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MEMORANDUM OF AGREEMENT made as of the 26th day of November, 1996.
B E T W E E N:
BASIC U.S. REIT, INC.,
a corporation incorporated under the laws of Maryland,
(hereinafter referred to as the "Company")
OF THE FIRST PART;
- and -
BASIC ADVISORS, INC.,
a corporation incorporated under the laws of Delaware,
(hereinafter referred to as the "Advisor")
OF THE SECOND PART.
WHEREAS shares of common stock in the Company are to be offered to
the public pursuant to a prospectus (the "Prospectus") dated the date hereof;
AND WHEREAS the Company will require investment advice with respect
to the investment of its assets in permitted real property investments and
the management thereof;
AND WHEREAS the Advisor has agreed to provide such investment and
management advice to the Company;
NOW THEREFORE THIS INDENTURE WITNESSETH THAT in consideration of the
respective covenants and agreements herein contained, the parties hereby
agree as follows:
ARTICLE 1
APPOINTMENT OF ADVISOR
1.01 The Advisor is hereby appointed to provide investment
management, administrative, bookkeeping, reporting, accounting and clerical
services and advice to the Company. The Advisor accepts such appointment and
acknowledges that it is familiar with the terms and provisions of the
Prospectus and the constating documents and by-laws of the Company and agrees
to act in accordance therewith and in accordance with the terms of this
Agreement in a competent, honest, fair, diligent and efficient manner, in
good faith and to the best of its ability in the best interests of the
Company. Furthermore, the Advisor agrees that it shall devote such time and
attention as may be required to fulfil its obligations hereunder.
ARTICLE 2
DUTIES OF THE ADVISOR
2.01 Subject to the exclusive and overriding authority of the
directors of the Company to manage the business and affairs of the Company,
the Advisor hereby agrees that it shall:
a) provide or arrange for the provision of research and other data
in connection with the Company's investments and investment
policies;
b) act as the Company's real property investment manager and
consultant, and in so doing make recommendations to the board of
directors of the Company with respect to the acquisition and
disposition of investments, perform or arrange for the
performance of such inspections and investigations in connection
therewith as are deemed appropriate and, upon request of the
board of directors of the Company, supervise closings in respect
thereof;
c) from time to time arrange for mortgage financing on behalf of the
Company for its real property investments provided the Advisor
may retain mortgage brokers at the expense of the Company and
with the consent of the board of directors of the Company to
assist in the arrangement of such mortgage financing.
d) obtain and review appraisal reports and title opinions or reports
from counsel in connection with real property investments made or
proposed to be made by the Company, review property location, the
building and its physical characteristics, the relevant rental
market, financial and character data relating to the property and
the vendor or purchaser, applicable environmental, zoning and
other governmental regulations, the character of tenant mix and
quality of tenants, insurance coverage, the long term anticipated
total return to the Company and other factors in connection with
the Company's investments;
e) supervise the performance of all property management, maintenance
and other customary services related to the ownership of the
Company's real estate investments;
f) manage the Company's short-term investments;
g) supervise the performance of the day-to-day administrative
functions in connection with the management of the Company;
h) deal with, retain or employ other persons on behalf of the
Company in connection with its investments, including solicitors,
consultants, property managers, leasing agents, finders, lenders,
brokers, insurers, banks, builders, developers and other
investment participants;
i) arrange for the provision to the Company of any information
required in order to report to shareholders;
j) arrange for the preparation of budgets;
k) arrange for the provision to the Company of such services by
others, as the board of directors may reasonably request in
connection with the activities of the Company; and
l) from time to time, report to the board of directors with respect
to its performance of the foregoing services.
