Mexico Construction Agreement

EXHIBIT 10.50


UNIT PRICE CONSTRUCTION AGREEMENT ENTERED INTO BY AND BETWEEN ST. JOHN DE MEXICO, S.A. DE C.V. REPRESENTED BY MR. RANDEE J. LAWRENCE, HEREINAFTER REFERRED TO AS THE "OWNER"; AND ADMINISTRACION TIJUANA INDUSTRIAL, S.A. DE C.V. REPRESENTED BY MR. PABLO RAFAEL CARRILLO BARRON, HEREINAFTER REFERRED TO AS THE "CONTRACTOR"


RECITALS


I. The representative of Owner declares:


a) That Owner is a corporation organized and existing in accordance with
the laws of the United Mexican States;


b) That his principal is in the process of acquiring the ownership of lots
113-A and 113-B, block 18. (the "Property");


c) That his principal needs the Contractor to build on the Property an
industrial building measuring 5,751.11 square meters or 61,904.43 square
feet and other improvements. For such purposes, Contractor has provided
its principal with a work estimate consisting of a catalog of unit price
concepts and matrix attached hereto as exhibit "A" ("Work Estimate").


d) That the building and said improvements are described in detail in the
plans, drawings, blueprints and specifications attached hereto as
exhibit "B", (the "Specifications"), which building and improvements
shall hereinafter be referred to as the "Work"; and;

e) That his principal has granted and delivered to him sufficient powers
and appropriate directions for the execution of this agreement, and
that such powers and directions have not since been modified, limited
nor revoked.


II. The representative of Contractor declares:


a) That Contractor is a company duly incorporated under the applicable
laws of the United Mexican States, as evidenced in Public Instrument
52,543, book 903, before Notary Public Number 3 for the Municipality of
Tijuana, Mr. Xavier Ibanez Herrera, duly recorded before the Public
Registry of Property and Commerce of Tijuana, Baja California on
September 29, 1988, registry number 20,279 page 413, Book XLIII-II
auxiliary Commerce Section.


b) That it is within Contractor's corporate purposes to execute and
perform this agreement and provide urbanization, engineering and
general construction services, and that it has the necessary
authorizations, registrations and licenses to operate as a contractor;


c) That Contractor has the experience, the know-how and the material and
human resources that are necessary and adequate to duly execute and
manage the Work;


d) That Contractor has resources of its own sufficient to fulfill all
labor obligations due to its workers in connection with the Work; and


e) That his principal has granted and delivered to him sufficient powers
and appropriate directions for the execution of this agreement, and
that such powers and directions have not since been modified, limited
nor revoked.


CLAUSES


ONE. SCOPE OF WORK.


1.1 Contractor agrees to perform all tasks and all other on-site work required
to construct the Work on the Property. Contractor shall furnish all labor,
materials, tools, equipment, transportation and all other goods and
services necessary for the performance of the Work.


TWO. SPECIFICATIONS.


2.1 The Work shall be performed in strict compliance with the technical
specifications and quality standards set forth in the blueprints, drawings
and specifications contained in Exhibit "B" hereof, as well as in
accordance with such other specifications and standards as may be indicated
by Owner from time to time in the manner set forth in this agreement
(hereinafter the "Specifications"), as well as on such written instructions
issued by the individual who will be in charge of supervising the Work,
herein contracted by Owner.


THREE. WORK SCHEDULE AND LOG.


3.1 Contractor shall perform the Work in strict accordance with the work
schedule (hereinafter the "Schedule") set forth in Exhibit "C" hereof.
Contractor shall keep an


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accurate daily log of the progress of the Work (hereinafter the "Log") and
shall submit to Owner a copy thereof, on a daily basis. The Log shall
reflect progress of the Work with respect to the Schedule and shall be
sufficiently detailed as to enable Owner to compare the actual with the
scheduled progress of the Work at all times throughout the performance of
the Work. The Log shall further contain a record of any observations,
clarifications, variations or corrections made by Contractor or by Owner,
in the performance of the Work, in respect of the Specifications.


FOUR. PRICE OF THE WORK.


