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EXHIBIT 10.4
MASTER PROPERTY MANAGEMENT AND LEASING
AGREEMENT
THIS MASTER PROPERTY MANAGEMENT AND LEASING
AGREEMENT (this "Agreement") is made and entered into as of the
19th day of December, 2008, by and between CNL Macquarie Global
Growth Trust, Inc., a Maryland corporation and CNL Macquarie
Growth, LP, a Delaware limited partnership (collectively,
"Company"), the various subsidiaries of the Company set forth on
the Joinder(s) attached hereto (individually or collectively or
both as the context requires, the Company and each such subsidiary,
only with respect to the property owned by it, "Owner") and CNL
Macquarie Global Growth Managers, LLC, a Delaware limited liability
company ("Manager").
W I T N E
S S E T H :
WHEREAS, Owner owns the Properties (as defined
below); and
WHEREAS, Owner intends to employ Manager to
manage and coordinate the leasing of certain of the Properties to
be acquired by Owner; and
WHEREAS, Owner and Manager are entering into
this Agreement to establish the terms and conditions for such
services.
NOW, THEREFORE, in consideration of the mutual
covenants herein, the parties agree as follows:
I. DEFINITIONS
Except as otherwise specified or as the context
may otherwise require, the following terms have the respective
meanings set forth below for all purposes of this Agreement:
1.A. "Account"
shall have the meaning ascribed to it in Section 2.C.9
herein.
1.B. "Affiliate"
means, with respect to any Person: (i) any Person directly or
indirectly owning, controlling or holding, with the power to vote,
50% or more of the outstanding voting securities of such other
Person; (ii) any Person 50% or more of whose outstanding
voting securities are directly or indirectly owned, controlled or
held, with the power to vote, by such other Person; (iii) any
Person directly or indirectly controlling, controlled by or under
common control with such other Person; (iv) any trustee or
general partner of such other Person; and (v) any legal entity
for which such Person acts as a trustee or general partner.
Notwithstanding the foregoing, Macquarie Real Estate Advisory
Services LLC and its Affiliates and CFG IV, Inc. and its Affiliates
shall not be deemed Affiliates of each other.
1.C. "Annual Business
Plan" shall have the meaning ascribed to it in
Section 2.E.3 herein.
1.D. "BOMA" shall
have the meaning ascribed to it in Section 8.I.2 herein.
1.E. "Cause"
means (i) with respect to the termination of this Agreement by
a party, a material breach of this Agreement of any nature
whatsoever by the other party, which breach is
not cured within thirty (30) days after
notice is given to the breaching party specifying the nature of the
alleged breach, and which breach relates to all or substantially
all of the Properties, and (ii) with respect to the removal of
a given Property from Schedule I hereto by a party, a material
breach of this Agreement of any nature whatsoever by the other
party, which breach is not cured within thirty (30) days after
notice is given to the breaching party specifying the nature of the
alleged breach, and which breach relates specifically to such
Property.
1.F. "Change of
Control" means a "CNL Change of Control" or an "MRE Change of
Control".
1.G. "CNL Change of
Control" means the occurrence of either of the following events
with respect to CNL: (i) James Seneff Entities, in the
aggregate, own, directly or indirectly, less than fifty-one percent
(51%) of the equity interests in CNL, or (ii) James
Seneff Entities, in the aggregate, do not possess the power,
through voting interests, proxy, voting trusts or other similar
instruments, to direct the management of CNL. For purposes of the
immediately preceding sentence, " CNL " means CFG IV,
Inc., a Florida corporation, and " James Seneff
Entities " means, collectively, James M. Seneff, Jr., his
spouse, siblings, parents, nephews, nieces, cousins, or any
children or other descendants or the spouses of any of the
foregoing, of James Seneff, whether individually or through any
trust, family limited partnership or other entity in which any such
individuals possess the entire beneficial or equity interest.
Notwithstanding anything to the contrary, the death of James M.
Seneff, Jr. or his spouse will not be a "CNL Change of
Control".
1.H. "Company"
shall have the meaning ascribed to it in the preamble of this
Agreement.
1.I. "Confidential
Information" shall have the meaning ascribed to it in
Section 8.P herein.
1.J. "Controlling
Agreements" shall have the meaning ascribed to it in
Section 2.C.11 herein.
1.K. "Documents and
Forms" shall have the meaning ascribed to it in
Section 2.E.2 herein.
1.L. "Eligible
Severance Payment" shall have the meaning ascribed to it in
Section 3.C herein.
