DESIGN/BUILD AGREEMENT

1.1

Design/Builder shall perform and complete, or cause to be performed and completed, the design and construction of all work required for the Project, all in strict conformity with the Design/Builder’s Proposal of July 20, 2005 as set forth in Exhibit A. The performance of all architectural and engineering services and the preparation of all schematic preliminary, design development and construction drawings, plans and specifications (collectively the “Contract Documents”) and the performance of all labor and the furnishing of all materials

and equipment for and on account of the Project, are hereinafter collectively referred to as the “Services”.

1.2

Intent of Contract Documents

a.

The intent of the Contract Documents is to include in the Services all applicable labor and materials, insurance, tools, equipment, licenses, approvals, transportation, surveys, testing, field engineering, design and other professional services and any other items required to design, construct and complete the Project satisfactorily in the interest of Owner and in accordance with Exhibit A. Design/Builder shall perform and complete the Services in strict accordance with the intent and meaning of the work to be performed on account of the Project so as to produce the intended result;

b.

The Contract Documents are complementary and what is called for by one shall be as binding as if called for by all;

c.

If any conflicts or ambiguities are found in or among any of the Contract Documents, they shall be brought to the attention of the Owner immediately for resolution. The Owner will resolve same in a manner so as to secure, in all cases, the most substantial and complete performance of the Services, consistent with the Contract Documents;

d.

Addenda to parts of the Contract Documents are for the purpose of varying, modifying, rescinding or adding to portion of the Contract Documents. All addenda should be read together with the portions of the Contract Documents to which they pertain. Where an addendum modifies a portion of a paragraph or a section, the remainder of the paragraph or section shall remain in full force and effect unless otherwise stated in the addendum;

e.

Captions, headings, cover pages, tables of contents and footnote instructions contained in the Contract Documents are inserted only to facilitate reference and for convenience and in no way define, limit or proscribe the scope, intent or meaning of any provisions of any of the Contract Documents;

f.

Words and abbreviations which have well known technical or trade meanings are used in the Contract Documents in accordance with such recognized meanings; and

g.

Should a conflict or discrepancy occur in, between or among any parts of the Contract Documents, the more reasonable way of performing the Services and the better quality to achieve the purpose intended shall govern, unless the Owner shall otherwise direct.

1.3

Obligations

a.

Design/Builder in a good and workmanlike manner, shall perform all the Services required in accordance with commercial standards applicable at the time the work is performed and to the satisfaction of Owner. Design/Builder shall supervise and direct the performance of the Services using its best skill, judgment and attention. Design/Builder shall be solely responsible for all construction means, methods, techniques, sequences and procedures within the scope of the Work;

b.

Design/Builder shall furnish, erect, maintain and remove such construction and such temporary work as may be required. Design/Builder shall be responsible for the safety, efficiency and adequacy of Design/Builder applications and methods, and for damage which may result from failure or improper construction, maintenance or operation of such applications and methods;

c.

Design/Builder shall deliver all Materials at such times and in such quantities as will insure the speedy and uninterrupted progress of the Work. All materials shall be delivered to the Site in proper order and quantity. Design/Builder shall handle and take care of all Materials, as the same are delivered to the Site.

d.

All Purchase Orders, guarantees or warranties executed and/or delivered in connection with the Materials which are pre-purchased by Design/Builder as provided herein, shall provide that if, upon inspection of the same by Owner, or if upon incorporation of the same in the Project, Owner determines that such materials, or any portion thereof, are faulty or defective in any respect, such materials shall be replaced, at the sole cost and expense of the Design/Builder, within sixty (60) days after receipt of written notice to such effect from Owner.

1.4

Quality, Quantity and Labeling

1.5

Phased Development of the Project

a.

the “Design Phase”; and

b.

the “Construction Phase”.

2.1

Design Phase

a.

Design/Builder shall perform or cause to be performed all architectural, structural, engineering, related programming, designing, drafting, testing, inspection and other services, including without limitation, the preparation of all drawings and specifications necessary to complete the design of all portions of the Project in accordance with the terms of this Agreement and the Scope of Work. Design/Builder has generally familiarized itself with the Site, the Contract Documents and agrees to design and construct the Project in strict accordance with the Scope of Work;

b.

Design/Builder shall consult with Owner and such other Consultants designated by Owner to ascertain Owner’s needs and goals and the requirements of the Project;

c.

Design/Builder shall visit the site, become familiar with the local conditions, and correlate observable conditions with the requirements of the Owner’s program; schedule, and budget;

d.

Design/Builder shall review laws applicable to design and construction of the Project; correlate such laws with the Owner’s program requirements; and advise the Owner if any program requirement may cause a violation of such laws;

e.

Design/Builder’s duties during the Design Phase shall include, but shall not be limited to, the following:

i.

Preparation of all preliminary and schematic design documents, consisting of drawings and other documents illustrating the scale and relationship of Project components and the coordination with the design of the Facility; furnishing copies thereof to the Owner for review;

ii.

Based on final schematic design documents reviewed by Owner, preparation of design development documents, consisting of drawings and other documents, to fix and describe the size and character of the entire Project as to structural, mechanical and electrical, Materials and such other essentials as may be appropriate or required; furnishing copies thereof to the Owner and obtaining Owner’s review therefor;

iii.

Based on design development documents reviewed by Owner and coordinated with the design of the Facility, preparation of all construction drawings, plans and specifications, setting forth the requirements of the Project, in detail sufficient to enable Trade Contractors and Materialmen to bid their respective portions of the Work; furnishing copies thereof to the Owner and obtaining Owner’s comments therefor;

iv.

