ADES » Topics » Article 3. Project Security and Favored Customer Status

These excerpts taken from the ADES 10-Q filed Nov 7, 2008.

Article 3. Project Security and Favored Customer Status

Project Security. Seller shall commence performance under this Contract without a payment and performance bond securing such performance. However, it is the intent of the Parties that promptly following the achievement of Unit Installation for Units #1 and #2, that Seller shall furnish a separate performance and payment bond (the “Bond”) in an amount equal to the total Contract Price and otherwise in form and substance substantially similar to the forms of bond set forth in Attachment 13 (“Form of Performance/Payment Bond”). The Bond shall secure performance by Seller (other than for the portion of the Work constituting design services and any warranty and Performance Guarantees) of all of its obligations under this Contract to cause Unit #4 to achieve Substantial Completion as provided in Article 10 herein and shall also secure payment by Seller of each Subcontractor performing work with respect to Unit #4. The Bond applicable to Unit #4 shall only secure performance with respect to Unit #4. The Contract Price includes * dollars ($*) in respect of this Bond.

If Seller fails to obtain within ten (10) Business Days following the achievement of Unit Installation for Units #1 and Unit #2, or once obtained, to maintain the Bond, then such failure shall not be a default hereunder, but upon sixty (60) days’ prior notice to Seller, Purchaser may terminate this Contract in whole or in part for such failure by Seller to obtain or maintain the Bond and such termination shall be Purchaser’s sole remedy in such event. Seller shall not owe damages or other termination charges in connection with any termination under this Article 3. If Purchaser terminates this Contract pursuant to this Article 3, then Purchaser shall also be entitled to terminate all of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder. If Purchaser terminates any of

 

Page 3 of 39


the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder, then Purchaser shall also be entitled to terminate this Contract pursuant to Article 3 hereunder. In connection with any termination of this Contract pursuant to this Article 3, Contractor shall be paid the Termination Payments described in Article 5 below (but no other amounts payable in connection with a termination for convenience) associated with such termination. Upon termination pursuant to this Article 3 (and, if terminated, pursuant to any or all of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder), Seller shall assign all subcontracts and/or purchase orders and deliver all Equipment and materials procured pursuant to any and all purchase orders entered into by Seller with Subcontractors.

At any time following the Unit Installation Completion Date, Purchaser may direct or approve, by written notice to Seller, a reduction in amount or termination of the Bond for Unit #4 so as to facilitate the issuance or enhancement of performance security provided by or on behalf of Seller under the other Multi-Hearth Furnace Contracts.

Any termination of this Contract by Purchaser under this Article 3 shall be effective upon receipt by Seller of written notice thereof. Upon receipt of such termination notice, Seller shall cease (and not merely suspend) performance of the Work. In the event of termination under this Article 3, Seller shall be entitled to the following payments:

 

  (i) the reimbursable costs, if any, incurred through the effective date of termination which have not yet been reimbursed by Purchaser, and

 

  (ii) all amounts outstanding under Article 4 and not yet paid for achievement of Milestones and/or progress payments and for Work performed, including work-in-progress at the time of termination, so long as such work-in-progress is made available to Purchaser.

In addition to the above payments in this Article 3, Seller shall be entitled to keep all funds previously paid by Purchaser under this Contract in accordance with Article 4 for Work performed prior to termination, and such amounts together with the above payments shall constitute payment in full of the Contract Price, and Seller shall receive no further payments under this Contract. Seller shall calculate amounts due pursuant to this Article 3 and submit such calculation to Purchaser within thirty (30) days of termination together with documentation substantiating all costs, which amounts will be subject to audit by Purchaser. In no event shall Seller be entitled to lost profits, opportunity costs or other amounts with respect to Work that has not been performed prior to termination under this Article 3. Payments resulting from this termination (or any portion thereof) will be made by Purchaser within thirty (30) days following a correct invoice therefor accompanied by reasonable documentation in support thereof. Purchaser shall own, and have salvage rights to, all materials and other Work to the extent that Purchaser has paid for the same, and Seller shall make such materials reasonably accessible to Purchaser or deliver to Purchaser, at Purchaser’s option, any materials or Work paid for by Purchaser but in the possession of Seller or its Subcontractors promptly after termination under this Article 3. In addition, Seller shall assign to Purchaser any or all of its contracts with Subcontractors relating to the Work (including, but not limited to, any warranties relating to equipment or materials previously supplied by such Subcontractor) as and to the extent requested in writing by Purchaser. Notwithstanding termination hereunder, the Parties shall remain liable to each other for liabilities that have accrued under other terms

