Document:

Exhibit 10.41

DEVELOPMENT AGREEMENT

(Residential Condominium Project)

 

BY
AND BETWEEN

 

THE PRIVATE RESIDENCES, LLC,

a Delaware limited liability company

 

(“Owner”)

 

AND

 

IFC, INC.,

a Missouri
corporation

 

(“Developer”)

 

December 1, 2006

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
  Page No.

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1  APPOINTMENT AND DEVELOPMENT

  	
   

  	
  2

  
	
  Section 1.1

  	
  Appointment of
  Developer as Developer

  	
   

  	
  2

  
	
  Section 1.2

  	
  Acceptance by
  Developer

  	
   

  	
  2

  
	
  Section 1.3

  	
  Pre-Construction
  Duties

  	
   

  	
  2

  
	
  Section 1.4

  	
  Project Design

  	
   

  	
  3

  
	
  Section 1.5

  	
  Other Services

  	
   

  	
  3

  
	
  Section 1.6

  	
  Project
  Commencement

  	
   

  	
  5

  
	
  Section 1.7

  	
  Project
  Administration

  	
   

  	
  5

  
	
  Section 1.8

  	
  Limitation on
  Expenditures

  	
   

  	
  9

  
	
  Section 1.9

  	
  Deemed Approval
  by Owner

  	
   

  	
  10

  
	
  Section 1.10

  	
  Employees

  	
   

  	
  10

  
	
  Section 1.11

  	
  Ownership of
  Information and Materials

  	
   

  	
  10

  
	
  Section 1.12

  	
  Hazardous
  Substances

  	
   

  	
  10

  
	
  Section 1.13

  	
  Payment for
  Materials

  	
   

  	
  11

  
	
  Section 1.14

  	
  Completion

  	
   

  	
  11

  
	
  Section 1.15

  	
  Developer to Act
  as Agent for Sales of Units

  	
   

  	
  12

  
	
  ARTICLE 2  COMPENSATION

  	
   

  	
  12

  
	
  Section 2.1

  	
  Development Fee

  	
   

  	
  12

  
	
  Section 2.2

  	
  Adjustment to
  Development Fee

  	
   

  	
  13

  
	
  Section 2.3

  	
  Withholding
  Pending Delivery of Completion Documentation

  	
   

  	
  13

  
	
  Section 2.4

  	
  No Other
  Compensation

  	
   

  	
  13

  
	
  ARTICLE 3  INSURANCE AND INDEMNITY

  	
   

  	
  14

  
	
  Section 3.1

  	
  Insurance
  Requirements

  	
   

  	
  14

  
	
  Section 3.2

  	
  Indemnity

  	
   

  	
  14

  
	
  Section 3.3

  	
  Waiver of
  Subrogation

  	
   

  	
  14

  
	
  ARTICLE 4  TERM AND TERMINATION

  	
   

  	
  15

  
	
  Section 4.1

  	
  Term

  	
   

  	
  15

  
	
  Section 4.2

  	
  Termination by
  Owner

  	
   

  	
  15

  
	
  Section 4.3

  	
  Termination by
  Developer

  	
   

  	
  16

  
	
  Section 4.4

  	
  Additional
  Remedies

  	
   

  	
  16

  
	
  ARTICLE 5  DUTIES UPON TERMINATION OR
  EXPIRATION

  	
   

  	
  16

  
	
  Section 5.1

  	
  Developer’s
  Duties

  	
   

  	
  16

  
	
  Section 5.2

  	
  Owner’s Duties

  	
   

  	
  16

  
	
  ARTICLE 6  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  17

  
	
  Section 6.1

  	
  Developer’s
  Representations and Warranties

  	
   

  	
  17

  
	
  Section 6.2

  	
  Owner’s
  Representations and Warranties

  	
   

  	
  18

  
	
  ARTICLE 7  MISCELLANEOUS PROVISIONS

  	
   

  	
  19

  
	
  Section 7.1

  	
  Notices

  	
   

  	
  19

  
	
  Section 7.2

  	
  Assignment

  	
   

  	
  19

  
	
  Section 7.3

  	
  Lender
  Requirements

  	
   

  	
  19

  
	
  Section 7.4

  	
  Waiver of Lien
  Claims

  	
   

  	
  19

  
	
  Section 7.5

  	
  Force Majeure
  Events

  	
   

  	
  19

  
	
  Section 7.6

  	
  Governing Law

  	
   

  	
  19

  

 

 i
 

 

 

	
  Section 7.7

  	
  Time of Essence

  	
   

  	
  19

  
	
  Section 7.8

  	
  Entireties,
  Beneficiaries

  	
   

  	
  19

  
	
  Section 7.9

  	
  No Agency

  	
   

  	
  19

  
	
  Section 7.10

  	
  Attorneys’ Fees

  	
   

  	
  20

  
	
  Section 7.11

  	
  No Waiver

  	
   

  	
  20

  
	
  Section 7.12

  	
  Entire Agreement

  	
   

  	
  20

  
	
  Section 7.13

  	
  Severability

  	
   

  	
  20

  
	
  Section 7.14

  	
  Amendments.

  	
   

  	
  20

  
	
  Section 7.15

  	
  Counterparts

  	
   

  	
  20

  
	
  Section 7.16

  	
  Additional Acts

  	
   

  	
  20

  
	
  Section 7.17

  	
  Exhibits

  	
   

  	
  20

  
	
  Section 7.18

  	
  Limitation of
  Liability

  	
   

  	
  21

  
	
  Section 7.19

  	
  Confidentiality

  	
   

  	
  21

  
	
  Section 7.20

  	
  Waiver of Jury
  Trial

  	
   

  	
  21

  
	
  Section 7.21

  	
  Compliance
  Amendments

  	
   

  	
  21

  
	
  Section 7.22

  	
  Dispute
  Resolution

  	
   

  	
  21

  

 

 ii

DEVELOPMENT AGREEMENT

(Residential
Condominium Project)

This Development Agreement (“Agreement”)
is made to be effective as of the 1st day of December 2006 (the “Effective Date”),
by and between THE PRIVATE RESIDENCES, LLC, a
Delaware limited liability company (“Owner”), and IFC, INC.,
a Missouri corporation (“Developer”), as follows:

RECITALS

A.                                   Owner is the owner of Floors 9-12,
Floors 14-15, Floors 17-27, and a part of Floor 28 of the Condominium Tower
(defined below).

B.                                     Chase Park Plaza Hotel, LLC, a Delaware
limited liability company and an affiliate of Owner (“Hotel Owner Affiliate”)
is the owner of a portion of the improvements located on the land (the “Land”)
in St. Louis, Missouri, described in Exhibit A
attached hereto and made a part hereof, generally comprised of the following:
(i) an eleven story hotel building with approximately two hundred fifty-one
(251) hotel rooms and related facilities and appurtenances (the “Main Hotel
Building”), (ii) the sub-basement, basement, Floors 1-8, Floor 16, a part
of Floor 28, and Floors 29-30 of an adjacent thirty-story mixed use tower that
is (or will be) subject to a condominium regime (the “Condominium Tower”);
and (iii) two parking garages associated with the Main Hotel Building and the
Condominium Tower (the “Parking Garages”).

C.                                     Owner and Hotel Owner Affiliate intend to
re-develop and renovate the Main Hotel Building, Condominium Tower and Parking
Garages as follows:  (i) Hotel Owner
Affiliate intends to renovate the existing hotel rooms in the
Main Hotel Building and perform (or cause to have performed) certain other
renovations of the Main Hotel Building (the “Main Hotel Building Renovation
Project”); (ii) Hotel Owner Affiliate intends to renovate the sub-basement,
basement, Floors 1-8, Floor 16, a part of Floor 28, and Floors 29-30 of the
Condominium Tower and the Parking Garages, it being the intent of Owner to
construct, among other improvements, approximately eighty-nine (89) new hotel
rooms on Floors 3-5 of the Condominium Tower and to construct approximately
forty-eight (48) corporate apartment units on Floors 6-8 of the Condominium
Tower (collectively, the “New Hotel Facilities and Corporate Apartments
Project”), and (iii) Owner intends to construct approximately eighty-seven
(87) residential for-sale condominium units on Floors 9-12, Floors 14-15,
Floors 17-27 and a part of Floor 28 of the Condominium Tower (the “Residential
Condominium Project”).

D.                                    Owner and Hotel Owner Affiliate desire to
retain Developer to assist Owner and Hotel Owner Affiliate with the Main Hotel
Building Renovation Project, the New Hotel Facilities and Corporate Apartments
Project and the Residential Condominium Project.  Accordingly, Owner and Developer desire to
enter into this Agreement pertaining to the Residential Condominium Project
and, concurrently herewith, (i) Hotel Owner Affiliate and Developer will enter
into a separate development agreement with respect to the Main Hotel Building
Renovation Project and a separate development agreement with respect to the New
Hotel Facilities and Corporate Apartments Project.  As used in this Agreement, the term “Project”
means the Residential Condominium Project and any other work for which
provision is made in the Final Development Budget (as hereinafter defined).

NOW THEREFORE, for and in consideration of the premises,
the mutual promises and agreements set forth herein and Ten and No/100 Dollars
($10.00) and other good and valuable consideration, in hand paid, the receipt
and sufficiency of which is hereby acknowledged, the parties do hereby agree as
follows:

 

ARTICLE 1

APPOINTMENT AND DEVELOPMENT

Section
1.1                                      Appointment of Developer
as Developer.  Owner hereby appoints Developer as its
independent contractor to perform the Project, and delegates to Developer the
right and obligation to supervise, manage and carry out the Project, on behalf
and for the account of Owner, upon the terms and conditions set forth in this
Agreement and in accordance with the Final Development Plan, Final Development
Budget and Final Project Schedule (as each such term is defined below) and all
items related thereto.

Section
1.2                                      Acceptance by Developer. 
Developer accepts such appointment and agrees to perform such services
on behalf and for the account of Owner as required by, and subject to, the
terms and conditions of this Agreement. 
Developer agrees to diligently use commercially reasonable efforts in
the performance of its duties hereunder, which performance in all respects and
at all times shall be carried out to the same extent and with the same degree
of care and quality as the Developer would exercise in the conduct of its own
affairs if the Developer were the owner of the Project.  Developer agrees to apply prudent and
reasonable business practices in the performance of its duties hereunder and shall
exercise that degree of skill, competence, quality and professional care
rendered by companies performing the same or similar type services for
comparable mixed-use projects in the St. Louis, Missouri area.  Developer will not subcontract any of its services
to any other entity or person without first obtaining Owner’s prior written
consent; provided, however, that Developer may retain such Consultants (as
hereinafter defined) as are contemplated in this Agreement without Owner’s
consent so long as the fees or other charges of such Consultants are set forth
in the Final Development Budget.

Section
1.3                                      Pre-Construction Duties. 
The initial objectives of the parties are to prepare a general
development plan for the Project, cause the preparation of plans and
specifications for the Project, and formulate a budget for the Project.

(a)                                  Developer shall submit to Owner for
approval a development plan (the “Development Plan”) for the Project
setting forth a description of the proposed improvements to be included in the
Project, the schedule for preparation of the plans and specifications for the
Project, and the proposed parameters of agreements with architectural,
engineering, consulting, and general contracting firms.  Attached hereto as Exhibit
B is a listing of the plans that comprise the conceptual
Development Plan for the Project, the Main Hotel Building Renovation Project,
and the Residential Condominium Project, all of which have been approved by
Owner.  Based upon the conceptual
Development Plan, Developer shall with reasonable promptness prepare and obtain
Owner’s written approval of a final Development Plan (together with such
changes expressly permitted pursuant to this Agreement, the “Final
Development Plan”) for the Project (such approval not to be unreasonably
withheld or delayed so long as the Final Development Plan is consistent with
the conceptual Development Plan).

(b)                                 Developer shall submit to Owner for
approval a budget (the “Development Budget”) for the Project setting
forth the hard costs, soft costs, and other expenditures anticipated to be
incurred in connection with the Project. 
Attached hereto as Exhibit C
is a conceptual Development Budget for the Project that has been approved by
Owner.  Based upon the conceptual
Development Budget attached hereto as Exhibit C,
Developer shall with reasonable promptness prepare and obtain Owner’s written
approval of a final Development Budget (together with such changes expressly
permitted pursuant to this Agreement, the “Final Development Budget”)
for the Project (such approval not to be unreasonably withheld or delayed so
long as the Final Development Budget is consistent with the conceptual
Development Budget 

 2
 

 

attached hereto as Exhibit
C).  The Final Development
Budget shall be consistent with AIA Form G702 with a schedule of values based
on standard Construction Specification Institute divisions, categories and
subcategories.

(c)                                  Developer shall submit to Owner for
approval a Project schedule (the “Project Schedule”) for the Project
setting forth a timeline of construction activities in connection with the
Project.  Attached hereto as Exhibit G is a conceptual Project
Schedule that has been approved by Owner. 
Based upon the conceptual Project Schedule attached hereto as Exhibit G, Developer shall with reasonable
promptness, but in no event later than ninety (90) days after the Effective
Date hereof, prepare and obtain Owner’s written approval of a final Project
Schedule (together with such changes expressly permitted pursuant to this
Agreement, the “Final Project Schedule”) for the Project (such approval
not to be unreasonably withheld or delayed so long as the Final Project
Schedule is consistent with the conceptual Project Schedule attached hereto as   Exhibit G).

(d)                                 Developer shall make recommendations to
Owner with respect to the execution of the Project (Architect, contractors,
Consultants), configuration of improvements included in the Project, and
special requirements and conditions.

(e)                                  Developer shall discuss with Owner and
make recommendations concerning expenses of the Project and financing and
ownership strategies.