1.M. "Embargoed
Person" shall have the meaning ascribed to it in
Section 7.A.13 herein.
1.N. "Gross
Revenues" means all amounts actually collected as rents (except
for rents paid under any vacant master lease space) or other
charges for the use and occupancy of Properties including but not
limited to parking income to the extent Manager’s
responsibilities include a parking facility, after hours HVAC
reimbursements and other direct tenant charges, on a cash basis,
but shall exclude: parking revenues to the extent a parking
facility is managed by a third party; any payments by tenants for
amortization of lease improvements over building standard,
determined by Owner; security deposits and reductions in security
deposits as a result
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of damage from tenant misuse of or damage to
property; rebates, discounts or other credits received by Manager
incident to purchases, contracts or other arrangements entered into
pursuant to this Agreement for the account of Owner, which items
shall accrue solely to the benefit of Owner; abated rent; sales
tax; lease termination/buyout settlement amounts; environmental
reimbursements; property tax refunds; miscellaneous income taxable
to Owner; interest and other investment income of Owner and
proceeds received by Owner for a sale, exchange, condemnation,
eminent domain taking, casualty or other disposition of assets of
Owner.
1.O.
"Improvements" means all buildings, structures and equipment
from time to time located on Properties and all parking and common
areas located on Properties.
1.P. "Key
Personnel" shall have the meaning ascribed to it in
Section 2.C.5(d) herein.
1.Q. "Lease" or
"Leases" means, unless the context otherwise requires, any
lease, ground lease, master lease or sublease made by Owner as
landlord or by its predecessor relating to a Property or portions
thereof.
1.R. "Leasing
Activities Agreement" shall have the meaning ascribed to it in
Section 2.C.1(f) herein.
1.S. "Lender" and
"Lenders" shall have the meaning ascribed to it in
Section 2.C.1(e) herein.
1.T. "List" shall
have the meaning ascribed to it in Section 7.A.13 herein.
1.U. "Losses"
shall have the meaning ascribed to it in Section 5.D.1
herein.
1.V. "Manager"
shall have the meaning ascribed to it in the preamble of this
Agreement.
1.W. "Management
Fee" means the fee payable to Manager for its services
hereunder.
1.X. "Manager
Indemnified Parties" shall have the meaning ascribed to it in
Section 2.E.4 herein.
1.Y. "Manager’s
Employees" shall have the meaning ascribed to it in
Section 2.C.5(a)(2) herein.
1.Z. "Minimum
Management Fee" shall have the meaning ascribed to it in
Section 4.A herein.
1.AA "MRE Change of
Control" means the occurrence of any of the following events
with respect to MRE: (i) Macquarie Group Entities, in the
aggregate, own, directly or indirectly, less than fifty-one percent
(51%) of the equity interests in MRE, (ii) Macquarie
Group Entities, in the aggregate, do not possess the power, through
voting interests, proxy, voting trusts or other similar
instruments, to direct the management of MRE, (iii) the
acquisition (in a single transaction or in multiple transactions
occurring within any twelve-month period) by any Person, or by any
Persons acting as a group (other than Macquarie Group Limited or
any Affiliate of
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Macquarie Group Limited), of beneficial
ownership of 35% or more of the combined voting power, or 35% or
more of the total fair market value, of Macquarie Group
Limited’s then outstanding stock, (iv) the consummation
of (A) any merger or consolidation of, with or into Macquarie
Group Limited where stockholders of Macquarie Group Limited
immediately prior to the merger or consolidation do not immediately
thereafter hold more than fifty percent (50%) of the combined
voting power of the surviving company’s then outstanding
securities, (B) a liquidation or dissolution of Macquarie
Group Limited, or (C) a sale of all or substantially all of
Macquarie Group Limited’s assets, or (v) a majority of
members of Macquarie Group Limited’s board of directors is
replaced during any twelve-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Macquarie Group Limited’s board of directors
prior to the date of the appointment or election. For purposes of
the immediately preceding sentence, " MRE " means
Macquarie Real Estate Advisory Services, LLC, a Delaware limited
liability company, and " Macquarie Group Entities "
means, collectively, Macquarie Group Limited and any successor by
merger or consolidation thereto.
1.BB. "OFAC"
shall have the meaning ascribed to it in Section 2.C.14
herein.
1.CC. "Owner"
shall have the meaning ascribed to it in the preamble of this
Agreement.