 

Page 4 of 39


of this Contract prior to such termination, and the Parties shall remain obligated and liable for obligations under this Contract that by their express terms survive termination, but only to the extent applicable. The Parties recognize, agree and acknowledge that Purchaser’s termination right hereunder is a permitted action under this Contract and not a breach hereof or a default hereunder.

Within ten (10) Business Days following the execution of this Contract by both Parties, Purchaser shall furnish a guaranty by Owner, in form and substance substantially similar to the Form of Parent Guaranty set forth in Attachment 14, whereby Owner shall guarantee Purchaser’s financial obligations to Seller pursuant to the terms and conditions of this Contract (“Parent Guaranty”); provided, however, that such Parent Guaranty shall expire, and neither Purchaser nor Owner shall thereafter be required to provide security hereunder for the benefit of Seller upon the date of Financial Close for the Project.

Seller shall provide a level of service to Purchaser consistent with and reasonably no less than the level of services provided to Seller’s other customers for Seller’s services. Furthermore, upon Purchaser’s request and to the extent necessary considering the Project Schedule and the general progress of the Work, Seller shall make Bill Mansfield and Bill Lill available to the Project for up to three and one-half (3  1/2) days a week for the Work until Unit Installation for all four (4) of the Units has been achieved. Seller also agrees to give Purchaser a priority to use Seller’s capacity during the term of this Contract and each of the other Multi-Hearth Furnace Contracts by giving Purchaser the first right of refusal to negotiate (an) additional order(s) for up to and including four (4) multi-hearth furnaces in addition to the four (4) multi-hearth furnaces provided for in this Contract and the other Multi-Hearth Furnace Contracts of a size substantially similar to the Units. To exercise this right, Purchaser shall give Seller as much advance notice as is practical of a potential order that will trigger operation of this Purchaser right. Also, Seller shall advise Purchaser in writing before Seller enters into any agreement(s) that would prevent Seller from having the capacity to provide Purchaser with up to and including four (4) additional multi-hearth furnaces in addition to the four (4) multi-hearth furnaces provided for in the Multi-Hearth Furnace Contracts. Purchaser and Seller shall have up to seven (7) Business Days after receipt of such written notice from one Party to the other to determine if the Parties will negotiate in good faith to supply such additional multi-hearth furnace(s) to Purchaser. If the Parties so agree, they shall thereafter negotiate in good faith the agreement for the additional multi-hearth furnace(s). Purchaser’s first right of refusal granted under this Article 3 is one and the same with Purchaser’s first right of refusal granted under Article 3 of each of the other Multi-Hearth Furnace Contracts.

Article 3. Project Security and Favored Customer Status

Project Security. Seller shall commence performance under this Contract without a payment and performance bond securing such performance. However, it is the intent of the Parties that promptly following the achievement of Unit Installation for Units #1 and #2, that Seller shall furnish a separate performance and payment bond (the “Bond”) in an amount equal to the total Contract Price and otherwise in form and substance substantially similar to the forms of bond set forth in Attachment 13 (“Form of Performance/Payment Bond”). The Bond shall secure performance by Seller (other than for the portion of the Work constituting design services and any warranty and Performance Guarantees) of all of its obligations under this Contract to cause Unit #3 to achieve Substantial Completion as provided in Article 10 herein and shall also secure payment by Seller of each Subcontractor performing work with respect to Unit #3. The Bond applicable to Unit #3 shall only secure performance with respect to Unit #3. The Contract Price includes * dollars ($*) in respect of this Bond.