(f)                                    Developer shall prepare and compile data
for the Project, including without limitation, site information, schedules,
drawings and renderings. Such items shall be delivered to Owner upon request.

Section
1.4                                      Project Design. 
Developer and Owner designate Klitzing Welsch Associates (“Architect”)
as the primary design architect for the Project.  Architect may engage an outside architectural
firm to produce construction drawings for the Project, so long as the costs,
fees and other expenses of such additional architectural firm are set forth in
the Final Development Budget.  If such
costs, fees and/or expenses are not set forth in the Final Development Budget
or exceed the line item(s) established in the Final Development Budget for such
costs, fees and/or expenses, such additional architect and the fees, costs and
expenses related thereto shall be subject to Owner’s prior written approval
(such approval not to be unreasonably withheld or delayed).  Developer shall negotiate the contract with
the Architect for the Project (as well as all contracts with any other
architectural firm, subject to the limitations set forth in this Section 1.4),
which shall be subject to the review and written approval of Owner (such
approval not to be unreasonably withheld or delayed).  Owner shall enter into such contract with the
Architect in the name of Owner. 
Developer shall not amend or alter the terms of the Architect’s contract
(or any contract with any additional architectural firm) without the prior
written approval of Owner (such approval not to be unreasonably withheld or
delayed).  Developer shall use diligent
efforts to cause the plans and specifications for the Project to be prepared in
a timely manner and in accordance with the Final Development Plan and Final
Development Budget for the Project.  The
final plans and specifications for the Project shall be approved in writing by
Owner (such approval not to be unreasonably withheld or delayed).

Section
1.5                                      Other Services. 
Developer has performed, and Developer shall continue to perform, the
following services with respect to the Project:

(a)                                  Interview, negotiate with, and, after
consultation with and approval of Owner, recommend for engagement by Owner any
other independent design and development consultants (the “Consultants”)
for the Project, including, if and as appropriate, space planners, 

 3
 

 

landscape architects, civil, soils, mechanical,
electrical and plumbing engineers, and acoustical, curtain wall, lighting, art
and graphic design consultants.  The
Consultants identified on Schedule 1 to this Agreement are hereby approved by
Owner.

(b)                                 Manage and coordinate the Consultants
regarding the Project and coordinate Architect’s preparation of the conceptual
design, and the detailed plans and specifications therefor, including, as
appropriate, matters relating to site planning, engineering, building shell,
public space, building height, total area, floor size and landscape design,
traffic and circulation matters.

(c)                                  Initiate the planning and coordinate with
Owner, the Architect and/or the General Contractor the receipt of all necessary
public and private approvals for the Project, including city planning,
applicable building codes, public works, any applicable architectural review
committee, and building permit approvals. Coordinate, with reliance on the
Architect, engineers and Consultants, the satisfaction of all laws and
regulations affecting the Project, including, without limitation, the Americans
with Disabilities Act, and all environmental laws.

(d)                                 Review designs during their development
and advise Owner regarding the interior design and use of improvements included
within the Project, selection of materials, building systems and equipment and methods
of delivery.

(e)                                  Provide Owner with a monthly progress
report at the beginning of each month detailing (i) the amount of work on the
Project that has been completed during the previous calendar month in relation
to the Final Project Schedule; and (ii) the General Contractor’s and all
subcontractors’ compliance with the Final Development Budget, as well as any
changed conditions regarding cost.  All
change orders shall be submitted to Owner as soon as possible for Owner’s
written approval and execution (such written approval and execution not be
unreasonably withheld or delayed), except that any change order that meets all
of the following requirements may be executed by Developer on behalf of Owner
without the prior approval of Owner: (A) such change order will not cause, when
considered in the aggregate with other all other change orders then executed
with respect to the Project (in this regard, Developer may, at its discretion,
reallocate available funds from within any individual line item or category of
the Final Development Budget to cover overages in any other line item or
category [or to cover increases resulting from the proposed change order in the
guaranteed maximum price established under the General Construction Contract]
and shall not be required to obtain the prior approval of the Owner to any
change order unless, after such reallocation, the total Final Development
Budget will be increased, as a result of the proposed change order, by more
than Thirty-Five Thousand Dollars ($35,000.00), and (B) such change order will
not materially alter the appearance, utility or design of the Project or extend
the Final Project Schedule.  If Developer
executes any change order on behalf of Owner pursuant to the preceding
sentence, Developer shall provide prompt notice of such change order to
Owner.  Promptly after the execution of
this Agreement, Developer shall prepare and obtain Owner’s approval of the
Final Project Schedule (such approval not to be unreasonably withheld or
delayed). In this regard, Owner and Developer agree that it is their intent to
commence the Project on or about May 1, 2007.

(f)                                    Advise Owner regarding space planning,
design and finish-out evaluations for the Project.

(g)                                 Prepare a detailed estimate of
construction costs, developed by using estimating techniques which anticipate
the various elements of the Project, and based on schematic design 

 4
 

 

documents prepared by the Architect.  Update and refine this estimate periodically
as the Architect prepares design development and construction documents.

(h)                                 Provide business administration and
supervision consistent with good construction practices and as may be required
for the Project; cause budget draw projections for all key trades and schedules
for the purchase and delivery of all materials for the Project to be prepared
and furnished to Owner.

Section
1.6                                      Project Commencement.

(a)                                  At such time as Owner elects to commence
the Project, Owner will give written notice thereof to Developer, and Developer
shall commence or cause to be commenced the Project within twenty (20) business
days thereafter.  Owner and Developer
hereby designate BSI Constructors as the general contractor (“General
Contractor”) for the Project. Developer shall negotiate a guaranteed
maximum price contract with the General Contractor for the Project (the “General
Construction Contract”), which shall be subject to the review and written
approval of Owner (such written approval not to be unreasonably withheld or
delayed).  Owner shall enter into the
General Construction Contract with the General Contractor in the name of Owner.
Developer shall not amend or alter the terms of the General Construction
Contract or issue or authorize change orders in connection therewith without
the prior written approval of Owner, except as expressly permitted under
Section 1.5(e) above.  Developer shall
provide Owner with copies of all change orders on a monthly basis, or as
otherwise requested by Owner or required by Section 1.5(e) above.

(b)                                 Developer shall cause the Project to be
developed and constructed in accordance with the Final Development Plan, Final
Development Budget and Final Project Schedule. 
Developer shall provide Owner with information in connection with
updating the Final Development Plan, Final Development Budget and Final Project
Schedule as construction progresses and when requested by Owner, and the Final
Development Plan, Final Development Budget and Final Project Schedule shall be
modified from time to time based on such updates to the extent such
modifications are approved by Owner (if Owner’s approval is required pursuant
to the terms of this Agreement). 
Developer shall use commercially reasonable efforts to cause the General
Contractor to comply with the Final Development Plan, Final Development Budget
and Final Project Schedule.

(c)                                  Unless otherwise consented to by Owner in
writing or expressly authorized under Section 1.5(e) of this Agreement ,
Developer shall incur no expenditures nor authorize any other person or entity
to incur or pay any expenditures in connection with the Project that are not
provided for in the Final Development Budget. 
All expenditures shall be charged to the proper account as specified in
the Final Development Budget, and no expenditure may be classified or
reclassified for the purpose of avoiding an excess of the budgeted amount of an
accounting category. Notwithstanding the foregoing, subject to any requirements
imposed by a Project Lender (as hereinafter defined), Developer may reallocate
(i) demonstrated cost savings in any particular accounting category to other
accounting categories within the Budget, and (ii) budgeted construction
contingency reserve or development contingency reserve to categories with
overruns.  Developer shall give Owner
prompt written notice of any reallocations made pursuant to the preceding
sentence.

Section
1.7                                      Project Administration. 
During the Project, with due reliance upon and assistance from the
Architect and Consultants, Developer shall exercise general management of the 

 5
 

 

Project team and in
connection therewith shall, without limiting the generality of the foregoing,
perform the following duties in respect of the Project:

(a)                                  Provide direction to the General
Contractor on behalf of Owner in matters requiring such direction per the terms
of the General Contract.

(b)                                 Appoint management, support staff and/or
Consultants to inspect the manner and progress of the Project;

(c)                                  Make, and to the extent set forth in the
Final Development Budget, engage an owner’s representative (“Owner’s
Representative”) to make, visits to the Project site to inspect the work
and progress of construction with the General Contractor and with the Architect
and other Consultants, which visits shall be of such frequency and duration as
shall be necessary for Developer to carry out its duties under this Agreement,
to guard against defects and deficiencies in the work and to determine that the
work is being performed in accordance with the construction documents.
Developer shall prepare and submit to Owner a progress report no less frequently
than once each week detailing the observations of Developer and Owner’s
Representative.  Owner hereby approves
Northstar Management Company, LLC, as Owner’s Representative for the Project,
but reserves the right to change Owner’s Representative if such a change is
deemed appropriate by Owner.  Any other
Owner’s Representative shall be subject to the prior written approval of Owner
(such approval not to be unreasonably withheld or delayed).

(d)                                 Advise Owner promptly of any material
omissions, substitutions, defects, or deficiencies noted by Developer or
reported to Developer by Owner’s Representative in the work of the General
Contractor or any contractor, subcontractor or materialman.

(e)                                  Consult with Owner regarding proposed
changes and modifications to the construction documents and coordinate issuance
of change orders in accordance with the terms of this Agreement.  Developer shall ensure that all changes to
the Project or services related thereto are implemented through written change
orders signed by the Owner (or by Developer, if permitted under Section 1.5(c)
of this Agreement) and the affected party. Developer shall establish a changes
system to control the writing of change orders and to record all changes to the
construction documents. For changes initiated by the Owner or Developer with
respect to the General Contractor’s work, Developer shall prepare (or cause to
be prepared at Developer’s cost and expense) written change order proposal
requests, incorporating detailed drawings and specifications prepared or
approved by the Architect where appropriate. For change order requests
initiated by the General Contractor, Developer shall evaluate the requests and,
if applicable, provide a copy to the Architect for comment. Developer shall
evaluate proposed change orders for price, schedule and coordination impact and
shall forward its recommendations to Owner, along with the comments of the
Architect.  Developer shall prepare
written change orders and shall obtain the signatures of the Owner and the
affected party.  If, pursuant to this
Agreement, Owner’s approval is not required for a change order, then Owner
shall promptly execute and deliver the same to Developer.  If a change is performed by the General
Contractor or a Consultant under a pricing arrangement other than lump sum,
Developer shall make a record of units, work or services or actual costs
incurred, as the case may be.  Developer
shall obtain from the General Contractor and Consultants copies of supporting
documents for all units of work or services or costs incurred. Developer shall
keep a record copy of all signed change orders and shall provide copies to the
Architect and Owner in accordance with Section 1.6(a) of this Agreement.

 6
 

 

(f)                                    Review and evaluate all invoices and
payment applications against actual progress to determine whether the amount
claimed as the percent complete is accurate. Developer shall certify the
amounts due the General Contractor and Consultants in a monthly draw request
submitted to Owner no later than the tenth (10th)
day of each calendar month after which the draw request applies, subject to
change by the Project Lender (as hereinafter defined). Developer may certify,
modify or withhold certification for payment, and shall require necessary
revisions to such invoices. Developer will submit certified Project invoices to
the Owner for review and approval along with a report summarizing the status of
payments to the General Contractor and the costs of the Project. The Developer’s
certification for payment shall constitute a representation to Owner, based on
the Developer’s determinations at the site and on the data comprising the
General Contractor’s invoices, that, to the best of the Developer’s knowledge,
information and belief, the work has progressed to the point indicated and,
except as stated in the certification for payment, the quality of the work is
in accordance with the construction documents.

(g)                                 Obtain from the General Contractor all
required lien waivers and all other documentation as provided for herein or in the
General Construction Contract.

(h)                                 Consult with the Architect and Owner if
the General Contractor or any contractor or subcontractor requests
interpretations of the meaning and intent of the plans and specifications and
assist in the resolution of any questions which may arise.

(i)                                     Assist in preparing such reports as may
be reasonably required for the use of any public agency on the progress of the
Project.

(j)                                     Maintain construction cost reporting for
the Project, using the format required under Section 1.3(b).

(k)                                  Arrange for the delivery and storage,
protection and security of Owner-purchased materials, systems and equipment
which are a part of the Project, until such items are incorporated into the
Project.

(l)                                     On application for final payment by the General
Contractor, cause a final inspection of the work by the Architect to be
performed, assemble and deliver to Owner any written guaranties, releases,
bonds and waivers, instruction books, diagrams and charts required by the
appropriate contract documents, and issue an approval for final payment.

(m)                               Arrange for and assist the General
Contractor in coordinating the installation of the public and private utilities
with the appropriate utility companies on the most favorable terms and
conditions obtainable for the Project at the time.

(n)                                 Coordinate the construction work with any
activities of Owner on or about the Land or the improvements thereon during the
construction period, including coordinating the preparation and completion of
punch list items.

(o)                                 Hold regular meetings to be attended by
representatives of Architect, General Contractor, Owner’s Representative and
other key parties, and such special meetings as requested or required, and
record and distribute minutes and decisions; and also provide copies of meeting
minutes to Owner.

 7
 

 

(p)                                 Establish a monthly reporting system that
covers major operations, cost, schedule, and marketing aspects of the Project,
including:

(i)                                     Cost Status - a monthly cost status report for each major cost item
in the Project, employing a format acceptable to Owner and tracking budget,
estimate, amount contracted, change orders and estimated cost to complete.

(ii)                                  Payments Status - a monthly payments status report for each major cost
item in the Project employing a format acceptable to Owner and track payments
made and amounts yet to be paid and project monthly cash requirements and
update projections periodically.