1.DD. "Owner
Indemnified Parties" shall have the meaning ascribed to it in
Section 5.D.2 herein.
1.EE. "Owner’s
Representative" shall have the meaning ascribed to it in
Section 8.S herein.
1.FF. "Owner’s
Share of Eligible Severance Payments" shall have the meaning
ascribed to it in Section 3.C herein.
1.GG. "Person"
means an individual, corporation, association, business trust,
estate, trust, partnership, limited liability company or other
legal entity.
1.HH. "Prohibited
Person" shall have the meaning ascribed to it in
Section 7.A.14 herein.
1.II.
"Properties" means all tracts (including all buildings and
other improvements and property of Owner located thereon) as yet
unspecified but to be acquired by Owner and other entities
controlled by the Company, specified in writing by Owner to be
managed by Manager, and included on Schedule I hereto, as
amended from time to time in accordance with Section 2.A or
Section 6.D herein, containing improvements or on which Owner
will construct improvements.
1.JJ. "Property
Financings" shall have the meaning ascribed to it in
Section 8.O herein.
1.KK. "Property
Management Representative" shall have the meaning ascribed to
it in Section 2.C.5(d) herein.
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1.LL. "Reimbursable
Staff Member" shall have the meaning ascribed to it in
Section 3.C herein.
1.MM.
"Submanager" means any Affiliate of Manager to whom Manager
has assigned or subcontracted all or part of its duties hereunder
pursuant to Section 8.C(1).
1.NN. "Reporting
Requirements" shall have the meaning ascribed to it in
Section 2.E.2 herein.
1.OO. "Updated
Requirements" shall have the meaning ascribed to it in
Section 2.E.2(a) herein.
II. APPOINTMENT
OF MANAGER; SERVICES TO BE PERFORMED
2.A. Appointment of
Manager. Owner hereby appoints Manager
as the exclusive managing agent and tenant coordinating agent of
the Properties, and Manager hereby accepts such appointment on the
terms and conditions hereinafter set forth. Owner hereby authorizes
Manager to exercise such powers with respect to the Properties as
may be necessary for the performance of Manager’s obligations
under the terms of this Agreement provided, however, Manager shall
have no right or authority to commit or otherwise obligate or bind
Owner in any manner whatsoever, except to the extent specifically
provided herein. From time to time during the term of this
Agreement, whenever Owner or any other entity controlled by the
Company shall acquire a tract containing improvements or on which
Owner or such entity will construct improvements, Owner shall be
required to amend Schedule I hereto, effective on the date of such
acquisition, to include such tract as a "Property" for purposes of
this Agreement.
2.B. General
Duties. Manager shall manage, operate,
maintain and lease the Properties in accordance with the generally
accepted standards for the type of property being managed in the
area in accordance with all applicable loan requirements, subject,
however to the management rights and responsibilities reserved or
allocated to any tenant under the leases for the respective
Properties. Manager shall make available to Owner the full benefit
of the judgment, experience and advice of the members of
Manager’s organization and staff with respect to the policies
to be pursued by Owner relating to the management, operation,
maintenance and leasing of the Properties. In addition, Manager
shall provide executive oversight over all of Owner’s
Properties, coordinate addressing matters that arise from Owner
holding Properties in multiple jurisdictions around the world, and
provide certain accounting and tax support not provided by any
submanager acting pursuant to Section 8.C.
2.C. Specific
Duties. Manager’s duties include
the following:
1.
Lease Obligations
. Manager shall be Owner’s exclusive
leasing agent for the Properties, and shall, to the extent
permitted by applicable law and subject to this Agreement, perform
all leasing functions relating to the Properties. Manager shall be
paid for such leasing activities in conformity with this Agreement,
which amounts shall be in addition to the compensation otherwise
payable to Manager hereunder. Without limiting the generality of
the foregoing, Manager’s leasing function includes the
following:
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(a) Manager shall
use commercially reasonable efforts to lease all space in the
Properties which is now vacant, becomes vacant or is projected to
become vacant during the term of this Agreement, subject to the
limitations imposed by any Annual Business Plan approved by Owner,
and Manager’s responsibilities shall include lease
negotiation coordination, tenant improvement coordination,
governmental liaison, opening activities, tenant liaison,
facilitating tenant move-in and similar activities. Manager may, in
its sole discretion, engage the services of other outside
cooperating real estate consultants and brokers to lease space in
the Properties on behalf of Owner and who shall be paid by Owner
such commissions as may be included in the Annual Business Plan
approved by Owner or are otherwise established by Owner and Manager
from time to time. Manager shall, so far as possible, procure
references from prospective tenants, investigate such references
and use its best judgment in the selection of prospective tenants.
