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DEVELOPMENT SERVICES AGREEMENT
CITY OF KALISPELL ("OWNER")
and
MONTANA HOTEL DEVELOPMENT PARTNERS, LLC ("DEVELOPER")
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TABLE OF CONTENTS
ARTICLE I. APPOINTMENT AND PROVISIONS APPLICABLE TO ALL SERVICES ......... 1
1.1
Appointment...........................................................................................................................1
1.2
Supervision and Direction.....................................................................................................1
1.3
Relationship; Authority ..........................................................................................................1
1.4
Contracts.................................................................................................................................. 2
1.5
Performance of Others..........................................................................................................2
1.6
Approvals.................................................................................................................................2
1.7
Personnel.................................................................................................................................2
ARTICLE II.
DEVELOPMENT SERVICES...........................................................................................3
2.1
Pre -Development Period.......................................................................................................3
2.2
Development Period.............................................................................................................. 3
2.3
Disbursements........................................................................................................................ 3
2.4
Changes to Plans.....................................................................................................................4
ARTICLE III. DEVELOPER FEES AND REIMBURSEMENTS.......................................................4
3.1
Pre -Development and Development Fee...........................................................................4
3.2
Reimbursement of Developer Expenses.............................................................................5
3.3
Late Payments......................................................................................................................... 5
ARTICLEIV.
TERM.......................................................................................................................................5
4.1
Term......................................................................................................................................... 5
4.2
Defaults....................................................................................................................................5
ARTICLEV.
MISCELLANEOUS..............................................................................................................8
5.1
Indemnification....................................................................................................................... 8
5.2
Insurance Policies...................................................................................................................
9
5.3
Attorneys' Fees........................................................................................................................9
5.4
Fair Interpretation................................................................................................................10
5.5
Captions.................................................................................................................................10
5.6
Notices...................................................................................................................................10
5.7
Invalidity ................................................................................................................................10
5.8
Governing Law, Jurisdiction & Law..................................................................................10
5.9
Grammar................................................................................................................................10
5.10
Assignment............................................................................................................................10
5.11
No Waiver..............................................................................................................................11
5.12
Confidentiality .......................................................................................................................11
5.13
Estoppel Certificate..............................................................................................................11
5.14
Further Assurances...............................................................................................................12
5.15
No Third Party Beneficiaries..............................................................................................12
5.16
Mutual Covenants Regarding Employees.........................................................................12
5.17
Survival...................................................................................................................................12
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EXHIBITS
The following Exhibits are made a part of this Agreement.
A Definitions
B Description of the Land
C Development Services to be Performed During Pre -Development Period
D Development Services to be Performed During Development Period
E Developer's & Owner's Insurance Requirements
F Development Budget
G Building
H Dispute Resolution Process
I Approved Drawing Log
DEVELOPMENT SERVICES AGREEMENT CITY OF KALISPELL AND MHDP, LLC
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DEVELOPMENT SERVICES AGREEMENT
AN AGREEMENT by and between:
"Owner" CITY OF KALISPELL
"Developer" MONTANA HOTEL DEVELOPMENT PARTNERS, LLC, a
MONTANA limited liability company.
BACKGROUND
A. The capitalized words and phrases used in this Background section and the other sections in
this Agreement are defined in Exhibit A.
B. The management of Developer is experienced in providing development services for projects
similar in size and complexity to the Project.
C. Owner and Developer entered into that certain Development Services Agreement dated as of
February 15, 2022 (the "Original Agreement").
ARTICLE I.
APPOINTMENT AND PROVISIONS APPLICABLE TO ALL SERVICES
1.1 Appointment. Owner engages Developer to perform the Developer Services and
Developer accepts the engagement, each pursuant to the terms and conditions of this Agreement.
Developer shall exert Commercially Reasonable Efforts in the performance of all Developer Services
and acknowledges that in the performance of the Developer Services it will be held to the
Commercially Reasonable Efforts standard.
1.2 Supervision and Direction. Owner has designated (i) Owner's Representative as its
representative to act as Developer's routine point of contact and interface with Owner and (ii) the
Project Accountant as the accountant for the Project and Developer's point of contact and interface
with respect to the construction accounting for the Owner. Should Owner desire to designate a
successor Owner's Representative or Project Accountant (in Owner's sole election), Owner shall
notify Developer of such successor in writing. Developer may rely, and is hereby authorized,
empowered and directed to rely, on the verbal or written directions, approvals and other
communications from Owner's Representative as the actions of Owner. Developer shall use
Commercially Reasonable Efforts to coordinate the performance of the Developer Services with
Owner's Representative and Project Accountant.
1.3 Relationship. Authority. Developer is an independent contractor retained by Owner
to perform the Developer Services. Developer has no power or authority to enter into, execute, make
or acknowledge any contract, covenant, agreement or representation pertaining to the Project in the
name of or on behalf of Owner except with respect to those matters for which Owner has expressly
authorized in writing Developer to enter into and execute pursuant to the terms hereof. Developer
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shall represent Owner in the day-to-day administration and coordination of the development and
construction of the Project, the Professionals and Operator during the Term in accordance with the
terms hereof.
1.4 Contracts. Contracts that are contemplated to be executed in connection with the
Project include, without limitation, contracts with the General Contractor, Construction project
manager, architects, engineers, and similar Professionals, however, the Owner shall cooperate in
procuring agreements with Governmental Authorities related to the Project with the advice and
assistance of Developer. Developer shall propose to Owner for Owner's approval the parties to be
engaged under any and all such contracts. Developer shall use Commercially Reasonable Efforts in
the negotiation and document of such contracts. Any such contracts shall be in the name of Owner
and may be executed by Developer on behalf of Owner except pursuant to Section 1.3 above. The
form and substance of such contracts, and the actual contractors selected, shall be subject to the prior
review and approval of Owner, in its sole discretion, and shall be executed by the Owner. All costs
incurred under such contracts shall be included within the definition of "Project Costs" or paid
separately by Owner. The Construction Contract, construction project management contract,
architectural contract and any other Contract shall acknowledge the role of Developer in the Project
pursuant to the terms of this Agreement and shall thereby authorize each party thereto to rely upon
the directions of the Developer as the authorized agent of the Owner pursuant to each such
agreement.
1.5 Performance of Others. Developer is not guaranteeing or warranting the performance
of the Professionals, or others employed, engaged or retained by Owner in connection with the
Project; however, Developer will (a) recommend and investigate Persons intending to contract with
Owner as contemplated by this Agreement, (b) as contemplated hereby, during the Term, supervise
(on -site), coordinate and evaluate the performance of the Operator and Professionals under their
respective contracts with Owner, and (c) coordinate the design, construction, development and
equipping of the Project to provide for (i) substantial conformity with this Agreement, the
Construction Contract, the Construction Documents, Governmental Authorizations, Governmental
Requirements, any and all Project financing, the Project Budget, the Project Schedule, and
Restrictions, and (ii) the efficient, economic and effective management of the Project and the
interaction of the Professionals and Operator with other Persons involved with the Project.
1.6 Approvals. All approvals required to be made by Owner under this Agreement, unless
otherwise provided in this Agreement, must be in writing and approved by Owner (and, if necessary
pursuant to the Decision Procedure, by Operator) pursuant to the Decision Procedure.
1.7 Personnel. Developer shall at all times supply sufficient experienced personnel,
organization and management which are necessary to carry out the requirements of this Agreement
and shall provide Owner with a staffing chart, listing the personal and professional details of such
personnel. Developer covenants to cooperate with Owner, Master, and contractors in furthering the
interests of Owner. Developer shall use Commercially Reasonable Efforts to ensure the efficient
administration of the Project and supervision of the Professionals and other contractors and persons
in their performance of the required work and services, and to cause all work on the Project to be
performed in an expeditious and economical manner in accordance with the requirements of this
Agreement and in all respects consistent with the interests of Owner, the Project Budget, the Design
Development Plan and the Construction Documents. All persons employed or engaged by Developer
in connection with the Development Services to be rendered by Developer to Owner hereunder shall
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be Developer's employees or independent contractors, as applicable, and shall not be the employees
or agents of Owner, and Developer shall be solely responsible for the salaries of Developer's
employees and any employee benefits. Developer shall not utilize any employee or independent
contractor on the Project if Owner complies with the Decision Process and thereby requests in writing
that such employee or independent contractor not be so utilized. In performing Developer's duties
and obligations under this Agreement, Developer agrees it will comply with all laws, rules and
regulations applicable to Developer and this Agreement and will not refuse any employee because of
race, color, religion, national origin, sex, marital status or physical disability.
