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Exhibit 10.9
DEVELOPMENT AGREEMENT
THIS
AGREEMENT ("Agreement") made this 18th of November, 2004, by
and
between KIRCO DEVELOPMENT LLC, a Michigan
limited liability company, whose
address is 101 West Big Beaver Road, Suite
200, Troy, Michigan 48084-5255
(hereinafter referred to as "Kirco"), and
MEEMIC INSURANCE COMPANY, a Michigan
corporation, whose address is 691 North
Squirrel Road, Suite 100, Auburn Hills,
Michigan 48326 (hereinafter referred to as
"Owner").
WITNESSETH:
1.
CONTRACT.
Owner is the owner of certain land, known as 1685 North
Opdyke Road, Auburn Hills, Michigan 48326,
more fully described on the attached
Exhibit A (the "Property"). Owner desires
to, and does hereby, engage Kirco to
design and obtain the necessary approvals
and permits to construct an office
building of approximately 104,383 gross
square feet (approximately 100,925
rentable square feet) (the "Building") and
related improvements hereinafter
described (collectively with the Building,
the "Improvements" or "Project"),
upon and subject to the terms and
conditions hereinafter set forth.
2.
CONTRACT
PRICE, DEVELOPMENT FEE, FINANCING. The contract price for
the Improvements shall be a cost plus/open
book with a guaranteed maximum price
("GMP") of approximately Fifteen Million
Six Hundred Thirty Six Thousand One
Hundred Thirty and 00/100 Dollars
($15,636,130.00) (the "Contract Price"). The
Contract Price includes, among other
things, a development fee payable to Kirco
in the amount of Seven Hundred Eighteen
Thousand Nine Hundred Forty-Three and
00/100 Dollars ($718,943.00), as more fully
discussed below and as set forth in
more detail on the Project Cost Summary
attached hereto as part of Exhibit B
(the "Development Fee"). The Development
Fee includes the cost of all
development personnel and overhead. The
Contract Price has been established
based on the present scope of the Project
and presently known facts, and is
subject to adjustment based on (i) any
material changes or modifications to the
scope of the work with respect to the
Building and other Improvements as may
hereafter be agreed to in writing by Kirco
and Owner, (ii) any changes in
material prices prior to finalization of
the plans and specifications for the
Project and final pricing, (iii) unforeseen
soil conditions or other unforeseen
circumstance, and/or (iv) changes in
statutes, ordinances or regulations or the
application thereof subsequent to the date
hereof that results in a required
change or modification to the scope of the
work.
3.
PAYMENT OF
CONTRACT PRICE. The Contract Price shall be paid by Owner
to Kirco as follows:
a.
Fifteen
percent (15%) of the Development Fee, or One Hundred Seven
Thousand Eight Hundred Forty One and 45/100
Dollars ($107,841.45) shall be paid
upon obtaining a building permit for the
Project.
b.
An
additional Fifteen percent (15%) of the Development Fee, or One
Hundred Seven Thousand Eight Hundred Forty
One and 45/100 Dollars ($107,841.45)
shall be paid upon commencement of
construction on the Project.
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c.
The
balance of the Development Fee shall be paid in installments
over the construction period at the same
time as the monthly installments of the
balance of the Contract Price. Each
increment of the Development Fee actually
paid shall be deemed fully earned by Kirco
upon achievement of the relevant
milestones set forth in the preceding
subparagraphs and, thereafter, upon
payment to Kirco.
d.
The
balance of the Contract Price shall be paid in monthly progress
payments in accordance with the procedures
set forth below. Owner shall make
monthly progress payments on account of the
Contract Price to Kirco based upon
the percentage of completion of the work as
evidenced by Applications for
Payment to be submitted to the Owner and to
Neumann-Smith & Associates, Inc.
(the "Architect") by Kirco as hereinafter
provided and Certificates for Payment
properly issued by the Architect. The
period covered by each Application for
Payment shall be one calendar month ending
on the twenty-fifth (25th) day of the
month.
e.
On or
before the first business day of each month after construction
has commenced, Kirco shall submit to the
Owner an Application for Payment
reflecting the percentage of the work
performed up to the twenty-fifth (25th)
day of the preceding month, or as close to
that date as possible, for which the
Application is made. In addition to other
required items, each Application for
Payment shall be accompanied by sworn
statements and waivers of lien, including
partial conditional waivers of lien from
the general contractor and all
subcontractors or suppliers. Kirco shall
submit unconditional waivers for such
payment with the Application for Payment
for the following month.
f.