(iii)                               Project Status – a monthly narrative with executive summary, which
outlines Project progress during reporting periods, and projection for work to
be commenced in the next period.

(iv)                              Marketing Status – a monthly report that reflects the
status of reservations and sales activity with respect to the Units in the
Project that compares actual sales with projected sales.

(q)                                 Review (and cause the appropriate
Consultants to review) all applicable building codes, environmental, zoning and
land use laws and other applicable local, state and federal laws, regulations
and ordinances concerning the Project. The Developer shall make application for
and seek to obtain and keep in full force and effect all necessary governmental
approvals and permits, and shall endeavor to perform such acts as shall be
reasonably necessary to effect compliance by the Owner with all laws, rules,
ordinances, statutes, and regulations of any governmental authority applicable
to the Project. Upon receipt of Owner’s written request, Developer shall seek
to obtain any variances or rezoning of such portion of the Land as are
necessary or appropriate to cause the Project to be in compliance with
applicable codes, laws, regulations and ordinances. Such services shall be
performed at Developer’s own cost and expense, except that all out-of-pocket
costs and costs of Owner-approved attorneys and Consultants incurred in any
such efforts shall be borne by Owner. Developer shall make recommendations to
Owner with respect to agreements with necessary government agencies and
utilities.

(r)                                    Establish and maintain a central file for
all design, construction, and related contractual documents, including
contracts, purchase orders and change orders.

(s)                                  Receive and confer with Owner regarding
response to all notices, claims and pertinent correspondence, and provide Owner
with three (3) close-out binders for each Unit (the “Close-Out Binders”)
containing all warranties, guarantees, operating manuals and as-built drawings
within ten (10) days after Completion (as hereinafter defined) of the Project
(or as soon thereafter as reasonably practicable).

(t)                                    Make payment each month of expenditures
authorized in the Final Development Budget, to the extent funds are made
available therefor by Owner.

(u)                                 Prepare and submit duplicate monthly
applications for payment to Owner and Project Lender on or before the tenth
(10th) day of each calendar month for the prior calendar month for which
payment is requested.  With each
application for payment, Developer shall submit invoices from Developer and all
contractors and subcontractors covering the period through the immediately
preceding payment, and such other evidence reasonably required by 

 8
 

 

Owner and/or Project Lender to demonstrate the amounts
claimed as then payable.  The
applications for payment shall show the costs actually incurred through the end
of the period covered by the application for payment and for which the
Developer has made or intends to make actual payment prior to the next
application for payment.  With each
payment to the General Contractor, Developer shall obtain a lien release from
the General Contractor and all major subcontractors, covering all work for
which payment is being made, and at such other intervals as Developer and/or
Project Lender feels is necessary to be satisfied that the General Contractor
is in fact paying its subcontractors.

(v)                                 Maintain current and accurate records and
reports with regard to the financing, development and progress of the
Project.  Such records shall be
maintained at the Developer’s principal place of business and shall be made
available to the Owner at any reasonable time, during normal business hours,
for review and inspection by the Owner. 
Owner shall have the right at its sole cost and expense to make copies
of any books and records applicable to the Project for Owner’s use and review.

(w)                               Enforce all contractual obligations of
the General Contractor to comply with all Governmental Requirements relating to
the Project, including, but not limited to, all applicable environmental laws
including the Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act.

(x)                                   Coordinate with the title company issuing
title insurance with respect to the Project the issuance of an appropriate
policy of title insurance and endorsements thereto such that Owner maintains
title insurance with respect to the Project that is typically maintained by
owners of projects similar to the Project in the St. Louis, Missouri area.

(y)                                 Perform such other additional development
management functions as are commercially appropriate to complete the Project in
accordance with the Final Development Plan, Final Development Budget and Final
Project Schedule.

In the performance of its services, Developer shall (1) exercise that
degree of professional skill, competence, quality and professional care
rendered by companies in the St. Louis, Missouri area performing the same or
similar type services for comparable mixed-use projects; (2) furnish efficient
business administration and supervision and use commercially reasonable efforts
to perform in an expeditious, timely and economical manner consistent with the
interests of the Owner; and (3) perform the services required of Developer
under this Agreement at all times in a professional and commercially reasonable
manner.  As used herein, “Governmental
Requirements” means final land development approval and all other permits
and approvals required to commence and complete the Project in accordance with
the Final Development Plan, Final Development Budget and Final Project Schedule
and all applicable statutes, ordinances, regulations, orders, rules, directives
or contracts of any federal, state, municipal or other governmental or
quasi-governmental board, agency, authority or body (individually and
collectively, a “Governmental Requirement” or the “Governmental Requirements”),
including the preparation and submission of all necessary drawings, documents,
information and comments (all of which shall be subject to Owner’s written
approval prior to submission to any governmental authority).

Section
1.8                                      Limitation on Expenditures.  Except for expenditures made and obligations
incurred in accordance with the Final Development Budget for the Project, or
otherwise approved in writing in advance by Owner or expressly permitted under
Section 1.5(e) of this Agreement, Developer 

 9
 

 

shall not have the power
or authority to make any expenditure or incur any expense or obligation on
behalf of Owner in connection with the Project, except in the face of an
emergency affecting the safety of persons or property in connection with the
Project, and then only to the extent reasonably necessary during the period of
such emergency.

Section
1.9                                      Deemed Approval by Owner. 
Whenever Developer shall be required under the terms of this Agreement
to obtain the approval of Owner with respect to a matter, Owner shall be deemed
to have approved such matter if Owner fails to send Developer written notice of
Owner’s disapproval of such matter within ten (10) business days after
Developer submits in writing such matter to Owner for consideration.

Section
1.10                                Employees. 
To the extent set forth in the Final Development Budget, Developer shall
engage at all times a sufficient number of capable employees, consultants or
independent contractors to enable Developer to perform its duties
hereunder.  The individual development
managers designated by Developer or the Consultants retained by Developer to be
dedicated to the Project and who shall be principally responsible for
performing the development management functions set forth in this Agreement
shall be subject to the reasonable approval of Owner (such approval not to be
unreasonably withheld or delayed). Owner hereby acknowledges its approval of
the following individuals as development managers principally responsible for
performing the development management functions set forth herein:  James L. Smith and Marcia Smith
Niedringhaus.  Any substitute development
manager shall also be subject to the reasonable approval of Owner. All persons
either employed or retained by Developer in the performance of its
responsibilities hereunder shall be exclusively controlled by Developer and
shall not be employees of the Owner, and Owner shall have no liability,
responsibility or authority with respect thereto.

Section
1.11                                Ownership of Information
and Materials.  Subject to any agreement with third parties
executed (or approved in writing) by Owner, Owner shall have the right to use,
without further compensation to Developer, all written data and information
generated by or for Developer in connection with the Project or supplied to Developer
by Owner or Owner’s contractors or agents, and all drawings, plans, books,
records, contracts, agreements and all other documents and writings in its
possession relating to its services or the Project.  Such data and information shall at all times
be the property of Owner. Developer agrees, for itself and all persons retained
or employed by Developer in performing its services, to hold in confidence and
not to use or disclose to others any confidential or proprietary information of
Owner which is heretofore or hereafter disclosed to Developer or any such
persons and which is designated by Owner as confidential and proprietary,
including but not limited to any proprietary or confidential data, information,
plans, programs, plants, processes, equipment, costs, operations, tenants or
customers which may come within the knowledge of Developer or any such persons
in the performance of, or as a result of, its services, except where (a) Owner
specifically authorizes Developer to disclose any of the foregoing to others or
such disclosure reasonably results from the performance of Developer’s duties
hereunder, or (b) such written data or information shall have theretofore been
made publicly available by parties other than Developer or any such persons, or
(c) Developer is required by law to disclose such information (provided that in
such case Developer shall give Owner prior notice of the request for disclosure
and shall cooperate with Owner in obtaining a protective order or other remedy
at Owner’s expense).

Section
1.12                                Hazardous Substances.  
Developer shall exercise such efforts as are exercised by other prudent
developers of similar property to prevent any Hazardous Substances from being
deposited, stored, disposed, placed, generated, manufactured, buried, refined,
transported, treated, discharged, handled or located on the Land or in the
improvements located thereon, except as may be specifically authorized by Owner
pursuant to this Agreement.  In
connection with any such Hazardous Substances so authorized, Developer shall
exercise commercially reasonable efforts to confirm that any 

 10
 

 

such authorized activity
with respect to Hazardous Substances is conducted in accordance with applicable
Governmental Requirements and the terms and conditions of any such authorization
by Owner.  The term “Hazardous Substances”
includes (a) any chemical, material, element, compound, solution, mixture,
substance or other matter of any kind whatsoever which is defined, classified,
listed, designated or regulated as hazardous, toxic or radioactive by any
federal statute, ordinance, regulation, order, rule or directive, or any
statute, ordinance, regulation, order, rule or directive of the State of
Missouri, any political subdivisions of that state, any township or municipal
corporation of the state, or any board, agency, authority or body associated
with any of the foregoing or any quasi-governmental body or agency with
jurisdiction over such matters; (b) PCBs or asbestos or materials containing
PCBs or asbestos; (c) petroleum and petroleum-based chemicals and substances;
and (d) urea formaldehyde.  Owner
authorizes Developer to allow a contractor engaged in construction to
temporarily use or store Hazardous Substances where (i) such Hazardous Substances
are reasonably required for an area in quantities appropriate to the
performance of the contractors’ work; (ii) the use and storage of such
Hazardous Substances is in conformity with all applicable requirements; and
(iii) Developer exercises reasonable oversight over the contractors’ compliance
with clauses (i) and (ii).

Section
1.13                                Payment for Materials.  Notwithstanding anything contained
herein to the contrary, no amount shall be paid to Developer for materials
delivered but not yet incorporated into the Project unless Owner and Project
Lender receive (a) bills of sale or other evidence of the passage of title
of such materials to Owner, subject only to payment, (b) evidence that the
materials are insured under applicable casualty insurance policies, and
(c) evidence that such materials are securely stored at the Property.  In the event of any conflict between this
Section 1.13 and the terms and conditions of Owner’s agreements with the
Project Lender, the latter shall control.

Section
1.14                                Completion.

(a)                                  Developer shall use its reasonable efforts to cause
Completion (defined below) of the Project to occur on or before the final
completion date set forth in the Final Project Schedule.

(b)                                 For purposes of this Agreement, the “Completion” of the Project shall be deemed to have occurred on such
date as all the following conditions are fulfilled:

(i)                                     The Project has been completed in
substantial accordance with the plans and specifications for the Project (as
same have been approved in writing by Owner) except for any Punchlist (defined
below) items; provided, however, that any Units then not sold or subject to a
Sale Agreement (defined below) need not have interior finish completed until
such time as the same are subject to a Sale Agreement and then in accordance
with the terms of such Sale Agreement;

(ii)                                  Developer has delivered to Owner a
Certificate of Substantial Completion (a “Completion Certificate”) from the
Architect on the form promulgated by the AIA in respect of the Project;
provided that such Completion Certificate may include an appropriate punchlist
(a “Punchlist”) or items still to be completed after the date of issuance of
the Completion Certificate;

(iii)                               Developer has delivered to Owner a final or temporary
certificate of occupancy from the City of St. Louis for the Project; and

(iv)                              Developer is then not in default under
this Agreement.

 11
 

 

(c)                                  Concurrently with Completion of the Project, or as soon thereafter as
reasonably practicable through the use of commercially reasonable efforts by
Developer, Developer shall deliver to Owner the following items (collectively,
the “Completion Documentation”):

(i)                                     a true and correct copy of an affidavit
or lien waiver from the General Contractor stating that: (A) the General
Contractor has been paid all amounts due for work performed by or through the
General Contractor with respect to the Project; and (B) the General Contractor
has paid, or will pay, all of its subcontractors, suppliers and other vendors
all amounts due them for such work, or in the alternative will indemnify and
hold the Owner and the Property harmless from and against any claims that may
be asserted by such subcontractors, suppliers or vendors seeking such payment,
or in the alternative to such an affidavit or lien waiver, a true and correct
copy of a settlement agreement or court order resolving all claims that have
been or could be asserted against the Owner or the Property by the General
Contractor or any of its subcontractors, suppliers or other vendors, seeking
payment for work performed with respect to the Project;

(ii)                                  a final certificate of occupancy from the
City of St. Louis for all Units within the Project that have been sold or are
at the time of Completion then subject to a Sale Agreement (defined below) and
such other governmental permits and licenses as are required for the occupancy
and operation of such Units;

(iii)                               evidence of completion of the Punchlist items; and

(iv)                              three (3) Close-Out Binders for each Unit
within the Project.

Section
1.15                                Developer to Act as Agent
for Sales of Units.  Attached as Schedule 3 to this
Agreement is a schedule of the pro forma sales prices for the Units (as the
same may be modified pursuant to this Agreement, the “Pro Forma Sale Prices”).  All reservation agreements for the Units
shall be documented on the form of agreement (as the same may be modified
pursuant to this Agreement, the “Reservation Agreement”) attached hereto
as Exhibit H, and all agreements for
the sale of each Unit shall be documented on the form of agreement (as the same
may be modified pursuant to this Agreement, the “Sale Agreement”)
attached hereto as Exhibit I.  Owner hereby appoints and designates
Developer as Owner’s agent for sales of the Units, with the authority to market
the Units, negotiate sales of the Units and the Sale Agreements relating
thereto, and to execute Reservation Agreements and Sale Agreements for the
Units on behalf of Owner. 
Notwithstanding the foregoing, Owner’s prior written approval (such
approval not to be unreasonably withheld or delayed) shall be required for any
Reservation Agreement or Sale Agreement that provides for a sales price less
than ninety-five percent (95%) of the Pro Forma Sale Price for each such Unit.