ARTICLE II.
DEVELOPMENT SERVICES
2.1 Pre -Development Period. Developer shall use Commercially Reasonable Efforts to
perform the Pre -Development Period Developer Services described on Exhibit H during the Pre -
Development Period, which Pre -Development Period Developer Services shall be performed in
accordance with the Development Budget attached hereto as Exhibit F.
2.2 Development Period. Developer shall use Commercially Reasonable Efforts to
perform the Developer Services described on Exhibit D during the Development Period, which
Developer Services shall be performed in accordance with the Project Budget and which period shall
not commence until the Project Budget has been finalized pursuant to Exhibit H.
2.3 Disbursements.
2.3.1 Status Reports, Requisition and Disbursement Procedures. On or about the
first (15) Business Day of each month, Developer will assemble and submit to Owner: (i) a
monthly status report, which will include (a) an executive summary of the status of the Project,
(b) an updated Project schedule, (c) contingency log, (d) change order and potential change
order log, (e) Project cost projection, (f submittal log and (g) request for information log, and
(ii) a requisition package prepared as of the last day of the prior month containing (a) during
the Development Period, the request for payment submitted by the General Contractor and
approved by the Architect, (b) during the Development Period, unconditional lien waivers
executed by the General Contractor and all material subcontractors and materialmen covering
all payments to them through the previous month's disbursement and conditional lien waivers
executed by the General Contractor and all material subcontractors and materialmen covering
all payments to them through the requested disbursement, (c) invoices from the other
Professionals, (d) invoices for any other Project Costs then due to third Persons and fees due
Developer under Section 3 hereof, and (e) an invoice for reimbursement of any other Project
Costs then due to Developer. The requisition package, together with all demands for payment
and draw requests, shall be made on a form of draw request agreed to by Owner, Lender and
Developer.
2.3.2 Analysis of Requisition. Developer will investigate and analyze the
information to be submitted to Owner as part of the requisition package pursuant to
Section 2.3.1 above and shall prepare and report its findings to Owner concurrently with the
delivery of the requisition package as to (a) the propriety of the amounts requisitioned under
the Construction Contract or any other applicable agreement or invoice and the identification
of any requisitioned amount which Developer recommends be excluded, if any, whether in
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whole or in part, from the Disbursement so requested; (b) any material variances between the
actual costs and budgeted costs in each line item category of the Project Budget; (c) material
variances between the Disbursements and the Project Draw Schedule for the Construction
Contract; (d) any line item or cost category of the Project Budget which will be materially
exceeded by the aggregate of past Disbursements in that category and the currently
requisitioned Disbursement or which Developer expects will be materially exceeded by future
requisitions; (e) a course of action to be taken by reason of the overages described in clauses
(b) or (d); (0 savings achieved in line items of the Project Budget where the work performed
or the materials supplied or the item is complete or completely known; (g) the conformity of
the Project to the Project Schedule; and (h) a course of action to deal with delays encountered
from the Project Schedule.
2.3.3 Payment of Disbursements. Owner will authorize the requisitioned amounts
within ten (10) calendar days after delivery of the requisition package pursuant to Section 2.3.2.
If Owner requests revisions to the requisition package or additional information relating to
the request for payment within such ten (10) calendar day period, then Developer will provide
satisfactory revisions or additional information to Owner, and Owner will pay the
requisitioned amounts into the Account within five (5) Business Days after receipt of such
revisions or additional information or the expiration of such ten (10) calendar day period,
whichever is later. Promptly upon payment by Owner of the requisitioned amounts into the
Account, Developer will make the payments described in the requisition package to the
appropriate person or entity from the Account. Developer has no obligation to make any
payments which Owner has not funded into the Account. The mechanics of the
disbursements are subject to any disbursing requirements of Lender for the Project.
2.3.4 Developer shall coordinate with Lender on all draw requests, subject to
approval by Owner.
2.4 Changes to Plans. If at any time Owner, Developer, or any Professional desires a
change in the Design Development Plans or Construction Documents, Developer will submit such
change request to Owner for Owner's review and approval. If such change request is approved by
Owner, Developer will cause, if necessary, the Professional to prepare a change order proposal stating
the increase or decrease, if any, in the Project Budget. Developer will review, analyze and advise Owner
with respect to such change orders and, except as provided below, no such change order shall be
implemented without Owner's prior written approval. Subject to the provisions of the Management
Contracts, Developer will cause each Professional to act in accordance with any applicable change
order initiated or approved by Owner. Notwithstanding the foregoing, Owner approval shall not be
required for any change provided that such change (i) does not increase the Project Budget, (ii) does
not extend the projected date of Substantial Completion, (iii) is not a structural change, (iv) does not
require approval from Operator; and (v) does not require approval from Lender.
ARTICLE III.
DEVELOPER FEES AND REIMBURSEMENTS
3.1 Pre -Development and Development Fee.
3.1.1 During the Pre -Development Period, Developer shall be paid a pre -
development fee (the "Pre -Development Fee") of Fifty Thousand Dollars ($50,000) per
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month on or before the fifteenth (15th) day of each calendar month during the Pre -
Development Period, with the final Pre -Development Fee payment being made by the
fifteenth (15th) day of the first month during the Development Period. The monthly Pre -
Development Fee may be prorated in the event of partial months. No Pre -Development Fee
shall accrue during the Development Period and the amount of the Pre -Development Fee
paid to Developer shall be credited against the Development Fee paid in accordance with
Section 3.1.2.
3.1.2 During the approved Development Period, as identified in the Exhibit F,
Owner shall pay Developer a development fee (the "Development Fee") in the amount of
five percent (50/6) of Project Costs. The Development Fee shall be payable in equal monthly
installments based on the amount of the Project Costs in Exhibit F divided equally over the
Development Period, or as otherwise may be required by Lender.
3.2 Late Payments. All payments due to Developer under this Section 3 shall be paid
within the time periods set forth in Section 2.3.3 above. Any payments not made within such time
frames shall thereafter include a late fee in an amount equal to two percent (21/6) of the payment
amount and, if such payment is more than thirty (30) days past due, shall also bear interest at twelve
percent (129/6) per annum from the date so past due until paid.
ARTICLE IV.
TERM
4.1 Term. Unless earlier terminated pursuant to the terms of this Agreement, the
Developer Services under this Agreement shall be for a term beginning upon the Agreement Date and
ending on Project Close -Out (the "Term").
4.2 Defaults.
4.2.1 Events of Default. The term "Event of Default," as used herein, shall mean
the occurrence or happening, at any time and from time to time, of any one or more of the
following:
4.2.1.1 if (i) Developer shall institute proceedings of any nature under the
Federal Bankruptcy Code, or any similar state or Federal law now or hereafter in effect
for the relief of debtors, effect a general assignment for the benefit of creditors or
admit in writing that it is unable to pay its debts as they mature; or (ii) there be
instituted against Developer a proceeding under any section or chapter of the Federal
Bankruptcy Code, or any similar Federal or state law now or hereafter in effect for the
relief of debtors, which proceeding is not dismissed or discharged within a period of
sixty (60) days after the filing thereof;
4.2.1.2 if there shall be an attachment, execution or other judicial seizure of (i)
all or any substantial part of the assets of Developer; or (ii) Developer's interest under
this Agreement, such attachment, execution or seizure remaining undismissed or
undischarged for a period of sixty (60) days after levy thereof;
4.2.1.3 if either (i) there shall occur any default in performance of, or failure
to comply with, any agreements, obligations or undertakings of Developer set forth in
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this Agreement, which default or failure continues for ten (10) days following the date
of written notice thereof given by Owner, provided that, as to non -monetary defaults
not susceptible to cure within such ten-day period, the period of cure shall be extended
to the extent necessary to achieve the cure so long as Developer (1) commences to
cure within the ten-day period; (2) at all times thereafter diligently pursues the cure;
and (3) in any event effects the cure within thirty (30) days following notice of the
failure; or (ii) any representation or warranty of Developer set forth herein is
determined to be false, misleading or erroneous when given and Developer has not
caused such representation or warranty to become true within ten (10) days following
the date of written notice thereof given by Owner;
4.2.1.4 If (i) Developer or any of its members, managers, principals, directors,
officers, shareholders, general partners, or employees, shall have engaged in fraud,
embezzlement, or gross negligence; or (h) Developer shall have (1) forfeited any
license necessary to conduct Developer's, Owner's, or any Affiliate's (of either
Developer or Owner) business in connection with the performance of this Agreement;
or (2) dissolved or otherwise ceased to exist; and/or
4.2.1.5 If Robert Watson, John Costa and/or Bill Goldberg are no longer
involved in the day-to-day management of Developer.
