EXHIBIT 10 (i)
DESIGN/BUILD
COST PLUS CONSTRUCTION CONTRACT
for
XXXX INCORPORATED
TABLE OF CONTENTS
DESIGN/BUILD
COST PLUS CONSTRUCTION CONTRACT
This Contract, made this 5th day of May, 1999, by and
between XXXX COMPANIES US, INC., a Minnesota corporation
(hereinafter called "Design/Builder"), and XXXX INCORPORATED, a
Minnesota corporation (hereinafter called "Owner");
Witnesseth that, in consideration of the mutual covenants
and agreements contained herein, Design/Builder and Owner hereby
agree as follows:
Article 1 - Scope of the Project
Design/Builder shall furnish all of the labor, materials,
equipment and all of the services necessary for the design of the
site work and building shell and construction of the entire site
work, shell building and interior improvements comprising an
approximately 63,500 square foot office/manufacturing building
and related improvements in accordance with the preliminary
plans, outline specifications and any other materials described
on Exhibit A and the final plans and specifications prepared
therefrom (hereinafter referred to as the "Project" or the
"Work"). The parties acknowledge and agree that Xxxx Associates
("Interior Architect") will design the interior improvements to
the building which are not described in the materials set forth
on Exhibit A hereto (the "Interior Improvements").
Design/Builder agrees to (a) provide access to the site for
Interior Architect, (b) cooperate with Interior Architect in the
design and drawings for the Project, and (c) coordinate and
consult with Interior Architect during the construction of the
Interior Improvements, which construction shall be completed by
Design/Builder pursuant to this Contract. Both the design and
construction of the Project shall be undertaken with a standard
of care, skill and workmanship throughout, consistent with
applicable industry standards in the area in which the Project is
located. Within 30 days from the date hereof, Design/Builder
shall submit to Owner for its approval final plans and
specifications for the portion of the Work that it has design
responsibility for, setting forth in detail the requirements for
construction thereof. Such final plans and specifications shall
be in substantial accordance with the documents described on
Exhibit A and shall be prepared and certified by architects or
engineers in their respective disciplines, selected by
Design/Builder, who are licensed in the state where the Project
is located. Design/Builder warrants that such final plans and
specifications will comply with all applicable building codes,
laws, ordinances and regulations in effect and enforced as of the
date of this Contract, and with any and all encumbrances filed
against the property as of the date of this Contract and which
are anticipated to be filed in connection with the construction
of the Project, including without limitation restrictions and
covenants required by prior owners and/or the City of Brooklyn
Park. Design/Builder's costs and expenses incurred in all such
compliance shall be included in the Cost of the Work. Owner
shall furnish to Design/Builder, in a timely manner, any
necessary program or design information regarding Owner's needs
or requirements for the Project and for any work to be performed
by separate contractors working directly for Owner.
Design/Builder shall be entitled to rely on the accuracy and
completeness of such information in the design of the Project.
Additional design services for space planning of moveable office
work stations, design of custom furniture, selection of
furnishings, artwork and accessories, and inventorying of
existing furniture and equipment are not within the scope of the
services to be provided by Design/Builder pursuant to this
Contract and must be separately contracted for in writing.
Design/Builder's rates for such additional design services
(performed by Design/Builder's personnel) are set forth in
Exhibit C. When said final plans and specifications have been
approved by Owner and Design/Builder, they shall be signed or
otherwise approved in writing by their appointed representatives
and shall supersede the preliminary plans, outline specifications
and any other materials described on Exhibit A. Owner agrees
that it will not unreasonably withhold its approval and will not
act in any arbitrary or capricious manner with respect to
approval of such final plans and specifications so long as the
same are in substantial accordance with the documents set forth
in Exhibit A. If final plans and specifications for the Project
have not been approved by Owner and Design/Builder within 10 days
after the first submittal thereof by Design/Builder, then either
party may terminate this Contract by giving written notice
thereof to the other party. In the event of such termination,
whether by Owner or Design/Builder, Owner shall within 10 days
thereafter pay to Design/Builder all costs (including
Design/Builder's personnel costs at the rates set forth in
Exhibit C and all out-of-pocket costs) which Design/Builder has
incurred for its time and expense in developing the preliminary
and proposed final plans and specifications. Such costs shall in
no event exceed $140,000. Upon receipt of such payment,
Design/Builder shall deliver to Owner uncertified copies of such
proposed final plans and specifications. In addition, Owner
shall pay Design/Builder for any other expenses incurred by
Design/Builder that Owner has given Design/Builder written
authorization to incur.
Not later than June 1, 1999, Owner shall furnish to
Design/Builder final plans and specifications for the Interior
Improvements. Such final plans and specifications shall be
prepared and certified by the Interior Architect and shall be
consistent with the final plans and specifications furnished by
Design/Builder.
Article 2 - Time of Completion
Design/Builder shall achieve Substantial Completion of the
Project not later than August 30, 1999. Design/Builder will
notify Owner by June 30, 1999 if it anticipates that Substantial
Completion of the Project will not be achieved by August 20,
1999. However, if Design/Builder is delayed at any time in the
progress of the Work by any act or neglect of Owner or of any
agent or employee of Owner or of any separate contractor employed
by Owner, failure to timely furnish the final plans and
specifications for the Interior Improvements, changes ordered in
the Work by Owner, labor disputes, fire or other casualty,
unusual delay in deliveries, shortages or unavailability of fuel
or materials, unusual weather, acts of God or public enemy,
governmental action or non-action, or by any other cause beyond
the control of Design/Builder, then the time by which Substantial
Completion is to be achieved shall be extended by a period equal
to such delay. Design/Builder shall not be entitled to a time
extension for delays that are the result of Design/Builder's
negligence. All claims for an extension of time shall be made in
writing to Owner within 20 days after the occurrence of the cause
of delay or shall be deemed waived, but in the case of a
continuing cause of delay, only one claim shall be necessary.
