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HomeMy WebLinkAboutContract 39666-TA1CITY SECRETARY CONTRACT NO.,361 to 6 6--FA 1 Takeover Agreement This Takeover Agreement ("Agreement') is entered into by and between North American Specialty Insurance Company ("Surety") and the City of Fort Worth, Texas ("Owner"), and is made effective as of the Jeday of March, 2011. Recitals. - WHEREAS, W. R. Hodgson Co., LP ("Contractor") and Owner entered into a written contract dated December 8, 2009, in the original amount of $4,762,729.50 (M&C C-23962) ("Original Contract'), whereby Contractor agreed to construct that certain construction project known as the Village Creek Reclaimed Water Eastern Delivery System Distribution Main Part 2, P257-705140021387, Project No. 00213, Fort Worth, Texas (the "Project'), in accordance with the terms and provisions of the Original Contract; WHEREAS, as required by law and under the terms of the Original Contract, Contractor and Surety executed and delivered to Owner a Performance Bond No. 2105800 and a Maintenance Bond No. 2105801 (collectively referred to herein as the "Performance Bond") along with a Payment Bond No. 2105800 ("Payment Bond"), each in the penal sum of $4,762,729.50; WHEREAS,. Contractor voluntarily defaulted and terminated the Original Contract, and Owner has called upon Surety to fulfill its obligations as surety under the terms of the Performance Bond; and WHEREAS, Surety is willing to undertake the completion of the Original Contract in accordance with the terms of the Performance Bond and this Agreement provided that in doing so it will receive the entire consideration as hereinafter defined below. NOW, THEREFORE, in consideration of the agreements and undertakings hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, Owner and Surety agree as follows: Agreement: 1. Surety hereby undertakes to cause the performance of the terms, covenants and conditions of the Original Contract, including all modifications thereto, and agrees to be bound by the Original Contract as modified herein. Owner acknowledges that Surety, by its execution of this Agreement, is acting in its capacity as the surety for Contractor in making arrangements for the performance and completion of the Original Contract, and not as a completing contractor, and that Surety is not assuming any obligations or liabilities beyond those set forth in the Performance Bond. As to the completion of the Original Contract, except as otherwise provided in this Agreement, Surety is entitled to all rights, title and interest of Contractor in and to the Original Contract in all respects as if Surety were the original party to the Original Contract. The term "contractor" as used Takeover Agreement - Page 1 - _ OFFICIAL RECORD CITY SECRETARY FT. WORTH, TX in the Original Contract shall be deemed, after the effective date of this Agreement, to refer to Surety rather than to Contractor. 2. The parties acknowledge and agree that: (i) Surety will arrange for the performance of the work contemplated under this Agreement through William J. Schultz, Inc. d/b/a Circle C Construction Company, as completion contractor ("Completion Contractor"), (ii) Surety will enter into a completion contract (the "Completion Contract") with Completion Contractor, (iii) Surety will subsequently assign the Completion Contract to Owner, and (iv) Owner agrees to accept such assignment, as further described below. The parties acknowledge that Owner secured the proposal from Completion Contractor which is the subject of the Completion Contract, and as a result, Owner will accept same without any representation or warranty by Surety as to the correctness and/or completeness of Completion Contractor's proposal in relation to the remaining scope of work on the Project. Surety may satisfy the required insurance obligations under the Original Contract by providing evidence of the required insurance coverage carried by Completion Contractor, with Surety and Owner being named as additional insureds under the policy or policies. 3. Owner represents and warrants to Surety that, as of the date of this Agreement, the remaining Original Contract Balance is $1,411,557.87 4. Owner agrees that the entire Original Contract Balance is dedicated to and will be applied to the completion of the Original Contract pursuant to this Agreement. Owner shall pay directly to Surety (as indicated below) the Original Contract Balance, plus or minus any additional amounts of money on account of any modifications or changes requested by Owner and agreed to in writing signed by Owner and Surety, as the work progresses. The payment of the Original Contract Balance to Surety shall be made in accordance with the terms of the Original Contract as to the time, amount and method of payment, and no payment shall