EXHIBIT 10.5
CONSTRUCTION AGREEMENT BETWEEN
GENERAL CONTRACTOR AND OWNER
DESIGN BUILD
THIS AGREEMENT, is made and entered into this 28th day of October, 1998
by and between Noah's Construction, Inc., a ("Contractor") and Caddx Controls,
Inc., a ("Owner").
RECITALS:
WHEREAS, Owner has title or an agreement to acquire title to certain
real property as described in Exhibit A ("Property");
WHEREAS, Owner desires that certain improvements be made on said real
property, the scope and purposes as generally outlined in the specifications and
plan as described in Exhibit B ("Project");
WHEREAS, Contractor desires to provide certain architectural,
engineering and construction services to complete Project for Owner and shall
complete detailed specifications and plans, to be set forth in Exhibit C; and
WHEREAS, Contractor and Owner desire to set forth in writing the term
and conditions of their Agreement and intend to be legally bound by their
Agreement.
NOW, THEREFORE, for and in consideration of the above premises, and of
the following terms, conditions and mutual covenants of Contractor and Owner as
hereinafter stated, IT IS HEREBY AGREED:
SECTION 1
OWNER'S OBLIGATIONS
1.01 Project. Owner shall provide Property for Project. Owner shall
furnish at Owner's expense certified surveys describing the physical
characteristics, soil reports, legal restrictions, utility locations and legal
description; and an ALTA title policy or other title report acceptable to
Contractor. Contractor shall be entitled to rely upon the accuracy and the
completeness of such information furnished by Owner.
1.02 Other Requirements. Owner shall furnish at Owner's expense all
necessary approvals; easements; assessments; expenses; building, use or
occupancy and other governmental permits and licenses required for the
construction; use or occupancy of permanent structures of Project; any bonds
that may be required; and any legal services that may be required to obtain such
items.
1.03 Owner's Participation. Owner shall timely furnish Contractor
complete information regarding Owner's requirements for Project. Owner shall
designate in writing a representative who shall have authority to approve Change
Orders and to furnish information on a timely basis. Owner shall promptly give
notice to Contractor of any known fault or defect in Project or nonconformance
with Project requirements.
1.04 Funding. Prior to Contractor commencing construction and at any
subsequent time requested by Contractor, Owner shall furnish evidence acceptable
to Contractor that sufficient funds are available and committed for the entire
Cost of Project as set forth in Section 4. If such evidence is not furnished by
Contractor, Section 8.02 shall apply.
1.05 Safety. Owner shall require and cause all of Owner's tenants and
all contractors separately hired by Owner to abide by and fully adhere to all
applicable federal, state and local safety laws and regulations and to comply
with Contractor's request for the elimination or abatement of safety hazards.
Owner shall indemnify and hold Contractor harmless from all claims and damages
arising from safety hazards caused by Owner's tenants and by separate
contractors employed by Owner. Owner shall be responsible for the elimination or
abatement of safety hazards created at Project by other persons employed by
Owner as separate contractors or by Owner's tenants.
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Owner shall cause such separate contractors and such tenants to coordinate and
cooperate with Contractor in all other respects of construction.
1.06 Subcontractors. Owner shall not have a contractual relationship
with Contractor's subcontractors and Owner shall communicate with such
subcontractors through Contractor.
SECTION 2
CONTRACTOR'S OBLIGATIONS
2.01 Design and Engineering. Based upon Owner's requirements,
Contractor shall perform the necessary design and engineering and shall prepare
detailed construction drawings and specifications to be set forth in Exhibit C
(to be signed by Owner and Contractor). Construction of Project shall be in
accordance with these drawings and specifications and with any subsequent
drawings and specifications as approved in writing by Owner and Contractor. The
drawings and specifications shall remain the property of Contractor and are not
to be used by Owner for other projects without the written consent of
Contractor.
2.02 Construction. Contractor shall be responsible for the construction
of Project and shall provide all supervision, labor, materials, tools,
machinery, equipment and other items necessary for the completion of Project.