If Seller fails to obtain within ten (10) Business Days following the achievement of Unit Installation for Units #1 and Unit #2, or once obtained, to maintain the Bond, then such failure shall not be a default hereunder, but upon sixty (60) days’ prior notice to Seller, Purchaser may terminate this Contract in whole or in part for such failure by Seller to obtain or maintain the Bond and such termination shall be Purchaser’s sole remedy in such event. Seller shall not owe damages or other termination charges in connection with any termination under this Article 3. If Purchaser terminates this Contract pursuant to this Article 3, then Purchaser shall also be

 

Page 3 of 39


entitled to terminate all of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder. If Purchaser terminates any of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder, then Purchaser shall also be entitled to terminate this Contract pursuant to Article 3 hereunder. In connection with any termination of this Contract pursuant to this Article 3, Contractor shall be paid the Termination Payments described in Article 5 below (but no other amounts payable in connection with a termination for convenience) associated with such termination. Upon termination pursuant to this Article 3 (and, if terminated, pursuant to any or all of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder), Seller shall assign all subcontracts and/or purchase orders and deliver all Equipment and materials procured pursuant to any and all purchase orders entered into by Seller with Subcontractors.

At any time following the Unit Installation Completion Date, Purchaser may direct or approve, by written notice to Seller, a reduction in amount or termination of the Bond for Unit #3 so as to facilitate the issuance or enhancement of performance security provided by or on behalf of Seller under the other Multi-Hearth Furnace Contracts.

Any termination of this Contract by Purchaser under this Article 3 shall be effective upon receipt by Seller of written notice thereof. Upon receipt of such termination notice, Seller shall cease (and not merely suspend) performance of the Work. In the event of termination under this Article 3, Seller shall be entitled to the following payments:

 

  (i) the reimbursable costs, if any, incurred through the effective date of termination which have not yet been reimbursed by Purchaser, and

 

  (ii) all amounts outstanding under Article 4 and not yet paid for achievement of Milestones and/or progress payments and for Work performed, including work-in-progress at the time of termination, so long as such work-in-progress is made available to Purchaser.

In addition to the above payments in this Article 3, Seller shall be entitled to keep all funds previously paid by Purchaser under this Contract in accordance with Article 4 for Work performed prior to termination, and such amounts together with the above payments shall constitute payment in full of the Contract Price, and Seller shall receive no further payments under this Contract. Seller shall calculate amounts due pursuant to this Article 3 and submit such calculation to Purchaser within thirty (30) days of termination together with documentation substantiating all costs, which amounts will be subject to audit by Purchaser. In no event shall Seller be entitled to lost profits, opportunity costs or other amounts with respect to Work that has not been performed prior to termination under this Article 3. Payments resulting from this termination (or any portion thereof) will be made by Purchaser within thirty (30) days following a correct invoice therefor accompanied by reasonable documentation in support thereof. Purchaser shall own, and have salvage rights to, all materials and other Work to the extent that Purchaser has paid for the same, and Seller shall make such materials reasonably accessible to Purchaser or deliver to Purchaser, at Purchaser’s option, any materials or Work paid for by Purchaser but in the possession of Seller or its Subcontractors promptly after termination under this Article 3. In addition, Seller shall assign to Purchaser any or all of its contracts with Subcontractors relating to the Work (including, but not limited to, any warranties relating to equipment or materials previously supplied by such Subcontractor) as and to the extent requested in writing by Purchaser. Notwithstanding termination hereunder, the Parties shall remain liable to each other for liabilities that have accrued under other terms

 

Page 4 of 39


of this Contract prior to such termination, and the Parties shall remain obligated and liable for obligations under this Contract that by their express terms survive termination, but only to the extent applicable. The Parties recognize, agree and acknowledge that Purchaser’s termination right hereunder is a permitted action under this Contract and not a breach hereof or a default hereunder.

