CONTRACT 4103A Other CLOSEDTAKEOVER AGREEMENT
This Takeover Agreement ( "Agreement") is made and entered into this 20th day of October,
2011, by and between the CITY OF EL SEGI JNDO ( "Owner ") and FIRST NATIONAL
INSURANCE COMPANY OF AMERICA ( "Surety ") acting through their respective duly
authorized, undersigned representatives.
WITNESSETH:
WHEREAS on or about December 8, 2010, Owner entered into a contract with EMAE
INTERNATIONAL, INC., ( "Original Contractor "), for construction of all work on the project
known as the Construction of a New Beach Bathroom Facility and Lifeguard Station at the El
Segundo Beach in the City of El Segundo, Specifications No. PW 10 -09 (the "Project ") (such
contract, including all related contract documents referenced in that contract, being referred herein as
the "Contract "). The Contract, 'including all documents referenced therein, are expressly
incorporated herein by reference; and
WHEREAS Surety and Original Contractor, as bond principal, executed and delivered to
Owner certain faithful performance and labor and material bonds, each numbered 155200959, dated
December 14, 2010, each with a penal sum in the amount of $1,111,000.00 (individually and
respectively, the "Performance Bond" or "Payment Bond;" collectively, the "Bonds'). Subject to
their terms, conditions and applicable law,, the Bonds guarantee Original Contractor's obligations
under the Contract and payment bond obligations under Civil Code sections 3248, et seq., on the
Project, respectively. The Performance Bond and Payment Bond are incorporated herein by
reference; and
WHEREAS Owner represents that it has declared Original Contractor in default of the
Contract upon 9,riginal Contractor's abandonment of the Project, terminated Original Contractor's
right to perform the Contract, and has made a demand on Surety, under the provisions and conditions
of the Performance Bond, to take over and complete all required work that remains to be performed
on the Project pursuant to the Contract, and
WHEREAS, Owner desires to expedite completion of the work covered by said Contract to
preserve continuity of performance and to avoid the delay and inconvenience of re- letting; and
WHEREAS, Surety is willing and desires to cooperate with Owner by procuring the
completion of the work through the use of a completion contractor, duly licensed and acceptable to
Owner, provided the entire unpaid balance of the contract price, including retainage (including all
deposits into the escrow account established with Union Bank (UB Escrow Account #23697), which
Owner will immediately demand be returned to it), together with any additional amount of money
added to the contract price on account of extra work or changes which has been performed but not
yet paid, is currently pending, or may arise, is paid to Surety or in accordance with its directions in
writing; and
WHEREAS, in entering this Agreement, Surety and Owner agree that this Agreement is
intended to clarify the terms by which the Surety and Owner shall perform their respective
OV496MV 1
obligations under the Performance Bond, and is not intended to serve as a novation of the
Performance Bond; and
WHEREAS, the Owner represents the Contract dated and signed December 8, 2010, had an
original contract price of $1,111,000.00, and there remains a contract balance including retainage
held in the Union Bank escrow account, still held and unpaid by Owner in the amount of
$833,184.98.
NOW, THEREFORE, Owner and Surety agree as follows:
1. Surety undertakes and agrees to procure the performance of all work remaining to be
completed in accordance with all the terms and conditions of the Contract; it is agreed that in so
doing, Surety is not acting as a contractor, but only in its capacity as performance bond surety and is
performing under its bond.