be delayed by reason of any slow down or cessation of work in connection with the takeover of the Original Contract by Surety. Surety agrees to spend its own funds (subject to the penal sum cap described below) as may be necessary from time to time to pay for the performance of the work under this Agreement by Completion Contractor in the event that the Original Contract Balance is insufficient, with any such payments being credited against the penal sum of the Performance Bond. Owner agrees that it will not assess any liquidated or other damages against progress and/or retainage payments from the Original Contract Balance payable to Surety under this Agreement alleged to have occurred on or before the effective date of this Agreement, and Owner agrees to pay said Original Contract Balance to Surety, without offset, back charge, reduction or diminution whatsoever for any action or inaction of Contractor and/or Surety alleged to have occurred on or before the effective date of this Agreement, except as may be made in accordance with the terms of this Agreement. All payments under this Agreement shall be made payable to Surety and shall be sent to Surety at the following address, unless and until Owner is notified in writing of any different address: Takeover Agreement - Page 2 North American Specialty Insurance Company c/o Jeffrey Goldberg Vice President 475 N. Martingale Road, Suite 850 Schaumburg, IL 60173. 5. It is contemplated and anticipated by the parties hereto that, after Surety procures the Completion Contract with Completion Contractor to perform the remaining work under the Original Contract, the Completion Contract will be assigned by Surety to Owner. Upon notice of assignment, Owner will accept such assignment and will coordinate and collaborate with Completion Contractor in routine fashion to complete the work on the Project, all without any further involvement of or by Surety. Surety agrees that it will have Completion Contractor furnish payment, performance and maintenance bonds in the amount of the Completion Contract price and that Owner will be named as an obligee on said bonds. Conditioned upon Owner receiving the bonds mentioned in this paragraph, Owner agrees that, upon the expiration of five (5) days after its receipt of the Assignment of Contract from Surety in the form attached hereto as Exhibit "A": (i) Surety and the Performance Bond are fully and finally released and discharged, save and except only from any potential latent defects in the work performed by Contractor to date, such that, in the event of any default by Completion Contractor under the terms of the Completion Contract, Obligee agrees to make demand upon and look solely to Completion Contractor and its surety for the performance of their obligations, completion of the work and all warranties under the Completion Contract and related bonds, (ii) Obligee shall make no further demands and assert no further liability against Surety for completion or correction of the work on the Project and agrees that Surety shall have no responsibility or obligation for the completion or correction of the work on the Project, (iii) Owner shall thereafter make payment for all work performed directly to Completion Contractor rather than Surety, and (iv) notices or communications to proceed, terminate, or of final completion issued by Owner shall be made directly to Completion Contractor with copy to Surety and other routine notices shall be communicated between Owner and Completion Contractor without copying Surety. Finally, based on Completion Contractor's proposal of $961,397.00 and the Original Contract Balance, there will be an anticipated balance of $450,160.87 remaining after payment to Completion Contractor by Owner out of the Original Contract Balance. In recognition of Surety's equitable subrogation rights due to losses paid by Surety under the Payment Bond, Owner agrees to pay to Surety this anticipated balance of $450,160.87 within thirty (30) days after final completion of the work under the Completion Contract. 6. Surety shall complete the work required under the Original Contract pursuant to this Agreement within 100 calendar days after receipt of a written notice to proceed from Owner (the "Completion Date"). Surety is hereby granted a non -compensatory time extension from the original completion date in the Original Contract until the Completion Date. As consideration for the non -compensatory time extension, Surety hereby waives any right to any claim for any additional time extensions and/or damages as a result of any delays which may have been caused by Owner up to and including the date of this Agreement. The assessment of any liquidated damages under the Original Contract and Takeover Agreement - Page 3 this Agreement may begin on the day after the Completion Date; provided, however, that any such assessment of liquidated damages shall not include any alleged delays of Contractor which occurred at any time during Contractor's performance of the work under the Original Contract, and that the calculation and assessment of any such liquidated damages shall include the recognition of any excusable delays during Surety's performance of this Agreement in accordance with the terms of the Original Contract. 