**Exhibit 10.32**

 

CONSTRUCTION AGREEMENT

 

BETWEEN OWNER,ARCHITECT, AND HBE FINANCIAL FACILITIES, A DIVISION OF HBE CORPORATION.  This Agreement sets forth a Contract madethis 12th day of February, 2003 between Heritage Oaks Bank, 545 12thStreet, Paso Robles, California 93446 (hereinafter referred to as “Owner”) andHBE Financial Facilities, a Division of HBE Corporation, a Delaware Corporationhaving its principal place of business at 11330 Olive Boulevard, St. Louis,Missouri, 63141 (hereinafter referred to as “HBE”), and Frederick S. Scott, andRonald L. Hollander (hereinafter referred to as “Architect”).

 

The parties hereto agree as follows:

 

A.                                   CONTRACT DOCUMENTS.The Contract between the parties consists of: this Agreement, the General Conditions of the Contract for Construction,Special Conditions of the Contract for Construction, the Drawings andSpecifications enumerated in Paragraph F hereof, and all Modifications issuedpursuant to the General Conditions.  Theseform the Contract and all are as fully a part of the Contract as if attached tothis Agreement or repeated herein.

 

B.                                     THE WORK.  HBE shall perform all the Work required bythe Contract for A New Building for Heritage Oaks Bank, Paso Robles,California.

 

C.                                     CONTRACTTIME.  The  Work to  be performed  under this  Contract  shall  commenced  on  April 14, 2003 or upon issuance of allnecessary construction permits, which ever is later and completed 35 weeksafter commencement provided the Owner has executed and returned the Contract bythe date first written above.

 

D.                                    PAYMENTS.  The Owner shall pay to HBE the Contract Sumof:  $1,855,000.00 One million eighthundred fifty five thousand and 00/100 dollars, subject to adjustment by ChangeOrder as provided in the Contract.

 

Based upon Applications for Payment submitted to the Architect by HBEand Certificates for Payment issued by the Architect, and approved by theOwner, the Owner shall make progress payments on account of the Contract Sum toHBE as follows:

 

1.               Upon execution of the ConstructionAgreement, 8% of the Contract Sum less previous payments.  The payment and all future payments underthis Agreement will be made by wire transfer of funds to US  Bank, St. Louis, Missouri for account of HBECorporation.

 

2.               Until the Work is 50% complete, on orbefore the 10th day of each month, 90% of the portion of the Contract Sumproperly allocable to labor, materials, and equipment incorporated in the Workand 90% of the portion of the Contract Sum properly allocable to materials andequipment suitably stored at the site or at some other location agreed upon inwriting by the Owner and HBE, up to the first day of that month, less theaggregate of previous payments.

 

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3.               After the Work is 50% complete andbefore Substantial Completion, on or before the 10th day of each month 100% ofthe portion of the Contract Sum properly allocable to labor, materials, andequipment incorporated in the Work, and 100% of the portion of the Contract Sumproperly allocable to materials and equipment suitably stored at the site or atsome other location agreed upon in writing by the Owner and HBE up to the firstday of that month, less the aggregate of previous payments and retainage.

4.               On or before the 10th day of the monthafter Substantial Completion of, or occupancy by the Owner of, any designatedportion of the Work, the retainage applicable to that portion of the Work, lesssuch amounts as the Architect shall determine to be required for completion ofand less such amounts for unsettled claims relating to that portion of the Workshall be due and payable; for purposes of this paragraph, a separate portion ofthe Work is any area that is or can be occupied by the Owner prior toSubstantial Completion of all the Work.

5.               Upon Substantial Completion of the Work,or occupancy by the Owner, a sum sufficient to increase the total payments tothe Contract Sum, less such retainage as the Architect and Owner shalldetermine for all incomplete Work and unsettled claims.

6.               Final payment, constituting the entireunpaid balance of the Contract Sum, shall be paid by the Owner to HBE 30 daysafter Substantial Completion provided the Work has been completed, the Contractfully performed, and a final Certificate for Payment has been issued by theArchitect, and approved by the Owner.

 

The Owner has no liability to the Architect for his compensation, itbeing understood that compensation for architectural services is included inthe Contract Sum payable to HBE.

 

E.                 DEFINITIONS.  The terms used in this Agreement which arein the General Conditions of the Contract for Construction shall have themeanings designated in those Conditions.

 

F.                 ENUMERATIONS OFDRAWINGS, SPECIFICATIONS & DOCUMENTS.

 

The following documents developed under PhaseIII of the Letter Agreement dated May 31, 2002 between the Owner and HBEare (except for Modifications issued after the execution of this Agreement) theContract Drawings, Specifications and Documents:

 

Construction Agreement dated February 12,2003.

General Conditions

Special Conditions

Specifications Part I including Divisions 2through 11, Divisions 15 and 16, and Part II Interior Work Divisions 6, 9 and12 all dated February 12, 2003. Drawings TS, CF.1, C1.1, C1.2, C1.3, C2.1, C2.2, A2.1, A2.2, A3.1, A4.1,A5.1, A5.2, A5.3, A6.1, A7.1, IW1.1, IW2.1, IW2.2, S1.1, S2.1, S3.1, S3.2,S4.1, M1.1, PFP1.0, PFP2.0, E1.1, E2.1, E3.1, E4.1, E4.2, E4.3, and E5.1, allby Frederick S. Scott, Architect, all dated February 12, 2003.

 

When the working drawings and specificationsto be developed under Phase IV of the above Letter Agreement are completed andare approved by the Owner, they will become the Contract Drawings andSpecifications.

