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.
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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 WHETHER ARISING UNDER ANY STATE OR FEDERAL STATUTE,
RULE, REGULATION OR CASE LAW, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
HABITABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR OTHERWISE. THE FOREGOING
NOTWITHSTANDING, IF ANY APPLICABLE LAW OR REGULATION SHALL LIMIT OR PREVENT THE
DISCLAIMER OF IMPLIED WARRANTIES, THE WARRANTY PERIOD FOR ALL SUCH IMPLIED
WARRANTIES SHALL BE LIMITED TO THE PERIOD SET FORTH IN THIS LIMITED WARRANTY.
d. Claims Procedure. If a defect appears which is or may be covered by
this Limited Warranty, Owner must deliver to Kirco within the twelve (12) month
warranty period or within one month thereafter a written service request
describing the purported defect; provided, with respect to hidden or latent
defects that are not discovered within the twelve (12) month warranty period and
which, in the written opinion of a qualified independent inspector, existed or
occurred during the initial twelve (12) month period, but due to the latent or
hidden nature of the defect, could not reasonably have been, and were not,
discovered during the initial twelve (12) month claim period, the claims period
shall be extended until sixty (60) days after the discovery of the latent or
hidden defect but not later than five (5) years after the date of Final
Completion. Kirco will investigate and
11
determine whether or not there is a defect and, if so, whether the defect is
covered by any assigned manufacturer's warranty. If Kirco determines that there
is or may be a defect and that it is covered by a manufacturer's warranty, Kirco
shall so notify Owner and Owner will be responsible for filing a warranty claim
with the manufacturer. Kirco may aggregate service requests for defects that do
not present a safety or health risk, and make only occasional service calls to
the Property for warranty repairs. Except as provided above with respect to
latent or hidden defects, Kirco will not be obligated to respond to any written
notice delivered to Kirco after the expiration of the twelve (12) month warranty
period, even if the defects that are claimed in the notice may have arisen
within the twelve (12) month warranty period.
e. Repairs. If Kirco's investigation following submission of a service
request discloses that a defect exists that is covered by this Limited Warranty,
Kirco will repair or replace, at Kirco's option, the defective item at no charge
to Owner within 60 days after Kirco's inspection (longer if unusual weather
conditions, labor problems or unanticipated materials shortages cause delays);
provided, however, that if a defect exists that is covered by this Limited
Warranty and emergency or extenuating circumstances require immediate repair or
replacement, Kirco shall immediately commence such repairs or replacement and
shall diligently complete the same and, provided further, if Kirco is unable to
make final repairs or replacement due to lack of immediately available materials
or replacement components, Kirco shall make such temporary repairs as may be
reasonably necessary and shall make final repairs as soon as the necessary
materials or components are available. Kirco's failure to commence such
emergency warranty repairs within two (2) business days of Owner's written
notification of the claimed defect and the circumstances requiring emergency
repairs shall permit Owner to undertake such repairs at Kirco's cost which,
provided the defect is covered by this Limited Warranty, Kirco shall pay
promptly upon demand. The work will be performed by Kirco or
contractors/subcontractors chosen by Kirco.
13. LIMITATION OF LIABILITY. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN
THIS AGREEMENT, KIRCO'S LIABILITY FOR ANY ALLEGED DEFECT IN DESIGN, MATERIALS OR
WORKMANSHIP SHALL BE LIMITED TO REPAIR OR REPLACEMENT AND TO ANY COSTS OR
DAMAGES FLOWING THEREFROM, INCLUDING, WITHOUT LIMITATION, COSTS OF RELOCATION OR
RENTING AND FURNISHING SPACE AND PROVIDING ALTERNATE UTILITIES (BEYOND THOSE
WHICH MEEMIC WOULD HAVE OTHERWISE INCURRED) AND OTHER SUPPORT SERVICES DURING
THE REPAIR OR REPLACEMENT PERIOD, DAMAGES TO OTHER IMPROVEMENTS, FURNITURE OR
FIXTURES OR INJURY TO PERSONS AS A DIRECT RESULT OF THE ALLEGED DEFECT IN
DESIGN, MATERIALS OR WORKMANSHIP. FURTHER, KIRCO SHALL HAVE NO LIABILITY FOR
INJURY TO PERSONS, PROPERTY, OR OTHERWISE RELATING TO THE PRESENCE OF ANY
ENVIRONMENTAL CONDITIONS (WHETHER NATURAL OR MAN-MADE) OR ANY TOXIC OR HAZARDOUS
WASTE, SUBSTANCE, OR CONTAMINATION, ON, OR UNDER THE PROPERTY, OR THE LAND
ADJACENT TO OR IN CLOSE PROXIMITY WITH THE PROPERTY THAT EXISTED PRIOR TO
KIRCO'S COMMENCEMENT OF ACTIVITIES ON THE PROPERTY. NO ACTION, REGARDLESS OF
FORM, ARISING OUT OF THE TRANSACTIONS UNDER THIS AGREEMENT MAY BE BROUGHT BY
OWNER MORE THAN SIX YEARS AFTER THE COMMENCEMENT OF THE WARRANTY PERIOD UNLESS
THE OWNER HAS NOTIFIED KIRCO OF THE CLAIMED DEFECT WITHIN THE TIME PROVIDED IN
THE PRECEDING SECTION 12. NOTWITHSTANDING THE ABOVE, NO ACTION
12
RELATING TO LATENT DEFECTS MAY BE BROUGHT AGAINST KIRCO UNLESS OWNER HAS
NOTIFIED KIRCO OF THE CLAIMED LATENT DEFECT WITHIN SIXTY (60) DAYS AFTER
DISCOVERY THEREOF AND THE ACTION BROUGHT NOT LATER THAN FIVE YEARS AFTER FINAL
COMPLETION.
