MASTER DEVELOPMENT AGREEMENT
between
EDISON SCHOOLS INC., as Agent for Certain Charter Holders
and
KSIXTEEN LLC,
as Developer
2
TABLE OF CONTENTS
Page
ARTICLE 1 - DEFINED TERMS............................................... 1
ARTICLE 2 - APPOINTMENT AND TERM........................................ 4
2.1 Appointment................................................. 4
2.2 Term........................................................ 5
ARTICLE 3 - RELATIONSHIP................................................ 5
ARTICLE 4 - DEVELOPMENT PROCESS......................................... 5
4.1 Preparation and Approval of Development Proposals........... 5
4.2 Development of a Project.................................... 7
4.3 Construction of a Project................................... 9
4.4 Additional Services......................................... 14
4.5 Additional Obligations...................................... 14
4.6 Employees................................................... 15
4.7 Emergencies................................................. 15
4.8 Lender and Legal Compliance................................. 15
4.9 Project Information......................................... 16
4.10 Edison and Charter Holder Information....................... 16
ARTICLE 5 - DEVELOPER'S AUTHORITY....................................... 16
ARTICLE 6 - INSURANCE AND INDEMNIFICATION............................... 16
6.1 Property Coverage........................................... 16
6.2 Loss of Use of Property..................................... 17
6.3 Liability Coverages......................................... 18
6.4 Fidelity Insurance.......................................... 19
6.5 General Insurance Requirements.............................. 19
6.6 Liability of Developer...................................... 20
6.7 Waiver of Subrogation....................................... 20
6.8 Indemnification............................................. 21
ARTICLE 7 - EDISON'S RIGHT TO INSPECT................................... 21
ARTICLE 8 - TERMINATION................................................. 21
8.1 Termination................................................. 21
8.2 Other Remedies.............................................. 23
ARTICLE 9 - COOPERATION................................................. 23
ARTICLE 10 - DELAYS..................................................... 23
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ARTICLE 11 - CONSENT; APPROVAL.......................................... 24
ARTICLE 12 - NOTICES.................................................... 24
ARTICLE 13 - COMPENSATION............................................... 25
13.1 Development Fee............................................. 25
13.2 Construction Management Fee................................. 26
13.3 Reimbursable Expenses....................................... 26
13.4 Fee for Additional Services................................. 26
ARTICLE 14 - ASSIGNABILITY.............................................. 26
ARTICLE 15 - MISCELLANEOUS.............................................. 27
15.1 Entire Agreement............................................ 27
15.2 Bind and Inure.............................................. 27
15.3 Amendment................................................... 27
15.4 Governing Law; Waiver of Jury Trial......................... 27
15.5 Headings.................................................... 27
15.6 No Waiver................................................... 27
15.7 Counterparts................................................ 27
15.8 Other Interests............................................. 27
15.9 Non-Recourse................................................ 27
15.10 Confidentiality............................................. 28
15.11 Exhibits.................................................... 28
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MASTER DEVELOPMENT AGREEMENT
This Agreement is entered into as of __________, 2000 by and between
Edison Schools Inc., a Delaware Corporation as operator of certain charter
schools for and on behalf of the respective Charter Holders (as hereinafter
defined) ("Edison"), and Ksixteen LLC, a Delaware limited liability company
("Developer").
W I T N E S S E T H:
WHEREAS, Edison operates Charter Schools (as hereinafter defined) in
various locations through-out the United States and in connection therewith
assists the corporations holding the charter for such schools (individually, a
"Charter Holder" and collectively, the "Charter Holders") in finding suitable
parcels of land or existing buildings (said parcels being individually referred
to herein as a "Parcel") on which to develop such schools and assisting the
Charter Holders in the development and construction of the building and other
improvements (individually, a "Building") in which such schools will operate;
and
WHEREAS, Edison as agent for and on behalf of the Charter Holders
desires to enter this contract with Developer under which Developer shall act as
developer and construction manager for each of the Charter Holders, providing
professional development, construction management and financial advisory
services applicable to the planning, development, construction and financing of
the Buildings to be developed by the Charter Holders (said Buildings and related
improvements on the respective Parcels being referred to individually as a
"Project", and collectively as the "Projects"), all on the terms and conditions
herein set forth;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and of other good and valuable consideration, the parties hereto agree
as follows:
ARTICLE 1
DEFINED TERMS
The following capitalized terms shall have the meanings set forth
below:
1.1 "Affiliate" is defined in Article 14.
1.2 "Agency Agreement" as defined in Section 2.1.
1.3 "Approval Period" shall mean thirty (30) days from the date a
Development Proposal for a Project is submitted to Edison and the
relevant Charter Holder.
1.4 "Approved Plans and Specifications" is defined in Section 4.2(b).
1.5 "Architect" is defined in Section 4.2(b).
1.6 "Budget" is defined in Section 4.2(e).
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1.7 "Building" is defined in the Recitals.
1.8 "Charter Holder(s)" is defined in the Recitals.
1.9 "Charter School" means a school operated or to be operated by
Edison under contract with a Charter Holder.
1.10 "Completion Date" shall mean the date on which the Architect
certifies that the work on a Project has been finally completed, including
completion of all landscaping, driveways and so-called punchlist items and if
issued by the requisite governmental authority having jurisdiction over the
Project, a permanent, unconditional certificate of occupancy has been issued
from the appropriate governmental authority for such Project.
1.11 "Contractor" is defined in Section 4.2(d).
1.12 "Contract School" means a school operated or to be operated by
Edison under contract with a public board of education or school board.
1.13 "Construction Financing" is defined in Section 4.2(f).
1.14 "Development Costs" shall mean with respect to each Project the
total of site acquisition costs and all hard and soft costs of developing,
financing and constructing the Project, including, without limitation, the
Development Fee, building permit fees, consultants' and architects' fees, and
costs of bonds, permitting and financing.
1.15 "Development Fee" is defined in Section 13.1.
1.16 "Development Period" shall mean with respect to each Project the
period of time beginning on the date of the Notice of Edison Approval and ending
on the Completion Date.
1.17 "Development Proposal" shall mean a written proposal given by
Developer to Edison and the applicable Charter Holder describing Developer's
detailed proposal for site acquisition, planning, developing, financing and
constructing a Project, which shall include, without limitation, the following:
(a) Developer's site selection recommendation;
(b) Feasibility and environmental studies for the development
of the Project;
(c) A detailed budget setting forth the estimated total
Development Costs to be incurred;
(d) A list of proposed contractors to be employed in the
construction and development of the Project, if available;
(e) A list of key permits and approvals required for each
Project and a schedule for obtaining the same;
(f) A schedule for the construction of the Project;
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(g) A plan for Project financing; and
(h) A staffing plan, naming the Developer's proposed Project
Manager for the Project and other staffing as described in Section 4.5.
1.18 "Force Majeure" shall have the meaning set forth in Article 10.
1.19 "Land" is defined in the Recitals.
1.20 Intentionally Omitted.
1.21 "Notice of Disapproval" shall mean a written notice given by
Edison or the relevant Charter Holder to Developer stating that Edison or the
Charter Holder does not approve the proposal for a Project as set forth in a
Development Proposal.
1.22 "Notice of Approval" shall mean a written notice given by Edison
and the relevant Charter Holder to Developer stating that Edison and the
relevant Charter Holder approve of the Project described in the Development
Proposal.
1.23 Intentionally Omitted
1.24 "Parcel" is defined in the Recitals.
1.25 "Permanent Financing" is defined in Section 4.2(f).
1.26 Intentionally Omitted.
1.27 "Progress Schedule" is defined in Section 4.2(e).
1.28 "Project" is defined in the Recitals.
1.29 "Project Manager" is defined in Section 4.5.
1.30 Intentionally Omitted
1.31 "Submitted Plans" is defined in Section 4.2(b).
1.32 "Substantial Completion of Construction" is defined in Section
4.3(c).
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ARTICLE 2
APPOINTMENT AND TERM
2.1 Appointment. Except as hereinafter provided, Edison hereby engages
Developer to oversee, arrange, supervise and coordinate on behalf of each
relevant Charter Holder all development, construction management and financial
advisory services for site selection, planning, design, construction and
financing of each Project for which a Notice of Approval has been issued, as
required and subject to the specifications in this Agreement, and Developer
hereby accepts such engagement on the terms and conditions herein contained.
Developer accepts the relationship of trust and confidence established by this
Agreement and covenants with Edison, on behalf of the Charter Holder, to utilize
the Developer's best skill, efforts and judgment in furthering the interests of
Edison and the Charter Holders in the performance of the services to be provided
by Developer hereunder.