ARTICLE 3
FEES AND EXPENSES
3.01 The Company shall pay to the Advisor an annual fee based upon
a percentage of Share Capital (as hereinafter defined) determined as follows:
SHARE CAPITAL RATE
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On the first $35 Million 1.5%
On the amount over $35 Million
and up to $125 Million 1.25%
On the amount over $125 Million
and up to $200 Million 1.00%
On the amount in excess
of $200 Million 0.75%
The fee payable pursuant to this Section 3.01, shall be calculated and paid in
monthly instalments in arrears, at one-twelfth (1/12) of the annual fee on the
fifteenth (15th) day of each month based upon the Share Capital on the last day
of the previous month. For the purposes hereof, Share Capital shall be the
aggregate of the proceeds received by the Company for all issued and outstanding
shares in the capital of the Company from time to time after deducting any
direct costs or expenses paid by the Company for the issuance of such shares
(including any agency commissions).
3.02 On the date of the closing of the disposition by the Company
or any subsidiary of the Company, of any real property or any interest in
real property, the Company shall pay to the Advisor a disposition fee equal
to one-quarter percent (0.25%) of the sale proceeds from the disposition of
such real property, all subject to the following rules:
a) in determining sale proceeds of any property, any mortgage
assumed or taken back on sale shall be included in the sale
proceeds on the basis of the actual indebtedness owing thereunder
as of the date of the closing of the sale;
b) in determining sale proceeds of any property, there shall be no
deduction from the sales proceeds for, any out of pocket costs
incurred by the Company in connection with the relevant
disposition including, without limitation, legal fees and
disbursements, registration and filing fees, sales taxes, real
estate commissions or other disposition fees;
c) for the purposes of this Section 3.02, sale proceeds shall
include the receipt of compensation for the expropriation of any
real property of the Company or any subsidiary of the Company or
any part thereof or interest therein, and the recovery of damage
awards or insurance proceeds not required to repair or
reconstruct the damaged assets (other than business or rental
interruption insurance proceeds) in respect thereof; and
d) except as provided herein, if any uncertainty or difference
between the Company and the Advisor arises in determining any
amount payable under this Section, advice (which shall not be
binding) shall be sought from the auditors of the Company.
3.03 On the date of the closing of the purchase by the Company or
any subsidiary of the Company, of any real property or any interest in real
property, the Company shall pay to the Advisor, an acquisition fee equal to
one and one-half percent (1.5%) of the cost of such real property to the
Company or its subsidiary all subject to the following rules:
a) the cost of any property shall be comprised of the purchase price
to the Company on the date of closing of the purchase without
including ancillary expenses such as legal fees and
disbursements, registration and filing fees, sales taxes, or
other acquisition fees;
b) in determining the cost of any property, any mortgage assumed on
purchase or given back on purchase or granted on purchase shall
be included in the cost on the basis of the actual indebtedness
owing thereunder as of the date of the closing of the purchase;
and
c) except as provided herein, if any uncertainty or difference
between the Company and the Advisor arises in determining any
amount payable
under this Section, advice (which shall not be binding) shall be
sought from the auditors of the Company.
3.04 On the date of the completion of any financing or
refinancing by the Company or any subsidiary of the Company of any real property
or any interest in real property, the Company shall pay to the Advisor a
financing fee equal to one-
quarter percent (0.25%) of the principal amount of the financing or refinancing
arranged, renewed, extended or increased in respect of any real property of the
Company or any subsidiary of the Company, whether the financing is secured by a
mortgage or mortgages on the real property, a debenture or debentures on the
real property, personalty or otherwise.
3.05 The Advisor shall be responsible for the employment expenses
of its personnel, rent and other office expenses and miscellaneous
administrative expenses relating to the performance of its functions under
this Agreement.
