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Exhibit 10.3  

 
  STANDARD FORM OF AGREEMENT BETWEEN
  
  
  OWNER AND CONSULTANT
  
  
  FOR THE
  
  
  QAD ORTEGA HILL PROJECT    
  

AGREEMENT

  made as of the 12th day of June, in the year 2002

  BETWEEN the Consultant's client identified as the Owner

QAD Inc.

6450 Via Real

Carpinteria, CA 93013

and the Consultant:

Ove Arup & Partners California

2440 S. Sepulveda Boulevard

Suite 180

Los Angeles, CA 90064 USA

Consultant's Discipline or Services:

See Exhibit A

For the following Project:

QAD Ortega Hill

The Owner and Consultant agree as follows. 

 

	ARTICLE 1 DESCRIPTION OF SCOPE
	
The Consultant shall provide QAD with professional services as described in Exhibit A.
	

ARTICLE 2 GENERAL PROVISIONS
	

2.1	
GENERAL
	

2.1.1	

The part of the Project for which the Consultant is to provide services is hereinafter called This Part of the Project. Except as set forth herein, the Consultant shall not have any duties or responsibilities for any other part of the
Project.
	

2.1.2	

The Construction Manager, Paul Franz Construction, Inc. shall be the general administrator of the professional services for the Project, and shall facilitate the exchange of information among the consultants retained by QAD as necessary for the
coordination of This Part of the Project.
	

ARTICLE 3 CONSULTANT'S RESPONSIBILITIES
	

3.1	
GENERAL RESPONSIBILITIES
	

3.1.1	

The services performed by the Consultant, Consultant's employees and Consultant's subconsultants shall be as enumerated in Articles 4 and 5.
	

3.1.2	

The Consultant shall designate a representative authorized to act on behalf of the Consultant with respect to This Part of the Project. The Consultant's representative authorized to act on behalf of the Consultant with respect to This Part of Project
shall be Catherine Wells unless otherwise designated by written notice from Consultant to the Construction Manager giving at least fourteen (14) days prior to the change.
	

3.1.3	

The Consultant shall recommend to the Construction Manager that appropriate investigations, surveys, tests, analyses and reports be obtained as necessary for the proper execution of the Consultant's services.
	

3.1.4	

The Consultant's services shall be coordinated with those of the Architect and other consultants for the Project in order to avoid unreasonable delay in the orderly and sequential progress of the Architect's or other consultants'
services.
	

3.1.5	

The Consultant shall provide copies of drawings, reports, specifications and other necessary information to the Construction Manager, the Architect and other consultants for coordination and review during the course of the Project.
	

3.1.6	

The Consultant shall not be responsible for the acts or omissions of the Construction Manager, Owner, Architect, Architect's other consultants, Contractor, Subcontractors, their agents or employees, or other persons performing any of the
Work.
	

3.1.7	

The Consultant shall maintain the confidentiality of information specifically designated as confidential by the Owner or the Construction Manager, unless withholding such information would violate the law, create the risk of significant harm to the
public or prevent the Consultant from establishing a claim or defense in an adjudicatory proceeding.
	

3.1.8	

The Consultant's services shall be performed as expeditiously as is consistent with professional skill and care and the orderly progress of the Project. The project schedule shall include allowances for periods of time required for the Construction
Manager's, Owner's and Architect's review and for approval of submissions by authorities having jurisdiction over the Project. Time limits established by this schedule shall not, except for reasonable cause, be exceeded by the Consultant or
Architect. The Consultant shall not be responsible for delays beyond the Consultant's control.
	
 	

 	

 

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3.2	
EVALUATION OF BUDGET AND COST OF WORK
	

3.2.1	

Evaluations of the Owner's budget for the Project, the preliminary estimate of the Cost of the Work and updated estimates of the Cost of the Work prepared by the Construction Manager engaged by the Owner for This Part of the Project represent
Construction Manager's judgment as a design professional familiar with the construction industry. It is recognized, however, that neither the Consultant nor Architect has control over the cost of labor, materials or equipment, over the Contractor's
methods of determining bid prices, or over competitive bidding, market or negotiating conditions. Accordingly, the Consultant cannot and does not warrant or represent that bids or negotiated prices for This Part of the Project will not vary from the
Owner's budget for the Project or from any estimate of the Cost of the Work or evaluation prepared or agreed to by the Consultant.
	

3.2.2	

If the budget for the Cost of the Work for This Part of the Project is exceeded by the lowest bona fide bid or negotiated proposal, QAD shall
	

 	
.1	

give written approval of an increase in the budget;
	

 	
.2	

authorize rebidding or renegotiating of the Project within a reasonable time;
	

 	
.3	

terminate in accordance with Paragraph 10.1.6 or
	

 	
.4	

cooperate in revising the Project scope and quality as required to reduce the Cost of the Work.
	

 	

If QAD chooses to proceed under Clause 3.2.5.4, the Consultant, as an additional service, shall modify the documents for which the Consultant is responsible, reducing the Cost of the Work for This Part of the Project as necessary to comply with
the budget for the Cost of the Work. The Consultant shall be entitled to compensation in accordance with this Agreement for all services performed whether or not construction is commenced.
	

ARTICLE 4 SCOPE OF CONSULTANT'S SERVICES
	

4.1	
DESIGN DEVELOPMENT
	

4.1.1	

When authorized by Construction Manager or QAD, the Consultant shall prepare Design Development Documents from the Schematic Design studies approved by the Owner and confirmed by the Architect. The Design Development Documents shall consist of
drawings and other documents to fix and describe This Part of the Project, including materials, equipment, component systems and types of construction or installation as may be appropriate, all of which are to be approved by the Owner and
Architect.
	

4.2	
CONSTRUCTION DOCUMENTS
	

4.2.1	

When authorized by Construction Manager or QAD, the Consultant shall prepare, from the Design Development Documents approved by the Owner and confirmed by the Architect, Drawings and Specifications setting forth in detail the requirements for the
construction of This Part of the Project, all of which are to be approved by the Owner and Architect. The Consultant shall prepare the Drawings and Specifications in such format as the Architect may reasonably require.
	

4.2.2	

The Consultant shall assist the Construction Manager and the Architect as necessary in connection with the Owner's responsibility for filing the documents concerning This Part of the Project required for the approval of governmental authorities
having jurisdiction over the Project.
	

4.3	
BIDDING OR NEGOTIATION
	

4.3.1	

The Consultant shall assist the Owner and Construction Manager in evaluating bids or negotiated proposals, and assist in awarding and preparing contracts for construction or installation.
	
 	

 	

 

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4.4	
CONTRACT ADMINISTRATION SERVICES
	

4.4.1	

The Consultant's responsibility to provide the Contract Administration services under this Agreement commences with the award of the initial Contract for Construction and terminates at the issuance to the Owner of the final Certificate for Payment.
However, the Consultant shall be entitled to a Change in Services in accordance with Paragraph 5.1 when Contract Administration Services extend 6o days after the date of Substantial Completion of the Work.
	

4.4.2	

The Consultant shall assist the Owner and Construction Manager in the administration of the Contract between Owner and Contractor with respect to This Part of the Project as set forth below.
	

4.4.3	

The Consultant shall visit the site at intervals appropriate to the stage of the Contractor's operations for This Part of the Project as defined in Exhibit A, or as otherwise agreed with the Construction Manager or the Owner in writing,
(1) to become generally familiar with and to keep the Construction Manager informed about the progress and quality of the portion of the Work completed for This Part of the Project, (2) to endeavor to guard the Owner against defects and
deficiencies in the Work, and (3) to determine in general if the Work is being performed in a manner indicating that the Work, when fully completed, will be in accordance with the Contract Documents. However, the Consultant shall not be required
to make exhaustive or continuous on-site inspections to check the quality or quantity of the Work for This Part of the Project. The Consultant shall neither have control over or charge of, nor be responsible for, the construction means, methods,
techniques, sequences or procedures, or for safety precautions and programs in connection with the Work for This Part of the Project, since these are solely the Contractor's rights and responsibilities under the Contract Documents.
	

4.4.4	

The Consultant shall report to the Construction Manager known deviations from the Contract Documents. However, the Consultant shall not be responsible for the Contractor's failure to perform the Work in accordance with the requirements of the
Contract Documents. The Consultant shall be responsible for the Consultant's negligent acts or omissions, but shall not have control over or charge of and shall not be responsible for acts or omissions of the Contractor, Subcontractors, or their
agents or employees, or of any other persons or entities performing portions of the Work.
	

4.4.5	

The Consultant shall at all times have access to the Work for This Part of the Project, wherever it is in preparation or progress.
	

4.4.6	

Upon written request of the Construction Manager, the Consultant shall furnish to the Construction Manager and the Owner with reasonable promptness, in writing or in the form of drawings, interpretations of the Contract Documents prepared by the
Consultant, if, in the opinion of the Construction Manager, such interpretations are necessary for the proper execution or progress of the Work.
	

