Document:

Exhibit 10.39

DEVELOPMENT AGREEMENT

(Main Hotel Building Renovation Project)

BY AND BETWEEN

CHASE PARK PLAZA HOTEL, 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

  	
   

  	
  6

  
	
  Section 1.8

  	
   

  	
  Limitation on Expenditures

  	
   

  	
  10

  
	
  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

  	
   

  	
  11

  
	
  Section 1.13

  	
   

  	
  Payment for Materials

  	
   

  	
  11

  
	
  Section 1.14

  	
   

  	
  Completion

  	
   

  	
  11

  
	
  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

  	
   

  	
  17

  
	
  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

  
	
  Section 7.7

  	
   

  	
  Time of Essence

  	
   

  	
  19

  

 i
 

 

 

	
  Section 7.8

  	
   

  	
  Entireties, Beneficiaries

  	
   

  	
  19

  
	
  Section 7.9

  	
   

  	
  No Agency

  	
   

  	
  20

  
	
  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

  	
   

  	
  21

  
	
  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

(Main
Hotel Building Renovation Project)

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

RECITALS

A.            Owner
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”).

B.            The
Private Residences, LLC, a Delaware limited liability company and an affiliate
of Owner (“Condo Owner Affiliate”), is the owner of Floors 9-12, Floors
14-15, Floors 17-27, and a part of Floor 28 of the Condominium Tower.

C.            Owner and Condo
Owner Affiliate intend to re-develop and renovate the Main Hotel Building,
Condominium Tower and Parking Garages as follows:  (i) Owner intends to renovate the existing
hotel rooms in the Main Hotel Building and perform (or cause to be performed) certain
other renovations of the Main Hotel Building (the “Main Hotel Building
Renovation Project”); (ii) Owner 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) Condo Owner Affiliate 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 Condo
Owner Affiliate desire to retain Developer to assist Owner and Condo 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 Main Hotel
Building Renovation Project and, concurrently herewith, (i) Owner and Developer
will enter into a separate development agreement with respect to the New Hotel
Facilities and Corporate Apartments Project, and (ii) Condo Owner Affiliate and
Developer will enter into a separate development agreement with respect to the
Residential Condominium Project.  As used
in this Agreement, the term “Project” means the Main Hotel Building
Renovation Project and any other work for which provision is made in the Final
Development Budget (as hereinafter defined).

 1
 

 

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 has submitted
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 Final Development Plan
for the Project, the New Hotel Facilities and Corporate Apartments Project, and
the Residential Condominium Project, all of which have been approved by Owner (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 has submitted
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 the 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

 2
 

 

unreasonably
withheld or delayed so long as the Final Development Budget is consistent with
the conceptual Development Budget 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).  In this regard, Owner and Developer agree
that it is their intent to commence the Project on or about the Effective Date.

(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:

 3
 

 

(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, 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 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 proposed change orders in respect of the
Project shall be submitted to Owner as soon as possible for Owner’s written
approval and execution (such written approval and execution not to be
unreasonably withheld or delayed). 
Notwithstanding the preceding sentence, however, Developer shall have
the right to execute on behalf of Owner, without the prior approval of (but
with notice to) Owner, any proposed change order described in the following
clauses (A) and, if applicable, (B), so long as such proposed change order will
not materially alter the appearance, utility or design of the Project or extend
the final Project Schedule:  (A) a
proposed change order for work within the scope of the General Construction
Contract (as hereinafter defined) that will not cause an increase in the Final
Development Budget, provided that if any such proposed change order requires an
allocation from the contingency line item in the Final Development Budget in
order to allow for payment of the work described therein, then such change
order shall also be subject to the requirements of the following clause (B) of
this Section 1.5(e); and (B) any proposed change order that requires an
allocation from the contingency line item in the Final Development Budget in
order to allow for payment of the work described therein, so long as such
allocation from the contingency line item does not cause the Approved
Contingency Limit to be exceeded.  The
term “Approved Contingency Limit” shall mean the positive difference between
the amount of Fifty Thousand Dollars ($50,000) and the amount allocated from
the contingency line item in the Final Development Budget for work described in
all proposed change orders that have not been expressly approved by Owner.  It is intended that the Approved Contingency
Limit will fluctuate from time to time. 
By way of non-binding example, if Developer signs a proposed change
order (the “Hypothetical Change Order”) that requires an allocation from the
contingency line item in the amount of $25,000 in order to