2. Surety will procure the performance of all work remaining by using a duly licensed
contractor acceptable to Owner ("Completion Contractor ")_
3. Owner agrees to administer all aspects of the Contract with respect to Completion
Contractor as were its admitustrative responsibilities to Original Contractor's, including but not
limited to inspections, on -site direction, requests for clarification, approval of pay estimates,
negotiations of change orders and time extension requests for excusable delays,_ evaluations of
claims and work and written approvals or disapprovals thereof, and approval cif submittal and other
paperwork requirements of the Contract,
4. Owner has reviewed the job status and represents that Contract Payment Estimate
Number 5 accurately reflects the percentage of work completed, approved and accepted as well as
the balance remaining on the Contract,_ both on base Contract work and on Change Orders submitted
or approved to date; if any. Owner recognizes Surety needs aril wild rely vri the information in
Contract Payment Estimate No. 5 to administer its contract with Completion Contractor in an
efficient manner and to deal with payment claims arising from the work of Original Contractor. To
the extent that either the percentage of work or contract balance set forth in Contract Payment
Estimate Number 5 is inaccurate, Surety expressly reserves the right to seek reformation of this
Agreement.
5. Owner agrees to accept progress payment estimates directly from Completion
Contractor and to review and approve such estimates in a timely manner. Owner agrees to transmit
such approvals to Surety promptly upon approval, insufficient detail as to allow Surety to determine
the proper amount to be paid, per Contract and Surety's Completion Contract, to Completion
Contractor on Surety's behalf or directly from Surety as Surety may determine. Owner recognizes
that such prompt and complete transmittals are a necessary part of Surety's obligations to
Completion Contractor and that failure to. abide by the obligations of this paragraphs 4 and 5 may
result in damage to Surety and possible breach of its: contractual relationship with Completion
Contractor.
6. Owner will pay directly to Surety all Contract sums due or to become due, as defined
below, at the time and in the manner provided in the Contract. The Contract balance of said
Contract is agreed to be:
41®
a. Original Contract: $1 111,400.00
b. Change Orders: $ 38.670.0.0
c. Revised Contract Price $1,149,670.00
d, Less Amounts Paid to Date ( 316,482.02)
e. Retention $ 35,164.67
Total Contract Balance (including retention) $ 798,023.31
The amount to be paid includes all monies due or to become due Original Contractor arising
out of or incidental to the performance of the Contract, including, but not limited to, unpaid Contract
balance including unpaid monies relating to approved change orders, retained percentages, monies
relating to pending or subsequently submitted change orders approved by tltc Owner, and any and all
monies withheld by Owner for retention, stop notices, claims and/or liquidated damages (collectively
hereinafter called "Contract Balance ").
7. Owner and Surety each reserve all right, defenses and remedies in connection with
the rime for completion under the Contract. Owner agrees that the Completion Contractor has
demanded _130 working days from the issuance of a new Notice to Proceed to the Completion
Contractor to complete the Project. Completion Contractor shall be afforded 130 days frona the
date of a notice to proceed to complete the Project (without waiving claims for damages or
extensions / compensable delays). As an inducement for the burden of Surety taking over the
Project, Owner agrees to waive any claims for delay related damages including, but not limited to,
actual, consequential and/or liquidated damages as against Surety. Nothing contained herein
impairs, affects or releases Owner's rights to pursue and /or recover any and all claims for delays,
including but not limited to actual, consequential and/or liquidated damages from Original
Contractor.
8. Owner further agrees, notwithstanding any provision to the contrary in the Contract,
to make payments to Surety as provided herein, regardless of whether or not any lien or other claims
to said funds have been made by Original Contractor or any of its subcontractors, laborers, or
suppliers; provided Surety (1) agrees to take over Owner's defense of such claims or any claim or
lien filed or presented after such payment, at the expense of the Surety; and. (2) agrees to indemnify
Owner and its members, agents and employees, to the extent of the amounts so released, against
liability for making such payments notwithstanding the pendency of such lien or other claim or lien
or claim filed or presented after such payments.
