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EXHIBIT 10.3
HTI ENGINEERING (M) SDN. BHD.
25-3(TINGKAT2), XXXXX 00/00, 00000 XXXXXXXX XXXX,
XXXXXXXX DARUL XXXXX, WEST MALAYSIA,
TEL: 00-0000000, 0000000
FAX: 00-0000000
Our Ref: HE/95/1218-shs
August 7, 1995
Zycon Corporation
000 Xx Xxxxxx Xxxx
Xxxxx Xxxxx
Xxxxxxxxxx, 00000-0000
U.S.A.
Attention: Xx. Xxx Xxxxxx
Dear Sir,
RE: AGREEMENT BETWEEN OWNER AND CONSTRUCTION MANAGER
ZYCON CORP. SDN BHD
HITI ENGINEERING (M) SDN BHD
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Enclosed is a copy of the Agreement which has been signed by the Construction
Manager, Xx. Xxxxx Tee Xxx Xxx.
Please do not hesitate to contact us if you require further information.
Your Faithfully,
HITI ENGINEERING (M) SDN BHD
/s/
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XX. XX XXXX XXXX
Technical Director
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AGREEMENT
BETWEEN OWNER AND
CONSTRUCTION MANAGER
This Document has important legal and insurance consequences; consultation with
an attorney is encouraged with respect to its completion or modification.
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AGREEMENT
Made this Third day of August in the year Nineteen Hundred and Ninety Five
(1995)
BETWEEN ZYCON CORPORATION SDN. BHD. the Owner, and HITI ENGINEERING (M) SDN.
BHD. the Construction Manager.
For services in connection with the following Project described on Exhibit A
hereto which is incorporated by reference.
The Owner and the Construction Manager agree as set forth below:
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TABLE OF CONTENTS
ARTICLE 1 The Construction Team and Extent of
Agreement...............................................4.
ARTICLE 2 Construction Manager's Services.........................4.
ARTICLE 3 Owner's Responsibilities...............................10.
ARTICLE 4 Trade Contracts........................................11.
ARTICLE 5 Schedule...............................................12.
ARTICLE 6 Guaranteed Maximum Price...............................12.
ARTICLE 7 Construction Manager's Fee............................13.
ARTICLE 8 Cost of the Project....................................13.
ARTICLE 9 Changes in the Project.................................15.
ARTICLE 10 Bonuses................................................18.
ARTICLE 11 Payments to the Construction Manager.. ................18.
ARTICLE 12 Insurance, Indemnity and Waiver of
Subrogation............................................20.
ARTICLE 13 Termination of the Agreement and Owner's
Right to Perform Construction Manager's
Obligations............................................23.
ARTICLE 14 Assignment and Governing Law...........................25.
ARTICLE 15 Miscellaneous Provisions...............................26.
ARTICLE 16 Arbitration............................................26.
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ARTICLE 1
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The Construction Team and Extent of Agreement
The CONSTRUCTION MANAGER accepts the relationship of trust and confidence
established between him and the Owner by this Agreement. He covenants with the
Owner to furnish his best skill and judgment and to cooperate with the Owner in
furthering the interests of the Owner. He agrees to furnish efficient business
administration and superintendence and to use his best efforts to complete the
Project in an expeditious and economical manner consistent with the interest of
the Owner.
1.1. THE CONSTRUCTION TEAM. The Construction Manager and the Owner
(through Owner's representative) called the "Construction Team" shall work from
the beginning of design through construction completion. The Construction
manager shall provide leadership to the Construction Team on all matters
relating to construction.
1.2. EXTENT OF AGREEMENT. This Agreement represents the entire
agreement between the Owner and the Construction Manager and supersedes all
prior negotiations, representations or agreements. When Drawings and
Specifications are completed, they shall be identified by amendment to this
Agreement. This Agreement shall not be superseded by any provisions of the
documents for construction and may be amended only by written instrument signed
by both the Owner and the Construction Manager.
1.3. DEFINITIONS. The Project is the total construction to be performed
under this Agreement, the exhibits hereto, and the Drawings and Specifications
and Time Schedule referenced below. The Work is that part of the construction
that the Construction Manager is to perform with his own forces or the part of
the construction that a particular Trade Contractor is to perform. The term day
shall mean calendar day unless specifically designated. "Hard Construction
Costs" shall mean the cost items specified in Article 8.2 below. "Soft
Construction Costs" shall mean all engineering costs associated with the Project
and the commissions and expenses involved in obtaining the Performance Bonds, as
defined below, and premiums for insurance required of Construction Manager under
Section 12.2 below.
ARTICLE 2
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Construction Manager's Services
The Construction Manager will perform the following services under this
Agreement in each of the two phases described below.
2.1. Design Phase.
2.1.1. CONSULTATION DURING PROJECT DEVELOPMENT. Schedule and
attend regular meetings with the Owner during the development of conceptual and
preliminary design to advise on site use and improvements, selection of
materials, building systems
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and equipment. Provide recommendations on construction feasibility, availability
of materials and labor, time requirements for installation and construction and
factors related to cost including costs of alternative designs or materials,
preliminary budgets and possible economies.
2.1.2. SCHEDULING. Develop with Owner a project Time Schedule
that coordinates and integrates the design efforts with construction schedule,
including realistic activity sequences and durations, allocation of labor and
materials, processing of shop drawings and samples, and delivery of products
requiring long lead-time procurement.
2.1.3. PROJECT CONSTRUCTION BUDGET. Prepare a Project Budget
within fourteen (14) days of execution of this agreement for Owner's approval,
which shall be consistent with the Construction Manager's May 18, 1995
quotation, as amended on May 30, 1995, on an overall basis, and update such
Budget periodically for the Owner's approval. Advise the Owner if it appears
that the Project Budget will not be met and make recommendations for corrective
action.
2.1.4. COORDINATION OF CONTRACT DOCUMENTS. Prepare with Owner
the Drawings and Specifications, recommending alternative solutions whenever
design details affect construction feasibility or schedules.