 4
 

 

allow
for payment of the work described therein, the Approved Contingency Limit at
that time would be $25,000 ($50,000 minus $25,000). Accordingly, until the
Hypothetical Change Order is submitted to and approved by Owner, the Approved
Contingency Limit would remain at $25,000 and, accordingly, any subsequent
proposed change order that, if approved, would require an allocation from the
contingency line item in excess of $25,000 would require the prior approval of
Owner. By way of further non-binding example, at such time as the Hypothetical
Change Order is submitted to and approved by Owner, the Approved Contingency Limit
would be increased by $25,000 as a result thereof, and thus would be re-set at
the amount of $50,000. If Developer executes any change order on behalf of
Owner pursuant to this Section 1.5(e), Developer shall provide prompt notice of
such change order to Owner.  The parties
expressly agree that Develeoper has the authority to execute any proposed
change order which Developer executes in compliance with the requirements and
procedures set forth in the foregoing provisions of this Section 1.5(e).  Accordingly, Owner agrees that Developer
shall have no liability to Owner of any type or kind whatsoever in connection
with any proposed change order approved and executed by Developer in accordance
with the requirements and procedures set forth in this Section 1.5(e).

(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
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)           Owner and Developer
hereby designate MCP, Inc. as the general contractor (“General Contractor”)
for the Project.  Developer has negotiated
a guaranteed maximum price contract with the General Contractor for the Project
(the “General Construction Contract”), which General Construction
Contract is hereby approved by Owner. 
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

 5
 

 

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, except as expressly provided in
Section 1.5(e) of this Agreement.

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 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.  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(e) 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

 6
 

 

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.

(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.

 7
 

 

(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.

(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.

(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 (the “Close-Out Binders”)
containing all warranties, guarantees, operating manuals and as-built
drawings within

 8
 

 

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
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,

 9
 

 

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 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

 10

 

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 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 Items (defined below);

(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

 11
 

 

an appropriate list of items (“Punchlist Items”) that
do not interfere with occupancy or use of the Project and remain 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.

(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 final lien waiver from the General Contractor on a form to be
reasonably approved in writing by Owner, which, among other things, (1) waives
and releases all lien rights and any claims the General Contractor may have
with respect to the Owner, the Project, or the Land and related improvements,
and (2) contains a statement that the General Contractor has paid all of its
subcontractors, suppliers and other vendors all amounts due them for such work
performed in respect of the Project. Notwithstanding the preceding sentence, if
there is any outstanding lien or claim to lien that constitutes an exception to
the statement contained in clause (2) of the preceding sentence, Developer may
purchase (or cause to be purchased) a bond in the amount of one hundred fifty
percent (150%) of the amount of such lien or claim to lien, and such bond shall
be deemed to satisfy such lien or claim to lien for purposes of this Section
1.14(c)(i), so long as the title company that issued the title insurance policy
maintained by Owner with respect to the Project provides affirmative insurance
coverage with respect to such lien or claim to lien.

(ii)           a
final certificate of occupancy from the City of St. Louis for the Project and
such other governmental permits and licenses as are required for the occupancy
and operation of the Project;

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

(iv)          three
(3) Close-Out Binders with respect to the Project.

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 as may be amended from time to time by the parties 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 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.

 12
 

 

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 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(c). 
Nothing in this Section 2.4 shall be

 13
 

 

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 Developer is not developing the Project in a manner
satisfactory to Owner, provided that (i) Owner shall have notified Developer in
writing of such dissatisfaction, (ii) Developer shall have failed to cure Owner’s
dissatisfaction within thirty (30) days after the giving of such notice, and (iii)
a final decision shall have been issued in an arbitration proceeding under
Section 7.22 of this Agreement that Developer has not discharged its duties
hereunder in a manner consistent with the standards set forth in Section 1.2
hereof;

(e)           a good faith
determination by Owner that 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);

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

(g)           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;

 15
 

 

(h)           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);

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

(j)            a termination for
cause of the development agreement executed between Condo Owner Affiliate and
Developer with respect to the Residential Condominium Project, it being agreed
that any termination by reason of provisions such as those set forth in
Sections 4.2(a)-(g) and 4.2(i) above shall be deemed a termination for cause;
or

(k)           the Smith Investor (as
such term is defined in the Limited Liability Company Agreement of Owner (the “Hotel
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 Hotel 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.

 16
 

 

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 Agreement pursuant
to Section 4.2(h) or 4.2(k), Owner shall pay to Developer a termination fee
equal to the net present value of the balance of the Development Fee that has
not been paid to Developer as of the date of termination.  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

 17
 

 

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.

