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Exhibit 10.127
COMPLETION AGREEMENT
This Completion Agreement ("Agreement") is made and entered into this
day of June, 2000, by and between BCC Development and Management Company
("Owner") and United States Fidelity & Guaranty Company ("Surety").
RECITALS
WHEREAS, on or about June 24, 1998, Owner entered into a construction
contract with CCI Construction Company, Inc. ("Principal") for the construction
of an assisted living community known as Outlook Pointe at Chesterfield, located
in Chesterfield, Virginia (the "Project"). The construction contract between
Principal and Owner, together with all agreed upon Change Orders thereto are
collectively referred to as the "Contract."
WHEREAS, on or about June 24, 1998, Surety executed a Performance Bond
for the Project in the penal sum of $3,850,000.00 (the "Performance Bond Penal
Sum"). On or about June 24, 1998, Surety executed a separate Payment Bond for
the Project in the penal sum of $3,850,000.00 (the "Payment Bond Penal Sum").
The Performance Bond and the Payment Bond are collectively referred to as the
"Bonds."
WHEREAS, on or about February 22, 2000, Principal voluntarily abandoned
the Project.
WHEREAS, on or about March 10, 2000, Owner made a formal written demand
upon Surety to cure all defaults and satisfy all obligations of Principal under
the Contract pursuant to Surety's obligations under the Bonds.
WHEREAS, in order to provide for the prompt and orderly completion of
the Project, Surety and Owner wish to enter into this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and obligations
set forth herein, and for other good and valuable consideration and intending to
be legally bound hereby, Surety and Owner hereby agree as follows:
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1. The parties agree that the Owner will employ forces to complete all
remaining work on the Project through Final Completion. Owner shall backcharge
against the Contract Balance (as defined herein) all amounts reasonably expended
to complete all of the Work under the Contract. Surety shall have the right to
review and verify all costs incurred in the completion of the Work and the
reasonableness thereof and Surety expressly reserves the right to contest the
validity of any backcharge. Owner expressly agrees that upon achievement of
Final Completion as per the Contract and identification and assessment of all
appropriate backcharges as provided for herein, Surety's obligation under the
Performance Bond to complete the construction work required under the Contract
shall be deemed to have been satisfied. Surety hereby expressly agrees and
acknowledges that, notwithstanding achievement of Final Completion and
satisfaction of certain obligations under the Performance Bond, and provided
that Owner completes the construction work in full compliance with the
requirements set forth in the Contract, Surety shall (i) remain liable for all
warranty obligations for the Project and (ii) remain responsible to satisfy its
obligations under this Agreement and the Payment Bond. Moreover, Owner expressly
reserves the right to assert damage claims under the Bonds and the Contract
resulting from defaults of Principal under the Contract.
2. The parties understand that as of the date of this Agreement:
(a) The Contract Sum or Guaranteed Maximum Price under the
Contract, including all approved Change Orders is
$4,089,160.05.
(b) To date, the Owner has paid to the Principal amounts
totaling $3,776,419.08.
(c) The difference between the amount in subsection (a) and
subsection (b) shall be referred to as the "Contract
Balance," which as of the date of this Agreement is
$312,740.97. The Contract Balance shall be increased or
decreased as provided for under the terms of the
Contract as a result of any pending Change Orders,
claims or other disputed items of work or requests for
additional compensation under the Contract. For purposes
of this Agreement, any liquidated damages assessed or to
be assessed by the Owner under the Contract shall not be
applied so as to reduce the Contract Balance.
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(d) The parties now estimate that the cost to complete the
construction work under the Contract is approximately
$50,000. This amount is an estimate of the parties based
upon available information. This estimate does not
constitute a limit on the amount of backcharges that
Owner may assess against the Contract Balance nor may it
be construed as an acceptance by the Surety of the scope
or cost of all work remaining under the Contract. The
amount of appropriate backcharges are governed by
Paragraph 1 above.
(e) The parties reserve the right to verify the accuracy of
the Contract Balance. The sole remedy of the parties in
the event it is determined that the Contract Balance is
inaccurate, is reformation of the Contract Balance set
forth in this Agreement.
3. After completion of the Work and achievement of Final Completion as
provided for herein, Owner shall pay to Surety the lesser of the following:
(a) The Contract Balance as reduced by all appropriate
backcharges for costs incurred by Owner to Complete the
Work; or
(b) All Payment Bond losses incurred by Surety in
satisfaction of claims or liens pursuant to its
obligations under the Payment Bond.
Owner shall not offset or otherwise reduce the payment to Surety for liquidated
damages, delay damages and other losses incurred as a result of Principal's
default under the Contract. Owner shall, however, be entitled to offset and
reduce the payment to Surety for any breach by Surety of its obligations under
this Agreement.