Where appropriate, upon the occurrence of a vacancy or a projected
vacancy, Manager will prepare and disseminate adequate rental
listings. After a vacancy is listed, Manager will cooperate with
brokers in an effort to aid in successfully filling the vacancy.
Manager shall establish procedures to ensure that ample time is
available to renew existing leases or obtain new tenants in an
effort to minimize vacancies and loss of income.
(b) Owner shall
refer all inquiries concerning the rental of space in the Property
to Manager. All negotiations with prospective tenants shall be
conducted by Manager or under its direction. All leases for the
Properties shall be prepared by Manager in the name of Owner and
shall be in accordance with such leasing guidelines as Owner and
Manager shall agree upon from time to time. Manager shall secure
Owner’s prior written approval before finalizing any lease
for a Property that is not in compliance with the leasing plan set
forth in the Annual Business Plan. All leases for Properties shall
be presented to and executed by Owner. Manager shall duly and
punctually comply with all the obligations of Owner under all
leases with tenants of space in the Property, but solely on behalf
of Owner and at Owner’s expense.
(c) Manager shall
prepare all advertising and promotional materials for the
Properties, which materials shall be used only after Owner’s
approval and shall comply with all applicable laws, ordinances and
regulations. The costs of all advertising and promotional materials
shall be at Owner’s sole cost and expense and shall either be
in accordance with an approved operating budget or otherwise
approved by Owner in writing.
(d) Rental rates for
space in the Properties shall be established by Owner. Manager
shall, promptly following the execution of this Agreement and from
time to time thereafter, provide general market information and
general office space rental rate surveys and make recommendations
to Owner with respect to rental rates.
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(e) Manager shall
assist Owner, as requested, in obtaining any approvals of proposed
leases for the Properties, the tenants and the terms thereof which
may be required from the Properties’ lenders, including
senior financing, mezzanine level financing or preferred equity
(each, a "Lender" and collectively, "Lenders") in accordance with
the terms of the applicable loan documents.
(f) Notwithstanding
anything in this Section 2.C.1 to the contrary, the parties
acknowledge and agree that Manager may not be licensed to act as a
real estate broker in the state(s) in which the Properties are
located and that, in such a case, Manager shall either:
(a) subcontract the leasing activities described herein to a
licensed real estate broker qualified (by years of experience,
number of employees, number and type of properties under management
and standing in the marketplace) to manage properties of like kind
in the vicinity of the Properties; or (b) if Owner elects to
enter into a separate agreement with a leasing agent, Manager shall
cause the leasing activities described herein to be performed by
Owner’s leasing agent by acting as Owner’s agent to
enforce all of Owner’s rights and fulfill Owner’s
duties under the separate agreement between Owner and Owner’s
leasing agent (the "Leasing Activities Agreement"), with the
exception of the obligation to pay Owner’s leasing agent the
commissions payable pursuant to the Leasing Activities Agreement
(which shall remain Owner’s responsibility). Notwithstanding
anything in this Section 2.C.1 to the contrary, if Owner
elects to enter into a Leasing Activities Agreement with a real
estate broker licensed in the state in which the Properties are
located and remains obligated to pay the commissions due
thereunder, then Manager shall not be paid for the leasing
activities described in Section 4.B below.
2.
Maintenance . Manager’s duties
and supervision in this respect shall include, without limitation,
cleaning of the interior and the exterior of the Improvements and
the public common areas on the Properties and the making and
supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this
Agreement and the Leases. Non-budgeted expenses for any individual
item of work which are not reimbursed by a tenant shall not exceed
the sum of $5,000 unless specifically authorized in advance by
Owner, provided that emergency repairs which are immediately
necessary for the preservation or safety of the Properties, for the
safety of occupants or other persons, or required to avoid the
suspension of any necessary service of the Properties may be made
by Manager without prior approval of Owner if, under the
circumstances, Owner cannot be conveniently notified before the
required emergency repairs must be done.
3. Intentionally
Omitted .
4. Notice of
Violations . Manager shall forward to
Owner promptly upon receipt all notices of violation or other
notices from any governmental authority,
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board of fire underwriters or any insurance
company, and shall make such recommendations regarding compliance
with such notice as appropriate.