The
Architect shall review each Application for Payment and the
supporting documentation and shall submit
to the Owner a Certificate for Payment
certifying the percentage of completion of
the work as determined by the
Architect.
g.
If the
Application for Payment and all supporting documentation are
satisfactory to the Owner and to the
Architect and the Architect issues a
Certificate for Payment, then payment shall
be made to Kirco on or before the
fifteenth (15th) day following the date on
which the Certificate for Payment was
submitted to Owner.
h.
Owner may
hold back from the progress payment an amount, not to
exceed ten percent (10%) of the amount of
Kirco's actual "hard" construction
costs and of the Kirco Development Fee
included in that draw request pending
completion of the construction to ensure
completion of the work by Kirco, the
general contractor and its subcontractors
and suppliers (hereinafter referred to
as "Retainage"); provided, that upon
completion by any of Kirco's contractors,
subcontractors and suppliers of their
entire portion of the work and acceptance
of the same by the Architect and the Owner,
Owner shall release the portion of
the Retainage pertaining to that
contractor, subcontractor or supplier. There
shall be no Retainage held with respect to
any engineer's fees, architect's
fees, or other professional fees, for which
Kirco will receive 100% payment of
the amounts included in each progress
payment application. All Retainage not
paid out pursuant to the foregoing shall be
paid to Kirco at the time of Final
Payment. Notwithstanding the foregoing, the
Owner shall have the option, but not
the obligation, to further reduce the
Retainage from time to time or at any time
or release any portion of the Retainage
prior to the completion of the work. Any
exercise of this option, however, shall not
be a waiver of (1) any of the
Owner's rights respecting
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Retainage for any other work, or (2) any
other right or remedy that the Owner
has under this Agreement, at law or in
equity.
i.
Owner
shall make the Completion Payment (as defined in Section 14
below) to Kirco upon Completion of Kirco's
work in accordance with Section 14
below, and Final Payment of the balance of
the Contract Price and all Retainage,
if any, in accordance with Section 23
below.
j.
If at any
time a lien is recorded with respect to the project site
or premises, by anyone claiming amounts due
from Kirco, Kirco shall have thirty
(30) days after written notice of
recordation of the lien to obtain a discharge
of the claim or lien by payment or to post
a bond discharging the lien in
accordance with the Construction Lien Act;
provided that if a lien is recorded
with respect to work for which the Owner
then owes Kirco but Kirco has not been
paid by Owner, Kirco shall not be obligated
to pay or otherwise discharge the
lien until Kirco has received payment from
Owner for the work for which the lien
was recorded. If Kirco fails to timely
discharge or post a bond with respect to
a lien for work for which Kirco has
received payment from Owner, Owner at its
discretion shall have the right to
discharge the claim of lien and deduct the
amount from any amount due to Kirco.
If Owner
fails to make any monthly progress payment within ten (10) days
following the date such payment is due, or
fails to make the Completion Payment
within thirty (30) days after the date of
Completion, as provided above, or
fails to make Final Payment within thirty
(30) days after the time Kirco has
satisfied all of the conditions for Final
Payment set forth in Section 23 below,
then in addition to all other remedies
available to Kirco, Owner shall pay to
Kirco interest on the amounts unpaid at a
rate equal to 200 basis points over
the prime rate of Standard Federal Bank, in
effect during the period that such
amounts remain unpaid, calculated on a per
diem basis for each day after the
tenth (10th) or thirtieth (30th) day, as
applicable, following the date on which
such payment is due until paid in full.
4.
GENERAL
DESCRIPTION OF BUILDING AND IMPROVEMENTS. The Building to be
constructed shall be an approximately
104,383 gross square foot (approximately
100,925 rentable square feet) office
building consistent with the specifications
outlined in Kirco's proposal dated May 5,
2004, as modified or supplemented by
letters dated July 17, August 17, August
26, and August 30, 2004, and by this
Agreement, and as may hereafter be modified
by subsequent letter agreements and
subject to any subsequent changes as
properly approved and authorized by Kirco
and Owner as stated in this Agreement, the
current site plan, elevation and
floor plans (collectively the "Preliminary
Plans") attached hereto as a part of
Exhibit C. The Property shall also be
landscaped by Kirco (subject to the
allowance limitation as hereinafter
provided) in accordance with a landscape
plan prepared by the Architect and approved
by the Owner.
