FOR DEVELOPER REVIEW
DRAFT 10/11/06
[VENABLE 10/27 COMMENTS]
DEVELOPMENT AGREEMENT
BETWEEN
ARMED FORCES RETIREMENT HOME
AND
_______________________________________________
___________________, 2006
______________________________________________________________________________
TABLE OF CONTENTS 
ARTICLE I	DEFINITIONS	2
ARTICLE II	STANDARD OF PERFORMANCE AND RELATED MATTERS	9
ARTICLE III	PROJECT BUDGET; PROJECT SCHEDULE; OPERATING BUDGET	 12
ARTICLE IV	CERTAIN OBLIGATIONS OF DEVELOPER	13
ARTICLE V	REPRESENTATIONS AND WARRANTIES	 17
ARTICLE VI	DESIGN PLANS	 20
ARTICLE VII	CONSTRUCTION	 21
ARTICLE VIII	PERMITS; OCCUPANCY	 23
ARTICLE IX	LEASING; PROJECT SECURITY	 24
ARTICLE X	PROPERTY MANAGEMENT; MAINTENANCE ; AND ENVIRONMENTAL MATTERS 	 24
ARTICLE XI	DEVELOPMENT SCHEDULE AND LEASES	 28
ARTICLE XII	TAX MATTERS	 31
ARTICLE XIII	DEFAULT AND REMEDIES	 31
ARTICLE XIV	NOTICES	 32
ARTICLE XV	INDEMNIFICATION	 33
ARTICLE XVI     MISCELLANEOUS	 33

EXHIBIT A	AFRH-W Campus
EXHIBIT B	Redevelopment Area
EXHIBIT C	Project Site
EXHIBIT C-1	Existing Buildings
EXHIBIT C-2 LaGarde Building
EXHIBIT D	Project Plan
EXHIBIT E	Construction Management Plan
EXHIBIT F	Initial Operating Budget
EXHIBIT G	Historic Structures
EXHIBIT H	Programmatic Agreement
EXHIBIT I	Form of Parcel Ground Lease
EXHIBIT J	Record of Decision

DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT (the “Agreement”) is made and entered into this ____ day of _______, 2006 (the “Effective Date”), by and between the Armed Forces Retirement Home, acting by and through THE SECRETARY OF DEFENSE (“AFRH”), and ________________________, a _____________ (“Developer”) (each a “Party” and collectively, the “Parties”).
RECITALS:
A.	AFRH is an independent establishment of the Federal executive branch.  AFRH owns and operates veterans’ retirement homes and related properties in Washington, DC and Gulfport, MS.
B.	AFRH is the owner of AFRH-W.  AFRH-W in its entirety is eligible for listing on the National Register of Historic Places.
C.	Pursuant to the National Defense Authorization Act for Fiscal Year 2002 (107 P.L. 107, 24 U.S.C. § 401, et seq.), the Secretary of Defense is authorized to sell or lease AFRH real property to supplement the AFRH trust fund.
D.	On or about October 12, 2005, AFRH issued its RFQ for the Redevelopment Area, consisting of Zones 3 and 4 (including the possible adaptive re-use of ten (10) buildings located in Zone 3).  Nine (9) of the ten (10) buildings are the Historic Structures.
E.	Developer submitted its response to the RFQ in a timely fashion on or about December 21, 2005, in which Developer represented that it has substantial experience in real estate projects similar to the Project and that it has the current financial and operational ability to perform the work necessary to successfully complete the Project.  After review of Developer’s response by AFRH and its consultants, Developer was among the respondents selected to submit a response to the RFP.  
F.	Developer timely submitted the Selected Proposal.  In accordance with the RFP, the Selected Proposal contains proposals for two options for development:  Option (1) - Zones 3 and 4, including the ten (10) buildings in Zone 3 identified on the Building Location Map in Section I of the RFP as available for potential adaptive re-use (approximately 77 acres), and Option (2) - Separate developments on (a) Zone 3  (approximately 55 acres) and (b) Zone 4 (approximately 22 acres), which has no buildings located on it as of the date of this Agreement.  
G.	Pursuant to 24 U.S.C. § 411(e)(3) and the selection process set forth in the RFQ and RFP, Developer has been selected to undertake the mixed-use redevelopment of the Project Site in accordance with this Agreement. 
H.	AFRH desires that Developer undertake the Project and Developer agrees to undertake the Project, and the Parties desire to provide for the terms and conditions of the development of the Project and the maintenance of the Project Site as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, which are hereby incorporated into and made a material part of this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the Parties agree as follows:
ARTICLE I	 DEFINITIONS
FOR PURPOSES OF THIS AGREEMENT, THE FOLLOWING TERMS SHALL HAVE THE DEFINITIONS ASSIGNED TO THEM BELOW:
1.1	“AFRH-W” means the two hundred seventy-two (272)-acre campus of the Armed Forces Retirement Home in Washington DC, located west of North Capitol Street, NW, and north of Irving Street, NW, as shown on the plat attached hereto as Exhibit A and made a part hereof.
1.2	“Agreement” means this Development Agreement.
1.3	“Applicable Laws” means, collectively, all Federal, state, and local laws, rules, regulations, orders, and ordinances that are applicable to Developer or the Project.
1.4	“Approved Mortgagee” means an approved Lender that has a security interest in the Leased Premises that is subordinate to the Master Lease or to a Parcel Ground Lease.
1.5	“Approved Punch List Items” means the punch list items approved in writing by AFRH upon Developer’s Substantial Completion of any of the Infrastructure Improvements, any of the New Improvements on each Parcel, or any renovation of the Existing Buildings in accordance with the Final Plans. 
1.6	“Architect’s Contract” means the contract with the Architect(s) with respect to the Project.
1.7	“Authorized AFRH Representatives” means the persons designated pursuant to Section 2.2.
1.8	“Authorized Developer Representatives” means the persons designated pursuant to Section 2.2.
1.9	“Capital Repair and Replacement Plan” means the capital repair and replacement plan and budget for the Project prepared by Developer and submitted to AFRH as part of the Initial Operating Budget and each Operating Budget, which shall (a) identify the projected capital repair and replacement needs of the Project, together with anticipated funding sources for the term of the Master Lease and each Parcel Ground Lease; and (b) explain any variances from the Capital Repair and Replacement Plan for the prior calendar year.
1.10	“CERCLA” has the meaning set forth in the definition of Environmental Laws in this Article 1.
1.11	“Construction Contract” means the contract with the Construction Contractor(s) with respect to the Project.
1.12	“Construction Documents” means the Schematic Design Plans, the Design Development Plans and the Final Plans to be submitted for AFRH approval.
1.13      	“Construction Management Plan” means the plan prepared by Developer and approved by AFRH for the management by Developer of the Project in accordance with the Project Plan, attached hereto and made a part hereof as Exhibit E.
1.14	“Closing Schedule” means the schedule for closing on Parcel Ground Leases for individual Parcels, attached as an exhibit to the Project Schedule, as subsequently revised from time to time pursuant to the terms of Section 11.5 hereof.
1.15	“Demolition Plan” means the plan prepared by Developer, approved by AFRH and incorporated in the Construction Management Plan for the demolition of any Existing Improvements by Developer.
1.16	“Design Criteria” means (a) the Master Plan; (b) the Preservation Plan; and (c) the applicable building codes and standards in the District of Columbia.
1.17	“Design Criteria Exception Notice” means the written notice sent by AFRH to Developer, with respect to the Schematic Design Plans, Design Development Plans and Final Plans submitted to it for its review setting forth any inconsistencies with the Project Design Plan and the Design Criteria, and any corrective action proposed by AFRH.
1.18	“Design Development Plans” means a set of design plans to be submitted to AFRH at the 65 percent phase of design for a New Improvement.
1.19	“Development Protocol” means the agreement attached to the Project Plan to govern the orderly and cooperative efforts and activities of the Parties during the development of the Project, as described in Section 2.8 hereof.
1.20	“Effective Date” means the date first written above, which represents the date on which the Parties are bound by the terms and conditions of this Agreement.
1.21	“Environmental Condition” means any Hazardous Substance, Pollutant or Contaminant, including Hazardous Waste or Hazardous Constituent, or Petroleum Product or its derivative as those terms are defined by Environmental Laws, disposed of, released or existing on, under or from the Redevelopment Area in environmental media such as soil, subsurface soil, air, groundwater, surface water or subsurface geological formations at levels that pose an unacceptable risk to human health and environment, that are above its naturally arising presence in the environment, and that require a response action in accordance with Applicable Laws.  
1.22	“Environmental Impact Statement” means the statement prepared by AFRH pursuant to requirements of NEPA that identifies impacts of development on the Project Site and any mitigation requirements arising from such identified impacts that are to be incorporated into the Project.
1.23	“Environmental Laws” means any and all Federal, state or local laws, statutes, rules, regulations, ordinances, codes, requirements, judicial and administrative orders, consents, decrees, writs, injunctions and judgments that address, are related to, or are otherwise concerned with pollution, protection of the environment, the use, storage or disposal of Hazardous Substances and/or health and safety issues (including occupational safety and health), including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (“CERCLA”); the Solid Waste Disposal Act (sometimes referred to as the Resource Conservation and Recovery Act of 1976), 42 U.S.C. § 6901 et seq. (“RCRA”); the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Clean Water Act, 33 U.S.C. § 1251 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq.; the Endangered Species Act of 1973, 16 U.S.C. § 460 et seq. (“ESA”); and the National Environmental Policy Act of 1969, 42 U.S.C. § 4321 et seq. (“NEPA”); as any of the preceding may be amended from time to time.  
1.24	 “Environmental Requirements” means all conditions, mitigation measures and other requirements with respect to the Redevelopment Area pursuant to applicable Environmental Laws.  
1.25	“Environmental Site Assessment” means the enumeration by AFRH of Hazardous Substance activity that has been identified on the Project Site, in accordance with CERCLA requirements and the third party Phase 1 and Phase 2 (if any) environmental reports for the Project Site.
1.26	“Event of Default” means any of the events of default set forth in Section 13.1. 
1.27	"Excusable Delay" shall have the meaning assigned to it in the Master Lease.
1.28	“Existing Buildings” means all existing buildings as shown on the Building Location Map in Section I of the RFP and identified on Exhibit C-1 [(and initially excepting the LaGarde Building and the parking area for the LaGarde Building, as shown on Exhibit C-2, for as long as the LaGarde Building is occupied by residents of AFRH-W)].
1.28	“Existing Improvements” means all improvements located on the Project Site as of the Effective Date of this Agreement, including the Existing Buildings and the Existing Infrastructure.
1.29	“Existing Infrastructure” means all roads, streets, curbing, sidewalks, parking areas, access drives, and appurtenant drainage thereto within the Project Site existing as of the Effective Date.
1.30	“Final Plans” means any or all of the Project Design Plans approved by AFRH that are one hundred percent (100%) complete and have been modified as required or as necessary to comply with the Master Plan and the Preservation Plan.  
1.31	“Force Majeure” shall have the meaning assigned to it in the Loan Documents.
1.32	“General Contractor” means the contractor selected by Developer and approved by AFRH for the construction of the New Improvements on the Project Site or any Parcel.
1.33	“Ground Lease” means the Master Lease or a Parcel Ground Lease, as the context may require.  
1.34	“Hazardous Substance” has the meaning set forth in CERCLA, 42 USC § 9601(14).
1.35	“Historic Structures” means the Existing Buildings set forth on Exhibit G that have been determined to be eligible for listing on the National Register, either individually or as part of a historic district.
1.36	“Hotel Tenant” means the operating company for any hotel constructed on the Project Site pursuant to the Project Plan that enters into a sublease with Developer for any portion of the Project Site.
1.37	 “Infrastructure Improvements” means certain infrastructure, open space, and related improvements undertaken by Developer in accordance with this Development Agreement and the Master Lease.	
1.38	“Initial Operating Budget” means the initial detailed budget for the ongoing operation of the Project prepared by Developer and submitted to AFRH for its review and approval. 
1.39	“Key Personnel” means the personnel listed in the Project Plan as the people primarily responsible for development of the Project.
1.40	“Leased Premises Improvements” means the improvements to be constructed and/or renovated on the Leased Premises pursuant to the Master Lease or a Parcel Ground Lease.
1.41	“Leasing and Occupancy Plan” means Developer’s plan for the leasing and occupancy of an individual Parcel.
1.42	“Leasing and Occupancy Plan Objection Notice” means the notice sent by AFRH to Developer, within thirty (30) days of its receipt of the Leasing and Occupancy Plan of any objections it may have to such plan.
1.43	“Lender” means an institutional lender that provides construction and/or permanent financing to Developer for the construction of the New Improvements on the Project Site or individual Parcels within the Project Site.   Developer may use one or more Lenders and may enter into a separate loan for each Parcel.
1.44	“Loan Documents” means those documents and instruments evidencing and securing a construction and/or permanent loan made by a Lender to Developer to finance Developer’s design, development and construction of the New Improvements.
1.45	“Management Review Committee” means the committee established by AFRH and Developer to discuss any issues relating to the provisions of this Agreement, the development and construction management of the New Improvements, and the operation and management of the Project.
1.46	“Master Lease” means the master Ground Lease by and between AFRH, and ____________________, dated ______________________, 
1.47	“Master Plan” means the final Master Plan approved by the National Capital Planning Commission for the development and construction of the improvements on the Project Site and other improvements to be made or caused to be made by AFRH on other portions of AFRH-W.
1.48	“NEPA” has the meaning set forth in the definition of Environmental Laws in this Article.
1.49	“New Improvements” means the Infrastructure Improvements and the Leased Premises Improvements.
1.50	“Operating Budget” means the annual operating budget for each succeeding calendar year after the Initial Operating Budget that is prepared by Developer and submitted to AFRH for its review and approval.
1.51 	“Overall Improvements” means the Existing Infrastructure, the Existing Buildings and the New Improvements, together with all personal property either existing of the Effective Date or to be placed on the Project Site.
1.52	“Parcel” means a portion of the Project Site that shall be the subject of a Parcel Ground Lease.   
1.53	“Parcel Ground Lease” means the instrument by which Developer will acquire the right to commence development and construction on each Parcel pursuant to the Phasing Plan in substantially the same form as Exhibit I attached hereto.
1.54	“Parcel Survey” means a Land Title Survey of each Parcel (with boundaries designated in accordance with the Final Master Plan) that clearly delineates such Parcel and includes the minimum 1999 ALTA/ACSM standard detail requirements.
1.55	“Permitted Encumbrances” means the recorded and unrecorded encumbrances for the Project Site shown on Exhibit E to the Master Lease. 
1.56	“Preservation Plan” means the plan setting forth detailed guidance on preservation of elements that contribute to the historic character of AFRH-W. 
1.57	“Programmatic Agreement” means the agreement entered into by AFRH and Developer pursuant to Section 106 of the National Historic Preservation Act governing the future use and development of the Redevelopment Area.
1.58	“Prohibited Person” means, at the time of such determination (a) any Person who is debarred, or suspended by any agency or instrumentality of the United States or included on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs or the Excluded Parties List System, each as maintained by the General Services Administration, or successor compilation of similar information pursuant to Executive Orders 12549 and 12689, 41 C.F.R § 105-68.140, and 48 C.F.R. § 9.404 or any similar or successor Executive Orders or rules; (b) any Person generally held in the real estate industry to lack a reasonably satisfactory record of integrity or business ethics; or (c) any Person that is not in compliance with Executive Order 13224 (September 23, 2001), the rules and regulations of the Office of Foreign Assets Control, Department of Treasury, or any enabling legislation or other Executive Orders in respect thereof or similar or successor rules.
1.59	“Project” means the mixed-use redevelopment of the Project Site, in accordance with Developer’s proposal for Option ___as set forth in the Project Plan.
1.60	“Project Agreements” means the Master Lease, each Parcel Ground Lease, the Project Plan, the Design Criteria, the Project Budget, the Project Schedule, the Architect’s Contract, the Construction Contract and the Master Plan, each as modified or amended from time to time in accordance with this Agreement, together with the Preservation Plan, the Construction Management Plan, the Programmatic Agreement, Property Management Agreement, the Demolition Plan, the Capital Repair and Replacement Plan,  the Project Security Agreement, the Record of Decision, this Agreement and any other agreement entered into by and between the parties governing the development, design, finance, demolition, construction, lease, maintenance and management of the Project and the Project Site.
1.61	“Project Budget” means the detailed budget proposed by Developer and approved by AFRH, for the design, development and construction phases of the Project, which detailed Project Budget (a) contains an itemized breakdown of hard and soft costs by phase; and (b) is attached as Exhibit __ to the Project Plan.
1.62	“Project Design Plan” means the design plans for the Project proposed by Developer and approved by AFRH and attached as Exhibit ___ to the Project Plan.
1.63	“Project Plan” means the document attached hereto as Exhibit D which details the development, Project Design Plan, finance, demolition, construction, lease, maintenance, management, environmental mitigation and socio-economic benefits of the Project and the Project Site to be carried out by Developer.
1.64	“Project Schedule” means the detailed schedule proposed by Developer and approved by AFRH for the design, development and construction phases of the Project, which detailed Project Schedule is attached as Exhibit __ to the Project Plan.
1.65	“Property Security Agreement” means an agreement prepared by Developer, submitted to AFRH for its review and approval and incorporated in the Construction Management Plan identifying security measures for the development, construction and operation phases of the Project.
1.66	“Project Team” means the firms listed in the Project Plan that will carry out the Project, as may be revised from time to time.
1.67	“Project Site” means the portion of the Redevelopment Area shown on Exhibit C, attached hereto and made a part hereof.
1.68	“Property Management Agreement” means the written agreement approved by AFRH and entered into between Developer and a third party or affiliate of Developer acceptable to AFRH for the management of the Project Site at all times from the date of the Master Lease through the end of the last Parcel Ground Lease.
1.69	“Property Manager” means a third party or affiliate of Developer selected by Developer and approved by AFRH to provide property management services under the Property Management Agreement.
1.70	“Property Survey” means a Land Title Survey of the Project Site that includes the minimum 1999 ALTA/ACSM standard detail requirements.
1.71	“Proposed Historic Changes Notice” means the written notice from Developer to the District of Columbia State Historic Preservation Office prior to Developer undertaking any construction, alteration, remodeling, demolition, or other modifications to the Historic Structures or streetscapes that would affect the integrity or appearance of the Project Site.
1.72	“Qualified Surety” means a corporate surety or insurer authorized to do business in the District of Columbia and possessing a long-term unsecured debt rating from a Rating Agency of no lower than two rating categories below the highest rating outstanding on the securities backed by this transaction. [No securitization expected for construction financing].
1.73	“Rating Agency” means any nationally recognized credit rating service that at the time the unsecured debt rating of the corporate surety is determined has one or more outstanding ratings of any securities issued by Developer to fund construction of the Project.
1.74	“Record of Decision” means the document setting forth the environmental mitigation measures to be completed and complied with by Developer, attached hereto and made a part hereof as Exhibit J.  
1.75	“Redevelopment Area” means the area shown on the plat attached hereto as Exhibit B and made a part hereof.
1.76	“Remediation” means corrective actions, response actions, remedial actions and/or monitoring plans reasonably necessary to permit the development, financing and use of the Redevelopment Area.
1.77	“RFQ” means the Request for Qualifications issued on October 12, 2005 by AFRH for the mixed-use redevelopment of the Redevelopment Area.
1.78	“RFP” means the Request for Proposals issued on August 11, 2006 by AFRH.
1.79	“Schematic Design Plans” means a set of design plans to be submitted to AFRH at the 30 percent phase of design for a New Improvement.
1.80	“Security Fence” means the new fence to be constructed by Developer to separate the Project Site from the rest of the AFRH-W campus as shown on the Project Design Plan.
1.81	“Selected Proposal” means Developer’s response to the RFP consisting of Volumes ____, dated ________, 2006.
1.82	“Small and Disadvantaged Business Enterprises” means businesses that have been certified under Sections 8(a) or 7(j) of the Small Business Act (15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d)).
1.83	“Standards” means the Secretary of the Interior Standards for Rehabilitation and Illustrated Guidelines for Rehabilitating Historic Buildings (U.S. Department of the Interior, National Park Service, 1992).
1.84	“Substantial Completion” means completion of any of the Infrastructure Improvements, any of the New Improvements on each Parcel, or any renovation of the Existing Buildings in accordance with the Final Plans, except for the Approved Punch List Items, in such a condition as to permit their use for their intended purposes.