Contractor shall use Contractor's best efforts to complete construction at the
earliest possible time and shall at all times furnish sufficient materials and
labor to assure an efficient completion of Project. Contractor is experienced
and qualified to perform the work provided for herein and shall finance its own
operations hereunder. Contractor shall operate as an independent contractor and
not as an agent of Owner.
2.03 Completion Date. The work to be performed under this Agreement
shall be substantially completed on or before the 1st day of June 1999
(Completion Date) as set forth in Paragraph 5.01, subject however, to delays
beyond the Contractor's control. In the event the work to be performed under
this Agreement shall not be substantially completed by the Completion Date, then
there shall be a penalty of -0-.
2.04 Accounting. Contractor shall keep detailed records necessary for
financial accounting of Project. Owner shall have access to Contractor's
records, drawings, receipts and similar data relating to Project. Contractor
shall specifically itemize all changes in Cost of Project and all Change Orders.
Contractor shall maintain all records for a period of three years after Final
Payment or longer where required by law.
2.05 Safety. Contractor shall take precautions for the safety of
Contractor's employees and shall comply with applicable provisions of federal,
state and local safety laws to prevent accidents or injury to persons on
Project.
2.06 Subcontracts. All construction that Contractor does not perform
shall be performed by subcontractors. The term "Subcontractor" shall not include
any separate contractor employed by Owner or such separate contractor's
subcontractors. Contractor shall be responsible for the management of
subcontractors in the performance of their work. Contractor shall cause all
subcontractors to indemnify and hold harmless Owner and Contractor form all
claims for bodily injury and property damage that may arise, other than property
damage required to be insured by Owner as set forth in Section 7.02.
2.07 Clean Conditions. Contractor shall maintain Project free from the
accumulation of construction waste and rubbish. Upon completion of Project,
Contractor shall deliver Project in a "clean" condition, free from all trash,
rubbish, debris, Contractor's tools, construction equipment and machinery,
surplus materials and inventory.
2.08 Warranties. Contractor warrants that all materials and equipment
furnished shall be new, unless otherwise specified, and that all construction
shall be of good quality, free from improper workmanship and defective materials
and in conformance with the drawings and specifications. Contractor warrants
that title to all work, materials and equipment shall pass to Owner upon
delivery to Owner free and clear of all liens, claims, security interests or
encumbrances ("Liens").
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Contractor shall correct all work performed by Contractor which proves to be
defective in material and workmanship within a period of one year from the date
of completion. Upon written notice of such defects, Contractor shall, at
Contractor's option, either make necessary repairs or request Owner to make such
repairs at Contractor's expense. Contractor will secure required certificatess
of inspection, testing or approval and any and all express warranties from
manufacturers, suppliers and subcontractors, and deliver same to Owner.
2.09 Manufactured Equipment. Contractor shall guarantee manufactured
equipment for ninety (90) days after initial use. Contractor shall collect all
warranties and equipment manuals and deliver same to Owner. Contractor shall
assist Owner's maintenance personnel with the testing and initial start up of
such systems and equipment.
SECTION 3
MUTUAL REPRESENTATIONS
3.01 Litigation. Contractor and Owner hereby warrant and represent that
neither is a party to or threatened with any litigation proceeding or
controversy before any Court or administrative agency nor in default with
respect to any judgment, order, writ, injunction, decree, rule, or regulation
before any Court or administrative agency which might result in any adverse
effect on representations, statements and conditions set forth in this
Agreement.
3.02 Conflicts. The execution of this Agreement by Contractor and Owner
will not violate or conflict with or result in a breach of or constitute a
default under any agreement or instrument which they may be bound. No consent of
any third party not a party to this Agreement is required.
3.03 Accuracy of Information. Contractor and Owner hereby warrant and
represent that this Agreement does not contain any false statements and that
this Agreement does not omit any material facts.
3.04 Authorization. Contractor and Owner have the requisite power and
authority for execution of this Agreement.