5.
PLANS AND
SPECIFICATIONS.
a.
The
Building and improvements shall be constructed as depicted on
the proposed site plan for the project, and
in accordance with the Scope of Work
for the project, and with the preliminary
plans and specifications for the
Building and Improvements prepared by the
Architects, all of which are described
on Exhibit C, as the same may be more fully
depicted and/or modified by the
final plans and specifications (the "Plans
and Specifications") to be prepared
by the Architect consistent with the
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foregoing and to be mutually approved by
Kirco and Owner in writing and to be
further described on Exhibit D and any
modifications or changes to the Plans and
Specifications that may hereafter be agreed
to by Kirco and Owner. Owner
acknowledges that the Architect has been
selected by Owner. Kirco will engage
the Architect to provide its architectural
services to Kirco and Owner pursuant
to this Agreement, and Architect will owe
its customary duty of care to Owner as
well as to Kirco. Once the final Plans and
Specifications have been agreed upon,
if any change from the Preliminary Plan and
Scope of Work that is reflected in
the final Plans and Specifications results
in a change in cost to Kirco, whether
requested by Owner, required by unforeseen
circumstances, or required due to
changes in statutes, ordinances or
regulations or the application thereof by
government officials, or price changes
resulting from changes in material costs,
the Contract Price shall be increased or
decreased accordingly, subject to the
approval of the Owner. The agreement
between Kirco and the Architect shall
provide that the Architect will owe its
customary duty of care to the Owner and
may report directly to the Owner as if the
contract were directly between the
Owner and the Architect, including
instances where Kirco has failed to comply
with the Agreement or with the Drawings or
Specifications. The foregoing
notwithstanding, Kirco reserves the right
to make reasonable changes or
substitutions of equivalent products and
materials for those listed in the Plans
and Specifications in the event of
unavailability or unanticipated price
increases or to avoid unnecessary delays in
the construction of the Building,
such changes must be agreed to by Owner,
whose consent shall not unreasonably be
withheld or delayed. Any Contract Price
changes shall include a proportional
increase or decrease in the construction
fee included in the Construction
Contract referred to in Section 6 below
(the "Construction Fee").
b.
Once the
Plans, Specifications and Scope of Work have been approved
in writing by Kirco and Owner, if the Owner
requests any changes in the Scope of
Work, any upgrade in materials or any
variation from the Plans and
Specifications, or if any such change is
required by unforeseen circumstances,
or required due to changes subsequent to
the date hereof in statutes, ordinances
or regulations or the application thereof
by government officials, Kirco will
obtain an estimate of any cost differential
resulting from such change from one
or more of Kirco's subcontractors or
suppliers, as applicable, and shall provide
that estimate to Owner, along with an
estimate of the increase or decrease in
Kirco's on-site personnel costs, if any. If
the change is based on an Owner
request, Owner shall notify Kirco in
writing within ten (10) business days
thereafter if Owner desires to include that
change in the Plans and
Specifications and, if Owner elects to make
the change, the parties shall
execute an appropriate change order. In the
absence of a timely notice electing
to make such change, Owner shall be deemed
to have elected to not make such
change. Owner may direct Kirco to make a
change in the Plans, the Specifications
or in the Building and, if time does not
permit the parties to determine the
impact on the Contract Price, if any, and
prepare and execute a complete Change
Order prior to the change being made, the
adjustment in the Contract Price
(including a proportionate adjustment in
the Construction Fee) will be
subsequently equitably determined based on
the cost increase or decrease
resulting from the change. If the change is
required by unforeseen
circumstances, or required due to changes
in statutes, ordinances or regulations
or the application thereof by government
officials, the Plans and Specifications
and Contract Price shall be adjusted in
accordance with the foregoing and the
parties shall execute an appropriate change
order if acceptable to the Architect
and to the Owner. Upon completion of the
Plans and Specifications, as part of
Kirco's bidding process Kirco will obtain
bids that reflect the actual
difference in cost resulting from the
changes requested by Owner. Upon award of
the contracts by Kirco,
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the amount of the difference in cost
resulting from the changes requested by
Owner as bid by the successful bidder for
that work or material will, as
applicable, be added to or subtracted from
the Contract Price, together with any
increase or decrease in Kirco's on-site
personnel costs resulting from such
change and, in the case of a change in
costs, a proportional increase or
decrease in the Construction Fee will be
added or deducted from the Contract
Price. Kirco's on-site personnel costs
shall include direct salary or hourly
pay, reasonable and customary fringe
benefits and ordinary and necessary
employer costs directly related to such
change. Kirco's administrative and
overhead costs are included in the
Development Fee and there will be no separate
adjustment for such costs.
c.