14. COMPLETION OF CONSTRUCTION AND COMPLETION PAYMENT. Upon Completion
of construction of the Building Kirco shall so notify Owner and, as soon
thereafter as possible, shall submit a payment application for all work
performed through the date of Completion which application shall be processed in
accordance with the application and payment process provided herein. Owner shall
pay to Kirco the balance of the Contract Price less only Retainage not then due
and payable, the amounts, if any, to be withheld pursuant to this Section 14 and
Section 16, and a proportional share of the Developer's Fee (the "Completion
Payment"). The issuance of a certificate of occupancy, whether temporary or
final, by the City of Auburn Hills permitting the Owner to occupy and conduct
its business in the Building and the issuance of a certificate of completion by
the Architect shall be evidence of "Completion". The Completion Payment shall
not be delayed due to the lack of completion of minor details or Kirco's
inability to complete outside cement work, grading, landscaping (if included) or
other similar work due to then prevailing weather or ground conditions or other
conditions beyond the control of Kirco, provided that such incomplete items do
not materially affect Owner's ability to conduct business. In such case, Kirco
shall deliver to Owner a standard weather letter or work order setting forth the
minor detail work or other work to be completed and an amount equal to the
anticipated cost of completion of such items, the initial punchlist items and
Retainage shall be withheld from the Completion Payment, together with the
anticipated cost to complete the landscaping, until each component of such work
shall be completed, at which time the amount for that component shall be paid to
Kirco. Kirco shall be entitled to the release of the withheld funds for each
component of work upon submission of written notice to the Owner that the
component of the work has been completed, together with a receipt for payment
from the contractor or subcontractor completing the work and the required
Architect's Certificate and sworn statements and waivers of lien.
15. INTENTIONALLY DELETED.
16. INSPECTION.
a. Not earlier than thirty (30) days, or later than fifteen (15) days,
prior to initial occupancy of the Building, Kirco and Owner shall schedule an
initial inspection of the Building. During the inspection, which shall be
conducted by authorized representatives of Kirco and Owner, Kirco and Owner
shall prepare an initial "punchlist" of items in need of repair or correction
and Kirco and Owner shall agree on a reasonable time frame for completion of the
punchlist items based on then existing circumstances.
b. Not earlier than thirty (30) days, or later than forty five (45)
days, after initial occupancy of the Building, Kirco and Owner shall schedule a
subsequent inspection of the Building. During the inspection, which shall be
conducted by authorized representatives of Kirco and Owner, Kirco and Owner
shall prepare a subsequent "punchlist" of items in need of repair or correction
and Kirco and Owner shall agree on a reasonable time frame for completion of the
punchlist items based on then existing circumstances. Kirco shall complete such
items within the agreed upon timeframe, which shall be no later than sixty (60)
days following such inspection.
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17. POSSESSION. The right of possession of the Building and Improvements
made thereon by Kirco shall remain at all times in the Owner; provided that
Kirco shall have the right to exclude any person other than Owner and its
authorized representatives, vendors or contractors from the Property at any time
prior to completion of the work, and the right to exclude any person from areas
under construction or other areas of danger for safety purposes or to avoid
interference with the performance of the work. However, the parties acknowledge
that the Owner's contractors may have access to the Building for installation of
cabling, installation of furniture and fixtures prior to Final Completion so
long as this work does not unreasonably interfere with Kirco. Kirco's right of
entry and use arises solely from the permission granted by the Owner in this
Agreement. The foregoing notwithstanding, if Owner denies Kirco access to the
Property at any time during this Agreement, such denial of access shall
constitute a default hereunder on the part of the Owner.
18. DEFAULT.
a. Owner's Default. In the event of default by Owner in the performance
of any of Owner's obligations hereunder, including the obligation to make
progress payments or Final Payment of the Contract Price within the time
provided in this Agreement, and if such default shall continue for a period of
fifteen(15) days after written notice thereof from Kirco to Owner, or if such
default is other than a failure to make a progress payment or Final Payment and
cannot be cured within fifteen (15) days, if Owner shall have failed to
undertake and diligently pursue the cure of such claimed default, Kirco shall
have all rights and remedies set forth in this Agreement or available at law or
in equity including without limitation, the right to enforce a construction lien
against the Property and, if such default occurs prior to Kirco's Final
Completion of the work, the right to suspend all work under this Agreement until
Owner's default has been cured and/or to declare this Agreement terminated, null
and void. In the event Kirco does so terminate this contract, Owner shall be
liable to Kirco for all of Kirco's damages including without limitation all
unpaid fees and profits that Kirco would have received had this Agreement not
been terminated.
b. Kirco's Default. Except as permitted pursuant to the preceding
subparagraph, if, following the commencement of construction of the Building by
Kirco pursuant to this Agreement, (i) Kirco ceases work on the Building and
other Improvements on the Property for a period of fifteen (15) consecutive work
days or thirty (30) days in the aggregate, unless delayed by unusual weather
conditions, unexpected material delays in obtaining permits or approvals,
strikes, unexpected shortages of materials, acts of God or other causes not
within Kirco's reasonable anticipation or control which excuse any delay on the
part of Kirco pursuant to Section 5 above and if Kirco fails to re-commence the
work within five (5) days after Owner's written notice of default to Kirco; or
(ii) if Kirco fails to finally complete construction within the time provided in
Section 6 (the "Default Deadline"), or (iii) Kirco persistently or repeatedly
fails to supply enough properly skilled workers or proper materials to maintain
progress of the work on a schedule that will permit final completion of the
Building within the time provided in Section 6, or (iv) Kirco persistently or
repeatedly fails to make payment to subcontractors for materials or labor in
accordance with the terms of this Agreement and the agreements with such
parties; or (v) persistently disregards laws, ordinances, or rules, regulations
or orders of a public authority having jurisdiction; or (vi) otherwise is guilty
of final breach of a provision of this Agreement and related documents, Owner
14
shall have the right, but not the obligation, to enter upon the Property and
take over the construction of the Building and other Improvements and, for the
purpose of completing the work, take possession of all materials, equipment,
tools, appliances and supplies belonging to or under the control of Kirco and
used or designated to be used in connection with the development of the
Property, and may finish the work by whatever method it may deem expedient
including having Kirco's contractors, subcontractors and suppliers continue to
perform under their contracts with Kirco or, if any of Kirco's contractors,
subcontractors or suppliers fails or refuses to perform under their contracts
for Owner, entering into contracts with replacement contractors, subcontractors
and/or suppliers to complete the work. If Owner does so proceed to take over the
work, Owner shall pursue the work to completion and, upon completion, the costs
incurred by Owner in completing the work shall be deducted from the balance of
the Contract Price. If the costs incurred by Owner to complete the work are less
than the balance of the Contract Price, the Contract Price shall be adjusted to
reflect such cost reduction. If the costs incurred by Owner to complete the work
are greater than the balance of the Contract Price, the difference shall be paid
by Kirco to Owner upon completion of all of the work.