3.05 Legal Responsibilities. Contractor and Owner shall comply, abide
by and fully adhere with all applicable federal, state, local and municipal
laws, regulations and ordinances applicable to any responsibilities of
Contractor and Owner hereunder.
SECTION 4
LUMP SUM BID
4.01 Lump Sum Bid. Owner shall pay Contractor for the cost of Project
as defined in Section 4.02 ("Cost of Project"). Owner shall pay Contractor
compensation for services a Lump Sum Price of $1,178,165.00.
4.02 Cost of Project. Cost of Project shall include:
(a) Architectural, engineering and consulting fees incurred in
design and construction of Project;
(b) Wages for Contractor's employees under (1) applicable
collective bargaining agreements, if any, and (2) under salary or wage schedule
agreed upon by Owner and Contractor;
(c) Salaries of contractor's employees when stationed at the field
office, and employees from the main office performing functions related to
Project;
(d) Cost of all employee benefits and taxes for unemployment
compensation and social security (all such cost based on wages of salaries paid
to Contractor's employees);
(e) Reasonable transportation, travel, hotel and relocation
expenses of Contractor's employees connected with Project;
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(f) Cost of all materials, supplies and equipment for Project and
cost of transportation and storage;
(g) Payments to subcontractors for work performed pursuant to this
Agreement;
(h) Cost, including transportation and maintenance, of all
temporary facilities and hand tools which are employed or consumed;
(i) Rental charges for machinery and equipment, whether rented
from Contractor or others, including installations, repairs, replacements,
removal, transportation and delivery costs, at rental rates consistent with
those prevailing in the area;
(j) Cost of premiums for all insurance and performance bonds which
Contractor is required to obtain or that is deemed necessary by Contractor;
(k) Sales, use, gross receipts or similar taxes related to
Project;
(l) Permit fees, licenses, tests, royalties, damages for
infringement of patents (and costs of defending suits thereof), and deposits
lost for causes other than Contractor's gross negligence;
(m) Losses, expenses or damages to the extent not compensated by
insurance or otherwise (including settlements made with the written approval of
Owner), and the cost of corrective work;
(n) Expenses such as telegrams, long-distance telephone calls,
telephone service at the site and similar minor cash items connected with
Project;
(o) Cost of removal of all trash and construction debris;
(p) Cost incurred due to an emergency affecting safety of persons
and property;
(q) Cost of accounting services required herein;
(r) Legal fees reasonably and properly resulting from actions
taken by Contractor on behalf of Owner or Project; and
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SECTION 5
PAYMENTS
5.01 Time Schedule. Construction of Project shall commence on or about
the 1st day of November 1998 ("Commencement Date"). Substantial completion of
Project shall occur on the 31st day of May 1999 ("Completion Date"). Contractor
shall prepare an estimated progress schedule for Project which shall set forth
the dates for the commencement and completion of the various stages of
construction. The schedule and Completion Date may be revised as provided in
Section 6.
5.02 Progress Payments. On or before the 25th day of each month after
Commencement Date, Contractor shall submit to Owner an application for progress
payment ("Application for Progress Payment") in such detail reasonably required
by Owner and based on the construction completed, along with the proportionate
amount of Contractor's Fee for such period, such aggregate amount hereinafter
referred to as "Progress Payment." Within ten days after receipt of said monthly
Application for Progress Payment, Owner shall pay Contractor the appropriate
amount for which Application for Progress Payment is made.
5.03 Retainage. Owner may retain ten percent (10%) of the amount of
each monthly Progress Payment to assure performance of this Agreement. A
reduction in the amount of funds retained shall be paid to Contractor if Owner
and Contractor agree that satisfactory progress is being maintained in the
construction of Project.
