10.2 Not implement such direction but shall notify the LBTPO in writing of such interpretation within three (3) working days after receipt of such direction. Such notice shall include the reasons upon which the Supplier bases its belief that the technical direction falls within the purview of the "Changes" clause, and provide information on costs, schedule delays and any other contractual impact that would result from implementing the technical direction.

10.3 If, after reviewing the information presented pursuant to the Supplier's notification that the technical direction falls within the purview of the "Changes" clause, the LBTPO agrees that the direction is within the purview of the "Changes" clause and considers such change desirable, unilateral direction to proceed pursuant to the "Changes" clause shall be issued. If LBTPO is of the opinion that the technical direction does not constitute a "Change", it shall so notify the Supplier, and the Supplier shall proceed pursuant to the technical direction. In case the Supplier does not agree with such opinion, it shall notify LBTC in writing and the Parties shall discuss and mutually agree on an equitable solution so as to define costs and allocate them.

Article 11 - CHANGES

11.2 If any such direction causes an increase or decrease in the cost of, or the time required for, performance of any part of the Work, whether or not changed by any such direction, or otherwise affects any other provisions of this Contract, an equitable adjustment shall be made in the (i) the Contract cost, delivery or completion schedule, or both; and (ii) other affected terms, and the Contract shall be modified accordingly.

11.3 Any claim for adjustment under this Article must be asserted within thirty (30) days from the date of receipt by the Supplier of the notification of change.

11.4 The LBTPO may require change order accounting when deemed necessary. The Supplier, for each change or series of related changes, shall maintain separate accounts, by job order or other suitable accounting procedure, of all incurred segregable, direct costs (less allocable credits) of work, both changed and not changed, allocable to the change. The Supplier shall maintain such accounts until the parties agree to an equitable adjustment for the changes order by the LBTPO.

11.5 Except as provided by Article 11.6 below, nothing contained in this Article shall excuse the Supplier from proceeding with the prosecution of the Work as modified.

11.6 Notwithstanding the provisions of Articles 11.1 and 11.2 above, the fixed-price cost of this Contract shall not be increased or considered to be increased except by specific written modification of the Contract indicating the new Contract fixed-price cost. Until this modification is made, the Supplier shall not be obligated to continue performance or incur costs beyond the established fixed-price cost.

Article 12 - RESPONSIBILITY FOR SUPPLIES

Article 13 - GOVERNING LAW AND VENUE

Article 14 - INTELLECTUAL PROPERTY

Article 15 - COMPLIANCE WITH INTERNATIONAL, FEDERAL, STATE AND LOCAL LAWS

In the United States, the Supplier represents that it has complied and will continue to comply during the performance of this Contract with the provisions of the "Fair Labor Standards Act" 1938, as amended, and the "Occupational Safety and Health Act", with the "Americans with Disabilities Act of 1990" and with the regulations and standards issued pursuant thereto.

The Supplier, in all matters relating to this contract, shall be acting as an independent contractor. Neither the Supplier nor any of the persons furnishing materials or performing work or services which are required by this Contract shall be considered employees of the LBTC.

The Supplier, at its own expense, shall comply with such laws, and assume all obligations imposed by any one or more of such laws with respect to this Contract.

Article 16 - DISPUTE RESOLUTION

16.1 Mediation.

Neither party shall commence an arbitration proceeding unless such party shall first give a written notice (a "Dispute Notice") to the other party setting forth the nature of the dispute. The parties shall attempt in good faith to resolve the dispute by mediation under the Commercial Mediation Rules of the American Arbitration Association (AAA) in effect on the date of the Dispute Notice. If the parties cannot agree on the selection of a mediator within twenty (20) days after delivery of the Dispute Notice, the mediator will be selected by the AAA. If the dispute has not been resolved by mediation as provided above within sixty (60) days after delivery of the Dispute Notice, then the dispute shall be determined by arbitration.

16.2 Arbitration.

16.2.1 Any dispute that is not settled through mediation shall be resolved by arbitration in Tucson, Arizona, governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq, and administered by the American Arbitration Association under its Commercial Arbitration Rules in effect on the date of the Dispute Notice. In the event the parties cannot agree on a mutually acceptable single arbitrator from the one or more lists submitted by the AAA, the AAA shall designate three persons who, in its opinion, are qualified to act as arbitrators in this matter. Each party shall be entitled to strike one of such three designees on a peremptory basis, indicating its order of preference with respect to the remaining designees, and the selection of the arbitrator(s) shall be made from among such designee(s) which have not been so stricken by either party in accordance with their indicated order of mutual preference. The arbitrator(s) shall base their award on applicable law and judicial precedent and, unless both parties agree otherwise, shall include in such award the findings of fact and conclusions of law upon which the award is based. Judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

