Exhibit 10.2
FOURTH AMENDED AND RESTATED
PROPERTY MANAGEMENT AND LEASING AGREEMENT
This FOURTH AMENDED AND RESTATED
PROPERTY MANAGEMENT AND LEASING AGREEMENT (this “Management
Agreement”) is made and entered into as of the 29
th day of December, 2006, by and among
BEHRINGER HARVARD REIT I, INC., a Maryland corporation
(“BH REIT”), BEHRINGER HARVARD OPERATING PARTNERSHIP I
LP, a Texas limited partnership (“BH OP”), and HPT
MANAGEMENT SERVICES LP, Texas limited partnership (the
“Manager”).
WHEREAS, BH OP was organized to
acquire, own, operate, lease and manage real estate properties on
behalf of BH REIT; and
WHEREAS, BH OP and BH REIT
and Manager previously entered into that certain Property
Management and Leasing Agreement dated February 14, 2003 as amended
and restated by the Amended and Restated Property Management and
Leasing Agreement dated June 2, 2003 the Second Amended and
Restated Property Management and Leasing Agreement dated February
11, 2005, and the Third Amended and Restated Property Management
and Leasing Agreement dated March 20, 2006 (the “Original
Management Agreement”); and
WHEREAS, BH REIT intends to continue
to raise money from the sale of its common stock to be used, net of
payment of certain offering costs and expenses, for investment in
the acquisition or construction of income-producing real estate and
other real estate-related investments (including the making or
purchase of mortgage loans), some or all of which are to be
acquired and held by Owner (as hereinafter defined) on behalf of
BH REIT; and
WHEREAS, Owner intends to continue
to retain Manager to manage and coordinate the leasing of certain
of the real estate properties acquired by Owner under the terms and
conditions set forth in this Management Agreement; and
WHEREAS, the parties desire to amend
and restate the Original Management Agreement in its entirety in
accordance with the terms and provisions hereof;
NOW, THEREFORE, in consideration of
the premises and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, do hereby agree, as
follows:
ARTICLE 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
Management Agreement, and the definitions of such terms are equally
applicable both to the singular and plural forms
thereof:
1.1
“Affiliate” means, with
respect to any Person, (i) any Person directly or indirectly
owning, controlling or holding, with the power to vote, 10% or more
of the outstanding voting securities of such other Person; (ii) any
Person 10% 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
executive officer, director, trustee
or general partner of such other Person; and (v) any legal entity
for which such Person acts as an executive officer, director,
trustee or general partner.
1.2
“Gross Revenues” means
all amounts actually collected as rents or other charges for the
use and occupancy of the Properties, but shall exclude 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.
1.3
“Improvements” means
buildings, structures, equipment from time to time located on the
Properties and all parking and common areas located on the
Properties.
1.4
“Intellectual Property
Rights” means all rights, titles and interests, whether
foreign or domestic, in and to any and all trade secrets,
confidential information rights, patents, invention rights,
copyrights, service marks, trademarks, know-how, or similar
intellectual property rights and all applications and rights to
apply for such rights, as well as any and all moral rights, rights
of privacy, publicity and similar rights and license rights of any
type under the laws or regulations of any governmental, regulatory,
or judicial authority, foreign or domestic and all renewals and
extensions thereof.
1.5
“Lease” means, unless
the context otherwise requires, any lease or sublease made by Owner
as landlord or by its predecessor.
1.6
“Management Fees” has
the meaning set forth in Section 5.1 hereof.
1.7
“Owner” means BH REIT,
BH OP and any joint venture, limited liability company or
other Affiliate of BH REIT or BH OP that owns, in whole or in
part, on behalf of BH REIT, any Properties.
1.8
“Person” means an
individual, corporation, association, business trust, estate,
trust, partnership, limited liability company or other legal
entity.
1.9
“Properties” means all
real estate properties owned by Owner and all tracts as yet
unspecified but to be acquired `by Owner containing
income-producing improvements or on which Owner will construct
income-producing improvements.
1.10
“Proprietary Properties”
means all modeling algorithms, tools, computer programs, know-how,
methodologies, processes, technologies, ideas, concepts, skills,
routines, subroutines, operating instructions and other materials
and aides used in performing the duties set forth in Article 2 that
relate to management advice, services and techniques regarding
current and potential Properties, and all modifications,
enhancements and derivative works of the foregoing.
