Development Management Agreement

EXHIBIT 10.69
DEVELOPMENT MANAGEMENT AGREEMENT
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THIS DEVELOPMENT MANAGEMENT AGREEMENT ("Agreement") made as of the _____ day of September, 1994, by and between ROSS DEVELOPMENT MANAGEMENT GROUP, INC., a Colorado corporation, (hereinafter called "Development Manager") and BIG O DEVELOPMENT, INC., a Colorado corporation, and BIG O TIRE, INC., a California corporation, jointly and severally (hereinafter collectively called "Owner").


WHEREAS, the Owner is desirous of developing certain real property which it is in the process of acquiring (each parcel of real property is individually referred to herein as a "Site" and collectively as the "Sites") as is more particularly described in Exhibit A (as amended from time to time) attached hereto and incorporated herein by this reference. For purposes of this Agreement, the Owner has designated its responsibilities hereunder to Big O Tires, Inc. Franchise Approval Review Management Committee ("Farm Committee");


WHEREAS, the Owner desires to develop each Site as a Big O Tire Store based on prototypical designs of Owner (each Site and all improvements to be constructed on each Site are each referred to as the "Project" and collectively referred to as the "Projects"); and


WHEREAS the Owner desires to engage Development Manager to supervise the development and construction of the Projects on the terms and conditions hereinafter set forth.


NOW, THEREFORE, in consideration of the premises and the respective undertakings of the parties hereinafter set forth, it is hereby agreed as follows:


1. General Project Management Responsibilities. Development Manager shall be responsible for managing and supervising the development of each Project so that each Project is completed in accordance with (i) those certain designs for the Projects ("Project Design") of Owner, which initial Project Design (known as "Prototype I") is attached hereto and incorporated herein by this reference as Exhibit B; (ii) that certain budget for the Project ("Project Target Budget"), which initial Project Target Budget is attached hereto as Exhibit C and incorporated herein by this reference, approved by Owner (Exhibits A, B, and C are hereinafter collectively referred to as "Plan Documents"), as the Plan Documents or any of them shall be amended from time to time as hereinafter provided.


The development and construction of each Project shall be accomplished serially, in phases, (each a Phase and collectively "Phases"), as defined below, and the Development Manager shall have the responsibilities set forth below as to each Phase. The commencement of the work of Development Manager for each Phase shall occur upon the execution of the Authorization to Proceed substantially in accordance with Exhibit D attached hereto; provided that an Authorization to Proceed is executed with respect to a Site by Owner. The amounts set forth on Exhibit C are estimates and will likely be adjusted on a Site by Site basis from


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time to time to reflect variations in acquisition costs and construction costs. The Phases shall consist of the following:


A. Phase A Work - Preliminary Due Diligence, Site Design and Budgeting. Development Manager shall, with respect to each site, commence the following activities:


(1) Review documentation submitted by Owner;

(2) Review status of title including development restrictions imposed by private covenants and/or zoning, subdivision or similar ordinances;


(3) Review (to the extent available) soils and environmental reports;


(4) Preparation of site plan sketches showing proposed layout, parking configuration and adjacent streets in accordance with applicable requirements and restrictions;


(5) Preparation of preliminary development budget;


(6) Preparation of Phase A Summary Report of findings, including recommendation of Development Manager as to whether or not to proceed;


B. Phase B - Architectural, Engineering Entitlements and Final GMP Budget. If Owner, after review of the Phase A Summary Report elects to proceed, Development Manager shall, upon receipt of a Phase B Authorization to Proceed, commence the following activities:


(1) To the extent not previously accomplished, obtain a soils report;


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(2) To the extent not previously accomplished, obtain a "Phase I" environmental report of a Site from the seller of a Site;

(3) Finalize the site plan for a Project;


(4) Prepare Architectural/Engineering, Construction Documents and Bid Specifications in accordance with an approved site plan;


(5) Prepare final budget;


(6) Negotiate and execute contracts for construction (Guaranteed Maximum Price);


(7) Negotiate contracts for acquisition of a Site; and


(8) Prepare Phase B Summary Report of findings including recommendation of Development Manager as to whether or not to proceed.


C. Phase C - Site Acquisition and Construction. If Owner, after review of the Phase B Summary Report, elects to proceed, Development Manager shall, upon receipt of a Phase C Authorization to Proceed, commence the following activities:

(1) Acquire the Site in the name of the Owner at the price not in excess of that amount set forth in Exhibit C;

(2) Obtain all required permits required for construction activities; and


(3) Commence and complete construction.


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2. Controls.