ARTICLE
2

COMPENSATION

Section
2.1                                      Development Fee.  For all services rendered in
connection with the Project pursuant to Article 1, Developer shall be paid a
fee (the “Development Fee”) equal to three percent (3%) of the
Designated Construction Costs set forth on Exhibit D
attached hereto, subject to the provisions of Section 2.2 and Section 2.3
below.  The Development Fee shall be paid
to Developer in accordance with Exhibit E
attached hereto.  The Development Fee
shall be Developer’s full and complete compensation for the performance of
duties, services, efforts and/or activities in connection with the development
of the Project, whether or not enumerated in Article 1.  Developer shall not be entitled to payment
for or 

 12
 

 

reimbursement of any
costs or expenses incurred in the performance of the services under Article 1
or otherwise in connection with the Project, except as expressly set forth in
this Agreement and the Final Development Budget.

Section
2.2                                      Adjustment to Development
Fee.  Upon the date of Completion, a determination
shall be made as to whether the Development Fee should be reduced, as follows:

(a)                                  If the costs to complete the Project
exceed the costs set forth in the Final Development Budget, then the
Development Fee shall be reduced by the lesser of (i) the amount by which
incurred costs exceed the costs set forth in the Final Development Budget, or
(ii) twenty-five percent (25%) of the budgeted Development Fee; and

(b)                                 If the actual date of Completion extends
beyond the date of Completion as projected in the Final Project Schedule
(excluding delays caused by Force Majeure Events, delays resulting from change
orders approved or deemed approved by Owner, or delays resulting from
arbitration proceedings pursuant to Section 7.22), then the Development Fee
shall be reduced as follows: (i) if the actual date of Completion exceeds the
projected Completion date by more than sixty (60) days, then the Development
Fee shall be reduced by five percent (5%) of the budgeted Development Fee; (ii)
if the actual date of Completion exceeds the projected Completion date by more
than ninety (90) days, then the Development Fee shall be reduced by fifteen
percent (15%) of the budgeted Development Fee; and (iii) if the actual date of
Completion exceeds the projected Completion date by more than one hundred
twenty (120) days, then the Development Fee shall be reduced by twenty-five
percent (25%) of the budgeted Development Fee.

(c)                                  Notwithstanding the foregoing provisions
of this Section 2.2, in no event shall the aggregate decrease in the
Development Fee pursuant to Sections 2.2(a) and 2.2(b) above exceed twenty-five
percent (25%) of the budgeted Development Fee.

(d)                                 Owner shall disburse the Development Fee,
as same may be reduced pursuant to this Section 2.2 or withheld pursuant to
Section 2.3 below, within twenty (20) business days after Completion, and any
amount of the Development Fee withheld pursuant to Section 2.3 below shall be
disbursed to Developer within ten (10) business days after receipt by Owner of
all Completion Documentation.

Section
2.3                                      Withholding Pending
Delivery of Completion Documentation. 
Notwithstanding anything contained herein to the contrary, Owner shall
have the right to withhold five percent (5%) of the Development Fee until such
time as all Completion Documentation has been delivered to Owner.

Section
2.4                                      No Other Compensation. 
Other than the Development Fee, Developer shall be entitled to no
compensation under this Agreement, nor will Developer be entitled to any
reimbursement of expenses except as expressly set forth in this Agreement or
the Final Development Budget. Without limiting the generality of the preceding
sentence, it is specifically agreed that, except as expressly set forth in the
Final Development Budget, Developer will not be entitled to reimbursement for
(a) the salary or wages, payroll taxes, insurance, workers’ compensation or
other benefits of any employees of Developer; (b) the cost of forms, papers,
ledgers or any other supplies or equipment used in the Developer’s office; (c)
the cost of electronic data processing or computer services that Developer may
elect to incur in the performance its duties under this Agreement; (d) the cost
of office equipment acquired by Developer to enable it to perform its duties
hereunder (except to the extent necessary to synthesize Developer’s software
capabilities with those of Owner in order for Developer to comply with 

 13
 

 

its obligations under
this Agreement); (e) the cost of advances made to employees of Developer and
cost of travel and lodging by Developer’s employees and agents; (f) Developer’s
overhead and general expenses; (g) costs arising from the fault or negligence
of Developer; or (h) costs Developer is prohibited from incurring with respect
to the Project pursuant to Section 1.6(d). 
Nothing in this Section 2.4 shall be construed to limit the right of Developer
(or any affiliate or shareholder of Developer) to be reimbursed for costs and
expenses incurred by Developer (or its affiliates or shareholders) prior to the
date of this Agreement that are set forth in the Final Development Budget
approved by Owner.

ARTICLE
3

INSURANCE AND INDEMNITY

Section
3.1                                      Insurance Requirements. 
Throughout the term of this Agreement, insurance with respect to the
Project shall be carried and maintained in force in accordance with the
provisions contained in Exhibit F
attached hereto and made a part hereof, with the premiums and other costs and
expenses for such required insurance to be borne as provided in Exhibit F.

Section
3.2                                      Indemnity. 
Subject to Section 3.3, Developer agrees to indemnify, defend and hold
Owner harmless from and against any and all costs, expenses, attorneys’ fees,
suits, liabilities, damages, or claims for damages, in any way relating to the
management of the Project by Developer and arising out of or in connection with
the gross negligence or willful misconduct of Developer or Developer’s failure
or refusal to comply with or abide by or perform its obligations set forth in
this Agreement. Subject to Section 3.3, Owner shall indemnify, defend and hold
Developer harmless from and against all costs, expenses, attorneys’ fees,
suits, liabilities, damages, or claims for damages arising out of or in
connection with the gross negligence or willful misconduct of Owner or Owner’s
failure or refusal to comply with or abide by or perform its obligations set
forth in this Agreement. The indemnities set forth in this Section 3.2 shall
survive the termination of this Agreement, but shall lapse and be of no further
effect unless a claim is made thereunder in a court of competent jurisdiction
within the applicable period of limitations provided under Missouri law.

Section
3.3                                      Waiver of Subrogation.  
Owner, on behalf of itself and its insurers, waives its rights of
recovery against Developer or Developer’s partners and their respective
officers, directors and employees, for damages sustained by Owner as a result
of any damage to any property arising from any risk or peril generally covered
or coverable by any insurance policy actually carried by or required to be
carried by Owner pursuant to the terms of this Agreement, regardless of cause,
including negligence; and Owner agrees that no party shall have any such right
of recovery by way of subrogation or assignment.  Developer, on behalf of itself and its
insurers, waives its rights of recovery against Owner and Owner’s partners and
their respective officers, directors and employees, for damages sustained by
Developer as a result of any damage to any property arising from any risk or
peril generally covered or coverable by any insurance policy actually carried
by or required to be carried by Developer pursuant to the terms of this
Agreement, regardless of cause, including negligence; and Developer agrees that
no party shall have any such right of recovery by way of subrogation or
assignment.  Owner and Developer shall
each notify their respective insurance carriers of the mutual waivers herein
contained and shall cause their respective insurance policies required
hereunder to be endorsed, if necessary, to prevent any invalidation of coverage
as a result of the mutual waivers herein contained.

 14
 

 

ARTICLE 4

TERM AND TERMINATION

Section
4.1                                      Term. 
Developer shall manage the Project as herein specified until Completion
or such earlier termination of this Agreement as set forth herein; provided,
however, if any remedial work to be performed by the General Contractor following
Completion has not been completed, the term of this Agreement shall be extended
until the date on which any remedial work required to be performed by the
General Contractor following Completion shall be so performed and accepted by
Owner.

Section
4.2                                      Termination by Owner.  
Notwithstanding the foregoing, however, Owner may terminate this
Agreement if one or more of the following events shall occur:

(a)                                  the filing by Developer of a voluntary
petition in bankruptcy, the filing by a creditor of an involuntary petition in
bankruptcy which is not dismissed within sixty (60) days, the adjudication of
Developer as bankrupt or insolvent, the filing by Developer of any petition or
answer seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution, assignment for the benefit of creditors, or similar
relief for debtors;

(b)                                 a failure by Developer to pay any amounts
or monetary obligations due and owing to Owner which is not cured within ten
(10) business days following receipt of written notice by Owner specifying such
default;

(c)                                  failure by Developer to achieve
Completion within one hundred twenty (120) days after the scheduled date of
Completion as set forth in the Final Project Schedule, subject to Force Majeure
Events, delays resulting from change orders approved or deemed approved by
Owner, or delays resulting from any arbitration proceedings pursuant to Section
7.22;

(d)                                 a good faith determination by Owner that
either (i) Developer is not developing the Project in a manner satisfactory to
Owner, after Owner shall have notified Developer in writing of such
dissatisfaction, Developer has not cured the event(s) leading to Owner’s
dissatisfaction within thirty (30) days after the giving of such notice, and a
final decision is issued pursuant to an arbitration proceeding under Section
7.22 of this Agreement that Developer is in default under this Agreement
pursuant to this Section 4.2(d); or (ii) completion of the Project is not
economically feasible (provided, however, that Owner must abandon the Project
for at least one (1) year and not continue construction thereof);

(e)                                  the costs of the Project exceed the
amount scheduled in the Final Development Budget by more than thirty percent
(30%);

(f)                                    a material default by Developer under
this Agreement that is not cured within thirty (30) days following receipt of
written notice from Owner specifying the default; provided, however, that if
such default cannot be cured within such thirty (30) day period through the use
of diligent efforts, such period shall be extended for an additional thirty
(30) days; provided, further, that if Developer promptly commences such cure
and thereafter diligently prosecutes such cure but is unable to complete such
cure within the aforesaid two thirty (30) day periods, Developer shall be
afforded an additional thirty (30) days to complete such cure;

(g)                                 Owner sells the Property, at Owner’s
election, and in connection with such sale Owner pays to Developer all amounts
required under this Agreement and the Hotel LLC Agreement (as hereinafter
defined);

(h)                                 a failure by Developer to maintain steady
progress of the Final Project Schedule, except as may otherwise be approved by
Owner and subject to Force Majeure Events, delays 

 15
 

 

resulting from change orders approved or deemed
approved by Owner, or delays resulting from arbitration proceedings pursuant to
Section 7.22;

(i)                                     a termination for cause of the
development agreement executed between Hotel Owner Affiliate and Developer with
respect to the New Hotel Facilities and Corporate Apartments Project, it being
agreed that any termination by reason of provisions such as those set forth in
Sections 4.2(a)-(f) and 4.2(h) above shall be deemed a termination for cause;
or

(j)                                     the Smith Investor (as such term is
defined in the Limited Liability Company Agreement of Owner (the “Condominium
LLC Agreement”)) ceases to be a Member of Owner and in connection therewith
the Smith Investor is paid any amount due to the Smith Investor under this
Agreement and the Condominium LLC Agreement by reason of termination of this
Agreement.

Section
4.3                                      Termination by Developer. 
Developer may terminate this Agreement if one or more of the following
events shall occur:

(a)                                  a failure by Owner to pay any amounts or
monetary obligations due and owing to Developer which is not cured within ten
(10) business days following receipt of written notice by Developer specifying
such default; or

(b)                                 a material default by Owner under this
Agreement that is not cured within thirty (30) days following receipt of written
notice from Developer specifying the default; provided, however, that if such
default cannot be cured within such thirty (30) day period through the use of
diligent efforts, such period shall be extended for an additional thirty (30)
days; provided, further, that if Owner promptly commences such cure and
thereafter diligently prosecutes such cure but is unable to complete such cure
within the aforesaid two thirty (30) day periods, Owner shall be afforded an
additional thirty (30) days to complete such cure.

(c)                                  Owner (or an Affiliate of Owner) defaults
in its obligations under that certain joint venture agreement executed on even
date herewith and such default is not cured within any applicable notice or
grace period.

Section
4.4                                      Additional Remedies. 
If either party defaults in the performance of any of its obligations
hereunder and such default continues beyond the applicable notice and cure
periods as set forth in Section 4.1, then the non-defaulting party may pursue
all other rights, remedies and recourses available at law.  Enforcement of the provisions of this Article
4 shall not diminish Developer’s obligations under Article 5.

ARTICLE
5

DUTIES UPON TERMINATION OR EXPIRATION

Section
5.1                                      Developer’s Duties. 
Upon termination or expiration of this Agreement, Developer shall,
within ten (10) business days thereafter, deliver to Owner complete copies of
all books and records maintained by Developer for the Project.

Section
5.2                                      Owner’s Duties.  Owner shall compensate Developer
for all fees earned hereunder through the expiration or earlier termination
date of this Agreement promptly following the delivery of the information
called for in Section 5.1, subject to any claims Owner may have arising out of
Developer’s default in performance hereunder. 
Additionally, with respect to any termination of this 

 16
 

 

Agreement pursuant to
Section 4.2(g) or 4.2(j), Owner shall pay to Developer a termination fee equal
to the net present value of the Development Fee that Developer would have been
paid from the date of termination through the “End Date” (as set forth in the
Final Project Schedule).  The discount factor to be applied to the
calculation of net present value shall be the prime rate or if not available
the substitute or replacement for the prime rate as then published in the Wall Street Journal on the date of the
notice of termination.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES

Section
6.1                                      Developer’s
Representations and Warranties.  Developer
hereby represents and warrants to Owner as of the date hereof as follows:

(a)                                  Developer is duly organized, validly
existing and in good standing under the laws of the State of Missouri, and is
authorized to conduct business in the State of Missouri.  Developer has full power and authority to execute,
deliver and carry out the terms and provisions of this Agreement and has taken
all necessary action, corporate or otherwise, to authorize the execution,
delivery and performance of this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of Developer enforceable in accordance with
its terms, subject to creditor’s rights, bankruptcy and any other equitable
principles. The execution and delivery of this Agreement by the party signing
on behalf of Developer has been duly authorized. No order, permission, consent,
approval, license, authorization, registration or validation of, or filing
with, or exemption by, any governmental agency, commission, board or public
authority is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement.

