EXHIBIT 10.15
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MANAGEMENT AGREEMENT
BETWEEN
CENTERMARK PROPERTIES, INC.,
AS OWNER,
AND
CENTERMARK MANAGEMENT COMPANY,
AS MANAGER.
DATED AS OF JULY 1, 1996
MANAGEMENT AGREEMENT
PAGE
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TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS.............................................1
ARTICLE II APPOINTMENT....................................................11
ARTICLE III MANAGER'S DUTIES...............................................12
A. Operating Standard; Duties................................12
B. Independent Contractor; Employees.........................14
C. Compliance with Requirements..............................14
D. Implementation of Annual Plan.............................15
E. Property Manager..........................................15
F. No Default................................................15
▇. ▇▇▇▇▇▇....................................................16
ARTICLE IV LEASING THE PROPERTY...........................................17
A. Leasing Obligations.......................................17
B. Brokers...................................................18
C. Temporary Leases..........................................19
D. Small Shop Leases.........................................19
E. Large Shop Leases and Nonconforming Small Shop
and Temporary Leases......................................19
F. Anchor Leases.............................................19
G. Leasing Fee...............................................20
H. Occupant Improvements.....................................20
ARTICLE V TENANT RELATIONS...............................................20
A. Reasonable Efforts........................................20
B. Procedures................................................20
C. Enforcement of Leases.....................................20
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ARTICLE VI RECEIPTS.......................................................21
A. Cash Receipts.............................................21
B. Security Deposit Account..................................21
ARTICLE VII ANNUAL PLAN....................................................21
A. Initial Annual Plan.......................................21
B. Submission of Annual Plans................................21
C. Owner's Approval..........................................22
D. Miscellaneous Provisions..................................23
ARTICLE VIII DISBURSEMENTS..................................................24
A. Payment of Operating Expenses.............................24
B. Checks....................................................24
ARTICLE IX ADVANCES FOR OPERATING EXPENSES................................24
A. Notification..............................................24
B. Owner's Advances..........................................25
C. Indemnification...........................................25
ARTICLE X FIDELITY INSURANCE COVERAGE....................................26
ARTICLE XI MAINTENANCE OF THE PROPERTY....................................26
A. Standard..................................................26
B. Supplies and Equipment....................................27
C. Enforcement of Contracts..................................27
D. Emergencies...............................................27
ARTICLE XII RECORDS AND REPORTS............................................27
A. Monthly Reports...........................................27
B. Financial Statements......................................29
C. Records...................................................31
D. Production of Records and Information.....................32
E. Tax Returns...............................................33
F. General Qualifications....................................33
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ARTICLE XIII COSTS AND EXPENSES - COMPENSATION..............................34
A. Management Fee.................................................34
B. Expense Reimbursement..........................................35
C. Leasing........................................................35
ARTICLE XIV INSURANCE......................................................36
ARTICLE XV ALTERATIONS....................................................36
ARTICLE XVI TERMINATION....................................................36
A. Term......................................................36
B. Non-Curable Terminating Events............................36
C. Curable Defaults..........................................38
D. Manager's Rights and Obligations on Termination...........39
ARTICLE XVII DELIVERY OF DOCUMENTS AND NOTICES..............................40
ARTICLE XVIII MISCELLANEOUS PROVISIONS.......................................41
A. Law to Apply..............................................41
B. Incorporation by Reference................................41
C. Section Headings and References...........................41
D. Terms.....................................................41
E. Waiver....................................................41
F. Severability..............................................42
G. Counterparts..............................................42
H. Time......................................................42
I. Incorporation of Prior Agreements.........................42
J. Further Assurances........................................42
K. Attorneys' Fees...........................................42
L. Personal Agreement........................................42
M. No Partnership............................................43
N. Amendments................................................43
O. Indemnities...............................................43
P. Object of Agreement.......................................44
Q. Owner's Lenders and/or Purchasers.........................44
R. Confidentiality...........................................44
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EXHIBITS
A - Other Management Agreements
iv
ENFIELD SQUARE
THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of
the 1st day of July, 1996 by and between CENTERMARK PROPERTIES, INC., a Missouri
corporation ("Owner"), and CENTERMARK MANAGEMENT COMPANY ("Manager"), a Delaware
partnership.
W I T N E S S E T H:
WHEREAS, Owner is the owner of that certain shopping center located in
Enfield, Connecticut, and commonly known as [ ]; and
WHEREAS, Owner and Manager desire to enter into this Agreement to
appoint Manager to manage the Property (as defined below), it being the
understanding that the object of this Agreement is the provision of property
management and leasing services by Manager to Owner, upon all of the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
respectively set forth in this Article I:
"ADVISOR" means Westfield U.S. Advisory, L.P., a Delaware limited
partnership, and its permitted successors and assigns under the Advisory
Agreement.
"ADVISORY AGREEMENT" means that certain Advisory Agreement, dated as
of the date hereof, between CenterMark Properties, Inc. and Advisor, as the same
may be amended from time to time.
"AFFILIATE" means, with respect to any Person (the "SUBJECT PERSON"),
any other Person controlling, controlled by or under common control with the
Subject Person. As used in this definition of "AFFILIATE," the term "CONTROL"
means, with respect to any Person, the right to the exercise, directly or
indirectly, of 50% or more of the voting rights attributable to such Person.
"ANCHOR LEASE" means a Lease for an Anchor Tenant.
"ANCHOR TENANT" means an Occupant that is a department store having
not less than seventy-five thousand (75,000) square feet of usable space at the
Property.
"ANNUAL PLAN" means the plan for the operation, leasing, maintenance
and improvement of the Property, including, without limitation, the Operating
Budget, prepared by Manager and approved by Owner as provided herein for each
Fiscal Year.
"BANKRUPTCY" of any Person means the occurrence of any of the
following events:
(i) if such Person shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or insolvent, or shall file
any petition or answer seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief for
itself under the present or any future Federal bankruptcy act or any other
present or future applicable Federal, state or other statute or law
relating to bankruptcy, insolvency, or other relief for debtors, or shall
seek or consent to the appointment of any trustee, receiver, conservator or
liquidator of such Person of all, or substantially all, of its property; or
(ii) if a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed against such Person
seeking any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the present or any future
Federal bankruptcy act, or any other present or future Federal, state or
other statute or law relating to bankruptcy, insolvency, or other relief
for debtors, and such order, judgment or decree shall remain unvacated and
unstayed for a period of ninety (90) days from the date of entry thereof,
or any trustee, receiver, conservator or liquidator of such Person or of
all or substantially all of its property shall be appointed without the
consent of such Person and such appointment shall remain unvacated and
unstayed for a period of ninety (90) days, or if such Person shall file an
answer
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admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or
(iii) if such Person shall admit in writing its inability
to pay its debts as they mature; or
(iv) if such Person shall make a general assignment for the
benefit of creditors or take any other similar action for the protection or
benefit of creditors; or
(v) if any assets of such Person are attached, seized or
subjected to a garnishment or other action by a creditor of such Person
seeking to realize upon a judgment against such Person, and such
attachment, seizure, garnishment or other action is not vacated, stayed or
otherwise resolved within ninety (90) days thereafter.
"BUSINESS DAY" means a day which is not a Saturday, Sunday or legally
recognized public holiday in the United States.
"COMMON AREAS" means all those parts of the Property which are not
exclusively used or intended for the exclusive use of any particular Occupant.
Common Areas shall include, without limitation, the following areas within the
Property: parking areas and facilities, traffic control and information signs
and equipment, roadways, pedestrian sidewalks, public transportation loading and
unloading facilities not devoted to a single Occupant, truckways, delivery
areas, landscaped areas, community rooms, office facilities, Property Manager's
office, elevators, escalators, the enclosed mall, including space occupied by
carts or kiosks, roof, skylights, beams, stairs and ramps not contained within
any Occupant's floor area, public restrooms and comfort stations, service areas,
service and fire exit corridors and passageways, those areas within the Property
and adjacent to the Property containing signs, pylons or structures advertising
the Property, and other areas, amenities, facilities and improvements provided
by Owner for the convenience and use of Owner, the Occupants and their
respective concessionaires, agents, employees, customers, invitees and other
licensees.
"DEVELOPER" means Westfield Corporation, Inc., any entity wholly owned
by Westfield Corporation, Inc., and the permitted successors and assigns of
Westfield Corporation, Inc. or any entity wholly owned by Westfield Corporation,
Inc., under the Development Framework Agreement or any Development Agreement and
Leasing Agreement.
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"DEVELOPMENT AGREEMENT" means any Design, Development and Construction
Agreement entered into between CenterMark Properties, Inc. or its Affiliate and
Developer in accordance with the terms of the Development Framework Agreement,
as the same may be amended from time to time.
"DEVELOPMENT FRAMEWORK AGREEMENT" means that certain Master
Development Framework Agreement, dated as of the date hereof, between CenterMark
properties, Inc. and Developer, as the same may be amended from time to time.
"DISCRETIONARY EXPENSES" means all Operating Expenses that are not
Non-Discretionary Expenses.
"EMERGENCY" means an event which, in Manager's reasonable judgment,
requires action to be taken prior to the time that approval could be obtained
from Owner (as reasonably determined by Manager) in order to comply with Legal
Requirements or Insurance Requirements or to preserve the Property, or for the
safety of any employees, Occupants, customers or invitees of the Property, or to
avoid the suspension of any services necessary to, or required by, the
Occupants, customers or invitees thereof.
"FISCAL YEAR" means the calendar year.
"GROSS INCOME" in respect of a particular period means all minimum,
fixed and percentage rents and all other receipts, revenues, proceeds and other
monies received by Owner, or by Agent on behalf of Owner, from or in connection
with the operation of the Property in respect of such period, directly or
indirectly and from any source whatsoever including, without limitation, all
payments made to Owner by Occupants including, but not limited to (i) minimum,
fixed and percentage rent (including proceeds from any litigation wherein
damages equivalent to or based upon rent from a defaulted tenant are recovered,
exclusive of interest), (ii) Common Area maintenance charges, (iii)
contributions for personal and real property taxes and sales taxes, insurance
premiums and deductibles, utilities, heating, ventilating and air conditioning,
domestic water and waste handling, sprinkler charges, Manager's administrative
costs and any other expenses of the Property for the payment of which Occupants
are obligated to contribute pursuant to their respective Leases, (iv) security
deposits which have been applied to rent, and (v) all proceeds from loss of
rents insurance maintained by Owner relating to the Property.
"INDEX" with respect to any applicable calculation that is provided
for herein, for each particular year or period in question, means the "All
Items" portion of the Consumer Price Index for All Urban Consumers: U.S. City
Average (1982-84 =
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100), issued and published by the Bureau of Labor Statistics of the United
States Department of Labor. If the Index ceases to use the 1982-84 average
equaling 100 as the basis of calculation, or if a change is made in the terms or
number of items contained in the Index, or if the Index is altered, modified,
converted or revised in any way, then the Index shall be determined by reference
to the index designated as the successor to the prior Index or other substitute
index published by the government of the United States and new index numbers
shall be substituted for the old index numbers in making the calculations, as
may be appropriate. If at any time the Bureau of Labor Statistics shall no
longer publish such Index, then any successor or substitute index to the Index
published by said Bureau or other governmental agency of the United States, and
similarly adjusted as aforesaid, shall be used. If such a successor or
substitute index is not available or may not lawfully be used for the purposes
herein stated, a reliable governmental or other non-partisan publication
selected by Manager and reasonably acceptable to Owner shall be used in
evaluating the information theretofore used in determining the Index.
