DEVELOPMENT AND DESIGN/BUILD AGREEMENT
FOR
SUBURBAN LODGE OF DALLAS-LEWISVILLE
DEVELOPMENT AND DESIGN/BUILD AGREEMENT
This Agreement made this 20th day of December, 1996 by and
between E.E.B. Lodging Systems II, LLC, a Georgia Limited Liability
Corporation (hereinafter "Owner"), and SLA DEVELOPMENT, INC., a
Georgia Corporation, (hereinafter "SDI").
Whereas, Owner has executed a Preliminary Agreement For a
License to Develop a Suburban Lodge Unit with Suburban Franchise
Systems, Inc. (hereinafter "SFS"), dated December 20, 1996,
(hereinafter the "Preliminary Agreement"); and
Whereas, Owner will execute a Suburban Lodge Franchise
Agreement (the "Franchise Agreement") with SFS pursuant to the
Preliminary Agreement, thereby authorizing Owner the non
exclusive right to operate a SUBURBAN LODGE System Unit
(hereinafter "Hotel") and to utilize the Licensed Marks in
conjunction therewith as defined by and in accordance with the
Franchise Agreement; and,
Whereas, Owner wishes to engage SDI, an affiliate of SFS, as
its developer and design/builder for the performance of certain
services in connection with the site selection, site purchase,
design, development and construction supervision of said Hotel in
conformity with the Franchise Agreement; and,
Whereas, SDI desires to perform certain services for Owner
in connection with the site selection, site purchase, design,
development and construction supervision of said Hotel.
NOW, THEREFORE, in consideration of the mutual covenants,
promises and agreements contained hereinbelow, Owner and SDI
covenant and agree as follows:
1. PROJECT SCOPE / SERVICES AND RESPONSIBILITIES
(a) The Project is the site selection, site purchase,
design, development and construction supervision of the Hotel for
which SDI is responsible. The Work comprises the completed
construction of the Hotel.
(b) Legal services shall be performed by licensed
practicing attorneys selected by SDI. Design, survey and testing
services shall be performed by qualified architects, engineers
and other professionals selected by SDI. The professional
obligations of such persons shall be undertaken and performed in
the interest of Owner. Construction services shall be performed
by qualified construction contractors and suppliers, selected by
SDI and acting in the interest of Owner. Affiliates of SDI may
provide construction services so long as the cost of such
services are comparable with the cost available from third
parties. All of the foregoing services shall be paid for by the
Owner.
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2. BASIC SERVICES
(a) SDI shall assist in and recommend possible sites for
the construction of the Hotel. Upon the approval of the site by
Owner, SDI shall secure, on Owner's behalf and cost, a legal
description and a certified land survey of the site, showing, as
applicable, rights-of-way, restrictions, easements,
encroachments, zoning, elevations and contours of the site;
locations, pertaining to existing improvements; and full
information concerning available services and utility lines, both
public and private, above and below grade, including inverts and
depths.
(b) SDI shall, after consultation with, and approval of the
site by, the Owner, negotiate for the purchase of the site,
subject to the ultimate approval by the Owner.
(c) SDI shall seek such zoning changes, variances and
approvals, on behalf of Owner, as may be necessary to develop the
Hotel on the site.
(d) SDI shall secure, on behalf of Owner, the services of
geotechnical engineers and other consultants on behalf of Owner
when such services are deemed necessary by SDI. Geotechnical
engineers and other consultants shall be selected by SDI. Such
services shall include, as required, applicable test borings,
test pits, soil bearing values, percolation tests, environmental
tests, and other necessary operations with reports and
appropriate professional recommendations.
(e) SDI shall secure the services of qualified architects,
engineers, and other professionals on behalf of Owner to prepare
Preliminary Design Documents, and thereafter Construction
Documents.
(f) SDI shall submit to the Owner for Owner's approval, a
Proposal including Preliminary Design Documents, an architectural
services agreement, a preliminary statement of the proposed
Design/Build Budget, a proposed schedule for completion of the
Work, and all other information necessary to complete the Work.
(i) The Preliminary Design Documents shall consist of
preliminary design drawings and other documents to fix and
describe the size, quality and character of the entire Project,
its architectural design and materials, and such other elements
of the Project as may be appropriate.