Upon
completion of the final plans, Kirco shall deliver the same to
Owner and Owner shall have ten (10)
business days following the date of delivery
to Owner to review and approve or comment
in writing on the design and
development drawings. If Owner timely
comments or raises any objection to the
final drawings Kirco shall address the
comments and objections with the
Architect within ten (10) business days
and, if necessary, will convene a
meeting between representatives of Kirco,
Owner and the Architect to resolve any
outstanding issues. Upon completion of any
revised plans and delivery of the
same to Owner, Owner shall have ten (10)
business days to review and approve or
comment in writing on them. If a second set
of revised plans is necessitated by
Owner's timely comments the parties shall
follow the same procedure as in the
case of the first set of revised plans.
Upon review, revision and approval in
accordance with the foregoing the design
and development plans shall become the
Plans and Specifications. If Owner does not
provide any written comments or
objections to the drawings or Plans and
Specifications, including any revisions
thereto, to Kirco within the time provided
in this Section, Owner shall be
deemed to have not approved the drawings
and Plans and Specifications as
delivered. Thereafter, Owner's review shall
only be as necessary or required
unless and until Owner requests review of
any subsequent drawings. Owner
acknowledges that its failure to timely
approve such Plans and Specifications in
accordance with the Master Building
Schedule may result in a delay in the
performance of Kirco's work under this
Agreement, in which the time in which
Kirco is obligated to complete its work
under this Agreement shall be extended
by one day for each day of Owner delay in
such approval. Once the drawings or
Plans and Specifications have been
approved, or Owner's right to comment or
object has expired, any changes or
revisions thereafter requested by Owner shall
be deemed to be changes which Owner shall
be liable for, and shall pay, any
increase in the Contract Price directly
occasioned by such changes and the cost
incurred by Kirco in connection therewith
including, without limitation, any
additional Architect's fees incurred for
the preparation of revisions to the
drawings or Plans and Specifications and
all additional fees and costs of
Kirco's construction contractor.
d.
Kirco
shall be responsible for reviewing the Plans and
Specifications and satisfying itself as to
the accuracy and completeness of the
same, except for those matters pertaining
to layout and functionality for
Owner's proposed use, which shall be
Owner's responsibility to review. Kirco
shall provide to Owner for review summaries
or, if available, copies of
manufacturer's and/or installer's
warranties, if any, regarding all major
systems, HVAC, windows, roofing, parking
(if applicable) and major fixtures
which shall meet or exceed commercially
reasonable warranties which are normal
for construction of this size and type.
Kirco shall also advise Owner if
extended warranties are available from the
manufacturer or installer for any of
such components and the extra cost of
obtaining the same, if any. Owner may
elect, at Owner's expense, to
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purchase extended warranty coverage if and
to the extent available from the
manufacturer or installer of any component
covered by a separate warranty and,
if Owner elects to do so the Contract Price
shall be increased accordingly.
Kirco shall bear all responsibility for
errors or defects, or failure to meet
statutory or code requirements, in the
Plans and Specifications of the Building
and Improvements, but Owner shall be
responsible for any errors or defects in
the Plans and Specifications of the
Building and Improvements pertaining to
layout and functionality for Owner's
proposed use.
e.
Upon
completion of the work, Kirco shall provide to Owner at no
additional cost to Owner original
manufacturer's and installer's warranties
regarding all major systems, HVAC, windows,
roofing, parking (if applicable) and
major fixtures. In addition, five (5)
complete sets of "as-built" plans for the
Building shall be delivered as soon as
practicable following Completion.
f.
