DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (this "Agreement") made as of the
1st day of October, 1996, between NRG MANAGEMENT SERVICES INC., an
Alberta corporation ("Developer"), having an address at 0000 XxxXxxx Xxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx and NATIONAL LODGING CORP., a
Delaware corporation having an office at 000 Xxxxx Xxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("NLC").
W I T N E S S E T H:
WHEREAS, concurrently with the execution of this Agreement,
Chartwell Canada Corp., an affiliate of NLC, ("Owner") is acquiring certain
hotels and other assets from Capital Properties Limited Partnership ("CPLP")
pursuant to a certain contract of sale dated as of July __, 1996 (the "Contract
of Sale"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement, Bear Financial Corp., an affiliate of NLC, ("NLC Lender") is
entering into certain agreements pursuant to which NLC Lender will acquire (the
"Loan Acquisition") the Assigned Debt (as such term is defined in the Contract
of Sale); and
WHEREAS, it is a condition precedent to Owner acquiring the
CPLP Assets and the Business (as such terms are defined in the Contract of
Sale) and NLC Lender entering into the Loan Acquisition that Developer agree
(i) to use its considerable expertise in the planning and execution of hotel
and motel projects in Canada to locate Future Projects (hereinafter defined),
(ii) to submit a Proposal (hereinafter defined) with respect to each Future
Project and (iii) other than in accordance herewith, to not acquire,
beneficially or nominally, any interest in a Future Project during the term of
this Agreement (as extended pursuant to the terms of this Agreement, the
"Term"), all in consideration for payment of the Development Fee (hereinafter
defined) and Flip Transaction Compensation (hereinafter defined) and as more
particularly provided in this Agreement; and
WHEREAS, Developer, in consideration of payment of the
Development Fee and the Flip Transaction Compensation, has agreed to provide
the aforementioned services, all as more particularly described herein, subject
to the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
legal sufficiency of which are hereby acknowledged, the parties, intending to
be legally bound, covenant and agree with each other as follows:
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ARTICLE 1.
APPOINTMENT OF DEVELOPER
1.1 Engagement of Developer. NLC hereby engages Developer to
perform the services described herein, and Developer hereby accepts such
engagement.
1.2 Agency Obligations. Developer agrees to devote such time
and attention as may be reasonably necessary to accomplish the purposes of this
Agreement. In the discharge of its duties, Developer acknowledges that it shall
act as an agent of NLC and shall not be entitled to receive or retain any
compensation or other fees related directly or indirectly to any Future Project
except as specifically set forth herein. Developer acknowledges and agrees that
the restrictions on its ability and authority to obtain, even if only
temporarily, any interest, whether beneficially and/or nominally, for its own
account, in a Future Project, is a material inducement for NLC to enter into
this Agreement and any breach of such covenants by Developer may be
specifically enforced by NLC.
ARTICLE 2.
DEVELOPMENT SERVICES
2.1 Certain Definitions. As used in this Agreement the following
terms shall have the meanings set forth below:
(i) "Term" shall mean the Initial Term, the First Extended
Term and the Second Extended Term, unless sooner terminated in
accordance with Articles 6 and 7;
(ii) "Initial Term" shall mean the period commencing on the
date hereof and ending on the day immediately preceding the first
(1st) anniversary of the date hereof.
(iii) "First Extended Term" shall mean the period commencing
on the first (1st) anniversary of the date hereof and ending on the
day immediately preceding the second (2nd) anniversary of the date
hereof.
(iv) "Second Extended Term" shall mean the period commencing
on the second (2nd) anniversary of the date hereof and ending on the
day immediately preceding the third (3rd) anniversary of the date
hereof.
(v) "Future Project" or "Future Projects" shall mean any
hotel/motel project located in Canada, whether by way of
rehabilitation, new construction, acquisition, sale/leaseback or other
means of ownership and/or operation and
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development and/or acquisition; provided, however, the term "Future
Project" shall not include any "timeshare" project or "resort" hotels
(which, for the avoidance of doubt, shall mean any project in which
individual units are sold to the general public for specific weekly
intervals during each calendar year and hotels which are rated with
three (3) diamonds or higher by AAA/CAA (Automobile Association of
America/Canadian Automobile Association) designation and will have
certain of the amenities which are customarily included in destination
resorts (such as pool and health club facilities, spa facilities,
recreational facilities and/or banquet/catering facilities).
(vi) "Proposal" shall mean a written business plan with
respect to the development/acquisition of a Future Project, together
with projected cash flows, site analysis, market study, environmental
study, title report and such other information as may be mutually
agreed upon by NLC and Developer in order to make a determination as
to whether to pursue the Future Project to which such Proposal
relates; provided, however, each Proposal must include (i) a
reasonably detailed itemization of the out-of-pocket costs actually
incurred to date in identifying such Future Project and a reasonably
detailed estimate of anticipated out-of-pocket costs to be incurred in
connection with acquiring/developing such Future Project through the
closing thereon (collectively, "Developer Diligence Costs") and (ii) a
detailed, good faith analysis of the fair market value (without
guaranty or liability on the part of Developer of the ultimate
validity of such analysis) of NLC's interest should NLC or Developer
acquire such Future Project or any interest therein and then sell such
interest to a third party prior to closing on such acquisition;
provided, further, that a submission by Developer shall not be
considered a "Proposal" until such Proposal includes all such
information as has been mutually determined to be necessary prior to
making a determination as to whether or not to acquire/develop such
Future Project.
2.2 Submission of Proposal. Commencing as of the date hereof
and ending on the last day of the Term, Developer shall use commercially
reasonable efforts to diligence all Future Projects of which Developer becomes
aware that meet the written criteria submitted to Developer by NLC from time to
time and, upon review of each such Future Project, to submit a Proposal with
respect to such Future Project for review by NLC.
2.3 Response to Proposal. Upon submission of a Proposal to
NLC, NLC shall, within thirty (30) days, deliver notice to Developer, stating
whether or not NLC intends to pursue such Future Project. If NLC elects to
pursue such Future Project, then Developer shall perform the services set forth
in this Agreement and such other related services as NLC shall from time to
time reasonably require in order to acquire such Future Project in the most
diligent, commercially reasonable, economically efficient manner possible;
provided, however, except as provided in this Agreement, including Section 5.5
hereof, Developer shall not be required to incur costs and expenses with
respect to any such
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Future Project unless and to the extent NLC has approved reimbursement to
Developer therefor. In the event NLC declines to pursue such Future Project
(such Future Project thereby becoming a "Rejected Future Project"), then
Developer shall have the option to either (i) not pursue such Future Project,
including, without limitation, to acquire, or seek to acquire, any interest
therein, until after the last day of the Term or (ii) seek a person not
affiliated with Developer, Xxxxx Xxxxxx, Xxxxx Xxxxx, Xxxx Xxxxx or Xxxxxxxx
Xxxxx (collectively, the "Royco Group") or NLC to acquire the interests in such
Future Project submitted under the Proposal (a "Flip Transaction") and receive
a commission or other compensation in connection with such introduction,
transfer, conveyance or assignment (such proceeds, howsoever defined or
denominated, "Flip Transaction Proceeds"). All Flip Transaction Proceeds shall
be held by Developer in trust, which shall, within five (5) days after receipt
thereof, distribute to NLC an amount equal to the Flip Transaction Proceeds
less the Flip Transaction Compensation (as defined and provided in Section 5.4
herein).