4.4.7	

The Consultant shall within a reasonable time render written recommendations on claims, disputes and other matters in question between the Owner and Contractor relating to the execution or progress of This Part of the Project as provided by the
Contract Documents.
	

4.4.8	

The Consultant shall assist the Owner and the Construction Manager in determining whether the Owner shall reject Work for This Part of the Project which does not conform to the Contract Documents or whether additional inspection or testing is
required.
	
 	

 	

 

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4.4.9	

The Consultant shall review and approve or take other appropriate action upon the Contractor's submittals pertaining to This Part of the Project, such as Shop Drawings, Product Data and Samples; but only for the limited purpose of checking for
conformance with information given and the design concept expressed in the Contract Documents. Following such appropriate action, the Consultant shall forward the Contractor's submittals to the Construction Manager for final disposition. Review of
such submittals is not conducted for the purpose of determining the accuracy and completeness of other details such as dimensions and quantities, or for substantiating instructions for installation or performance of equipment or systems designed by
the Contractor, all of which remain the responsibility of the Contractor, as required for this Part of the Project by the Contract Documents. The Consultant's review shall not constitute approval of safety precautions or, unless otherwise
specifically stated by the Consultant, of any construction means, methods, techniques, sequences or procedures. The Consultant's approval of a specific item shall not indicate approval of an assembly of which the item is a component.
	

4.4.10	

If professional design services or certifications by a design professional related to systems, materials or equipment are specifically required of the Contractor by the Contract Documents, the Consultant shall specify appropriate performance and
design criteria that such services must satisfy. Shop Drawings and other submittals related to the Work designed or certified by the design professional retained by the Contractor shall bear such professional's written approval when submitted to the
Construction Manager. The Consultant shall be entitled to rely upon the adequacy, accuracy and completeness of the services, certifications or approvals performed by such design professionals.
	

4.4.11	

The Consultant shall assist the Owner in preparing Change Orders and Construction Change Directives for This Part of the Project for the Owner's approval and execution in accordance with the Contract Documents, and may recommend to the Construction
Manager minor changes in the Work not involving an adjustment in the Contract Sum or an extension of the Contract Time which are consistent with the intent of the Contract Documents.
	

ARTICLE 5 OTHER SERVICES
	

5.1	
CHANGE IN SERVICES
	

5.1.1	

Change in Services of the Consultant other than a change required to bring This Part of the Project within the Project budget for the Cost of the Work, including services required of subconsultants, may be accomplished after execution of this
Agreement, without invalidating the Agreement, if mutually agreed in writing, if required by circumstances beyond the Consultant's control, or if the Consultant's services are affected as described in Subparagraph 5.1.2. In the absence of mutual
agreement in writing, the Consultant shall notify the Construction Manager and the Owner prior to providing such services. If the Owner or the Construction Manager deems that all or a part of such Change in Services is not required, and gives prompt
written notice to the Consultant, then the Consultant shall have no obligation to provide those services. Except for a change due to the fault of the Consultant, Change in Services of the Consultant shall entitle the Consultant to an adjustment in
compensation pursuant to Subparagraph 13.2.2, and to any Reimbursable Expenses described in Paragraph 12.6.
	

5.1.2	

If any of the following circumstances affect the Consultant's services for the Project, the Consultant shall be entitled to an appropriate adjustment in the Consultant's schedule and compensation:
	

 	
.1	

change in the instructions or approvals given by the Owner that necessitate revisions in Instruments of Service;
	

 	
.2	

enactment or revision of codes, laws or regulations or official interpretations which necessitate changes to previously prepared Instruments of Service;
	
 	

 	

 

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.3	

decisions of the Owner not rendered in a timely manner;
	

 	
.4	

significant changes in the Project including, but not limited to, size, quality, complexity, the Owner's schedule or budget, or procurement method;
	

 	
.5	

evaluation of the Owner's or Contractor's proposals, including the preparation or revision of Instruments of Service, and provision of other services in connection with Change Orders and Construction Change Directives;
	

 	
.6	

providing consultation concerning replacement of Work resulting from fire or other causes during construction;
	

 	
.7	

failure of performance on the part of the Owner, the Owner's consultants or contractors;
	

 	
.8	

evaluation of an extensive number of claims submitted by the Owner's consultants, the Contractor or others in connection with the Work;
	

 	
.9	

preparation for and attendance at a public hearing, a dispute resolution proceeding or a legal proceeding except where the Consultant is party thereto;
	

 	
.10	

evaluation of substitutions proposed by the Owner or the Contractor after the award of the Contract for Construction;
	

 	
.11	

preparation of design and documentation for alternate bids or proposal requests proposed by the Owner;
	

 	
.12	

change in the Preliminary Project information contained in the Agreement between Owner and Architect; or
	

 	
.13	

Contract Administration Services provided 6o days after the date of Substantial Completion of the Work.
	

5.2	
PROJECT REPRESENTATION SERVICES
	

5.2.1	

If more extensive representation at the site than is described under Subparagraph 4.5.3 is required for This Part of the Project, the Consultant shall, if requested by the Owner, provide one or more Project Representatives to assist the Consultant in
carrying out such additional on-site responsibilities.
	

5.2.2	

Project Representatives shall be selected, employed and directed by the Consultant, and the Consultant shall be compensated therefor as agreed by the Owner and Consultant. The duties, responsibilities and limitations of authority of Project
Representatives shall be as described in an exhibit to this Agreement.
	

5.2.3	

Through the presence at the site of such Project Representatives, the Consultant shall endeavor to provide further protection for the Owner against defects and deficiencies in the Work for This Part of the Project, but the furnishing of such project
representation shall not modify the rights, responsibilities or obligations of the Consultant as described elsewhere in this Agreement.
	

ARTICLE 6 ARCHITECT'S RESPONSIBILITIES
	

6.1	
GENERAL
	

6.1.1	

The Owner, through the Construction Manager, shall provide available information in a timely manner regarding requirements for and limitations on This Part of the Project. The Owner, through the Construction Manager, shall furnish to the Consultant,
within 21 days after Construction Manager's receipt of a written request, information necessary and relevant for the Consultant to evaluate, give notice of or enforce lien rights.
	
 	

 	

 

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6.1.2	

The Owner's Representative is the Construction Manager. The Owner or Construction Manager shall render decisions in a timely manner pertaining to documents submitted by the Consultant in order to avoid unreasonable delay in the orderly and sequential
progress of the Consultant's services.
	

6.1.3	

If the Consultant considers it necessary for This Part of the Project, the Owner shall furnish the services of other consultants when such services are reasonably required by the scope of the Project, including surveys to describe physical
characteristics, legal limitations and utility locations for the site of the Project and a written legal description of the site. The surveys and legal information shall include, as applicable, grades and lines of streets, alleys, pavements and
adjoining property and structures; adjacent drainage; rights-of-way, restrictions, easements, encroachments, zoning, deed restrictions, boundaries and contours of the site; locations, dimensions and necessary data with respect to existing buildings,
other improvements and trees; and information concerning available utility services and lines, both public and private, above and below grade, including inverts and depths. All information on the survey shall be referenced to a Project
benchmark.
	

6.1.4	

On the Consultant's request for This Part of the Project, the Owner shall furnish to the Consultant, in a timely manner, (1) detailed layouts showing the location of connections, and (2) tabulations giving sizes and loads of equipment
designed, specified or furnished by others for incorporation into other parts of the Project.
	

6.1.5	

On the Consultant's request for This Part of the Project, the Owner shall furnish, in a timely manner, the services of geotechnical engineers. Such services may include, but are not limited to, test borings, test pits, determinations of soil bearing
values, percolation tests, evaluations of hazardous materials, ground corrosion tests and resistivity tests, including necessary operations for anticipating subsoil conditions, with reports and appropriate recommendations.
	

6.1.6	

The services, information, surveys and reports required by Paragraphs 6.3 through 6.6 shall be furnished at no expense to the Consultant, who shall be entitled to rely upon the accuracy and completeness thereof. The Consultant shall provide prompt
written notice to the Construction Manager if the Consultant becomes aware of any errors, omissions or inconsistencies in such services or information.
	

6.1.7	

The Owner, through the Construction Manager, shall provide prompt written notice to the Consultant if the Owner becomes aware of any fault or defect with respect to This Part of the Project including any errors, omissions or inconsistencies in the
Consultant's Instruments of Service.
	

6.1.8	

The Architect employed by the Owner shall confer with the Consultant before issuing interpretations or clarifications of documents prepared by the Consultant and shall request the recommendation of the Consultant before providing interpretations or
clarifications of Shop Drawings, Product Data, Samples or other submissions of the Contractor, or upon Change Orders and Construction Change Directives affecting This Part of the Project.
	

