DEVELOPMENT AGREEMENT

THIS DEVELOPMENT AGREEMENT (this "Agreement"), is made and entered into this day of , 2006 by and between the CITY OF LAWRENCE,
KANSAS, a municipal corporation duly organized under the laws of the State of Kansas ("City"), and Harris Construction Co., Inc. and Cinco Hombres, LLC ("Developers").

A. The City has authority to create a Neighborhood Revitalization Plan and Program (the “Plan”) Exhibit 1 pursuant to K.S.A. 12-17,114 through 12-17,120, and amendments thereto, (the "Neighborhood Revitalization Act"), for the purpose of financing revitalization related projects which by reason of age, history or architecture or significance should be restored to productive use. Under the Act, the owners of all land within the proposed revitalization area may apply to the city to request an ad valorem property tax rebate resulting from the improvements.

B. The city desires to support a Redevelopment Project proposed by the Developers in the area surrounding 8^th Street and Pennsylvania District in Lawrence, Kansas.

C. As approved, the Project requires Developers to construct certain public and private improvements. A description of such public and private improvements and the total estimated costs of the public and private improvements are set forth in Exhibit 2 (the "Project Improvements"). Only the Project Improvements set forth in Exhibit 3 will be eligible for property tax rebates.

D. City and Developers believe that the creation of a Neighborhood Revitalization Plan and Program for the purpose of financing the area improvements is in the best interests of the City, the Developers and the surrounding community.

E. The parties now desire to enter into this Agreement to formalize the development, construction and implementation of the Neighborhood Revitalization Plan and the financing of the Improvements.

NOW, THEREFORE, in consideration of the foregoing and in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION

Definitions of Words and Terms.

Capitalized words used in this Agreement shall have the meanings set forth in the Recitals to this Agreement or they shall have the following meanings:

"City" means the City of Lawrence, KS.

"Developers" means Harris Construction Co., Inc. and Cinco Hombres, LLC, and its successors and assigns.

"Event of Default" means any event or occurrence as defined in Article IV of this Agreement.

"Project Improvements" means the projects and related required improvements as described in Exhibit 2 which includes the public and private improvements to the 8^th Street and Pennsylvania District Redevelopment Project.”

Rules of Construction.

For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires, the following rules of construction apply in construing the provisions of this Agreement:

A. The terms defined in this Article include the plural as well as the singular.

B. All references in this instrument to designated "Articles," "Sections" and other subdivisions are to be the designated Articles, Sections and other subdivisions of this instrument as originally executed.

C. The words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision.

D. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

ARTICLE II
DEVELOPMENT OF THE PROJECT

A. Developers shall complete the public and private improvements for the Project in conformance with the Preliminary and Final Plat, approved site plans for each phase of the project, Horizon 2020 Comprehensive Plan, Public Improvement Plans, Urban Conservation Overlay District and design guidelines, zoning ordinance, related stipulations, City building codes, the Code of the City of Lawrence and the City of Lawrence Standard Specifications, and all other applicable rules and regulations. Before commencement of construction or development of any buildings, structures or other work or improvement, Developers shall obtain any and all permits, which may be required by the City and any other governmental agency having jurisdiction as to such construction, development or work. The City shall cooperate and provide all usual and required assistance in obtaining and/or issuing such permits.

B. Developers shall be responsible for and will bear all costs of the 8^th and Pennsylvania Street Redevelopment Project including the Project Improvements as described in Exhibit 2, subject to the terms of this Agreement.

C. Developers shall ensure the streets and sidewalks in the area where the builder or Developers is working shall remain free and clear of dirt, mud and other debris. If, upon inspection, at any time during the construction period, the Building Official determines the affected area is not properly free and clear of mud and debris, then the Building Official shall provide notice of violation to the builder or Developers.

D. In the event that any item covered under this agreement has been determined by City staff to be defective, in need of repair or replacement, or was not properly installed, then either the Building Official or the City Engineer shall provide notice of violation to the Developers. Upon receipt of such notification, the Developers shall be allowed a period of 10 working days in which to remedy any and all defects or submit, subject to City staff review and approval, a plan to remedy the defects .