Developer acknowledges and agrees that Edison is acting hereunder as
agent for and on behalf of the respective Charter Holders; however, in some
cases at Edison's election, Edison may direct Developer in writing to commence
work on one or more Projects before the Charter Holders which will own such
Projects are organized. Until the Charter Holder for any one or more Projects is
organized and executes an Agency Agreement with Edison substantially in the form
attached hereto as Exhibit A (each an "Agency Agreement"), Edison shall make all
decisions with respect to such Project hereunder (and neither Developer nor
Edison need obtain such Charter Holder's consent or approval of any matter in
connection with such Project(s) as would otherwise require the Charter Holder's
consent or approval hereunder) and Edison shall be solely responsible to
Developer for all amounts due with respect to such Project(s) and shall pay all
amounts due Developer hereunder in connection with such Project(s). As and when
Edison enters an Agency Agreement with the Charter Holder for any such
Project(s) and delivers to Developer (i) a copy of such Agency Agreement and
(ii) evidence that the Charter Holder has or will obtain necessary construction
financing for the Project necessary to pay the Development Costs for the Project
set forth in the Project's Budget, the respective Charter Holders shall have all
rights of a Charter Holder hereunder as to its Project and such Charter Holder
shall be solely responsible for the obligations and liabilities of Edison
arising hereunder with respect to such Project(s) and Edison shall be relieved
from any further liability for the Development Costs, including, without
limitation, the Development Fee payable for such Project(s) hereunder (excepting
only obligations and liabilities caused by Edison's gross negligence or willful
misconduct). If Developer is not satisfied that the Charter Holder is
financially able to discharge its obligations under this Agreement, Developer
may notify Edison within ten (10) days after delivery to it of the Agency
Agreement, and unless Edison elects (in its sole discretion) in a written notice
to Developer to guarantee the obligations of such Charter Holder hereunder,
Developer may upon written notice to Edison, withdraw from the affected Project,
in which case Developer shall be paid all amounts due to Developer on such
Project hereunder as of the date of such notice and Developer shall have no
further obligation to perform services in connection therewith, however, this
Agreement shall remain in full force and effect in all other respects.
Edison has advised Developer that a number of Projects are currently
underway and are in the various stages of development as shown on Exhibit B
attached hereto and made a part hereof (the "Existing Projects"). Also shown on
Exhibit B is the Charter Holder responsible for
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each of such Existing Projects together with the stage of completion thereof. As
to such Existing Projects, Developer shall assume responsibility for the
development, construction management and financial advisory services to be
performed from and after the date of this Agreement and in recognition of the
fact that development services on such Projects have been partially completed,
the Developer shall be paid for each such Project the Development Fee set forth
on Exhibit B hereto in lieu of the Development Fee otherwise payable in
accordance with Article 13 hereof.
Developer shall perform all development, construction management and
financial advisory services required hereunder for the benefit of each of the
Charter Holders as if such Charter Holders were parties to this Agreement,
however, Edison shall remain the agent for such Charter Holders. Copies of all
communications by and between the Charter Holders and Developer with respect to
any Project shall be forwarded to Edison. It is understood and agreed that no
Charter Holder has any liability or obligation under this Agreement or under its
Agency Agreement for obligations or liabilities arising hereunder with respect
to any Project other than the Project identified in its Agency Agreement or for
costs or liabilities arising from Edison's gross negligence or willful
misconduct.
Edison shall diligently endeavor to provide or cause the applicable
Charter Holders to provide timely responses to all requests by Developer for
Edison's or a Charter Holder's approval or other decisions required of them
hereunder.
2.2 Term. Subject to the provisions of Article 8 hereof, this Agreement
shall be for a term commencing as of the date of this Agreement and continuing
through the later of the fifth anniversary of the date of this Agreement or the
Completion Date for the last Project for which Edison has issued a Notice of
Edison Approval.
ARTICLE 3
RELATIONSHIP
Developer shall at all times be an independent contractor and neither
Developer nor its employees shall be agents or employees of Edison or any
Charter Holder. Nothing herein shall be deemed to create a partnership or joint
venture between Developer and Edison or any Charter Holder.
Edison acknowledges that this Agreement is not an exclusive engagement
of Developer and Developer may provide similar or other real estates services to
parochial, public or private schools unrelated to Edison or any of the Charter
Holders.
ARTICLE 4
DEVELOPMENT PROCESS
4.1 Preparation and Approval of Development Proposals. Edison may from
time to time during the term of this Agreement request that Developer perform
the following pre-development services:
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(a) Intentionally Omitted.
(b) Preparation of Development Proposal. In the event
Edison and the relevant Charter Holder authorize Developer in writing to prepare
a Development Proposal for a Project, the Developer shall deliver a Development
Proposal for such Project to Edison and the relevant Charter Holder within sixty
(60) days after the date of such written authorization or within such additional
time (not to exceed ninety (90) days in the aggregate) as Developer may request
in writing. The third party costs and expenses to be incurred by Developer and
fees and charges payable to Developer in the preparation of any such Development
Proposal shall not exceed the Retainer paid to Developer therefor in accordance
with Section 13.1(a) hereof. If Developer wishes to incur any cost or expense
which together with its fee shall cause all costs of the Development Proposal to
exceed the Retainer, Developer shall provide Edison and the relevant Charter
Holder with such information as Edison or the relevant Charter Holder shall
reasonably require in order to approve the proposed excess costs. Edison or the
relevant Charter Holder shall have the right to approve or disapprove the
Development Proposal for such Project in Edison's or the relevant Charter
Holder's sole discretion.
(c) Intentionally Omitted.
(d) Timing for Approval. Edison and the relevant Charter
Holder may send Developer a Notice of Approval or a Notice of Disapproval within
the applicable Approval Period. If Edison and the relevant Charter Holder send a
Notice of Approval, Developer shall commence the development of the Project
described in the Development Proposal subject to and in accordance with the
provisions of Section 4.2 hereof. If the Approval Period expires and Edison and
the relevant Charter Holder have not sent a Notice of Approval, as the case may
be, the Project described in the Development Proposal, as the case may be, shall
be deemed disapproved. The parties may agree in writing to extend the Approval
Period to permit the Developer to submit additional information, documents and
plans reasonably requested by Edison or to revise same.
(e) Reimbursement for Certain Costs. Developer may charge
1.1 times all third party out-of-pocket costs and expenses reasonably incurred
by Developer in connection with the preparation of a Development Proposal
against the Retainer paid to Developer in accordance with Section 13.1(a)
hereof, provided that the sum of such reimbursements plus the Developer's fee in
connection with the preparation of any Development Proposal do not exceed in the
aggregate the Retainer. Upon completion of the Development Proposal, Developer
shall submit to Edison a detailed accounting (supported by documentation as
Edison shall reasonably request) of all such costs and fees charged against the
Retainer and any amounts in excess of the Retainer that were approved in writing
in advance by Edison and the applicable Charter Holder in accordance with
Section 4.1(b). Amounts in excess of the Retainer approved by Edison and the
applicable Charter Holder shall be paid within fifteen (15) days following
submission of Developer's invoice therefor together with such additional
documentation as Edison may reasonably require.
(f) Ownership of Development Proposals. Each Development
Proposal shall be made in the name of Edison, or, if an Agency Agreement has
been signed, in the name of the relevant Charter Holder. Edison, or, if an
Agency Agreement has been signed, the relevant
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Charter Holder, shall have title to and the right to rely upon any and all of
the contents thereof, and such materials may not be used for any other purpose
by Developer without prior written approval from Edison or the relevant Charter
Holder's, as the case may be, which approval shall not be unreasonably withheld,
conditioned or delayed.
4.2 Development of a Project. In the event Edison and the relevant
Charter Holder approve a Development Proposal, the Developer shall perform the
following development services:
(a) Site Acquisition. Developer shall work with legal
counsel reasonably selected by Edison to negotiate a contract to purchase or a
suitable lease of the selected Parcel on the most favorable terms reasonably
achievable, and thereafter assist Edison in conducting all necessary or
appropriate due diligence with respect to the selected Parcel including,
analysis of applicable zoning and subdivision laws and regulations, title
searches, site surveys and environmental assessments.
(b) Engagement and Supervision of Architect. Developer
shall, on behalf of Edison as agent for the relevant Charter Holder, solicit and
recommend a reputable and licensed architect (the "Architect") and such other
engineers, designers, experts and consultants, as necessary or appropriate, to
provide design services for the construction and operation of the Project.