1.85	“Tenants” means any commercial tenant and any Hotel Tenant that subleases a portion of the Project Site or space within any Improvements from Developer.
1.86	“Tenant Leases” means all commercial, residential or hotel subleases that Developer enters into for portions of the Project Site or space within any Overall Improvements pursuant to Article IX.
1.87	“Water and Sanitation Regulations” means Sections 526 through 535 of Title 21 of the District of Columbia Municipal Regulations which regulate storm water runoff from new construction, set controls on the quantity and quality of runoff for specified storm events and regulate discharges into the District’s wetlands. The Water and Sanitation Regulations are enforced by the District of Columbia Department of Health, Environmental Health Administration, Watershed Protection Division.
ARTICLE II	 STANDARD OF PERFORMANCE AND RELATED MATTERS
2.1	General. Developer shall develop, design, finance, demolish, construct, lease, maintain and manage the Project in accordance with the Project Agreements which are hereby incorporated into and made a material part of this Agreement. [IF THE PROJECT SITE INCLUDES THE LAGARDE BUILDING: Developer shall ensure that, in accordance with the Project Plan, while the LaGarde Building is being utilized for residential occupancy, Developer shall not unreasonably interfere with or disturb the residents of the LaGarde Building.]
2.2	Authorized Representatives.  The Parties acknowledge that __________________ and __________________ shall be the Authorized Developer’s Representatives for the Project and any successors to these individuals shall be subject to the approval of AFRH in its reasonable discretion.  The Parties further acknowledge that _________________ and _________________ shall be the Authorized AFRH’s Representatives for the Project.
2.3	Independent Contractor.  Developer shall at all times act as an independent contractor (and not as an agent of AFRH) with no authority to bind AFRH to any contract or other written or oral agreement.  This Agreement creates no relationship between Developer and AFRH other than that of independent contractor and no other relationship shall be deemed created or implied by any term of this Agreement.  All third-party contracts required, necessary or appropriate for the Project shall be between Developer and such third party.  AFRH shall not be a party to any such third-party contracts.  
2.4	Developer Costs.  All costs of payroll or other remuneration for individuals employed by Developer, including, without limitation, salaries, payroll taxes, insurance (including worker’s compensation) and related employment costs, bonuses and fringe benefits, shall be the sole responsibility of Developer and shall not be reimbursed by AFRH.  AFRH shall have no obligation to make available to Developer any sums of money or financing in connection with the Project, and AFRH shall have no obligation or liability for any debt or other financing obtained by Developer in connection with the Project. 
2.5	Standard of Performance.  Developer agrees to perform its work and provide the services required in this Agreement or to cause the work and services required in this Agreement using its best professional skill and judgment as a real estate developer, development manager and construction manager experienced in the development of like projects of a comparable scope in the geographic area in which the Project Site is located and consistent with the practices used therein for mixed-use projects.  AFRH has entered into this Agreement with Developer because of Developer’s special knowledge and skill in the planning, scheduling, development, financing, leasing, construction and maintenance of projects similar to the Project and in reliance on Developer’s representations in its response to the RFQ and in the Selected Proposal.  Developer shall conduct its duties under this Agreement and any related activities in a professional, timely, safe and workmanlike manner and in accordance with all requirements of this Agreement and Applicable Laws.  Developer shall notify AFRH immediately in writing of any changes or circumstances in the future that preclude or could reasonably be expected to preclude Developer’s continued compliance with the terms of this Agreement.
2.6	Parcel Reclassification and Reconfiguration.  The Parties acknowledge that each Parcel may, at Developer’s election, be subdivided or otherwise reconfigured, and uses changed, which modification(s) (and any other modification of the Project Design Plan) shall be subject to the approval of AFRH, not to be unreasonably withheld, conditioned or delayed, so long as all payments required or contemplated by the Master Lease or a Parcel Ground Lease are not reduced.
2.7	Tax Lot.  Developer shall arrange, at Developer’s sole cost and expense, for delineation of the Project Site into separate tax lots, which delineation shall be subject to AFRH’s prior approval, which shall not be unreasonably withheld, conditioned or delayed if and to the extent such delineation is consistent with the AFRH-approved metes and bounds or other legal description for the Parcels as shown on a final plat or survey which is consistent with the Master Plan.  AFRH agrees to cooperate with Developer in this regard, including, but not limited to, executing any such reasonable forms of documents, certificates, plats, submissions, applications and other documents that are required in connection with the foregoing; provided, that AFRH shall be under no obligation to incur any out-of-pocket expenses or any liabilities with respect to its cooperation under this Section.  AFRH agrees that the legal description for each Parcel that will be attached to or contained in the Parcel Ground Lease for such Parcel shall be the legal description therefore as certified to AFRH in the applicable Parcel Survey. 
2.8	Development Protocol.  Developer shall prepare and deliver to AFRH a draft of the Development Protocol for the Project Site.  AFRH and Developer shall negotiate in good faith to agree upon the final form of the Development Protocol.  The Parties recognize and agree that the Development Protocol may need to be amended thereafter to reflect changes in development, activities and other issues.  The Development Protocol shall include provisions for regular reports and regular meetings.  At such meetings, the Parties shall pursue and coordinate their respective activities and share information relating to the Project.  Developer will provide to AFRH current information as to Developer’s marketing activities, financing, requested updates to the Master Plan, general progress and to the extent reasonably available at any given time, information needed to allow AFRH to program, plan and budget and obtain necessary funds for its activities.  AFRH will provide to Developer current information as to uses of any parts of the Redevelopment Area not yet leased and any updates with respect to occupied portions of the Redevelopment Area or the Project Site.  The Parties agree that the Development Protocol shall contain provisions striking a reasonable balance between AFRH’s desire to use and enjoy its parts of the Redevelopment Area, including the occupied areas of the Project Site and Developer’s desire to have uses by AFRH on the Project Site and the Redevelopment Area not impair Developer’s marketing and development activities.   The Development Protocol shall include provisions for use by Developer of the portions of the Project Site for storage of materials, construction trailers, staging areas and the like, taking into account AFRH’s desire to use and enjoy the Project Site and that AFRH should not be able to use the Project Site in a manner that materially hinders or adversely affects Developer’s ability to commence, continue and complete construction thereon so as to comply with various provisions of this Agreement or impedes Developer's ability to secure the Project Site.  