3.06 The Company shall be responsible for all of the expenses of
the Company and any subsidiary of the Company and all expenses incurred by
the Advisor in the performance of its duties in accordance herewith (other
than expenses to be paid by the Advisor pursuant to Section 3.05), including
without limiting the generality of the foregoing, the following:
a) interest and other costs of borrowed money;
b) taxes and assessments on real property and income, if applicable;
c) fees and expenses of lawyers, accountants, appraisers, property
managers and other agents or consultants employed by or on behalf
of the Company;
d) fees and expenses of the directors and officers of the Company;
e) expenses of managing, leasing and maintaining real property;
f) expenses of servicing mortgages;
g) insurance as required, including liability insurance for
directors and officers of the Company;
h) expenses in connection with distributions to shareholders of the
Company;
i) expenses of maintaining the books and records of the Company;
j) expenses in connection with communications to shareholders of the
Company and other bookkeeping and clerical work necessary in
maintaining relations with shareholders;
k) registration, custodial, administrative and other fees and
expenses in connection with the securities of the Company;
l) all fees and expenses in connection with the acquisition,
disposition and ownership of its investments, including property
management fees;
m) all fees and expenses of listing and maintaining the listing of
the securities of the Company on any exchange;
n) all fees and expenses of the registrar and transfer agent
appointed by the Company for the shares of the Company;
o) all fees and expenses of the Company complying with applicable
securities legislation;
p) all fees and expenses incurred by the Advisor in performing any
of the services required of it hereunder other than those set out
in Section 3.05; and
q) all other expenses not specifically assumed by the Advisor
hereunder.
3.07 Except for property management services, where any of the
services to which the expenses referred to in Section 3.06 relate are
performed by the Advisor or its affiliates, the Advisor or such affiliates
shall only be compensated for its or their reasonable expenses directly
incurred in performing such services (other than expenses to be paid by the
Advisor pursuant to Section 3.05). If and to the extent that the Advisor or
any person affiliated with the Advisor shall render services to the Company
at the request of the Company in addition to those specifically required to
be rendered under this Agreement, such services will be compensated
separately on the basis of fees at least as favourable to the Company as
those then generally charged for comparable services and activities.
3.08 Any proposed change in the amount or basis or calculation of
fees and other expenses provided hereunder which would or could result in an
increase in charges to the Company may only be made if approved by the
Advisor, the board of directors of the Company and, if required by law, a
majority of the votes cast at a meeting of the shareholders.
3.09 The Company shall forthwith reimburse the Advisor for all
costs, charges and expenses properly incurred by the Advisor on behalf of the
Company or any of its subsidiaries in the ordinary course of the business of
the Company and its subsidiaries and not specifically agreed to be borne by
the Advisor hereunder.
ARTICLE 4
TERM OF AGREEMENT
4.01 This Agreement shall continue in full force and effect for a
period of five (5) years from the date of completion of the acquisition by
the Company of its first investment in real property; provided, however,
notwithstanding the foregoing, upon the expiry of the original term, this
Agreement shall, subject to Section 4.05, be renewed thereafter for further
periods of five (5) years upon the approval of a majority of the directors of
the Company, including a majority of the independent directors of the
Company, and a majority of the votes cast at a meeting of shareholders of the
Company held prior to the expiration of the initial term or renewal term (as
the case may be).
