RISK MANAGEMENT EDUCATIONAL SESSION:

CONTRACT CHECKLISTS

PRESENTERS

• Robert Moore, Chief Legal Officer, NBIS

• Dave Wittwer, CIC, CRM, The Buckner Company

• Billy Smith, EVP, Claims and Risk Management, NBIS

• Jeff Haynes, USI EVP National Construction Practice Leader

• Randy Proos, USI VP National Construction Accounts

TRANSPORTATION CONTRACTS

PART I: TRANSPORTATION CONTRACTS

THROUGH BILL OF LADING

• Carriage of Goods by Sea Act (COGSA)– Should be incorporated by reference into every through bill of lading

(bill of lading for the foreign transport of goods to or from the US)– Contains a list of causes of loss for which the carrier or vessel is not

liable as long as the carrier exercised reasonable steps to make the ship seaworthy and to handle/stow goods responsibly

– COGSA also limits liability to $500/package or customary freight unit, unless another amount is specifically mentioned in the bill of lading – that amount however can never be greater than the actual loss incurred

THROUGH BILL OF LADING

• Defenses under COGSA– Pursuant to 46 U.S.C.A. 30706, a carrier and the vessel are not liable

for loss or damage arising from:• Dangers of the sea or other navigable waters• Acts of God• Public enemies• Seizure under legal process• Inherent defect, quality, or vice of the goods• Insufficiency of package• Act or omission of the shipper or owner of the goods or their agent, or• Saving or attempting to save life or property at sea, including a deviation

in rendering such a service

BILLS OF LADING

Contractual Provisions “received subject to individually determined rates” language Section 7 language Declaration of Value No consequential, punitive, or special damages Shipper load and count Time period for filing claims/suit Liability for dangerous or explosive goods

“Received subject to…”

• Old language: “received subject to the classifications and tariffs in effect on the date of the issue of this shipping order”

• This language should be taken out because according to case law, it gives the shipper the argument that the bill of lading did not incorporate the carrier’s tariff and the carrier can be held liable for substantially more

• New language: replace with new, modern, carrier favored language “received, subject to individually determined rates or contracts that have been agreed upon in writing between the carrier and shipper, if applicable, otherwise to the rates, classifications and rules that have been established by the carrier and are available to the shipper, on request” (*make sure you have a rate schedule with limitation of liability in it or a separate contract between shipper and your company*)

BILL OF LADING SECTION 7 TERMS AND CONDITIONS LANGUAGE

• “Subject to Section 7 of Conditions, if this shipment is to be delivered to the consignee without recourse on the consignor, the consignor shall sign the following statement: The carrier shall not make delivery of this shipment without payment of freight and all other lawful charges.”

• Execution of this can arguably preclude your company from collecting from the consignor/shipper unless the shipment is also marked “prepaid”; this becomes problematic when the shipment was to be paid by the shipper, but this section is executed, and the shipper goes bankrupt

DECLARATION OF VALUE

• If a value is declared on the property, it is important to also include the following language:

“Declaring a value does not, by itself, increase carrier liability above the default limitation listed below”

• Also, make sure you have a default limitation. Including these two things can significantly reduce your level of liability.

NO CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES

• As a carrier, you can further limit your liability exposure by including language that states under no circumstances will you be liable for consequential, punitive, or special damages.

SHIPPER LOAD AND COUNT

• SLC is addressed in the Bill of Lading Act, 49 U.S.C. §80113– “A common carrier issuing a bill of lading is not liable for

non-receipt, misdescription or improper loading when (1) the goods are loaded by the shipper, and (2) the bill contains the words ‘shipper’s weight, load, and count,” – language indicative of the shipper having loaded the goods

– Statute is intended to shield a carrier from responsibility for delivered goods when the carrier and driver had no opportunity to inspect, correct or approve the manner in which the load was loaded or secured

SHIPPER LOAD AND COUNT

• You must consistently ensure the phrase “shipper’s weight, load, and count” are stated on the bill of lading prior to execution. In absence of the language on the original BOL, drivers should be instructed to place “SLC” on every bill of lading in which they were denied the opportunity to observe the loading of freight

• Claims example: You have been hired to transport a load of widgets. You load the wrapped widgets onto your truck, transport them to their destination, and offload them. Upon offloading, water damage is discovered. **IF SLC is on the BOL, then you have a defense that the water damage is not your responsibility.

SLC AND SPENCE V. ESAB GROUP INC.

• In 2010 3rd Circuit Court of Appeals rejected the argument that federal trucking regulations preclude Pennsylvania from imposing historically carrier-related safety obligations on shippers

• In Spence the shipper packaged the load into boxes, stacked them on to pallets, stretch-wrapped the pallets, and loaded them with a forklift onto the truck. The shipper allowed the driver to secure the cargo, but with load star cleats furnished by the shipper. Once secured, the driver drove a short distance and upon rounding a corner lost control of the tractor-trailer as it overturned. The driver claimed the accident and his injuries were caused by the shipper’s failure to prevent the load from laterally shifting on the bed of the truck.