ARTICLE III PROJECT BUDGET; PROJECT SCHEDULE; OPERATING BUDGET
3.1	Project Budget.  Developer shall cause the Project to be completed in accordance with the Project Budget, as modified periodically with the written consent of AFRH, such consent not to be unreasonably withheld, conditioned or delayed.
3.2	Project Schedule.  Developer shall cause Project to be completed in accordance with the Project Schedule, subject to extensions that are (a) are consented to in writing by AFRH, such consent not to be unreasonably withheld, conditioned or delayed; or (b) are granted in writing by the Lender due to the occurrence of Force Majeure events; or (c) arise from an Excusable Delay; provided, however, that no such extensions, modifications or amendments shall reduce the payments required or contemplated by the Master Lease or a Parcel Ground Lease   .  The Project Schedule contains milestone dates for commencement and Substantial Completion of the Infrastructure Improvements, the New Improvements on each Parcel, and renovation of the Existing Buildings.  In the event that Developer has failed to use commercially reasonable business efforts to meet the milestone dates set forth in the Project Schedule, as such milestone dates may be modified as provided for in this Section and subject to Force Majeure and Excusable Delays, and such failure continues for sixty (60) days following Developer’s receipt from AFRH of written notice thereof, then such failure shall be deemed an Event of Default and without any obligation to allow for any further notice and cure period, AFRH may terminate this Agreement as to the portion of the Project Site that is the subject of the written notice and Developer shall lose the balance of its development rights for the remainder of the Project Site, except for other portions of the Project Site on which Developer has commenced or completed construction in accordance with the Project Plan and is not otherwise in default ofthere is no uncured Event of Default after all applicable notice and cure periods regarding the milestone dates for such construction or of any of its material obligations under this Agreement.  
3.3	Operating Budget.  Not less than one hundred twenty (120) days from the Effective Date, Developer shall prepare and submit to AFRH for its review and approval the Initial Operating Budget for the Project Site or, if applicable, for individual Parcels within the Project Site to be in conformance with the Project Budget.  The Initial Operating Budget shall include, but not be limited to, leasing and marketing costs, maintenance costs, including, if applicable, costs for maintaining any or all of the Historic Structures, third-party fees, repair and replacement reserves, debt service on Project loans, a Capital Repair and Replacement Plan and such other matters as are typically included in an operating budget for mixed-use development projects similar to the Project in the geographic area in which the Project Site is located.  Not more than thirty (30) days after its receipt of the proposed Initial Operating Budget, AFRH shall provide in writing any comments it may have on the Initial Operating Budget.  The Parties shall meet within ten (10) days of Developer’s receipt of AFRH’s comments on the Initial Operating Budget to resolve any differences.  AFRHDeveloper shall have final approval rights in its reasonable discretion with respect to the Initial Operating Budget.  Once approved, the Initial Operating Budget shall be attached hereto and made a part hereof as Exhibit F.  Thereafter, Developer shall prepare and submit to AFRH for its review and approval an Operating Budget for each succeeding calendar year not later than ninety (90) days prior to the end of the then-current calendar year.  Not more than thirty (30) days after its receipt of each proposed Operating Budget, AFRH shall provide in writing any comments it may have on the Operating Budget.  The Parties shall meet within ten (10) days of Developer’s receipt of AFRH’s comments on the Operating Budget to resolve any differences.  AFRH shall have final approval rights with respect to all Operating Budgets. [INTERAL – Do want to keep AFRH's approval right in here?  If so should we have an objective standard for approval?]
ARTICLE IV	 CERTAIN OBLIGATIONS OF DEVELOPER
4.1	Compliance with Loan Documents.  Without limiting any of Developer’s other obligations under this Agreement, Developer shall at all times strictly comply and shall cause all aspects of the design, development, demolition, construction and operation of the Project, as well as all Tenants, as applicable, to comply with the terms and conditions of any Loan Documents secured by all or any portion of the Project, including all financial and non-financial terms, conditions and covenants of any Loan Documents.  Developer acknowledges and agrees that AFRH does not and shall not have any obligation or responsibility for compliance with any of the terms, conditions or covenants of any Loan Documents, including but not limited to any payment obligations, except and solely to the extent set forth in any separate written agreement between AFRH and any Lender.  Without limiting the foregoing, Developer shall take any and all actions that may be necessary and/or required by a Lender to timely obtain any advance or disbursement of funds by a Lender for the payment of the General Contractor and any subcontractors.  
4.2	Compliance with Project Agreements. Without limiting any of Developer’s other obligations under this Agreement, Developer shall at all times cause the Project to be developed and constructed strictly in accordance with the Project Agreements.  Without limiting the foregoing, Developer shall monitor and assure compliance by the General Contractor with the Construction Contract.  Developer shall also monitor and assure compliance by the Architect with its contract, shall monitor the Architect’s preparation and review of shop drawings, product data and the like, and shall use its bestcommercially reasonable business efforts to cause the Architect to respond in a timely fashion so as not to cause delay in the design, development or construction of the Project. 
4.3	Historic Preservation.
4.3.1	Section 106 of the National Historic Preservation Act requires, among other things, that Federal agencies consider the effects of their undertakings on properties listed, or eligible for listing, on the National Register of Historic Places.  AFRH-W is eligible for listing on the National Register of Historic Places as a Historic District, and it contains built and natural resources that contribute to its historic significance. Developer shall comply with the Preservation Plan adopted by AFRH and consented to by Developer in its reasonable discretion.  Moreover, Developer acknowledges that the future use and development of the Property is subject to a Programmatic Agreement entered into by AFRH, which agreement is attached hereto and made a part hereof as Exhibit H, and to which Developer will also be a Party.  Developer shall take no actions which are inconsistent with the Programmatic Agreement or that mayshall cause AFRH to be in violation of that Programmatic Agreement and will rehabilitate Historic Structures to meet the Standards and such other standards and guidelines as may be applicable from the Design Criteria.
4.3.2	Developer covenants, on behalf of itself and its successors and assigns, to AFRH and to the District of Columbia State Historic Preservation Office to preserve and maintain the Historic Structures in accordance with the recommended approaches in the Standards or design guidelines approved by the District of Columbia State Historic Preservation Officer in order to preserve and maintain those qualities that make these properties eligible for inclusion on the National Register of Historic Places. 
4.3.3	The design of New Improvements, if applicable, proposed for the Project Site shall adhere to the Design Criteria. 
4.3.4	In the event that Developer enters into a lease agreement with another entity for the reuse of any of the Historic Structures, Developer shall include appropriate covenants to ensure that if the Historic Structures are rehabilitated, they will be rehabilitated and maintained in accordance with the Standards and plans and specifications submitted to AFRH and the District of Columbia State Historic Preservation Office for review and approval.
4.3.5	Developer shall consult with the District of Columbia State Historic Preservation Office during the development of Schematic Design Plans for any New Improvements.
4.4	Compliance with National Environmental Policy Act of 1969.  AFRH will issue a Record of Decision in accordance with the requirements of NEPA upon issuance of the final Environmental Impact Statement for the Project Site.  A delay in the release of the Record of Decision after the date set forth in the Project Schedule shall be an Excusable Delay.  Except to the extent arsing from conditions present before the Effective Date hereof or the actions of AFRH, its employees, contractors, agents, or invitees, Developer shall be solely responsible, without expense to AFRH, for completion of and compliance with the mitigation measures identified as mandatory in the Record of Decision.   (Note to developers: the mitigation measures will be incorporated into the Project Plan and will include, but are not limited to, preparation and implementation of a Transportation Management Program to mitigate traffic impacts and an Energy Conservation Plan.  Both the Transportation Management Program and the Energy Conservation Plan are required for the Final Master Plan submission to the National Capital Planning Commission.  Once developed and approved by AFRH, the Transportation Management Plan and the Energy Conservation Plan shall be attached as exhibits to the Project Plan.  With respect to mitigation measures identified for consideration in the Record of Decision, AFRH and Developer will work in good faith with the appropriate parties or agencies to determine which may be feasible or appropriate and how such mitigation measures may be accomplished.)  AFRH shall not be responsible for any costs and expenses relating to any subsequent compliance with NEPA required solely as a result of New Improvements proposed by Developer.  In evaluating (for approval or disapproval) any request by Developer to change the Master Plan, AFRH may take into account, among other things, any applicable NEPA requirements.  [Developer presumes that is will be able to revisit this subsection after the release of the Record of Decision.]

4.5	Property Survey; Parcel Surveys.  Within 120 days following the Effective Date, Developer shall, at its cost and expense, obtain and deliver to AFRH the Property Survey.  Developer shall, at its cost and expense, obtain and deliver to AFRH a Parcel Survey for each Parcel.  Each Parcel Survey is subject to AFRH’s reasonable approval to ensure such survey accurately describes each Parcel, which approval shall not be unreasonably withheld, conditioned or delayed.  

	4.6	Master Plan.	Developer shall participate with AFRH in seeking approval from the National Capital Planning Commission for the Master Plan.  Developer will contribute to its development, support AFRH in meetings and presentations, and share the cost of its development and production with AFRH in the same proportion as the density of Developer’s New Improvements approved by the National Capital Planning Commission in the Master Plan is to the density of new development approved by the National Capital Planning Commission in the Master Plan for AFRH-W.  

	4.7	Stakeholders.  Developer shall be required to participate with AFRH in AFRH’s outreach to the stakeholders identified in Section IV.G. of the RFP regarding the redevelopment of the Project Site, including through (a) formal processes such as are required for compliance with Section 106 of the National Historic Preservation Act and NEPA; (b) community-wide meetings; (c) meetings with residents of AFRH-W; and (d) individual meetings with public agencies, elected officials, institutions and individuals.  Developer shall adhere to relevant terms of the Programmatic Agreement and, if agreed to in Developer's reasonable consent, other agreements that may be entered into between AFRH and stakeholders, such as the Programmatic Agreement. 

4.8	Storm Water Management and Wetlands.	Developer shall develop and pay for a Storm Water Management Plan compliant with the Water and Sanitation Regulations, construct and maintain a storm water management system that is fully compliant with the requirements set forth in the Water and Sanitation Regulations and be fully responsible for compliance with the Water and Sanitation Regulations.  