Substantial Completion shall be deemed to have been achieved when
construction is sufficiently complete so that Owner can utilize
the Project for the purpose for which it is intended and a
certificate of occupancy (temporary or permanent) has been issued
for the Project. Owner and Design/Builder shall execute a
Certificate of Substantial Completion certifying such date as the
Date of Substantial Completion. As of the Date of Substantial
Completion, Owner shall assume full responsibility for all
utilities, insurance, security, and all other operational aspects
of the Project.
Article 3 - Contract Sum
Owner shall pay Design/Builder for the performance of this
Contract, subject to additions and deductions as provided for
herein, in current funds, the Contract Sum consisting of the Cost
of the Work as defined in Article 8 plus the Design/Builder's Fee
to be determined as follows:
Design/Builder's Fee shall be $192,588.
Article 4 - Guaranteed Maximum Price
The sum of the Cost of the Work and the Design/Builder's Fee
is guaranteed by Design/Builder not to exceed Three Million Six
Hundred Eighty-four Thousand One Hundred and Forty-eight Dollars
($3,684,148), which includes a contingency in the amount of
$78,288 (the "Contingency"), subject to additions and deductions
by Change Order as provided in this Contract. Such maximum sum
is referred to in this Contract as the Guaranteed Maximum Price.
Such Guaranteed Maximum Price includes allowances for the Cost of
the Work relating to (a) the Interior Improvements of $447,840,
(b) electrical power and lighting of $214,732, and (c) exterior
signage of $7,500. Costs which would cause the Guaranteed
Maximum Price to be exceeded shall be paid by Design/Builder
without reimbursement by Owner. If the Cost of the Work plus the
Design/Builder's Fee is less than the Guaranteed Maximum Price,
the difference thereof (hereinafter referred to as the "Savings")
shall be divided between Owner and Design/Builder as described in
this Article 4. Provided that Design/Builder achieves
Substantial Completion by August 20, 1999, Design/Builder shall
receive, as additional Design/Builder's Fee, an amount equal to
fifty percent (50%) of any amount remaining in the Contingency.
All remaining Savings, including the other fifty percent (50%) of
any remaining Contingency, shall accrue to Owner.
Article 5 - Payment of Contract Sum
(a) Progress Payments. Owner shall make payments on
account of the Contract Sum as follows:
(i) Design/Builder shall submit to Owner, on or about
the first day of each month, an Application for Payment
for the value of the Work completed (including
materials suitably stored on the site and a
proportionate share of Design/Builder's Fee) based upon
the Schedule of Values set forth in Exhibit B. If no
Schedule of Values is attached hereto, Design/Builder
shall submit one to Owner prior to its first
Application for Payment.
(ii) Upon receipt of each Application for Payment,
Owner shall have the right to inspect the Project to
confirm that Design/Builder's Application reflects the
value of Work actually completed. If Owner discovers
that the Work actually completed differs from that
represented on the Application for Payment, or the Work
is defective or does not comply with the requirements
of this Contract, Owner may withhold such sums as it
reasonably deems necessary in light of the Work
actually completed until the Work is completed or the
defect is remedied.
(iii) Within 20 days after receipt of each
Application for Payment, Owner shall pay to
Design/Builder the entire amount thereof, subject to
possible withholding as provided above, except that a
retainage of 5% of the amount set forth in each
Application for Payment shall be withheld. No payment
to Design/Builder shall constitute an acceptance of any
Work not in accordance with the requirements of this
Contract.
(iv) Upon receipt of each payment from Owner,
Design/Builder shall deliver to Owner its lien waiver
in the amount of such payment. Prior to receipt of the
second and each succeeding payment, Design/Builder
shall deliver to Owner lien waivers from its
subcontractors and suppliers covered by the previous
payment received from Owner. Design/Builder guarantees
that title to all Work, materials and equipment covered
by an Application for Payment, whether incorporated
into the Project or not, will pass to Owner free and
clear of all liens, claims, security interests and
encumbrances upon the receipt of such payment by
Design/Builder. Design/Builder agrees to pay its
suppliers and subcontractors promptly after receipt of
payment from Owner. Design/Builder shall cooperate
with Owner's title insurance carrier, Old Republic
National Title Insurance Company ("Title"), which will
disburse all payments to Design/Builder pursuant to
this Contract, such that Design Builder will provide
any and all documentation reasonably and customarily
provided under the circumstances.
(b) Punchlist Work. Upon Substantial Completion of the
Project by Design/Builder, Design/Builder, Interior
Architect and Owner shall jointly inspect the Work. If
there remain "punch list" items to be completed,
Design/Builder and Owner shall list such items and
Design/Builder shall complete said items within 30 days
thereof, unless Design/Builder is unable to complete such
items due to weather conditions, unavailability of materials
or other conditions beyond the control of Design/Builder, in
which event Design/Builder shall diligently and
expeditiously complete construction of any punchlist items
as soon as possible and practicable under the circumstances.
(c) Final Payment. The amount of the final payment shall
be calculated as follows:
(i) Take the sum of the Cost of the Work
substantiated by the Design/Builder's final accounting
and the Design/Builder's Fee plus Design/Builder's
portion of the Savings; but not more than the
Guaranteed Maximum Price. Subtract the aggregate of
previous payments made by Owner. The remaining balance
shall be paid to Design/Builder as its final payment.
If the aggregate of previous payments made by Owner
exceeds the amount due Design/Builder, Design/Builder
shall pay the difference to Owner.
(ii) Owner's accountants or other Owner designated
representative will review and report in writing on
Design/Builder's final accounting (which shall include
all detail reasonably necessary for verification of the
Cost of the Work) within 15 days after delivery of the
final accounting to Owner by Design/Builder.
(iii) If Owner's accountants or other Owner
designated representative report the Cost of the Work
as substantiated by Design/Builder's final accounting
to be less than claimed by Design/Builder,
Design/Builder shall be entitled to demand arbitration
of the disputed amount. Such demand for arbitration
shall be made by Design/Builder within 30 days after
Design/Builder's receipt of notice from Owner. Failure
to demand arbitration within this 30-day period shall
result in the substantiated amount reported by Owner's
accountants becoming binding on Design/Builder.
