2. Sections 20.2A and 20.2B shall not be construed to limit Contractors obligation to complete the Work for the compensation provided under this Agreement.
20.3 Liquidated Damages In General.
A. Liquidated Damages Not Penalty. It is expressly agreed that Liquidated Damages payable under this Agreement do not constitute a penalty and that the Parties, having negotiated in good faith for such specific Liquidated Damages and having agreed that the amount of such Liquidated Damages is reasonable in light of the anticipated harm caused by the breach related thereto and the difficulties of proof of loss and inconvenience or nonfeasibility of obtaining any adequate remedy, are estopped from contesting the validity or enforceability of such Liquidated Damages.
B. Liquidated Damages as Exclusive Remedy.
1. Delay Liquidated Damages shall be Owners sole and exclusive remedy, and the sole and exclusive liability of Contractor, for delay as set forth in Section 13.1; provided that, this Section 20.3B.1 shall not be interpreted to preclude Owner from (i) terminating Contractors performance of the Work pursuant to Section 11.4B(b) or (ii) terminating Contractor pursuant to Section 5.5A.
2. Performance Liquidated Damages shall be Owners sole and exclusive remedy, and the sole and exclusive liability of Contractor, for failure to achieve the Performance Guarantee. This Section 20.3B.2 is not applicable for Contractors failure to achieve Minimum Acceptance Criteria.
C. Payment of Liquidated Damages. With respect to any Liquidated Damages that accrue, Owner shall invoice Contractor for such Liquidated Damages. Contractor shall pay such Liquidated Damages within ten (10) Days after Contractors receipt of such invoice. To the extent Contractor does not pay such Liquidated Damages within such ten (10) Day period, Owner may, at its option, do one or more of the following: (i) withhold from Contractor amounts that are otherwise due and payable to Contractor in the amount of such Liquidated Damages and/or (ii) collect on the Letter of Credit in the amount of such Liquidated Damages. For the avoidance of doubt, prior to exercising such right to withhold or collect on the Letter of Credit, Owner shall not be required to provide the notice as set forth in Section 7.8. As used in this Agreement, Liquidated Damages are paid if and to the extent Owner exercises option (i) or (ii) above for the collection of Liquidated Damages.
20.4 Consequential Damages. NOTWITHSTANDING ANY OTHER PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, NEITHER OWNER GROUP NOR CONTRACTOR GROUP SHALL BE LIABLE UNDER THIS AGREEMENT OR UNDER ANY CAUSE OF ACTION RELATED TO THE SUBJECT MATTER OF THIS AGREEMENT, WHETHER IN CONTRACT, WARRANTY, TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, PRODUCTS LIABILITY,
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PROFESSIONAL LIABILITY, INDEMNITY, CONTRIBUTION, OR ANY OTHER CAUSE OF ACTION FOR SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL LOSSES OR DAMAGES, INCLUDING LOSS OF PROFITS, LOSS OF USE, LOSS OF OPPORTUNITY, LOSS OF REVENUES, LOSS OF FINANCING, LOSS OR INCREASE OF BONDING CAPACITY, COSTS OF OBTAINING OR MAINTAINING FINANCING, LOSS OF GOODWILL, OR BUSINESS INTERRUPTION, OR DAMAGES OR LOSSES FOR PRINCIPAL OFFICE EXPENSES INCLUDING COMPENSATION OF PERSONNEL STATIONED THERE (CONSEQUENTIAL DAMAGES) AND OWNER SHALL RELEASE CONTRACTOR GROUP AND CONTRACTOR GROUP SHALL RELEASE OWNER GROUP FROM ANY LIABILITY FOR SUCH CONSEQUENTIAL DAMAGES; PROVIDED THAT THE EXCLUSION OF LIABILITY SET FORTH IN THIS SECTION 20.4 (I) IS NOT INTENDED TO PREVENT CONTRACTOR FROM RECEIVING PROFIT TO THE EXTENT THAT CONTRACTOR IS ENTITLED TO RECEIVE SUCH PROFIT UNDER THE PROVISIONS OF THIS AGREEMENT AND (II) SHALL NOT APPLY (A) TO AMOUNTS ENCOMPASSED WITHIN LIQUIDATED DAMAGES, (B) TO CONTRACTORS INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO LOSSES SUFFERED BY ANY THIRD PARTY OR, WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 17.2, MEMBERS OF THE CONTRACTOR GROUP OR ANY SUBCONTRACTORS OR SUB- SUBCONTRACTORS, OR (C) TO OWNERS INDEMNIFICATION OBLIGATIONS UNDER THIS AGREEMENT WITH RESPECT TO LOSSES SUFFERED BY ANY THIRD PARTY OR, WITH RESPECT TO THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 17.3, MEMBERS OF THE OWNER GROUP OR ANY OTHER CONTRACTORS OF OWNER.
20.5 Exclusive Remedies. Where a remedy specified in this Agreement is expressly stated to be a Partys sole remedy, it is intended that such remedy shall be the sole and exclusive remedy of such Party for the matter in question, notwithstanding any remedy otherwise available at law or in equity.
20.6 Applicability. EXCEPT TO THE EXTENT EXPRESSLY PROHIBITED BY LAW, THE WAIVERS AND DISCLAIMERS OF LIABILITY, RELEASES FROM LIABILITY, EXCLUSIONS, LIMITATIONS AND APPORTIONMENTS OF LIABILITY AND INDEMNITIES EXPRESSED IN THIS AGREEMENT SHALL APPLY EVEN IN THE EVENT OF FAULT, NEGLIGENCE (IN WHOLE OR IN PART), STRICT LIABILITY, BREACH OF CONTRACT OR OTHERWISE OF THE PARTY RELEASED OR WHOSE LIABILITY IS WAIVED, DISCLAIMED, LIMITED, FIXED OR INDEMNIFIED AND SHALL EXTEND IN FAVOR OF MEMBERS OF THE OWNER GROUP AND THE CONTRACTOR GROUP.
20.7 Term Limit. WITH THE EXCEPTION OF ARTICLE 10, ARTICLE 19 AND SECTIONS 8.1, 17.1A, 17.1B, 17.1C, 17.1E, 17.4 AND 17.5 (AND TO THE EXTENT THE FOLLOWING RELATE TO THE FOREGOING ARTICLES AND SECTIONS: SECTIONS 1.1, 17.8, 17.9 AND ARTICLE 18, ARTICLE 20 AND ARTICLE 21), NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY UNDER THIS AGREEMENT FOR ANY CLAIMS BROUGHT THREE (3) YEARS OR MORE AFTER SUBSTANTIAL COMPLETION OF SUBPROJECT 2.
ARTICLE 21
MISCELLANEOUS PROVISIONS
21.1 Entire Agreement. This Agreement, including the Attachments and Schedules attached to and incorporated into this Agreement, contains the entire understanding of the Parties with respect to the subject matter hereof and incorporates any and all prior agreements and commitments with respect thereto. There are no
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other oral understandings, terms or conditions, and neither Party has relied upon any representation, express or implied, not contained in this Agreement. General or special conditions included in any of Contractors price lists, Invoices, tickets, receipts or other such documents presented to Owner shall have no applicability to Owner with respect to this Agreement. Without limitation, this Agreement supersedes in its entirety the Technical Services Agreement and any other agreements between the Parties related to the Project.
21.2 Amendments. No change, amendment or modification of the terms of this Agreement shall be valid or binding upon the Parties hereto unless such change, amendment or modification is in writing and duly executed by both Parties hereto.
21.3 Joint Effort. Preparation of this Agreement has been a joint effort of the Parties and the resulting document shall not be construed more severely against one of the Parties than against the other.
21.4 Captions. The captions contained in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope of intent of this Agreement or the intent of any provision contained herein.
21.5 Notice. Any notice, demand, offer, or other written instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the Party giving such notice and shall be hand delivered or sent by overnight courier, messenger, facsimile or certified mail, return receipt requested, to the other Party at the address set forth below.
A. | If delivered to Owner: |
Sabine Pass Liquefaction, LLC
700 Milam, Suite 800
Houston, Texas 77002
Facsimile: (713) 375-6206
Attn: ***
with a copy to:
Sabine Pass Liquefaction, LLC
700 Milam, Suite 800
Houston, Texas 77002
Facsimile: (713) 375-6228
Attn: ***
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B. | If delivered to Contractor: |
Bechtel Oil, Gas & Chemicals, Inc.
3000 Post Oak Boulevard
Houston, Texas 77056
Facsimile: (713) 235-4494
Attn: ***
with a copy to:
Bechtel Oil, Gas & Chemicals, Inc.
3000 Post Oak Boulevard
Houston, Texas 77056
Facsimile: (713) 235-3945
Attn: Principal Counsel
Each Party shall have the right to change the place to which notice shall be sent or delivered by sending a similar notice to the other Party in like manner. Notices, demands, offers or other written instruments shall be deemed to have been duly given on the date actually received by the intended recipient.
21.6 Severability. The invalidity of one or more phrases, sentences, clauses, Sections or Articles contained in this Agreement shall not affect the validity of the remaining portions of this Agreement so long as the material purposes of this Agreement can be determined and effectuated.
21.7 Assignment. This Agreement may be assigned to other Persons only upon the prior written consent of the non-assigning Party hereto, except that Owner may assign this Agreement to any of its Affiliates by providing notice to Contractor. Furthermore, Owner may, for the purpose of providing collateral, assign, pledge and/or grant a security interest in this Agreement to any Lender without Contractors consent. When duly assigned in accordance with the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the assignee; provided that any assignment by Contractor or Owner pursuant to this Section 21.7 shall not relieve Contractor or Owner (as applicable) of any of its obligations or liabilities under this Agreement, nor shall any such assignment discharge Guarantor of its obligations under the Parent Guarantee. Any assignment not in accordance with this Section 21.7 shall be void and without force or effect, and any attempt to assign this Agreement in violation of this provision shall grant the non-assigning Party the right, but not the obligation, to terminate this Agreement at its option for Default.
21.8 No Waiver. Any failure of either Party to enforce any of the provisions of this Agreement or to require compliance with any of its terms at any time during the term of this Agreement shall in no way affect the validity of this Agreement, or any part hereof, and shall not be deemed a waiver of the right of such Party thereafter to enforce any and each such provisions.