5.04 Final Payment. The final payment, ("Final Payment") shall be due
and payable when Project is substantially completed and (1) delivered to Owner
ready for occupancy or (2) when Owner occupies Project, whichever event occurs
first, ("Substantial Completion"); PROVIDED, HOWEVER, in the event that there
should remain minor items to be completed, then and in that event Contractor and
Owner shall list such items and Contractor shall deliver a written guarantee to
complete said items within a reasonable time thereafter. Owner may retain a sum
equal to One Hundred Fifty Percent (150%) of the estimated costs of completing
any unfinished items; PROVIDED, HOWEVER, that each unfinished item and the
estimated cost of completing each unfinished item shall be listed separately.
Thereafter, Owner shall pay Contractor on a monthly basis the amount retained
for such unfinished items as said items are completed for the previous month.
Contractor shall provide Owner with a Certificate of Completion and Application
for Final Payment prior to Owner's Final Payment to Contractor.
5.05 Inspection. Progress Payments to Contractor shall not be construed
as an absolute acceptance by Owner of the construction completed to the date of
such Progress Payment except as to matters that are open and obvious. During the
construction period, Owner shall exercise reasonable diligence in discovering
and promptly reporting to Contractor all materials and labor which are not in
accordance with drawings and specifications. Upon Completion Date, Owner shall
diligently inspect all work for improper workmanship or defective materials,
including work not open and obvious upon inspection during construction.
5.06 Payments Due and Unpaid. In the event Owner should fail to pay
Contractor at the time that the payment of any amount becomes due under the
terms of this Agreement, then and in that event Contractor may, and at any time
thereafter, serve written notice that Contractor will stop work within five days
after receipt of the notice by Owner. After the expiration of said five day
period, Contractor shall have the right to stop all work on Project until
payment of said unpaid amount has been paid to Contractor. Payments due to
Contractor and unpaid shall bear interest at the highest legal commercial rate.
5.07 Waiver of Claims. The making of Final Payment shall constitute a
waiver of all claims by Owner except those rising from unsettled liens, improper
workmanship and defective materials appearing within one year after Completion
Date, except those previously made in writing and unsettled. The acceptance of
Final Payment shall constitute a waiver of all claims by Contractor except those
previously made in writing and unsettled.
5.08 Discounts. All discounts for prompt payment shall accrue to Owner
when paid directly by Owner or from a fund made available by Owner to Contractor
for such payments. To the extent that such is paid with funds of Contractor, all
cash discounts shall accrue to Contractor. All trade discounts, rebates and
refunds, and all returns from sale of surplus materials and equipment, shall be
credited to Cost of Project.
5.09 Royalties and Patents. Contractor shall pay all royalties and
license fees for materials, methods and systems. Contractor shall defend all
suits or claims for infringement of any patent rights except when a particular
design, process or product is specified by Owner.
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SECTION 6
CONTINGENCIES
6.01 Change Orders. All changes to Project shall be authorized by a
written change order authorizing such change and signed by Contractor and Owner
("Change Order"). Each Change Order shall be numbered and dated, and shall
clearly itemize the amount attributable to Cost of Project and Contractor's Fee
and shall reflect any change in Completion Date. The value of the work added or
omitted in a Change Order shall be agreed upon by Owner and Contractor. A Change
Order shall be signed by Contractor and Owner prior to Contractor proceeding
with the work set forth in the Change Order.
6.02 Events Beyond Control: Cost of Project shall be increased by a
reasonable amount and Completion Date shall be extended by a reasonable period
upon the occurrence of events beyond Contractor's control as agreed upon by
Owner and Contractor. Such additional costs and fee adjustments required by any
event beyond Contractor's control shall be evidenced by a written Change Order
executed within a thirty day period after such event occurs. Such events shall
include, but not be limited to, the following: (1) an act or neglect by Owner or
by third persons not under the control of Contractor; (2) changes required to
comply with new laws, rules or regulations; (3) labor disputes; (4) earthquakes,
tornado, windstorms, floods or other actions of the elements; (5) war; (6) fire;
(7) concealed and unknown conditions below the surface of the ground or
concealed and unknown conditions in an existing structure at variance with the
conditions indicated by the drawings and specifications, information furnished
by Owner, or of an unusual nature differing materially from those ordinarily
encountered and generally recognized as inherent in work of the character
provided for in this Agreement; or (8) any cause beyond Contractor's control
which Contractor could not have reasonably foreseen.
