Exhibit 10.3
DEVELOPMENT
AGREEMENT
THIS DEVELOPMENT AGREEMENT (this
“ Agreement ”) is made and entered into as of
the 12th day of October, 2005, by and between WTC-Trade Mart, L.P.,
a Delaware limited partnership (“ Owner ”) and
Dallas Market Center Operating, L.P., a Delaware limited
partnership (“ Developer ”).
RECITALS:
A. Owner is the holder of the
leasehold estate with respect to certain land located in the City
and County of Dallas, Texas (as more fully described on Exhibit A
attached hereto, the “Land”), and owns the improvements
located thereon.
B. Owner desires to engage Developer
to develop the Project (hereinafter defined) on the Land in
accordance with the Development Plan (hereinafter defined), subject
to the terms hereof.
NOW, THEREFORE, in consideration of
the mutual rights and obligations herein set forth, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Defined
Terms . As used in this Agreement, the following terms shall
have the following respective meanings where they appear with their
initial letters capitalized, unless otherwise specifically provided
or unless the context in which they appear otherwise
requires:
“ Affiliate ”
means, with respect to each party hereto, any person, firm,
corporation, partnership, association, trust, or other entity that,
directly or indirectly, controls, or is under common control with,
such party, and with respect to each party hereto, any firm,
corporation, partnership, association, trust, or other entity that
is controlled by such party. For purposes of this definition, the
term “ control ” means the possession, directly
or indirectly, of the power to direct the management and policies
of any such party, whether through the ownership of voting
securities, by contract, or otherwise.
“ Change Order ”
means any change to a Construction Contract.
“ Construction Contract
” means the construction contract between Owner and the
General Contractor regarding the Project.
“ Construction Schedule
” means the progress schedule for the construction of the
Project that is contained in the Development Plan.
“ Development Contracts
” means the architectural services contract between Owner and
the Project Architect, the Construction Contract, this Agreement,
and any and all other agreements and/or contracts that may be
entered into in connection with the development and construction of
the Project .
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“ Development Plan
” means the comprehensive program for the Project as approved
by Owner and Developer, including, without limitation, all plans
for demolition and temporary relocation, plans and specifications
for renovation and construction, the Project Budget and the
Construction Schedule.
“ General Contractor
” means the contractor who has been or will be approved by
the Owner and Developer and who will have overall responsibility
for completion of the Project in accordance with the Plans and
Specifications, the Construction Schedule and the Project Budget,
all as more fully described in the Construction
Contract.
“ Inspecting Architect
” means an architect selected by and at the option of Owner
to perform periodic inspections and provide independent advice and
consultation in respect of the construction of the
Project.
“ Memorandum of
Understanding ” means that certain Memorandum of
Understanding Regarding Lighting Industry Expansion Project of even
date herewith made by and among the partners of CNL Dallas Market
Center, L.P., a Delaware limited partnership (the “
Partnership ”).
“ Project ” means
the expansion of the building known as the Dallas Trade Mart to
provide larger facilities for lighting industry trade shows and
marketing facilities and all other improvements to be constructed
on the Land in accordance with the Development Plan and related
off-site improvements.
“ Project Budget
” means the budget approved by the Partnership and attached
to the Memorandum, as the same may be amended from time to time by
approval of the partners in the Partnership.
“ Project Architect
” means the professional architect or architecture firm
approved by Owner and Developer who shall be responsible for
preparation of the Plans and Specifications for the Project, review
of the progress of completion, and other duties, all as more fully
described in the contract for architectural services for the
Project.
ARTICLE II.
ENGAGEMENT OF DEVELOPMENT MANAGER
Section 2.01 Developer
Services . Owner hereby engages the services of Developer as an
independent contractor, with the powers and duties, subject to
Section 2.02 herein, of arranging, supervising, and
coordinating on behalf of Owner all development and construction
services for the Project, and Developer undertakes and accepts such
engagement. Subject to Section 2.02 , the powers and
duties of Developer shall include the following:
(a) Developer will negotiate with
the General Contractor, any and all consulting engineers,
subcontractors, or other persons required in connection with the
construction of the Project, for their retention by Owner on terms
and conditions acceptable to Owner (but execution of any agreements
or documents by Owner or Developer on behalf of Owner will be at
Owner’s sole discretion).
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(b) Developer will conduct
negotiations and calls for bids or proposals, and will review and
analyze such bids or proposals when received in respect of the
Project.
(c) Developer will negotiate any
Change Orders with the General Contractor and the Project
Architect, but all Change Orders are subject to approval by
Owner.
(d) Developer will secure or cause
to be secured all required permits, licenses, and approvals from
applicable authorities in connection with (i) any demolition
of portions of the existing improvements, (ii) the
construction and completion of the Project in accordance with the
Development Plan, and (iii) the development of the Project,
including, without limitation, zoning, building, and environmental
impact and hazardous or toxic waste laws, and act as a liaison
between the Owner and all federal, state, and local governmental
boards, statutory bodies, or other agencies having jurisdiction
over the Project so that the development and construction of the
Project will proceed in an authorized and expeditious
manner.
(e) Developer will require the
General Contractor to prepare a critical path or other appropriate
progress schedule for the construction of the Project and effect
coordination and integration of the various services required for
the critical path construction and completion of the Project in
conformity with the Construction Schedule.