Pending a final resolution by arbitration, Owner shall
pay Design/Builder the undisputed amount.
(iv) Subject to the provision of Clause 5(c)(iii)
hereof, the unpaid balance of the Contract Sum,
including all sums retained pursuant to Clause
5(a)(iii) hereof, shall be due and payable within 15
days after Design/Builder has submitted its final
accounting. Final payment shall be made simultaneously
with the furnishing of a lien waiver from
Design/Builder and lien waivers from its subcontractors
and suppliers for all sums paid to Design/Builder, as
required by Title Owner may withhold a sum equal to
150% of the estimated cost of completing any unfinished
Work. Thereafter, Owner shall pay to Design/Builder,
on a monthly basis, the amount withheld for unfinished
items as each item is completed. Acceptance of final
payment by Design/Builder shall constitute a waiver of
all claims against Owner. However, making final
payment shall not constitute a release of claims that
Owner may have against Design/Builder, except for
claims or disputes that have been previously resolved.
(d) Liens. Design/Builder shall, at all times, keep the
Project free of liens arising out of the Work of this
Contract for which Design/Builder has been paid. If any
such liens are filed, Design/Builder shall, within 14 days
after such filing, either,
(i) Satisfy such lien, or
(ii) Post a bond in an amount equal to 150% of the
amount of such lien.
(e) Late Payment. In the event that any payment by Owner
to Design/Builder is not paid when due, Owner shall pay
interest on said unpaid amount from the date due to and
including the date of payment at a variable rate equal to 2%
per annum in excess of the rate of interest from time to
time publicly announced by U.S. Bank National Association,
Minneapolis, Minnesota, as its reference rate, or such
lesser rate as may be the maximum rate permitted by law.
Owner shall pay to Design/Builder all costs reasonably
incurred by Design/Builder in the collection of amounts
payable by Owner hereunder, including reasonable attorneys'
fees.
Article 6 - Bond
Upon Owner's request at any time prior to commencement of
construction, Design/Builder shall furnish a surety bond for its
performance of this Contract and the payment of all obligations
to subcontractors arising hereunder. If such bond is requested,
the Guaranteed Maximum Price shall be increased by the full
amount of the premium therefor.
Article 7 - Changes in the Work
(a) Owner, without invalidating this Contract, may request
changes in the Work within the general scope of this
Contract, consisting of additions, deletions, alterations or
other modifications, with the Guaranteed Maximum Price and
the time for Substantial Completion to be adjusted
appropriately. All changes in the Work shall be made only
pursuant to a written Change Order signed by Owner and
Design/Builder setting forth any adjustment to the
Guaranteed Maximum Price and time for Substantial
Completion. If applicable, the adjustment to the Guaranteed
Maximum Price shall be determined by application of the unit
prices set forth in the specifications. Otherwise, the
adjustment shall be agreed upon by Design/Builder and Owner
before Design/Builder proceeds on any such changes,
additions or alterations. Design/Builder's Fee shall not be
increased until the total of all Change Orders exceeds ten
percent (10%) of the total of (a) the total amount of the
Cost of the Work as determined by Owner and Design/Builder
following the acceptance of all Bids (pursuant to Article 11
of this Contract), less any total excess costs for allowance
items, and (b) the Design/Builder's Fee in the amount
described in Article 3 of this Contract. Thereafter,
Design/Builder's Fee shall be increased by six percent (6%)
of the estimated Cost of the Work pertaining to the change.
(b) If, during the design process, Owner requests a
substantial change to the design of the Project that Owner
has previously approved or given Design/Builder direction to
perform, the Guaranteed Maximum Price and Design/Builder's
design fee set forth in Clause 8(g)(i) shall be increased by
the amount of Design/Builder's additional design costs to
perform such change. Design/Builder shall notify Owner of
such costs and a Change Order shall be entered into prior to
making such change.
(c) If, after the final plans and specifications have been
approved by Owner and Design/Builder, Owner requests
Design/Builder to submit a proposal for a change in the Work
and then elects not to proceed with the change, a Change
Order shall be issued to reimburse Design/Builder for any
costs incurred for design services for proposed revisions to
the final plans and specifications.
(d) The rates in Exhibit C shall apply to all changes that
involve Design/Builder's design personnel.
Article 8 - Costs to be Reimbursed
The term Cost of the Work shall mean costs necessarily
incurred by Design/Builder in the proper performance of the Work.
Such costs shall be at rates not higher than the standard paid at
the place of the Project except with prior consent of Owner. The
Cost of the Work shall include only the items set forth in this
Article 8.
(a) Design/Builder's Labor Costs. (Excluding Design
Costs)
(i) Wages of construction workers directly
employed by Design/Builder to perform the construction
of the Work at the site or at off-site workshops.
(ii) Wages or salaries of Design/Builder's
supervisory, safety and administrative personnel when
stationed at the Project site.
(iii) Wages and salaries of Design/Builder's
supervisory and administrative personnel stationed at
Design/Builder's principal office as follows:
None
(iv) Wages and salaries of Design/Builder's
supervisory or administrative personnel engaged, at
factories, workshops or on the road, in expediting the
production or transportation of materials or equipment
required for the Work, but only for that portion of
their time required for the Work.
(v) Costs paid or incurred by Design/Builder for
taxes, insurance, contributions, assessments and
benefits required by law or collective bargaining
agreements and, for personnel not covered by such
agreements, customary benefits such as sick leave,
transportation costs, medical and health benefits,
holidays, vacations and pensions, provided such costs
are based on wages and salaries included in the Cost of
the Work as provided above. The cost of
Design/Builder's contributions for F.I.C.A. taxes,
state unemployment taxes, federal unemployment taxes,
worker's compensation insurance and general liability
insurance shall be an amount equal to 39% the
employee's taxable wages. Such amount shall only apply
to Design/Builder's field labor force and does not
apply to its project management or design personnel.