E. Prior to the issuance of the building permit and as required by the Code of the City of Lawrence, State Law and the City of Lawrence Standard Specifications, the Developers shall provide escrow fees, letters of credit, and/or a payment, performance maintenance and statutory bonds, in an amount to be determined by the City Engineer to ensure that public improvements, amenities, and landscaping will be installed, approved, and maintained during and after the completion of the public improvements.

F. All work and items must be installed within two (2) years of the issuance of the building permit, unless the Planning Director or City Engineer notify the Developers in writing that the items shall be installed within a shorter time period.

G. Upon satisfaction of the conditions of this Agreement, the City will create a Neighborhood Revitalization Fund.

ARTICLE III

NEIGHBORHOOD REVITALIZATION PLAN REBATES AND
PERMISSIBLE IMPROVEMENTS

A. Neighborhood Revitalization Rebate. The Developers of the property must apply, pursuant to KSA 12-17,118, for any ad valorem property tax rebates held in the Neighborhood Revitalization Fund. Any rebates approved by the governing body because of the incremental increases in ad valorem property tax resulting from the project improvements shall be equal to but no greater than the total dollar amount of the Project Improvements for the project and pursuant and limited by the terms of the Plan, Exhibit 1 and this Agreement. Only Project Improvements listed in Exhibit 2 will be eligible for rebates. Once the Developers have applied and received eligible rebates for the Project Improvement expenditures pursuant to the Plan they shall be ineligible for any additional rebates.

The parties acknowledge that such exhibits contain preliminary information. It is expected that the estimates of expenses and quantity of unit costs related to the Plan may change prior to and during actual construction of the Project. The parties acknowledge that Exhibit 2 may not contain all expenses related to the Plan.

B. Certification of Expenditures. Developers shall certify all costs and expenditures to be made in connection with the public improvements in accordance with the following:

1. The Developers shall submit to the City a Certification of Expenditure setting forth the amount for which certification is sought and identification of the relevant project improvement.

2. The Certification of Expenditure shall be accompanied by such bills, contracts, invoices, lien waivers and other evidence as the City shall reasonably require to document the eligibility for rebates.

3. The City reserves the right to have its engineer or other agents or employees inspect all work in respect of which a Certification of Expenditure is submitted, to examine the Developers’ and other's records relating to all expenses related to the project improvements to be paid, and to obtain from such parties such other information as is reasonably necessary for the City to evaluate compliance with the terms hereof.

4. The City shall have 60 calendar days after receipt of any Certification of Expenditure to review and respond by written notice to the Developers. If the submitted documentation demonstrates that: (1) the Certification of Expenditure relates to the project improvements; (2) the expense was incurred; (3) Developers is not in material default under this Agreement; and (4) there is no fraud on the part of the Developers, then the City shall approve the Certification of Expenditure. If the City reasonably disapproves of the Certification of Expenditure, the City shall notify the Developers in writing of the reason for such disapproval within such 60-day period.

ARTICLE IV
DEFAULTS AND REMEDIES

A. Defaults - General. The following events shall constitute an Event of Default under this Agreement:

1. Subject to the extensions of time set forth in subsection E below (Enforced Delay), failure or delay by either party to perform any term or provision of this Agreement, after receiving written notice and failing to cure, as set forth in paragraph (b) below, constitutes a default under this Agreement. A party claiming a default (claimant) shall give written notice of default to the other party, specifying the default complained of.

2. The claimant shall not institute proceeding against the other party, nor be entitled to damages if the other party within fourteen (14) days from receipt of such written notice, with due diligence, commences to cure, correct or remedy such failure or delay and shall complete such cure, correction or remedy within thirty (30) days from the date of receipt of such notice or if such cure, correction or remedy by its nature cannot be effected within such thirty (30) day period, such cure, correction or remedy is diligently and continuously prosecuted until completion thereof.

B. Legal Actions.

1. Institution of Legal Actions. Any legal actions related to or arising out of this Agreement must be instituted in the District Court of Douglas County, Kansas or, if federal jurisdiction exists, in the Federal District Court in the District of Kansas.