2.4 Restrictions on Developer's Acquisitions. During the
Term, neither Developer nor any of the Royco Group shall, directly or
indirectly, undertake the acquisition/ development of, or obtain any interest,
whether beneficial or nominal, permanent or temporary, xxxxxx or inchoate, in,
a Future Project (a "Developer Interest"); provided, however, the term
"Developer Interest" shall not include an interest in a Future Project acquired
in connection with the fulfillment of Developer's obligations hereunder.
2.5 Development Services Generally. As and to the extent
reasonably requested by NLC, Developer shall be responsible for performing the
activities set forth on Exhibit A hereto; provided, however, as and to the
extent that Developer does not have the personnel on staff to perform such
activities, then, in each such event, Developer shall retain third parties
(under agreements or other arrangements approved in writing in advance by NLC)
at NLC's cost or expense to perform such activities and shall direct and
supervise such performance. Developer, as an independent contractor, but as
agent of NLC, shall perform, or contract for, direct and supervise the
performance of, the aforesaid duties and the other duties and obligations set
forth herein with respect to Future Projects within the parameters and upon the
terms and conditions set forth herein.
2.6 Service Contracts. As a condition precedent to receipt of
any compensation hereunder, Xxxxx Xxxxxx and Xxxxx Xxxxx shall not be in breach
of any representations, warranties or covenants under the Service Contracts.
Attached hereto as Exhibit B are the service contracts which require that the
services of Xxxxx Xxxxxx and Xxxxx Xxxxx to be provided to the Developer (each,
a "Service Contract" and, collectively, the "Service Contracts"). Such Service
Contracts may not be amended without the prior written consent of NLC.
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ARTICLE 3.
RESPONSIBILITIES OF DEVELOPER
3.1 Personnel. Subject to Section 2.5 with respect to the
Development Services set forth on Exhibit A, Developer shall employ such
personnel as Developer shall from time to time consider appropriate to enable
it to properly perform its obligations hereunder and shall be solely
responsible to its personnel and members of its staff for their salary, bonuses
and other benefits. Developer may itself or through any of its affiliates
perform any part or all of its obligations hereunder at Developer's cost and
expense, in which case the obligations of the Developer shall be treated as
satisfied when performed by any such affiliate.
3.2 Meetings. Developer shall be available at reasonable
intervals and on reasonable notice to participate at such public and private
meetings and hearings as may be reasonably requested by NLC.
3.3 Reporting. Developer shall at all times keep NLC advised
of the activities of Developer hereunder and shall afford NLC an opportunity to
take part in all decisions affecting a Future Project. Without limiting the
foregoing, not less frequently than monthly, Developer shall furnish to NLC a
written status report concerning all Future Projects as to which Developer is
considering submitting a Proposal. In addition to the monthly status report,
Developer shall prepare, from time to time, such other reports as NLC may
reasonably request.
ARTICLE 4.
RESPONSIBILITIES OF NLC
4.1 Representative. NLC shall designate in writing a
representative who shall have the sole responsibility for representing it
during the Term of this Agreement. Developer shall communicate with and through
the representative on all matters relating to Developer's performance under
this Agreement and shall have the right to rely on the representative as being
duly authorized to act for NLC on all matters hereunder. The initial Project
representative of NLC shall be Xxxxxx X. Xxxxxxx; the Project representative
may be changed by NLC from time to time during the Term of this Agreement by
delivery of written notice to Developer.
4.2 Payments. NLC shall make when due all payments hereunder
required to be paid to Developer pursuant to Article 5 and all payments due to
third parties approved in
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writing by NLC under a written agreement in connection with the acquisition of
a Future Project.
4.3 Retention of Management; Future Project Profit
Participation. In the event NLC acquires a Future Project for which Developer
submitted a Proposal during the Term of this Agreement, then, in such event,
NLC shall retain NL Hotels, Inc. (an entity controlled by NLC, being, for the
avoidance of doubt, the same entity which is the manager of Owner's hotels and
hereinafter defined as "Manager") to manage each such Future Project pursuant
to a management agreement (each, a "Management Agreement") which shall be on
terms substantially similar to those contained in that certain management
agreement dated as of the date hereof between Owner, as owner, and Manager, as
manager (the "Chartwell Management Agreement"); provided, however, each such
Management Agreement for a Future Project shall provide that upon expiration or
sooner termination of this Agreement, or any time thereafter, Owner may in its
sole and absolute discretion terminate each Management Agreement on ninety (90)
days written notice without payment of premium or penalty. In addition, through
a separate agreement executed concurrently with each Management Agreement or
earlier as hereinafter provided, Developer shall be entitled to receive a
contractual (i.e., not through equity ownership in the Future Project-owning
entity) five (5%) percent profit participation in the interests of NLC or its
Affiliates in annual cash flow from operations and capital transactions in
respect of the Future Project (as determined in accordance with United States
generally accepted accounting principles consistently applied from period to
period, modified as required by the accounting practices set forth in the
Uniform System of Accounts for Hotels and Motels (most current edition)) after
NLC has received (i) a thirteen (13%) percent cumulative compounded return on
all invested capital, whether through equity or debt investment, with respect
to such Future Project ("Aggregate Capital Investment") and (ii) a return of
the Aggregate Capital Investment with respect to such Future Project (such
Developer profit participation shall be defined, with respect to any Future
Project, as "Future Project Profit Participation"). The agreements evidencing
the Future Project Profit Participation with respect to any Future Project
shall (i) be in a form and structure similar to the manner in which the Capital
Proceeds Participation Calculation, but amended to include cash flow from
operations as set out above, is made pursuant to, and as such term is defined
in, the Future Payments Agreement (as such term is defined in the Contract of
Sale) and (ii) survive termination of the Management Agreement with respect to
such Future Project.
4.4 Non-Exclusive Engagement. It is expressly acknowledged
and agreed that during the term of this Agreement, except as specifically
provided herein with respect to Future Projects for which Developer has
submitted a Proposal, (i) NLC shall have no obligations or liabilities to
Developer whatsoever with respect to Future Projects and (ii) if NLC elects to
construct, operate or acquire other hotels/motels, timeshares or resort hotels
in Canada ("Hotels"), alone or with third parties, NLC shall have no obligation
to employ Developer as manager thereof.
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ARTICLE 5.