In the event of litigation or other enforcement proceedings between the
parties as a result of any default or alleged default by either party hereunder,
the prevailing party shall also be entitled to receive from the other party all
costs and expenses incurred, including attorneys' fees, in connection with the
enforcement of this Agreement, as well as costs and attorneys' fees incurred in
the collection of such amounts.
19. NOTICES. The notices required or referred to in this Agreement shall
be sufficient if personally delivered or sent by first class mail, return
receipt requested with postage prepaid, by facsimile with confirmation of
receipt or by recognized overnight courier service to the parties at the
addresses shown above or at such other address as either party shall designate
in writing to the other. If mailed, delivery shall be deemed complete on the
earlier of the date on which the notice is receipted for in writing or the
second business day following the date of mailing. If sent by courier, delivery
shall be deemed complete on the earlier of the date on which the notice is
receipted for in writing or the first business day following the date of
delivery to the courier. Notice to Kirco shall be addressed to the attention of
A. Matthew Kiriluk, President. In addition, a copy of all notices to Kirco shall
be sent to Kirco's attorney, D. Stewart Green, Esquire, at Butzel Long, 100
Bloomfield Hills Parkway, Suite 200, Bloomfield Hills, Michigan 48304, and
Notice to Owner shall be addressed to the attention of Christine C. Schmitt,
with a copy to W. A. Steiner, Jr. at Dykema Gossett, 400 Renaissance Center,
Detroit, Michigan 48243. Failure to provide a copy of any notice to the attorney
for the addressee shall not invalidate notice otherwise properly served.
20. INTERIOR BUILDOUT ALLOWANCE. The Contract Price includes an
allowance for interior improvements to the Building in the amount of Thirty-Five
and 00/100 Dollars ($35.00) per square foot or a total of Three Million Five
Hundred Thirty-Two Thousand Three Hundred Seventy-Five and 00/100 Dollars
($3,532,375.00) based upon 100,925 rentable square feet which excludes any
Architect or interior designers fees for such interior improvements (the
"Buildout Allowance"). If the actual square footage of the Building varies is
more or less than 100,925 rentable square feet, the total Buildout Allowance,
will not change except as may be provided in a written change order executed by
the parties. If the actual cost of the interior improvements for the Building
not included in the base building exceeds the Buildout Allowance such excess
costs shall be reduced to a Change Order, and the Contract Price shall be
increased by an
15
amount equal to such excess costs and Owner shall pay the full amount of the
same as part of the monthly progress payments as provided above. Conversely, if
the actual cost of interior improvements for the Building not included in the
base building is less than the Buildout Allowance, the Contract Price shall be
reduced by an amount equal to the difference in such costs. The costs to be
charged against the Buildout Allowance include a Construction Fee payable to the
contractor in the amount of two and one-half percent (2 1/2%) of the hard costs
of the interior improvements, but will not include any architects' fees, which
are included in the base Building cost.
21. CONTINGENCY ALLOWANCE. The Contract Price includes contingency
allowances in the amount of Two Hundred Ninety-Four Thousand and 00/100 Dollars
($294,000.00) for construction costs and One Hundred Thousand and 00/100 Dollars
($100,000.00) for soft costs, as set forth on the Project Costs Summary attached
as part of Exhibit B. The contingency allowances are intended to be utilized by
Kirco for unanticipated costs due to unforeseen circumstances, increases in
material costs, or other causes not within the control of Kirco or Owner. Except
as provided in this Section, Owner shall not have the right to apply the
contingency allowance, or any portion thereof, toward the payment of costs or
Contract Price increases resulting from Owner's changes to the scope of the
work, Plans or Specifications. If, upon completion of the work and Final Payment
for the same by Owner, the contingency allowances have not been expended by
Kirco, the unexpended portion of the contingency allowances may, at Owner's
election, be deducted from the Contract Price or, if already paid to Kirco,
credited toward the unpaid balance of the Contract Price including, without
limitation, the cost of any changes requested by Owner or refunded to Owner. In
any event, any use of the contingency is subject to the Owner's prior written
approval, which approval shall not be unreasonably withheld, conditioned or
delayed.
22. AUTHORIZED REPRESENTATIVES. Any consent, approval, authorization or
other action required or permitted to be given or taken under this Agreement by
Owner or Kirco, as the case may be, shall be given or taken by one or more of
the authorized representatives of each. For purposes of this Agreement: (1) the
authorized representatives of Owner shall be any one or more of the following:
Lynn Kalinowski, Christine C. Schmitt or Carolyn Shaw and (2) the authorized
representatives of Kirco shall be any one or more of the following: A. Mathew
Kiriluk II and Clifford Aiken III. Either party hereto may from time to time
designate other or replacement authorized representatives to the other party
hereto. The written statements and representations of any authorized
representative of Owner or Kirco shall be binding upon the party for whom such
person is an authorized representative, and the other party hereto shall have no
obligation or duty whatsoever to inquire into the authority of any such
representative to take any action which he proposes to take.
23. KIRCO'S COMPLETION OBLIGATIONS. Following the Completion Payment
pursuant to section 14 above and completion of the subsequent punchlist items as
provided in section 16 above, Owner shall pay to Kirco the balance of the
Contract Price and any other sums remaining to be paid hereunder ("Final
Payment"), including without limitation any amounts withheld for completion of
"punchlist" items not paid out pursuant to section 14 above, upon execution,
delivery and/or completion of all of the following by Kirco, which shall be a
condition of Final Payment.
a. A bill of sale for any personal property included within the Plans
and Specifications that does not otherwise become affixed to the Property.
