GENERAL CONDITIONS

Article No.1 - Definitions and Interpretations:

Firstly - The following words and expressions shall have the meaning
assigned to them herein, unless explicitly or implicitly mentioned in
the text, otherwise.

a. The Employer (First Party):

Refers to the Saline Water Conversion Corporation that invited for

submission of tenders for (works) implementation and that
employees the Contractor or any other entity assign for supervising
the work.

b. The Contractor (Second Party):

Refers to the natural or judicial persons whose bid has been

accepted by the Employer, including their representatives, successors
or assignees as approved by the Employer.

c. The Engineer:

Refers to the natural or judicial person assigned any time by the

Employer to supervise the implementation of the Contract.

d. Representative of the Engineer:

Refers to any Resident Engineer or any work supervisor assigned by

the Employer or the Engineer from time to time to carry out the
duties stipulated in Article Two of these conditions and within the
authorities notified in writing to the Contractor by the Employer or
the Engineer.

e. Works:

Refers to all the works that should be implemented as per the

Contract.

1
 f. Temporary Works:

Refers to all the works that are not permanent by nature, regardless
of their type, and that can be removed, replaced, or cancelled
during or after the implementation of the works.

g. Construction Equipment:

Refers to all machinery and tools or other necessary for the

implementation of permanent or temporary works and does not refer
to the materials or items that are constructed as part of the
permanent works.

h. Drawings:

Refers to the drawings referred to in the Contract or any

amendments thereto notified in writing to the Contractor from time
to time.

i. The Site:

Refers to the lands and locations where or under or through which

the works shall be implemented and any other lands or locations
provided by the employer for the purposes of the Contract, in
addition to any other locations specified by the Contract as part of
the site.

j. Approval:

Refers to the written approval including subsequent written

confirmation of any previous verbal approvals.

II. Singulars and Plurals:

The words mentioned in the singular form shall have the same meaning in
the plural from and vice versa if so required in the text.

III. Headings & Marginal Notes:

The headings and marginal notes contained in the Contract are not
considered a part thereof and shall not be taken into consideration for the
purposes of interpreting the Contract.

2
Article No. 2 - The Engineer
Authority of the Engineer:
The Engineer shall have the authority to oversee and supervise the works, as
well as examine and test any materials or methods used for the implementation
of the works. However, the Engineer shall not have the authority to relieve the
Contractor from any of his duties or obligations stipulated in the Contract or to
order the execution of any works that may result in delays or in an increase in
the financial obligations incurred by the Employer. Moreover, the Engineer may
not introduce any changes in the works unless explicitly stipulated in the
Contract.

The Engineer may at times authorize his representative in writing to exercise any
of the authorities enjoyed by the Engineer and shall provide the Contractor with
a copy of this written Authorisation. The written instructions and approvals
issued by the representative of the Engineer to the Contractor shall be within the
limits of the said delegation of authority and shall be binding to the Contractor
and to the Employer as if issued by the Engineer himself. The following shall be
observed:

a. The neglect on the part of the representative of the Engineer manifested

by the rejection or acceptance of any materials or works does not affect
the authority of the Engineer who may later on reject the said works or
materials or order the demolition or removal thereof.
b. In case the Contractor does not approve of any decision taken by the
representative of the Engineer, he may refer the matter to the Engineer
who shall, in this case, have the right to confirm, cancel, or amend the
said decision.

Article No.3 - Relinquishment to other Parties:

The Contractor shall not relinquish to other parties this Contract or any
part thereof or any gain or advantage originating or resulting there from
without the prior written approval of the Employer. However, the
Contractor shall remain responsible to the Employer jointly with the party
to whom the Contract or part thereof has been relinquished to upon the
execution of the Contract.

3
 Article No.4 - Subcontracting:

The Contractor shall not subcontract all Contract works constituting the
object of the Contract and shall not - unless otherwise stipulated in the
Contract - subcontract any part of works without the prior written
approval of the Employer. However, such approval does not relieve the
Contractor from the responsibilities and obligations resulting from the
Contract and he shall remain responsible for any act or mistake or neglect
on the part of any subcontractor or his agents or employees or workers as
if such act or mistake or neglect were committed by the Contractor
himself or his agents or employees or workers. The Contracts of
Employment concluded by the Contractor on a by piece wage basis shall
not be considered as subcontracts as per this article.

Article No.5 - Scope of the Contract:

This Contract shall include the following:

a) Implementation, completion and maintenance of work.

b) Provision of labour, materials necessary for the works, construction

equipment and provisional works unless otherwise stipulated.

d) Any other items, whether of a permanent or provisional nature as

long as the need thereto is explicitly stipulated in the contract or may
be logically deduced there from.

Article No.6 - Language of the Contract:

a. The Arabic language is the language approved for the interpretation

and implementation of the Contract; however, the two parties may
use any foreign language to write the Contract or any part thereof, in
addition to the Arabic language. Should a contradiction arise
between the Arabic and the foreign texts, the Arabic text shall
prevail. Moreover, the Arabic language shall be relied upon in what
concerns Specifications and Plans.

b. All correspondence related to this Contract shall be in the Arabic

language. However, the Contractor may use one of the foreign
languages and shall translate it at his expense to the Arabic
language. In case of conflict, the Arabic text shall prevail.

4
Article No.7 - Keeping of Plans:

Firstly: The Engineer shall keep copies of Plans and Specifications and shall
provide free one copy thereof to the Contractor, subsequently, the
Contractor shall bear the expenses of preparing any additional copies
necessary for the implementation of his work and he shall - upon
expiration of the Contract - return to the Engineer all the Plans that
have been handed over to him. Moreover, the Contractor shall -
sufficiently ahead of time - inform the Engineer or his representative
in writing of his need for additional copies of the Plans or
Specifications necessary for the implementation of the works.

Secondly: The Contractor undertakes to keep on the site a copy of the plans
that have been handed over to him; moreover, such plans must be
ready at all appropriate times for inspection and use by the Engineer
or his representative or any other person delegated in writing by the
Engineer or the Employer to inspect or use such plans.