DEVELOPER COMPENSATION
5.1 Certain Definitions. As used in this Agreement, the
following terms shall have the meaning set forth below:
(a) "Initial Term Compensation" shall mean an amount equal to
Eight Hundred Thousand ($800,000 CDN) (Canadian) Dollars. The Initial Term
Compensation shall be payable as follows: an amount (the "First Installment")
equal to Three Hundred Forty-One Thousand Six Hundred Seventy-Four ($341,674
CDN) (Canadian) Dollars payable concurrently with the parties' execution of
this Agreement, receipt of which is hereby acknowledged, and Four Hundred
Fifty-Eight Thousand Three Hundred Twenty-Six ($458,326 CDN) Dollars (Canadian)
payable in eleven (11) equal monthly installments of Forty-One Thousand Six
Hundred Sixty-Six ($41,666 CDN) Dollars (Canadian) commencing on the first day
of the next full calendar month following the date hereof and ending on the
first day of the last calendar day of the Initial Term.
(b) "First Extended Term Compensation" shall mean Five
Hundred Thousand ($500,000 CDN) Dollars (Canadian), payable in equal monthly
installments during the First Extended Term commencing on the first day
thereof.
(c) "Second Extended Term Compensation" shall mean an amount
equal to Five Hundred Thousand ($500,000 CDN) Dollars (Canadian) payable in
equal monthly installments during the Second Extended Term commencing on the
first day thereof.
5.2 Development Fee. In consideration for the services to be
performed by Developer hereunder and Developer's agreement to refrain from
acquiring a Developer Interest in Future Projects as and to the extent provided
herein, NLC agrees to pay to Developer, compensation (the "Development Fee") as
follows:
(a) During the Initial Term, the Initial Term Compensation;
(b) During the First Extended Term, if applicable, the First
Extended Term Compensation; and
(c) During the Second Extended Term, if applicable, the Second
Extended Term Compensation.
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5.3 Expense Reimbursement.
(a) If NLC approves a proposal for a Future Project, then
Developer Diligence Costs (exclusive of any goods and services tax under the
Excise Tax Act (Canada) (the "GST") for which the Developer is entitled to an
input tax credit and exclusive of any like tax paid by Developer for which
Developer is entitled to a refund) with respect thereto and consistent with the
proposal shall be reimbursed by NLC to Developer (or, at NLC's election, paid
directly to the supplier of materials and/or provider of services) within
thirty (30) days after receipt of such documentation as may be reasonably
requested by NLC to confirm the incurrence of such expenditures.
(b) If a Rejected Future Project is a subject of a Flip
Transaction, then the Developer Diligence Costs for such Rejected Future
Project ("Rejected Future Project Authorized Expenses") shall be paid in
accordance with Section 5.4 hereof from Flip Transaction Proceeds within
fifteen (15) days after receipt of such documentation as may be reasonably
requested by NLC to confirm the incurrence of such expenditures.
(c) All expenses, howsoever denominated or defined, incurred
in connection with locating, or performing due diligence upon, Future Projects
for which a Proposal is not submitted or, if a Proposal is submitted with
respect to such Future Project, if such Future Project is a Rejected Future
Project and is not the subject of a Flip Transaction, shall be paid by
Developer, unless NLC, in its sole discretion, shall otherwise agree. If NLC
agrees, in its sole and absolute discretion, to pay any such costs and
expenses, then such approved costs and expenses shall be reimbursed by NLC to
Developer (or, at NLC's election, paid directly to the supplier of materials
and/or provider of services) within thirty (30) days after receipt of such
documentation as may be reasonably requested by NLC to confirm the incurrence
of such approved costs and expenses. Developer covenants and agrees to
indemnify and hold NLC harmless from any loss, cost or expense incurred by NLC
in connection with any claim or demand by a provider of services or supplier of
materials, payment for which is the responsibility of Developer (i.e., for
payment of expenses which NLC has not expressly elected to assume, as provided
above).
5.4 Flip Transaction Compensation. In addition to the
Development Fee, upon receipt of any Flip Transaction Proceeds (which Developer
shall hold in trust for NLC as provided in Section 2.3 hereof), together with a
certification from Developer that all expense reimbursement requests with
respect to such Rejected Future Project which is the subject of the Flip
Transaction have been properly submitted to NLC, Developer shall retain from
such Flip Transaction Proceeds (i) the Rejected Future Project Authorized
Expenses and (ii) fifty (50%) percent of the balance of Flip Transaction
Proceeds in consideration for its services performed hereunder in arranging for
such Flip Transaction ("Flip Transaction Compensation"). After reducing the
Flip Transaction Proceeds by the Flip Transaction
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Compensation, Developer shall deliver to NLC the balance of the Flip
Transaction Proceeds from such Rejected Future Project.
5.5 Developer's Overhead. Except as expressly provided herein
with respect to reimbursement of certain Developer Diligence Costs, the
Development Fee and Flip Transaction Compensation shall be deemed to cover all
costs and expenses incurred by Developer in performing its services hereunder;
provided, however, the following, items shall be borne solely by Developer out
of the Development Fee, without any obligation upon NLC to reimburse Developer
therefor or to pay Developer any amount with respect thereto (i.e., these costs
and expenses shall not be includable as Developer Diligence Costs): salaries,
bonuses and other compensation of employees of Developer; rent for offices used
by Developer in performing obligations hereunder; local transportation charges;
telephone, facsimile transmission and utility charges incurred by Developer at
its general office; and office supplies, repair and maintenance of office
machines and postage incurred by Developer at its general office.
5.6 Indemnification Obligations. Developer acknowledges and
agrees that all compensation or other sums due and payable to Developer or its
affiliates hereunder other than amounts paid to Developer in trust for further
payment to persons not affiliated with any of the persons constituting the
Royco Group in reimbursement of expenses previously approved by NLC in
connection with a Future Project or a Rejected Future Project shall be subject
to offset and/or reduction as provided in that certain indemnification
agreement dated as of the date hereof between NLC, Owner and NL Hotels, Inc.,
on the one hand, and Developer, Syndicated Capital Properties Inc., CPLP and
Royco Hotels & Resorts, Ltd., on the other (the "Indemnification Agreement").
5.7 GST and Withholding. All payments in respect of the
Development Fee shall be net of Goods & Services Tax (GST), and the parties
acknowledge that the amount of the GST which NLC is required to pay on such
payments shall be paid by NLC to Developer and shall be remitted by Developer
in accordance with applicable law. To the extent Developer is required by law
to withhold any withholding tax (by reason of NLC being a United States
taxpayer), such amounts shall be deducted from Flip Transaction Proceeds
payable to NLC hereunder; provided, however, the parties shall endeavor to
structure all transactions to eliminate, or minimize, any such withholding tax.
Developer shall provide evidence of payment of GST and withholding tax upon
request of NLC.
ARTICLE 6.
TERM
6.1 Initial Term. Subject to the terms and conditions set forth
in Sections 6.2 and 6.3 below, the parties' obligations under this Agreement
shall commence on the date
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hereof and shall terminate on the last day of the Second Extended Term, unless
this Agreement shall be sooner terminated in accordance with Article 7 below.