Documentation of all changes in the Design Criteria made during the course of the Work; furnishing copies of such changes to the Owner and obtaining Owner’s approval thereof; and

v.

Preparation of the “Progress Schedule” as defined in Article 2.2(e) below for the design and construction of the different components of the Project, indicating design task, durations, milestones, reviews and approvals, and specifying the planned timing of each element comprising the Project, as same may be updated and revised from time to time, with the prior approval of Owner in accordance with the terms of this Agreement;

f.

All charges and fees for services rendered by any Design Consultants or others retained by Design/Builder subject to Owner’s approval in connection with the Design Work, shall be included in, and compensated for Design/Builder as part of, the Contract Sum payable by Owner hereunder for the Services;

g.

Design/Builder shall be responsible for coordination of its services with those of the Owner’s Consultants so as to provide a coordinated set for Construction Documents for preparation and submission of documents required for the approval of all applicable governmental authorities having jurisdiction over the Project and provide assistance to, and cooperate with Owner and Owner’s consultants in obtaining all necessary approvals of Government Authorities having jurisdiction over the Project;

h.

In connection with the design services listed above, Design/Builder shall:

i.

Provide coordination of the construction performed by Design/Builder’s subcontractors, with the construction work of separate contractors retained by Owners;

ii.

Subject to paragraph 2.1(b) make revisions of the construction, drawings, specifications or other documents when such revisions are consistent with written approvals or instructions previously given, are required by the enactment or revision of codes, laws or regulations subsequent to the preparation of such documents;

iii.

Make investigations including surveys, valuations, inventories or detailed appraisals or existing facilities, and services required in connection with the Project;

iv.

Prepare a set of reproducible record drawings showing significant changes in the Work made during construction based on marked-up prints, drawings and other data;

v.

Provide design services until the Project is 100% complete;

vi.

Prepare to serve or serving as an expert witness in connection with any public hearing, arbitration proceeding or legal proceeding with regard to the work contemplated by this Agreement not including any dispute between the parties hereto and at the sole cost and expense of Owner;

vii.

Provide services for architectural, structural, mechanical electrical engineering services for the Project and any other engineering services that may be required to produce the project; and

viii.

Provide the insurance for the Project as provided in Exhibit F.

i.

Design/builder shall advise the Owner with respect to the following:

i.

the availability of labor, materials and supplies;

ii.

elimination of possible conflicts and/or overlapping jurisdictions among the various trades or overlapping responsibilities among Trade Contractors;

iii.

conflicts and omissions;

iv.

variations from customary construction practices and methods which, may cause difficulties or occasion delay in the performance of the Work;

v.

conduct of construction operations under good construction practices;

vi.

unit prices and alternates;

vii.

required temporary and Project support facilities;

viii.

construction detailing; and

ix.

construction economies through alternative methods, materials, or concepts, consistent with Owner’s requirements and sound construction practice;

2.1.1

Owner’s Responsibilities During Design

a.

The Owner in conjunction with Design/Builder shall provide full information regarding requirements for the Project including a program, which shall set forth the Owner’s design objectives, constraints and criteria, including space requirements and relationships, flexibility and expandability, special equipment and systems and site requirements;

b.

The Owner shall furnish required information and services and shall render approvals and decisions as expeditiously as necessary for the orderly progress of the services and of the Work; and

c.

Any review required of the Owner shall be promptly addressed and any approval required to be given by Owner shall not be unreasonably withheld. Any documents delivered by Design/Builder to Owner for Owner’s review and approval shall be deemed approved if, within fifteen (15) days from the delivery of said documents, Owner has not made a written comment in regard thereto.

2.1.2

Ownership of Design Documents

a.

Any drawings and specifications and other Materials, including any and all documentation in electronic form (i.e. CADD) prepared by Design/Builder shall be the property of the Owner whether the project for which they are made is executed or not. If the Drawings and Specifications are used by the Owner, for additions to this Project, or for completion of this Project by others, Design/Builder is to receive notification and shall not be held responsible for any use of these drawings which is beyond the scope of this Agreement or any modifications of these drawings by others or services covered under this Agreement performed by others to complete this Project; and

b.

Submission or distribution to met official regulatory requirements or for other purposes in connection with the Project is not to be construed as publication in derogation of Design/Builder’s rights.

2.2

Construction Phase

a.

establish procedures for the orderly and expeditious performance and Final Completion of the Work in accordance with the terms of this Agreement; perform, or require to be performed, all Work necessary in connection therewith; establish

procedures for administration of Trade Contracts; and maintain coordination among Trade Contractors;

b.

prepare Project site organization and lines of authority in order to carry out the Work on a coordinated basis;

c.

organize staff and assign personnel to various areas to provide a positive and efficient means by which the Work may be controlled, coordinated and expedited;

d.

submit a Project Schedule. All modifications to the Progress Schedule must be coordinated with Owner. The Progress Schedule shall also (i) set forth a construction time schedule which identifies all major and critical components of the Project and the Work, including Engineer’s preparation of design documents, all major and critical design details and all matters relating to Trade Contractors and Trade Contract awards, and which identifies Owner’s responsibilities, if any, with respect to the design documents, and (ii) from and after the date that the same is available, incorporate the information described in this Article 2.2 Design/Builder agrees that the Progress Schedule shall not be amended, modified or extended without Owner’s prior written approval;

e.