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21.9 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the state of Texas (without giving effect to the principles thereof relating to conflicts of law). The United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Agreement and shall be disclaimed in and excluded from any Subcontracts entered into by Contractor in connection with the Work or the Project.
21.10 Successors and Assigns. This Agreement shall be binding upon the Parties hereto, their successors and permitted assigns.
21.11 Attachments and Schedules. All Attachments and Schedules shall be incorporated into this Agreement by such reference and shall be deemed to be an integral part of this Agreement.
21.12 Obligations. Nothing contained in this Agreement shall be construed as constituting a joint venture or partnership between Contractor and Owner.
21.13 Further Assurances. Contractor and Owner agree to provide such information, execute and deliver any such instruments and documents and to take such other actions as may be reasonably requested by the other Party that are not inconsistent with the provisions of this Agreement and that do not involve the assumption of obligations or liabilities greater than those provided for in this Agreement, in order to give full effect to this Agreement and to carry out the intent of this Agreement.
21.14 Priority. The documents that form this Agreement are listed below in order of priority, with the document having the highest priority listed first and the one with the lowest priority listed last. In the event of any conflict or inconsistency between a provision in one document and a provision in another document, the document with the higher priority shall control. This Agreement is composed of the following documents, which are listed in priority:
A. Change Orders which expressly modify the terms of this Agreement or written amendments to this Agreement;
B. the Articles of this Agreement; and
C. Attachments and Schedules to this Agreement.
21.15 Restrictions on Public Announcements. Neither Contractor nor its Subcontractors or Sub-subcontractors shall take any photographs of any part of the Liquefaction Facility or the Existing Facility, issue a press release, advertisement, publicity material, financial document or similar matter or participate in a media interview that mentions or refers to the Work or any part of the Liquefaction Facility or the Existing Facility without the prior written consent of Owner; provided that Contractor shall not be required to obtain Owners prior written consent of Contractors issuance of a press release to correct any errors made by Owner concerning Contractor in a prior press release issued by Owner if Contractor first gives Owner five (5) Days prior written notice of Contractors intent to issue
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such corrective press release and an opportunity of Owner to correct such error within such five (5) Day period. Owner agrees to cooperate with Contractor and provide to Contractor for review and comment a copy of any press release that mentions or refers to Contractor prior to the issuance of such press release; provided that Owner shall not be required to obtain Contractors prior consent prior to the issuance of such press release. Contractor acknowledges and agrees that Owner shall be required, from time to time, to make disclosures and press releases and applicable filings with the SEC in accordance with applicable securities laws, that Owner believes in good faith are required by Applicable Law or the rules of any stock exchange. If any such disclosure, press release or filing includes any reference to Contractor, then Owner shall provide as much notice as is practicable to Contractor to provide it with an opportunity to comment; provided, however, the final determination shall remain with Owner. Contractor acknowledges that Owner shall be required from time to time to make filings in compliance with applicable securities laws, including a copy of this Agreement.
21.16 Potential Lenders, Potential Equity Investors and Equity Participants.
A. Potential Lenders. Owner shall provide to Contractor (i) the identity of Potential Lenders that have signed confidentiality agreements with Owner and (ii) a copy of the preliminary information memorandum or preliminary offering circular distributed to such Potential Lenders and any final loan agreements executed with Owner and such Potential Lenders. As used herein, Potential Lender shall mean any commercial bank, insurance company, investment or mutual fund or other entity that is an accredited investor (as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended) and which extends credit, buys loans and is in the business of lending as one of its businesses.
B. Potential Equity Investors. Prior to disclosure of any Work Product (other than ConocoPhillips Work Product which disclosure is governed by the ConocoPhillips License Agreement) by Owner to any potential equity investor in Owner in connection with the Project, Owner shall (i) obtain Contractors written consent (such consent not to be unreasonably withheld) to the description of the Work Product to be disclosed, and (ii) obtain a waiver from such potential equity investor agreeing that it is not relying upon such Work Product in making any investment decision in connection with the Project and waiving and releasing any claim it may have against Contractor or Contractors Affiliates on account of any such reliance or purported reliance. Owner acknowledges and agrees that each potential equity investor shall be an accredited investor within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended.
C. Equity Participants. Owners successors, assigns and any future recipient of any equity ownership in Owner shall be bound by the releases, limitations on liability and other protections of Contractor set forth in this Agreement, and Owner shall obtain the express written agreement of such equity participants to be bound by such releases, limitations of liability and other protections of Contractor.
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21.17 Foreign Corrupt Practices Act. With respect to the performance of the Work, Contractor shall, and shall cause each member of the Contractor Group to, comply with all provisions of the Foreign Corrupt Practices Act of the United States (15 U.S.C. § 78dd-1 and 2) and the Bribery Act 2010 of the United Kingdom, and not to take any action that could result in Owner or any of its Affiliates becoming subject to any action, penalty or loss of benefits under such Acts. Owner shall, and shall cause each member of the Owner Group to, comply with all provisions of the Foreign Corrupt Practices Act of the United States (15 U.S.C. § 78dd-1 and 2) and the Bribery Act 2010 of the United Kingdom, and not to take any action that could result in Contractor or any of its Affiliates becoming subject to any action, penalty or loss of benefits under such Acts.
21.18 Parent Guarantee. Guarantor will guarantee the full and faithful performance of all obligations and liabilities of Contractor under this Agreement in the form attached as Attachment FF hereto (Parent Guarantee). Contractor shall not be entitled to any compensation under the Agreement unless and until Contractor provides the foregoing Parent Guarantee to Owner in accordance with this Section 21.18.
21.19 Language. This Agreement and all notices, communications and submittals between the Parties pursuant to this Agreement shall be in the English language.
21.20 Counterparts. This Agreement may be signed in any number of counterparts and each counterpart shall represent a fully executed original as if signed by each of the Parties. Facsimile signatures shall be deemed as effective as original signatures.
21.21 Federal Energy Regulatory Commission Approval. Issuance of the NTP pursuant to Section 5.2B is contingent upon FERC issuing the FERC Authorization. In the event FERC denies Owners application for the FERC Authorization or the content of such FERC Authorization is not acceptable to Owner, then Owner shall not be obligated to appeal therefrom. In the event FERC denies Owners application, then Owner may terminate this Agreement for convenience in accordance with Section 16.2.
21.22 Owners Lender. Contractor shall, on or before issuance of the NTP, enter into a mutually acceptable form of acknowledgement and consent with the Collateral Agent. Such acknowledgement and consent shall be substantially in the form of Attachment AA. Contractor shall cooperate in considering appropriate and reasonable amendments to that form of direct agreement as such amendments may be proposed by Lender or its counsel. Contractor acknowledges and agrees that Owners issuance of the NTP is contingent upon obtaining project financing in connection with this Project or other forms of financing.
21.23 Independent Engineer. Contractor shall cooperate with Independent Engineer in the conduct of his or her duties in relation to the Project and the Work, including the duties listed in Attachment CC. No review, approval or disapproval by Independent Engineer shall serve to reduce or limit the liability of Contractor to Owner under this Agreement.
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21.24 Survival. Subject to Section 20.7, Article 6, Article 7, Article 9, Article 10, Article 12, Article 14, Article 15, Article 16, Article 17, Article 18 and Article 19, Article 20, Sections 3.8, 3.13, 3.17, 8.1, 8.2, 21.9, 21.16 and this Section 21.24 shall survive termination of this Agreement, in addition to any other provisions which by their nature should, or by their express terms do, survive or extend beyond the termination of this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Contract Date.
Owner: | ||||
SABINE PASS LIQUEFACTION, LLC | ||||
By: | /s/ R. Keith Teague | |||
Name: R. Keith Teague | ||||
Title: President |
Contractor: | ||
BECHTEL OIL, GAS AND CHEMICALS, INC. | ||
By: | /s/ James T. Jackson | |
Name: | James T. Jackson | |
Title: | Executive Vice President |
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ATTACHMENT A
SCOPE OF WORK AND BASIS OF DESIGN
This Attachment A is comprised of the Scope of Work (Attachment A, Schedule A-1), Scope of Facilities, Basis of Design and FEED Documents Incorporated into Agreement (Attachment A, Schedule A-2). The priority of between these documents is set forth in Section 1.3 of Attachment A, Schedule A-1.