"INSURANCE REQUIREMENTS" means the requirements of any insurer or
insurance carrier, to the extent that such requirements are applicable to the
Property, or any portion thereof, the use or manner of use of the same, or to
Owner in its capacity as owner of the Property.
"LAND" means that certain parcel or parcels of real property on which
Enfield Square is located.
"LARGE SHOP LEASE" means any Lease which is not an Anchor Lease, a
Small Shop Lease or a Temporary Lease.
"LEASE" means any lease, sublease, license to occupy or other right of
occupancy, use or possession of the Property or any part of the Property,
entered into or granted by or on behalf of Owner or by or on behalf of Owner's
predecessors in title, whether temporarily or for a fixed or periodic term,
whether or not recorded, and whether oral or written including, without
limitation, any storage license, cart or kiosk lease or license, and any other
specialty lease or license. "LEASES" means each and every Lease in effect at
the applicable time, collectively.
"LEASING AGREEMENT" means any Leasing Agreement entered into between
CenterMark Properties, Inc. or its Affiliate and Developer in accordance with
the terms of the Development Framework Agreement, as the same may be amended
from time to time.
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"LEASING GUIDELINES" means the annual leasing guidelines for the
Property proposed by Manager and approved by Owner, which approval will not be
unreasonably withheld by Owner, as an element of each Annual Plan, as such
guidelines may be amended from time to time in accordance with the terms hereof.
"LEGAL REQUIREMENTS" means all laws, statutes, codes, ordinances,
orders, regulations, judgments, decrees and directions of all federal, state and
local governments and courts and the appropriate agencies, officers,
departments, boards, authorities and commissions thereof, whether now or
hereafter enacted, to the extent that the same are applicable to the use or
operation of the Property or any portion thereof.
"MARKETING FUND" means the media fund or other like fund or
organization established, operated and maintained by Manager in accordance with
the Operating Budget for the advertising, merchandising and promotion of the
Property.
"NON-DISCRETIONARY EXPENSES" means those Operating Expenses, the
payment and amount of which are not within the discretion of Owner or Manager,
including without limitation utility charges, salaries and benefits of Property
employees, scheduled payments of principal and interest on indebtedness
encumbering the Property, real estate and personal property taxes and
assessments, insurance premiums, amounts due and payable under service contracts
and other agreements entered into in accordance with any Annual Plan, and
Operating Expenses required to be paid by Legal Requirements or Insurance
Requirements.
"OCCUPANTS" means all Persons using or in possession or occupation of
any portion of the Property from time to time under any Lease.
"OPERATING BUDGET" means the annual operating budget for the Property
proposed by Manager and approved by Owner, which approval will not be
unreasonably withheld by Owner, for the relevant Fiscal Year, as the same may be
amended from time to time in accordance with the terms hereof.
"OPERATING EXPENSES" means the total for each relevant period of the
costs and expenses incurred or accrued in respect of the Property by Owner or by
Manager on behalf of Owner in accordance with this Agreement. Subject to the
foregoing, Operating Expenses shall include, without limitation:
(i) all rates, taxes, assessments and impositions whatsoever
(whether assessed, charged or imposed by or under Federal, State or local Legal
Requirements) assessed, charged or imposed in respect of the Property or Owner
in its capacity
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as owner of the Property, except to the extent that Owner has elected to appeal
the same until such time as such taxes are paid, including, without limitation,
sales taxes paid by Manager with respect to goods or services benefiting the
Property acquired or provided in accordance with the Operating Budget;
(ii) charges for supply of water, sewerage, gas, electricity and
other utilities supplied to the Common Areas, and the disposal of all garbage
and refuse from the Common Areas;
(iii) costs of operating, maintaining, repairing and cleaning
all areas of the Property, including the salary, wages, benefits and other costs
of (x) all on-site employees at the Property employed by Manager or its
Affiliates and (y) all off-site costs which are allocable to the Property (which
shall include home office or regional office operational employees to the extent
such employees perform services specifically related to the Property), as may be
necessary or appropriate for the proper operation thereof and the performance by
Manager of its obligations hereunder, all in accordance with the Operating
Budget;
(iv) all charges for leasing or licensing, operating,
maintaining and repairing the lighting and HVAC systems, vertical or horizontal
transportation equipment, sanitary, security and fire detection and fighting
equipment and all other equipment, machinery and systems provided for or to the
Property from time to time, in accordance with the Operating Budget;
(v) the portion of overhead costs incurred by or on behalf of
Manager in performing its duties under this Agreement which (x) are for the sole
benefit of the Property and (y) have been approved by Owner in the Operating
Budget for the applicable Fiscal Year;
(vi) the costs of leasing, maintenance, registration and other
expenses incurred in respect of vehicles used by employees of Manager or a
Related Person of Manager in connection with the performance of services for the
benefit of the Property which are properly incurred in the performance by
Manager of its duties and obligations under this Agreement, in accordance with
the Operating Budget;
(vii) all fees and charges incurred in connection with the
opening, maintenance and operation of any bank accounts operated for the
Property by Manager;
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(viii) advertising, marketing and promotional costs for the
Property in accordance with the applicable Operating Budget or which otherwise
have been approved in writing by Owner;
(ix) the fees of attorneys and consultants incurred by Manager
in accordance with the Operating Budget or at the written request of Owner in
connection with the performance by Manager of its duties and obligations under
this Agreement including, without limitation, the enforcement of all Leases;
(x) all contributions made by Owner or Manager on behalf of
Owner from time to time to the Marketing Fund;
(xi) the payment or reimbursement of the applicable portion of
costs incurred by Owner or by or on behalf of Manager for insurance and claims
management services for the Property in accordance with the Operating Budget,
whether such payment is incurred pursuant to any master policy covering other
properties under the management of Manager or any Related Person, or otherwise;
(xii) all expenses incurred by Manager in accordance with the
Operating Budget or as otherwise approved in writing by Owner in connection with
equipment provided by or on behalf of the Manager or by others for the purpose
of the operation and maintenance of the Property or the applicable portion of
such costs relating solely to the Property including, without limitation, all
financing, leasing and other charges incurred in respect of such equipment and
legal and other costs associated with the arranging thereof;
(xiii) miscellaneous donations made by Manager from time to
time in the course of operations of the Property in accordance with the
Operating Budget or as otherwise approved in writing by Owner;
(xiv) third party audit and accountancy fees incurred in
accordance with the Annual Plan in connection with the preparation of any
accounts or financial statements relating solely to the Property prepared by or
on behalf of Owner for the purpose of providing the financial information to
Owner required by this Agreement and enabling Manager to perform its obligations
under this Agreement;
(xv) all third party costs and expenses incurred by Manager
directly for the benefit of the Property in connection with the lease or license
of space within the Property in accordance with the Operating Budget or as
otherwise approved in
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writing by Owner, excluding, however, brokerage or agency fees, commissions or
expenses payable to Manager or any third parties;
(xvi) the Management Fee payable to Manager in accordance with
Article XIII hereof;
(xvii) general expenses associated with the Property incurred in
accordance with the Operating Budget or as otherwise approved in writing by
Owner; and
(xviii) all costs incurred in accordance with the Operating
Budget or as otherwise approved in writing by Owner in connection with (x)
complying with Legal Requirements and Insurance Requirements binding the
Property, binding Owner in its capacity as owner of the Property, or binding
Manager in its capacity as Owner's agent; and (y) enforcing compliance with
Legal Requirements and Insurance Requirements binding Occupants, contractors or
consultants, provided, however, that if any such noncompliance was caused by
Manager's gross negligence, willful misconduct or fraud, any incremental
increase in the cost of enforcing such compliance shall be borne by Manager and
shall not be an Operating Expense;
PROVIDED, HOWEVER, that notwithstanding the foregoing, "OPERATING EXPENSES"
shall exclude:
(a) income taxes, capital gains tax and any other taxes imposed
on Owner, Manager or Occupants in their capacities as individual taxpayers;
(b) the fees of consultants and other costs proven by Owner to
have been incurred as a direct result of Manager's gross negligence, willful
misconduct or fraud; and
(c) premiums and other costs payable by Manager for fidelity
bond insurance.
"OTHER MANAGEMENT AGREEMENTS" mean the management agreements listed on
Exhibit A attached hereto between Manager and certain Affiliates of Owner, and
any new management agreements entered into between Manager and Owner in
accordance with that certain letter agreement, dated as of the date hereof,
between Manager and CenterMark Properties, Inc. ("CENTERMARK").
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"OWNER" means CenterMark Properties, Inc., a Missouri corporation, and
its permitted successors or assigns hereunder. For purposes of granting any
approvals or consents under this Agreement with respect to the operation,
leasing or maintenance of the Property, Owner shall act through its Board of
Directors or through an executive committee of the Board of Directors.
"OWNER'S ACCOUNT" means the account established by Owner into which
Manager is to deposit all amounts collected by Manager under Section VI.A.
"PERSON" means an individual, partnership, joint venture, corporation,
trust, unincorporated association or other entity.
"PRIME RATE" means the rate of interest announced by ▇▇▇▇▇▇ Guaranty
Trust Company of New York or its successors, from time to time in its New York
City office as its "prime" rate, or if no such rate is announced, then the rate
charged to its best corporate customers for demand loans.
"PROPERTY" means the Land together with all of the improvements now or
hereafter erected thereon (including, without limitation, buildings, parking
structures, paved areas, landscaped areas, landscaping, sidewalks, bridges and
tunnels) commonly known as [ ] as it may be expanded or renovated
from time to time hereafter, together with all fixtures, machinery, equipment,
and other property located thereon belonging to or leased or licensed by or for
Owner and used in connection with the operation thereof.
"RELATED PERSON" means, with respect to any Person (the "SUBJECT
PERSON"), any other Person having any of the following relationships with the
Subject Person:
(i) any Affiliate of the Subject Person;
(ii) any other Person owning directly or indirectly more than
fifteen percent (15%) of the issued and outstanding stock of, or more than a
fifteen percent (15%) beneficial or voting interest in, the Subject Person; or
(iii) any other Person more than fifteen percent (15%) of the
issued and outstanding stock of which, or more than a fifteen percent (15%)
beneficial or voting interest in which, is owned directly or indirectly by the
Subject Person;
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"SMALL SHOP LEASE" means any Lease which both (i) covers a gross
leasable area at the Property which is twenty thousand (20,000) square feet or
less, and (ii) has a term, including renewal options (if any), less than or
equal to ten (10) years; provided, however that the term "Small Shop Lease"
expressly excludes all Temporary Leases.
"STANDARD FORM OF SHOP LEASE" means the standard form leasing
documents for Small Shop Leases and Large Shop Leases at the Property as
approved by Owner, which approval will not be unreasonably withheld by Owner, as
the same may be amended or restated from time to time in accordance with the
provisions of this Agreement.
"TEMPORARY LEASE" means any Lease of a temporary or seasonal nature,
having a term, including renewal options (if any) of less than one (1) year,
including without limitation, short-term concessions or license agreements and
cart or kiosk leases or licenses for less than one year.