4.2.2 Rights Upon Developer Default. Upon the occurrence of any Event of
Default by Developer under Section 4.2.1.3, the Owner shall pursue the Dispute Resolution
Process set forth on Exhibit H attached hereto, and if such process is unsuccessful in resolving
such Event of Default to the Owner's satisfaction or upon the occurrence of any Event of
Default other than under Section 4.2.1.3, then Owner shall be entitled to do any or all of the
following: (a) cause the termination of this Agreement and the Profits Interest Agreement by
giving written notice to Developer setting forth the Event of Default that exists and the
effective date of such termination (without prejudice to any claims which Owner may have
against Developer); and (b) subject as provided below, exercise each and every other right or
remedy available to Owner with respect to such Event of Default under this Agreement
and/or the Profits Interest Agreement, at law or in equity. On the effective date of such
termination, this Agreement and the Profits Interest Agreement shall be of no further force
or effect and the parties shall have no further rights or obligations hereunder, except for (i)
those obligations expressly set forth in this Agreement and the Profits Interest Agreement to
survive termination hereof; and (ii) any claims Owner may have against Developer. In
addition, if a dispute exists between Owner and Developer as to whether an Event of Default
by Developer exists, Owner shall be permitted to suspend or replace Developer pending
resolution of such dispute. During the pendency of such dispute, Developer would retain the
right to accrue additional fees until the dispute is finally resolved, provided that it is determined
that an Event of Default did not occur.
4.2.3 Owner's Default. Owner shall be in default under this Agreement (an
"Owner's Default") if (i) Owner shall fail to pay to Developer any portion of the
Development Fee, as set forth in the Project Budget, which is not then the subject of a good
faith bona fide dispute between Owner and Developer, within twenty (20) days after such
payment shall be due and payable under this Agreement, provided that Developer shall notify
Owner in writing at the end of such 20 day period that such payment has not been made and
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Owner shall thereafter fail to make such payment for more than ten (10) days after receiving
such notice, or (ii) there shall occur any default in performance of, or failure to comply with,
any agreements, obligations or undertakings of Owner set forth in this Agreement, which
default or failure continues for ten (10) days following the date of written notice thereof given
by Developer, provided that, as to non -monetary defaults not susceptible to cure within such
ten-day period, the period of cure shall be extended to the extent necessary to achieve the cure
so long as Owner (1) commences to cure within the ten-day period; (2) at all times thereafter
diligently pursues the cure; and (3) in any event effects the cure within sixty (60) days following
notice of the failure. Upon the occurrence of an Owner's Default under item (ii) above, the
Developer shall pursue the Dispute Resolution Process set forth on Exhibit H attached hereto,
and if such process is unsuccessful in resolving such Owner's Default to the Developer's
satisfaction or if such Owner's Default is not related to item (ii) above, then Developer shall
be entitled to terminate this Agreement by giving Owner at least five (5) Business Days' prior
written notice thereof, which notice shall set forth the termination date (which shall not be
more than ten (10) days after the delivery of such notice), and unless Owner shall have cured
such Owner's Default prior to such termination date (in which event such termination notice
shall be null and void and this Agreement shall continue in full force and affect), this
Agreement shall terminate on such termination date without any further action by the parties.
In addition, upon such termination, Owner shall pay Developer any and all amounts due
hereunder that have been earned by Developer through the date of termination, including
without limitation (i) Developer's out-of-pocket expenses incurred in accordance with Section
3_2 above (ii) that portion of Pre -Development Fee and Development Fee, if any, that has
accrued through the date of such termination, and (iii) any amounts that be due or may become
due under the Profits Interest Agreement. In the event of such termination, the parties shall
have no further rights or obligations hereunder, except those obligations expressly set forth in
this Agreement to survive termination hereof.
4.2.4 Effect of Termination. If Owner or Developer shall terminate this Agreement
as permitted under this Article IV, Developer shall (a) immediately after the effective date of
such termination, return to Owner all design documents and all other documents and/or
information pertaining to the Project in Developer's possession or control, which obligation
shall survive the termination of this Agreement; and (b) use all necessary efforts to cooperate
with, and assist, Owner in the prompt and diligent transition of Developer's duties and
obligations under this Agreement to Owner or any person or entity designated by Owner that
will assume such duties and obligations, which obligation shall survive the termination of this
Agreement for a reasonable time thereafter but Developer has no obligation to incur any cost
or expenses in connection with same.
4.2.5 Owner's Limitation of Liability. Notwithstanding any provisions in this
Agreement to the contrary, the aggregate liability of Owner under this Agreement is limited to
Owner's ownership interest in the Project, and is non -recourse to any and all officers,
managers, directors, members, partners, or shareholders of Owner.
4.2.6 Accounting. Developer will assist the Project Accountant in performing all
accounting functions for the Project during the portion of the Term through Project Close -
Out. In the event of termination or expiration of this Agreement, Developer will, within ten
(10) Business Days after the termination or expiration is effective:
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4.2.6.1 at Owner's cost, deliver to Owner all Project records and documents
in Developer's possession or control (including computer records and operational
programs in a format usable by Owner, together with any required licenses);
4.2.6.2 promptly remove from the Project all property owned or leased by
Developer (other than any property the cost of which was reimbursed or paid for by
Owner) and repair any damage caused by such removal;
4.2.6.3 leave the areas of the Project occupied by Developer in a neat and
orderly condition; and
4.2.6.4 promptly remove all of Developer's employees and agents and vacate
the Project.
ARTICLE V.
MISCELLANEOUS
5.1 Indemnification.
5.1.1 Subject to the provisions set forth in Section 5.1.3 below, to the fullest extent
permitted by law, Owner shall, and does hereby, indemnify, defend, protect and hold harmless
Developer and Developer's partners, officers, directors, shareholders, members, owners,
professional advisors, agents and employees, and each of their respective successors and
assigns, from and against any and all claims, demands, actual damages, actual losses, lawsuits
and other proceedings, judgments, causes of action, liabilities, claims of lien, liens, civil or
criminal penalties and charges, costs and expenses (including, without limitation, reasonable
attorneys' fees and costs) (collectively, "Claims") arising by reason of any action taken or
omitted to be taken pursuant to this Agreement by Owner or its respective partners, officers,
directors, shareholders, members, owners, professional advisors, agents and employees, and
each of their respective successors and assigns, or otherwise arising from or related to the
Project, except for Claims for which Developer has released pursuant to Section 5.1.2 below.
All costs and expenses incurred by Owner in performing its obligations under this Section 5.1
shall be at Owner's sole cost and expense. The indemnity provided for in this Section 5.1.1
shall not apply to the extent of any liability resulting from the fraudulent acts, willful
misconduct or grossly negligent acts or omissions of the Developer. This section is not
intended to relieve and does not relieve the Developer from its obligation to ensure that all
facets of the construction project subject to this agreement fully comply with all building and
design standards applicable to construction projects conducted within the City of Kalispell,
Montana.
5.1.2 Subject to the provisions set forth in Section 5.1.3 below, to the fullest extent
permitted by law, Developer shall indemnify, defend, protect and hold harmless Owner and
Owner's partners, officers, directors, shareholders, members, owners, professional advisors,
agents and employees, and each of their respective successors and assigns, from and against
any and all Claims arising out of or resulting from (a) Developer's grossly negligent acts, fraud,
or willful misconduct, or (b) an Event of Default by Developer as determined by the final
judgment or determination of a court or an arbitrator. All costs and expenses incurred by
Developer in performing its obligations under this Section 5.1.2 shall be at its own expense.
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The indemnity provided for in this Section 5.1.2 shall not apply to the extent of any liability
resulting from the fraudulent acts, willful misconduct or grossly negligent acts or omissions of
the Owner.