Before engaging any such persons, Developer shall obtain the prior written
consent of Edison (not to be unreasonably withheld) as to the identity of the
person to be engaged and as to the form and substance of the contract therefor
which shall be entered into and executed by Edison as agent for the applicable
Charter Holder. In no event, however, shall Edison have any liability or
obligation under such contracts except to the extent that Edison elects, in its
sole discretion, in writing to guarantee the obligations of the Charter Holder
thereunder. Developer shall cause the parties engaged pursuant to this Section
4.2(b) to prepare and submit to Edison, Developer and the relevant Charter
Holder, for Edison's, Developer's and the relevant Charter Holder's review and
approval (not to be unreasonably withheld), complete plans, specifications and
working drawings for the construction of the Project in such form as Edison may
reasonably require (the "Submitted Plans"). Developer shall supervise all of
such architectural/engineering and design services such that the Submitted Plans
will be prepared and be substantially consistent with the conceptual plans
identified in the Development Proposal. Edison and the relevant Charter Holder
shall provide their written approval or notice of any modifications required to
such plans, specifications and drawings within thirty (30) days after receipt
thereof. The Architect shall make any required modifications within thirty (30)
days of receiving comments from Edison or the relevant Charter Holder. Such
plans, specifications and drawings, when approved by Edison in writing, shall be
referred to herein as the "Approved Plans and Specifications." The Approved
Plans and Specifications shall not be revised in any material respect without
the prior written consent of Edison and the relevant Charter Holder (which
consent shall not be unreasonably withheld).
(c) Procuring Entitlements, Permits and Approvals.
Immediately following the engagement of the Architect provided above, Developer
shall process, procure and maintain in the name of Edison or the applicable
Charter Holder all necessary entitlements and governmental approvals for the
design, development, construction, completion, equipping, occupancy, operation,
and use of the Project, including, without limitation, any special permits,
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rezoning, subdivisions, variances or authorizations required by applicable law.
Developer shall maintain true and complete copies of all such permits and
authorizations and, at the request of Edison or the relevant Charter Holder,
promptly provide copies of same to Edison or the relevant Charter Holder. In
addition, Developer shall make all requisite arrangements with public and/or
private utilities to ensure that water, sewer, electric, gas and other
utilities, in appropriate capacities, will be available to serve the Project.
(d) Engagement of Contractor. Following completion of the
Approved Plans and Specifications, Developer shall negotiate and submit to
Edison for its review and approval (not to be unreasonably withheld), all
necessary construction and other contracts for the construction of the Project,
all of which shall be consistent with the Approved Plans and Specifications. The
total amounts payable under all such contracts which relate to the construction
of the Project shall not exceed the amounts set forth in the Development
Proposal, without prior written approval from Edison and the relevant Charter
Holder. Developer shall obtain the prior written consent of Edison (not to be
unreasonably withheld) as to the selection of the general contractor (the
"Contractor") to be engaged. The construction contract shall be in a form
reasonably satisfactory to Edison and shall be subject to the prior written
approval (not to be unreasonably withheld) of Edison and shall be consistent
with the Budget. Edison (and, in the case of any change order which will cause
an increase in the Budget, the relevant Charter Holder) shall have the right to
approve any change order for a single change in excess of $50,000 and all change
orders after more than $250,000 of change orders of any type have been requested
per Project.
(e) Budget and Progress Schedule. Developer shall prepare
and submit to Edison and the relevant Charter Holder for their approval (i) a
final development budget (the "Budget") for each Project setting forth in detail
on a line item basis reasonably satisfactory to Edison the Development Costs of
the Project and which shall substantially conform to the budget contained in the
Development Proposal except as otherwise approved by Edison and the relevant
Charter Holder, and (ii) a "Progress Schedule" for the Project which shall set
forth the dates for starting and completing the various stages of construction
of the Project and which shall substantially conform to the timing set forth in
the Development Proposal except as otherwise approved by Edison and the relevant
Charter Holder. In the event the Budget or the Progress Schedule do not
substantially conform to those approved by Edison and the relevant Charter
Holder in the Development Proposal, either Edison or the relevant Charter Holder
shall have the right to disapprove the construction of such Project. Developer
shall not revise the Progress Schedule without the prior written consent of
Edison and the relevant Charter Holder. Developer shall keep Edison and the
relevant Charter Holder advised, on a monthly basis, or more frequently as
Edison or the relevant Charter Holder may reasonably request, as to the progress
of the various stages of construction under the Progress Schedule and any
acceleration or delay with respect to such stage.
(f) Financing. Developer shall assist Edison or the
relevant Charter Holder, if requested by Edison or the relevant Charter Holder,
in applying for (i) construction and development financing for the Project
("Construction Financing"), and (ii) upon completion of each Project, long term
financing of the Project (the "Permanent Financing"), which will be sufficient
(to the extent a loan of such amount is available on terms acceptable to Edison
and the applicable Charter Holder) to discharge the construction loan, if any.
Such assistance shall
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include (a) the preparation of those portions of the application packages
relating to the nature, extent and cost of the Project and other matters
relating to the site acquisition and the construction of the Project and
operation of the Project, (b) making available to any such lenders all reports,
tests, studies, plans, specifications, governmental approvals and other
documentation relating to the Project and the construction thereof, (c)
negotiating for Edison or the relevant Charter Holder the terms of all
applicable loan commitments, and (d) obtaining all title insurance policies,
surveys, opinions of counsel and other documentation or information required in
connection therewith. Developer shall coordinate its activities with counsel
reasonably selected by Edison or the relevant Charter Holder in their
discretion. Developer shall also monitor and advise Edison and the relevant
Charter Holder regarding compliance with Edison's or the relevant Charter
Holder's obligations under the loan documents evidencing or securing such loan.
4.3 Construction of a Project. In the event that Edison and the
relevant Charter Holder elect to proceed with construction of the Building(s)
required in connection with any Project, Developer shall provide the following
construction management services:
(a) Construction Management. Developer shall supervise,
coordinate and manage all construction work by Contractor and others engaged for
the construction of the Project in order to expedite completion of the Project
on schedule and on budget, and in connection therewith, Developer shall:
1. Provide overall supervision, coordination,
and direction of the construction of the
Project (herein sometimes referred to as the
"Work") of the Contractor and shall
coordinate the Work of Contractor with the
work of all other contractors performing
services or construction work for Edison in
connection with the Project (the "Other
Contractors"), if any;
2. Assure that a competent construction,
supervisory, and inspection staff is
assigned for the supervision, coordination,
and direction of the Work of the Contractor
and prepare and submit to Edison an
organization chart showing proposed job-site
staff, job classifications, time and period
of commencement and termination of each
member of such staff, and salary ranges of
such staff; such chart and any revisions
thereto shall be subject to the prior
written approval of Edison;
3. Establish on-site organization and lines of
authority in order to carry out all phases
of Project on a totally coordinated basis;
4. Establish and implement procedures for
coordination of services by and among
Edison, Architect, and Contractor with
respect to all aspects of Project;
5. Maintain the Progress Schedule approved by
Edison and the Charter Holder in accordance
with Section 4.2(e) and if necessary,
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add thereto a comprehensive schedule of work
for the Contractor and all Other
Contractors, and submit such schedule for
approval by Edison and the relevant Charter
Holder; revise the Progress Schedule as
required to incorporate such approved
scheduling data submitted by the Contractor
and Other Contractors; periodically update
such schedule to reflect actual construction
progress; coordinate contractor lead times,
procurement, and field starts to accomplish
the schedule; report to Edison on progress
and to identify all failures and causes
thereof to maintain the schedule; and to
make recommendations for recovery of any
lost time;
6. Monitor Architect's coordination, review,
and distribution of construction contract
documents, including revised drawings and
specifications;
7. Schedule and conduct job meetings to be
attended by the Contractor, Other
Contractors, if any, and various
subcontractors, Architect, and Edison to
discuss such matters as procedures,
progress, problems, and scheduling and to
establish status and accountability for
necessary timely action for each item of
work; cause minutes of such job meetings to
be transcribed and distributed;
8. Until final completion and acceptance of the
Project by Edison and the relevant Charter
Holder, direct and inspect the Work of the
Contractor and the work of any Other
Contractors in an effort to see that the
materials furnished and work performed are
in accordance with the applicable contract
documents and that all work on Project is
progressing on schedule and, when the work
is completed, make recommendations relating
to acceptance thereof by Edison and
Architect; in the event the interpretation
of the meaning and intent of said
construction contract documents becomes
necessary during construction, Developer
shall consult with Architect and Edison,
ascertain said interpretation, and transmit
such information to the Contractor and Other
Contractors, as appropriate; and promptly
advise Edison of any undue delay in
obtaining such interpretations;
9. Determine the adequacy of the Contractor's
and Other Contractors' personnel and
equipment and the availability of necessary
materials and supplies;
10. Assist the Contractor in establishing a
comprehensive safety program for Project and
to monitor compliance therewith by the
Contractor and Other Contractors, if any.