ARTICLE II
APPOINTMENT
Owner hereby appoints Manager to rent, lease, operate, manage and
direct the operation of the Property subject to the terms and conditions
hereinafter set forth. The appointment of Manager shall be exclusive to Manager
except to the extent that Manager otherwise agrees from time to time in
Manager's sole and absolute discretion. Manager agrees that during the term of
this Agreement it will not act as the property manager for any regional shopping
center which directly competes with the Property and which is within the primary
market area of the Property ( a "Competing Mall"), PROVIDED that the foregoing
restriction shall not be deemed to be violated if Manager shall acquire, either
directly or indirectly, all or substantially all of the assets of, or an
interest in, an entity which is engaged in the property management business and
which manages, among other properties, a regional shopping center which is a
Competing Mall.
Owner and Manager acknowledge that Owner has engaged Developer as the
exclusive developer for the Property pursuant to the Development Framework
Agreement with respect to any expansion, redevelopment or refurbishment of the
Property (any such expansion, redevelopment or refurbishment being hereinafter
referred to as a "Project"). Owner and Manager further acknowledge that to the
extent Developer is providing leasing services with respect to the initial
leasing of any portion of the
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Project pursuant to a Leasing Agreement, Manager shall have no responsibility
hereunder for the initial leasing of such portion of the Project.
ARTICLE III
MANAGER'S DUTIES
A. OPERATING STANDARD; DUTIES. Manager shall exercise its powers and
perform its duties and obligations under this Agreement in a diligent manner,
and shall exercise professional competence in managing the Property at the
prevailing national standard of industry practice for properties of a similar
type and quality as the Property. Manager represents and warrants that it,
together with its Affiliates, has the skill and experience necessary to perform
its obligations in accordance with the terms of this Agreement. Owner
acknowledges that the prior management of the Property by Manager has met or
exceeded the standard set forth above. Without limiting the generality of the
foregoing, Manager shall perform the following duties, subject to the
limitations imposed by the Annual Plan and all other provisions of this
Agreement:
(1) The billing and collection of all amounts payable to Owner by
Occupants under the Leases and other amounts included in Gross Income and the
prompt deposit of all such amounts received by Manager in the Owner's Account;
(2) To the extent funds have been made available by Owner through
deposits into the Owner's Account, the payment of all Operating Expenses and
capital expenses of the Property;
(3) Subject to the Leasing Guidelines, the negotiation of Leases,
the administration and enforcement by commercially reasonable methods of all
Leases and all other service, maintenance and other agreements or contracts made
by or on behalf of Owner for the Property, and the performance of the
obligations specified in Article IV relating to the leasing of the Property;
(4) The selection, engagement, employment, payment, supervision,
direction and discharge of all Property employees reasonably necessary or
appropriate for the proper, safe and economic operation and maintenance of the
Property, in number and at wages in accordance with the Operating Budget, the
carrying of Worker's Compensation Insurance (and, when required by law,
compulsory Non-Occupational Disability Insurance) covering such employees, and
the use of reasonable care in the selection, supervision and discharge of such
employees. Manager shall use its
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diligent, good faith efforts to comply with all laws and regulations and
collective bargaining agreements, if any, affecting such employment. All
persons employed in connection with the operation and maintenance of the
Property shall be employees of Manager or its Affiliates or employees of
contractors providing contract services to the Property;
(5) The cleaning, maintenance, servicing and repair of the
Property (whether by employees of Manager or through supervision of
contractors), including all machinery, equipment and other items whether leased
or provided by Manager or provided by Owner for the operation of the Property,
in accordance with Article XI;
(6) The management and administration of the Marketing Fund and
the advertising, merchandising and promotion of the Property and the Occupants'
respective businesses in accordance with the Annual Plan and this Agreement or
as otherwise approved in writing by Owner;
(7) The provision to Owner of the financial, accounting and
reporting services relating to the Property specified in Article XII;
(8) The making of recommendations concerning the Property
(including, without limitation, as to the tenant mix, maintenance, refurbishment
of the Property and structural alterations or improvements to the Property) as
Owner may from time to time reasonably require;
(9) Preparing, maintaining and providing (at the request of
Owner) copies to Owner of all depreciation schedules for the machinery,
equipment and other property located at the Property;
(10) Notifying Owner in its quarterly report to the Board of
Directors of Owner of any material tax assessments, reassessments, or other
impositions relating to the Property or to Owner in its capacity as owner of the
Property received by or on behalf of Manager and the handling of any relevant
appeals at the request and cost of Owner;
(11) Attending, by telephone or, at the request of Owner, in
person, such meetings with any one or more of the representatives of Owner as
Owner may reasonably require (provided Manager receives reasonable notice
thereof) for the purposes of delivering Annual Plans, reports, financial
statements and other documents, making such recommendations or discussing such
aspects of the operation and
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management of the Property as Manager is required to provide under this
Agreement, provided that this provision will not be deemed to require Manager to
deliver Annual Plans, reports, financial statements or other documents at times
earlier than the times otherwise set forth herein;
(12) Formulating and, subject to the Annual Plan, implementing an
insurance program for the Property;
(13) The management, administration and coordination of all
design and construction associated with the maintenance, repair and/or leasing
of the Property including all tenant improvements to be constructed at the
Property, but excluding all initial construction and tenant improvements
associated with any expansion, redevelopment or refurbishment of the Property
(which will be covered in a separate Development Agreement), provided, however,
that Manager shall not be required to perform any actual design or construction
work, and provided further that with respect to tenant improvements, Manager
shall only be responsible for the approval, supervision and coordination of the
design of any Occupant's store to the extent contemplated in such Occupant's
Lease, including without limitation the design of such Occupant's store front
and the specifications of such Occupant's equipment;
(14) Keeping Owner reasonably informed through reports at regular
quarterly meetings of the Board of Directors of Owner with respect to any other
material matters relating to the management, leasing and operation of the
Property; and
(15) Performing all additional duties which Owner may reasonably
require Manager to perform from time to time which are (i) consistent with the
provisions of this Agreement, and (ii) generally performed by property managers
of properties of the type and quality as the Property.
B. INDEPENDENT CONTRACTOR; EMPLOYEES. In performing its duties
hereunder, Manager at all times shall be acting as an independent contractor
contracted by Owner (except where acting as agent for Owner as specifically
required pursuant to this Agreement) and all contractors or consultants engaged
or supervised by Manager shall be independent contractors or employees of
Manager. All Property employees shall be employed by Manager or its Affiliates
and Manager shall oversee such Property employees in the discharge of their
duties.
C. COMPLIANCE WITH REQUIREMENTS. Subject to the Annual Plan or as
otherwise approved or authorized in writing by Owner and Manager, Manager shall
manage, maintain, lease and operate the Property in compliance with (1) all
Legal
14
Requirements concerning the Property; (2) the provisions of all mortgages,
notes, deeds of trust and any other instruments encumbering the Property,
provided that Manager shall not be obligated to comply with the terms of any
amendments or modifications of such mortgages, notes or deeds of trust unless
Owner has delivered copies to Manager of any of such amendments or modifications
which impose new or additional requirements or restrictions on Manager or the
leasing or operation of the Property; (3) all Insurance Requirements; (4) the
Leases; and (5) all covenants binding Manager under agreements or arrangements
made with third parties including, without limitation, contractors, consultants
and the lessors of any leased equipment or machinery, and, to the extent it is
in Manager's legal capacity to do so, Manager shall perform all obligations
binding Owner under agreements or arrangements made with third parties. If
Manager ascertains that the Property is not in compliance with any of the
foregoing items and such compliance is not contemplated by the Annual Plan,
Manager shall notify Owner in writing, and Owner shall instruct Manager in
writing as to how to proceed. To the extent that Manager complies with Owner's
instructions relating to Owner's, Manager's or the Property's compliance or
non-compliance with any of the foregoing items, Manager shall in no event be
deemed in breach of any provision of this Agreement, and Manager shall be fully
indemnified under the provisions of Section XVIII.O(2).
Notwithstanding the foregoing, Manager, with the prior written
approval of Owner, shall be entitled to contest in good faith any Legal
Requirement or Insurance Requirement provided that such contest is not
reasonably expected to result in the cancellation or interruption of insurance
coverage for the Property or subject Owner to any civil or criminal liability or
fines and is not reasonably expected to result in a breach, violation or
termination of any mortgage, Lease or other material contract or agreement
encumbering or relating to the Property. Manager's good faith noncompliance
with the applicable Legal Requirement or Insurance Requirement shall not be
deemed a default under this Agreement provided that Manager prosecutes such
contest in good faith and with due diligence to a final determination.
D. IMPLEMENTATION OF ANNUAL PLAN. Manager shall use its diligent good
faith efforts to implement the terms of each approved Annual Plan and shall
exercise control over and shall expend or otherwise transfer rents and other
sums received on behalf of Owner in accordance with the terms hereof. Manager
shall not take any actions which are inconsistent with the Annual Plan and are
not otherwise authorized in writing by Owner, PROVIDED that Manager may exceed
the annual Operating Budget with respect to the payment of Operating Expenses as
set forth in Article VIII.A.
15
E. PROPERTY MANAGER. Manager shall retain the services of an
experienced project manager (as an employee of Manager) (the "PROPERTY
MANAGER"), at Owner's cost, to perform the on-site management functions
specified herein.
F. NO DEFAULT. Notwithstanding anything to the contrary in this
Agreement, except to the extent that the payment of additional monies is proven
by Owner to have been required as a direct result of Manager's gross negligence,
willful misconduct or fraud Manager shall not be required to expend money in
excess of that contained in the Owner's Account or otherwise made available by
Owner to be expended by Manager hereunder. Manager will not be in breach or
default of any obligation under this Agreement if, upon receipt of a timely
written request from Manager, Owner fails to advance funds as provided in
Article IX below, fails to make a decision, recommendation or request, fails to
give a direction, approval or consent, fails to execute any notice or document
required by Manager, or fails to make a demand or other communication in any
such case necessary for the performance by Manager of that obligation under this
Agreement.