Article No.8 - Plans & Additional Instructions:

Notwithstanding the provisions of Article No. (2), the Engineer shall be

fully authorized to provide the Contractor from time to time during the
course of the Contract with any other plans or additional instructions
necessary for his honoring of his obligations in a perfected and sound
manner. The Contractor shall implement and abide by such plans and
instructions; however, should such plans or instructions entail any
increase in determined quantities or any decrease or change in the
materials or the type thereof in a manner that may result in an increase or
decrease in prices, they should be submitted to the Employer for approval
if they have an equivalent price in the price lists or shall be agreed upon
between the Owner, the Engineer and the Contractor.

GENERAL OBLIGATIONS

Article No.9 - Performance Bond:

Firstly: The Contractor shall - within ten days of the date he has been
notified by a registered letter of the acceptance of his bid-submit to
the Employer a bond equivalent to five percent (5%) of the bid value
as insurance of the implementation of the Contract. The Employer

5
 may grant the Contractor to ten-days extension starting from the
date of expiration of the aforementioned period.

The Performance Bond shall be irrevocable and valid throughout the

duration of the Contract and up to the date of Final Hand-Over.

Secondly: The Performance Bond shall be a letter of bank guarantee issued by

one of the local banks, or a letter of bank guarantee issued by a
bank abroad and presented by a bank operating approved by SAMA
the banks shall undertake to pay the amount mentioned in the letter
at the request of SWCC despite the opposition of the contractor and
without any legal dispute.

The bond may be a letter issued by insurance certificate by a

specialized insurance company accredited by Ministry of Finance and
national economy, the Insurance Company undertake to place at the
Employer's disposal in the currency nominated in the Contract an
amount equivalent to 25% (Twenty-Five percent) of total contract
price at the Employer request its amount, even with the opposition of
the Contractor and without any legal dispute.

The Performance Bond shall be in form stipulated by the regulations

agreed upon between Ministry of Finance and National Economy and
SAMA.

Thirdly: If the Contractor whose bid has been accepted does not provide the
necessary guarantee, the Employer shall have the choice between
withdrawing his acceptance of the bid & confiscating the provisional
guarantee or executing the works at the expense of the Contractor
as stipulated in Article (53) of these conditions without need for
warning or notification and without prejudice to the Employer's right
to request the Contractor to pay the necessary compensation for any
damages and losses that he may incur as a result.

Article No.1 0 - Site Inspection:

10-1 The Contractor shall - at his own expense examine and inspect the
site and the surrounding areas and shall personally make sure,
before submitting his tender, of the appearance of the site and the
nature of its soil by making the necessary probing and holes; the
Contractor shall also review the quantities and nature of the work,
the materials necessary for completion of the works, the ways of
reaching the site and the utilities that it requires. He shall generally

6
 obtain for his own use all necessary information and other
elements that may affect his bid.

10-2 The Contractor shall be responsible for reviewing the engineering

and technical plans in all their details and he shall notify the
Employer and the Engineer of any mistakes or remarks that he may
discover in the plans and drawings during implementation.

Article No. 11 - Sufficiency of Bid:

It is assumed that the Contractor shall have obtained complete
information before submitting his bid and ascertained that the prices he
listed in the list of quantities and price lists are sufficient to cover all his
obligations resulting from the Contract as well as other matters and items
necessary for the completion and maintenance of the works in a perfected
and sound manner.

In case the Contractor is faced during the implementation of the works

with any financial difficulties or any unusual difficulties that any
experienced contractor could not have logically anticipated, he shall
immediately and within ten days of discovering such difficulties and
obstacles inform the Engineer or his representative of this fact in writing.
In such case, the Engineer shall submit a report on this matter to the
Employer indicating his opinion in the additional costs incurred by the
Contractor as a result of such difficulties and obstacles if the presence
thereof has been confirmed for the review of and appropriate action by
the Employer. However, should the Contractor didn’t notify the Engineer
within the said ten days and claim the necessary compensation, he shall
have no right to do so.

Article No. 12 - Execution of the Works:

12/1 The Contractor shall implement, complete and maintain the works
of the Contract and shall comply to the engineer instructions and
written directives in all matters pertaining to the works, regardless
of whether they mentioned in the Contract or not. The Contractor
shall receive the instructions and directives from the Engineer or his
representative within the limits indicated in Article No. (2) of these
conditions.
12/2 The Contractor shall abide by the following:
a. He shall purchase local products and shall not use similar
imported products for the purpose of implementing the
contract.

7
b. The materials used for the implementation of the Contract -
whether they are locally made or imported - shall conform
with the Standard Specifications approved by the Saudi
Arabian Organization for Standard and Specifications, as for
the materials that do not have Saudi Standard Specification
they shall conform with one of the internationally well known
specifications as determined by the person supervising the
implementation of the Works.

c. The Contractor shall respect all standards and by-laws relative

to environmental protection in the Kingdom issued by the
competent authorities.

d. The foreign contractor shall assign not less than 30% of the
works constituting the object of the Contract to a Saudi
contractor, SWCC shall - in agreement with the Ministry of
Finance and National Economy - relieve the foreign contractor
wholly or partly from the obligation of assigning the above
percentage of the works to a Saudi contractor if no works may
be implemented by Saudi contractor or if the percentage is
less than 30%. This exception shall apply only if SWCC’s
technical staff determines, upon preparing for the project and
before inviting tenderers, the percentage of total or partial
relief from such obligations with the participation of the
Consultant that designed the project and formulated its
specifications.

e. The Contractor shall purchase the tools and equipment

necessary for the implementation of his Contract from the
Saudi agents of such tools and equipments in the Kingdom
and he shall not import these tools and equipments directly
from abroad unless for his personal used equipments.
f. The Contractor shall obtain the following services from local
Saudi establishments.
1. Transport of commodities and personnel inside the
Kingdom if such transport is not directly performed by
the Contractor by means of his own equipments and
personnel directly working for him.
2. Local insurance services.
3. Banking services.