(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 similar
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.

 19
 

 

Section 7.9             No Agency.  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 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.

 20
 

 

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.

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

 21
 

 

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
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

 22
 

 

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
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: 

  	
  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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  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 10.40

DEVELOPMENT AGREEMENT

(New Hotel Facilities and Corporate Apartments Project)

BY
AND BETWEEN

CHASE
PARK PLAZA HOTEL, 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
  Manager as Developer

  	
  2

  
	
  Section 1.2

  	
  Acceptance by
  Manager

  	
  2

  
	
  Section 1.3

  	
  Pre-Construction
  Duties

  	
  2

  
	
  Section 1.4

  	
  Project Design

  	
  3

  
	
  Section 1.5

  	
  Other Services

  	
  4

  
	
  Section 1.6

  	
  Project
  Commencement

  	
  5

  
	
  Section 1.7

  	
  Project
  Administration

  	
  6

  
	
  Section 1.8

  	
  Limitation on
  Expenditures

  	
  10

  
	
  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

  	
  11

  
	
  Section 1.13

  	
  Payment for
  Materials

  	
  11

  
	
  Section 1.14

  	
  Completion

  	
  11

  
	
  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

  	
  17

  
	
  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

  
	
  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

  

 

 i
 

 

 

	
  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

(New
Hotel Facilities and Corporate Apartments Project)

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

RECITALS

A.            Owner 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”).

B.            The Private Residences, LLC,
a Delaware limited liability company and an affiliate of Owner (“Condo Owner
Affiliate”), is the owner of Floors 9-12, Floors 14-15, Floors 17-27, and a
part of Floor 28 of the Condominium Tower.

C.            Owner and Condo Owner
Affiliate intend to re-develop and renovate the Main Hotel Building,
Condominium Tower and Parking Garages as follows:  (i) Owner intends to renovate the existing
hotel rooms in the Main Hotel Building and perform (or cause to be performed)
certain other renovations of the Main Hotel Building (the “Main Hotel
Building Renovation Project”); (ii) Owner 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) Condo Owner Affiliate 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 Condo Owner
Affiliate desire to retain Developer to assist Owner and Condo 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 New Hotel Facilities and Corporate
Apartments Project and, concurrently herewith, (i) Owner and Developer will
enter into a separate development agreement with respect to the Main Hotel
Building Renovation Project, and (ii) Condo Owner Affiliate and Developer will
enter into a separate development agreement with respect to the Residential
Condominium Project.  As used in this
Agreement, the term “Project” means the New Hotel Facilities and
Corporate Apartments 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

 2
 

 

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 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 sub-categories.

(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). In this regard,
Owner and Developer agree that it is their intent to commence the Project on or
about May 1, 2007.

(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).

 3
 

 

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, 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 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 proposed change orders in respect of the Project shall be submitted
to Owner as soon as possible for Owner’s written approval and execution (such
written approval and execution not to be unreasonably withheld or
delayed).  Notwithstanding the preceding
sentence, however, Developer shall have the right to execute on behalf of
Owner, without the prior approval of (but with notice to) Owner, any proposed
change order described in the following clauses (A) and, if applicable, (B), so
long as such proposed change order will not materially alter the appearance,
utility or design of the Project or extend the final Project Schedule:  (A) a proposed change order for work within
the scope of the General Construction Contract (as hereinafter defined) that
will not cause an increase in the Final Development Budget, provided that if
any such proposed change order requires an allocation from the contingency line
item in the Final Development Budget in order to allow for payment of the work
described therein, then such change order shall also be subject to the
requirements of the following clause (B) of this Section 1.5(e); and (B) any
proposed change order that requires an allocation from the contingency line
item in the Final Development Budget in order to allow for payment of the work
described therein, so long as such allocation from the contingency line item
does not cause the Approved Contingency Limit to be exceeded. The term “Approved
Contingency Limit” shall mean the positive difference between the amount of One
Hundred Fifty Thousand Dollars ($150,000) and the amount allocated from the
contingency line item in the Final Development Budget for work described in all
proposed change orders that have not been expressly approved