(ii) The Design/Build Budget shall reflect the
projected costs and expenditures (including contingencies) for
the design, development and construction of the Hotel. Said
Design/Build Budget shall be adjusted accordingly in the event of
the need for a change or an addition to the initial scope of the
Work contemplated herein due to: (A) a request for a change or
addition by Owner; (B) a request for a material change or
addition by SDI and approved by Owner; (C) a request for a change
or addition by a regulatory authority or other governmental
authority; (D) concealed or unknown conditions; or, (E) the
enactment of codes, laws or regulations subsequent to the
submission of the Design/Build Budget by SDI to Owner.
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(g) Upon Owner's approval of the Proposal, SDI shall have
prepared and submit to the Owner Construction Documents for
approval by the Owner. Construction Documents shall include
technical drawings, schedules, diagrams and specifications,
setting forth in detail the requirements for construction of the
Hotel and shall: (i) provide information customarily necessary
for the use of those in the building trades; and (ii) include
documents customarily required for regulatory agency approvals.
(h) SDI shall, by Owner s professionals, file the documents
required to obtain necessary approvals of governmental
authorities having jurisdiction over the Project.
(i) SDI shall negotiate for, on behalf of the Owner, the
design services, labor, materials, equipment, utilities,
transportation and other facilities and services necessary for
proper execution and completion of the Work.
(j) SDI shall be responsible for and shall coordinate all
construction methods, sequences and procedures.
(k) SDI shall keep the Owner informed of the progress and
quality of the Work.
(l) SDI shall include in the construction contracts the
requirement that the contractors correct Work which does not
conform to the Construction Documents.
(m) SDI shall include in the construction contracts the
requirement that the contractors give all necessary notices
required by and, and will otherwise comply with laws, ordinances,
rules, regulations and lawful orders of public authorities
relating to the Project.
(n) SDI shall include in the construction contracts the
requirement that the contractors keep the premises free from
accumulation of waste materials or rubbish caused by their
operations. At the completion of the Work, SDI shall require that
the contractors remove from and about the Project their tools,
construction equipment, surplus materials, waste materials and
rubbish.
(o) SDI shall have authority to make minor changes in the
design and construction of the Hotel consistent with the intent
of this Agreement, not involving a material adjustment in the
Design/ Build Budget. SDI shall promptly inform the Owner, in
writing, of minor changes in the design and construction.
(p) SDI shall maintain in good order at either its office
or the site one record copy of the drawings, specifications,
product data, samples, shop drawings, and modifications, marked
currently to record changes made during construction. These
shall be delivered to the Owner upon completion of the design and
construction and prior to final payment.
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3. OWNER
(a) The Owner shall pay for the cost of all of the services
and expenditures described herein, including but not limited to
land costs, legal, design/engineering and other professional
services, building and other permits, fees and licenses,
construction services and materials and any other costs, services
and expenditures associated with the site selection and purchase
and the design, development, construction and equipping of the
Hotel. All such payments shall be made in accordance with the
requirements of Paragraph 5 below.
(b) The Owner shall pay SDI's Compensation and Reimbursable
Expenses in accordance with the schedules described in Paragraphs
7 and 8 below.
(c) The Owner shall provide all funding for the Project and
the Work including sufficient funds to pay for the construction
and equipping of the Hotel. The Owner shall provide to SDI upon
request but no less than quarterly, evidence of the immediate
availability of sufficient funds to construct and equip the Hotel
in the manner contemplated herein and to comply with all
provisions of the Franchise Agreement. This evidence shall be in
a form and substance required by SDI. The obligations of SDI are
conditioned upon the compliance by the Owner with the provisions
of this paragraph and the constant compliance with the financial
requirements set forth herein. SDI shall have the right to
terminate its obligations hereunder in the event the Owner fails
to provide the evidence required herein or in the event SDI
determines in its discretion that the funds available to the
Owner on an immediate and uncontested basis are insufficient to
fund the Project and the Work or to otherwise comply with the
Franchise Agreement.
(d) All contracts or other obligations for the purchase of
the site, and for the design, engineering and construction of the
Hotel shall be in the name of the Owner and shall be the
obligation of the Owner. To facilitate the purchase of the site
and the construction of the Hotel, the Owner hereby appoints and
constitutes SDI as its duly appointed and constituted attorney in
fact to execute such documents and instruments in the name of the
Owner as SDI may deem necessary or appropriate in order to
develop the Project and perform the Work. The Owner hereby
indemnifies SDI for all losses, costs, damages, claims or other
amounts incurred by or asserted against SDI in connection with
the performance of obligations under documents or instruments
executed pursuant to this power of attorney or under this
Agreement. This power of attorney is coupled with an interest
and is revocable only upon written notice to SDI. Third parties
may rely upon the validity of this power of attorney without
further inquiry until a revocation thereof is recorded in the
Cobb County, Georgia Superior Court records.
