EXHIBIT NO. 99.4
MANAGEMENT AND LEASING AGREEMENT
THIS MANAGEMENT AND LEASING AGREEMENT (this "Agreement"), dated as of this
8th day of October, 2003, is made and entered into by and between DEARBORN
CENTER, L.L.C., a Delaware limited liability company ("Owner"), and PRIME GROUP
REALTY SERVICES, INC., a Maryland corporation ("Manager").
R E C I T A L S:
WHEREAS, Owner owns fee title in and to that certain property commonly
known as Bank One Center and located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
including all improvements located thereon, which property is legally described
on Schedule A attached hereto and made a part hereof (the "Property"); and
WHEREAS, Manager is experienced and qualified in the business of managing,
marketing, leasing and operating properties such as the Property; and
WHEREAS, Owner desires to engage and utilize the services and experience
of Manager in connection with the management, marketing, leasing and operation
of the Property; and
WHEREAS, Manager desires and is willing to render such services and
operate the Property, all upon the terms and subject to the conditions set forth
in this Agreement.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the foregoing Recitals (which Recitals
are, by this reference, incorporated into the text of this Agreement as if fully
set forth herein) and the mutual promises and covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. Responsibilities of Manager.
(a) Owner hereby engages and appoints Manager, on an exclusive basis, to
manage, market, lease and operate the Property, which shall include,
without limitation, the construction and installation (or the
administration and/or supervision thereof) of any tenant improvements in,
at or upon the Property, and Manager hereby accepts such engagement and
appointment and, subject to the conditions set forth in this Agreement,
agrees to manage, market, lease, supervise and operate, at Owner's
expense, the Property in accordance with the terms, provisions, covenants
and conditions set forth in this Agreement. During the Term (as defined in
Section 4 below) of this Agreement, and subject to the limitations
contained herein, Manager shall, subject to the provisions hereof, the
Annual Leasing Plan and the Annual Budget, have (1) full authority to
manage, market, lease and operate the Property as a mixed-use office and
retail building in accordance with the terms and conditions hereof, (2)
full and complete control and reign over, and use of, the entire Property,
including, without limitation, its common areas, and (3) the right to
determine operating policies, standards of operation, quality of service
and any other matters affecting tenant or public relations with respect to
the Property. Without limiting the generality of the foregoing, Manager
shall have full authority and responsibility, at Owner's cost and expense,
as follows:
(i) Operational Policies and Forms. Subject to the applicable Annual
Budgets (as defined in Section 1(a)(xii) below) and subject to
Owner's reasonable supervision, Manager shall be permitted to
establish and implement such operational policies and procedures,
and develop such new policies and procedures, as Manager may deem
reasonably necessary to cause or to ensure the establishment and
maintenance of operational standards appropriate for the nature of
the Property.
(ii) Manager's Control. Subject to the terms and conditions of this
Agreement, Manager shall have day-to-day responsibility for the
operation of the Property. Manager shall, with the prior approval of
Owner (which shall not be unreasonably withheld or delayed)
determine, (a) rental rates and related concessions, and (b) charges
to tenants for other Property services and for the use of the
Property for all customary purposes. Manager shall, with Owner's
supervision, determine (x) the terms of security at the Property,
(y) policies relating to credit, and (z) all phases of publicity and
promotion related to the Property. Notwithstanding the foregoing,
Manager shall not decrease the minimum rental rates below, or
increase the maximum tenant improvements allowance and other
concessions above, the amounts which are specifically delineated
therefor in the then adopted Annual Leasing Plan (as defined in
Section 1(a)(xii) below) without first obtaining Owner's written
consent thereto. Owner and Manager agree that, upon request from the
other party, each promptly will deliver to the other, as the case
may be, copies of all leases and amendments and modifications
thereto and extensions, renewals and terminations thereof that may
affect the Property from time to time.
(iii) Information; Advertising. Subject to Owner's supervision, (a)
Manager shall be permitted to develop any informational material,
mass media releases and other related publicity materials that
Manager deems necessary for the management, marketing, leasing and
operation of the Property, and (b) to the extent approved in the
Annual Budgets, Manager shall be permitted to advertise and promote
the business of the Property at such times and in such manner as
Manager deems appropriate.
(iv) Regulatory Compliance. Manager shall use commercially
reasonable efforts (a) to maintain and keep in full force and effect
all licenses, permits, qualifications and approvals from any
applicable governmental or regulatory authority with jurisdiction
over the Property required for the management, marketing, leasing
and operation of the Property, (b) to manage, market, lease and
operate the Property in material compliance with all laws, statutes,
codes, ordinances, rules and regulations of governmental authorities
having jurisdiction over the Property (collectively, "Legal
Requirements"), and (c) to comply with all Legal Requirements in
performing Manager's obligations under this Agreement. In addition,
Manager shall supervise and coordinate the preparation and filing of
(and, where required to do so under the Legal Requirements, file)
all reports or other information required by all state or other
governmental agencies having jurisdiction over the Property, and
shall deliver copies of all such reports and information to Owner
upon request. Upon the expiration or other termination of this
Agreement, any and all licenses, permits and approvals which Manager
has obtained and which relate to the Property or to the use or
operation thereof or the construction or installation of
improvements thereon (all of which shall be in Owner's name except
if otherwise required by applicable Legal Requirements), shall be
delivered to Owner or Owner's designee. Further, Manager understands
and agrees that, in connection with any financing Owner obtains for
the Property, the Lender (as defined in Section 1(a)(vii)) of such
financing may require that Manager's or Owner's interest, as the
case may be, in any and all such licenses, permits, qualifications
and approvals be assigned to such lender for collateral purposes.
Manager hereby agrees to execute and deliver any such collateral
assignment and other documents which are reasonably required by any
such lender and acceptable to Manager promptly upon request therefor
by Owner. In the event any alterations, additions or improvements,
structural or non-structural, shall be required to be made to the
Property to comply with any Legal Requirements, such alterations,
additions and improvements shall be the responsibility of and shall
be performed at the sole expense of Owner but as part of Manager's
duties hereunder Manager will supervise same on behalf of Owner.
Manager shall defend, if requested by Owner, any actions, suits or
other proceedings alleging non-compliance with any Legal
Requirements. Manager shall contest, if requested by Owner, by
appropriate legal proceedings conducted in good faith, in the name
of Manager or Owner, or both, the validity or application of any
Legal Requirements. If Owner shall approve any such contest, Owner
shall execute and deliver any appropriate documents which may be
necessary or proper to permit Manager to prosecute such contest.
(v) Equipment and Improvements. Subject to the applicable Annual
Budget, Manager shall, on behalf of Owner, acquire and install or
effect the acquisition and installation of equipment and
improvements which are needed (a) to maintain or upgrade the quality
of the Property or its services, (b) to replace obsolete or run-down
equipment, or (c) to correct any other deficiencies which may be
identified by Manager during the Term of this Agreement. In
connection therewith, Manager shall make, or engage third parties to
make, all such repairs, replacements and maintenance and shall cause
to be acquired all necessary equipment, including replacement
equipment.
(vi) Accounting. Manager shall supervise and coordinate accounting
support to, and prepare and maintain books, records and reports for,
the Property and the Owner, including the following:
A. a monthly balance sheet and statement of operations for
Owner;
B. tenant billing records;
C. accounts receivable and collection records;
D. accounts payable records;
E. all payroll functions, including preparation of payroll
checks, establishment of depository accounts for withholding
taxes, payment of such withholding taxes (at Owner's sole
expense), filing of payroll reports and the issuance of W-2
forms to all employees, if any;
F. a complete general ledger for the purposes of recording and
summarizing all transactions for the Property;
G. the preparation and filing of all necessary reports as
required by any and all governmental authorities having
jurisdiction over the Property or the operation thereof.
Manager shall file, on its own behalf or on behalf of Owner,
all such reports as are required to be filed by Manager or
Owner;
H. monthly occupancy and tenant delinquency reports; and
I. regular leasing reports for the Property setting forth the
common area charges, taxes and insurance incurred or payable
(or expected to be incurred or payable) with respect to the
operation of the Property and each tenant's proportionate
share thereof.
In connection with the performance of its duties under this
Section 1(a)(vi), Manager will develop accounting procedures and
systems to facilitate the preparation of the books, records and
reports (the "Accounting Procedures"). All Accounting Procedures
developed by Manager shall comply with generally accepted accounting
principles ("GAAP") and will not materially distort income or loss
from the operation of the Property. Any modifications to the
Accounting Procedures will be subject to Owner's approval, which
will not be unreasonably withheld or delayed. Subject to the
applicable Annual Budgets, nothing herein shall preclude Manager at
Owner's cost from engaging a third party to assist it in the
performance of the accounting duties provided for herein including,
without limitation, Owner's independent accounting firm (the
"Company Accountant"); provided that the cost of the accounting
duties described in Section 1(a)(vi)(A)-(I), inclusive, will be
borne by Manager and not by Owner. Manager shall maintain such books
and records either at the Property or Manager's principal place of
business in Chicago, Illinois. Owner, or any agents or employees of
Owner or the Company Accountant shall have the right from time to
time, during normal business hours and upon reasonable prior notice
to Manager, to examine such books and records at the offices of
Manager.
(vii) Operating and Tax Reports. In addition to the reports to be
prepared by Manager pursuant to Section 1(a)(vi) of this Agreement,
Manager will supervise and coordinate the preparation of the
following operating and tax information for the Property and Owner,
all of which will be prepared (to the extent applicable) in
accordance with GAAP:
A. Within twenty (20) days after the end of each calendar
month, (1) an unaudited balance sheet for Owner, dated as of
the last day of such month, and unaudited statements of income
and expenses (with budget variance explanation) and cash flow
for such month relating to the operation of the Property
(collectively, the "Monthly Statements"), (2) a leasing report
detailing letters of intent and leases entered into in the
previous calendar month and information regarding any lease
renewals, modifications, extensions and terminations (if any)
during the previous calendar month; (3) a capital expenditures
report detailing the nature and amount of capital expenditures
made in the previous calendar month; and (4) bank account
reconciliations and copies of bank statements.