(b) Subcontract Costs. Payments made by Design/Builder to
subcontractors in accordance with the requirements of the
subcontracts.
(c) Costs of Materials and Equipment Incorporated in
the Completed Construction.
(i) Costs, including transportation, of materials
and equipment incorporated in the completed
construction.
(ii) Costs of materials described in the preceding
Clause 8(c)(i) in excess of those actually installed
but required to provide reasonable allowance for waste
and for spoilage. Unused excess materials, if any,
shall be handed over to Owner at the completion of the
Work or, at Owner's option, shall be sold by
Design/Builder. Amounts realized, if any, from such
sales shall be credited to Owner as a deduction from
the Cost of the Work.
(d) Costs of Other Materials and Equipment, Temporary
Facilities and Related Items
(i) Costs, including transportation,
installation, maintenance, dismantling and removal of
materials, supplies, temporary facilities, machinery,
equipment, and hand tools not customarily owned by the
construction workers, which are provided by
Design/Builder at the site and fully consumed in the
performance of the Work; and cost less salvage value on
such items if not fully consumed, whether sold to
others or retained by Design/Builder. Cost for items
previously used by Design/Builder shall mean fair
market value. Traffic control costs.
(ii) Rental charges for temporary facilities,
machinery, equipment, and hand tools not customarily
owned by the construction workers, which are provided
by Design/Builder at the site, whether rented from
Design/Builder or others, and costs of transportation,
installation, minor repairs and replacements,
dismantling and removal thereof. The rates for such
equipment rented from Design/Builder shall not exceed
85% of current Associated Equipment Distributors
(A.E.D.) rental rates.
(iii) Costs of removal of debris from the site.
(iv) Costs of telegrams and long-distance
telephone calls, cellular phone charges, postage and
parcel delivery charges, telephone service at the site
and reasonable xxxxx cash expenses of the site office.
(v) Costs of temporary utilities (such as
electricity, gas, sewer, water and other such items)
utilized to construct the Project.
(vi) That portion of the reasonable travel and
subsistence expenses of Design/Builder's personnel
incurred while traveling in discharge of duties
connected with the Work.
(e) Miscellaneous Costs
(i) That portion of premiums for insurance and
bonds directly and solely attributable to this Contract
that Design/Builder is required to provide.
(ii) Sales, use, gross receipts or similar taxes
imposed by a governmental authority which are related
to the Work and for which Design/Builder is liable.
(iii) Fees and assessments for the building
permit (including a park dedication fee of $13,560) and
for other permits, licenses and inspections for which
Design/Builder is required by this Contract to pay.
(iv) Fees of testing laboratories for tests and
inspections related to the Work.
(v) Royalties and license fees paid for the use
of a particular design, process or product required by
Owner; the cost of defending suits or claims for
infringement of patent rights arising from such
requirements; payments made in accordance with legal
judgments against Design/Builder resulting from such
suits or claims and payments of settlements made with
Owner's consent; provided, however, that such costs of
legal defenses, judgment and settlements shall not be
included in the calculation of the Design/Builder's Fee
or of the Guaranteed Maximum Price, and provided that
such royalties, fees and costs are not otherwise
excluded by this Contract.
(vi) Deposits lost for causes other than
Design/Builder's fault or negligence.
(vii) Any deductibles paid by Design/Builder
as a result of casualty losses.
(viii) Other costs incurred in the performance
of the Work if and to the extent approved in writing by
Owner.
(ix) Site preparation costs incurred prior to the date
of this Contract in the amount of $101,903.
(x) A fee to The Tegra Group, Inc. in the amount of
$144,000, which shall be paid upon Substantial
Completion.
(f) Emergencies. The Cost of the Work shall also include
costs which are incurred by Design/Builder in taking action
to prevent threatened damage, injury or loss in case of an
emergency affecting the safety of persons or property.
(g) Design, Engineering and Other Professional Services
(i) Design/Builder shall be paid a design fee of
$137,760 to provide architectural, structural
engineering, and civil engineering design services with
Design/Builder's personnel. Such design fee shall be a
reimbursable Cost of the Work and is not included in
the Design/Builder's Fee.
(ii) Costs paid to third parties by Design/Builder
to provide soil investigation, surveying, environmental
consulting and other professional services that are not
performed by Design/Builder's personnel. The cost of
the ALTA survey provided by Design/Builder in
connection with its sale of the site to Owner will not
be included in the Cost of the Work. Design/Builder
will provide an as-built survey of the site and the
Project upon completion of construction, and the cost
thereof and of surveying services during construction
will be included in the Cost of the Work.
(iii) Costs of travel of design professionals.
(iv) Costs of reproduction of any drawings,
specification, submittal or Contract document.
Article 9 - Costs Not To Be Reimbursed.
(a) The Cost of the Work shall not include:
(i) Salaries and other compensation of
Design/Builder's personnel stationed at
Design/Builder's principal office or offices other than
the site office, except as specifically provided in
Clause 8(a)(iii) and Paragraph 8(g).
(ii) Expenses of Design/Builder's principal office
and offices other than the site office, except for long
distance phone calls, reproduction costs, postage and
courier services.
(iii) Overhead and general expenses, except as
may be expressly included in
Article 8.
(iv) Design/Builder's capital expenses, including
interest on Design/Builder's capital employed for the
Work.
(v) Rental costs of machinery and equipment,
except as provided in Clause 8(d)(ii).
(vi) Any cost not specifically and expressly described
in Article 8.
(vii) Taxes levied and assessed against
Design/Builder for property, materials or equipment
belonging to Design/Builder.
(viii) Costs which would cause the Guaranteed
Maximum Price to be exceeded.
Article 10 - Discounts, Rebates and Refunds.