(e) The Owner shall designate a representative authorized
to act on the Owner's behalf with respect to the Project. The
Owner or such authorized representative shall examine the
requests, proposals and documents submitted by SDI from time to
time as required herein, and shall promptly render decisions
pertaining thereto, to avoid delay in the orderly progress of
site purchase and design, development and construction of the
Hotel.
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(f) If the Owner observes or otherwise becomes aware of any
fault or defect in the Work, the Owner shall give prompt written
notice thereof to SDI.
(g) The Owner shall communicate with architect, engineers,
contractors and other professionals engaged in the performance of
the Project and the Work only through SDI.
(h) The Owner shall purchase and maintain policies of
liability and property insurance in such amounts and coverages as
SDI shall recommend, which coverage shall name SDI, its parent
and affiliates, as additional insureds. SDI shall assist Owner
in securing such insurance coverage.
4. OWNERSHIP AND USE OF DOCUMENTS
(a) The drawings, specifications and other documents to be
generated for Owner by SDI are owned by SFS and licensed to Owner
pursuant to the Franchise Agreement, and shall not become the
property of the Owner whether or not the Project for which they
are made is commenced. Drawings, specifications and other
documents furnished by SDI shall not be used by the Owner on
other projects.
(b) Submission or distribution of documents to meet
official regulatory requirements or for other purposes in
connection with the Project is not to be construed as publication
in derogation SFS's common law copyrights or other reserved
rights. The Owner shall own neither the documents nor the
copyrights.
5. PAYMENTS
(a) Owner shall advance to SDI, upon request, such amounts
as may be necessary to pay for the services and expenditures
described herein, within ten days of the Owner's receipt of a
properly submitted itemized Application for Payment.
(b) The Application for Payment shall constitute a
representation by SDI to the Owner that, to the best of SDI's
knowledge, information and belief the services and expenditures
are necessary and appropriate for the continued site selection,
site purchase, design, development construction and/or equipping
of the Hotel; and that the lawyers, architects, engineers,
contractors and others are entitled to payment in the amount
requested and/or the expenditures are necessary in the amount
requested.
(c) SDI shall include in the construction contracts that
the final ten percent (10%) of the unpaid balance of the amount
due under the construction contracts shall be due and payable at
the time the Work is completed and the construction contracts are
fully performed.
(d) The making of final payment shall constitute a waiver
of all claims by the Owner except those arising from: (i)
unsettled liens, and (ii) faulty or defective Work appearing
during the first year after the Certificate of Occupancy.
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6. PROTECTION OF PERSONS AND PROPERTY
(a) SDI shall in include in the construction contracts the
requirement that the contractors carry all-risks insurance,
workers compensation and other applicable policies of insurance
showing Owner and SDI, its parents and affiliates, as additional
insureds and be responsible for initiating, maintaining and
providing supervision of safety precautions and programs in
connection with the Work. SDI shall include in the construction
contracts the requirement that the contractors provide
certifications evidencing the procurement of such policies of
insurance. SDI shall also include in the construction contracts
the requirement that the contractors indemnify Owner and SDI for
any losses, costs, damages, claims or other amounts incurred by
or asserted against Owner or SDI arising from the performance of
the Work as a result of any negligent acts or omissions caused by
the contractors.
(b) SDI shall include in the construction contracts the
requirement that the contractors take reasonable precautions for
safety of, and shall provide reasonable protection to prevent
damage, injury or loss to: (1) employees on the Work and other
persons who may be affected thereby; (2) the Work and materials
and equipment to be incorporated therein; and (3) other property
at or adjacent to the site.
(c) SDI shall include in the construction contracts the
requirement that the contractors give notices and comply with
applicable laws, ordinances, rules, regulations and orders of
public authorities bearing on the safety of persons and property
and their protection from damage, injury or loss.