B. Within thirty (30) days after the end of each calendar
quarter (other than the last calendar quarter of each year),
(1) an unaudited balance sheet for Owner, dated as of the last
day of such calendar quarter, and unaudited statements of
income and expense (with budget variance explanation) and cash
flow for such quarter relating to the operation of the
Property, (2) a report containing information regarding
changes in the capital accounts of Owner's members (the
"Statement of Capital Accounts"), which shall include the
amount of capital contributions credited to each member's
capital account during such period, any distribution received
by any member during such period, and any items of profit or
loss from Owner's activities and the operation of the Property
during such period, and (3) a quarterly marketing report
relating to the leasing activity at the Property.
C. Within ninety (90) days after the end of each calendar year
(1) a final unaudited balance sheet for Owner, dated as of
December 31 of each calendar year during the Term, and
unaudited statements of income and expenses (with budget
variance explanation) and cash flow for such calendar year, in
sufficient detail to enable the Company Accountant to audit
the financial statements for Owner and the Property, and (2) a
Statement of Capital Accounts for such calendar year.
D. At such time or times as may be required by the loan
documents for Owner's mortgage loan encumbering the Property
(the "Loan Documents"), Manager will prepare and submit to
Owner and the relevant lenders (individually and collectively,
the "Lender") such financial reports as may be required by the
Loan Documents. Manager will familiarize itself with the
provisions contained in Owner's Loan Documents and shall, to
the extent funds are made available to Manager hereunder for
such purpose, use commercially reasonable efforts to keep
Owner and the Property in compliance with all material
provisions thereof; provided, however, that the foregoing
requirement does not include any obligation to make payments
of debt service under any Loan Documents or any other amount
payable to the Lender pursuant to Owner's Loan Documents.
Manager acknowledges that the Loan Documents provide for a
holdback of $22,500,000 to be used to pay costs incurred by
the Owner for tenant improvements and leasing commissions (the
"Holdback Amount"), and that, subject to the requirements of
the Lender, such funds are intended by Owner to be utilized to
pay for such costs prior to any utilization of the Operating
Account (defined below) or other funds of Owner for such
costs. Therefore, any delay in receiving these funds in
connection with the draw process set forth in the Loan
Documents shall not be a default by Owner under this Agreement
or Schedule B attached.
E. Manager also shall prepare and submit to Owner and its
members, such monthly, quarterly and annual returns and
reports for Owner and the Property containing such information
as may be reasonably necessary for Owner and its members to
prepare and file on a timely basis any monthly, quarterly
and/or annual returns or reports required to be filed by Owner
or any of its members with the Securities and Exchange
Commission, the Internal Revenue Service or other governmental
bodies and such other reports and information as Owner or
Prime Group Realty, L.P. ("PGRLP") reasonably requests
including, without limitation, such information as PGRLP
reasonably requests with respect to reporting and other
requirements applicable to real estate investment trusts
generally and Prime Group Realty Trust, in particular.
Owner will provide Manager with such information as Manager
reasonably requests to enable Manager to timely prepare all reports
required to be prepared by Manager including, without limitation,
the Loan Documents and information relating to the distribution and
other transactions affecting the members' capital accounts. Manager
shall not be considered to be in default of any of its obligations
under this Section 1(a)(vii) if Manager is unable to complete and
deliver any reports required hereunder because Owner or PGRLP fails
to promptly deliver any information reasonably requested by Manager.
Owner and Manager hereby acknowledge and agree that Manager shall be
responsible for the preparation and maintenance of all books and
records of the Property and Owner including, without limitation, the
accounting and tax records for Owner and the Property and that
Manager shall be responsible for the preparation of all Federal,
state and local income tax returns and reports for Owner and the
Property. In this regard, Owner agrees to promptly deliver to
Manager all bank statements received by Owner for the Company
Account, the Operating Account and any other bank or similar account
maintained by Owner with respect to the Property and to promptly
notify Manager of any and all transactions, withdrawals, payments,
receipts, wire transfers and other activity in any such accounts to
enable Manager to maintain and prepare all of the accounting, income
tax and other books and records for Owner and the Property. Owner
agrees to pay Manager (in addition to the Management Fees (defined
below) and to any costs attributable to the Company Accountant) an
amount equal to ten cents ($.10) per rentable square foot of the
Property each year to cover the costs and expenses incurred by
Manager in preparing, supervising and coordinating the books,
records, reports, accounting, tax and other materials under this
Section 1(a)(vii) including, without limitation the allocated share
of the wages, salaries and benefits of Manager's or any of its
Affiliates' and its Affiliates and their respective employees that
prepare any of the foregoing. Such amount may be increased from time
to time as mutually agreed by Owner and Manager in their reasonable
discretion to reflect actual increases in such costs and expenses.
(viii) Bank Accounts. All rents and other sums received from tenants
and other third parties relating to the Property shall be deposited
in an account at SunTrust Bank or another bank designated by Owner
(the "Company Account"). Owner also shall establish a segregated
account or accounts for and in the name of Owner at such bank as is
agreed upon by Owner and Manager from time to time (the "Operating
Account"). If Owner and Manager decide to change such bank, Manager
shall promptly transfer all funds remaining in the previously
established Operating Account to the new bank account. Manager shall
deposit into the Company Account all money received by Manager on
Owner's behalf from the management, marketing, leasing and operation
of the Property. After payment of all amounts due under the Loan
Documents, Owner shall make regular, monthly (or more often, if
necessary) deposits into the Operating Account (to the extent
sufficient funds are available in the Company Account and any other
accounts Owner maintains for the Property) to pay all expenses and
capital items (including, but not limited to, improvements, tenant
improvements, leasing commissions and leasing costs) of the Property
and other amounts to be paid by or to Manager pursuant to this
Agreement including, without limitation, all amounts contemplated by
the Annual Budgets. Notwithstanding the foregoing, payment for
leasing commissions and tenant improvements will be made from the
Holdback Amount and will be due only from those funds until the
Holdback Amount is exhausted and will be disbursed as provided in
the relevant Loan Documents. Withdrawals and payments from the
Operating Account shall be made only on checks signed (personally or
by facsimile signature) by one or more person or persons designated
by Manager. Manager shall give Owner written notice as to the
identity of such authorized signatories on such account.
Notwithstanding the foregoing, a single representative of Owner
shall also have signatory authority on the Operating Account
provided such signatory authority by Owner shall not be exercised
without Owner having first provided Manager with at least two (2)
business days' prior written notice of such exercise. In no event
shall the exercise by Owner of such signatory authority cause the
Operating Account to become overdrawn or otherwise be exercised in
any manner which would interfere with Manager's rights and
obligations under this Agreement. Subject to Section 1(a)(xii)(b)
below, any and all expenditures and expenses (ordinary,
extraordinary, capital, foreseen and/or unforeseen) incurred in the
management, marketing, leasing and operation of the Property (other
than those relating to the payment of interest, principal, and other
amounts due under the Loan Documents), including, but not limited
to, payroll and employee benefits, real estate taxes, repair and
maintenance expenses, Leasing Fees payable to Outside Brokers (as
defined in Schedule B attached hereto), reserves established
pursuant to the applicable Annual Budgets, capital items (including,
but not limited to, improvements, tenant improvements, leasing
commissions and leasing costs) and other operating expenses of the
Property, shall be paid by check drawn on the Operating Account and,
accordingly, Owner hereby authorizes Manager to pay such
expenditures and expenses as and when the same shall become due and
payable and in all events prior to delinquency, subject to the
availability of sufficient funds in the Operating Account.
Management Fees and Leasing Fees (as such terms are defined in
Section 8 below), other than those due to any Outside Broker, will
be paid by Owner to Manager from the Company Account on a pari passu
basis with the monthly UST Administrative Fee (as defined in
Operating Agreement) payable to UST XI Dearborn, Ltd. ("UST"). Any
Management Fees, Leasing Fees and other amounts due and payable
pursuant to this Agreement which are not paid when due as a result
of Owner's failure to deposit funds in the Operating Account or any
default by Owner under Section 5 of this Agreement shall (a) accrue,
(b) be due and payable promptly by Owner directly to Manager, and
(c) if not paid within five (5) days after due, shall accrue
interest at the Default Rate (as defined in Section 23 below) until
paid. If any Management Fees, Leasing Fees or other amounts payable
hereunder are not paid when due because of an insufficiency of funds
in the Company Account or other accounts maintained by Owner with
respect to the Property (and such insufficiency is not due to
distributions made by Owner to any of its members) or because the
Lender has not yet funded such amounts from the Holdback Amount
pursuant to the Loan Documents, then such amounts shall accrue and
shall be paid promptly after sufficient funds are available in the
Company Account or are funded from the Holdback Amount, as
applicable, but shall not accrue interest. Owner agrees that during
the Term of this Agreement and subject to the availability of funds
in the Company Account, a minimum balance of $500,000.00 or such
other amount as agreed upon in writing by Owner and Manager, shall
be maintained in the Operating Account. If for any reason, the
amount of funds in the Operating Account falls below the aforesaid
minimum balance threshold or because of a draft to be written upon
Operating Account the balance thereof will fall below such minimum
balance threshold, Manager shall promptly notify Owner. Thereafter,
subject to the availability of funds in the Company Account, Owner
shall immediately cause funds to be deposited into the Operating
Account in an amount sufficient to restore the balance thereof to a
level equal to or greater than the aforementioned minimum balance
threshold. After payment of all amounts pursuant to this subsection
(viii), and subject to the foregoing minimum balance threshold, any
excess funds remaining in the Operating Account as of the end of a
calendar month shall be, if applicable, deducted from the amounts
required to be transferred by Owner into the Operating Account for
the following month. Copies of all cancelled checks and deposit
slips shall be maintained at the offices of the Manager in Chicago,
Illinois.