require submission of, and review, progress schedules of Trade Contractors and make adjustments to such schedules as appropriate in an effort to continue the expeditious Final Completion of the Work within the time periods set forth in the Progress Schedule;

f.

except as otherwise provided in Article XXIII hereof, obtain Owner’s written approval of any changes in the Work and any approvals or other documents necessary in connection therewith;

g.

conduct necessary job and coordination meetings, which job meetings shall be held not less than twice monthly and which coordination meetings shall be held as required, and attend all such meetings;

h.

prepare detailed written agendas and minutes of each job and coordination meeting and furnish copies thereof to Owner and other Consultants designated by Owner; minutes must be provided within five (5) days after each meeting;

i.

prepare and maintain, on a current basis, an on-Project Site record keeping system, including but not limited to, records of all changes in the Work necessitated by reason of Change Orders, Emergency Change orders and Field Orders, Work progress schedules, shop drawing logs, material lists, records of all pertinent communications, equipment and material deliveries, visitors, special occurrences, and other Work related information and make such on-Project Site records available for inspection to Owner (and, if required by Owner’s Consultants). In addition,

copies of all correspondence pertaining to the Work shall be maintained by Design/Builder and shall be made available at all times to Owner;

j.

submit to Owner each month a “Job Progress Report” which shall describe the following: (i) the financial condition of the Work, including Trade Contract awards, Project modifications, anticipated cost and Change Order summary; (ii) construction status, including updated Progress Schedules with projected critical dates compared with original milestone dates, status of job progress to date, current Work activity, projected Work activity for the following month, job photos and status of materials required; and (iii) drawing status, including status of drawing schedule, status of shop drawings, shop drawing schedule, status of coordination drawings, coordination drawing routing schedule, and coordination meeting minutes;

k.

assemble and review all required brochures, guarantees, certificates of compliance and other agreements and instruments;

l.

Design/Builder acknowledges and agrees that as part of its obligations under this Agreement, Design/Builder, its Trade Contractors and Contractor are to prepare and submit shop drawings and other submissions, conduct coordination meetings and prepare coordination drawings for the purpose of coordinating the work required of Design/Builder and its Trade Contractors. This process, in part, is intended to recognize and resolve design conflicts in advance of fabrication and installation of the various components of the Work. Design/Builder agrees that it shall expeditiously and thoroughly prepare and submit shop drawings and conduct and conclude the coordination effort at the earliest possible time so as to facilitate the recognition and resolution of conflicts, including errors in the Construction Documents, such that any adverse effects on the progress of the Work are avoided to the fullest extent reasonably possible. Similarly, the proposal of substitutions in accordance with Article XXII of this Agreement shall be conducted at the earliest possible time. Nothing herein shall relieve Design/Builder from its own failure to comply with its obligations with respect to shop drawings, samples and catalog cuts;

m.

maintain at the Project Site, on a current basis and make available to Owner, copies of any records with respect to Trade Contracts, shop drawings, samples, operating manuals, the Construction Documents, equipment and any and all other related documents and any revisions to any of the foregoing which may arise out of, or be related to, this Agreement; maintain and provide, and make available to Owner, Design Consultants, Owner’s Consultants and Contractor, three (3) sets of progress photos taken on a monthly basis according to a plan, as previously approved by Owner; and at Owner’s request, upon final completion of the Work or any phase thereof, deliver to Owner copies of a complete set of “as-built drawings”, showing the Work, as actually completed, in such form, content and detail and, at Owner’s option, in such electronic medium, as Owner may specify, together with copies of all operating instructions and maintenance manuals (bound and indexed);

n.

establish and coordinate with Owner a system for processing, expediting and administering all Trade Contracts for the purchase of materials, supplies and equipment. Manage the procurement and delivery of critical materials to the Project Site and coordinate the deliveries with the progress of the Work;

o.

advise owner that material and equipment is currently available to accomplish the Work and immediately alert Owner and Contractor if it believes that job progress will be adversely affected by circumstances related to the availability of material or equipment;

p.

notify Owner of the progress of the Work, and advise Owner, in accordance with the provisions of Article VII hereof, of any delays or serious potential delays which may affect Final Completion of the Work and of Design/Builder’s recommendations regarding such delays;

q.

inspect, manage and coordinate the work of all Trade Contractors, enforce the terms of their respective Trade Contracts and enforce strict discipline and good order among all Trade Contractors in an effort to see that the Work is performed in accordance with the terms of such Trade Contracts, the Contract Documents, recognized trade standards and the applicable laws, rules and regulations of all Government Authorities and endeavor to guard Owner against any delays, increased costs and defects and deficiencies in the Work. The inspection required herein shall not include controlled or technical inspections. In connection with the foregoing, Design/Builder shall (i) require any Trade Contractor to stop the performance of any Work which Design/Builder observes or should have observed is not in compliance with the requirements of its respective Trade Contract, the Contract Documents, recognized trade standards or the applicable laws, rules and regulations of any governmental authorities having jurisdiction over the Work; (ii) reject and require to be corrected, those portions of the Work which Design/Builder discovers or should have discovered does not conform to the requirements of the applicable Trade Contract, the Contract Documents, recognized trade standards or the applicable laws, rules and regulations of any governmental authorities having jurisdiction over the Work; (iii) inspect all materials, supplies and equipment delivered or installed in connection with, or pursuant to, any Trade Contract in an effort to determine that the same are in compliance with the requirements of the applicable Trade Contract, the Contract Documents, recognized trade standards and the laws, rules and regulations of all governmental authorities having jurisdiction over the Work and reject and require replacement of all non-conforming materials, supplies and equipment; and (iv) not employ on the Work any person or Trade Contractor unfit for or unskilled in the assigned task and, subject to Owner’s prior approval, remove such unfit or unskilled employee or such Trade Contractor from the Project Site;

r.