7. COMPENSATION
(a) As its compensation for the services described herein
SDI shall be paid One Hundred Thousand Dollars ($100,000). An
initial payment of Twenty Five Thousand Dollars ($25,000), shall
be made upon the execution of this Agreement. A second payment
of Fifty Thousand Dollars ($50,000) shall be made upon ground
breaking for the construction of the Hotel. The remaining
payment of Twenty Five Thousand Dollars ($25,000) shall be made
upon the issuance of a Certificate of Occupancy for the Hotel by
the applicable governmental authority. All payments hereof shall
be deemed earned at the time of payment.
8. REIMBURSABLE EXPENSES
Reimbursable Expenses are in addition to Compensation.
Reimburseable Expenses are actual expenditures made by SDI and
SDI's employees in the interest of the Project and the Work,
including but not limited to expenses for demographics,
preliminary site plans, application and submittal fees in
connection with zoning and permitting, miscellaneous office
expenses such as express mail and long distance calls, and
travel, meals and lodging expenses. Such expenditures shall not
exceed Seven Thousand Five Hundred Dollars ($7,500) except with
the written approval of Owner. SDI shall include its
Reimbursable Expenses in its Application for Payment described in
Section 5 above.
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9. INTEREST PAYMENTS
The rate of interest for past due payments required
hereunder shall be twelve (12%) percent per annum and shall begin
to accrue thirty (30) days after billing.
10. CONCEALED CONDITIONS
If concealed or unknown conditions of an unusual nature that
affect the performance of the Work and vary from those indicated
by the Contract Documents are encountered below ground or in an
existing structure other than the Work, which conditions are not
ordinarily found to exist or which differ materially from those
generally recognized as inherent in work of the character
provided for in this Agreement, notice by the observing party
shall be given promptly to the other party and, if possible,
before conditions are disturbed and in no event later than
twenty-one (21) days after first observance of the conditions.
11. CORRECTION OF WORK
SDI shall promptly cause the applicable contractor to
correct Work rejected by the Owner or known by SDI to be
defective or failing to conform to the Construction Documents,
whether or not fabricated, installed or completed.
12. TIME
(a) SDI shall provide its services as expeditiously as is
consistent with reasonable skill and care and the orderly
progress of design and construction.
(b) Time is of the essence of this Agreement.
(c) If SDI is delayed in the progress of the Project by
acts or neglect of the Owner, Owner's employees, third party
contractors, changes or additions ordered in the Work not caused
by the fault of SDI, labor disputes, fire, unusual delay in
transportation, adverse weather conditions not reasonably
anticipatable, unavoidable casualties, or other causes beyond
SDI's control, or by delay authorized by the Owner's pending
arbitration or another cause which the Owner and SDI agree is for
the amount of time caused by such delay or act of God, the
schedule for completion of the Work shall be reasonably extended.
13. ARBITRATION
(a) Claims, disputes and other matters in question between
the parties to this Agreement arising out of or relating to this
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Agreement shall be decided by arbitration in accordance with the
Rules of the American Arbitration Association then in effect
unless the parties agree otherwise. No arbitration arising out
of or relating to this Agreement shall include, by consolidation
or joinder or in any other manner, an additional person not a
party to this Agreement except by written consent containing
specific reference to this Agreement and signed by the Owner, SDI
and any other person sought to be joined. Consent to arbitration
involving an additional person or persons shall not constitute
consent to arbitration of a dispute not described therein or with
a person not named therein. This provision shall be specifically
enforceable in any court of competent jurisdiction.
(b) Notice of demand for arbitration shall be filed in
writing with the other party and with the American Arbitration
Association. The demand shall be made within a reasonable time
after the claim, dispute or other matter in question has arisen.
In no event shall the demand for arbitration be made after the
date when the applicable statute of limitations would bar
institution of a legal or equitable proceeding based on such
claim, dispute or other matter in question.
(c) The award rendered by arbitrators shall be final, and
judgment may be entered upon it in accordance with applicable law
in any court having jurisdiction.
(d) Unless otherwise agreed in writing, SDI shall carry on
the services and maintain progress during any arbitration
proceedings, and the Owner shall continue to make payments to SDI
in accordance with this Agreement.
(e) Any breach of any obligation under the Franchise
Agreement or default or other failure to comply with the terms
and conditions thereof by the Owner or party related to the Owner
shall automatically relieve SDI from its obligations hereunder.
The alternative dispute resolution provisions set forth in this
Section 13 shall not be applicable to disputes or defaults
arising under the Franchise Agreement. The provisions of the
Franchise Agreement shall control over contrary provisions herein
including the dispute resolution provisions in the Franchise
Agreement. Any default under this Agreement shall be deemed to be
a default under the Franchise Agreement.
