3.              Term and Termination .

 

a.              Term .  The term of this Agreement shall begin on [                    ] [    ], 20[    ] and end on December 31, 20[    ] (the “Initial Term”).  Unless terminated as provided in Section 3(b)  below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20[    ], and ending on December 31, 20[    ].

 

b.              Termination .

 

i.               Either party may terminate this Agreement if sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term, as applicable, it notifies the other party hereto in writing that it elects to terminate this Agreement, in which case this Agreement shall be terminated on the last day of the Initial Term or the current Renewal Term, if applicable.  Manager, between ninety (90) and sixty (60) days prior to the expiration of the Initial Term and each Renewal Term, shall notify the independent members of the Company’s Board of Directors, of Company’s right to cancel this Agreement pursuant to this Section 3(b)(i) .

 

ii.              Additionally, at any time, the Company may terminate this Agreement, without cause or penalty, upon a vote of a majority of the Company’s independent directors by providing no less than sixty (60) days written notice to Manager.

 

iii.             At the sole option of the Company, this Agreement shall be terminated immediately upon written notice of termination from the Board of Directors of the Company to the Manager if any of the following events occurs:

 

(A)           the Manager violates any provisions of this Agreement and after notice of such violation fails to cure the default within thirty (30) days;

 

(B)            a court of competent jurisdiction enters a decree or order for relief in respect of the Manager in any involuntary case under the applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Manager or for any substantial part of its property or orders the winding up or liquidation of the Manager’s affairs; or

 

(C)            the Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Manager or for any substantial part of its property, or makes any

 

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general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

(D)           The Manager agrees that if any of the events specified in subsections (B) and (C) of this Section 3(b)(iii)  occur, it will give written notice thereof to the Company within seven (7) days after the occurrence of the event.

 

c.              Effect of Termination .  Upon termination of this Agreement, all Management Agreements and Oversight Agreements entered into among the Company, its affiliates and Manager shall automatically terminate.  In addition, upon termination of this Agreement, the Manager shall cooperate with the Company and take all reasonable steps requested by the Company to assist it in making an orderly transition of the functions performed by Manager.

 

4.              Indemnification .

 

a.              The Company shall indemnify the Manager and its officers, directors, employees and agents (individually an “Indemnitee”, collectively the “Indemnitees”) to the same extent as the Company may indemnify its officers, directors, employees and agents under its Articles of Incorporation and bylaws so long as:

 

i.               the Indemnitee has determined, in good faith, that the course of conduct that caused the loss, liability or expense was in the best interests of the Company;

 

ii.              the Indemnitee was acting on behalf of, or performing services for, the Company;

 

iii.             the liability or loss was not the result of negligence or misconduct on the part of the Indemnitee; and

 

iv.             any amounts payable to the Indemnitee are paid only out of the Company’s net assets and not from any personal assets of any stockholder of the Company.

 

b.              The Company shall not indemnify any person or entity for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws by any party seeking indemnity unless one or more of the following conditions are met:

 

i.               there has been a successful adjudication on the merits of each count involving alleged securities law violations as to the particular person or entity;

 

ii.              the claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to the particular person or entity; or

 

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iii.             a court of competent jurisdiction approves a settlement of the claims and finds that indemnification of the settlement and related costs should be made and the court considering the request has been advised of the position of the Securities and Exchange Commission and the published opinions of any state securities regulatory authority in which securities of the Company were offered and sold with respect to the availability or propriety of indemnification for securities law violations.

 

c.              The Company shall advance amounts to persons entitled to indemnification hereunder for legal and other expenses and costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

 

i.               the legal action relates to acts or omissions with respect to the performance of duties or services by the Indemnitee for or on behalf of the Company;

 

ii.              the legal action is initiated by a third party and a court of competent jurisdiction specifically approves the advance; and

 

iii.             the Indemnitee receiving the advances undertakes to repay any monies advanced by the Company, together with the applicable legal rate of interest thereon, in any case(s) in which a court of competent jurisdiction finds that the party is not entitled to be indemnified.

 

5.              Company’s Representative .   Company designates Inland Diversified Business Manager and Advisor, Inc. as Company’s Representative or any other person or entity designated by Company in all dealings with Manager hereunder. Whenever the notification and reporting to Company or the approval, consent or other action of Company is called for hereunder, any notification and reporting if sent to or specified in writing to Company’s Representative, and any approval, consent or action if executed by any of the officers of Company’s Representative, shall be binding on Company. Company’s Representative address for delivery of reports or notice shall be:

 

Name		Address
Inland Diversified Business Manager and		2901 Butterfield Road
Advisor, Inc.		Oak Brook, IL 60523
Attn. Ms. Roberta S. Matlin,		Telephone:	(630) 218-8000
President		Facsimile:	(630) 218-4955

 

Company’s Representative may be changed at the discretion of Company, at any time and from time to time, and shall be effective upon Manager’s receipt of written notice of the new Company’s Representative.

 

6.              Notices .  Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or

 

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other communication is accepted by the party to whom it is given and shall be given by being delivered at the following addresses of the parties hereto:

 

If to the Company, to:		Inland Diversified Real Estate Trust, Inc.
		2901 Butterfield Road
		Oak Brook, IL 60523
		Attention:	Ms. Roberta S. Matlin,
			Vice President
		Telephone:	(630) 218-8000
		Facsimile:	(630) 218-4955
If to the Manager, to:		[Management Company] LLC
		2901 Butterfield Road
		Oak Brook, IL 60523
		Attention:	Thomas P. McGuinness
		Telephone:	(630) 218-8000
		Facsimile:	(630) 218-4955

 

Either party may at any time give notice in writing to the other party of a change of its address for the purpose of this Section 6 .

 

7.              Miscellaneous.

 

a.              Nothing contained herein shall be construed as creating any rights in third parties who are not the parties to this Agreement, nor shall anything contained herein be construed to impose any liability upon Company or Manager for the performance by Company or Manager under any other agreement they have entered into or may in the future enter into, without the express written consent of the other having been obtained.  Manager and Company shall not be construed as joint venturers or partners of each other pursuant to this Agreement, and neither shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of Manager to Company under this Agreement is that of an independent contractor.

 

b.              Wherever possible, each provision of this Agreement shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited or invalid under applicable law, the provision shall be ineffective only to the extent of the prohibition or invalidity, without invalidating the remainder of the provision or the remaining provisions of this Agreement. This Agreement, its validity, performance and enforcement shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to conflicts of law principles.

 

c.              This Agreement shall be binding upon the successors and assigns of Manager and the heirs, administrators, executors, successors and assignees of Company.  This Agreement contains the entire Agreement of the parties relating to the subject matter hereof, and there are no understandings, representations or undertakings by either party

 

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except as herein contained. This Agreement may be modified solely by a written agreement executed by both parties hereto.

 

d.              If any party hereto defaults under the terms or conditions of this Agreement, the defaulting party shall pay the non-defaulting party’s court costs and attorneys’ fees incurred in the enforcement of any provision of this Agreement.

 

e.              The failure of either party to this Agreement to, in anyone or more instances, insist upon the performance of any of the terms, covenants or conditions of this Agreement, or to exercise any rights or privileges conferred in this Agreement, shall not be construed as thereafter waiving any such terms, covenants, conditions, rights or privileges, but the same shall continue in full force and effect as if no the forbearance or waiver had occurred.

 

f.               All exhibits and schedules attached to this Agreement are hereby incorporated by reference.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

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WHEREFORE, the undersigned have executed this Agreement by their duly authorized officers or representatives as of the date first above written.

 

COMPANY:			PROPERTY MANAGER:
INLAND DIVERSIFIED REAL ESTATE TRUST,			[MANAGEMENT COMPANY] LLC
INC.
By:			By:
Name:			Name:
Its:			Its:

 

 

EXHIBIT A

 

FORM OF MANAGEMENT AGREEMENT

 

See attached.

 

 

REAL ESTATE MANAGEMENT AGREEMENT

 

THIS REAL ESTATE MANAGEMENT AGREEMENT (this “Agreement”), dated as of [                    ] [    ], 20[    ], is entered into by and between [SINGLE MEMBER LLC] (“Owner”), and [Management Company] LLC, a Delaware limited liability company (the “Manager”).

 

WHEREAS, Owner’s ultimate parent company, Inland Diversified Real Estate Trust, Inc. (the “Parent Company”) directly or indirectly owns or controls Owner;

 

WHEREAS, the Parent Company intends to qualify to be taxed as a real estate investment trust pursuant to the terms of its articles of incorporation (the “Articles of Incorporation”) and bylaws (the “Bylaws”), as each may be amended from time to time;

 

WHEREAS, Owner and the Parent Company desire to avail themselves of the experience, sources of information, advice, assistance and facilities available to the Manager and to have the Manager undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the board of directors of the Parent Company (the “Board of Directors”) and the Owner’s Representative (as defined below), all as provided herein; and

 

WHEREAS, the Manager is willing to undertake to render these services on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.              Exclusive Management.   Owner hereby engages Manager exclusively (subject to Section 4 below), to perform the services described herein for the property legally described on Exhibit A attached hereto and made a part hereof (the “Premises”), upon the terms and conditions hereinafter set forth herein and Manager accepts such exclusive engagement.

 

2.              Term and Termination.

 

a.              Term .  The term of this Agreement shall begin on [                    ] [    ], 20[    ] and end on December 31, 20[    ] (the “Initial Term”).  Unless terminated as provided in Section 2(b)  below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20[    ], and ending on December 31, 20[    ].

 

b.              Termination .

 

i.               Either party may terminate this Agreement if sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term, as applicable, it notifies the other party hereto in writing that it elects to terminate this Agreement, in which case this Agreement shall be terminated on the last day of the Initial Term or the current Renewal Term, if applicable.  Manager, between ninety (90) and sixty (60) days prior to the expiration of the Initial Term and each Renewal

 

 

Term, shall notify the independent members of the Board of Directors, of Owner’s right to cancel this Agreement pursuant to this Section 2(b)(i) .

 

ii.              Additionally, at any time, the Owner may terminate this Agreement, without cause or penalty, upon a vote of a majority of the Parent Company’s independent directors by providing no less than sixty (60) days written notice to Manager.

 

iii.             At the sole option of the Owner, this Agreement shall be terminated immediately upon written notice of termination from the Owner to the Manager if any of the following events occurs:

 

A.                                    the Manager violates any provisions of this Agreement and after notice of such violation fails to cure the default within thirty (30) days;

 

B.                                      a court of competent jurisdiction enters a decree or order for relief in respect of the Manager in any involuntary case under the applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Manager or for any substantial part of its property or orders the winding up or liquidation of the Manager’s affairs; or

 

C.                                      the Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Manager or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

D.                                     The Manager agrees that if any of the events specified in subsections (B) and (C) of this Section 2(b)(iii)  occur, it will give written notice thereof to the Company within seven (7) days after the occurrence of the event.

 

3.              Manager Duties.   Owner hereby gives Manager the exclusive authority and power, as agent for Owner, to provide the services listed in this Section 3 or elsewhere in this Agreement, and Owner agrees to reimburse Manager, its affiliates for all expenses paid or incurred in connection therewith.  Manager shall be entitled at all times to manage the Premises in accordance with Manager’s standard operating policies and procedures all in accordance with the budget approved by Owner, except to the extent that any specific provisions contained herein are to the contrary, in which case Manager shall manage the Premises consistent with the specific provisions of this Agreement.

 

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a.              Collection of Gross Income .

 

i.               Manager shall collect all rents or assessments and other items due Owner related to the Premises (all such items being referred to herein as “Gross Income”).  Manager shall give Owner receipts therefore and deposit all such Gross Income collected hereunder in Manager’s custodial account which Manager will open and maintain, in a state or national bank of Manager’s choice and whose deposits are insured by the Federal Deposit Insurance Corporation, exclusively for the Premises and any other properties owned by Owner (or any entity that is owned or controlled by the parent of Owner) and managed by Manager.  Owner agrees that Manager shall be authorized to maintain a reasonable minimum balance (to be determined jointly from time to time) in the custodial account. Manager may endorse any and all checks received in connection with the operation of the Premises and drawn to the order of Owner and Owner shall, upon request, furnish Manager’s depository with an appropriate authorization for Manager to make the endorsement.

 

ii.              When applicable, Manager shall collect and bill for security deposits or assessments and other items, including but not limited to calculating, preparing and mailing all invoices for tenant payments for real estate taxes, property liability and other insurance, damages and repairs, common area maintenance, tax reduction fees and all other tenant reimbursements, administrative charges, proceeds of rental interruption insurance, parking fees, income from coin operated machines and other miscellaneous income as stipulated in the leases.  At the request of Owner, Manager will administer, and create if necessary, a bill-back program for tenant utility consumption unless prohibited by local law.

 

b.              Payment of Expenses .  Manager shall pay all expenses of Owner with respect to the Premises from the Gross Income collected in accordance with Section 3(a)(i)  hereof, from the custodial account established for the Premises using Owner approved software. In the event that expenses paid pursuant to this Section 3(b)  exceed Gross Income for any monthly period, Manager shall notify Owner of same. Owner shall pay the excess amount immediately upon request from Manager, and nothing herein contained shall obligate Manager to advance its own funds on behalf of Owner.

 

c.              Annual Budgets .  Manager shall prepare an annualized budget for operation of the Premises and submit to Owner for approval (the “Annualized Budget”).  Manager will use its commercially reasonable efforts to operate the Premises pursuant to the Annualized Budget, provided, however, Manager shall have no liability to Owner for failure to meet such Annualized Budget.  The Annualized Budget shall include a comparison back to the original underwriting performed at the time of Owner’s acquisition of the Premises and prior year performance.  The first Annualized Budget has been prepared and approved for the year commencing [                    ], [    ] 20[    ] and ending on December 31, 20[    ].  Notwithstanding the period covered by the first Annualized Budget, all subsequent Annualized Budgets shall cover the period from

 

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January 1st of each year through December 31st of the same year. The proposed Annualized Budget for each calendar year shall be submitted by Manager to Owner by December 1st of the year preceding the year for which it applies, and Owner shall notify Manager within fifteen (15) days as to whether Owner has or has not approved the proposed Annualized Budget. If Owner does not approve the proposed Annualized Budget, Owner shall notify Manager and Manager shall make the necessary amendments to the Annualized Budget. During the time Manager is preparing these amendments, Manager will continue to operate the Premises according to the last approved Annualized Budget. Owner’s approval of the Annualized Budget shall constitute approval for Manager to expend sums for all budgeted expenditures, without the necessity to obtain additional approval of Owner under any other expenditure limitations as set forth elsewhere in this Agreement.

 

d.              Non-Budgeted Expenses over $20,000 .  Manager shall secure the approval of, and execution of appropriate agreements by, Owner for any non-budgeted and non-emergency/contingency capital items, alterations or other expenditures in excess of Twenty Thousand Dollars ($20,000.00) for any one item, securing for each item at least three (3) written bids, if practicable, or providing evidence satisfactory to Owner that the agreed amount is lower than industry standard pricing, from responsible contractors. Manager shall have the right from time to time during the term hereof, to contract with and make purchases from its affiliates and third party agents; provided that contract rates and prices are competitive with other available sources. Manager may at any time, and from time to time, request and receive the prior written authorization of Owner of any one or more purchases or other expenditures, notwithstanding that Manager may otherwise be authorized hereunder to make such purchases or expenditures.

 

e.              Third-Party Agreements .  Owner hereby appoints Manager as Owner’s authorized agent for the purpose of executing, as agent for Owner, any agreements with third-parties necessary for operation of the Premises.  For example, and not in limitation of the foregoing, Manager shall negotiate and enter into contracts for services and items in the Annualized Budget relating to the Premises.

 

f.               Manager Employees .  Manager shall hire, supervise, discharge and pay salary and benefit expenses for all employees of Manager determined necessary to perform Manager’s duties described in this Agreement including, but not limited to managers, assistant managers, leasing consultants, engineers, janitors and maintenance supervisors.  All expenses of such employment, including but not limited to, wages, salaries, insurance, benefits, employment related taxes, overhead and other governmental charges, shall be deemed operational expenses of the Premises and Owner shall reimburse Manager for such expenses which may be charged to Owner on a per square foot basis.  Notwithstanding the foregoing, salaries and benefits of Manager’s employees who also serve as the one of the Parent Company’s executive officers or as an executive officer of the Manager shall not be reimbursed by the Owner.  The number and classification of employees serving the Premises shall be as determined by Manager to be appropriate for the proper operation of the Premises; provided that Owner may request changes in the number or classification of employees, and Manager shall make all requested changes unless in its judgment the resulting level of operation or maintenance

 

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of the Premises will be inadequate. [ Manager shall honor any collective bargaining contract covering employment at the Premises which is in effect upon the date of execution of this Agreement; provided that Manager shall not assume or otherwise become a party to any collective bargaining contract for any purpose whatsoever and all personnel subject to a collective bargaining contract shall be considered the employees of the Owner and not Manager (delete bracketed text if not applicable to Premises ] .

 

g.              Insured Losses .

 

i.               Manager shall be responsible for taking all steps necessary to file any claim for insured losses or damages; provided that Manager will not make any adjustments or settlements in excess of $50,000.00 without Owner’s prior written consent.

 

ii.              Manager shall coordinate with the appropriate insurance company or companies, if applicable, to process claims.

 

iii.             Manager shall administer compliance of insurance provisions of tenant leases for all vendors and commercial tenants, including confirming insurance requirements for any special events at the Premises and obtaining certificates of insurance.

 

iv.             At the request of Owner, Manager shall assist Owner’s insurance consultants with any necessary insurance matters.

 

v.              Manager shall attend Owner’s Representative’s meetings regarding loss control and claims.

 

h.              Monthly Remittance .  Manager shall remit to Owner the excess of Gross Income over expenses paid pursuant to Section 3(b)  hereof (“Net Proceeds”) for each month as directed by Owner at the address as stated in Section 7 hereof.

 

i.               Reporting .  Upon the request of Owner, Manager shall render reports for the Premises.  Such reports may include specific and detailed line item information for budget comparison, expense detail, payables and receivables information, leasing progress, marketing information, peer comparison and all other measurements of the key performance indications of the Premises.

 

j.               Litigation .  Manager shall institute and prosecute actions to evict tenants and to recover possession of the Premises or portions thereof, to sue for in the name of Owner of the Premises and recover rent and other sums due; and to settle, compromise and release such actions or suits, or reinstate such tenancies