6.2 Earlier Expiration of the Term. (a) During the Initial
Term, NLC, in its sole and absolute discretion, may elect to terminate this
Agreement with respect to Future Projects by delivering written notice of
termination to Developer, on or prior to the date which is ninety (90) days
prior to the last day of the Initial Term, in which event the Term shall expire
on the last day of the Initial Term.
(b) During the First Extended Term, NLC, in its sole and
absolute discretion, may elect to terminate this Agreement by delivering
written notice of termination (the "Second Extended Term Termination Notice")
to Developer, on or prior to the date which is ninety (90) days prior to the
end of the First Extended Term, in which event the Term shall expire on the
last day of the First Extended Term.
(c) If (i) NLC does not deliver the Second Extended Term
Termination Notice and (ii) Developer, in its sole and absolute discretion,
does not desire to so further extend the Term to include the Second Extended
Term, then Developer may terminate this Agreement by delivering written notice
of termination to NLC on or prior to the date which is sixty (60) days prior to
the last day of the First Extended Term, in which event the Term shall expire
on the last day of the First Extended Term.
6.3 Expiration of Term. Upon expiration of the Term, by
operation of this Article 6 or pursuant to Article 7:
(i) Developer shall no longer have any obligation to provide NLC
with a Proposal prior to acquiring/developing Future Projects;
(ii) Developer shall have the right to pursue Future Projects
for its own account;
(iii) Developer (1) shall receive Future Project Profit
Participation in respect of any Future Project in existence as at the
expiration of the Term, (2) shall be entitled to receive Future
Project Profit Participation or Flip Transaction Compensation, as the
case may be, arising in respect of any Proposal submitted prior to the
expiration of the Term (and for greater certainty, the provisions of
Section 2.3 of this Agreement shall continue to obtain in respect of
any such Rejected Future Project), (3) shall be entitled to receive
Flip Transaction Compensation arising in respect of any Rejected
Future Project (and for greater certainty, the provisions of Section
2.3 of this Agreement shall continue to obtain in respect of any such
Proposal), (4) shall receive Due Diligence Costs to which it is
entitled pursuant to Section 5.3 of this Agreement and (5) shall
receive installments of Development Fee
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due with respect to the applicable Term in which such termination
event occurs through the date specified in the termination notice;
(iv) Developer shall not be obligated to provide any
development or other services under this Agreement from and after the
expiration of the Term except for its continuing obligation to deliver
to Owner Flip Transaction Proceeds (less Flip Transaction
Compensation) with respect to the Rejected Future Projects in
accordance with Section 2.3; and
(v) for greater certainty, except as expressly provided in
subsection (iii) above, NLC shall have no obligation or liability to
Developer under this Agreement from and after the expiration of the
Term.
ARTICLE 7.
TERMINATION
7.1 Definitions. As used in this Article 7:
(i) An "Insolvency Event" shall have occurred with respect
to a party if such party (and with respect to Developer, Xxxxx Xxxxxx
and Xxxxx Xxxxx shall be deemed a "party") shall make an assignment
for the benefit of creditors, or files, or consents to, any petition
in bankruptcy or for reorganization under any bankruptcy or insolvency
law, or for a receiver or trustee for a substantial portion of its
property, or to effect a composition or extension of time to pay its
debts, or for any alteration or adjustment of a substantial part of
its indebtedness; or if a party shall commence proceedings for or take
any corporate action authorizing or providing for its dissolution or
liquidation; or if a receiver or trustee shall be appointed for a
substantial part of the property of such party and such appointment
shall not be vacated in sixty (60) days; or if a petition in
bankruptcy or insolvency or for reorganization or liquidation of such
party or for alteration or adjustment of a substantial part of the
indebtedness of such party shall be filed against such party under any
bankruptcy, insolvency or other law relating to debtors or to
alteration or adjustment of indebtedness, or if a petition, complaint
or action shall be filed against such party seeking its liquidation,
and any such petition, complaint or action shall not be dismissed
within ninety (90) days after filing.
(ii) A "for cause" event shall be deemed to have occurred
with respect to a party if such party commits gross negligence, fraud
or wilful misconduct, or suffers a criminal indictment, and if any of
such events results in a material breach of such party's obligations
hereunder, which material breach is not cured within thirty (30)
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days after receipt by such party of a notice setting forth and
describing such breach or, if such breach cannot be cured within
thirty (30) days, the curing of such breach is not commenced within
said thirty (30) days and thereafter diligently prosecuted until cured
within a period not to exceed thirty (30) additional days. In
addition, a "for cause" event shall be deemed to have occurred with
respect to Developer if Developer acquires, or contracts to acquire or
attempts to acquire, a Developer Interest in any Future Project
(including any Rejected Future Project), except, upon notice to NLC,
solely in connection with arranging a Flip Transaction.
(iii) The term "Disabled" with respect to any person means
that such person has (i) suffered an Insolvency Event, (ii) become
legally incompetent, (iii) become disabled from performing the
services required under this Agreement for a period of either ninety
(90) consecutive days or sixty (60) days in any one hundred eighty
(180) day period.
7.2 Termination by NLC or Developer. This Agreement is
terminable by NLC immediately upon notice to Developer upon (i) the occurrence
of an Insolvency Event, (ii) Xxxxx Xxxxxx having been Disabled, unless Xxxxx
Xxxxx or another person acceptable to NLC (in its sole and absolute discretion)
having substantial experience in developing Future Projects binds himself
contractually to devote substantially all of his time to NLC in accordance with
this Agreement, within thirty (30) days of Xxxxx Xxxxxx having become Disabled,
(iii) the occurrence of a "for cause" event with respect to Developer or Xxxxx
Xxxxxx or any of their respective successors or (iv) a breach by Xxxxx Xxxxxx
and Xxxxx Xxxxx of their obligations under the Service Contracts, which breach
is not cured within ten (10) days of written notice of such breach by NLC to
Developer. This Agreement is terminable by Developer immediately upon notice to
NLC upon the incurrence of an Insolvency Event or a "for cause" event by NLC.
Upon termination by NLC under this Section 7.2, this Agreement shall be
terminated as if the date specified in said notice of termination was the last
day of the Term and NLC and Developer shall have no further obligation or
liability whatsoever to each other except as set out in Section 6.3.
7.3 Final Reports and Accounts. Within thirty (30) days after
the effective date of termination of this Agreement by either party, Developer
shall furnish to NLC such statements, accounts and reports relating to all
Future Projects located by Developer prior to the effective date of termination
as may be reasonably requested by NLC for tax, administration, diligence or any
other purpose or purposes.
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ARTICLE 8.
NOTICES
8.1 All notices under this Agreement shall be written and
shall be (a) delivered personally, (b) sent by prepaid, nationally recognized
overnight delivery service, or (c) sent by telecopy or other facsimile
transmission (following with next-day hard copy sent by prepaid, nationally
recognized overnight delivery service).