5. Personnel
. Subject to Section 8.C below, Manager
shall employ at all times a sufficient number of capable employees
to properly, safely and economically manage, operate and maintain
the Properties. Manager shall fully comply with all applicable laws
and regulations and agreements having to do with worker’s
compensation, social security, unemployment insurance, hours of
labor, wages, working conditions under Manager’s control and
other employer-employee related subjects. All matters pertaining to
the employment, supervision, compensation, promotion and discharge
of such employees are the responsibility of Manager.
(a) Employees of
Manager:
(1) Manager, as an
independent contractor, has the authority to control and direct the
management and operation of the Properties in accordance with the
terms hereof.
(2) All persons
employed in connection with the management and operation of the
Properties ("Manager’s Employees") shall be employees of
Manager or such consultants, independent contractor or contractors
as may be retained by Manager and not employees of Owner.
(b) It shall be the
responsibility of Manager to properly train the members of its
property team and cause the appropriate team members to become
familiar with the terms of this Agreement, key tenant lease
provisions and vendor/contractor contract terms.
(c) Schedule of
Employees: Manager shall provide Owner with
a schedule of employees annually. This schedule shall include the
names of employees, job title, and time allocated to the
Properties. Manager agrees to identify in the annual operating
budget for approval by Owner, all employees’ salaries that
are directly charged to the Properties. When such employee
terminates his employment with Manager, or the employee’s
employment is otherwise terminated, a new employee must be
identified by notification in writing to Owner by Manager as a
replacement. When it is necessary to replace employees working at
the Properties, Manager shall notify Owner, in advance, of the
reasons for the replacement and the qualifications for the
replacement personnel and Owner shall have the right to approve any
such replacement personnel.
(d) Key
Personnel: This agreement is made with the
understanding that Owner and Manager have identified the key
personnel ("Key Personnel") set forth in Appendix A attached
hereto, including the employee who will be responsible for the
direct management of each Property (the "Property Management
Representative"). Owner has a right
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to approve any Key Personnel
change. Appendix A shall be updated
jointly by Owner and Manager, each acting reasonably and in good
faith, upon any modification of Schedule I to add or remove a
Property pursuant to this Agreement.
6. Utilities and
Supplies . Manager shall, on behalf of
Owner, enter into or renew contracts for electricity, gas, steam,
landscaping, fuel, oil, maintenance and other services as are
customarily furnished or rendered in connection with the operation
of similar rental property in the area, or as it, in its reasonable
judgment, shall deem prudent, provided that Manager shall submit to
Owner for its approval such contracts for items of expense which
are not contemplated in the Annual Business Plan. Further, at the
time of execution of any service contract, the cost of the services
to be provided under such contract shall be comparable with general
prevailing market conditions, as to each of the Properties. Unless
Owner notifies Manager of its disapproval of any such contract
within ten (10) days of the Owner’s receipt of a copy of
such written contract, Owner shall be deemed to have approved such
contract. Manager shall also purchase all supplies which Manager
deems necessary to maintain and operate the Properties, provided
that no such purchase which is outside the ordinary course of
business or which is of a nature not reimbursed by tenants shall be
made by Manager without the prior written consent of Owner.
7. Expenses
. Manager shall analyze all bills received
for services, work and supplies in connection with maintaining and
operating the Properties, pay all such bills from the Account (as
defined below), and, if requested by Owner, pay, when due, utility
and water charges, sewer rent and assessments, and any other amount
payable in respect to the Properties from the Account. All bills
shall be paid by Manager within the time required to obtain
discounts, if any. Owner may from time to time request that Manager
forward certain bills to Owner promptly after receipt, and Manager
shall comply with any such request. It is understood that the
payment of real property taxes, assessments and insurance premiums
will be paid out of the Account (as hereinafter defined) by Manager
at the direction of Owner. All expenses shall be billed at net cost
(i.e., less all rebates, commissions, discounts and allowances,
however designed).
8. Monies
Collected . Manager shall, in accordance
with any applicable loan requirements or other Controlling
Agreement, use diligent efforts to collect all rent and other
monies from tenants of the Properties and any sums otherwise due
the Properties with respect to Owner in the ordinary course of
business including, but not limited to, tenants’ payments for
real estate taxes, insurance, damages and repairs, and common area
maintenance, and shall deposit such monies in the Account (as
defined below). In collecting such monies, Manager shall inform
Owner’s tenants that all remittances are to be in the form of
a check, wire transfer, money order, automatic payments or other
forms approved by Owner. Owner authorizes Manager to request,
demand and collect all such rent and other monies due and, at
Owner’s request, to institute legal proceedings in the name
of Owner and at Owner’s expense for the collection thereof
and for the dispossession of any
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tenant in default under its Lease. Manager shall
not compromise with any tenant or waive Owner’s rights under
any Lease without Owner’s prior written consent. Nothing in
this Agreement shall be construed as a guarantee of payment or
collection by Manager of rent or other monies due from tenants of
the Properties.