4. Rental and purchase of land and buildings.

8
 5. Accommodation and supply of foodstuffs.

12/3 The Contractor shall submit his letters, accounts and data to the
administrative agency in the Arabic language and shall keep his
records and all of his accounts and documents locally in the Arabic
language and under his responsibility, accompanied with a
certificate issued by a chartered accountant authorized to work in
the Kingdom. In case of violation of this condition, appropriate
penalties shall be applied.

12/4 The Contractor shall provide air transport of all that should be
transported by air and is necessary for the implementation of the
Contract such as passengers, materials and other by means of
Saudi Arabian Airlines. In case of violation of this condition,
appropriate penalties shall be applied.

The Contractor shall also transport by sea any materials that should
be transported by sea and that are necessary for the
implementation of the Contract by means of Saudi ships and
vessels as per the instructions and orders issued in this regard.

12/5 The Contractor shall - upon signing any contract exceeding five
million Riyals in value - submit to the competent government
authority the necessary insurance policy indicating that he has
insured the project and its basic components during its
implementation and up to the date of preliminary handover, such a
policy shall be issued by the National Insurance Company.

Article No. 13 - Work Schedule:

The Contractor shall enclose with his bid a timetable indicating the order
of progress of the works and the way he suggests for implementation of
the works. The Contractor shall also present to the Engineer or his
representative upon request any written detailed information regarding
the arrangements necessary for the implementation of the works, the
construction equipment, and the provisional works that the Contractor
intends to submit or use or construct as is the case.

Article No. 14 - Supervision of the Contractor

Firstly: The Contractor shall provide the necessary supervision during and after
implementation of the works to the degree that the Engineer judges
necessary for fulfilling his contractual obligations in a perfected and
sound manner and the Contractor or his representative, accepted in
writing by the Engineer, shall perpetually and constantly reside in the

9
 work site and shall dedicate all his time to supervise the
implementation of the work.

In case the Engineer withdraws his aforementioned acceptance, the

Contractor shall immediately upon receiving a written notification to
this effect - transfer his representative from the work site as soon as
possible and shall not subsequently use him again on the work site;
moreover, he shall instead appoint another representative approved by
the Engineer and such representative shall - on behalf of the
Contractor - receive all instructions and directions and directives issued
by the Engineer or his representative within the limits indicated in
Article (2) of these conditions.

Secondly: If the representative of the Contractor is unable to speak the Arabic

language fluently, the Contractor shall - at all times use on the site a
translator who is able to speak Arabic fluently.

Article No. 15 - The Contractor's Personnel:

Firstly: The Contractor shall use on site for the purpose of the implementation
and maintenance of the works:

a. The experienced and skilled technical assistance - each in his

own specialty - as well as the efficient assistance, work
supervisors and supervisors who shall monitor accurately the
works that they are assigned.
b. The sufficient number of skilled, semiskilled and unskilled labors
necessary for the implementation and maintenance of the works
in a perfected and sound manner.

Secondly: The Engineer shall - at all times - have the right to object and to
request the Contractor to withdraw immediately from the work site
any person that he uses for the implementation and maintenance of
the works or any matters related thereto if the Engineer believes that
he is ill-mannered or inefficient or neglects his duties or that his
employment is undesirable from the viewpoint of the Engineer. In
this case, such person may not be employed anew without the
written approval of the Engineer and the Contractor shall as soon as
possible replace any individual who has been withdrawn in the
manner indicated above with a substitute approved by the Engineer.

Article No. 16 - Specifying the Work Sites:

The Contractor shall be responsible for the implementation of the work on
site in an accurate and sound manner and for connecting such works with
the original points and the basic lines, dimensions and levels presented to

10
 him by the Engineer or his representative as well as for providing all
necessary equipments, tools and labour in this regard and he shall correct
any error in this implementation or points and lines, dimensions and levels
at his own expense unless the mistake is caused by the inaccuracy of any
of the information presented to him by the Engineer or his representative,
in which case the correction costs shall be borne by the Employer.

The inspection of the works in progress on site or of the points, lines,

dimensions and levels by the Engineer or his representative do not in any
case relieve the Contractor from his responsibility for ensuring their
accuracy.

The Contractor shall maintain all marks necessary for the implementation
of the works on site or the points and dimensions and levels.

Article No. 17 - Guarding and Lighting:

The Contractor shall provide - at his own expense - all necessary lighting,
guarding, fencing and control supplies in the places and at the times
determined by the Engineer or his representative or any public authority
for the purpose of protecting the works or ensuring the safety of the
public or such other matters.

Article No. 18 - Damages inflicted on Individuals and Properties:

The Contractor shall be responsible for all losses and damages inflicted on
individuals and properties as a result of the implementation or
maintenance of the works or any reason related thereto and for any
lawsuits, claims and expenses resulting there from.

The Contractor shall not be responsible for the following matters:

1. The losses and damages to the rights of utilization due to the
neighborhood, which is inevitable as a result of the implementation
of the works as per the Contract.

2. The losses and damages inflicted on individuals and properties as a

result of a mistake or negligence on the part of the Employer or one
of his employees or agents or staff or workers.

Article No. 19 . Sending Notifications and Paying Fees and Penalties:

Firstly:The Contractor shall send all necessary notifications and shall pay all
necessary fees as for the statutes or by-laws or decisions regarding the
implementation of the works or the provisional works or the relative
regulations and rules in any way.

11
Secondly: Abiding by Regulations and Decisions:
The Contractor shall abide by the regulations, by-laws and decisions
issued by the competent public authority relative to the works or the
provisional ones and shall also abide by the regulations and rules issued
by the competent public agencies and concerned companies; he shall also
bear responsibility and penalties regardless of the nature thereof - as a
result of his violation of such regulations or by-laws or decisions.

Article No. 20 - Remains of Antiquities, Valuable Things and Other:

All monies, valuable things, antiques, buildings, monuments and all other
geologically or archeologically valuable things discovered in the work site
shall be the sole property of the Employer. The Contractor shall take all
necessary precautions to prevent his workers or any other individuals from
moving or damaging any of these things. The Contractor shall also -
immediately upon discovering and before moving such things - inform the
Employer or his representative and the competent agency of such
discovery and shall follow his instructions in what regards disposing of
these things at the expense of Employer.