SPENCE SAYS SHIPPER HAS DUTY OF CARE

• The 3rd Circuit Court of Appeals reversed a decision by the U.S. District Court, holding that the FMCSA regulations that require the Carrier to safely secure cargo to prevent shifting during transit should not be interpreted so broadly as to ignore that shippers my share responsibilities for shifting loads under certain circumstances

• “Where there is evidence that a shipper undertook to load and secure the cargo being transported by a third-party carrier, the shipper also bears an obligation to exercise reasonable care”

• SLC on the bill of lading greatly bolsters this argument• Spence v. ESAB Group, Inc., 623 F.2d 212 (3rd Cir. 2010).

TIME PERIOD FOR FILING CLAIMS/SUIT

• Include language that there are 9 months from the date of loss to file claims; and, 2 years from denial of a claim to file suit.

LIABILITY FOR DANGEROUS OR EXPLOSIVE GOODS

• You should always know what the shipper’s freight contains, particularly if it is dangerous or explosive

• Include the following language in your bill of lading to further protect you: “Every party, whether principal or agent, shipping explosives or dangerous goods without previous full written disclosure to the carrier of their nature, shall be liable for and indemnify the carrier against all loss or damage caused by such goods, and such goods may be warehoused at owner’s risk and expense or destroyed without compensation

WIND FARM TRANSPORTATION CONTRACTS

Contractual Provisions Shipper Obligations Carrier Obligations Carrier Drivers and Equipment Indemnity and Defense Form of Receipt Billing payment and claims Liability Detention Insurance Waiver of Subrogation Termination Confidentiality Force Majeure Representations and Warranties

SHIPPER OBLIGATIONS

• Tender freight to Carrier• All dims and weights must be accurate• Schedule must be accurate; all changes must be made within

reasonable period of time for carrier to replace and reschedule its own business

• Warrants suitable ingress and egress to and from origin and destination to allow for safe transportation of wind components

CARRIER OBLIGATIONS

• Deliver goods safely• Subcontract allowed – as a Carrier, are you allowed under the

agreement to subcontract your obligations?• Securement – explicitly outline your obligations for securing

the load• Follow all applicable rules/regulations

– Hours of service– Load regulations– Company policies/procedures– DOT rating

CARRIER DRIVERS AND EQUIPMENT

• Have equipment necessary to do the job

• Have competent drivers to do the job

• Pay for operating costs of transportation such as fuel, tires, maintenance, etc. (unless such maintenance is caused by poor site conditions, in which case the shipper pays)

INDEMNITY AND DEFENSE

• Must be reciprocal

• Cannot defend and indemnify for shipper’s own negligence and wrongdoing (this is now the law in many states)

• Will agree to defend and indemnify for claims resulting from carriers negligence or willful misconduct arising from contractual obligation to shipper

INDEMNIFICATION

• The following states have enacted motor carrier anti-indemnification laws:

• Alaska• Arizona• California• Connecticut• Florida• Georgia• Illinois• Indiana• Iowa• Louisiana

• Maine• Maryland• Missouri• Nebraska• New Mexico• North Carolina• Oregon• Pennsylvania• Utah• Washington

FORM OF RECEIPT

• Uniform bill of lading

• Signed by both Carrier and Shipper

BILLING PAYMENT AND CLAIMS

• 30 days from receipt of Bill of Lading

• 1% late fee/month after 30 days

LIABILITY

• $2.50 per pound of lading• In rare cases, agree to insure for actual loss as measured by

manufactured cost of goods sold (not full replacement value)• Carrier not responsible nor liable for loading and unloading;

securement is only responsibility• Salvage – if carrier is liable for full value, they get salvage or a

fair market value salvage credit• Shipper has 90 days from receipt of BOL to file claim• Not set offs against freight charges owed to carrier• No liability for consequential, incidental, indirect, or

liquidated damages

LOSS DAMAGE

• This becomes a huge issue in energy/wind farm trucking claims

• If a substantial piece of equipment is damaged during transportation, the risk is present that the warranty on the equipment may be voided by the manufacturer

• Make sure you have favorable language present to avoid this risk, as well as consequential damages, loss of use, etc.