6.1.9	

The Owner shall furnish to the Consultant a copy of the preliminary estimate or updated estimates of Cost of the Work as submitted to the Owner or Construction Manager, bidding documents, bid tabulations, negotiated proposals and Contract Documents,
including Change Orders and Construction Change Directives as issued, to the extent that they pertain to This Part of the Project.
	

6.1.10	

The Owner, through the Construction Manager, shall advise the Consultant of the identity of other consultants participating in the Project and the scope of their services.
	
 	

 	

 

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6.1.11	

The Architect and the Construction Manager employed by the Owner shall review the Consultant's work for compliance with the Owner's program and for overall coordination with the architectural and engineering requirements.
	

ARTICLE 7 COST OF THE WORK
	

7.1	
DEFINITION
	

7.1.1	

The Cost of the Work shall be the total cost or, to the extent the Project is not completed, the estimated cost to the Owner of all elements of the Project designed or specified by the Architect and the Owner's consultants. The Cost of the Work for
This Part of the Project shall be the total cost or estimated cost to the Owner of all elements of the Project designed or specified by the Consultant.
	

7.1.2	

The Cost of the Work or the Cost of the Work for This Part of the Project shall include the cost at current market rates of labor and materials furnished by the Owner and equipment designed, specified, selected or specially provided for by the
Architect or Consultant, including the costs of management or supervision of construction or installation provided by a separate construction manager or contractor, plus a reasonable allowance for their overhead and profit. In addition, a reasonable
allowance for contingencies shall be included for market conditions at the time of bidding and for changes in the Work.
	

7.1.3	

The Cost of the Work does not include the compensation of the Architect and the Owner's consultants, the costs of the land, rights-of-way and financing or other costs that are the responsibility of the Owner as provided in Article 6 of this
Agreement.
	

ARTICLE 8 INSTRUMENTS OF SERVICE
	

8.1	
GENERAL
	

8.1.1	

Drawings, specifications, and other documents, including those in electronic form, prepared by the Consultant are Instruments of Service for use solely with respect to this Project. Unless otherwise provided, the Consultant shall be deemed the author
and owner of the Consultant's Instruments of Service and shall retain all common law, statutory and other reserved rights, including copyrights.
	

8.1.2	

Upon execution of this Agreement, the Consultant grants to the Owner a nonexclusive license to reproduce the Consultant's Instruments of Service for purposes of designing, administering, using and maintaining the Project, provided that the Owner
shall comply with all obligations, including prompt payment of all sums when due, under this Agreement. Such license shall authorize the Owner and the Owner's contractors and consultants to reproduce applicable portions of the Consultant's
Instruments of Service solely for purposes of constructing, using and maintaining the Project. Any termination of this Agreement prior to completion of the Project as a result of any default by Owner shall terminate this license. Upon such
termination, the Owner shall refrain from making further reproductions of the Consultant's Instruments of Service and shall return to the Consultant within seven days of termination all originals and reproductions in the Owner's possession or
control.
	
 	

 	

 

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8.1.3	

Except for the licenses granted in Paragraph 8.2, no other license or right shall be deemed granted or implied under this Agreement. The Owner shall not assign, delegate, sublicense, pledge or otherwise transfer any license granted herein to
another party (except for successors in interest) without the prior written agreement of the Consultant. Submission or distribution of Instruments of Services to meet official regulatory requirements or for similar purposes in connection with the
Project is not to be construed as publication in derogation of the reserved rights of the Consultant. The Owner shall not use the Consultant's Instruments of Service for future additions or alterations to this Project or for other projects, unless
the Owner obtains the prior written agreement of the Consultant which will not be unreasonably withheld or delayed. Any unauthorized use of the Instruments of Service shall be at the Owner's sole risk and without liability to the
Consultant.
	

8.1.4	

Prior to the Consultant providing to the Owner or the Construction Manager any Instruments of Service in electronic form or the Owner providing to the Consultant any electronic data for incorporation into the Instruments of Service, the Owner and
Consultant shall by separate written agreement set forth the specific conditions governing the format of such Instruments of Service or electronic data, including any special limitations or licenses not otherwise provided in this
Agreement.
	

8.1.5	

The Owner and Consultant shall not make changes to the Instruments of Service without written permission of the other party.
	

8.1.6	

The Consultant shall maintain on file and make available to the Owner design calculations for This Part of the Project, and shall furnish copies thereof to the Construction Manager and the Owner on request.
	

ARTICLE 9 DISPUTE RESOLUTION
	

9.1	
MEDIATION
	

9.1.1	

Any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to mediation as a condition precedent to arbitration or the institution of legal or equitable proceedings by either party. If such matter
relates to or is the subject of alien arising out of the Consultant's services, the Consultant may proceed in accordance with applicable law to comply with the lien notice or filing deadlines prior to resolution of the matter by mediation or by
arbitration.
	

9.1.2	

The Owner and Consultant shall endeavor to resolve claims, disputes and other matters in question between them by mediation which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry Mediation Rules of
the American Arbitration Association currently in effect. Request for mediation shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. The request may be made concurrently with the filing of a
demand for arbitration but, in such event, mediation shall proceed in advance of arbitration or legal or equitable proceedings, which shall be stayed pending mediation for a period of 60 days from the date of filing, unless stayed for a longer period
by agreement of the parties or court order.
	

9.1.3	

The parties agree to split the mediator's fee and any filing fees equally. The mediation shall be held in the place where the Project is located, unless another location is mutually agreed upon. Agreements reached in mediation shall be enforceable as
settlement agreements in any court having jurisdiction thereof.
	
 	

 	

 

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9.2	
ARBITRATION
	

9.2.1	

Any claim, dispute or other matter in question arising out of or related to this Agreement shall be subject to arbitration. Prior to arbitration, the parties shall endeavor to resolve disputes by mediation in accordance with
Paragraph 9.1.
	

9.2.2	

Claims, disputes and other matters in question between the parties that are not resolved by mediation shall be decided by arbitration which, unless the parties mutually agree otherwise, shall be in accordance with the Construction Industry
Arbitration Rules of the American Arbitration Association currently in effect. Demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association.
	

9.2.3	

A demand for arbitration shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings
based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations.
	

9.2.4	

An arbitration arising out of or related to this Agreement may be consolidated with an arbitration between the Owner and any other person or entity if such arbitration involves common issues of fact relating to the performance by the Consultant of
the Consultant's obligations under this Agreement.
	

9.2.5	

The award rendered by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
	

9.3	
CLAIMS FOR CONSEQUENTIAL DAMAGES
	

9.3.1	

The Owner and Consultant waive consequential damages for claims, disputes or other matters in question arising out of or relating to this Agreement. This mutual waiver is applicable, without limitation, to all consequential damages due to either
party's termination in accordance with Article 10.
	

ARTICLE 10 TERMINATION OR SUSPENSION
	

10.1	
GENERAL
	

10.1.1	

If the Owner fails to make payments to the Consultant in accordance with this Agreement within ten (10) business days after written notice from Consultant, such failure shall be considered substantial nonperformance and cause for termination or,
at the Consultant's option, cause for suspension of performance of services under this Agreement. If the Consultant elects to suspend services, prior to suspension of services, the Consultant shall give seven days' written notice to the Owner. In the
event of such a suspension of services, the Consultant shall have no liability to the Owner for delay or damage caused the Owner because of such suspension of services. Before resuming services, the Consultant shall be paid all sums due prior to
suspension and any expenses incurred in the interruption and resumption of the Consultant's services. The Consultant's fees for the remaining services and the time schedules shall be equitably adjusted. Owner shall have the right to terminate this
Agreement in the event a default is not cured by Consultant within ten (10) business days after written notice from Owner.
	

10.1.2	

If the Project is suspended by the Owner for more than 30 consecutive days, the Consultant shall be compensated for services performed prior to notice of such suspension. When the Project is resumed, the Consultant shall be compensated for reasonable
expenses incurred in the interruption and resumption of the Consultant's services. The Consultant's fees for the remaining services and the time schedules shall be equitably adjusted.
	

10.1.3	

If the Project is suspended for more than ninety (90) consecutive days by either party, the Consultant may terminate this Agreement by giving not less than seven days' written notice.
	
 	

 	

 

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10.1.4	

Owner may terminate this Agreement upon not less than seven (7) days' written notice.
	

10.1.5	

In the event of termination not the fault of the Consultant, the Consultant shall be compensated for services performed prior to termination, together with Reimbursable Expenses then due and all Termination Expenses as defined in
Article 10.1.6.
	

10.1.6	

Termination Expenses are in addition to compensation for the services of the Agreement and include reasonable expenses directly attributable to termination for which the Consultant is not otherwise compensated.
	

ARTICLE 11 MISCELLANEOUS PROVISIONS
	

11.1	
GENERAL
	

11.1.1	

This Agreement shall be governed by the law of the principal place of business of the Owner, unless otherwise provided in Article 14.
	