The performance of these services by
Developer shall not relieve the Contractor,
Other Contractors and various subcontractors
of their responsibilities for
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the safety of persons and property and
compliance with all statutes, rules,
regulations, and orders applicable to the
conduct of the work, nor shall it impose on
Developer any responsibility for the safety
program or compliance therewith by
Contractor, Other Contractors and
subcontractors;
11. Make recommendations and render assistance
as necessary to the development and
administration of an effective labor
relations program for Project and to the
avoidance of labor disputes during
construction;
12. Monitor Architect's coordination, review for
approval, and distribution of shop drawings,
catalogs, and samples, and to promptly
advise Edison and the relevant Charter
Holder of any undue delay in connection
therewith;
13. Make recommendations to Edison, the Charter
Holder, and Architect for such changes in
the work as Developer may consider necessary
or desirable;
14. Review for propriety all requests for
changes to the Construction Contract for the
Project; monitor Architect's preparation and
verification of quantity and price accuracy
and processing of all change proposals; to
review and analyze change proposals for
reasonableness of costs; and recommend
action by Architect and Edison with respect
thereto;
15. Make recommendations to Edison and Architect
regarding the approval of subcontractors and
material vendors;
16. Keep accurate and detailed written records
of the progress of the Project during all
stages of planning and construction; submit
monthly written progress reports to Edison
and the Architect, including, but not
limited to, reports concerning the progress
of the work of the Contractor and Other
Contractors, if any, the percentage of
completion, the number and amount of change
orders, and the existence of any present or
anticipated problems;
17. Inspect the Project, jointly with Architect,
no less than seven (7) days prior to the
time Edison is to take over, use, occupy, or
operate any part of all of the Project and
to furnish a detailed report to Edison, the
Charter Holder, and Architect of observed
discrepancies, deficiencies, and incomplete
items in the work performed by the
Contractor and Other Contractors, if any;
18. Provide assistance to Architect in
assembling and transmitting written
guarantees, warranties, instruction manuals,
and other data required of the Contractor
and Other Contractors;
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19. Monitor compliance with all laws (including,
without limitation, laws pertaining to the
Americans With Disabilities Act), and with
all rules and regulations that may
reasonably be prescribed from time to time
by Edison or the relevant Charter Holder;
and
20. Monitor all costs and expenses of the
construction to confirm and verify that at
each stage of the construction process there
are sufficient remaining funds within the
Budget to complete the Project in accordance
with the Development Proposal, as may be
amended by change orders approved by Edison
and the relevant Charter Holder or as
otherwise amended by Edison, the relevant
Charter Holder, and Developer, and so that
at the Completion Date, the Budget will not
be exceeded.
(b) Construction and Draw Disbursements. Developer shall
review and submit to Edison and, if requested by Edison, any construction lender
and/or construction consultant named by Edison, all demands for payment made
under any contract or agreement with respect to the construction of the Project,
or for any labor, materials or services furnished in connection with the
construction of the Project, all of which demands for payment shall be made on
the standard form AIA Construction Draw Request or such other form of draw
request agreed to by Edison and Developer. All such demands for payment shall
include all appropriate lien releases (in accordance with local custom) and
shall be accompanied by copies of all invoices and such other materials as
Edison or such construction lender shall reasonably require to analyze such
demand for payment. Developer shall determine whether such labor, materials or
services have been supplied and completed in accordance, and otherwise
consistent with, the Approved Plans and Specifications, and with the general
contract or other agreement pursuant to which such labor, materials or services
were supplied. Developer shall certify to Edison, the relevant Charter Holder
and such construction lender, if any, that the amounts due pursuant to the
construction contract or relevant agreement relate to the labor, materials,
services and work for which payment has been sought and that such work has been
completed in accordance with such governing contract or agreement. Developer
shall also provide such evidence as Edison or such construction lender deems
reasonably necessary to confirm that the requested payment is due. No payment
shall be made by Developer without the express written approval of Edison. The
construction funds delivered by Edison or the relevant Charter Holder to
Developer for payment of the cost of construction shall be maintained in a
separate bank account established in the name of Edison or the relevant Charter
Holder on terms and conditions approved by Edison.
(c) Completion of Construction. When the construction of
the Project has been substantially completed in accordance with the Approved
Plans and Specifications (other than any punch list items), and in accordance
with all governmental laws, rules and regulations and when the Project is ready
for occupancy, Developer shall obtain, on behalf of Edison and the applicable
Charter Holder, a certification to that effect from the Architect to the extent
that the Architect is required under its contract or otherwise agrees to provide
such a certification (it being understood that Developer shall endeavor to
include such requirement in the Architect's contract). At such point in time the
construction of the Project shall be deemed substantially completed (the
"Substantial Completion of Construction"). During the course of construction and
from and after the Substantial Completion of Construction, Developer shall,
subject to the
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prior written approval of Edison (and, if any such settlement will cause an
increase in the Budget, the relevant Charter Holder), negotiate final
settlements with all mechanics, materialmen and subcontractors and, if any
mechanic's, materialmen's or similar lien is filed with respect to all or any
portion of the Project, take such action at Edison's or the relevant Charter
Holder's cost (or the cost of the contractor or subcontractor responsible
therefor to the extent funds are received) as is necessary or appropriate to
contest any such liens and to cause all related claims to be settled and such
liens to be removed by bonding or otherwise. Following Substantial Completion of
Construction, Developer shall enforce on behalf of Edison or the applicable
Charter Holder all warranties, representations and guarantees of the Architect,
Contractor and subcontractors, suppliers and materialmen, and all other persons
furnishing supplies, materials, equipment, or services in connection with the
construction or equipping of the Project, with respect to any defects in the
construction of the Project or the installation or operation of any fixture or
equipment therein. Upon the Completion of the Project, Developer shall (i)
deliver to Edison and the relevant Charter Holder a Statement of Costs
(including all Development Costs incurred in connection with the Project)
certified as true and correct by Developer, and (ii) monitor the compliance of
the Architect and the Contractor, as appropriate, with respect to the provision
of any and all documentation and other materials relating to the Project in
their possession to the extent required by the applicable contract, such as, but
not limited to, the following:
1. As-built drawings and specifications;
2. Change Orders;
3. Reports including, but not limited to, soils
reports, concrete reports, equipment testing
and balancing reports, termite reports, etc;
4. Operation maintenance manuals for all
equipment;
5. Certifications and test results;
6. Warranties or guarantees, including but not
limited to the roof warranty, HVAC
warranties, plumbing warranties, etc.;
7. Keys for all locks;
8. Maintenance stock; and
9. Progress photos taken at least monthly
throughout the Project.
(d) Legal Actions. At the direction of Edison or the relevant
Charter Holder, Developer shall institute, commence and prosecute on behalf of
Edison and the applicable Charter Holders and, at Edison's or the applicable
Charter Holder's expense, all such legal actions and suits as may be required in
connection with the construction of a Project and cause Edison and the Charter
Holders to be defended in connection with any legal action or suit commenced
against any of them. All such legal actions, and any and all decisions with
respect
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to the prosecution and defense of such actions, shall be made by Edison, in
consultation with the relevant Charter Holder, with counsel approved by Edison.
(e) Design Errors. In no event shall Developer have any
liability or obligation for any errors or omissions of architects or engineers
retained to perform architectural or engineering services in connection with any
Projects.
4.4 Additional Services. Developer shall from time to time upon request
of Edison provide in connection with the Project(s) additional services not
described in Section 4.2 or 4.3 above for an additional fee as provided in
Section 13.4. Upon receipt of a request from Edison or any Charter Holder for
such additional service, Developer shall first, before performing any such
service, notify Edison and the relevant Charter Holder in writing (i) that
Developer considers the service to be an additional service for which an
additional charge shall be made, and (ii) of Developer's estimate of the
additional fees that will be charged for such service. Developer shall not
undertake to perform any such additional services unless and until such
performance and reimbursement at the rate requested by Developer is approved in
writing by Edison and the relevant Charter Holder.