4. Surety acknowledges that Owner has been served with Writs of
Execution and/or Attachment ("Writs") by Allfirst Bank which designate Owner as
a garnishee to satisfy Principal's debt to Allfirst Bank in the amount of
$1,600,691.81. Notwithstanding the Writs, Surety has requested that Owner pay
all Contract Balance funds remaining after the Owner's completion of the work to
the Surety. In lieu of initiating an interpleader action and asking a court to
adjudicate the respective rights of Surety and Allfirst Bank to funds (if any)
that may in the future become due and payable under the terms of
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the Contract and/or the Bonds, Owner has agreed to pay money directly to Surety
pursuant to the terms of this Agreement; provided, however, that Owner's
agreement to make such payments to Surety is conditioned upon Surety's agreement
to provide full indemnification for all claims and damages as provided for in
this Agreement.
5. The Surety shall defend, indemnify and hold harmless Owner and its
respective past, present, and future administrators, officers, directors,
shareholders, employees, predecessors, successors, representatives, agents,
attorneys, advisers, assigns, transferees, parents, subsidiaries, partners,
members, managers, affiliates and legal representatives (collectively
"Indemnitees") from and against any and all claims, liabilities, damages,
losses, costs and expenses (including without limitation attorneys' fees),
arising out of or related in any way to the Writs and/or payments by Owner to
Surety pursuant to the terms of this Agreement.
6. After receiving notice of any claim by Allfirst for which
Indemnification would be available under this Agreement, the Indemnitee shall
within a reasonable time period, give notice thereof to Surety, provided that
the giving of such notice shall not be a condition of indemnification. After
receipt of notice of an Indemnified Claim, Surety agrees to bear all reasonable
costs and expenses (including attorneys' fees) incurred in connection with the
investigation, negotiation, settlement or defense of any Indemnified Claim, and
further agrees to pay all such costs and expenses as incurred on a monthly
basis. Surety shall have the right to review all legal costs and other expenses
for which indemnification is sought. Surety further agrees to indemnify the
Indemnitees from and against any liability, damages, losses or settlements which
may be incurred as a result of an Indemnified Claim. The Indemnitees agree to
cooperate with Surety and provide Surety information regarding the status of any
Indemnified Claims. Surety shall have the right to select counsel of its choice
for the defense of any Indemnified Claim, provided that such counsel is
reasonably acceptable to Owner, or to tender defense of such claims to the
Indemnitees.
7. With the exception of its liability as set forth in Paragraph 10,
the total liability of the Surety under this Agreement and the Performance Bond
for completion of the Work under the Contract and payment of all damages
incurred by Owner as a result of the defaults of Principal in completing the
Work, shall not exceed the Penal Sum of the Performance Bond. Nothing in this
Agreement constitutes a waiver of such penal sum or an
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increase in the liability of the Surety under the Performance Bond.
8. Owner agrees that it will give Surety prompt notification of any
problems, disputes, or claims that occur in respect to the remaining work for
the completion of the Contract.
9. As part of this Agreement, Owner hereby rescinds the notice of
default under the Performance Bond for this Project that it issued to Surety on
April 13, 2000. Owner has agreed to rescind its notice of default for purposes
of implementing this Agreement, and such recession does not constitute an
admission or acknowledgement of any kind with respect to defaults (if any) by
Surety under the Bonds. Pursuant to the terms of this Agreement, Owner reserves
all rights related to any such defaults.
10. Surety hereby agrees to satisfy or bond off all currently known
liens on the Project by all Claimants that have standing to assert claims under
the Payment Bond within twenty-one (21) days of the execution of this Agreement.
Surety further agrees to keep the Project totally free and clear of all liens
and encumbrances that have been or may be asserted by any contractor,
subcontractor, supplier, or worker that performed work on or supplied material
to the Project on behalf of the Principal prior to the Owner's commencement of
its efforts to complete all remaining work under the Contract.
11. With the exception of its liability as set forth in Paragraph 7,
the total liability of the Surety under this Agreement and the Payment Bond for
satisfaction of Surety's obligations under the Payment Bond shall not exceed the
sum of (i) all amounts paid to Surety by Owner pursuant to the terms of this
Agreement, plus (ii) the Penal Sum of the Payment Bond. All amounts in excess of
amounts paid directly to Surety by Owner, properly and reasonably expended by
Surety to satisfy its obligations under the Payment Bond, shall be credited to
Surety against the Penal Sum of the Payment Bond. Nothing in this Agreement
constitutes a waiver of such penal sum or an increase in the liability of Surety
under the Payment Bond.
12. Provided that Owner completes all remaining work on the Project in
full compliance with the requirements set forth in the Contract, Surety shall be
obligated to perform or cause to be performed all warranty work required under
the terms of the Contract, whether such work is required before or after
achievement of Final Completion. All such warranty obligations
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shall be coextensive with the warranty obligations under the Contract.
