1. business and industrial
2. business operations
3. management
4. project management

DEVELOPMENT SERVICES AGREEMENT
TifiS DEVELOPMENT SERVICES AGREEMENT (this “Agreement”) is made and
entered into- effective-- as of the 17th day of December, 2008, by and between HOTEL
BLACKHAWK, L.L.C., an Iowa limited liability company (the “Owner”), and
RESTORATION ST. LOUIS, INC., a Missouri corporation, dba Restoration Iowa (the
“Developer”).
WITNESSETH:
WHEREAS, the Owner has been formed to acquire, develop, construct, own, lease,
maintain and operate a real estate development for hotel and commercial uses at a building
known and numbered as 200 East 3~, located in the City of Davenport, Iowa (the “Project”); and
WHEREAS, the Owner is governed by that certain Operating Agreement of Hotel
Blackhawk, L.L.C. (formerly Blackhawk Davenport Hotel, L.L.C.) effective as of October 3,
2008, as such may be amended from time to time (the “Operating Agreement”); and
WHEREAS, the Owner acknowledges that Developer already has provided certain
services with respect to the development of the Project and desires that Developer continue
performing on-going development and rehabilitation services with respect to the Project on
behalf of the Owner until all development work is completed and be compensated for such
services; and
WhEREAS, the Owner specifically acknowledges that Developer began providing
services with respect to the development of the Project in November 2006 and has continued
such services through the date of this Agreement as indicated on attached Exhibit A, as amended
from time to time, including meeting with officials of the City of Davenport and local business
leaders; and
WHEREAS, the Owner and the Developer wish to reduce to writing their agreements
and understandings concerning Project development services.
NOW, THEREFORE, in consideration of the foregoing, of the mutual promises of the
parties hereto and of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, it is agreed as follows:
Section 1. Obligations of the Developer. The Developer shall have the following duties,
to the extent they have not already been performed:
(a)
act on behalf of the Owner in its relation with governmental agencies and
authorities and construction lenders with respect to all matters relating to the
rehabilitation of the Project;
(b)
assist the Owner in the preparation of a budget of rehabilitation cost, incorporate
changes as they occur, and develop related cash flow reports and forecasts as needed;
487322.2
(c)
select the architect (the “Architect”), coordinate the preparation of the
plans and specifications for the rehabilitation of the Project (the “Plans and
Specifications”) and recommend alternative solutions whenever design details affect
rehabilitationfeasibility or schedules;
-
-
(d)
ensure that the Plans and Specifications are in compliance with all
applicable codes, laws, ordinances, rules and regulations;
(e)
select the contractor (the “Contractor”) and negotiate the construction
contract (the “Construction Contract”) and any necessary contracts and subcontracts for
the rehabilitation of the Project;
(t)
choose the products and materials necessary to rehabilitate the Project in a
manner which satisfies all requirements of the Project mortgage loans and the Plans and
Specifications, and oversee the processing of acquisition of materials;
(g)
monitor disbursement and payment of amounts owed the Architect,
Contractor and the subcontractors for rehabilitation of the Project;
(h)
ensure that the Project is constructed and/or rehabilitated free and clear of
all mechanics’ and materialmen’s liens;
(i)
obtain an Architect’s certificate that the rehabilitation work on the Project
is substantially complete, and inspect Contractor’s work;
secure all building code approvals and obtain certificates of occupancy for
all of the units of the Project;
(k)
inspect and monitor rehabilitation of the Project, and cause the same to be
completed in a prompt and expeditious manner, consistent with good workmanship, and
in compliance with the following:
-
(i)
the Plans and Specifications and Construction Contract (including
any required off-site work), as they may be amended by the agreement of the
parties hereto and with the consent of the Project mortgage lenders;
(ii)
loans; and
any and all obligations of the Owner under the Project mortgage
(iii)
any and all zoning regulations, city and county ordinances,
including health, fire and safety regulations, and any other requirements of
federal, state and local laws, rules, regulations and ordinances applicable to
construction andlor rehabilitation of the Project;
(1)
cause to be performed in a diligent and efficient manner the following:
487322.2
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(i)
rehabilitation
Specifications; and
of the
Project pursuant to
the
Plans
and
(ii)
general administration and supervision of rehabilitation of -the
Project, including but not limited to activities of Contractor and subcontractors
and their employees and agents, and others employed as to the Project in a
manner which complies in all respects with the Project mortgage loans and the
