Turnkey Design and Construction Contract

TURNKEY DESIGN/BUILD



CONSTRUCTION AND RELATED SERVICES





WEBVAN GROUP, INC.





BECHTEL CORPORATION













TURNKEY DESIGN/BUILD

CONSTRUCTION AND RELATED SERVICES





THIS CONTRACT ("CONTRACT") is dated the 8th day of July, 1999, for reference purposes only, by and between Webvan Group, Inc. (formerly known as Intelligent Systems for Retail, Inc.), a California corporation ("WEBVAN"), and Bechtel Corporation, a Nevada corporation ("BECHTEL").





1.0 THE PROJECT



1.1 The project ("PROJECT") consists of the location, selection, evaluation, design, development, construction, start-up and testing of up to twenty-six (26) distribution center warehouse facilities ("DC'S") to be located in various cities to be determined by Webvan throughout the United States and the design, engineering, procurement, assembly, installation, start-up, testing and calibration of materials handling and distribution equipment and systems and all other materials, equipment and systems (including, without limitation, food production, refrigeration and specialized heating, ventilation and air conditioning equipment and systems) necessary for the operation of each DC in the manner specified in the applicable Contract Documents (defined in Section 2.5) (collectively, the "OPERATING EQUIPMENT"). The provision of all such services with respect to any DC is referred to herein as the "DEVELOPMENT" of a DC. The Development of any particular DC is referred to herein as a "DC PROJECT".



1.2 Each DC Project will be described more particularly in the drawings, plans and specifications to be prepared by Bechtel. Webvan, however, shall be solely responsible for the design and installation of each DC's local area network, conveyor software and associated server systems (excluding programmable logic controllers and conveyor scanning hardware embedded in conveyor and related Operating Equipment), radio frequency scanners and "Fill-To-Order" computing systems and software (collectively, the "WEBVAN Systems"). Prior to Substantial Completion (defined in Section 2.5), but after Bechtel has assembled and installed all Operating Equipment for a DC Project, Bechtel shall notify Webvan that the materials handling and distribution system at such DC is ready for start-up testing. No later than ten (10) days after Webvan's receipt of such notice, Webvan shall install the Webvan Systems and Webvan's "Order Fulfillment System" server and software at such DC and shall conduct such testing as reasonably required to confirm that each item (both individually and in concert with other items) of the materials handling and distribution equipment and systems installed at the DC meets the applicable functionality specifications provided in the Contract Documents for such DC Project and to confirm that such materials handling and distribution system properly operates at the volume and through-puts specified in the Notice to Proceed for such DC Project (collectively, the "PERFORMANCE STANDARDS").



1.3 The term of this Contract shall commence as of the Effective Date (defined in Section 8.12) and shall expire on the third (3rd) anniversary of the Effective Date, unless extended by the written agreement of Webvan and Bechtel. Notwithstanding the expiration of the term of this Contract, Bechtel shall continue thereafter to perform all Services (defined in Section 2.0) to achieve Final Completion (defined in Section 3.2) of all DC Projects for which a Notice to Proceed (defined in Section 2.0) has been executed in accordance with the applicable Contract Documents (defined in Section 2.5).







2.0 BECHTEL'S SERVICES



When requested by Webvan, Bechtel shall perform or cause to be performed for the Project the services and items generally described below (collectively, the "SERVICES"). Notwithstanding anything to the contrary in this Contract, Bechtel shall not perform any of the Services unless and until a fully executed notice to proceed ("NOTICE TO PROCEED") for specified Services in the form attached hereto as Appendix 2.0 has been entered by Webvan and Bechtel, and Webvan shall have no obligation to pay for any Services performed by Bechtel which are not specifically authorized in a Notice to Proceed executed by Webvan. All Services performed by Bechtel for the Project shall be classified as within one or more of Sections 2.1 through 2.7 of this Section 2.0.



2.1 Program Management.



Based on Webvan's program and criteria for the Project, Bechtel shall prepare and submit for Webvan's approval a "DEVELOPMENT PLAN" (which shall initially be based upon Webvan's existing DCs located in Oakland, California and Atlanta, Georgia) of preliminary proposals and recommendations regarding Project concept, development strategy, architectural and design concepts, space requirements and adjacency relationships, number and functional responsibilities of personnel, special equipment and systems, human and material flow patterns, governmental approval strategies, construction schedule requirements, construction budget requirements, and other matters regarding the Development of the DC Projects, including, but not limited to:



2.1.1 Preparation of a preliminary assessment of the Project budget taking into account the activities contemplated for the Project.



2.1.2 Consultation with Webvan's independent consultants and Webvan concerning the Project and development of Project plans, drawings and specifications.