16
b. All written warranties from any manufacturer or installer to be
assigned to Owner pursuant to this Agreement, to the extent Kirco has received
the same from the manufacturers or installers prior to Final Payment, together
with an assignment of the same to Owner, and any manufacturer's or installer's
warranty received by Kirco after Final Payment shall be delivered upon receipt
along with an assignment of the same by Kirco to Owner.
c. A Final Payment application and sworn statement, together with
waivers of lien from contractors of Kirco, and for all subcontractors and
suppliers, as follows: Final unconditional lien waivers for work that has been
completed and paid for by Owner prior to Final Payment, final conditional lien
waivers for work that has been completed prior to Final Payment but which has
not been fully paid for by Owner prior to Final Payment, partial unconditional
lien waivers to the extent of payment by Owner prior to Final Payment for work
that has not been completed prior to Final Payment.
d. Completion of all items listed on the pre-occupancy inspection
"punchlist" and/or Kirco's other standard completion inspection documents
pertaining to incomplete or defective inspection items to be completed by Kirco.
e. A final certificate of occupancy upon completion of any items
required by the City of Auburn Hills for the issuance of the final certificate
of occupancy.
f. One complete set of record plans and specifications for the Building
(both in the form of a hard copy and in the form of a computer (CAD) disk in a
format reasonably acceptable to Owner).
24. BROKERAGE FEES. Kirco and Owner each represent to the other that,
except as to Signature Associates who Owner is paying directly, they have not
dealt with any real estate brokers in connection with this transaction, and each
party agrees to indemnify and hold the other party harmless from any liability
for any brokerage fees or commissions which may become due and payable to any
broker, with whom the indemnifying party has dealt.
25. DISPUTE RESOLUTION. Any claim or dispute which might be the subject
of a civil action against the Kirco or Owner arising out of or related to this
Agreement, or the alleged breach hereof including, without limitation, any claim
of breach of warranty, up to the total sum of $250,000.00 at the election of
either Kirco or Owner, shall be settled by binding arbitration conducted by the
American Arbitration Association. Any other claims or disputes are not subject
to arbitration unless the parties agree thereto. Any arbitration shall be
conducted in accordance with applicable Michigan law governing arbitrations and
then applicable construction industry arbitration rules of the American
Arbitration Association. Any arbitration award shall include the costs and
reasonable attorneys' fees incurred by the prevailing party as provided in
Section 18 above. Judgment upon the award rendered by arbitration may be entered
in a court of competent jurisdiction. Any award shall include an award of costs
and attorneys' fees to the prevailing party. The foregoing notwithstanding, no
claim seeking only specific performance shall be the subject of binding
arbitration and, if the dispute concerns the interpretation of the Plans and
Specifications, the Architect shall be the final arbiter of such dispute.
17
26. NO ASSIGNMENT. Neither party shall assign, set over or transfer this
Agreement or any of such party's rights or interest hereunder without the prior
written consent of the other any such purported assignment without such consent
shall be void and of no effect.
27. ENTIRE AGREEMENT. This Agreement, together with the Rider and other
attachments hereto, constitutes the entire agreement between Kirco and Owner and
supersedes any and all prior written or oral agreements and any contemporaneous
oral agreements between the parties. No amendment or modification of this
Agreement shall be effective or binding upon the parties hereto unless set forth
in writing and signed by all of the parties hereto.
28. SUCCESSORS. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, representatives,
successors or permissible assigns.
29 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.
30. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of such
counterparts together shall constitute one and the same instrument.
31. AUTHORIZATION. Both Owner and Kirco, and the undersigned on behalf
of the respective parties, hereby represent and warrant that the undersigned are
duly authorized to enter into this Agreement on behalf of their respective
parties and to consummate all transactions contemplated pursuant to the terms
hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
WITNESSES: OWNER:
MEEMIC Insurance Company,
a Michigan corporation
/s/ Carolyn Shaw By: /s/ Lynn Kalinowski
- -------------------------- --------------------------
Carolyn Shaw
/s/ Christine C. Schmitt Printed Name: Lynn Kalinowski
- --------------------------
Christine C. Schmitt Title: President & CEO
[signatures continued on next page]
18
KIRCO:
KIRCO DEVELOPMENT LLC, a
Michigan limited liability company
/s/ John R. Boyd By: /s/ Cliff Aiken
- -------------------------- ----------------------
John R. Boyd
/s/ Michael D. Piette Printed Name: Cliff Aiken
- --------------------------
Michael D. Piette Title: Vice President
Exhibits:
A Property (Paragraph 1)
B Project Cost Summary (Paragraph 2)
C Preliminary Plans (Paragraph 4)
D Final Plans and Specifications (Paragraph 5a)
E Clarifications (Paragraph 5g)
19
RIDER TO DEVELOPMENT AGREEMENT BETWEEN
MEEMIC INSURANCE COMPANY, AS OWNER, AND
KIRCO DEVELOPMENT COMPANY, AS DEVELOPER,
DATED NOVEMBER 18, 2004
The following provisions modify, delete and/or supplement (as indicated) the
Development Agreement Between the Owner and Kirco (sometimes referred to herein
as the "Agreement"). If a provision of this Rider conflicts with a provision of
the Development Agreement, the provisions of this Rider shall control.
1. RELATIONSHIP.
(a) Kirco agrees to furnish the architectural, engineering and
construction services set forth herein and agrees to furnish efficient business
administration and superintendence and to use its best efforts to complete the
Building in the best and soundest way and in the most expeditious and economical
manner consistent with the interest of the Owner. Kirco acknowledges that the
Owner is relying on Kirco's skills and integrity to produce a completed
operational office building suitable for the Owner's intended purposes. Towards
that end, Kirco agrees that it is responsible for the total design and
construction of the Project, including all professional design and engineering
services and all labor, materials and equipment used or incorporated in such
design and construction. The foregoing notwithstanding, the relationship between
Kirco and Owner is contractual, only, and Kirco does not hereby assume or accept
any trustee or other fiduciary responsibilities or obligations to Owner.
(b) Nothing contained in the Development Agreement shall create a
contractual relationship between the Owner and any third party. It is understood
and agreed that the Owner is an intended third party beneficiary of all
contracts with design professionals, all subcontracts, purchase orders and other
agreements between Kirco and third parties. Kirco shall incorporate the
obligations of this Agreement with the Owner in its contracts with design
professionals, as well as all of its general contractor, subcontracts, supply
agreements, purchase orders and other agreements. Where appropriate Kirco shall
cause it's general contractor to comply with the terms hereof.