4.5 Additional Obligations. Developer's services under this Agreement
shall be subject to the following:
(a) Contracts with Affiliates. Notwithstanding any
provision contained in this Agreement to the contrary, Developer shall not be
permitted to enter into any contract with an Affiliate unless prior thereto
Developer first discloses to Edison and the relevant Charter Holder in writing
(i) the Affiliate with which such contract will be entered, (ii) the relation of
such Affiliate to Developer and (iii) all proposed terms for any such contract.
Developer agrees that any contract with an Affiliate shall be at prevailing
market rates and on customary terms and conditions, and Developer shall provide
to Edison and the relevant Charter Holder such evidence as Edison or the
relevant Charter Holder shall reasonably require to confirm the foregoing.
(b) In performing its services hereunder, Developer shall
place emphasis on considerations that will aid in expediting the construction of
the Project consistent with the construction standards and procedures of Edison.
Developer acknowledges that time will be of the essence of the Project and
agrees to use reasonable care and diligence and to exercise its commercially
reasonable efforts to supervise, coordinate, and direct the work of the
Contractor so as to assist Edison in having the Project completed on or before
its established completion date subject however to delays due to Force Majeure;
provided, however, that Developer, except as may otherwise herein be specified,
shall not be responsible for any failure or inability of the Contractor to
complete the Project or any portion thereof within the time or times provided in
the Construction Contract.
(c) All recommendations and communications by Developer
to Edison, the relevant Charter Holder, and Architect that will affect the cost
of the Project shall be made or confirmed by it in writing. Edison or the
relevant Charter Holder may also require other recommendations and
communications by Developer to be made or confirmed by it in writing. All
recommendations relating to proposed changes in the work, work schedules,
instructions to Contractor, and all other matters requiring action by Edison,
the relevant Charter Holder,
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Architect, and/or the Contractor shall be made directly to Edison, the relevant
Charter Holder and Architect, unless otherwise directed by Edison and the
relevant Charter Holder. After approval by Edison, the relevant Charter Holder,
and/or Architect and subject to the general supervision of Edison, Developer
shall issue instructions directly to the Contractor.
(d) The services to be performed by Developer hereunder
may be performed under subcontract with firms reasonably acceptable to Edison.
No provision of this Agreement shall, however, be construed as constituting an
agreement between Edison or any Charter Holder and any such person or firm.
4.6 Employees. Developer shall employ such employees and consultants as
shall be necessary or appropriate to enable Developer at all times to oversee,
arrange, supervise, coordinate and provide the required services to the Projects
pursuant to this Agreement. Such employees shall be deemed to be the employees
of Developer or its subcontractors, and Developer shall indemnify, defend and
save Edison and the Charter Holders harmless from and against all claims made by
such employees based on job related illness or injury. The foregoing indemnity
shall survive the termination of this Agreement. All matters pertaining to the
employment, training, conduct, supervision, compensation, promotion and
discharge of such employees shall be the responsibility of Developer and
Developer shall comply with all applicable laws and regulations having to do
with worker's compensation, social security, unemployment insurance, hours of
labor, wages, working conditions and safety and similar matters with respect to
such employees. Developer shall designate a project manager (the "Project
Manager") for each Project who shall be reasonably acceptable to Edison. The
Project Manager shall not be replaced without Edison's prior written consent
unless such individual is no longer employed by Developer or any of its
Affiliates. Any substitute Project Manager shall be subject to Edison's prior
written approval, which shall not be unreasonably withheld. Edison shall have
the right to require Developer to replace the Project Manager, or any other
employee of Developer providing services hereunder, if Edison has reasonable
objections to any such individual.
4.7 Emergencies. In the case of emergencies, Developer shall use best
efforts to notify Edison and the relevant Charter Holder immediately, but if
Developer is unable to reach Edison and the relevant Charter Holder, Developer
shall take whatever action it deems reasonable, to protect, maintain or repair
the Projects and to protect any person on or about the Projects, without the
prior consent of Edison and the relevant Charter Holder except to the extent of
any contingency set forth in the Budget. In any event, Developer shall notify
Edison and the relevant Charter Holder of any emergencies as soon as possible.
For purposes of this Section 4.7, the term "emergencies" shall mean any
immediate threat or occurrence of damage or injury to persons or property.
4.8 Lender and Legal Compliance. Developer shall be responsible for the
planning and development of the Projects in compliance with all terms and
conditions in any ground lease, mortgages, other security instruments or similar
encumbrances affecting any Project provided that copies of such instruments have
been made available to Developer. Developer shall also be responsible for
ensuring that the Projects are completed in compliance with all applicable laws
including, without limitation, all building, zoning, fire, handicap access,
environmental and similar laws, rules and regulations of all state, federal and
local authorities having jurisdiction
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over the Projects. Upon the Completion Date, and as a condition precedent to
payment of the last installment of the Construction Management Fee, the
Developer shall deliver to Edison and the relevant Charter Holder, a
certification of Developer and, if available under terms of the applicable
contracts, certificates from the Project architect, engineers or general
contractor, evidencing compliance with the provisions of this Section 4.8 and
certifying that the Project has been completed in accordance with the Approved
Plans and Specifications.
4.9 Project Information. Developer shall make the Project Manager for
each Project and its other personnel available at reasonable times for
communications with Edison and will keep Edison advised of matters affecting the
Projects and will provide regular updates regarding the status of the Projects
on a basis acceptable to Edison.
4.10 Edison and Charter Holder Information. Edison and the applicable
Charter Holder for each Project shall make personnel available at reasonable
times for communication with Developer, and will cooperate with Developer as
reasonably necessary and will provide Developer such information regarding
Edison and the applicable Charter Holder as Developer may reasonably require to
perform its services hereunder.
ARTICLE 5
DEVELOPER'S AUTHORITY
Developer shall have only the power and authority expressly delegated
to it hereunder. Developer shall not be permitted to execute any agreement on
behalf of, or in the name of, Edison or the relevant Charter Holder unless
Edison or the relevant Charter Holder specifically authorizes such action by
Developer.
ARTICLE 6
INSURANCE AND INDEMNIFICATION
6.1 Property Coverage. If requested by Edison, Developer shall procure
and maintain for each Project, on behalf of Edison and the applicable Charter
Holder and at Edison's or the Charter Holder's cost (to be pro-rated and charged
to applicable projects as a Development Cost in accordance with the Project
Budgets), the following insurance against property damage:
(a) All-risk coverage (including earthquake coverage, if
reasonably requested by Edison) in an amount equal to full replacement cost,
with an agreed amount endorsement or a waiver of co-insurance.
(b) Boiler and machinery insurance, if required by Edison or
any lender, and flood and earthquake insurance, if available, in each case in
amounts required by Edison or any lender.
(c) Demolition and increased cost of construction coverages.
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(d) With respect to and during the construction of the
Project, Builders Risk insurance and other associated coverage with limits equal
to the replacement value of the Property (completed value form), with Edison and
the Charter Holder as the named insured.
(e) With respect to improvements under construction, the
following additional requirements shall apply:
1. Such insurance shall be provided in
completed value form, or contain a waiver of
co-insurance, with Edison and the Charter
Holder as the named insured.
2. Transit risks shall be covered if
applicable.
3. The occupancy exclusion shall be deleted.
4. Such insurance shall, if available, provide
coverage against losses during construction
resulting from design defects.
5. Such insurance shall include a soft cost
endorsement, which shall provide coverage to
Edison and the Charter Holder against extra
financing costs, taxes and insurance,
overhead, loss of income, architectural and
engineering fees and marketing and legal
expenses which result from the
insured-against casualty.
All of such insurance may be provided under a blanket policy,
provided that such blanket policy will, in all events, provide Edison and the
Charter Holder the protection against loss specified above. The insurance
coverages required under this Section 6.1 shall in no event provide for
deductibles in excess of $25,000 per occurrence, without the approval of Edison.
6.2 Loss of Use of Property. If requested in writing by Edison for any
completed Project, the Developer shall maintain, at Edison's or the applicable
Charter Holder's sole cost and expense (to be charged to Edison or the
applicable Charter Holder as a Development Cost in accordance with the
applicable Project Budgets), insurance against loss of rental income from the
Project (or business interruption insurance, if applicable) which shall meet the
following requirements:
(a) The amount of such insurance shall equal the maximum
actual loss which might be sustained if the property to which it applies were
totally destroyed, but in no event less than the maximum tenant economic
obligations for a twelve-month period, less a deductible as may be approved by
Edison.