11.1.2	

Terms in this Agreement shall have the same meaning as those in the edition of AIA Construction Manager Version Document A201, General Conditions of the Contract for Construction, current as of the date identified in the Prime Agreement.
	

11.1.3	

Causes of action between the parties to this Agreement pertaining to acts or failures to act shall be deemed to have accrued and the applicable statutes of limitations shall commence to run not later than either the date of Substantial Completion for
acts or failures to act occurring prior to Substantial Completion or the date of issuance of the final Certificate for Payment for acts or failures to act occurring after Substantial Completion. In no event shall such statutes of limitation commence
to run any later than the date when the services are substantially completed.
	

11.1.4	

To the extent damages are covered by property insurance during construction, the Owner and Consultant waive all rights against each other, contractors, consultants, agents and employees of the other for damages, except such rights as they may have to
the proceeds of such insurance as set forth in the edition of AIA Document A201, Construction Manager Version, General Conditions of the Contract for Construction, current as of the date identified in the Prime Agreement. The Consultant or the
Architect, as appropriate, shall require of the Owner, contractors, consultants, agents and employees of any of them similar waivers in favor of the other parties enumerated herein.
	

11.1.5	

The Owner and Consultant, respectively, bind themselves, their partners, successors, assigns and legal representatives to the other party to this Agreement and to the partners, successors, assigns and legal representatives of such other party with
respect to all covenants of this Agreement. Neither Owner nor Consultant shall assign this Agreement without the written consent of the other, except that Owner may assign this Agreement to Owner's lender(s) and Consultant shall execute any
reasonable consent in connection therewith that is requested by such a lender.
	

11.1.6	

This Agreement represents the entire and integrated agreement for This Part of the Project between the Owner and the Consultant and supersedes all prior negotiations, representations or agreements, either written or oral. This Agreement may be
amended only by written instrument signed by both Owner and Consultant.
	

11.1.7	

Nothing contained in this Agreement shall create a contractual relationship with or a cause of action in favor of a third party against either the Owner or Consultant.
	

11.1.8	

Unless otherwise provided in this Agreement, the Owner and Consultant shall have no responsibility for the discovery, presence, handling, removal or disposal of or exposure of persons to hazardous materials or toxic substances in any form at the
Project site.
	
 	

 	

 

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ARTICLE 12 PAYMENTS TO THE CONSULTANT
	

12.1.1	

Payments on account of services rendered and for Reimbursable Expenses incurred shall be made monthly within thirty (30) days presentation of the Consultant's statement of services to the Construction Manager. No deductions shall be made from
the Consultant's compensation on account of penalty, liquidated damages or other sums withheld from payments to contractors, or on account of the cost of changes in the Work other than those for which the Consultant has been adjudged to be
liable.
	

12.1.2	

If and to the extent that the time initially established in Subparagraph 13.4.1 of this Agreement is exceeded or extended through no fault of the Consultant, reasonable compensation for services rendered during the additional period of time shall be
computed on an hourly basis as additional services.
	

12.2	
REIMBURSABLE EXPENSES
	

12.2.1	

Reimbursable Expenses are in addition to compensation for the Consultant's services and shall mean reasonable expenses incurred by the Consultant and Consultant's employees and subconsultants directly related to the Project, of the types generally
described in the following Clauses:
	

 	
.1	

transportation in connection with the Project, authorized out-of-town travel and subsistence, and electronic communications;
	

 	
.2	

fees paid for securing approval of authorities having jurisdiction over the Project;
	

 	
.3	

reproductions, plots, standard form documents, postage, handling and delivery of Instruments of Service;
	

 	
.4	

expense of overtime work requiring higher than regular rates if authorized in advance by the Owner;
	

 	
.5	

renderings, models and mock-ups requested by the Owner; and
	

 	
.6	

expense of professional liability insurance dedicated exclusively to this Project or the expense of additional insurance coverage or limits requested by the Owner or Architect in excess of that normally carried by the Consultant.
	

12.2.2	

Records of Reimbursable Expenses and expenses pertaining to a Change in Services and services performed on the basis of hourly rates shall be available to the Owner and Construction Manager at mutually convenient times.
	

12.3	
INSURANCE
	

12.3.1	

The Consultant shall obtain insurance in the amount of $1,000,000 covering claims arising out of the performance of professional services under this Agreement and caused by errors, omissions or negligent acts for which the Consultant is liable. The
Consultant shall maintain this insurance in force, if available, after the completion of professional services under this Agreement until the expiration of the applicable statutes of limitations. In the event there is no such statute specifically
applicable to design and construction of improvements to real property, this insurance, if available, shall be maintained in force by the Consultant for three (3) years.
	

12.3.2	

Unless otherwise agreed, the Owner and Consultant shall each provide insurance to protect themselves from claims under workers' compensation acts; from claims for damages because of bodily injury, including personal injury, sickness, disease, or
death of any employees or of any other person; from claims for damages because of injury to or destruction of property including loss of use resulting therefrom; and from damage to or destruction of property including valuable papers and records
coverage and including loss of use resulting therefrom.
	
 	

 	

 

12

 

	

12.3.3	

The insurance required pursuant to Subparagraphs 12.3.1 and 12.3.2 shall be in not less than the minimum limits required by law.
	

12.3.4	

The Consultant shall promptly furnish to the Owner certificates of insurance evidencing the insurance required by Subparagraphs 12.3.1 and 12.3.2, including appropriate evidence that each type of insurance includes appropriate coverages for this
specific Project. Certificates shall contain provisions that at least 30 days' prior written notice will be given to the Construction Manager in the event of cancellation, reduction in or nonrenewal of the insurance.
	

ARTICLE 13 BASIS OF COMPENSATION
	
See Exhibit A.
	

13.1	
ADDITIONAL PROVISIONS
	
The Owner and Consultant agree that:
	

13.1.1	

If services covered by this Agreement have not been completed within thirty months of the date hereof, through no fault of the Consultant for This Part of the Project, extension of the Consultant's services beyond that time shall be compensated on
the basis of hourly rates as provided in Exhibit A.
	

13.1.2	

The rates set forth for services shall be annually adjusted in accordance with normal reasonable salary review practices of the Consultant. Consultant agrees to inspect upon (a) substantial and (b) final completion and issue certificates to
Architect and Owner at those points.
	

13.1.3	
PAYMENT PROVISIONS
	

 	

 	

 

(Insert provisions as to conditions, contingencies, times, manner and other particulars concerning payments, including any provisions for the payment of
interest.)  

        This Agreement entered into as of the day and year first written above. 

	

/s/  K. M. FISHER      
OWNER (Signature) 	
 	

/s/  S. CARTER      
CONSULTANT (Signature)
	

 	
 	

 
	

K. M. Fisher, CFO
(Printed Name and Title)	
 	

S. Carter, Principal
(Printed Name and Title)
	

 	
 	

 
	

 	
 	

 

13

  

	 	 	
Exhibit A

1

  

	Our ref 76019.06/dc

Date March 29, 2002

  
 BY FAX AND MAIL	 	2440 South Sepulveda Boulevard

Suite 180

Los Angeles California 90064

Tel +1 310 312 5040

Fax +1 310 312 5788

atila.zekioglu@arup.com
	

 	
 	

www.arup.com

Mr. Paul Franz

Paul Franz Construction Inc.

3749 Santa Claus Lane

Carpenteria, CA 93013 

ARUP  

Dear Mr. Franz: 

QAD Ortega Hill Campus Phase I

Revised Proposal to Provide Building Engineering Services (2nd Revision)  

        We are excited to hear that this project is going forward again and that QAD has invited us to be part of a team once more. We enclose our  revised fee proposal and scope of services for the structural, mechanical, electrical and plumbing engineering design for the shell and core phase on
this project. 

PROJECT DESCRIPTION  

        The project is a new 88,5000 gross square foot headquarters building for the QAD software company located in Carpenteria, in Santa Barbara County. The building is
single story with a partial basement. Phase I includes only the design of the shell and core of the building. The tenant improvements will be a separate, future phase. The current building
construction cost is estimated at $15,635,138.00 and the design schedule is fast-track. 

SCHEDULE  

        Arup Los Angeles currently employs over 120 technical staff in its Los Angeles office. If appropriate this can be augmented with additional staff from our other
US offices. We understand that the project schedule is currently under review, but we are aware of the urgency to occupy the building and will work with QAD, the architect and the construction team to
provide engineering services to meet QAD's goals. 

SCOPE OF WORK  

        Ove Arup & Partners California Ltd. (OAPCAL) will provide standard consulting structural, mechanical, electrical and plumbing engineering design
services from the schematic design phase of the project through construction administration. Cost estimates will be provided at each phase by a construction
manager employed by the Owner. OAPCAL will provide assistance in analyzing these estimates. 