Article No. 21 - Patent Rights and Ownership:

The Contractor shall protect the Employer from and compensate him for
any claims and procedures resulting or originating from the violation of
any right or privilege or design or trademark or name or other patent
rights relative to any of the construction equipments or the tools and
materials used for the implementation of any or all of the works or the
provisional ones, as well as for all claims, requests, procedures, damages,
expenses, fees and costs resulting there from or related thereto,
regardless of the amount thereof.

Article No. 22 - Impeding Traffic Flow and Damaging Neighbouring

Property:
The Contractor is responsible for all operations necessary for the
implementation of the works or the provisional ones within the scope
permitted by the requirements of the Contract in a way that is not
contradictory with the rules and with the public convenience and does not
prevent access to public and private roads and passageways, or entering
or exiting properties, whether they are in the possession of the Employer
or any other person.

12
 The Contractor shall also protect and prevent any damage to the
Employer and shall compensate him for any claims or requests or
procedures or damages or expenses or fees or costs regardless of the
amount thereof if they are the result of or related to such matters to the
extent where they are the responsibility of the Contractor.

Article No. 23 - Unusual Traffic:

Firstly:The Contractor shall use all reasonable ways and precautions in order to
prevent any damage or blocking the public roads or bridges connected
to the site or the roads leading thereto as a result of the traffic caused
by the Contractor or any of his subcontractors as per the regulations in
force.

The Contractor shall in particular select the roads and select and use the
vehicles, determine and distribute the loads so as for any unusual traffic
resulting inevitably from the transport of equipments and materials to
and from the site is as limited as possible and to the appropriate extent
that allows the prevention of any damage or breakdown unnecessarily
inflicted upon such roads and bridges.

Secondly: Special Loads:

Should it become necessary for the Contractor to transport one or more
loads of construction equipment or tools or prefabricated units or any
pieces of the works units on any segment of a public road or bridge, and
in the event such transport is damaging to such road or bridge, if the
necessary precautionary or special reinforcement measures are not
taken, the Contractor shall - in such case - before using such road or
bridge for the transport of such load - send to the Engineer or his
representative a written notification indicating the weight of the load
that shall be transported and its other specifications as well as his
suggestions as to the way of protecting and reinforcing the said road or
bridge.

The Contractor shall abide by the instructions of the Engineer in this

connection and in the event the Engineer or his representative not
sending to the Contractor within fourteen (14) days of receiving the
notification a similar notification indicating the absence of any need to
take precautionary of reinforcement measures, the Contractors shall - at
his own expenses - carry out his suggestions or any other modifications
thereto deemed necessary by the Engineer.

Article No. 24 - Giving the Opportunity to Other Contractors:

The Contractor shall - as per the instructions and orders of the Engineer -
provide the opportunity to any of the other contractors employed by the

13
 Employer to implement their own works and he shall provide the same
opportunity to the workers of such contractors or of the Employer or the
government workers used on or at the proximity of the site for the
purpose of implementing any works that are not contained in the Contract
or for implementing any contract concluded with the Employer and related
to or attached to or supplementing the works:

Article No. 25 - Clearing The Site Following Completion Of The Works:

The Contractor shall - immediately following the completion of the works
clear the site and transport there from all construction equipments,
materials, debris and provisional works regardless of the type thereof; he
shall also leave the site and all works clean and ready for use or in the
state approved by the Employer.

LABOUR

Article No. 26 - Use of Labour:

The Contractor shall take special measures for using and treating all
national or foreign labour according to the labour law, the social security
law, the residence law and others he shall provide his workers with
necessary requirements, including sanitary housing, means of
transportation and medical care as stipulated in this special conditions.

Article No. 27 - list of Workers:

The Contractor shall - at the times specified by the Engineer or his
representative - provide a detailed list showing the names of all his
employees and workers and any other information requested by the
Engineer or his representative relative to labour or construction
equipment.

Article No. 28 - Materials and Workmanship:

All materials and workmanship should conform to the Saudi specifications
or the specifications described in the Contract and conform to instructions
of the Engineers. Materials and workmanship should be subject from time
to time to any tests that the Engineer wishes to make in the location
where such materials were manufactured, or at site or both, or in any
other location.

Article No. 29 - Access to the Site:

The Engineer or any other individual authorized by him shall at all times
have the right to examine the works and have access to the site and to all
workshops and places where work is being prepared for or where the
materials, manufactures and tools necessary for the works are obtained.

14
 The Contractor shall provide all facilities and necessary help for exercising
such right.

Article No. 30 - Examining The Works Before they Are Covered:

Firstly: Any works may not be covered or eclipsed without the consent of the
Engineer or his representative and the Contractor shall provide the
necessary opportunity to the Engineer or his representative in order to
examine and measure any works that shall be covered or eclipsed. The
Contractor shall when such works are or about to be ready for
inspection - present to the Engineer or his representative a written
notification to inspection and measure the works as soon as possible,
unless such mater is deemed unnecessary by the Engineer or his
representatives and the Contractor has been notified to this effect.

Secondly: Inspecting and Making Holes in the Works:

The Contractor shall inspect any works or any part/parts thereof or
make any holes therein or through such works as ordered by the
Engineer from time to time and he shall return such part/parts to
its/their original state as is deemed satisfactory by the Engineer.

In the event the part/parts of the works has/have been covered

following its/their examination as per paragraph one of this article and it
becomes necessary at a later date to expose such part/parts or make
holes in or through such part/parts, the cost of inspecting & returning
such part/parts to its/their original state shall be borne by the Owner on
condition that they conform with the Contract. In all other cases, all
expenses shall be borne by the Contractor.