If, after
completion of the work and Final Payment by Owner, Owner
determines that the Architects have failed
to properly design the Building
and/or Improvements or that there otherwise
exists any basis on which Owner
intends to pursue a claim against the
Architects, Kirco shall assign to Owner
all of Kirco's rights and claims under the
agreement with the Architects. Owner
covenants that Owner will not join Kirco as
a party in any suit or proceeding
against the Architects unless, and only, if
the participation of Kirco in such
suit or proceeding is necessary as a matter
of law to fully adjudicate Owner's
claims. In the latter event Owner shall, if
requested by Kirco, reassign to
Kirco, in whole or in part, all of such
previously assigned rights and claims
against the Architect and/or take such
other action with respect to the assigned
claims as may be necessary to permit Kirco
to retain a sufficient cause of
action against the Architect, whether for
indemnity and reimbursement or
otherwise, to permit both Owner and Kirco
to fully recover on their claims.
g.
The work
to be performed by Kirco for the Contract Price includes
all work necessary for the design,
obtaining of permits and completion of
construction of the Building and
Improvements as shown on the Plans and
Specifications to be described herein, but
subject to certain clarifications
identified on Exhibit E. The costs of all
work in excess of the clarifications
shall be the sole responsibility of Owner
and, if installed or completed by
Kirco, shall be added to the Contract
Price, together with an appropriate
increase in the Construction Fee, if
applicable.
6. CONSTRUCTION. Subject
to the foregoing, Kirco shall provide or cause to be
provided and pay for design services,
labor, materials, equipment, tools,
construction equipment, and machinery,
water, heat, utilities, transportation
and other facilities and services necessary
for proper execution and completion
of construction of the Building. Kirco
shall be responsible for all construction
means, methods, techniques, sequences, and
procedures, and for coordinating all
portions of the construction. Kirco shall
provide a Construction Superintendent
who is reasonably acceptable to Owner. In
particular but without limitation,
Owner acknowledges that Kirco intends to
engage a related entity, Kirco
Construction LLC, to perform the actual
construction work. Owner acknowledges
that the contract with Kirco Construction,
and the Contract Price, will include
a construction fee payable to Kirco
Construction equal to two and one-half
percent (2 1/2%) of all costs incurred by
Kirco Construction in the performance
of its work (the "Construction Fee").
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Kirco has
commenced the performance of its obligations hereunder and
shall
commence construction as soon as practical
after (i) the issuance of all
necessary building permits and other
permits necessary for the construction of
the Building and related Improvements, and
(ii) completion of all necessary
pre-construction meetings between the
designated representatives of Kirco and
Owner. Kirco will proceed with the site
work based upon the approved final site
plan and, if the final Plans and
Specifications have not been completed and
approved by the time for commencement of
the Building shell, Kirco will proceed
with the Building shell construction based
on the agreed plans and
specifications for the Building shell, but
shall not be obligated to perform any
other work on the Building and related
Improvements until the final Plans and
Specifications have been approved by Owner
and Kirco unless Kirco and Owner
otherwise agree in writing. Kirco shall
pursue the issuance of all permits,
approvals and construction with reasonable
diligence in accordance with the
Master Building Schedule submitted by Kirco
and approved by the Owner (Kirco
will promptly advise the Owner of any delay
in processing or obtaining any
permits or approvals), and shall Complete
the construction on or before June 1,
2006, (the "Completion Date") but subject
to delays occasioned by unusual
weather conditions, unexpected material
shortages, unexpected material delays in
obtaining permits or approvals, strikes,
fires or other casualty, acts of God,
war, insurrection, actions of terrorists or
foreign insurgents, or other causes
beyond Kirco's reasonable anticipation and
control. In no event shall Kirco have
any liability to Owner for any damage
caused by delays in completion of
construction except as may be expressly
provided in this Agreement.
No work
shall be performed and no appliances, wiring, cabinets,
fixtures
or other materials shall be installed in
the Building or on the Property by
Owner or any contractor, supplier or other
person acting on Owner's behalf prior
to Completion without Kirco's prior written
consent, which consent shall not be
unreasonably withheld or delayed. Owner
shall be responsible for all actual and
demonstrable loss, cost or damage suffered
or incurred by Kirco, if any,
including without limitation any additional
costs occasioned by delay or
interference in Kirco's completion of any
portion of its work, as a result of
any such work performed or installations
made by Owner or on Owner's behalf,
whether with or without Kirco's consent,
and Owner shall indemnify and hold
Kirco harmless with respect to the same, so
long as Kirco gives Owner timely
notice thereof. Any such additional loss,
costs or damage actually incurred by
Kirco as a result of Owner's work on site
shall be added to the Contract Price
and shall be payable in full by Owner upon
Final Completion.