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Schedule A-1
SCOPE OF WORK
TABLE OF CONTENTS
1. | SCOPE REQUIREMENTS | 4 | ||||||||
1.1 | GENERAL INTRODUCTION | 4 | ||||||||
1.2 | SUMMARY OF CONTRACTOR SCOPE | 4 | ||||||||
1.3 | DEFINITIONS | 6 | ||||||||
1.4 | PRIORITY OF DOCUMENTS | 6 | ||||||||
2. | MANAGEMENT AND SUPERVISION | 7 | ||||||||
2.1 | OWNER MANAGEMENT PHILOSOPHY | 7 | ||||||||
2.2 | PROJECT EXECUTION PLAN | 7 | ||||||||
2.3 | OWNER OFFICE ACCOMMODATIONS | 8 | ||||||||
3. | ENGINEERING | 9 | ||||||||
3.1 | BASIS OF DESIGN | 9 | ||||||||
3.2 | APPLICABLE CODES AND STANDARDS | 9 | ||||||||
3.3 | PROJECT ENGINEERING PLAN | 10 | ||||||||
3.4 | ENGINEERING DESIGN | 10 | ||||||||
3.5 | PRE-INVESTMENT | 11 | ||||||||
3.6 | PROCUREMENT AND MATERIAL CONTROL | 12 | ||||||||
3.7 | BID PACKAGES | 13 | ||||||||
3.8 | TRANSPORTATION OF MATERIAL AND EQUIPMENT TO LIQUEFACTION FACILITY SITE | 13 | ||||||||
3.9 | SPARE PARTS | 13 | ||||||||
3.10 | REIMBURSABLE PURCHASES (REIMBURSABLE CHANGE ORDERS) | 13 | ||||||||
4. | SUBCONTRACTS | 16 | ||||||||
4.1 | GENERAL | 16 | ||||||||
4.2 | PROJECT SUBCONTRACT PLAN | 16 | ||||||||
4.3 | LOCAL SUBCONTRACTORS AND SUB-SUBCONTRACTORS | 16 | ||||||||
4.4 | BID PACKAGES | 16 | ||||||||
5. | CONSTRUCTION | 17 | ||||||||
5.1 | GENERAL | 17 | ||||||||
5.2 | SITE PREPARATION | 19 | ||||||||
5.3 | SCAFFOLDING AND ACCESS EQUIPMENT | 19 | ||||||||
5.4 | CRANEAGE AND LIFTING EQUIPMENT | 19 | ||||||||
5.5 | MEDICAL FACILITIES | 20 | ||||||||
5.6 | SANITATION | 20 | ||||||||
5.7 | HOUSEKEEPING | 20 | ||||||||
5.8 | TEMPORARY FACILITIES | 21 | ||||||||
5.9 | HEALTH, SAFETY AND THE ENVIRONMENT (HSE) | 21 | ||||||||
5.10 | INDUSTRIAL RELATIONS | 21 | ||||||||
5.11 | LIQUEFACTION FACILITY SITE SECURITY | 22 | ||||||||
5.12 | MATERIALS HANDLING, CONTROL AND PRESERVATION | 22 | ||||||||
5.13 | MATERIAL CONTROL PROCEDURE | 23 |
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5.14 | MATERIAL MARKING | 24 | ||||||
5.15 | CONSTRUCTION UTILITIES | 24 | ||||||
5.16 | FIRST FILL MATERIALS | 25 | ||||||
6. | QUALITY MANAGEMENT | 26 | ||||||
6.1 | QUALITY ASSURANCE REQUIREMENTS | 26 | ||||||
6.2 | PROJECT QUALITY PLAN | 26 | ||||||
7. | COMMISSIONING AND START UP | 28 | ||||||
7.1 | INTRODUCTION | 28 | ||||||
7.2 | PROJECT COMMISSIONING PLAN | 28 | ||||||
7.3 | OPERATING AND MAINTENANCE MANUALS | 29 | ||||||
7.4 | PERFORMANCE TESTS | 30 | ||||||
7.5 | OPERATING TESTS | 30 | ||||||
7.6 | OWNER OPERATOR TRAINING | 31 | ||||||
7.7 | VENDOR TRAINING | 31 | ||||||
7.8 | OPERATIONS ACTIVITIES PRIOR TO SUBSTANTIAL COMPLETION OF SUBPROJECT 2 | 31 | ||||||
8. | PROJECT CONTROL | 32 | ||||||
8.1 | GENERAL | 32 | ||||||
8.2 | PROJECT CONTROLS PLAN | 32 | ||||||
8.3 | PROGRAM REPORTING - PLANNING NETWORK | 32 | ||||||
8.4 | CPM SCHEDULE | 32 | ||||||
8.5 | PROGRESS MEASUREMENT | 34 | ||||||
8.6 | MEETINGS; WEEKLY PROGRESS MEETINGS; MINUTES | 34 | ||||||
8.7 | MONTHLY PROGRESS REPORTS | 35 | ||||||
8.8 | QUARTERLY EXECUTIVE PROGRESS REPORTS | 36 | ||||||
8.9 | CONTRACTOR DELIVERABLES | 37 | ||||||
9. | CONTRACTOR INTERFACES | 38 | ||||||
9.1 | FERC ACTIVITIES DIVISION OF RESPONSIBILITY | 38 | ||||||
9.2 | FERC REQUIRED REPORTS | 40 | ||||||
9.3 | REQUIREMENTS OF DEPARTMENT OF HOMELAND SECURITY | 44 | ||||||
9.4 | IMPORT GAS PIPELINES | 45 | ||||||
9.5 | ENVIRONMENTAL MITIGATION | 45 | ||||||
9.6 | LANDOWNER ACCESS | 45 | ||||||
10. | SCOPE OF LNTP | 46 |
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1. SCOPE REQUIREMENTS
1.1 | General Introduction |
This Scope of Work provides an overall description of Contractors responsibilities for the design, engineering, procurement, manufacture, management, construction, installation, testing, commissioning, Start Up, initial operations, and Performance Testing, of the Liquefaction Facility and certain modifications and improvements to the Existing Facility.
The Site is located off Gulf Beach Highway 82 on 853 acres of land along the Sabine Pass Navigation Channel on the border between Texas and Louisiana, in Cameron Parish, Louisiana, as further defined in Attachment Y. Located within the Site boundaries are Existing Facilitys marine facilities designed to load and unload LNG carriers located on the Sabine Pass Navigation Channel, 3.7 nautical miles from the open water and 23 nautical miles from the outer buoy.
All obligations and responsibilities referred to in this Attachment A are Contractors obligations and responsibilities, unless expressly stated to be the obligation of Owner or a third Person.
References in this Attachment A to any Section or Article shall mean the sections or articles of this Attachment A, unless express reference is made to another section or article of the Agreement. Any capitalized term used in this Attachment A which is defined in the Agreement shall have the same meaning as defined in the Agreement, unless a different meaning is expressly provided in this Attachment A.
1.2 | Summary of Contractor Scope |
Except for items and services excluded from Contractors Scope of Work as identified in the Agreement to be provided by Owner or others, Contractors responsibilities for the design, engineering, procurement, fabrication, manufacture, erection, installation, construction, management, inspection, repair (including Corrective Work), testing (including Performance Tests), training, pre-commissioning, commissioning and placing into service of the Liquefaction
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Facility and modifications and improvements to the Existing Facility and Equipment and systems, and the required related labor and materials, shall generally include:
a. | Detailed engineering design of the Liquefaction Facility and modifications and improvements to the Existing Facility; |
b. | Development of Contractor deliverables as described in Attachment B of the Agreement; |
c. | Supply of Equipment; |
d. | Mobilization and Liquefaction Facility Site establishment; |
e. | Management, reporting and supervision of the Work; |
f. | Construction and installation of Liquefaction Facility and modifications and improvement for the Existing Facility; |
g. | Care, maintenance and preservation of all Equipment; |
h. | Pre-commissioning; |
i. | Mechanical Completion; |
j. | Ready for Start Up; |
k. | Commissioning and Start Up; |
l. | Initial Operation of the each Subproject up to Substantial Completion of such Subproject; |
m. | Performance Test; |
n. | Substantial Completion of such Subproject; |
o. | Performance Tests; |
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p. | Performance of Corrective Work in accordance with Article 12 of the Agreement; and |
q. | Final Completion. |
1.3 | Definitions |
Basis of Design means FEED Document Number 25611-200-3BD-M04-00002 Rev 00E dated September 28, 2011. The Basis of Design is also referred to as the Design Basis in the Agreement.
Codes and Standards Specification means FEED Document Number 3DS-G01-00001 Rev 00B dated June 9, 2011.
FEED Documents has the meaning specified in Attachment A, Schedule A-2.
Scope of Facilities means FEED Document Number 25611-200- G01-000-00001 Rev 00D dated September 28, 2011.
1.4 | Priority of Documents |
In the event of any conflict or inconsistency between this Scope of Work, the Basis of Design, the FEED Documents, or the Scope of Facilities, such conflict or inconsistency shall be resolved in accordance with the following order of priority, with the document having the highest priority listed first and the one with the lowest priority listed last:
a. | Scope of Work (Attachment A, Schedule A-1); |
b. | Scope of Facilities; |
c. | Basis of Design; |
d. | Other FEED Documents (Attachment A, Schedule A-2). |
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2. MANAGEMENT AND SUPERVISION
2.1 | Owner Management Philosophy |
Owner Representative will utilize a team of Owners personnel or consultants, which will be resident in the Contractors Houston home office during design and procurement phase, and at Site during construction through commissioning, Start Up, initial operations, and until Substantial Completion of Subproject 2, to facilitate prompt and accurate communications between Owner and the Contractor.
2.2 | Project Execution Plan |
Without prejudice to any other provision of this Attachment A or the Agreement which sets out specific requirements for any of the plans or documents listed below, within sixty (60) Days after Notice to Proceed, Contractor shall submit to Owner for review Contractors project execution plan (Project Execution Plan), which shall address, summarize, and provide a schedule for development and finalization of the following plans, procedures, and other documents:
a. | Project objectives; |
b. | Project management; |
c. | Project Engineering Plan; |
d. | Document Management Plan; |
e. | Project Controls Plan; |
f. | Project Procurement Plan; |
g. | Revisions to Attachment G, if any; |
h. | Document control plan; |
i. | Communications plan; |
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j. | Subcontractor list; |
k. | Project Subcontract Plan; |
l. | HSE Plan; |
m. | Interface management plan; |
n. | Project Quality Plan; |
o. | Project Construction Plan; |
p. | Project Commissioning Plan; |
q. | Performance Test Procedures; |
r. | Labor relations plan; |
s. | Management of change plan; and |
t. | Operations training plan. |
2.3 | Owner Office Accommodations |
All security, furnishings, electrical power and other temporary utilities, lighting, telephones, facsimile, and high speed internet access associated with the office accommodation below shall be provided by Contractor. This shall include the telecommunications line rentals from Notice to Proceed until thirty (30) Days after Substantial Completion of Subproject 2. International long distance calls will be reimbursed to Contractor as Reimbursable Costs. Owner will supply computers to Owner personnel.
Contractor shall provide office accommodation for:
a. | Up to a peak of thirty-three (33) Owner personnel at Contractors Houston home office, including six reserved covered parking spaces, commencing with NTP and concluding with Substantial Completion of Subproject 2. |
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b. | Up to total forty-two (42) Owner personnel at Liquefaction Facility Site during construction activities, including reserved parking area and six covered parking spaces for Owner personnel until Substantial Completion of Subproject 2. |
3. ENGINEERING
3.1 | Basis of Design |
Owner shall be responsible for providing those items of information defined as Rely Upon in the Basis of Design and for providing to Contractor the information or items specified in Attachment U, subject to Contractors obligation to provide information to Owner as specified in Attachment U. In accordance with Section 4.8 of the Agreement, Owner shall remain fully responsible for the accuracy, completeness and sufficiency of such information.
All other information constituting the Basis of Design or otherwise required for performance of the Work shall be provided or developed by Contractor, as applicable, and Contractor shall be fully responsible for the accuracy, correctness and completeness thereof, and the provisions of Section 2.5A of the Agreement shall apply with respect to all such information provided or developed by Contractor or otherwise required for performance of the Work (other than the information, as specified in the preceding paragraph, which is the responsibility of Owner).