8.2 All notices shall be deemed given when actually received
or refused by the party to whom the same are directed. Any notice required to
be sent under the terms of this Agreement shall be sent as follows:
(i) If to Developer, at the address first set forth above,
attention Xxxxx Xxxxxx, telecopy No.: (000) 000-0000;
with a copy to:
Brans, Lehrun, Xxxxxxx & Champagne
000 Xxxxxxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx X0X 0X0
Attention: Xxxxxx Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to NLC, at the address first set forth above,
Attention: Xxxxxx X. Xxxxxxx,
telecopy No.: (000) 000-00000
with a copy to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
By giving to the other party at least 15 days written notice
thereof, the parties hereto and their respective successors and assigns will
have the right from time to time and
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C/M: 11752.0002 346852.8
at any time during the Term of this Agreement to change their respective
addresses and each will have the right to specify as its address any other
address.
ARTICLE 9.
REPRESENTATIONS AND WARRANTIES
9.1 Representations and Warranties of NLC. NLC represents and
warrants to Developer that it is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has all
necessary power to execute and deliver this Agreement and perform all its
obligations hereunder. This Agreement has been duly authorized by all requisite
action on the part of NLC and is a valid and legally binding obligation of NLC
enforceable in accordance with its terms. Neither the execution and delivery of
this Agreement by NLC nor the performance of its obligations hereunder will
result in the violation of any provision of its articles of formation, as
amended to date, or will conflict with (i) any law or any order or decree of
any court or governmental instrumentality having jurisdiction or (ii) any other
agreement to which NLC is a party or is otherwise bound.
9.2 Representations and Warranties of Developer. Developer
represents and warrants to NLC that it is a corporation duly organized, validly
existing and in good standing under the laws of the Province of Alberta and has
all necessary power to execute and deliver this Agreement and perform all its
obligations hereunder. This Agreement has been duly authorized by all requisite
action on the part of Developer and is a valid and legally binding obligation
of Developer enforceable in accordance with its terms. Neither the execution
and delivery of this Agreement by Developer nor the performance of its
obligations hereunder will result in the violation of any provisions of its
constating documents, as amended to date, or will conflict with (i) any law or
any order or decree of any court or governmental instrumentality having
jurisdiction or (ii) any other agreement to which Developer is a party or is
otherwise bound.
ARTICLE 10.
INDEMNIFICATION PROVISIONS; NLC EXCULPATION
10.1 Indemnity. Developer and NLC agree to indemnify and hold
harmless the other and all of its officers, directors, shareholders, partners,
affiliates, agents and employees (collectively and respectively, "Developer
Indemnitees" and "NLC Indemnitees") against any and all claims, losses,
penalties, fines, forfeitures, judgments, reasonable attorneys' fees and
related litigation costs, fees and expenses and amounts paid in
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settlement actually and reasonably incurred in connection with any claim(s)
against any NLC Indemnitee or Developer Indemnitee, as the case may be:
(a) which result from any act or omission constituting gross
negligence, bad faith or willful misconduct by Developer or NLC, as the case
may be, or any officer, director, shareholder, partner, agent or employee of
Developer or NLC, as the case may be, in connection with the performance by
Developer or NLC of their respective obligations under this Agreement;
(b) which result from any action taken by or on behalf of
Developer or NLC, as the case may be, which is a material breach of any
Developer's or NLC's, as the case may be, covenants or representations in this
Agreement; or
Any payment (the "Payment") made pursuant to this Section 10.1 that is subject
to Goods and Services Tax (GST) or is deemed by Revenue Canada to be inclusive
of Goods and Services Tax (GST), or is subject to any other tax, the
Indemnifying Party (as defined below) agrees to pay to the Indemnified Party
(as defined below), in addition to the Payment, an amount equal to the tax
payable in connection with such Payment and such additional amount.
10.2 Indemnity Procedures. If any claim shall be asserted, or
any action, suit or other proceeding shall be instituted, by a third party
against any NLC Indemnitee or Developer Indemnitee (each an "Indemnified
Party"), with respect to any occurrence as to which the other party (an
"Indemnifying Party") shall have any indemnity obligation under this Agreement,
such Indemnified Party shall promptly notify Indemnifying Party of the
assertion of such claim, action, suit or proceeding and shall tender the
defense and, subject to the next succeeding paragraph, settlement or compromise
of any such claim, action, suit or proceeding to Indemnifying Party for conduct
thereof by Indemnifying Party. Indemnifying Party shall timely commence and
diligently continue such defense, settlement or comprise at Indemnifying
Party's sole expense. Indemnifying Party shall have the right to select
counsel, subject to Indemnified Party's prior written approval, which approval
shall not be unreasonably withheld or delayed, for such defense. Should any
such claim, action, suit or proceeding result in a final and unappealable
judgment, Indemnifying Party shall promptly pay the same. Indemnified Party
agrees to cooperate with Indemnifying Party to the extent Indemnifying Party
may reasonably request such cooperation but at the sole expense of Indemnifying
Party. Indemnifying Party shall succeed to and have the benefit of all the
defenses, claims and other rights of each Indemnified Party relating to or
affecting any obligation or liability of Indemnifying Party under this
indemnity, and each Indemnified Party agrees to fully disclose any and all such
defenses, claims and other rights to Indemnifying Party and upon request to
promptly execute any documents and take any other action (at the sole expense
of the Indemnifying Party) necessary or desirable to further assure unto
Indemnifying Party the right to benefit from such defenses, claims or other
rights.
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Indemnified Party shall have the right (but shall not have the obligation) upon
notice to Indemnifying Party and failure of Indemnifying Party to act, at any
time and at its own cost and expense, to participate in the defense of any such
claim, action, suit or proceeding, to be represented by counsel of its choice
(provided, however, that the Indemnifying Party shall not be liable under this
subparagraph for the fees and expenses of more than one set of counsel for all
Indemnified Parties unless a conflict of interest exists between or among
Indemnified Parties) and to assert in any such action, suit or proceeding any
counterclaims or cross claims Indemnified Party may have. In the event
Indemnifying Party fails to timely commence the defense, settlement or
compromise thereof, Indemnified Party shall have the right (but shall not have
the obligation), following notice to Indemnifying Party, to act, defend,
settle, compromise or take such other action as Indemnified Party shall deem
necessary in connection with any such claim, action, suit or proceeding. In the
event it is determined that Indemnified Party was entitled to be indemnified
under this Article by Indemnifying Party, then Indemnified Party shall have the
right to be indemnified by Indemnifying Party for the entire cost of defense,
including reasonable attorneys' fees and disbursements and experts' fees and
expenses (including those incurred in connection with appellate proceedings).