5.2 Insurance Policies. Developer and Owner will obtain and purchase within 30 days
after the Agreement Date, and thereafter maintain all of the insurance described in the attached
Exhibit E (the cost of all such insurance shall be paid as a Project Cost in accordance with the
Disbursement provisions of this Agreement). Liability insurance policies may be maintained as a
Project Cost for at least one (1) year following Project Close -Out. Each of Developer and Owner
shall (i) add the other as additional insured to each of such insurance policy, and (ii) furnish the other
evidence of such insurance coverage.
5.3 Attorneys' Fees. In the event any Party shall bring legal action or mediation under the
dispute resolution provisions of Exhibit H for the breach of or to enforce or interpret this Agreement,
the substantially prevailing party (after a final non -appealable judgment or final ruling of the arbitrator)
shall be entitled to reasonable attorneys' fees, expenses and court costs.
5.4 Fair Interpretation. This Agreement has been carefully reviewed and negotiated by all
parties and shall be given fair and reasonable interpretation in accordance with the words contained
in it without any weight being given to whether a provision was drafted by one party or its counsel.
5.5 Captions. The descriptive headings of the sections of this Agreement are inserted for
convenience only. They are not intended to and shall not be construed to limit, enlarge, or affect the
scope or intent of this Agreement or the meaning of any provision of it. Obligations of the parties
set forth in the definitions appearing on Exhibit A shall have the same force and effect as though set
forth in another Section of this Agreement.
5.6 Notices. All notices, demands, statements, approvals, acceptances and
communications ("Notices") required under this Agreement shall be in writing and, if intended for
Owner, shall be addressed to Owner at the address set forth opposite Owner's signature; and if
intended for Developer, shall be addressed to the Developer at the addresses set forth opposite
Developer's signature, or to such other address as such party may by written notice, given in
accordance with this Section 5.6, advise the other parties. Only if the Notice is service of any
summons or legal process, a notice of breach or default, or a demand for performance must such
Notice be sent to counsel designated to receive a copy opposite Developer's or Owner's signature.
Any such written notice, request, demand, claim or other communication hereunder shall be sent by
(i) personal delivery (including receipted courier service) or overnight delivery service, with
confirmation of receipt, (ii) facsimile or by electronic email transmission with confirmation of receipt
to the number or email address indicated, (iii) reputable commercial overnight delivery service courier,
with confirmation of receipt, or (iv) registered or certified mail, return receipt requested, postage
prepaid and addressed to the intended recipient as set forth herein. All such notices, requests, consents
and other communications shall be deemed to have been given (i) if sent by personal delivery
(including receipted courier service) or overnight delivery service, on the next business day, (ii) if sent
by facsimile or by electronic email transmission, on the day sent, (iii) if sent by reputable commercial
overnight delivery service courier, on the next business day, and (iv) if sent by registered or certified
mail, three business days following deposit with the U.S. Postal Service. Either party may change its
email address, facsimile number or its address to which notices, requests, demands, claims and other
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communications hereunder are to be delivered by giving the other parties hereto notice in the manner
then set forth.
5.7 Invalidiiy. In case any one or more of the provisions contained in this Agreement
shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been contained herein.
5.8 Governing Law.- jurisdiction & Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by and construed and enforced in accordance with the laws of
the state of Montana, regardless of its the conflict of laws principles. The parties consent to the
jurisdiction of the courts of Flathead County in the State of Montana, in the event of any litigation
arising out of this Agreement. By execution and delivery of the Agreement, Owner and Developer
irrevocably accept and submit to, for themselves and, subject to the terms and conditions of Sections
4.2.2 and 4.2.3 above and the Dispute Resolution Process set forth on Exhibit H, in respect of their
property, generally and unconditionally, the nonexclusive jurisdiction of any such court, and to all
proceedings in such courts. In addition to any method provided by applicable law, the parties each
irrevocably consent to service of any summons or legal process or both by registered or certified
United States mail, postage prepaid, to such party's address set forth at the end of this Agreement,
such method of service to constitute, in every respect, sufficient and effective service of process in
any such legal action or proceeding. Nothing in this Agreement or elsewhere shall affect either party's
right to serve process in any other manner permitted by law or limit the right of either party to bring
actions, suits or proceedings in the courts of any other jurisdiction. To the extent not prohibited by
law, the parties agree that final non -appealable judgment in any such legal action, suit or proceeding
shall be conclusive and may be enforced in any other jurisdiction, within or outside the United States
of America, by suit on the judgment. A certified or exemplified copy of the final judgment shall be
conclusive evidence of the fact and the amount of the liability. OWNER AND DEVELOPER
EACH HEREBY KNOWINGLY, INTENTIONALLY, FULLY AND IRREVOCABLY
WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT.
5.9 Grammar. The word "including" or derivatives thereof shall be deemed to mean
"including, but not limited thereto." As the context requires the singular shall include the plural
and the plural shall include the singular, and references to any one gender shall include each other
gender.
5.10 Assignment.
5.10.1 Except as provided herein, neither Developer nor Owner shall assign this
Agreement in whole or in part or delegate or subcontract its duties under this Agreement
without the prior approval of the other, which consent may be granted, withheld or
conditioned in the reasonable discretion of the Party whose consent is requested.
5.10.2 Notwithstanding the provisions of Section 5.10.1., Owner shall have the right
to collaterally assign and grant a security interest in all of Owner's right, title and interest in, to
and under this Agreement to any third -party lender or mortgages which shall provide to
Owner debt financing for the development, design, construction or operation of the Project,
or otherwise related thereto. Developer hereby (a) consents to any such assignment,
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(b) acknowledges and agrees that Developer's right, title and interest in, to and under this
Agreement shall be at all times subordinate, inferior and subject to the lien of any and all
present and future third -party mortgages, deeds of trust, financing statements and security
agreements affecting or encumbering all or any portion of the Project and any and all renewals,
extensions, modifications or reinstallations thereof, and (c) acknowledges and agrees that
Developer will, if requested by Owner, sign, deliver and record in the official records of the
county in which the Land is located any agreement or instrument reasonably requested by
Owner which evidences (i) the consent to any assignment as set forth in Section 5.10.1. above
and this Section 5.10.2., (ii) the subordination of Developer's right, title and interest in, to and
under this Agreement to the lien of any third -party mortgages, deed of trust, financing
statement or security agreement, and (iii) Developer's agreement, in the event any third -party
lender or mortgages which provides funds for the development, design, construction or
operation of the Project, or otherwise related thereto, succeeds to the rights of Owner in the
Project by foreclosure, deed in lieu of foreclosure or otherwise, to attorn to such lender or
mortgages and recognize such lender or mortgages as the successor to Owner hereunder,
provided such successor to Owner agrees to be bound by the terms and conditions of this
Agreement and agrees to pay to Developer all past due amounts due to Developer at the time
of such assumption hereunder.
5.11 No Waiver. The failure of any party to seek redress for violation, or to insist upon
strict performance, of any covenant, agreement, provision or condition of this Agreement shall not
constitute a waiver of such violation, act or omission.
5.12 Confidentiality. Developer and Owner will keep the specific terms of this Agreement
confidential and not disclose same to any third party. The prohibitions set forth in the preceding
sentence shall not apply to information which: (i) as to all economic, marketing, and financial
information, is or becomes generally available to the public other than as a result of a disclosure by
the party bound hereunder; or (h) is required to be disclosed by law or by regulatory or judicial process.
Each party has the right to disclose information to its actual and prospective partners, investors,
shareholders, members, officers, principals, employees, lenders, attorneys, accountants, agents,
advisors, developers and other Persons acting for or on behalf of such party, each with a reasonable
need -to -know such information, provided such party shall inform each Person that receives any of
the confidential information of the requirements of this Agreement. In addition to the foregoing,
Developer and Owner agree to comply with the confidentiality provisions and pre -approval of any
marketing or press statement provisions of any letter of intent for hotel management, and any
Management Contracts and any other confidentiality, disclosure or public statement limitations
contained in any other documents with Operator, whether or not such letter of intent or Management
Contracts have been executed or are in draft form between Owner or Operator.