It is
mutually agreed by and between the parties hereto that time shall
be
an essential part of this contract and that
if Kirco fails to complete its
contract within the time specified and
agreed upon, the Owner will be damaged
thereby due to extra rent and penalties
which Owner may incur. Accordingly, if
Kirco fails to complete the Building within
the time provided in Section 6 of
this Agreement, or July 1, 2006, whichever
is later (the "Liquidated Damage
Date"), Kirco shall pay to Owner (or Owner
may take credit for) at the time of
Final Payment as liquidated damages for
delay, an amount equal to the sum of (i)
Four Thousand and 00/100 Dollars
($4,000.00) per day for each day of delay after
the Liquidated Damage Date through the
thirtieth (30th) day, and (ii) Eight
Thousand and 00/100 Dollars ($8,000.00) per
day, plus interest and reasonable
attorneys fees, for each day after the
thirtieth (30th) day following the
Liquidated Damage Date until the Building
is Completed; provided, that the
Liquidated Damage Date shall be extended
one day of each day of delay in
completion occasioned by unusual weather
conditions, unexpected material
shortages, unexpected material delays
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in obtaining permits or approvals, strikes,
fires or other casualty, acts of
God, war, insurrection, actions of
terrorists or foreign insurgents, or other
causes beyond Kirco's reasonable
anticipation and control. Owner's right to
liquidated damages for delay in Final
Completion pursuant to this Section shall
be Owner's sole and exclusive measure of
damages for any such delay. Kirco's
sole and exclusive remedy for delay shall
be an extension of the Completion Date
and Liquidated Damage Date. However, Kirco
acknowledges that due to the nature
of the Owner's business, it requires a
three day holiday weekend to move into
the Building and commence business
operations. Therefore, in the event that the
Building is not Completed prior to the July
4th holiday weekend, the Owner may
not be able to move until the Labor Day
weekend and the liquidated damages shall
run through the Labor Day weekend
notwithstanding that the Building may be
completed after the July 4th weekend, but
prior to the Labor Day weekend.
7.
CHANGES.
a.
Except as
otherwise provided herein, all changes or revisions to the
final Plans and Specifications ("Change
Order") must be in writing and signed by
both Owner and Kirco to be effective. In
the event any such Change Order results
in a change in Kirco's costs, whether for
increases or decreases in
contractor/subcontractor/supplier charges
or for Kirco's on-site personnel
costs, or both, the Contract Price shall be
increased or decreased to reflect
those changed costs. The changed costs
occasioned by such Change Order shall be
added to or deducted from the Contract
Price and paid over the term of the
contract through progress payments as
provided in Section 3 above. Each Change
Order shall also include any changes in the
Master Building Schedule and in the
Completion Date. If the actual change in
the Contract Price can be determined at
the time the Change Order is signed, the
Change Order shall include the amount
of any increase or decrease in the Contract
Price resulting from such change. If
the actual change in the Contract Price
cannot be determined at that time due to
lack of revised construction drawings or
any other reason, Kirco shall obtain an
estimate of the cost of the change in the
same manner as provided in Section 5
above, the Change Order shall include an
estimate of any change in the Contract
Price, and a revised Change Order shall be
prepared and executed when the actual
change in the Contract Price can be
determined. Neither Owners nor Kirco shall
be bound by any such Change Order revision
unless and until agreed in writing by
Kirco and Owner; provided, if the change is
occasioned by unforeseen
circumstances, changes in any statute,
ordinance or regulation or the
application thereof by government
officials, or increases in costs of materials
or supplies, and if the anticipated cost of
remedying such circumstance,
condition or occurrence is Twenty-Five
Thousand and 00/100 Dollars ($25,000.00)
or less, Kirco shall be free to proceed to
remedy the same, but subject to
Owner's right to order Kirco to stop such
remedial work pending a final decision
by Owner concerning the same. If the
anticipated cost of remedying such
circumstance, condition or occurrence is
more than Twenty-Five Thousand and
00/100 Dollars ($25,000.00), Kirco shall
not take any action to remedy the same,
unless such action is necessary to avoid
damage to the Building or the Property,
until Kirco has given Owner notice of such
circumstance, condition or occurrence
including Kirco's best estimate of the cost
of remedying the same. In all such
cases, Kirco shall give notice of such
circumstance, condition or occurrence to
Owner within one business day after Kirco
discovers the same. Owner acknowledges
that any material change or modification to
the Plans or Specifications, Owner's
direction to Kirco to not proceed with or
to cease any such remedial work, or
any delay by Owner responding to such
notice of such circumstance, condition or
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occurrence, may result in a delay in the
anticipated completion date of the
Building, for which Kirco will have no
liability to Owner for such delay and any
scheduled completion date and the
Liquidated Damage Date shall be extended
accordingly. Kirco will promptly advise
Owner of any Owner caused delay and
failure to do so shall constitute a waiver
of any claim for delay or delay in
the Master Building Schedule or Completion
Date.