2.1.3 Assistance with utility optimization and sourcing, as requested, to develop alternative methods to reduce utility costs and ongoing operation of DC's.



2.1.4 Development of cost control systems for the Project, including regular monitoring of actual costs for activities in progress and estimates for uncompleted tasks.



2.1.5 Development of milestone completion dates for the Project.



2.2 Site Evaluation and Selection. As and when requested by Webvan:



2.2.1 Provide building and site evaluation to review physical plants and properties and to assess and compare alternative DC sites.



2.2.2 Ascertain as to a proposed DC Project whether there are any significant zoning, building code, entitlement or other governmental compliance issues (including transportation issues), prepare a plan for addressing any such issues, and assist Webvan in addressing such issues, including, without limitation, Bechtel's development of an entitlement strategy for obtaining such approvals as are required from governmental authorities to develop each DC Project within the time frame and costs contemplated by the Project Schedule and Project Budget (as each is defined below) for a DC Project, coordination of all development requirements of applicable governmental authorities, and making such appearances and attending such meetings as are necessary or appropriate in connection with obtaining required permits and approvals.







2.2.3 Assist Webvan in conducting inspections, evaluations, surveys and tests as may be necessary or appropriate in connection with any DC Project, including, without limitation, such engineering and geotechnical studies, seismic tests, and inspections and reviews of all buildings and related operating systems to determine the feasibility of a DC Project. Bechtel shall not be required, however, to perform any testing or analysis to determine the presence or extent of any hazardous materials at the DC Projects.



2.2.4 Bechtel's liability for any deficient Services provided under this Section 2.2 shall be limited to the reperformance of such Services during the term of this Contract at no additional charge to Webvan.



2.3 Design.



2.3.1 Schematic Design Services.



2.3.1.1 Based on the approved Development Plan for each of the DC Projects and any adjustments authorized by Webvan in such Development Plan, Bechtel shall prepare for Webvan's review and approval schematic drawings, descriptive specifications and other documents appropriate to the size of each of the DC Projects illustrating and describing the concept, quality, layout, scale and relationship of the DC Project components (including, without limitation, the Operating Equipment), which documents are collectively referred to as the "SCHEMATIC DESIGN DOCUMENTS". Webvan acknowledges that the conceptual design of the DC Projects shall initially be based upon Webvan's existing DCs located in Oakland, California and Atlanta, Georgia. Bechtel shall, however, review with Webvan alternative designs and construction methods relating to each DC Project.



2.3.1.2 Upon completion of the Schematic Design Documents for a DC Project, Bechtel shall prepare and submit to Webvan a comprehensive, detailed preliminary budget for such DC Project and for all costs to be incurred as part of the DC Project, which budget shall at all times be subject to Webvan's approval both as to form and content. The parties acknowledge that such DC Project budgets will be critical in allowing the parties to conceptualize and monitor the Development of the Project, and Bechtel shall use its best efforts to prepare and update each such DC Project budget so as to be as detailed and realistic as possible. Each such DC Project budget, as revised from time to time and approved by Webvan, is referred to herein as a "PROJECT BUDGET". Bechtel shall design each DC Project in accordance with its Project Budget.



2.3.2 Design Development Services.



2.3.2.1 Based on the approved Schematic Design Documents for each DC Project and any adjustments authorized by Webvan in the Development Plan or the Project Budget for such DC Project, Bechtel shall prepare for Webvan's review and approval drawings of sufficient detail to describe the size, shape, configuration, and quantity of typical and non-typical elements of each such DC Project (including, without limitation, the Operating Equipment), outline specifications and other documents which fix and describe the size and character of the DC Project as to architecture, engineering, structure, layout, electrical systems, mechanical systems, plumbing systems, materials and equipment (including the Operating Equipment), all of which documents are collectively referred to herein as the "DESIGN DEVELOPMENT DOCUMENTS".



2.3.2.2 Bechtel shall refine the Project Budget for each DC Project based on the Design Development Documents for such DC Project. Bechtel shall revise the Design Development









Documents as required by Webvan to make them acceptable to Webvan and shall adjust the Project Budget for such DC Project accordingly.



2.3.3 Construction Documents Services.



2.3.3.1 Based on the Design Development Documents approved by Webvan for each DC Project and the approved Project Budget for each such DC Project, Bechtel shall prepare the final drawings, plans and specifications setting forth in detail the requirements for Development of each such DC Project, collectively referred to herein as the "CONSTRUCTION DOCUMENTS". The Construction Documents shall include the detailed Performance Standards for the operation of the materials handling and distribution system and equipment included within such DC Project.