(b)                                 The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder on
the part of Developer do not and will not conflict with or result in the breach
of any material terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge, or encumbrance upon
any of the assets of Developer by reason of the terms of any contract,
mortgage, lien, lease, agreement, indenture, instrument or judgment to which
Developer is a party or which is or purports to be binding upon Developer or
which otherwise affects Developer, or which otherwise will not be discharged,
assumed or released. No action by any federal, state or municipal or other
governmental department, commission, board, bureau or instrumentality is
necessary to make this Agreement a valid instrument binding upon Developer in
accordance with its terms.

(c)                                  There are no attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or involuntary proceedings in bankruptcy or pursuant to any other
debtor relief laws contemplated or filed by Developer or pending against
Developer.

(d)                                 All authorizations, approvals and
consents, if any, required to be obtained from, and all registrations,
declarations and filings, if any, required to be made with, all governmental
authorities and all other persons or entities to permit Developer to execute
and deliver and to perform its obligations
under this Agreement have been obtained or made and all such authorizations,
approvals, consents, registrations, declarations and filings are in full force
and effect, and all terms and conditions contained in or existing in respect of
such authorizations, approvals, consents, registrations, declarations and
filings have, to the extent necessary prior to the date of execution and
delivery hereof and thereof, been duly satisfied and performed.

 17
 

 

(e)                                  Except as set forth on Schedule 2
attached hereto and incorporated herein by reference, there are no claims,
actions, litigation, judgments, rulings, suits or proceedings actual, pending,
or, to the best of Developer’s knowledge, threatened by or against Developer
which, if determined adversely to Developer, would materially adversely affect
Developer’s ability to perform its obligations under this Agreement.

(f)                                    Developer is possessed of sufficient
skill, qualifications, experience, expertise and capability to perform its
obligations hereunder, shall maintain and/or cause its agents, affiliates, or
consultants to maintain adequate personnel, manpower, capital, equipment and
facilities to perform its obligations hereunder, and holds any and all
licenses, certificates, authorizations and registrations required to permit it to perform its obligations hereunder.

(g)                                 Developer represents that it is
knowledgeable and experienced in the development, construction management and
leasing of business property in the St. Louis, Missouri metropolitan area.

Section
6.2                                      Owner’s Representations
and Warranties.  Owner hereby represents and warrants to
Developer as of the date hereof:

(a)                                  Owner is duly organized, validly existing
and in good standing under the laws of the State of Delaware, and is authorized
to conduct business in the State of Missouri and State of Texas.  Owner has full power and authority to
execute, deliver and carry out the terms and provisions of this Agreement and
has taken all necessary action to authorize the execution, delivery and performance
of this Agreement, and this Agreement constitutes the legal, valid and binding
obligation of Owner enforceable in accordance with its terms, subject to
creditor’s rights, bankruptcy and any other equitable principles. The execution
and delivery of this Agreement by the party signing on behalf of Owner has been
duly authorized. No order, permission, consent, approval, license,
authorization, registration or validation of, or filing with, or exemption by,
any governmental agency, commission, board or public authority is required to
authorize, or is required in connection with, the execution, delivery and
performance of this Agreement.

(b)                                 The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereunder on
the part of Owner do not and will not conflict with or result in the breach of
any material terms or provisions of, or constitute a default under, or result
in the creation or imposition of any lien, charge, or encumbrance upon any of
the assets of the Owner by reason of the terms of any contract, mortgage, lien,
lease, agreement, indenture, instrument or judgment to which Owner is a party
or which is or purports to be binding upon Owner or which otherwise affects
Owner, or which otherwise will not be discharged, assumed or released. No
action by any federal, state or municipal or other governmental department,
commission, board, bureau or instrumentality is necessary to make this
Agreement a valid instrument binding upon Owner in accordance with its terms.

(c)                                  There are no attachments, executions,
assignments for the benefit of creditors, receiverships, conservatorships or
voluntary or involuntary proceedings in bankruptcy or pursuant to any other
debtor relief laws contemplated or filed by Owner or pending against Owner.

 18
 

 

ARTICLE 7

MISCELLANEOUS PROVISIONS

Section
7.1                                      Notices.  
All notices given hereunder shall be made in writing and given to the
addressee at the address specified on the signature pages hereof.  Notices may be given by certified mail,
return receipt requested, by hand delivery, by Federal Express or other
nationally-recognized overnight delivery service, or by facsimile transfer and
shall be effective upon receipt at the address of the addressee.

Section
7.2                                      Assignment. 
Developer may not assign its rights nor delegate its duties hereunder
without the prior written consent of Owner, except to the extent that Developer
has the right under this Agreement to engage Consultants or other agents.  Developer’s assignment in contravention of
this Section shall be null and void.  Any
permitted assignment by Developer shall not relieve Developer of any of its
obligations hereunder.  Owner shall have
the right to assign its rights and duties under this Agreement, in whole but
not in part, without the consent of Developer.

Section
7.3                                      Lender Requirements. 
Developer agrees to execute such commercially reasonable documents as
may be required by any lender (the “Project Lender”) financing the
Project. In addition, Developer agrees to conform its general policies and
procedures to any commercially reasonable requirements of the Project Lender.

Section
7.4                                      Waiver of Lien Claims.  Developer hereby waives any and
all rights it may now or hereafter have to assert a lien (whether
constitutional, statutory, conferred by common law or arising in any other
manner) against the Land, the improvements located thereon, or any part
thereof.

Section
7.5                                      Force Majeure Events.  Except for obligations regarding
the payment of money and the maintenance of insurance, whenever a period of
time is herein prescribed for action to be taken by Owner or Developer, neither
party shall be liable or responsible for, and there shall be excluded from the
computation for any such period of time, any delays due to Force Majeure
Events.  For purposes hereof, “Force
Majeure Events” shall consist of abnormal weather patterns that affect
critical path construction, acts (or the failure to act) by the other party to
this Agreement, unforeseeable physical conditions, uncontrollable delay in
issuance of permits, changes in governmental laws, enemy or hostile
governmental action, acts of terrorism or war, civil commotion, unavailability
or shortage of labor or materials, and condemnation actions, fire or other
casualty, or any other event beyond the reasonable control of the parties. The
party seeking to excuse delay in performance by reason of a Force Majeure Event
must, no later than the tenth (10th)
day of the calendar month immediately following the calendar month in which
such Force Majeure Event occurs, notify the other party thereof in writing, and
of the cause or causes thereof.

Section
7.6                                      Governing Law. 
This Agreement shall be governed and construed in accordance with the
laws of the State of Missouri.

Section
7.7                                      Time of Essence. 
Time is of the essence of this Agreement.

Section
7.8                                      Entireties, Beneficiaries.  This Agreement represents the entire Agreement
between Owner and Developer with regard to management of the Project and all
prior agreements are superseded hereby. 
This Agreement is for the sole benefit of Owner and Developer and no
other party is benefited hereby.  This
Agreement creates contractual rights only between Owner and Developer, and
Developer has no lien rights in or to the Land, the improvements located
thereon, or any part thereof.

Section
7.9                                      No Agency. 
Except as otherwise provided in Section 1.15 of this Agreement,
Developer and its agents shall all act as independent contractors in respect of
Owner with regard to this Agreement.  All
personnel and staff of Developer shall be and remain employees or agents of, or

 19
 

 

independent contractors
with, Developer and not of or with Owner. 
Developer shall at all times represent to third parties that the
relationship of Developer to Owner, with regard to Developer’s duties under
this Agreement, is that of independent contractor, and Developer and Owner
shall not represent to any party that Developer and Owner are partners,
co-venturers or principal and agent, or have any other relationship other than
that of independent contractors with regard to this Agreement.  Developer’s authority to act on behalf of
Owner is strictly limited to that expressly delegated herein.  Developer represents and warrants that (a) it
has all the requisite licenses and other approvals required by law to carry out
its duties hereunder; or (b) it will effect the services requiring such
licenses through duly licensed agents and subcontractors who are affiliates of
Developer that have all requisite licenses and authority to carry out such
services.

Section
7.10                                Attorneys’ Fees. 
Should either the Owner or the Developer employ an attorney or attorneys
to enforce any of the terms and conditions of this Agreement, or to protect any
right or interest created or evidenced hereby, the losing party shall pay the
party obtaining final, unappealable judgment all reasonable costs, damages and
expenses, including reasonable attorneys’ fees and expenses incurred by the
prevailing party.

Section
7.11                                No Waiver. 
The failure of either party to seek redress for violation, or to insist
upon the strict performance of any covenant, agreement, provision or condition
of this Agreement shall not constitute a waiver of such strict performance, and
the parties shall have all remedies provided in this Agreement and by
applicable law with respect to any subsequent act which would have originally
constituted a violation.

Section
7.12                                Entire Agreement. 
This Agreement embodies the entire understanding of the parties and
supersedes all prior agreements and understandings, and there are no further
agreements or understandings, written or oral, in effect between the parties
relating to the subject matter of this Agreement.

Section
7.13                                Severability. 
If one or more of the provisions of this Agreement or any application of
this Agreement shall be invalid, illegal or unenforceable in any respect, the
validity, legality or enforceability of the remaining provisions of this
Agreement and any other application of such provisions shall in no way be
affected or impaired.

Section
7.14                                Amendments. 
This Agreement may be amended, from time to time, only with the written
consent of both Owner and Developer.

Section
7.15                                Counterparts.  This Agreement may be executed in
several counterparts, each of which shall be deemed an original, and said
counterparts shall constitute but one and the same instrument.

Section
7.16                                Additional Acts. 
In connection with this Agreement, as well as all transactions
contemplated by this Agreement, Owner and Developer each agree to execute and
deliver such additional documents and instruments and take all such necessary
action and perform such additional acts as may be necessary or appropriate to
effectuate, carry out and perform all of the terms, provisions and conditions
of this Agreement and all such transactions; provided, however, this Agreement
may be modified only in accordance with the terms hereof.

Section
7.17                                Exhibits.  All
exhibits referred to herein shall be considered a part of this Agreement as
fully as if and with the same force and effect as if such exhibit had been
included herein in full.

 20
 

 

Section
7.18                                Limitation of Liability. 
Any liability of Owner to Developer (or any person or entity claiming
by, through or under Developer) for any default by Owner under this Agreement
or any matter relating to this Agreement shall be limited to Developer’s actual
direct, but not consequential, damages therefore.  The liability of Owner for the payment of all
sums which may be owed to Developer under this Agreement and for the
performance of all other obligations of Owner to Developer under this Agreement
shall be limited to Owner’s interest in the Project and the proceeds
thereof.  Neither Owner nor any of the
constituent partners or members of Owner or any partners or members,
shareholders, officers, directors, beneficiaries or trustees of the constituent
partners or members of Owner shall be personally liable for the payment of any
sums or the performance of any other obligations due to Developer under this
Agreement.

Section
7.19                                Confidentiality. 
Owner and Developer each agree to use commercially reasonable efforts to
keep confidential (a) the terms of this Agreement, and (b) all written and
verbal negotiations and communications with Owner in connection with this
Agreement (collectively, “Confidential Information”).  However, notwithstanding the foregoing
provisions or anything else to the contrary contained in this Agreement (i)
Owner and Developer may disclose such Confidential Information to its
consultants, attorneys, accountants, and lenders, and others who need to know
the Confidential Information for the purpose of assisting Owner or Developer,
as the case may be, in connection with the transaction that is the subject of
this Agreement; (ii) the foregoing covenant of confidentiality shall not be
applicable to any information that is public knowledge or otherwise available
in the public domain without breach of this Agreement; and (iii) Owner and
Developer shall be permitted to disclose such Confidential Information as may
be recommended by such party’s legal counsel in order to comply with all
financial reporting, securities laws and other legal requirements applicable to
Owner or Developer, as the case may be, including any required disclosures to
the Securities and Exchange Commission.

Section
7.20                                Waiver of Jury Trial. 
Developer
and Owner each hereby waives trial by jury in any action arising out of matters
related to this Agreement, which waiver is informed and voluntary.

Section 7.21                                Compliance Amendments. Reference is made to
Behringer Harvard Opportunity Op I LP, a Texas limited partnership (“BH REIT”), which owns a direct or
indirect interest in Owner. 
Notwithstanding anything contained herein to the contrary, in the event
that legal counsel for Owner reasonably determines that an amendment to this
Agreement is necessary or advisable in order for this Agreement to comply with
applicable tax laws (including, without limitation, laws and regulations
pertaining to real estate investment trusts), applicable securities laws, the
offering documents pertaining to BH REIT or any Affiliate, or the Statement of Policy Regarding Real Estate Programs of the North American
Securities Administrators Association, Inc., effective September 29, 1993, as
amended, then Owner and Developer shall, within ten (10) business days after
request from Owner, execute such an
amendment; provided, however, that no such amendment may decrease the
compensation to which Developer is entitled hereunder or materially increase
Developer’s liabilities or obligations under this Agreement without Developer’s
written consent.