(f) Developer will maintain a
current record of expenditures in accordance with the line items
set forth in the Development Plan.
(g) Developer will require the
General Contractor to negotiate, finalize, and award all major
subcontracts and material purchase orders, all of which
subcontracts and purchase orders shall be in accordance with the
Development Plan.
(h) Developer will establish and
implement a procedure for the review and processing of applications
submitted by the General Contractor for progress and final payments
and establish procedures for the payment of all professionals or
consultants retained by Owner to perform services for the
development of the Project.
(i) Developer will inspect, cause
the Project Architect and other professionals and consultants to
inspect, and permit the Inspecting Architect to inspect, the
progress of the course of construction of the Project, including,
without limitation, verification of the quantity and quality of
materials and labor being furnished for the construction of the
Project and permit the Project Architect, the Inspecting Architect,
and other professionals or consultants to verify that the
construction is being carried out in accordance with the
Development Plan.
(j) Developer will contractually
require the General Contractor to obtain and maintain insurance
coverage for the Project, and the Owner at all times until
completion of the construction of the Project. Developer may, at
its option, obtain and maintain the builder’s risk insurance
for the Project with coverage to include the General
Contractor.
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(k) Developer will contractually
require the General Contractor to conduct regular Project site
meetings during the construction of the Project with the Project
Architect.
(l) Developer will coordinate and
direct the activities any environmental and testing consultants and
recommend special additional testing when required, in addition to
the required materials testing.
(m) Developer will collect and
assemble all operating instructions, manuals, warranties, field
record information, as-built drawings, plans, specifications,
samples, shop drawings, and product data required to be provided
pursuant to the terms and conditions of the Development Plan and
Development Contracts.
(n) Developer will provide
administration of all of the Development Contracts and the
enforcement thereof, including, without limitation, maintaining all
appropriate records related to the Project, and the Development
Contracts.
(o) Developer will coordinate and
direct the preparation of the “punch-list” by the
General Contractor and coordinate and direct the completion of the
items on the “punch-list” and Project
“close-out” until final completion of the
Project.
(p) Developer will establish and
administer the construction cost accounting and reporting
procedures that will accomplish the proper (i) segregation of
construction and design costs in accordance with Owner and any
tenant lease requirements pertaining to cost responsibility, rent
determination, and tax and insurance considerations, and
(ii) cost control of the overall Project. Reports (including
status reports showing the status of construction and work in
progress, actual and projected cost overruns, cash flow
projections, lease-up projections, leases entered into and leases
in process, and any other information reasonably requested by
Owner) will be delivered to Owner on a monthly basis.
(q) Developer shall assist Owner in
enforcing appropriate guarantees and warranties from all General
Contractors, subcontractors, and suppliers and shall cause such
General Contractors, subcontractors, or suppliers promptly to
correct all defects in construction of the Project that Developer
or Owner finds at any time for the period such guarantees or
warranties are in effect.
(r) Developer will oversee and
enforce the performance by the General Contractor, the Project
Architect, and other contractors and consultants of their
obligations under the Development Contracts.
Section 2.02 Limitations on
Developer Authority .
(a) Notwithstanding the provisions
of Section 2.01 to the contrary, Owner reserves the
right to approve the following:
A. The Development Contracts and all
Change Orders;
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B. All other contracts with third
parties (including any Affiliates of Developer) that must be
executed by Owner or approved in writing by Owner, which approval
may include authorizations for Developer to execute such approved
contract;
C. Any changes to the Development
Plan or the Construction Schedule; and
D. Any other action or decision that
requires approval of Owner under this Agreement.
(b) Any approval by Owner required
under this Agreement must be obtained in writing. Under no
circumstances (other than in emergency situations in which health
or safety to persons or property is threatened) shall Developer
take any action or make any decision that requires Owner approval
without first obtaining the prior written approval of
Owner.
(c) Developer shall have no power or
authority to mortgage, pledge, grant a security interest in, or
otherwise encumber or dispose of the Project or any interest in
this Agreement.
Section 2.03 Performance of
Duties . Developer agrees to act in good faith and with
prudence and diligence in performance of its duties and
responsibilities hereunder; provided , however ,
Developer shall not be liable for any delay, loss, or damage to
Owner to the extent that such delay, loss, or damage is caused by
Owner’s failure to provide Developer upon request with funds
necessary to permit Developer to perform hereunder.
ARTICLE III.
FUNDING AND REIMBURSEMENT
Section 3.01 Funding .
Owner shall provide funds to Developer for the Project on a
quarterly basis, in advance, and in accordance with the Development
Plan and Project Budget.
Section 3.02 Reimbursement
for Construction Advances . In the event Developer makes any
advance to the General Contractor or pursuant to any other
Development Contract prior to the date Owner is required to fund
such advance, Developer shall be entitled to seek reimbursement for
such advance from Owner but only if, and to the extent, such
advance is in accordance with the Development Plan and the
applicable Development Contract or such expenditure is approved in
writing by Owner. Developer shall submit to Owner a summary of
expenses incurred along with all appropriate backup documentation
to support the expenses incurred (including but not limited to
copies of general contractor billing statements, sub-contractor
billing statements, lien waivers and other relevant documentation
which is required to support the amount of the reimbursement being
requested). In no event shall Owner have any obligation to
reimburse Developer for an adva