3.2 | Applicable Codes and Standards |
The Applicable Codes and Standards include (i) any codes and standards specifically mentioned in any provision of the Agreement or the Attachments as applicable to the Work; (ii) any codes or standards set forth or listed in any document listed in Schedule A-2; and (iii) those codes and standards of generally accepted practices, methods, techniques and standards employed by the international LNG industry constituting GECP, as specifically identified through detailed engineering.
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3.3 | Project Engineering Plan |
Contractor shall produce a detailed project engineering plan (Project Engineering Plan) for review by Owner within sixty (60) Days after Notice to Proceed. The Project Engineering Plan will provide a summary of the procedures, plans, and execution methodologies to be used by Contractor to develop the engineering design in accordance with the Applicable Codes and Standards and the requirements of the Agreement.
3.4 | Engineering Design |
3.4.1 | General |
In addition to any other engineering requirements specified in Attachment A or any other provision, Attachment or Schedule of the Agreement, the following services, Drawings, and Specifications, as a minimum, shall be provided by Contractor in respect of all engineering disciplines during engineering of the Liquefaction Facility and modifications to the Existing Facility:
a. | Completing the engineering design documents including the FEED Documents for the Liquefaction Facility and modifications to the Existing Facility, as required, which were developed by Contractor prior to the Contract Date; |
b. | Developing new Drawings and revising existing drawings for modification and improvement of Existing Facilities sufficient for procurement of materials and Equipment, installation, construction, manufacture, fabrication, commissioning, Start Up, testing, operation and maintenance of the Liquefaction Facility and modifications to the Existing Facility; |
c. | Preparation of Equipment data sheets; |
d. | Preparation of Drawings for the Liquefaction Facility and related Drawing list; |
e. | Preparation of engineering material requisitions and purchase requisitions, and amendments as necessary up to record status; |
f. | Technical evaluation for all Major Equipment; |
g. | Review of vendor data, Drawings and other documentation for engineered Equipment; |
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h. | Detailed material take-offs and monitoring of material changes for all disciplines; |
i. | Development of acceptance test requirements for all Major Equipment; |
j. | Development and implementation of a plan for witnessing of factory acceptance tests at vendors shops for all Major Equipment; |
k. | Drawings control, vendor data and documentation control using a computer database utilizing Contractors document control procedure; |
l. | Review of vendors recommended spares for Equipment and prepare final recommended Operating Spare Parts List in accordance with Section 3.4 of the Agreement; |
m. | Development of technical documents for Subcontracts; |
n. | Provision of engineering support for procurement, construction and commissioning, including assistance to Subcontractors in the interpretation of technical requirements and Drawings; |
o. | Preparation of mechanical catalogues and vendor data books; |
p. | Provision of all Record Drawings and Specifications; |
q. | Drawings required for tie-ins; |
r. | Development of Equipment lists, instrument index, line lists; |
s. | HAZOP review of P&IDs not previously conducted |
t. | Safety Integrity Level (SIL) review to define safety levels of critical control and safety systems not previously completed. |
3.5 | Pre-investment |
Pre-investment items are specified in the Scope of the Facilities.
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3.6 | Procurement and Material Control |
3.6.1 | General |
The Project procurement plan will provide a summary of the procedures, plans, and execution methodologies to be used by Contractor for procuring Equipment, materials, goods and services within the Scope of Work (Project Procurement Plan).
3.6.2 | Project Procurement Plan |
Contractor shall produce a Project Procurement Plan for review by Owner within ninety (90) Days after Notice to Proceed, and Owner will provide review comments within ten (10) Business Days after receipt. The Project Procurement Plan will address, at a minimum:
a. | Inspection; |
b. | Expediting; |
c. | Supplier quality reports; |
d. | Technical requirement compliance; |
e. | Material control, marking, and certification; |
f. | Packing, consolidation, importing; |
g. | Transportation, handling, and storage; |
h. | Warranties and guarantees; |
i. | Vendor servicemen; |
3.6.3 | Local Suppliers |
Contractor shall give due consideration to local companies to provide materials and services, provided they are competitive in terms and price, proven quality, experience, expertise, service and delivery. Contractor will establish procedures to ensure appropriate consideration of local suppliers.
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3.7 | Bid Packages |
Contractor shall be responsible for preparing and issuing bid packages or requests for proposals for materials, Equipment and services within the Scope of Work where required. Contractor shall receive the bids and perform the formal bid evaluations. Selection of such Subcontractors and execution of related Subcontracts shall comply with the requirements of Section 2.4 of the Agreement.
3.8 | Transportation of Material and Equipment to Liquefaction Facility Site |
Contractor shall be fully responsible for the packaging, transportation, importation, and customs clearance of all Equipment to and from the Liquefaction Facility Site, including all costs associated with such transportation. To the extent Equipment is transported to the Liquefaction Facility Site by vessels, Contractor shall only use vessels that are acceptable to the marine cargo insurance providers. All Equipment deliveries shall be made to the Liquefaction Facility Site and not the Existing Facility Site, even if such Equipment will be incorporated into the Existing Facility, unless prior written approval for delivery to the Existing Facility is obtained from Owner.
3.9 | Spare Parts |
Contractor shall be responsible for obtaining vendor recommendations for spare parts and delivering such recommendations and spare parts to Owner in accordance with Section 3.4 of the Agreement.
3.10 | Reimbursable Purchases (Reimbursable Change Orders) |
In the event that Owner specifically requests Contractor, by way of Change Order in accordance with Article 6 and Schedule D-4 of the Agreement, to purchase an item which is not included in the Scope of Work on a cost-reimbursable basis (Reimbursable Change Order), the provisions of this Section 3.10 shall apply to such reimbursable purchases.
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3.10.1 | Inquiries |
For reimbursable purchases valued over One Million U.S. Dollars (US$1,000,000.00), to be purchased by Contractor under a Change Order, Contractor shall ensure all inquiries request sufficient information to support a complete commercial and technical evaluation, including nearest parts and service location. Inquiries shall be issued to vendors/subcontractors on the approved Subcontractors list set out in Attachment G. A sufficient number of qualified suppliers/subcontractors shall be invited to bid to ensure receipt of at least three (3) bona fide bids for reimbursable purchases unless otherwise agreed by Owner.
Contractor shall prepare all inquiries to ensure that the inquiry documentation is comprehensive and complete with all Drawings so that competitive bids received will require a minimum amount of conditioning.
3.10.2 | Bid Evaluations |
Contractor shall issue a complete technical and commercial bid evaluation with recommendations for award to Owner for review and agreement, prior to any award. Owner technical and administrative personnel will work with Contractors staff in bid evaluations for all purchases of cost-reimbursable Equipment and other items.
3.10.3 | Purchase Orders |
Following bid evaluation and agreement on the selection of the vendor, Contractor shall issue a purchase order to the selected vendor. The purchase order shall include and confirm all factors considered in the inquiry and technical bid evaluation, and other relevant information and requirements.
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3.10.4 | Communications |
Contractor shall give Owner in writing, at least ten (10) Business Days advance notice of proposed technical and logistics meetings and commercial negotiations for cost-reimbursable items between Contractor and vendors, together with date, time and subject of the meeting. Owner will indicate whether or not it will participate.
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4. SUBCONTRACTS
4.1 | General |
Subject to the provisions of Sections 2.3 and 2.4 of the Agreement, Contractor shall engage Subcontractors as required to perform the Work and carry out Contractors obligations under the Agreement.
4.2 | Project Subcontract Plan |
Contractor shall produce a detailed Subcontract plan (Project Subcontract Plan) for review by Owner within ninety (90) Days after Notice to Proceed. The Project Subcontract Plan will provide the procedures, plans, and execution methodologies to be used by Contractor for bidding, evaluating, awarding, inspection, progress monitoring, technical requirement compliance, material controls, and expediting of Subcontracts.
4.3 | Local Subcontractors and Sub-subcontractors |
Contractor shall give due consideration to local companies to provide materials and services, provided they are competitive in terms and price, proven quality, experience, expertise, service and delivery. The Project Subcontract Plan shall indicate how Contractor intends to ensure appropriate consideration of local subcontractors.
4.4 | Bid Packages |
Contractor shall be responsible for preparing and issuing bid packages or request for proposals for Subcontracts. Selection of such Subcontractors and execution of related Subcontracts shall comply with the requirements of Section 2.4 of the Agreement.
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5. CONSTRUCTION
5.1 | General |
Contractor shall produce a detailed construction plan (Project Construction Plan) for review by Owner within ninety (90) Days after Notice to Proceed. Owner will provide comments within ten (10) Business Days following receipt. The Project Construction Plan will provide a summary of the procedures, plans, and execution methodologies to be used by Contractor for all management, controls, labor, supervision, consumables, tools, plant and Equipment necessary to construct, mechanically complete, test, and pre-commission the Liquefaction Facility and modifications to the Existing Facility. The Project Construction Plan will address the following:
a. | Construction procedures; |
b. | Policies, rules and regulations for: |
i. | HSE; |
ii. | Personnel identification; |
iii. | Access to Site; |
iv. | Access to Off-Site Rights of Way and Easements; |
v. | Firearms, drugs, alcohol, animals, etc.; |
vi. | Access Equipment; |
vii. | Construction Permits; |
viii. | Parking; |
ix. | Vehicular access; |
x. | Personnel orientation; and |
xi. | Construction plant and Construction Equipment; |
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c. | Construction methodology; |
d. | Tie-In plan including: |
i. | Activity description; |
ii. | Component of Existing Facility (or Liquefaction Facility after Substantial Completion of Subproject 1) impacted; and |
iii. | Component impact duration; |
e. | Demolition; |
f. | Scaffolding and access equipment; |
g. | Temporary roads; |
h. | Work force training; |
i. | Industrial relations; |
j. | Public relations; |
k. | Security; |
l. | Transportation of Equipment; |
m. | Construction dock; |
n. | Utilities, chemicals, lubricants; |
o. | Construction communication procedures; |
p. | First fills; |
q. | Punchlists; |
r. | Close out; and |
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s. | Demobilization. |
5.2 | Site Preparation |
Contractor shall be responsible for carrying out Site preparation Work as defined in Basis of Design, including:
a. | Removal of all vegetation; |
b. | Soils improvement; |
c. | Temporary and permanent roads; |
d. | Top soil removal; and |
e. | Temporary and permanent drainage. |
5.3 | Scaffolding and Access Equipment |
The Contractor shall provide a safe means of access to the Work at all times, including for purposes of inspections by Owner. Scaffolding must be substantial and appropriately designed for the job. The Contractor shall keep adequate records to demonstrate a system of regular inspection of scaffolds, by appropriately qualified personnel. Records shall also be maintained of calculations performed for load bearing scaffolds. Tags with inspection, and expiration shall be prominently displayed on all scaffolding.