(b) Such insurance shall include extra expense coverage, if
applicable.
(c) Such insurance shall provide coverage against the perils
insured against under Section 6.1.
(d) Such insurance shall contain an agreed amount
endorsement or a waiver of co-insurance as specified by Edison.
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6.3 Liability Coverages. The Developer shall maintain, or cause to be
maintained, liability insurance coverages relating to the Project, naming Edison
and the applicable Charter Holder as additional insureds, at Edison's or the
applicable Charter Holder's sole cost and expense (to be pro-rated and charged
to applicable Projects as a Development Cost in accordance with the Project
Budgets) as follows:
(a) Commercial general liability insurance in an amount
not less than $1,000,000 combined single limit with an aggregate limit of
$2,000,000. The aggregate limit is to apply separately to each Project.
(b) Automobile liability insurance covering owned, hired or
non-owned vehicles with a combined single limit of not less than $1,000,000 each
accident.
(c) Workers' compensation in accordance with statutory
requirements including employer's liability insurance with limits not less than
$100,000.
(d) Umbrella or excess liability insurance with limits of not
less than $10,000,000. Such insurance shall be in excess of all liability
coverage required in subsections (a), (b) and (c)
(e) With respect to property under construction,
including the initial development and construction of the Project, the Developer
shall cause the Contractor to provide an owners protective policy with limits
not less than $1,000,000.
(f) With respect to property under construction,
including the initial development and construction of the Project, the Developer
shall cause the Contractors and subcontractors to provide the following
insurance coverages:
1. Commercial general liability insurance,
including products and completed operations
coverage, with a combined single limit of
not less than $1,000,000 with an aggregate
limit of $2,000,000. The aggregate limit is
to apply separately for each project.
2. Automobile liability insurance covering
owned, hired and non-owned vehicles, with a
combined single limit of not less than
$1,000,000 each accident.
3. Workers' compensation in accordance with
statutory requirements including employer's
liability insurance with limits of not less
than $100,000.
(g) The Developer shall cause the Contractor to maintain
umbrella or excess liability insurance with limits of not less than $5,000,000.
Such insurance shall be in excess of all liability coverage required in
subsections (f) (1), (2) and (3).
(h) If required by any lender making a loan relating to a
specific project, or if reasonably requested by Edison, Developer will 1)
require higher limits of coverage to be carried
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by the Contractor and Subcontractors, and/or 2) require a higher limit of Owners
Protective Insurance to be furnished by the Contractor for Edison.
(i) Such additional insurance against other risks of loss
to the Project as, from time to time, may be required by any lender making a
loan relating to the Project, or which may reasonably be deemed desirable by
Edison and which additional insurance is requested by Edison in writing.
All liability insurance policies shall be written on an
occurrence basis. The required coverages may be provided by a blanket,
multi-location policy, if such policy provides a separate aggregate limit per
occurrence for the benefit of the Project. Except as otherwise provided herein,
no deductibles shall be permitted in any of the policies required under this
Article 6 without the approval of Edison.
6.4 Fidelity Insurance. At the request of Edison, employees of the
Developer who handle or are responsible for funds of Edison or any Charter
Holder shall be covered by fidelity insurance (the cost of which shall be
pro-rated among the Projects as a Development Cost and included in applicable
Project Budgets) in an amount equal to $200,000 or such greater amount as may be
requested by Edison (provided such greater amount is available at commercially
reasonable rates).
6.5 General Insurance Requirements.
(a) Required Provisions. All insurance policies required under
this Article 6 shall:
1. be issued in a form and contain terms, all
as reasonably approved by Edison,
2. provide that such policies shall not be
canceled nor shall any material change be
made therein without at least thirty (30)
days' prior written notice to Edison (or
such shorter period of prior written notice
as is then commercially available),
3. except as otherwise provided above, name
Edison and each Charter Holder as an
additional insured, and
4. provide that any loss shall be payable to
Edison or applicable Charter Holder
notwithstanding any act or negligence of the
Developer which might otherwise result in
forfeiture of such insurance. All insurance
required by this Article 6 shall be a cost
of the Project to be paid by Edison or the
applicable Charter Holder.
(b) Rating. All insurers providing the coverages specified in
this Article 6 shall be rated A-IX or better by Best's.
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(c) Certificates of Insurance. The Developer shall
provide Edison with certificates evidencing the insurance coverages required by
this Article 6 (whether maintained by the Developer or by Contractor and all
subcontractors) prior to the commencement of any activity or operation which
could give rise to a loss to be covered by such insurance. Each certificate
shall state that at least 30 days' notice shall be given to Edison (or such
shorter period of prior written notice as is then commercially available) prior
to the amendment, termination or cancellation of any policy evidenced thereby.
Replacement certificates shall be sent to Edison as policies are renewed,
replaced or modified.
(d) Investigation of Claims. The Developer shall promptly
investigate and make a full, timely, written report to any insurance company
providing coverage, with a copy to Edison, of all accidents, claims, or damage
relating to ownership, operation and maintenance of the Project, any damage or
destruction to the Project and the estimated cost of repair thereof, and shall
prepare any and all further reports required by any such insurance company in
connection therewith. The Developer shall have no right to settle, compromise or
otherwise dispose of any claims, demands or liabilities, whether or not covered
by insurance, exceeding $10,000.00, without the prior written consent of Edison.
6.6 Liability of Developer. The Developer shall be liable to Edison for
any loss by reason of the inadequacy of the insurance proceeds payable under any
policy of insurance to be procured and maintained by the Developer pursuant to
this Article 6 if Edison previously notified and authorized the Developer, in
writing, to increase the limits of any such insurance to amounts within
reasonable industry standards (if such insurance was available), the Developer
failed to apply for such increase in insurance within fifteen (15) days after
such notice, the failure to apply for such increase in insurance constituted
gross negligence or willful misconduct on the part of the Developer and the
insured-against event occurred.
6.7 Waiver of Subrogation. Developer shall furnish whatever information
is reasonably requested by Edison for the purpose of establishing the placement
of insurance coverages and shall aid and cooperate in every reasonable way with
respect to such insurance and any loss thereunder. All policies covering real or
personal property which either party obtains affecting the Projects shall
include a clause or endorsement denying the insurer any rights of subrogation
against the other party to the extent rights have been waived by the insured
before the occurrence of injury or loss, if the same are obtainable, and if
there is any additional charge for such clause or endorsement, such charge shall
be paid by the party benefiting from the same. Developer and Edison waive any
rights of recovery against the other for injury or loss due to hazards covered
by policies of insurance containing such a waiver of subrogation clause or
endorsement to the extent of the injury or loss covered thereby.
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6.8 Indemnification.
(a) Edison or applicable Charter Holder hereby agrees that it shall
protect, defend, indemnify, and hold harmless Developer to the fullest extent
permitted by law from and against any and all claims, proceedings,
investigations, and all loss, costs, damages, liability, and expenses (including
court costs and reasonable attorneys' fees): (a) arising out of any negligent
actions or omissions or willful misconduct by Edison or its agents or employees,
or (b) arising out of any breach or violation of this Agreement by Edison. The
obligations of Edison arising under this Section 6.8(a) during the Term of this
Agreement shall survive expiration or sooner termination thereof.
(b) Developer agrees to protect, defend, indemnify, and hold harmless
Edison and each Charter Holder to the fullest extent permitted by law from and
against any and all claims, proceedings, investigations, and all loss, costs,
damages, liability, and expenses (including court costs and reasonable
attorneys' fees): (a) arising out of any negligent actions or omissions or
willful misconduct by Developer or its agents or employees; or (b) arising out
of any breach or violation of this Agreement by Developer. The obligations of
Developer arising under this Section 6.8(b) during the Term of this Agreement
shall survive expiration or sooner termination thereof.
ARTICLE 7
EDISON'S RIGHT TO INSPECT
Edison shall have the right, at its sole cost and expense, upon reasonable
advance notice during normal business hours, to examine the books and records
maintained by Developer pertaining to the performance of Developer's services
under this Agreement.
ARTICLE 8
TERMINATION
8.1 Termination.
(a) Termination where no Final Notice of Approval Issued.
Either party shall have the unconditional right to terminate this Agreement
without cause on fifteen (15) days notice except as to the Projects which are
then subject to a Development Proposal for which a final Notice of Approval has
been given by Edison and, if applicable, the Charter Holder. In the case of any
such termination, Edison or the applicable Charter Holder, will reimburse all of
Developer's out-of-pocket expenses incurred through the date of such termination
as provided in Section 4.1(e).