2.1.5. CONSTRUCTION PLANNING. Recommend for purchase and
expedite the procurement of long-lead items to ensure their delivery by the
required dates.
2.1.5.1. Make recommendations to the Owner regarding
the division of work in the Drawings and Specifications to facilitate the
bidding and awarding of Trade Contracts, allowing for phase construction taking
into consideration such factors as time performance, availability of labor,
overlapping trade jurisdictions and provisions for temporary facilities.
2.1.5.2. Review the Drawings and Specifications with
the Owner to eliminate areas of conflict and overlapping in the Work to be
performed by the various Trade Contracts and prepare pre-qualification criteria
for bidders.
2.1.5.3. Develop Trade Contractor interest in the
Project and as working Drawings and Specifications are completed, take
competitive bids of the Work from the various Trade Contractors. After analyzing
the bids and aware contract pursuant to Article 4 below.
2.2. Construction Phase
2.2.1. PROJECT CONTROL. Monitor the work of the Trade
Contractors and coordinate the Work with the activities and responsibilities of
the Owner and to complete the Project in accordance with the Owner's objectives
of cost, time and quality.
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2.2.1.1. Maintain a competent full-time staff at the
Project site to coordinate and provide general direction of the Work and
progress of the Trade Contractors on the Project.
Without limiting the above, Construction Manager agrees, except in the
event of death or disability:
a. Xxxx Xxx Xxxx Xxx and Chua Shen Huat shall be on the
construction site on all work days during the start up and
through the completion of the major civil and structural
phases;
b. Xxxx Xxx Xxxx Xxx shall be present at the construction site
through the balance of the project including, but not
limited to, the electrical phase;
x. Xx Xxxx Xxxx or Change Chin Sia shall be present at the
construction site on all work days during the installation
of the mechanical and electrical equipment;
x. Xxxxx Tee shall supervise the Project as required but at a
minimum shall be on site at least every other week for
sufficient time to assure that prudent decisions have been
made concerning the construction and that materials and
equipment have been ordered in sufficient time to assure
that the Project is completed as contemplated by this
agreement.
In the event of death or disability of any of the aforementioned
individuals, Construction Manager shall replace the individual at Construction
Manager's expense with another qualified individual acceptable to Owner.
2.2.1.2. Establish on-site organization and lines of
authority in order to carry out the overall plans of the Construction Team.
2.2.1.3. Establish procedures for coordination with
the Owner and Trade Contractors with respect to all aspects of the Project and
implement such procedures.
Without limiting the above, Construction Manager shall hold
weekly progress meetings concerning the status of the construction project, a
comparison with the estimated construction Time Schedule and Construction
Budget. Construction Manager shall prepare accurate minutes of such meetings
which shall be promptly forwarded to Xxxxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Jo and
Xxxxxxx Xxx.
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2.2.1.4. Schedule and conduct progress meetings at
which Trade Contractors, owner and Construction Manager can discuss jointly such
matters as procedures, progress, problems and scheduling.
2.2.1.5. Provide regular monitoring of the schedule
as construction progresses. Identify potential variances between scheduled and
probable completion dates. Review schedule for Work not started or incomplete
and recommend to the Owner and Trade Contractors adjustments in the schedule to
meet the probable completion date. Provide summary reports of each monitoring
and document all changes in schedule.
2.2.1.6. Determine the adequacy of the Trade
Contractors' personnel and equipment and the availability of materials and
supplies to meet the schedule.
2.2.1.7. Pay strict attention to safety on the
Project for all workers and others visiting the site and will insure that safety
helmets and apparel are worn by all workers and other persons visiting the site.
Construction Manager shall instruct all employees and hold appropriate classes
on safety.
2.2.2.1. PHYSICAL CONSTRUCTION. Except as provided
in Article 2.2.2.2., provide all supervision, labor, materials, construction
equipment, including, but not limited to, equipment, tools and subcontract items
which are necessary for the completion of the Project which are not provided by
either the Trade Contractors or the Owner. To the extent that the Construction
Manager performs any Work with his own forces, he shall, with respect to such
Work, perform in accordance with the Drawings and Specifications and in
accordance with the procedure applicable to the Project.
2.2.2.2. The Project items which Construction Manager
is not required to provide are:
a. Process vacuum system
b. Epoxy floor coatings
c. Ceco scrubber system
The above items will be obtained and paid for directly by Owner
and will not be considered Costs of the Project. Construction Manager shall,
however, unless directed otherwise by Owner, supervise and direct the
installation of such items. Owner shall pay Construction Manager a separate
supervision fee equal to 2% of the Owner's cost of each system or equipment, the
installation of which Construction Manager supervises.
2.2.3. COST CONTROL. Develop and monitor an effective system of
Project cost control. Revise and refine the initially approved Project
Construction Budget, incorporate approved changes as they occur and develop cash
flow reports and forecasts as needed. Identify variances between actual and
budgeted or estimated costs and advise
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Owner whenever projected cost exceeds budgets or estimates. All modifications to
the Project construction Budget must be approved by Owner.
2.2.3.1. Maintain cost accounting records on
authorized Work performed. Afford the Owner access to these records and preserve
them for a period of six (6) years after final payment.
2.2.4. CHANGE ORDERS. Develop and implement a system for
the preparation, review and processing of Change Orders. Recommend necessary or
desirable changes to the Owner, review requests for changes, submit
recommendations to the Owner and assist in negotiating Change Orders. All Change
Orders must be approved by Owner.
2.2.5. PAYMENTS TO TRADE CONTRACTORS. Develop and implement
a procedure for the review, processing and payment of applications by Trade
Contractors for progress and final payments, which procedure shall be
satisfactory to Owner.
2.2.6. PERMITS AND FEES. Obtain all building permits and
special permits for permanent improvements.