4.1 Owner shall pay to Contractor the resulting amount according to the
concepts, volumes and unit prices conforming with the work progress for
which Contractor shall present, for its weekly revision and authorization,
the estimates supported with the volume generators in the formats so
indicated by Owner.


4.2 The total price of this operation is $1,931,912.99 (one million nine
hundred and thirty one thousand nine hundred and twelve 99/100) dollars,
United States of America currency, plus the Value Added Tax (v.a.t.), and
it is based upon the estimated volume of work as of this date.


4.3 The ruling unit prices are the ones presented by Contractor for the Work
bidding, pursuant to Exhibit "B" and cannot be subject to change, unless a
written agreement is made on the part of Owner.


4.4 Owner shall pay, as advance payment the amount of $772,765.20 (seven
hundred and seventy two thousand seven hundred and sixty five 20/100 )
dollars, United States of America currency, that shall be proportionately
amortized according to the amounts of the payable estimates presented by
Contractor.


4.5 The balance, less a holdback of 5% of the balance, shall be paid in equal
monthly installments over the course of construction of the Work. Such
holdback amount will be paid to Contractor upon completion and acceptance
of the Work by Owner.


FIVE. PAYMENT OF THE PRICE.


5.1 Contractor shall provide Owner, against payment for any concept, the
invoices corresponding to the total estimate value, which shall meet all
tax requirements as requested by Mexican Law. The payments shall be paid
accordingly to the Schedule.


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In the event contractor has a delay in the performance of the jobs, the
payments shall be withhold.


5.2 Acceptance of the final payment by Contractor, shall be considered as
Contractor's acceptance of its assumed responsibility regarding each and
all claims that may arise against Owner in connection with Work and with
the present agreement.


SIX. RESPONSIBILITY FOR SPECIFICATIONS.


6.1 Contractor shall be responsible for the proper design, engineering and
supervision of the Work, in accordance with the Specifications, and in
accordance with all applicable federal, state and local legal requirements,
and common local industry practices for capacity, strength, vibration and
function. Contractor shall be solely responsible for defining the
Specifications and represents to Owner that same are true and correct, and
in conformity with all industry standards and in compliance with all
applicable legal requirements.


SEVEN. OWNERSHIP OF SPECIFICATIONS.


7.1 Owner shall be the sole and exclusive owner of the drawings, plans,
blueprints and any other documents containing the Specifications, including
all the information contained therein, which shall constitute proprietary
information. Contractor shall provide Owner, at the time the Work is
accepted by Owner upon its completion, with one final set updated according
to the actual performance of Work, printed in Mylar, of all reproducible
drawings and specifications.


EIGHT. QUALITY OF WORK, LABOR AND MATERIALS.


8.1 All work, labor and materials employed, provided or utilized by Contractor
or its sub-contractors in the performance of the Work, shall be of the
highest quality available, or of any lesser quality authorized in the
Specifications, provided, however, that in no event may Contractor or its
sub-contractors employ, provide or utilize work techniques, labor or
materials that fail to meet the quality requirements or other
specifications set forth by the current or applicable construction laws,
regulations, ordinances or guidelines in force in Mexico.


NINE. NO AGENCY OR REPRESENTATION.


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9.1 Contractor shall not be considered a representative or agent of Owner,
provided, however, that Contractor may act on behalf of Owner in the
obtainment of permits and the procurement of materials, to the extent
therefore necessary and in such other specific cases as approved in
writing by Owner.


TEN. REQUIRED PERMITS AND REGISTRATIONS.


10.1 Contractor shall obtain at its expense all required licenses,
authorizations and permits, including, without limitation, the
corresponding construction license from the municipal government of
Tijuana, Baja California. Likewise, Contractor shall properly file all
required registration applications before the corresponding governmental
agencies, including, without limitation the registration of the Work with
the Mexican Institute of Social Security. All such licenses,
authorizations, permits and registrations shall clearly show Owner as the
owner of the Work.


10.2 Owner will promptly deliver to Contractor all information and documents
held by same, which result necessary for the filing, processing and
obtainment of the above referred permits, licenses, authorizations and
registrations.


10.3 The originals of said permits, licenses, authorizations and registrations
shall be delivered to Owner upon final acceptance of the Work.