▇. ▇▇▇▇▇▇. For the purposes of carrying out its duties referred to in
this Agreement, Manager is authorized from time to time during the continuance
of this Agreement:
(1) To enter upon the Property for the purposes of carrying out
the provisions of this Agreement;
(2) To negotiate Leases in Owner's name and implement rent
escalations, the terms of such Leases and rent escalations to be in accordance
with the Leasing Guidelines, PROVIDED that Manager is authorized to enter into
Leases having rent terms which do not vary by more than ten percent (10%) from
the terms of the Leasing Guidelines (except for Temporary Leases which will not
be covered by the Leasing Guidelines and may be negotiated by Manager on the
terms set forth in Article IV.C) and, to the extent it is in Manager's legal
capacity and commercially reasonable to do so, on Owner's behalf to fully
perform and exercise the rights of Owner under any such Leases;
(3) To execute in Owner's name all Temporary Leases, all Small
Shop Leases, all Large Shop Leases and all licenses or other occupancy
agreements negotiated for Common Areas, provided that Manager shall have
obtained Owner's prior written consent with respect to those Leases and
agreements requiring such consent pursuant to Article IV, and, for the purpose
only of such execution, Owner hereby appoints Manager as Owner's
attorney-in-fact;
16
(4) As agent for Owner and without need for consent of Owner, to
institute, prosecute, defend, settle or otherwise deal with (i) any claim or
legal proceeding against Owner which is not covered by Owner's insurance or
Owner's self-insured retention, but is likely to be settled or otherwise
resolved at a total cost to Owner (excluding attorneys' fees and expenses but
including payments made to any claimant or potential claimant) that is equal to
or less than Fifty Thousand Dollars ($50,000), subject to annual increase on
each January 1 commencing on January 1, 1997 based on the percentage increase in
the Index during the preceding Fiscal Year, (ii) any collection or enforcement
action or eviction proceeding with respect to any Lease other than an Anchor
Lease or a Large Shop Lease, and (iii) any claim, lawsuit or proceeding against
Owner which is (A) covered by the Owner's self insured retention, to the extent
that payments made from such self-insured retention are recoverable from
Occupants, and in the event that the entire amount of such self-insured
retention set forth in the Operating Budget for any Fiscal Year has been
exhausted, only if such claim, lawsuit or proceeding is settled or resolved at a
cost to Owner (excluding attorneys' fees) of less than Fifty Thousand Dollars
($50,000), subject to annual increase on each January 1 commencing on January 1,
1997 based on the percentage increase in the Index during the preceding Fiscal
Year, or (B) covered by insurance and is being defended, pursued or settled by
Owner's insurance company or adjuster; and, subject to the prior written consent
of Owner, to commence, prosecute or defend or otherwise deal with any other
legal or other action relating to any other matter concerning the Property;
(5) As agent for Owner, to accept and receive all Gross Income
for deposit into the Owner's Account;
(6) To advertise, merchandise and promote the Property in
accordance with the Annual Plan or as otherwise approved in writing by Owner;
(7) To select, retain, engage, employ, replace, supervise,
dismiss, or otherwise deal with any contractors or consultants as may be
reasonably necessary or desirable for the efficient management and operation of
the Property by Manager, PROVIDED that such contractor is not a Related Person
of Manager and the applicable contract or agreement shall not be for a term
longer than one (1) year unless such contract may be terminated on no more than
thirty (30) days' notice without charge or penalty; and
(8) Subject to the Annual Plan or as otherwise authorized or
approved in writing by Owner, to do and perform in respect of the Property all
things reasonably necessary or appropriate on the part of Manager in compliance
with the
17
covenants and obligations of Manager herein contained to fully and effectively
manage the Property and otherwise perform its obligations hereunder.
ARTICLE IV
LEASING THE PROPERTY
A. LEASING OBLIGATIONS. Manager shall use its diligent, good faith
efforts during the term of this Agreement to lease the Property in accordance
with the Annual Plan. In connection therewith, Manager shall:
(1) assist in the preparation of and make recommendations to
Owner as to variations to the Standard Form of Shop Lease to be used at the
Property from time to time;
(2) use the Standard Form of Shop Lease as the basis for the
negotiation of all Small Shop Leases and Large Shop Leases;
(3) subject to the terms of the Leasing Guidelines, negotiate the
terms and conditions of all Leases, including, without limitation, all
extensions, renewals, amendments and modifications thereto, in accordance with
the Annual Plan, with such immaterial variances from the Standard Form of Shop
Lease as may be reasonably required, unless otherwise authorized in writing by
Owner; PROVIDED that Manager may negotiate terms and conditions for Leases which
vary from the rent terms set forth in the Leasing Guidelines by up to ten
percent (10%);
(4) arrange for the execution of Leases and all amendments and
modifications thereto by all parties thereto, and distribute copies thereof in
accordance with this Agreement;
(5) locate and endeavor to secure, in accordance with the Annual
Plan, suitable Occupants for all areas of the Property that may be vacant from
time to time or are to be come vacant in the near future and are reasonably
available for occupation or use, including, to the extent applicable, the Common
Areas;
(6) review the general suitability of prospective Occupants and,
to the extent Manager may deem it reasonably necessary or appropriate, seek
references from prospective Occupants and conduct such other investigations as
will establish
18
whether or not the prospective Occupant is capable of performing all obligations
which the prospective Occupant would be required to perform under its Lease;
(7) coordinate the activities of management, leasing, design and
engineering personnel and/or consultants to implement the leasing program for
the Property; and
(8) perform such other leasing activities as may be required by
and consistent with the prevailing national standard for properties of a similar
type and quality as the Property.
B. BROKERS. Manager may engage and cooperate with brokers, as may be
reasonably necessary or appropriate, so as to secure prospective tenants for the
Property. Unless otherwise specifically contemplated under the Annual Plan or,
unless otherwise approved in writing by Owner, Manager shall be responsible for
the payment of any commissions payable in connection with procuring tenants for
the Property and Manager does hereby indemnify and hold Owner harmless from and
against any and all loss, cost, liability or damage (including attorneys' fees
and expenses incurred in good faith and court costs), incurred by Owner in
connection with any claim for leasing commissions in connection with the
leasing of the Property after the date hereof.
C. TEMPORARY LEASES. If the terms and conditions of any Temporary
Lease are consistent with the budget for Temporary Leases (subject to a variance
of up to ten percent (10%) on the rent terms) and are on the standard form of
lease for Temporary Leases (without material modification thereto) or have
otherwise been approved in writing by Owner, Manager is authorized to execute
such Temporary Leases on behalf of Owner, without seeking Owner's consent
thereto. Manager shall deliver a conformed copy of any such Temporary Lease to
Owner promptly after Owner's request therefor.
D. SMALL SHOP LEASES. If the terms and conditions of any Small Shop
Lease are consistent with the Annual Plan and the Leasing Guidelines (subject to
a variance of up to ten percent (10%) on the rent terms) or have otherwise been
approved in writing by Owner, Manager is authorized to execute such Small Shop
Lease on behalf of Owner, without seeking Owner's consent thereto. Manager
shall deliver a conformed copy of each such Small Shop Lease to Owner within ten
(10) Business Days after Manager's execution thereof.
E. LARGE SHOP LEASES AND NONCONFORMING SMALL SHOP AND TEMPORARY
LEASES. Manager shall obtain the written consent of Owner to the terms and
conditions of any Large Shop Lease or any Small Shop or Temporary Lease which
19
Manager is not authorized to execute on behalf of Owner pursuant to the terms
hereof, by delivering such Lease to Owner together with all reasonably relevant
information. Owner shall grant or deny (with specificity) its approval of the
terms and conditions of any such Lease within ten (10) Business Days after
Owner's receipt of such Lease and relevant information. In the event that Owner
shall fail to notify Manager (by telephone, facsimile or otherwise) of its
approval or rejection within such ten (10) Business Day period, Owner shall be
deemed to have approved such Lease. Upon Owner's approval or deemed approval of
any such Lease, Manager shall be authorized to execute such Lease on behalf of
Owner, and shall deliver a conformed copy thereof to Owner within ten (10)
Business Days after Manager's execution of such Lease.
F. ANCHOR LEASES. Manager shall obtain the written consent of Owner
to the terms and conditions of any Anchor Lease by delivering such Anchor Lease
to Owner together with all reasonably relevant information. Owner shall grant
or deny (with specificity) its approval of the terms and conditions of any
Anchor Lease within twenty-one (21) days after Owner's receipt of such Lease and
relevant information. Manager will deliver each fully negotiated and approved
Anchor Lease to Owner for Owner's execution thereof, and provided that the terms
of any such Anchor Lease are consistent with the terms approved in writing by
Owner, Owner shall execute any such Anchor Lease within fifteen (15) Business
Days after Owner's receipt thereof.
G. LEASING FEE. Except for any amounts to be reimbursed to Manager in
accordance with the terms hereof, Manager shall be entitled to receive fees and
commissions in connection with the negotiation and execution or administration
of Leases in accordance with Section XIII.C as its sole compensation for the
leasing services contemplated by this Article IV.
H. OCCUPANT IMPROVEMENTS. Manager shall review, approve and
coordinate the design of the Occupants' stores to the extent contemplated in the
Occupants' respective Leases, including without limitation obtaining and
reviewing design drawings for Occupants' store fronts and specifications for
Occupants' equipment, and monitoring the progress of Occupants' construction of
standard tenant improvements at the Property.
20
ARTICLE V
TENANT RELATIONS
A. REASONABLE EFFORTS. Manager shall exercise its diligent good faith
efforts consistent with Article IV to maintain good tenant relations with
Occupants of the Property in a reasonable manner.
B. PROCEDURES. Manager shall establish procedures for the prompt
receipt, investigation and handling of Occupant requests and complaints, and
shall request that any and all allegations by Occupants of defaults by Owner or
Manager under the Leases be made in writing.
C. ENFORCEMENT OF LEASES. Manager shall establish procedures
consistent with this Agreement for the collection and receipt of rent and all
other charges due Owner under and in accordance with the Leases, including
procedures for advising Occupants of overdue rent. To the extent commercially
reasonable, Manager shall, on behalf of Owner:
(1) subject to the limitations set forth in Section III.G(4),
engage attorneys experienced in the field of landlord-tenant relations to
prosecute defaults under any of the Leases;
(2) take such other action as may be directed by Owner to enforce
the Leases; and
(3) hire auditors to audit Occupants in order to collect
applicable sales information, and charge the reasonable costs of such auditors
to the Property.
ARTICLE VI
RECEIPTS
A. CASH RECEIPTS. Except as provided in Section B of this Article,
all rent and other monies with respect to the Property received by Manager from
whatever source (the "CASH RECEIPTS") shall promptly be deposited by Manager
into the Owner's Account.
21
B. SECURITY DEPOSIT ACCOUNT. Manager shall deposit into a segregated
interest bearing account (hereinafter referred to as the "SECURITY DEPOSIT
ACCOUNT"), prior to the close of business of the third succeeding Business Day
after receipt by Manager, all security deposits. If any Lease requires the
security deposit or any other payment to be in an interest bearing account,
Manager shall so comply. Manager shall hold all security deposits received in a
form other than cash (e.g., letters of credit or certificates of deposit) in a
safe and secure location. Manager shall from time to time withdraw funds from
any Security Deposit Account (and convert any non-cash security deposits to
cash) and deposit the same in the Owner's Account in accordance with the terms
of the Leases. Manager shall not commingle security deposits with any funds or
other property of Manager.
ARTICLE VII
ANNUAL PLAN
A. INITIAL ANNUAL PLAN. Owner and Manager have agreed upon and
adopted an initial Annual Plan for the remainder of the 1996 Fiscal Year.
B. SUBMISSION OF ANNUAL PLANS. At least thirty (30) days prior to the
beginning of each Fiscal Year Manager shall deliver to Owner for its approval an
Annual Plan for the succeeding Fiscal Year which shall incorporate:
(1) an Operating Budget for that Fiscal Year setting forth, with
reasonable specificity, the estimated Gross Income and Operating Expenses for
the Property and showing ongoing expenses and extraordinary expenses and the
approximate dates upon which funds therefor will be needed;
(2) a capital expenditures budget for that Fiscal Year;
(3) the projected timing and estimated amount(s) of any required
capital advances by Owner for that Fiscal Year;
(4) Manager's marketing and leasing plans for the Property for
the following Fiscal Year, and any modifications to the Leasing Guidelines, if
any, proposed by Manager;
22
(5) the type and coverage levels and premiums of all insurance
for the Property to be maintained during the subsequent Fiscal Year if not
covered by Owner's or its Affiliate's corporate leasing program;
(6) a summary of all agreements relating to the Property between
Manager and any Related Persons of Manager; and
(7) such other matters as Owner may reasonably require to be
included in such Annual Plan from time to time.