DETENTION

• 2 free hours at loading and unloading. For wind – 6 free hours at loading and unloading

• Starts when the truck arrives• Only in cases where there is a schedule that governs

detention – the schedule cannot be changed unreasonably. If changes, it must be done so in an adequate amount of time for carrier to adjust its schedule without suffering economic loss (extra permits, escorts, sitting an extra day) such loss must be paid by shipper that changed schedule unreasonably

INSURANCE

• Property damage and cargo to cover liability amount• Employers Liability, Workers Comp, Comprehensive General

Liability• Can add shipper as additional insured in rare cases, but only if

requested and not for Workers Comp or Employer’s liability

WAIVER OF SUBROGATION

• Cannot waive insurers rights of subrogation

• In rare cases, may agree to waive it with the following language added “unless claim is caused by shipper’s negligence or willful misconduct”

TERMINATION

• Must be reciprocal• Either party has the right to terminate for material breach of

contract immediately• Either party has right for no reason at all, with 30 days notice• Automatic right to cure breach – deal with on a case by case

basis

CONFIDENTIALITY

• Allowed to disclose the existence of the contract, but not the contents of the contract

FORCE MAJEURE

• An event out of the control of the parties occurs that causes a breach of the contract

• Relieves parties from obligations under the contract while condition exists, including cargo liability while loaded on carrier’s trailer

• Include 24 hour notice requirement

REPRESENTATIONS AND WARRANTIES

• Can include that shipper and carrier represent and warrant that they are able and qualified to do those things outlined in shipper obligations, carrier obligations, and carrier driver and equipment

INDEPENDENT CONTRACTOR ESCORT AGREEMENT

Contractual Provisions Independent Contractor Relationship Payment Process Obligations of Contractor Indemnification Insurance

Primary non-contributory general liability insurance Excess/umbrella Inland marine insurance Worker’s Compensation Insurance Additional Insured Status Waiver of Subrogation

INDEPENDENT CONTRACTOR RELATIONSHIP

• Independent contractors have the potential to cause your company significant liability; the independent contractor has your company’s logo and info displayed on the tractor and therefore represents your company any time its on the road

• Include language that recognizes the relationship is that of a company and an independent contractor, and not as an employer-employee relationship

PAYMENT PROCESS

• It is important for both parties, especially in the independent contractor situation, to outline how the contractor is to be paid

• This is also the place to outline any fringe benefits that may or may not be included, as well as how any advances from the company are to be handled and deducted from the contractors pay

OBLIGATIONS OF CONTRACTOR

• Included in this section should be which party is responsible for operating expenses of the equipment, fuel, oil, maintenance, repairs, taxes, fines, violations, etc

• This is also the place to outline contractors required compliance with all applicable laws; maintaining a valid driver’s license; requirement that contractor operate in a safe and prudent manner, etc.

INDEMNIFICATION

• Many states have started to enact anti-indemnification statutes for the transportation industry, like those for construction contracts that relate to crane and rigging

• These statutes bar indemnity for sole or partial fault, so that each party can only indemnify the other for their own negligence

MOTOR CARRIER/SHIPPER AGREEMENT

Contractual Provisions Scope of Agreement/DOT Rating Rates/Charges/Payment Terms Freight Documentation Insurance Indemnity Cargo Liability Sealed Shipment

SCOPE OF AGREEMENT/DOT RATING

• This section should clearly outline how long the agreement is in effect, and whether each party may terminate the agreement with or without cause

• This section should also define the Carrier as a motor carrier under 49 U.S.C. 12102, so that all rights and duties of the federal law govern the contract, unless otherwise excluded

• It is also helpful to clearly state the Carrier’s DOT rating in the contract

RATES/CHARGES/PAYMENT TERMS

• This section is important, particularly if you are dealing with billings to 3rd parties.

• The best practice, is to state that the Shipper is still held responsible for all freight and related transportation charges under the Agreement, even if the Carrier is to bill a 3rd party. This ensures your company will be paid for the work performed. Even if you agree to bill a 3rd party, it is important for the Shipper to agree to guarantee payment and stand as the primary debtor

FREIGHT DOCUMENTATION

• This provision should clearly state that the Parties may use another document for the purpose of documenting pick-up and delivery of freight, either a uniform freight documentation form, or bill of lading, but that the master agreement shall prevail over anything appearing in those forms

• The Uniform Freight Documentation Form should contain:– Carrier’s contact information– Shipper’s contact information– Where and when the freight was received– That the property was in good order except as noted– Who it was consigned to/destination address– Who is paying– The weight/class/type of freight and whether it is hazardous

INSURANCE AND INDEMNITY

• The insurance and indemnity provisions should be tailored, as previously discussed, to be valid under any applicable state anti-indemnification laws

• Any additional insured endorsements shall also be provided, as previously discussed

CARGO LIABILITY

• This provision relieves carrier from liability in certain instances that are out of their control (i.e. Acts of God, etc)

• It should clearly cap liability and define how liability is to be determined based on loss or physical damage to the cargo

• This section should also clearly state the time period in which the Shipper may file a claim for loss or damage

• Of utmost importance is language stating that the Carrier shall not be liable to Shipper or any 3rd party for special, incidental, or consequential damages that relate to loss, damage, or delay to a shipment

SEALED SHIPMENT

• Having the proper “sealed shipment” and “shipper load and count” language in your contract can save you from significant liability