b.
The
provisions contained herein with regard to Change Orders must
be
adhered to strictly. No action, conduct,
omission, prior failure or course of
dealing by the Owner shall act to waive,
modify, change, or alter the
requirement that Change Orders must be in
writing signed by the Owner and Kirco,
and that such written change orders are the
exclusive method for effecting any
change to the contract sum or contract
time. The Owner and Kirco understand and
agree that neither the Contract Price nor
the Agreement time can be changed by
implication, oral agreements, actions,
inactions, course of conduct, or
constructive change order.
c.
NO CHANGE
IN THE WORK, WHETHER BY WAY OF ALTERATION OR ADDITION TO
THE WORK, SHALL BE THE BASIS OF AN ADDITION
TO THE GUARANTEED MAXIMUM PRICE OR A
CHANGE IN THE TIME BY WHICH ANY PORTION OF
THE WORK IS TO BE COMPLETED UNLESS
AND UNTIL SUCH ALTERATION OR ADDITION AND
ANY RESULTING ADDITION TO THE
GUARANTEED MAXIMUM PRICE OR CHANGE IN THE
REQUIRED TIME FOR COMPLETING ANY
PORTION OF THE WORK HAVE BEEN AUTHORIZED BY
A CHANGE ORDER EXECUTED AND ISSUED
IN ACCORDANCE WITH AND IN STRICT COMPLIANCE
WITH THE REQUIREMENTS OF THE
AGREEMENT DOCUMENTS.
d.
ANY CLAIM
FOR INCREASED COST FOR DELAY AND ANY CLAIM FOR A CHANGE IN
THE AGREEMENT TIME SHALL BE ASSERTED IN
ACCORDANCE WITH THE PROVISIONS OF THIS
AGREEMENT. THESE REQUIREMENTS ARE OF THE
ESSENCE OF THE AGREEMENT DOCUMENTS.
ACCORDINGLY, NO COURSE OF CONDUCT OR
DEALINGS BETWEEN THE PARTIES, NOR EXPRESS
OR IMPLIED ACCEPTANCE OF ALTERATIONS OR
ADDITIONS TO THE WORK, AND NO CLAIM THAT
THE OWNER HAS BEEN UNJUSTLY ENRICHED BY ANY
ALTERATION OR ADDITION TO THE WORK,
WHETHER OR NOT THERE IS IN FACT ANY SUCH
UNJUST ENRICHMENT, SHALL BE THE BASIS
FOR ANY CLAIM TO AN INCREASE IN THE
GUARANTEED MAXIMUM PRICE OR CHANGE IN THE
REQUIRED TIME FOR COMPLETING ANY PORTION OF
THE WORK.
8.
VEGETATION, LANDSCAPING. Subject to the laws and ordinances of
Auburn Hills and approval of the Owner,
Kirco shall have the right, at any time
during construction of the Building, to
remove such trees, shrubs, grass or
other natural vegetation as Kirco shall
deem reasonably necessary to permit
construction of the Building as part of the
Contract Price and not part of the
landscaping allowance. Subject to the
landscaping allowance included in the
Project Summary, Kirco shall sod or seed
(as agreed to by the parties) and
landscape the Property at the appropriate
stage of construction, weather
conditions permitting, in accordance with
the landscaping plan to be approved by
Kirco and Owner prior to commencement of
physical site work. Any additional
landscaping requested by Owner shall
require a Change Order, and shall otherwise
be subject to the change provisions of
Section 7 above.
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9.
SELECTIONS. Owner shall, from time to time as requested by Kirco
and
in any event within seven (7) business days
after written notice from Kirco
which notice shall include proposed
selections consistent with the Plans and
Specifications, indicate in writing to
Kirco all necessary paint, tile,
carpeting or other selections of any kind
or description required for completion
of the Building.