Notwithstanding the foregoing, if any party making such claim, or any party to
any such action, suit or proceeding, shall take any action to create or impose
any lien or encumbrance on any of the assets of Indemnified Party in respect of
such claim, action, suit or proceeding or if any judgment shall be entered
which would result in Indemnified Party being obligated to pay the same, then
Indemnifying Party shall provide such bond, deposit or take such other action
as shall be required to prevent the creation or imposition of any such lien,
and to stay the execution of such judgment pending any appeal or other
proceeding prior to final entry thereof. Indemnifying Party shall have the
right to settle or compromise any such claim, action, suit or proceeding
without the prior written consent of Indemnified Party provided that, at the
time of such settlement or compromise, Indemnifying Party shall satisfy and
discharge any and all liability of Indemnified Party resulting therefrom or
shall post security reasonably satisfactory to the Indemnified Party to assure
the ultimate satisfaction and discharge of such liability. Except as provided
in the preceding sentence, Indemnifying Party shall not settle or compromise
any such claim, action, suit or proceeding without the prior written consent of
the Indemnified Party, which consent shall not be unreasonably withheld or
delayed. The failure or delay of Indemnified Party to promptly notify
Indemnifying Party of the institution of any claim, action, suit or other
proceeding shall not release or otherwise limit the indemnification obligation
of Indemnifying Party except to the extent that Indemnifying Party shall be
prejudiced by the failure or delay of Indemnified Party to give Indemnifying
Party notice of such action, suit or proceeding.
10.3 Recovery of Litigation Costs. In the event any dispute
between the parties to this Agreement shall result in litigation, arbitration
or other proceeding, the court shall be requested to award to the prevailing
party all reasonable costs and expenses, including without limitation
reasonable attorneys' fees and disbursements, incurred by the
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C/M: 11752.0002 346852.8
prevailing party in connection with such litigation or other proceeding and any
appeal thereof. Such costs, expenses, fees and disbursements shall be included
and made a part of the judgment recovered by the prevailing party, if any.
ARTICLE 11.
MISCELLANEOUS PROVISIONS
11.1 Governing Law. This Agreement has been entered into in
the Province of Ontario. This Agreement and all rights of the parties hereunder
shall be governed by and construed in accordance with the laws of the Province
of Ontario without regard to principals of conflicts of laws.
11.2 Entire Agreement. This Agreement embodies and
constitutes the entire understanding among the parties with respect to the
matters herein contained, and all prior or contemporaneous agreements,
understandings, representations and statements, oral or written, are merged
into this Agreement. No waiver or modification of any provision of this
Agreement shall be valid unless in writing and signed by the party to be
charged, and then only to the extent therein set forth.
11.3 Captions. The captions in this Agreement are intended
only for convenience of reference, do not constitute a part of this Agreement
and shall not be construed to define, interpret, describe or limit the scope or
intent of any provision of this Agreement.
11.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original.
11.5 Benefits and Obligations. Except as otherwise provided
in this Agreement, this Agreement shall be binding upon and shall inure to the
benefit of the respective successors and permitted assigns of the parties
hereto. NLC shall have the right to assign its interests in this Agreement to
any successor-in-interest of NLC's rights in, to or under any Future Project
if, but only if, such assignee and/or a financially capable affiliate thereof
agree to assume each and every obligation of NLC hereunder including, without
limitation, payment of the Compensation payable under Article 5 hereof.
11.6 Prohibition on Assignment by Developer. The rights,
duties and performance of Developer hereunder are personal in nature and may
not be assigned or transferred to any other party other than an entity
wholly-owned, directly or indirectly, and controlled by Xxxxx Xxxxxx, Xxxxx
Xxxxx, Xxxx Xxxxx and Xxxxxxxx Xxxxx, or a combination thereof.
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11.7 No Waiver. No assent, express or implied, by either
party to any breach of or default in any Term, covenant or condition herein
contained on the part of the other to be performed or observed shall constitute
a waiver of or assent to any succeeding breach of or default in the same or any
other Term, covenant or condition hereof.
11.8 Force Majeure. In the event that either party shall be
unable to perform timely its obligations hereunder due to fire, earthquake,
flood, explosion, casualty, strikes, walkouts, work stoppages or other labor
disputes, unavailability of materials, unavoidable accident, riot,
insurrection, governmental action or omission, judicial regulatory order, civil
disturbance, act of public enemy, embargo, war, act of God, or any other cause
beyond its control, the time for such performance shall be extended for a
period equal to the length of the delay caused thereby.
11.9 Invalidity of Provisions. In the event that any one or
more of the phrases, sentences, clauses or paragraphs contained in this
Agreement shall be declared invalid by the final and unappealable order, decree
or judgment of any court, this Agreement shall be construed as if it did not
contain such phrases, sentences, clauses or paragraphs; provided, however, that
the parties hereto shall endeavor in good faith to replace such invalid aspect
with another that is valid and that insofar as possible manifests the intent by
the parties to this aspect.
11.10 Rights of Others. Nothing in this Agreement, express or
implied, is intended to confer upon any person other than the parties hereto,
and their permitted successors and assigns, any rights or remedies under or by
reason of this Agreement.
11.11 Affiliate Transactions. In the performance of its
duties hereunder, Developer may retain, employ or contract with on behalf of
NLC any affiliate, subsidiary or other related person or entity for the
furnishing of materials or services in connection with the Project; provided,
however, that the terms and provisions of any such agreement must be (i)
approved in advance by NLC and (ii) at least as favorable to NLC as would be
obtainable by Developer in a comparable arm's-length transaction with a person
or entity other than Developer's affiliate, subsidiary or other related person
or entity.
11.12 Independent Contractor. Developer's performance of its
duties hereunder will be solely as an independent contractor. Under no
circumstances will Developer be deemed to be a partner or a joint venturer with
NLC, and Developer will have no authority to bind NLC other than as set forth
in this Agreement.
11.13 Survival of Obligations. All of the obligations,
representations, warranties and covenants made in this Agreement shall be
deemed to have been relied upon by the party to which it was made and to be
material and shall survive the execution and performance of any agreements
related hereto to the extent that they are, by their terms, or
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C/M: 11752.0002 346852.8
by a reasonable interpretation of the context, to be performed or observed
after the performance of any such agreements.
11.14 Supplemental Documents. Recognizing that the
implementation of the provisions hereof with respect to various actions of the
parties hereto may require the execution of supplemental documents the precise
nature of which cannot now be anticipated, each of the parties agrees to assent
to, execute and deliver such other and further documents as may be reasonably
required by other parties hereto so long as such other and further documents
are consistent with the terms and provisions hereof, shall not impose
additional obligations on any parties, shall not deprive any party of the
privileges herein granted to it and shall be in furtherance of the intent and
purposes of this Agreement.
11.15 Confidentiality. Developer and NLC, for themselves and
their affiliates, subsidiaries, agents, employees, and retained professionals,
agree to keep this Agreement confidential and not to make any public
announcements or public disclosures or communicate with any media with respect
to the subject matter hereof without the written consent of all parties.
Developer and NLC shall cause their affiliates, subsidiaries, agents, employees
and retained professionals to agree in writing to comply with the provisions of
this paragraph.