(a) Cash discounts obtained on payments made by
Design/Builder shall accrue to Owner if (1) before making the
payment, Design/Builder included them in an Application for
Payment and received payment therefor from Owner, or (2) Owner
has deposited funds with Design/Builder with which to make
payments; otherwise, cash discounts shall accrue to
Design/Builder. Design/Builder shall notify Owner of the
availability of such cash discounts. Trade discounts, rebates,
refunds and amounts received from sales of surplus materials and
equipment shall accrue to Owner, and Design/Builder shall make
provisions so that they can be secured.
(b) Amounts which accrue to Owner in accordance with the
provisions of Paragraph 10(a) shall be credited to Owner as a
deduction from the Cost of the Work.
Article 11 - Subcontracts and Other Agreements.
(a) Portions of the Work may be performed under
subcontracts or by other appropriate agreements with
Design/Builder. Unless Owner reasonably determines that three
(3) bids are not necessary, Design/Builder shall obtain three (3)
competitive bids (including bids from in-house trades) from
subcontractors and suppliers of materials or equipment
fabricated especially for the Project (the "Bids") and shall
review such Bids with Owner. Owner and Design/Builder will then
jointly determine which Bids will be accepted. Owner may
designate specific persons or entities from whom Design/Builder
shall obtain bids; however, if a Guaranteed Maximum Price has
been established, Owner may not prohibit Design/Builder from
obtaining bids from others. Design/Builder shall not be required
to contract with anyone to whom Design/Builder has reasonable
objection.
(b) If a Guaranteed Maximum Price has been established and
a specific bidder among those whose Bids are delivered by
Design/Builder to Owner (1) is recommended to Owner by
Design/Builder; (2) is qualified to perform that portion of the
Work; and (3) has submitted a Bid which conforms to the
requirements of this Contract without reservations or exceptions,
but Owner requires that another Bid be accepted; then
Design/Builder may require that a Change Order be issued to
adjust the Guaranteed Maximum Price by difference between the Bid
of the person or entity recommended to Owner by Design/Builder
and the amount of the subcontract or other agreement actually
signed with the person or entity designated by Owner.
Article 12 - Accounting Records.
Design/Builder shall keep full and detailed accounts and
exercise such controls as may be necessary for proper financial
management under this Contract; the accounting and control
systems shall be satisfactory to Owner. Owner and Owner's
accountants shall be afforded access to Design/Builder's records,
books, correspondence, instructions, drawings, receipts,
subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Contract, and Design/Builder shall preserve
these for a period of three (3) years after Substantial
Completion of the Project, or for such longer period as may be
required by law.
Article 13 - Correction of the Work.
(a) Rejected work. Design/Builder shall promptly correct
Work rejected by Owner that does not conform to the requirements
of this Contract.
(b) Warranty Period. If, within one year after the Date of
Substantial Completion of the Project, or within such longer
period of time as may be prescribed by law or by the terms of any
applicable special warranty contained in the specifications, any
of the Work is found to be defective due to faulty workmanship or
materials or not in accordance with the requirements of this
Contract, and if, within such period Owner notifies
Design/Builder thereof in writing, then Design/Builder shall
promptly and expeditiously correct the same as soon as possible
and practicable under the circumstances after receipt of such
notice. Owner shall notify Design/Builder promptly after
discovery of the condition. Establishment of this one year
warranty period relates only to the specific obligation of
Design/Builder to correct the Work, and shall in no way affect
the time within which Design/Builder's obligation to comply with
the requirements of this Contract may sought to be enforced.
Prior to the expiration of this warranty period, representatives
of Owner and Design/Builder shall inspect the Project, jointly
determine if any Work does not conform to the requirements of
this Contract, and Design/Builder shall promptly correct such non-
conforming Work, provided that such non-conforming Work is not
the result of abuse, neglect or improper or inadequate care and
maintenance by Owner.
Article 14 - Insurance.
(a) Design/Builder's Liability Insurance. Design/Builder
shall purchase and maintain such insurance as will protect it
(and, where stated, Owner) from the claims set forth below which
may arise out of the performance of this Contract, whether such
performance be by Design/Builder or by any subcontractor of
Design/Builder or by anyone directly or indirectly employed by
any of them or by anyone for whose acts any of them may be
liable:
(i) Worker's Compensation and Employer's Liability
insurance for claims under workers' compensation, disability
benefit and other similar employee benefit acts, in the
amounts required by law and claims for damages arising out
of bodily injury, occupational sickness or disease, or death
of its employees, in the amounts specified below:
Insurance Limits
Worker's Compensation Statutory
Employer's Liability $1,000,000
(ii) Commercial General Liability insurance for claims for
damages arising out of bodily injury, sickness or disease,
personal injury, or death of any person other than its
employees, and for damages arising out of injury to or
destruction of tangible property (other than the Project),
in the amount of $5,000,000 (including umbrella coverage)
per occurrence. Owner shall be named as an additional
insured under such liability insurance policy to the extent
of any liability arising out of Design/Builder's Work. Such
insurance policy shall include premises operations
(including explosion, collapse and underground coverage),
elevators (if applicable), independent contractors,
completed operations (for not less than one year after the
Date of Substantial Completion) and broad form property
damage coverage.
(iii) Automobile Liability insurance for claims for
damages for bodily injury or death of a person or property
damage arising out of the ownership, maintenance or use of
all owned, hired and non-owned motor vehicles. The combined
single liability limit for bodily injury and property damage
shall be $5,000,000 (including umbrella coverage) per
occurrence.
Certificates of such insurance, showing such coverages to be in
force, shall be furnished to Owner prior to commencement of
construction.
(b) Casualty Insurance. Design/Builder shall purchase and
maintain, until the Date of Substantial Completion, "all-risk"
builder's risk insurance covering the Project in an amount not
less than $3,227,000, and with a deductible amount not to exceed
$10,000. Design/Builder shall be responsible to pay any such
deductibles, which shall be considered a Cost of the Work under
this Contract. Such insurance shall be provided on a
non-reporting, completed value basis. Owner and Design/Builder's
subcontractors and suppliers shall be named as additional
insureds under such policy. Any insured loss under such policy
shall be adjusted with Owner and Design/Builder and made payable
to both Owner and Design/Builder (subject to any applicable
mortgagee clause) as trustee for the insureds, as their interests
may appear. A certificate of insurance showing such coverage to
be in force shall be furnished to Owner prior to commencement of
construction.