(ix) Personnel. Manager shall have full power and authority to
recruit, hire, train, promote, direct, discipline and fire all
personnel performing services relating to the Property; establish
salary levels, personnel policies and employee benefits; and
establish employee performance standards, all as Manager determines,
in its sole discretion, to be necessary or desirable during the Term
of this Agreement to ensure the efficient and satisfactory operation
of all departments within, and all services offered by, the
Property. All of the foregoing obligations shall be undertaken in
accordance with the Annual Budgets and all Legal Requirements. All
of the personnel shall be the employees of Manager, unless otherwise
agreed by Owner and Manager, and all salary, bonuses, fringe
benefits, payroll taxes and related expenses payable to or in
respect of the personnel shall be expenses of the Property. Owner
shall reimburse Manager for all reasonable travel expenses incurred
in good faith by any of Manager's employees relative to hiring and
training of Property employees, maintaining the physical condition
and appearance of the Property, maintaining and promoting proper
operational procedures and practices, maintaining books and records
and otherwise performing duties undertaken by or rights granted to
Manager in this Agreement. Notwithstanding the foregoing, Manager
shall not be reimbursed under this Agreement for the following
expenses: cost of salary, wages, commissions or other remuneration,
and related benefits for any officer, director, partner, principal
or executive of Manager, except that Manager will be (i) reimbursed
the salary and other benefits of the employees of Manager working
solely at the Property, including, but not limited to, the full-time
building manager ("Building Manager"), as an operating expense of
the Property and (ii) the costs incurred by Manager to pay salary
and benefits or compensation to Manager's employees as provided in
Section 1(a)(vii) above.
(x) Supplies, Materials and Equipment. Manager shall be permitted to
purchase all supplies, materials and non-capital equipment as
Manager deems reasonably necessary to manage, market, lease and
operate the Property within the budgetary limits set forth in the
Annual Budgets.
(xi) Legal Proceedings. Manager shall have the right, through legal
counsel designated by Manager, to direct all legal matters and
proceedings that are within the scope of Manager's authority
pursuant to this Agreement, including without limitation, (a)
defending any claims instituted by third parties relating to the
Property, and (b) instituting any necessary legal actions or
proceedings to collect obligations owing to Manager, Owner and/or
the Property, canceling or terminating any lease, contract or
agreement relating to the Property for breach thereof or default
thereunder, and otherwise enforcing the obligations of the tenants,
sponsors, licensees, customers and any other occupants and users of
the Property. Notwithstanding the foregoing, Manager will not
commence any litigation or terminate or cancel any lease, contract
or agreement on behalf of Owner and in performance of its
obligations and duties under this Agreement without Owner's consent,
which will not be unreasonably withheld or delayed. Without limiting
the generality of the foregoing, Manager is authorized to settle, in
the name and on behalf of Owner and on such terms and conditions as
Manager may deem to be in the best interests of the Property, any
and all claims or demands arising out of, or in connection with, the
management, marketing, leasing and operation of the Property,
whether or not legal action has been instituted, provided that any
such settlement resulting in the expenditure of funds from the
Operating Account does not exceed the amount for each such
individual claim or demand as set forth in the most recently
approved Annual Budgets; and provided further that Manager shall be
required to obtain Owner's consent (which will not be unreasonably
withheld or delayed) to settle any matter for which the amount in
controversy exceeds $25,000.00, unless a greater amount was
previously approved in the applicable Annual Budget. All such
amounts paid in respect of any such settlements shall be expenses of
the Property. Manager will give prompt notice to Owner of all
demands and claims and all settlements and legal actions.
(xii) Annual Budgets.
(a) Preparation and Submission. Attached hereto as Schedule C
are the Annual Budgets for the remainder of calendar year 2003
and calendar year 2004, which Annual Budgets are hereby
approved by Manager and Owner. The Annual Budgets shall be
comprised of three (3) components consisting of the following:
(i) the Annual Leasing Plan, which identifies the prospective
lease terms for the coming year and projects the revenues
available and funds required during such calendar year in
order to lease and market the Property and includes lease
guidelines pursuant to which Manager will have authority to
lease the Property, (ii) the Annual Capital Plan, which
projects the revenues available and funds required during such
calendar year to make the capital improvements necessary or
desirable in order to keep the Property in good condition and
repair, and (iii) the Annual Operating Budget, which projects
the revenues available and funds required during such calendar
year in order to manage, maintain and operate the Property and
keep the Property in compliance with the terms and conditions
of this Agreement. Any references herein to the Annual Budgets
shall be deemed to collectively refer to the Annual Leasing
Plan, the Annual Capital Plan and the Annual Operating Budget
and any reference to an Annual Budget shall mean the Annual
Leasing Plan, the Annual Capital Plan or the Annual Operating
Budget, as applicable. Except for the Annual Budgets for the
remainder of the 2003 calendar year and the 2004 calendar
year, at least forty-five (45) days prior to the end of each
calendar year during the Term of this Agreement, Manager shall
submit to Owner a proposed Annual Leasing Plan, Annual Capital
Plan and Annual Operating Budget for the following calendar
year (the "Proposed Annual Budgets"). The Proposed Annual
Budgets shall be based upon data and information then
available to Manager and shall include, without limitation,
estimated salaries and fringe benefits for all personnel
groups, projected staffing patterns for the Property,
estimates of required capital expenditures and purchases of
equipment, supplies, materials, inventory, food and similar
items, and an estimate of the level of rates and charges to
tenants of the Property sufficient to generate revenue
necessary to manage, market, lease and operate the Property
and make the capital improvements projected in the applicable
Proposed Annual Budget. The Proposed Annual Budgets shall
include an estimate of revenues, costs, expenses and
expenditures, and Owner and Manager acknowledge and agree that
(1) projected revenue may not be actually received and (2)
projected costs, expenses and expenditures may be exceeded by
actual costs, expenses and expenditures incurred in connection
with the management, marketing, leasing, repair and operation
and maintenance of the Property. By submitting the Proposed
Annual Budgets, Manager shall not be deemed to be providing a
guarantee or warranty as to the projected revenue, costs,
expenses or expenditures of, or as to any other financial
matter relating to, the Property, except that Manager does
represent and warrant that Manager will prepare the proposed
Annual Budgets in good faith and based on commercially
reasonable assumptions.
(b) Adoption. The Annual Budgets, as finally adopted in
accordance with this subsection (b) (including as it may
thereafter be revised from time to time during any calendar
year pursuant to the written agreement of Owner and Manager)
shall constitute the "Annual Budgets" for all purposes of this
Agreement. Owner shall, within thirty (30) days following
receipt from Manager of the Proposed Annual Budgets, notify
Manager of either (1) Owner's approval of the Proposed Annual
Budgets (or individually, the proposed Annual Leasing Plan,
Annual Capital Plan, or Annual Operating Budget) or (2) those
items of each such budget or plan that Owner approves and
those items of each such budget or plan that Owner
disapproves. If Owner shall approve the Proposed Annual
Budgets (or any of them), the same automatically shall be
adopted as the applicable Annual Budget for the applicable
calendar year. In the event that Owner does not notify Manager
in writing of Owner's approval or disapproval, in total or in
part, of the Proposed Annual Budgets within such thirty (30)
day period, then all of the Proposed Annual Budgets shall be
deemed approved by Owner and automatically shall be adopted as
the Annual Budgets for the applicable calendar year. If Owner
disapproves of the Proposed Annual Budgets either in total or
in part within such thirty (30) day period as aforesaid, then
Owner and Manager shall have an additional fifteen (15) days
from the date of Manager's receipt of Owner's disapproval
notice to formulate and adopt the mutually agreeable Annual
Budgets. If the parties are unable to reach an agreement on
any line-item in the Proposed Annual Budgets within said
additional fifteen (15) day period, then the applicable
line-items which are the subject of such dispute in the Annual
Budgets for the calendar year immediately preceding the
calendar year for which Owner and Manager are unable to agree
(i.e., the calendar year in which the approval process for
such budget was to occur), including any such prior Annual
Budgets determined in accordance with this sentence, shall be
increased by the percentage increase in the Consumer Price
Index -- Urban Wage Earners (or, if such index is no longer
published, such other index as is determined by Manager in
good faith to be comparable) during the 12-month period ending
on November 30th of such preceding year, and such increase
shall constitute the relevant line-items in the Annual Budgets
pending the final adoption of the Annual Budgets; provided,
however, that the budgeted items for the categories of heat,
light, power, insurance, real estate taxes and other operating
items necessary for the day-to-day operation of the Property
shall be deemed increased as required to reflect actual
expenses for the succeeding calendar year. The terms of the
immediately preceding sentence shall apply separately to each
line-item of the Proposed Annual Budgets (e.g., should Manager
and Owner agree on all line-items in the proposed Annual
Leasing Plan and not in the Annual Capital Plan or the Annual
Operating Budget, the agreed-upon proposed Annual Leasing Plan
and agreed upon line items in the Annual Capital Plan and
Annual Operating Budget shall be adopted for the applicable
calendar year while the disputed line items in the Annual
Capital Plan and the Annual Operating Budget shall be
determined in accordance with this Section 1(a)(xii)(b)).