2.3.3.2 Bechtel shall revise the Construction Documents as required by Webvan to make them acceptable to Webvan and shall adjust the Project Budget for each such DC Project accordingly.



2.3.3.3 Bechtel shall complete the Construction Documents for each DC Project, including Bechtel's coordination of all documents and corrections based on such coordination, prior to preparing and issuing bid documents for each such DC Project.



2.3.3.4 Bechtel shall submit all necessary Construction Documents approved by Webvan and applications for all necessary permits and approvals for the Development of each DC Project to the appropriate governmental authorities and shall process such Construction Documents, subject to the terms of this Contract, as required by such governmental authorities to secure the issuance of such permits and approvals for the use and occupancy of each DC Project.



2.3.4 General.



2.3.4.1 The Design Services and Construction Documents provided and/or prepared by Bechtel for each DC Project shall comply with (i) all applicable federal, state and local laws, ordinances, building and other codes, rules and regulations (collectively, "LAWS"), (ii) all covenants, conditions, restrictions, easements and leases affecting the applicable DC Project sites, copies of which have been provided to Bechtel by Webvan (collectively "PRIVATE RESTRICTIONS"), (iii) all applicable manufacturers' and vendors' instructions and specifications, and (iv) sound design and construction practices. Bechtel shall make recommendations regarding alternative solutions whenever design details appear to affect adversely the Development of any DC Project, the Project Budget, or the Project Schedule. If Webvan or Bechtel determines that modifications are necessary to any such Construction Documents to comply with Laws which were in effect at the time each Construction Document is issued to Webvan or if Webvan or Bechtel determines that modifications are necessary to any Construction Documents to comply with any Private Restriction at the time such Construction Documents were issued to Webvan, Bechtel, at its sole cost and expense, shall immediately modify the Construction Documents as necessary to bring the Construction Documents into compliance with such Laws and Private Restrictions which were in effect at the time of issuing the Construction Documents and shall notify Webvan in writing of such modifications.



2.3.4.2 Bechtel shall provide all design services for the Development of the DC Projects requested by Webvan and shall employ the services of reputable, licensed and well-qualified professional architects, engineers and other design consultants in connection with the Project (collectively "SUBCONSULTANTS") only with Webvan's prior written consent. After Webvan has approved









any particular Subconsultant, Bechtel shall contract, solely in its own name and behalf and not in the name or behalf of Webvan, with such Subconsultant. Bechtel's form of agreement with Subconsultants shall be subject to the prior approval of Webvan and shall provide that the Subconsultants shall perform their respective portions of the DC Project work in accordance with all applicable provisions of this Contract and the other Contract Documents. Webvan's approvals shall not, however, make Webvan a party to any such agreement. Bechtel shall direct and coordinate the work of its Subconsultants and shall be responsible for the work performed by its Subconsultants and the compensation payable to its Subconsultants. Notwithstanding anything to the contrary in this Contract, Webvan's consent to any Subconsultant shall not in any way relieve Bechtel of any duty, liability or responsibility to Webvan for the Design Services (defined in Section 3.1) provided by Bechtel or any of its Subconsultants.



2.3.4.3 Bechtel and the applicable Subconsultants shall sign all Construction Documents and other design documents prepared by or caused to be prepared by Bechtel under this Contract.



2.3.4.4 Bechtel shall cooperate with Webvan during Development of the DC Projects to effect cost savings as deemed appropriate by Webvan without unnecessarily altering established Project scope or quality. Bechtel shall perform value-engineering concurrent with the design process to ensure that building systems, materials, construction methods, Operating Equipment and costing are properly considered. Bechtel shall seek to achieve construction efficiency during the design process and capture savings for Webvan to the extent reasonably possible.



2.3.4.5 Bechtel shall prepare and submit a critical path or network construction schedule in form and substance satisfactory to Webvan for the timing of the various components of the Development of each DC Project, which shall show in detail the various major activities to be undertaken in connection with each such DC Project (including demolition, design, bidding, construction, assembly, installation, start-up and testing phases of the DC Project, including the obtaining of all governmental approvals and permits for use and occupancy) and the approximate timing of the commencement and completion of such activities. Each such DC Project schedule shall also include at least a general indication of the various activities that Bechtel expects to undertake in connection with the DC Project and the approximate timing of the commencement and completion of such activities. The parties acknowledge that each such DC Project schedule will be critical in allowing the parties to conceptualize and monitor the Development of the Project, and Bechtel shall use its best efforts to prepare and regularly update each DC Project schedule so as to be as detailed and accurate as possible. Each such DC Project schedule, as revised from time to time and approved by Webvan, is referred to herein as a "PROJECT SCHEDULE".