(c) Waiver of Subrogation. Owner and Design/Builder waive
all rights against each other, and against their respective
agents, employees and subcontractors, for damages caused by
perils covered by the insurance to be maintained pursuant to
Paragraph 14(b) hereof, except such rights as they may have to
the proceeds of such insurance. If the policy of insurance to be
provided pursuant to Paragraph 14(b) hereof requires an
endorsement for continued coverage where there is a waiver of
subrogation, the party providing such insurance shall cause such
policy to be so endorsed.
(d) Notice of Cancellation. All insurance policies
provided by either party to this Contract shall contain a
provision requiring the insurer to give a minimum of 30 days
advance written notice to the other party of cancellation, non-
renewal or modification of the terms of the policy.
Article 15 - Termination of the Contract.
(a) Termination by Design/Builder. If construction on the
Project is stopped (through no fault of Design/Builder) for a
period of 30 days under order of any court or other public
authority having jurisdiction, or as a result of any governmental
act such as a declaration of national emergency making fuels or
materials unavailable, or if Owner wrongfully fails to make any
payment to Design/Builder within 20 days after Design/Builder
gives Owner written notice of such non-payment and Owner has
failed to cure such default (or to provide reasonable security
for such payment if such payment is disputed by Owner),
Design/Builder may stop construction and terminate this Contract
and recover from Owner payment for all Cost of the Work incurred
by Design/Builder, all of Design/Builder's Fee and such other
damages under subcontracts as Design/Builder may sustain by
reason thereof. If the termination is caused by anything other
than a default by Owner, Design/Builder may recover all of the
above except that Design/Builder shall only be entitled to
receive the proportionate share of its Fee based upon the Cost of
the Work incurred.
(b) Termination by Owner. If Design/Builder fails to
diligently proceed with the Work, materially breaches this
Contract, is adjudged a bankrupt, or if it makes a general
assignment for the benefit of its creditors, or if a receiver is
appointed on account of its insolvency, or if it persistently or
repeatedly refuses or fails, except in cases for which extension
of time is provided, to supply enough properly skilled workers or
proper materials, or if it fails to make prompt payment to
subcontractors or for materials or labor, or disregards laws,
ordinances, rules, regulations or orders of any public authority
having jurisdiction, Owner may, without prejudice to any right or
remedy and after giving Design/Builder and its surety, if any, 10
days' written notice (during which time the failure is not
cured), terminate this Contract and take possession of the site
and of all materials, equipment, tools, construction equipment
and machinery thereon owned by Design/Builder and may finish the
Project by whatever method it may deem expedient. In such case
Design/Builder shall not be entitled to receive any further
payment. If Owner's costs to complete the Project exceed the
difference between what Owner has paid to Design/Builder and the
Guaranteed Maximum Price, Design/Builder shall immediately upon
demand pay the difference to Owner. This obligation for payment
shall survive the termination of this Contract. If Owner so
terminates this Contract, Design/Builder shall, upon Owner's
request, immediately assign all design agreements, subcontracts
and purchase orders to Owner so that Owner may expeditiously
complete the Project. Design/Builder shall also immediately
provide to Owner all drawings, plans, specifications and
accountings to allow Owner to complete the Work.
(c) Termination for Convenience. Owner may, at any time
and in its sole discretion, terminate this Contract at its
convenience. Should Owner so terminate this Contract, Owner
shall pay to Design/Builder all amounts due pursuant to Paragraph
15(a) hereof, including Design/Builder's Fee and such other
damages under subcontracts as Design/Builder may sustain.
Article 16 - Miscellaneous Provisions.
(a) Owner and Design/Builder Representatives. Owner and
Design/Builder shall each appoint a representative with full
authority to act on behalf of each party. Owner's representative
shall be Xxxxxx Xxxxxxxx and Design/Builder's representative
shall be Xxxxx Xxxxxx. Communication between the parties shall,
whenever possible, be accomplished by the above representatives.
(b) Ownership of Plans. The drawings, specifications and
other design documents prepared by Design/Builder or its design
consultants pursuant to this Contract are the property of
Design/Builder or its design consultants and Design/Builder or
its design consultants shall retain all common law, statutory and
other reserved rights including the copyright thereto, except as
specifically set forth in Article 15. However, Owner shall have
a royalty-free license to reproduce, distribute and otherwise use
such drawings, specifications and other design documents for
additions to or remodeling of the Project, provided that Owner
shall indemnify, defend and hold harmless Design/Builder and its
design consultants for any claims and liabilities arising from
such use thereof.
(c) Survey and Easements. Design/Builder has furnished a
current ALTA/ACSM land title survey of the Project site showing
the boundaries, dimensions and topography thereof and the
location of all utilities, easements and other restrictions.
Design/Builder has obtained all easements necessary for access to
the Project site, including easements for installation and
maintenance of utilities.
(d) Supervision and Construction Procedures.
Design/Builder shall supervise and direct the Project and shall
be solely responsible for all construction means, methods,
techniques, sequences and procedures, and for coordinating all
portions of the Work under this Contract. Design/Builder shall
employ a competent superintendent who shall be stationed at the
Project site during the progress of the Work. Design/Builder
shall be responsible to Owner for the acts and omissions of all
of its employees and all subcontractors of Design/Builder and
their agents and employees. Design/Builder shall at all times
enforce strict discipline and good order among its employees and
other persons carrying out the Work, and shall not employ on the
Project any unfit person or anyone not skilled in the assigned
task.
(e) Labor and Materials. Unless otherwise provided in this
Contract, all materials used in the Project shall be new.