Without limiting the above, Construction Manager shall be
responsible for obtaining all necessary permits, licenses and approvals in
connection with the Project other than approval from the Division of Environment
including, but not limited to, the following agencies:
a. Sarawak State Government
b. Local town council
c. Fire department (BOMBA)
d. Jabatan Kerja Raya/water boards
e. State Economic Development Corporation (SEDCO)
Construction Manager shall insure that all work on the Project
is done in conformity with such permits, licenses and approvals (and the
approval of the Department of Environment) and all such work shall be done in
compliance with all applicable laws, including local laws and ordinances of
Kuching. The cost of obtaining all such approvals (other than from the
Department of Environment) shall be considered a Cost of the Project within the
meaning of Article 8, but not a Hard Construction Cost. Fees required by the
licensing authorities shall be paid directly by Owner or Construction Manager,
but if Owner pays the fees (other than for approval from the Department of
Environment), the amount so paid shall be credited against the Cost of the
Project at the time of final payment under Article 11.2. Notwithstanding
anything to the contrary above stated, in the event any contributions, fees or
levies shall be imposed by either XXXXX, the Sarawak Water Board or Telekoms,
such contributions, fees or levies shall be paid directly by the Owner and shall
not be considered a Cost of the Project.
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2.2.7. OWNER'S CONSULTANTS. If required, assist the Owner in
selecting and retaining professional services of a surveyor, testing
laboratories and special consultants and coordinate these services, without
assuming any responsibility or responsibility or liability of or for these
consultants.
2.2.8. INSPECTION. Inspect the work of Trade Contractors
for defects and deficiencies in the Work.
2.2.8.1. Review the safety programs of each of the
Trade Contractors and make appropriate recommendations. The performance of such
services by the Construction Manager shall not relieve the Trade Contractors of
their responsibilities for the safety of persons and property, and for
compliance with laws, rules, regulations and orders applicable to the conduct of
the Work.
2.2.9. Intentionally omitted.
2.2.10. REPORTS AND PROJECT SITE DOCUMENTS. Record the
progress of the Project. Submit written progress reports to the Owner including
information on the Trade Contractors' Work and the percentage of completion.
Keep a daily log available to the Owner.
2.2.10.1. Maintain at the Project site, on a current
basis: records of all necessary Contracts, Drawings, Permits, Licenses and
Approvals, samples, purchases, materials, equipment, maintenance and operating
manuals and instructions, and other construction related documents, including
all revisions. Obtain data from Trade Contractors and maintain a current set of
record Drawings, Specifications and operating manuals. At the completion of the
Project, deliver all such records to the Owner.
2.2.12. TRADE CONTRACTORS' SUPERVISION. Prepare for Trade
Contractors' readiness and assist in their initial start-up and supervise and
direct Trade Contractors' performance.
2.2.13. START-UP. With the Owner's maintenance personnel,
direct the checkout of utilities, operations, systems and equipment for
readiness and assist in their initial start-up and testing by the Trade
Contractors.
2.2.14. FINAL COMPLETION. Provide written notice to the Owner
that the Work is ready for final inspection. Secure and transmit to the Owner
required guarantees, affidavits, releases, bonds and waivers. Turn over to the
Owner all keys, manuals, record drawings and maintenance stocks.
2.2.15. PIPES: All process pipes shall be labeled every
twenty (20) feet by the Construction Manager to identify the gases or fluids
transported.
2.2.16. AS-BUILT PLANS: Upon completion of the Project, the
Construction Manager shall deliver a complete set of as-built plans for the
Project to the Owner.
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2.2.17. WARRANTY. Where any Work is performed by the
Construction Manager's own forces or by Trade Contractors under contract with
the Construction Manager, the Construction Manager shall warrant that all
materials and equipment included in such Work will be new, unless otherwise
specified, and that such Work will be of good quality, free from improper
workmanship and defective materials and in conformance with the Drawings and
Specifications. With respect to the same Work, the Construction Manager further
agrees to correct all work defective in material and workmanship for a period of
one year from the Construction Completion Date, as defined below, or for such
longer periods of time as may be set forth with respect to specific warranties
contained in the trade sections of the Specifications. The Construction Manager
shall collect and deliver to the Owner any specific written warranties given by
others.
2.3. Additional Services.
2.3.1. At the request of the Owner the Construction Manager
will provide the following additional services upon written agreement between
the Owner and Construction Manager defining the extent of such additional
services and the amount and manner in which the Construction Manager will be
compensated for such additional services.
2.3.2. Services related to investigation, appraisals or
valuations of existing conditions, facilities or equipment, or verifying the
accuracy of existing drawings or other Owner-furnished information.
2.3.3. Services related to Owner-furnished equipment,
furniture and furnishings which are not a part of this Agreement.
2.3.4. Obtaining or training maintenance personnel or
negotiating maintenance service contracts.
2.4. As a condition to Construction Manager's rights under this
agreement and Owner's obligation to Construction Manager, Construction Manager
shall obtain and provide to Owner two performance guarantees ("Performance
Bonds") through a bank or insurance company operating in Malaysia which bank or
insurance company is acceptable to Owner each in an amount equal to 5% of the
Guaranteed Maximum Price. The cost of such bonds shall be borne by Construction
Manager and shall not be considered a Hard Construction Cost within the meaning
of Article 10. Owner shall permit the cancellation of one Performance Bond in an
amount of not more than RM1,675,000 when Owner has recouped payment made under
Article 11.6. as provided in Article 11.1. The other Performance Bond shall
remain effective through completion of the Project.
2.5. All plans and equipment to be purchased for the Project must
be approved in writing by Owner. Any changes to the building plans or types and
brands of equipment already selected for the Project must also be approved.
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ARTICLE 3
Owner's Responsibilities
3.1. The Owner shall provide full information regarding his
requirement for the Project.
3.2. The Owner shall designate a representative who shall be fully
acquainted with the Project and has authority to issue and approved Project
Construction Budget, issue Change Orders, Equipment Purchases, render decisions
within three (3) business days (excluding Saturdays and Sundays) of receipt of a
written request by the Construction Manager and furnish information
expeditiously by telephone facsimile.