9. Bank
Account . Manager shall, in accordance
with any applicable loan requirements or other Controlling
Agreement, establish and maintain a separate checking account or
accounts (collectively, the "Account") for funds relating to the
Properties. Manager shall cooperate with Owner and all lenders with
respect to any lock box or cash management agreements established
by Owner or any lender. All monies deposited from time to time in
the Account shall be deemed to be trust funds and shall be and
remain the property of Owner and shall be withdrawn and disbursed
by Manager for the account of Owner only as expressly permitted by
this Agreement for the purposes of performing the obligations of
Manager hereunder. No monies collected by Manager on Owner’s
behalf shall be commingled with funds of Manager. The Account shall
be maintained, and monies shall be deposited therein and withdrawn
therefrom, in accordance with the following:
(a) All sums
received from rents and other income from the Properties shall be
promptly deposited by Manager in the Account. Manager shall have
the right to designate two or more persons who shall be authorized
to draw against the Account, but only for purposes authorized by
this Agreement.
(b) All sums due to
Manager hereunder, whether for compensation, reimbursement for
expenditures, or otherwise, as herein provided, shall be a charge
against the operating revenues of the Properties and shall be paid
and/or withdrawn by Manager from the Account.
(c) All sums
necessary to pay the operational expenses of the Properties,
including real estate taxes and insurance premiums, as set forth in
Section 2.C.7.
(d) By the 20th day
of each month, except as otherwise directed by Owner, Manager shall
forward to Owner net operating proceeds from the preceding month,
retaining at all times, however, a reasonable reserve for the
subsequent month’s cash requirements.
10. Tenant
Complaints . Manager shall maintain
business-like relations with the tenants of the Properties and use
commercially reasonable efforts to resolve any tenant complaint or
to cooperate with Owner in so doing.
11. Controlling
Agreements . Manager has received copies
of (and will be provided with copies of future) applicable articles
of incorporation, agreements of limited partnership, joint venture
agreements, operating agreements, loan agreements, deeds of trust
or mortgages, each as may be amended from time to
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time, of Owner (the "Controlling Agreements")
and is and will be familiar with the terms thereof. Manager shall
use reasonable care to avoid any act or omission that, in the
performance of its duties hereunder, shall in any way conflict with
the terms of the Controlling Agreements.
12. Signs
. The Manager shall place and remove, or
cause to be placed and removed, leasing signs upon the Properties
as the Manager deems appropriate, subject, however, to the terms
and conditions of the Leases, to any applicable ordinances,
regulations and covenants or restrictions and Owner’s
approval of the size and general appearance of such signs.
13. Other
Services . Manager shall recommend from
time to time to Owner such procedures with respect to the
Properties as Manager may deem advisable for the most efficient and
economic management services which normally are performed in
connection with the operation of first-class office and commercial
buildings or other buildings, as applicable, and perform all
services normally provided to similar premises, without additional
charges to Owner.
14. Office of
Foreign Assets Control, Department of the Treasury
("OFAC"):
(a) Manager hereby
acknowledges and agrees that it will be performing OFAC
searches/checks on each potential tenant (including renewals) that
may be leasing space in the Properties. Manager is required to keep
verification of the OFAC check in the tenant file. Manager also
agrees that a tenant shall not be permitted to sublet its space to
a new tenant without Manager performing an OFAC search/check on the
potential sublessee.
(b) Manager hereby
acknowledges and agrees that it will be performing OFAC (defined
below) searches/checks on each potential vendor (including
renewals) that may be performing work in or around the Properties.
Manager is required to keep verification of the OFAC check in the
vendor file.
(c) OFAC
searches/checks may be done online using the Bridger Insight Free
Name Check web site at the following link:
www.bridgerinsight.choicepoint.com , or any of the other
free name check services that may also be available on the web.
(d) All leases,
lease renewals and contracts including all construction contracts,
purchase orders and service agreements and renewals thereof shall
include OFAC language.