 4
 

 

by Owner.  It is intended that the Approved Contingency
Limit will fluctuate from time to time. 
By way of non-binding example, if Developer signs a proposed change
order (the “Hypothetical Change Order”) that requires an allocation from the contingency
line item in the amount of $100,000 in order to allow for payment of the work
described therein, the Approved Contingency Limit at that time would be $50,000
($150,000 minus $100,000). Accordingly, until the Hypothetical Change Order is
submitted to and approved by Owner, the Approved Contingency Limit would remain
at $50,000 and, accordingly, any subsequent proposed change order that, if
approved, would require an allocation from the contingency line item in excess
of $50,000 would require the prior approval of Owner. By way of further
non-binding example, at such time as the Hypothetical Change Order is submitted
to and approved by Owner, the Approved Contingency Limit would be increased by
$100,000 as a result thereof, and thus would be re-set at the amount of
$150,000. If Developer executes any change order on behalf of Owner pursuant to
this Section 1.5(e), Developer shall provide prompt notice of such change order
to Owner. The parties expressly agree that Developer has the authority to execute
any proposed change order which Developer executes in compliance with the
requirements and procedures set forth in the foregoing provisions of this
Section 1.5(e). Accordingly, Owner agrees that Developer shall have no
liability to Owner of any type or kind whatsoever in connection with any
proposed change order approved and executed by Developer in accordance with the
requirements and procedures set forth in this Section 1.5(e).

(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 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.

 5
 

 

(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, except as expressly provided in
Section 1.5(e) of this Agreement.

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 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.  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

 6
 

 

permitted under Section
1.5(e) 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.

(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).

 7
 

 

(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.

(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.

(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.

 8
 

 

(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 (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 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

 9
 

 

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 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

 10
 

 

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 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:

 11
 

 

(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 Items (defined below);

(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
list of items (“Punchlist Items”) that do not interfere with occupancy
or use of the Project and remain 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.

(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 final lien waiver from the
General Contractor on a form to be reasonably approved in writing by Owner,
which, among other things, (1) waives and releases all lien rights and any
claims the General Contractor may have with respect to the Owner, the Project,
or the Land and related improvements, and (2) contains a statement that the
General Contractor has paid all of its subcontractors, suppliers and other
vendors all amounts due them for such work performed in respect of the Project.
Notwithstanding the preceding sentence, if there is any outstanding lien or
claim to lien that constitutes an exception to the statement contained in
clause (2) of the preceding sentence, Developer may purchase (or cause to be
purchased) a bond in the amount of one hundred fifty percent (150%) of the
amount of such lien or claim to lien, and such bond shall be deemed to satisfy
such lien or claim to lien for purposes of this Section 1.14(c)(i), so long as
the title company that issued the title insurance policy maintained by Owner
with respect to the Project provides affirmative insurance coverage with
respect to such lien or claim to lien.

(ii)           a final certificate of
occupancy from the City of St. Louis for the Project and such other
governmental permits and licenses as are required for the occupancy and
operation of the Project;

(iii)          evidence of completion of
all Punchlist Items; and

(iv)          three (3) Close-Out Binders
with respect to the Project.

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 as may be amended from time to time by the parties hereto,
subject to the provisions of Section 2.2 and Section 2.3 below.  The

 12
 

 

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 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.

(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

 13
 

 

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 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(c).  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 Developer is not developing the Project in a manner satisfactory
to Owner, provided that (i) Owner shall have notified Developer in writing of
such dissatisfaction, (ii) Developer shall have failed to cure Owner’s
dissatisfaction within thirty (30) days after the giving of such notice, and
(iii) a final decision shall have been issued in an arbitration proceeding
under Section 7.22 of this Agreement that Developer has not discharged its
duties hereunder in a manner consistent with the standards set forth in Section
1.2 hereof;

(e)           a good faith determination
by Owner that 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);

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

(g)           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;

 15
 

 

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

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

(j)            a termination for cause of
the development agreement executed between Condo Owner Affiliate and Developer
with respect to the Residential Condominium Project, it being agreed that any
termination by reason of provisions such as those set forth in Sections
4.2(a)-(g) and 4.2(i) above shall be deemed a termination for cause; or

(k)           the Smith Investor (as such
term is defined in the Limited Liability Company Agreement of Owner (the “Hotel
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 Hotel 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.

 16
 

 

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 Agreement by Owner pursuant to Section 4.2(h) or 4.2(k), Owner shall
pay to Developer a termination fee equal to the net present value of the
balance of the Development Fee that has not been paid to Developer as of the
date of termination.  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, 

 17
 

 

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.

(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 similar 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.  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 independent contractors with, Developer
and not of or with Owner.

 19
 

 

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

 

IN WITNESS WHEREOF, the parties hereto have executed
the foregoing document to be effective as of the 1st day of December 2006.

	
  

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  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

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  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-2

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"}]]