1.11
“Texas Tax Code” means
the Texas Tax Code as amended by Texas H.B. 3, 79th Leg., 3rd C.S.
(2006), and reference to any provision of the Texas Tax Code Act
shall mean such provision as in effect from time to time, as the
same may be amended, and any successor provision thereto, as
interpreted by any applicable administrative rules as in effect
from time to time.
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ARTICLE II
APPOINTMENT AND STATUS OF MANAGER;
SERVICES TO BE PERFORMED
2.1
Appointment of Manager
. Owner hereby engages and
retains Manager as the manager and as tenant coordinating agent of
the Properties, and Manager hereby accepts such appointment on the
terms and conditions hereinafter set forth; it being understood
that this Management Agreement shall cause Manager to be, at law,
Owner’s agent upon the terms contained herein.
2.2
Treatment Under Texas Margin
Tax. For purposes
of the Texas margin tax, Manager’s performance of the
services specified in this Agreement will cause Manager to conduct
part of the active trade or business of the Owner, and
Manager’s compensation includes both the payment of
management fees and the reimbursement of specified costs incurred
in Manager’s conduct of the active trade or business of the
Owner. Therefore, Owner and Manager intend Manager to be, and
shall treat Manager as, a “management company” within
the meaning of Section 171.0001(11) of the Texas Tax Code.
Owner and Manager will apply Sections 171.1011(m-1) and
171.1013(f)-(g) of the Texas Tax Code to Owner’s
reimbursements paid to Manager pursuant to this Agreement of
specified costs and allocable wages and compensation. Owner
and Manager further recognize and intend that as a result of the
relationship created by this Agreement, reimbursements paid to
Manager pursuant to this Agreement include (i) “flow-though
funds” that Manager is mandated by law or fiduciary duty to
distribute, within the meaning of Section 171.1011(f) of the Texas
Tax Code, and (ii) “flow-through funds” that Manager is
mandated by contract to distribute, within the meaning of Section
171.1011(g). The terms of this Agreement shall be interpreted
in a manner consistent with the characterization of the Manager as
a “management company” as defined in Section
171.0001(11), and with the characterization of the reimbursements
as “flow-though funds” within the meaning of Section
171.1011(f)-(g) of the Texas Tax Code.
2.3
General Duties
. Manager shall devote its
best efforts to performing its duties hereunder to manage, operate,
maintain and lease the Properties in a diligent, careful and
vigilant manner. The services of Manager are to be of scope
and quality not less than those generally performed by professional
property managers of other similar properties in the area.
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 operation and leasing of the
Properties.
2.4
Specific Duties
. Manager’s duties
include the following:
(a)
Lease Obligations
. Manager shall perform all
duties of the landlord under all Leases insofar as such duties
relate to operation, maintenance, and day-to-day management.
Manager shall also provide or cause to be provided, at
Owner’s expense, all services normally provided to tenants of
like premises, including where applicable and without limitation,
gas, electricity or other utilities required to be furnished to
tenants under Leases, normal repairs and maintenance, and cleaning,
and janitorial service. Manager shall arrange for and
supervise the performance of all installations and improvements in
space leased to any tenant that are either expressly required under
the terms of the lease of such space or that are customarily
provided to tenants.
(b)
Maintenance
. Manager shall cause the
Properties to be maintained in the same manner as similar
properties in the area. 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
Management Agreement and the Leases. Construction activities
undertaken by Manager, if any, will be limited
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to activities related to the
management, operation, maintenance, and leasing of the Property
(e.g., repairs, renovations, and leasehold
improvements).
(c)
Leasing Functions
. Manager shall coordinate the
leasing of the Properties and shall negotiate and use its best
efforts to secure executed Leases from qualified tenants, and to
execute same on behalf of Owner, if requested, for available space
in the Properties, such Leases to be in form and on terms approved
by Owner and Manager, and to bring about complete leasing of the
Properties. Manager shall be responsible for the hiring of
all leasing agents, as necessary for the leasing of the Properties,
and to otherwise oversee and manage the leasing process on behalf
of Owner.