4.9	Archaeology.	Developer will be responsible for developing and implementing archaeological testing strategies on the Project Site, in consultation with AFRH and the District of Columbia State Historic Preservation Office and any delays arising from archaeological matters shall be considered Excusable Delays. 
4.10	Comfort and Safety of the Residents of the Home.	Developer shall minimize adverse impacts of construction on the residents of AFRH-W.  Construction shall not interfere with the operations of AFRH-W’s shuttle service.  The Construction Management Plan shall include mitigation measures to address the quality of life of the residents, such as air quality, noise levels, and security.   The current number of parking spaces for the LaGarde Building shall be maintained as long as residents of AFRH-W occupy that building.  

4.11	Security Fence.	Developer will be responsible for the design, construction, financing and maintenance of a new security fence between the Project Site and the non-development portion of AFRH-W, subject to AFRH’s approval. If more than one developer is selected for Zones 3 and 4, the costs of design, construction and maintenance of the fence will be borne by such developers in proportion to the approved density of the development in each zone.  Developer shall be prohibited from using the Eagle Gate [INTERNAL – confirm OK] at any time during the term of this Agreement, the Master Lease or any Parcel Ground Lease.

4.12	Open Space.	Developer shall be responsible for the design, construction, financing and maintenance of the open space in accordance with the Project Plan and the Capital Repair and Replacement Plan. If more than one developer is selected for Zones 3 and 4, the costs of design, construction and maintenance of the major open spaces (open space located in Zones 3A and 3B in the Master Plan) and the bike path will be borne by such developers in proportion to the approved density of the development in each zone. 

4.13	Infrastructure Improvements.	Developer shall be responsible for the design, construction, financing and maintenance of the Infrastructure Improvements on the Project Site, including the security fence.  Developer will be required to comply with all District of Columbia laws and regulations governing the construction of such Infrastructure Improvements and obtaining all necessary permits.  If more than one developer is selected for Zones 3 and 4, the cost of design, construction and maintenance of the Infrastructure Improvements shall be borne by such developers in proportion to the approved density of the development in each zone or as otherwise agreed by the selected developers. 

4.14	Socio-Economic Requirements.

4.14.1	Non-Discrimination.	Developer, its successors and assigns shall not discriminate against any individual or business entity on the basis of race, color, gender, disability, religion or national origin in (a) the use, occupancy, sale or lease of the Project Site; (b) the selection of construction subcontractors, vendors or suppliers; and (c) any employment practices with respect to employees employed at or in connection with the Project Site.  AFRH shall be deemed a beneficiary of this agreement not to discriminate regardless of whether it continues to own any portion of the Project Site or lease any portion of the Project Site and AFRH shall have the right to enforce this agreement not to discriminate in any court of competent jurisdiction.  

4.14.2	Inclusion of Small, Disadvantaged Business Enterprises.	Developer shall be required to implement its plans, as proposed by the Developer, approved by AFRH, and included in the Project Plan, for the inclusion of Small and Disadvantaged Business Enterprises.  AFRH will monitor compliance with the plans. 

4.14.3	Apprenticeship Program.	Developers will be required to implement the labor/trade apprenticeship and training program plan as proposed by the Developer, approved by AFRH, and included in the Project Plan, which plan shall be included in each construction contract to ensure that the commitments for the labor/trade apprenticeship and training programs are met. AFRH will monitor compliance with the plan. 

4.14.4	Compliance with All Applicable Laws.	Developer shall comply with all Applicable Laws, including without limitation land use and environmental requirements.