5.4 | Craneage and Lifting Equipment |
The Contractor shall only employ craneage and lifting equipment that has been tested and which is fit for purpose. All crane operators and riggers shall be adequately trained and must be able to demonstrate that they hold the appropriate certification. The Contractor shall keep records of tests and certification of all lifting equipment, craneage and operators employed in the Work. Contractor shall comply with its internal rigging procedures for all lifting operations. Contractor will submit rigging plans for lifts exceeding fifty (50) tons, multiple crane lifts or lifts which are considered critical for review by Owner or Owners designee.
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5.5 | Medical Facilities |
The Contractor shall provide provisions for suitable first-aid facilities which shall be available to all personnel at the Site, including those employed by Owner, Subcontractors and visitors.
The first-aid facilities, as a minimum, shall include a fully equipped first-aid room capable of treating injuries that can be anticipated on a construction site. Consideration shall be given for at least one qualified EMT or nurse on duty during the hours when construction Work is in progress at the Site. The Contractor shall also provide a program of training for first-aid personnel among the workforce and establish an emergency response team, drawn from the medical and workforce first-aid personnel, to deal with serious on Site accidents.
The Contractor shall produce for review by Owner within thirty (30) Days after Notice to Proceed, a plan detailing how emergency medical treatment will be administered. Such plan shall take into account capabilities of local hospital, medical facilities and Existing Facility capabilities and emergency plan.
5.6 | Sanitation |
The Contractor shall provide adequate washing and latrine facilities for its workforce and for visitors permitted on the Liquefaction Facility Site. These facilities shall be cleaned, disinfected, stocked with supplies and maintained regularly at all times and the disposal of sanitary waste shall conform to statutory requirements.
5.7 | Housekeeping |
The Contractor shall provide suitable receptacles and services to ensure that all scrap materials, debris and spoil generated by the Work, are collected regularly and properly disposed. Disposal of such materials outside the Site shall be to a properly licensed land fill or environmental waste subcontractor, in accordance with Applicable Law and Permits.
As soon as practicable after the completion of all Punchlist items, Contractor shall remove all Construction Equipment, construction trailers and other temporary facilities, and all other items brought onto the Site by Contractor, Subcontractors or Sub-subcontractors which are not the
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property of Owner, and remove from the Site and properly dispose of all scrap materials, debris and spoil. Contractor shall allow all temporary construction laydown areas to naturally revegetate, unless such areas are designated for wetland mitigation or other use by Owner that does not require such restoration.
5.8 | Temporary Facilities |
Until Substantial Completion of Subproject 2, Contractor shall provide all temporary facilities necessary for performance of the Work. All temporary buildings, piping, cabling, communications equipment, storage facilities, fencing, gates, gas detection equipment, utilities, and the like shall be removed on Substantial Completion of Subproject 2.
5.9 | Health, Safety and the Environment (HSE) |
Contractor shall comply with the requirements of the Agreement and Attachment J of the Agreement.
5.10 | Industrial Relations |
The Contractor shall prepare and provide to Owner within ninety (90) Days following Notice to Proceed, its policies and plans for managing industrial relations at the Liquefaction Facility Site, for review by Owner. Such policies and plans shall cover working hours, right to work policies, working patterns, shifts, disputes procedure, welfare facilities (catering, sanitary, wet weather gear, protective clothing etc.), training, wet weather working, holidays and any other relevant matters.
The Contractor shall report all disputes or potential disputes involving Contractor or Subcontractor employees to Owner Representative as soon as practicable after they occur. The Contractor will be expected to take a pro-active role in managing industrial relations among such employees at the Liquefaction Facility Site and Existing Facility Site.
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5.11 | Liquefaction Facility Site Security |
The Contractor shall be responsible at all times for security at the Liquefaction Facility Site until Substantial Completion of Subproject 2. Adequate fencing and security devices shall be provided and maintained to prevent unauthorized access to the Liquefaction Facility Site and theft or damage. The Contractor shall employ sufficient security personnel to police the Liquefaction Facility Site entrances, perimeter fencing and secure areas at all times and to carry out random searches of vehicle arriving or leaving the Liquefaction Facility Site. Adequate security lighting of the Liquefaction Facility Site shall be provided. Contractor shall abide by Sabine Pass LNG Terminal Security Policy during modifications and improvements to Existing Facility.
The Contractor shall prepare within thirty (30) Days after Notice to Proceed a security plan for the Liquefaction Facility Site for review by Owner, that shall address measures related to access to the Liquefaction Facility Site by Owner, Contractor, Subcontractors, Sub-subcontractors and third parties, personnel identification, coordination with Existing Facility security policy, enforcement and compliance by all such Persons with the Liquefaction Facility Site security policy. Contractor shall be responsible for implementing, including monitoring of compliance with and enforcement of, such security plan.
5.12 | Materials Handling, Control and Preservation |
Contractor shall be responsible for developing and implementing a plan for all items of Equipment delivered to Site which will include and address the following obligations of Contractor as a minimum:
a. | Ensure that all materials are delivered to Liquefaction Facility Site unless prior written approval of delivery to Existing Facility is obtained from Owner; |
b. | Receipt of all items including unloading, unpacking, inspection, storage and protection of same; |
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c. | Ensure that all materials are used correctly and no materials are substituted without Contractors agreement; |
d. | Safekeeping, in accordance with the vendor/manufacturer guidelines/instructions for preservation of all Equipment on Site and ensuring that all materials are marked as being provided for the Work; |
e. | Establishing and maintaining an adequate security system to control access to Equipment storage sites and prevent theft or other loss; |
f. | Maintain records and account for all Equipment delivered and installed, and the remaining surplus and scrap for all Equipment; |
g. | Maintain and provide to Owner upon request a critical items delivery report (Procurement Status Report), for Major Equipment and other critical items required for the Work; |
h. | Development and implementation of a materials handling methods procedure for the movement of all Major Equipment and materials, and |
i. | The inspection, care, preservation, and maintenance of materials and equipment. |
5.13 | Material Control Procedure |
Contractor shall implement strict material control throughout all phases of the Work. Contractor shall submit to Owner for review within ninety (90) Days after Notice to Proceed, its proposed material control procedures for inclusion in the Project procedures manuals, which shall include Contractors plans and procedures for the use of appropriate computer systems to manage material control and to provide Owner with periodic status reports regarding the control of Equipment, and it shall submit its procedures for these systems for Owner review.
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5.14 | Material Marking |
All Equipment arriving on Site shall be inspected by Contractor to ensure that it is marked according to Project requirements, and purchase order instructions. The marking of each item will act as a cross-reference to associated documentation, Drawings and Work scope.
5.15 Construction Utilities
5.15.1 | Electrical |
Contractor shall be responsible for provision of construction power facilities and payment for electrical consumption during construction until Substantial Completion of Subproject 2.
5.15.2 | Potable Water |
Contractor shall provide potable water and ice for the Liquefaction Facility Site use, and ensure that a safe and plentiful supply of potable water and ice is available for all activities on the Liquefaction Facility Site until Substantial Completion of Subproject 2. The water and ice for human consumption shall be of suitable quality.
5.15.3 | Air |
Until Substantial Completion of Subproject 2, Contractor shall provide instrument air for testing and operation and compressed air suitable for construction, testing and drying and any other purposes required in connection with performance of the Work.
5.15.4 | Nitrogen |
Until Substantial Completion of Subproject 2, Contractor shall provide all nitrogen as required for construction, testing, drying, purging and commissioning, including the Tanks.
5.15.5 | Fuels, Lubricants & Service Fluids |
Until Substantial Completion of Subproject 2, Contractor shall provide all necessary fuels, lubricants, catalysts, and service fluids required for all Equipment, except that Owner will supply Commissioning Feed Gas in accordance with Section 4.8 of the Agreement. Contractor shall provide suitable temporary storage of fuels, lubricants, and service fluids, including secondary containment where required.
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5.16 | First Fill Materials |
Contractor shall supply and install all first fill lubricants, liquids, fuels, chemicals, and packings. First fill materials shall be stored in accordance with the manufacturers instructions. Contractor shall provide lubricating oils, mDEA, and refrigerants from date of first fill, including changes and replenishments, until Substantial Completion of Subproject 2.
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6. QUALITY MANAGEMENT
6.1 | Quality Assurance Requirements |
Contractor shall provide an integrated quality management group to operate the quality assurance, quality control and certification functions of the quality management system. The quality management group shall be independent from Contractors construction, procurement and scheduling activities.
6.2 | Project Quality Plan |
Contractor shall produce a detailed Project-specific quality assurance and inspection plan (Project Quality Plan) for Review by Owner within sixty (60) Days after Notice to Proceed. The Project Quality Plan shall define the Contractor organization and responsibilities of the quality management group personnel and shall detail the procedures the Contractor intends to use to manage and control those aspects of the Work which may affect the quality of the completed Project.
The Project Quality Plan shall meet the requirements of Section 3.18 of the Agreement, may be based on Contractors standard quality assurance procedures, and shall, at a minimum, cover the following information:
a. | Project quality policy; |
b. | Project quality objectives; |
c. | Management responsibilities and duties of all key QA personnel; |
d. | Quality assurance and quality control organization; |
e. | A list and status of the procedures that will be employed on the Project. Program of internal, supplier, and Subcontractor audits; |
f. | Documentation and certification control; |
g. | Control of nonconforming products or processes and corrective actions; |
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h. | Design validation; |
i. | Material traceability for all cryogenic materials; and |
j. | Witness points in accordance with Section 12.2 of the Agreement. |
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7. COMMISSIONING AND START UP
7.1 | Introduction |
Contractor will be responsible for carrying out the commissioning, Start Up, and testing of Equipment including conducting Performance and Commissioning Tests, as set forth in greater detail in Attachment V, Attachment S, and Attachment T. In addition, Contractor will be responsible for operation of the Liquefaction Facility through Substantial Completion of such Subproject (subject to Owners rights under Section 11.8B of the Agreement). The Contractor shall have responsibility for the Equipment including upkeep, scheduled and preventative maintenance until Substantial Completion of such Subproject; provided, however, Owner shall bear the cost of any of the foregoing incurred by reason of any Operations Activity required by Owner under Section 11.8B of the Agreement. Contractor shall provide all consumable and spare parts for commissioning and anticipated start up spare requirements, including all first fills, chemicals, and lubricants. Commissioning activities include all activities that must be completed prior to Start Up of Equipment, including, but not limited to, introduction of inert gas to oxygen-free the equipment and begin the drying out process.
