Developer understands and agrees that if Developer fails to complete the Work in accordance with the Contract Documents, TxDOT will suffer substantial Losses. Developer agrees that it shall be liable for all such Losses. Developer and TxDOT have agreed to require payment of Liquidated Damages with respect to certain types of Losses. Developer acknowledges and agrees that the Liquidated Damages are intended to compensate TxDOT solely for Developer's failure to meet the deadlines set forth in Section 4.2 and shall not excuse Developer from liability from any other breach of requirements of the Contract Documents, including any failure of the Work to conform to applicable requirements. Developer shall not be liable for actual damages in addition to the Liquidated Damages for Developer's failure to meet the deadlines set forth in Section 4.2. The fact that TxDOT has agreed to accept Liquidated Damages as compensation for its damages associated with any delay in meeting a Completion Deadline shall not preclude TxDOT from exercising its other rights and remedies respecting the delay set forth in Section 16.2 and, if applicable, Section 16.3, other than the right to collect other damages due solely to the delay, except that TxDOT agrees not to exercise such other rights and remedies respecting the delay so long as (a) the applicable Pilot System Schedule or Project Segment Schedule demonstrates that Developer is capable of meeting such Completion Deadline within 90 Days after the Completion Deadline and (b) Developer diligently performs the Work in accordance with said schedule.
Developer acknowledges and agrees that because of the unique nature of the Project and each Pilot System and Project Segment, the importance of establishing the viability of the System through the development of each Pilot System, the fact that the Project Segments are essential parts of the Texas highway system, and the fact that inconvenience to the traveling public will be one of the significant impacts of any failure by Developer to achieve each System Acceptance, Punch List Acceptance and Final Acceptance by the applicable Completion Deadline, it is impracticable and extremely difficult to ascertain and determine the actual Losses which would accrue to TxDOT and the public in such event. Therefore, Developer shall pay TxDOT a liquidated amount (the "Liquidated Damages") as deemed compensation to TxDOT for such Losses, in the following amounts:
(a) For each Day after the applicable System Acceptance Deadline and through the date of System Acceptance, but not to exceed 365 Days, the amount set forth in Exhibit Y-1 for each Pilot System, and for each Project Segment, a dollar amount per Day to be set forth in the relevant Project Segment Supplement, determined by TxDOT in accordance with the methodology described for the Pilot System Liquidated Damages in Exhibit Y-1; and
(b) For each Day after the applicable Punch List Acceptance Deadline and through the date of Punch List Acceptance, the amount set forth in Exhibit Y-2 for each Pilot System, and for each Project Segment, a dollar amount per Day to be set forth in the relevant Project Segment Supplement, determined by TxDOT in accordance with the methodology described for the Pilot System Liquidated Damages in Exhibit Y-2; and
(c) For each Day after the applicable Final Acceptance Deadline and through the Date of Final Acceptance, the amount set forth in Exhibit Y-3 for each Pilot System, and for each Project Segment, a dollar amount per Day to be set forth in the relevant Project Segment Supplement, determined by TxDOT in accordance with the methodology described for the Pilot System Liquidated Damages in Exhibit Y-3.
Developer acknowledges and agrees that the foregoing damages have been set based on an evaluation by TxDOT of damages to TxDOT and the public caused by late completion. Developer and TxDOT agree that the amount of such damages are impossible to ascertain as of the date of execution hereof and the parties have agreed to such Liquidated Damages in order to fix Developer's costs and to avoid later disputes over which items are properly chargeable to Developer. It is understood and agreed by Developer that any Liquidated Damages payable in accordance with Section 17.2 are in the nature of liquidated damages and not a penalty and that such sums are reasonable in light of the anticipated or actual harm caused by the breach, the difficulties of the proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. Developer further acknowledges and agrees that Liquidated Damages may be owing even though no Event of Default has occurred.
17.4.1 Stipulated Damages Generally
Developer understands and agrees that if any Project Segment (and for purposes of Stipulated Damages, a permanent Pilot System shall be considered a Project Segment) fails to meet the Performance Requirements at any time after Project Segment System Acceptance, TxDOT will suffer substantial Losses. Developer agrees that it shall be liable for all such Losses. Developer and TxDOT have agreed to require payment of Stipulated Damages with respect to Losses resulting from a Project Segment's failure to meet the Performance Requirements at any time during the Maintenance Term (including any Maintenance Option Periods) for such Project Segment. Developer acknowledges and agrees that the Stipulated Damages are intended to compensate TxDOT solely for a Project Segment's failure to meet the Performance Requirements, and shall not excuse Developer from liability from any other breach of requirements of the Contract Documents. Developer shall not be liable for actual damages in addition to the Stipulated Damages for the Project Segment's failure to meet the Performance Requirements. The fact that TxDOT has agreed to accept Stipulated Damages as compensation for its damages associated with any Project Segment's failure to meet the Performance Requirements shall not preclude TxDOT from exercising its other rights and remedies respecting such failure, except that TxDOT agrees not to exercise such other rights and remedies so long as (a) Developer demonstrates that Developer is capable of making adjustments to the Project Segment that will cause it to meet the Performance Requirements after TxDOT's written notice to Developer of the failure, and (b) Developer diligently performs the Work required to cause the Project Segment to meet the Performance and continues such Work to completion.