4.15	Government Approvals.  Any application for permits, land use reviews, special exceptions or variances, street closings, street openings, dedications or realignments, lot consolidations, or subdivisions (or any other platting or replatting approaches or processes), local historic preservation approvals or for any other land use or regulatory process, strategy or approach required from the District of Columbia for the development of the Project, and any other approvals (similar or dissimilar to the foregoing) made or required pursuant to District of Columbia legal requirements shall be Developer’s responsibility.   AFRH shall support Developer's efforts to obtain the approvals set forth in this subsection to the extent that Developer's efforts are not inconsistent with the Project Plan and shall use commercially reasonable efforts to do so.
ARTICLE V	 REPRESENTATIONS AND WARRANTIES 
5.1	Representations and Warranties of Developer.
5.1.1	Formation; Good Standing; Authority.  Developer is a duly formed _______________ validly existing and in good standing under the laws of the State of _____________ and authorized to conduct business in the District of Columbia. Developer has the requisite power, right and authority to enter into and perform all of its obligations under this Agreement and the instruments and documents referred to herein, and to consummate the transaction contemplated under this Agreement.  The person(s) executing this Agreement and the instruments referred to herein on behalf of Developer has the requisite power, right and authority to bind Developer and is legally competent.  This Agreement is a valid and binding obligation of Developer, enforceable against Developer in accordance with its terms.
5.1.2	Consents.  Developer has undertaken all requisite action and has obtained all requisite consents, releases and permissions in connection with entering into this Agreement and the instruments and documents referred to herein or required under any covenant, agreement, encumbrance, law or regulation with respect to the obligations required hereunder, and no consent of any third party is required for the performance by Developer of its obligations hereunder.
5.1.3	Execution; Delivery; Enforceability.  This Agreement is, and all instruments and documents to be executed and delivered by Developer pursuant to this Agreement shall be, duly authorized, executed and delivered by Developer.  This Agreement is, and all instruments and documents to be executed and delivered by Developer shall be, valid and legally binding upon Developer and enforceable in accordance with their respective terms.
5.1.4	No Violations.  Entering into this Agreement and fulfilling its obligations hereunder will not cause Developer to violate any Applicable Laws to which Developer is subject or any agreement or other instrument to which Developer is a Party or by which it is bound, nor will it violate any of the terms of any of Developer’s organizational documents, including, but not limited to, any stockholders’ or other voting agreements, or any loan documents to which Developer is a Party or by which Developer is bound.
5.1.5	No Pending Actions.  There are no legal actions, suits or administrative proceedings pending before any court of law, tribunal or other governmental body or to Developer’s actual knowledge threatened against Developer which if adversely determined would materially adversely affect Developer’s ability to perform its obligations hereunder.
5.1.6	Financial and Operational Capability.  Developer has the financial and operational capability to perform all of its obligations hereunder, including, without limitation, its indemnification obligations, and there is no financing contingency with respect to Developer’s obligations under this Agreement.
5.1.7	No Actions for Relief from Claims.  Developer is not the subject of any proceeding under the United States Bankruptcy Code or any similar Federal or state law or statute regarding relief from creditors claims, whether voluntary or involuntary; Developer has no present intent to commence a bankruptcy proceeding on its own behalf; and Developer has not received any actual notice that any such proceedings have been instituted or threatened by any Party against Developer.
5.1.8	Sophisticated Developer.  Developer, through its affiliates has substantial experience in the successful design, development, construction and maintenance of mixed-use real estate projects similar to the Project.  Developer’s Key Personnel and Project Team are as set forth in the Project Plan.  Developer’s experience is such that Developer (either directly through the Key Personnel or through one or more of its Project Team members or Developer's affiliates) has the experience to perform all of its obligations under this Agreement.  Developer shall makecause no change or substitutions in the Key Personnel or Project Team identified in the Project Plan without AFRH’s prior written approval, which shall not be unreasonably withheld, conditioned or delayed.  In the event Developer desires to makecause a change in the Key Personnel or Project Team for any reason, Developer shall submit to AFRH, in writing, the name and qualifications of a proposed replacement with equal or better qualifications, experience and record of past performance sufficient to ensure the performance of all of the Developer's obligations under this Agreement.  AFRH shall provide its approval or disapproval (which notice of disapproval shall state the reasons in reasonable detail for AFRH’s disapproval of the request) to Developer in writing within the later of (a) twenty (20) business days following AFRH’s receipt of Developer’s request for AFRH’s approval, or (b) five (5) business days following AFRH’s receipt of a second notice from Developer reminding AFRH of the approval deadlines set forth in this Section and expressly stating that, if AFRH fails to respond in such period, Developer may act pursuant to this Section in accordance with such notice, provided that such 20-business day and 5-business day periods shall be extended if and to the extent any additional time is required for Developer to deliver such additional materials as AFRH reasonably requires and requests in order to complete its review of such request.  Developer’s notice(s) to AFRH requesting AFRH’s approval shall clearly state the approval deadlines set forth in this Section.  If AFRH fails to respond as provided in this Section to Developer’s request for AFRH approval within the 5-business day period described in clause (b) above (and following the period in clause (a) above), then Developer may implement the change in Key Personnel and Project Team as set forth in such notice.  
5.1.9	Acknowledgement of Disclaimer.  PurchaserDeveloper acknowledges and agrees that, except as expressly set forth in this Agreement, the Master Lease or a Parcel Ground Lease, AFRH has not made, does not make and specifically negates and disclaims any representations and/or warranties (whether express or implied), promises, covenants, agreements or guaranties of, as to, concerning or with respect to (a) the value, quality or condition of the Project Site; (b) the income to be derived from the Project; (c) the suitability of the Project Site for any and all uses and activities that Developer may conduct thereon; (d) the habitability, merchantability, marketability, profitability or fitness for a particular purpose of the Project Site; (e) the manner or quality of the construction or materials incorporated into the Existing Improvements; (f) the manner, quality, state of repair or lack of repair of the Project Site and Existing Improvements; or (g) any other matter with respect to the Project Site and/or the Existing Improvements.  Developer further acknowledges and agrees that, with respect to the physical condition of the Project Site and the Existing Improvements, having been given the opportunity to inspect them, Developer is relying solely on its own investigations and not on any information provided or to be provided by AFRH and waives all objections or claims against AFRH arising from or relating to the Project Site and the Existing Improvements except as expressly provided in this Agreement, the Master Lease or a Parcel Ground Lease.  Developer further acknowledges and agrees that any information provided or to be provided with respect to the Project Site and the Existing Buildings was obtained from a variety of sources and that AFRH has not made any independent investigation or verification of such information and makes no representation as to the accuracy or completeness of such information, with the exception that AFRH has no actual knowledge that any information provided by AFRH to Developer is false, incomplete or misleading in any material respect.  Developer further acknowledges and agrees that, to the maximum extent permitted by law, the conveyance of any Existing Buildings under the Master Lease or any Parcel Ground Lease is made on an “as-is” basis with all faults.  [Developer anticipates conducting title, environmental and other commercially reasonable due diligence assessments of the Project Site prior to the Effective Date hereof and reserves the right to further comment pending the results of such assessments.]
5.2	Representations and Warranties of AFRH.
5.2.1	Entity.  AFRH is an independent establishment of the Federal executive branch.  AFRH has the requisite power, right and authority to enter into and perform all of its obligations under this Agreement and the instruments and documents referred to herein, and to consummate the transaction contemplated under this Agreement.  The person(s) executing this Agreement and the instruments referred to herein on behalf of AFRH has the requisite power, right and authority to bind AFRH and is legally competent.  This Agreement is a valid and binding obligation of AFRH, enforceable against AFRH in accordance with its terms.
5.2.2	Consents.  AFRH has undertaken all requisite action and has obtained all requisite consents, releases and permissions in connection with entering into this Agreement and the instruments and documents referred to herein or required under any covenant, agreement, encumbrance, law or regulation with respect to the obligations required hereunder, and no consent of any third party is required for the performance by AFRH of its obligations hereunder.
5.2.3	Execution; Delivery; Enforceability.  This Agreement is, and all instruments and documents to be executed and delivered by AFRH pursuant to this Agreement shall be, duly authorized, executed and delivered by AFRH.  This Agreement is, and all instruments and documents to be executed and delivered by AFRH shall be, valid and legally binding upon AFRH and enforceable in accordance with their respective terms.
5.2.4	No Violations.  To AFRH’s knowledge, entering into this Agreement and consummating this transaction will not violate any Applicable Laws to which AFRH is subject or any agreement or other instrument to which AFRH is a Party or by which it is bound, nor will it violate any of the terms of AFRH’s statutory authority.
5.2.5	No Pending Actions.  There are no legal actions, suits or administrative proceedings pending before any court of law, tribunal or other governmental body or, to AFRH’s actual knowledge, threatened against AFRH or the Project Site that, if adversely determined, would materially adversely affect DeveloperAFRH’s ability to perform its obligations hereunder or Developer’s intended use of the Project Site.
5.2.6	Compliance.  To AFRH’s knowledge, but without inquiry, the Project Site and the Existing Buildings are in compliance with all Applicable Laws.  AFRH has received no notice of any violation of any zoning, subdivision, platting, building, fire, insurance, safety, health or other Applicable Laws with respect to the Project Site or the Existing Buildings.
5.2.7	Condemnation.  There is no pending, nor to AFRH’s actual knowledge, threatened, condemnation or eminent domain proceeding affecting any portion of the Project Site.
5.2.8	Mechanics’ Liens.  All bills and claims for labor performed and materials furnished to or for the benefit of the Project Site or the Existing Buildings at AFRH’s request during the period preceding the Master Lease and any Parcel Ground Lease have been (or will as of the date of the applicable Parcel Ground Lease be) paid in full, and there shall be no mechanics’ or materialmen’s liens (whether or not perfected) on or affecting the applicable Parcel on the date of the Parcel Ground Lease. 
5.2.9	Environmental Hazards.  AFRH makes no representations, express or implied, and gives no warranties, concerning or regarding the environmental condition of the Project Site or the Existing Buildings.  Developer expressly acknowledges and agrees that it is relying solely on environmental reports, studies and investigations obtained by Developer from third parties other than AFRH in entering into this Agreement, the Master Lease and each Parcel Lease.  
5.2.10	Leases.  There are no agreements in effect for the occupancy of any portion of the Project Site. 
5.2.11	Purchase Option.  No person has a right of first refusal or an option to purchase all or any portion of the Project Site, any Existing Building or any part thereof (including, without limitation, air rights or so-called transferable development rights).
ARTICLE VI	 DESIGN PLANS 
6.1	Compliance with Plans.  Developer will comply with the Final Plans.  The Schematic Design Plans, the Design Development Plans and the Final Plans for all New Improvements shall be subject to AFRH’s review and approval solely for consistency with the Project Design Plan.  Any renovation of Existing Improvements or construction of New Improvements on the Project Site shall be completed in accordance with the Project Design Plan and the Final Plans.   The Final Plans shall control in the event of any inconsistencies between the Project Design Plan and the Final Plans unless AFRH otherwise expressly agrees in writing.
6.2	Submission of Plans.  The Schematic Design Plans, Design Development Plans and Final Plans shall be submitted to AFRH for review solely to ensure consistency with the Project Design Plan and the Design Criterea.  Such plans must be prepared, signed and certified by a duly qualified architect registered in the District of Columbia and shall include foundation, framing and structural component drawings signed and sealed by a District of Columbia licensed structural engineer.  A written statement of the elements, if any, of such that deviate from the Project Design Plan and Design Criteria must be submitted with the Schematic Design Plans, Design Development Plans and Final Plans.  Any architect or structural engineer who signs any of the Schematic Design Plans, Design Development Plans and Final Plans must be employed by Developer or by contractors engaged by Developer. 
6.3	Alterations to Plans.  If at any time Developer desires to propose material changes to the Final Plans previously approved by AFRH, then Developer shall submit the proposed changes to AFRH solely to ensure consistency with the Project Design Plan and the Design Criteria.  Plan alterations must be prepared, signed and certified by a duly qualified architect registered in the District of Columbia and shall include foundation, framing and structural component drawings signed and sealed by a District of Columbia licensed structural engineer.
6.4	AFRH Objections to Plans.  If AFRH believes that any of the Schematic Design Plans, Design Development Plans and Final Plans submitted to it for its review are not consistent with the Project Design Plan and Design Criteria, then AFRH shall provide to Developer a Design Criteria Exception Notice within forty-five (45) days of receipt of such plans by AFRH.    [The review period should be shorter for plan revisions (e.g. mid-construction)]. 
6.5	Alterations After the Substantial Completion of the New Improvements.  After the Substantial Completion of the New Improvements for each Parcel, and the design of any  subsequent improvements, renovations or alterations (or a series thereof) whose cost equals or exceeds ten percent (10%) of the then appraised value of the improvements on such Parcel, shall be subject to the prior review and approval of AFRH to ensure they are consistent with the Master Plan and applicable District of Columbia law and not unreasonably interfere with the operation of any property operated by AFRH proximate to such Parcel.  Subsequent improvements, renovations or alterations (or a series thereof) whose cost is less than ten percent (10%) of the then appraised value of the improvements on such Parcel may be done without AFRH's prior consent so long as such work is consistent with the Master Plan and applicable District of Columbia law does not unreasonably interfere with the operation of any property operated by AFRH proximate to such Parcel. 
ARTICLE VII	 CONSTRUCTION
7.1	Commencement of Construction. New Improvements shall be completed in accordance with the Project Schedule, the Project Plan, and the Construction Management Plan and be consistent with the Project Design Plan and Design Criteria and the Final Plans as approved in Article VI of this Agreement.  Within two (2) weeks after AFRH provides written confirmation to Developer of its receipt of the Final Plans for a New Improvement, AFRH will, subject to Developer’s continued compliance with this Agreement, issue written authorization for Developer to proceed with the work.  Developer shall not undertake any work until it receives AFRH’s written authorization, which shall not be unreasonably withheld, delayed or conditioned.  Developer shall commence and diligently proceed with construction of the work, or cause third parties to commence and diligently proceed with construction of the work in a good and workmanlike manner and in accordance with this Agreement. Developer shall at all times be responsible for the management of the Project pursuant to a Construction Management Plan to be agreed upon by Developer and AFRH.
7.2	Payment and Performance Bonds. No construction shall be commenced or continued with respect to any of the New Improvements unless and until Developer shall provide AFRH with evidence reasonably satisfactory to AFRH that payment and performance bonds are in place and run in favor of AFRH and any Approved Mortgagee, as their respective interests may appear, and are sufficient to cover the cost of construction of such New Improvements.  Each of the bonds must: (a) be issued by a Qualified Surety; (b) be in a form satisfactory to AFRH and any Approved Mortgagee; (c) be in the amount of the total cost of constructing the New Improvements, as such cost is stipulated in the construction contract between Developer and its general contractor; and (d) guarantee the performance of the contract for the construction of such improvements in accordance with the Construction Management Plan; provided, however, that Developer may satisfy this obligation by providing a performance and payment bond for each New Improvement in an amount equal to the hard and soft costs of construction of the New Improvement as set forth in the approved Project Budget.  
7.3	 Completion in Accordance with Plans.  Developer shall cause the General Contractor selected by Developer and approved by AFRH and all subcontractors to cause the Project to be completed in strictsubstantial compliance with all Applicable Laws and the Project Agreements (including, without limitation, the Project Budget, the Project Schedule, the Construction Management Plan) and, if any, all applicable public works agreements, free and clear of all liens and other title encumbrances other than the Loan Documents and the Permitted Encumbrances.  No addition to, deletion from, or modification of any of the Project Plan, Project Schedule, Project Budget and the Construction Management Plan that has a materially adverse effect on Developer's ability to fulfill its obligations under this Agreement or other Project Agreements, or the financial interest of AFRF under the Master Lease or any Parcel Lease shall be implemented unless and until approved in writing by AFRH.  Failure to renovate, demolish, and/or construct the Overall Improvements in accordance with the Project Plan, the Final Master Plan, the Programmatic Agreement and the Construction Management Plan shall constitute an Event of Default if such failure is not corrected by Developer within the notice and cure period provided in this Agreement.
7.4	Construction Free of Defects.  Developer hereby represents and warrantscovenants to obtain and make the benefit thereof available to AFRH a representation and warranty from all contractors and/or subcontractors designing or constructing the New Improvements that, for a period of twoone (21) yearsyear from the date of completion, construction of any of the New Improvements shall be free of any defect in equipment, material, design, or workmanship performed by Developer or any contractor or subcontractor.  Performance of this representation and warranty shall be secured, at no cost or expense to AFRH, by a corporate guaranty or corporate surety acceptable to AFRH or by insurance in an amount not less than _____ MILLION DOLLARS ($_,000,000.00); provided, however, that Developer’s warranty obligations shall not, in any way, be limited or otherwise affected by the amount of such corporate surety bond, insurance policy or corporate guaranty.  The warranty must be issued by a surety, an insurer or guarantor acceptable to AFRH.  The form of the surety bond, corporate guaranty or insurance coverage must be acceptable to AFRH in all respects.  Developer shallSubject to Developer's right to contest an alleged defect or the remedy thereof, in Developer's reasonable and good faith discretion, Developer shall use its best efforts to cause the warranting party to begin work to remedy any defect in equipment, material, design, or workmanship within ten (10) days after receivingDeveloper's receipt of written notice of the defect from AFRH.  If Developer and if warranting party fails to remedy the defect within a reasonable time after itsDeveloper's receipt of notice, AFRH shall give notice of such failure to Developer and have the right to require the corporate surety or insurer to replace, repair or otherwise remedy the defect at no cost or expense to AFRH.  The warranty shall not limit any rights of AFRH under this Agreement with respect to latent defects, gross negligence, willful misconduct, or fraud.
7.5	Quality Control.  Developer shall maintain an effective quality control program that will assure that the workmanship of and materials used by any contractor, subcontractor, or vendor satisfy the requirements of the Construction Management Plan.  The quality control program shall be administered by an independent certified professional hired by Developer and approved by AFRH and any Approved Mortgagee to perform inspections and provide certification to AFRH and each Approved Mortgagee of compliance with the Construction Management Plan.
7.6	Demolition.  Any Existing Improvements to be demolished by Developer shall be demolished in accordance with the Demolition Plan.  The Demolition Plan shall clearly set out a schedule of demolition activities, and shall include an asbestos and lead-based paint disposal plan that identifies the proposed disposal site for asbestos and lead-based paint.
7.7	AFRH Approval of Certain Matters.  All matters of ingress, egress, contractor haul routes, construction activity and disposition of excavated material in connection with this Agreement shall be approved by AFRH in accordance with the Construction Management Plan.
7.8	Temporary Structures.  Developer shall not construct any temporary structure on the Project Site except as set forth in the Project Plan.
7.9	No Cost to AFRH.  All construction provided for in the Final Plans shall be without cost or expense to AFRH, and AFRH shall have no obligations or liabilities with respect to such construction.
7.10	Title to Overall Improvements.  Title to the Overall Improvements shall be vested in Developer or its successor in interest throughout the Lease Term of the Master Lease and each Parcel Ground Lease, and Developer’s rights with respect to such Overall Improvements shall be as set forth in the Master Lease and the applicable Parcel Ground Lease.
7.11	Substantial Completion; Punch List.  Upon Substantial Completion of any of the New Improvements, Developer shall furnish to AFRH: (a) certificates of each of a duly qualified architect registered in the District of Columbia, a structural engineer licensed in the District of Columbia, and any inspecting architect, in the form of AIA Document G704 confirming that the New Improvements have been completed in accordance with the Final Plans, subject to Approved Punch List Items; (b) a true, correct and complete copy of the permits and licenses, if any, required in connection with the construction, renovation and demolition of the New Improvements; (c) an as-built plat of survey (prepared, to the maximum extent practicable, in accordance with ALTA/ACSM Standards) of the Project Site detailing easements, the parcel boundaries and any encroachments to the boundaries, certified to Developer, any Approved Mortgagees and AFRH and ; (d) an electronic record in a format and with the level of detail specified by AFRH, in its reasonable discretion, providing (i) as-built drawings of the New Improvements for the Parcel; and (ii) the Final Plans for the Parcel; provided, however, that items (c) and (d) shall only be provided at the end of all work performed on any such Parcel.  All of the foregoing shall be satisfactory to AFRH in its reasonable discretion as to form and accuracy. 
ARTICLE VIII	 PERMITS; OCCUPANCY
8.1	Permits.  Developer shall be responsible for obtaining and complying with, at its cost and expense, all permits and other governmental approvals necessary or required for the construction, leasing, management and operation of the Project, including but not limited to building permits and occupancy permits.  AFRH shall have no responsibility for obtaining or complying with any permits or other governmental approvals for the Project.
8.2	Occupancy.  Developer shall not authorize or allow any Tenant to occupy any new or renovated space in the Project unless and until a certificate of occupancy or its functional equivalent has been issued for such space.
8.3	Coordination.  Developer shall coordinate the work of any Tenant contractor with the General Contractor’s work; coordinate the punch list process with the Architect and the General Contractor; and coordinate Tenant occupancy with the General Contractor.
ARTICLE IX	 LEASING; PROJECT SECURITY 
9.1	Leasing Standards.  With respect to non-residential tenancies, developer shall lease or cause to be leased space in the Project to reputable Tenants approved by AFRH in its reasonable business judgment who are, which approval shall be granted to prospective tenants who would be leasing space for lawful and non-immoral purposes and would not pose an unreasonable risk to national security or the security of the tenants on other parcels of land proximate to the Project Site owned and operated by AFRH.  Neither Developer nor its agents shall discriminate against any person on the basis of race, color, creed, gender, sexual orientation or ethnic background.
9.2	Limit on Tenant Lease Term.  Developer shall not enter into any Tenant Lease for a term that extends beyond the last day of the lease term under the applicable Parcel Ground Lease.
9.3	No AFRH Liability.  Each Tenant Lease shall expressly state that AFRH has no liability to Tenant under the Tenant Lease, and that Tenant shall look solely to Developer for remedies under the Tenant Lease.
9.4	Leasing and Occupancy Plan. Developer shall submit to AFRH each Leasing and Occupancy Plan not less than ninety (90) days prior to the first offering of any space in the Project to the public.  AFRH shall provide Developer with a Leasing and Occupancy Plan Objection Notice within thirty (30) days of its receipt of the Leasing and Occupancy Plan.  AFRH and Developer shall meet promptly thereafter to resolve any differences arising from the Leasing and Occupancy Plan Notice.  
9.5	Project Security.  Developer shall be responsible for security at the Project at all times from the date of this Agreement through the termination of the last Parcel Ground Lease.  As part of its Construction Management Plan, Developer shall submit to AFRH for its review and approval, prior to authorizing any contractor or subcontractor to enter onto the Project Site, a Property Security Agreement. 
ARTICLE X PROPERTY MANAGEMENT, MAINTENANCE AND ENVIRONMENTAL MATTERS
10.1	General Responsibilities.  Developer shall enter into a Property Management Agreement with a qualified, reputable property management company experienced in successfully managing properties substantially similar to the Project.  Any such agreement is subject to the prior written approval of AFRH, which approval shall not be unreasonably withheld, delayed or conditioned.  Developer shall not make any material revision to the Property Management Agreement without the prior written consent of AFRH.  
10.2  	Management Review Committee.  AFRH and Developer shall establish a Management Review Committee.  AFRH and Developer each shall appoint two representatives to the Management Review Committee.  The Management Review Committee shall meet not less than monthly (or, following the Substantial Completion of the improvements contemplated by the Project Plan, as reasonably determined to be necessary by the Management Review Committee) beginning in the first month after the execution of the Master Lease and continuing through the first month after the termination of the last Parcel Ground Lease. The Management Review Committee shall adhere to the Development Protocol.
10.3 	Developer to Provide Maintenance.    Developer shall be responsible for the maintenance of the Project Site and the Overall Improvements at no cost to AFRH, consistent with that customary for first-class mixed-use projects in the District of Columbia.  The Master   Lease and each Parcel Ground Lease shall state the specific requirements for maintenance of the Project.
10.4. Environmental Matters. 
10.4.1	Hazardous Substances.	Developer is hereby notified that the following Hazardous Substance activity has been identified on the Project Site as a result of a search of agency records by AFRH.  Developer acknowledges and agrees that, to the extent such information was available on the basis of a complete search of agency records, AFRH has provided notice to Developer of the type and quantity of any Hazardous Substance that is known to have been stored for one year or more, known to have been released, or known to have been disposed of on the Project Site; the time at which such storage, release, or disposal took place; and a description of the response action taken, if any, for each such Hazardous Substance.  The specific nature and quantity of all Hazardous Substance activities identified are set forth in (a) the Final Phase I Environmental Site Assessment; and (b) the Final Phase II Environmental Site Assessment. 

