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Tools & Programs: SEP-15

Texas Toll Roads Statewide Open-Road Toll Collection System Project (TX Toll Collection System)

Comprehensive Development Agreement TxDot Statewide Open-Road Toll Collection System

SECTION 8. PERFORMANCE AND PAYMENT BONDS

8.1 Provision of Bonds

Developer shall provide payment, performance and warranty bonds to TxDOT securing Developer's obligations hereunder, each in an amount set forth herein, and shall maintain such bonds in full force and effect as described below.

8.1.1 A copy of the Performance Bond for the Pilot System Work covered by Pilot System NTP 1 previously provided is attached hereto as Exhibit H. As a condition to issuance of an NTP for an additional Pilot System or a Project Segment, Developer shall provide a Rider to the existing Performance Bond, or furnish TxDOT with a separate Performance Bond in the form of attached Exhibit H-1, with respect to such additional Pilot System or Project Segment. Such bond (or Rider, as the case may be) shall be in an amount of 100% of the Pilot System Price or Project Segment Price, as applicable. Subject to Section 8.1.3, TxDOT will release any individual Performance Bond relating solely to a Pilot System or a Project Segment or, if a Rider is provided, reduce the amount of the Performance Bond by the Pilot System Price or Project Segment Price, as applicable, (a) upon expiration of the Warranty term related to such Pilot System or Project Segment, as applicable, provided that no outstanding claims are then pending or threatened against Developer hereunder, or (b) upon satisfaction of the conditions in Section 8.1.3.

8.1.2 A copy of the Payment Bond for the Pilot System Work covered by Pilot System NTP 1 previously provided is attached hereto as Exhibit I. As a condition precedent to issuance of an NTP for an additional Pilot System or a Project Segment, Developer shall provide a Rider to the existing Payment Bond, or furnish TxDOT with a Payment Bond in the form of Exhibit I-1 with respect to such additional Pilot System or Project Segment. Such Bond (or Rider, as the case may be) shall be in an amount of 100% of the relevant Pilot System Price or Project Segment Price. Subject to Section 8.1.3, TxDOT will release any individual Payment Bond relating solely to a Pilot System or a Project Segment or, if a Rider is Provided, reduce the amount of the Payment Bond by the Pilot System Price or Project Segment Price, as applicable, (a) upon receipt of (i) evidence satisfactory to TxDOT that all Persons eligible to file a claim against the bond have been fully paid and (ii) unconditional releases of Liens and stop notices from all Subcontractors who filed preliminary notice of a claim against the bond, (b) upon expiration of the statutory period for Subcontractors to file a claim against the bond if no claims have been filed, or (c) upon satisfaction of the conditions in Section 8.1.3.

8.1.3 After any Final Acceptance, subject to the requirements herein, Developer may obtain a reduction in the amount of the relevant Performance Bond by providing a warranty bond, or such other security as is approved by TxDOT, in its sole discretion, which shall guarantee performance of the Work required to be performed during the Warranty term and which shall also constitute a payment bond guaranteeing payment to Persons performing such Work ("Warranty Bond"). The Warranty Bond shall be (i) in an amount equal to 20% of the applicable Pilot System Price or the Project Segment Price, (ii) substantially in the form attached hereto as Exhibit O, and (iii) released upon satisfaction of the conditions in Section 8.1.1(a) and Section 8.1.2(a) or (b).

8.1.4 As a condition to any Final Acceptance, for each Pilot System and Project Segment, Developer shall furnish TxDOT with (a) a Maintenance Performance Bond in the form of Exhibit H-2 , and (b) a Maintenance Payment Bond in the form of Exhibit I-2. After the initial Maintenance Performance Bond and Maintenance Payment Bond are issued, as a condition precedent to subsequent Final Acceptances, in lieu of providing separate Maintenance Performance Bonds and Maintenance Payment Bonds for each additional Pilot System and/or Project Segment, Developer may provide Riders to the existing Maintenance Performance Bond and Maintenance Payment Bond. Maintenance Performance Bonds (or Riders, as the case may be) shall be in an amount equal to 100% of the Maintenance Price for the relevant Pilot System and/or Project Segment. TxDOT will reduce the amount of the Maintenance Performance Bond by the applicable Maintenance Price upon expiration of the applicable Maintenance Term. TxDOT will reduce the amount of the Maintenance Payment Bond (i) upon receipt of (A) evidence satisfactory to TxDOT that all Persons eligible to file a claim against the bond have been fully paid and (B) unconditional releases of Liens and stop notices from all Subcontractors who filed preliminary notice of a claim against the bond, or (ii) upon expiration of the statutory period for Subcontractors to file a claim against the bond if no claims have been filed.

8.1.5 Also as a condition to any Final Acceptance, Developer shall furnish TxDOT with a Maintenance Warranty Bond in the amount of ___% of the applicable Pilot System Price or Project Segment Price, as the case may be, or other such security as is approved by TxDOT, in its sole discretion, guaranteeing performance of the Warranty Work that Developer may be required to perform with respect to Work performed during the applicable Maintenance Term.