Owner has designated Xxxxx Jo as its representative. However, all
project construction budgets, change orders, equipment purchases and other
decisions called for under this agreement must be approved by one of the
following persons in addition to Xxxxx Jo:
a. Xxxxxx Xxxxxx
b. Xxxxxx Xxxxxx
c. Xxx Xxxxxxx
Owner reserves the right to change its representative for any reason
whatsoever by giving notice to Construction Manager.
3.3. Within three business days (excluding Saturdays and Sundays
and American national holidays) of a party's receipt of any written request for
information or a decision concerning the Project from the other party, the
information or decision will be communicated to the requesting party by personal
delivery or telephone facsimile.
3.4. The Owner shall furnish soil reports for the site of the
Project.
3.5. Intentionally omitted.
3.6. Intentionally omitted.
3.7. Intentionally omitted.
3.8. The Owner shall provide insurance for the Project as provided
in Article 12.4.
3.9. The services, information, and reports required by Owner under
the above paragraphs or otherwise to be furnished by other consultants employed
by the Owner, shall be furnished with reasonable promptness at the Owner's
expense and the
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Construction Manager shall be entitled to rely upon the accuracy
and completeness thereof.
3.10. If the Owner becomes aware of any fault or defect in the
Project or non-conformance with the Drawings and Specifications, he shall give
prompt written notice thereof to the Construction Manager.
3.11. The Owner shall communicate with the Trade Contractors only
through or with the knowledge of the Construction Manager.
ARTICLE 4
Trade Contracts
4.1. All portions of the Project that the Construction Manager does
not perform with his own forces shall be performed under Trade Contracts. The
Construction Manager shall request and receive proposals from Trade Contractors
and award Trade Contracts. Trade Contractor's proposals will be submitted to
Owner for review on Owner's request.
4.2. If the Owner refuses to accept a Trade Contractor recommended
by the Construction Manager, the Construction Manager shall recommend an
acceptable substitute and the Guaranteed Maximum Price if applicable shall be
increased or decreased by the difference in cost occasioned by such substitution
and an appropriate Change Order shall be issued.
4.3. Unless otherwise directed by the Owner, Trade Contracts will
be between the Construction Manager and the Trade Contractors. Whether the Trade
Contracts are with the Construction Manager or the Owner, the form of the Trade
Contracts shall be prepared by Construction Manager, include the General and
Supplementary Conditions, and shall be satisfactory to the Construction Manager.
4.4. The Construction Manager shall be responsible to the Owner for
the acts and omissions of his agents and employees, Trade Contractors performing
Work under a contract with the Construction Manager and such Trade Contractor's
agents and employees.
4.5. No Trade Contract will be awarded and no Trade Contractor will
be used if Owner objects in writing to the Trade Contract or the Trade
Contractor.
ARTICLE 5
Schedule
5.1. The services to provide under this Agreement shall be in
general accordance with the Time Schedule mutually agreed upon by the parties in
writing.
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5.2. Intentionally omitted.
5.3. "Substantial Completion" of the Project occurs when
construction is substantially completed in accordance with the Drawings and
Specifications so the Owner can occupy and utilize the Project for its intended
purpose and a temporary occupancy permit or appropriate letter of approval for
occupancy from appropriate government authorities has been issued. In the Time
Schedule, the date projected for Substantial completion shall be July 1, 1996,
which shall be referred to as the "Construction Completion Date."
5.4. If the Construction Manager is delayed at any time in the
Progress of the Project by any act or neglect of the Owner or by any separate
contractor employed by the Owner, or by changes ordered in the Project, the
Construction Completion Date shall be extended by Change Order for a reasonable
length of time, and the dates set forth in Article 10 (relative to Bonus) shall
be extended accordingly, but no such extensions shall affect the dates set forth
in Article 10 (relative to Bonus) by more than two weeks.
ARTICLE 6
Guaranteed Maximum Price
6.1. The Guaranteed Maximum Price (guaranteeing the maximum price
to the Owner for the Cost of the Project and the Construction Manager's Fee) is
RM33,500,000. Such Guaranteed Maximum Price will be subject to modification for
Changes in the Project as provided in Article 9, and for additional reasonable
costs directly arising from delays caused by the Owner. The Guaranteed Maximum
Price is made up of the following: Hard Construction Cost - RM30,000,000.00,
Soft Construction Cost - RM1,896,000.00, and Construction Manager's Fee -
RM1,610,000.00 for a total of RM33,500,000.00.
6.2. The Owner authorizes the Construction Manager to take all
steps necessary, including arbitration or litigation, to assure that the Trade
Contractors perform their contracts in accordance with their terms.
6.3. Intentionally omitted.
6.4. Intentionally omitted.
ARTICLE 7
Construction Manager's Fee
7.1. In consideration of the performance of this agreement, the
Owner agrees to pay Construction Manager as compensation for services under this
agreement, a Construction Manager's Fee equal to Ringgit Malaysian One Million
Six Hundred and Ten Thousand Only (RM1,610,000.00).
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7.2. The Construction Manager's Fee shall be paid in accordance
with the provisions of Article 11. The Construction Manager's Fee in relation to
change orders approved by Owner and with respect to items of cost that are
incurred if the Construction Manager is placed in charge of the reconstruction
of any insured or uninsured loss (provided such uninsured loss does not arise
from a breach of duty or warranty by Construction Manager) shall be five percent
(5%) of the costs to be incurred resulting from the change orders. In the event
of a change order resulting in savings, the Construction Manager's Fee shall be
similarly reduced. The Construction Manager's Fee shall in the event of change
orders being issued be calculated according to the following formula:
Construction Manager's Fee = RM1,610,000.00 +/- (5% x Value of Change Orders).
ARTICLE 8
Cost of the Project
8.1. The term Cost of the Project shall mean cost necessarily
incurred in the Project during either the Design or Construction Phase, and paid
by the Construction Manager other than as set forth in Article 7. Such costs are
the Soft Construction Costs and the items set forth below in this Article,
including all items of costs set forth under `A' and `B' in Construction
Manager's quotation, dated May 30, 1995.