(c) Efforts to Operate within Annual Budgets. Manager agrees
to use commercially reasonable efforts to manage, market,
lease and operate the Property in accordance with the Annual
Budgets. Subject to the foregoing limitation, Owner shall be
responsible, as and when needed, for the payment of any and
all costs, expenses and expenditures incurred in connection
with the management, marketing, leasing, operation, repair and
maintenance of the Property, including, without limitation,
Management Fees, Leasing Fees and cost overruns, which exceed
the projections in the then current Annual Budgets and
including the cost of all litigation and other proceedings
relating to the Property and compliance with Legal
Requirements. In no such event, without Owner's prior written
approval, shall Manager make expenditures in excess of any
line item in the then applicable Annual Operating Budget to
the extent such increased expenditures (i) exceed the amount
of the applicable line item by more than five percent (5%) of
such line item for any calendar year; or (ii) exceed the total
aggregate amount of all line items by more than one percent
(1%) for any calendar year. Notwithstanding anything in this
Agreement to the contrary, if Manager determines in good faith
that the incurrence of any cost, expense or expenditure is
required in order to comply with any Legal Requirements or is
required or desirable in the event of an emergency or other
occurrence where prompt action is necessary, then, without
Owner's prior approval, Manager shall be entitled to incur
such costs and expenses and make such expenditures, all of
which shall be deemed, for all purposes of this Agreement, to
be in accordance with the then current Annual Operating
Budget.
(xiii) Collection of Funds. Manager shall issue bills for, and use
commercially reasonable efforts to collect, all rents, receipts,
income and security deposits and all other sums of money whatsoever
which may be or become due and payable to Owner in connection with
the occupancy, use or enjoyment of the Property or that may be owed
for goods and services furnished by the Property, Owner or Manager,
including, but not limited to, enforcing the rights of Owner and the
Property as creditor under any contract or in connection with the
rendering of any services. Owner hereby authorizes Manager to
request, demand, collect, receive and receipt for any and all such
rents, receipts, income, security deposits and other sums of money
and to recommend to Owner the institution of legal proceedings for
the collection thereof and for the dispossession of tenants and
other persons from the Property. Any actions taken by Manager to
collect said accounts receivable shall be in accordance with any
Legal Requirements governing the collection of accounts receivable
and in accordance with the applicable Annual Budget.
(xiv) Maintenance and Repairs. To the extent of the expenditures set
forth in the then approved Annual Budgets for maintenance and
repairs, Manager shall cause to be made all repairs, corrections and
maintenance as shall be required in the normal and ordinary course
of operation of the Property in order to maintain the Property in
good order and in a safe condition and in compliance with all Legal
Requirements including, without limitation, keeping the sidewalks,
parking areas, and common areas forming a part of the Property or
serving the Property free of debris and from ice and snow. Any
repairs, corrections or maintenance in excess of the expenditures
approved therefor in the then adopted Annual Budgets shall be caused
to be made only upon the prior written approval (not to be
unreasonably withheld or delayed) of Owner and in any case where
written approval is required, once such written approval has been
obtained, Manager is authorized to take all actions and to make and
enter into all such contracts and purchase orders as Manager deems
necessary or desirable. Notwithstanding the foregoing or anything to
contrary contained herein, in the event a condition should exist, or
an event or circumstance should occur, in or about the Property of
an emergency or other nature which immediately requires that repairs
be made or actions to be taken to preserve and protect the Property
or assure its continued operation, or to protect the tenants,
employees and/or invitees in the Property or Manager, or is
otherwise related to or concerning the safety of the Property or any
person, Manager is hereby authorized to take all actions, enter into
all contracts and purchase orders and to make all expenditures as
Manager deems reasonably necessary or desirable to repair and
correct any such condition and/or cure and respond to such event or
circumstance; provided, however, that Manager shall, to the extent
practicable, endeavor to first contact and inform Owner of the
necessity, nature and estimated costs of such emergency repairs or
expenditures.
(xv) Contracts. Manager shall negotiate, enter into, secure, amend,
modify, alter, extend, renew, cancel and/or terminate such
agreements and contracts which Manager may deem necessary or
advisable for the management, marketing, leasing and operation of
the Property, including, without limitation, the leasing of space,
the furnishing of concessions, supplies, utilities, extermination,
refuse removal, the retention of real estate tax and insurance
consultants (which shall be subject to Owner's approval, not to be
unreasonably withheld or delayed) and other services. Where lawful,
said agreements and contracts will be entered into by Manager in the
name of and on behalf of Owner. At the request of Owner and/or when
determined desirable by Manager, Manager shall contract with a tax
service to make a review of and submit a report with respect to all
real estate and personal property taxes and assessments affecting
the Property and shall file all personal property tax returns after
consulting with Owner concerning the contents thereof.
(xvi) Tenant Relations. Manager shall use good faith efforts to
maintain businesslike relations with all tenants of the Property and
shall receive, consider and record all service requests from such
tenants in a systematic fashion and shall take commercially
reasonable actions in response to each such request. Serious
complaints from tenants of the Property, after investigation, shall
be duly reported to Owner with recommendations as to the manner in
which or course of action to take with respect thereto. Manager
agrees that, except for services of the types delineated on Schedule
D attached hereto, neither Manager nor its Affiliates or any of
their respective employees shall perform any services directly for
any tenant of the Property (as opposed to those performed for Owner
and the Property pursuant to this Agreement) without the consent of
Owner, which will not be unreasonably withheld or delayed.
(xvii) Leasing. Manager shall devote its commercially reasonable
efforts and time to the negotiation of leases and lease amendments,
extensions and renewals for any space within the Property that is
now or hereafter becomes vacant during the term (as may be extended
as provided herein) of this Agreement. Manager shall be the
exclusive leasing broker of Owner for the purpose of leasing the
Property or any portion thereof; provided, however, that Manager may
engage sub-agents to perform its obligations under this Section
1(a)(xvii) including, without limitation, with respect to the
leasing of the retail portion of the Property, Mid-America Real
Estate Corporation. Owner shall have the right, in its reasonable
discretion, to approve the terms, provisions, covenants, conditions
and forms of any proposed lease or lease amendment, modification,
extension, renewal, termination or cancellation, and to approve any
prospective tenants of the Property. In the event that Owner fails
to disapprove any proposed lease, or lease amendment, modification,
extension, renewal, termination or cancellation, or any other
agreement related to the use and occupancy of the Property or any
portion thereof, within ten (10) days after Manager delivers to
Owner the proposed final draft thereof, then Owner shall be deemed
to have granted its consent thereto and approval thereof. Manager
shall use commercially reasonable efforts to comply in all material
respects with any leasing requirements of any Lender contained in
any Loan Document of which a copy has been delivered either to
Manager or to PGRLP In the event that Owner enters into negotiations
directly with any tenant at or prospective tenant of the Property,
such negotiations shall neither affect the amount of any leasing
commission or fee that would otherwise be due and payable to Manager
with respect to such lease, amendment, modification, alteration,
extension, renewal, termination or cancellation, nor affect the
terms and conditions of this Agreement regarding whether and when a
leasing commission and/or fee is deemed earned (it being the
understanding and agreement of Manager and Owner that Manager shall
be entitled to be paid a Leasing Fee as provided in Section 8 below
and Schedule B attached hereto with respect to any and all leases,
lease amendments, lease modifications, lease extensions or renewals,
licenses and other agreements related to the use and occupancy of
the Property or any portion thereof by any party, regardless of
whether or not Manager procured such party or was involved in
negotiations). In the event any Outside Broker is involved by
Manager in obtaining any new tenant of the Property on behalf of or
in conjunction with Manager and a commission is due hereunder,
Manager shall have the discretion to negotiate the fee payable to
such outside broker, and any such commission shall be paid in
accordance with the terms and provisions of Section 8 below and
Schedule B attached hereto.
(b) Exclusive Representative. It is understood and agreed that Manager
shall be the sole and exclusive representative of Owner for purposes of
communicating and dealing directly with the regulatory authorities,
governmental agencies, employees, independent contractors, suppliers,
tenants, sponsors, licensees, customers and guests of the Property. Any
communications from Owner to such persons or entities or authorities shall
be directed through Manager unless Owner and Manager mutually agree that
direct communications between Owner and one or more such persons or
entities is appropriate. In this regard, Owner hereby appoints Manager as
its agent and authorized representative to negotiate, enter into, secure,
amend, modify, alter, extend, renew, cancel and/or terminate any contracts
and agreements contemplated by this Agreement including, without
limitation, the contracts and agreements described in Section 1(a)(xii)
and (xv) and all existing and future leases, licenses and other occupancy
agreements, and all amendments, extensions, renewals, terminations and
cancellations of any of the foregoing as contemplated by Section 1(a)(xii)
and (xvii) hereof (collectively, the "Contracts and Leases"), subject to
the terms and conditions of this Agreement. Notwithstanding the foregoing,
Manager acknowledges and agrees that Owner has the right to participate in
any communication or dealing with regulatory authorities and governmental
agencies and that Manager has no right to terminate or cancel leases
without Owner's consent, which will not be unreasonably withheld or
delayed.