Plans and Specifications;
(m)
keep, or cause to be kept, accounts and cost records as to the acquisition of
materials and rehabilitation of the Project;
(n)
maintain, or cause to be maintained, at its expense, all office and
accounting facilities and equipment necessary to adequately perform the foregoing
functions;
(o)
make available to the Owner, during normal business hours and upon the
Owner’s written request, copies of all material contracts and subcontracts;
(p)
deliver to the Owner dimensioned as-built surveys of the Project (locating
only buildings) and as-built drawings of the rehabilitated Project;
(q)
provide, and periodically update, the Project rehabilitation time schedule,
which shall coordinate and integrate Architect’s and Contractor’s services and material
acquisition with development schedules;
(r)
investigate and recommend a schedule for purchase by the Owner of all
materials and equipment necessary for the rehabilitation of the Project requiring long
lead-time procurement, coordinate the schedule with Architect and Contractor and
expedite and coordinate delivery of such purchases;
(s)
coordinate the work of Architect and Contractor to complete the
rehabilitation of the Project in accordance with the objectives as to cost, time and quality,
and provide sufficient personnel at the Project with authority to achieve such objectives;
(t)
provide a detailed schedule of realistic activity sequences and durations,
allocation of labor and materials and processing of shop drawings and samples as to the
rehabilitation of the Project;
(u)
provide regular monitoring of the schedule as rehabilitation progresses,
identif~, potential variances between scheduled and probable completion dates, review the
schedule for work not started or incomplete, recommend to the Owner adjustments in the
schedule to meet the probable completion date, provide summary reports of such
monitoring, and document all changes in the schedule;
487322.2
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(v)
recommend courses of action to the Owner when requirements of the
Construction Contract are not being fulfilled;
(w)
revise and refine the approved estimate of rehabilitation cost, incorporate
changes as they occur, and-develop related cash flow reports and forecasts as needed;
-
(x)
provide regular monitoring of the approved estimate of rehabilitation cost,
show actual costs for such activities in process and estimates for uncompleted tasks,
identifS’ variances between actual and budgeted or estimated rehabilitation costs and
advise the Owner whenever such projected costs exceed budgets or estimates;
(y)
develop and implement a system for review and processing of change
orders as to rehabilitation of the Project;
(z)
develop and implement a procedure for the review and processing of
applications by Contractor and subcontractors for progress and final payments as to the
rehabilitation of the Project;
(aa)
establish and implement procedures for expediting the processing and
approval of progress and final payments for the rehabilitation of the Project;
(bb) record the progress of the rehabilitation of the Project, including, without
limitation, achieving the 10% qualified rehabilitation expenditure cost threshold for Iowa
state historic tax credit purposes, and submit written progress reports to the Owner,
including the percentage of completion and the number and amounts of change orders;
(cc)
review and approval of the Disbursing Agreement to be required by the
various lenders and investors for advancement of funds for construction and
rehabilitation; and
(dd) review and approval of bridge loan documents between the Owner as
borrower and the City of Davenport as the bridge lender.
The Developer may retain the services of independent consultants, provided the Owner
shall have no responsibility to such independent parties.
Section 2. Development Fee. In consideration of the performance by the Developer of
the rehabilitation services described herein, the Owner shall pay to the Developer a development
fee (the “Development Fee”) in the amount of Seven Million Eight Hundred Eight Thousand
One Hundred Eight and 00/100 Dollars ($7,808,108.00).
(a)
The Development Fee shall be shall be earned and accrued as follows:
(i)
One Million Five Hundred Sixty-One Thousand Six Hundred
Twenty-Two and 00/100 Dollars ($1,561,622.00) on or before June 30, 2009 which
amount shall be deemed to have been fully earned and accrued for development services
487322.2
4
rendered on or before such date in recognition of the relative value of such services and
the risks inherent in the Project prior to such date (such accrued fee shall be allocated as
set forth in Exhibit A, as amended from time to time, hereto); and
(ii)
The remainder of the Development Fee shall be earned and
accrued in proportion to construction and rehabilitation progress and shall be fully earned
for all development services contemplated in this Agreement upon the date the Project is
placed in service pursuant to Section 47 of the Internal Revenue Code of 1986, as
amended through the date hereof (the “Code”).