8.1.1. The Owner agrees to pay the Construction Manager for
the Cost of the Project as defined in Article 8. Such payment shall be in
addition to the Construction Manager's Fee stipulated in Article 7.
8.2. HARD CONSTRUCTION COSTS.
8.2.1. Wages paid for labor in the direct employ of the
Construction Manager in the performance of this Work under applicable collective
bargaining agreements, or under any salary or wage schedule, and including such
welfare or other benefits, if any, as may be payable with respect thereto.
8.2.2. Salaries of the Construction Manager's employees when
stationed at the field office, in whatever capacity employed, employees on the
road in expediting the production or transportation of materials and equipment,
and employees in the main or branch office performing the functions listed
below.
8.2.3. Cost of all employee benefits and taxes for such items
as unemployment compensation and social security, insofar as such cost is based
on wages, salaries, or other remuneration paid to employees of the Construction
Manager and included in the Cost of the Project under Subparagraphs 8.2.1 and
8.2.2.
8.2.4. Reasonable transportation, traveling, moving and hotel
expenses of the Construction Manager or of his officers or employees incurred in
discharge of duties connected with the Project.
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8.2.5. Cost of all materials, supplies and equipment
incorporated in the Project, including costs of transportation and storage
thereof.
8.2.6. Payments made by the Construction Manager or Owner to
Trade Contractors for their Work performed pursuant to contract under this
Agreement. This provision shall not apply to Owners' installation of any of the
items specifically excluded from the agreement under Article 2.2.2.2.
8.2.7. Cost, including transportation and maintenance, of all
materials, supplies, equipment, temporary facilities and hand tools not owned by
the workmen, which are employed or consumed in the performance of the Work, and
cost less salvage value on such items used but not consumed which remain the
property of the Construction Manager.
8.2.8. Rental charges of all necessary machinery and
equipment, exclusive of hand tools, used at the site of the Project, whether
rented from the Construction Manager or other, including installation, repairs
and replacements, dismantling, removal, costs of lubrication, transportation and
delivery costs thereof, at rental charges consistent with those prevailing in
the area.
8.2.9. Intentionally omitted.
8.2.10. Sales, use, gross receipts of similar taxes related to
the Project imposed by any governmental authority, and for which the
Construction Manager is liable. Notwithstanding anything to the contrary in this
Section 8.2.10, in the event any taxes, duties or levies are imposed on
production or support materials and equipment for incorporation into the
Project, Construction Manager shall use its best efforts to eliminate any such
taxes, duties or levies and shall prepare all necessary documents for a protest
of
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9.1.1. A Change Order is a written order to the Construction
Manager signed by the Owner or his authorized agent issued after the execution
of this Agreement, authorizing a change in the Project or the method or manner
of performance and/or an adjustment in the Guaranteed Maximum Price, the
Construction Manager's Fee or the Construction Completion Date. Each adjustment
in the Guaranteed Maximum Price resulting from a Change Order shall clearly
separate the amount attributable to the Cost of the Project and the Construction
Manager's Fee.
9.1.2. The increase or decrease in the Guaranteed Maximum
Price resulting form a Change in the Project shall be determined in one or more
of the following ways:
a. by mutual acceptance of a lump sum properly
itemized and supported by sufficient
substantiating data to permit evaluation;
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b. by Cost as defined in Article 8 plus a
percentage equal to the Construction Manager's
Fee Percentage specified in Article 7.1; or
c. by the method provided in subparagraph 9.1.3.
9.1.3. If none of the methods set forth in Clauses 9.1.2.a.
through 9.1.2.c is agreed upon, the Construction Manager, provided he receives a
written order signed by the Owner, shall promptly proceed with the Work
involved. The cost of such Work shall then be determined on the basis of the
reasonable expenditures and savings of those performing the Work attributed to
the change, including, in the case of an increase in the Guaranteed Maximum
Price, an increase in the Construction Manager's fee based upon the Construction
Manager's fee Percentage or in the case of a decrease in the Guaranteed Maximum
Price, a decrease in the Construction Manager's Fee based upon the Construction
Manager's Fee Percentage. In such case, and also under Clause 9.1.2.c. and
9.1.2.d. above, the Construction Manager shall keep and present, in such form as
the Owner may prescribe, an itemized accounting together with appropriate
supporting data of the increase in the Cost of the Project as outlined in
Article 8. When both additions and credits are involved in any one change, the
increase or decrease in the Construction Manager's Fee shall be figured on the
basis of net increase or net decrease, if any.
9.1.4. If unit prices are stated in the Agreement or
subsequently agreed upon, and if the quantities originally contemplated are so
changed in a proposed Change Order or as a result of several Change Orders that
application of the agreed unit prices to the quantities of Work proposed will
cause substantial inequity to the Owner or the Construction Manager the
applicable unit prices and Guaranteed Maximum Price shall be equitably adjusted.
9.1.5. Intentionally omitted.
9.2. CLAIMS FOR ADDITIONAL COST OR TIME.
9.2.1. If the Construction Manager wishes to make a claim or
an increase in the Guaranteed Maximum Price, an increase in his fee, or
extension in the Construction Completion Date, he shall give the Owner written
notice thereof within a reasonable time after the occurrence of the event giving
rise to such claim. This notice shall be given by the Construction manager
before proceeding to execute any Work, except in an emergency endangering life
or property in which case the Construction Manager shall act, at his discretion,
to prevent threatened damage, injury or loss. Claims arising from delay shall be
made within a reasonable time after the delay. No such claim shall be valid
unless so made. If the Owner and the Construction Manager cannot agree on the
amount of the adjustment in the Guaranteed Maximum Price, Construction Manager's
Fee or Construction Completion Date it shall be determined pursuant to the
provisions of Article 16. Failure of the Owner and the Construction manager to
agree on any such adjustment shall not entitle the Construction manager to
suspend or stop the performance of Work. Any change in the Guaranteed Maximum
Price, Constructions Manager's Fee
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or Construction Completion Date resulting from such claim shall be authorized by
Change Order.