4.02 If and whenever:
a) the Advisor shall commit a material breach of any of the material
terms, covenants or conditions of this Agreement and within
thirty (30) days after written notice of such breach is given by
the Company to the Advisor, such breach shall not be cured or the
Advisor fails to commence to cure any such breach and fails to
continue to use its reasonable best efforts to cure such breach
thereafter;
b) a decree or order by a court having jurisdiction in the matter
shall have been entered for relief in respect of an involuntary
bankruptcy, or adjudging the Advisor bankrupt or insolvent, or
approving as properly filed, a petition seeking reorganization
under applicable bankruptcy law, and such decree shall have
continued, undischarged, undismissed or unstayed for a period of
ninety (90) consecutive days; or a decree or order of a court
having jurisdiction in the matter for the appointment of a
receiver, liquidator or trustee or assignee or custodian, or
sequestrator (or similar official) in bankruptcy or insolvency of
the Advisor or for any substantial part of the Advisor's
property, or for the winding up or liquidation of the Advisor's
affairs shall have been entered and such decree or order shall
have remained in force, undischarged, undismissed or unstayed for
a period of ninety (90) consecutive days;
c) the Advisor shall institute proceedings to be adjudicated a
voluntary
bankrupt or insolvent or shall consent to the filing of a
bankruptcy or insolvency proceeding against it, or shall file a
petition or answer or consent seeking relief, or shall commence a
voluntary case under applicable bankruptcy law or shall consent
to the filing of any such petition or to the entry of any such
order for relief in an involuntary case under any such bankruptcy
law, or shall consent to the appointment of or taking possession
by a receiver or liquidator or trustee or assignee or custodian
or sequestrator (or similar official) in bankruptcy or insolvency
of the Advisor or of any substantial part of the Advisor's
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts generally as they become due and its willingness to be
adjudicated a bankrupt;
d) the Advisor passes a resolution for its winding up or dissolution
or is ordered dissolved by a court having jurisdiction and such
order shall have remained in force undischarged, undismissed or
unstayed for a period of ninety (90) consecutive days;
then the Company shall have the right to terminate this Agreement forthwith by
notice in writing to the Advisor. The Advisor shall be entitled to the fees
described in Section 3.01 pro rated to the date of termination and shall be
entitled to reimbursement for the expenses described in Section 3.06 if such
expenses were incurred prior to the date of termination.
4.03 In addition to Section 4.02, this Agreement may be terminated
by the Company during its term after the first twelve (12) months of the term
hereof upon giving the Advisor not less than sixty (60) days' written notice
after:
a) approval of the termination by two-thirds of the votes cast at a
meeting of shareholders called for such purpose;
b) approval of other advisory arrangements by two-thirds of the
votes cast at a meeting of shareholders called for such purpose;
c) the payment to the Advisor of all amounts owing by the Company to
the Advisor to the date of termination; and
d) the payment to the Advisor of an amount equal to three (3) times
the fees paid to the Advisor by the Company pursuant to Section
3.01 during the twelve (12) month period immediately prior to the
date of termination of this Agreement plus an amount equal to the
average of the aggregate annual acquisition and disposition fee
paid by the Company to the Advisor pursuant to Sections 3.02 and
3.03 during the three (3) year period immediately prior to the
date of termination of this Agreement.
4.04 If and whenever the Company shall commit a material breach of
any of the material terms, covenants or conditions of this Agreement and
within thirty (30) days after written notice of such breach is given by the
Advisor to the Company, such breach shall not be cured or (except for a
monetary default) the Company fails to commence to cure any such breach and
continues to use its reasonable best efforts to cure such breach thereafter,
the Advisor shall have the right to terminate this Agreement forthwith by
notice in writing to the Company. It is expressly understood that the
failure by the Company to pay any fees or expenses to the Advisor due and
payable hereunder shall be deemed a material breach of this Agreement for the
purposes of Section 4.04.
4.05 The Advisor may not terminate this Agreement during its term
other than in accordance with Section 4.04 hereof and shall give the Company
not less than six (6) months notice in writing of its intention not to renew
this Agreement.
4.06 The Advisor shall within thirty (30) days after termination or
non-renewal deliver to the Company:
a) all records, documents and books of account; and
b) all materials and supplies for which the Advisor has been paid by
the Company, which are in the possession or control of the
Advisor and relate directly or indirectly to the performance by
the Advisor of its obligations under this Agreement, provided,
however, that the Advisor may retain notarial or other copies of
such records, documents and books of account and the Company
shall produce at its head office the originals of such records,
documents and books of account whenever reasonably required to do
so by the Advisor for the purpose of legal proceedings or
dealings with any governmental authorities.
4.07 Within thirty (30) days following the termination or
non-renewal of this Agreement there shall be an accounting between the
parties with respect to the monies due by the Company to the Advisor under
the terms of this Agreement or any other agreement or instrument entered into
in furtherance of this Agreement. The Company shall forthwith pay to the
Advisor all monies which shall be owing pursuant to such accounting.