• SLC is addressed in the Bill of Lading Act, 49 U.S.C. §80113– “A common carrier issuing a bill of lading is not liable for

non-receipt, misdescription or improper loading when (1) the goods are loaded by the shipper, and (2) the bill contains the words ‘shipper’s weight, load, and count,” – language indicative of the shipper having loaded the goods

– Statute is intended to shield a carrier from responsibility for delivered goods when the carrier and driver had no opportunity to inspect, correct or approve the manner in which the load was loaded or secured

SEALED SHIPMENT

• Chain of custody for seal– Along with the SLC language in the bill of lading, the chain of custody

for the seal continues to offer the strongest evidence that at a minimum, the load was not disturbed prior to removal by the consignees or consignee's witness

– Continuation of the shipment under seal makes it more difficult for the shipper to reverse the presumption and how the carrier was negligent

– When the bill of lading contains SLC language and there is evidence the seal remained intact during transit, the burden is on the shipper to establish that an event occurred in transit that adversely impacted the condition of the load as transferred by the shipper

BROKER-CARRIER CONTRACTS

Contractual Provisions Relationship of Parties Term of Agreement Payment/Cargo Liens Responsibility for Personnel/Safety Rating Loss/Damage/Delay of Goods Insurance Indemnity Non-Solicitation

RELATIONSHIP OF PARTIES

• This provision should explain the relationship between the Carrier and the Broker; the Carrier’s safety rating, license number; and, a statement that the broker is hiring the carrier to perform contract carrier services, and there is no employer/employee relationship

TERM OF AGREEMENT

• Again, it is important to clearly state how long the agreement is in effect, and any termination rights of either part

• It is also helpful to state what services the carrier will be providing and whether there is a “minimum shipment guarantee” on the part of the broker, or a minimum capacity guarantee on the part of the carrier

• Rates and charges relevant to the agreement can also be included here

PAYMENT AND CARGO LIENS

• The contract should clearly state how and when the broker will pay the carrier. It should also include whether the broker will be liable for any late payment fees or collection costs, and whether carrier may contact broker’s customers regarding payment

• Depending on whether you are operating as the carrier or broker, you may also want to have, or waive, the right to any lien on cargo or other property

RESPONSIBILITY FOR PERSONNEL/SAFETY RATING

• The contract should include language that both the carrier, and the broker, assume full responsibility for their personnel, including compliance will all applicable laws and regulations, payroll taxes, social security, unemployment insurance, etc.

• Neither party shall be an agent for the other• If desired, you can also include language that in the event the

carrier’s safety rating becomes unsatisfactory, the broker may elect to terminate the agreement

LOSS, DAMAGE, OR DELAY OF GOODS

• Depending on whether you are acting as the broker or carrier, you will also want to add in language regarding whether the carrier shall be liable for the loss, damage, or delay of goods while in carrier’s possession

INSURANCE AND INDEMNITY

• The insurance and indemnity provisions should be tailored, as previously discussed, to be valid under any applicable state anti-indemnification laws

• Any additional insured endorsements shall also be provided, as previously discussed

NON-SOLICITATION

• If you are operating as the broker you will want to have a non-solicitation clause in the contract (if you’re the carrier you will want to negotiate to not have this clause)

• The non-solicitation clause should state that for a period of 12 months, the carrier will not “back-solicit” any customer of broker where the availability of such traffic first became known to carrier as a result of broker’s efforts

• You can also include a calculation for damages should the carrier violate this 12 month period

CRANE & RIGGING

PART II: CRANE & RIGGING CONTRACTS CHECKLIST

Crane Companies Can Work under multiple Contract Agreements

for the Same Project

Master General Contract Agreement Subcontract Agreement Crane Rental Agreement Daily Work Ticket

Master Agreement

• Will contain Contractual Risk Transfer language in favor of the:

OwnerArchitect General Contractor

(Downstream Risk Transfer)

Subcontract Agreement

• Will contain Contractual Risk Transfer language in favor of the:

Subcontractor & also will reference or “tie-in” the risk of all of the subcontractor’s upstream exposure from the Master Agreement.

(Downstream Risk Transfer)

Effective Contractual Risk Transfer Management Requires Coordination From Multiple Players

Crane Company Management Legal Counsel Insurance Agent / Broker Claim Professional / Adjuster Defense Counsel

Legal Disclaimer

Contracts including Indemnification and Hold Harmless clauses should be reviewed by Legal Counsel prior to signing!!!!!

Legal Counsel will determine issues such as: Statutory Compliance Enforceability

INDEMNIFICATION CLAUSES

Type 1: “Broad Form” Indemnity Clause Includes Indemnitee’s Sole Negligence Crane Company:

Negligence or Fault ( 0 – 100% )Crane Company pays ( 100% )

Broad Form

Crane Company agrees to defend, indemnify and hold harmless Contractor, Owner, their agents and employees from and against any and all claims arising out of or occurring in connection with the performance of the work by Crane Company whether or not caused by the negligence of the indemnified parties and including the sole negligence of the Contractor.