(d)
Notice of Violations
. Manager shall forward to
Owner promptly upon receipt all notices of violation or other
notices from any governmental authority, and board of fire
underwriters or any insurance company, and shall make such
recommendations regarding compliance with such notice as shall be
appropriate.
(e)
Personnel . Any personnel hired by Manager to
maintain, operate and lease the Property shall be the employees or
independent contractors of Manager and not of Owner of such
Property, BH OP or BH REIT. Manager shall use due
care in the selection and supervision of such employees or
independent contractors. Manager shall be responsible for the
preparation of and shall timely file all payroll tax reports and
timely make payments of all withholding and other payroll taxes
with respect to each employee.
(f)
Utilities and Supplies
. Manager shall 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.
(g)
Expenses . Manager shall analyze all bills received
for services, work and supplies in connection with maintaining and
operating the Properties, pay all such bills when due, 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. 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. Manager shall pay all bills, assessments, real
property taxes, insurance premiums and any other amount payable in
respect to the Properties out of the Account (as hereinafter
defined). All expenses shall be billed at net cost (i.e.,
less all rebates, commissions, discounts and allowances, however
designed).
(h)
Monies Collected
. Manager shall timely collect
all rent and other monies, in the form of a check or money order,
from tenants and any sums otherwise due Owner with respect to the
Properties in the ordinary course of business. Owner
authorizes Manager to request, demand, collect and provide receipt
for all such rent and other monies and to institute legal
proceedings in the name of Owner for the collection thereof and for
the dispossession of any tenant in default under its
Lease.
(i)
Banking Accommodations
. Manager shall establish and
maintain a separate checking account (the “Account”)
for funds relating to the Properties. 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 Management Agreement for the purposes
of performing the obligations of Manager hereunder. No monies
collected by Manager on Owner’s behalf shall be
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commingled with funds of
Manager. The Account shall be maintained, and monies shall be
deposited therein and withdrawn therefrom, in accordance with the
following:
(i)
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
Management Agreement.
(ii)
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 prior to the making of any
other disbursements therefrom.
(iii)
By the 15 th day after the end of each month, Manager
shall forward to Owner all monies contained in the Account other
than a reserve of $5,000 and any other amounts otherwise provided
in the budget, which shall remain in the Account.
(j)
Ownership Agreements
. Manager has received copies
of (and will be provided with copies of future) Articles of
Incorporation, Agreements of Limited Partnership, Joint Venture
Partnership Agreements and Operating Agreements, each as may be
amended from time to time, of Owner, as applicable (the
“Ownership Agreements”) and is 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 Ownership
Agreements.
(k)
Signs . Manager shall place and remove, or cause
to be placed and removed, such signs upon the Properties as Manager
deems appropriate, subject, however, to the terms and conditions of
the Leases and to any applicable ordinances and
regulations.
2.5
Approval of Leases, Contracts,
Etc . In fulfilling
its duties to Owner, Manager may and hereby is authorized to enter
into any leases, contracts or agreements on behalf of Owner in the
ordinary course of the management, operation, maintenance and
leasing of the Property.
2.6
Accounting, Records and
Reports .
(a)
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. 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 Management 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.
(b)
Monthly Reports
. On or before the 15
th day after the end of each month during the
term of this Management Agreement, Manager shall prepare and submit
to Owner the following reports and statements:
(i)
rental collection record;
(ii)
monthly operating
statement;
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(iii)
copy of cash disbursements ledger
entries for such period, if requested;
(iv)
copy of cash receipts ledger entries
for such period, if requested;
(v)
the original copies of all contracts
entered into by Manager on behalf of Owner during such period, if
requested; and
(vi)
copy of ledger entries for such
period relating to security deposits maintained by Manager, if
requested.