2.3.4.6 All design approvals required by Webvan shall be in writing. The approval by Webvan of any design document required by this Contract (including, without limitation, the Schematic Design Documents, the Design Development Documents, and the Construction Documents) shall not constitute a waiver by Webvan or require Webvan to relinquish any of its rights under this Contract, nor shall it relieve Bechtel of any of its obligations or liabilities for the technical or professional adequacy of its services as described in this Contract.



2.3.4.7 If any defect in any DC Project work arises on or before the [*] anniversary of the date of Substantial Completion of the DC Project as a result of any error or omission in the performance of Design Services, then (provided that Webvan gives Bechtel notice of such defect on or before such [*] anniversary) Bechtel shall, within ten (10) business days after receipt of such written notice (or such longer time as may reasonably be necessary to correct such defect) and at no cost





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to Webvan, (i) perform all Design Services to remedy such errors and omissions, including, without limitation, the development and preparation of additional Construction Documents in accordance with this Contract to correct such errors and omissions, and (ii) provide all Construction Services (including, without limitation, all labor, equipment and materials at the applicable DC Property) necessary (a) to cause the DC Project to comply in all respects with such corrective Construction Documents and (b) to alter, repair, replace and/or restore DC Project work (including, without limitation, Operating Equipment) and the applicable DC Property damaged, destroyed or rendered unusable (in Webvan's reasonable judgment) as a result of any such errors or omissions in the performance of Design Services under this Contract. If Bechtel is required to remedy any such defects, errors and omissions under the foregoing sentence, then all Design Services and Construction Services provided by Bechtel to remedy such defects, errors and omissions shall themselves be subject to the foregoing remedial obligation. If, therefore, any defect in such corrective Design Services and/or Construction Services arises within the earlier to expire of (1) [*] after the date such corrective work has been completed or (2) the [*] anniversary of the date of Substantial Completion of the applicable DC Project then provided that Webvan gives Bechtel prompt notice of such defect and in no event later than such [*] anniversary) Bechtel shall, within ten (10) business days after receipt of a written notice of such further defect (or such longer time as may reasonably be necessary to correct such defect) perform such additional Design Services and provide such additional Construction Services as may be necessary to correct such further defect as provided in the foregoing provisions of this Section 2.3.4.7. If Bechtel fails promptly to correct any such defects within the foregoing time periods, then Webvan may (without affecting Bechtel's obligations or liability hereunder) correct, or cause to be corrected, such defects and charge all related costs to Bechtel, together with interest (accruing from the date fifteen (15) days following the date of Webvan's invoice to Bechtel for such costs) at a rate (the "DEFAULT RATE") equal to the lesser of (A) a simple per annum interest rate equal to four percent (4%) above the prime lending rate quoted from time to time to substantial and responsible commercial borrowers on 90-day loans by the Bank of America, N.T.&S.A., San Francisco, California, or (B) the maximum rate permitted by applicable Law, until Bechtel has paid such costs.



2.4 Reserved.



2.5 Construction Services. Bechtel shall provide all work and furnish all labor, services, materials and equipment necessary to construct and complete, in a good and workmanlike manner, each of the DC Projects (including, without limitation, the procurement, assembly, installation, testing and calibration of all Operating Equipment), as described and reasonably inferable from the approved Construction Documents for such DC Projects. Bechtel shall also assist Webvan with (i) planning and coordinating building systems and equipment and Operating Equipment pre-operational tests, start-up performance tests, on-site observation and troubleshooting, (ii) notifying vendors regarding necessary modifications, if any, to equipment, and (iii) coordinating the services to be provided by manufacturers in adjusting, calibrating and verifying the correct installation of their equipment. Upon Bechtel's receipt, after completion of the Construction Documents and Webvan's approval of the Project Schedule and Project Budget for a DC Project, of a written request by Webvan substantially in the form of Appendix 2.5A attached hereto and made a part hereof (a "REQUEST TO SOLICIT BIDS"), Bechtel shall solicit bids for such work from Subcontractors (as defined in Section 2.5.8) pursuant to the bidding and approval process more particularly described in Section 2.5.8. Based on Subcontractor bids approved pursuant to Section 2.5.8, Bechtel shall deliver to Webvan for Webvan's approval a completed Notice to Proceed for such DC Project. If Webvan and Bechtel are unable to agree upon the terms of a Notice to Proceed or if Bechtel fails to deliver to Webvan a completed Notice to Proceed within thirty (30) days after the date of Webvan's Request to Solicit Bids, then Webvan may, at Webvan's election and in Webvan's sole discretion, rescind its request for such work and obtain performance of such work by others. Bechtel