4.08 Upon termination or non-renewal of this Agreement, the Advisor
shall be released from all further obligations hereunder (but without
prejudice to any liability existing on such date). The Company shall fully
indemnify, save and hold the Advisor harmless from and against any and all
claims, demands, actions, suits, losses, costs, charges, damages,
liabilities and expenses whatsoever incurred, sustained or suffered by the
Advisor, its directors, officers, shareholders, employees and agents with
respect to events which occur in relation to the Company after the effective
date of such termination or non-renewal.
ARTICLE 5
INVESTMENTS
5.01 The Advisor hereby agrees that all investments of the Company
shall at all times conform to and be in accordance with the requirements
imposed by law and by the provisions of the constating documents of the
Company and, subject to the control of the directors of the Company, with the
policies set out in Section 5.02.
5.02 The Advisor acknowledges that it is the policy of the Company
that, subject to the provisions of Section 5.03, the Company will invest its
assets in investments which meet the following objectives and criteria:
a) to achieve stable cashflow for distribution to its shareholders
and to maximize share value through the ongoing active management
of its assets and through the future acquisition of additional
properties. The Company will seek to manage its assets with an
emphasis on maintaining stable cashflow through long term leases
to creditworthy tenants;
b) initially, the Company will focus on neighbourhood and community
shopping centres. The Company will consider acquiring shopping
centres that satisfy a combination of some or all of the
following factors set out in this paragraph b). Priority will be
given to centres:
i) with anchor tenants, such as department stores, supermarkets
and national retail chains, to ensure the quality of retail
services offered by the centre, the quality of its tenants and
the desired return on sales;
ii) which, if combined with the other real property investments of the
Company, provide the Company with a diversified tenant base with
the anchor tenants accounting for a minimu of sixty percent
(60%) of the gross leasable area of the Company's shopping centre
portfolio. The anchor tenants should be dominant enough to
establish the shopping centre as a destination centre;
iii) where the average anchor lease extends for a minimum of ten (10)
years from the date of acquisition by the Company;
iv) in a strategic location, in a strong market area with convenient
access and visibility to a high traffic area;
v) with construction materials which are of sufficiently high
quality to require no more than industry standard levels of
maintenance;
vi) with convenient access for both shoppers and tenants;
vii) where rental rates are on average at or lower than comparable
market rates in the area. This is intended to reduce the
possibility of losing tenants to other sites and to create the
potential to increase rates in the future;
viii) in a location experiencing above average growth in retail
sales, provided that the growth in the retail sector for that
area will not outpace economic growth in the area;
c) potential real property investments should receive favourable
environmental and engineering reports;
d) the Company may participate with other entities in property
ownership, through joint ventures or other types of ownership;
e) the Company will not enter into a joint venture or partnership
to make an investment that would not otherwise meet its
investment policies;
f) the Company will seek mortgage financing for its real estate
investments which is non-recourse to the Company (other than
for issues relating to environmental matters, waste to
property, frauds or misrepresentations, taxes or other similar
assessments, tenant prepayments, condemnation and insurance
proceeds, grossly negligent violations of the law and net
revenue obligations and other obligations customarily retained
in non-recourse financing);
g) the Company may consider cross-collateralized loans to reduce
borrowing costs;
h) the Company may take on recourse obligations such as lines of
credit and loans for property expansion;
i) the Company will continue to acquire only shopping centres
until the aggregate of the acquisition prices of all
properties owned by the Company exceeds One Hundred Million
Dollars ($100,000,000);
j) after the initial investment of One Hundred Million Dollars
($100,000,000) in neighbourhood and community shopping
centres, the following types of real property investments will
also be considered for acquisition by the Company:
i) the Company will seek to acquire office buildings in urban
centres based on location, credit rating of tenants, terms
of existing leases and the potential for income growth
through the management of leases and for capital
appreciation;
ii) mixed-used commercial properties may be selected for their
complementary tenant mix and for their income and capital
appreciation potential;
iii) the Company will seek to acquire multi-tenant investment
buildings and major business parks where credit worthy
tenants with net leases will be the occupants;
iv) shopping centres which do not necessarily meet the
criteria contained in paragraphs a) through i) will also
be considered; and
k) the Company will not invest in hotels or nursing homes or
similar real estate which includes the operation of a business
separate and
distinct from the operation of income producing property.