Maintenance work during commissioning shall be the responsibility of Contractor. This work includes, but is not limited to, checking pipe hangers, supports, guides and pipe specialties for operating settings and making necessary adjustments. It also includes repair of any Equipment, piping, welding, assistance in cleaning temporary strainers, replacing filters and removal of any blinds as required.
7.2 | Project Commissioning Plan |
Contractor shall produce a detailed plan (Project Commissioning Plan) for review by Owner. The Project Commissioning Plan shall list the procedures the Contractor intends to use to ensure that Equipment is brought through pre-commissioning, commissioning, Start Up, Performance Tests and Substantial Completion of each Subproject safely and in accordance with Attachment V of the Agreement. The Project Commissioning Plan will be implemented by Contractor, and address the following as a minimum:
a. | Mechanical completion; |
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b. | Field testing; |
c. | Ready for Start Up; |
d. | Commissioning; |
e. | Development of operating manuals; |
f. | Development of maintenance manuals; |
g. | Ready for Performance Testing; |
h. | Performance Testing; |
i. | Emissions and noise testing; |
j. | Interface with the FERC as required in accordance with Section 9; |
k. | Substantial Completion Punchlist of each Subproject; |
l. | Close-out; and |
m. | Demobilization. |
7.3 | Operating and Maintenance Manuals |
Contractor shall supply Start Up, operation, and maintenance manuals for review by the Owner in accordance with Attachment V of the Agreement. These Start Up manuals will include the sequence of activities that must be carried out in order to Start Up of the Liquefaction Facility. The manuals shall incorporate the DOT Part 193 Operator Qualification and OSHA 1910 requirements that define the process safety management system.
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7.4 | Performance Tests |
Contractor shall perform Performance Tests in accordance with Section 11.2 of the Agreement and Attachment S.
7.5 | Operating Tests |
Contractor shall conduct testing in accordance with Attachment S - Facility Testing Philosophy and the following operating tests to confirm the design meets the requirements of the Scope of Work. The procedures and acceptance criteria will be finalized by Contractor and reviewed by Owner prior to conducting the operating tests. The operating tests will be conducted before or after the Performance Tests as agreed by the Parties.
7.5.1 | ESD Tests |
Emergency shutdown (ESD) systems will be tested during precommissioning, commissioning or operation with LNG/Natural Gas in the system as follows. If unplanned inadvertent ESD trips occur during initial operations then the below corresponding ESD test will be deemed completed:
a. | Tanks will be loaded to test the high level shutdown function; the test shall be conducted to verify liquefaction shutdown; |
b. | ESD shutdown will be initiated to ensure that each LNG Train is shutdown safely and in proper sequence during operation; and |
c. | Power failure simulation shutdown will be initiated to ensure a safe, smooth shutdown sequence is achieved during LNG Train operation. |
7.5.2 | Commissioning Tests |
Contractor shall perform Commissioning Tests in accordance with Attachment S.
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7.6 | Owner Operator Training |
Contractor will provide training to Owner in accordance with Section 3.5 of the Agreement and Attachment V.
7.7 | Vendor Training |
Contractor shall coordinate vendor training in accordance with Section 3.5 of the Agreement and Attachment V.
7.8 | Operations Activities Prior to Substantial Completion of Subproject 2 |
Contractor will operate the Liquefaction Facility in accordance with Section 11.7 of the Agreement.
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8. PROJECT CONTROL
8.1 | General |
Contractor shall plan and program the Work and its resource requirements in accordance with the requirements of the Project Schedule.
8.2 | Project Controls Plan |
Contractor shall produce a detailed Project controls plan (Project Controls Plan) for review by Owner within sixty (60) Days after Notice to Proceed. Owner will provide comments within ten (10) Business Days. The Project Controls Plan shall detail the procedures to be used by Contractor to maintain the scheduling, control, progress, Change Order control, and reporting of all activities required to ensure that Substantial Completion of each Subproject is achieved by the Guaranteed Substantial Completion Date of such Subproject.
8.3 | Program Reporting - Planning Network |
The Work shall be planned, managed, monitored and controlled by use of an integrated critical path network planning system, derived from a work breakdown structure (WBS).
8.4 | CPM Schedule |
Contractor shall produce a CPM Schedule in accordance with Section 5.4 of the Agreement that will be the reference schedule for the duration of the Project unless revised by Change Order approved by the Owner. The CPM Schedule shall be the Project baseline plan comprising a control network detailing all activities to be completed in a logical sequence and being in sufficient detail to identify key activities and restraints, interdependencies, interrelationships and resources required to control the Project.
The CPM Schedule shall:
a. | Be consistent with the Project Schedule, including LNTP, NTP, the Guaranteed Substantial Completion Date for each Subproject; |
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b. | Represent Contractors best judgment as to how it shall complete the Work in compliance with the Project Schedule; |
c. | Be a detailed graphic representation of all significant aspects of the Work showing Contractors plans for performance of the Work; |
d. | Comply with GECP; |
e. | Indicate a level of detail sufficient for Contractor to plan, organize, direct, coordinate, perform and execute the Work, and for Owner to monitor the progress of the Work; |
f. | Include separate activities for each significant portion of the Work including activities for mobilization, engineering, procurement, construction, commissioning, start up, testing, closeout and demobilization; |
g. | Show the duration, start dates, and finish dates for each activity; |
h. | Show activity number, activity description, and responsible Person (i.e., Contractor, Subcontractor, or Sub-subcontractor) for each activity; |
i. | Reflect logical relationships between activities with a reasonable duration for each activity, and show an uninterrupted critical path from the LNTP through NTP, First LNG Cargo, Substantial Completion of each Subproject and Final Completion of each Subproject; |
j. | Indicate all Milestones to be used for progress payments. The initial CPM Schedule shall reflect the dates on the original Milestones progress payment schedule. Thereafter, at least once each quarter Milestones shall be re-scheduled in the CPM Schedule, if necessary, to reflect the current Schedule progress and updated projected Milestone dates. New Change Order Milestones, if any, shall be incorporated into the CPM Schedule at the quarterly CPM Schedule update; and |
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k. | Be segregated into two or more schedule sub-networks defining: (1) Work within the Liquefaction Site and (2) Work within Existing Facilities as generally defined in Attachment X. The Existing Facilities sub-network schedule will be used by Contractor and Owner to plan and confirm schedule dates with plant operations to minimize disruptions to Contractors Work in the Existing Facility, subject to Section 3.25 of the Agreement. |
8.5 | Progress Measurement |
The Contractor shall, until Substantial Completion of Subproject 2, develop and maintain systems and procedures for the measurement of progress against the CPM Schedule. The Contractor shall measure progress based on actual Work completed.
8.6 | Meetings; Weekly Progress Meetings; Minutes |
Periodic meetings shall be held as required for the purpose of keeping Owner fully informed of all aspects of the Work, and for reviewing execution plans, technical or financial concerns, progress status and scheduling of the Work, remedial actions, quality concerns, safety concerns, interfaces, and Owner and Contractor plans for resolving issues.
Commencing with LNTP, weekly progress meetings will be held between Owners Representative or his designee, and any other Persons designated by Owner, and Contractors Key Personnel at the appropriate Site location, or as agreed by the Parties, Owner or Contractor home office. Owner and Contractor shall agree on dates, standardized reports and agenda for such meetings well in advance as the Work demands.
Minutes of all progress-related meetings (including weekly and monthly progress meetings) shall be prepared by Contractor (unless otherwise agreed by Owner) and sent to Owner in electronic format within five (5) Business Days following the meeting. The contents of the minutes shall be subject to review at the next weekly progress meeting. The format for the preparation of the minutes shall be mutually agreed at the first meeting. The minutes as a minimum should include decisions made, action item responsibilities and action dates and the results of assigned actions outlined in the previous minutes and shall be distributed to all attendees, Owner Representative, and in accordance with the document distribution matrix, to be developed during the Project execution.
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8.7 | Monthly Progress Reports |
Commencing with LNTP, Contractor shall provide a written Monthly Progress Report to Owner no later than ten (10) Days after the end of each Month, and the Monthly Progress Report shall cover activities up through the preceding the Month in which the Monthly Progress Report is issued. The Monthly Progress Report shall be provided in MS Word format. Contractor shall provide Owner with the number of copies of such reports and shall arrange for the distribution thereof as Owner may reasonably request.
Commencing with LNTP a progress meeting shall be held each Month by Contractor at the Site or at an alternate site mutually agreeable to Owner and Contractor and at a mutually agreeable time, for the purpose of reviewing with Owner the Monthly Progress Report issued during such Month.