15. Compliance
with Laws: Manager shall, in the
performance of its services hereunder, comply with all federal,
state, municipal or other governmental laws, ordinances, rules or
regulations affecting the Properties.
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(a) Manager shall
also be responsible for complying with REIT testing for disallowed
income subject to U.S. REIT standards. Examples of disallowed
income include, but are not limited to: leasing fees, management
fees, a disallowed service provided to a tenant without charge as a
condition of the lease, amenities that would normally attract a
charge but are provided for free, etc. The last two examples of
disallowed income are where there is a service provided for no
charge, but, the income is deemed to exist as a component of rental
income. From Manager’s perspective, REIT testing for
disallowed income is based upon regulatory requirements. The
process involves ensuring timely completion of testing and
undertaking an annual survey regarding the property’s
income.
(b) Manager shall
not in performance of its services hereunder violate, and shall
comply in all respects with the terms of, any ground lease, space
lease, mortgage, deed of trust or other security instrument binding
on or affecting any of the Properties. If Manager identifies a
conflict between the terms of any such document and the terms of
this Agreement, Manager shall not take any action except to notify
Owner and await Owner’s written instructions.
16. Manager’s
Cooperation with Sale of the Properties:
Manager agrees to facilitate, in any and
all manner, and cooperate with Owner’s listing agent for the
sale of the Properties. Such cooperation and assistance shall be
considered a normal function of the property management duties
agreed to under the terms of this Agreement.
2.D. Approval of
Leases, Contracts, Etc. In fulfilling
its duties to Owner, Manager hereby is authorized to negotiate, on
behalf of Owner, leases for any Properties, and to negotiate and
enter into any other leases, contracts or agreements on behalf of
Owner in the ordinary course of the management, operation,
maintenance and leasing of each Property, subject to the
requirement that Owner execute all leases for Properties in
accordance with Section 2.C.1(b), the limitations set forth
above in Section 2.C, any leasing and property management
guidelines established by Owner, and the Annual Business Plan set
forth in Section 2.E.3 below; provided, however that Manager
shall not enter into any lease, contract or agreement on behalf of
Owner that would cause a material deviation from the Annual
Business Plan. Owner hereby appoints Manager as Owner’s
authorized agent for the purposes of executing, as the agent of
Owner, all such leases, contracts and agreements. Manager is
required to clearly identify itself as Owner’s agent and to
inform all third parties with whom Manager is dealing that Manager
is acting solely as Owner’s agent with respect to the
Properties and is not itself the owner of the Properties. Manager
is further required to correct any known misunderstanding with
respect to the ownership of the Properties. In addition, Owner
agrees to (a) specifically assume in writing all obligations
of Owner under all such leases, contracts and agreements entered
into by Manager as the agent of Owner upon termination of this
Agreement, and (b) indemnify, protect, defend, save and hold
harmless Manager and all of the other Manager Indemnified Parties
of and from any and all Losses (as defined in Section 5.D
below) that may be imposed on any or all of them in connection with
or relating to the obligations of Owner under any such leases,
contracts or
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agreements following the termination of this
Agreement. If Manager subcontracts any of the obligations required
of Manager hereunder, Manager shall cause the subcontract to
include provisions which require the subcontractor (a) to a
thirty (30) day termination for convenience clause,
(b) to clearly identify itself as Owner’s agent and to
inform all third parties with whom subcontractor is dealing that it
is acting solely as Owner’s agent with respect to the
Properties and is not itself the owner of the Properties and
(c) to correct any known misunderstanding with respect to the
ownership of the Properties; provided, however that Manager shall
not enter into an agreement delegating its day to day property
management obligations or functions hereunder without Owner’s
prior written consent.
2.E. Accounting,
Records and Reports.
1.
Records
. Manager shall maintain all office records
and books of account and shall record therein, and keep copies of,
each invoice received from services, work and supplies ordered in
connection with the maintenance and operation of the Properties and
Manager’s record retention policy. Such records shall be
maintained on a double entry basis. Owner and persons designated by
Owner shall at all reasonable time have access to and the right to
audit and make independent examinations of such records, books and
accounts and all vouchers, files and all other material pertaining
to the Properties and this Agreement, all of which Manager agrees
to keep safe, available and separate from any records not
pertaining to the Properties, at a place recommended by Manager and
approved by Owner.