5.03 In accordance with the objectives of the Company and to limit
financial and other risks, the Company intends to comply with the following
restrictions:
a) the Company may not make any investment that would result in its
ceasing to qualify as a Real Estate Investment Trust (as defined
in the U.S. Internal Revenue Code of 1986, as amended);
b) the Company may not incur indebtedness if the aggregate
outstanding principal amount all indebtedness the Company secured
against properties of the Company or against any part thereof
exceeds sixty percent (60%) of the greater of:
i) aggregate acquisition prices of all properties of the Company;
and
ii) the aggregate current fair market value of all properties of
the Company. For the purposes hereof, fair market value is
to be determined by an independent third party appraisal;
c) the Company may not engage in construction or development of real
property except to the extent to maintain its properties in good
repair, for expansion of an existing property or to otherwise
enhance the income producing ability of the properties;
d) pending investment or reinvestment, cash on hand will be invested
in certificates of deposit with terms of less than one (1) year
or U.S. government securities (i.e. treasury obligations);
e) the Company may not invest in mortgages, unless the underlying
security is income-producing property or is in the process of
being developed as income-producing property, all such mortgages
do not exceed ten percent (10%) of the aggregate cost of all
assets of the Company, the mortgage is a first mortgage and the
term of the mortgage is five (5) years or less and the
amortization period is thirty (30) years or less;
f) the Company may not invest in any real properties without
obtaining an independent third party appraisal, an environmental
assessment and an engineering report for each centre;
g) after the acquisition of the first two (2) properties, the
Company may not acquire any single investment in real property if
the cost to the Company of such acquisition will exceed (i) after
the aggregate acquisition prices of all properties owned by the
Company exceeds One Hundred Million Dollars ($100,000,000),
twenty-five percent (25%) of the aggregate acquisition prices of
all properties inclusive of the proposed investment, and (ii)
Twenty-Five Million Dollars ($25,000,000) until the aggregate
acquisition prices of all properties owned by the Company
inclusive of the proposed investment exceeds One Hundred Million
Dollars ($100,000,000);
h) the Company may not grant or assume a mortgage on any office
property if the aggregate outstanding principal amount of the
mortgage and of all other mortgages granted or assumed by the
Company secured against its office properties or any part
thereof exceeds fifty percent (50%) of the aggregate
acquisition prices of all office properties of the Company.
5.04 The board of directors shall determine whether any property
meets the policies set out in Section 5.02 and the restrictions set out in
Section 5.02 may be amended by a majority of the board of directors of the
Company, such majority to include a majority of those directors of the
Company which are independent of the Advisor. The restrictions set out in
Section 5.03 may only be amended by a majority of votes cast at a meeting of
shareholders of the Company called for such purposes and approval by a
majority of the board of directors of the Company, such majority to include a
majority of those directors of the Company which are independent of the
Advisor.
ARTICLE 6
POTENTIAL CONFLICTS OF INTEREST
6.01 The Advisor and its affiliates shall be under no liability to
the Company or its subsidiaries, the directors, officers and shareholders of
the Company or its subsidiaries, for or as a result of their continuing
engagement in the business of investing in and managing real estate in Canada
or the United States or for the manner in which they resolve any conflicts of
interest deriving therefrom:
a) if, in any case in which the Advisor or its affiliates have a
material interest other than as an advisor, the Advisor has acted
in accordance with the procedures outlined in this Agreement and
the Prospectus; or
b) in any case where the Advisor or its affiliates have no material
interest other than as an advisor, unless the Advisor or its
affiliates have acted in a manner which is dishonest or wilfully
or grossly negligent.