INDEMNIFICATION CLAUSES

Type 2: “Intermediate Form” Indemnity Clause Includes 100% indemnity if claim is caused “In Whole or In

Part” by Crane Company ( Similar to most Additional Insured language )

Crane Company:Negligence or Fault (1 – 100% )Crane Operator pays ( 100% )

Intermediate Form

Crane Company agrees to defend, indemnify and hold harmless Contractor, Owner, their agents and employees from and against any and all claims arising out of or occurring in connection with the performance of the work by caused in whole or in part by the negligence of the Crane Company except excluding the sole negligence of the Contractor

INDEMNIFICATION CLAUSES

Type 3: “Comparative Fault” Indemnity Clause Includes Indemnity only for the portion of loss caused by or

the extent of the negligence of the Crane Company Crane Company:

Negligence or Fault (20% ) ( 50%)

Crane Operator pays ( 20% ) (50%)

% Fault

% Damages

Limited or Comparative

Crane Company agrees to defend, indemnify and hold harmless Contractor, Owner, their agents and employees from and against any and all claims arising out of or occurring in connection with the performance of the work but only to the extent caused by the negligent acts or omissions of the Crane Company.

Responding to Indemnity

Tolerance for Risk Transfer What is the scope of work? Who controls the work? Project?

• Who signals the operator? “Qualified Signal Person”?• Who will perform the rigging? “Qualified Rigger”?

Who is the client? What the job represent in terms of $$$$$?

Responding to Indemnity

Crane Company’s obligation to defend, indemnify or hold harmless shall be limited to the limits of coverage stipulated in the insurance requirements section of the contract and further subject to the terms and exclusions of such insurance. (Watch out for words like “irrespective of limits”)

* INDEMNITY = INSURANCE REQUIREMENTS *

This is good language to use if you can negotiate it into an agreement

Add this whenever or wherever you can-

“but only to the extent caused by the negligent acts or omissions of the Crane Company.”

A Double Edged Sword

• You have to be careful---where they can’t get you tied up with Indemnity they will do so with Additional Insured provisions

• Watch what you agree too• The Progressively Narrowing Coverage of CG 20 10:

Contractors and Additional Insured Endorsements

Additional Insured = Broad Form Indemnity

Indemnitee typically require additional insured status in an attempt to circumvent State Statutes prohibiting the transfer of fault or negligence in indemnity provisions. This goal can be achieved by requiring the use of specific additional insured endorsements, e.g. CG 20 10 11 85

Insurance Requirements and “Additional Insured”

Lets look at:

Contract Insurance RequirementsAdditional Insured issues

“Additional Insured Form”Here's what it looks like

CG 20 10 11 85

CG 20 10 10 01

CG 20 10 07 04

TCG 20 10 07 04

Manuscript endorsement limiting primaryand non-contributory status only apply to the sole Negligence of the named insured (Crane Company)

Caused by instead of arising out of

TGL 20 10 07 04

Manuscript endorsement limiting primaryand non-contributory status only apply to the Negligence of the named insured (Crane Company)

Caused by instead of arising out of

When asked to sign Upper Tiered Contracts

• Try to match up the Indemnity with the Additional Insured provisions

• If limited indemnity don’t agree to broader AI status—get limited AI status as well

• Always try to agree to “caused in whole or in part” instead of “arising out of” the best would be for “your sole negligence” or “your negligence” but that’s harder to accomplish

Crane Rental Agreement

Should: Have a operator maintained and bare rental versions Be drafted with State specific indemnification language Refer to the ASME B30.5 ( 2007 ) Refer to the New OSHA 29 CFR subpart CC 1926, Specifically

with respect to selection of competent and “qualified” signal persons and “qualified” riggers”

State that the agreement is in effect for a duration of one year Address responsibility for Powerlines, Ground Conditions,

Rigging No reliance on LMI

(Upstream Risk Transfer)

Crane Rental Agreement

TERMS AND CONDITIONS OF CONTRACT (TX)