(b) Termination without Cause. In addition, either party
shall have the unconditional right to terminate this Agreement without cause on
fifteen (15) days notice with respect to any Project(s) for which a final Notice
of Approval has been given by Edison and, if applicable, the Charter Holder.
This Agreement shall automatically terminate as to any Project(s) for which the
Agency Agreement(s) is(are) terminated upon delivery of notice of such
termination to Developer unless Edison elects in writing within fifteen (15)
days thereafter to
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assume the applicable Charter Holder's obligations hereunder for such
Project(s). Upon any termination under this paragraph (b), Edison or the
applicable Charter Holder shall pay to Developer (i) any portion of the
Development Fee then due and payable to Developer, (ii) if construction of the
Project has begun, any portion of the Construction Management Fee then due based
upon the percentage of the work that is complete as determined under the
Construction Contract, and (iii) all third party costs and expenses reimbursable
to Developer in connection with such Project in accordance with this Agreement.
If Edison elects to terminate this Agreement as to any Project in accordance
with this Section 8.1(b) or this Agreement is terminated as to any Project due
to the termination of the applicable Agency Agreement therefor, Edison or the
applicable Charter Holder will also reimburse Developer for such reasonable
termination charges as Developer may actually incur in terminating contracts
entered into in accordance herewith, demobilizing Project staff and equipment
and or reassigning staff members to other projects. Upon payment of such
amounts, Edison and the applicable Charter Holder shall have no further
liability to Developer hereunder with respect to such Project(s) excepting only
such liability under Section 6.8 hereof as shall by its terms, survive
expiration or sooner termination of this Agreement.
(c) Termination for Default.
(1) Either Edison or Developer shall have the
right to terminate this Agreement with
respect to any Project(s) at any time for
any default by the other party in the
performance of its duties hereunder
(including all exhibits hereto) with respect
to such Project(s), provided (i) if such
default is a monetary default, that such
default continues for a period of ten (10)
days after notice is given to the defaulting
party, or (ii) if such default is a
nonmonetary default, that such default
continues for a period of thirty (30) days
after notice is given to the defaulting
party (or if such nonmonetary default cannot
reasonably be cured within 30 days, then
such nonmonetary default continues for a
period of ninety (90) days in the aggregate
after notice is given to the defaulting
party); or
(2) Either Edison or Developer shall have the
right to terminate this Agreement in its
entirety or with respect to any or more
Projects, at any time if the other party
hereto makes an assignment for the benefit
of creditors, or if a receiver, trustee,
custodian, guardian, liquidator or similar
agent is appointed with respect to such
party, or if a petition is filed by or with
the consent of any party hereto under any
Federal or state law concerning bankruptcy,
insolvency, reorganization, arrangement, or
relief from creditors, or if such a petition
is filed against such party and such
petition is not dismissed within 90 days
thereafter.
(3) Generally, notwithstanding the foregoing,
neither party shall have any cure period
with respect to a breach caused by such
party's fraud or intentional misconduct or,
in the case of the Developer, in
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the event the Developer (i) fails to
maintain the insurance required under
Article 6 hereof, or (ii) misapplies funds
provided by Edison or a Charter Holder or
fails to pay the Contractor or any other
person or entity performing work on the
Project after Edison or the applicable
Charter Holder has approved such payment and
has provided Developer with any funds
required hereunder. In the case of the
termination of this Agreement after a
default by Developer, Edison and the
applicable Charter Holder(s) shall have no
obligation to pay any additional portion of
the Development Fee or Construction
Management Fee to Developer, and Developer
shall be liable to Edison and the applicable
Charter Holder(s) for all damages suffered
or incurred by Edison or the applicable
Charter Holder(s) as a result of such
default including, without limitation, costs
and expenses reasonably incurred by Edison
or the applicable Charter Holder(s) in
completing any Project(s) which are in
excess of the applicable Budget.
8.2 Other Remedies. The specific remedies to which any party may resort
under the terms of this Agreement are cumulative and are not intended to be
exclusive of any other remedies or means of redress to which such party may be
lawfully entitled in case of the occurrence of a default beyond applicable grace
periods by the other party. The termination of this Agreement shall not relieve
any party of any of its obligations theretofore accrued under this Agreement
prior to the effective date of such termination. Notwithstanding anything herein
to the contrary, Developer, Edison and the Charter Holders shall have no
liability hereunder for special or consequential damages that may be incurred by
the other parties to this Agreement.
ARTICLE 9
COOPERATION
Should any claims, demands, suits or other legal proceedings be made or
instituted by any third person against Developer, Edison or any Charter
Holder(s) which arise out of any of the matters relating to any part of the
Projects or this Agreement, Developer, Edison and the applicable Charter
Holder(s) shall each give the other, at the expense of the party being sued, all
pertinent information in its possession (excluding any such information which is
confidential or proprietary and may be withheld in accordance with Section 15.10
hereof) and reasonable assistance in the defense or other disposition thereof.
ARTICLE 10
DELAYS
Neither party shall be liable for its failure to perform its
obligations hereunder due to Force Majeure. For purposes hereof, Force Majeure
shall mean any accident, unusual difficulty or inability in obtaining services
or supplies from sources usually used, unusually bad weather conditions, labor
difficulties, the other party's failure to perform its obligations hereunder or
any other causes beyond such party's reasonable control. Either party claiming
any such delay shall
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provide notice of such claim promptly after the occurrence of the event causing
such delay. In the case of a continuing delay, only one claim shall be required.
Each such claim shall provide an estimate of the probable impact of such delay
on the Projects.
ARTICLE 11
CONSENT; APPROVAL
Whenever in this Agreement the consent or approval of any party is
required, such consent or approval shall be in writing only, shall not be unduly
delayed and shall only be effective if given by a duly authorized officer or
agent for the party granting such consent or approval.
ARTICLE 12
NOTICES
All notices and other communications provided for herein shall be in
writing and shall be sent to the address set forth below (or such other address
as a party may hereafter designate for itself by notice to the other parties as
required hereby) of the party for whom such notice or communication is intended:
If to Edison: Edison Schools Inc.
521 Fifth Avenue
New York, New York 10175
Attention: Chris Whittle
Fax: 212-419-1604
With a copy to: Edison Schools Inc.
521 Fifth Avenue
New York, New York 10175
Attention: John Williams, Esq.
Fax: 212-419-1868
If to Developer: Ksixteen LLC
c/o Edison Schools Inc.
521 Fifth Avenue
New York, New York 10175
Attention: Joe Keeney
Fax: 212-419-1715
With a copy to: Coudert Brothers
1114 Avenue of the Americas
New York, NY 10035
Attention: Gerard Hannon, Esq.
Fax: 212-626-4120
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All notices to a Charter Holder shall be in writing and shall be delivered in
accordance with the applicable Agency Agreement. Any notice or communication
shall be sufficient if sent by registered or certified mail, return receipt
requested, postage prepaid; by hand delivery; by overnight courier service; or
by facsimile, with an original by regular mail. Any such notice or communication
shall be effective the earlier of (i) the date when received by the addressee,
or (ii) the date sent if sent by overnight courier for next business day
delivery and actually received on the next business day.
ARTICLE 13
COMPENSATION
13.1 Development Fee. In addition to the sums Edison or the applicable
Charter Holder is specifically obligated to reimburse to Developer related to
approved costs and expenditures as described in this Agreement, Developer shall
receive for its services described in Sections 4.1 and 4.2 in developing each
Project in accordance with this Agreement a development fee (the "Development
Fee") equal to six percent (6%) of the Development Costs (excluding the
Development Fee) for such Project as set forth in the original Budget approved
by Edison and, if applicable, the relevant Charter Holder for such Project,
payable as follows:
(a) Upon issuance of a request for a Development Proposal
for any Project, Edison (on behalf of the applicable Charter Holder) shall pay
to Developer a retainer in the amount of $25,000 for Charter School proposals
and $10,000 for Contract Schools (the "Retainer"). Following Edison's issuance
of a Notice of Approval for any Project, Developer shall be paid monthly by
Edison or the applicable Charter Holder for Developer's approved staff providing
services in connection with the proposed Project at the hourly rates set forth
on Exhibit C hereto, and as set forth in the Approved Development Plan,
provided, however, that the cost reimbursed shall not exceed the lesser of (i)
the amounts approved by Edison in connection therewith, or (ii) three percent
(3%) of approved Development Costs (excluding the Development Fee) set forth in
the original Development Budget approved by Edison and, if applicable, the
relevant Charter Holder for the Project. Developer shall first credit all such
charges as well as all reimbursable costs in accordance with Section 4.1(e)
hereof against the applicable Retainer until the Retainer is exhausted.