(c) Right to Replace Leasing Agent. Manager and Owner agree that in the
event that the office portion of the Property is not Eighty Percent Leased
(as defined below) by the Office Leasing Deadline (as defined below), then
at any time after the Office Leasing Deadline until the date the office
portion of the Property is Eighty Percent Leased, Owner shall have the
right, upon thirty (30) days advance written notice to Manager, to replace
Manager as the leasing agent for the Property, but not as the manager of
the Property. In the event that the Manager is replaced as the leasing
agent for the Property pursuant to this Section 1(c), Manager shall
continue to have the right to receive Leasing Fees as contemplated by this
Agreement for the 180-day period after such replacement. No replacement of
Manager as leasing agent pursuant to this Section 1(c) shall affect
Manager's right to receive Management Fees or any other amounts due under
this Agreement except Leasing Fees. The term "Eighty Percent Leased" shall
mean that eighty percent (80%) of the office portion of the Property as of
the date of this Agreement consisting of a total of 1,402,234 square feet
(and not including the 24,223 square feet of storage space and 95,349
square feet of retail space) is leased to tenants pursuant to signed
leases, without the necessity of such tenants having yet occupied the
space or commenced paying rent. The term "Office Leasing Deadline" shall
mean the date that is the second annual anniversary of the date of this
Agreement; provided that if on such date the Manager is negotiating the
actual form of a lease or leases with one or more tenants pursuant to
business terms consistent with leasing guidelines previously approved by
Owner or otherwise reasonably acceptable to Owner, and the execution of
such lease or leases would cause the office portion of the Property to be
Eighty Percent Leased, then the Office Leasing Deadline shall be extended
for such period of time, not to exceed an additional sixty (60) days, that
such negotiations are ongoing until such lease or leases are signed or
such negotiations cease on leases sufficient to cause the office portion
of the Property to be Eighty Percent Leased. In addition, it shall not be
a default by Owner under this Agreement if the Lender requires Owner to
replace Manager as the leasing agent for the Property to the extent
expressly provided in the applicable Loan Documents.
2. Insurance. Manager, at Owner's request, cost and expense, shall arrange
for and shall maintain and keep in full force and effect insurance coverage with
respect to the Property as agent of and on Owner's behalf, including, without
limitation, (a) comprehensive general liability insurance, fire and extended
coverage insurance, workers' compensation insurance, business interruption
insurance and any other insurance customarily and usually procured in the
operation of a Class A mixed-use office and retail building located in Chicago,
Illinois and similar to the Property, or required by any Lender (provided that
Owner delivers to Manager a copy of any such Lender's insurance requirements)
and (b) the following types of insurance with respect to Manager and its
employees performing duties under this Agreement: (i) comprehensive general
liability insurance, including a broad form endorsement, hired and non-owned
automobile insurance and workers' compensation insurance, covering Manager's
employees performing duties under this Agreement; (ii) professional liability
errors and omissions coverage for the management of the Property with minimum
limit of $1,000,000 (or such higher amount as Owner may reasonably request) per
claim (such coverage may be an endorsement of the general liability insurance
policy); and (iii) crime coverage including employee dishonesty, forgery, theft
of money and securities, with minimum limit of $2,000,000 (or such higher amount
as Owner may reasonably request) per occurrence and in the aggregate. All such
insurance shall be in reasonable amounts and effected by policies issued by
insurance companies of good reputation and sound financial responsibility in
Manager's reasonable discretion. Upon Owner's request, certificates of insurance
evidencing such insurance shall be promptly delivered to Owner. All
comprehensive general liability and hired and non-owned automobile insurance
policies procured by Manager under this Section 2 shall name Owner and any
Lender of the Property of whom Owner has informed Manager in writing as
additional insureds. All such policies of insurance shall also be endorsed
specifically to the effect that such policies shall not be cancelled or
materially changed without at least thirty (30) days' prior written notice to
Owner, Manager and any Lender with respect to the Property, if required by the
terms of such Lender's mortgage. The parties acknowledge that the insurance
required to be maintained by Manager on behalf of Owner under this Section 2 may
be provided under blanket policies obtained by PGRLP and that may also cover
other properties in which PGRLP or its Affiliates and/or related parties have
interests. Likewise, the insurance policies to be maintained by Manager for
itself and its employees under this Section 2 may be provided under blanket
policies obtained by Manager and that also may cover other properties managed by
Manager.
3. Proprietary Interest. The systems, methods, procedures and controls
employed by Manager including, without limitation, the Accounting Procedures and
any written materials or brochures developed by Manager to document the same are
to remain and shall be the property of Manager provided, however, that Manager
shall provide Owner with a copy or copies of such materials and brochures upon
request. The books, records and reports to be prepared by Manager pursuant to
this Agreement will be and remain Owner's property, provided, however, that
Manager will have the right to make and retain copies of any or all of the
foregoing. Manager agrees to keep and maintain the books and records of the
Owner that are prepared and maintained by Manager pursuant to this Agreement
confidential; provided, however, that the foregoing agreement of Manager shall
not apply to any disclosure of the books and records of Owner or any information
contained therein (a) as contemplated by this Agreement; or (b) as may be
required by applicable Legal Requirements or a court order or applicable
administrative rule or regulations or order of regulatory or supervisory agency
or authority of competent jurisdiction over such matter (in which case Manager
shall advise Owner of its intention to disclose the information (unless
prohibited by any Legal Requirement) and, if applicable, permit Owner to attempt
to obtain a protective court order with respect thereto).
4. Term of Agreement; Effect of Termination.
(a) Unless this Agreement is sooner terminated as provided in Section 5
below or in this Section 4, the initial term of this Agreement shall commence on
the date hereof and shall end on the date that is seven (7) years after the
commencement date (the "Initial Term"). The Initial term of this Agreement is
subject to renewal and extension as follows: (i) at the end of the Initial Term,
if Owner or any Affiliate (as defined below) is the owner of the Property, then
the Initial Term shall be automatically extended for a period equal to the term
of the loan obtained by Owner or such Affiliate or Investor to refinance the
loan encumbering the Property at the time the Initial Term ends (the "First
Renewal Term") and (ii) after the First Renewal Term expires and for so long as
Owner or any Investor or any Affiliate owns the Property, the Term of this
Agreement shall automatically be renewed for successive one (1) year periods,
with each such renewal period commencing on the day after the expiration of the
First Renewal Term or any succeeding renewal period, as applicable, and ending
on the first anniversary of the commencement date of such renewal period (each
such renewal period, together with the Initial Term and the First Renewal Term,
are referred to collectively in this Agreement as the "Term").
(b) Notwithstanding the foregoing, this Agreement may be terminated (i) by
Owner (A) at any time after the date hereof for Cause (hereinafter defined), or
(B) upon the date of the closing of the sale of the Property, to any person
other than an Affiliate of Owner, and (ii) by Manager upon ninety (90) days'
prior written notice to Owner given at any time after the date hereof; provided,
however, that in the event of a termination by Manager pursuant to clause (ii)
above, Manager reasonably shall cooperate with and assist Owner, at Owner's cost
and expense and for a period not to exceed ninety (90) days after the effective
date of termination, in engaging a qualified replacement manager for the
Property and assisting such replacement manager in the transition.
Notwithstanding the foregoing, any transfer of PGRLP's membership interests in
Owner pursuant to the terms and conditions of the purchase option contained in
Section 11.2 of the Operating Agreement shall result in a termination of this
Agreement.
(c) Upon any termination of this Agreement pursuant to subsection (b)
above, except as provided in Section 5(c) below, the parties hereto shall have
no further rights, obligations or liabilities other than (i) the right of
Manager to receive and the obligation of Owner to pay to Manager (A) Management
Fees through the effective date of termination, (B) Leasing Fees in accordance
with Section 8 below for leases, lease amendments, lease modifications, lease
extensions or renewals, licenses and other agreements related to the use and
occupancy of the Property or any portion thereof executed (1) through the
effective date of termination and/or (2) within one hundred eighty (180) days
after the effective date of termination with any tenants or other parties with
respect to which Manager has conducted conversations or negotiations and has
notified Owner in writing prior to the date of termination, and (C) any other
amounts due and owing Manager as of the effective date of termination, and (ii)
Manager's obligation to reasonably cooperate with Owner, for a period of time
not to exceed ninety (90) days after the effective date of termination, to
facilitate a smooth transition of the management, marketing, leasing and
operation of the Property to a qualified replacement manager; provided, however,
that, upon the expiration or earlier termination of this Agreement for any
reason, the parties reasonably shall cooperate (at Owner's expense) to minimize
the impact of the change on the tenants and other occupants of the Property, and
during any such period (not to exceed ninety (90) days after the effective date
of termination) for which Manager provides services or assists in the operation
of the Property in connection therewith it shall be entitled to receive a
reasonable fee therefor.
(d) For the purposes of this Agreement, the term "Affiliate" shall mean
with respect to any natural person, corporation, limited liability company,
trust, general partnership, limited partnership, joint venture, union,
association, court, agency, government, tribunal, instrumentality, commission,
arbitrator, board, bureau or other entity or authority (each individually, a
"Person"), any other Person that directly, or indirectly through one or more
intermediaries, controls is controlled by, or is under common control with the
Person specified. For the purpose of this Section 4, "control" and words of
similar import shall mean the ability to direct or cause the direction of the
management or affairs of a Person, whether through the direct or indirect
ownership of voting interests, by contract or otherwise. For purposes of this
Agreement, "Cause" shall mean any Event of Default on Manager's part under
Sections 5(a)(ii) or 5(a)(iii) below.
5. Events of Default and Remedies.
(a) Defaults(a). Each of the following shall constitute an Event of
Default hereunder:
(i) if Owner shall fail, within five (5) days after the due date with
respect thereto, to pay or allow payment of any installment of the
Management Fees, the Leasing Fees and/or any other amounts due and
payable to Manager in accordance with and/or pursuant to the terms and
provisions of this Agreement, except for any failure by the Lender to
release any portion of the Holdback Amount pursuant to the Loan
Documents; or
(ii) if either Owner or Manager fails to perform any of their
respective duties, obligations or covenants contained in this
Agreement (other than payment of monetary obligations and as set forth
in Section 5(a)(i) above) and such failure continues for a period of
ten (10) days after written notice from the other party specifying
such failure to perform and expressly referencing the ten (10) day
cure period in this Section 5(a)(ii) (unless such failure is of a
nature that cannot reasonably be cured within such 10-day period, in
which event, the defaulting party shall have as much time as is
reasonably necessary to cure such default/failure provided and subject
to the condition that such defaulting party commences such cure within
such 10-day period and diligently continues to pursue such cure to
completion).