arrange for all cutting, fitting or patching that may be required to complete the Work or to make its several parts fit together properly;

s.

use best efforts to resolve disputes between Trade Contractors relative to the performance of their work or the furnishing of materials, supplies or equipment in connection with the Work;

t.

arrange for the storage and inspection of all materials, supplies, systems and equipment provided in connection with the performance of the Work;

u.

maintain the Project Site in a safe and orderly fashion and provide Project Site clean-up of the Work on a regular basis during the course of construction, and also upon Substantial Completion and Final Completion, as provided in this Agreement or the Contract Documents;

v.

enforce the implementation of necessary safety, health and environmental protection measures during the performance of the Work, which shall include, without limitation, the erection and maintenance of all reasonable safeguards and the posting of danger signs and other warnings against hazards, conduct inspections and require that all Trade Contractors comply with all Federal, State and local safety, health, equal opportunity and environmental protection and other requirements, laws, rules and regulations as well as all necessary safety, health and environmental protection measures as provided herein applicable to the Work;

w.

prepare a Schedule of Values and all Applications for Payment in a form approved by Owner; determine, prior to the submission of each Application for Payment, whether and to what extent the sums requested therein are due and payable; and certify the same to Owner;

x.

make recommendations with respect to any changes Design/Builder may consider necessary or desirable in connection with the Work (including, but not limited to, changes in response to events of force majeure ), it being understood and agreed that, except as otherwise provided in Article XXIII hereof, no changes may be made in connection with the Work without the prior written approval of Owner;

y.

review with Trade Contractors all methods and materials that may be used in connection with the Work and make recommendations to Owner regarding proposed changes, if any, that may be implemented in the Construction Documents as a result of such recommendations;

z.

issue to Trade Contractors (i) all Change Orders approved by Owner, and (ii) all Emergency Change Orders and Field Orders in the manner and in accordance with the provisions set forth in Article XXIII hereof;

aa.

with respect to portions of the Work to be performed pursuant to a Change Order, an Emergency Change Order, or a Field Order, on a time and material, unit-cost or other similar basis, keep and require the keeping of records and computations thereof and maintain accurate cost accounting records; provide copies of all such records to Owner;

bb.

assist Owner in determining when Substantial Completion of the Work (or any segregated portion thereof) has taken place; subsequent to Substantial Completion of the Work or of a portion thereof, prepare (in consultation with Owner) lists of incomplete or unsatisfactory Work (“Punch Lists”), which incomplete or unsatisfactory Work shall be limited to minor details which do not affect Owner’s ability to use the Project, and perform or cause to be performed, and supervise all work necessary to complete the items set forth on the Punch Lists; provided, however, that the failure to include any element of the Work on such Punch Lists shall not alter the responsibility of Design/Builder and/or Trade Contractors to complete the Work in accordance with the Contract Documents; and subsequent to the completion of all items set forth on the Punch Lists items and any other unfinished portions of the Work, provide written notice to Owner, that the Work has reached the stage of Final Completion and is ready for final inspection;

cc.

assist Owner, Owner’s Consultants and Owner’s maintenance personnel in the initial start up, testing and operation of the Work and all systems comprising a portion of the same;

dd.

prior to making final payment under any Trade Contract, (i) prepare a Trade Contract status summary indicating its financial status, complete with a summary of all approved Change Orders and payments made to date, and (ii) secure and deliver to Owner all guarantees, warranties, affidavits, general releases, releases of liens, waivers, certificates, consent of any surety to final payment, as-built drawings, maintenance manuals, operating instructions and other documents required to be delivered under this Agreement, or requested by Owner, in connection with the Work;

ee.

make recommendations regarding, and render assistance necessary for, the development and administration of an effective labor relations program for the Work and the avoidance of labor disputes during the performance of the Work and assist in negotiating any agreements with labor unions which will result in cost savings and use best efforts to secure better agreements;

ff.

review with Trade Contractors all methods and materials that may be used in connection with the Work and make recommendations to Owner regarding proposed changes, if any, that may be implemented in the Construction Documents as a result of such recommendations;

gg.

positively affirm that labor is currently available to accomplish the Work and immediately alert Owner if it believes that job progress will be adversely affected by circumstances related to the availability of labor;

hh.

attend meetings with Owner, or with Design Consultants, Owner’s Consultant’s and Contractor as required; Design/Builder represents that on such occasions the persons enumerated in Section XVI, or substitutes approved by Owner, shall be available; and

ii.

with the exception of the environmental consents, approvals, licenses and permits which Design/Builder need not secure and deliver, secure and deliver to Owner all governmental consents, approvals, licenses and permits including other consents and permits required by all Government Authorities customarily obtained by a Design/Builder performing services and functions similar to the services and functions being performed by Design/Builder hereunder, including, but not limited to, a Temporary Certificate of Occupancy; it is expressly understood that the making of final payment by Owner to Design/Builder hereunder shall be conditional upon the deliverance by Design/Builder of the foregoing to Owner unless the failure to obtain any of the above is due to causes beyond the reasonable control of Design/Builder

jj.