16.2.2 Notwithstanding the foregoing, in the event the dispute is determined other than by the unanimous decision of three arbitrators, upon the application by either party to a court for an order confirming, modifying or vacating the award, the court shall have the power to review whether, as a matter of law based on the findings of fact determined by the arbitrator(s), the award should be confirmed, modified or vacated in order to correct any errors of law made by the arbitrator(s). In order to effectuate such judicial review limited to issues of law, the parties agree (and shall stipulate to the court) that the findings of fact made by the arbitrator(s) shall be final and binding on the parties and shall serve as the facts to be submitted to and relied on by the court in determining the extent to which the award should be confirmed, modified or vacated.

16.2.3 Costs and Attorneys' Fees. If either party fails to proceed with mediation or arbitration as provided herein or unsuccessfully seeks to stay such mediation or arbitration, or fails to comply with any arbitration award, or is unsuccessful in vacating or modifying the award pursuant to a petition or application for judicial review, the other party shall be entitled to be awarded costs, including reasonable attorneys' fees, paid or incurred by such other party in successfully compelling such arbitration or defending against the attempt to stay, vacate or modify such arbitration award and/or successfully defending or enforcing the award.

All applicable statutes of limitations (which require that a lawsuit be brought within a specified time period, or it is barred) and defenses based upon the passage of time shall be tolled or suspended while the procedures specified in this Section are pending, so that a subsequent lawsuit will not be time-barred as a result of the parties' participation in such procedures. The parties will take such action, if any, required to effectuate such tolling.

Article 17 - STOP WORK ORDER

• Cancel the stop work order; or

• Terminate the work as provided in Article 18.

• The stop work order results in an increase in the time required for, or in the Supplier's cost properly allocable to, the performance of any part of this Contract; and

• The Supplier asserts a claim for the adjustment within 30 days after the end of the period of work stoppage; provided, that if the LBTC decides the facts justify the action, it may receive and act upon the claim asserted at any time before final payment under this Contract.

18.2 Notice of Termination. After receipt of a Notice of Termination (whether with or without cause) and except as directed by LBTC, the Supplier shall immediately proceed as follows:

• Stop work as specified in the notice.

• Place no further subcontracts or orders, except as necessary to complete the continued portion of the Contract.

• Terminate all applicable subcontracts and cancel or divert applicable commitments covering personal services that extend beyond the effective date of termination.

• If requested by LBTC, assign to LBTC all right, title, and interest of the Supplier under the subcontracts terminated

• Transfer title (if not already transferred) and deliver to LBTC any information and items that, if the Contract had been completed, would have been required to be furnished, including (1) materials or equipment produced, in process, or acquired for the work terminated and (2) completed or partially completed plans, drawings and information.

• Complete performance of the work not terminated.

• Take any action that may be necessary, or that LBTC may direct, for the protection and preservation of the property related to this Contract that is in the possession of the Supplier and in which the LBTC has or may acquire an interest. The LBTC will remain responsible for all costs resulting from their action.

• Use its best efforts to sell, as directed or authorized by LBTC, termination inventory other than that retained by LBTC under Article 18.2 above: Provided, However, that the Supplier (1) is not required to extend credit to any purchaser and (2) may acquire the property under the conditions prescribed by, and at prices approved by LBTC. The proceeds of any transfer or disposition will be applied to reduce any payments to be made by the LBTC under this Contract, credited to the price or cost of the work, or paid in any other manner directed by LBTC.

  18.3 Termination without Cause.

  18.3.1 After termination by LBTC without cause, the Contractor shall submit a final termination settlement proposal to LBTC in the form and with the certification prescribed by LBTC. The Supplier shall submit the proposal promptly but no later than six months from the effective date of termination unless extended in writing by LBTC upon written request of the Supplier within this six-month period. If the Supplier fails to submit the termination settlement proposal within the time allowed, LBTC may unilaterally determine, on the basis of information available, the amount if any, due the Supplier because of the termination and shall pay the amount determined, and shall not be liable for any other amounts.

  18.3.2 This amount may include reasonable cancellation charges incurred by the Supplier and any reasonable loss on outstanding commitments for materials and personal services that the Supplier is unable to cancel, provided that the Supplier exercised reasonable diligence in diverting such commitments to other operations.

  18.3.3 If the Supplier submits a termination settlement proposal and, upon review, the LBTC finds it to be acceptable, the LBTC shall pay the amount requested within thirty (30) days of submittal of the proposal. If the LBTC disagrees with the amount of the proposal, it shall negotiate in good faith with Supplier to reach a mutually agreeable settlement amount. In the event that such negotiation fails, the dispute shall be resolved according to Article 16.