6.03 Emergencies. In an emergency affecting the safety of persons or
property, Contractor shall act, in Contractor's sole discretion, to prevent
threatened damage, injury or loss. Any increase in the Cost of Project or
extension of Completion Date on account of emergency work shall be determined as
provided in Section 6.02.
SECTION 7
INSURANCE/INDEMNITY
7.01 Contractor. Contractor shall purchase and maintain the following
insurance:
(a) Workers' Compensation Insurance that shall comply with the state
law of the site of the Project relating to compensation of injured workmen; and
(b) Comprehensive General Liability Insurance, for not less than such
reasonable limits of liability as may be required by Owner. Such insurance
policies shall contain a provision that the policies will not be cancelled or
not renewed until at least sixty days written notice has been given to Owner and
Contractor. Certificates of Insurance showing such coverages to be in force
shall be filed with Owner prior to commencement of the work.
(c) Contractor shall purchase and maintain "All Risk" Builder's Risk
Insurance.
7.03 Waiver of Subrogation. Owner and Contractor waive all rights
against each other, Subcontractors and Sub-subcontractors for damages caused by
perils covered by insurance provided by Owner, except such rights as they may
have to the proceeds of such insurance. Contractor shall require waivers from
all Subcontractors and Sub-subcontractors.
7.04 Indemnity. Owner hereby indemnifies Contractor against all
liabilities, claims and demands for negligent acts or personal injury or
property damage arising out of or caused by any act or omission of Owner.
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Owner's separate Contractors and separate Sub-subcontractors, Owner's agents and
employees arising from the commencement of construction until final completion.
Contractor hereby indemnifies Owner against all liabilities, claims and demands
for negligent acts or personal injury or property damage arising out of or
caused by any act or omission of Contractor, Contractor's separate contractors
and separate Sub-subcontractors, agents and employees arising from the
commencement of construction until final completion. Contractor and Owner agree
to use proper care not to cause damage to any adjoining or adjacent property.
Contractor shall indemnify and hold Owner harmless from any liabilities, claims
or demands for damage to such adjoining or adjacent property caused by
Contractor.
SECTION 8
TERMINATION
8.01 Termination by Owner. In the event Contractor should at any time
fail to perform the work with promptness or diligence, then and in that event
Owner shall have the right to terminate this Agreement after ten days notice to
Contractor (unless within said ten day period Contractor begins to remedy such
failure.) In the event of termination by Owner, Owner shall pay Contractor for
all work performed, all obligations incurred by Contractor which cannot be
cancelled, and the proportionate amount of Contractor's Fee.
8.02 Termination by Contractor. In the event (1) the work should be
stopped for a period of ten days by Owner, (2) Owner should fail to pay
Contractor any sum then payable and due Contractor, or (3) Owner should fail for
ten days to perform any other obligation hereunder, then and in that event
Contractor may after five days notice to Owner stop work or terminate this
Agreement and recover from Owner payment for all work performed, all obligations
incurred by Contractor which cannot be cancelled, all loss sustained upon
Project or material, Contractor's Fee on the Cost of Project incurred, and any
other expense, loss or damage which Contractor may sustain.
8.03 Termination Without Cause. If the work should be stopped for a
period of thirty days by any public law, regulation, acts of public officials or
other causes not the fault of Owner or Contractor, then either Owner or
Contractor shall have the right and option, upon ten day's notice to the other,
to terminate this Agreement, in which event Owner shall pay Contractor for all
Cost of Project, all obligations incurred by Contractor which cannot be
cancelled, all loss sustained upon the Project or materials, and the
proportionate amount of Contractor's Fee.