Article No. 31 - Removing the Works and Materials Non-conforming

with the Contract:

Firstly: The Engineer may, during the progress of the work, order the following
in writing from time to time:

a. Removing from the site any materials that the Engineer judges
non-conforming with the Contract and within a period of time
specified in the order.

b. Substituting such materials with appropriate and suitable ones.

c. Removing and re-implementing accurately any work that the

Engineer judges non-conforming with the Contract, whether in
regards to materials or workmanship and despite any pre-

15
 testing of the said work or any disbursement of any part of the
costs thereof.

Secondly: Failure of the Contractor to abide by the Orders of the

Engineer's instructions:
In the event the Contractor's failure to carry out the orders of the
Engineer, the Employer shall have the right to employ other individuals
and to pay them the salaries necessary for carrying out of such orders and
the Contractor shall bear all the expenses resulting there from or related
thereto. The Employer shall have the right to refer such expenses to the
Contractor or to deduct them from any amounts that are or will be due to
him.
Article No. 32 - Suspension of Work:
The Contractor shall - as per the written order of the Employer - suspend
the works or any part thereof for the period or in the manner considered
necessary by the Employer for the safety of the work. The Contractor shall
also protect the work and guarantee its progress during the period of
suspension to the extent that the Engineer judges necessary.

The Employer shall not bear the expenses resulting from the suspension
of the works in the following cases:-
1. If such suspension is stipulated in the Contract.
2. If it is necessary for workmanship purposes or if it is caused
by climatic conditions or neglect on the part of the Contractor.
3. If it is necessary for the safety of the works or any part
thereof.

DATE OF WORK START-UP AND DELAYS

Article No. 33 . Start-up of the Work:

The Contractor shall start carrying out the works immediately upon hand-
over of the site and he shall do so expeditiously and without delay.

Article No. 34 . Hand-over and Possession of Site:-

Firstly: With the exception of what is stipulated in the Contract regarding the
specification of those parts of the site that shall be handed over at
intervals to the Contractor and the order in which such parts shall be
handed over, and in accordance with any request stipulated in the
Contract regarding the order or progress of the works, the Employer
shall hand over to the Contractor the necessary part of the site and the
Engineer's written order to start the work in order for the Contractor to
be able to carry out the works according to the schedule referred to in
Article (13) of these conditions, if any, or according to the appropriate

16
 suggestions provided to and accepted by the Engineer as per a written
notification. The Employer shall at intervals and as work progresses,
hand over to the Contractor other parts of the site as necessary in order
for him to continue to implement and accomplish the works at the
appropriate time whether according to the time schedule or to the
suggestions presented by the Contractor as is the case.

Secondly: Rights of Way:

The Contractor shall bear all expenses and fees necessary for securing
the special or temporary rights of way that he requires in order to reach
the site and he shall arrange at his own expense any additional housing
facilities outside the site as is necessary for the purposes of the work, as
regulated by the competent authorities.

Thirdly:Except as is otherwise stipulated. The limits of the site shall be as

shown in the Contract drawings, in the event the Contractor needs for
the purposes of the project related works an area that is beyond the
limits of the site, he shall obtain such area at his own expense.

Fourthly:The Contractor shall construct at his own expense temporary fencing

appropriate for the site or any part thereof whenever necessary for the
safety of the workers or the public or animals or to protect the works.

Article No. 35 - Period Of Time Necessary For The Accomplishment Of

The Works:
Notwithstanding any request contained in the specifications regarding the
completion of any part of the works, the works should be accomplished
within the period of time stipulated in the Contract.

Article No. 36 - Extension of the Period of Time Necessary for the

Accomplishment of the Works:
The duration of the Contract may be extended as per Article (9) of the
Law for Securing the Purchases of the Government and the
Implementation of its Projects and Works.

Article No. 37 - Prohibiting Work At Night And On Official Holidays:-

Except as is hereinafter stipulated, work may not be carried out at night
or on Fridays or other official holidays without the written authorisation of
the Engineer or his representative, unless it is absolutely necessary to
carry out the work at such time or on such days or in order to save lives
or properties or to guarantee the safety of the works in which case the
Contractor shall immediately notify the Engineer or his representative.

17
 The provisions of this article shall not apply in those cases where it is
customary to carry out the work on two or more shifts.

Article No. 38 - Rate Of Progress Of The Work:

Firstly:In the event the Engineer considers that the rate of progress of the work
is slow to an extent that does not permit the accomplishment of the works
in due time, he shall warn the Contractor in writing and the Contractor
shall take the steps that he judges necessary and that meet the approval
of the Engineer in order to expedite the progress of the work and to
accomplish it in due time.

Secondly: Periodical Reports:

The Contractor shall periodically present to the Engineer and as
determined by the Employer a detailed report on the progress of the
work, accompanied by the supporting drawing and documents from the
contractor.

Article No. 39. Penalty Of Delay:

In the event the Contractor delays the accomplishment of the work and its
complete hand-over at the specified time and the Employer did not judge
it necessary to withdraw the work from the Contractor, the Contractor
shall pay a penalty for the period of delay beyond the specified date of
hand-over, the penalty shall be calculated on the basis of the average
daily cost of the project by dividing the value of the Contract by its
duration as follows:

a. Penalty on the first part of the period of delay amounting to one

quarter of the average daily cost for each day of delay until the
longer of the two periods reaches fifteen days or five percent of the
duration of the Contract.

b. Penalty on the second part of the period of delay amounting to half

the average daily cost for each day of delay until the two parts of the
longer of the two periods reaches thirty days or ten percent of the
duration of the Contract.

c. Penalty on the third part of the period of delay amounting to the full
average daily cost for each day of delay following the longer of the
two periods as stipulated in paragraph (b).

The total penalties should not exceed ten percent (10%) of the
Contract value, however, in the event the Employer considers that
the delayed part does not prevent the full use of the work on the due
date of completion and does not cause any inconvenience in the use

18
 of other facilities and does not affect the accomplishment part of the
work in an adverse manner, the total penalties shall not exceed ten
percent (10%) of the value of delayed works.