7. Insofar as the Owner has any right, title or interest therein, Owner agrees that Surety and Completion Contractor shall have the right to use, without charge, any of the equipment, materials and appurtenances furnished or supplied by Contractor which may be stored on or about the premises of the Project site or materials which may have been fabricated for use in connection with the Original Contract, whether or not presently upon the Project site. 8. The total liability of Surety under this Agreement and the Performance Bond for the performance of the work is limited to and shall not exceed the penal sum of the Performance Bond in the amount of $4,762,729.50. All payments properly made by Surety for the performance of the Original Contract shall be credited against the penal sum of the Performance Bond. Nothing in this Agreement constitutes a waiver of such penal sum as the maximum limitation of Surety's liability under the Performance Bond. 9. In no event shall Owner withhold any of the Original Contract Balance from Surety because of or on account of any claims, liens, suits or demands by any persons or entities furnishing or alleging to have furnished labor and/or materials to the Project. The Payment Bond shall remain in full force and effect in accordance with its terms and provisions, except that, upon Owner's receipt of the Assignment of Contract, it is expressly agreed by and between Surety and Obligee that the scope and coverage of said Payment Bond shall not apply to or cover the Completion Contractor and/or any of its subcontractors, sub -subcontractors or materialmen for any work performed and/or materials delivered to the Project after the date hereof. The total liability of Surety under the Payment Bond is limited to the work performed by Contractor and shall not exceed the penal sum of the Payment Bond in the amount of $4,762,729.50. All payments properly made by Surety under the Payment Bond shall be credited 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. 10. Owner agrees that it will not acknowledge or honor any claim or charges against the Original Contract Balance by Contractor or any alleged assignees, successors, creditors or transferees of Contractor, or any other party making claim to any such proceeds or balances, without the prior written consent of Surety, or except by order of a court of competent jurisdiction after due notice to Surety. 11. This Agreement constitutes the entire agreement between the parties and supersedes any and all prior discussions, agreements, arrangements and/or understandings by and between them, all of which are merged into this Agreement. This Agreement shall not be changed, amended or altered in any way except in writing and signed by both Owner and Takeover Agreement - Page 4 Surety. 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 discussions conducted prior to the effective date of this Agreement shall not in any way vary or alter the terms of this Agreement. Except as herein modified, all terms and conditions of the Original Contract shall remain unchanged and in full force and effect. The Recitals to this Agreement shall be considered substantive terms and conditions and not mere recitals in the interpretation of this Agreement. 12. This Agreement is solely for the benefit of Owner and Surety. Owner and Surety do not intend by any provision of this Agreement to create any rights in any third -party beneficiaries, nor to confer any benefit 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. 13. This Agreement shall be governed by and controlled by the laws of the State of Texas and is performable in Tarrant County, Texas. 14. Any notices which are required to be given by the terms of this Agreement shall be sent via certified mail, return receipt requested, to the following persons and addresses: Owner: City of Fort Worth, Texas c/o Andy Cronberg Re: Village Creek Reclaimed Water Eastern Delivery System Distribution Main Part 2 1000 Throckmorton Street Fort Worth, Texas 76102 And City Attorney's Office Attn: Douglas W. Black, Assistant City Attorney 1000 Throckmorton Street Fort Worth, Texas 76102 Takeover Agreement - Page 5 Suretv: North American Insurance Company c/o Jeffrey Goldberg Vice President 475 N.. Martingale Road, Suite 850 Schaumburg, IL 60173 and Robert M. Fitzgerald Law Offices of Robert M. Fitzgerald 1219 FM 314 Van, TX 75790. 