Section
7.22                                Dispute Resolution. 
The parties hereto have agreed to submit disputes to mandatory
arbitration in accordance with the provisions of this Section 7.22.  Each party waives the right to commence an action
in connection with this Agreement in any court and expressly agrees to be bound
by the decision of the arbitrator determined in this Section 7.22; provided,
however, the waiver in this Section 7.22 will not prevent the other party from
commencing an action in any court for the sole purposes of enforcing the
obligation of the other party to submit to binding arbitration or the
enforcement of an award granted by arbitration herein.  Notwithstanding the foregoing, prior to
submitting any dispute hereunder to arbitration, each party shall first attempt
in good faith, for thirty (30) days after the first 

 21
 

 

notice given under this
Agreement regarding such dispute, to resolve any such dispute promptly by
negotiation between executives of each party who have authority to settle the
dispute, which shall include an in-person meeting between such executives in
St. Louis, Missouri.

(a)                                  Any dispute between the parties as to the
interpretation of any provision of this Agreement or the rights and obligations
of any party hereunder shall be resolved through binding arbitration as hereinafter
provided in St. Louis, Missouri.

(b)                                 If arbitration is required to resolve a
dispute between the parties, a panel of three (3) arbitrators shall be
convened.  Each party hereto shall each
select one (1) arbitrator with at least five (5) years experience in commercial
real estate in general and hotel operation in particular, and those two (2)
arbitrators shall by agreement select a third arbitrator having recognized
expertise and at least five (5) years experience in commercial real estate in
general and hotel operation in particular.

(c)                                  The arbitrators selected pursuant to
Section 7.22(b) above will establish the rules for proceeding with the
arbitration of the dispute, which will be binding upon all parties to the
arbitration proceeding. The arbitrators may use the rules of the American
Arbitration Association for commercial arbitration but are encouraged to adopt
the rules the arbitrators deem appropriate to accomplish the arbitration in the
quickest and least expensive manner possible. Accordingly, the arbitrators may
(i) dispense with any formal rules of evidence and allow hearsay testimony
so as to limit the number of witnesses required, (ii) minimize discovery
procedures as the arbitrators deem appropriate, (iii) limit the time for
presentation of any party’s case as well as the amount of information or number
of witnesses to be presented in connection with any hearing, and
(iv) impose any other rules which the arbitrators believe appropriate to
effect a resolution of the dispute as quickly and inexpensively as possible. In
any event, the arbitrators (A) shall permit each side no more than two (2)
depositions (including any deposition of experts), which depositions may not
exceed four (4) hours each, one set of 10 interrogatories (inclusive of
sub-parts) and one set of five (5) document requests (inclusive of sub-parts);
(B) shall not permit any requests for admissions; (C) shall limit the hearing,
if any, to two (2) days; and (D) shall render their decision within sixty (60)
days of the filing of the arbitration.

(d)                                 The arbitrators will have the exclusive
authority to determine and award costs of arbitration and the costs incurred by
any party for its attorneys, advisors and consultants.

(e)                                  Any award made by the arbitrators shall
be binding on the parties and all parties to the arbitration and shall be
enforceable to the fullest extent of the law.

(f)                                    In reaching any determination or award,
the arbitrators will apply the laws of the state of Delaware.  Except as permitted under Section 7.22(d)
above, the arbitrators’ award will be limited to actual damages and will not
include consequential, special, punitive or exemplary damages. Nothing.
contained in this Agreement will be deemed to give the arbitrators any
authority, power or right to alter, change, amend, modify, add to or subtract
from any of the provisions of this Agreement. All privileges under state and
federal law, including, without limitation, attorney-client, work product and
party communication privileges, shall be preserved and protected. All experts
engaged by a party must be disclosed to the other party within fourteen (14)
days after the date of notice and demand for arbitration is given.

(g)                                 Notwithstanding any provision of this
Agreement to the contrary, any party may seek injunctive relief or other form
of ancillary relief at any time from any court of competent jurisdiction in St.
Louis County, Missouri. In the event that a dispute or controversy requires 

 22
 

 

emergency relief before the matter may be resolved
under the arbitration procedures of this Section 7.22, notwithstanding the fact
that any court of competent jurisdiction may enter an order providing for
injunctive or other form of ancillary relief, the parties expressly agree that
such arbitration procedures will still govern the ultimate resolution of that
portion of the dispute or controversy not resolved pursuant to said court
order.

(h)                                 Owner and Developer agree that if a
dispute is submitted to arbitration pursuant to this Section 7.22 prior to
Completion of the Project and the dispute is such that construction of the
Project cannot proceed until such dispute is resolved, then the date for
Completion set forth in the Final Project Schedule shall be extended by the
number of days such dispute remains in arbitration hereunder.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 23

 

Executed effective as of the date written above.

 

	
  

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  CHASE PARK PLAZA HOTEL, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  15601 Dallas Parkway, Suite 600

  
	
   

  	
   

  	
   

  	
  Addison, Texas 75001

  
					

 

 S-1
 

 

 

	
  

  	
  DEVELOPER:

  
	
   

  	
   

  
	
   

  	
  IFC, INC.,

  
	
   

  	
  a Missouri corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L. Smith

  	
   

  
	
   

  	
   

  	
  James L. Smith, President

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  212 N. Kingshighway, Suite 1023

  
	
   

  	
   

  	
  St. Louis, Missouri 63108

  
	
   

  	
   

  	
  Attn: James L. Smith

  
					

 

 S-2Exhibit
10.42

OWNER
AGREEMENT

THIS OWNER AGREEMENT (“Agreement”)
is being entered into effective as of the 1st day of December,
2006 by and among CHASE PARK PLAZA HOTEL, LLC, a Delaware limited liability
company (“Lessor”); KINGSDELL L.P., a Delaware
limited partnership (“Lessee”); and
CWE HOSPITALITY SERVICES, LLC, a Missouri limited liability company (“Manager”).

RECITALS:

WHEREAS, Lessor owns certain real property
located in St. Louis, Missouri, and described in Exhibit A hereto,
upon which exists the Chase Park Plaza Hotel (the “Hotel”);

WHEREAS, simultaneously with Lessor’s
acquisition of the Hotel, Lessor has leased the Hotel to Lessee, and Lessee has
leased the Hotel from Lessor, pursuant to that certainLease
Agreement (the “Lease”), dated as of the date
hereof, which Lease is attached hereto as Exhibit B;

WHEREAS, Lessee and
Manager (which is an affiliate of Lessee) are parties to that certain Hotel
Operating Agreement (the “Management Agreement”),
dated as of the date hereof, pursuant to which Lessee has engaged Manager to
manage and operate the Hotel, which Management Agreement is attached hereto as Exhibit
C;

WHEREAS, Manager
has agreed to enter into the Management Agreement with Lessee on the condition
that Lessor and Lessee enter into this Agreement;

WHEREAS, Lessor, Lessee and Manager desire
to set forth certain obligations of the parties with respect to the ownership
and operation of the Hotel and to address certain portions of the Management
Agreement that affect the rights and obligations of all three parties.

NOW, THEREFORE, for the mutual covenants
and considerations herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto intending to be legally bound agree as follows:

1.                           Definitions.  Capitalized terms that are not specifically
defined herein shall have the meaning ascribed to such terms in the Management
Agreement.

2.                           Lessor Consideration.  Lessor hereby acknowledges that it: (i)
derives and expects to derive benefits from this Agreement, and (ii) has
determined that its execution, delivery and performance of this Agreement
directly benefit Lessor, are within the organizational purposes of Lessor, and
are in the best interest of Lessor.

3.                           Acknowledgement of Lease.  Manager
hereby acknowledges the lease of the Hotel from Lessor to Lessee pursuant to
the Lease in the form attached hereto as Exhibit B.  The
Lease shall not be construed to impose any additional obligations or
liabilities upon Manager, and shall 

 

not be construed to modify or amend any of the rights and duties of the
parties under the Management Agreement; however, Manager agrees to operate the
Hotel in compliance with the terms of the Lease to the extent that such terms
do not conflict with the terms of the Management Agreement or impose upon
Manager any additional obligations beyond those expressly set forth in the
Management Agreement.  To the extent that
any of the provisions of the Management Agreement impose a greater or
inconsistent obligation on Lessee than the corresponding provisions of the
Lease, Lessee shall be obligated to comply with, and to take all actions
necessary to prevent breaches or defaults under, the relevant provisions of the
Management Agreement.  Manager shall have
no duty, obligation or liability to Lessor or Lessee to (i) make any
determination as to whether any expense required to be paid by Manager
hereunder is a cost of Lessor or a cost of Lessee or (ii) require that any
costs or expenses of Lessor be paid from funds that can be identified as
belonging to Lessor, or that other costs and expenses required to be paid by
Lessee be paid from funds that can be identified as belonging to Lessee; it
being the intent of the parties to this Agreement that (x) Lessee and Lessor
shall look only to each other and not to Manager with respect to moneys that
may be owed one to the other under the Management Agreement or the Lease and
(y) except as otherwise specifically provided in this Agreement, Manager shall
look only to Lessee to pay operating costs of the Hotel and other “Owner”
obligations under the Management Agreement.

4.                           Survival of Management Agreement After Termination of
Lease.  The parties agree
that the Management Agreement and the rights and benefits of Manager thereunder
shall not be terminated or disturbed in any respect except in accordance with
the terms of the Management Agreement and this Agreement.  A termination of the Lease shall not result
in the termination of the Management Agreement unless termination of the Lease
is the result of a Bad Boy Default (as defined below) by Lessee thereunder (in
which event Lessor shall have the option of terminating the Management
Agreement as well as the Lease). 
Accordingly, if the Lease is terminated for any reason other than a Bad
Boy Default by Lessee thereunder, including, without limitation, expiration of
the term thereof (such term treated as including any Renewal Term (as defined
in the Lease)) or the “rejection” thereof following Bankruptcy (as defined
below) of Lessee (collectively, a “Lease Termination”),
Lessor:  (a) shall recognize Manager’s
rights under the Management Agreement, (b) agrees that Manager shall not
be named as a party in any eviction or other possessory action or proceeding,
and that Manager shall not be disturbed in its right to manage the Hotel
pursuant to the Management Agreement, and (c) shall at the time of, or
prior to, such Lease Termination, at its sole option, either (i) directly
assume all of the rights and obligations of the “Owner” under the Management
Agreement with respect to periods after the Lease Termination, or (ii) cause a “Substitute
Lessee” (as defined below) to (x) succeed to and assume Lessee’s rights
and obligations under the Lease, the Management Agreement, and this Agreement,
or (y) enter into a new lease with Lessor in substantially the same form
as the Lease, and assume the rights and obligations of the Lessee under the
Management Agreement and this Agreement, the intent being that, if Lessor
elects to proceed under this clause (ii), then the relationship between any
successor Lessee, Lessor and Manager be under the same terms and conditions as
the relationship between Lessee, Lessor and Manager hereunder and under the
Management Agreement and the Lease.  So
long as Behringer Harvard Opportunity REIT I, Inc. or any affiliate, successor
or assignee (“BH REIT”) is a real estate
investment trust for federal income tax purposes (a “REIT”)
and so long as BH determines that Manager qualifies as an eligible independent
contractor (or “EIK”), as defined in Section 

 2
 

 

856(d)(9) of the
Internal Revenue Code of 1986, as amended (the “Code”),
a substitute Lessee shall be defined as (i) any taxable REIT subsidiary (or “TRS”), as such term is defined in Section 856(l) of the
Code, with respect to BH, which is controlled by Lessor or (ii) any partnership
or limited liability company controlled by a TRS of BH, which TRS is controlled
by BH ((i) or (ii) shall be hereinafter referred to as a “TRS Tenant”).  So long as BH is a REIT and so long as BH
determines that Manager does not qualify as an EIK, a Substitute Lessee shall
be defined as (i) Lessee if approved by Lessor in its sole discretion or (ii) a
tenant selected by Lessor so long as Lessor determines that the rent paid to
Lessor pursuant to the Lease (or a substitute lease) will constitute qualifying
“rents from real property,” as such term is defined in Section 856(d) of the
Code.  Notwithstanding any indication in
this Agreement to the contrary, the terms of the Lease between Lessor and the
Substitute Lessee may be modified at the time of the Lease Termination to the
extent Lessor determines such modification is necessary to cause the rent paid
to Lessor pursuant to such lease to constitute qualifying “rents from real
property,” as defined in Section 856(d) of the Code.  Notwithstanding any indication in this
agreement to the contrary, in the event that Lessor is not a REIT (or
controlled by a REIT) at the time of the Lease Termination, Lessor may elect
that all of Owner’s rights, benefits, privileges and obligations under the
Management Agreement after the Lease Termination be assumed directly by Lessor.

As used in this
Section 4, a “Bad Boy Default” shall mean any
default under the Lease by Lessee, or any default by Manager under the Management
Agreement, arising out of any of the following: 
(A) any fraud or intentional tort on the part of Lessee or Manager; (B)
any criminal act on the part of Lessee or Manager; (C) the use or distribution
of any insurance proceeds or condemnation awards contrary to the terms of the
Lease; (D) the failure of Lessee to apply revenues, rents, and income of the
Property (“Property Income”) received by Lessee to the Rent (as defined in the
Lease) due under the Lease (except to the extent the Property Income is insufficient
to pay such Rent as and when due); (E) any failure by Lessee to pay any
Impositions (as defined in the Lease) or insurance premiums when the same are
due and payable (except to the extent the Property Income is insufficient to
pay such items as and when due); or (F) any other act of Lessee or Manager that
causes BH REIT to incur any liability under that certain Recourse Guaranty
Agreement (the “Mass Guaranty”) dated on or about December 1, 2006, executed by
BH REIT in favor of Massachusetts Mutual Life Insurance Company (“Mass Mutual”).

5.                           Right of Lessor to Terminate Lease.  In addition to the rights of Lessor to
terminate the Lease as set forth in the Lease, Lessee and Manager agree that
Lessor may, at its sole option, terminate the Lease in the event that the
Management Agreement is terminated (i) pursuant to Section 8.3.1 of the
Management Agreement, or (ii) pursuant to the provisions of Sections 9.1, 9.2,
10.1, 10.2, or 10.3 of the Management Agreement; provided that the Termination
Fee due to Manager under the Management Agreement (if any) is paid in full in
connection with such termination.