Design/Builder shall provide and pay for all labor, services,
materials, equipment, tools, machinery, utilities, transportation
and other facilities and services necessary for the proper
execution and completion of the Work.
(f) Quality Assurance and Testing. Design/Builder shall
establish and implement a written quality assurance and testing
program that is appropriate for the Project. Owner shall have
the right to review such program and receive copies of any test
reports, if requested. Owner shall have the right, at Owner's
expense, to perform any additional testing or inspection that it
deems necessary. If such additional testing reveals the presence
of substandard, defective or non-conforming Work, Design/Builder
shall pay the cost of such testing.
(g) Taxes, Permits and Fees and Bonds. Design/Builder
shall pay all sales, consumer, gross receipts, use and other
similar taxes required by law and imposed, as of the date of this
Contract, upon the labor and materials provided by Design/Builder
or any of its subcontractors. Design/Builder shall be entitled
to an increase in the Guaranteed Maximum Price to the extent that
an increase in the aggregate of such taxes payable by
Design/Builder hereunder results from any change in the laws,
enacted after the date of this Contract, creating or modifying
such taxes. Design/Builder shall secure and pay for the building
permit and all other governmental permits (except zoning, land
use permits and fees, and acreage assessment charges), licenses
and inspections necessary for the proper execution and completion
of the Work, including utility availability and hook-up charges,
which are legally required as of the date of this Contract.
Design/Builder shall not be required to pay any special
assessment charges for public improvements and other municipal
charges for the payment of capital improvements. Owner shall be
responsible for all permits, licenses and fees relating to the
operation or use (as opposed to the construction) of the Project,
including (but not limited to) storm water discharge permits for
the operation of the facility, air emission permits and indirect
source permits. Owner shall provide any bonds, guarantees or
other forms of security required by local governmental units
having jurisdiction over the Project relating to on-site or off-
site improvements.
(h) Royalties and Patents. Design/Builder shall pay all
royalties and license fees, and shall defend all suits or claims
for infringement of any patent rights and save Owner harmless
from loss on account thereof.
(i) Concealed Conditions. Should there be discovered
unknown physical conditions below the surface of the ground or
concealed conditions in an existing structure, differing
materially from those ordinarily encountered in work of the
character provided for in this Contract or should the same be at
variance with the conditions indicated in the plans and
specifications for the Project, the time by which Substantial
Completion is to be achieved shall be extended by the period of
the delay resulting therefrom and the Guaranteed Maximum Price
shall be increased by the amount of all costs incurred by
Design/Builder by reason thereof, provided that a written claim
therefor is submitted to Owner within 20 days after the first
observance of the conditions by Design/Builder. Design/Builder
has reviewed the subsurface exploration report prepared by GME
Consultants, Inc., dated March 23, 1999 (the "Soils Report"),
and relied on this information in designing the Project,
establishing the Guaranteed Maximum Price and the time for
Substantial Completion. Actual subsurface conditions that
materially differ from those identified in the Soils Report, or
from those which are reasonably inferable therefrom, shall
constitute a concealed condition under this provision.
Design/Builder acknowledges that it has familiarized itself with
the Project site and taken what it believes to be a reasonable
number of soil borings.
(j) Cleaning Up. Design/Builder shall at all times keep
the Project site free from accumulation of waste materials or
rubbish caused by its operations. At Substantial Completion of
the Project, Design/Builder shall remove all of its surplus
materials, rubbish, tools, equipment and machinery from the
Project site, and shall clean all glass surfaces and leave the
Project in a "broom clean" condition. If Design/Builder fails to
clean up at the completion of the Project, and such failure
continues for 5 days after notice thereof to Design/Builder,
Owner may perform such clean up and the cost thereof shall be
deducted from the Guaranteed Maximum Price.
(k) Access. Owner and its representatives shall at all
times have access to the Project, and Design/Builder shall permit
and facilitate inspections of the Work by Owner and its
representatives.
(l) Work by Owner. Owner shall have the right to perform
work related to the Project with its own forces and to award
separate contracts therefor, provided such work does not
interfere with the Work of Design/Builder. Owner shall not award
contracts to any contractor who is not signatory to a collective
bargaining agreement with a local AFL-CIO Building Trades Union
without the written approval of Design/Builder. Owner will
provide for the coordination of such separate work with the Work
of the Design/Builder, who shall cooperate therewith. Owner
shall be responsible to provide all necessary insurance for the
work of such contractors. Owner agrees to cause its employees
and any such separate contractors to abide by all federal, state
and local safety laws and regulations and to comply with
Design/Builder's safety program for the Project.
(m) Indemnification. To the fullest extent permitted by
law, Design/Builder shall indemnify, defend and hold harmless
Owner, its officers, directors, employees and agents, from and
against all claims, suits, demands, damages, losses, liabilities
and expenses, including reasonable attorneys' fees, arising out
of or resulting from the performance of this Contract, provided
that any such claim, damage, loss or expenses (i) is attributable
to bodily injury, sickness, disease or death, or to injury to or
destruction of tangible property (other than the Project itself),
and (ii) is caused or alleged to be caused in whole or in part by
any negligent or willful act or omission of Design/Builder, any
subcontractor of Design/Builder, anyone directly or indirectly
employed by any of them, or anyone for whose acts any of them may
be liable. Owner shall notify Design/Builder of any claim under
this indemnity promptly after Owner becomes aware of same, so as
to avoid prejudice to Design/Builder; and Design/Builder shall
have the right to defend in any action with respect to such claim
with counsel reasonably acceptable to Owner.
(n) Notices. All notices permitted or required by this
Contract shall be in writing and shall be deemed to have been
given when personally delivered to the respective persons whose
name appears below or when deposited in the United States mails,
certified or registered mail, postage prepaid and addressed as
follows:
If to Design/Builder: Xxxx Companies US, Inc.
000 Xxxxxxxxxxxxx Xxxxxx
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxx
If to Owner: Xxxx Incorporated
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
Either party may change the address for mailing of notices to it
hereunder and/or the person to receive such notices by giving 10
days written notice thereof to the other party in the manner
above provided.