17.4.2 Amount of Stipulated Damages
Developer acknowledges and agrees that because of the unique nature of the Project and each Project Segment, and the fact that performance of the System in conformance with the Performance Requirements is essential to TxDOT's ability to collect toll revenue to enable it to continue to finance, construct, operate and maintain and improve the Texas highway system, it is impracticable to ascertain and determine the actual Losses which would accrue to TxDOT and the public from such failure. Therefore, commencing upon the applicable Project Segment System Acceptance date, Developer shall pay to TxDOT a stipulated amount (the "Stipulated Damages") as deemed compensation to TxDOT for such Losses, in the following amounts:
(a) For each Project Segment that experiences System Availability below the percentage required by the Performance Requirements, a dollar amount calculated as the average hourly toll revenues typically experienced by such Project Segment during the period of substandard System Availability times the number of hours (with partial hours rounded to the nearest quarter hour) of unavailability in excess of that required by the Performance Requirements for the period of time in question, less tolls actually collected during such period of unavailability; provided, however, that if the Project Segment does not have at least 12 months of operating history from which to determine such average toll revenues, Stipulated Damages for substandard System Availability shall be determined by reference to the traffic and revenue study estimates for such Project Segment for the period of time in question.
(b) For each Project Segment that experiences System Accuracy below that required by the Performance Requirements, a dollar amount calculated as the difference between the required System Accuracy percentage and the Project Segment's actual System Accuracy percentage during the period of time in question, divided by the Required System Accuracy percentage, times the Project Segment's total toll revenues during the period of time in question.
(c) In the event Developer fails in any calendar month to achieve a mean time to respond to a maintenance call or to achieve a mean time to repair within the time stated in TP Section 4.1.7.6, (a) for each Pilot System Developer shall pay TxDOT the amount specified in Exhibit Y-4 for each hour or portion thereof (with partial hours rounded to the nearest quarter hour), that the total number of hours of response time exceeds the required mean time to respond multiplied by the number of response incidents plus the total number of hours of repair time that exceeds the required mean time to repair multiplied by the number of repair incidents for such Pilot System, and (b) for each Project Segment Developer shall pay TxDOT a dollar amount per hour to be set forth in the relevant Project Segment Supplement, determined by TxDOT in accordance with the methodology described for the Pilot System Stipulated Damages in Exhibit Y-4, for each hour or portion thereof (with partial hours rounded to the nearest quarter hour), that the total number of hours of response time exceeds the required mean time to respond multiplied by the number of response incidents plus the total number of hours of repair time that exceeds the required mean time to repair multiplied by the number of repair incidents for such Project Segment.
Developer understands and agrees that any Stipulated Damages payable in accordance with this Section 17.4.2 are in the nature of stipulated damages and not a penalty and that such sums are a reasonable approximation of the actual damages from lost toll revenues that TxDOT will accrue as a result of the circumstances giving rise to such Stipulated Damages. Developer further acknowledges and agrees that Stipulated Damages may be owing even though no Event of Default has occurred.
17.5.1 Liquidated Damages and Stipulated Damages shall be payable by Developer to TxDOT within 10 Days after Developer's receipt of an invoice therefore from TxDOT.
17.5.2 TxDOT shall have the right to deduct any amount owed by Developer to TxDOT hereunder (i) from any amounts owed by TxDOT to Developer, including any Retainage which may be payable by TxDOT to Developer pursuant to Section 12.3.1; and/or (ii) by drawing upon the Performance Bond provided for the relevant Pilot System or Project Segment pursuant to Section 8.1.1 and/or any Letter of Credit provided pursuant to Section 8.2 (whether applicable to the Pilot System or Project Segment affected or not). In the event of any such deduction from the Retainage for a Pilot System or Project Segment, or draw against a letter of credit provided with respect to a Pilot System or Project Segment, Developer shall replenish the applicable Retainage and reinstate the amount available to draw under the relevant letter of credit as required by Section 8.2, Section 12.3.1.6 and Section 12.3.1.7.
17.5.3 Permitting or requiring Developer to continue and finish the Work or any part thereof after a Completion Deadline or notwithstanding any failure to meet the Performance Requirements, as applicable, shall not act as a waiver of TxDOT's right to receive Liquidated Damages or Stipulated Damages hereunder or any rights or remedies otherwise available to TxDOT.
To the extent permitted by applicable Law, TxDOT will not seek indemnification and defense under Section 18 or to recover damages from Developer resulting from breach of this Agreement (whether arising in contract, negligence or other tort, or any other theory of law) in excess of the sum of (a) all those costs reasonably incurred by TxDOT or any party acting on TxDOT's behalf in completing or correcting the Work or having the Work completed or corrected by another Person, (b) an amount equal to $________ (which amount shall specifically include any Liquidated Damages and Stipulated Damages paid pursuant to this Section 17 as well as any payments made by Developer pursuant to Section 18); (c) any amounts paid by Developer which are covered by insurance proceeds; (d) all Losses incurred by any Indemnified Party relating to or arising out of any illegal activities, fraud, criminal conduct, gross negligence or willful misconduct on the part of any Developer-Related Entity; and (e) work required or arising under the Warranties.