6.02 If the Advisor or any of its affiliates is a party to or has
any material interest, including as mortgagee, in connection with any
proposed transaction with the Company, disclosure of such interest will be
made to the board of directors of the Company.
6.03 The Advisor and its affiliates shall not directly or
indirectly act as advisors or managers of another real estate investment
trust without the approval of a majority of the votes cast at a meeting of
shareholders of the Company.
6.04 If the Advisor or any director or officer of the Advisor
desires to acquire any real property investment which falls within the
Company's then applicable investment policies, the Advisor shall advise the
Company in writing with all relevant details thereof and make available to
the Company the opportunity to participate in such acquisition on the same
terms. The Company shall notify the Advisor in writing within thirty (30)
days of first being advised by the Advisor of such acquisition if it wishes
to invest in such opportunity, failing which, the Advisor or its directors or
officers (as the case may be) shall be entitled to acquire such investment on
their own behalf or as intended.
6.05 Any services to be provided by the Advisor or any of its
affiliates to the Company other than specifically provided herein and any
fees relating thereto shall require the unanimous approval of the board of
directors of the Company. Notwithstanding anything to the contrary contained
herein, the Advisor or its affiliates may, without the approval of the
Company receive commissions from vendors in connection with real property
purchased by the Company and any commission received by the Advisor or its
affiliates in excess of one percent (1%) of the acquisition price to the
Company shall reduce the fee payable by the Company to the Advisor pursuant
to Section 3.03 for the purchase of such real property.
ARTICLE 7
INDEMNITIES
7.01 The Company shall fully indemnify, save and hold the Advisor
harmless from and against any and all claims, demands, actions, suits,
losses, costs, charges, damages, liabilities and expenses whatsoever
incurred, sustained or suffered by the Advisor, its directors, officers,
shareholders, employees and agents arising out of the Advisor's actions
pursuant to this Agreement including, without limitation, legal costs on a
solicitor and his own client basis, other than liability and expense arising
out of the reckless disregard of its duties, bad faith, gross negligence or
wilful misconduct of the Advisor or its directors, its agents or its
employees.
7.02 The Advisor shall full indemnify, save and hold harmless the
Company from and against any and all claims, demands, actions, suits, losses,
costs, charges, damages, liabilities or expenses whatsoever including,
without limitation, legal costs on a solicitor and his own client basis,
incurred, sustained or suffered by the Company, its directors, officers,
shareholders, employees and agents arising out of the bad faith, gross
negligence or wilful misconduct of the Advisor or its agents or employees.
ARTICLE 8
DELEGATION BY THE ADVISOR
8.01 The Company hereby authorizes the Advisor to delegate its
duties and powers by entering into any agreement which the Advisor considers
necessary or appropriate in the circumstances with third parties for the
purpose of carrying out the Advisor's duties and obligations under this
Agreement.
8.02 The Advisor agrees and acknowledges that any agreement entered
into with any party for the purposes set forth in Section 8.01 of this
Article shall not in any manner abridge or vary the obligations of the
Advisor to the Company pursuant to this Agreement.
ARTICLE 9
ADVISOR'S RELIANCE
9.01 The Advisor may consult with and rely upon counsel in any case
where it appears to the Advisor to be necessary or desirable with respect to
its authority and obligations hereunder.
9.02 The Advisor may rely and act upon any certificates or other
instruments or paper believed in good faith by the Advisor to be genuine and
to have been signed by any person thereunto duly authorized.
ARTICLE 10
GENERAL
10.01 Any notice required or permitted to be given shall be in
writing and shall be validly given if delivered personally addressed as
follows:
TO THE COMPANY AT:
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TO THE ADVISOR AT:
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or to such other address as either party shall have communicated in writing as
aforesaid to the other.