9.3. MINOR CHANGES IN THE PROJECT.
9.3.1. Owner's representative, as designated under Article
3.2, will have authority to order minor Changes in the Project not involving an
adjustment in the Guaranteed Maximum Price or an extension of the Construction
Completion Date and not inconsistent with the intent of the Drawings and
Specifications. Such Changes may be effected by written order and shall be
binding on the Owner and the Construction Manager.
9.4. EMERGENCIES.
9.4.1. In any emergency affecting the safety of persons or
property, the Construction Manager shall act, at his discretion, to prevent
threatened damage, injury or loss. Any increase in the Guaranteed Maximum Price
or extension of time claimed by the Construction Manager on account of emergency
work shall be determined as provided in this Article.
ARTICLE 10
Bonuses
10.1. COST BONUS. If the final total Hard Construction Costs of the
Project is RM30,000,000 or less, than the difference between the total Hard
Construct Cost of the Project and RM30,000,000 shall be shared and divided
equally between Owner and Construction Manager. For example, if the total Hard
Construction Cost of the Project is RM26,000,000, then Owner shall pay to
Construction Manager a bonus of RM2,000,000. Any payment due under this Article
shall be paid after Owner has been granted a final occupancy permit and all
items contained on the punch list referred to in Article 11.2 have been
completed to Owner's satisfaction. As used herein, Hard Construction Costs are
the cost of labor, equipment, materials, and Trade Contracts, and the
Construction Manager's Fee but are not Construction Manager's fixed costs,
overhead, and the costs of insurance, Performance Bonds, permit approval costs
or similar items, all of which Construction Manager has estimated to be in the
amount of approximately RM1,890,000.
10.2. TIMELINESS BONUS. Owner will pay Construction Manager a bonus
equal to RM250,000 at the date of occupancy if there is no material breach of
this Agreement and all of the following conditions are fully and timely met:
a. The Project is completed so that Owner is able to commence
installation of the automatic plating lines no later than
April 1, 1996;
b. The Project is completed so that Owner is able to commerce
the installation of the waste treatment equipment no later
than April 1, 1996; and
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c. Owner receives a temporary occupancy permit or an
appropriate letter of approval for occupancy from
appropriate governmental authorities no later than
July 1, 1996.
ARTICLE 11
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Payments to the Construction Manager
11.1. Construction Manger shall submit to Owner in California by
telephone facsimile, personal delivery, or Federal Express (or DHL) delivery, on
a monthly basis, a statement showing in detail the amount of all bills for
labor, material, subcontracts and other Costs of the Project for work completed
during the previous calendar month with each item compared to the approved
budget for such item. Owner (or a personal or entity designated by Owner which
may be Owner's bank) shall within ten (10) days after receipt of such a progress
statement certify that the work was actually performed in compliance with the
approved plans and actually performed in compliance with the approved plans and
specifications, the amounts charged were reasonable and the work and amount
shown were within the budget for such items and consistent with the overall
Project budget. If any cost claimed
[PAGE 19 MISSING]
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The Owner may remit payment by wire transfer to an account designated by the
Construction Manager.
11.5. Payments due but unpaid shall bear interest at the rate the
Owner is paying on his construction loan.
11.6. Owner shall pay Construction Manager an amount equal to 10% of
the Guaranteed Maximum Price when this agreement has been signed by both parties
and the conditions in Section 13.3.3 have been met.
11.7. BONUS. A Bonus will be paid in accordance with Article 10.2.
ARTICLE 12
----------
Insurance, Indemnity and Waiver of Subrogation
12.1. INDEMNITY
12.1.1. The Construction Manager agrees to indemnify, hold
harmless and defend Owner, its shareholders, and their respective officers,
employees, directors, agents ("Indemnitees") from and against any and all
liabilities, damages, actions, costs, losses, claims and expenses (including
attorneys' fees) on account of personal injury, or death of any persons
whomsoever or damage to or loss of real or personal property or profits arising
out of or resulting, in whole or in part, from any act, omission, negligence,
violation of law or ordinance by or attributable to the Construction Manager,
any Trade Contractor or any of their employees or agents. Such indemnification
shall apply unless and to the extent such damage or injury results from the sole
negligence or willful misconduct of Owner, its employees or agents.
12.1.2. The Owner shall cause any other contractor who may
have a contract with Owner to perform construction or installation work in the
areas where Work will be performed under this agreement, to agree to indemnify
the Owner and the Construction Manager and hold them harmless from all claims
for bodily injury and property damage (other than property insured under Article
12.3.) that may arise from the contractor's operations. Such provisions shall be
in a form satisfactory to the Owner.
12.2. CONSTRUCTION MANAGER'S LIABILITY INSURANCE
12.2.1. Without prejudice to the Construction Manager's
liability to indemnify the Owner under subparagraph 12.1.1., the Construction
Manager shall purchase a Workmen Compensation Policy and such other liability
insurance as is satisfactory to Owner for the duration of the Project from a
reputable insurance company acceptable to Owner. Construction Manger shall
submit the insurance policies to Owner for Owner's approval.
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12.2.2. The foregoing policies shall contain a provision that
coverages afforded under the policies will not be cancelled or not renewed until
at least sixty (60) days' prior written notice has been given to the Owner.
Certificates of Insurance showing such coverages to be in force shall be filed
with the Owner prior to commencement of the Work. The Owner may require copies
of the insurance policies or inspect the originals thereof at any time during
construction. All insurers for policies under this Article 12.2 shall be
acceptable to the Owner with coverages acceptable to Owner.
12.3. OWNER'S LIABILITY INSURANCE.
12.3.1. The Owner may purchase and maintain his own liability
insurance and, at his option, may purchase and maintain such insurance as will
protect him against claims which may arise from operations under this Agreement.
Such insurance shall be secondary to insurance carried by Construction Manager.