The Annual Plan shall be in form and substance reasonably acceptable to Owner,
and shall be submitted together with a report containing recommendations for the
subsequent Fiscal Year in relation to any matters deemed appropriate by Manager
or reasonably requested by Owner.
C. OWNER'S APPROVAL. Owner shall approve or disapprove Manager's
proposed Annual Plan within thirty (30) days after receipt thereof. Owner shall
specify the reasons for any disapproval. Owner's failure to respond within such
thirty (30)-day period shall be deemed to be an approval of the Annual Plan as
submitted. Upon Manager's timely receipt from Owner of a notice of disapproval
or a request for supplemental information regarding the proposed Annual Plan or
any component thereof, Manager shall diligently undertake to modify the
disapproved matters or to provide Owner with such requested supplemental
information. Owner and Manager shall act in good faith in order to agree upon
each Annual Plan and provide for the continued orderly operation of the
Property. Pending the resolution of any such dispute, the submitted Annual Plan
shall control with the sole exception of those specific items not approved by
Owner, and the Annual Plan for the preceding Fiscal Year (exclusive of any line
items relating to expenditures for specified capital works which shall be
established by Owner) shall control with respect to those specific items not
approved by Owner; provided, however, that unless Owner and Manager otherwise
agree:
(1) individual unapproved line items may be increased to such
amount as may be necessary for Non-Discretionary Expenses and any Operating
Expenses incurred in connection with any Emergency;
(2) any other unapproved line item relating to Operating Expenses
payable to third parties who are not Related Persons to Manager, or pursuant to
existing contracts with third parties who are Related Persons to Manager which
are known at that time to have increased or decreased in cost shall be increased
or decreased, as applicable, to the then current level as of the end of such
prior Fiscal Year;
23
(3) any line items relating to expenditures for capital works or
other capital expenditure in the Annual Plan for the preceding Fiscal Year shall
be disregarded except where the capital expenditure approved for the preceding
Fiscal Year remains to be paid in accordance with the approval;
(4) with respect to each other unapproved line item of the
submitted Operating Budget, the amount for such line item set forth in the
Operating Budget for the preceding Fiscal year shall be increased by five
percent (5%).
D. MISCELLANEOUS PROVISIONS. Manager shall operate the Property
in accordance with the applicable Operating Budget with such variances as may be
permitted pursuant to Section VIII.A, or as otherwise expressly provided by this
Agreement. Manager may from time to time recommend to Owner proposed amendments
to the then current Annual Plan or Operating Budget, and upon Owner's written
approval thereof, Manager shall operate the Property in accordance with the
Annual Plan or Operating Budget as so amended. Any inconsistencies between the
terms and conditions of this Agreement and the provisions of any Annual Plan
shall be governed by the provisions of the Annual Plan. Manager shall not be
deemed to be in breach of its obligation to comply with the operating standards
provided in this Agreement to the extent that the failure to comply with such
standards results from insufficient funds due to Owner's refusal to approve any
element of an Annual Plan proposed by Manager, or insufficient funds being on
deposit in the Owner's Account due to withdrawals by Owner, provided that the
foregoing shall not be deemed to relieve Manager from liability for such
obligations if the need for such funds resulted from Manager's gross negligence,
willful misconduct or fraud.
ARTICLE VIII
DISBURSEMENTS
A. PAYMENT OF OPERATING EXPENSES. Subject to the provisions of
Article IX, Manager shall pay, prior to delinquency, during each month of the
term hereof from funds on deposit in the Owner's Account as provided in
Section B of this Article, all Operating Expenses due and payable in accordance
with the Operating Budget without further consent of Owner, and such further
sums as Owner may have directed in writing Manager to pay. In addition, Manager
may pay the following Operating Expenses without obtaining Owner's consent
whether or not the amount thereof is in excess of the respective amounts set
forth therefor in the Operating Budget: (1) all Non-Discretionary Expenses, (2)
Emergency expenditures in accordance with Section XI.D,
24
and (3) Discretionary Expenses exceeding any individual line item in the
Operating Budget, provided that the aggregate amount of such excess
Discretionary Expenses in any Fiscal Year, exclusive of any amounts expended
pursuant to the foregoing clauses (1) or (2), shall not exceed five percent (5%)
of the aggregate amount of all Discretionary Expenses set forth in the Operating
Budget for such Fiscal Year, without Owner's prior written consent.
B. CHECKS. Manager shall designate one or more officers or employees
to sign checks for the payment of Operating Expenses from the Owner's Account.
Except for the drawing of certain checks on the Owner's Account as expressly
authorized herein, Manager shall not have any authority to withdraw funds from,
or otherwise give instructions relating to, the Owner's Account. Owner shall
designate one or more representatives of Owner as signatories on the Owner's
Account which representatives shall have the right to sign checks, draw funds
from and otherwise give instructions relating to the Owner's Account, PROVIDED
that Owner shall not withdraw funds from the Owner's Account which would, in the
reasonable judgment of Manager, be necessary to be retained to ensure that all
Operating Expenses and capital expenses can be paid from time to time as and
when they become due.
ARTICLE IX
ADVANCES FOR OPERATING EXPENSES
A. NOTIFICATION. Pursuant to Section XII.A(16), Manager shall submit
to Owner, on a monthly basis, an estimate of the Operating Expenses and other
items required to be paid by Manager hereunder which will become due during the
ensuing calendar month and the dates on which such amounts will be payable. In
addition, if, during any month within the term of this Agreement, Manager
determines that the balance in the Owner's Account is or will be insufficient to
pay Operating Expenses and any other items required to be paid by Manager
hereunder, Manager shall promptly notify Owner of that event and of the amount
of the deficiency, actual or anticipated. Such notice shall be accompanied by
an explanation for any variance from the Operating Budget, and, unless any such
variance is the result solely of a change of not more than thirty (30) days in
the timing of payment of certain Operating Expenses, or is the result of Owner's
withdrawal of funds from the Owner's Account, then as promptly as practicable
thereafter Manager shall deliver to Owner for Owner's reasonable approval a
revised Operating Budget for the remainder of the applicable Fiscal Year.
25
B. OWNER'S ADVANCES. Promptly after receipt of the Manager's estimate
under Section A of this Article or upon request by Manager, Owner may advance or
cause to be advanced to the Owner's Account such funds as are necessary to pay
Operating Expenses as they become due. Manager's obligation to pay the
obligations of the Property and Owner under this Agreement is conditioned upon
the availability of sufficient funds (from a Person other than Manager) to
perform such obligation, and, Manager shall not be deemed in default of any
provision of this Agreement for its failure to pay or discharge any Operating
Expenses or other Property expenses to the extent the balance of the Owner's
Account is insufficient to pay the same.
C. INDEMNIFICATION. Owner hereby agrees to indemnify, defend and
protect Manager and to hold Manager harmless from and against any and all causes
of action, losses, costs, damages, expenses or liabilities (including reasonable
attorneys' fees and expenses incurred in good faith and court costs) suffered or
incurred by Manager as a result of Owner's failure to advance funds to cover a
deficiency in the Owner's Account if:
(1) the expense relates solely to the Property;
(2) the deficiency in the Owner's Account has not been caused by
Manager's gross negligence, willful misconduct or fraud; and
(3) Manager promptly notified Owner of the existence and the
amount of the deficiency in accordance with Section A of this Article.
ARTICLE X
FIDELITY INSURANCE COVERAGE
Manager and all officers and employees of Manager who may handle or
are responsible for the handling of receipts or disbursements shall be covered
by insurance maintained by Manager, at its sole cost and expense, in an amount
not less than One Million Dollars ($1,000,000) for employee dishonesty coverage
against any and all loss, theft, embezzlement or other fraudulent acts on the
part of Manager or Manager's employees, and not less than One Hundred Thousand
Dollars ($100,000) for money and securities on and off the premises, transit and
depositors forgery coverage, indemnifying Owner, as obligees, against any and
all loss, theft, embezzlement or other fraudulent acts on the part of Manager or
Manager's employees.
26
ARTICLE XI
MAINTENANCE OF THE PROPERTY
A. STANDARD. Manager shall cause the Property and all buildings,
improvements and systems comprising same to be maintained at a standard not less
than the prevailing national standard of industry practice for properties of a
similar type and quality as the Property. In connection therewith, Manager
shall use its diligent good faith efforts to contract in the name and at the
expense of Owner, for all services and utilities necessary for the efficient
maintenance and operation of the Property, as contemplated by the Annual Plan.
Manager shall not enter into any contracts on behalf of Owner without the prior
written consent of Owner unless (1) the payments required to be made by Manager
and/or Owner under such contract, in the aggregate, are contemplated by the
applicable Annual Plan or will be less than or equal to One Hundred Thousand
Dollars ($100,000) per Fiscal Year, subject to annual increase on each January 1
commencing on January 1, 1997 based on the percentage increase in the Index
during the preceding Fiscal Year, and such expense is included within a line
item in the Operating Budget, (2) such contract is for a term no longer than one
year unless such contract may be terminated on no more than thirty (30) days'
notice without charge or penalty, and (3) such contract is not with a Related
Person to Manager, in which event Manager shall be entitled to enter into such
contract without Owner's consent. All work for the maintenance and repair of
the Property shall be performed by independent contractors or affiliates of
Manager, or by Property employees, except to the extent required by Manager's
gross negligence, willful misconduct or fraud.
B. SUPPLIES AND EQUIPMENT. Manager shall, at Owner's expense,
purchase such supplies, equipment and services as are necessary for the
maintenance and operation of the Property; PROVIDED, HOWEVER, that except as
otherwise expressly permitted hereunder no disbursement for this purpose shall
exceed the amount set forth in the Operating Budget (subject to variances
permitted by Section VIII.A) and no such disbursement shall be made unless the
necessary funds are available to Manager from the Owner's Account.
C. ENFORCEMENT OF CONTRACTS. In connection with the maintenance and
operation of the Property, Manager shall take all commercially reasonable steps,
including legal action when authorized in writing by Owner, to enforce all
maintenance, service and supply contracts, guarantees, warranties, bonds and
other third party contractual undertakings, if any.
27
D. EMERGENCIES. In the event of an Emergency, Manager may make such
repairs to the Property and take such other actions as Manager may deem
reasonably necessary irrespective of any cost limitations or other restrictions
imposed by this Agreement, provided, however, that Manager will use its diligent
good faith efforts to notify Owner prior to making any such repair or taking any
such action and shall not take any such action if Owner has otherwise directed
Manager in writing following receipt of such notification. Promptly after an
Emergency, or after knowledge of any conditions which require maintenance or
repair work at a projected cost in excess of the annual amounts authorized in
the Annual Plan, Manager shall deliver a notice thereof to Owner together with
its recommendations with regard thereto.