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shall undertake the construction of only those DC Projects authorized in writing by Webvan in a Notice to Proceed. Bechtel shall perform all Construction Services (as defined in Section 3.1) specified in a Notice to Proceed in accordance with this Contract (including the General Conditions for Construction attached hereto as Appendix 2.5 and made a part hereof (the "GENERAL CONDITIONS") and all other appendices attached hereto), the applicable approved Construction Documents and all applicable Change Orders (as defined below in Section 2.5.4) executed by Webvan and Bechtel. Bechtel shall achieve Substantial Completion of such work on or before the date specified in such Notice to Proceed, at a cost not exceeding the Budgeted Cost (defined in Section 2.5.1) stated in such Notice to Proceed, subject to adjustment by Change Orders executed by Webvan in accordance with Section 2.5.4.1. The "CONTRACT DOCUMENTS" for a DC Project shall consist of this Contract, the applicable approved Construction Documents, and Change Orders thereto executed by Webvan, and the Notice to Proceed. As used herein, the term "SUBSTANTIAL COMPLETION" of a DC Project shall mean that (i) the Development of the DC Project has been completed in accordance with the applicable Contract Documents (including, without limitation, the procurement, assembly, installation, calibration and testing of all Operating Equipment and the confirmation that the materials handling and distribution Operating Equipment meets the Performance Standards as provided in Section 1.2) to the extent sufficient for Webvan to occupy and utilize the DC Project in a manner consistent with the Contract Documents, (ii) Bechtel has issued and Webvan has approved (such approval not to be unreasonably withheld) a certificate of Substantial Completion for the DC Project, and (iii) Bechtel has delivered to Webvan all required permits and approvals with respect to the DC Project from the appropriate governmental authorities, including all certificates and approvals (including food, health and safety permits and approvals) necessary for Webvan to use and occupy the DC Project in a manner consistent with the Contract Documents.



2.5.1 Budgeted Cost. The "BUDGETED COST" for the Development of a DC Project shall equal the sum of (i) the Approved Cost of the Work for such DC Project, plus (ii) the Contingency Amount (defined in Section 2.5.1.2 below) based on such Approved Cost of the Work. Bechtel shall specify Bechtel's proposed Budgeted Cost, estimated Cost of the Work (defined in Section 2.5.5 below), Base Contingency (defined in Section 2.5.1.2) and any requested Excess Contingency (also defined in Section 2.5.1.2) for the Development of a particular DC Project in Bechtel's Notice to Proceed for such DC Project. The estimated Cost of the Work for a DC Project shall be determined by adding (a) the sum of all accepted Subcontractor bids for the Cost of the Work and (b) the General Work Requirements Amount (defined in Section 2.5.3 below). The estimated Cost of the Work for a DC Project specified in the Notice to Proceed approved and executed by Webvan for such DC Project is referred to herein as the "APPROVED COST OF THE WORK".



2.5.1.1 If the actual Cost of the Work is less than the Budgeted Cost, then (except as otherwise expressly provided in Section 5.6) all savings shall benefit Webvan. If the actual Cost of the Work is more than the Budgeted Cost, then Bechtel shall pay such excess from its own funds, Webvan shall not be required to pay any part of such excess, and Bechtel shall have no claim against Webvan on account thereof. Without limiting the generality of the foregoing, the Budgeted Cost for a particular DC Project shall apply only with respect to the DC Project in question. Any savings of the Cost of the Work for a given DC Project under the applicable Budgeted Cost shall not be offset or credited to reduce the Budgeted Cost of any other DC Project, and any excess of the Cost of the Work for a given DC Project over the applicable Budgeted Cost shall not be applied to increase the Budgeted Cost of any other DC Project. The Approved Cost of the Work and the Budgeted Cost for a DC Project may be modified only as expressly provided in Change Orders executed by Webvan for such DC Project in accordance with Section 2.5.4.1, 2.5.11 or 2.5.13.







2.5.1.2 The "CONTINGENCY AMOUNT" for a DC Project shall equal the sum of the Base Contingency for such DC Project plus any Excess Contingency specified in the Notice to Proceed for such DC Project executed by Webvan. The "BASE CONTINGENCY" for a DC Project shall equal (i) [*] percent ([*]%) of the Approved Cost of the Work for each of the first six (6) DC Projects for which Webvan has executed a Notice to Proceed and (ii) [*] percent ([*]%)of the Approved Cost of the Work for each additional DC Project. In addition to the Base Contingency, Bechtel may request that Webvan approve an additional contingency amount (the "EXCESS CONTINGENCY") for a particular DC Project. Notwithstanding anything to the contrary in any Contract Document ...