A. Development Manager shall establish and implement appropriate administrative and financial controls for the design and construction of each Project in accordance with the requirements set forth herein. Without limiting the foregoing, the Development Manager shall:

(1) select all professionals to be utilized in the acquisition of a Site and the development of the Project, including, without limitation, architects, engineers, attorneys, contractors, and consultants in connection with the design and development of the Project (the "Project Team");


(2) subject to paragraph 6D hereof, contract with the individuals comprising the Project Team, in Development Manager's own name, for completion of the Project in accordance with the Project Design, at costs not to exceed the Project Budget and within the time frame set forth in the Project Schedule, subject to paragraph 19 of this Agreement, and each such contract shall be in the name of Development Manager and include a provision that Owner is a third party beneficiary of such contract and that Owner shall have the right, in addition to Development Manager, to enforce such contract and exercise all remedies under such contract (all warranties under each contract shall be assigned to Owner);


(3) coordinate and administer the activities of the Project Team;


(4) perform all due diligence investigations related to a Site as Development Manager deems reasonably necessary;


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(5) participate in conferences and render advice and assistance to aid in developing economical, efficient and desirable design and construction procedures;


(6) review, approve for payment, and submit to the Owner for approval and payment of all certified applications for payments under any architectural agreement, or general contractor's agreement providing funds for the benefit of the Owner for the design or construction of the Project, which submittal shall be made on a monthly basis;


(7) monitor and supervise compliance with all terms and conditions applicable to the Owner or the Project contained in any governmental permit or approval required or obtained for the lawful construction of the Project or in any insurance policy affecting or covering the Project;


(8) furnish such consultation and advice relating to the Project as may be reasonably requested from time to time by the Owner;


(9) keep the Owner fully informed on a regular basis, through the furnishing of reports for Farm Committee review, together with attendance at periodic meetings to discuss and review the status and the progress of the design and construction of each Project.


(10) implement and review compliance of all of the Owner's instructions, requirements, and approvals and all agreements with the Project Team; and


(11) file on behalf of Owner any notices of completion required or permitted to be filed upon the completion of


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any portion of the Project and take such customary and reasonable actions as may be required to supervise the obtaining of all certificates of occupancy or equivalent documents required to permit the occupancy of any portion of the Project.


B. Development Manager shall use reasonable efforts to insure that the Project Architect ("Architect"), and the other qualified consultants inspect the progress of construction of the Project to verify, among other matters, that the construction is being carried out substantially in accordance with the Plan Documents and to have the Project Architect so certify in writing along with each construction draw request. In the event construction or such inspections are not being so carried out based upon Development Manager's own inspection of the Project or reports obtained from such Architect or consultants, Development Manager shall promptly notify the Owner and take appropriate action to minimize loss or delay in the construction of the Project and to protect Owner's right to enforce compliance with the Plan Documents and the respective agreements entered into with the members of the Project Team.


C. Development Manager shall hire and retain, at the expense of Development Manager and as employees of Development Manager, and not as employees of the Owner, such personnel as may be required to properly perform Development Manager's functions hereunder. The compensation, retention and performance of Development Manager's employees shall be controlled exclusively by Development Manager, and Development Manager shall be responsible for complying with all laws and regulations affecting such


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employment, including the provisions of any benefits or compensation required by statute or contract. Development Manager, on behalf of itself and any employee, understands and agrees that it shall not be entitled to any of the rights and privileges established for Owner's employees, including, but not limited to, the following: retirement benefits, medical insurance coverage, life insurance coverage, disability insurance coverage, severance pay benefits, paid vacation and sick pay, overtime pay, or any of them. Development Manager understands and agrees that Owner will not pay or withhold from the compensation paid to the Development Manager pursuant to this Agreement any sums customarily paid or withheld for or on behalf of employees for income tax, unemployment insurance, Social Security, worker's compensation or any other withholding tax, insurance or payment pursuant to any law or governmental regulation, and all such payments as may be required by law are the sole responsibility of Development Manager. Owner shall have no responsibility for any of Development Manager's debts, liabilities or other obligations, or for the intentional, reckless or negligent acts or omissions of Development Manager or Development Manager's employees or agents.


D. Development Manager shall manage, review and monitor the construction activities on the Project with regard to compliance with all applicable laws, ordinances, orders, rules, regulations and requirements (hereinafter called "Laws") of all federal, state and municipal governments, courts, departments, commissions, boards and offices, any national or local Board of Fire Underwriters or Insurance Services Offices having jurisdiction


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in any applicable state, or any political subdivision thereof, or any other body exercising functions similar to those of any of the foregoing, or any insurance carriers providing any insurance coverage for the Owner or the Project or any part thereof. Development Manager retains the sole and absolute discretion in the manner and means of the construction of the Project, subject to the approved plans.


E. Development Manager shall assem ...