(b) Remedies. At any time after the occurrence and during the continuance
of an Event of Default, the party who has not committed or suffered the
Event of Default may, at its option, and at any time prior to the cure of
such Event of Default, terminate this Agreement by giving written notice
to the other party and, except as provided in this Agreement, shall be
entitled to exercise all rights and remedies available under this
Agreement, at law and in equity; provided, however, that Owner may cause
the effective date of any termination by Manager to be deferred for up to
thirty (30) days to afford Owner the opportunity to engage a replacement
manager of the Property and to facilitate a smooth transition to such
replacement manager. If this Agreement shall be terminated as aforesaid,
Manager shall be entitled to receive, and Owner shall pay, a reasonable
fee for such transition services up to and including the effective date of
such termination, which fee will be netted out against costs of
termination and replacing Manager if this Agreement has been terminated
for Cause.
6. Property Operations.
(a) No Guarantee of Profitability. Manager does not guarantee that
management, marketing, leasing and operation of the Property will be
profitable.
(b) Standard of Performance; Acting within Budget. In performing its
obligations under this Agreement, Manager shall use commercially
reasonable efforts and act in good faith and with professionalism in
accordance with the Annual Budgets and the prevailing standards of Class A
office buildings in Chicago, Illinois.
(c) Force Majeure. Notwithstanding anything contained in this Agreement to
the contrary, the parties hereby agree that neither shall be deemed to be
in violation or default of or under this Agreement if they are prevented
from performing any of their respective duties, obligations, covenants or
agreements hereunder (other than any obligations related to the payment of
money with respect to which this provision shall not apply) for any reason
beyond the reasonable control of the party that claims to have been so
prevented from performing such duties, obligations, covenants or
agreements, including, without limitation, strikes, shortages, war, acts
of terrorism, acts of God, or any applicable statute, regulation or rule
of federal, state or local government or agency thereof having
jurisdiction over the Property or the operations thereof (collectively,
"Force Majeure Events"); provided, however, that such non-performing party
shall only be excused from the performance of its duties, obligations,
covenants and/or agreements for so long as such Force Majeure Event
exists.
7. Withdrawal of Funds by Owner. Owner and Manager acknowledge and agree
that the efficient operation of the Property requires that Manager have ready
access to the funds required therefor. Accordingly, Owner shall not have any
right to withdraw funds from the Property's Operating Account.
8. Fees.
(a) During the Term of this Agreement, Manager shall be entitled to
receive, and Owner shall pay to Manager, on a monthly basis, management
fees (the "Management Fees") in an amount equal to two percent (2%) of the
monthly Gross Revenues of the Property during each month or portion
thereof occurring during Term, until such time as there are signed leases
pursuant to which the tenants have commenced paying rent for ninety
percent (90%) of the rentable square footage of the Property, exclusive of
the parking garage and any storage space in the Property (the "Leasing
Target"); and from and after the date the Property achieves the Leasing
Target, the Management Fees shall be increased to two and one-half percent
(2.5%) of the monthly Gross Revenues of the Property (whether or not
leasing at the Property later falls below the Leasing Target). Management
Fees with respect to a particular month shall be due and payable by Owner
to Manager promptly (i.e., within five (5) business days) after the
delivery by Manager to Owner of the Monthly Statement for such particular
calendar month and on a pari passu basis with the UST Administrative Fee.
In addition, a schedule of leasing commissions and fees payable to Manager
and Outside Brokers is attached hereto as Schedule B and made a part
hereof. Manager shall be entitled to receive and, if and as applicable,
pay to Outside Brokers leasing commissions (the "Leasing Fees") in
accordance with Schedule B hereto; provided, however, that Leasing Fees
payable to Manager (as opposed to Outside Brokers) shall be paid on a pari
passu basis with the UST Administrative Fee. All Leasing Fees payable to
Manager will be paid within ten (10) days after Manager submits an invoice
to Owner for the payment of such Leasing Fees, subject to the release by
Lender of the Holdback Amount pursuant to the Loan Documents for any
amounts to be paid from the Holdback Amount. Leasing Fees payable to
Outside Brokers will be due and payable in accordance with Schedule B
attached hereto and the terms and conditions of the Outside Broker's
commission agreement.
(b) For the purposes of this Agreement, the term "Gross Revenues"
shall mean all amounts actually collected as rents or other charges for
use and occupancy of the Property, but shall exclude: (i) income derived
from interest on investments or otherwise, (ii) proceeds of claims on
account of insurance policies (other than rent loss or business
interruption insurance), (iii) abatement or refund of taxes; (iv) awards
arising out of takings by eminent domain; (v) discounts and dividends on
insurance policies; (vi) receipts and other income from or on account of
vending machines and other concessions; (vii) all purchase discounts,
concessions, rebates and allowances; (viii) reimbursement by any tenant,
whether in a lump sum or in installments, of expenditures made by Owner
for tenant improvements; (ix) security, cleaning and all other like
deposits (until forfeited); and (x) parking income, except that parking
income shall not be excluded that is collected during any period when
Manager, rather than a third party, is managing the parking facilities
located at the Property. Gross Revenues shall be reduced by any refund
paid to a tenant respecting any sum that was originally included in Gross
Revenues. For the purpose of determining Gross Revenues, income from
automatic teller machines shall not be deemed to be income from or on
account of vending machines or other concessions.
(c) Anything in this Agreement to the contrary notwithstanding,
Manager acknowledges and agrees that for the period between the date
hereof and ending December 31, 2004 (the "Subordination Period"), in the
event there is not sufficient "Distributable Cash" (as defined in the
Amended and Restated Limited Liability Company Agreement of Dearborn
Center, L.L.C. dated as of the date hereof, the "Operating Agreement") to
pay the UST Priority Return at any time during the Subordination Period,
the Management Fees will be subordinate to the UST Priority Return to the
extent of such insufficiency and will accrue beyond the Subordination
Period to the extent sufficient Distributable Cash is not available
relating to the Subordination Period. Any amounts so accrued shall be
payable solely from any Net Sale or Refinancing Proceeds prior to the
return to "UST" of any "UST Invested Capital" and prior to the return to
"Prime" of any "Prime Invested Capital" (as such terms in quotations are
defined in the Operating Agreement). Nothing in this subparagraph (c)
shall affect the rights of UST to collect the UST Administrative Fee
during the Subordination Period notwithstanding other provisions in this
Agreement which provide for payment of the Management Fees and the UST
Administrative Fee on a pari passu basis.
9. Assignment. This Agreement shall not be assigned (including by
operation of law, whether by merger, consolidation or otherwise) by Owner or
Manager without the prior written consent of the other party hereto; provided,
however, that (a) Manager may assign this Agreement without Owner's consent (i)
to any Affiliate of Manager, or (ii) to any entity in connection with any
merger, consolidation, reorganization, sale, liquidation or similar transaction
with respect to Manager, any of its Affiliates or related parties; and (b) Owner
may collaterally assign this Agreement without Manager's consent pursuant to
Section 1(a)(iv) of this Agreement. No assignment by Manager shall relieve
Manager of its liability hereunder which shall continue in full force and shall
be joint and several with that of the assignee.
10. Notices. Any notices required or permitted to be sent hereunder shall
be in writing and be delivered personally or mailed, certified mail, return
receipt requested, or delivered by nationally-recognized, overnight courier
service to the following addresses, or such other addresses as shall be given by
notice delivered hereunder, and shall be deemed to have been given upon
delivery, if delivered personally, three (3) business days after mailing, if
mailed, or one (1) business day after delivery to the courier, if delivery by
overnight courier service:
If to Owner, to:
Estein & Associates USA, Ltd.
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With a copy to:
Prime Group Realty, L.P.
c/o Prime Group Realty Trust
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
And with copy to:
▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
If to Manager, to:
Prime Group Realty Services, Inc.
c/o Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
`Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
and a copy to:
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
10. Relationship of the Parties. The relationship of Manager to Owner in
connection with this Agreement shall be that of an independent contractor, and
all acts performed by Manager during the Term hereof shall be deemed to be
performed in Manager's capacity as an independent contractor. Nothing contained
in this Agreement is intended to or shall be construed to give rise to or create
a partnership or joint venture or lease between Owner, its successors and
assigns, on the one hand, and Manager, its successors and assigns, on the other
hand.
11. Entire Agreement, Governing Law; Amendments. This Agreement and any
documents executed in connection herewith contain the entire agreement among the
parties and shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns (subject, however, to the terms of
Section 9 above), and shall be construed and interpreted in accordance with the
laws of the State of Illinois. This Agreement may not be modified or amended
except by written instrument signed by the parties hereto.
12. Contract Modifications for Certain Legal Events. In the event any state
or federal laws or regulations, whether now existing or enacted or promulgated
after the effective date of this Agreement, are interpreted by judicial
decision, a regulatory agency or legal counsel of both parties in such a manner
as to indicate that the structure of this Agreement may be in violation of such
laws or regulations, Owner and Manager agree to cooperate reasonably in
restructuring their relationship and this Agreement to eliminate such violation
or to reduce the risk thereof to the extent such restructuring can be
accomplished upon commercially reasonable terms; provided, that any such
restructuring shall, to the maximum extent possible, preserve the underlying
economic and financial arrangements between Owner and Manager set forth in this
Agreement. The parties agree that such amendment may require either or both
parties to obtain appropriate regulatory licenses and approvals.
13. Captions. The captions used herein are for convenience of reference
only and shall not be construed in any manner to limit or modify any of the
terms hereof.