  18.4 In the event that the LBTC terminates this Contract because of the Supplier's breach of any term hereof, LBTC shall be required to pay only for the portion of the Work performed prior to the termination, less any loss or expense suffered by LBTC as a result of the breach or incurred by LBTC in responding to the breach (including, but not limited to, any expenses incurred by LBTC in obtaining another contractor to complete the Work). In the event that loss and expense suffered or incurred by LBTC as a result of the breach exceeds the value of the completed Work, Supplier shall promptly pay such difference to LBTC upon demand.

  Article 19 - WARRANTY

  19.1 Definitions, as used in this article.

  19.1.1 "Correction," means the elimination of a Defect.

  19.1.2 "Supplies," means the end items furnished by the Contractor and related services required under this Contract. The word does not include "data."

  19.1.3 "Customer Furnished Property," means property furnished by the LBTC for incorporation into the work hereunder.

  19.2 Warranty.

  19.2.1 The Supplier warrants that all supplies furnished under this Contract (whether by Supplier or by any Subcontractor) will be free from defects in material and workmanship and will conform with all requirements of this Contract; provided, however, that with respect to Customer Furnished Property (CFP), the Contractor's warranty shall extend only to its proper installation, unless the Supplier performs some modification or other work on the property, in which case the Supplier's warranty shall extend to the modification or other work.

  19.2.2 Any supplies or parts thereof corrected or furnished in replacement shall be subject to the conditions of Article 19 to the same extent as supplies initially delivered. This warranty shall run from the date of delivery of the corrected or replaced supplies.

  19.2.3 The Supplier shall also prepare and furnish to LBTC data and reports applicable to any correction required (including revision and updating of all affected data called for under this Contract) at no increase in the Contract price.

  19.2.4 All implied warranties of merchantability and "fitness for a particular purpose" are excluded from any obligation contained in this Contract.

  19.3 Remedies Available to LBTC.

  19.3.1 In the event a deficit covered by this Warranty is discovered, LBTC may, at no increase in contract price; either:

  (a) Require the Supplier, at the place of delivery specified in the Contract (irrespective of the f.o.b. point or the point of acceptance) or at the Supplier's plant, to repair or replace at the Supplier's election, defective or nonconforming supplies; or

  (b) Make an equitable reduction in the Contract price.

  19.3.2 LBTC shall notify the Supplier in writing of any breach of the warranty within 60 days after discovery of the defect. The Supplier shall submit to LBTC a written recommendation within 30 days as to the corrective action required to remedy the breach. After receipt of the Supplier's recommendation for corrective action, LBTC may, in writing, direct correction or replacement as provided in Section 19.3.1, and the Supplier shall, notwithstanding any disagreement regarding the existence of a breach of warranty, comply with this direction. If it is later determined that the Supplier did not breach the warranty, the Contact price will be equitably adjusted.

  19.3.3 In no event shall the Supplier be liable to the LBTC for consequential damages resulting from general or particular requirements and needs of the LBTC, of which the Supplier, at the time of contracting, had no reason to be aware and which could not reasonably be prevented by cover or otherwise.

  19.4 The warranty provided hereunder shall be valid covering a period of one week from the date of delivery. The Supplier shall, in addition, provide LBTC with a copy of any standard warranty which is normally offered on a commercial product deliverable under this Contract. This warranty shall be deemed to be incorporated by reference, and LBTC shall be entitled to all rights under such warranty in addition to the provisions of the warranty herein; however, such commercial warrant shall not be construed as limiting LBTC's rights under this Article.

  Article 20 - INSURANCE AND INDEMNIFICATION

  20.0 Damage Insurance. The Supplier shall, at the expense of LBTC, provide and maintain, with a carrier licensed and admitted in the country of execution, during the entire performance period of this Contract, a policy of Physical Damage Insurance for all of the Parts to be transported. Each piece should be insured against damage or loss for its declared value, as per the conditions laid out in the Fagioli document on page 40.

  20.1 Liability Insurance. The Supplier shall, at its own expense, provide and maintain, with a carrier licensed and admitted in the country of execution, during the entire performance period of this Contract, at least the following kinds and minimum amounts of insurance:

  The conditions laid out in the Fagioli document on page 40 shall apply.

  20.1.1 A policy of Comprehensive Liability Insurance, including automobiles (owned, non-owned, or leased), completed operations and products, with a combined single limit of not less than $5000000, for deaths, injuries and property damage arising from one accident or occurrence.