14. TERMINATION OF THE AGREEMENT
(a) This Agreement may be terminated by either party upon
seven (7) days' written notice should the other party fail
substantially to perform in accordance with its terms through no
fault of the party initiating the termination. In the event of
termination SDI shall be paid for all of the Reimbursable
Expenses for which it is due pursuant to Sections 2, 3 and 8.
(b) In the event of termination not the fault of SDI, SDI
shall be paid all of the compensation described in Section 7
above in addition to the reimbursements required by Sections 2, 3
and 8 above.
(c) This Agreement may be terminated by SDI upon seven (7)
days notice if: (1) SDI recommends in its reasonable discretion a
site to Owner for purchase within a three mile radius of the area
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described by the Preliminary Agreement and Owner fails to approve
of such site, (2) after six (6) months from the date of this
Agreement SDI is unable despite reasonable efforts to locate a
site to recommend in its reasonable discretion for purchase by
Owner or (3) SDI is unsuccessful in an attempt to rezone or
obtain necessary variances or permits for a site. In the event
of any such termination by SDI, SDI shall be entitled to retain
any compensation previously paid and shall be entitled to be paid
any compensation then due and payable at the time of termination
as described in Section 7 above in addition to any "Reimburseable
Expenses" required by Sections 2, 3 and 8 above.
This Agreement shall terminate upon the completion of the
services described herein or upon the termination of the
Franchise Agreement, whichever is earlier.
15. MISCELLANEOUS PROVISIONS
(a) This Agreement shall be governed by the laws of the
State of Georgia.
(b) The table of contents and the headings of articles and
paragraphs are for convenience only and shall not modify rights
and obligations created by this Agreement.
(c) In case a provision of this Agreement is held to be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected.
(d) This Agreement shall be binding on successors, assigns
and legal representatives of any persons in privity of contract
with the Owner or SDI. Neither party shall assign, sublet or
transfer an interest in this Agreement without the written
consent of the other.
(e) This Agreement represents the entire agreement between
the Owner and SDI and supersedes prior negotiations,
representations or agreements.
(f) Except as may be expressly provided elsewhere herein to
the contrary, wherever in this Agreement there is required the
consent and/or approval of Owner or SDI to any action or proposed
action or to any performance by or on the part of Owner or SDI,
said consent and/or approval of Owner or SDI shall not be
unreasonably withheld and, if not given or denied for cause by or
before the expiration of ten (10) calendar days from the date of
request for said consent and/or approval by Owner or SDI, shall
be deemed given.
(g) All notices, requests, approvals, demands and other
communications required or permitted to be given under this
Agreement shall be in writing and shall either be mailed by
certified mail, return receipt requested or delivered by a
recognized courier service, receipt acknowledged. Any notice
complying with the provisions hereof shall be deemed to have been
duly given and to be effective three (3) business days after
mailing, or on the date of receipt, whichever is earlier.
Notices shall be addressed as follows:
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(a) If to SDI:
c/o David Krischer, President
120 Interstate North Parkway East
Building 100, Suite 120
Atlanta, Georgia 30339
(b) If to Owner:
c/o Michael McGovern
P.O. Box 420528
Atlanta, GA 30342
or such address as the party to whom the notice is sent shall
have designated.
(h) This Agreement may be executed in several counterparts,
each of which shall be an original, but all of which constitute
but one and the same instrument.
(i) Neither this Agreement nor any term or provision hereof
may be changed, waived, or discharged or terminated orally, but
only by an instrument in writing signed by the party against
which the enforcement of the change, waiver, discharge or
termination is sought. This Agreement may be amended only by an
instrument executed by both parties which expressly refers to
this Agreement.
(j) In providing and performing services pursuant to this
Agreement, SDI shall be acting as an independent contractor.
Nothing contained in this Agreement shall constitute or be
construed to be or create either a leasehold interest in the
Hotel or a partnership or joint venture between Owner and SDI.
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IN WITNESS WHEREOF, the parties have executed and caused
their seals to be affixed to this Agreement as of the day and
year first above written.
Witness As To Owner E.E.B. Lodging Systems II, LLC
"Owner"
[unreadable]
By: /s/ Michael McGovern
Michael McGovern
Title: Manager
Witness As To SDI SLA Development, Inc.
"SDI"
[unreadable]
By: /s/ David Krischer
Title: President
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