5.13 Estoppel Certificate. Any party, at any time and from time to time, but no more than
four (4) times per calendar year, will, within ten (10) days after any other parry's written request,
execute, acknowledge and deliver to the requesting party or its designee without charge an estoppel
certificate pursuant to which such party shall certify (a) that this Agreement is unmodified and in full
force and effect (or, if there shall have been modifications, that the same is in full force and effect as
modified and stating any such modifications or a copy of the agreement, as so modified being attached
thereto), (b) the dates through which the Development Fee have been paid and the amount of the
Development Fee which have been paid, (c) whether or not, to the Knowledge of such party, any
party hereto is in default of its obligations hereunder and, if so, specifying each such default,
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(d) whether, to the Knowledge of such party, there exists any condition or circumstance which, with
the passage of time or the giving of notice or both, would constitute an Event of Default hereunder,
and (e) such other information as the requesting party or its designee may reasonably request, it being
intended that any such estoppel certificate delivered pursuant to this Section 5.13 may be relied upon
only by a prospective assignee of the requesting party's interest in Owner or the Agreement, as the
case may be, or any prospective mortgagee of Owner's interest in the Project.
5.14 Further Assurances. Each party hereto shall, from time to time, execute, deliver and
furnish such documents as any other party may reasonably deem necessary or desirable to (a) correct
any scrivener errors which may be contained in this Agreement or (b) consummate fully the
transactions contemplated under this Agreement.
5.15 No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties
hereto and their successors and assigns permitted under this Agreement, and no provisions of this
Agreement shall be deemed to confer upon any other person any remedy, claim, liability,
reimbursement, cause of action or other right.
5.16 Mutual Covenants Regarding Employees. Each party hereto covenants and agrees
with the others that for a period ending upon the earlier of the completion of the construction of the
Project, such party, and its Affiliates, will not hire or engage, or solicit the hiring or engagement of,
any current or future employee of the other party.
5.17 Survival. Notwithstanding the expiration or earlier termination of this Agreement, the
rights and obligations of either party expressly accruing or earned prior to the expiration or termination
of this Agreement under Section 2, Section 3, Section 5.1. Section 5.3. Section 5.8 and Section 5.12
shall survive such expiration or termination.
[Signature Pages Follow.]
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Designated Address for Developer:
Montana Hotel Development Partners,
LLC
208 1 st Ave E
Kalispell, Montana. 59901
Attention: Robert Watson
Email: rwatson@bondpartners.us
Designated Address for Owner:
City of Kalispell
201 1 st Ave E
Kalispell, MT 59901
Attention: Doug Russell
Email: cityrmanager,kalis eln l.com
Developer:
MONTANA HOTEL DEVELOPMENT
PARTNERS, LLC
a Montana limited liability company
By: Bond Partners, LLC, Member
a Delaware limited liability company
dodoop verified I
7 03/16/22 10:29 AM PDT
By:
WNMP•OWEA-61A3-X2P�
Name: Robert Watson
Its: Chief Executive Officer
Owner:
CITY OF KALISPELL
By:
ou ssell
DEVELOPMENT SERVICES AGREEMENT BURP, LLC and MHDP, LLC
Signature Page
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EXHIBIT A
DEVELOPMENT SERVICES AGREEMENT
Definitions
For purposes of the Agreement to which this is an exhibit, the terms underlined in the sections
of this exhibit shall have the meaning set forth next to the underlined term.
AAA. Defined in Section (9) of Exhibit H.
Account. An interest -bearing account to be established by Owner prior to the expiration of
the Pre -Development Period at a bank satisfactory to Owner, in the name of Developer (unless
required by lenders to be in Owner's name), as agent for Owner. A representative of Owner and a
representative of Developer shall each have signature authorization on the Account.
Affiliate. Any Person that directly or indirectly, through one or more intermediaries, controls,
is controlled by, or is under common control with the Person in question. As used in this definition
of "Affiliate," the term "control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether through ownership of
voting securities, by contract or otherwise.
AUe� em ent. This Development Services Agreement, its Exhibits and any written amendments
to this Agreement or Exhibits that may be executed from time to time by Owner and Developer.
Agreement Date. This Agreement is dated effective as of February 15, 2022. Each party
authorizes the endorsement of such date for administrative reference in the space provided in the
heading of this Agreement.
Architect. To be selected thru RFP process
Authorized Individuals. Defined in Section (3) of Exhibit H.
Building. Defined in Exhibit G.
Business Days. Monday through Friday of each calendar week, exclusive of federal bank
holidays.
Claims. Defined in Section 5.1.
Commercially Reasonable Efforts. The highest level of professional care, skill, judgment and
diligence commensurate with that practiced by Persons regularly performing services of the type in
connection with which this term is employed.
Concept Drawings. Defined in paragraph 5(a) of Exhibit C.
Construction Contract. The guaranteed maximum price, construction contract for
construction of the Project executed or to be executed by and between Developer and General
Contractor, as it may be amended pursuant to its terms.
EXHIBIT A TO DEVELOPMENT SERVICES AGREEMENT City of Kalispell and MHDP, LLC
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Construction Documents. Defined in paragraph 11(d) of Exhibit C. The term Construction
Documents shall include any changes or revisions to them authorized under Section 2.5 hereof.
Decision Procedure. Except as expressly provided otherwise herein, whenever under this
Agreement an approval or consent is required, the party asked to give consent shall respond to a
request for such approval or consent within seven (7) Business Days after receipt of such request,
except for Construction Documents, which shall be within sixty (60) Calendar Days for the initial
review of Construction Documents for all required city review or within fifteen (15) business days for
all other document review thereafter. All approvals and consents requested or to be obtained pursuant
to this Agreement shall, except to the extent expressly provided otherwise in this Agreement by
reference to "sole discretion", be subject to a reasonableness standard and shall not be unreasonably
withheld, conditioned or delayed. If the party from who consent is sought does not approve in writing
or provide written comments or corrections to the other party within such required responses
described above„ as applicable, the party seeking consent shall send an additional notice, which shall
contain the following language at the top of the notice: "URGENT NOTICE: YOUR RIGHTS
MAY BE IMPAIRED BY OUR FAILURE TO RESPOND". If the party from who consent is
sought fails to respond to such urgent notice within two (2) Business Days, the materials submitted
or approvals requested shall be deemed to be disapproved. Any disapprovals (except deemed
disapprovals) shall be accompanied by the specific objections and/or required changes necessary for
approval. The party requesting the approval may then provide a second submittal clearly indicating
that it constitutes a "second submittal", and that the failure to respond within seven (7) Business Days
to the second submittal shall be deemed an approval. The receiving party shall have seven (7) Business
Days following any such second submittal in which to approve in writing or provide written comments
or corrections. If such party fails to approve in writing or provide written comments or corrections
within such seven (7) Business Day period, the submitted materials or requested approvals shall be
deemed disapproved.
Design Development Plans. Defined in paragraph 11(c) of Exhibit C. The term Design
Development Plans shall include any changes or revisions to them authorized under Section 2.5.
Developer. Identified on the first page of this Agreement.
Developer Services. The services to be performed by Developer under this Agreement.
Development Fee. Defined in Section 3.1.
Development Period. The time period (a) beginning with the closing of the Owner's financing
for the Project, and (b) ending on Project Close -Out.
Disbursement(s). Payments of Project Costs made in accordance with this Agreement.
Dispute. Defined in Section (1) of Exhibit H.
Event of Default. Defined in Section 4.2.1.
Force Majeure Event. Any "Act of God", labor dispute, governmental pre-emption of
property, public emergency, shortages of fuel, supplies or labor, or any other cause beyond
Developer's reasonable control. Economic hardship of or suffered by a party shall not constitute a
Force Majeure Event.
EXHIBIT A TO DEVELOPMENT SERVICES AGREEMENT City of Kalispell and MHDP, LLC
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General Contractor. The general contractor selected to construct the Project, and any general
contractor who replaces or supplements the work of such general contractor. General Contractor will
be chosen thru and RFP process.
Governmental Authorities. Any and all federal, state, county, parish, city, town, other
municipal corporation, governmental or quasi -governmental board, agency, authority, department or
body having jurisdiction over the Land or the Project.
Governmental Authorizations. The permits, variances, approvals and other actions which
under Governmental Requirements applicable to the Project have been or must be issued, granted, or
taken by Governmental Authorities in connection with the Project.