(c)
Budgets and Leasing
Plans . Not later
than November 15 of each calendar year, Manager shall prepare and
submit to Owner for its approval an operating budget and a
marketing and leasing plan on each Property for the calendar year
immediately following such submission. In connection with any
acquisition of a Property by Owner, Manager shall prepare a budget
and marketing and leasing plan for the remainder of the calendar
year. The budget and marketing and leasing plan shall be in
the form of the budget and plan 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 budget or plan incorporating such changes as
shall be necessary to reflect cost over-runs and the like during
such period. If Owner does not disapprove any such budget
within 30 days after receipt thereof by Owner, such budget shall be
deemed approved. If Owner shall disapprove any such budget or
plan, it shall so notify Manager within said 30-day period and
explain the reasons therefor. If Owner disapproves of any
budget or plan, Manager shall submit a revised budget or plan, as
applicable, within 10 (ten) days of receipt of the notice of
disapproval, and Owner shall have 10 (ten) days to provide notice
to Manager if it disapproves of any such revised budget or
plan. Manager will not incur any costs other than those
estimated in any budget except for:
(i)
tenant improvements and real estate
commissions required under a Lease;
(ii)
maintenance or repair costs under
$5,000 per Property;
(iii)
costs incurred in emergency
situations in which action is immediately necessary for the
preservation or safety of the Property, or for the safety of
occupants or other persons (or to avoid the suspension of any
necessary service of the Property);
(iv)
expenditures for real estate taxes
and assessment; and
(v)
maintenance supplies calling for an
aggregate purchase price less than $25,000 per annum for all
Properties.
Budgets prepared by Manager shall be
for planning and informational purposes only, and Manager shall
have no liability to Owner for any failure to meet any such
budget. However, Manager will use its best efforts to operate
within the approved budget.
(d)
Legal Requirements
. Manager shall execute and
file when due all forms, reports, and returns required by law
relating to the employment of its personnel. Manager shall be
responsible for notifying Owner in the event it receives notice
that any Improvement on a Property or any equipment therein does
not comply with the requirements of any statute, ordinance, law or
regulation of any governmental body or of any public authority or
official thereof having or claiming to have jurisdiction
thereover. Manager shall promptly forward to
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Owner any complaints, warnings,
notices or summonses received by it relating to such matters.
Owner represents that to the best of its knowledge each of its
Properties and any equipment thereon will upon acquisition by Owner
comply with all such requirements. Owner authorizes Manager
to disclose the ownership of the Property by Owner to any such
officials. Owner agrees to indemnify, protect, defend, save
and hold Manager and its stockholders, officers, directors,
employees, managers, successors and assigns (collectively, the
“Indemnified Parties”) harmless of and from any and all
Losses (as defined in Section 3.5(a) hereof) that may be
imposed on them or any or all of them by reason of the failure of
Owner to correct any present or future violation or alleged
violation of any and all present or future laws, ordinances,
statutes, or regulations of any public authority or official
thereof, having or claiming to have jurisdiction thereover, of
which it has actual notice.
2.7
Guaranty of Deposits.
Should Owner acquire real
property from Behringer Development Company LP, a Texas limited
partnership (“Behringer Development”), Manager hereby
guarantees the full, prompt and unconditional refund of any earnest
money deposit paid by Owner to Behringer Development should Owner
be entitled to such refund as a result of (i) the failure of
Behringer Development to develop the property, (ii) the failure of
all or a specified portion of the pre-leased tenants to take
possession under their leases for any reason, or (iii) the
inability of Owner to pay the full purchase price at
closing.
ARTICLE III
AUTHORITY GRANTED TO MANAGER AND
CERTAIN OWNER OBLIGATIONS
3.1
Authority As To Tenants,
Etc. Owner agrees
and does hereby give Manager the following exclusive authority and
powers (all of which shall be exercised either in the name of
Manager, as Manager for Owner, or in the name or Owner entered into
by Manager as Owner’s authorized agent, and Owner shall
assume all expenses in connection with such matters):
(a)
to advertise each Property or any
part thereof and to display signs thereon, as permitted by
law;
(b)
to lease the Properties to
tenants;
(c)
to pay all expenses of leasing such
Property, including but not limited to, newspaper and other
advertising, signage, banners, brochures, referral commissions,
leasing commissions, finder’s fees and salaries, bonuses and
other compensation of leasing personnel responsible for the leasing
of the Property;
(d)
to cause references of prospective
tenants to be investigated, it being understood and agreed by the
parties hereto that Manager does not guarantee the creditworthiness
or collectibility of accounts receivable from tenants, users or
lessees; and to negotiate new Leases and renewals and cancellations
of existing Leases that shall