10.02 This Agreement shall be subject to and construed in
accordance with the laws of the State of Delaware and each of the parties
hereby irrevocably attorns to the jurisdictions of the courts thereof.
10.03 Nothing in this Agreement shall be deemed in any way or for
any purpose to constitute any party a partner of the other party to this
Agreement in the conduct of any business or otherwise or a member of a joint
venture or joint enterprise with the other party to this Agreement. The
Advisor shall for all purposes be an independent contractor and not an agent
or employee of the Company.
10.04 Subject to Section 5.04, this Agreement may be amended or
altered and any such changes shall only become effective when reduced to
writing and signed by both of the parties.
10.05 Time shall be of the essence of this Agreement.
10.06 This Agreement shall not be assignable by either party
without the written consent of the other party.
10.07 This Agreement shall enure to the benefit of and be binding
upon the parties and their successors and permitted assigns.
10.08 Terms which are used herein but not defined herein and which
are defined in the Prospectus have the respective meanings ascribed thereto
in the Prospectus.
IN WITNESS WHEREOF the parties have signed, sealed and delivered this
Agreement on the date first above written.
BASIC U.S. REIT, INC.
Per:
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Per:
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BASIC ADVISORS, INC.
Per:
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Per:
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SCHEDULE "A"
PROPERTY MANAGEMENT SERVICES
1. The furnishing of management services for the economic and
efficient operation of each real property of the Company.
2. The taking of such steps, so far as is possible, in order to
comply with all restrictions and obligations, statutory, municipal or otherwise,
with respect to each real property of the Company and impose upon the Company or
for which the Company may be liable by law.
3. The planning of the time of moving into and out of each real
property of the Company by all tenants, and supervising such activities so that
there will be a minimum of disturbance to the operation of each such property
and to other tenants in occupancy.
4. From the date of occupancy of each tenant, the establishment and
maintenance on behalf of the Company of any and all necessary liaison with each
tenant.
5. The giving of all notices and statements required to be sent to
tenants under all leases affecting each real property and the giving of all
other notices necessary to good management of each real property.
6. The taking of such steps as are reasonable and proper in the
circumstances to cause all rent and additional charges to be regularly received
at the earliest possible date in accordance with the terms of the respective
tenants' leases and the receiving, for the account of the Company, of all such
rents and other amounts payable by tenants pursuant to their leases or other
contractual obligations.
7. The obtaining, in accordance with the provisions of leases of
each real property, of tenants' sales figures and calculating percentage rentals
to be derived therefrom and, where necessary, the causing of inspection of
tenants' books to be made, and at the expense of the Company, the causing of
audits of the tenants' books to be made where necessary to collect rents or any
other charges from the tenants which may be in arrears; the instituting and
prosecuting of actions, the evicting of tenants, the recovering of possession of
premises occupied by evicted tenants, or which may be abandoned by tenants, the
suing for, in the name of the Company, and the recovering of, rents and other
sums due and, when expedient, the settling, compromising and releasing of such
actions or suits or the reinstating of such tenancies.
8. The doing or causing to be done, at the expense of the Company.,
of all such things as are reasonably necessary to enable compliance with all the
terms and conditions of the tenants' leases.
9. The arranging for, supervising and being responsible for all
common area maintenance and supervisions within each real property, and all
property repairs, maintenance and upkeep, all at the expense of the Company.
10. The hiring, directing and supervising of, in the name of the
property manager as employer, all on-site personnel as may, in the opinion of
the property manager, be reasonably required for the proper management and
promotion of each real property.
11. At the Company's expense, the paying of all debt service,
carrying charges and other expenses relating to the operation of each real
property including, without limitation, realty taxes, mortgage instalments,
water rates, light and power rates, merchants' association dues, wages and fuel
costs.
12. The receiving and collecting on behalf of the Company for the
account of the Company, of all gross rentals from the real properties and, until
disbursed to the Company, the holding of such moneys in trust for the Company.