Governmental Requirement(sl. Building, zoning, site planning, drainage and water detention,
water quality, subdivision, traffic, parking, land use, environmental, occupancy, health, accessibility for
disabled, low-income housing and all other applicable laws, statutes, codes, ordinances, rules,
regulations, requirements, and decrees, of any federal, state, county, parish, municipal or other
governmental or quasi -governmental authority, or agency regarding (i) the Project or any portion
thereof, (ii) the use and operation of the Project for its intended purpose, or (iii) if the context of the
sentence establishes this term is being used in connection with a different subject than those described
in clauses (i) or (ii), then the subject matter described in the section in which the term is used. This
term shall include the conditions or requirements of Governmental Authorizations.
Hazardous Substances. The term includes (a) any chemical, material, element, compound,
solution, mixture, substance, or other matter of any kind whatsoever which is defined, classified, listed,
designated or regulated as hazardous, toxic or radioactive by any federal statute, ordinance, regulation,
order, rule or directive, or any statute, ordinance, regulation, order, rule or directive of the state where
the Project is located, any political subdivisions of that state, any municipal corporation of that state,
or any board, agency, authority or body associated with any of the foregoing or any quasi -
governmental body or agency with jurisdiction over such matters and having jurisdiction over the
Land or the Project, (b) PCBs or asbestos or materials containing PCBs or asbestos, (c) petroleum and
petroleum -based chemicals and substances, and (d) urea formaldehyde.
Incentive Agreements: One or more agreements between a Government Authority and one
or more Owners providing economic development incentives to the Projects, if any, as amended.
Initiating Party. Defined in Section (2) of Exhibit H.
Knowled . Information (a) appearing in the files or records of such party, (b) actually known
by one or more of the persons currently employed by such party with a level of responsibility generally
considered to be "top management"; and/or (c) which would have become known by one or more of
such persons in the exercise of that level of professional care, skill, judgment and diligence
commensurate with that practiced by Persons regularly performing services of the type in connection
with which this term is employed.
Land. The parcel of real property legally described on Exhibit B.
Lender. TBD, or such other financial institution providing construction financing for the
Projects.
EXHIBIT A TO DEVELOPMENT SERVICES AGREEMENT City of Kalispell and MHDP, LLC
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Notice. Defined in Section 5.6.
Notice to Proceed. A notice from Developer on behalf of Owner to General Contractor to
proceed with the work under the Construction Contract.
Owner. Identified on the first page of this Agreement.
Owner's Representative. A person to be named by Owner prior to financial closing or such
successor as provided in Section 1.2.
Person. An individual, corporation, limited liability company, association, trust or other entity
or organization.
Plans. The Concept Drawings, Schematic Plans, Design Development Plans, and
Construction Documents defined in Exhibit C.
Pre -Development Budget. The budget for the Pre -Development Period Development
Services as set forth on Exhibit F. Developer will submit a revised Pre -Development Budget to Owner
when information has been presented that confirms that the existing Pre -Development Budget is no
longer accurate, and the Pre -Development Budget, as so revised and approved by Owner, shall
become the new Pre -Development Budget.
Pre -Development Fee. Defined in Section 3.1.
Pre -Development Period. The time period beginning on the March 1, and ending on the
earlier of (a) April 29, 2022, or (2) the date Owner closes on its construction financing for the Project.
Pre -Development Period Development Services. The Development Services to be performed
by the Developer during the Pre -Development Period as set forth in Exhibit C.
Procedure. Defined in Section (1) of Exhibit H.
Professionals. The Construction Project Manager, General Contractor, the Architect, the, and
the other parties, including, but not limited to subcontractors, engineers, who are necessary to the
design, equipping and construction of the Project.
Profits Interest. Defined in Section 3.5.
Profits Interest Agreement. Defined in Section 3.5.
p
Project. A collective reference to (a) the Land, (b) the Building. The descriptions in this
Agreement and the Exhibits as to the number of stories or floors, square feet, the number of parking
spaces in the Project, and any similar descriptions, are all approximations and, like the inclusion in the
Project of any component, are subject to change by Owner, in Owner's sole discretion.
Project Accountant. TBD or such other accountant selected by Developer.
Project Budget. The budget for the development and construction of the Project, which may
be modified from time to time in accordance with paragraph (7) of Exhibit C.
EXHIBIT A TO DEVELOPMENT SERVICES AGREEMENT City of Kalispell and MHDP, LLC
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Project Close -Out. The occurrence or the accomplishment following Substantial Completion
of the final completion by each of the Professionals of such work, if any, as necessary to entitle each
such Professional to payment under the applicable contract of all holdbacks conditioned upon the
final completion by such Professional of any work.
Project Costs. The aggregate of all amounts paid or incurred, directly or indirectly, for the
ownership, development, financing and construction of the Project (excluding Land) to and through
the Project Close -Out. Project Costs will include the cost of the project staff, including out-of-pocket
costs of such project staff.
Project Management. Compass Management Servicers, LLC
Project Schedule. The schedule for completion of the Project, which may be modified from
time to time in accordance with Exhibit C.
Punch List Work. Minor items of work necessary to complete the Project which will not
interfere with the opening or materially interfere with the operation of the Garage and which are
otherwise of a scope and nature as this term is commonly understood in the construction industry.
Required Contributions. Contributions to or toward the cost of constructing, installing,
operating or maintaining public improvements, installations or facilities and other special taxes,
assessments, licenses, fees, or impact or mitigation charges or contributions required under
Governmental Requirements or Restrictions for the Project or otherwise undertaken in connection
with the Project.
Restrictions. Any and all restrictions, easements, conditions, covenants, and other agreements
recorded against the Land or the Project, whether recorded prior to the Agreement Date or during
the Term provided notice thereof is given to Developer.
Schematic Plans. Defined in paragraph 5(b) of Exhibit C.
Substantial Completion. The issuance by (a) the General Contractor of a Certificate of
Substantial Completion and (b) the Governmental Authorities of a final certificate of occupancy or its
equivalent for the Garage Structure.
Term. Defined in Section 4.1.
EXHIBIT A TO DEVELOPMENT SERVICES AGREEMENT City of Kalispell and MHDP, LLC
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EXHIBIT B
DEVELOPMENT SERVICES AGREEMENT
Description of the Land
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EXHIBIT C
DEVELOPMENT SERVICES AGREEMENT
Pre -Development Period
The following Developer Services and other obligations of Developer during the Pre -Development
Period, are as follows:
Pre -Development Period Development Services:
(1) Selection of Professionals. Developer shall (a) propose for Owner's approval any such
parties, including the name and proposed scope of work for such parties, (b) coordinate with Owner
on the format of the agreements with the Professionals, (c) negotiate, in consultation with Owner any
such agreements, and (d) cause any such agreements to be execute.
(2) Schematic Design. Developer shall work with the Architect to develop Project
requirements and design criteria to incorporate into the schematic design drawings for the Project
prepared by the Architect to Owner for Owner's approval.
(3) Traffic Study Analysis. Developer will commission a 3rd Party Traffic study.
(4) Project Budget and Project Schedule. Developer shall prepare and submit a proposed
budget and schedule for the development, and construction of the Project. Upon approval by Owner,
such schedule shall be the "Project Schedule". Developer will submit a revised Project Schedule to
Owner when needed, and the Project Schedule as so revised and when approved by Owner, shall
become the new Project Schedule. Developer will submit a revised Project Budget to Owner when
needed, and the Project Budget as so revised and when approved by Owner shall become the new
Project Budget.
(5) Pricing. Developer will assist Owner with obtaining initial pricing for the Design
Development Plans, as well as bids for final pricing based on the Construction Documents.
(6) Financing. Developer shall procure debt financing for the Project, including providing
information to prospective lenders, responding to inquiries and otherwise assisting such parties with
inspections and evaluations of the Project.
(7) Budgets/Schedules. During the Pre -Development Period and Development Period,
Developer will promptly notify Owner if Developer obtains Knowledge that the Project Schedule or
Project Budget (including if the actual cost for any line item in the Project Budget is likely to materially
exceed the amount budgeted for such line item), or any part of them are no longer accurate. Developer
will recommend to Owner when a Notice to Proceed should be issued and delivered to General
Contractor under the Construction Contract and Owner shall not unreasonably withhold nor delay
issuance of such Notice to Proceed.
(8) Plans.