 

G.                ARCHITECT.  The Architect will provide generaladministration of the Contract per Article 2 of the General Conditions; however,decisions rendered by the Architect in the performance of these duties will notbe binding upon the Owner.

 

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H.               CONTRACT TIME ANDCONTRACT SUM.  The Contract Time andContract Sum are based upon this Agreement being signed by the Owner byFebruary 12, 2003.

 

I.                    GOVERNINGCODE.  The governing code officials havenot completed their review of the Contract Drawings and Specifications at thetime of Contract signing, and any changes required for their final approvalswill be incorporated into the Contract by a modification issued pursuant to theGeneral Conditions.

 

J.                   ADDITIONALSERVICES OF THE ARCHITECT.  Preparingdrawings, specifications, estimates, and other supporting data for proposedChanges in the Work requested by the Owner shall be considered AdditionalServices and reimbursed to HBE at HBE’s published rates.  Such Additional Services shall be added tothe Contract by Change Order as defined in Article 12 of the GeneralConditions.  The additional work will beperformed at the following rates:

 
| Principal                           |   | $250.00/Hour |   |
|-------------------------------------|--------|--------------|--------|
| Arch. Engineer of Record            |   | 160.00/Hour  |   |
| Design Arch./Engr./APM              |   | 130.00/Hour  |   |
| Staff Arch./Engr./Interior Designer |   | 90.00/Hour   |   |
| Draftsman/Clerical                  |   | 55.00/Hour   |   |

 

K.               AMERICANS WITHDISABILITIES ACT (ADA). The Department of Justice issued its final rule andAccessibility Guidelines for Building and Facilities on July 26, 1991implementing Title III of the ADA with regard to public accommodation andcommercial facility requirements for new construction. At present, there is noreviewing authority established to review the Contract Documents with regard totheir specific compliance with Title III of the ADA. HBE has attempted in goodfaith, when questions of interpretation have arisen, to include in the ContractDocuments the requirements of Title III of the ADA. Should an interpretation beissued after contract execution and during construction by agencies havingjurisdiction over compliance which would require a change to the ContractDocuments, then any such change, if acceptable to all parties, shall beincorporated into the Contract Documents by a modification issued pursuant tothe General Conditions.

 

L.                 PRIORITY OFCONTRACT DOCUMENTS.  The ContractDocuments are intended to complement and supplement each other, however, whenthe General Conditions of the Contract grant authority to the Architect to makedecisions, such decisions shall be specifically subject to Paragraph G. of thisConstruction Agreement, and, in general, to the extent there are any otherconflicts between the various Contract Documents, as between Owner and HBE, thefollowing relative order shall apply:

 

1.            This Construction Agreement

2.            Special Conditions

3.            General Conditions

4.            Drawings and Specifications

 

M.            The site engineeringplans and information have been developed by North Coast Engineering under aseperate contract with the Owner.  HBEhas relied on the accuracy of the plans and information developed by North CoastEngineering. In the event of any errors or omissions in such plans and/orinformation, the Owner agrees to protect and hold harmless HBE from any costs,expenses or liability resulting from such errors or omissions, and to defendand indemnify HBE from any expenses, including attorney’s fees, resultingtherefrom.

 

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N.               DISPUTERESOLUTION.  Owner and HBE agree that ifthere is a dispute between them, that each will negotiate with the other ingood faith to attempt to resolve the dispute, and that as long as thesenegotiations continue, each party will continue to perform its obligationsunder this contract until either party gives the other party ten (10) daysprior written notice that the dispute cannot be resolved by furthernegotiations and that said party will, after such ten (10) day notice, proceedto exercise any and all rights of his under this contract.  In the event of litigation between theparties, the parties agree that the venue for such litigation shall be thestate or federal courts within the State of California, and each partyexpressly consents to the exercise of personal jurisdiction therein.  The prevailing party to any such litigationshall be entitled to recover its reasonable costs and attorney’s fees incurredin such litigation.

 

This Agreement executed the day and year first above written.

 
|                  |          |                  | HERITAGE OAKS BANK  PASO ROBLES, CALIFORNIA                                                 |
|-----------------------|---------------|-----------------------|---------------------------------------------------------------------------------------------|
|                  |          |                  |                                                                                        |   |
|                  |          |                  |                                                                                        |   |
|                  | **OWNER: BY** |                  |                                                                                        |
|                  |          |                  |                                                                                        |
|                  |          |                  | TITLE                                                                                       |   |
|                  |          |                  |                                                                                        |
|                  |          |                  |                                                                                        |
| CONTRACTOR:           |          |                  | HBE  FINANCIAL  FACILITIES  A  DIVISION  OF  HBE  CORPORATION |
|                  |          |                  |                                                                                        |   |
|                  |          |                  |
|                  |          |                  | BY                                                                                          |   |
|                  |          |                  |                                                                                        | Fred S. Kummer |
|                  |          |                  |                                                                                        | President |
|                  |          |                  |                                                                                        |   |
|                  |          |                  |                                                                                        |   |
| ARCHITECT:            |          |                  |                                                                                        |   |
|                  |          | Frederick S. Scott    |
|                  |          | **Architect**         |                                                                                        |
|                  |          |                  |                                                                                        |   |
|                  |          |                  |                                                                                        |   |
| HBE CONTRACTOR NUMBER |          | California Contractor |
|                  |          |                  |                                                                                        | License No. 283655 |
|                       |               |                       |                                                                                             |  |  |  |  |  |  |

 

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