6.                           Guaranty.  Lessor shall be directly liable for and
hereby guarantees to Manager the complete and satisfactory payment of each and
every monetary obligation of Lessee as “Owner” under Sections 3.6, 3.9,
5.4.1 and 9.1 of the Management Agreement (the “Guaranteed
Obligations”), so long as the Management Agreement remains in
effect.  Lessor hereby absolutely,
irrevocably, and unconditionally guarantees that the Guaranteed Obligations
shall be 

 3
 

 

paid when due and payable.  This
guaranty is an absolute, irrevocable and unconditional guaranty of payment and
the liability of Lessor hereunder shall be absolute and unconditional
irrespective of:  (i) any lack of validity,
irregularity or enforceability of the Management Agreement or this Agreement;
(ii) any change in the time, manner, place or any other term or condition
of payments due under the Management Agreement or this Agreement, or any other
amendment or waiver of, or consent to, or any departure from, the Management
Agreement or this Agreement; (iii) any failure of Manager to enforce the
provisions of the Management Agreement or this Agreement against Lessee; or
(iv) any other circumstances that might otherwise constitute a defense
available to Lessor with respect to, or a discharge of, any of the Guaranteed
Obligations (other than because, or to the extent, the same have been
previously discharged in accordance with the terms of the Management
Agreement).  If all or any part of the
Guaranteed Obligations shall not have been paid when due and payable or
performed at the time performance is required, Lessor (without first requiring
the Manager to proceed against Lessee or any other party or any other security)
shall pay or cause to be paid to Manager the amount thereof as is then due and
payable and unpaid (including interest and other charges, if any, due thereon
through the date of payment in accordance with the applicable provisions of the
Management Agreement) or perform or cause to be performed such obligations in
accordance with the Management Agreement, within ten (10) business days
after receipt of written notice from the Manager of the failure by Lessee to
make such payment or render such performance. 
If for any reason Lessor fails to perform or cause to be performed such
obligations, Manager shall have the right to exercise any and all of the
remedies available at law or in equity, and Lessor hereby agrees to pay any and
all reasonable expenses (including counsel fees and expenses) incurred by
Manager in enforcing its rights under this Agreement.  The guaranty contained in this
Agreement:  (A) is a continuing
guaranty and shall remain in full force and effect until the indefeasible
satisfaction and discharge in full of Lessee’s obligations as “Owner” under the
Management Agreement and Lessor’s and Lessee’s obligations under this
Agreement, and (B) shall continue to be effective or shall be reinstated,
as the case may be, if at any time any payment under the Management Agreement
or this Agreement becomes unrecoverable from Lessee by operation of law or for
any other reason or must otherwise be returned by Manager upon the insolvency,
bankruptcy or reorganization (“Bankruptcy”) of
Lessor or Lessee.  The provisions of this
Section shall survive the expiration or termination of the Management Agreement
and this Agreement.

7.                           Certain Lessor Obligations.   In addition to Lessor’s obligations under
this Agreement, Lessor agrees that it shall perform, comply with and be bound
by the Management Agreement, as it may be amended, in accordance with the terms
thereof and hereof, as if Lessor were “Owner” thereunder with respect to the
provisions of Sections 3.13, 5.4.1, 11.1, 11.2, 13.25 and 17 thereof and with
respect to any other Owner obligations with respect to any Deed of Trust.  Notwithstanding the provisions of Section
3.3.2 of the Management Agreement, so long as Manager is the manager under the
Management Agreement and either James L. Smith or Marcia Smith Niedringhaus
maintains an active role in the management of the Hotel, Manager’s selection of
the Senior Executives shall not require Owner’s prior consent.  Notwithstanding the provisions of Section
11.1.2 of the Management Agreement, Lessor shall have the right to obtain one
or more mortgage loans that are secured by (either directly or indirectly
through cross-default or cross-collateralization provisions) both the Hotel and
other property owned by Lessor 

 4
 

 

and the Residential Units and other property owned by The Private
Residences, LLC, a Delaware limited liability company, which is an Affiliate of
Lessor.

8.                           Certain Manager Obligations.  Lessee and Manager agree that Lessor shall
have the same approval rights as Lessee (in its capacity as “Owner” under the
Management Agreement) with respect to the matters set forth in Sections 3.1,
3.3.2 (subject to the last sentence of Section 7 hereof), 3.3., 3.4, 3.5, 4.1,
4.2, 4.5, 6.2, 7.1., 9.1, 12.1, 13.17 and Exhibit B of the Management
Agreement.  In addition, Lessor shall
have the same rights as Lessee (in its capacity as “Owner” under the Management
Agreement) to enforce directly the covenants made by Manager in Sections 3.15,
3.18, 4.5, 4.6, 11.1, 11.2, 13.6, 13.25 and 16.1 of the Management
Agreement.  Furthermore, Lessor shall
have the same rights as Lessee (in its capacity as “Owner” under the Management
Agreement) (i) to declare Manager in default under the Management Agreement
pursuant to Article 8 thereof and exercise all available remedies against
Manager, and (ii) to terminate the Management Agreement to the extent Lessee
would be entitled to do so pursuant to Section 8.3 or Article 9 of the
Management Agreement (or any other provision of the Management Agreement that
gives the “Owner” the right to terminate the Management Agreement).  Lessor shall also have the same rights as
Lessee (in its capacity as “Owner” under the Management Agreement) to inspect,
copy, and be furnished with books and records relating to the Hotel and the
operation thereof.  Lessee agrees that it
will cooperate with Lessor in the assertion by Lessor of any rights under the
Management Agreement conferred upon Lessor by this Agreement or in the
Management Agreement, and Manager agrees that if it receives conflicting
instructions from Lessor and Lessee during the assertion of such rights by
Lessor, Manager shall comply with the instructions of Lessor given pursuant to
and in accordance with the exercise of permitted rights and remedies of Lessor
(in its capacity as “Owner” under the Management Agreement).  In addition to the obligations of Manager
under Article 11 of the Management Agreement, Manager agrees that it will use
commercially reasonable efforts to cooperate with Lessor in Lessor’s efforts to
obtain financing for the Hotel (including Manager’s execution of documents that
are substantially similar to documents previously executed by Manager in
connection with any prior financing of the Hotel).  Notwithstanding anything to the contrary in
Section 3.5.2 or Section 5.4.2 of the Management Agreement, all monies in the “Replacement
Reserve Fund” (as defined in the Management Agreement) shall be the property of
Lessor.  The parties hereto acknowledge
that the “Working Capital” and “Expansion Space Working Capital” defined in
Section 7.7 of the Lease are the same as the “Working Capital” addressed in
Section 3.6 of the Management Agreement and shall be subject to repayment as
set forth in Section 7.7 of the Lease.

9.                           Lease Modifications; Modifications to Management
Agreement.   Manager
agrees that the Lease may be amended or modified from time to time by agreement
between Lessor and Lessee, and Lessor may exercise any one or more of its
rights under the Lease from time to time at Lessor’s discretion (subject, in
all events, to the terms and conditions of Section 3 above), all without
consent of Manager, and this Agreement shall continue in full force and effect
as to all such renewals, extensions and/or modifications and all such exercise
of rights; provided, however, that the prior consent of Manager shall be
required for any amendment or modification to the Lease with respect to
(a) any provisions that require the Lessee or the Lessor to provide funds
or to pay any obligations with respect to the operation, improvement or repairs
to the Hotel, or (b) any provisions that require performance by Lessee
under the Management 

 5
 

 

Agreement or hereunder, or (c) any provision that, if amended,
would be inconsistent with the obligations of the Lessor or Lessee hereunder or
under the Management Agreement.  Lessor
and Lessee agree to deliver copies to Manager of any amendments or
modifications of the Lease promptly following the execution and delivery
thereof.  Lessee and Manager shall not
amend or modify the Management Agreement without Lessor’s prior written consent,
not to be unreasonably withheld, conditioned or delayed, and Lessee and Manager
shall provide to Lessor copies of any notices of default send under the
Management Agreement.

10.                     Consents Under Management Agreement.  Manager will look solely to Lessee to satisfy
Owner’s obligations and duties under the Management Agreement, except as
otherwise specifically provided in this Agreement.  Without limiting the foregoing,except as otherwise provided in Section 8 or the other
provisions of this Agreement, Manager shall seek all approvals and/or consents
required from “Owner” under the Management Agreement, and elections to be made
by “Owner” under the Management Agreement, solely from Lessee, and shall be
entitled to rely and act on all approvals and/or consents obtained or received
from, or elections made by, Lessee under any provisions or requirements of the
Management Agreement; provided, however, in the event, any parallel approval or
consent is required from Lessor under the Lease or this Agreement, Manager
shall grant any additional time for Lessor to instruct Lessee with respect to
such matters and provide its approval or consent.  Lessor agrees that, in its exercise of rights
under the Lease that affect Lessee’s exercise of rights under the Management
Agreement, Lessor shall exercise such rights under the same conditions and
principles that apply to Lessee’s exercise of the same rights under the
Management Agreement, and shall, where a dispute is referred to the Arbitration
Tribunal for a decision, agree to be bound by the decision of such Arbitration
Tribunal.

11.                     Agreements Relating to Tenancy.  Lessor agrees that, for so long as Lessee’s
interest in the Hotel is held through tenancy title as that of Lessee or its
permitted successors or assigns (subject to the provisions of this Agreement),
Lessor will, upon request by Manager pursuant to the terms and conditions of
the Management Agreement, not unreasonably withhold or delay the prompt
signing, without charge, of applications for licenses, permits or other
instruments necessary for operation of the Hotel, which applications shall be
prepared by Manager as necessary from time to time.

12.                     Certain Provisions Regarding Bankruptcy.  In the event the Lease shall be rejected on
behalf of Lessor under Section 365 of the United States Bankruptcy Code (“Code”) or any other applicable law or authority (“Rejection”), Lessee shall promptly notify Manager in writing
of such Rejection and Lessee shall, as directed by Manager, either treat the
Lease as terminated by such Rejection or retain its rights under the Lease as
permitted by the Code or other applicable law or authority.  Lessor and Lessee each agree that it will not
join in any involuntary petition against the other under the Code or any other
similar federal or state law providing for debtor relief, without the consent
of Manager.

13.                     Term.                               The term of this Agreement shall commence
on the date set forth above and shall run concurrently with the term of the
Management Agreement, except as otherwise expressly set forth herein.

 6
 

 

14.                     Transfers.  In connection with any sale, assignment, or
transfer (a “Transfer”) of the Hotel that
includes a transfer of Lessor’s and/or Lessee’s title in the Site and/or the
Hotel, although Section 12.2 of the Management Agreement does not apply to any
Transfer by Lessor of Lessor’s interest in the Site or the Hotel, Lessor,
Lessee and Manager hereby agree that the following provisions shall apply to
any such Transfer by Lessor:

A.                       In the
event Lessor desires to effect a Transfer without terminating the Management
Agreement, Lessor shall give Manager not less than sixty (60) days prior
written notice of the Proposed Transfer. 
If Manager determines that a proposed Transfer is to a Prohibited Party,
then Manager shall have the right to terminate the Management Agreement and
this Agreement upon giving Lessor and Lessee written notice of termination
within thirty (30) days after Manager’s receipt of Lessor’s notice of Transfer
pursuant to this Section.  No Termination
Fee shall be due to Manager in the event Manager so elects to terminate the
Management Agreement and this Agreement.

B.                         Concurrently
with or prior to any Transfer that occurs without termination of the Management
Agreement, the assignor and assignee shall execute and deliver to Manager a
written agreement, in a form reasonably acceptable to Manager, in which the
assignee (i) if the Transfer is of the Lease, or is a Transfer of the Hotel
that involves a termination of the Lease, acknowledges that the Management
Agreement remains in full force and effect, accepts such assignment and assumes
all of Owner’s obligations under the Management Agreement and liabilities
accruing under the Management Agreement from and after the effective date of
such assignment, or (ii) if the Transfer is of the Hotel and the Lease remains
in place, shall assume the Lessor’s rights and obligations under this
Agreement.

C.                         If all
provisions of this Section 14 have been satisfied, then the obligations of the
assigning party in connection with a Transfer shall terminate as of the date
the provisions of this Section 14 shall have been satisfied, except as to
obligations of the assigning party that accrued prior to such date.

D.                        If Lessor
desires to terminate the Management Agreement and this Agreement in connection
with a Transfer, then Lessor shall pay to Manager the Termination Fee due to
Manager under Section 9.1 of the Management Agreement.

15.                     Indemnification.  Lessee acknowledges that, notwithstanding
Lessor’s contractual liability to Manager under Section 4 hereof, Manager
is operating the Hotel for the benefit of Lessee, and Lessee agrees to hold
Lessor harmless for any loss suffered by Lessor as a result of Lessee’s failure
to timely perform all of the obligations assumed by Lessee.  Lessee and Manager, jointly and severally,
shall indemnify, defend and hold harmless BH REIT from any and all claims,
demands, losses, costs and expenses, including reasonable attorneys’ fees and
court costs sustained or incurred by BH REIT or asserted against BH REIT under
the Mass Guaranty as a result of any act of Lessee or Manager.  Further, Lessee shall indemnify, defend and
hold harmless BH REIT from any and all claims, demands, losses, costs and
expenses, including reasonable attorneys’ fees and court costs sustained or
incurred by BH REIT or 

 7
 

 

asserted against BH REIT under that certain Environmental
Indemnification Agreement (the “Environmental Indemnity”), dated effective as
of December 1, 2006, granted by BH REIT for the benefit of Mass Mutual, as a
result of any violation of any Environment Law (as defined in the Environmental
Indemnity) that existed prior to December 1, 2006 or any Hazardous Substance
(as defined in the Environmental Indemnity) located on, under or about the
Premises (as defined in the Environmental Indemnity) prior to December 1, 2006.