Contractor shall provide Monthly Progress Reports in a form reasonably acceptable to Owner which will indicate, at a minimum:
a. | Narrative summary of progress; |
b. | A description, as compared with the Project Schedule and CPM Schedule, of engineering, procurement, construction, commissioning, and testing status including actual percentage complete versus planned percentage complete, document status, significant activities accomplished during the reporting Month, significant activities planned for the current Month and current estimated dates on which First LNG Cargo and Substantial Completion for each Subproject shall be achieved; |
c. | Summary of Milestones planned and actually completed during the covered Month; |
d. | Change Orders pending and approved; |
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e. | Description of any problems (including any occurrence of which Contractor is aware that could reasonably be expected to increase the cost of the Project or delay Substantial Completion of such Subproject beyond the Substantial Completion Date) and summary of plans for resolution; |
f. | A description of the status of the Contractors Permits, including the dates of Contractors applications submitted or to be submitted and the anticipated dates of actions by Governmental Instrumentalities with respect to such Permits; |
g. | A description of reportable environmental, health and safety incidents as well as any unplanned related impacts, events, accidents, reported near misses or issues that occurred during the reporting period; |
h. | A description of all safety and security issues; |
i. | A description of quality assurance activities; |
j. | Progress photos showing representative portions of the Site and the Work, including completed Milestones, with a description of the photograph and the date taken; and |
k. | All applicable information reasonably required by FERC and other Governmental Instrumentalities as identified in Section 9.0. |
8.8 | Quarterly Executive Progress Reports |
Commencing at LNTP, within fifteen (15) Days after the end of each quarter, Contractor shall provide Owner an executive progress report (Executive Progress Report) suitable for presentation to Owners executive management and shareholders in a form reasonably acceptable to Owner. These reports will be presented to Owner and discussed at a progress meeting to be held between Contractor Key Personnel and Owner Representative or his designee and any other Persons designated by Owner, every four Months. The Executive Progress Reports will include:
a. | Narrative summary of progress; |
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b. | Update of the status of the Project, including a high level summary schedule depicting current progress and projected First Cargo and Substantial Completion for both Subproject 1 and Subproject 2; |
c. | Progress photographs and other illustrations; and |
d. | Description of any problems and summary of plans for resolution. |
8.9 | Contractor Deliverables |
(See Attachment B, Contractor Deliverables)
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9. CONTRACTOR INTERFACES
9.1 | FERC Activities Division of Responsibility |
Owner is required to provide regular reports and other information to the FERC during design, construction, and operation of the Liquefaction Facility as outlined in FERC Authorization, and in the Code of Federal Regulations (CFR), Title 49 Transportation; Part 191 Transportation of Natural and Other Gas by Pipeline; Annual Reports, Incident Reports, and Safety Related Condition Reports, and Part 193 Liquefied Natural Gas Facilities: Federal Safety Standards. The Liquefaction Facility will also be subject to regular inspections by FERC staff, and continuous monitoring by inspectors providing reports to FERC. Contractor shall assist Owner for interfaces with FERC, including as specifically noted in the Division of Responsibility Matrix below:
FERC Activity |
Owner | Contractor | Remarks | |||
FERC Permit overall responsibility |
P | Note 1 | Refer to Owner Permits, Attachment Q. | |||
Note 1 - Contractor is responsible for construction related Permits,) refer to Attachment P). | ||||||
FERC coordination during Project execution |
P | S | ||||
Department of Transportation (DOT) drug testing program during construction. |
S | P |
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FERC Activity |
Owner | Contractor | Remarks | |||
FERC compliance and inspection during Project execution
(a) Owners Monthly Report
(b) Support FERC and DOT inspection visits
(c) Environmental inspectors weekly reports concerning construction activities;
(d) Provide required Project data
(e) Update FERC permit data
(f) FERC technical reviews and occasional meetings
(g) FERC witness of tests such as tank foundation, hydro test, Start Up and commissioning etc.
(h) Address FERC compliance issues |
P | S | ||||
Submit final report to FERC |
P | S | ||||
Obtain FERC Authorization |
P | S | The FERC Authorization is required to site, construct and operate the Liquefaction Facility | |||
FERCs authorization to commence operation |
P | S | ||||
Start-up and commissioning coordination with FERC |
P | S | Owner responsible for Feed Gas supply, shipping and logistics, and bi-directional Pipeline. |
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FERC Activity |
Owner | Contractor | Remarks | |||
FERC requirement for Project Books and Records to be maintained three years after Final Completion |
P | Note 2 | Note 2 - Contractor to turn over Project records at the earlier of expiration of the Defect Correction Period or termination of the Agreement. |
Legend:
P = Primary responsibility
S = Contractor support
9.2 | FERC Required Reports |
Owner is required to provide regular reports and other information to the FERC during design, construction, and operation of the Liquefaction Facility and modifications to Existing Facility. The Liquefaction Facility and modifications to Existing Facility will also be subject to regular inspections by FERC staff, and continuous monitoring by inspectors providing reports to FERC. Contractor shall assist Owner with all interfaces with FERC as follows:
a. | Operation and maintenance procedures and manuals, as well as emergency plans and safety procedure manuals, shall be filed with the FERC prior to commissioning operations. Contractor is responsible for developing these documents, including changes recommended by the FERC, and resubmitting these documents as required; |
b. | The FERC staff shall be notified of any proposed revisions to the security plan and physical security of the Liquefaction Facility or Existing Facility prior to commissioning. Contractor shall assist Owner in the development of these plans, and shall advise Owner if changes to the design or construction of the Liquefaction Facility or modifications to Existing Facility may impact these plans; |
c. | Progress on the Project shall be reported in monthly reports submitted to the FERC. Details should include a summary of activities, problems encountered and remedial actions taken. The Monthly Progress Report described in Section 8.7 shall be formatted so that the required information can be easily extracted by Owner and sent to the FERC; |
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d. | Problems of significant magnitude shall be reported to the FERC on a timely basis. Additional Site inspections and technical reviews will be held by FERC staff prior to commencement of operation. Contractor shall cooperate with Owner at all times in this regard and report any such problems to Owner immediately, and in all cases within twenty-four (24) hours; |
e. | The Liquefaction Facility and modifications to Existing Facility shall be subject to regular FERC staff technical reviews and Site inspections on at least a biennial basis or more frequently as circumstances indicate. Prior to each FERC staff technical review and Site inspection, the Owner will respond to a specific data request including information relating to possible design and operating conditions that may have been imposed by other agencies or organizations. Provision of up-to-date detailed piping and instrumentation diagrams reflecting modifications and provision of other pertinent information not included in the semi-annual reports described below, including events that have taken place since the previously submitted annual report. Contractor shall assist Owner with these FERC reviews, requests, inspections, and reports as required; |
f. | Semi-annual operational reports shall be filed with the FERC to identify changes in Existing Facility design and operating conditions, abnormal operating experiences, activities (including ship arrivals, quantity and composition of imported LNG, vaporization quantities, boil-off/flash gas, etc.), Existing Facility modifications including future plans and progress thereof. Abnormalities should include, but not be limited to: unloading/shipping problems, potential hazardous conditions from offsite vessels, Tank stratification or rollover, geysering, Tank pressure excursions, cold spots on the Tanks, Tank vibrations and/or vibrations in associated cryogenic piping, Tank settlement, significant equipment or instrumentation malfunctions or failures, non-scheduled maintenance or repair (and reasons therefore), relative movement of Tank inner vessels, vapor or liquid releases, fires involving Natural Gas and/or from other sources, negative pressure (vacuum) within a Tank and higher than predicted Boil-Off rates. Adverse weather conditions and the effect on the Project also should be reported. Reports should be submitted within forty-five (45) Days after each period |
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ending June 30 and December 31. In addition, a section entitled Significant plant modifications proposed for the next 12 months (dates) also shall be included in the semi-annual operational reports. Such information would provide the FERC staff with early notice of anticipated future construction/maintenance projects at the Liquefaction Facility and Existing Facility. Contractor shall assist Owner with any semi-annual operational reports that may be due during the period before Substantial Completion of such Subproject or modification to the Existing Facility; |
g. | Significant non-scheduled events, including safety-related incidents (i.e., LNG or Natural Gas releases, fires, explosions, mechanical failures, unusual over pressurization, and major injuries) shall be reported to FERC staff within forty-eight (48) hours. In the event an abnormality is of significant magnitude to threaten public or employee safety, cause significant property damage, or interrupt service, notification shall be made immediately, without unduly interfering with any necessary or appropriate emergency repair, alarm, or other emergency procedure. This notification practice shall be incorporated into the Liquefaction Facilitys emergency plan. Contractor shall report all such incidents to Owner immediately, and in all cases within twenty-four (24) hours, and develop for Owner any such reports that may be required during the period before Substantial Completion of such Subproject. Examples of reportable LNG-related incidents include: |
i. | Fire; |
ii. | Explosion; |
iii. | Property damage exceeding $10,000; |
iv. | Death or injury requiring hospitalization; |
v. | Free flow of LNG for five minutes or more that results in pooling; |
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vi. | Unintended movement or abnormal loading by environmental causes, such as an earthquake, landslide, or flood, that impairs the serviceability, structural integrity, or reliability of the Liquefaction Facility; |
vii. | Any crack or other material defect that impairs the structural integrity or reliability of Equipment that contains, controls, or processes Natural Gas or LNG; |
viii. | Any malfunction or operating error that causes the pressure of a pipeline or Equipment that contains or processes Natural Gas or LNG to rise above its maximum allowable operating pressure (or working pressure for LNG facilities) plus the build-up allowed for operation of pressure limiting or control devices; |
ix. | A leak in Equipment that contains or processes Natural Gas or LNG that constitutes an emergency; |
x. | Inner tank leakage, ineffective insulation, or frost heave that impairs the structural integrity of a any tank; |
xi. | Any safety-related condition that could lead to an imminent hazard and cause (either directly or indirectly by remedial action of the operator), for purposes other than abandonment, a twenty (20) percent reduction in operating pressure or shutdown of operation of a pipeline or an Equipment that contains or processes Natural Gas or LNG; |
xii. | Safety-related incidents to LNG trucks or LNG vessels occurring at or in route to and from the Liquefaction Facility; and |
xiii. | The judgment of the LNG personnel and/or management even though it did not meet the above criteria or the guidelines set forth in the Liquefaction Facilitys incident management plan. |
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In the event of an incident, the FERC has authority to take whatever steps are necessary to ensure operational reliability and to protect human life, health, property or the environment, including authority to direct the Liquefaction Facility to cease operations. Following the initial notification to Owner, FERC staff will determine the need for Owner to file a separate follow-up report or follow-up in the upcoming semi-annual operational report. All follow-up reports should include investigation results and recommendations to minimize a reoccurrence of the incident. Contractor shall develop for Owner any such reports that may be required if the incident happened before Substantial Completion of Subproject 2.
Owner has overall responsibility for the FERC permit application, coordination with FERC, and compliance issues. Contractor will support Owner in providing required clarifications to FERC. Any (i) FERC related support provided by Contractor exceeding one thousand (1,000) man hours or (ii) additional Work required by FERC that is not contemplated in this Scope of Work shall be subject to a Change Order to the extent such excess support or additional Work adversely impacts (i) Contractor cost of performance of the Work; (ii) Contractors ability to perform the Work in accordance with the Project Schedule or (iii) Contractors ability to perform any obligation under the Agreement.
Notwithstanding the foregoing, Contractor shall not contact or otherwise engage in communications with FERC and other Governmental Instrumentalities regarding the Project without Owners involvement.