  20.1.2 Workers' Compensation and Employer's Liability Insurance. It is the responsibility of the Supplier to follow the laws and regulations of the Supplier's host country regarding workers compensation and occupational disease statutes. However, the Supplier, in fulfillment of its obligation to provide Workers' Compensation Insurance, may maintain a self-insurance program if the Supplier is qualified pursuant to statutory authority to do so. At no time will LBTC be held liable for workers compensation and employer's liability.

  20.2 Insurance Certificates and Endorsements.

  Before commencing Work under this Contract, the Supplier shall furnish:

  • certificates of insurance for coverages specified in Articles 20.0 and 20.1 above, and
  • an additional insured endorsement naming the LBTC as an additional insured under the liability policy required by 20.1.1 above.

  Such certificates and the endorsement shall provide that any cancellation or material change in the insurance policies shall not be effective

  • for such period as the laws of the State in which this Contract is to be performed prescribe or
  • until 30 days after the insurer or the Supplier gives written notice to LBTC, whichever period is longer.

  Also, such certificates and the endorsement shall be primary and non-contributing to any insurance procured by the LBTC.

  The Supplier agrees to permit the LBTC to examine its original policies, should the LBTC so request. Should the Supplier at any time neglect or refuse to provide the insurance required herein, or should such insurance be canceled, the LBTC shall have the right to procure same and the costs thereof shall be deducted from monies then due or thereafter to become due to the Supplier.

  20.3 Indemnification. The Supplier agrees that it will indemnify, defend, and hold harmless the LBTC, its members, directors, trustees, officers and employees, from and against any loss, cost, damage, expense or liability (including attorney's fees), suffered or incurred by any of them, arising out of or in connection with the performance of Work hereunder by the Supplier or any of its subcontractors, howsoever the same may be caused, excepting only such loss, cost, damage, expense or liability attributable to the sole negligence or willful misconduct of the LBTC, its trustees, members, directors, officers or employees.

  Article 21 (For U.S. Companies only) - NON-DISCRIMINATION

  The parties agree to be bound by applicable state and federal rules governing Equal Employment Opportunity and Non-Discrimination.

  Article 22 - FORCE MAJEURE

  Performance of a party shall be excused hereunder, and such party shall not be considered to be in breach hereof, in the event that such party's performance is rendered impossible or impracticable due to causes beyond the control of such party (or those acting on such party's behalf, such as, in the case of Supplier, its subcontractors or, in the case of LBTC, other suppliers of Project components) and not caused by the negligence or intentional act of such party, including such things as fires, floods, strikes, or embargos.

  Article 23 - KEY PERSONNEL AND FACILITIES

  The personnel and/or facilities listed in Attachment B are considered essential to the Work. Before removing, replacing, or diverting any of the listed or specified personnel or facilities, the Subcontractor shall notify the LBTC reasonably in advance and submit justification (including proposed substitutions) in sufficient detail to permit evaluation of the impact on this subcontract.

  Article 24 - OFFICIAL NOTICES

  Unless otherwise provided in this Contract, any communication provided or permitted hereunder shall be in writing and addressed to the party for which it is intended. The Supplier shall forward official notices to the LBTC as follows:

  If to the Corporation:
  

  
  	LBT Project Office/USA
  	Steward Observatory
  	The University of Arizona
  	Tucson, AZ 85721-0065
          USA
  
  	Phone:   520 626-5231
  	Telefax: 520 626-9333

  E-Mail:

  jhill@as.arizona.edu (LBT Director, Tucson Project Office)
  salinari@arcetri.astro.it (LBT Deputy Director, Arcetri Observatory)
  jslagle@as.arizona.edu (LBT Assistant Director, Tucson Project Office)
  dferris@as.arizona.edu (Program Coordinator, Tucson Project Office)
  cevans@as.arizona.edu (Administrative Assistant, Tucson Project Office)

  Notices to Supplier shall be directed to the address set forth in Attachment B.

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  In Witness whereof the parties hereto have executed this Contract with the effective date as shown on page one (1) of this document.

  FOR FAGIOLI S.P.A.

  BY________________________________________

  TYPED  Mr. Riccardo Tippmann

  TITLE  Senior Vice President International Business, FAGIOLI S.P.A.

  DATE ________________________________________

  
  FOR THE LARGE BINOCULAR TELESCOPE CORPORATION
  BY________________________________________

  TYPED  Dr. Peter A. Strittmatter

  TITLE  President, Large Binocular Telescope Corporation

  DATE ________________________________________

  
  
  
  
  

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  Last modified: Mon Oct 15 11:50:24 2001