2. PLANS.
(a) Kirco shall be responsible for apprising itself of all codes,
ordinances and regulations of any kind affecting the Building in any way. The
Plans and Specifications shall accurately reflect all applicable codes,
ordinances and regulations. Kirco shall investigate the availability of all
necessary utility services and shall meet with and discuss the availability of
such services with appropriate authorities. Kirco shall obtain, in cooperation
with the Owner, all necessary approvals and permits from authorities having
jurisdiction over the Building and Kirco shall, with the cooperation of Owner,
provide such certificates of costs, completion, and Building information as may
be required by Owner.
(b) Should the Plans or the Specifications conflict in themselves or with
each other, Kirco shall provide the better quality or greater quantity of work
and/or materials unless otherwise directed by a written addendum to the
Agreement.
(c) Kirco and all Subcontractors shall refer to all of the Plans,
including those showing primarily the work of the mechanical, electrical and
other specialized trades, and to all of the Sections of the Specifications, and
shall perform all work reasonably inferable therefrom as being necessary to
produce the indicated results.
1
(d) All indications or notations which apply to one of a number of similar
situations, materials or processes shall be deemed to apply to all such
situations, materials or processes wherever they appear in the Work, except
where a contrary result is clearly indicated by the Plans or the Specifications.
(e) Where codes, standards, requirements and publications of public and
private bodies are referred to in the Specifications, references shall be
understood to be to the latest revision prior to the date of the Agreement,
except where otherwise indicated.
(f) Where no explicit quality or standards for materials or workmanship
are established for work, such work is to be of good quality for office building
use and consistent with the quality of the surrounding work (including the
existing components of construction) and of the construction of the Building
generally.
(g) All manufactured articles, materials, and equipment shall be applied,
installed, connected, erected, used, cleaned, and conditioned in accordance with
the manufacturer's written or printed directions and instructions unless
otherwise indicated herein or in the Plans and Specifications.
(h) Unless otherwise specifically provided in the Plans and
Specifications, all equipment, material, and articles incorporated in the Work
shall be new and of the most suitable grades for office building use. Materials
shall conform to manufacturer's standards in effect at the date of execution of
the Development Agreement and shall be installed in strict accordance with
manufacturer's latest directions. Kirco shall, if required by Owner, furnish
satisfactory evidence as to the kind and quality of any materials. All packaged
materials shall be shipped to the site in the original containers clearly
labeled, and delivery slips shall be submitted with bulk materials, identifying
thereon the source and warranting quality and compliance with the Plans and
Specifications.
(i) It shall be the obligation of Kirco to review the Plans and
Specifications to determine whether they are in accordance with building codes
and regulations.
3. BUILDING SCHEDULE.
(a) Kirco has delivered to the Owner a preliminary schedule, which it will
update from time to time as appropriate to reflect changes in work, updated
information or excusable delays. Upon receipt of the final Plans and
Specifications, Kirco shall prepare in accordance with Kirco's standard
practices, and deliver to Owner for review, a schedule of the anticipated
construction (the "Master Building Schedule").
(b) The Master Building Schedule shall:
(i) Identify the approximate start and completion dates for each
major activity shown on the Master Building Schedule.
(ii) Include any construction activities to be preformed by Owner
and known to Kirco, if any.
(iii) Reflect the Owner's requirements with respect to occupancy
dates, as adjusted from time to time.
(c) Upon submission of the Master Building Schedule by Kirco, Kirco and
Owner (and any separate contractors or consultants designated by the Owner)
shall meet to discuss the Master Building Schedule and resolve any conflicts
with respect thereto. After approval by the Owner, Kirco shall make best efforts
to comply with the Master Building Schedule, subject to the provisions of this
Agreement governing delays and change orders.
2
(d) At the end of the first month following issuance of the Master
Building Schedule and every month thereafter (or at such lesser intervals if
deemed necessary by the Owner), and as part of the documents submitted with the
Application for Payment, Kirco shall prepare an updated Master Building Schedule
showing the actual status of the Building as of the date of the updated Master
Building Schedule. The updated Master Building Schedule shall show any variances
from the original Master Building. Kirco shall prepare and deliver to Owner, a
detailed updated bar chart schedule to facilitate review by the Owner of the
progress of the Work.
(e) Kirco shall make its best efforts to remain on schedule with the
Master Building Schedule, as revised from time to time pursuant to this
Agreement.
4. BIDS. Kirco shall keep Owner advised concerning the bids and
bidders. Subcontractors shall be selected by Kirco subject to Owner's approval,
which shall not be unreasonably withheld, conditioned or delayed. Kirco shall
comply with all applicable laws and regulations in obtaining the bids. Kirco
shall prepare the necessary bidding information, bidding forms, bid packages,
the form of the subcontract and the conditions of this Agreement for the various
subcontracts. Kirco shall review the recommended subcontract awards and advise
the Owner whether the bids are responsive and acceptable in the context of the
total Building requirements. Kirco shall advise the Owner of the acceptability
of sub-subcontractors and material suppliers proposed by subcontractors. Kirco
shall award subcontracts only when approved by Owner. The Owner shall be
reasonably expedient in approving or objecting to subcontract awards.
5. OWNERSHIP. All ownership rights in the Plans, Specifications,
reports and other data (including without limitation, written, printed, graphic,
video and audio material contained in any computer data base or computer
readable form) (hereinafter "Works of Authorship") developed during the term of
this Agreement, shall be the property of the Architect or other professionals
preparing such Works of Authorship as instruments of service. Owner may retain
copies of the as built Plans and Specifications and shall be entitled to the use
of the same in connection with the Building, but Owner shall not use the same
nor permit them to be used in connection with the design or construction of
another building without the Architect's prior written consent. If Owner uses or
permits the use of the same for such purposes Owner shall indemnify the
Architect for any loss, costs or damages suffered or incurred by the Architect
as a result of such use. Upon Final Payment Kirco shall execute an assignment
and/or other appropriate documents, and otherwise take such actions as may be
reasonably requested by Owner to assign to Owner whatever rights or interests
Kirco may have with respect to such Works of Authorship, but Kirco does not now
warrant, and will not hereafter warrant, that it now owns or will hereafter own
or hold any such rights. Kirco expressly disclaims any ownership rights in Works
of Authorship related to the performance of services under this Agreement. Kirco
shall obtain the Owner's written permission to use photographs, models,
renderings, narrative descriptions, and the like in regards to this Building in
connection with publications, awards, competitions, press releases, and
brochures, which permission shall not be unreasonably withheld, delayed or
conditioned, Owner recognizing that it is customary for developers to display
and utilize photographs of completed projects.