	10.4.2	Remediation Work and Financial Arrangements.
  
            	10.4.2.1	All necessary Remediation work on the Project Site will be undertaken at AFRH’s cost and expense on AFRH’s behalf by Developer in accordance with the provisions set forth herein.  Developer shall not be financially liable for any environmental condition that existed on, under, or was released from the Project Site or otherwise arose prior to the Effective Date.  AFRH is responsible under CERCLA for causing the completion of all Remediation work necessary to provide the Section 120(h) CERCLA covenant; provided that, Developer shall fund the Remediation work and will receive a credit (including a reasonable interest factor) toward future payment owed to AFRH pursuant to this Agreement, the Master Lease or any Parcel Ground Lease in the amount of such advance.  In connection with the development of the Project, Developer shall remediate or cause the Project Site to be remediated in accordance with applicable Environmental Laws and this Agreement at AFRH's sole cost and expense.

10.4.2.2	Subject to the terms in this Article, AFRH certifies that all Remediation work consistent with the intended uses of the Project Site as developed in accordance with this Agreement and in compliance with Applicable Laws relating to such use, with respect to any such environmental condition remaining on the Redevelopment Area has been taken or will be taken prior to a grant of an interest in any Parcel to the extent required under Environmental Laws.  Subject to the terms in this Article, AFRH shall, to the extent required under CERCLA § 120, cause to be conducted, at AFRH's sole cost and expense, any additional Remediation work found to be necessary after the date of the grant of interest that results from any environmental condition that occurred or existed on, under, or was released from the Project Site prior to the Effective Date, except to the extent and only to the extent of liability arising from or actions required as a result of a release or threatened release as to which Developer is or was a responsible Party.  Notwithstanding the foregoing, in the event Developer is or was the responsible Party with respect to a release of Hazardous Substances after the Effective Date, AFRH shall not be required to take any such Remediation work nor have any other obligations under this section or under CERCLA § 120(h) as it relates to the release of Hazardous Substances at the Project Site by Developer.  [INTERNAL - Isn't Developer performing all work? – this implies AFRH is doing work.  This seems like a boiler plate certification.]

10.4.2.3	To the extent such action does not materially interfere with or delay he performance of any Developer's obligations hereunder or under any Project Agreements (including, without limitation, those related to construction), AFRH reserves the right to access the Project Site at reasonable times, in a reasonable manner and upon reasonable notice, with respect to any Parcel in order to accomplish any further investigation, monitoring, Remediation work, or other such actions that may be required under this Section, and AFRH agrees to promptly repair in a good and workmanlike manner any material damage caused thereby.  To this end, aAny delay to the Project Schedule caused by such work shall be an Excusable Delay.  A clause shall be placed in all Parcel Ground Lease(s) that grant AFRH access to the Project Site consistent with the foregoing in any case in which Remediation work or other such action is found to be necessary after the effective date of each Parcel Ground Lease.    

10.4.3	District of Columbia Soil Characteristic Notice.	Pursuant to D.C. Code Ann. (2001), § 42-608(b), AFRH states: (a) the characteristic of the soil on the Project Site as described by the Soil Conservation Service of the United States Department of Agriculture in the Soil Survey of the District of Columbia published in 1976 and as shown on the Soil Maps of the District of Columbia at the back of that publication is “urban land”; and (b) for further information, Developer can contact a soil testing laboratory, the District of Columbia Department of Environmental Services or the Soil Conservation Service of the Department of Agriculture.  

10.4.4	District of Columbia Underground Storage Tank Disclosure Notice.     In accordance with the requirements of Section 3(g) of the District of Columbia Underground Storage Tank Management Act of 1990, as amended by the District of Columbia Underground Storage Tank Management Act of 1990 Amendment Act of 1992, AFRH is required to inform Developer in writing of the existence of any underground storage tanks at the Project Site.  Developer acknowledges receipt of such notice prior to entering into this Agreement.

10.4.5	Notice of the Presence of Asbestos – Warning!	

10.4.5.1	Developer is warned that the Project Site contains asbestos-containing materials.  Unprotected or unregulated exposures to asbestos in product manufacturing, shipyard, and building construction workplaces have been associated with asbestos-related diseases.  Both the Occupational Safety and Health Administration and the Environmental Protection Agency regulate asbestos because of the potential hazards associated with exposure to airborne asbestos fibers.  Both the Occupational Safety and Health Administration and the Environmental Protection Agency have determined that such exposure increases the risk of asbestos-related diseases, which include certain cancers and which can result in disability or death. 

10.4.5.2	Developer is invited, urged and cautioned to inspect the Project Site prior to entering into a Parcel Ground Lease for a particular Parcel as to its asbestos content and condition and any hazardous or Environmental Conditions relating thereto.  AFRH will assist Developer in obtaining any authorization(s) that may be required in order to carry out any such inspection(s).  Except to the extent specifically provided otherwise in this Agreement, Developer shall be deemed to have relied solely on its own judgment in assessing the overall condition of all or any portion of the Project Site including, without limitation, any asbestos hazards or concerns.

10.4.5.3	No warranties either express or implied are given with regard to the condition of the Project Site including, without limitation, whether the Project Site does or does not contain asbestos or is or is not safe for a particular purpose.  The failure of Developer to inspect, or to be fully informed as to the condition of all or any portion of the Project Site, will not constitute grounds for any claim or demand for adjustment of the cost for carrying out the Remediation work, provided, however, that, notwithstanding anything to the contrary set forth herein, nothing in this Section shall waive or diminish the obligations of AFRH to comply with applicable Environmental Laws.

10.4.5.4	Except with respect to liability caused by AFRH’s breach of contract, tortious acts or negligence, AFRH assumes no liability for damages for personal injury, illness, disability or death, to Developer, or to Developer’s successors, assigns, employees, tenants, invitees, or any other person subject to Developer’s control or direction, or to any other person, including members of the general public, arising from or incident to the purchase, transportation, removal, handling, use, disposition, or other activity causing or leading to contact of any kind whatsoever with asbestos on the Project Site, whether Developer, its successors or assigns has or have properly warned or failed properly to warn the individual(s) injured.

10.4.5.5	Developer further agrees that in its development, use and occupancy of the Project Site, Developer will comply with all Applicable Laws relating to asbestos.
10.4.6	Notice that the Redevelopment Area Contains Improvements That May Contain Lead-Based Paint – Warning!	Developer is hereby informed and does hereby acknowledge that all buildings on the Project Site that were constructed or rehabilitated prior to 1978 are presumed to contain lead-based paint.  Developer is on notice as to lead-based paint on the Project Site prior to the Effective Date.  Each Parcel Ground Lease shall include any legally required disclosures or covenants with respect to lead-based paint or lead-based paint hazards. 

ARTICLE XI DEVELOPMENT SCHEDULE AND LEASES 
11.1	Development Schedule.  Developer shall complete the Project in accordance with the Project Schedule.  Developer shall not diverge from the Project Schedule in a way that will materially delay the substantial completion of the New Improvements without the prior written consent of AFRH, which consent may be granted or denied in AFRH’s solereasonable discretion.  
11.2	Parcel Development Leasing.  At such time as Developer has completed the site-wide Infrastructure Improvements required for a particular Parcel, complied with the requirements of Section 11.3 below and is prepared to commence on-site development of a Parcel in accordance with the Project Plan, Developer shall enter into a Parcel Ground Lease with AFRH for such Parcel substantially in the form of Exhibit I.   Each Parcel Ground Lease shall be for a term of sixty (60) years, except in the case of Parcel Ground Lease for a Parcel to be developed with residential condominiums, in which case the Parcel Ground Lease shall be for a term of ninety-nine (99) years with the right of renewal for consecutive additional terms of not less than ninety-nine (99) years in accordance with Applicable Laws, in each case subject to earlier termination on the terms and conditions set forth in the Parcel Ground Lease.   
11.3	Master Lease and Parcel Ground Lease.  Concurrent with the execution of this Agreement, Developer and AFRH have entered into the Master Lease.  Each Parcel shall be released from the Master Lease pursuant to the Project Plan once (a) the applicable Infrastructure Improvements and the other work set forth in the Project Schedule and Project Plan are completed; (b) Developer is prepared to enter into a Parcel Ground Lease for such Parcel; and (c) each of the following conditions has been met to AFRH’s satisfaction:
		(i)	Developer has provided evidence of financing for the improvements on the Parcel acceptable to AFRH in its solereasonable discretion [need objective standard of what is acceptable];
		(ii)	the Final Plans for the Parcel have been approved by AFRH;
		(iii)  	the Construction Management Plan for the Parcel has been approved by AFRH;
		(iv) 	the Capital Repair and Replacement Plan for the Parcel has been approved by AFRH;
		(v)	Developer has entered into a Property Management Agreement with a property manager approved by AFRH for the management and maintenance of the Parcel;
		(vi)	the apprenticeship and training programs referenced in Article IV are in place;
		(vii)	the Developer has complied with the Small and Disadvantaged Business Enterprise plan referenced in Article IV;	
		(viii)	all necessary and required permits for the commencement of construction of the New Improvements on the Parcel have been obtained by Developer;
		(ix)	Developer is not in defaultno uncured Event of Default after the expiration of all applicable notice and cure periods under any provision of the Master Lease or any Parcel Ground Lease; and
		(x)	Developer is not in defaultno uncured Event of Default after the expiration of all applicable notice and cure periods under any provision of this Agreement.