9.3 | Requirements of Department of Homeland Security |
9.3.1 | Facility Security Plan |
Owner is subject to the requirements found in 33 CFR Part 105, and has developed a facility security plan (Facility Security Plan or FSP), which will require modification due to the addition of the Liquefaction Facility. Contractor shall assist Owner in the revision of the existing FSP as required, and will structure all training programs for Owner to comply with this FSP. Applicable Contractor personnel shall also be trained to comply with this FSP for the period up to Substantial Completion of Subproject 2.
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9.3.2 | Facility Security Assessment |
Owner may be required to develop a revised facility security assessment (Facility Security Assessment or FSA) which address response procedures for fire or other emergency response conditions (33 CFR 105.305(a)(2)). The US Coast Guard also requires an emergency manual for LNG terminals in accordance with 33 CFR 127.307. The emergency manual will be prepared and submitted to the COTP, along with the operations manual required by 33 CFR 127.305, for approval before the Liquefaction Facility can be placed in service. Contractor shall assist Owner in the development of this FSA and emergency manual.
9.4 | Import Gas Pipelines |
Owner shall be responsible for construction and completion of the Import Gas Pipelines and facilities up to the designated tie-in points on the outlet weld-in-insulator, as specified in the FEED Documents. Space shall be allowed for construction and operations of metering facilities, and road access.
9.5 | Environmental Mitigation |
Owner is responsible for wetlands mitigation required by Permits, Applicable Law or Governmental Instrumentalities to be performed on or off the Site. Subject to Applicable Law and Permits. It is anticipated that most such mitigation will take place after the majority of construction by the Contractor has been completed. Contractor shall cooperate to ensure the mitigation is accomplished expeditiously and with minimum interference.
9.6 | Landowner Access |
Landowners shall be provided access in accordance with Section 3.24 of the Agreement.
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10. | SCOPE OF LNTP |
The following activities are in Contractors Scope of Work during the period after issuance of the LNTP and prior to issuance of the NTP (the LNTP Work). These activities will focus on supporting the critical path schedule and include the following: Any such LNTP Work to be agreed by mutual Change Order.
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Schedule A-2
FEED Documents
Contractor performed front end engineering design (FEED) for the Project under the Technical Services Agreement, which resulted in the submittal by Contractor to Owner of the FEED documents which are listed in this Attachment A, Schedule A-2 (FEED Documents) and are incorporated by reference into this Agreement and form a part of the Scope of Work. The FEED Documents are fully incorporated into this Agreement as if fully repeated herein. All other drawings, specifications and documents developed under the Technical Services Agreement are expressly excluded from the Agreement.
The FEED Documents generally reflect the Work required to be performed by Contractor under the Agreement, but do not reflect all Work required to be performed under the Agreement. Contractor may change the FEED Documents (except the Basis of Design, Scope of Facilities, Codes and Standards Specification and those documents defining the Reimbursable Cost Work) as necessary to meet the MAC, Performance Guarantee and other requirements of the Agreement (including GECP); provided that, under no circumstances shall such changes involve a change in the Liquefaction Facility layout, change in the requirements of Schedule A-1, deletion of or material change to the previously Owner-approved tagged Equipment, reduction of quality in any portion of the Work, change that adversely impacts the safety, performance or materials of construction, or a change that adversely impacts the operability or maintenance of the Liquefaction Facility, the Existing Facility or any component of either facility, unless approved by Owner in writing. With respect to plans that Contractor is required to develop under Attachment A (e.g. Project Execution Plan, Project Engineering Plan, etc.), Contractor may update or deviate from such plans without Owners approval (except for those plans under Attachment A that are subject to the Owners approval (as specified under Attachment A or Attachment B), then, with respect to those plans, revisions are subject to Owners approval rights as may be prescribed in Attachment A or Attachment B). Any deviation in accordance with the immediately preceding sentence shall not constitute a Defect or a breach of this Agreement.
To the extent there are any conflicts or inconsistencies between the FEED Documents and any provision or requirement in the remainder of Attachment A, Schedule A-1, then priority shall be according to Section 1.4 of Attachment A, Schedule A-1. Without limiting the prior sentence, nothing in the FEED Documents shall reduce or limit Contractors obligations or liabilities under the Agreement.
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Execution Version
TABLE A-1
FEED DOCUMENTS
Section |
Title |
Sub-Section No. |
Document Number |
Rev. | Description | |||||
TABLE OF CONTENTS | 25611-200-G71-GAM-00001 | 0 | ||||||||
1 | Project Information | |||||||||
1.1 | Project Execution Plan | 25611-200-G01-GAM-00002 | 0 | |||||||
2.0 | DESIGN INFORMATION | |||||||||
2.1 | Basis of Design (BOD) Summary | 25611-200-3BD-M04-00002 | 00E | Basis Of Design - BOD - Summary | ||||||
2.2 | Design Basis Facility Operation | 25611-200-30Y-G03-00001 | 00B | Design Basis: Facility Operation | ||||||
2.3 | List of Codes & Standards | 25611-200-3DS-G01-00001 | 00B | Codes and Standards | ||||||
2.4 | Scope of Facilities | 25611-200-G01-000-00001 | 00D | Scope of Facilities | ||||||
2.5 | Basic Engineering Design Data (BEDD) | 25611-200-3BD-M04-00001 | 00E | Basic Engineering Design Data (BEDD) | ||||||
2.6 | Discipline Design Basis | |||||||||
2.6.1 | 25611-200-3DR-V04F-00001 | 000 | General Specification for Process Design Basis | |||||||
2.6.2 | 25611-200-3DR-V04F-00002 | 00C | Specification for Relief System Design Basis | |||||||
2.6.3 | 25611-200-3DR-H04F-00001 | 00B | Environmental Design Basis | |||||||
2.6.4 | 25611-200-3DR-U04F-00001 | 00C | Process Safety Design Basis | |||||||
2.6.5 | 25661-200-3DR-P04F-00001 | 00B | Plant Design and Piping Layout and Design Criteria | |||||||
25611-200-3DR-P40F-00001 | 00B | Plant Design and Piping Design Criteria for Pipe Stress and Support | ||||||||
2.6.6 | 25611-200-3DR-C04F-00001 | 00B | Design Criteria For Civil SiteWork | |||||||
25611-200-3DR-S04F-00001 | 00C | Design Criteria For Structures and Foundations | ||||||||
25611-200-3DR-S04F-00003 | 00B | Design Basis For Standard Seed File Setups | ||||||||
2.6.7 | 25611-200-3DR-E12F-00001 | 00C | Design Criteria For Electrical Systems Design and Installation | |||||||
25611-200-3DR-E12F-00001 | 00C | Design Criteria For Telecommunication | ||||||||
2.6.8 | 25611-200-3DR-J04F-00001 | 00B | Control System Design Criteria (Instrument and Control Philosophy) | |||||||
2.7 | Engineering Studies (Non Confidential) | |||||||||
25611-200-G0R-000-00002 | 00B | Boil-Off Gas System Layout Study Report | ||||||||
25611-200-G65-GEV-00002 | 00B | Process Study For Solvent Flash Drum Flash Gas Destination | ||||||||
25611-200-G65-GEV-00003 | 00A | Air Recirculation CFD Study Report | ||||||||
25611-200-G65-GEX-00001 | 00B | Marine Operation in the Construction Dock Fit for Purpose Study |
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Section |
Title |
Sub-Section No. |
Document Number |
Rev. | Description | |||||
25611-200-HEC-29-00001 | 00B | Calculation for Adequacy of Existing Sanitary Treatment Plant | ||||||||
25611-200-MCC-0024-02401 | 00A | BOG Recycle Compressor 00C-24001A/B/C/D/E/F | ||||||||
2.7.1 | Engineering Studies (Liquefaction) - Confidential | |||||||||
25611-200-G65-GEV-00004 | 00A | Refrigeration Compressor Anti-Surge Study Report | ||||||||
2.8 | Fire Water Location Plans (Non Confidential) | |||||||||
25611-200-U1-1-10001 | 00B | Firewater Location Plan - LNG Tank Area | ||||||||
25611-200-U1-2-10001 | 00B | Firewater Location Plan - Process Area | ||||||||
25611-200-U1-21-10001 | 00B | Firewater Location Plan - LNG Storage Tank | ||||||||
25611-200-U1-35-10002 | 00B | Firewater Location Plan - OSBL Bog Recycle Compressor and Utilities Area Trains 1 and 2 | ||||||||
25611-200-U1-35-10003 | 00C | Firewater Location Plan - Utilities Area Trains 3 and 4 | ||||||||
25611-200-U1-35-10004 | 00B | Firewater Location Plan - OSBL Area 35 Refrigerant and Amine Storage | ||||||||
25611-200-U1-35-10005 | 00B | Firewater Location Plan - OSBL Area 35 Wet and Dry Gas Flares - Trains 1 and 2 | ||||||||
25611-200-U1-35-10007 | 00B | Firewater Location Plan - OSBL Area 35 Operator Shelter | ||||||||
25611-200-U1-35-10008 | 00B | Firewater Location Plan - Ambient Air and Sub Combustion Vaporizers Area | ||||||||
25611-200-U1-4-10001 | 00B | Firewater Location Plan - Utility Area | ||||||||
2.8.1 | Fire Water Location Plans (Confidential) | |||||||||
25611-200-U1-32-10001 | 00C | Confidential - Firewater Location Plan ISBL Process Area 32 Typical For Liquefaction Train | ||||||||
25611-200-U1-31-10001 | 00B | Confidential - Firewater Location Plan ISBL Process Area 31 Typical For Liquefaction Train | ||||||||
25611-200-U1-34-10001 | 00C | Confidential - Firewater Location Plan ISBL Process Area 34 Typical For Liquefaction Train | ||||||||
25611-200-U1-33-10001 | 00C | Confidential - Firewater Location Plan ISBL Process Area 33 Typical For Liquefaction Train | ||||||||
2.8.2 | Passive Fire Protection Location Drawing with Schedule | |||||||||
25611-200-U1X-000-00002 | 00C | Passive Fire Protection Schedule- Non Confidential | ||||||||
25611-200-U1-35-20004 | 00C | Passive Fire Protection Zone Layout OSBL Area 35 Refrigerant Nitrogen and Amine Storage |
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Execution Version