12.4. INSURANCE TO PROTECT PROJECT.
12.4.1. The Owner shall purchase and maintain property
insurance upon the entire Project for the full cost of replacement as of the
time of any loss. This insurance shall include as named insured only the Owner,
and shall include "All risk" insurance for physical loss or damage with coverage
acceptable to Owner. The Owner will increase limits of coverage, if necessary,
to reflect estimated replacement cost. The Owner will be responsible for an
co-insurance penalties or deductibles.
12.4.1.1. If the Owner finds it necessary to occupy or use a
portion of the Project prior to Substantial Completion thereof, such occupancy
shall not commerce prior to a time mutually agreed to by the Owner and
Construction Manager and to which the insurance company or companies providing
the property insurance have consented by endorsement to the policy or policies.
This insurance shall not be cancelled or lapsed on account of such partial
occupancy. Consent of the Construction Manager and of the insurance company or
companies to such occupancy or use shall not be unreasonably withheld. It is
contemplated that prior to Substantial Completion, Owner will be given access to
the building to commerce or cause its contractors to commerce installation of
equipment to be supplied by Owner. All policies provided shall permit such
occupancy.
12.4.2. The Owner shall purchase and maintain such boiler and
machinery insurance as may be required or necessary. This insurance shall
include only the interests of the Owner.
12.4.3. Intentionally omitted.
12.4.4. Intentionally omitted.
12.5. PROPERTY INSURANCE LOSS ADJUSTMENT
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12.5.1. Any insured loss shall be adjusted with the Owner and
made payable to the Owner, subject to any applicable mortgages clause.
12.5.2. Intentionally omitted.
12.6. ADDITIONAL INSURANCE PROVISIONS
12.6.1. Intentionally omitted.
12.6.2. Intentionally omitted.
12.6.3. Intentionally omitted.
12.6.4. If the policies of insurance referred to in this
Article 12, require an endorsement to provide for continued coverage where there
is a waiver of subrogation, the owners of such policies will cause them to be
co-endorsed.
12.7. Notwithstanding the provisions of Articles 12.2 or 12.4, Owner
shall have the right to either require Construction Manager to obtain the
liability insurance required under Section 12 or Owner may obtain such policies
itself. If the Construction Manager fails to pay insurance or fails to renew the
same, the Owner may pay such premiums or renew the insurance on behalf of the
Construction Manager. If Owner obtains or renews such policies, then the cost of
such insurance shall not be considered a Cost of the Project and the Guaranteed
Maximum Price established under Article 6 shall be reduced by the sum of the
cost of said insurance and by Construction Manager's Fee Percentage attributable
thereto.
12.8. Construction Manager will not do any act or permit or suffer
any circumstances whereby the insurance referred to in Articles 12.2 and 12.4
may at any time become void or voidable and the Construction Manager shall at
all times at its own expense comply with conditions of the policies and the
requirements of the insurer so as to prevent the invalidation of those insurance
or otherwise prejudice the rights of any insured. The Construction Manager
hereby indemnifies the Owner against all or any losses, caused, and expenses
arising out of the Construction Manager's default under this clause.
12.9. Upon the happening of any loss, damage, injury, death or
accident likely to give rise to a claim under insurance referred to in Articles
12.2 and 12.4, the Construction Manager shall immediately give notice thereof to
the Owner stating the circumstances of the damages, injury, death or accident.
Such notice shall be confirmed in writing by the Construction Manager as soon as
possible. If any theft, vandalism, or malicious damages is suspected, the
Construction Manager shall forthwith inform the appropriate law enforcement
agencies. The Construction Manager shall comply in all respects with
requirements for notice, reporting, detail, insurance claims, and any other item
in accordance with the policies. In addition, the Construction Manager shall at
all times fully cooperate with the Owner in pursuing recovery of any claims
under the
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insurances referred to in Articles 12.2 and 12.4, including the
provisions of report, information and other matters as may be required by the
Owner from time to time.
12.10. The Owner shall have the power to negotiate settlement and to
effect compromise in respect of any claims against insurers under the insurances
referred to in Article 12.4 and the Owner shall not be liable for any loss to
the Construction Manager or any other insured occasioned thereby.
Notwithstanding the above, the Owner may direct the Construction Manager to
claim, negotiate and settle whether in part or in whole, any claim against
insurers under insurances referred to in Articles 12.2 and 12.4.
ARTICLE 13
----------
Termination of the Agreement and Owner's Right
to Perform Construction Manager's Obligations
13.1. Termination by the Construction Manager.
13.1.1. If the Project, in whole or substantial part, is
stopped for a period of thirty days under an order of any court or other public
authority having jurisdiction, or as a result of an act of government, such as a
declaration of a national emergency making materials unavailable, through no act
or guilt of the Construction Manager, or if the Project should be stopped for a
period of thirty days by the Construction Manager for the Owner's failure to
make an undisputed payment thereon, then the construction Manager may, upon
seven days' written notice to the Owner terminate this Agreement and recover
from the Owner payment for all completed Work executed, the Construction
Manager's Fee earned to date, any proven loss sustained upon any materials,
equipment, tools, construction equipment and machinery, cancellation charges on
existing obligations of the Construction Manager, and a reasonable profit.
13.2. OWNER'S RIGHT TO PERFORM CONSTRUCTION MANAGER'S OBLIGATION AND
TERMINATION BY THE OWNER FOR CAUSE.
13.2.1. If the Construction Manager fails to perform any of
his obligations under this Agreement including any obligation he assumes to
perform Work with his own forces, the Owner may, after seven days' written
notice during which period the Construction Manager fails to perform such
obligation, make good such deficiencies. The Guaranteed Maximum Price, if any,
shall be reduced by the cost of the Owner of making good such deficiencies plus
the Construction Manager's fee attributable thereto.