Article No. 40 - Supervision Costs Resulting from Delay:

In addition to the penalty stipulated in the previous article, the Contractor
shall bear the fees of the project supervisor during the period where the
Contractor was subjected to the penalty of delay. Such fees are calculated
on the basis of the Supervisor's Contract and may be paid in the form of a
periodical amount or a certain percentage of the value of the Contract.

If a lump sum is paid for supervision or if supervision is carried out by the

government agency, the fees of the supervisor shall be calculated as
follows:-

Value of the Contract x 1 x Period of delay in days

100 Duration of Contract

Article No. 41. Maintenance period:

Firstly: Definition of the Period of Maintenance:

The expression "Period of Maintenance" stipulated in these
conditions refers to the period specified in the Contract that starts
from the date of Preliminary Acceptance until the date of Final
Acceptance. In the case Preliminary Acceptance is carried out in
stages, the period of maintenance shall be calculated for each stage
as of the date of its preliminary hand-over.

Secondly: Implementation of Repair Works and Other:

Since the intent is to hand-over the works to the Employer upon
expiration of the period of maintenance or as soon as possible after its
expiration and that the works should be in a state of perfection
satisfactory to the Engineer and in no less condition than the one they
were in upon the beginning of the period of maintenance, except for
normal wear and tear, the Contractor shall carry out any repairs or
amendments or reconstruction or correction of defects as requested in
writing by the Employer or the Engineer during the period of
maintenance or upon final hand-over.
It is understood that the maintenance works do not include the repairs
necessitated by the use or wear and tear of the works that have been
previously handed over unless such repairs become necessary as a
result of default in maintenance or implementation.

19
Thirdly: Costs of Repair Works and Others:
The Contractor shall carry out all repair works at his own expense if
such repairs are necessary in the opinion of the Engineer due to the
fact that the materials used or the workmanship do not conform with
the Contract or that the Contractor has neglected to honor any explicit
or implicit obligation resulting from the Contract.

Fourthly:Handling the Contractor's Neglect to Carry Out the Works

Required by the Engineer.
If the Contractor abstains from carrying out any of the works
stipulated in this article and required by the Engineer. The Employer
shall have the right to carry out such works by his own means or by
means of other Contractors and he shall charge the costs of such
works to the Contractor or deduct such costs from the amounts that
are due or will be due to the Contractor.

Fifthly: The Contractor guarantee the buildings and structures that he has
constructed against any whole or partial destruction thereof during the
ten years that follow the date of hand-over of the project to the
concerned Employer, if such destruction is a result of a defect in
implementation unless the two contracting parties have agreed to keep
the facilities for a shorter period.

Article No. 42 - The Contractor's Obligation To Detect The Reason For

Defects Or Mistakes Or Imperfections:
The Contractor shall - if so requested in writing by the Engineer - search
for the reasons for any defects or mistakes or imperfections as directed by
the Engineer. If the defects or mistakes or imperfections are the
responsibility of the Contractor, the search costs shall be borne by the
Contractor and he shall in this case repair and correct such defects or
mistakes or imperfections at his own expense as per the provisions of
Article (41) of these conditions.

Article No. 43 - Modifications, Additions And Cancellations:

Firstly:The Engineer may - after obtaining the approval of the Employer or
within the authorities assigned to him - make any changes in the
appearance or type or quantity of the works or any part thereof as
appropriate and the Contractor shall carry out such changes on condition
that they do not result in modifying the location of the Contract or in
exceeding the limits stipulated in the following paragraph:

20
Secondly:The Employer may - during the implementation of the Contract -
increase the amounts of works by a percentage that does not exceed ten
percent (10%) of the total value of the Contract and he may decrease the
amount of works by a percentage that does not exceed twenty percent
(20%) of the total value of the Contract, in which case the value of the
Contract may be increased or decreased accordingly.

Thirdly:The Contractor shall not affect any of the aforementioned changes

without the written order of the Engineer.

Article No. 44 Evaluation of Changes:

The Engineer shall determine the amount - if any - that he thinks should
be added to or deducted from the amount mentioned in the tender due to
any additional work affected or any work deleted at his orders. Such work
shall be evaluated according to the rates mentioned in the Contract if the
Engineer thinks they are applicable. If the Contract does not contain any
rates that apply to any additional works, the Employer and the Contractor
shall agree upon the equivalent prices.
Secondly: Claims:
The Contractor shall send the Engineer once a month an account showing
in a comprehensive and detailed manner the information relative to all his
claims for additional expenses as well as all additional works authorized by
the Engineer and carried out by the Contractor in the previous month. Any
claim for payment of the value of such works shall not be considered if it
is not contained in the aforementioned special information of monthly
account.

Article No. 45 - Temporary Equipment And Works And The Materials:

Firstly:Use of Equipment and Other in the implementation of the
Works:
The provisional equipment and works and the materials supplied by the
Contractor once on site shall be wholly and solely dedicated to the
purpose of constructing and accomplishing the works. The Contractor shall
not move such equipment. works and materials or any part thereof from
the site without the written consent of the Engineer unless such moving is
from one part of the site to the other and the Engineer shall not abstain
from granting such written consent without a reasonable cause.

Secondly:Transporting Equipment and Other:

The Contractor shall - after accomplishing the works - transport from the
site all of the above mentioned construction equipments, the remaining

21
 provisional works and all unused materials that he had supplied and shall
clean the site.

Thirdly:Irresponsibility of Employer for any, Breakdown in Equipment

and Other:
The Employer shall not at any time be responsible for any loss or damage
to any of the equipment or provisional works or materials, except as
stipulated in Article (54) of these conditions.

Article No. 46 - Quantities:

The quantities mentioned in the list of quantities refer to the estimated
quantities of work and the payment shall be made according to the actual
quantities carried out.

Article No. 47 - Surveying The Works:

Except as otherwise stipulated, the Engineer shall make certain by way of
survey of the amount of work that has been accomplished as per the
Contract and shall determine its value accordingly. In the event the
Engineer wishes to survey any part of the works, he shall notify the
Contractor or his delegated agent or his representative of such wish and
all or any of the individuals mentioned above shall attend in person or
send a delegated agent in order to assist the Engineer or his
representative in conducting such survey and shall provide the Engineer
or to his representative with all the information that any of them may
request.