1. INDEMNIFICATION (FOR ALL CONTRACTS EXCEPT FOR CONTRACTS PERTAINING TO A WELL FOR OIL, GAS, OR WATER OR TO MINE FOR A MINERAL) -- LESSEE AGREES TO INDEMNIFY AND SAVE LESSOR, ITS EMPLOYEES AND AGENTS HARMLESS FROM ALL CLAIMS FOR DEATH OR INJURY TO PERSONS, INCLUDING LESSOR'S EMPLOYEES, OF ALL LOSS, DAMAGE OR INJURY TO PROPERTY, INCLUDING THE EQUIPMENT, ARISING IN ANY MANNER OUT OF LESSEE'S OPERATION. LESSEE'S DUTY TO INDEMNIFY THEREUNDER SHALL INCLUDE ALL COSTS OR EXPENSES ARISING OUT OF ALL CLAIMS SPECIFIED HEREIN, INCLUDING ALL COURT AND/OR ARBITRATION COSTS, FILING FEES, ATTORNEYS' FEES AND COSTS OF SETTLEMENT. LESSEE SHALL BE REQUIRED TO INDEMNIFY LESSOR FOR LESSOR'S OWN NEGLIGENCE OR FAULT, WHETHER THE NEGLIGENCE OR FAULT OF THE LESSOR BE DIRECT, INDIRECT OR DERIVATIVE IN NATURE. HOWEVER, THE INDEMNIFICATION OBLIGATION ABOVE SHALL NOT BE LIMITED IN ANY WAY BY ANY LIMITATION ON THE AMOUNT OR TYPE OF DAMAGE, COMPENSATION, OR BENEFITS PAYABLE BY OR FOR THE LESSEE UNDER WORKER'S COMPENSATION ACTS, DISABILITY BENEFIT ACTS, OR OTHER EMPLOYEE BENEFIT ACTS. THE LESSEE'S OBLIGATIONS HEREUNDER SHALL FURTHER NOT BE LIMITED BY THE AMOUNT OF ITS LIABILITY INSURANCE AND THE PURCHASE OF SUCH INSURANCE FOR LESSOR SHALL NOT OPERATE TO WAIVE ANY OF THE ABOVE OBLIGATIONS. PURSUANT TO V.T.C.A. GOVERNMENT CODE §2252.902, LESSOR MAY NOT BE INDEMNIFIED FOR ITS SOLE, JOINT, OR CONCURRENT NEGLIGENCE ON ANY STATE PUBLIC WORK UNLESS THE LOSS OR LIABILITY IS CAUSED BY OR RESULTS FROM THE SOLE, JOINT, OR CONCURRENT NEGLIGENCE OF THE LESSOR AND ARISES FROM THE BODILY INJURY OR DEATH OF (1) AN EMPLOYEE OF LESSEE; (2) LESSEE’S SUBCONTRACTOR, SUPPLIER OR EQUIPMENT LESSOR; (3) ANY LOWER-TIER SUBCONTRACTOR, SUPPLIER, OR EQUIPMENT LESSOR OF LESSOR OR (4) ANY INDEPENDENT CONTRACTOR DIRECTLY RESPONSIBLE TO A PERSON DESCRIBED IN (1)- (3). THIS PROVISION IS SEPARATE AND DISTINCT FROM ANY OTHER PROVISION OR PARAGRAPH IN THIS CONTRACT, INCLUDING ANY PROVISION OR PARAGRAPH CONCERNING PARTIAL INDEMNIFICATION AND PROCUREMENT OF INSURANCE. IF THIS PARAGRAPH IS DECLARED INVALID, THEN ALL OTHER PARAGRAPHS OF THIS CONTRACT SHALL STAND. MUTUAL INDEMNIFICATION (ONLY FOR CONTRACTS PERTAINING TO A WELL FOR OIL, GAS, OR WATER, OR TO MINE FOR A MINERAL, PURSUANT TO V.TCA. CIVIL PRACTICE CODE §127.001-127.007) – LESSOR AND LESSEE AGREE TO INDEMNIFY EACH OTHER AND EACH OTHER’S CONTRACTORS AND THEIR EMPLOYEES AGAINST LOSS, LIABILITY OR DAMAGES ARISING IN CONNECTION WITH BODILY INJURY, DEATH, AND DAMAGE TO PROPERTY OF THEIR RESPECTIVE EMPLOYEES, CONTRACTORS OR THEIR EMPLOYEES, AND INVITEES OF EACH PARTY ARISING OUT OF OR RESULTING FROM THE PERFORMANCE OF THE CONTRACT. THIS PROVISION ONLY APPLIES TO CONTRACTS FOR A WELL FOR OIL, GAS, OR WATER, OR TO MINE FOR A MINERAL, PURSUANT TO V.T.C.A. CIVIL PRACTICE CODE §127.001-127.002. THIS PROVISION IS SEPARATE AND DISTINCT FROM ANY OTHER PROVISION OR PARAGRAPH IN THIS CONTRACT, INCLUDING ANY PROVISION OR PARAGRAPH CONCERNING INDEMNIFICATION AND PROCUREMENT OF INSURANCE. IF THIS PARAGRAPH IS DECLARED INVALID, THEN ALL OTHER PARAGRAPHS OF THIS CONTRACT SHALL STAND. 2. INSURANCE –The Lessee agrees to purchase the following insurance coverages prior to the equipment’s arrival on the job site. The Lessee shall procure the following coverages for Lessor: a.) worker's compensation and employer's liability insurance, with limits of at least the statutory minimum or $1,000,000, whichever is greater; b) primary non-contributory commercial general liability insurance on an occurrence basis, including bodily injury and property damage coverages with minimum limits of $1,000,000 per occurrence and $2,000,000, in the aggregate; c) excess/umbrella non-contributory insurance in the amount of $5,000,000 and Lessee’s primary and excess/umbrella policies must be endorsed so that they are primary and non-contributory to all of Lessor’s insurance policies; d) inland marine/all risk physical damage insurance, on a primary non-contributory basis, to cover the full insurable value of the equipment, including any boom or jib, for its loss or damage from any and all causes, including, but not limited to, overloading, misuse, fire, theft, flood, explosion, overturn, accident, and acts of God occurring during the rental term; e) all policies are to be written by insurance companies acceptable to the Lessor; f) the Lessor and all affiliated partnerships, joint ventures, corporations and anyone else who Lessor is required to name as an additional insured, are to be included as additional insured on all liability insurance policies, including excess/umbrella policies (ISO Form CG 20 10 10 01 and ISO CG 20 37 10 01 must be used), Lessee shall name Lessor as a Loss Payee on all insurance policies, and Lessee shall provide all insurance certificates to Lessor when requested; g) all policies shall be endorsed to require the insurer to give thirty (30) days advance notice to all insured’s prior to cancellation; h) all of Lessor’s, and anyone Lessor is required to insure, policies are excess over all of Lessee’s policies. In the event of loss, proceeds of property damage insurance on the equipment shall be made payable to Lessor. Lessee's agreements to indemnify and hold Lessor harmless from any liability, damage and loss are in addition to, and not an alternative to, these insurance provisions and the purchase of any of the above coverages shall not operate to waive any of the above indemnity provisions. To the extent that the Lessee may perform under this lease without obtaining the above coverages, such an occurrence shall not operate, in any way, as a waiver of the Lessor's right to maintain any breach of contract action against the Lessee. Lessee hereby agrees to waive any and all rights of subrogation and any and all lien rights (including those arising from worker's compensation/employer's liability policies or other employee benefit programs, commercial general liability policies, or similar policies) which may accrue to it or its insurers. This shall include, but not be limited to, rights of subrogation and lien rights. The Lessee understands that this waiver shall bind its insurers of all levels, and agrees to put these insurers on notice of this waiver and to have any necessary endorsements added to the insurance policies applicable to this lease.