9. Insofar as Owner has any right; title or interest therein, Owner agrees that Surety,
Completion Contractor or its subcontractors will have the right to use, without charge, any of the
materials., supplies, equipment or personal property furnished or supplied to or by Original
Contractor which may be stared on the premises of the Project or which may have been fabricated
for use in connection with the Project, whether or not presently upon the Project. Furthermore,
except for such claims and causes of action it may have against Original Owner as to its reservation
of rights in Section 8, Owner hereby sets over and assigns to Surety any and all right, title, actions,
causes of action, and claims it has or may have against Original Contractor, including but not limited
QC4969930
to all rights of set -off to any and all funds in its possession or to which it may claim a right, and
authorizes Surety to exercise such set -off rights to the extent the Owner may legally do so.
10. Surety shall perform with reasonable speed all of the remaining work required by the
Contract, including warranties and guarantees therein contained, in accordance with the terms and
conditions of said Contract except as to time of completion. Nothing in this Agreement shall be
construed in any way to release any -other liability of Surety to the Owner under the aforesaid Bond.
11. Surety shall be entitled to further time extensions as allowed for excusable or
compensable delays as provided in the Contract, including but not limited to, extensions associated
with approved change orders, change orders in progress or additional change orders which have yet
to be submitted
12. Owner and Surety agree that any and all agreements, judgmental decisions, and any
other matters pertaining to the day -to -day coordination of the work to be performed under the
Contract will be made between Surety's designated representative, Mike Torneo of Benchmark
Consulting Services, LLC, 2'Venture, Suite 220, Irvine, California 92618, telephone (949) 622 - 0300,
facsimile (949) 622 -0301, and the Owner's engineer/architect in charge or a designated
representative of the Owner as provided in the Contract. Owner agrees to cooperate with Surety's
designated representative (.$) in providing any information concerning the performance of the
Contract.
13. Surety will, with all reasonable dispatch, investigate and discharge its liability under
the Payment Bond as to all demands upon it by subcontractors and suppliers to Original Contractor
of labor and material in connection with the Original Contractor's work.
14. Except as modified by this Takeover Agreement, all of the terms and conditions of
the Contract and Performance Bond, including the plans and specifications thereof, remain
unaffected, except any deadlines for compliance with notice or other provisions are extended,..for a
reasonable time for Surety to investigate any open issues. Surety confirms that its Performance and
Payment Bonds (No. 155200959) remain in full force and effect according to their terms.
15. Owner and Surety shall cooperate fully and in good faith by taking such actions and
executing such further documents as may be necessary for timely completion of, and payment for
said Contract. Any notices of payment under this Takeover Agreement shall be directed to the
following:
Owner. City of El Segundo
Attn.: Stephanie Katsouleas
Director of Public Works
350 Main Street
El Segundo, California 90645
Surety: First National Insurance Company of America
Attn: Jason Stonefeld
1001 e Avenue, Suite 1700
Seattle, Washington 98154
W4968830
With copies to:
Benchmark Consulting Services, LLC
Attn: Mike Tomeo
2 Venture, Suite 220
Irvine, California 92618
Sedgwick LLP
Attn: Jonathan J. Dunn, Esq,
3 Park Plaza,. 170 Floor
Irvine, California 92614
Jenkins & Hogin, LLP
Attn: Karl I.I. Berger
Manhattan Towers
1230 Rosecrans Avenue, Suite 110
Manhattan Beach, CA 90266
16. This Agreement shall be interpreted, construed, and enforced in accordance with and
governed by the provisions and laws of the State of California.
17. This Agreement may be executed in zounteriparts.
18. The Parties agree that facsimile or electronic: copies. of their signatures to this
Agreement shall be treated as original signatures, are acceptable to each other, and shall bind the
Parties' respective rights and obligations under this Agreement, to the same extent as if such
signatures were original (wet) signatures.
19: This Agreement represents the whole and complete agreement among the parties and
shall not be changed, modified, or abridged, except by a subsequent written agreement executed by
the parties hereto.
Dated Zi'GT 21, 20 /I
Dated:.►
OU496883v!
CITY OF EL SEGUNDO
By�_._.
Im Doug Willmore, City Manager
m
Assistant
ci
yn
01 Of El SeNndo
10-IMMUM