2. Monthly
Reports . The financial reporting
responsibilities of Manager are set forth in Appendices B ,
C and D attached hereto (the "Reporting
Requirements"). Manager acknowledges and agrees that it has had the
opportunity to review the contents of the Reporting Requirements
prior to executing this Agreement, and agrees to comply with and be
bound by the terms thereof and to compile and submit all reports in
the format required by Owner in accordance with its established
Documents and Forms ("Documents and Forms") which will be provided
to Manager within ten (10) days. Manager acknowledges and
agrees that the Documents and Forms and Reporting Requirements are
proprietary to Owner, and Manager agrees that Manager, its
employees, agents or representatives shall not disseminate, release
or use the Reporting Requirements for any purpose other than the
performance of Manager’s obligations hereunder.
(a) Updates/Additions: The
Reporting Requirements may be updated from time to time as deemed
necessary by Owner, both to change or delete existing provisions
and to add new provisions. In the event of modifications or updates
to the policies, procedures, forms or information contained in
Reporting Requirements Owner shall provide written notification
("Update Notice") of modifications to the Reporting Requirements
(the "Updated Requirements") to Manager via e-mail to
Manager’s designated Property Management Representative
(defined below). Within five (5) business days of receipt of
such Update Notice, Manager shall inform Owner in writing via
e-mail whether any such
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Updated Requirements constitute a Material
Updated Requirement (as defined below). If Manager informs Owner
that the Updated Requirements are not Material Updated
Requirements, then Owner will use reasonable efforts to provide a
courtesy e-mail copy of the notice to all other employees of
Manager for which Manager has supplied valid e-mail addresses, but
failure to notify any of Manager’s personnel other than the
Property Management Representative shall not affect the validity of
the notice. Any Updated Requirements shall become effective upon
the latter of: (1) the date specified in the e-mail notice, or
(2) the sixth business day after receipt of the Update Notice
by the Property Management Representative and Manager has not
provided Owner with notice that any Updated Requirements are
Material Updated Requirements.
(b) If Manager has
informed Owner that any update/addition is a Material Updated
Requirement in accordance with subsection (a) above, the Owner
and Manager agree to negotiate in good faith the amount of
reimbursement of additional costs that Owner shall pay Manager to
implement and provide the Material Updated Requirement(s). As used
in this Agreement, a "Material Updated Requirement" means
additional requirements in the aggregate that increase the time of
non-Reimbursable Staff Members on an individual Property by more
than eight (8) hours per month.
(c) In addition,
Appendices B, C and/or D shall be updated jointly by Owner
and Manager, each acting reasonably and in good faith, upon any
modification of Schedule I to add or remove a Property pursuant to
this Agreement, but only if Owner or Manager requests such an
update with respect to such Property based on its attributes. Any
updates pursuant to this subsection (c) shall be subject to
the provisions in subsection (b) above, except that the
addition of a Property to Schedule I shall not be treated as a
Material Updated Requirement unless there are requirements unique
to such Property that, in the aggregate, increase the time of
non-Reimbursable Staff Members on an individual Property by more
than eight (8) hours per month.
3. Budgets and
Leasing Plans . No later than ninety
(90) days before each calendar year end, Manager shall prepare
and submit to Owner for its approval an operating budget, capital
budget and a marketing and leasing plan (collectively, the "Annual
Business Plan") on each Property for the calendar year immediately
following such submission. The Annual Business Plan shall be in the
form approved by Owner prior to the date thereof. As often as
reasonably necessary during the period covered by any such budget,
Manager may submit to Owner for its approval an updated Annual
Business Plan incorporating such changes as shall be necessary to
reflect cost over-runs and the like during such period. If Owner
disapproves any such Annual Business Plan, Manager shall submit a
revised Annual Business Plan, as applicable, within twenty
(20) days of receipt of the notice of disapproval, and Owner
shall have twenty (20) days to provide notice to
14
Manager if it disapproves of any such revised
Annual Business Plan. In the event that an operating budget has not
been approved prior to each December 31, the operating budget
for the prior twelve month period shall govern to the extent of any
unapproved items. In the event a capital budget has not been
approved by Owner prior to each December 31, Manager shall not
make any capital or extraordinary expenditures for the Properties
(other than in the event of an emergency) without the prior written
consent of Owner.
Manager shall use reasonable diligence and
employ commercially reasonable efforts to ensure that the actual
costs of maintaining and operating the Properties shall not exceed
the budgeted amount in total or in any one accounting category. All
expenses must be charged to the proper account on either the
operating budget or capital budget and no expense may be classified
or reclassified for the purpose of
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