3. OPERATION OF EQUIPMENT -- It is expressly agreed by and between the parties hereto that the equipment and all persons operating, repairing, or maintaining and assemble/disassemble the equipment are under the exclusive jurisdiction, supervision and control of Lessee under this lease. It shall be the duty of Lessee to give specific instructions and directions to all persons operating, repairing, and maintaining the leased equipment. Lessee agrees to provide or otherwise select competent and experienced personnel to direct the operation of the equipment, in accordance with OSHA 29 CFR 1926.1428 signal person qualifications and Lessee further agrees that the standard of care and responsibilities will be in accordance with all American National Standards Institute (ANSI) and that ASME B30.5 -2007 (and as amended) shall be used when operating the equipment, specifically Chapter 5-3 Operation, as well as the OSHA 29 CFR Subpart CC Cranes and Derricks in Construction sections 1926.1400 – 1926.1442Lessee specifically agrees that the Lessor has absolutely no control over any person operating or assisting in operating, repairing, or maintaining the leased equipment. Lessor may provide an operator with the equipment. Lessee may reject this operator; however, if operator is not rejected, the operator is under the Lessee’s exclusive direction and control and is Lessee’s agent, servant, and employee. The lease payments made by the Lessee shall include the operator’s wages, even though the operator's wages may be disbursed by the Lessor. This lease is upon the agreement of the parties that Lessor has no right to replace or substitute personnel except at the direction of and with the approval of Lessee and that the Lessee shall have the right to control, including the right of termination, and shall be deemed to have exercised that right as to all details or operation of the leased equipment and personnel the Lessee selects to operate the leased equipment. If the equipment is damaged, involved in an accident, or made inoperable in any way, the Lessee shall notify Lessor in writing within 48 hours of its occurrence, specifying the extent and nature of the accident or damage. The cost of any repair necessary to restore the equipment to said condition shall be paid by Lessee. Any time beyond the minimum term required to make such repairs shall extend the term of this agreement to include such reasonable additional repair time as is necessary under the circumstances. Time is of the essence of this lease and all its provisions. Lessor’s failure to require strict performance by Lessee of any of the lease provisions, or Lessor’s acceptance of late or partial performance hereunder, shall not constitute a waiver of any prior defaults of Lessee, nor of Lessor’s rights under this agreement This lease shall be binding upon and shall inure to the benefit of the parties and their successors, administrators, executors, trustees and assigns. This agreement shall be interpreted according to the laws of Lessor’s location stated on the front page. This agreement shall be interpreted fairly and reasonably and neither more strongly for nor against either party. THIS CONTRACT SHALL BE IN EFFECT FOR A DURATION OF ONE YEAR FOR THIS OR SIMILIAR EQUPIMENT OR UNLESS EXPRESSLY TERMINATED IN WRITING BY Lessor. In the event that the Lessee loans, sublets or allows a third party to use the crane and the services of the operator, Lessee agrees to have said third party sign and agree to the terms of this contract. 4. CONDITIONS –GROUND/POWERLINES/RIGGING—The Lessee hereby agrees that it will assume all responsibility for the ground or soil conditions in the area where the crane is to be stored, parked or operated. The Lessee shall perform or have performed all necessary inspections or testing to determine the nature of the ground or soil and its ability to support the crane while in operation or otherwise. If the ground or soil condition is such that it cannot support the crane, the Lessee shall take all necessary measures to insure that these conditions are remedied prior to the crane being placed on that ground or soil. These measures include, but are not limited to, the provision of proper shoring or cribbing or other measures. Lessee assumes all responsibility to protect the equipment and persons in or around the equipment from the danger of power lines. Lessee shall not expose the equipment or any persons in or around such equipment to the danger of energized power lines. All power lines in the work area shall be identified prior to the work beginning. All power lines are to be de-energized prior to the equipment being operated in or around such power lines. Lessee shall contact the local electric utility or other such authorized entity to arrange to have the power lines de-energized prior to beginning work. Even if power lines are de-energized, Lessee shall keep the equipment clear of such power lines at the distances required by OSHA, ANSI and any other safety regulations or standards. If it is not possible to de-energize power lines, then the Lessee shall be responsible for the insulating of any power lines, the grounding of all equipment and will be required to use rigging or other equipment designed to prevent electrocution. Lessee is required to provide any and all rigging to be used with the equipment. If chokers, slings, straps, chains, hooks, spreaders, fittings, rope or wire, etcetera; are loaned to the Lessee by the Lessor for the Lessee’s convenience, and is solely at the Lessee’s responsibility. Lessee assumes responsibility for any defects in any rigging, whether the property of Lessee or otherwise. Lessee assumes the responsibility for damage to any load on hook due to a failure of the rigging. Lessee assumes the responsibility for the method of rigging and agrees that all persons involved in the rigging process are qualified according to OSHA’s definition 1926.1401 under Lessee’s direct supervision and control. 5. NO RELIANCE ON LOAD MEASURING DEVICE -- If any crane has been fitted with a load measuring device, the Lessee hereby acknowledges and agrees that the Lessor has made no warranties or representations whatsoever with respect to the ability of the said load measuring device to accurately or consistently measure the weight of loads being lifted by such crane. The Lessee further acknowledges and agrees that it is the responsibility of the Lessee to independently determine the weight of every load to be lifted by any crane comprising all or portion of the equipment so as to ensure that any such load measuring device shall be used as an operator-aide only. As well, the Lessee acknowledges and agrees that if he relies in any way whatsoever on any load measuring device that he does so completely at his own risk. 6. AUTHORIZED SIGNATURE - In the event this agreement has been executed on the reverse side by an individual on behalf of a corporation or other business entity, the person whose signature is affixed hereto and the company for which the individual has signed this agreement represent to Lessor that the individual signing has full authority to execute this agreement on behalf of said corporation or other business entity.