6. PERMITS. Kirco shall file the documents required to obtain necessary
approvals of governmental authorities having jurisdiction over the Project.
Kirco shall procure all certificates of inspection, use, occupancy, permits and
licenses, pay all charges and fees and give all notices necessary and incidental
to the due and lawful prosecution of the Work. Certificates of inspection, use
and occupancy shall be delivered to the Owner upon completion of the Work in
sufficient time for occupation of the Building in accordance with the approved
schedule for the Work.
7. COST OF THE WORK. The term "Cost of the Work" shall mean costs
necessarily incurred by Kirco (which shall also be deemed to include such costs
incurred by Kirco Construction) in the proper performance of the Work. Such
costs shall be at rates not higher
3
than those customarily paid at the place of the Project except with prior
consent of the Owner. The Cost of the Work shall include only the actual cost of
the items set forth in this Paragraph 7.
(a) Labor Costs.
(i) Wages of construction workers directly employed by Kirco to
perform the construction of the Work at the site or, with the Owner's
agreement, at off-site workshops.
(ii) Wages or salaries of Kirco's Project Management and supervisory
and administrative personnel.
(iii) Wages and salaries of Kirco's supervisory or administrative
personnel engaged, al factories, workshops or on the road, in expediting
the production or transportation of materials or equipment required for
the Work, but only for that portion of their time required for the Work.
(iv) Costs paid or incurred by Kirco for taxes, insurance,
contributions, assessments and benefits required by law or collective
bargaining agreements, and, for personnel not covered by such agreements,
customary benefits such as sick leave, medical and health benefits,
holidays, vacations and pensions, provided that such costs are based on
wages and salaries included in the Cost of the Work under Subparagraphs
7(a)(i) to 7(a)(iii).
(b) Subcontract Costs. Payments made by Kirco to Subcontractors in
accordance with the requirements of the subcontracts, including fees of
architects, designers and engineers retained by Kirco to design and engineer the
Project.
(c) Costs Of Materials And Equipment Incorporated In The Completed
Construction.
(i) Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed construction.
(ii) Costs of materials described in the preceding Subparagraph
7(C)(i) in excess of those actually installed but required to provide
reasonable allowance for waste and for spoilage. Unused excess materials,
if any, shall be handed over to the Owner at the completion of the Work
or, at the Owner's option, shall be sold by Kirco; amounts realized, if
any, from such sales shall be credited to the Owner as a deduction from
the Cost of the Work.
(d) Costs Of Other Materials And Equipment, Temporary Facilities And
Related Items.
(i) Costs, including transportation, installation, maintenance,
dismantling and removal of materials, supplies, temporary facilities,
machinery, equipment, and hand tools not customarily owned by the
construction workers, which are provided by Kirco at the site and fully
consumed in the performance of the Work; and cost less salvage value on
such items if not fully consumed, whether sold to others or retained by
Kirco. Cost for items previously used by Kirco shall mean fair market
value.
(ii) Rental charges for temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which
are provided by Kirco at the site, whether rented from Kirco or others,
and costs of transportation, installation, minor repairs and replacements,
dismantling and removal thereof. Rates and quantities of equipment rented
shall be subject to the Owner's prior approval.
4
(iii) Costs of removal of debris from the site.
(iv) Reasonable reproduction costs, facsimile transmissions and
long-distance telephone calls, postage and express delivery charges,
telephone service at the site and reasonable petty cash expenses of the
site office.
(v) That portion of the reasonable travel and subsistence expenses
of Kirco's personnel incurred while traveling in the Wayne, Oakland and
Macomb county area in discharge of duties connected with the Work.
(e) Miscellaneous Costs.
(i) That portion directly attributable to this Contract of premiums
for insurance and bonds.
(ii) Sales, use or similar taxes imposed by a governmental authority
which are related to the Work and for which Kirco is liable.
(iii) Fees and assessments for the building permit and for other
permits, licenses and inspections for which Kirco is required by the
Contract Documents to pay.
(iv) Fees of testing laboratories for tests required by the Contract
Documents, except those related to nonconforming Work other than that for
which payment is permitted by Subparagraph 7(g)(ii).
(v) Royalties and license fees paid for the use of a particular
design, process or product required by the Contract Documents; payments
made in accordance with legal judgments against Kirco resulting from such
suits or claims and payments of settlements made with the Owner's consent;
provided, however, that such costs of legal defenses, judgments and
settlements shall not be included in the calculation of Kirco's Fee or the
Contract Price and provided that such royalties, fees and costs are not
excluded by the other provisions of this Agreement.
(vi) Data processing costs related to the Work.
(vii) Deposits lost for causes other than Kirco's negligence or
failure to fulfill a specific responsibility to the Owner set forth in
this Agreement.
(viii) Legal, mediation and arbitration costs, other than those
arising from dispute between the Owner and Kirco, reasonably incurred by
Kirco in the performance of the Work and with the Owner's written
permission, which permission shall not be unreasonably withheld.
(f) Other Costs. Other costs incurred in the performance of the Work if
and to the extent contained in the budget as approved by the Owner, as the same
may be adjusted and updated from time-to-time, or as otherwise approved in
writing by the Owner pursuant to this Agreement.
(g) Emergencies And Repairs To Damaged Or Nonconforming Work. The Cost of
the Work shall also include costs described in Subparagraph 7(a)(i) which are
incurred by Kirco:
(i) In taking action to prevent threatened damage, injury or loss in
case of an emergency affecting the safety of persons and property.