16.                     Notices.  All notices and other communications provided
for hereunder shall be in writing, and shall be sent or delivered by the
methods and to the addresses for Lessee and Manager as required under the Management
Agreement.  The address for Lessor for
purposes of such notices is as follows:

Chase Park Plaza
Hotel, LLC

c/o Behringer
Harvard Opportunity OP I, LP

15601 Dallas
Parkway, Suite 600

Addison,
Texas  75001

Attn:  Joe Jernigan

With a copy to:

Chase Park Plaza
Hotel, LLC

c/o Behringer
Harvard Opportunity OP I, LP

15601 Dallas
Parkway, Suite 600

Addison,
Texas  75001

Attn:  Chief Legal Officer

17.                     REIT Compliance.  Manager acknowledges that BH is a REIT and
the provisions of this Section 17 shall apply for so long as the Hotel is
owned by Lessor and leased to Lessee or a Substitute Lessee as part of any
ownership structure that is subject to REIT tax requirements.

A.                                   Manager agrees that, as of
the date hereof, (i) Manager is an “independent contractor,” within the meaning
of Section 856(d)(3) of the Code, with respect to BH and (ii) BH does not
directly or indirectly (through Lessor or otherwise) derive or receive any
income from Manager (whether it be interest income, dividend income, rent
income or any other type of income). 
Manager further agrees that it shall maintain such status as an
independent contractor from which BH does not directly or indirectly derive any
income throughout the term of this Agreement. 
Manager shall take all actions reasonably requested by Lessor as may be
necessary to ensure that Lessor’s rental income from Lessee under the Lease
qualifies as “rents from real property” pursuant to Section 856(d) of the Code;
provided, however, any additional costs or expenses (including internal costs
and expenses) incurred by Manager in complying with such a request shall be
borne by Lessor.  Notwithstanding Section
12.1 of the Management Agreement, Manager may only assign the Management
Agreement and its rights and obligations thereunder to an assignee that (i)
qualifies as an “independent contractor” within the meaning of Section
856(d)(3) of the Code with respect to BH from which BH does not directly or
indirectly derive or receive any income, and (ii) assumes the obligations of
Manager under this Agreement.

 8
 

 

B.                                     Manager acknowledges that it
is a limited liability company that is treated as a partnership for federal
income tax purposes.  Manager agrees
that, during the term of this Agreement, Manager shall not, without the written
consent of Lessor, (i) change its ownership in such a manner that it is
disregarded as an entity separate from its owner within the meaning of Treas.
Reg. §301.7701-3(b)(2)(i)(C), (ii) convert into another form of entity, (iii)
merge or otherwise combine with any other entity, (iv) acquire an interest in
another entity or (v) otherwise change its ownership in such a manner that
could cause Manager to fail Section 17.A.

C.                                     Manager and Lessor recognize
that, as of the date hereof, Manager does not qualify as an EIK.  Manager has entered into an agreement (the “EIK
Agreement”) with Lessor pursuant to which Manager has agreed, subject to the
terms and conditions thereof, after Completion (as defined in the EIK
Agreement) to use commercially reasonable efforts to qualify as an EIK.  In the event that Lessor reasonably concludes
that Manager qualifies as an EIK and in the event that pursuant to the terms of
the EIK Agreement Lessor leases the Hotel to a TRS Tenant, Manager agrees to
maintain its status as an EIK during the remaining term of this Agreement and
acknowledges that any lease of the Hotel and assignment of the Management
Agreement to a TRS Tenant shall be deemed a permitted assignment under Section
12.2 of the Management Agreement upon compliance by the TRS Tenant with Section
12.2.2 of the Management Agreement.  To
that end:

(i)                       Manager shall
take all actions reasonably requested by Lessor or TRS Tenant to ensure that
Lessor’s rental income from TRS Tenant qualifies as “rents from real property”
pursuant to Sections 856(d), 856(d)(8)(B) and 856(d)(9) of the Code; provided,
however, any additional costs or expenses (including internal costs and
expenses) incurred by Manager in complying with such a request shall be borne
by Lessor or TRS Tenant.

(ii)                    Manager shall not permit wagering activities to be conducted
at or in connection with the Hotel by any person who is engaged in the business
of accepting wagers and who is legally authorized to engage in such business at
or in connection with the Hotel, as described in Section 856(d)(9)(D)(i) of the
Code;

(iii)                 Manager
shall cause the Hotel to be operated in such a manner as to qualify as a “qualified
lodging facility” under Section 856(d)(9)(D) of the Code (including,
without limitation, causing the Hotel to be managed so that more than one-half
of the dwelling units are used on a transient basis);

(iv)                Manager
shall not own, directly or indirectly or constructively (within the meaning of
Section 856(d)(5) of the Code), more than thirty five percent (35%) of the
shares of BH (whether by vote, value or number of shares), and Manager shall
otherwise comply with any regulations or other administrative or judicial
guidance now or hereafter existing under said Section 856(d)(5) of the Code
with respect to such ownership limits; and

(v)                   Manager shall be actively
engaged (or shall, within the meaning of Section 856(d)(9)(F) of the Code, be
related to a person that is so actively engaged) in the trade or business of
operating “qualified lodging facilities” (defined below) for a person who is 

 9
 

 

not a “related person” within the meaning of Section
856(d)(9)(F) of the Code with respect to BH or TRS Tenant.

(vi)                A “qualified
lodging facility” is defined in Section 856(d)(9)(D) of the Code and means a “lodging
facility” (defined below), unless wagering activities are conducted at or in
connection with such facility by any person who is engaged in the business of
accepting wagers and who is legally authorized to engage in such business at or
in connection with such facility.   A “lodging
facility” is a hotel, motel or other establishment more than one-half of the
dwelling units in which are used on a transient basis, and includes customary
amenities and facilities operated as part of, or associated with, the lodging
facility so long as such amenities and facilities are customary for other
properties of a comparable size and class owned by other owners unrelated to
BH.

D.                                    In the event of an Adverse Regulatory Event (defined below) arising from or
in connection with this Agreement or the Management Agreement, Lessee and
Manager shall work together in good faith to amend this Agreement or the
Management Agreement to eliminate the impact of such Adverse Regulatory
Effect.  For purposes of this Agreement,
the term “Adverse Regulatory Effect” means any time that a law, statute,
ordinance, code, rule or regulation imposes (or could impose in Lessor’s
reasonable opinion) any material threat to BH’s status as a REIT or to the
treatment of amounts paid to Lessor as “rents from real property” under Section
856(d) of the Code.  Each of Manager and
Lessor shall inform the other of any Adverse Regulatory Event of which it is
aware and which it believes likely to impair compliance of the Hotel with
respect to the aforementioned sections of the Code.

E.                                      Notwithstanding Sections 3.2 and 3.4 of the Management Agreement, Manager
shall cause the Hotel to be operated in such a manner that Article XXXV of the
Lease is complied with at all times.  In
particular, but without limitation, Manager shall not sublet or otherwise enter
into any agreement with respect to the Hotel on any basis such that in the
opinion of Lessor the rental or other fees to be paid by any sublessee
thereunder would be based, in whole or in part, on either (i) the income or
profits derived by the business activities of such sublessee, or (ii) any other
formula such that any portion of such sublease rental would fail to qualify as “rents
from real property” within the meaning of Section 865(d) of the Code.

F.                                      Manager
agrees that Manager shall not enter into any lease, sublease or license
(including, but not limited to, with Manager or an affiliate of Manager) with
respect to the Hotel (or any part thereof) without first providing Lessor with
a copy thereof.  Lessor shall have twenty
(20) days from the date of its receipt of such proposed lease to give written
notice to Manager indicating whether such lease, sublease or license could, in
Lessor’s reasonable judgment, cause Lessor to receive or accrue any amount that
would fail to qualify as “rents from real property” within the meaning of
Section 856(d) of the Code, or any similar or successor provisions
thereto.  If Lessor provides timely
notice of its determination that such proposed lease could cause Lessor to
receive such an amount, then Manager will not enter into such proposed
lease.  If Lessor shall fail to give
Manager such written notice within such twenty (20) day period, Lessor shall be
estopped from claiming that such lease violates the terms of this Section 17.F.

18.                                 Casualty or Condemnation.   With respect to the provisions of
Article 10 of the Management Agreement concerning casualty and condemnation, “Landlord”
shall be substituted 

 10
 

 

for “Owner” and Lessor shall have the rights of Owner under
Article 10, it being specifically agreed that casualty insurance proceeds and
condemnation awards shall belong to Lessor, except to the extent that such
provisions of Article 10 expressly confer upon Manager the right to share in
such insurance proceeds or condemnation awards. 
In the event of any conflict between the casualty or condemnation
provisions of the Lease and the Management Agreement (as supplemented by this
Agreement), including without limitation, any conflict regarding the rights and
obligations of the parties with respect to use of insurance proceeds or
condemnation awards, or the rights to terminate the Lease or the Management
Agreement in the event of a casualty or condemnation, the terms of the
Management Agreement (as supplemented by this Agreement) shall control.

19.                                 Confidentiality.  Notwithstanding anything contained
in the Management Agreement or this Agreement to the contrary, Lessor shall be
permitted to disclose such information regarding the Hotel and its management
as may be recommended by Lessor’s legal counsel in order to comply with all
financial reporting, securities laws and other legal requirements applicable to
Lessor, including any disclosures required to the Securities and Exchange
Commission.  Furthermore, Lessor shall
have the right to issue press releases regarding the Hotel consistent with its
publicity program.

20.                                 Miscellaneous.

A.                                   Modification of this Agreement.  No amendment, modification, alteration or
waiver of any provision of this Agreement shall be effective unless it is in
writing and signed by the party against whom enforcement of such amendment is
sought, and no waiver of any provision of this Agreement by any party hereto,
and no consent to any departure therefrom by any party hereto, shall be
effective unless it is in writing and signed by the party against whom
enforcement of such waiver or consent is sought, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

B.                                     No Waiver.  No failure by any party hereto to exercise,
and no delay in exercising, any right under the Management Agreement or this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right preclude any other or further exercise thereof or the
exercise of any other right.

C.                                     Remedies Cumulative.  The rights and remedies of any party hereto
provided in the Management Agreement and this Agreement are cumulative and are
in addition to, and not exclusive of, any rights or remedies provided by law or
equity.

D.                                    Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Missouri.

E.                                      Severability.  The invalidity, illegality or
unenforceability of any one or more phrases, sentences, clauses or sections
contained in this Agreement shall not affect the validity, legality or
enforceability of the remaining portions of this Agreement.

 11
 

 

F.                                      Entire Agreement.  This Agreement, together with the Management
Agreement and the Lease constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, between the parties
hereto with respect to the subject matter hereof.

G.                                     Successors and Assigns.  The parties hereto shall not assign or
transfer or permit the assignment or transfer of this Agreement without the
prior written consent of the other parties hereto, except that Lessee and
Manager shall each have the right to assign its respective interest in this
Agreement to any party to which its respective interest in the Management
Agreement may be assigned under the terms of the Management Agreement, provided
that such assignee assumes the obligations of Lessee or Manager, as
appropriate, under this Agreement, and Lessor shall have the right and
obligation to assign its interest in this Agreement to any party to which its
interest in the Site and Hotel may be assigned, subject to the requirements of
Section 14 of this Agreement.

H.                                    Captions.  The captions and headings of the sections and
subsections of this Agreement are for purposes of convenience and reference
only and shall not limit or otherwise affect the meaning hereof.

I.                                         Time of the Essence.  Time shall be of the essence in the
performance of this Agreement.

J.                                        Incorporation of Recitals.  The recitals hereto are incorporated herein
as part of this Agreement.

K.                                    Counterparts.  This Agreement may be executed simultaneously
in several counterparts, each of which shall be deemed an original, but each of
which, taken together with the others shall constitute one and the same
instrument.

[SIGNATURES FOLLOW
ON NEXT PAGE]

 12
 

 

SIGNATURE PAGE TO OWNER AGREEMENT

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement under seal as of the date first written above.

	
  

  	
  LESSOR:

  
	
   

  	
   

  
	
   

  	
  CHASE
  PARK PLAZA HOTEL, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard Opportunity OP I LP,

  
	
   

  	
   

  	
  a Texas limited
  partnership,

  
	
   

  	
   

  	
  Authorized
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer Harvard Opportunity REIT I, Inc.,

  
	
   

  	
   

  	
   

  	
  a Maryland
  corporation,

  
	
   

  	
   

  	
   

  	
  Its General
  Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
   Executive
  Vice President

  

 

 13
 

 

SIGNATURE PAGE TO OWNER AGREEMENT

IN WITNESS WHEREOF, the parties hereto have
duly executed this Agreement under seal as of the date first written above.

 

	
  

  	
  LESSEE:

  
	
   

  	
   

  
	
   

  	
  KINGSDELL L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  IFC, INC., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James L. Smith

  	
   

  
	
   

  	
   

  	
   

  	
  James L. Smith, President

  

 

 14
 

 

SIGNATURE PAGE TO OWNER AGREEMENT

 

	
  

  	
  MANAGER:

  
	
   

  	
   

  
	
   

  	
  CWE HOSPITALITY
  SERVICES, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L.
  Smith

  	
   

  
	
   

  	
   

  	
  James L. Smith,
  President

  

 

 15

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00116-of-00352.parquet"}]]