(b)
The development fee shall be p4j4 as follows:
i)
$320,000 by June 30, 2009;
ii)
$975,798 in eleven equal montH)’ installments of $81,317 starting
July 31, 2009 one payment of $81,311 on June 30, 2010;
Hi)
$2,651,249 not later than February 28, 2013 from the Owner’s
proceeds from the Enterprise Zone Credits, the final State of Iowa Historic Tax Credits
(the amount in excess of the fiscal year 2011 reservation) and any other necessary sources
of flmding; and
iv)
The remainder of the Development Fee shall be payable out of the
cash flow of the Owner in accordance with the terms of the Operating Agreement, by the
tenth anniversary of the first day of the month following the date the Project is placed in
service pursuant to Section 47 of the Code, but in no event later than December 1, 2021.
If the entire Development Fee is not paid on or before December 1, 2021, the Owner shall
pay the Developer the unpaid Development Fee from other sources, including capital
contributions from the members of the Owner.
(c)
Notwithstanding anything to the contrary in this Agreement, no fees shall
be earned hereunder by Developer for services which are not directly and substantially
related to ‘qualified rehabilitation expenditures’ (as defined in Section 47(c)(2) of the
Code) made in connection with the Project.
Section 3. Termination of Duties and Responsibilities of Developer. The Developer
shall have no further duties or obligations hereunder after receipt of a final certificate of
occupancy for the Project and completion of all punch list items. The Developer’s duties,
responsibilities, and rights hereunder shall not be terminated by the Owner except for “cause” as
finally determined by a court of competent jurisdiction, and subject to Section 7(e) hereof. For
purposes hereof, “cause” shall mean fraud, dishonesty, reckless disregard for customary
practices, and intentional misconduct after at least thirty (30) days’ prior notice and opportunity
to cure.
Section 4. Notice. Any notice required to be given hereunder shall be in writing and
mailed by certified mail, postage prepaid, or hand delivered with receipt of service
simultaneously to all parties and Chevron at the addresses set forth in the Operating Agreement.
487322.2
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Each party shall have the right to change its address for the receipt of notices, upon the giving of
proper notice to all other parties hereto. Whenever a period of time is to be computed from the
date of receipt of an item of certified mail, such period shall be computed from the fifth day
following the date of mailing if delivery of the certified mail item is refused by the party to
whom it was directed~
Section 5. Responsibilities of the Owner. In order for the Developer to perform duties
described herein, the Owner shall:
(a)
the Project;
provide full information regarding its requirements for the rehabilitation of
(b)
designate a representative who shall be fully acquainted with the scope of
the rehabilitation work and has authority to render decisions promptly and furnish
information expeditiously; and
(c)
if the Owner becomes aware of any fault or defect in the rehabilitation of
the Project or nonconformance with any contract or other documents, it shall give prompt
written notice thereof to the Developer.
Section 6. Independent Contractor. The parties hereto do not intend to create a
partnership or any similar association for any purpose. The Developer shall be an independent
contractor for all purposes.
Section 7. Miscellaneous.
(a)
This Agreement shall be binding upon the parties hereto and their
respective successors and permitted assigns. This Agreement may be assigned by either
of the parties hereto without the written consent of the other party, except that the
Developer may assign its rights but not its duties under this Agreement and the Owner
may assign the Agreement only with the prior written consent of Chevron T.C.I., Inc.
(“Chevron”) until after the date when neither Chevron nor an Affiliate Fund is an
Investor Member (as “Affiliate Fund,~’ and “Investor Member” are defined in the Master
Tenant’s Operating Agreement which term itself is defined in the Operating Agreement).
From and after the effective date of any assignment by Owner of its obligation to pay a
portion of the Development Fee, the Owner shall be released from its payment obligation
with respect to such portion.
(b)
The descriptive paragraph headings of this Agreement are inserted for
convenience only and are not intended to and shall not be construed to limit, enlarge, or
affect the scope or intent of this Agreement nor the meaning of any provision hereof.