ARTICLE XII
RECORDS AND REPORTS
A. MONTHLY REPORTS. Manager shall maintain at its offices and deliver
to Owner at Owner's request a report in form reasonably acceptable to Owner
containing the following information with respect to the Property within thirty
(30) days after the end of each calendar month (or within thirty (30) days after
the end of such other period as may be agreed between the parties) (each such
month or other period being referred to herein as a "PERIOD"):
(1) An itemized statement of Cash Receipts for the Period and
cumulatively for the Fiscal Year to date and the amount of all deposits into the
Owner's Account for the Period and cumulatively for the Fiscal Year to date;
(2) An itemized statement of capital receipts for the Period and
cumulatively for the Fiscal Year to date;
(3) An itemized statement showing the Operating Expenses for the
Period and the cumulative Operating Expenses for the Fiscal Year to date;
(4) An itemized statement showing the capital expenditures and
significant maintenance items of a capital nature for the Period and
cumulatively for the Fiscal Year to date;
(5) A list of debtors, aging such debtors as at the end of the
Period and specifying the source of the debt;
28
(6) To the extent such information is available to Manager, a
reconciliation statement for the Period of the Owner's Account and any other
account opened by the Manager for the purposes of this Agreement or maintained
by the Manager in the name of or on behalf of Owner;
(7) A statement of net operating income for the Period and
cumulatively for the Fiscal Year to date;
(8) A statement of variations between the Operating Budget and
the net operating income for the Period and cumulatively for the Fiscal Year to
date;
(9) A statement of variations between the capital budget and
capital expenditures for the Period and cumulatively for the Fiscal Year to
date;
(10) A leasing status report for all Occupants containing a rent
roll, a statement of vacancies in the Property at the end of the Period (showing
the rental value of the premises and the status of any negotiations with
potential Occupants) and any new or renewed Leases executed, pending or under
negotiation and highlighting all changes in the status of any Leases since the
last such monthly report, PROVIDED, HOWEVER, that with respect to Temporary
Leases, Manager need provide in its monthly report only aggregate amounts for
income and expenses and delineate any in-line space occupied under any Temporary
Leases;
(11) Details of rent and fee reviews negotiated during the Period
under all Leases other than Temporary Leases;
(12) A statement of the respective sales figures achieved by each
Occupant (except for Occupants under Temporary Leases) during the Period and
during the current Fiscal Year to date, including comparisons with the same
period in the previous Fiscal Year; and, to the extent that any Occupants are
required for that Period to, and in fact do, deliver audited statements under
their Leases or Manager has carried out an audit as permitted under such Leases,
an audited statement of such Occupants' respective sales figures;
(13) A statement containing full details of any Emergency
occurring during the Period including details of the action taken by Manager
under Article XI and an itemized schedule of costs incurred by Manager in
respect of the Emergency;
29
(14) A management report summarizing significant events or
activities affecting the Property which occurred during the Period or which are
likely to occur in subsequent months;
(15) An estimate of any Operating Expenses and other items
required to be paid by Manager hereunder becoming due during the ensuing month
and the dates on which such amounts will become due;
(16) For every three-month period, a report of the amount spent
on marketing, advertising and promotion of the Property and Occupants'
respective businesses in the immediately preceding three-month period; and
(17) Any other information or statements reasonably requested by
Owner from time to time.
B. FINANCIAL STATEMENTS. (1) Manager shall maintain or cause to be
maintained accurate and complete financial accounts (including the appropriate
ledgers and journals) and supporting documents (including invoices and receipts)
for the Property showing assets, liabilities, income, operations, transactions
and the financial position of the Property to enable the financial statements
referred to in Section B(2) of this Article to be properly and efficiently
prepared (including, without limitation, by maintaining proper computer programs
and systems), and must keep "hard" copies of such financial accounts and
supporting documents at its principal office, or otherwise ensure that such
copies are readily available, for at least seven (7) years. Owner acknowledges
that (unless Owner shall have contributed to the cost of acquiring or developing
such software) the computer software maintained by Manager for the purposes of
this Section B belongs to Manager if the software is used by Manager or Related
Persons in connection with other shopping centers or assets.
(2) Manager shall deliver to Owner, within thirty (30) days after
the end of each fiscal quarter, except for the last quarter of any Fiscal Year
in which case the applicable period shall be sixty (60) days after the end of
such Fiscal Year:
(i) for the periods ending March 31, June 30 and September 30 in
the relevant Fiscal Year, unaudited financial statements for the Property for
the respective periods and for the Fiscal Year to date; and
(ii) for the period ending December 31, in the relevant Fiscal
Year, unaudited financial statements for the Property for the respective period
and for the Fiscal Year to date,
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in each case including, without limitation, a profit and loss statement, a
balance sheet and reconciliations for the Owner's Account and any other account
operated by Manager for the purposes of this Agreement.
(3) The financial reports delivered pursuant to Section B(2) of
this Article shall be accompanied by:
(i) a revised projection for the balance of the Fiscal Year
comparing the Property's position with the Annual Plan, taking into account the
actual Gross Income, Operating Expenses and capital expenses received from or
incurred for the Property to the relevant date and of the estimated sums for the
balance of the Fiscal Year of anticipated Operating Expenses, capital expenses,
Gross Income and capital receipts, together with an explanation of material
variances from the Annual Plan;
(ii) a revised statement of anticipated events or activities
affecting the Property which are expected to take place;
(iii) such other information, including, without limitation,
such reports as may be required by any lender or mortgagee of Owner, as Owner
may reasonably request in good faith concerning the Property; and
(iv) for the period ending December 31, in each Fiscal Year
only, an inventory of all equipment, machinery and other property owned by Owner
showing their current depreciated values as at December 31, of the relevant
Fiscal Year for tax purposes.
(4) All financial reports prepared pursuant to this Article
shall be prepared on a basis of presentation as agreed upon by Owner and Manager
from time to time.
C. RECORDS. (1) Manager shall maintain proper and sufficient
management accounts and records for the Property to enable Manager to
efficiently perform its obligations under this Agreement and to enable Owner to
promptly obtain any information concerning the Property required by Owner, and
Manager shall keep such management accounts and records at the Property or
another location in the continental United States reasonably approved by Owner
for at least seven (7) years. All records maintained by Manager pursuant to
this Agreement shall be the property of Owner and shall be delivered to Owner
upon the termination of this Agreement or, at Owner's request, prior to disposal
by Manager. Manager shall maintain files with the
31
originals, or if the originals have been delivered to Owner, copies of all
Leases and other material contracts and agreements relating to the Property.
(2) Without limiting Section C(1) above, Manager shall keep or
cause to be kept the following records with respect to the Property:
(i) a rent roll of Occupants containing all relevant information
in relation to each such Occupant;
(ii) a record of all material contracts or other material
agreements made with contractors or consultants containing details of the
essential terms of such contracts or arrangements;
(iii) a register of depreciable improvements and equipment
showing the cost, date of purchase and current depreciated value of each item
shown in the books of account kept by Manager for Owner;
(iv) a record of all insurance claims pending, current or
contemplated in respect of any insured risk incurred as a consequence of the
ownership, use, operation or occupation of the Property made or managed by
Manager on behalf of Owner showing the status of each claim (a loss run prepared
by a third party insurance adjustor will satisfy this requirement);
(v) an updated record of the total benefits and entitlements of
all Property employees; and
(vi) a register of all complaints received concerning the
Property from all Persons including, without limitation, Occupants, customers,
visitors, authorities, and neighboring residents, owners and occupiers, and the
responses made thereto, except those complaints which, in Manager's reasonable
opinion, do not require further action.
D. PRODUCTION OF RECORDS AND INFORMATION. Subject to all other
provisions of this Agreement, Manager shall:
(1) if requested by Owner produce such financial accounts, books
of account, records or information in relation to the Property to any one or
more of Owner's appraisers, accountants, lenders or other agents as Owner may
reasonably require and take or permit those Persons to take photocopies of the
books of account and records or information at the expense of such Persons;
32
(2) if requested by Owner, permit Owner or its agents to carry
out an independent audit or inspection of Manager's books of accounts, records
or information for the Property or Owner at Owner's cost, unless the amount of
Gross Income or total Operating Expenses for any Fiscal Year as determined by
any such audit or inspection differs by more than five percent (5%) from the
amount of Gross Income or total Operating Expenses for such Fiscal Year recorded
in Manager's books and records, in which case Manager shall be responsible for
the cost of such audit or inspection; and
(3) from time to time, as may be reasonably appropriate in order
to give Owner time to make any necessary or appropriate decisions in response
thereto, provide information and recommendations to Owner as to:
(i) market conditions and trends affecting the Property;
(ii) changes or proposed changes to Legal Requirements affecting
the Property (including, without limitation, reassessments carried out by any
responsible authority) and any changes or proposed changes to practices or
procedures adopted by a majority of property owners or managers or both
concerning the prevailing national standard of industry practice with respect to
the management, operation and leasing of properties of a type and quality
similar to the Property of which Manager is aware;
(iii) any proposed or recommended amendments to the Standard
Form of Shop Lease or other standard documents for the Property, the rules for
the Property or the memorandum or articles of association of any committee,
merchants association or similar body appointed to operate and administer the
Media Fund;
(iv) any improvements which may be made to the Property, this
Agreement, the procedures employed by Manager for carrying out its obligations
under this Agreement, the Operating Budget, the capital budget or any other
matter to improve the value, economical operation and efficiency or appearance
of the Property;
(v) the occupancy mix within the Property;
(vi) the type of insurance maintained for the Property, the
coverage level of insurance under any policy effected for the Property and
alterations to the terms of any insurance policy held by or on behalf of Owner
for the Property; and
(vii) any other matters which should be disclosed to Owner in
the proper performance of its obligations under this Agreement or which may be
reasonably requested by Owner from time to time, including, without limitation,
any additional
33
information or financial reports and statements that Owner may reasonably
require to provide to its lenders, bankers, partners, shareholders, joint
venturers or any similar Person, PROVIDED that Owner shall be responsible for
any additional costs of Manager in providing such additional information or
reports.
E. TAX RETURNS. Within ninety (90) days after the end of each Fiscal
Year, Manager will provide the information relating to the Property necessary to
complete the tax returns of Owner and will cooperate with Owner and its
attorneys, accountants and tax advisers with respect to the completion thereof
in good faith.
F. GENERAL QUALIFICATIONS. Owner acknowledges that Manager and its
Affiliates manage shopping centers other than the Property on behalf of
proprietors other than Owner (collectively, "OTHER MANAGEMENT ACTIVITIES").
Owner further acknowledges that:
(1) in order to undertake effectively the Other Management
Activities in accordance with their respective obligations under agreements
relating to those Other Management Activities, Manager and Related Persons
employ reasonable standardized and uniform information and accounting procedures
and systems (collectively, the "MANAGEMENT INFORMATION SYSTEMS"); and
(2) the obligations of Manager under this Agreement to provide
information (I.E., additional information that is not specifically described in
this Agreement and which is requested by Owner pursuant to this Article XII,
pertaining to the management and operations of the Property (collectively, "
OWNER'S ADDITIONAL INFORMATION REQUIREMENTS")) are not intended to operate in
such a way as to cause unreasonable disruption to the Management Information
Systems or to require Manager to incur unreasonable costs and expenses in
obtaining and adapting the Management Information Systems in order to provide
Owner's Additional Information Requirements. Notwithstanding the foregoing, and
any other provisions of this Agreement, unless any such requested information is
Confidential Information as defined below, Manager will comply with Owner's
Additional Information Requirements and will supply the information requested;
PROVIDED, however, that Owner will reimburse Manager for the reasonable direct
additional costs that Manager demonstrates Manager or any Affiliate incurred in
complying with such request, if it is not common practice for managers of
regional malls of a kind similar to the Property to provide the information
requested pursuant to the Owner's Additional Information Requirements.