        Our
services relate to the design of building systems typically located at defined positions not more than 5'-0" from the building envelope. These services will be provided
under an AIA C141 (1997) Standard Form of Agreement between Owner and Consultant augmented by the Scope of Building Engineering Services document attached to this proposal. At this point, we have not
received a copy of the Owner/Consultant contract. We reserve the right to review our conditions upon review of it. We have listed separately services that are excluded from our proposed scope of work. 

2

 

BUILDING ENGINEERING FEES  

        The attached fees are based on our current understanding of the project as represented by the project cost estimate prepared by Melchiori Construction Co., dated
February 7th, 2002 with an estimated building construction cost of $15,635,138.00 (shell and core—$10,323,875.00 and tenant improvements—$5,311,263.00).
However, we would welcome the opportunity to negotiate fees based on any additional information that you may provide. We propose building engineering fees as outlined below. 

SHELL AND CORE FEES  

        The fees are based on a building shell and core construction cost of 2.7% of $10,323,875, for basic services related to structural,
mechanical, electrical and plumbing engineering for the shell and core design for the Design Development through Construction Administration phases. The fees have been separated by phase, however our
proposal is based on the assumption that we will be providing services for all phases. Our scope includes fitout of the core spaces, the lobbies, MEP supply to a single point of connection in the
kitchen and HVAC for the data center. The following items are additional to this basic fee.  

	1.
	 Update to current building code requirements  

The existing building design was based on the 1994 code requirements and so a complete re-design of the mechanical work done to date and the building lateral system
is needed to meet current codes and this also has impacts on the architectural design. This will result in an updated set of drawings for costing and Owner approvals. The design development fee
indicated in the schedule below covers this re-work.  

	2.
	 Integration of structure, systems and ceiling heights  

The site constraints on the overall building height, combined with QAD's desire to maximize internal ceiling height, require the MEP and structural systems to be carefully
coordinated together, unlike typical shell and core construction where structure and services are separate. We propose an additional lump sum fee of $40,000 to do sizing and preliminary distribution
plans for the MEP systems in all the TI spaces and to modify structure and ductwork to best achieve the required ceiling heights. This information will be documented for use by the TI designer.  

	3.
	 Mechanical Title 24 analysis  

In order to retain the existing architectural concept as much as possible, while meeting the new Title 24 energy conservation requirements, we are carrying out a specialized
performance analysis of the building, rather than the standard prescriptive code approach. This requires additional analysis in both the design development and construction administration phases and
for this we propose and additional lump sum fee of $25,000.  

	4.
	 Site Lighting  

We have also been asked to include the design of site and parking lot lighting in our scope, including selection of fixtures in conjunction with the architect and preparation
of plans. We will also provide a lighting level plan based on the selected fixtures. We propose a fee of $4,000 including one trip to Santa Barbara County. QAD will be responsible for obtaining any
necessary approvals from the local neighborhood jurisdictions.  

 TENANT IMPROVEMENT FEES  

        These fees are based on 84,000sf of space, including offices, conference rooms, fitness center, visitor center and data center. There is
also a kitchen, which will be designed by a specialist kitchen consultant.

3

 

        For this scope of work, we propose a fee of $120,000. If we are awarded the TI scope in addition to the shell and core, we will charge only $20,000 fee under
shell and core design services for integration of structure, systems and ceiling heights.

        Should
the program change in scope or area or the budget change once it is established in later phases, we would amend our fees as appropriate. In addition, our fee proposal is based on
seamless continuity between phases, and any delays in the project not the fault of the design team, will be subject to negotiated demobilization and mobilization costs. We do understand that there
will be the obligatory review periods by the user groups and facilities personnel, as well as plan check by the governing agencies. 

        This
proposal is based on our invoicing monthly through each phase of the project, and receiving payment within 45 days of invoice. 

SHELL AND CORE FEES  

	Phase
 
	 	Phase Split
	 	Structural, Mechanical, Electrical and Plumbing Shell and Core Engineering Fees

	Design Development	 	22	%	$	61,324.00
	Construction Documents	 	44	%	$	122,648.00
	Bidding / Negotiations	 	6	%	$	16,725.00
	Construction Administration	 	28	%	$	78,048.00
	Sub-Total	 	100.00	%	$	278,745.00
	Integration of Systems	 	—	 	$	40,000.00
	Mechanical Title 24 Analysis	 	—	 	$	25,000.00
	Site Lighting	 	—	 	$	4,000.00
	Total	 	—	 	$	347,745.00

TENANT IMPROVEMENT FEES  

	Phase
 
	 	Phase Split
	 	Structural, Mechanical, Electrical and Plumbing Tenant Improvement Engineering Fees

	Schematic Design	 	15	%	$	18,000.00
	Design Development	 	15	%	$	18,000.00
	Construction Documents	 	40	%	$	48,000.00
	Bidding / Negotiations	 	5	%	$	6,000.00
	Construction Administration	 	25	%	$	30,000.00
	Sub-Total	 	100.00	%	$	120,000.00

QUOTED FEES ASSUMPTIONS  

	1.
	Our
fee is based on a design development plus construction document phase schedule of a total of ten (10) months. Should that time
period be extended beyond eleven (11) months, we will asses an additional service charge of $5,000.00 per month.

	2.
	If
the project is placed on hold, we will be assessing an additional start up and mobilization fee of $10,000.00 when the project resumes.

	3.
	We
reserve the right to stop work if fees are not received 60 days after issuing an invoice.

	4.
	Invoices
older than 60 days will attract a backdated finance charge of 1.5% per month. 

4

 

ADDITIONAL SERVICES AVAILABLE  

        We have attached for your reference our standard scope of engineering services. In addition to our Basic Building Engineering services, we have the ability to
provide Additional or Specialist Services in various areas, if necessary, in the course of the project. Some of the services, which may prove to be relevant to this project, are: 

	•
	Architectural
Lighting Design: As part of Basic Services, OAPCAL will provide general lighting design as defined in the attached scope of work, and site
lighting as an additional service described previously.

	•
	Acoustics,
including architectural and environmental noise issues and noise control. Please see our proposal submitted under separate cover.

	•
	Telecommunications
systems, including voice, data, paging, intercom, public address, central clocks, elapsed timers, etc. Our basic fee includes only
providing electrical power to the equipment. Conduit layouts, sizing, and all associated infrastructure for these systems will be the responsibility of the Owner. When the extent of any
telecommunications infrastructure to be provided in our work is clarified, we will provide an additional services proposal.

	•
	Audio
Visual systems, including audiovisual for meeting rooms, exhibits, retail floor, etc. Our basic fee includes only providing electrical power to the
equipment. Conduit layouts, sizing, and all associated infrastructure for these systems will be the responsibility of the Owner.

	•
	Security
Systems, including CCTV, door alarms, and card key access system. Our basic fee includes only providing electrical power to the equipment. Conduit
layouts, sizing, and all associated infrastructure for these systems will be the responsibility of the Owner.

	•
	Life
Cycle Costing Analysis, Early in the design process life cycle cost for tradeoffs of alternative building systems can be analyzed and explored to arrive
at the most appropriate and cost effective solution. Life cycle costing of systems is an integral and important element of the process of energy efficient design. Upon request, we would be happy to
provide a proposal.

	•
	Computerized
Daylighting Studies

	•
	Computational
Fluid Dynamics Study, the use of CFD analysis can be used as a means to understand air flows within a space by modeling the space in
2- or 3-D. This has been proven to save clients on capital cost and energy consumption. Upon request we would be happy to provide a proposal.

	•
	Non-linear
and / or Performance Based Seismic Design of Structural Systems

	•
	Dynamic
Analysis of Structural Systems, where not required by Code.

	•
	Sustainable
Design Consulting Services—Our basic services does not include the detailed Energy Analyses required for LEED certification, advice
on Integrated Envelope Design and LEED rating specifications not specifically related to the mechanical, electrical or plumbing systems. These elements can be provided as an additional service.

	•
	Façade
Engineering

	•
	Special
Materials—Incorporation of special materials as part of the structural system, which are not recognized by the Building Code. 

        Additional
services will be carried out on either a negotiated lump sum or time and materials basis. Our current time and materials rates are as follows. Hourly rates are reviewed
annually in April. 

5

 

SCHEDULE OF HOURLY TIME BASIS RATES  

	Principal	 	$	225.00
	Senior Associate/ Project Manager	 	$	155.00
	Associate	 	$	135.00
	Senior Engineer	 	$	110.00
	Engineer	 	$	95.00
	Sr. Draftsperson	 	$	90.00
	Designer / Draftsperson	 	$	80.00
	Clerical I	 	$	50.00
	Clerical II	 	$	65.00

OUTLINE OF EXCLUDED SCOPE  

        The basic scope of our services, and therefore the engineering fees as outlined in the proposal, DOES NOT include the following items: 

	•
	Cost
estimating. However, as part of Basic Services, OAPCAL will provide review and comment to cost analysis completed by others as part of this scope of
work.