13.2.2. If the Construction Manager is adjusted bankrupt, or
if he makes a general assignment for the benefit of his creditors, or if a
receiver is appointed on account of his insolvency, or if he refuses to or
fails, to a material extent, except in cases for which extension of time is
provided, to supply enough properly skilled workmen or proper materials or fails
to timely complete construction in accordance with the Time Schedule agreed upon
by the parties or if he fails to make proper payment to Trade Contractors or for
materials or labor, or materially or intentionally disregards laws,
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ordinances, rules, regulations or orders of any public authority having
jurisdiction, or otherwise is guilty of a substantial violation of a provision
of the Agreement then the Owner may, without prejudice to any right or remedy
and after giving the Construction Manager and his surety, if any, seven days'
written notice, during which period the Construction Manager fails to cure the
violation, terminate the employment of the Construction Manager and take
possession of the site and of all materials, equipment, tools, construction
equipment, plans, records and machinery thereon owned by the Construction
Manager and may finish the Project by whatever reasonable method he may deem
expedient. In such case, the Construction Manager shall not be entitled to
receive any further payment until the Project is finished nor shall he be
relieved from his obligations assumed under this Agreement.
13.3.1. If the Owner terminates this Agreement other than
pursuant to Article 13.2.2. or Article 13.3.2. he shall reimburse the
Construction Manager for any unpaid Cost of the Project due to him under Article
8, plus (1) the unpaid balance of the Fee computed upon the Cost of the Project
to the date of termination at the rate of the percentage named in Article 7.2.1.
The Owner shall also pay to the Construction Manager fair compensation either by
purchase or rental at the election of the Owner, for any equipment retained. In
case of such termination of the Agreement, the Owner shall further assume and
become liable for obligations, commitments and unsettled claims that the
Construction Manager has previously undertaken or incurred in good faith in
connection with said Project which benefit the Project. The Construction Manager
shall, as a condition of receiving the payments referred to in this Article 13,
execute and deliver all such papers and take all such steps, including the legal
assignment of his contractual rights, as the Owner may require for the purpose
of fully vesting in him the rights and benefits of the Construction Manager
under such obligation or commitments.
13.3.2. After the completion of the Design Phase, if the final
cost estimates make the Project no longer feasible from the standpoint of the
Owner, the Owner may terminate this Agreement and pay the Construction Manager
his Fee in accordance with subparagraph 7.1.1. plus any Costs of the Project
incurred pursuant to Article 9 and the Construction Manager's Fee attributable
thereto.
13.3.3. Owner may cancel this agreement and shall have no
liability to Construction Manager if:
a. Owner does not obtain a permit to proceed with the
construction by the Department of Environment; or
b. Owner does not receive financing to construct the
Project satisfactory to Owner; or
c. Construction Manager fails to obtain the performance
bonds or any insurance required by this agreement; or
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d. Construction Manager and Owner fail to agree in
writing on the Time Schedule for construction, Construction Budget and final
Drawings and Specifications by July 31, 1995.
Notwithstanding the foregoing, if the Owner cancels this agreement
under Section 13.3.3.b., the Owner shall reimburse the Construction Manager for
all its expenses incurred to the date of such cancellation.
13.4. OTHER REMEDIES: Nothing in this Article shall be construed as
a limitation on any remedies available at law, including damages, to either
party, for breach of this agreement by the Construction Manager or Owner,
including any failure of the Construction Manager to comply with the Time
Schedule (including the Construction Completion Date), Construction Budget, and
final Drawings and Specifications.
13.5. DELAY DAMAGES: If Substantial Completion of the Project is
delayed beyond the Construction Completion Date, as agreed by the Owner and the
Construction Manager in the Time Schedule, the parties agree that the Owner
would suffer damages and Construction Manager shall therefore pay to the Owner
the sum of RINGGIT MALAYSIA EIGHT THOUSAND (RM8,000.000) per day for each
calendar day during which Substantial Completion Date as agreed by Owner and the
Contractor in the Time Schedule.
ARTICLE 14
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Assignment and Governing Law
14.1. Neither the Owner nor the Construction Manager shall assign
his interest in this Agreement without the written consent of the other except
as to the assignment of proceeds.
14.2. This Agreement shall be governed by the laws of the place
where the Project is located.
ARTICLE 15
----------
Miscellaneous Provisions
15.1. Intentionally omitted.
ARTICLE 16
----------
Arbitration
16.1. Any dispute, controversy or claim arising out of or relating
to this contract or the breach, termination or invalidity thereof, shall be
settled by arbitration in accordance with the UNCITRAL Arbitration Rules in
effect on the date of this contract. If the parties are unable to agree upon an
arbitrator or if for any reason an appointing
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authority is necessary, the appointing authority shall be the director of the
Regional Center for Arbitration in Kuala Lampur. At the request of either party,
the case shall be administered by the director of the Regional Center for
Arbitration in Kuala Lampur in accordance with its Procedure for cases under the
UNCITRAL Arbitration Rules.
The language to be used in the arbitral proceedings shall be English.
Unless the parties agree otherwise, the place of arbitration shall be
Kuala Lampur and there shall be only one arbitrator and he shall be a citizen of
Singapore.
16.2. Notice of the demand for arbitration shall be filed in writing
with the other party to this Agreement. The demand for arbitration shall be made
within a reasonable time after the claim, dispute or other matter in question
has arisen, and in no event shall it be made after the date when institution of
legal or equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statute of limitations.
16.3. The award rendered by the arbitrators shall be final and
judgment may be entered upon it in accordance with applicable law in any court
having jurisdiction thereof.
16.4. Unless otherwise agreed in writing, the Construction Manager
shall carry on the Work and maintain the Contract Completion Date during any
arbitration proceedings, and the Owner shall continue to make payments in
accordance with this Agreement.
16.5. All claims which are related to or dependent upon each other,
shall be heard by the same arbitrator or arbitrators even though the parties are
not the same unless a specific contract prohibits such consolidation.
This Agreement executed the day and year first written above.
OWNER:
ZYCON CORPORATION SDW. BHD
By: /s/ Xxxxxx X. Xxxxxx - President
--------------------------------
Name:
Title:
CONSTRUCTION MANAGER:
HITI ENGINEERING (M) SDW.BHD
By: /s/ Xxxxx Tee Xxx Xxx
--------------------------------
Name:
Title:
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