Notwithstanding anything to the contrary contained in this Agreement,
in no event shall Manager be obligated to provide to Owner any information,
document or
34
report which (i) is prepared for the purposes of, or any minutes of proceedings
of, the board of directors of Manager or any Affiliate of Manager, (ii) directly
and primarily relates to commercially confidential information concerning other
shopping centers managed by any Affiliates of Manager, or (iii) is prepared for
the direct and primary purposes of, or constitutes a report to the Westfield
Finance and Management Committee or other corporate management committee
performing similar functions (collectively, "CONFIDENTIAL INFORMATION").
Notwithstanding anything to the contrary contained herein, Owner shall
in no event acquire any rights with respect to Manager's Management Information
Systems or Manager's plans, programs or processes for the management and
operation of the Property.
ARTICLE XIII
COSTS AND EXPENSES - COMPENSATION
A. MANAGEMENT FEE. Manager shall be entitled to a management and
leasing fee (the "MANAGEMENT FEE") for rendering the services herein required
during the term of this Agreement equal to five percent (5.0%) of all minimum,
fixed and percentage rent (including without limitation (1) proceeds from any
litigation wherein damages equivalent to or based upon rent payable to Owner
from a defaulted Occupant are recovered, exclusive of interest, (2) all security
deposits which have been applied to rent payable to Owner, and (3) all proceeds
from loss of rents insurance maintained by Owner relating to the Property but
excluding income from specialty leasing which is paid to Owner on a net basis)
under all Leases at the Property during each Fiscal Year (or the pro rata
portion of such amounts for any partial Fiscal Year during the term of this
Agreement). Subject to adjustment as hereinafter provided, such fee shall be
payable monthly by Owner in arrears at the end of each month during the term of
this Agreement based on the minimum, fixed and percentage rent for such month as
shown in the most recent leasing status report delivered pursuant to
Article XII.A(10). Manager is hereby authorized to pay to itself on account of
the Management Fee each such monthly installment from the Owner's Account. The
Management Fee shall be adjusted on the following basis so that the aggregate
Management Fee equals the amount set forth in this Section A: (1) monthly on an
interim basis as soon as practicable after Manager has delivered to Owner the
financial statements specified in Section XII.A for such month, (2) quarterly on
an interim basis as soon as is practicable after the delivery to Owner of the
quarterly financial statements specified in Section XII.B(2)(i), and (3)
annually on a final basis as soon as is practicable after the delivery to Owner
of the annual financial
35
statements specified in Section XII.B(2)(ii). Promptly after each such
adjustment, Owner or Manager, as the case may be, shall pay to the other the
amount of the applicable shortfall or overpayment of the Management Fee as
determined by such adjustment. In the event that there are insufficient funds
in the Owner's Account to pay the Management Fee due for any month during the
term of this Agreement, then if Owner does not pay the amount of such Management
Fee within ten (10) Business Days after receipt of notice of such insufficiency,
such unpaid Management Fee shall bear interest at a rate equal to the lesser of
(1) the Prime Rate plus two percent (2%), compounded monthly, or (2) the highest
rate allowable by law, for the period from the date such Management fee was due
until the date that it is paid in full by Owner to Manager. With respect to any
partial Fiscal Year during the term of this Agreement, for the purpose of
calculating the Management Fee, the percentage rent shall be allocated to the
portion of the year during which the Management Fee is payable by multiplying
(1) the amount of percentage rent received from the Property for the entire
applicable Fiscal Year, by (2) a fraction, the numerator of which shall be the
applicable Occupant's gross sales upon which the percentage rent is calculated
with respect to the portion of such Fiscal Year during which this Agreement was
in effect, and the denominator of which shall be such gross sales of the
applicable Occupants with respect to such entire Fiscal Year.
B. EXPENSE REIMBURSEMENT. In addition to the Management Fee specified
in Section A above, Manager shall be entitled to reimbursement as an Operating
Expense of the Property, for those costs and expenses relating to the
management, operation and leasing of the Property incurred by it and
specifically authorized for reimbursement under the terms of this Agreement.
Manager shall not be obligated to incur or bear any expenses of the Property
except those reimbursable under the terms of the immediately preceding sentence.
C. LEASING. Manager shall be entitled to receive from Owner (1) a
lease preparation fee of Seven Hundred and Fifty Dollars ($750) per Lease and
(2) to the extent not recovered from any Occupant, a plan review fee of One
Thousand Dollars ($1,000) per Occupant, such amounts to be subject to annual
increase from and after January 1, 1997 based on the annual increase in the
Index during the preceding Fiscal Year.
36
ARTICLE XIV
INSURANCE
Unless such insurance is maintained by Owner and its Affiliate as part
of a corporate insurance program, Manager shall procure and maintain all
insurance required pursuant to the applicable Annual Plan or any mortgage or
deed of trust encumbering the Property, and shall procure such insurance in such
amount and from such companies as may be approved by Owner in the Annual Plan or
otherwise authorized by Owner in writing. Manager shall comply with all
Insurance Requirements in the management and operation of the Property and shall
use its diligent good faith efforts to cause all Occupants to comply with any
applicable Insurance Requirements.
ARTICLE XV
ALTERATIONS
Manager shall make no changes or alterations in or additions to the
Property or any part thereof of a material nature without the prior written
consent of Owner, except as otherwise expressly set forth in the Annual Plan.
Except with respect to any expansion, redevelopment or refurbishment, or
preliminary services relating thereto, performed pursuant to a Development
Agreement for the Property, Manager shall supervise the performance of all
repairs, renovations and alterations performed at the Property, and shall
monitor all Occupant alterations of the Property on behalf of Owner in such a
manner as may be reasonably required of Manager. Manager shall promptly report
any liens on the Property to Owner.
ARTICLE XVI
TERMINATION
A. TERM. The term of this Agreement shall commence on the date hereof
and shall continue until terminated pursuant to this Article.
B. NON-CURABLE TERMINATING EVENTS. (1) Owner may terminate this
Agreement on not less than 15 days written notice to Manager upon the occurrence
of any of the following events:
37
(i) the Bankruptcy of Manager;
(ii) Owner sells or transfers 100% of its interest in the
Property (other than to a Related Person), whether directly or indirectly;
(iii) the aggregate direct and indirect interest of Westfield
America Trust, a public unit trust organized under the laws of New South Wales
and Westfield Holdings Limited, a company incorporated in the State of New South
Wales ("WHL") or their respective Affiliates (including any investment vehicle
sponsored, promoted or managed by any such entity) in CenterMark is less than
20%;
(iv) any of the Other Management Agreements are validly
terminated by Owner or one of its Affiliates in accordance with their terms by
reason of Manager's material default thereunder;
(v) the foreclosure by any mortgagee upon the Property or the
taking of possession thereof by deed-in-lieu of foreclosure, except as otherwise
agreed in writing by Manager and such Mortgagee;
(vi) an act of fraud, embezzlement or theft constituting a
felony against Owner or its Affiliates which causes it material injury is
perpetrated by Manager or by Developer or by Advisor in its corporate capacity
(as distinguished from the acts of any employees of such entities which are
taken without the approval or complicity of the Board of Directors of Manager's
managing general partner) under this Agreement, the Advisory Agreement, the
Development Framework Agreement, any Development Agreement or any Leasing
Agreement; or
(vii) the Property or a substantial part of the Property is
damaged or destroyed where the Owner has determined not to rebuild or
reconstruct, provided, however, that in such event Manager will continue to
operate the Property for a reasonable period of time until Owner winds down the
operation of the Property, and provided further that (i) this Agreement shall be
automatically reinstated if, within twenty-four (24) months after the date of
such damage or destruction, Owner determines to rebuild the Property or develop
a new shopping center as a replacement for the Property, and (ii) in the case of
the destruction of only a substantial part of the Property, if Owner elects to
continue the operation of the remaining portion of the Property, this Agreement
shall remain in effect with respect to the portion of the Property to be
operated.
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(2) This Agreement shall terminate if Manager shall notify Owner
that management of regional shopping centers shall cease to be one of the
principal business undertakings of WHL in the United States, PROVIDED that this
Agreement shall continue for a period of 180 days after delivery of such notice
to Owner if Owner shall be reasonably satisfied with Manager's ability to
continue managing the Property during such period.
C. CURABLE DEFAULTS. (1) Either Owner or Manager may terminate this
Agreement by written notice to the other party in the event that the other party
shall default (the "Defaulting Party") in the performance or observance of any
material term, condition or covenant contained in this Agreement in respect of
the Property not falling under Section XVI.B or shall fail to perform or observe
the same in accordance with the required standard under this Agreement and such
default shall continue for a period of thirty (30) days after written notice
thereof shall have been received by the non-defaulting party (the
"Non-Defaulting Party") specifying such default and requesting that the same be
remedied in such thirty-day period, provided that a ten (10) day period shall
apply with respect to any failure to make a monetary payment hereunder (a
"DEFAULT NOTICE").
The Defaulting Party shall be deemed to have complied with a Default
Notice given under this Section XVI.C if the default (other than a monetary
default) is such that it cannot reasonably be remedied within thirty (30) days
and the Defaulting Party shall, in good faith, have commenced to remedy the
default specified therein as soon as is practicable after receiving such Default
Notice, and, thereafter shall have diligently prosecuted the cure to its
completion.
(2) A Non-Defaulting Party shall have the right to terminate this
Agreement based on a default by a Defaulting Party under this Section XVI.C only
if such default is determined to constitute an Adjudicated Default as provided
below. If a Non-Defaulting Party believes that the other party has defaulted in
the performance of a material obligation under this Agreement, and that such
default remains uncured following the delivery of a default notice and the
expiration of the applicable cure period provided in Section XVI.C(1), then such
Non-Defaulting Party may deliver a written notice to the other party setting
forth its intention to terminate this Agreement pursuant to this Section (a
"TERMINATION NOTICE"). If the Defaulting Party desires to contest such
termination, then the Defaulting Party shall so notify the Non-Defaulting Party
within ten (10) Business Days after receipt of the Termination Notice, and a
senior officer of each party shall meet promptly and negotiate in good faith in
order to resolve such dispute. If such senior officers are unable to resolve
the dispute within thirty (30) days after the Defaulting Party's receipt of the
Termination Notice, then the Defaulting Party may
39
institute an action in the appropriate judicial forum within thirty (30) days
thereafter to determine whether the Defaulting Party has defaulted in the
performance of a material obligation hereunder. An "ADJUDICATED DEFAULT" shall
be deemed to have occurred if:
(i) the parties' respective senior officers are unable to
resolve such dispute and the Defaulting Party does not institute a judicial
proceeding within sixty (60) days after it's receipt of a Termination Notice;
(ii) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of a material obligation
hereunder, and the Defaulting Party does not deliver a notice of appeal to the
appropriate parties within the applicable appeal period; or
(iii) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of a material obligation
hereunder and an appeal is perfected by the Defaulting Party within the
applicable appeal period, and a second court renders a final decision finding
that the Defaulting Party has defaulted in the performance of a material
obligation hereunder.