11.4	Required Terms.  The Master Lease and each Parcel Ground Lease shall provide, without exception, that (a) they will be unsubordinated; (b) AFRH will retain ownership of the land that is the subject of each Lease; and (c) AFRH will retain reversionary rights to the land and all of the improvements on the land, whether currently existing or added by Developer, at the conclusion of each Lease term; and (d) AFRH, in its sole discretion, may elect to require Developer to remove any or all improvements in one or more Parcels at Developer’s sole cost and expense.
11.5	Closing.	Subject to any Developer closing conditions and any AFRH closing conditions, the closing for each Parcel shall occur as determined pursuant to Section 11.3 and in accordance with the Closing Schedule.  Developer may, in good faith, revise the Closing Schedule from time to time with the approval of AFRH, not to be unreasonably withheld, conditioned or delayed, as set forth below in this Section 11.5.

	11.5.1	Adjustments of Actual Closing Dates.
  
11.5.1.1	The Parties recognize that the Closing Schedule (as may be revised from time to time in a manner consistent with the Project Schedule or as mutually agreed between the parties in their reasonable discretion) reflects closing dates that, in the ordinary course of events, will require adjustments in the actual day of Closing, the scope of which is not reflective of a “revision” of the Closing Schedule and does not require AFRH’s consent.  Consequently, the Parties have established a process by which the actual closing date for any given Parcel is to be determined.  This process for determining the actual closing date is separate and apart from the designation of closing dates in the Closing Schedule (as revised) and, is not intended to replace any requirement for approval of a revision to the Closing Schedule that does not fall within the scope of this Section.

11.5.1.2	Developer shall provide AFRH written notice no later than 180 days in advance of any closing date on the Closing Schedule, stating the approximate date Developer believes closing will occur, which date must be within 60 days of the date shown on the Closing Schedule to not be treated as a revision to the Closing Schedule.  To the extent Developer provides such notice earlier than the 180th day prior to the closing date on the Closing Schedule, Developer shall at any time and from time-to-time prior to such 180th date be entitled to re-designate the proposed closing date.  Such approximate date shall become the proposed closing date.  Developer shall then provide AFRH written notice no later than 30 days in advance of the proposed closing date of the actual closing date, which date must be no sooner than one week, and no later than 30 days, from the proposed closing date to not be treated as a revision to the Closing Schedule.  To the extent Developer provides such notice earlier than the 30th day prior to the proposed closing Date, Developer shall at any time and from time-to-time prior to such 30th day be entitled to re-designate the actual closing date.

11.5.1.3	The Parties acknowledge that each closing date is subject to the AFRH closing conditions and Developer closing conditions, and the provisions of this Section are for the purposes of establishing an actual date for closing. If closing does not occur on the date finally determined by operation of this Section, then the provisions of this Agreement dealing with failure of conditions and/or default shall apply.
11.5.2	Approval of Proposed Revisions Resulting in Delays.  If Developer proposes a revision to the Closing Schedule after the Closing Schedule has been agreed to, and the proposed revision would result in the delay of Closing on any given Parcel, AFRH shall provide its approval or disapproval of the revision to the Closing Schedule within the later of (a) twenty (20) business days following AFRH’s receipt of Developer’s request for AFRH’s approval; or (b) five (5) business days following AFRH’s receipt of a second notice from Developer reminding AFRH of the approval deadlines set forth in this Section and expressly stating that, if AFRH fails to respond in such period, Developer may act pursuant to this Section in accordance with such notice, provided that such 20-business day and 5-business day periods shall be extended if and to the extent any additional time is required for Developer to deliver such additional materials as AFRH reasonably requires and requests in order to complete its review of such request.  Developer’s notice(s) to AFRH requesting AFRH’s approval shall clearly state the approval deadlines set forth in this Section.  If AFRH does not respond to Developer’s request for AFRH approval as provided above in this Section within the 5-business day period described in clause (b) above (and following the period in clause (a) above), then, Developer may revise the Closing Schedule as set forth in such notice.
11.5.3	Place of Closing.	Each closing shall take place in the offices of Developer located in the Washington, D.C. area, in the offices of Developer’s counsel located in the Washington, D.C. area, or in the offices of the Title Company located in the Washington, D.C. area, as determined by Developer, or at such other location as otherwise agreed in writing by Developer and AFRH.  The delivery of the documents and the payment of the sums to be delivered and paid at each applicable closing, if any, shall be made to the Title Company.  The Title Company shall be responsible at each closing for preparing the settlement sheet, causing all documents to be recorded, disbursing all applicable closing proceeds, filing IRS Form 1099-B or any similar city or Federal form required to be filed reporting the sale transaction, and otherwise conducting each closing in accordance with local industry standards and Applicable Laws and pursuant to closing instructions consistent with this Agreement and otherwise reasonably satisfactory to AFRH and Developer.  [Need to address closing deliveries from AFRH such title policy affidavit and estoppels and SNDA from Approved Mortgagees]

		11.5.4	Closing Costs.  Developer shall pay all recordation and transfer taxes, if applicable, title company charges and other normal and ordinary incidental costs of each closing, provided, however, that, except as otherwise specifically provided in this Agreement to be paid by another person, AFRH shall pay all costs it incurs in the performance of any of its covenants or obligations hereunder with respect to each closing, expressly excluding any recordation, transfer or other similar taxes.  Each Party shall be responsible for its own attorneys’ fees in connection with this transaction. 

ARTICLE X	II TAX MATTERS
12.1	Developer shall be responsible for the full and timely payment of all property, income, sales and other taxes on Developer, the Project Site, the Overall Improvements and the Project.   AFRH shall have no responsibility for the payment of any taxes on Developer, the Project Site, the Overall Improvements or the Project that become due from the period commencing on the executionEffective Date of the Master Lease and ending, for all or a portion of the Project Site, on the effective date of termination of a Parcel Lease.

ARTICLE XIII DEFAULT AND REMEDIES
13.1	Events of Default.  In addition to events defined elsewhere in this Agreement as Events of Default, any one of more of the following shall constitute an Event of Default by Developer under this Agreement:
13.1.1	The occurrence of an uncured Event of Default under the Master Lease, any Parcel Ground Lease or any of the Project Agreements.
13.1.2	The filing of a voluntary or involuntary bankruptcy proceeding for protection under the United States Bankruptcy Code by or against Developer, or if Developer voluntarily or involuntarily becomes subject to any reorganization, receivership, insolvency proceeding or other similar proceeding pursuant to any other Federal or state law affecting debtor and creditor rights and is not dismissed or discharged within sixty (60) days after filing, or if Developer becomes unable to pay its obligations to creditors generally.
13.1.3	A determination by AFRH thatIf any of the representations or warranties of Developer in the Master Lease or any Parcel Ground Lease, this Agreement or any of the Project Agreements, as applicable, was, at the time made, materially false or misleading.
13.1.4	Failure of Developer to comply with Applicable Laws following notice of such failure to comply.
13.1.5	The breach by Developer of any of its payment or performance obligations under this Agreement or of any covenant, term or condition of this Agreement.
13.1.6	The failure to cure any default under any Loan Document in accordance with the terms of such Loan Document.
13.1.7	Failure of Developer to complete all required elements of each portion of the Phasing Plan in accordance with the Project Schedule, the Project Plan, the Construction Management Plan and the Project Budget which failure has a materially adverse effect on Developer's ability to fulfill its obligations under this Agreement or other Project Agreements, or the financial interest of AFRF under the Master Lease or any Parcel Lease.
13.2	Notice and Cure.  Upon the occurrence of an Event of Default, Developer shall, upon receipt of written notice from AFRH, have ten (10) days to cure any monetary defaults and thirty (30) days to cure any non-monetary defaults; provided, that if any non-monetary defaults are not capable of cure during said thirty (30)-day period, then such period shall be extended for a reasonable amount of time to allow Developer to cure such default so long as Developer commences the cure during such thirty (30)-day period and is diligently and in good faith pursuing a cure.
13.3	Remedies.  Upon the occurrence of an Event of Default and the failure of Developer to cure such Event of Default, AFRH shall have the remedies and shall follow the procedures set forth in the relevant Ground Lease.  In the event the relevant Ground Lease is terminated, this Agreement shall simultaneously terminate, without further action on AFRH’s part, as to that portion of the Project Site covered by the relevant Ground Lease.
13.4	Limited Waiver.  Waiver by AFRH of any Event of Default shall be limited to that occurrence of that Event of Default and shall not be deemed a waiver of any other occurrences of an Event of Default.  
13.5	Tolling.  No Event of Default shall be deemed to have occurred for any period of time during which an Excusable Delay exists or Developer and AFRH are attempting to resolve a dispute about an alleged default as provided in Article 16.6.  For an Excusable Delay, Developer's period for cure shall be tolled for the period of time that the Excusable Delay exists. For a dispute, if, pursuant to the dispute resolution procedures set forth in Article 16.6, a default is determined to have occurred, Developer’s period for cure shall not begin until the day after the final decision on the dispute is issued and such default shall not become an Event of Default until any applicable cure period has expired. In the event of a conflict with any other provision of this Agreement or any other Project Document, the provisions of this Section 13.5 shall control.

ARTICLE XI	V NOTICES
14.1	Any notice that a Party is required or may desire to give to any other Party under this Agreement shall be in writing and may be delivered (a) personally; (b) by United States registered or certified mail, postage prepaid; (c) by Federal Express or other reputable overnight delivery service that regularly provides evidence of delivery (with charges paid by the delivering Party); or (d) by facsimile, provided that such facsimile shall immediately be followed by delivery of such written notice pursuant to clause (a), (b) or (c) above. Any such notice shall be addressed as follows, subject to the right of a Party to designate a different address for itself by notice similarly given:
If to AFRH:

With copies to:

and to:				

If to Developer:	c/o Crescent Resources, LLC 2805 S. Crystal Drive Arlington, VA 22202 Fax: (703) 416-4442 Attn: Daniel B. Kohlhepp Attn: Robert H. Zeiller 