2. Applicable Law. The laws of the State of Kansas shall govern the interpretation and enforcement of this Agreement.

3. Acceptance of Service of Process.

a. In the event that any legal action is commenced by the Developers against the City, service of process on the City shall be made by personal service upon the City Clerk or in such other manner as may be provided by law.

b. In the event that any legal action is commenced by the City against the Developers, service of process on the Developers shall be made by personal service upon an officer or agent of the Developers and shall be valid whether made within or without the State of Kansas or in such other manner as may be provided by law.

C. Rights and Remedies Are Cumulative. Except as otherwise expressly stated in this Agreement, the rights and remedies of the parties are cumulative, and the exercise by either party of one or more of such rights or remedies shall not preclude the exercise by it, at the same or different times, of any other rights or remedies for the same default or any other default by the other party.

D. Inaction Not a Waiver of Default. Any failures or delays by either party in asserting any of its rights and remedies as to any default shall not operate as a waiver of any default or of any such rights or remedies, or deprive either such party of its right to institute and maintain any action or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.

E. Enforced Delay; Extension of Times of Performance.

1. In addition to specific provisions of this Agreement, performance by either party hereunder shall not be deemed to be in default, and all performance and other dates specified in this Agreement shall be extended, where party seeking the extension has acted diligently and delays or defaults are due to events beyond the reasonable control of the party such as but not limited to: default of other party; war; insurrection; strikes; lockouts; riots; floods; earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; market conditions; quarantine restrictions; freight embargoes; lack of transportation; unusually severe weather; or any other causes beyond the control or without the fault of the party claiming an extension of time to perform.

2. Times of performance under this Agreement may also be extended in writing by the mutual agreement of City and the Developer.

ARTICLE V
GENERAL PROVISIONS

A. Time of Essence. Time is of the essence of this Agreement. The City and Developers will make every reasonable effort to expedite the subject matters hereof and acknowledge that the successful performance of this Agreement requires their continued cooperation.

B. Amendment. This Agreement, and any exhibits attached hereto, may be amended only by the mutual consent of the parties, upon official action of the City's governing body approving said amendment, and by the execution of said amendment by the Parties or their successors in interest.

C. Immunity of Officers, Employees and Members of the City. No personal recourse shall be had for the creation of a Neighborhood Revitalization Plan or Fund, for the payment of any ad valorem property tax rebates or for any claim based thereon or upon any representation, obligation, covenant or agreement in this Agreement against any past, present or future officer, member, employee or agent of the City, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and any liability of any such officers, members, directors, employees or agents is hereby expressly waived and released as a condition of and consideration for the execution of this Agreement. Furthermore, no past, present or future officer, member, employee or agent of the City shall be personally liable to the Developers, or any successor in interest, for any default or breach by the City.

D. Right to Inspect. The Developers agrees that the City, with reasonable advance notice and during normal business hours, shall have the right and authority to review, inspect, audit, and copy, from time to time, all of the Developers’ books and records relating to the Redevelopment Project as pertinent to the purposes of this Agreement.

E. Right of Access. For the purposes of assuring compliance with this Agreement, representatives of the City shall have the right of access to the Redevelopment Project, without charges or fees, at normal construction hours during the period of construction for purposes related to this Agreement, including, but not limited to, the inspection of the work being performed in constructing the improvements. Such representatives of the City shall carry proper identification, and shall not interfere with the construction activity.

F. No Other Agreement. Except as otherwise expressly provided herein, this Agreement and all documents incorporated herein by reference supersedes all prior agreements, negotiations and discussions, both written and oral, relative to the subject matter of this Agreement and is a full integration of the agreement of the parties.

G. Severability. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid or unenforceable in whole or in part, this Agreement shall be deemed amended to delete or modify, in whole or in part, if necessary, the invalid or unenforceable provision or provisions, or portions thereof, and to alter the balance of this Agreement in order to render the same valid and enforceable. In no such event shall the validity or enforceability of the remaining valid portions hereof be affected.

H. Amendment to Carry Out Intent. If any provision, covenant, agreement or portion of this Agreement, or its application to any person, entity or property, is held invalid, the parties shall take such reasonable measures including but not limited to reasonable amendment of this Agreement, the Redevelopment Plan, to cure such invalidity where the invalidity contradicts the clear intent of the parties in entering into this Agreement.