SECTION 9
MISCELLANEOUS PROVISIONS
9.01 Arbitration. Subsequent to the execution of this Agreement by the
parties hereto, all claims, disputes, differences, controversies and questions
which may arise concerning the matters and obligations set forth in this
Agreement, or for the construction or application of this Agreement, or
concerning any liabilities created hereunder, or any act or omission of any
Party hereto, shall be subject to arbitration in accordance with the rules and
regulations then in force of the American Arbitration Association. The
prevailing party shall be entitled to their costs including reasonable
attorney's fees; PROVIDED, HOWEVER, this clause shall not limit the right of any
party to seek temporary injunctive relief where an unacceptable interim period
may exist between the time the decision to arbitrate is made and the earliest
time at which arbitration can be commenced.
9.02 Time of Essence. Time is of the essence of this Agreement.
9.03 Attorney's Fees. Any party who unreasonably fails to perform any
covenant of this Agreement shall pay to the other party the amounts of all
attorney's fees and expenses incurred or sustained by such other party in
enforcing performance by the other party.
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9.04 Notices. Any notices or other communication to be given under this
Agreement to any party hereto shall be mailed certified mail, return receipt
requested, addressed to such party as follows:
Contractor: Noah's Construction, Inc.
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Owner: Caddx Controls, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
A change of such mailing address by either party shall be made by giving notice
to the other party in accordance with this Section. Such notice or other
communication shall be deemed to have been given when so served, or upon the
expiration of seventy-two (72) hours after such mailing, as the case may be.
9.05 Entire Agreement. This Agreement constitutes the entire Agreement
between the parties hereto and none of the parties shall be bound by any
promises, representations or agreements except as are herein expressly set
forth.
9.06 Amendments. This Agreement can be amended, modified or
supplemented only by a written document signed by the parties hereto. Any
purported oral amendment, modification or supplement shall be void.
9.07 Filing of Agreement. This is a confidential Agreement among the
parties hereto and this Agreement shall not be filed of record with any city,
county, state or federal authority.
9.08 Assignment. The parties hereto shall not have the power or right
to assign their respective duties and obligations hereunder unless such
assignment is agreed to in writing by the parties hereto, or is provided
otherwise herein.
9.09 Applicable Law. This Agreement shall be construed according to the
laws of the State of Texas regardless of where such Agreement is signed or the
site of Project.
9.10 Unenforceable Provisions. If any portion of this Agreement shall
be held to be void or unenforceable, the balance thereof shall nevertheless be
carried into effect.
9.11 Benefit. This Agreement shall be binding upon the parties, their
heirs, legal representatives, successors and permitted assigns.
9.12 Preamble Clauses. The preamble clauses hereto are hereby
incorporated into this Agreement as though fully rewritten herein at length.
9.13 Descriptive Headings. The descriptive paragraph headings contained
herein are for convenience only and are not intended to include or conclusively
define all the subject matter in the paragraphs accompanying such headings and,
accordingly, such headings should not be resorted to for interpretation of this
Agreement.
9.14 Interpretation. Any words used herein shall be interpreted as
singular or plural, and any pronouns used herein shall be interpreted as
masculine, feminine or neuter, as the context so requires.
9.15 Exhibits. All Exhibits attached hereto are made a part hereof by
reference and are hereby incorporated into this Agreement as though fully
rewritten herein at length.
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9.16 Acknowledgments. Each of the parties to this Agreement hereby
acknowledges that such party has received a fully executed copy of this
Agreement and further acknowledges that such party has carefully reviewed the
representations, terms and conditions contained herein.
IN WITNESS WHEREOF, the parties have entered into this Agreement the
day and year first above written.
"Contractor"
/s/ ▇▇▇▇ ▇▇▇▇▇
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By ▇▇▇▇ ▇▇▇▇▇
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Title President
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"Owner"
/s/ ▇▇▇ ▇▇▇▇▇
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By ▇▇▇ ▇▇▇▇▇
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Title President
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CONTRACTOR
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