(ii) In repairing or correcting damaged or nonconforming Work
executed by Kirco or Kirco's Subcontractors or suppliers, provided that
such damaged or
5
nonconforming Work was not caused by the acts or omissions of Kirco to the
Owner set forth in this Agreement or the failure of Kirco's personnel to
supervise adequately the Work of the Subcontractors or suppliers, and only
to the extent that the cost of repair or correction is not recoverable by
Kirco from insurance, Subcontractors or suppliers.
(h) Cost Inclusion. The costs described in Subparagraphs 7(a) through 7(g)
shall be included in the Cost of the Work notwithstanding any provision of the
Agreement which may require Kirco to pay such costs, unless such costs are
excluded by the provisions of Subparagraph 7(i).
(i) Costs Not To Be Reimbursed. The Cost of the Work shall not include:
(i) Salaries and other compensation of Kirco's personnel stationed
at Kirco's principal office or offices other than the site office, except
as specifically provided in Subparagraphs 7(a)(ii) and 7(a)(iii).
(ii) Expenses of Kirco's principal office and offices other than the
site office except as specifically provided in this Paragraph 7.
(iii) Overhead and general expenses, except as may be expressly
included in this Paragraph 7.
(iv) Kirco's capital expenses, including interest on Kirco's capital
employed for the Work.
(v) Rental costs of machinery and equipment, except as specifically
provided in Subparagraph 7(d)(ii).
(vi) Except as provided in Subparagraph 7(g)(ii), costs due to the
fault or negligence of Kirco, Subcontactors, anyone directly or indirectly
employed by any of them, or for whose acts any of them may be liable or to
the failure of Kirco to fulfill a specific responsibility to the Owner set
forth in this Agreement, including, but not limited to the costs for the
correction of damaged, defective or nonconforming Work, disposal and
replacement of materials and equipment incorrectly ordered or supplied and
making good any damage to property not forming part of the Work.
(vii) Except as provided in Subparagraph 7(f), any cost not
specifically and expressly described in this Paragraph 7.
(viii) Costs which would cause the Contract Price to be exceeded.
(ix) Notwithstanding any other provision hereof, salary or other
compensation or costs of Kirco's development personnel or development
overhead.
(j) Notwithstanding anything contained herein to the contrary, with
respect to each component of the Cost of the Work, the Owner shall be credited
with (i) such time/payment discounts of invoices as may be obtainable (provided
that Owner must advance funds to Kirco to obtain prepayment discounts); (ii) the
fair market value of materials charged to the Owner and taken over by Kirco for
its use or sale when no longer needed by it in its performance of this
Agreement; and (iii) any rebates, refunds, returned deposits or other allowances
received by Kirco.
(k) Kirco shall maintain accurate books and records relating to the costs
incurred in connection with the Project at the offices of Kirco. Owner, or it's
agents or representatives shall be entitled, at any time, upon reasonable notice
to audit the books and records of Kirco relating to the Project.
6
8. CONSTRUCTION.
(a) The Development Agreement is intended to produce an office building of
a consistent character and quality of design. All components of the Work
including visible items of mechanical and electrical equipment shall have a
coordinated design in relation to the overall appearance of the building.
(b) Kirco shall employ a competent superintendent and such assistant
superintendents as may be necessary, all reasonably acceptable to the Owner, so
that at least one of them will be in attendance at the Building site during
performance of the Work. If the Owner has a reasonable objection to the
superintendent (or any assistant of the superintendent) employed by Kirco, the
Owner shall have the right to request that such person(s) be replaced promptly
with person(s) of Kirco's selection reasonably acceptable to the Owner.
(c) Kirco shall retain a competent Registered Professional Engineer or
Registered Land Surveyor, who shall establish the exterior lines and required
elevations of all improvements to be erected on the site and shall establish
sufficient lines and grades for the construction of associated work such as, but
not limited to, roads, utilities and site grading. The Engineer or Land Surveyor
shall certify as to the actual location of the constructed facilities in
relation to property lines, building lines, easements, and other restrictive
boundaries as well as to proper compaction of all soils properly located on the
site after completion of site grading.
(d) Kirco shall establish the building grades, lines, levels, column, wall
and partition lines required by the various subcontractors in laying out their
work.
(e) Kirco shall coordinate and supervise the work performed by
Subcontractors to the end that the Work, to the extent possible, is carried out
without conflict between trades and so that no trade, at any time, causes delay
to the general progress of the Work. Kirco and all Subcontractors shall at all
times afford each trade, any separate subcontractor, or the Owner, every
reasonable opportunity for the installation of its properly scheduled portion of
the work.
(f) During the progress of the Work and at all times prior to the date of
occupancy of the Building by the Owner, Kirco shall provide temporary heat,
ventilation, and enclosure, adequate to prevent damage to completed work, work
in progress, the Building or to materials stored on the premises. The permanent
heating and ventilation systems may be used for these purposes when available
unless otherwise provided in the Plans and Specifications.
(g) Kirco shall be present at the initial start-up, testing, adjusting and
balancing of major equipment or systems utilized in the Project. Kirco shall
provide assistance in the utilization of any major equipment, systems, or
materials which do not function in a manner consistent with the Plans and
Specifications, product data, or industry standards for a period of twelve (12)
months after occupancy at no cost to the Owner.
(h) Kirco shall also be responsible to the Owner for the acts and
omissions of the subcontractors, trade contractors, suppliers, agents and
employees of those in privity with Kirco.
9. COMPLETION.
(a) The scheduled Completion Date and Liquidated Damage Date may only be
extended if Kirco delivers to the Owner within ten (10) days after the beginning
of any delay, obstruction or hindrance, a notice of the delay and, if the delay
is not such a delay as will constitute an excusable delay pursuant to paragraph
6 of the Agreement, a Request for a Change Order, accompanied by a good faith
estimate of the length or duration of the anticipated delay. If the delay is an
excusable delay for the purposes of paragraph 6 of the Agreement, or if it
results from the acts or omissions of the Owner which are not required to
correct design problems or work discrepancies, the Completion Date and
Liquidated Damages Date shall be
7
extended for the number of days that the work is delayed by such cause. If the
cause of the delay is not such that would give rise to an excusable delay
pursuant to paragraph 6 of the Agreement, the Owner, in the exercise of its sole
discretion, may grant or deny the Request for a Change Order. A Request for
Change Order shall only be considered if Kirco is delayed, obstructed and/or
hindered in the performance of the Work by any other cause which Kirco could not
reasonably control or circumvent, and such delay is not caused by or resulting
from, in whole or in part, the default or collusion of Kirco. In any event, the
extension shall only be considered for a time period equal to the delay,
obstruction or hindrance. Any disputes between Owner and Kirco concerning
Kirco's entitlement to an extension of time shall be resolved in the same manner
as other disputes as provided in the Agreement.