Documentation of all changes in the Design Criteria made the course of the Work; furnishing copies of such changes to the Owner and obtaining Owner’s approval thereof;

kk.

Provide coordination of Work performed by Design/Builder’s subcontractors, separate contractors and by the Owner’s own forces;

ll.

Prepare a set of reproducible record drawings showing significant changes in the Work made during construction based on marked-up prints, drawings and other data; and

mm.

provide punch list, operating manuals and as-built drawings upon substantial completion.

nn.

Provide services until the Project is 100% complete

2.3

Design/Builder agrees to perform such other and additional services similar in type and obligation to those listed above, prepare such other reasonably requested schedules, reports, budgets and other technical data, and attend such meetings during the Design Phase and/or Construction Phase as Owner may reasonably request in order to assist in the preparation of the Construction Documents, cost estimates, updated Progress Schedules and any other documents and instruments relative to the Work and the Project, to the end that Final Completion of the Work may be brought and maintained within the GMP and time objectives specified by Owner. Design/Builder acknowledges that the Design and Construction Phases may be on-going at same time and that certain services may overlap.

3.1     a.

Upon completion of Final Design Documents, Design/Builder shall submit to Owner a guaranteed maximum price (“GMP”) for the Project. The Guaranteed Maximum Price shall be comprised of the Cost of the Work ($7,173,275.00), as defined in Section 5.1(b); which amount includes Design Builder’s Fee composed of those items in Article 4.1 below and a not to exceed General Conditions Costs of $46,000.00, for the items set forth in Section 5.1(a). The Guaranteed Maximum Price shall be prepared on the basis of (i) all Work necessary to provide a fully complete, operational, code compliant and functional Project in accordance with the Owner’s objectives for cost, time and quality consistent with the terms of this Agreement; and (ii) a broad review of the Project and not solely on the specific work shown on the documents existing at the time of the execution of the Agreement, and shall include all Work which is necessary for a complete and proper installation and shall include all work, labor, and materials required to provide a complete, operational, code compliant and functional Project.

b.

The General Conditions Costs of ($46,000.00) as defined in Section 5.1(a) below is not to exceed a fixed sum and shall not be increased for any reason unless specifically provided otherwise in this Agreement.

4.1

Items Covered By Design Builder’s Fee

a.

Salaries, fringe benefits, or other compensation of Design/Builder’s Employees at the principal office and branch offices involved in Project activities including, without limitation, scheduling, legal, estimating, accounting and purchasing;

b.

General operating and corporate expenses of Design/Builder’s principal and branch offices other than the field office;

c.

Design/Builder’s capital expenses, including any interest on Design/Builder’s capital employed for the Project;

d.

Overhead or general expenses of any kind which are not expressly included in Section 5.1(b) below;

e.

Salaries, fees and related fringe benefits of Design/Builder’s corporate officers and directors except as to those individuals listed in Section 5.1(b)(i) below;

f.

Design/Builder’s profit;

g.

Costs incurred by Design/Builder due to the fault or neglect of Design/Builder or any of its Employees; and

h.

All other costs, expenses and changes of any kind whatsoever not specifically included within Reimbursable Costs Article V below.

5.1

To the extent payable hereunder, and subject to Owner’s receipt from Design/Builder of monthly Construction Budgets (as such term is defined in subparagraph (d) of Section 2.2 hereof) and such other supporting documentation as Owner may reasonably require, from time to time, Owner shall reimburse Design/Builder, in accordance with Article XI hereof, for only the actual costs set forth in this Section, to the extent such costs are necessarily incurred by Design/Builder in the proper performance of the Work during Construction Phase (the “Reimbursable Costs”), which Reimbursable Costs shall be at rates not higher than those which are competitive and prevailing in the locality for work and services similar to the Work. Reimbursable Costs shall not include any costs which arise out of the negligence, misconduct, or breach of this Agreement by Design/Builder, or by any Trade Contractor of, or material supplier to, Design/Builder or by anyone employed by any of the foregoing or by anyone for whose acts any of them may be liable.

a.

The General Conditions Costs shall consist of all items generally considered to be general conditions, and as generally described on Exhibit C and the parties agree that these items are by way of illustration and not by limitation and shall not exceed the fixed amount of $46,000.00.

b.

The term “Cost of the Work” shall mean those costs, without duplication, expressly set forth in this Section 5.1(b) which are necessarily incurred in the proper performance of the Work and paid or to be paid by Design/Builder a and include those items comprising Design Builder’s Fee as set forth in Article 4.1 and exclude those items included in the Cost of General Conditions Work as set forth in Section 5.1(a) above. Such costs shall be at rates not higher than the standard paid in the locality of the Work (or, such other locality as, with respect to any item(s), may be appropriate) except with the prior written consent of Owner:

i.

Payments made by Design/Builder for work performed and materials, supplies and equipment furnished pursuant to Trade Contracts and/or Purchase Orders approved by Owner in accordance with the provisions of this Agreement, including the costs of all materials and equipment pre-purchased in accordance with the provisions of Article XXI hereof (“Trade Contract Costs”);

ii.

actual wages and associated benefits of construction workers paid by Design/Builder pursuant to collective bargaining agreements in effect at that time, together with materials purchased by Design/Builder, to perform the construction of the Work at the Site or, with the Owner’s agreement, at off-Site locations;

iii.

Cost of all materials, supplies and equipment purchased or to be purchased by Design/Builder and approved by Owner in writing and which are incorporated in the Work, including costs of transportation and storage thereof, exclusive of General Conditions Work covered under Section 5.1(a) and excluding any materials, supplies or equipment purchased directly by Owner;

iv.