11.16 Assignment. Except for assignment to an entity or
entities directly or indirectly owned or controlled by NLC, for which
Developer's consent shall not be required, this Agreement may not be assigned
by NLC without the prior written consent of Developer, which consent may be
granted or withheld by Developer in its sole and absolute discretion. In the
event of any such assignment to an affiliate of NLC, NLC will guaranty, in form
and substance reasonably acceptable to the Developer, the obligations of such
assignee under this Agreement.
[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK;
THE SIGNATURE PAGE FOLLOWS]
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C/M: 11752.0002 346852.8
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Development Agreement as of the day and year first above
written.
NATIONAL LODGING CORP. (Now known as
Chartwell Leisure Inc. as of 8/8/96)
By: /s/ Xxxxxxx Xxxxxx
Name: XXXXXXX XXXXXX
Title:
NRG MANAGEMENT SERVICES INC.
By: /s/ Xxxxx Xxxxxx
Name: XXXXX XXXXXX
TITLE:
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C/M: 11752.0002 346852.8
EXHIBIT A
Development Services
1. Obtain Required Approvals: Developer shall assist NLC as requested in
obtaining all necessary zoning and other approvals, consents, permits,
licenses, variances, and authorizations required or desirable for the
acquisition, construction, development and operation of each Future Project
(collectively, the "Required Approvals"). Developer hereby agrees to use its
reasonable commercial efforts (x) to secure all Required Approvals and (y) to
comply with all conditions precedent set forth in the Required Approvals or
otherwise to complete each Future Project in accordance with the development
plan therefor ("Development Plan").
2. Retain Project Architect: Developer shall retain, on behalf of the NLC, one
or more architectural firms licensed in the Province in which such Future
Project is located (collectively, the "Project Architect") to prepare initial
schematic and development drawings. The identity and Term of employment of the
Project Architect and any associated architects and design professionals shall
be subject to NLC's approval. Developer shall cause the Project Architect to
prepare preliminary, schematic and final drawings and, thereafter, plans and
specifications for each Future Project (as revised, "Plans and Specifications")
consistent with the Development Plan. NLC shall approve the schematic drawings
and, if inconsistent with the schematic drawings, the final Plans and
Specifications. Developer shall not make material changes to the Plans and
Specifications without NLC's prior written approval unless such material
changes are reflected in the Development Plan or Project Budget.
3. Prepare Pro-Forma Budget: Developer shall prepare, for NLC's approval and as
part of the Proposal, an economic pro-forma budget, noting in detail the
schedule of costs and income sources expected during development of each Future
Project for the period noted in such budget (as revised from time to time, the
"Project Budget") which shall be not earlier than the first anniversary of the
anticipated closing thereon.
4. Assist in Financing: Upon request by NLC, Developer shall introduce NLC to
construction lenders with whom Developer has a continuing and satisfactory
relationship.
5. Retain Construction Manager and Subcontractor: Developer will advise, assist
and make recommendations to NLC regarding the selection of the construction
manager (the "Construction Manager"), subcontractors and any other specialists
retained in connection with the design, construction and completion of the
Project, as well as the negotiation of the agreement(s) under which they are
retained. Developer will endeavor to provide that the general construction
contracts or appropriate change order (i) contains all representations and
warranties with respect to construction, which are required of NLC pursuant to
any lease or
C/M: 11752.0002 346852.8
financing entered into with respect to the Project, and (ii) provides for
liability insurance, fidelity bond and completion guaranty of the kind and
amounts customarily carried in a construction project of this type and
magnitude; provided, however, any such insurance requirement may be satisfied
by alternative means approved by NLC.
6. Construction Documents; Coordination of Construction Activities: (a)
Developer will supervise the preparation of, and administer and monitor
compliance with, the Construction Documents. As used in this Agreement, the
term "Construction Documents" means, collectively, (x) the Plans and
Specifications setting forth in detail the requirements for the construction of
the Project and (y) the construction agreements between NLC and all
materialmen, suppliers and contractors.
(b) Developer will (w) prepare and maintain time schedules,
(x) coordinate the design, construction and completion of the Project with the
Project Architect, engineers and contractors retained by NLC, (y) supervise and
inspect all phases of the construction of the Project, monitoring the
contractors, Project Architect, engineers and other specialists for performance
in accordance with their respective agreements and (z) promptly notify NLC of
any material failure by such parties to comply with such agreements of which
Developer is aware.
(c) Developer will review the preparation of "punch lists" of
construction work requiring completion and correction from time to time to
ensure such work is performed in accordance with the Construction Documents.
(d) Developer will review applications for payment by
contractors, architects and other specialists in connection with the Project,
will provide recommendations or comments or take other appropriate action with
respect to such applications and will aid in processing such applications with
each Lender.
(e) Developer will establish adequate administrative and
control procedures for the Project, including cash accounting, budgeting,
scheduling and reporting procedures to facilitate completion of the Project in
accordance with the Development Plan, subject to force majeure, and will notify
NLC of any occurrence or circumstance that could reasonably be expected to
materially delay or prevent completion of the Project as provided therein of
which Developer is aware.
7. Cost Estimates: Developer will:
(a) Revise and refine the approved estimate of construction
cost, incorporate approved changes as they occur, and develop cash flow reports
and forecasts as needed.
(b) Provide regular monitoring of the approved estimate of
construction cost, showing actual costs for activities in progress and
estimates for uncompleted tasks. Identify
C/M: 11752.0002 346852.8
variances between actual and budgeted or estimated costs, and advise NLC
whenever projected costs exceed budgets or estimates.
(c) Arrange for the maintenance of cost accounting records on
authorized work performed under unit costs, actual costs for labor and
materials, or other bases requiring accounting records.
(d) Develop and implement a system for review and processing of
Change Orders.
(e) Recommend necessary or desirable changes to NLC and the
Project Architect, review requests for changes, submit recommendations to NLC
and the Project Architect, and assist in negotiating Change Orders.
(f) Develop and implement a procedure for the review and
processing of applications by Contractors for progress and final payments. Make
recommendations to the Project Architect for certification to NLC for payment.
Cost estimates prepared by the Developer represent its best judgment as a
professional familiar with the construction industry. It is recognized,
however, that the Developer has no control over, or makes any warranty
hereunder as to, the cost of labor, materials or equipment, over Contractors'
methods of determining bid prices, or other competitive bidding or market
conditions.
8. Construction Draws: Developer will supervise the administration of financing
and will use reasonable efforts to arrange for, or to cause, NLC's satisfaction
of the conditions necessary to authorize draws by NLC under any loans obtained
by NLC in connection with the Project. Developer will respond promptly to the
requests of any Lender for information that shall be required under such
Lender's loan documents.
9. Forecasting; Accounting: Developer will arrange a system of capital accounts
and cost accounting for distribution of commitments and expenditures, relating
actual expenditures to those forecast or budgeted.