(c)
This Agreement and the rights and obligations of the parties hereto shall
be governed, construed, and enforced in accordance with the laws of the State of
Missouri. This Agreement may be executed in any number of counterparts, each when
taken together shall constitute a single valid and binding instrument.
487322.2
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(d)
This Agreement embodies the entire agreement and understanding
between the parties relating to the subject matter hereof and supersedes all prior
agreements and understandings related to such subject matter, and it is agreed that there
are no terms, understandings, representations or warranties, express or implied, otherthan
those set forth herein.
(e)
This Agreement shall not be amended, modified in any respect, or
terminated without the prior written consent of (i) each party hereto and (ii) Chevron until
after the date when neither Chevron nor an Affiliate Fund is an Investor Member (as
“Affiliate Fund,” and “Investor Member” are defined in the Master Tenant’s Operating
Agreement which term itself is defined in the Operating Agreement).
(f)
No party hereto shall file or attempt to file this Agreement of record.
(g)
This Agreement and the obligations of the Developer hereunder are solely
for the benefit of the Owner and its members and no benefits to third parties are intended.
(h)
In the event any provision hereof is deemed to be unenforceable or against
public policy, then such provision shall be deemed omitted from this Agreement and to
the extent possible such provision shall be replaced with an enforceable provision which
corresponds with the spirit of the omitted provision, and no other provision of this
Agreement shall be affected by such omission or unenforceability.
(i)
The parties agree that the prevailing party in any action or dispute
involving litigation concerning the subject matter hereof shall be entitled to attorneys’
fees and court costs.
(j)
The waiver by any party of any breach of this Agreement shall not operate
or be construed to be a waiver of any subsequent breach.
(k)
All capitalized terms herein shall have the same meanings as set forth in
the Operating Agreement, except as otherwise expressly set forth herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
[SIGNATURES ON FOLLOWING PAGE1
487322.2
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IN WITNESS WHEREOF, this Development Services Agreement shall be effective as of
the day and year first above written and has been executed by the undersigned as provided below.
OWNER:
HOTEL BLACKHAWK, L.L.C., an Iowa
limited liability company
By: 200 East T
,
L.L.C., its sole memberr
Afn%j3llCMana~er
By:/ (~AJ.-~”L,C
Amy Gill, 4’c’ianager
DEVELOPER:
RESTORATION ST. LOUIS, INC.,
a
By
ident
487322.2
8
EXHIBIT A
TO DEVELOPMENT SERVICES AGREEMENT (USA)
Development Services Per Section 1 of the USA
of June 1.2009
(a)
act on behalf of the Owner in its relation with
governmental agencies and authorities and construction lenders with
respect to all mailers relating to the rehabilitation of the Project;
20%
(b)
assist the Owner in the preparation of a budget of
rehabilitation cost, incorporate changes as they occur, and develop related
cash flow reports and forecasts as needed;
90%
(c)
select the architect (the “Architect”), coordinate the
preparation of the plans and specifications for the rehabilitation of the
Project (the “Plans and Specifications”) and recommend alternative
solutions whenever design details affect rehabilitation feasibility or
schedules;
80%
(d)
ensure that the Plans and Specifications are in
compliance with all applicable codes, laws, ordinances, rules and
regulations;
100%
(e)
select the contractor (the “Contractor”) and negotiate the
construction contract (the “Construction Contract”) and any necessary
contracts and subcontracts for the rehabilitation of the Project;
100%
(f)
choose the products and materials necessary to
rehabilitate the Project in a manner which satisfies all requirements of the
Project mortgage loans and the Plans and Specifications, and oversee the
processing of acquisition of materials;
(g)
monitor disbursement and payment of amounts owed the
Architect, Contractor and the subcontractors for rehabilitation of the
Project;
(h)
ensure that the Project is constructed and/or rehabilitated
free and clear of all mechanics’ and materialmen’s liens;
(i)
obtain an Architect’s certificate that the rehabilitation
work on the Project is substantially complete, and inspect Contractor’s
work;
0)
secure all building code approvals and obtain certificates
of occupancy for all of the units of the Project;
(k)
inspect and monitor rehabilitation of the Project, and
cause the same to be completed in a prompt and expeditious manner,
consistent with good workmanship, and in compliance with the following:
(i)
the Plans and Specifications and Construction
487322.2