ELEVEN. START AND COMPLETION DATE.


11.1 Contractor shall initiate performance of the Work immediately upon
execution hereof and of reception of advance payment ("Initiation Date"),
and shall complete same in the manner herein required within six (6)
months from the Initiation Date. The date of expiration of the above
referred six months term shall be referred to hereinafter as the
"Completion Date". If in the reasonable opinion of the Owner it becomes
necessary that Contractor operates night shifts or weekends and holidays,
or that it hires additional labor force, in order to complete the Work by
the Completion Date, Contractor shall operate the necessary night shifts,
weekends or holidays, or hire such additional labor force as is therefore
necessary, without additional cost to Owner, unless such additional
efforts are necessary as a result of modifications to the Specifications
authorized by Owner or are otherwise attributable to Owner, or are
necessary because of a Work delay which is excused pursuant to the
following paragraph.


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11.2 If the performance of the Work is delayed due to actions or omissions of
Owner, or to acts of god, such as fire, flood, rain, wind or others beyond
the control and without the fault or negligence of Contractor which
temporarily prevent the performance of the Work, the Completion Date shall
be set back the same number of days during which said actions, omissions,
or acts of god prevented the performance of the Work. Contractor shall not
be entitled to demand payment of damages or increased costs suffered due
to the delays above mentioned, except for delays caused by actions or
omissions of Owner. The supervision and inspection of the Work by the
Owner, and the requirement of corrections to non conformities with the
Specifications shall not be deemed to constitute a delay due to Owner.


11.3 The modifications to the Specifications directed or requested by Owner
shall not constitute a reason for setting back the Completion Date in the
manner above indicated, unless such is agreed to at the time said
modifications are communicated to Contractor.


TWELVE. MODIFICATIONS TO SPECIFICATIONS.


12.1 At any time during the performance of the Work, Owner may direct or
request Contractor to modify the Specifications as it deems appropriate
and necessary. The Price shall be adjusted in accordance with the increase
or reduction in Contractor's accruable fees, labor, materials and sub-
contracting expenses resulting from the modification and considering the
time impact on the Completion Date. Such modifications shall be notified
to Contractor by a Change Order drafted in the manner set forth in Exhibit
"C" hereof. No changes shall be made to the Specifications without the
written approval of the Owner.


THIRTEEN. CONTRACTOR'S SUPERVISION OF THE WORK.


13.1 Contractor shall supervise and direct the Work using its best skill and
attention in order to make sure that all work techniques, materials and
labor used in the performance of the Work comply with the terms of this
agreement.


13.2 To the above effects, Contractor shall keep at the Work site during the
performance of the Work a competent superintendent, satisfactory to Owner.
In case a superintendent proves unsatisfactory to Owner, same shall be
promptly replaced by Contractor, upon written request by Owner. The
superintendent or its assistants, shall not be changed without 30 days
notice to Owner in writing.


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FOURTEEN. OWNER'S INSPECTION OF THE WORK.


14.1 Contractor shall allow Owner to inspect the Work at any time, without need
of prior notice, in order to verify performance of the Work in accordance
with the terms hereof. Such supervision shall not relieve Contractor of
any responsibility or liability deriving herefrom in connection with the
performance of the Work.


FIFTEEN. CORRECTIONS.


15.1 Should any part of the Work or the materials utilized in its performance
be found by Owner to be defective, damaged or in any way non conforming
with the Specifications, Owner shall immediately notify Contractor
thereof, and Contractor shall, immediately or as soon as it is
practicable, remove, replace, reconstruct or refinish, as appropriate and
at the sole reasonable discretion of the Owner, the defective, damaged or
non conforming materials or portion of the Work. Such correction shall be
entirely at the expense of Contractor and shall not originate the
Completion Date to be set back.


15.2 In the event Contractor fails to correct the Work as provided in the
preceding paragraph, Owner may, upon five (5) days written notice to
Contractor, order Contractor to stop performance of any part or all of the
Work and may correct or have corrected the corresponding deficiencies. In
such event, Owner shall deduct the actual cost thereof from the Price.
Such correction by Owner shall not imply a waiver of its rights to any
other remedies a ...