Why include an AI provision in your own manned contract???

• They may have a policy that has a blanket AI endorsement similar to yours

• It will depend on how the endorsement is triggered• Your Broker and your Carrier can work with you to limit your

liability especially if you did nothing wrong• If you give it away we can’t get it back

Their policy may have the same or similar language

• In many cases your insurance policy will have language similar to this

• This endorsement will give coverage to a customer of yours when you are required by contract to name that person (business) on your policy in order to do business with that person (business)– see highlight

• Your policy will be triggered in the event of a claim—duty to defend

However some of the endorsements in a policy may require additional processing!!

Make sure your agent understands your business

Your customer or you may have a different Endorsement

• In this case the AI status is afforded but only when the person (business) is named in the schedule-see highlight

Be careful what you give away and also pay attention to what you get !!

• Thoroughly review both the service agreement and the insurance policies in question with your broker before becoming or accepting an additional insured. Each of these documents is capable of creating insurance gaps for an unsuspecting party. The key to avoiding these traps is a clear understanding of each party’s expectations and careful review of those documents to insure that these expectations are accomplished

Checklist!!!

• Limit your agreement on Indemnity to type 2 or 3 if possible

• Look for words that may tie you back in throughout the contract

• Make sure the state statute allows for the indemnity called for in agreement

• Make sure if you give AI status or you are getting AI status you get the right form

• When giving AI status try to give 04 version “caused in whole or in part” When getting AI status try to get 01 version “arising out of”

Checklist!!

• Try to keep your subrogation rights in case of a loss so you can come back to get what your entitled too

• Soil and site conditions should be a part of your contract. Include language according to OSHA CC1400 and B30.5

Questions or Comments?