15. This Agreement shall be binding upon the parties and their respective successors and assigns. 16. In the event that one or more provisions of this Agreement shall be declared to be invalid, illegal or unenforceable in any respect, unless such invalidity, illegality or unenforceability shall be tantamount to a complete failure of consideration, the validity, legality and enforceability of the remaining provisions contained in this Agreement shall not in any way be affected or impaired thereby. 17. It is understood and agreed by Owner and Surety that each party and each parry's counsel have reviewed and approved this Agreement and that each party has fully understood and voluntarily accepted each and every provision contained in this Agreement. Accordingly, this Agreement shall be construed without regard to any presumption or other rule requiring construction against the party causing this Agreement to be drafted. 18. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original. SIGNATURE PAGE TO FOLLOW Takeover Agreement - Page 6 IN WITNESS WHEREOF, the parties have executed this Agreement and made effective as of the date indicated 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: CITY OF FORT WORTH, TEXAS By: Fernando Costa Assistant City Manager Recommended: r Frank Crumb Director, Water Department Approved asAp Form and Legality: Q Doug as . 13 ack �� Assistant City Attorney ATTEST: Marty Hendrix City Secretary Date: March ,�, q, 2011 No M&C Required — Authorized by contract executed per M&C C-23962 approved 12-8-09 OFFICIAL RECORD CITY SECRETARY FT. WORTHi TX Takeover Agreement - Page 7 SURETY: NORTH AMERICAN SPECIALTY INSURANCE CO PANY By: Jeffrey Goldberg, Vice President Takeover Agreement - Page 8 Assignment of Contract WHEREAS, W. R. Hodgson Co., LP ("Contractor") and the City of Fort Worth, Texas ("Owner") entered into a written contract dated December 8, 2009, in the original amount of $4,762,729.50 ("Original Contract"), whereby Contractor agreed to construct that certain construction project known as the Village Creek Reclaimed Water Eastern Delivery System Distribution Main Part 2, P257-705140021387, Project No. 00213, Fort Worth, Texas (the "Project"), in accordance with the terms and provisions of the Original Contract; and WHEREAS, as required by law and under the terms of the Original Contract, Contractor and Surety executed and delivered to Owner a Performance Bond No. 2105800 and a Maintenance Bond No. 2105801 (collectively referred to herein as the "Performance Bond") along with a Payment Bond No. 2105800 ("Payment Bond"), each in the penal sum of $4,762,729.50; and WHEREAS, Contractor voluntarily defaulted and terminated the Original Contract, and Surety has arranged for the completion of the work under the Original Contract pursuant to a Completion Contract dated March , 2011, a copy of which is attached hereto and made a part hereof ("Completion Contract"), made and entered into by and between Surety and William J. Schultz, Inc. d/b/a Circle C Construction Company ("Completion Contractor") in conjunction with that certain Takeover Agreement entered into by and between Surety and Owner dated March , 2011 ("Takeover Agreement") concerning the Project; and WHEREAS, the Takeover Agreement and Completion Contract contemplate an assignment by Surety to Owner of all of Surety's rights and interest under the Completion Contract in accordance with the terms of said agreements. NOW, THEREFORE, in consideration of the agreements and for other good and valuable consideration, the receipt and sufficiency of which being hereby acknowledged, Surety does hereby sell, assign, transfer and set over unto Owner all of Surety's rights and interest in and to the Completion Contract. Surety further acknowledges and consents to Completion Contractor being paid directly by Owner all amounts to be paid under the Completion Contract under and pursuant to the Takeover Agreement, and Surety waives any and all subrogation rights it has to such payments for purposes of effecting this assignment (save and except the anticipated remaining balance of $450,160.87 to be paid to Surety upon completion of the Completion Contract per ¶5 of the Takeover Agreement, which right is expressly reserved unto Surety and is not assigned herein). Signed and dated this _ day of March, 2011. NORTH AMERICAN SPECIALTY INSURANCE COMPANY Lb -A Jeffrey Goldberg, Vice President Assignment of Contract - Page 1 Exhibit "A" ACCEPTED BY OWNER: CITY OF FORT WORTH, TEXAS By: Fernando Costa Assistant City Manager Recommended: Frank Crumb Director, Water Department Approved as to Form and Legality: Douglas W. Black Assistant City Attorney ATTEST: Marty Hendrix City Secretary Date: March , 2011 No M&C Required — Assignment of Contract - Page 2 Exhibit "A"