Within ten (10) Business Days following the execution of this Contract by both Parties, Purchaser shall furnish a guaranty by Owner, in form and substance substantially similar to the Form of Parent Guaranty set forth in Attachment 14, whereby Owner shall guarantee Purchaser’s financial obligations to Seller pursuant to the terms and conditions of this Contract (“Parent Guaranty”); provided, however, that such Parent Guaranty shall expire, and neither Purchaser nor Owner shall thereafter be required to provide security hereunder for the benefit of Seller upon the date of Financial Close for the Project.

Seller shall provide a level of service to Purchaser consistent with and reasonably no less than the level of services provided to Seller’s other customers for Seller’s services. Furthermore, upon Purchaser’s request and to the extent necessary considering the Project Schedule and the general progress of the Work, Seller shall make Bill Mansfield and Bill Lill available to the Project for up to three and one-half (3  1/2) days a week for the Work until Unit Installation for all four (4) of the Units has been achieved. Seller also agrees to give Purchaser a priority to use Seller’s capacity during the term of this Contract and each of the other Multi-Hearth Furnace Contracts by giving Purchaser the first right of refusal to negotiate (an) additional order(s) for up to and including four (4) multi-hearth furnaces in addition to the four (4) multi-hearth furnaces provided for in this Contract and the other Multi-Hearth Furnace Contracts of a size substantially similar to the Units. To exercise this right, Purchaser shall give Seller as much advance notice as is practical of a potential order that will trigger operation of this Purchaser right. Also, Seller shall advise Purchaser in writing before Seller enters into any agreement(s) that would prevent Seller from having the capacity to provide Purchaser with up to and including four (4) additional multi-hearth furnaces in addition to the four (4) multi-hearth furnaces provided for in the Multi-Hearth Furnace Contracts. Purchaser and Seller shall have up to seven (7) Business Days after receipt of such written notice from one Party to the other to determine if the Parties will negotiate in good faith to supply such additional multi-hearth furnace(s) to Purchaser. If the Parties so agree, they shall thereafter negotiate in good faith the agreement for the additional multi-hearth furnace(s). Purchaser’s first right of refusal granted under this Article 3 is one and the same with Purchaser’s first right of refusal granted under Article 3 of each of the other Multi-Hearth Furnace Contracts.

Article 3. Project Security and Favored Customer Status

Project Security. On or before the date of Financial Close for the Project, Seller shall furnish a separate performance and payment bond (the “Bond”) in an amount equal to the total Contract Price and otherwise in form and substance substantially similar to the forms of bond set forth in Attachment 13 (“Form of Performance/Payment Bond”). The Bond shall secure performance by Seller (other than for the portion of the Work constituting design services and any warranty and Performance Guarantees) of all of its obligations under this Contract to cause Unit #1 to achieve Substantial Completion as provided in Article 10 herein and shall also secure payment by Seller of each Subcontractor performing work with respect to Unit #1. The Bond applicable to Unit #1 shall only secure performance with respect to Unit #1. The Contract Price includes * in respect of this Bond. If Seller is unable to obtain or maintain the Bond, then Purchaser may terminate this Contract in whole or in part for such inability by Seller pursuant to this Article 3 and such termination shall be Purchaser’s sole remedy in such event. If Purchaser terminates this Contract pursuant to this Article 3, then Purchaser shall also be entitled to terminate all of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder. If Purchaser terminates any of the other Multi-Hearth Furnace Contracts pursuant to Article 3 thereunder, then Purchaser shall also be entitled to terminate this Contract pursuant to Article 3 hereunder.

At any time following the Unit Installation Completion Date, Purchaser may direct or approve, by written notice to Seller, a reduction in amount or termination of the Bond for Unit #1 so as to facilitate the issuance or enhancement of performance security provided by or on behalf of Seller under the other Multi-Hearth Furnace Contracts.