Developer shall provide Edison and the relevant Charter Holder monthly with a
written accounting of all amounts charged against Retainers. If a Project is
terminated before the Retainer for such Project is exhausted, the balance, if
any, shall be refunded to Edison or the relevant Charter Holder, as the case may
be.
(b) Upon Edison's (or the applicable Charter Holder's)
lease or purchase of the Parcel for any Project, Edison (on behalf of the
applicable Charter Holder) shall pay Developer -1/2 of the total Development Fee
for the Project less all amounts previously paid to Developer in connection with
such Project.
(c) Upon Closing of the Permanent Financing for any
Project obtained in accordance with Section 4.2(f), Edison (on behalf of the
applicable Charter Holder) shall pay Developer the remaining unpaid balance of
the Development Fee for the Project. If Permanent Financing is not available for
any Project then, except as otherwise provided under Article 8, Edison (on
behalf of the applicable Charter Holder) shall pay Developer such unpaid balance
of
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the Development Fee for such Project no later than twelve (12) months following
Substantial Completion of Construction of such Project.
13.2 Construction Management Fee. In addition to the sums Edison (on
behalf of the applicable Charter Holder) is obligated to pay Developer for each
Project in accordance with Section 13.1 above, Developer shall receive for its
services described in Section 4.3 in construction management of a Project, in
accordance with this Agreement, a construction management fee (the "Construction
Management Fee") for the Developer's staff performing construction management
services in connection with the Project at the hourly rates set forth on Exhibit
C hereto, provided, however, that the cost reimbursed shall not exceed the
Construction Management Fee set forth in the Budget.
13.3 Reimbursable Expenses. Except as herein expressly provided, all
expenses incurred by Developer under this Agreement shall be paid by Developer,
unless Edison and the relevant Charter Holder have previously approved such
expenses under the provisions of the Budget.
13.4 Fee for Additional Services. In the event that Edison and the
applicable Charter Holder approve performance by Developer of any additional
services in connection with the Project, Edison (on behalf of the applicable
Charter Holder) shall pay Developer a fee for the time spent by Developer's
staff performing additional services in connection with the Project at a rate
equal to 1.25 times the hourly rate set forth in Exhibit C hereto and shall
reimburse all costs reasonably incurred by Developer in connection therewith
provided, however, that in no event shall such fee and costs payable to
Developer for additional services exceed the amount estimated by Developer and
approved in advance by Edison and the applicable Charter Holder therefor.
ARTICLE 14
ASSIGNABILITY
The services to be performed by Developer under this Agreement are
personal to Developer and Developer shall not assign its rights or obligations
under this Agreement without the prior consent of Edison (and the applicable
Charter Holders on Projects affected by such assignment), however Developer may
subcontract with Affiliates or others reasonably acceptable to Edison (and the
applicable Charter Holders on Projects affected by such subcontract) for the
services or staffing required hereunder. Edison shall be permitted to assign its
rights under this Agreement to any Affiliate of Edison and/or the respective
Charter Holders. No assignment by Edison, Developer or a Charter Holder shall
relieve Edison, Developer or such Charter Holder of its liabilities hereunder
except as otherwise herein expressly provided. For purposes of this Agreement,
the term "Affiliate" means any corporation, partnership or other entity or party
which either directly or indirectly, through one or more intermediaries, (i)
controls or has the right to control, (ii) is controlled by, or (iii) is under
common control with the other specified corporation, partnership or other
entity.
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ARTICLE 15
MISCELLANEOUS
15.1 Entire Agreement. This Agreement contains the entire agreement
between the parties respecting the matters herein set forth and supersedes all
prior agreements between the parties hereto respecting such matters.
15.2 Bind and Inure. Subject to Article 14 hereof, the rights, duties
and obligations of the parties to this Agreement shall be binding upon and inure
to the benefit of the respective successors and permitted assigns of such
parties.
15.3 Amendment. This Agreement may not be amended or modified except by
an instrument in writing and signed by all parties hereto.
15.4 Governing Law; Waiver of Jury Trial. This Agreement shall be
governed and construed in accordance with the laws of the State of New York.
Each party hereto waives the right of trial by jury in any action brought in
connection with this Agreement.
15.5 Headings. The headings used in this Agreement are for convenience
only and are not to be considered in connection with the interpretation or
construction of this Agreement.
15.6 No Waiver. The failure of any party to seek redress for violation
of, or to insist upon the strict performance of, any covenant, agreement,
provision or condition of this Agreement shall not constitute a waiver thereof
nor prevent any subsequent act, which would have originally constituted a
violation, from having all the force and effect of an original violation.
15.7 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original of this Agreement, but all of
which, taken together, shall constitute one and the same agreement.
15.8 Other Interests. Subject to the limitations set forth in Section
4.5 hereof, any party may, individually or with others, be engaged with respect
to, or possess an interest in, any other projects and ventures of any kind or
nature, whether or not competitive with the Projects, and the other parties
shall not, by virtue of this Agreement, have any rights to any such project or
any income, profits or compensation derived therefrom.
15.9 Non-Recourse. Developer hereby agrees that in no event shall
Edison have any liability for amounts due and owing the architect, engineers,
contractor or others with whom or which Developer may enter into contracts in
accordance with this Agreement except to the extent, if any, that Edison elects
(in its sole discretion) in writing to guaranty the obligations under such
contract(s). In addition, Developer shall neither assert nor seek to enforce any
claim for breach of this Agreement, for any default by Edison or any Charter
Holder under this Agreement, or otherwise directly or indirectly as a result of
or incident to this Agreement against any party who at any time is or has been
an officer, trustee, director, partner, beneficiary, joint venturer, member,
agent, stockholder or other principal of Edison or such Charter Holder. In no
event shall any of the officers, trustees, directors, partners, beneficiaries,
joint venturers,
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members, agents, stockholders or other principals, disclosed or undisclosed, of
Edison or any Charter Holder ever be liable for any such liability.
15.10 Confidentiality. Each party to this Agreement, including, as to
each Project, the applicable Charter Holder agree that it will not disclose any
oral or written information about the transactions contemplated herein to anyone
without the prior written approval of the other parties hereto involved in such
transactions except as may be required by law. After termination of this
Agreement as to any Project(s), Developer shall return to Edison or the
applicable Charter Holder(s) any documents and written information produced by
and belonging to the Charter Holder(s) or Edison related to such Project(s) in
the possession of the Developer or its attorneys, agents or other consultants
and Edison or the applicable Charter Holder(s) shall return to the Developer any
documents and written information produced by and belonging to Developer related
to such Project(s) in the possession of Edison of such Charter Holder(s) or
their respective attorneys, agents or other consultants. The provisions of this
Section 15.10 shall survive the cancellation or termination of this Agreement.
15.11 Exhibits. The exhibits listed below are hereby attached hereto
and incorporated herein:
Exhibit A - Agency Agreement
Exhibit B - Existing Project and Remaining Development Fees Payable
Therefor
Exhibit C - Personnel Hourly Rates
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
EDISON SCHOOLS INC.
By:__________________________
Its:
KSIXTEEN LLC
By: _________________________
Its:
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EXHIBIT A
AGENCY AGREEMENT
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EXHIBIT B
EXISTING PROJECT AND REMAINING
DEVELOPMENT FEES PAYABLE THEREFOR
1. Schomburg Charter School, Jersey City, NJ $210,000 payable upon closing
of financing
2. Milwaukee Academy of Science, Milwaukee, WI $195,000 payable upon
closing of Phase I financing $117,000 payable upon lease execution
$117,000 payable upon closing of Phase II financing
3. Renaissance Academy-Edison Charter School, Phoenixville, PA $185,000
payable upon closing of financing
4. Rochester Charter School of Science and Technology, Rochester, NY
$195,000 payable upon closing of Phase I financing $60,000 payable upon
closing of Phase II financing
5. Edison-Friendship Public Charter School $249,000 payable upon closing
of Phase II financing
6. Detroit YMCA $90,000 payable upon closing of financing
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EXHIBIT C
PERSONNEL HOURLY RATES
Chief Executive Officer $200/hour
Senior Vice President $175/hour
Vice President $150/hour
Director $125/hour
Manager $100/hour
Senior Associate $75/hour
Associate $50/hour
Analyst $35/hour
Support staff $30/hour
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Master Development Agreement - Edison Schools Inc. and KSixteen LLC
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