14. Severability. In the event one or more of the provisions contained in
this Agreement is deemed to be invalid, illegal or unenforceable in any respect
under applicable law, the validity, legality and enforceability of the remaining
provisions hereof shall not in any way be impaired thereby.
15. Remedies Cumulative; No Waiver. No right or remedy herein conferred
upon or reserved to any of the parties hereto is intended to be exclusive of any
other right or remedy, and each and every right and remedy shall be cumulative
and in addition to any other right or remedy given hereunder, or now or
hereafter legally existing upon the occurrence of an Event of Default hereunder.
The failure of any party hereto to insist at any time upon the strict observance
or performance of any of the provisions of this Agreement or to exercise any
right or remedy as provided in this Agreement shall not impair any such right or
remedy or be construed as a waiver or relinquishment thereof with respect to
subsequent defaults. Every right and remedy given by this Agreement to the
respective parties hereto may be exercised from time to time and as often as may
be deemed expedient by such parties. To the extent either party hereto incurs
legal fees and expenses in connection with such party's enforcement of any of
its rights hereunder as a result of a breach of this Agreement by the other
party hereto (the "Breaching Party"), then, to the extent it is determined by a
court having competent jurisdiction over such dispute, that the Breaching Party
had committed the alleged breach of this Agreement, then the Breaching Party
shall pay all such reasonable attorneys' fees and expenses incurred by the other
party in connection with such enforcement.
16. Subordination. All rights of Manager hereunder shall be subject and
subordinate at all times to all mortgages or deeds of trust which may now or
hereafter be outstanding on the Property or the improvements thereon, and to all
renewals, modifications, consolidations, replacements and extensions thereof and
Manager shall execute any subordination agreement reasonably required by the
holder of any such mortgage or deed of trust.
17. Survival. All representations, warranties, agreements, obligations and
indemnities of the parties hereto arising prior to the expiration or other
termination of this Agreement shall survive such expiration or other
termination.
18. Further Actions. Owner and Manager agree to do, execute, acknowledge
and deliver all contracts, agreements and other documents and to take all
actions reasonably necessary or desirable to comply with the provisions of this
Agreement and the intent thereof.
19. No Third Party Beneficiaries. This Agreement is for the sole and
exclusive benefit of the parties hereto and their respective successors and
assigns, and no third party is intended to or shall have any rights hereunder.
20. Time of Essence. Time is of the essence of this Agreement and the
provisions contained herein.
21. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, and each such counterpart
shall together constitute but one and the same Agreement.
22. Default Rate. Except and otherwise provided in this Agreement, any
amount which is not paid when due hereunder shall bear interest from the date
due until the date paid at the annual interest rate equal to the Prime Rate in
effect from time to time during such period plus six percent (6%), but in no
event higher than the maximum rate permitted by law (the "Default Rate"). For
purposes of this Agreement, the "Prime Rate" shall mean the rate of interest
determined on a daily basis and listed in the Wall Street Journal as the prime
date of interest. If the Wall Street Journal ceases to publish the prime rate of
interest, the Prime Rate shall be equal to the prime rate or corporate base rate
of interest then announced by a national lending institution selected by
Manager.
23. Rule of Construction. For the purposes of this Agreement, the words
"hereunder", "hereof", "herewith" and "herein", and words of similar import,
shall refer to this Agreement as a whole and not any particular section of this
Agreement.
24. Indemnification.
(a) Owner shall indemnify, defend and hold Manager and its Affiliates and
their respective officers, directors, shareholders, employees,
trustees, agents and assigns harmless from and against any and all
claims, demands, action (including enforcement proceedings initiated
by any government agency), penalties, suits and liabilities (including
the cost of defense, settlement, appeal and reasonable attorneys' fees
and costs, but excluding consequential damages), which they or any of
them may have alleged against them, incur, become responsible for, or
pay out for any reason related to: (i) ownership or operation of the
Property, including the employment and discharge of personnel (unless
arising as a result of an act or omission of Manager) and matters
pertaining to the accessibility of the Property to persons with
disabilities (but Manager agrees to call to Owner's attention any such
matter that comes to Manager's attention); (ii) an Event of Default by
Owner with respect to any provision of this Agreement; (iii)
contamination of or any adverse effects on the environment with
respect to the Property (but Manager agrees to call to Owner's
attention any such matter that comes to Manager's attention); (iv) any
violation of any Legal Requirements (but Manager agrees to call to
Owner's attention any such matter that comes to Manager's attention);
provided, however, that in no event shall Owner's indemnification
obligations under this Section 24 extend to any negligence, willful
misconduct or fraud committed by ---------- Manager or its employees
in the performance of Manager's duties under this Agreement, or for
Manager's breach of this Agreement.
(b) To the extent not covered by any liability insurance actually carried
by Owner (which such insurance shall include a waiver of subrogation),
Manager shall indemnify, defend and hold Owner and its Affiliates and
their respective members, officers, employees, agents and assigns
harmless from and against any and all claims, demands, actions
(including enforcement proceedings initiated by any government
agency), penalties, suits and liabilities (including the cost of
defense, settlement, appeal and reasonable attorneys' fees and costs,
but excluding consequential damages), which they or any of them may
have alleged against them, incur, become responsible for, or pay out
for any reason, to the extent such matters are caused by Manager's
negligence, willful misconduct or fraud, or Manager's breach of this
Agreement. Any deductible under Owner's liability insurance policy
shall be paid by Owner.
(c) Each of Owner and Manager hereby waives all claims and rights of
recovery against the other and their respective officers, directors,
shareholders, representatives, trustees, employees, agents,
Affiliates and assigns for any loss or damage to their respective
properties or interests, which loss is insured against, or required
to be insured against, by Owner or Manager (as applicable) pursuant
to this Agreement, regardless of fault or negligence, to the extent
of the amount so covered and any applicable deductible.
(d) The obligations set forth in this Section 24 shall survive any
termination of this Agreement.
25. Business Interruption. If the Property suffers damage or loss that
results in an interruption in the operations of the Property other than due to a
Force Majeure Event, Owner shall nevertheless be obligated to pay to Manager all
amounts that would be due to Manager under this Agreement, including the
Management Fee, Leasing Fees, and all Reimbursable Expenses, for the period of
the business interruption. In the event of such a business interruption, the
Management Fee shall be calculated based on (i) the Gross Revenue for the
portion of the Property, if any, not subject to the damage or loss, and (ii) a
proportionate amount of any business interruption insurance received with
respect to the damaged portion of the Property related to the Management Fee.
Owner shall, immediately on receipt, deposit any and all proceeds of business
interruption insurance received by Owner in the Company Account and shall
continue to fund the Operating Account in the manner required under this
Agreement using the proceeds of such business interruption insurance, to the
extent necessary.
26. Manager Assumes No Liability. Manager assumes no liability whatsoever
for any acts or omissions of Owner, or any previous owners of the Property, or
any previous management or other agent of either. Manager assumes no liability
for any failure of or default by any tenant in the payment of any rent or other
charges due Owner or in the performance of any obligations owed by any tenant to
Owner pursuant to any lease or otherwise. Nor does Manager assume any liability
for previously unknown and/or known violations of environmental or other
regulations which may become known during the period in which this Agreement is
in effect, unless such violations are the result of such Manager's bad faith,
gross negligence or willful misconduct or Manager acting clearly outside the
scope of its authority on or after the date hereof. In addition, Manager shall
not be liable for and assumes no liability whatsoever for any obligations,
liabilities or claims made in connection with or pursuant to any of the
Contracts and Leases executed and delivered by Manager as Owner's agent and
authorized representative pursuant to the terms and conditions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Management and
Leasing Agreement to be executed and delivered in their names and on their
behalf as of the date first set forth above.
OWNER:
DEARBORN CENTER, L.L.C., a Delaware
limited liability company
By: UST XI Dearborn, Ltd.,
a Florida limited partnership,
its administrative member
By: ▇▇▇▇ Chicago, L.C.,
a Florida limited liability company,
its general partner
By: Estein Management Corporation,
a Florida corporation,
its manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
MANAGER:
PRIME GROUP REALTY SERVICES, INC.,
a Maryland corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Title:Co-President
------------------------
SCHEDULE A
Legal Description
Lots 5, 6, 7 and that part of Lot 8 lying East of the East line of Dearborn
Street (excepting therefrom the North 9 feet of said Lots taken for alley) in
Block 141 in School Section Addition to Chicago in ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇ of the Third Principal Meridian, in ▇▇▇▇ County, Illinois.
SCHEDULE B
LEASING COMMISSION/FEE SCHEDULE
1. Defined Terms. All capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Agreement to which this Leasing
Commission/Fee Schedule (the "Commission Schedule") is attached as Schedule B.
For purposes of this Agreement, the following terms have the following meanings:
"Average Annual Fixed Minimum Rent" means, with respect to a Lease (as
hereinafter defined), the actual total base rent or actual fixed minimum rent
payable by the tenant under such Lease (taking into account all "free rent" or
other rent concessions given to the tenant thereunder) for the entire initial
term of the Lease divided by the number of years in the initial term of the
Lease, and specifically excludes (i) any rental escalation based on changes in
operating expenses, taxes, the consumer price index or any similar index; (ii)
any percentage or other similar type of contingent rent; (iii) any portion of
the rent specifically allocated as payment for electricity or other utilities,
taxes, insurance or other operating expenses; (iv) any parking fees or charges;
(v) any late charges, interest or attorneys fees or other items of additional
rent; (vi) any amounts payable to the landlord on account of profit arising from
the assignment or subletting of the leased premises demised by the Lease and
(vii) any free or abated rent. If the rent payable under any Lease is calculated
on a gross basis, rather than a net basis, Average Annual Fixed Minimum Rental
for such Lease shall be calculated based on what the amount of Average Annual
Fixed Minimum Rental would be if it were calculated for such Lease on a net
basis, as opposed to a gross basis (i.e., by subtracting from such annual gross
rental rate the component of the gross rental rate attributable to the current
annual additional rent charges for the Property).