 

Page 3 of 40


Any termination of this Contract by Purchaser under this Article 3 shall be effective upon receipt by Seller of written notice thereof. Upon receipt of such termination notice, Seller shall cease (and not merely suspend) performance of the Work. In the event of termination under this Article 3, Seller shall be entitled to the following payments:

 

  (i) the reimbursable costs, if any, incurred through the effective date of termination which have not yet been reimbursed by Purchaser, and

 

  (ii) all amounts outstanding under Article 4 and not yet paid for achievement of Milestones and/or progress payments and for Work performed, including work-in-progress at the time of termination, so long as such work-in-progress is made available to Purchaser.

In addition to the above payments in this Article 3, Seller shall be entitled to keep all funds previously paid by Purchaser under this Contract in accordance with Article 4 for Work performed prior to termination, and such amounts together with the above payments shall constitute payment in full of the Contract Price, and Seller shall receive no further payments under this Contract. Seller shall calculate amounts due pursuant to this Article 3 and submit such calculation to Purchaser within thirty (30) days of termination together with documentation substantiating all costs, which amounts will be subject to audit by Purchaser. In no event shall Seller be entitled to lost profits, opportunity costs or other amounts with respect to Work that has not been performed prior to termination under this Article 3. Payments resulting from this termination (or any portion thereof) will be made by Purchaser within thirty (30) days following a correct invoice therefor accompanied by reasonable documentation in support thereof. Purchaser shall own, and have salvage rights to, all materials and other Work to the extent that Purchaser has paid for the same, and Seller shall make such materials reasonably accessible to Purchaser or deliver to Purchaser, at Purchaser’s option, any materials or Work paid for by Purchaser but in the possession of Seller or its Subcontractors promptly after termination under this Article 3. In addition, Seller shall assign to Purchaser any or all of its contracts with Subcontractors relating to the Work (including, but not limited to, any warranties relating to equipment or materials previously supplied by such Subcontractor) as and to the extent requested in writing by Purchaser. Notwithstanding termination hereunder, the Parties shall remain liable to each other for liabilities that have accrued under other terms of this Contract prior to such termination, and the Parties shall remain obligated and liable for obligations under this Contract that by their express terms survive termination, but only to the extent applicable. The Parties recognize, agree and acknowledge that Purchaser’s termination right hereunder is a permitted action under this Contract and not a breach hereof or a default hereunder.

Within ten (10) Business Days following the execution of this Contract by both Parties, Purchaser shall furnish a guaranty by Owner, in form and substance substantially similar to the Form of Parent Guaranty set forth in Attachment 14, whereby Owner shall guarantee Purchaser’s financial obligations to Seller pursuant to the terms and conditions of this Contract (“Parent Guaranty”); provided, however, that such Parent Guaranty shall expire, and neither Purchaser nor Owner shall thereafter be required to provide security hereunder for the benefit of Seller upon the date of Financial Close for the Project.

 

Page 4 of 40


Seller shall provide a level of service to Purchaser consistent with and reasonably no less than the level of services provided to Seller’s other customers for Seller’s services. Furthermore, upon Purchaser’s request and to the extent necessary considering the Project Schedule and the general progress of the Work, Seller shall make Bill Mansfield and Bill Lill available to the Project for up to three and one-half (3  1/2) days a week for the Work until Unit Installation for all four (4) of the Units has been achieved. Seller also agrees to give Purchaser a priority to use Seller’s capacity during the term of this Contract and each of the other Multi-Hearth Furnace Contracts *. Purchaser and Seller shall have up to seven (7) Business Days after receipt of such written notice from one Party to the other to determine if the Parties will negotiate in good faith to supply such additional multi-hearth furnace(s) to Purchaser. If the Parties so agree, they shall thereafter negotiate in good faith the agreement for the additional multi-hearth furnace(s). *

EXCERPTS ON THIS PAGE:

10-Q (3 sections)
Nov 7, 2008
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki