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Exhibit 99.5
Copy of Form of
Management and Leasing Agreement
dated September 30, 1996
between
__________________________________________________
and
First Union Management, Inc., a Delaware corporation
for each of the following properties:
Alexandria Mall, Alexandria, Louisiana
Brazos Mall, Lake Jackson, Texas
Killeen Mall, Killeen, Texas
Mesilla Valley Mall, Las Cruces, New Mexico
Park Plaza, Little Rock, Arkansas
Shawnee Mall, Shawnee, Oklahoma
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇ ▇▇▇▇▇▇
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MANAGEMENT AND LEASING AGREEMENT
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THIS MANAGEMENT AND LEASING AGREEMENT is made as of September 30, 1996 by
and between SOUTHWEST SHOPPING CENTERS CO. II, L.L.C., a Delaware limited
liability company ("OWNER"), and FIRST UNION MANAGEMENT, INC., a Delaware
corporation ("MANAGER").
RECITALS
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A. Owner holds title to an approximately ____________ square foot shopping
center known as ____________, located at ____________________________, ________
and legally described on EXHIBIT A attached hereto (the "PROPERTY").
B. Owner wishes to provide for the management, leasing and operation of the
Property and Manager is willing to perform such services as an independent
contractor for Owner, all pursuant to the terms of this Agreement.
NOW, THEREFORE, incorporating the Recitals as set forth above, and in
consideration of the mutual covenants herein contained, Owner and Manager
hereby agree as follows:
ARTICLE 1
AGREEMENT TO MANAGE AND TERM
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1.1 AGREEMENT TO MANAGE. Owner hereby appoints Manager, an independent
contractor, as the sole and exclusive property manager and leasing agent for the
Property upon the terms hereinafter set forth. Manager hereby accepts such
appointment and agrees to furnish the services provided in this Agreement.
1.2 TERM. This Agreement shall commence on the date hereof, shall have an
initial term of one (1) year from the date hereof and shall be automatically
renewed for additional one (1) year terms until the earlier to occur of (i) the
termination of this Agreement as provided herein or (ii) the date that is the
seventh anniversary of the date hereof.
1.3 TERMINATION BY EITHER PARTY. Either party has the right at any time by
giving five (5) days' notice to the other party to terminate this Agreement upon
the occurrence of any of the following "Events of Default":
(a) If the other party shall fail to make any payment which it is
obligated to make pursuant to the terms of this Agreement and such failure
shall continue for a period of five (5) days after notice thereof to the
defaulting party;
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(b) If the other party shall fail to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement, other
than an obligation to pay money, to be kept, observed or performed by such
other party, and such failure shall continue for a period of thirty (30)
days after notice thereof to the defaulting party; provided, however, that
if such default is curable but cannot be cured with reasonable diligence in
said 30-day period and the applicable party shall have commenced such cure
within said 30-day period and is diligently proceeding to complete such
cure, such 30-day period shall be extended during the period of such
diligent cure but not longer than one hundred eighty (180) days after the
expiration of the initial thirty (30) day period, unless further extended
by the non-defaulting party;
(c) If the other party shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator of such party or of all or
a substantial part of its assets, (ii) file a voluntary petition in
bankruptcy, or admit in writing its inability to pay its debt as they come
due, (iii) make a general assignment for the benefit of creditors, or (iv)
file a petition or an answer seeking reorganization or agreement with
creditors or take advantage of any insolvency law, or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding;
(d) If the other party shall have an order, judgment or decree entered
against it by any court of competent jurisdiction, on the application of a
creditor, adjudicating such party a bankrupt or insolvent or approving a
petition seeking reorganization of such party or appointing a receiver,
trustee or liquidator of such party or of all or a substantial part of its
assets, and such order, judgment or decree shall continue unstayed and in
effect for a period of ninety (90) consecutive days.
1.4 AUTOMATIC TERMINATION. This Agreement shall automatically terminate
upon the occurrence of any of the following conditions:
(a) The Property is sold to a party that is not an affiliate of First
Union (defined below);
(b) If GMAC or the Senior Preferred Holder (each as defined below),
individually or collectively, exercises its or their right to acquire all
of the interests in Owner pursuant to Section 19 of that certain Limited
Liability Company Agreement of Southwest Shopping Centers Co. I, L.L.C.,
dated as of September _, 1996, by and among GMAC Commercial Equity
Investments, Inc. ("GMAC") CFSC Capital Corp. XXXI ("CARGILL") and First
Union Southwest L.L.C. ("FIRST UNION"), then upon six months' notice from
GMAC to Manager after consummation of such acquisition, this Agreement
shall terminate on the date specified in such notice; or
(c) Subject to the consent of the Lender (as defined below), upon
written notice from the Owner at any time that an Event of Default shall be
continuing under the Acquisition Loan Documents (as defined in the below).
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(d) First ▇▇ ▇▇, L.L.C. resigns as "Manager" pursuant to Section 14(c)
of that certain Limited Liability Company Agreement of Southwest Shopping
Centers Co. II, L.L.C., dated as of September __, 1996 between Southwest
Shopping Centers Co. I, L.L.C. and First ▇▇ ▇▇, L.L.C. (the "Operating
Agreement").
(e) First ▇▇ ▇▇, L.L.C. is removed as "Manager" pursuant to Section
14(d) of the Operating Agreement.
As used herein, the term Senior Preferred Holder shall mean the holder from
time to time of the Senior Preferred Capital (as defined in the Operating
Agreement).
1.5 TERMINATION BY LENDER. The holder of any mortgage lien against the
Property, including, without limitation, the holder of the Acquisition Loan
Documents (the "Lender") shall have the right to terminate this Agreement upon
thirty (30) days notice to Manager and without penalty or premium (i) upon the
appointment of a receiver, (ii) if it, or its successors or assigns, shall
succeed to the interest of the Owner in the Property by reason of foreclosure of
such mortgage or a deed-in-lieu thereof or (iii) in accordance with the
provisions of Section 3.13(c) of the Mortgage and Security Agreement of even
date herewith granted by First Owner to Lender, encumbering the Property and
more fully described on Exhibit B hereto.
1.6 EFFECT OF EXPIRATION OR TERMINATION. (a) Any expiration or termination
of this Agreement shall in no way affect or impair any rights or obligations
which have accrued to either party hereto for the period ending on or prior to
the earlier to occur of such expiration or termination; provided, however, that
no such expiration or termination shall impair the rights of Manager to receive
payments provided for in SECTION 1.7 or ARTICLE 4 hereof. Immediately upon the
expiration or termination of this Agreement, Manager shall deliver to Owner all
funds, including tenant security deposits, tenant correspondence, property
files, vendor invoices and books and records of Owner related to the Property
then in possession or control of Manager. Within sixty (60) days following
expiration or termination of this Agreement, Manager shall deliver to Owner a
final accounting concerning the operations of the Property through the date of
expiration or termination.
(b) EFFECT ON TEMPLE AGREEMENT. Manager has assumed the obligations of
manager under a certain property management agreement relating to management and
leasing of the Temple Mall in Temple, Texas (the "Temple Agreement"). The Temple
Agreement provides, among other things, that the manager thereunder may resign
upon 30 days notice. Notwithstanding any other provision of this Agreement or
the Temple Agreement, Manager agrees that it shall be deemed to have given such
notice under the Temple Agreement in the event that Manager shall be terminated
pursuant to Section 1.4 or Section 1.5 of this Agreement and shall,
nevertheless, promptly give such notice to the other party to the Temple
Agreement. The foregoing covenant may be enforced directly by GMAC or Cargill,
and their respective successors and assigns under the applicable operating
agreement.
1.7 PENDING MATTERS. Within fifteen (15) days after the expiration or
termination of this Agreement, Manager shall submit to Owner a pending matters
list (the "PENDING MATTERS
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LIST") setting forth in reasonable detail all leasing transactions that were in
the course of active negotiation at the time of such expiration or termination.
In the event any leasing transaction appearing on said Pending Matters List is
consummated (as evidenced by the execution and delivery of a Lease executed and
delivered by the tenant and Owner) within twelve (12) months after the
cancellation or termination of this Agreement, then such transaction shall be
deemed a transaction consummated during the term hereof, and Owner shall pay a
Commission (such commission, a "POST-TERMINATION COMMISSION") to Manager for
such transaction in accordance with the applicable provisions and conditions of
this Agreement. The provisions of this SECTION shall survive the expiration or
termination of this Agreement.
ARTICLE 2: MANAGEMENT
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2.1 GENERAL. Subject to the availability of funds in the Operating Account
(defined below), Manager shall manage and operate the Property in a manner
consistent with the management and operation of comparable regional malls in the
same market or similar market as the Property, shall provide such services as
are customarily provided by a manager of regional malls of comparable class and
standing in the same market or similar market as the Property, and shall consult
with Owner and keep Owner advised as to all material or extraordinary matters
and decisions affecting the Property. Without limiting the foregoing, Manager
shall timely prepare and deliver to Owner such accounting and operations reports
in the manner required hereunder and maintain businesslike relations with
tenants of the Property whose service requests shall be received, considered and
recorded in systematic fashion in order to show the action taken with respect to
each request. Complaints of a serious nature shall be promptly reported to Owner
and, after thorough investigation, Manager shall timely report to Owner with
appropriate recommendations for addressing such complaints.
2.2 BUDGETS.
(a) BUDGET APPROVAL PROCESS. Manager shall submit by November 15th of each
year during the term hereof an estimated budget detailing all projected revenues
and expenses for the operation of the Property during the next calendar year.
Manager shall prepare such budget in the form and with such detail as reasonably
required by Owner. Owner shall, within thirty (30) days after receipt of such
budget, notify Manager of its approval or disapproval of such budget. Owner's
failure to timely respond shall be deemed Owner's approval of such budget. In
the event Owner disapproves of any proposed budget, Manager shall make all
revisions thereto which Owner shall direct. Manager shall promptly resubmit the
revised proposed budget to Owner for approval and upon such approval, or deemed
approval as provided above, such budget shall be the "APPROVED BUDGET" for such
calendar year. Until a proposed budget is approved, Manager shall continue to
operate the Property pursuant to the Approved Budget for the prior calendar year
except for increased expenses relating to taxes, insurance, then existing
financing and utilities which shall be paid on a current basis.
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Manager agrees that it shall, to the extent that it is so informed of any
requirements, comply with any budget preparation requirements agreed upon
between the members of Owner pursuant to the terms of Owner's formation
documents.
(b) PAYMENT OF BUDGETED EXPENSES. Manager shall have the right to withdraw
funds from the Operating Account in order to pay all Property expenses then due
and in accordance with the Approved Budget. Manager shall also have the right to
pay those Property expenses that vary from the Approved Budget without first
obtaining Owner's consent, so long as such variances (the "PERMITTED VARIANCE
RANGE") do not exceed, on an expense category subtotal line basis ten percent
(10%) of the applicable subtotal line value in the Approved Budget, and all
variances, whether permitted or approved do not in the aggregate exceed 10%. (By
way of illustration, see Exhibit G. In Exhibit G. "Total HVAC" is an expense
category subtotal, made up of lines 5220, 5270 and 5280). Excluded from the
variance restrictions in the immediately preceding sentence are those variances
(collectively, the "VARIANCE EXCLUSIONS") which are created because of the
timing of their payment during the year, utility expenses, general real estate
taxes, insurance premiums, financing costs and emergency expenses which Owner
authorizes Manager to pay on a current basis.
2.3 REIMBURSABLE AND NONREIMBURSABLE COSTS. All costs incurred by Manager
in the performance of its duties under this Agreement that are in accordance
with the Approved Budget, within the Permitted Variance Range or are Variance
Exclusions shall be reimbursed by Owner to the extent not reimbursed out of the
Operating Account. The following costs, however, shall not be reimbursable by
Owner to Manager:
(a) salaries and payroll expenses of Manager's executives, personnel,
and employees of Manager above the level of Regional Manager, other than
those typically charged in whole or in part to tenants through common area
maintenance or other passthroughs;
(b) Manager's off-site overhead and general administrative expenses,
except long distance telephone, fax, overnight delivery, courier,
registered mail, copying, entertainment (subject to Owner's prior approval
in each instance), uniforms, and twoway radios, where such charges are
directly related to the operation of the Property;
(c) costs of Manager's principal and branch offices;
(d) any costs incurred by Manager as a result of Manager's Event of
Default hereunder, Manager's gross negligence or Manager's willful
misconduct; and
(e) any costs incurred by Manager in the performance of its duties
hereunder that are not (i) approved by Owner, or (ii) in accordance with
the Approved Budget, or (iii) within the Permitted Variance Range, or (iv)
a Variance Exclusion or (v) incurred by Manager in the performance of its
obligations under SECTION 2.7 hereof, or (vi) expressly provided for in
this Agreement.
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2.4 EMPLOYMENT AND SUPERVISION OF PERSONNEL. Manager shall retain qualified
outside vendors or employ and supervise all personnel required for the
management and leasing of the Property, as well as the maintenance of the
necessary books and records in connection therewith, including management for
on-site supervision, operation and security of the Property. All such employees
shall be employees of the Manager, shall be on Manager's payroll, shall be
under the control of the Manager and shall not be employees of Owner. Manager
will, in the hiring and retention of such employees, use reasonable care to
select qualified, competent and trustworthy employees. Manager shall procure and
maintain, at Owner's sole expense, worker's compensation insurance and
employer's liability insurance covering all employees working on or about the
Property and, to the extent reasonably required in writing by Owner and at
Manager's expense, fidelity bonds covering all employees who handle funds of
Owner.
2.5 CONTRACTS AND SUPPLIES. Manager shall, at Owner's expense, enter into
contracts on behalf of Owner for the furnishing to the Property of required
utility services, and shall arrange for appropriate heating and air-conditioning
services and other janitorial, maintenance, pest control, and any other services
and concessions which are reasonably required in connection with the maintenance
and operation of the Property through such contracts or its employees. Owner's
prior approval shall be required for any contracts (a) that have a term in
excess of one (1) year and that are not terminable on sixty (60) days notice or
less or (b) that are with affiliates of Manager and that are on terms in excess
of those that would have been obtained in a bona fide arms-length negotiation.
Manager shall provide Owner with prior written notice before it enters into any
agreement with an affiliate of Manager pursuant to clause (b) of the immediately
preceding sentence. Manager shall also place purchase orders for cleaning and
maintenance supplies, goods and other personal property as are reasonably
necessary to properly maintain the Property. All such contracts and orders shall
be for amounts in accordance with the Approved Budget, the Permitted Variance
Range and the Variance Exclusions. When taking bids or issuing purchase orders,
Manager shall use all reasonable efforts to secure for and credit to Owner, any
discounts, commissions or rebates obtainable as a result of such purchases or
services.
2.6 ALTERATIONS, REPAIRS AND MAINTENANCE. Manager shall, at Owner's sole
expense, ensure that the Property's physical facilities, personal property and
grounds are at all times well maintained and kept in good order and repair and
in a proper state of cleanliness. Manager shall, on behalf of Owner and at
Owner's expense, make or contract for all repairs, alterations, decorations, or
replacements which shall be reasonably required to preserve, maintain and keep
the Property in similar condition to that of the Property at the commencement of
this Agreement (ordinary wear and tear excepted). Manager shall not make or
contract for any repair or improvement in or to the Property without Owner's
prior written approval if the cost would exceed the year to date allocation for
the applicable line items for such repairs set forth in the Approved Budget plus
the Permitted Variance Range, unless the same is immediately required by law, is
necessary without delay in order to protect the Property or any person, is a
Variance Exclusion or is made under other circumstances which Manager reasonably
deems to be an emergency.
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2.7 COMPLIANCE WITH LAWS.
(a) Subject to the availability of funds in the Approved Budget or
otherwise made available by Owner, Manager shall use commercially
reasonably efforts to cause the Property to be in full compliance with all
applicable federal, state, and municipal laws, ordinances, regulations and
orders relating to the use, operation, repair and maintenance of the
Property and with the rules, regulations or orders of the local Board of
Fire Underwriters or other similar body, if any. Manager shall give prompt
notice to Owner of any violation or notice of alleged violation of any
laws, ordinances, regulations, rules and orders that comes to its
attention. Subject to the availability of funds in the Approved Budget or
otherwise made available by Owner and provided Owner has not notified
Manager that it intends to contest any violation, Manager shall promptly
remedy any violation of any such federal, state and municipal law,
ordinance, rule, regulation or order which comes to its attention. Owner
and Manager agree to cooperate with each other to cause the Property to be
operated at all times in compliance with all applicable federal, state and
municipal laws, ordinances and regulations and shall not knowingly,
directly or indirectly, suffer, permit or make any use of the Property
which is prohibited by any such laws, ordinances and regulations. Owner
hereby indemnifies and agrees to defend and hold Manager and its partners,
officers, employees and agents harmless from any Losses (defined below) by
virtue of the Property's noncompliance with federal, state or municipal
laws, ordinances or regulations or its use prohibited thereby, to the
extent not caused by the gross negligence or willful misconduct of Manager.
(b) The Property is currently subject to the agreements, covenants,
conditions and restrictions contained in those certain deeds, mortgages,
easements, and ordinances listed in EXHIBIT B attached hereto as well as to
all existing leases (as the same may be amended from time to time, the
"AGREEMENTS"). Manager shall use commercially reasonable efforts to fully
perform all of the obligations and duties on the part of Owner to be
performed under the Agreements and all other agreements binding against the
Property of which Owner makes Manager aware, provided, that Manager shall
not be required to make any payment or incur any liability on account
thereof and provided, further, that with respect to any such agreements,
amendments or other documents entered into after the date hereof, such
documents shall not materially increase Manager's obligations hereunder
without Owner first obtaining Manager's prior consent.
2.8 COLLECTION OF RENT. Manager shall exercise commercially reasonable
efforts to collect all rents and other sums and charges due from tenants,
subtenants, licensees and concessionaires of the Property. However, Manager
shall not terminate any lease, lock out a tenant, institute suit for rent or for
use and occupancy, or institute proceedings for recovery of possession, without
in each case first obtaining the prior written approval of Owner which approval
may not be unreasonably withheld, and shall be deemed received if Owner does not
respond within five (5) business days. In connection with such suits or
proceedings only legal counsel designated by Owner shall be retained, and all
such suits or proceedings shall be brought
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in the name of Owner, at Owner's expense, and (except to the extent Owner
directs otherwise) shall be handled in such manner as Manager elects.
2.9 INVENTORY. Manager shall maintain a current inventory of all equipment
supplies, furnishings, furniture and all other items of personal property now or
hereafter owned by Owner and located upon or used in the operation of the
Property. Within ten (10) days after written request by Owner, Manager shall
provide Owner with a copy of such inventory list.
2.10 SIGNS. Manager may place one or more signs on or about the Property
stating, among other things, that Manager is the exclusive management and
leasing agent for the Property. All such signs and locations thereof shall be
subject to Owner's prior reasonable approval.
2.11 ADDITIONAL SERVICES. If Owner requests Manager to perform services
which are not specifically provided for in this Agreement (including without
limitation, the supervision of tenant improvements or the supervision of capital
repairs or replacements), Manager shall be compensated for such services on an
hourly basis or on a negotiated fee basis consistent with market terms for such
service in the market in which the Property is located.
2.12 ADVANCES. Manager shall not be obligated to make any advance to or for
the account of Owner or to pay any sum except out of funds held or provided as
set forth in this Agreement. Manager shall not be obligated to incur any
liability or obligation for the account of Owner without assurance that the
necessary fund for the discharge thereof will be promptly provided.
2.13 OWNER'S SEPARATE LEGAL EXISTENCE. Manager shall act, as appropriate,
in a manner that identifies and recognizes the separate legal existence of
Owner.
ARTICLE 3: MANAGEMENT FEE
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3.1 MANAGEMENT FEE. As consideration for the performance by Manager of all
of its property management duties under this Agreement, Owner agrees to pay to
Manager a property management fee (the "MANAGEMENT FEE") equal to four percent
(4%) of Gross Receipts (defined below). The Management Fee shall be paid in
arrears on a monthly basis, not later than the tenth (1Oth) day of the month
following the month for which such fee is earned. "GROSS RECEIPTS" means all
revenues of every kind and nature derived from the operation of the Property
during a month determined on a cash basis, including, without limitation, (i)
rent, (ii) rent adjustments, (iii) utility charges, (iv) parking charges, (v)
service charges, (vi) forfeited security deposits and other forfeited tenant
deposits, (vii) proceeds of rent interruption insurance and (viii) tenant
reimbursements for operating expenses, taxes and insurance. Gross Receipts shall
not include: (i) non-forfeited security deposits and other non-forfeited
refundable deposits; (ii) interest on bank accounts for the operation of the
Property; (iii) proceeds from the sale or refinancing of any part of the
Property; (iv) insurance proceeds or dividends received from any insurance
policies pertaining to physical loss or damage to the Property or any part
thereof (but
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not proceeds of rent interruption insurance which are included as provided
above); (v) condemnation awards or payments received in lieu of condemnation of
the Property or any part thereof; and (vi) any trade discounts and rebates
received in connection with the purchase of personal property.
3.2 PAYMENT OF MANAGEMENT FEE AND LEASING COMMISSION. Provided that no
Event of Default is then existing with respect to Manager, Manager shall be
entitled to pay itself from the Operating Account the monthly Management Fee
then due as well as any Commission then due hereunder. Upon the cure of such
Event of Default, Manager shall be entitled to deduct any past Management Fee or
Commission which was not paid by virtue of the immediately preceding sentence.
ARTICLE 4: LEASING
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4.1 LEASING. Owner hereby designates Manager as its exclusive broker for
leasing of space in the Property and agrees that it shall refer all inquiries
for leases and renewals to Manager and Manager shall negotiate all such leases,
subleases, renewals, licenses and agreements (collectively, "LEASES"). Manager
shall make every reasonable effort to obtain and keep desirable tenants for the
Property. Manager shall, so far as reasonably possible, procure financial
references for prospective tenants, investigate such references, and use its
best judgment in the selection of prospective tenants. Manager agrees to perform
whatever reasonable service may be required in connection with the negotiation
of Leases or renewals, extensions, modifications, or cancellations thereof.
4.2 EXECUTION OF LEASES. All Leases are to be prepared by Manager in
accordance with the leasing guidelines set forth in any loan document
constituting an Agreement as well as any further guidelines established by
Owner, unless Owner shall otherwise consent in writing. The initial leasing
guidelines required by Owner are attached hereto as EXHIBIT C. Manager
is authorized to enter into and execute on Owner's behalf Leases for space in
the Property in accordance with the terms hereof and, except as otherwise
directed by Owner in a particular case, all Leases shall be in the Owner's name
but executed by Manager as managing agent for Owner.
4.3 LEASE FORMS. All Leases entered into after the date hereof (but not the
renewal, extension, expansion, amendment, modification or supplement of any
Leases existing as of the date hereof) shall be on the form approved by Owner
unless Owner shall otherwise consent in writing; provided, however, that Manager
shall have the right (i) to use the form required by any national or regional
tenant if reasonably necessary to conclude the transaction and is customary in
the market and (ii) to make any modifications from the form approved by Owner to
the extent such changes are reasonably necessary to conclude the transaction and
are customary in the market, so long as such modifications, do not significantly
affect Owner's material rights and obligations under the Lease and conform in
all material respects to the
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leasing guidelines approved by Owner. Owner hereby approves the forms of lease
and license agreements attached hereto as EXHIBIT D and EXHIBIT E, respectively.
4.4 ADVERTISING. Manager shall coordinate all advertising, promotions and
marketing affecting the Property. All such advertising and marketing shall be
prepared by Manager in accordance with the Approved Budget, the Permitted
Variance Range or the Variance Exclusions. From time to time upon Manager's
request and to the extent funds are unavailable in the Operating Account, Owner
shall remit to Manager Owner's contribution to merchants' association,
promotional or marketing fund as required under the Leases. Any advertising or
promotional materials for the Property that utilizes the name "General Motors"
or "GMAC" or any variant thereof shall be subject to the prior approval of GMAC.
4.5 LEASING EXPENSES. Owner shall reimburse Manager for all reasonable
out-of-pocket expenses of Manager, if any, directly related to negotiating
Leases for space in the Property, including, without limitation, all reasonable
attorneys' fees and expenses, costs of postage, telephone, mailings,
presentations, reports, renting plans, descriptive brochures and other leasing
materials.
4.6 LEASING COMMISSIONS.
(a) INITIAL LEASES AND RENEWALS AND EXTENSIONS.
(i) During the term of this Agreement, and thereafter as herein
provided, Owner shall pay Manager a commission (a "COMMISSION") with
respect to each Lease of all or any portion of the Property equal to
(1) four and one-half percent (4.5%) of the entire Base Rent
(hereinafter defined) payable over the term (exclusive of any period
covered by any un-exercised renewal or extension option) for any Lease
entered into during the term of this Agreement or any Lease entered
into after the termination or expiration of this Agreement if such
post termination or expiration Lease is entered into pursuant to the
terms of SECTION 1.7 hereof and (2) in the case of negotiated renewal
or extension (as opposed to a renewal or extension by the applicable
lessee pursuant to the its exercise of a renewal or extension option
granted in the applicable Lease that does not require the negotiation
of the terms of such renewal or extension option), three percent (3%)
of the entire Base Rent payable over the period covered by the renewed
or extended term (exclusive of any period covered by any un-exercised
renewal or extension option) of any Lease existing as of the date
hereof or any Lease entered into during the term of this Agreement or
any Lease entered into after the termination or expiration of this
Agreement if such post termination or expiration Lease is entered into
pursuant to the terms of SECTION 1.7 hereof, all whether such renewal
or extension occurs during the term hereof, during the period
described in SECTION 1.7 hereof or thereafter, each to the extent such
Lease under this clause (2) contains an option of extension or
renewal. Commissions
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shall be paid at the times and in the manner set forth in SECTION
4.6(b) or (c) hereof.
(ii) The term "BASE RENT", when used herein, shall be defined to
mean the entire rent or consideration payable by a tenant under any
applicable Lease during the initial term of such Lease, including
fixed and specified increases in such rent or consideration, less: (1)
all credits and payments allowed or made to or for the benefit of such
tenant other than for construction of its space, specifically provided
for in any applicable Lease, including, but not limited to: (A)
Commissions paid to brokers unaffiliated with Owner in connection with
the applicable Lease; (B) rent abatements; (C) "take-over" payments
with respect to space formerly occupied by such tenant; and (D) rent
payable under the Lease which is attributable to operating costs,
insurance expenses, real estate taxes or the consumer price index or
another inflationary index; (2) late payment charges; (3) percentage
rentals; (4) security deposits; (5) extra services or supplies
furnished or constructed by or for the Owner and reimbursed to the
Owner by such tenant by way of additional rental or other payment
pursuant to a Lease or separate agreement; (6) rent allocated to
payment for gas, water, electricity, telephone service, heat, air
conditioning or any equipment associated therewith except to the
extent that payment of any such items is covered in the initial
expense stop stipulated in a Lease; (7) moving allowances; and (8)
rental payments upon a continuation of tenancy on a statutory or
month-to-month basis. The aforesaid deductions shall be allocated over
the entire term of any such Lease and shall not include any extension
or renewal term.
(b) PAYMENT OF COMMISSION FOR RENEWALS AND EXTENSIONS.
(i) If a Lease gives the tenant an option of renewal or extension
and in the event the tenant exercises any option of renewal or
extension during the term of the Lease or any extension or renewal
thereof, a Commission for such renewal or extension calculated
pursuant to SECTION 4.6(a) will be paid by the Owner to Manager based
upon the extended or additional period.
(ii) Any such Commissions shall be due and payable in full within
thirty (30) days of the commencement of any renewal or extension term.
For any exercise of Lease extension or renewal after expiration or
termination of this Agreement, the Owner shall promptly notify the
Manager in writing of such exercise and the terms thereof. The Owner's
obligation to pay such Commission for such Leases shall survive the
expiration or termination of this Agreement.
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(c) PAYMENT OF COMMISSIONS FOR INITIAL LEASES.
(i) All Commissions due to Manager and to any cooperating broker
pursuant to this Agreement shall, except as provided in SECTION 4.6(b)
hereof, be payable on the following terms: (1) one half (1/2) of the
Commission shall be paid within thirty (30) days after execution by
any tenant which is binding upon such tenant (and acceptance by Owner,
if not within pre-approved guidelines); and (2) the balance of the
Commission shall be paid within thirty (30) days after the last to
occur of (i) any such tenant has taken possession of the demised
premises, (ii) if rent is payable in the first (1st) month, commenced
paying rent, (iii) any security then required by the Lease is
deposited or delivered to Owner, (iv) the term of the Lease has
commenced and (v) any consents or subordination, non-disturbance and
attornment agreements then required by the Lease have been given or
delivered by the tenant to the appropriate parties.
(ii) In the event that a tenant defaults under a Lease for which
Manager is entitled to the balance of its Commission, Owner shall have
no duty to enforce such Lease in order to preserve such Commission. In
the event that a tenant defaults under a Lease for which Manager is
entitled to a Commission prior to the time all of the Commission is
payable pursuant to the foregoing, then all previously paid portions
of such Commission may be retained by Manager but Manager shall not be
entitled to any portion of the Commission not yet paid unless such
default is cured.
(iii) In the event that a tenant has the right during the initial
stated term under a Lease to terminate the Lease for reasons other
than the Owner's default, a Commission shall be computed and paid in
accordance with this Agreement based on the Base Rent allocable to the
period of time, if any, as to which such tenant has no such rights to
terminate the Lease. In the event the Lease is not terminated during
the initial stated term by the tenant, Owner shall pay (at the time
said right to terminate expires or is waived, whichever is sooner) any
unpaid balance of the Commission otherwise due.
(d) COOPERATING BROKERS. Manager agrees to actively solicit the
cooperation of other real estate brokers in finding tenants for space in
the Property. In the event a cooperating broker is involved in securing a
tenant, the Owner shall pay a total Commission equal to one hundred fifty
percent (150%) of the Commission provided for in the provisions of CLAUSES
(a) and (c) of this SECTION 4.6. Manager shall be responsible for
negotiating an acceptable sharing of the total Commission with the
cooperating broker. In no event shall Manager receive more than 100% of the
Commission provided for in the provisions of CLAUSES (a) through (c) of
this SECTION 4.6.
(e) CONSTRUCTION MANAGEMENT FEE. Owner agrees that if Manager shall be
responsible for coordinating the build-out of any tenant space, Manager
shall be entitled
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to a construction management fee equal to ten percent (10%) of the hard
costs of such construction, not to exceed $75,000.00 in any one instance.
ARTICLE 5: PROCEDURE FOR
HANDLING RECEIPTS AND OPERATING CAPITAL
---------------------------------------
Subject to the terms and conditions of the Operating Agreement and the
Acquisition Loan Documents, all funds relating to the management and operation
of the Property shall be administered as follows:
5.1 RECEIPTS. All monies received by Manager for or on behalf of Owner in
connection with the operation and management of the Property shall, within one
(1) business day after receipt, be deposited by Manager in an operating account
(the "Operating Account") established in Owner's name at such bank as directed
by Owner. [As of the date hereof, the Owner owns six other regional malls
(herein, such regional malls, together with other properties acquired in
substitution or replacement thereof, are called the "OTHER PROPERTIES")that are
subject to separate management and leasing agreements with Manager, each of
which agreements are in substantially the same form as this Agreement
(collectively, the "OTHER MANAGEMENT AGREEMENTS"). The Owner agrees that the
Manager may establish one Operating Account for the monies received by Manager
for or on behalf of Owner in connection with the operation and management of the
Property and some or all of the Other Properties in satisfaction of the
requirements of SECTION 5.1 of this Agreement and the applicable Other
Management Agreements.
5.2 DISBURSEMENTS. Owner shall deposit and maintain sufficient funds in the
Operating Account, and Manager shall withdraw and pay from Operating Account,
such amounts at such times as the same are required in connection with the
management and operation of the Property in accordance with the Approved Budget
and the provisions of this Agreement. Manager shall remit to Owner on or after
the twentieth (20th) day of each month during the term hereof, all funds in the
Operating Account except those necessary to pay additional obligations with
respect to this Property and the applicable Other Properties anticipated to come
due prior to the receipt of additional rentals.
5.3 AUTHORIZED SIGNATORIES. Certain designated officers and employees of
Manager, approved by Owner, shall be authorized signatories on the Operating
Account and shall have authority to make withdrawals from the Operating Account
in accordance with the terms hereof. Manager shall, to the extent reasonably
required in writing by Owner, cause all persons who are authorized signatories
or who in any way handle funds for the Property to be bonded, at Manager's
expense, in an amount reasonably designated by Owner.
5.4 SECURITY DEPOSITS. All security deposits of tenants of the Property
shall be maintained under the joint control of Owner and Manager in such manner
as Owner shall approve and as required by the applicable state law.
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ARTICLE 6: ACCOUNTING
---------------------
6.1 BOOKS AND RECORDS. Manager shall maintain a comprehensive system of
office records, books, computer files and data and accounts pertaining to the
Property, which system, records, books, computer files and data and accounts
shall be available for examination, copying and audit by Owner and its agents,
accountants and attorneys during regular business hours. The Owner shall
establish guidelines and procedures for such books and records and Manager shall
maintain such records in accordance with such guidelines and procedures at the
on-site Property management office or at Manager's central office. Manager
shall preserve all records, books, computer files and data and accounts for a
period of three years during the term hereof and at the end of such period shall
deliver or make available to Owner such records, books, computer files and data
and accounts. All such records, books and computer files and data shall be the
property of Owner. Without limiting the generality of this Section, Manager
shall provide reports to Owner as set forth on Exhibit F hereto.
6.2 PERIODIC STATEMENTS: AUDITS.
(a) PERIODIC STATEMENTS. Manager shall timely prepare and deliver to
Owner such monthly, quarterly and/or annual leasing and management reports
and accounting information as and in the manner reasonably required
pursuant to Owner's standard reporting requirements, as may be amended from
time to time.
(b) AUDIT. In the event that Owner requires an audit, the audit shall
be at Owner's expense and the Manager shall cooperate with the auditors.
6.3 RETURN OF COMPUTER HARDWARE AND SOFTWARE. Immediately following the
termination of this Agreement by either Owner or Manager, Manager shall return
and/or deliver to Owner, in good condition and working order, all hardware,
software, documentation, backup tapes, signature cartridges and all other
computer hardware and software purchased or otherwise provided by Owner to
Manager for Manager's use during the term of this Agreement. Promptly upon
Owner's request following the termination of this Agreement, Manager shall
deliver to Owner hard copy outputs of information on its computer systems that
relate to the Property, but Manager shall not be required to provide any
computer hardware or software.
ARTICLE 7: INSURANCE
--------------------
7.1 INSURANCE BY OWNER. Owner, at its expense, will obtain and keep in
force any insurance required by any lender with a security interest in the
Property as well as adequate insurance against physical damage (e.g., fire and
extended coverage endorsement, boiler, and machinery) and against liability for
loss, damage, or injury to property or persons which might arise out of the
occupancy, management, operating, or maintenance of the Property. Manager shall
be named as a named insured on all liability insurance policies obtained by
Owner. Owner
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hereby waives, and shall cause its insurer to waive, all rights to subrogation
with respect to losses payable under such policies.
7.2 INSURANCE BY MANAGER. Manager shall obtain the worker's compensation
insurance and fidelity bonds reasonably required by Owner pursuant to the terms
hereof, such worker's compensation insurance to be at Owner's expense as
provided in SECTION 2.4 hereof and such fidelity bonds to be at Manager's
expense as provided in SECTION 2.4 hereof and SECTION 5.3 hereof. In addition,
Manager shall, at its expense which is not reimbursable, obtain and keep in
force, commercial general liability and automobile liability insurance relating
to its activities and those of its employees and agents with respect to the
performance of its obligations under this Agreement. Such insurance shall be
with companies and in an amount reasonably acceptable to Owner. Owner shall be
named as a named insured on such commercial general liability policy. Manager
hereby waives, and shall cause its insurer to waive, all rights to subrogation
with respect to losses payable under such policies.
7.3 LOSS OR DESTRUCTION. Manager agrees (a) to notify Owner and the
insurance carrier promptly after Manager receives notice of any loss, damage or
injury to the Property and (b) to take no action (such as admission of
liability) which might bar Owner from obtaining any protection afforded by any
policy Owner may hold. Manager shall aide and cooperate with Owner in every
reasonable way with respect to such insurance or any loss thereunder. Manager is
authorized to settle on Owner's behalf any and all property damage claims not in
excess of $250,000, which includes authority for the execution of proof of loss,
the adjustment of losses, signing of receipts and the collection of money. If
the claim is greater than $250,000, Manager shall act only with the prior
written approval of Owner. Any money collected by Manager under this SECTION
shall be deposited in the Operating Account.
ARTICLE 8: INDEMNIFICATION
--------------------------
8. 1 GENERAL.
(a) OWNER INDEMNIFICATION. Owner agrees to indemnify, defend and hold
Manager and its partners, officers, employees and agents harmless from any
and all claims, judgments, damages, penalties, fines, costs, expenses,
liabilities (including sums paid in settlement of claims) or losses, direct
or indirect, known or unknown, including without limitation, reasonable
attorneys', consultants' and experts' fees and expenses (collectively,
"LOSSES"), suffered, paid or incurred by Manager (i) in connection with the
performance of its obligations under this Agreement (other than those
arising out of Manager's gross negligence or willful misconduct), (ii) the
matters subject to indemnification as described in SECTION 2.7(a) of this
Agreement, (iii) in connection with action taken by Manager at the request
of Owner or (iv) by reason of Owner's failure or refusal to comply with or
abide by any rule, order, determination, ordinance or law of any federal,
state or municipal authority; excluding, however, in each instance, those
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Losses arising out of Manager's gross negligence or willful misconduct. The
provisions of this paragraph shall survive the termination of this
Agreement.
(b) MANAGER INDEMNIFICATION. Manager hereby agrees to indemnify,
defend and hold Owner and its partners, officers, employees and agents
harmless from any and all Losses arising out of or in any way connected
with any act or omissions of Manager or its employees or agents, which
constitute gross negligence or willful misconduct and that are not taken or
omitted at the direction of Owner; excluding, however, in each instance,
those Losses arising out of Owner's gross negligence or willful misconduct.
The provisions of this paragraph shall survive the termination of this
Agreement.
8.2 ENVIRONMENTAL INDEMNIFICATION. Owner agrees to indemnify, defend and
hold Manager and its partners, officers, employees and agents harmless from any
Losses which are incurred by Manager or arise against Manager during or after
the term of this Agreement from or in any way connected with the presence or
suspected presence of Hazardous Substances (as defined below) existing or
present on, under or about the Property, unless the Hazardous Substances are
present solely as a result of the gross negligence or willful misconduct of
Manager, its officers, employees, or agents. For purposes of this section,
"HAZARDOUS SUBSTANCES" shall mean any hazardous, toxic, radioactive, infectious
or carcinogenic substances, material, gas or waste which is or becomes listed or
regulated by any federal, state or local law or governmental authority or
agency, including, without limitation, petroleum and petroleum products, PCBs,
asbestos, and all substances defined as hazardous materials, hazardous wastes,
hazardous substances or extremely hazardous waste under any federal, state or
local law or regulation.
ARTICLE 9: MISCELLANEOUS PROVISIONS
-----------------------------------
9.1 NOTICES. All notices, waivers, demands, requests, or other
communications required or permitted hereunder shall be in writing and be deemed
to have been properly given, served and received (i) if delivered by messenger,
when delivered, (ii) if mailed, three (3) business days after deposit in the
United States mail, certified or registered, postage prepaid, return receipt
requested, (iii) if telecopied, upon mechanical confirmation of completed
transmission, or (iv) if delivered by reputable overnight express courier,
freight prepaid, the next business day after delivery to such courier; in every
case addressed to the party to be notified as follows:
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To Manager: First Union Management, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
First Union Management, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇
Chief Accounting Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To Owner: Southwest Shopping Center Co. II, L.L.C.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address(es) or addressee(s) as any party entitled to receive
notice hereunder shall designate to the others in the manner provided herein for
the service of notices. Rejection or refusal to accept or inability to deliver
because of changed address or because no notice of changed address was given,
shall be deemed receipt.
9.2 SUBORDINATION. (a) Owner and Manager agree that this Agreement is
subordinate to any mortgages or trust deeds held by or for any bank, insurance
company or other lending institution that may now or hereafter be placed upon
the Property. The preceding sentence shall
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not be interpreted to enlarge the duties of Manager hereunder or to diminish the
rights of Manager hereunder, the sole purpose of the preceding sentence being to
indicate the agreement of Owner and Manager that a foreclosure of any such
mortgage or trust deed shall terminate this Agreement in accordance with the
provisions of SECTION 1.5 hereof (but shall not release the then accrued
obligations of the parties hereunder or those obligations of the parties
hereunder that survive the termination of this Agreement).
(b) Manager agrees that the terms of this Agreement are subject to any
contrary terms set forth in any written agreement between Manager and the holder
of such lien.
9.3 SEVERABILITY. If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
held to be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant or condition of this Agreement shall
be valid and shall be enforced to the fullest extent permitted by law.
9.4 NO JOINT VENTURE OR PARTNERSHIP. Owner and Manager hereby renounce the
existence of any joint venture or partnership between them and agree that
nothing contained herein or in any document executed in connection herewith
shall be construed as making Manager and Owner joint venturers or partners.
9.5 MODIFICATION. TERMINATION. This Agreement may be amended or modified
only by a written instrument executed by Manager and Owner.
9.6 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject maker hereof.
9.7 ARTICLE AND SECTION HEADINGS. Article and Section headings contained in
this Agreement are for reference only and shall not be deemed to have any
substantive effect or to limit or define the provisions contained herein.
9.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding on the parties
hereto, and their successors and permitted assigns. Manager may not assign or
otherwise transfer its interest hereunder without the prior written consent of
Owner, which consent may be withheld in Owner's sole discretion. This Agreement
is freely assignable by Owner.
9.9 GOVERNING LAW. This Agreement shall be construed in accordance with the
internal laws of the state in which the Property is located.
9.10 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original, but all of which shall
constitute one and the same instrument.
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9.11 ATTORNEY'S FEES. In the event of any controversy, claim or action
being filed between the parties respecting this Agreement or in connection with
the Property the prevailing party shall be entitled to recover reasonable
attorney's fees, costs and expenses, whether or not such controversy was
litigated or prosecuted to judgment.
9.12 MANAGER'S OFFICE. Owner shall provide a reasonable and appropriate
space within the Property, rent free, to serve as Manager's on-site office.
Owner shall fully furnish and equip the same and shall pay all direct costs of
operating said on-site office, including utilities, telephone and office
supplies. Manager's right to occupy such space shall be pursuant to a license
granted under this Agreement and shall terminate simultaneously with the
termination of this Agreement. Manager shall use such office only for the
performance by Manager of its duties and responsibilities hereunder.
9.13 CONFIDENTIALITY. Except for information generally available to the
public from sources other than the Manager, Manager shall not disclose to third
parties unaffiliated with itself or the members of Owner any proprietary
information concerning the Property, including without limitation, information
concerning Property income and expenses. Notwithstanding the restrictions of the
immediately preceding sentence, Manager may disclose proprietary information
concerning the Property to its employees, agents, attorneys, accountants and
other consultants, or as required by legal, administrative or regulatory
requirements.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as
of the date first above written.
SOUTHWEST SHOPPING CENTERS CO. II,
L.L.C., a Delaware limited liability company
By: First ▇▇ ▇▇, L.L.C., a Delaware limited
liability company, its manager
By: First Southwest II, Inc., a Delaware
corporation, its manager
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Vice President
MANAGER:
FIRST UNION MANAGEMENT, INC.,
a Delaware corporation
By:
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Title: ASST. VICE PRESIDENT,
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RETAIL OPERATIONS
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