	•
	Smoke
exhaust calculations. However, as part of Basic Services, OAPCAL will design smoke control systems based upon airflow calculations, smoke exhaust and
pressurization requirements and concepts provided by a specialty Fire and Life Safety Code Consultant.

	•
	Preparation
of Record Drawings from the Contractor's As-Built drawings. However, as part of Basic Services, OAPCAL will review the
as-built drawings by the Contractor for completeness.

	•
	Building
commissioning. However, as part of Basic Services, OAPCAL will review testing and balancing reports, as-built drawings, owner's manuals
and final field observation report during the construction administration phase. Witnessing and directing the actual testing and balancing of the mechanical and electrical systems and / or full
commissioning of the building services is excluded from our scope of work.

	•
	Preparation
of demolition drawings / site surveys / building services surveys, utilizing non-invasive activities, including building a set of CAD
drawings is excluded from our scope of work.

	•
	Wind
tunnel testing and evaluation. 

REIMBURSABLE EXPENSES  

        Reimbursable expenses include the following items, all of these expenses will be reimbursed at 1.1 times cost. We suggest that you allow for $20,000.00 (twenty
thousand dollars) for reimbursable expenses related to this project. 

	•
	Travel
and accommodations outside of Los Angeles County.

	•
	All
costs associated with printing and plotting of formal submissions to the Owner, other consultants, and the Contractor.

	•
	Courier
and long distance telephone charges.

	•
	Additional
CADD drawings requested by the Owner other than that required in the final submittal for each phase of the project as detailed in the attached
Scope of Engineering Services.

	•
	If
authorized in advance by the Owner, expense of overtime work requiring higher than regular rates. 

6

 

	•
	Expense
of renderings, models and mock-ups requested by the Owner. 

        We
have a team of experienced engineers looking forward to the chance to work on this project. We would be pleased to have the opportunity to meet with you to discuss this proposal in
detail. If you need any further information, please do not hesitate to call our proposed Project Manager, Catherine Wells or me. 

Yours
sincerely,

    for Ove Arup & Partners California Ltd. 

   

    

Atila
Zekioglu

Principal 

Enc        Scope
of Engineering Services 

7

  

	QAD Ortega Hill, Phase I

Scope of Engineering Consulting Services

March 29, 2002	 	ARUP

STRUCTURAL ENGINEERING SERVICES AND DELIVERABLES  

Introduction  

        The basic structural design services of Ove Arup & Partners California Ltd. (OAPCAL) include designing building structural systems and all other
major components of the buildings requiring support limited to within five feet (5'-0") of any building envelope. All free standing structures including but not limited to retaining walls,
property line walls / fences, trash enclosure walls, stairs, flagpoles, planter and landscaping walls, equipment enclosures, pavement sections, shall be done by a registered Civil Engineer retained by
others, and are not included as part of this scope. We will design bases for light poles at the building exterior. 

1.0  Design Development  

        Based on the previously approved schematic design scheme, OAPCAL will prepare design drawings and other documents as required to describe the structural systems,
materials, and design intent as delineated by the Architect and other such elements, as may be appropriate. 

	1.1
	OAPCAL
will review the existing geotechnical report for structural concerns and conformance with new codes, and respond in writing.

	1.2
	OAPCAL
will re-analyze the building lateral systems and prepare CADD plans of the revised structural system in conformance with the 1997 Uniform Building Code and current
architectural layouts, showing foundations, framing and preliminary design of special conditions and systems including materials, gross sizes, critical details, coordination clearances and basic
dimensions.

	1.3
	OAPCAL
will participate in cost analysis and cooperate with the construction manager in the preparation of detailed estimates,
including alternate materials and systems.

	1.4
	OAPCAL
will coordinate its work with that of other consultants.

	1.5
	OAPCAL
will coordinate the Design Development drawings with the revised drawings prepared by other consultants and prepare a list of any and all design concerns and considerations
related to structural engineering.

	1.6
	OAPCAL
will attend two(2) design coordination meeting with the Design Team in Santa Barbara County. 

2.0  Construction Documents  

        Based on the approved design development scheme, OAPCAL will prepare construction documents. 

	2.1
	Construction
documentation shall include preparation of documents necessary to fully and completely convey the design, which shall be used for bidding and construction. Documents
shall include detailing of structural connections.

	2.2
	OAPCAL
will indicate non-structural items that affect the basic structure or provide appropriate cross-references to drawings by others for such items. Special attention
will be required relative to the exterior façade. We will account for design loads (wind, gravity, etc.) imposed onto the building structural system, as a result of the exterior
façades. However, the façade component design and detailed façade attachments are not included in OAPCAL's building engineering scope of
work. 

1

 
	2.3
	OAPCAL
will provide necessary criteria and other information needed for the design and installation of pre-engineered elements.

	2.4
	OAPCAL
will indicate on the drawings design criteria such as live and superimposed dead loads, material strengths, code requirements and any provisions for future additions.

	2.5
	OAPCAL
will coordinate as required with the Architect and other consultants relative to structural impacts to their work.

	2.6
	OAPCAL
will produce, as required by jurisdictional authorities, structural calculations in order to facilitate review of the documents for permit. Drawings and calculations shall be
"signed and sealed" as required by the building official in order to obtain a building permit.

	2.7
	The
design and documentation of non-primary and non-load bearing structural components as required by the Architect and other consultants in order to
facilitate other components of the project, including ceiling and interior partitions, are not part of OAPCAL's scope.

	2.8
	OAPCAL
will assist the Architect in specifying the scope, standards and frequency of required testing and inspection services by independent agencies.

	2.9
	OAPCAL
will revise drawings as required by reviewing code authorities and assist the Architect to obtain all City, County, State or other governmental approvals prior to bid.

	2.10
	OAPCAL
will attend three (3) coordination meetings with the Design Team in Santa Barbara County.

	2.11
	OAPCAL
will prepare final specifications utilizing our master specification system based on the CSI format to include the Architect's typeface and page layout. 

3.0  Bidding and Negotiations  

	3.1
	OAPCAL
will be responsible for coordination and incorporating all addenda into the Construction Documents package for issue to the Contractor "for construction."

	3.2
	OAPCAL
will assist the Owner and the Architect during the Bid Phase by interpretation of the Bid Documents and coordination and preparation of Addenda.

	3.3
	OAPCAL
will attend Pre-Bid and Pre-Construction meetings, answer Contractor questions and issue addenda. 

4.0  Construction and Post Construction Administration  

	4.1
	OAPCAL
will visit the site at intervals, to become generally familiar with the progress and quality of the work and to see whether construction is proceeding in accordance with the
Construction Documents. This will be one visit per month over the construction period of the superstructure. A written report of OAPCAL's findings shall be prepared at the conclusion of
each site visit and be forwarded to the Owner and the Architect.

	4.2
	OAPCAL
will resolve all "Requests for Information" pertaining to the structural design.

	4.3
	OAPCAL
will advise and consult with the Owner, the Architect and other consultants during the Construction Administration phase.

	4.4
	OAPCAL
will report to the Owner and the Architect in writing any work observed during site visits that does not conform to the Construction Documents.

	4.5
	OAPCAL
will prepare revisions, modifications and construction bulletins as required. 

2

 
	4.6
	OAPCAL
will review or reject the Contractor's submittals (such as shop drawings, product data and samples), but only for conformance with the Construction Documents. Such action shall
be taken with reasonable coordination and promptness and in no case longer than ten (10) working days from receipt, so as to cause no delay. If any Contractor submittal requires more than two
reviews, the third review and any subsequent review will be an additional service. 

5.0  Exclusions  

	5.1
	Performance
of cost analysis. However, OAPCAL will provide review and comment to cost analyses completed by others as part of this scope of work.

	5.2
	As
part of Basic Services, OAPCAL will review the as-built drawings prepared by the Contractor for completeness. These as-built drawings will be the record
drawings.

	5.3
	Non-public
exit stairs and external stairs outside the building envelope.

	5.4
	Design
of curtain wall / façade framing for heavier finishes such as full course brick veneer, GFRC, precast concrete or stone finishes.

	5.5
	Design
and detailing for aluminum and steel glass storefront window wall systems.

	5.6
	Underpinning
and / or shoring of existing and adjacent buildings and streets as may be required during construction. Shoring and / or excavation procedures and design packages of any
sub-grade components.

	5.7
	Large
billboards, signage and graphic elements, which are not an integral part of the building's structural system.

	5.8
	We
have assumed that the project will be bid as one complete package for construction in one continuous phase, and as such, the documentation and effort to create separate foundation,
steel, etc., bid packages is excluded.

	5.9
	Design,
engineering and plan check approval of remedial solutions required to correct as-built conditions (Contractor errors) that significantly do not conform to the
Construction Documents. 