Article No. 48. Surveying Method:

Firstly: The works shall be surveyed on the sole basis of the net
measurements, unless otherwise stipulated explicitly in the Contract.

Secondly: Except as specifically stipulated, the metric system shall be used in

all measurements and purposes relative to this Contract.
Article No. 49 . Use of Explosives:
The Contractor may not use any explosives without the written permission
of the Engineer and the Engineer shall make certain before explosives are
used that the Contractor has observed all regulations and instructions
relative to this matter. Refusal on the part of the Engineer to grant such
permission shall not be a basis for any claims against the Employer and
the Engineer shall have no right to abstain from granting such permission
without a reasonable cause.

22
Article No.50 - Payment, Preliminary And Final Acceptance, Period of
Guarantee:
a. The Employer may pay for the contractor when necessary an
advanced payment not exceed 10% of the contract value after site
handing over to him against bank guarantee with same amount and
will deduct this advanced payment from the actual contractor's dues
in same percentage.

b. The amounts due to the Contractor as per the works that have been
accomplished and the payment certificates approved by the
Consultant or the technical agency supervising the project shall be
paid periodically at the rate of at least one certificate per month.
The payment of the last certificate that shall represent at least ten
percent (10%) of the value of the Contract or of the accomplished
work shall be deferred until the preliminary acceptance of the project
and submitting certificate from Zakat and Taxes certifying settlement
of Zakat or Tax.
c. After the works are preliminary accepted and the certificate issued by
the Zakat and Income Tax Department is presented, the Employer
shall disburse the deferred percentage of the value of the works that
have been actually accomplished and any remaining amounts paid in
advance to or due by the Contractor shall be deducted there from.
d. Upon the Final Acceptance of the works, and the expiration of the
period of maintenance and submission by the Contractor of the
official minutes of meeting certifying this fact, final payment shall be
settled and the letter of guarantee submitted by the Contractor as
per Article (9) of these conditions shall be released.
e. Notwithstanding regulations and instructions ,all payments to be
made in Saudi Arabia's currency unless otherwise currency stipulated
in the special condition if any,
Article No. 51 - Preliminary Acceptance:
The Contractor shall immediately upon accomplishing the works, clear the
site from all equipments, materials, dirt and debris and shall make it
usable. He shall subsequently send a written notification to the Employer
who shall determine the date of inspection pending the preliminary
acceptance and the Employer shall determine the date of inspection by
means of a written notification within a maximum of fifteen days from the
date of notification of the Contractor in this connection.

Upon the acceptance of the works the Employer or his delegates shall
inspect and preliminarily accept the works in the presence of the
Contractor or his delegate and minutes of meeting of the preliminary

23
 acceptance shall be drafted in several copies as necessary and a copy
shall be delivered to the Contractor. In the event the acceptance has
taken place in the absence of the Contractor despite the fact that he has
been notified by a registered letter to this effect, his absence shall be
certified in the minutes of meeting. And should the inspection reveal that
the works have been accomplished properly, the date of notification to the
Employer by the Contractor of his readiness to hand-over the works shall
be considered as the date of accomplishment of the works and the
beginning of the period of maintenance. In the event the inspection
reveals that the works have not been properly accomplished, this fact
shall be certified in the minutes of meeting and the acceptance shall be
deferred until the completion of the works to be carried out or corrected.

In the event the Preliminary Acceptance reveals that some items or parts
have not been carried out by the Contractor and the Preliminary
Acceptance committee considers that the missing works do not prevent
the use of the work for the purpose for which it was erected, the
Employer may, in this case, consider that the works have been
preliminarily handed over and he shall request the Contractor to
accomplish the missing works within a reasonable period of time;
otherwise, the Employer may deduct the amount of such works and may
assign other parties to accomplish same at his own expense and charge
any price differentials to the Contractor.
Article No. 52 - Final Acceptance:
The Contractor shall - in an appropriate length of time before expiration of
the period of maintenance - send a written notification to the Employer to
determine the date of inspection, pending the Final Acceptance. Should
the inspection reveal that the works conform to the conditions and
specifications, they shall be finally accepted as per minutes drafted by the
Employer or his delegate in several copies as required and signed by the
two parties or the delegates thereof; a copy shall be delivered to the
Contractor.
In the event the inspection reveals the presence of a defect or
imperfection in some of the work, even if they are not contained in the
preliminary hand-over minutes, the acceptance shall be deferred and the
period of maintenance shall be extended until the defect or imperfection
are corrected by the Contractor within a reasonable period of time
determined by the Engineer. If this period of time expires and the
Contractor has not carried out the necessary correction, the Employer has
the discretion to carry out the necessary repairs at the expense and under
the responsibility of the Contractor or to deduct the value thereof from the
amount of guarantee as per the list of quantities and prices.

24
Article No. 53 - Withdrawing The Work From The Contractor:
Notwithstanding the other relevant regulations, the Employer has the right
to do the following:-
Firstly: Withdraw the work from the Contractor and take possession of the
site in any one of the following cases:-
a. If the Contractor delays the start-up of the works or if the
progress of the work carried out by the Contractor is slow or if
the work is totally suspended by the Contractor to the extent
that the Employer judges it impossible to accomplish the work
on due time.

b. If the Contractor withdraws from carrying out the works, or if

he gives up, leaves, relinquishes, or subcontracts the works
without the prior written permission of the Employer.

c. If the Contractor violates any of the conditions of the Contract

or abstains from respecting any of his contractual obligations
and does not remedy such situation despite the fact that fifteen
days have expired since he received a written notification to this
effect.

d. If the Contractor - in person or by other means - presents or

promises any gift or loan or bonus to any government employee
or worker or any other person having any relation with the work
that is the object of the Contract.

e. If the Contractor becomes bankrupt or requests to be declared

bankrupt, or if there is evidence of the Contractor's insolvency,
or if an order was issued to place the Contractor under state
control, or if the Contractor is a company that has been
liquidated or dissolved.
Secondly: Withdrawing the work from the Contractor shall be by written
notification based upon the recommendation of the bid inspection
committee without need to take any judicial procedures or other.