10. Tenant Improvements: Developer will supervise and coordinate construction
of all tenant improvements for which NLC has responsibility under the Terms and
provisions of space leases.
11. Monitor Budget: Developer, after each calendar quarter, shall revise the
Project Budget as necessary to reflect (a) actual costs for activities in
progress and estimates for uncompleted work, (b) variances in progress and
estimates for uncompleted work and (c) variances between actual and budgeted or
estimated costs for items where costs in the applicable Project Budget for such
items vary from actual costs by more than ten (10%) percent.
C/M: 11752.0002 346852.8
12. Permits and Government Approvals: Developer shall use reasonable efforts to
take such actions as may be necessary to comply with laws, ordinances, orders,
rules, regulations and requirements of federal, provincial and municipal
governments, courts, departments, commissions, boards and officers, or other
bodies exercising similar functions, which may be applicable to the Project,
and attempt to obtain and maintain all building permits, certificates of
occupancy, licenses and/or operating permits, if any, for the Project. NLC
agrees to execute and deliver any and all applications and other documents
reasonably requested by Developer and otherwise to cooperate to the fullest
extent with Developer in applying for, obtaining and maintaining such
certificates, licenses and permits as are reasonably required. Developer will
also use reasonable efforts to cause the Project to comply with the Terms,
covenants and provisions contained in any mortgage, operating agreement or
other agreement encumbering or affecting the Project or any security agreement
now or hereafter encumbering or affecting the personal property located at the
Project. Developer shall act as NLC's representative in all meetings with
public agencies and in negotiating all contracts with any agency, the State of
New York or any political or quasi-political subdivision thereof, subject to
NLC's approval.
13. Accounting: Developer shall maintain current and complete records and
accounts of all transactions with respect to the realization and implementation
of each Future Project for the benefit of both Developer and NLC. All such
records and accounts shall be maintained at Developer's main office or at such
other place as Developer and NLC shall agree upon, and each party hereto shall
be entitled to audit, at its own expense, such records and accounts by an
accounting firm of its own choosing and at any reasonable time shall have
access to such books. At the end of each calendar year and upon the fulfillment
of its obligations under this Agreement Developer shall retain the Project
Accountants to audit such records and accounts and to prepare and certify
complete financial statements for each Future Project in accordance with
generally accepted accounting principles.
14. Design; Feasibility: Act as NLC's representative in all design matters.
Provide recommendations on relative construction feasibility, availability of
materials and labor, time requirements for installation and construction, and
factors related to costs including costs of alternative designs or materials,
preliminary budgets, and possible economies.
15. Employment: Select, employ and negotiate the Terms and conditions of
employment of all parties employed in the development of the Project.
16. Contracts: Negotiate with all outside parties who are in any way related or
concerned directly or indirectly with the Project.
17. Substantial Completion: Upon the Contractors' determination of substantial
completion of the work or designated portions thereof with respect to each
Future Project, direct the Project Architect's preparation of a list of
incomplete or unsatisfactory items and schedule for their completion. After the
Project Architect certifies the date of substantial
C/M: 11752.0002 346852.8
completion, direct the Project Architect in the supervision of the correction
and completion of punch list work.
18. Final Project Completion: Upon final project completion with respect to
each Future Project, Developer shall: (i) coordinate the Project Architect's
determination of final completion and provide written notice to NLC and the
Project Architect that the work is ready for final inspection; (ii) secure and
transmit to the Project Architect any required guarantees, affidavits,
releases, bonds and waivers; and (iii) turn over to NLC all keys, manuals,
record drawings and maintenance stocks.
C/M: 11752.0002 346852.8
BF DRAFT -- 03/10/96
03/11/96
06/20/96
06/22/96
07/02/96
07/10/96
DEVELOPMENT AGREEMENT
between
NATIONAL LODGING CORP.
and
NRG MANAGEMENT SERVICES INC.
Hotel/Motel Properties located in Canada
_______ ___, 1996
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C/M: 11752.0002 346852.8
TABLE OF CONTENTS
Page
ARTICLE 1. APPOINTMENT OF DEVELOPER............................ 2
1.1 Engagement of Developer...................................... 2
1.2 Agency Obligations........................................... 2
ARTICLE 2. DEVELOPMENT SERVICES................................ 2
2.1 Certain Definitions.......................................... 2
2.2 Submission of Proposal....................................... 3
2.3 Response to Proposal......................................... 3
2.4 Restrictions on Developer's Acquisitions..................... 4
2.5 Development Services Generally............................... 4
2.6 Service Contracts............................................ 4
ARTICLE 3. RESPONSIBILITIES OF DEVELOPER....................... 5
3.1 Personnel.................................................... 5
3.2 Meetings .................................................... 5
3.3 Reporting.................................................... 5
ARTICLE 4. RESPONSIBILITIES OF NLC............................. 5
4.1 Representative............................................... 5
4.2 Payments .................................................... 5
4.3 Retention of Management; Future Project Profit Participation. 6
4.4 Non-Exclusive Engagement..................................... 6
ARTICLE 5. DEVELOPER COMPENSATION ............................. 7
5.1 Certain Definitions.......................................... 7
5.2 Development Fee.............................................. 7
5.3 Expense Reimbursement........................................ 8
5.4 Flip Transaction Compensation................................ 8
5.5 Developer's Overhead......................................... 9
ARTICLE 6. TERM................................................ 9
6.1 Initial Term................................................. 9
6.2 Earlier Expiration........................................... 10
6.3 Expiration of Term........................................... 10
ARTICLE 7. TERMINATION......................................... 11
7.1 Definitions.................................................. 11
7.2 Termination by NLC or Developer.............................. 12
7.3 Final Reports and Accounts................................... 12
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Page
ARTICLE 8. NOTICES............................................. 13
ARTICLE 9. REPRESENTATIONS AND WARRANTIES...................... 14
9.1 Representations and Warranties of NLC........................ 14
9.2 Representations and Warranties of Developer.................. 14
ARTICLE 10. INDEMNIFICATION PROVISIONS; NLC EXCULPATION......... 14
10.1 Indemnity................................................... 14
10.2 Indemnity Procedures........................................ 15
10.3 Recovery of Litigation Costs................................ 16
ARTICLE 11. MISCELLANEOUS PROVISIONS............................ 17
11.1 Governing Law............................................... 17
11.2 Entire Agreement............................................ 17
11.3 Captions.................................................... 17
11.4 Counterparts................................................ 17
11.5 Benefits and Obligations.................................... 17
11.6 Prohibition on Assignment by Developer...................... 17
11.7 No Waiver................................................... 18
11.8 Force Majeure............................................... 18
11.9 Invalidity of Provisions.................................... 18
11.10 Rights of Others........................................... 18
11.11 Affiliate Transactions..................................... 18
11.12 Independent Contractor..................................... 18
11.13 Survival of Obligations.................................... 18
11.14 Supplemental Documents..................................... 19
11.15 Confidentiality............................................ 19
11.16 Assignment................................................. 19
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