Subject to the prior written approval of Owner, the cost of corrective work or purchase of additional supplies or materials due to fire, theft, vandalism or other factors not under the reasonable control of the Design/Builder to the extent not compensated by insurance and not due to the fault or negligence of the Design/Builder; provided, however, that where any such costs are incurred due, to Design/Builder’s failure properly to secure the Project Site in accordance with Section 1.5(c) hereof, such costs shall be borne by Design/Builder;

v.

Cost of premiums (or such portion thereof as is reasonably allocable to the Project) for all insurance and bonding which Design/Builder is required by Owner to purchase, procure and maintain; and

vi.

Subject to the prior written approval of Owner, all other separately itemized costs directly incurred in the performance of the Work and not included in the Design/Builder’s Fee or in General Conditions Work.

5.2

Design/Builder shall use its best efforts to minimize the Reimbursable Costs incurred in the performance of the Work, consistent with the intent and purposes of this Agreement, sound business practice and the instructions of Owner. All Reimbursable Costs are limited to actual expenses paid by Design/Builder, and Owner reserves the right to audit these expenses at its own cost and expense in accordance with this Agreement and any adjustments which are yielded by an audit shall be paid to Owner by Design/Builder or, at Owner’s option,

deducted from payments due to Design/Builder. To the extent the audit reveals that Design/Builder has under billed Owner, such sums will be paid by Owner to Design/Builder.

6.1

Owner shall not reimburse Design/Builder for any of the following costs, all of which shall be borne by Design/Builder at its sole cost and expense:

a.

salaries or other compensation of any principals and branch office heads of Design/Builder;

b.

expenses of operating Design/Builder’s home and branch offices, including overhead and administrative expenses not included in General Conditions Cost as defined in Article 5.1(a);

c.

any part of Design/Builder’s capital expenses, including interest on capital employed in connection with the Work;

d.

costs not reimbursed by insurance, due (x) to the acts or omissions of Design/Builder (or of any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable), or the failure of Design/Builder (or of any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable) to perform its obligations under this Agreement or (y) from the violation by Design/Builder (or by any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable) of any Federal, State or local laws, ordinances or statutes; (ii) casualty losses and related expenses sustained by Design/Builder (or by any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable) in connection with tools, equipment, supplies and other personal effects owned or rented by Design/Builder (or by any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable); and (iii) any other costs which would have been insured but for the failure of Design/Builder (or of any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable) to carry the insurance required to be carried hereunder or the failure of Design/Builder (or of any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable) to comply with the requirements of any insurance carriers providing insurance coverage for the Project, as set forth in Exhibit F hereof;

e.

costs of uncovering, correcting or replacing defective Work which has arisen by reason of Design/Builder’s negligence or the negligence of any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable, or breach of this Agreement or failure to properly supervise or coordinate the Work;

f.

losses, costs, and expenses (including attorneys’ fees and disbursements) incurred by Design/Builder in connection with, or as a result of, the occurrence of any event expressly provided for under the terms of this Agreement wherein Design/Builder agrees to indemnify and hold harmless Owner against such losses, costs and expenses;

g.

General Conditions Costs which have been back-charged or are deducted from any Trade Contractor for any reason;

h.

costs on account of the performance by Design/Builder, or of any Trade Contractor, of general conditions work, other than or in addition to those expressly identified as Reimbursable Costs under Article V;

i.

costs incurred by reason of Design/Builder’s failure to comply with its obligations under this Agreement, including costs in the form of penalties, fines or other similar charges, as well as any and all costs incurred by reason of Design/Builders violation of laws, rules and regulations;

j.

New Jersey State and any other Governmental Authority’s sales and use taxes on any portion of the Work which is subject to exemption, whether by reason of a certificate of capital improvement or otherwise;

k.

cost of insurance on tools and equipment owned by workmen;

l.

costs of any item expressly excluded from, or not expressly included within, the items referred to in Article V hereof; and

m.

costs of any item or expense which this Agreement provides are to be paid or borne by Design/Builder at its sole cost and expense.

7.1

Design/Builder shall promptly and diligently perform, or caused to be performed, the Work in strict accordance with the time periods (“Milestone Dates”) set forth in the Progress Schedule annexed hereto as Exhibit D so that all Milestone Dates (as such may be amended

from time to time) shall be achieved and the Work shall be (a) substantially completed on or before July 31, 2006 (“Substantial Completion Date”), and (b) finally completed on or before the date which is thirty (30) days from the Substantial Completion Date (“Final Completion Date”), in each case as set forth in the Progress Schedule, subject to adjustments as hereinafter provided. Design/Builder acknowledges that it has reviewed the Progress Schedule and has independently determined that it can complete the Work in accordance with such Schedule. Within thirty days of the award of this Agreement, Design/Builder will submit a detailed critical path method (“CPM”) schedule which refines the Progress Schedule and is consistent with the original Milestone Dates. Design/Builder further acknowledges that the timely performance of its obligations under this Agreement is of the essence, and such time of the essence requirement shall apply to all dates, time limits and time requirements set forth in this Agreement and the Progress Schedule. The Work shall be deemed substantially completed (“Substantial Completion”) on the date when all of the following shall have occurred: (a) Owner may use and occupy the Project or, if requested by Owner, portions thereof without interference for all of its intended uses under this Agreement, (b) only minor Punch List items (as such term is defined in Section 11.1(d) hereof), if any, remain incomplete provided they do not interfere with such use and occupancy; and (c) Owner shall have received from the Department of Buildings of the Town of Hanover, New Jersey all required permits and certificates necessary to occupy and operate the Project, including, if required, a Temporary Certificate of Occupancy. The Work shall be deemed finally completed (“Final Completion”) on the date when the Work shall have been finally completed and Owner shall have received satisfactory evidence, that:

a.