13. This Agreement is effective as of the date first written above.
14. This Agreement shall inure to the benefit of and be binding upon
the parties hereto, their successors and assigns. Owner and Surety do not intend
by any provision of this Agreement to create any rights in or increase the
rights of any third-party beneficiaries, nor to confer any benefits upon or
enforceable rights under this Agreement or otherwise upon anyone other than
Owner and Surety. Specifically, Owner and Surety acknowledge that nothing in
this Agreement shall extend or increase the rights of any third-party claimants
or the liabilities or obligations of Surety under the Bonds.
15. This Agreement may not be amended or altered in any way except in
writing executed by both the parties hereto.
16. This Agreement shall be governed and controlled by the laws of the
State of Virginia.
17. This Agreement, together with the Contract and the Bonds,
constitutes the whole of the understanding, discussions and agreements by and
between Owner and Surety. The terms and provisions of this Agreement are
contractual and not mere recitals. Owner and Surety acknowledge that there have
been no oral, written or other agreements of any kind as a condition precedent
to or to induce the execution and delivery of this Agreement. Any written or
oral discussion conducted prior to the effective date of this Agreement shall
not in any way vary or alter the terms of this Agreement.
18. Any notices which are required to be given by the terms of this
Agreement, the Contract or the Bonds shall be made in writing as follows:
As to Owner:
Xxxxx X. Xxxxxx, Esquire
Balanced Care Corporation
0000 Xxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
and
Xxxxxx X. Xxxxxx, Esquire
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Xxxxxxxxxxx and Xxxxxxxx LLP
Xxxxx X. Xxxxxx Building
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
As to Surety:
St. Xxxx Surety Claims
Xxxxxxx X. Xxxxxxxxxxx, Esquire
P.O. Box 1138 (MC 41)
Xxxxxxxxx, XX 00000-0000
and
Xxxx X. Xxxxxxxxx, Esquire
Watt, Tieder, Hoffar & Xxxxxxxxxx, L.L.P.
0000 Xxxxxxxx Xxxxx, Xxxxx 000
XxXxxx, XX 00000
19. It is understood and agreed by Owner and Surety that this Agreement
shall be construed without regard to any presumption or other rule requiring
construction against the party causing this Agreement to be drafted.
20. Surety expressly reserves all prior rights, equitable liens and
rights to subrogation that would be the Principal's, the laborers' or
materialmen's or the Contractor's under the Contract or at law or equity, as
well as its own rights dating back to the execution of the Bonds, including but
not limited to those rights and remedies that may accrue during the completion
of the Contract. No waiver of such rights is agreed to or implied or intended
regardless of any provisions of this Agreement to the contrary.
21. Owner expressly reserves all rights, claims and causes of action
that it may have against Principal and/or Surety under the Contract, this
Agreement and/or the Bonds to seek recovery of any and all damages incurred by
Owner as a result of defaults under and/or breaches of the Contract, the
Agreement and/or the Bonds. The rights, claims and causes of action reserved by
Owner shall include, without limitation, claims for delay damages incurred by
Owner as a result of Principal's and/or Surety's defaults. Notwithstanding any
language in the Contract to the contrary, the making of payments to Surety as
provided for herein shall not constitute a waiver of any rights or claims for
damages resulting from breaches of the Contract. By paying the Contract Balance
to Surety as provided for herein, Owner is
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merely acknowledging completion of the construction work as required by the
Contract. Surety hereby acknowledges that Owner has reserved its rights with
respect to damages incurred as a result of defaults of Principal and/or Surety
and that Owner has the right to and may assert claims against Surety and/or
Principal to recover all such damages.
22. Owner agrees that as part of its obligations hereunder, it will
stay all pending arbitration proceedings against principal relating to this or
any other Project for a period of ninety (90) days from the date of execution of
this Agreement to provide the parties with an opportunity to negotiate a
settlement of any outstanding claims. Should such settlement negotiations fail,
Owner shall have the right to reinitiate its arbitration proceedings upon the
expiration date of this ninety (90) day period.
23. All terms and conditions of the Contract shall be and remain the
same.
24. Other than as set forth below in this paragraph, the parties hereto
do not intend by any provision of this Agreement to create any third-party
beneficiaries nor to confer any benefit upon or enforceable rights or otherwise
upon anyone other than the parties hereto. The parties do, however, acknowledge
that the Contract and the Bonds were collaterally assigned by Owner to New
Meditrust Company LLC ("New Meditrust") at the commencement of the Project and
that, pursuant to such assignment, New Meditrust has certain rights under the
Contract, the Bonds and/or this Agreement.
25. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
the same Agreement. Delivery of an executed copy of this Agreement via facsimile
or other electronic transmission shall be deemed effective delivery.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date first written above, and each of the undersigned
personally represent and warrant that they have the full right, power and
authority to execute this Agreement on behalf of the respective parties.
OWNER
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Vice President and
Secretary
SURETY
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Surety Claims Attorney
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