8.1.6 Each bond required hereunder shall be issued by a Surety authorized to do business in the State with a rating of at least AVIII by "Best & Company" or rated in the top two categories by two nationally recognized rating agencies, or as otherwise approved by TxDOT in its sole discretion. If any bond previously provided becomes ineffective, or if the Surety that provided the bond no longer meets the requirements hereof, Developer shall provide a replacement bond in the same form issued by a surety meeting the foregoing requirements, or other assurance satisfactory to TxDOT in its sole discretion. If a Price is increased in connection with a Change Order, TxDOT may, in its sole discretion, require a corresponding proportionate increase in the amount of each bond or alternative security.

8.2 Letter of Credit

A copy of the unconditional, irrevocable direct pay Letter of Credit securing Developer's obligation to perform under the Contract Documents, including the obligation to pay Liquidated Damages, Stipulated Damages, compensation for Losses and any other amounts that may become payable to TxDOT under the Contract Documents with respect to the Pilot System covered by Pilot System NTP 1 is attached hereto as Exhibit Q. As a condition precedent to issuance of any NTP after Pilot System NTP 1, Developer shall provide a Rider to the existing Letter of Credit, or furnish TxDOT with a separate irrevocable Letter of Credit in the form of Exhibit Z with respect to the additional Pilot System and/or Project Segment to be covered by the additional NTP. The available amount of the Letter of Credit (or Rider, as the case may be) shall be an amount equal to the sum of _____ Days of Liquidated Damages and ____ Days of Stipulated Damages, in each case, as determined under the relevant Project Segment Supplement. The issuing bank shall be a recognized financial institution having unsecured long-term debt obligations rated in one of the three highest rating categories of Moody's or Standard & Poors' and short-term obligations rated in the highest Rating Category of Moody's or Standard & Poor's (a "Letter of Credit Bank"). Should a Letter of Credit Bank's credit rating fall below that required herein, Developer shall provide substitute Letters of Credit from a financial institution meeting such requirements within 15 Days. Failure to provide such substitute shall entitle TxDOT to draw the full amount of such existing Letter of Credit and hold the same as security against any obligation of Developer to pay Liquidated Damages and Stipulated Damages hereunder. In such event, Developer shall receive such funds, without interest thereon, only upon (i) provision of a new Letter of Credit as provided herein; or (ii) satisfaction of all conditions to release of a Letter of Credit hereunder. At least 60 Days prior to the stated expiration of any Letter of Credit provided hereunder, Developer shall either (i) deliver a replacement letter of credit in the form required hereby, (ii) deliver an extension of the letter of credit in the form required hereby for at least an additional year from the prior expiration date, or (iii) deposit cash or a certificate of deposit in the amount of the expiring Letter of Credit (without regard to prior draws or payments upon the same). In the event of a TxDOT draw on such letter of credit reducing the amount available to be drawn thereunder to compensate TxDOT for Developer's obligation to pay Liquidated Damages or Stipulated Damages with respect to any Pilot System or Project Segment, Developer shall, within five (5) business days after such draw, cause the available amount of the Letter of Credit to be reinstated to the full amount required hereunder. Should Developer fail to reinstate such Letter of Credit, (x) TxDOT shall be entitled to draw the remaining amount of the Letter of Credit and hold the same as security as described and in the manner set forth above; and (y) such draw by TxDOT shall not cure Developer's obligation to provide a reinstated Letter of Credit as required hereby.

8.3 No Relief of Liability

Notwithstanding any other provision set forth in the Contract Documents, performance by a Surety or Guarantor of any of the obligations of Developer shall not relieve Developer of any of its obligations hereunder.

8.4 Guarantees

8.4.1 ____________________ is the Guarantor of Developer's obligations under the Contract Documents in accordance with that certain guarantee executed by ___________________ and delivered to TxDOT concurrently with the execution of this Agreement. Such guarantee(s) assure(s) performance of Developer's obligations hereunder and shall be maintained in full force and effect throughout the duration of this

Agreement. [NOTE TO PROPOSERS "" 8.4.1 WILL BE DELETED IF NO GUARANTOR IS REQUIRED AT SIGNING]

8.4.2 If at any time during the course of this Agreement the total combined Tangible Net Worth of Developer, its equity members and any Guarantors, if any, is less than $25,000,000 (excluding Tangible Net Worth in excess of any applicable limit of liability stated in the guarantee), Developer shall provide one or more guarantees. Each such guarantee shall be in the form attached to the RFDP as Form I together with appropriate evidence of authorization, execution, delivery and validity thereof (including an opinion of counsel as to the guarantee in the form of Form N of the RFDP), and shall guarantee the Guaranteed Obligations (as defined in Form I). Each guarantee must be provided by (a) a parent corporation or a shareholder of Developer, or (b) a parent corporation or a shareholder of an equity member of Developer.

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