I. Kansas Law. This Agreement shall be construed in accordance with the laws of the State of Kansas.

J. Duration. The duration of the agreement shall be ten (10) years from the date of the approval of the Neighborhood Revitalization Plan and Program or until the maximum rebate limits pursuant to the Neighborhood Revitalization Plan and Program have been reached, unless terminated as herein provided.

K. Notice. All notices and requests required pursuant to this Agreement shall be in writing and shall be sent as follows:

To the Developers:

To the City:

David Corliss, City Manager City of Lawrence

P.O. Box 708

6 East 6th

Lawrence, KS 66044

With copies to:

Ed Mullins, Director of Finance

City of Lawrence

P.O. Box 708

6 East 6th

Lawrence, KS 66044

Toni Ramirez Wheeler, Interim Director of Legal Services

City of Lawrence

P.O. Box 708

6 East 6th

Lawrence, KS 66044

or at such other addresses as the parties may indicate in writing to the other either by personal delivery, courier, or by registered mail, return receipt requested, with proof of delivery thereof. Mailed notices shall be deemed effective on the third day after mailing; all other notices shall be effective when delivered.

L. Counterparts. This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same agreement.

M. Consent or Approval. Except as otherwise provided in this Agreement, whenever consent or approval of either party is required, such consent or approval shall not be unreasonably withheld.

N. Survivorship. Notwithstanding the termination of this Agreement, Developers’ obligations with respect to any terms and conditions of this Agreement which by their nature should survive termination, shall survive the termination of this Agreement.

O. Incorporation of Exhibits. The Exhibits attached hereto and incorporated herein by reference are a part of this Agreement to the same extent as if fully set forth herein.

P. Indemnity and Release. Devlopers’ covenant and agree, at their expense, to pay and to indemnify and hold the City and its repective members, officers, employees, and agents harmless from an against any loss, liabilty, damage or expense arising out of any and all claims, demands, expenses, penalties, fines, taxes of any character or nature whatsoever regardless of by whom imposed, and losses of every conceivable kind, charcter and nature whatsoever arising from the Plan, the Redevelopment Project, the 8^th Street and Pennsylvania District the the issuance of any Bonds, letters of credit or escrow and the execution of this agreement, including but not limited to, claims for for loss or damamge to any property or injury to or death of any person, asserted by or on behalf of any person, firm corporation, or governemtal authority arising out of or in any way connected to the with any property of the Developers, or the conditions, occupancy, use, possession, conduct or managemant of, or any work done in or about the Plan or Redevelopment Project by the Developers or its agents; provided , however, that such indemnification shall not extend to any default under this Agreement by the City. The Developers also covenant and agree at their expense to pay, and to indemnify and save the City and its respective members, officers, employees and agents harmless of, from and against, all costs, reasonable counsel fees, expenses and liabilities incurred by it or the Developers in any action or proceeding broiught by reason of such claim, demand, expense penalty, fine or tax. If any action or prroceeding is brought against the City or its respective members, directors, officers, employees or agentsby reason of any such claim or demand the Developer, upon notice from the City, covenants to resist and defend such action or proceeding on demand of the City or its respective members, directors, officers, employee or agants. Notwithstanding the forgoing, neither the City not its respective members, directors, officers, employees or agents shall be indemnified against liablity for damage arising out of bodily injury to persons or damage to property caused by its own act or omision or the acts or omisions of its own members, directors, officers, employees or agents.

Q. Termination. This agreement shall terminate upon the earlier of (1) an event of Default by the Developers, or (2) ten years from the date of the approval of the Neighborhood Revitalization Plan and Program, or (3) or until the maximum rebate limits pursuant to the Neighborhood Revitalization Plan and Program have been reached.

IN WITNESS WHEREOF, the City and the Developers have duly executed this Agreement pursuant to all requisite authorizations as of the date first above written.

CITY OF LAWRENCE, KANSAS

_______________________________

Mike Amyx, Mayor

ATTEST:

____________________________

Frank Reeb, City Clerk

APPROVED AS TO FORM:

___________________________

Toni Ramirez Wheeler

Interim Director of Legal Services