10.
INSURANCE. Kirco
shall maintain a Builder's Risk Insurance Policy
and such other insurance coverage as Owner
deems appropriate covering the
Building, Improvements and the construction
during the period of construction,
and in any event such insurance shall
comply with the requirements of Owner and
Owner's construction lender. The cost of
all such insurance is included in the
Contract Price.
11.
EVIDENCE OF
TITLE. As evidence of title, Owner has delivered to
Kirco, a copy of a title policy evidencing
and insuring Owner's fee title
interest in the Property.
12.
LIMITED
WARRANTY.
a.
Coverage.
Subject to the limitations and exclusions from coverage
set forth below, Kirco hereby warrants:
that the Building shall be constructed
in accordance with the Plans and
Specifications and in accordance with this
Agreement and free from defects in design,
materials or workmanship for a period
of twelve months following the date of
Completion (as defined in paragraph 14
hereof), and that all materials shall be
new and inspected for defects prior to
installation, but Kirco makes no warranty
or representation with respect to
layout and functionality, for which Owner
shall be solely responsible.
b.
Exclusions
from Coverage. Kirco does not assume responsibility for
any of the following, all of which are
excluded from the coverage of this
Limited Warranty:
i. Roof
membranes and/or other roofing materials, door sills and
frames, overhead doors, furnaces, boilers
and other components, appliances and
articles of equipment which are covered by
manufacturers' warranties. Kirco will
assign all manufacturers' warranties to
Owner, and Owner will be responsible for
complying with the warranty claim
procedures in those warranties if defects
appear in any of the covered components.
Kirco agrees to provide reasonable
assistance to Owner in pursuing all such
warranty claims and remedies and to
provide all documentation and testimony
reasonably necessary to prosecute such
claims. All such warranties shall be in
good standing as of the date of issuance
of a certificate of occupancy and shall not
commence the running of such
warranty periods prior to the Final
Completion date provided for in Section 14
below. Kirco shall provide the warranties
customarily provided by the respective
manufacturers, unless a different warranty
is specifically required by the final
Plans and Specifications. Kirco shall
provide to Owner for Owner's review prior
to completion of the work copies of all
manufacturers' warranties, if available,
along with the Plans and Specifications.
Any items excluded from Kirco's limited
warranty must be covered by a
manufacturer's warranty as approved by the Owner
as set forth in Section 5 hereof.
ii. Damage due
to ordinary wear and tear, abusive use, or lack of
proper maintenance of the Building.
10
<PAGE>
iii. Damage to Kirco's
work caused by Owner or any contractor,
installer or other person acting on behalf
of Owner.
iv. Minor
defects which are the result of characteristics common
to the materials used, such as (but not
limited to) warping and deflection of
wood; fading, chalking, and checking of
paint due to sunlight; cracks due to
drying and curing of concrete, stucco,
plaster, bricks, and masonry; spalling of
concrete; drying, shrinking and cracking of
caulking and weather-stripping;
cracks in tile or concrete and heaving of
tile or concrete , unless the heaving
of the concrete adversely affects the
fitness of the Building or the use
contemplated thereof; or non-structural
settlement of the Building or the ground
under or around the Building.
v. Damage
to or destruction of any tree, shrub or plant growth
which is native to the Property and which
remains after completion of
construction of the Building.
vi. Defects in
items installed or work performed by Owner or by
anyone on Owner's behalf, other than Kirco
or its agents, employees or
subcontractors.
vii. Loss or damage
due to the elements subsequent to completion.
viii. Conditions resulting from abnormal expansion or
contraction
of, materials which could not reasonably be
foreseen or avoided.
ix.
Consequential or incidental damages, including without
limitation the cost of replacement of wall
coverings or other decorations or
improvements installed by Owner or loss of
revenues due to Owner's inability to
occupy the Building when anticipated by
Owner.
c.
NO OTHER
WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH HEREIN, OR IN ANY
WRITTEN WARRANTY HEREAFTER DELIVERED BY
KIRCO TO OWNER, TO THE FULLEST EXTENT
PERMITTED BY LAW, KIRCO HEREBY EXPRESSLY
DISCLAIMS ALL OTHER WARRANTIES, WHETHER
EXPRESS OR IMPLIED, AND