(a) Concept Drawings. Shall mean the concept drawings for the Project which
have previously been approved as identified on Exhibit J attached hereto.
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(b) Schematic Plans. Shall mean the schematic drawings for the Project which
have yet to be created and approved.
(c) Design Development Plans. Developer shall submit the equivalent of the
"Design Development Documents" that is consistent with the International Building Code
and as described in the AIA Standard Form of Agreement Between Owner and Architect to
Owner for Owner's approval, and shall also include preliminary designs, materials and finish
treatments for the Project, including landscaping, and color boards. All of the documents
described in the previous sentence shall conform in all material respects to, or be a logical
extension of, the Schematic Plans and shall be consistent with the Project Budget, as same
may be revised pursuant to paragraph 4 of this Exhibit C. Upon final approval by Owner,
such preliminary plans and specifications shall be the "Design Development Plans."
(d) Construction Documents. Developer will submit the equivalent of the
"Construction Documents" that is consistent with the International Building Code and as
described in AIA Standard Form of Agreement Between Owner and Architect to Owner for
Owner's approval, and shall also include final designs, the form for all bid documents and
application documents for a Conditional Use Permit, materials and finish treatment for the
Project, including landscaping, and color boards. All of the documents described in the
previous sentence will conform in all material respects to, or be a logical extension of, the
Design Development Plans and will be consistent with the Project Budget, as same may be
revised pursuant to paragraph 4 of this Exhibit C. Upon final approval by Owner, such final
plans for the Project shall be the "Construction Documents" and shall define the scope of
the work for the Construction Contract.
(9) Budgets/Schedules. During the Pre -Development Period and Development Period,
Developer will promptly notify Owner if Developer obtains Knowledge that the Project Schedule or
Project Budget (including if the actual cost for any line item in the Project Budget is likely to materially
exceed the amount budgeted for such line item), or any part of them are no longer accurate. Developer
will recommend to Owner when a Notice to Proceed should be issued and delivered to General
Contractor under the Construction Contract and Owner shall not unreasonably withhold nor delay
issuance of such Notice to Proceed.
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EXHIBIT D
DEVELOPMENT SERVICES AGREEMENT
Development Period
The Developer Services and other obligations of Developer during the Development Period are as
follows:
(1) Construction of Project. Following the issuance of a Notice to Proceed, Developer will use
its Commercially Reasonable Efforts to coordinate all construction through completion,
supervise and manage the Professionals and Operator, and coordinate the interaction of the
Professionals and Operator with the Owner and other Persons involved with the Project.
Developer shall also oversee the start-up and commissioning of all Building mechanical
systems.
(2) Hazardous Substances. Developer will provide or make available to Owner copies of any
soils, geotechnical or environmental reports obtained or prepared by or under the control of
Developer or its Affiliates in connection with the Project. Owner has authorized Developer
and Operator to procure and store in or about the Project cleaning supplies used in the
construction and operation of the Project which may qualify as Hazardous Substances. The
use and storage of such cleaning supplies shall be permitted as reasonably required for and are
in quantities appropriate to the construction and operation of the Project and are stored,
handled and disposed of in accordance with all applicable laws.
(3) Easements and Other Agreements. In the event any other agreements are required in
connection with the Project that require execution by Owner, Developer will submit such
agreements to Owner for Owner's review and approval and make appropriate
recommendations concerning same.
(4) Proceedings_. Developer (without obligation to incur any external out-of-pocket cost or
expense) will assist Owner in connection with any administrative proceedings, litigation or
dispute resolution proceeding of any kind between Owner and the Professionals relating to
the design, construction, use or occupancy of the Project, including any defense of any
mechanic's, materialmen's, contractor's or subcontractor's claim or any claim against the
General Contractor's bonding company, if applicable. As provided in Section 5.1 of the
Agreement, Owner will indemnify and hold Developer harmless from and against any cost or
expense associated with any such proceedings or litigation.
(5) General Services. Developer will timely (a) assist Owner in performing any obligations or
services to be performed by Owner described in the Construction Contract and any other
agreement entered into by Owner regarding the Project, including any other agreements with
Operator, (b) provide Owner with copies of the Construction Documents and all approved
change orders and change directives, and (c) advise Owner of all scheduled job site meetings
prior to the date of such meetings and provide Owner with copies of project schedules, job
minutes and other information that allows Owner to evaluate the quality and progress of the
work on the Project.
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(6) Project Close -Out. Developer will assist in inspecting completed portions of the Garage and
obtain approvals and necessary documents from Operator and the Professionals so as to
achieve the completion of Punch List Work and the accomplishment of the other
requirements for Project Close -Out within a reasonable time after Substantial Completion.
The foregoing shall not be construed to be a guarantee of timely completion of Project Close -
Out and, so long as Developer has exercised Commercially Reasonable Efforts in obtaining
approvals and necessary documents from Operator and the Professionals, the failure to
achieve the completion of Punch List Work and the accomplishment of the other
requirements for Project Close -Out within a reasonable time after Substantial Completion will
not constitute a default hereunder.
(7) Notices to Owner. Promptly after Developer obtains Knowledge, Developer shall notify
Owner that (a) any Person or party is or may be in breach of any of its material obligations
under the Construction Contract, any and all Project financing, or other material agreement
or contract relating to the Project, (b) there is any pending or threatened litigation or
proceeding affecting the Project, or (c) any fact or condition specific to the Project exists that
would materially impair the current or contemplated use or fair market value of the Project or
the cost of operating the Project.
(8) Timing for Substantial Completion. Developer will manage the Professionals in such a
manner as to achieve Substantial Completion on or before the date set forth for Substantial
Completion in the Project Schedule, as it may be adjusted by Owner. The foregoing shall not
be construed to be a guarantee of timely completion of the Project and, so long as Developer
has exercised Commercially Reasonable Efforts in the management of such Professionals, the
failure to achieve Substantial Completion on or before the date set forth for Substantial
Completion in the Project Schedule, as it may be adjusted by Owner, will not constitute a
default hereunder. Promptly after Developer obtains Knowledge, Developer will notify
Owner of the occurrence of any Force Majeure Event or any other event or condition which
can be reasonably expected to have a material and adverse impact on the Project Schedule.
(9) Prohibition Against Mechanic's Liens. Developer will not file or permit to be filed on behalf
of Developer (or by, or on behalf of, any Affiliate of Developer) against the Project any lien,
encumbrance, charge or mechanic's, materialmen's, contractor's or subcontractor's liens
arising from any claim growing out of the work of any construction, repair, restoration,
reinstallation or improvement, or any other claim arising out of this Agreement. If any such
lien, encumbrance or charge is filed against the Project, Developer will cause its removal and
otherwise resolve the claim upon which it is based. This paragraph is not intended to deal
with any liens that may be filed by the General Contractor, Architect, any Professional or any
other contractor or subcontractor engaged directly by Owner or by the Persons listed in this
sentence.
(10) Record Keeping. Developer will maintain records of the progress of the work on the Projects,
and retain copies of the Construction Documents, change orders, shop drawings, applicable
manuals and handbooks, maintenance and operating manuals and instructions, warranties,
purchase orders, contracts, agreements, and approvals related to the Project for four (4) years
after the date of such document. Developer will maintain the books and records of requests
for payments, amounts disbursed and similar relevant information. Such documentation
materials will be kept at Developer's principal place of business in Kalispell, Montana. Owner,
EXHIBIT D TO DEVELOPMENT SERVICES AGREEMENT. City of Kalispell and MHDP, LLC
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with forty-eight (48) hours' prior notice and during regular business hours, has the right to
review and copy, at such Owner's cost, such materials and other documentation. Developer
will assist Owner in reviewing accounting records kept by Developer relating to the Project,
and will advise and counsel Owner concerning the information disclosed by such records.