6.0  Scope Clarifications  

	6.1
	Stair
Design: As part of Basic Services, we have included the design of all concrete stairs within and directly adjacent to the building.

	6.2
	Ceilings:
We will provide attachment points for heavy decorative plaster, metal or wood ceilings from the roof or floor structure above. Lightweight ceiling suspension systems will be
a bidder-designed element, indicated on the architectural drawings.

	6.3
	Handrails:
The design of handrails / guardrails is included for stairs that we design (see above), catwalks that we design, seating balconies, and lobbies. Handrails / guardrails for
bidder-designed stairs will be a bidder-designed element.

	6.4
	We
will assist the Architect to provide a design-build specification and conceptual details indicating the nature of exterior skin connections, including metal
studs, and supports for exterior building maintenance equipment. We are assuming that for the purposes of this proposal that the façade is non-load
bearing. Our experience has been that the curtain wall contractor's final methods of attachment to the building superstructure (including embedded items and architectural pre-cast
concrete) differ, and the design-build contractor will provide the Owner with the most cost effective solution. 

3

 

MECHANICAL / PLUMBING ENGINEERING SERVICES AND DELIVERABLES  

Introduction  

        The basic mechanical and plumbing engineering services of OAPCAL include design of all mechanical, plumbing and energy management systems for the project,
including water, sewer and natural gas systems to a point of connection five feet (5'-0") outside of the main building. Design of the fire hydrant system to a point of connection, as
required, shall be done by a registered Civil Engineer. As part of its Basic Services, OAPCAL will develop a performance specification for the fire sprinkler system, fire riser location and main pipe
distribution. Site drainage shall be performed by a registered Civil Engineer. 

        Primary
ductwork routes will be designed for vertical risers and main horizontal distribution to service a nominal number of VAV devices. This effort is necessary due to required
coordination with architectural, structural and other trades for restricted floor to ceiling heights. Coordination of sprinkler main and roof drain piping with structure and
ceiling will be carried out.

1.0  Design Development  

	1.1
	OAPCAL
will attend two (2) systems design / coordination meetings with the Design Team in Santa Barbara County.

	1.2
	OAPCAL
will re-size mechanical units, provide weights, electrical loads and unit locations in building(s).

	1.3
	OAPCAL
will determine main duct sizes and VAV device zoning.

	1.4
	OAPCAL
will contact local authorities to determine requirements and develop code review for any special requirements.

	1.5
	OAPCAL
will re-evaluate the building for compliance with the new Title 24 Energy Code requirements and revised building codes. OAPCAL will advise on architectural
implications due to new code requirements.

	1.6
	OAPCAL
will prepare Design Development drawings on electronic backgrounds of architectural plans.

	1.7
	OAPCAL
will coordinate with other consultants. 

2.0  Construction Documents  

	2.1
	OAPCAL
will attend three (3) coordination meetings with the Design Team in Santa Barbara County.

	2.2
	OAPCAL
will coordinate work with other consultants.

	2.3
	OAPCAL
will prepare final construction documents.

	2.4
	OAPCAL
will revise drawings as required by reviewing code authorities. Assist the Architect to obtain all City, County, State or other governmental approvals prior to bid.

	2.5
	OAPCAL
will attend final meeting with the Owner prior to review of final construction drawings.

	2.6
	OAPCAL
will attend all backcheck meetings, as required, with government agencies to obtain approval of mechanical systems.

	2.7
	OAPCAL
will prepare final specifications utilizing our master specification system based on the CSI format to include the Architect's typeface and page layout. 

4

 

3.0  Bidding and Negotiations  

	3.1
	OAPCAL
will respond to the Architect with all clarifications of drawings.

	3.2
	OAPCAL
will provide addenda as required to clarify drawings.

	3.3
	OAPCAL
will assist with post-bid analysis of mechanical / plumbing engineering components. 

4.0  Construction and Post Construction Administration  

	4.1
	OAPCAL
will provide one visit per month during the major installation of mechanical and plumbing systems and a final jobsite observation to prepare a mechanical/plumbing punch list.

	4.2
	OAPCAL
will provide clarifications and revisions to drawings and / or specifications when required.

	4.3
	OAPCAL
will review shop drawings and submittals. If any Contractor submittal requires more than two reviews, the third review and any subsequent review will be an additional service. 

5.0  Exclusions  

	5.1
	Specialist
studies (i.e., life cycle costing, daylighting and natural ventilation)

	5.2
	Performance
of cost analysis. However, OAPCAL will provide review and comment to cost analyses completed by others as part of this scope of work.

	5.3
	As
part of Basic Services, OAPCAL will review the as-built drawings prepared by the Contractor for completeness. These as-built drawings will be the record
drawings.

	5.4
	Kitchens,
cafeteria, concessions and pantries will be provided with single utility connection points at agreed positions and floor drainage connection points at agreed positions. The
kitchen or concession shall be designed by a specialist consultant who will provide all necessary information for furniture, mechanical and plumbing services and obtain all necessary permits; OAPCAL
will coordinate utility connection points only, as noted above.

	5.5
	Special
mechanical systems and / or process systems.

	5.6
	Design,
engineering and plan check approval of remedial solutions required to correct as-built conditions (Contractor errors) that significantly do not conform to the
Construction Documents.

	5.7
	Acoustical
consulting services related to the analysis and evaluation of on-site and off-site noise, including noise generated by mechanical equipment.

	5.8
	Design
of infrastructure for a dedicated Data Center is included as part of this Scope of Work. 

6.0  Scope Clarifications  

	6.1
	OAPCAL
will design smoke control systems based upon airflow calculations and concepts provided by a specialty Code Consultant retained by others.

	6.2
	OAPCAL
will undertake a prescriptive Title 24 code check on the building at the Design Development Phase, and will make recommendations on any modifications that may be necessary in
order to comply with Title 24 requirements. Once the modifications are made, OAPCAL will undertake a further prescriptive compliance check. 

5

 

ELECTRICAL ENGINEERING SERVICES AND DELIVERABLES  

Introduction  

        The basic electrical engineering services of OAPCAL include the basic design of building and site electrical systems as required for a core and shell design. This
will include electrical service from the building to a point of connection supplied by the utility company, design of general power service to all HVAC and plumbing equipment. Additionally, this will
include all required minimum emergency power, fire and smoke detection, emergency lighting and normal power systems for core and utility areas. 

1.0  Design Development  

	1.1
	OAPCAL
will attend two (2) systems design / coordination meetings with the Design Team in Santa Barbara County.

	1.2
	OAPCAL
will re-evaluate and re-define all major electrical systems.

	1.3
	OAPCAL
will re-evaluate and incorporate any design/code changes and prepare Design Development drawings on electronic backgrounds of architectural plans. 

2.0  Construction Documents  

	2.1
	OAPCAL
will attend three (3) coordination meetings with the Design Team in Santa Barbara County.

	2.2
	OAPCAL
will coordinate work with other consultants.

	2.3
	OAPCAL
will prepare final construction documents.

	2.4
	OAPCAL
will revise drawings, as required by reviewing code authorities. Assist the Architect to obtain all City, County, State or other governmental approvals prior to bid.

	2.5
	OAPCAL
will attend final meeting with the Owner prior to review of final construction drawings.

	2.6
	OAPCAL
will attend all backcheck meetings, as required, with government agencies to obtain approval of electrical systems.

	2.7
	OAPCAL
will prepare final specifications utilizing our master specification system based on the CSI format to include the Architect's typeface and page layout. 

3.0  Bidding and Negotiations  

	3.1
	OAPCAL
will respond to Architect with all clarifications of drawings.

	3.2
	OAPCAL
will provide addenda as required to clarify drawings.

	3.3
	OAPCAL
will assist with post-bid analysis of electrical engineering components, if required. 

4.0  Construction and Post Construction Administration  

	4.1
	OAPCAL
will provide one visit per month during major installation of electrical systems and a final jobsite observation to prepare an electrical punch list.

	4.2
	OAPCAL
will provide clarifications and revisions to drawings and / or specifications when required.

	4.3
	OAPCAL
will review shop drawings and submittals. If any Contractor submittal requires more than two reviews, the third review and any subsequent review will be an additional service. 

6

 

5.0  Exclusions  

        The following work is excluded from the OAPCAL scope of work: 

	5.1
	Tenant
improvements and fit-outs of the occupied spaces. OAPCAL scope of work will be limited to minimal core and shell type of services.

	5.2
	Record
drawings. However, as part of Basic Services, OAPCAL will review the as-built drawings by the Contractor for completeness. These as-built drawings will
be the record drawings.

	5.3
	Kitchens,
cafeteria, concessions and pantries will be provided with a single utility connection point at an agreed position. The kitchen or concession shall be designed by a
specialist consultant who will provide all necessary information for equipment requiring electrical services and obtain all necessary permits; OAPCAL will coordinate the utility connection point only,
as noted above.