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50%
10%
10%
0%
0%
Contract (including any required off-site work), as they may be
amended by the agreement of the parties hereto and with the
consent of the Project mortgage lenders;
(ii)
any and all obligations of the Owner under the
Project mortgage loans; and
(iii)
any and all zoning regulations, city and county
ordinances, including health, fire and safety regulations, and any
other requirements of federal, state and local laws, rules,
regulations and ordinances applicable to construction and/or
rehabilitation of the Project;
(I)
the following:
10%
10%
10%
cause to be performed in a diligent and efficient manner
(i)
rehabilitation of the Project pursuant to the Plans
and Specifications; and
(H)
general administration and supervision of
rehabilitation of the Project, including but not limited to activities
of Contractor and subcontractors and their employees and agents,
and others employed as to the Project in a manner which
complies in all respects with the Project mortgage loans and the
Plans and Specifications;
(m)
keep, or cause to be kept, accounts and cost records as to
the acquisition of materials and rehabilitation of the Project;
10%
10%
10%
(n)
maintain, or cause to be maintained, at its expense, all
office and accounting facilities and equipment necessary to adequately
perform the foregoing functions;
10%
(o)
make available to the Owner, during normal business
hours and upon the Owner’s written request, copies of all material
contracts and subcontracts;
10%
(p)
deliver to the Owner dimensioned as-built surveys of the
Project (locating only buildings) and as-built drawings of the rehabilitated
Project;
0%
(q)
provide, and periodically update, the Project
rehabilitation time schedule, which shall coordinate and integrate
Architect’s and Contractor’s services and material acquisition with
development schedules;
(r)
investigate and recommend a schedule for purchase by
the Owner of all materials and equipment necessary for the rehabilitation
of the Project requiring long lead-time procurement, coordinate the
schedule with Architect and Contractor and expedite and coordinate
delivery of such purchases;
(s)
coordinate the work of Architect and Contractor to
487322.2
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10%
50%
1.
complete the rehabilitation of the Project in accordance with the
objectives as to cost, time and quality, and provide sufficient personnel at
the Project with authority to achieve such objectives;
(t)
provide a detailed schedule of realistic activity sequences
and durations, allocation Of labor and materials and processing of shop
drawings and samples as to the rehabilitation of the Project;
(u)
provide regular monitoring of the schedule as
rehabilitation progresses, identify potential variances between scheduled
and probable completion dates, review the schedule for work not started
or incomplete, recommend to the Owner adjustments in the schedule to
meet the probable completion date, provide summary reports of such
monitoring, and document all changes in the schedule;
(v)
recommend courses of action to the Owner when
requirements of the Construction Contract are not being fulfilled;
(w)
revise and refine the approved estimate of rehabilitation
cost, incorporate changes as they occur, and develop related cash flow
reports and forecasts as needed;
(x)
provide regular monitoring of the approved estimate of
rehabilitation cost, show actual costs for such activities in process and
estimates for uncompleted tasks, identi& variances between actual and
budgeted or estimated rehabilitation costs and advise the Owner whenever
such projected costs exceed budgets or estimates;
(y)
develop and implement a system for review and
processing of change orders as to rehabilitation of the Project;
20%
100%
10%
10%
10%
10%
100%
(z)
develop and implement a procedure for the review and
processing of applications by Contractor and subcontractors for progress
and final payments as to the rehabilitation of the Project;
100%
(an)
establish and implement procedures for expediting the
processing and approval of progress and final payments for the
rehabilitation of the Project;
100%
(bb)
record the progress of the rehabilitation of the Project,
including, without limitation, achieving the 10% qualified rehabilitation
expenditure cost threshold for Iowa state historic tax credit purposes, and
submit written progress reports to the Owner, including the percentage of
completion and the number and amounts of change orders;
(cc)
review and approval of the Disbursing Agreement to be
required by the various lenders and investors for advancement of funds for
construction and rehabilitation; and
(dd)
review and approval of bridge loan documents between
the Owner as borrower and the City of Davenport as the bridge lender.
487322.2
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25%
100%
100%