Thirdly: The Employer may - at his own discretion - take the necessary
measures that ensure the implementation of the work according to
the required specification and within the specified time limit,
including assigning the management of the project to a consulting
office without any need for withdrawing the work.

25
Article No. 54 - Implications of Withdrawing the Work:
Firstly: In case of the work is withdrawn from the Contractor, the Employer
may - at his absolute discretion - have recourse to any of the
following procedures:-
1. Agree with the tenderer who follows in order to carry out the
work at the same prices that he had originally submitted; in the
event the said tenderer does not comply with such condition,
the tenderers following in order shall be negotiated with the
same effect.

2. To re-invite bids for the implementation of all or part of the

unaccomplished works; this shall be done in all cases at the
expenses of the Contractor.

Secondly: The Employer may - in anyone of those cases stipulated in the

previous article - to retain the materials, equipment and machinery
present on site for use in the implementation of the work without
paying any amounts in exchange to the Contractor or another party
and without being responsible for any damage or deficiency thereto
as a result of such use. The Employer may also charge to the
Contractor all the losses or damages that he has incurred as a result
of withdrawing the work. If the final bond doesn’t cover the loss and
damages, in which case, the contractor shall pay the employer at his
request the differences due to employer, If the Contractor abstains
from paying such amount, the Employer may, despite notifying the
Contractor in writing, sell the retained materials, equipment and
machinery and may also take all necessary measures to obtain all his
dues from the Contractor.

Thirdly: After financial settlements are made between the Contractor and the
Employer, the Contractor may transport his equipment, machines
and materials from the site location.

Article No. 55 - Special Risks:

Special risks refer to war, invasion by enemy forces, military activities and
other.

The Contractor shall not be responsible for paying any form of

compensation for any sabotaging or destruction of the works or of the
provisional works or property of the Employer or any third party or for any
defect or casualties as a result of the special risks.

26
 With the exception of the works that are subject to demolition and
rejection as per Article (31), the Contractor shall have the right to obtain
from the Employer the amounts corresponding to the works or the
provisional works or the materials if the fact that they were dedicated for
the implementation of the works is established or if they are sabotaged or
destroyed as a result of special risks regardless of the fact that they were
located on or near or on the road leading to the work site and the
Contractor shall have the right to obtain from the Employer the cost of
repairing the works or the provisional works to the extent judged
necessary by the Engineer based upon the cost price plus a reasonable
amount of profit as determined by the Engineer.

Any damage or loss or causalities caused by an explosion or pressure in

any place or at any time as a result of a mine or bomb or missile or
ammunition or explosives or any military materials shall be considered a
result of special risks and shall be treated as such as stipulated in this
article, unless they are the result of an act of negligence on the part of
the Contractor or his subcontractors or their staff.

If war breaks out during the period of validity of this Contract, the
Contractor shall take any possible measures and shall exert all efforts
toward completing the works and the Employer shall - at all times - have
the right to terminate the Contract per written notification to the
Contractor by which the Contract shall be considered as terminated, with
the exception of the rights entitled to the two parties as stipulated by this
article and by Article No. (56) and without violating the rights entitled to
any of the two parties relative to any infraction preceding the termination
of the Contract.

Article No. 56 - Break out of war:

In case of the Contract being terminated due to the breaking out of war
as previously indicated, the Employer shall pay to the Contractor all his
dues in exchange of the works that he has implemented in addition to the
value of materials and goods supplied to the site after deducting the
amounts remaining due to the Employer in the Contractor's debt from the
balance of the amounts advanced to the Contractor or any other amounts
paid to the Contractor in connection with the implementation of the work.

Article No. 57 - Settlement of Disputes:

Any disputes arising from the implementation of this Contract and
remaining unsettled between the two parties shall be referred to the
board of grievances for final settlement.

27
 NOTIFICATIONS

Article No. 58 - Sending Notifications:

Notifications and notices related to this Contract shall be delivered either
personally against a receipt or by official or registered mail and shall be
considered as received if delivered by any of this means at any of the
following addresses in the Kingdom:

For the Employer:

Saline Water Conversion Corporation
P.O. Box 5968, Riyadh 11432

For the Contractor:

Consortium of Yuksel Holding, Yuksel Insaat A.S and Yuksel Insaat
Saudia Co.

Address may be changed by notifying the other party, thirty days

before the addresses are changed.

Article No. 59 - Neglect on the part of the Employer:

The Employer shall respect the Terms of the Contract in good intention
and shall pay to the Contractor the due installments without delay. In the
event the Employer violates any of the conditions of the Contract or
neglects payment on due time, the Contractor may request compensation
for any losses resulting from such neglect or violation.

However, the Contractor may not suspend the work on the basis of
delayed payment on the part of the employer as a result of any error
committed by the Contractor and the Contractor shall be deemed as
relinquishing any right for compensation that he does not claim within
thirty days from the occurrence of the incident on the basis of which the
compensation is claimed.

Article No. 60 - Taxes and Fees:

The Contractor shall be subject to the Saudi regulations governing taxes
and fees and he shall be responsible for paying such taxes and fees on
due time and in the amount due to the competent authorities.

In the event such taxes and fees are increased or decreased following the
date of submission of tenders, the amount of the Contract shall be
increased or decreased accordingly, as is the case. However, in order for

28
 the difference resulting from the increase in custom fees, the Contractor
shall submit evidence that he has paid the difference that is in excess of
the fees as a result of supplying materials destined for the implementation
of the Contract works after the fees are increased, and he shall also
submit evidence that such difference has not been compensated for as a
result of price modification as per this article.

Article No. 61 Regulation of Import

The Second Party (The Contractor/The Supplier) certifies his knowledge of
the fact that import and customs laws and regulations enforced in the
Kingdom apply to supply and shipping of any products Or any parts
thereof to and from the Kingdom, including the regulations regarding
prohibition of importing.

29