	5.4
	Performance
of cost analysis. However, OAPCAL will provide review and comment to cost analysis completed by others as part of this scope of work.

	5.5
	The
design of the telephone, data, sound, audio-visual, security and other signal systems including device layouts, cable trays, conduit routings, system specifications, equipment
layouts, and wiring will be
provided by specialist consultants appointed by the Owner / Architect. Our basic fee includes only providing power supplies to the equipment, based on information provided by others.

	5.6
	Design,
engineering and plan check approval of remedial solutions required to correct as-built conditions (Contractor errors) that significantly do not conform to the
Construction Documents.

	5.7
	The
shell and core scope of work includes space for a future computer room. We will provide power to this room, based on requirements from QAD. The telecommunications designer will
provide requirements for underground telecommunication conduits to the room. 

6.0  Scope Clarifications  

	6.1
	As
part of Basic Services, OAPCAL will provide basic building lighting design. This includes the development of appropriate lighting schemes for typical toilet rooms, utility rooms,
main lobby, exit lighting at exterior doors and core spaces only. Our work will include the selection of light fixtures, providing catalog sheets, and assisting the Architect in generating reflected
ceiling plans. Excluded from our scope of work are exhibit lighting, accent lighting and custom light fixtures. OAPCAL will provide Title 24 calculations as part of the mechanical calculations, with
an allowance for interior lighting to be used in the tenant improvement fit-out design by others. If local jurisdiction requires independent calculations to be completed for individual
spaces, this shall be an additional service and a separate proposal can be forwarded at that time. 

7

QuickLinks

STANDARD FORM OF AGREEMENT BETWEEN OWNER AND CONSULTANT FOR THE QAD ORTEGA HILL PROJECTExhibit 10.4  

[FOOTHILL
CAPITAL LETTERHEAD]

July 31, 2002 

QAD Inc.

6450 Via Real

Carpinteria, California 93102

Attn: Christopher L. Greco, Treasury Manager 

	Re:
	Amendment to Loan and Security Agreement

Dear
Mr. Greco: 

        Reference
is made to that certain Loan and Security Agreement, dated as of September 8, 2000, by and between Foothill Capital Corporation ("Lender") and QAD Inc.
("Borrower"), as amended (as so amended, the "Loan Agreement"). Capitalized terms, which are used herein but not defined herein, shall have the meanings ascribed to them in the Loan Agreement. 

        Borrower
has requested Lender's consent for Borrower to incur certain obligations in connection with the development of certain real property, to sell other real property, and to
re-set the covenants set forth in the following sections of the Loan Agreement: 

	(i)
	Section 7.20(a)(i) (Minimum EBITDA);

	(ii)
	Section 7.20(a)(ii) (Tangible Net Worth); and

	(iii)
	Section 7.20(b)(i) (Capital Expenditures). 

        By
their respective signatures below, Lender and Borrower hereby agree to the following: 

        1.    Effective
as of Borrower's compliance with the Conditions (as defined below), the Loan Agreement shall be amended as follows: 

        (a)  The
following terms are added to Section 1.1 of the Loan Agreement: 

"California Development Plan" means Borrower's plan for development of the Ortega Hill Property. 

"Ortega Hill Property" means Borrower's Real Property commonly known as 2111 Ortega Hill Road, Summerland, California 93067." 

"Mark
Hill Property" means Borrower's Real Property commonly known as 6390 Via Real Carpinteria, CA 93013. 

        (b)  The
term "Permitted Dispositions" in Section 1.1 of the Loan Agreement is deleted and replaced by the following: 

"Permitted Dispositions" means (a) sales or other dispositions by Borrower of Equipment that is substantially worn, damaged, or obsolete in the
ordinary course of Borrower's business, (b) sales by Borrower of Inventory to buyers in the ordinary course of business, (c) the use or transfer of money or Cash Equivalents by Borrower
in a manner that is not prohibited by the terms of this Agreement or the other Loan Documents, (d) the licensing by Borrower, on a non-exclusive basis, of patents, trademarks,
copyrights, and other intellectual property rights in the ordinary course of Borrower's business, (e) sale of the Real Property Collateral so long as there has not occurred any Event of Default
which is continuing, and (f) the transfer to Caltrans of approximately one-quarter acre of the Ortega Hill Property, for use as a bike trail, as described in the California
Development Plan." 

 

        (c)  Section 7.20(a)(i) of the Loan Agreement is deleted and replaced by the following: 

Minimum EBITDA. EBITDA, measured on a fiscal quarter-end basis, of not less than the required amount set forth in the following table for
the applicable period set forth opposite thereto:   

	Applicable Amount
 
	 	Applicable Period

	$3,600,000	 	For the 12 month period ending July 31, 2002
	

$1,900,000	
 	

For the 12 month period ending October 31, 2002
	

($2,300,000)	
 	

For the 12 month period ending January 31, 2003"

        (d)  Section 7.20(a)(ii) of the Loan Agreement is deleted and replaced by the following: 

"Tangible Net Worth. Tangible Net Worth of at least the required amount set forth in the following table as of the applicable date set forth opposite
thereto: 

	Applicable Amount
 
	 	Applicable Date

	$6,032,000	 	July 31, 2002
	

$2,687,000	
 	

October 31, 2002
	

$3,683,000	
 	

January 31, 2003"

        (e)  Section 7.20(b)(i) of the Loan Agreement is deleted and replaced by the following: 

"(b)
Make: 

        (i)    Capital Expenditures. Capital expenditures in any fiscal year in excess of the amount set forth in the following table
for the applicable period: 

	Applicable Amount
 
	 	Applicable Period

	$14,000,000	 	Fiscal Year 2003
	

$21,000,000	
 	

Fiscal Year 2004
	

$7,000,000	
 	

Fiscal Year 2005"

        (f)    Borrower
wishes to develop the Ortega Hill Property. In connection with the development of the Ortega Hill Property, Borrower plans to do all of the following, all in
accordance with the California Development Plan, a copy of which has been delivered to Lender: 

        (i)    construction
of two new buildings on the Ortega Hill Property; 

        (ii)  demolition
of the west wing (approximately 8,000 square feet) of the existing building on the Ortega Hill Property, in order to clear the site for the two buildings
described in clause (i) (the "Demolition"); and 

        (iii)  incur
additional Indebtedness of no more than $20,000,000. 

        (iv)  guarantee
Indebtedness of no more than $20,000,000. 

        Accordingly, 

        (x)  Lender
consents to the Demolition; and 

2

 

        (y)  Schedule 5.20 is amended to add the debt described in clause (iii) above; and

        (z)  Schedule 7.6 is amended to add the guarantee described in clause (iv) above. 

        (g)  Lender
hereby consents to the sale of the Mark Hill Property Collateral, so long as: 

        (i)    Prior
to and after giving effect to such sale, no Event of Default has occurred which is continuing; and 

        (ii)  Borrower
causes 25% of the sales proceeds or $500,000, whichever is less, from the sale of the Mark Hill Property to be delivered to Lender within two business days
from the close of escrow. 

Upon
the delivery to Lender of the sums described in clause (ii), Lender shall deliver the original unrecorded Mortgage to Borrower. The sums described in clause (ii) shall be applied
first to interest due on the Term Loan, with the remainder to the outstanding principal balance of the Term Loan (in the inverse order of the maturity of the installments due thereunder). 

        2.    Lender
is willing to enter into this letter amendment, provided that Borrower complies with the following conditions precedent (collectively, the "Conditions") no later
than July 31, 2002, time being of the essence: 

        (a)  Borrower
executes and delivers a copy of this letter agreement to Lender; and 

        (b)  Borrower
pays Lender a non-refundable fee of $35,000. 

        3.    Subject
to the satisfaction of the Conditions Lender hereby agrees to the amendments to the Loan Agreement provided herein; provided, however, that this letter agreement
is not a waiver of the same provisions of the Loan Agreement in any other instance or of any Default of Event of Default. Lender is not obligated to provide this or any other consent. 

        4.    This
letter agreement constitutes an amendment to the Loan Agreement. Except as expressly set forth herein, the Loan Documents shall remain in full force and effect. 

        5.    This
letter may be executed in any number of counterparts which, when taken together, shall constitute but one agreement. 

        Please
indicate your agreement to the foregoing by executing a copy of this letter in the space below. 

Sincerely,

	FOOTHILL CAPITAL CORPORATION	 	 
	

By	

/s/  JOHN NOCITA      
 John Nocita	
 	

 
	

Its	

Vice President
	
 	

 
	 	 	 	 
	

CONSENTED AND AGREED TO:	
 	

 
	

QAD INC.	
 	

 
	

By	

/s/  KATHLEEN M. FISHER      
 Kathleen M. Fisher	
 	

 
	

Its:	

Executive Vice President
Chief Financial Officer
	
 	

 
	 	 	 	 

3

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