(o) Governing Law. This Contract shall be governed by and
construed in accordance with the laws of the state of Minnesota.
(p) Binding Effect and Assignment. This Contract shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns. Neither party to
this Contract shall assign any interest in this Contract without
the written consent of the other party. No permitted assignment
by either party, however, shall release it from primary liability
for the performance of its obligations hereunder.
(q) Hazardous Substances, Buried Tanks and Xxxxx. Should
any so-called "hazardous or toxic substances," buried tanks or
xxxxx, as defined and/or regulated by federal, state or local
laws or regulations, be encountered in the performance of the
Work, Design/Builder shall immediately cease work and notify
Owner thereof. Owner shall promptly thereafter cause any such
substances, tanks or xxxxx to be removed in accordance with all
applicable laws. Design/Builder shall not be required to resume
construction until such substances, tanks or xxxxx have been so
removed; and Owner shall provide Design/Builder with written
evidence of compliance with applicable laws in the removal of
such substances, tanks or xxxxx as Design/Builder may reasonably
request. If the remediation of the hazardous substances, buried
tanks or xxxxx only affects a portion of the Project site,
Design/Builder agrees to continue working on portions of the
Project that are unaffected so long as such Work does not present
a safety hazard to workers on the Project. The time by which
Substantial Completion is to be achieved shall be extended by the
period of delay resulting therefrom and the Guaranteed Maximum
Price shall be increased by any additional costs reasonably
incurred by Design/Builder due to such cessation and delay,
except to the extent that Design/Builder knew of such conditions.
If such substances, tanks or xxxxx have not been removed as
required herein within 30 days from the date of Design/Builder's
notice to Owner, then Design/Builder may terminate this Contract
by written notice to Owner and recover from Owner the amounts
provided in Paragraph 15(a), unless Design/Builder knew of such
conditions. Irrespective of whether or not this Contract shall
have been so terminated by Design/Builder, unless Design/Builder
knew of such conditions, Owner shall indemnify, defend and hold
harmless Design/Builder and all of its employees and
subcontractors from and against any and all liability, loss, cost
and expense arising by reason of the presence of such hazardous
substances, tanks or xxxxx on the Project site, except such as
may result from the gross negligence of Design/Builder or its
subcontractors.
(r) Project Closeout. Prior to receiving final payment,
Design/Builder shall furnish Owner with the following:
(i) One operation and maintenance manual;
(ii) Three sets of record drawings (blue
prints) for the entire Project, with accompanying
CADD discs;
(iii) Any special warranties or guarantees
that Design/Builder secures;
(iv) A project directory listing all names,
addresses and phone numbers of Design/Builder's
subcontractors who worked on the Project.
(s) Entire Agreement. This Contract represents the entire
and integrated agreement between Owner and Design/Builder
pertaining to the Project, and supersedes all prior negotiations,
representations or agreements, whether written or oral. This
Contract may be amended only on a written instrument signed by
both Owner and Design/Builder.
(t) Allowances. Design/Builder shall include in the
Guaranteed Maximum Price all allowances stated in the plans and
specifications. Unless specified otherwise herein, each
allowance shall include all of Design/Builder's costs (labor,
installation costs, materials, equipment, subcontractor costs,
taxes, freight, etc.) for that portion of the Project (but no
Design/Builder Fee). Whenever the actual costs covered by the
allowance are more or less than the allowance, the Guaranteed
Maximum Price shall be adjusted accordingly by Change Order.
(u) Addendum. The terms and provisions contained in any
Addendum or Exhibit which is attached hereto are incorporated
herein by reference and made a part of this Contract.
Article 17 - Arbitration and Legal Costs.
(a) Arbitration. All claims or disputes between the
parties to this Contract arising out of or relating to this
Contract, or the breach thereof, shall be decided by arbitration
in accordance with the Construction Industry Arbitration Rules of
the American Arbitration Association then in effect, unless the
parties hereafter agree otherwise. This provision shall be
specifically enforceable in any court of competent jurisdiction.
Notice of demand for arbitration shall be filed in writing with
the other party to this Contract and with the American
Arbitration Association. The demand shall be made within a
reasonable time after the dispute has arisen or as otherwise
required by this Contract. In no event shall the demand for
arbitration be made after the date when the applicable statute of
limitations would bar institution of a legal or equitable
proceeding based on such claim, dispute or other matter in
question. All arbitration proceedings shall be conducted in
Minneapolis, Minnesota, and prehearing discovery in the time and
manner provided by the then effective Federal Rules of Civil
Procedure shall be permitted. The award rendered by the
arbitrator or arbitrators shall be final, and judgment may be
entered upon it in accordance with applicable law in any court
having jurisdiction. Unless otherwise agreed in writing,
Design/Builder shall carry on the Work and maintain its progress
during any arbitration proceedings, and Owner shall continue to
make payments to Design/Builder in accordance with the terms of
this Contract except for the specific items that are in dispute.
(b) Legal Costs. If either party hereto shall file for
arbitration or bring suit against the other party to enforce the
terms of this Contract, the losing party shall pay to the
prevailing party that percentage of the prevailing party's costs
and expenses incurred in such action, including reasonable
attorney's fees, in an amount equal to the percentage that the
value of the judgment or award received by the prevailing party
bears to the total value of the judgment or award claimed by such
party, but in no event more than one hundred percent (100%) of
such costs and expenses, provided that the prevailing party has
not rejected a bona fide written settlement offer from the other
party in an amount greater than the amount of the judgment or
award received, in which case the prevailing party shall be
entitled to no reimbursement for its costs and expenses.
IN WITNESS WHEREOF, Design/Builder and Owner have executed this
Contract as of the date first above written.
OWNER: DESIGN/BUILDER:
XXXX INCORPORATED XXXX COMPANIES US, INC.
By: By:
(Signature) (Signature)
(Printed Name and Title) (Printed Name and
Title)