(b) Extension of time shall be Kirco's sole remedy for any such delay
unless the same shall have been caused by the acts constituting intentional
interference by the Owner with Kirco's performance of the work where such acts
continue after Kirco's written notice to the Owner of such interference. The
Owner's exercise of any of its rights under the Agreement document regarding
changes in the Work, regardless of the extent or number of such changes, or the
Owner's exercise of any of its remedies of suspension of the Work or requirement
of correction or re-execution of any defective Work shall not under any
circumstances be construed as intentional interference with Kirco's performance
of the Work.
10. INTENTIONALLY OMITTED.
11. PROTECTION.
(a) Kirco shall provide and maintain in good operating condition suitable
and adequate fire protection equipment and services, and shall comply with all
reasonable recommendations regarding fire protection made by the representatives
of the fire insurance company carrying insurance on the Work or by the local
fire chief or fire marshall. The area within the site limits shall be kept
orderly and clean, and all combustible rubbish shall be promptly removed from
the site.
(b) Kirco shall utilize good construction practices at all times during
the performance of the Work.
(c) Kirco shall take all precautions necessary to prevent loss or damage
caused by vandalism, theft, burglary, pilferage, or unexplained disappearance of
Owner installed property, whether or not forming part of the Building.
12. INSURANCE.
(a) Kirco's insurance shall be written for not less than any limits of
liability required by law or those set forth as follows, whichever is greater,
on an occurrence coverage basis, and Owner, Kirco and such parties as may be
designated by Owner shall be named insureds under the above coverages, to the
extent possible.
(i) Worker's Compensation - Statutory.
(ii) Employer's Liability - $500,000.
(iii) Comprehensive General Liability (including premises -
operations; independent contractors' protective; products and completed
operations; broad form property damage; automobile coverage and
contractual liability) Public Liability - Per Person/Per Occurrence.
Bodily & Personal Injury - $1,000,000/occurrence;
$2,000,000 aggregate.
8
Property Damage (including water damage, sprinkler
leakage and coverage for explosion or collapse) -
$1,000,000/occurrence; $2,000,000 aggregate.
Contractual Liability (hold harmless coverage):
(iv) Automobile Liability - Per Person/Per Occurrence.
Bodily Injury $1,000,000/occurrence; $2,000,000
aggregate.
Property Damage $1,000,000/occurrence: $2,000,000
aggregate.
(v) Products and Completed Operations - Same limits as above for 3
years, commencing with issuance of final Certificate of Payment.
(vi) Umbrella $5,000,000 - occurrence: $5,000,000 aggregate
(b) If any of Kirco's employees perform any architectural or design
services, Kirco shall obtain and maintain a Building policy (vis-a-vis a claims
made policy) which provides professional errors and omissions coverage with
respect to Kirco's employees performing design services in the amount of
$1,000,000. Kirco shall require the Architect to obtain and maintain
professional errors and omissions coverage in connection with its work, all in
forms acceptable to the Owner. Professional errors and omissions insurance shall
be endorsed to provide contractual liability coverage. Certificates of such
coverage shall be furnished to Owner along with other certificates of insurance
and such coverage shall be for Kirco, and each professional architect, engineer,
contractor or subcontractors in an amount no less than $2,000,000. Kirco agrees,
and shall require each professional architect or engineer to agree, to maintain
such coverage in effect for a period of three (3) years following completion of
the Project.
(c) All insurance policies required under this Section shall: (i) be
issued by companies with an A. M. Best rating or not less than A, (ii) be issued
by companies licensed to do business in Michigan; (iii) not be subject to
cancellation or material change or non-renewal without at least thirty (30)
days' prior written notice to Owner. Certified copies of all insurance policies
required pursuant to this Section (or certificates thereof, in form and
substance acceptable to Owner), shall be delivered to Owner not less than ten
(10) days after execution hereof.
13. PAYMENT. At a minimum, each Application for Payment shall (i) be
submitted on AIA forms G702 and G703; (ii) be accompanied by the Contractor's
sworn statements and waivers of lien, which sworn statement and waiver shall
cover all work, labor and materials, including equipment and fixtures of all
kinds done, performed or furnished as of the date of the request for payment;
(iii) be accompanied by properly completed sworn statements and waivers of lien
from each Subcontractor, Sub-subcontractor, laborer and materialman, which sworn
statements shall cover all work, labor and materials, including equipment and
fixtures of all kinds done, performed or furnished as of the date of the
previous request for payment, and which waivers shall cover all work, labor and
materials, including equipment and fixtures of all kinds, done, performed or
furnished as of the previous request for which payment has been received;
approved and signed by the Architect and (v) such other evidence necessary to
satisfy the Owner and any other applicable authorities designated by Owner that
the Work for which payment is requested has been completed in conformance with
this Agreement, and that all amounts which have previously been paid for Work
have been properly distributed to the various Subcontractors,
Sub-subcontractors, laborers and materialmen. No payment, of any nature
whatsoever, will be made to Kirco, for additional work or services, without
prior written approval by the Owner.
9
WITNESSES: OWNER:
MEEMIC Insurance Company,
a Michigan corporation
/s/Carolyn Shaw By: /s/Lynn Kalinowski
- ----------------------- -------------------------
Carolyn Shaw
/s/Christine C. Schmitt Printed Name: Lynn Kalinowski
- -----------------------
Christine C. Schmitt Title: President & CEO
[signatures continued on next page]
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KIRCO:
KIRCO DEVELOPMENT LLC, a
Michigan limited liability company
/s/John R. Boyd By: /s/Cliff Aiken
- ----------------------- -------------------------------
John R. Boyd
/s/Michael D. Piette Printed Name: Cliff Aiken
- -----------------------
Michael D. Piette Title: Vice President
11