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EXHIBIT E
DEVELOPMENT SERVICES AGREEMENT
Developer's Insurance Requirements
Insurance
Coverage & Limits
Workers'
Statutory Limits
Compensation
Employer's Liability
$1,000,000 each accident for bodily injury by accident
$1,000,000 each employee for bodily injury by disease
$1,000,000 bodily injury by disease for entire policy
Commercial General
$1,000,000 per occurrence
Liability
$2,000,000 general aggregate
(Occurrence Basis)
$2,000,000 product -completed operations aggregate limit
$1,000,000 personal and advertising injury limit
$1,000,000 damage to premises rented to you limit
medical ex ense limit: Not Applicable
Excess Liability
$5,000,000 each occurrence/general aggregate ($5 million)
Occurrence Basis
Owner's Insurance Requirements
Insurance:
Coverage & Limits
Montana
Municipal
Interlocal
Authority
General Liability
$750,000 per occurrence
$1,500,000 general aggregate
(Statutory Limits)
Excess Liability
$10,000,000 each occurrence/general aggregate
(Occurrence Basis)
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EXHIBIT F
DEVELOPMENT SERVICES AGREEMENT
Development Budget
=,aispell Parking Garage
Anticipated Project Cost
Item Approved Budget Budget Changes Committed Approved Current
Change Orders Commitment
ils M.
Development Fee 5% of HC + CM
357,770
Financing Fees - 2% Project Cost
-
Architectural/Consultants
600,000
Impact FeestTap Fees/Taxes
125,000
Interest during construction
400,000
Insurance
225,000
Legal
50,000
Origination Fee
Environmental/Traffic Study
25,000
Building Permits
75,000
Soft Cost Total 1,867,770
-
General Contractor 239 Spaces X $26,000 per space
6,214,000
Construction Contingency 10%
621,400
Hard Cost Total
6,835,400
-
7�Construcfion Mgt
220,000
core Software/Site Monitoring Equip.
50,000
struction Testing on behalf of Owner
50,000
Construction Mgt
320,000
Project Subtotal
9,013,170
-
Project Contingency 2.51/6 225,329
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EXHIBIT G
DEVELOPMENT SERVICES AGREEMENT
Garage
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EXHIBIT H
DEVELOPMENT SERVICES AGREEMENT
Dispute Resolution Process
(1) Agreement to Use Procedure. Developer and Owners have entered into this Agreement in
good faith and in the belief that it is mutually advantageous to them. It is with that same spirit of
cooperation that they pledge to attempt to resolve any dispute amicably without the necessity of
litigation. Accordingly, they agree that if any alleged Event of Default occurs (the "Dispute"), then
prior to the commencement of any legal action to interpret or enforce this Agreement, the Dispute
will be subject to the alternative dispute resolution procedures described in the remainder of this
Exhibit H (the "Procedure").
(2) Initiation of Procedure. The Party seeking to initiate the Procedure (the "Initiating Party")
shall give written notice to the other Party, describing in general terms the Event of Default, the
Initiating Party's claim for relief and identifying one or more individuals with authority to settle the
Dispute on such Party's behalf. The Party receiving such notice shall have five (5) Business Days
within which to designate by written notice to the Initiating Party one or more individuals with
authority to settle the Dispute on such Party's behalf. The individuals so designated shall be known
as the "Authorized Individuals."
(3) Direct Negotiations. The Authorized Individuals shall be entitled to make such reasonable
investigation of the Dispute as they deem appropriate, but agree to meet promptly, and in no event
later than ten (10) days from the date of receipt of the Initiating Party's written notice, to discuss
resolution of the Dispute. The Authorized Individuals shall meet at such times and places and with
such frequency as they may reasonably agree. If the Dispute has not been resolved within five (5)
days from the date of their initial meeting, either Party may cease direct negotiations and shall submit
the Dispute to mediation in accordance with the procedures described in the remainder of this Exhibit
H.
(4) Selection of Mediator. Within five (5) days after direct negotiations cease as provided above,
the Authorized Individuals shall attempt, in good faith, to select a mutually acceptable mediator. If
they do not do so, each Authorized Individual, within three (3) days after the expiration of such five
(5) day period, shall submit to the other a list of three acceptable mediators (listed in order of
preference). If only one person appears on both lists, that person shall be the mediator. If more than
one person appears on both lists, the person with the highest average ranking shall be the mediator,
or if each of such two persons has the same average ranking, the mediator shall be one of those two
persons decided by a coin -flip. If no mediator has been selected under this procedure, the Parties
agree jointly to request an Eleventh District Court Judge of their choosing to supply within ten (10)
days a list of three potential qualified mediators from that Court's list of Settlement Masters. Within
five (5) days of receipt of the list, each Authorized Individual shall rank the proposed mediators in
numerical order of preference and shall simultaneously exchange such list. The mediator shall be the
individual receiving the highest average ranking. If two persons have the same average ranking, the
mediator shall be one of those two persons decided by a coin -flip. If such mediator is not available
to serve within the time period stated in Paragraph (5) of this Exhibit H, they shall proceed to contact
the mediator who has the next highest average ranking until they are able to select a mediator.
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(5) Time and Place for Mediation. In consultation with the mediator selected, the Parties shall
promptly designate a mutually convenient time and place in the county where the Project is located,
for the mediation, and unless circumstances require otherwise, such time is to be not later than fifteen
(15) days after selection of the mediator.
(6) Exchange of Information. In the event a Party to this Agreement has substantial need for
information in the possession of the other Party to this Agreement in order to prepare for the
mediation, all Parties shall attempt in good faith to agree on procedures for the expeditious exchange
of such information, with the help of the mediator if required.
(7) Summary of Views. At least seven (7) days prior to the first scheduled session of the
mediation, each Party shall deliver to the mediator and to the other Party a concise written summary
of its views on the matter in Dispute and such other matters as may be required by the mediator. The
mediator also may request that a confidential issue paper be submitted to him by each Party.
(8) Parties to be Represented. In the mediation, each Party shall be represented by an Authorized
Individual and may be represented by counsel. In addition, each Party may, with permission of the
mediator, bring such additional persons as are needed to respond to questions, contribute information
and participate in the negotiations.
(9) Conduct of Mediation. The mediator shall determine the format for the meetings, designed
to assure that both the mediator and the Authorized Individuals have an opportunity to hear an oral
presentation of each Party's views on the matter in dispute, and that the Authorized Individuals
attempt to negotiate a resolution of the matter in dispute, with or without the assistance of counsel or
others, but with the assistance of the mediator. To this end, the mediator is authorized to conduct
both joint meetings and separate private caucuses with the Parties. The mediation session shall be
private. The mediator will keep confidential all information learned in private caucus with any Party
unless specifically authorized by such Party to make disclosure of the information to the other Party.
The Parties agree to sign a document agreeing that the mediator shall be governed by the provisions
of Commercial Arbitration Rules of the AMERICAN ARBITRATION ASSOCIATION
(as then in effect) and such other rules as the mediator shall reasonably prescribe. The Parties commit
to participate in the proceedings in good faith with the intention of resolving the Dispute, if at all
possible.
(10) Termination of Mediation. The Parties agree to participate in the mediation procedure to its
conclusion. The mediation shall be terminated by (a) the execution of a settlement agreement by the
Parties, (b) a declaration of the mediator that the mediation is terminated; or (c) a written declaration
of a Party to the effect that the mediation process is terminated at the conclusion of one (1) full day's
mediation session. Upon termination of Mediation, any further remedies are governed by Section 4.2
of the Agreement.
(11) Confidentiality. Mediation is a compromise negotiations for purposes of the Federal and State
Rules of Evidence and constitutes privileged communication under the law of the state where the
Project is located. To the extent permitted by law applicable to municipalities, the entire mediation
process is confidential, and no stenographic, visual or audio record shall be made. All conduct,
statements, promises, offers, views and opinions, whether oral or written, made in the course of the
mediation by any Party, by their agents, employees, representatives or other invitees and by the
mediator are confidential and shall, in addition and where allowable, be deemed to be privileged. Such
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conduct, statements, promises, offers, views and opinions shall not be discoverable or admissible for
any purposes, including impeachment, in any litigation or other proceeding involving the Parties and
shall not be disclosed to anyone not an agent, employee, expert, witness or representative of any of
the Parties; provided, however, that evidence otherwise discoverable or admissible is not excluded
from discovery or admission as a result of its use in the mediation.
(14) Time Periods. If any time period set forth above ends on a Saturday, Sunday or national bank
holiday, the last day of such time period shall be extended to the next Business Day.
(15) Attorneys' Fees. The terms and provisions of Section 5.3 of the Agreement are hereby
incorporated into this Exhibit H by reference.
EXHIBIT H TO DEVELOPMENT SERVICES AGREEMENT. City of Kalispell and MHDP, LLC
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