all Work, including all items set forth on the Punch Lists, has been fully and satisfactorily completed in a good and workmanlike manner, in conformance with the Contract Documents and in full compliance with all applicable laws, rules, requirements and regulations of all Government Authorities having jurisdiction over the Work including required sign-offs;

b.

all final certificates of approval relating to the Work and the contemplated uses of the Project, including, without limitation, all necessary certificates of the Board of Fire Underwriters or any successor thereto and all certificates of inspection shall have been issued and delivered to the Owner; and

c.

all required receipts, general releases, releases of liens, affidavits, waivers, guarantees, warranties, bonds, as-built drawings and any other documents required under this Agreement or the Trade Contracts shall have been issued and delivered to Owner.

7.2

Design/Builder shall notify Owner promptly if the Work, or any portion thereof, will not be completed within the time provided for in the Progress Schedule. If Design/Builder so notifies Owner, or if, in the opinion of Owner reasonably exercised, Design/Builder falls behind in the Progress Schedule for any reason, Design/Builder shall take appropriate action to improve the progress of the Work and shall, if requested by Owner, submit operational

plans to demonstrate the manner in which the lost time may be regained if possible. Such actions shall not result in an increase in the Final Guaranteed Maximum Price, Design/Builder’s Fee or General Conditions Costs.

7.3

On or before the Substantial Completion Date, Design/Builder shall clear, or cause to be cleared, the Project Site and the Project of any debris, construction materials, rubbish, rubble, discarded equipment or spillage of solid or liquid waste, shall remove all tools, construction equipment, machinery and surplus materials, and shall maintain the Project free of such items until Final Completion. In addition, on or before the Substantial Completion Date, Design/Builder shall clean, or cause to be cleaned, the Project, as provided in the Construction Documents. If the Project or the Project Site are injured or damaged by Design/Builder or any Trade Contractor of, or material supplier to, Design/Builder or anyone employed by any of the foregoing or anyone for whose acts any of them may be liable, Design/Builder, at its sole cost and expense and without additional cost to Owner, promptly shall repair and restore the portion thereof so damaged or injured to its condition immediately prior to such damage or injury in a manner satisfactory to Owner. If Design/Builder fails to undertake or cause the undertaking of the aforesaid cleaning, removal and repairs, in such event, the Owner may, at Owner’s sole option, avail itself of any of the remedies provided in this Agreement and, subject to giving 48 hours’ prior written notice to Design/Builder, Owner may also perform, or cause to be performed, the aforesaid cleaning, removal and repairs and, in such event, all additional expenses incurred by Owner in connection therewith, at Owner’s option, shall be reimbursed to Owner either (a) by Owner not paying Design/Builder monies then due or next becoming due from Owner to Design/Builder hereunder, or (b) by Design/Builder paying such amounts to Owner on demand, after rendition of a bill or statement therefor.

7.4

Prior to Substantial Completion of the Work, Owner or Owner’s designees, including, but not limited to, additional Design/Builders retained by Owner to perform services outside of this Agreement, shall have the right to use or occupy all or any portion of the Project or to install or cause the installation of furniture, furnishings and equipment therein. Such use or occupancy by Owner or Owner’s designees shall not (a) constitute acceptance by Owner of any element of the Work or the space, systems, materials or equipment incorporated in the Project, (b) be construed as a waiver of any right or claim by Owner in connection with any Work, or (c) affect the obligations of Design/Builder or any Trade Contractor for any Work which is not in accordance with this Agreement, the respective Trade Contracts or the Contract Documents. Design/Builder shall continue performance of the Work in a manner which shall not unreasonably interfere with the aforesaid use, occupancy and operation by Owner or Owner’s designees. Design/Builder agrees that it shall not interfere with, or object to, such use or occupancy by Owner or Owner’s designees and that it shall cooperate with Owner and any designated occupants to facilitate such early occupancy.

7.5

Owner and Owner’s designees shall have the right of access to the entrances, elevators, loading facilities and such other services as Design/Builder shall be using or providing to the Project. Such right of access shall be subject to the reasonable rules of Design/Builder,

which rules (a) shall be for the sole purpose of coordinating such access and for observing all safety and precautionary measures, and (b) shall not hinder, prohibit or interfere with such access by Owner or Owner’s designees. In addition, Owner may require the use and operation of any completed heating, ventilating or air conditioning equipment at the time that Owner or Owner’s designees occupy or use any portion of the Project. Any such use or occupancy by Owner shall not affect the warranties and guarantees required under the provisions of Section 8.3, herein.