"Existing Lease" means any Lease to which Owner is a party as of the date
of the Agreement.
"Expansion" means the exercise of any option, right of first refusal,
right of first offer or other right (an "Option") under an Existing Lease or a
New Lease (as hereinafter defined) with respect to the leasing of additional
space in the Property ("Additional Space"); provided, and subject to the
condition that such Option with respect to Additional Space is irrevocably
exercised by the tenant not later than one hundred eighty (180) days following
the expiration date of the Term of the Agreement.
"Lease" means any lease, sublease, license, and/or occupancy agreement
entered into by Owner and pursuant to which any Person is granted a possessary
interest in or right to use and occupy space in the Property including, without
limitation, any New Lease and any Existing Lease, and any modification or
amendment to a Lease resulting in a lease of Additional Space or First Hold
Space.
"New Lease" means each Lease executed by Owner and the tenant thereto and
delivered to the tenant thereto within 180 days after the expiration of the Term
(other than a Renewal or an Expansion).
"Renewal" means the exercise of any extension or renewal pursuant to the
terms of a New Lease or an Existing Lease, or except as otherwise provided in
this Commission Schedule, with respect to any additional period of tenancy for
an existing tenant (whether pursuant to a New Lease or an Existing Lease);
provided and subject to the condition that such extension or renewal is
irrevocably exercised by the tenant no later than one hundred eighty (180) days
following the expiration date of the Term.
2. Rates. Commissions shall be payable at the following rates:
(a) With respect to New Leases (and with respect to First Hold Space
(as hereinafter defined) and Leases of Additional Space as described in
Sections 4(a) and 4(b), respectively), an amount equal to the sum of: (i)
eight percent (8%) of one year's Average Annual Fixed Minimum Rent plus
(ii) the product of three percent (3%) of the product of the Average
Annual Fixed Minimum Rent multiplied by the number of additional years
(up to fifteen (15)) during the initial term of the Lease after the first
year.
(b) With respect to any Renewal or Expansion pursuant to a Lease
(that is not First Hold Space or a Lease of Additional Space as described
in Sections 4(a) and 4(b), respectively), three percent (3%) of the
product of the Average Annual Fixed Minimum Rent multiplied by the number
of years (up to fifteen (15)) during the term of such Extension or
Renewal.
3. Schedule of Payments. Commissions will be deemed earned and will be paid as
follows:
(a) With respect to any New Lease, (i) one-half (1/2) of the
commissions shall be paid upon the delivery of a fully executed Lease and
(ii) one-half (1/2) shall be paid upon the earlier of (1) tenant occupancy
of any portion of its leased premises and (2) commencement of rent under
the Lease.
(b) With respect to any First Hold Space, (i) one-half (1/2) of the
commissions shall be paid on the date the tenant irrevocably exercises its
First Hold Space Option and (ii) one-half (1/2) of the commissions shall
be paid upon the earlier of (1) tenant occupancy of any portion of its
leased premises and (2) commencement of rent under the Lease.
(c) With respect to any Leases of Additional Space pursuant to any
Lease as hereinafter described in Section 4(b), (i) one-half (1/2) of the
commissions shall be paid upon the delivery of a fully executed Lease and
(ii) one-half (1/2) of the commissions shall be paid upon the earlier of
(1) tenant occupancy of any portion of its leased premises and (2)
commencement of rent under the Lease.
(d) With respect to any Renewal or Expansion (other than with
respect to First Hold Space and Leases of Additional Space as described in
Sections 4(a) and 4(b), respectively), commissions shall be paid in full
at such time as the tenant shall have irrevocably exercised its option
thereunder and the renewal term shall have commenced.
(e) Notwithstanding the foregoing, if the tenant or guarantor under
any Lease has an investment grade rating, all commissions shall be paid
upon delivery of a fully executed Lease, amendment or modification of
Lease, or irrevocable exercise of an Option, as applicable.
4. First Hold and Additional Space.
(a) Owner shall pay Manager a commission equal to the commission
payable for a New Lease with respect to the exercise of any option or right
under any Lease of Additional Space (the "First Hold Space") prior to the
commencement of the tenant's lease term (the "First Hold Space Option"). Such
commission shall be deemed earned at such time as the First Hold Space Option is
irrevocably exercised by the applicable tenant.
(b) Owner shall pay Manager a commission in connection with the
Lease of Additional Space by a tenant under any Lease, which Additional Space is
not leased pursuant to any option or right contained in such Lease, as follows.
If a tenant shall remain in, or remain liable for, all of its space under the
terms of any Lease (such space, the "Original Space"), and enters into a Lease
for Additional Space not later than one hundred eighty (180) days following the
expiration date of the Term, then Manager shall be entitled to a commission on
such Lease for Additional Space as if such Lease for Additional Space were a New
Lease under the terms hereof. If the tenant shall be relieved of its obligations
with respect to any or all of its Original Space in connection with its Lease of
Additional Space, Manager shall be paid a commission, if any, at the market rate
for Class A space in the Chicago central business district to be negotiated by
the parties at such time. The provisions of Section 7(a) below with respect to
the vesting of commissions shall apply to any commission payable under this
Section 4(b). Such commission shall be subject to the terms of Sections 5(a) and
5(b) below.
5. Outside Brokers.
(a) If a licensed real estate broker other than Manager (an "Outside
Broker") is the procuring cause of a Lease or extension or modification thereof
or represents the tenant thereof, Owner shall pay such Outside Broker the amount
required pursuant to such Outside Broker's written brokerage or commission
agreement, provided, however, that the amount of any such commission shall not
be greater than the product of $1.00 per rentable square foot of space subject
to such Lease, multiplied by the number of years (not to exceed fifteen (15)) in
the term of such Lease (e.g., for a ten-year lease for 30,000 rentable square
feet, the commission to the Outside Broker would be equal to $300,000 ($1.00 x
30,000 x 10)), unless Owner shall otherwise agree in writing.
(b) If an Outside Broker is the procuring cause of a Lease or
extension or modification thereof or represents the tenant thereof and is due a
commission under Section 5(a) above, Owner shall pay to Manager a commission
which shall be equal to one-half (1/2) of the amount otherwise payable in
accordance with this Commission Schedule. Unless otherwise expressly agreed to
in writing by Owner, in no event shall an Outside Broker be paid a commission
for the contraction of a tenant's leased space within the Property, a relocation
of a tenant's leased space within the Property, or a financial reconstitution of
a tenant's lease (i.e., a readjustment of the rental amounts); provided,
however, that the foregoing shall not apply to any initial commission paid to an
Outside Broker. Nothing contained herein shall be deemed to create any right in
any Outside Broker as a third party beneficiary and neither Owner nor Manager
shall have any obligation of any kind with respect to any Outside Broker unless
a written commission agreement is executed between Owner or Manager and such
Outside Broker.
6. Retail Leases. Owner and Manager acknowledge that Mid-America Real Estate
Corporation ("Mid-America") and Owner are parties to that certain Leasing Agency
Agreement dated March 31, 2003 (the "Agency Agreement"). Owner shall pay all
commissions due and payable under the Agency Agreement in accordance with the
terms and conditions of the Agency Agreement. Manager shall not be entitled to
any commissions in connection with any such Leases. Notwithstanding the
foregoing, Manager shall be entitled to receive a commission with respect to any
Lease, Expansion or Renewal in the retail portion of the Property if Mid-America
is not entitled to a commission for such Lease, Expansion or Renewal under the
terms and conditions of the Agency Agreement. Any such commission to Manager
shall be determined in accordance with Section 2 of this Commission Schedule;
provided, however, that if such Lease is a retail Lease (as opposed to an office
Lease), Manager's commission shall be computed using a three percent (3%)
commission rate for the entire term of such Lease (up to fifteen years). Manager
shall have the right, on Owner's behalf, to terminate or extend the term of the
Agency Agreement.
SCHEDULE C
ANNUAL BUDGETS FOR 2003 - 2004
[Intentionally Omitted]
SCHEDULE D
PERMITTED SERVICES TO TENANTS
o After hours dock usage
o After hours freight elevator usage
o Additional security services o Light bulb/ballast replacements o Locksmith
services (keys, lock changes, etc.)
o Security access cardkey replacements or additions (beyond initial move-in)
o Moving of furniture/equipment or furniture reconfiguration
o Delivery assistance
o Hanging of pictures/bulletin boards
o Installation of shelving or cabinets
o Painting services
o Carpentry services
o Construction services
o Property disposal
o Day ▇▇▇▇▇▇ services (additional cleaning services)
o Telecommunication/riser services
o Additional signage
o Additional cleaning services (refrigerator cleaning, microwave cleaning,
pantry/kitchen special cleaning, gym/health club cleaning, executive
shower cleaning, purchase of additional cleaning or paper products,
Saturday or Sunday additional cleaning services, etc.)
o Carpet cleaning
o Electrical services (outlet installation, dedicated outlet, additional
lighting, workstation wiring, etc.)
o Supplemental HVAC systems or upgrades/HVAC modifications to provide
additional zones o Additional cable television services
o Various purchases/installations requested by tenant (examples could
include: purchase and installation of privacy partition in restrooms;
purchasing of gondolas or other trash containers, etc.)
o Parking garage services
o Interior design or decorating
o Day care/child care services
o Concierge services, to the extent the services provided are over and above
the concierge services generally provided at the Property
o Maintenance in tenant's space, to the extent the maintenance provided is
over and above the maintenance services generally provided at the Property
o Any other similar services the charges for which do not exceed market
rates.