With a copy to:
If to Guarantor:
With a copy to:	Venable LLP 575 7th Street, NW Washington, DC 20004 Fax: (202) 344-8300 Attn: Jerry A. Moore, Esq. Attn: Philip M. Horowitz, Esq. 
 ARTICLE V INDEMNIFICATION
15.1	Developer hereby indemnifies, defends and holds AFRH harmless (except to the extent caused by AFRH, its employees, agents, contractors, or invitees) from and against any and all claims, demands, actions, proceedings, litigations, damages and liabilities whatsoever by any third party arising from or relating to (a) Developer’s performance under this Agreement; (b) any environmental harm, personal injuries or property loss or damage in, under or on the Project Site or the Overall Improvements occurring on or after the date of this Agreement, unless caused by a condition present prior to the Effective Date hereof; and (c) any other loss or damage of any kind in, under or on the Project Site or the Overall Improvements occurring on or after the date of this Agreement.
ARTICLE XVI MISCELLANEOUS
16.1	Press Release.  Any press release or other written public comment issued by Developer with respect to the transaction contemplated herein or the Project shall be subject to the prior written approval of AFRH, which approval shall not be unreasonably withheld.
16.2	Survival.  Unless otherwise expressly provided for in this Agreement, the representations, warranties, indemnification obligations and covenants of the Parties set forth in this Agreement shall survive the consummation of the transaction contemplated hereby.  All warranties and representations shall be effective regardless of any investigation made or which could have been made.
16.3	Entire Agreement; Exhibits; Amendments.  This Agreement contains all the terms agreed upon between the Parties with respect to the subject matter of this Agreement. All exhibits attached and referred to in this Agreement are hereby incorporated herein as though fully set forth herein (and shall be deemed to be a part of this Agreement).  This Agreement may not be changed, modified or terminated, except by an instrument executed by the Parties to this Agreement who are or will be affected by the terms of such instrument.
16.4 	Further Instruments.  Each Party will, whenever and as often as it shall be requested so to do by any other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement.
16.5	No Waiver.  Any Party may at any time or times, at its election, waive any of the conditions to its obligations hereunder, but any such waiver shall be effective only if contained in a writing signed by such Party.  No such waiver shall reduce the rights or remedies of a Party by reason of any breach by any other Party.  Waiver by one Party of the performance of any covenant, condition or promise of any other Party shall not invalidate this Agreement, nor shall it be deemed to be a waiver by such Party of the performance of any other covenant, condition or promise by such other Party (whether preceding or succeeding and whether or not of the same or similar nature).  No failure or delay by one Party to exercise any right or remedy it may have by reason of the default of any other Party shall operate as a waiver of default or modification of this Agreement or shall prevent the exercise of any right or remedy by such Party while the other Party continues to be so in default.
16.6	No Effect Unless and Until Signed.  This Agreement shall be of no force or effect and shall not bind Developer or AFRH unless and until both Parties shall have executed, delivered and exchanged counterparts of this Agreement.  Pending execution, delivery and exchange by the Parties of this Agreement, each Party reserves the right to withdraw from this transaction for any reason or no reason and shall have no liability to the other on account of any such decision not to proceed.
16.7	Successors and Assigns.  This Agreement shall bind and benefit the Parties and their successors and assigns.  No transfer or assignment of rights or obligations under this Agreement shall release the transferor from any of its obligations or liabilities under this Agreement (and each transferor hereby waives any and all defenses, including any suretyship defenses, to its continued liability under this Agreement).  Developer shall not assign or transfer its rights and responsibilities under this Agreement to any third party without the prior written consent of AFRH; provided, Developer shall have the right to assign or transfer its rights and responsibilities under this Agreement to an entity in which Developer or an affiliate of Developer either holds a majority equity interest or in which Developer is the general partner or managing member without AFRH’s approval.  No such assignment shall relieve Developer of its obligations under this Agreement.  Developer shall provide to AFRH written notice of a permitted assignment under this Section 16.7 within five (5) days after such assignment. 
16.8	Prohibition on Transfers to Prohibited Persons.  Notwithstanding anything else in this Agreement to the contrary, under no circumstances shall there be a transfer of all or any portion of the rights of Developer in and to this Agreement, the Project or any direct or indirect controlling interest in Developer to a Prohibited Person or a person controlled by a Prohibited Person.
16.9	Developer Statement Regarding Debarment and Suspension.  Pursuant to 41 C.F.R. § 105-68.225, Developer and this Agreement are currently subject to Executive Orders 12549 and 12689, 41 C.F.R. Part 105-68, and 48 C.F.R. Subpart 509.4.  To Developer’s knowledge as of the Execution Date, Developer and the key personnelKey Personnel for this Agreement:  (a) are not presently excluded or disqualified; (b) have not been convicted within the preceding three years of any of the offenses listed in 41 C.F.R. § 105.68.800(a) or had a civil judgment rendered against it for one of those offenses within that time period; (c) are not presently indicted for or otherwise criminally or civilly charged by a governmental entity (Federal, State, or local) with commission of any of the offenses listed in 41 C.F.R. § 105.68.800(a); or (d) have not had one or more public transactions (Federal, State, or local) terminated within the preceding three years for cause or default.  
16.10	Partial Invalidity.  If any term or provision of this Agreement or the application of any such term or provision to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by Applicable Laws.
16.11	Interpretation.  All references in this Agreement to the word “include” and derivations thereof are intended to be descriptive only, and shall not be interpreted to limit the application of the subject provision in any way.  The subject headings in this Agreement are inserted for convenience of reference only and do not define, describe, modify, expand, restrict or limit the scope or intent of all or any portion of this Agreement. Terms defined in the singular shall have the same meaning when used in the plural, with appropriate adjustments for use of the plural number, and vice versa.  Any reference to a “Party” means Developer or AFRH as applicable.  If a Party is identified as consisting of more than one person, then the liability of all such persons shall be joint and several.  This Agreement and any documents delivered pursuant hereto are the result of good faith, arm’s-length negotiation between parties of comparable sophistication and shall be construed without regard to the identity of the person who drafted the various provisions thereof.  Moreover, each and every provision of this Agreement and such other documents shall be construed as though all Parties hereto had participated equally in the drafting thereof.  As a result of the foregoing, any rule of construction that a document is to be construed against the drafting Party shall not be applicable.
16.12	Counterparts; Facsimile Copies.  This Agreement may be executed in several counterparts, each of which shall constitute the same instrument.  Signed copies of this Agreement may be exchanged by facsimile and all signatures exchanged by facsimile may be relied upon and shall have the same force and effect as if original signatures were exchanged.
16.13	Time Limits.  If the final date of any period provided for in this Agreement falls on a Saturday, Sunday or legal holiday under the laws of the District of Columbia, then in such event such period shall be deemed extended to the next day that is not Saturday, Sunday or legal holiday under such laws.
16.14	No Relationship of Parties.  Nothing contained in this Agreement shall be deemed or construed to create the relationship of principal and agent, partnership, joint venture or any association between Developer and AFRH.
16.15	Notices by Attorneys.  The respective attorneys for the Parties are hereby authorized to give any notices, and agree to any extensions of time, on behalf of the Party they represent.
16.16	Governing Law and Disputes.  Any disputes under this Agreement shall be resolved in accordance with applicable Federal law, and, in case such law does not exist, in accordance with the applicable District of Columbia law.  Each Party consents to the jurisdiction of the Federal courts of the District of Columbia and hereby waives any right or basis it may have to object to such jurisdiction.  [From Leases] If a dispute arises out of or relates to this Lease, or the breach thereof, and if said dispute cannot be settled through negotiation, the Parties agree first to attempt in good faith to settle the dispute by mediation, before resorting to litigation.  AFRH agrees that AFRH’s contracting officer shall not issue any final determination regarding any claim by or against Developer until and unless such mediation has been concluded, or either AFRH or Developer advises the other that a resolution of the dispute by mediation does not appear likely within a reasonable time.  AFRH and Developer each acknowledge that the other Party may exercise and enforce any and all its rights and remedies under this Lease.  Notwithstanding anything to the contrary herein, in the event that any dispute hereunder relates to matters directly addressed in any Parcel Lease, the matter shall be resolved pursuant to such Parcel Lease.
16.17	Disclaimer.	DEVELOPER ACKNOWLEDGES AND AGREES AS FOLLOWS:  That, except as specifically set forth in this Agreement or in the Master Lease or any Parcel Ground Lease, AFRH has not made, does not make and specifically negates and disclaims any representations and/or warranties (whether express or implied), promises, covenants, agreements or guaranties of, as to, concerning or with respect to (a) the value, quality or condition of the Project Site; (b) the income to be derived from the Project Site; (c) the suitability of the Project Site for any and all uses and activities currently or subsequently contemplated by Developer on the Project Site; (d) the habitability, merchantability, marketability, profitability or fitness for a particular purpose of the Project Site; (e) the manner or quality of the construction materials incorporated into any of the Existing Buildings; (f) the manner, quality, state of repair or lack of repair of the Project Site; (g) title; (h) the accuracy of any information or assumptions contained in the RFQ, the RFP or otherwise furnished by AFRH; (i) environmental conditions on the Project Site; (j) the zoning or regulatory requirements that apply or might be applied to all or any portion of the Project Site; or (k) any other matter with respect to, and any other conditions on, the Project Site not defined in (a) through (j) above.  Developer further acknowledges and agrees that, except as specifically set forth in this Agreement, the Master Lease, or any Parcel Ground Lease, any information provided or to be provided with respect to the Project Site was obtained from a variety of sources and that AFRH has informed Developer that AFRH has not made any independent investigation or verification of such information and makes no representation as to the accuracy or completeness of such information.  Developer further acknowledges and agrees that, except as specifically set forth in this Agreement, the Master Lease or in any Parcel Ground Lease, (including AFRH’s obligations with respect to the Project Site set forth in this Agreement) to the maximum extent permitted by Applicable Laws, the lease of the Project Site as provided for in this Agreement is made on an “as-is, where-is” basis subject to all conditions of the Project Site with all faults except as expressly provided by Applicable Laws.  Except as specifically set forth in this Agreement, in the event of any defect or deficiency in any portion of the Project Site of any nature, whether patent or latent, AFRH shall not have any responsibility or liability with respect thereto.  The provisions of this Section have been negotiated, and, except as specifically set forth in this Agreement, the Master Lease or any Parcel Ground Lease, the foregoing provisions are intended to be a complete exclusion and negation of any warranties by AFRH, express or implied, with respect to the Project Site, arising pursuant to the Uniform Commercial Code as currently in effect in the District of Columbia or as subsequently modified or amended, or any other Applicable Laws now or hereafter in effect or otherwise.    
	16.18	Officials Not to Benefit.  No Member of or delegate to Congress or staff member of any Member of or delegate to Congress, the Mayor of the District of Columbia, no member of the City Council of the District of Columbia and no officer or employee of the United States Government or the Government of the District of Columbia is or shall be permitted to share in any part of this Agreement, the Master Lease or any Parcel Ground Lease or any benefit arising therefrom, including but not limited to fees or commissions arising therefrom; provided, however, that this provision shall not be construed as extending to any person who may be a shareholder (other than a controlling shareholder) of any publicly-held corporation if this Agreement is for the general benefit of such corporation in the ordinary course of its business.
	16.19	Consent Standards and Timing.  Unless otherwise indicated, where AFRH is required to give its consent pursuant to the terms of this Agreement, such consent shall not be unreasonably withheld, conditioned or delayed.  Unless otherwise indicated, if no specific response period is given, then if within ten (10) business days of receipt of a consent request from Developer, AFRH does not approve or reject in writing a consent request, the consent so requested shall be irrevocably deemed given.

	16.20	Financing Related Revisions.  In connection with Developer's financing of all or any portion of the Project with an Approved Lender, the parties hereto agree to revise this Agreement to accommodate the Approved Lenders commercially reasonable requests for revisions made in connection with such financing so long as such requests to not materially increase either party's obligations hereunder.

	[INTERNAL – Lacks Time Is of the Essence Provision – to our benefit?]

(SIGNATURES APPEAR ON FOLLOWING PAGE)
	IN WITNESS WHEREOF, each of the Parties has caused its duly authorized representative to execute and deliver this Agreement as of the Effective Date.
					ARMED FORCES RETIREMENT HOME

Signed, sealed and delivered			UNITED STATES OF AMERICA, acting by
in the presence of:				and through the DEPARTMENT OF DEFENSE,
						Secretary of Defense

By: _____________________________ 					
Witness_____________________________	Name: __________________________

						Title: ___________________________
Witness_____________________________

					DEVELOPER:					
Witness_____________________________	By:_____________________________
					Name: __________________________
Witness_____________________________	Title: ___________________________

EXHIBIT A
AFRH-W CAMPUS 

EXHIBIT B
REDEVELOPMENT AREA

EXHIBIT C
PROJECT SITE

EXHIBIT C-1
EXISTING BUILDINGS

EXHIBIT C-2
LAGARDE BUILDING

EXHIBIT D
PROJECT PLAN
Development Program, Concept and Schedule – Submission items A through I from Section 2, as may be revised due to NCPC Master Plan, EIS, ROD and negotiations with AFRH
Environmental Mitigation: Submission items A through E from Section 3, as may be revised due to NCPC Master Plan, EIS, ROD and negotiations with AFRH
Socio-economic Benefits:  Submission items A through C from Section 4, as may be revised due to NCPC Master Plan, EIS, ROD and negotiations with AFRH
Finance: Submission items A, C, D, E, F from Section 5, Development, as may be revised due to NCPC Master Plan, EIS, ROD and negotiations with AFRH
 Team:  Submission item B from Section 6
Key Personnel: From RFQ and any additions in the submission
	Security Plan for LaGarde Building.

EXHIBIT E
CONSTRUCTION MANAGEMENT PLAN

EXHIBIT F
INITIAL OPERATING BUDGET 

EXHIBIT G
HISTORIC STRUCTURES

EXHIBIT H
PROGRAMMATIC AGREEMENT

EXHIBIT I
FORM OF PARCEL GROUND LEASE

EXHIBIT J
RECORD OF DECISION

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Document 1	file://C:/WINDOWS/Profiles/lrk01/Desktop/10.11.06_AFRH Development Agreement - Developer Review Draft.DOC 	
Document 2	file://C:/WINDOWS/Profiles/lrk01/Desktop/10-27 Development Agreement .doc 	
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