7.6

Any claims for extension of the Substantial Completion Date as a result of delays caused by Contemplated Delays (“Extension of Time”) shall be made in writing within seven (7) days of the occurrence leading to delay and shall set forth in detail (i) the nature of the circumstances which form the basis for each claim; (ii) the date upon which each alleged cause of delay began and ended, or began to affect the timely prosecution of the Work, or ceased to have an adverse effect upon the timely prosecution of the Work; (iii) and the number of days’ Extension of Time requested as a consequence of each alleged cause of delay. Design/Builder shall provide such supporting documentation as Owner may require, including, where appropriate, a revised Progress Schedule for performance of the Work, indicating all of the activities affected by the circumstances which form the basis for the claim. Design/Builder shall not be entitled to separate Extensions of Time for each one of a number of causes of delay which have a concurrent or interrelated effect on the progress of the Work. Owner shall respond to Contractor’s claim for an extensive of time within five (5) business days, however, Owner shall have the right to defer its decision with reference to any claims made pursuant to the provisions of this Section, until the actual effect or effects of the circumstances which form the basis for such claims may be fully assessed.

8.1

Unless otherwise agreed upon in writing by Owner, all items of the Work to be performed and all materials, supplies and equipment to be furnished in connection herewith (other than those portions of the General Conditions Work Items which are required to be performed by Trade Contractors under their respective Trade Contracts) shall be performed by Trade Contractors, materialmen, and suppliers (collectively, “Trade Contractor”), approved by Owner, pursuant to written Trade Contracts (“Trade Contracts”) awarded by Design/Builder. Design/Builder assures Owner that the Trade Contracts are to be awarded in such a manner that such Trade Contracts shall, cumulatively, include all Work required of respective trades as shown on the Construction Documents.

8.2

It is expressly understood and agreed that no portion of the Work shall be performed, and no materials or equipment required on account of the Work shall be furnished, by any Trade Contractor unless and until a Trade Contract for the same is entered into between Design/Builder and the Trade Contractor in question in accordance with the provisions of

Section 8.1 hereof and a copy thereof is delivered to Owner, unless Owner expressly waives, in each instance, the requirement that the same be delivered as aforesaid.

8.3

Design/Builder shall, and shall require all Trade Contractors to, warrant and represent that all materials and equipment incorporated in the Work shall be new and that the Work shall be of good quality, free from improper workmanship and defective materials and in strict conformance with the Contract Documents, and all applicable laws, rules, requirements and regulations of any governmental authorities having jurisdiction over the Work, including the requirements of the Underwriters Laboratory or any successor thereto;

8.4

Design/Builder shall, and shall require all Trade Contractors to, guarantee all Work for a period of one (1) year after Substantial Completion of the Work, or should this Agreement and the applicable Trade Contract be sooner terminated by Owner or Design/Builder within one (1) year (or such longer period as may be contained in the Trade Contract in question) after the date of such termination, or such longer period of time as may be prescribed by law or by the terms of any special warranty required by the Contract Documents or any of the Trade Contracts. Notwithstanding the foregoing, in the event Design/Builder achieves Substantial Completion of a distinct and several building system, the warranties and guarantees on such building system will commence to run on the date Owner issues written approval and acceptance of such system. In the event the Work or any portion thereof is found defective or not in accordance with the Contract Documents, within such time period, Design/Builder shall itself, or require the appropriate Trade Contractor to correct it promptly after written notice from Owner to do so unless Owner has previously given written acceptance of such condition. Owner shall give such written notice promptly after discovery of the same. Notwithstanding the foregoing and in recognition that Design/Builder is required to include guarantees of the type contained in this Section 8.3 in Trade Contracts with Trade Contractors, in the event that Owner shall agree in writing, in its sole discretion, to the inclusion in a specific Trade Contract of a period of guaranty which has a duration of less than one (1) year, then the obligation of Design/Builder under this Section 8.3 with respect to the work of such Trade Contractor shall be applicable only for the shorter period contained in the Trade Contract;

8.5

Nothing contained in Section 8.5 shall be construed to establish a period of limitation with respect to any other obligation which Design/Builder might have under the Contract Documents, including Section 8.4. The establishment of the time periods Section 8.4, or such longer period of time as may be prescribed by law or by the terms of any warranty required by the Contract Documents, relates only to the specific obligation of the Design/Builder and the appropriate Trade Contractor to correct the Work, and has no relationship to the time within which Design/Builder’s or a Trade Contractor’s obligation to comply with the Contract Documents may be sought to be enforced, nor to the time within which proceedings may be commenced to establish Design/Builder’s liability with respect to Design/Builder’s obligations other than specifically to correct the Work.

8.6

Design/Builder shall cause all Trade Contractors to comply with the affirmative action requirements set forth in Article XXVII below.

10.1

Design/Builder shall monitor delivery to the Project Site of all materials, equipment and supplies used in connection with the Work or incorporated in the Project, shall check all labor performing Work and shall keep accounting and auditing records and procedures in an effort to provide the proper financial management of the Work. In addition Design/Builder shall maintain separate books and records and institute such other accounting procedures reasonably requested by Owner, in connection with any sales tax exemptions or other tax rebates, credits, exemptions or benefits available to Owner in connection with the Work. Owner shall have the right to audit all accounting records relating to change orders incurred above the firm fixed price of $7,173,275.00

11.1

Owner shall make progress payments to Design/Builder at monthly intervals in accordance with the following procedures:

a.

On or before the twenty-fifth (25th) day of the calendar month following commencement of the Work and on or before the twenty-fifth (25th) day of each calendar month thereafter, Design/Builder shall submit to Owner, for review, an application for partial payment (the “Application for Payment”), based upon a schedule of values approved by Owner, in form satisfactory to Owner setting forth in complete detail (i) the portion of Reimbursable Costs, excluding General Conditions Costs, incurred by Design/Builder in connection with the Work during the immediately preceding thirty (30) day period for which Design/Builder is to be reimbursed as provided in Section 12.1(c) hereof, (ii) the