D. MANAGER'S RIGHTS AND OBLIGATIONS ON TERMINATION. Upon termination
of this Agreement Manager shall:
(1) promptly surrender and deliver to Owner any space in the
Property occupied by Manager and pay to Owner or as Owner shall direct all Gross
Income and other monies related to the Property on hand and all moneys due to
Owner under this Agreement including any moneys received after termination;
(2) promptly deliver to Owner originals in the possession of or
reasonably available to Manager, its Affiliates, agents or employees or, if such
originals are not in the possession or reasonably available to Manager, copies
of all contracts, documents, reports, market studies, files, funds, surveys,
insurance policies, papers, Leases, keys, records and other property pertaining
to this Agreement or to the Property in the possession of or reasonably
available to Manager, its Affiliates, agents or employees;
(3) furnish all such information and take all such action as
Owner may reasonably require in order to effect an orderly and systematic
termination of Manager's duties and activities hereunder and the appointment of
a substitute manager;
40
(4) as soon as is reasonably practicable, deliver to Owner, at
Owner's expense, audited financial statements reflecting the balance of all
Gross Income, all capital contributions, all Operating Expenses, all capital
expenses and the credit balance of all accounts maintained by the Manager under
this Agreement as at the date of termination;
(5) if requested by Owner, at Owner's cost, promptly give written
notice to the Occupants, in a form reasonably satisfactory to Owner, that
Manager no longer manages or is otherwise associated with the Property;
(6) immediately assign and transfer all accounts maintained by
Manager under this Agreement for Owner and assign all contracts with respect to
the Property to a person designated by Owner or as otherwise directed by Owner
and such person shall assume all of Manager's obligations under such contracts;
and
(7) be paid all Management Fees earned under the provisions of
this Agreement prior to such termination. Manager shall not be obligated to
refund any Management Fees earned and received from any month prior to the month
in which this Agreement is terminated, provided, however, that Manager shall
refund to Owner any overpayments of the Management Fee previously paid to
Manager.
ARTICLE XVII
DELIVERY OF DOCUMENTS AND NOTICES
In order to be deemed effective, all documents to be delivered and all
notices, approvals, authorizations and/or consents to be given or obtained by
any party to this Agreement shall be in writing and shall be given by personal
delivery, or sent by express mail or nationally recognized overnight courier, or
by registered or certified mail, postage prepaid, return receipt requested, or
by facsimile (with confirmed receipt) addressed as follows:
41
To Manager: CenterMark Management Company
c/o Westfield Corporation, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Executive Director
Fax: ▇▇▇-▇▇▇-▇▇▇▇
To Owner: CenterMark Properties, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: ▇▇▇-▇▇▇-▇▇▇▇
The above addresses may be changed for future communications or delivery of
notice hereunder by giving notice of such change to the others listed above in
the manner prescribed by this Article. All notices shall be deemed effective
when received by all applicable parties at the addresses set forth above (as
such addresses may be changed by the parties in accordance herewith).
Notwithstanding the foregoing, no notice shall be deemed ineffective because of
any party's refusal to accept delivery at the address specified for the giving
of such notice in accordance herewith.
ARTICLE XVIII
MISCELLANEOUS PROVISIONS
A. LAW TO APPLY. This Agreement is made in and shall be governed by
and construed in accordance with the laws of the State of New York.
B. INCORPORATION BY REFERENCE. Exhibit A, as attached hereto, is
hereby expressly incorporated herein to the same extent and with the same effect
as if fully set out herein.
C. SECTION HEADINGS AND REFERENCES. Headings at the beginning of
Articles and Sections of this Agreement are solely for the convenience of the
parties and are not a part of this Agreement. All references herein to specific
Articles or Sections are references to the applicable Articles or Sections of
this Agreement, unless otherwise indicated.
42
D. TERMS. When required by the context, whenever the singular number
is used in this Agreement, the same shall include the plural, and the plural
shall include the singular, and the masculine gender shall include the feminine
and neuter genders.
E. WAIVER. Any waiver, express or implied, by a party hereto, of any
breach of this Agreement by another party or parties, shall not be considered a
waiver of any subsequent breach.
F. SEVERABILITY. The invalidity or unenforceability of any portion of
this Agreement shall not render the remainder hereof invalid or unenforceable.
G. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, with the same effect as if all parties hereto had all signed
the same signature page. Any signature page of this Agreement may be detached
from any counterpart of this Agreement without impairing the legal effect of any
signatures thereon and may be attached to another counterpart of this Agreement
identical in form hereto but having attached to it one more additional signature
pages.
H. TIME. Time is of the essence of this Agreement and each of its
provisions.
I. INCORPORATION OF PRIOR AGREEMENTS. This Agreement contains all of
the agreements of the parties hereto with respect to the matters contained
herein, and no prior agreement or understanding pertaining to any such matter
shall be effective for any purpose. No provision of this Agreement may be
amended or added to except by an agreement in writing signed by the parties
hereto.
J. FURTHER ASSURANCES. Each party hereto hereby agrees to execute and
deliver any and all instruments, agreements and other documents reasonably
necessary to effect the acts contemplated hereby, to the extent required by this
Agreement.
K. ATTORNEYS' FEES. If any party commences an action against another
to enforce any of the terms hereof or because of the breach by any party of any
of the terms hereof, then the successful party after final judgment shall be
entitled to receive from the other party its reasonable attorneys' fees and
other costs and expenses incurred in connection with the prosecution or defense
of such action.
43
L. PERSONAL AGREEMENT. This Agreement shall be binding on the parties
hereto. No assignment by Manager shall be effective for any purpose without the
written consent and approval of Owner; PROVIDED, however, that notwithstanding
the foregoing provisions of this Section L, Manager shall have the right to
assign its rights and obligations under this Agreement without Owner's prior
consent to any Affiliate of WHL as long as the transferee Person assumes the
obligations and liabilities of Manager hereunder from and after the effective
date of such transfer. The transfer of an interest in Manager or any
constituent partner of Manager shall not be deemed an assignment of this
Agreement so long as WHL continues to own, directly or indirectly, at least a
50% voting and economic interest in Manager. Upon any such transfer, Manager
shall be released from all liabilities arising hereunder from and after the
effective date of such transfer. Manager agrees that it will not subcontract
all or substantially all of its management responsibilities under this
Agreement, except to an Affiliate of WHL, without the written consent and
approval of Owner. Any attempted assignment or sub-contract in violation of the
provisions of this Section L shall be void AB INITIO.
M. NO PARTNERSHIP. Nothing contained in this Agreement shall
constitute Owner and Manager as partners with one another. Subject to the terms
and provisions of this Agreement, each of the parties shall have the right to
engage in other businesses and business transactions and the other party shall
have no right or interest therein.
N. AMENDMENTS. No amendment to this Agreement shall be effective
unless signed by the party to be charged with any additional responsibilities
thereunder.
O. INDEMNITIES. (1) Manager hereby agrees to indemnify, defend and
protect Owner and its respective officers and directors (such persons
collectively called the "INDEMNIFIED PARTIES" for the purposes of this Section
XVIII.O(1)), and hold each of the Indemnified Parties harmless against all
losses, damages, costs, expenses and liabilities (including, without limitation,
attorneys' fees and expenses incurred in good faith and court costs) incurred by
the Indemnified Parties by reason of any claim or demand being made upon or any
action taken against any of the Indemnified Parties arising from Manager's gross
negligence or willful misconduct or fraud with respect to its duties and
obligations under this Agreement. The Indemnified Parties shall, in good faith,
endeavor to notify Manager in writing as to every such claim, demand or action
against the Indemnified Parties within ten (10) Business Days after the
Indemnified Parties become aware that such claim or demand has been made or such
action has been taken. A failure to notify Manager shall not limit Manager's
liability under this Section XVIII.O(1) to the extent that such failure to
notify does not adversely affect Manager's rights with respect to such claim.
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(2) Owner hereby agrees to indemnify, defend and protect Manager and
each of Manager's constituent partners and their respective officers and
directors (each such person collectively called the "INDEMNIFIED PARTIES" for
the purposes of this Section XVIII.O(2)), and hold each of the Indemnified
Parties harmless against all losses, damages, costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses incurred in good
faith and court costs) incurred by the Indemnified Parties by reason of any
claim or demand being made upon or any action taken against any of the
Indemnified Parties arising from (i) any gross negligence or willful misconduct
or fraud of Owner, except to the extent Manager or its Affiliate is responsible
for such gross negligence or willful misconduct, or (ii) any act taken or
omission made by Manager in the performance of its obligations under this
Agreement, which act or omission was not the result of Manager's gross
negligence or willful misconduct or fraud. The Indemnified Parties shall, in
good faith, endeavor to notify Owner in writing as to every such claim, demand
or action against the indemnified parties within ten (10) Business Days after
the Indemnified Parties become aware that such claim or demand has been made or
such action has been taken. A failure to notify Owner shall not limit Owner's
liability under this Section XVIII.O(2) to the extent that such failure to
notify does not adversely affect Owner's rights with respect to such claim.
(3) No person engaged as an independent contractor by Owner or Manager
shall be considered an employee, servant, agent or other Person that Owner or
Manager (as the case may be) shall be obligated to indemnify for the purposes of
this Section XVIII.O. Manager shall use its reasonable efforts to cause Owner
to be listed as an indemnified party in any indemnity contained in an agreement
with an independent contractor. The indemnity contained in this Section XVIII.O
made by Owner and Manager shall survive the termination of this Agreement.
P. OBJECT OF AGREEMENT. The object of this Agreement is the provision
of services by Manager to Owner, and no tangible property will be conveyed other
than tangible property incidental to the provision of such services.
Q. OWNER'S LENDERS AND/OR PURCHASERS. (1) Manager shall, at the
request of Owner, enter into agreements with lenders providing financing to
Owner encumbering all or any party of the Property, pursuant to which agreements
Manager (i) recognizes the collateral rights, if any, of such lender(s) with
respect to this Agreement, and (ii) acknowledges that if any such lender
forecloses upon Owner's interest in this Agreement, then such lender or its
assignee shall not be liable for any act or omission of Owner under this
Agreement prior to the date of such foreclosure or assignment; provided that
Manager shall not be obligated to enter into any such agreement that
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materially increases Manager's obligations or materially diminishes Manager's
rights hereunder.
(2) Manager shall, at Owner's request, cooperate with and provide
information to any lender(s) providing financing to Owner or to any potential
purchaser(s) of the Property regarding actual facts and matters within the
knowledge of Manager's personnel engaged in the management of the Property.
R. CONFIDENTIALITY. (a) Manager agrees to hold in confidence and not
to use or disclose to others any confidential or proprietary information of
Owner heretofore or hereafter disclosed to Manager ("Owner Confidential
Information"), including, but not limited to, any data, information, plans,
programs, processes, costs, operations or the names of any tenants which may
come within the knowledge of Manager in the performance of, or as a result of,
its services, except where required by judicial or administrative order, or
where Owner specifically gives Manager written authorization to disclose any of
the foregoing to others or such disclosure hereunder. If Manager is required by
a judicial or administrative order to disclose any Owner Confidential
Information, Manager will promptly notify Owner thereof, consult with Owner on
the advisability of taking steps to resist or narrow such request and cooperate
with Owner in any attempt it may make to obtain an order or other assurance with
confidential treatment will be accorded to the Owner Confidential Information
disclosed.
(b) Owner agrees to hold in confidence and not to use or disclose to
others any confidential or proprietary information of Manager heretofore or
hereafter disclosed to Owner ("Manager Confidential Information"), including,
but not limited to, any information, plans, programs, processes, costs or
operations which may come within the knowledge of Owner as a result of the
services performed by Manager, except where required by judicial or
administrative order, or where Manager specifically gives Owner written
authorization to disclose any of the foregoing to others or such disclosure
hereunder. If Owner is required by a judicial or administrative order to
disclose any Manager Confidential Information, Owner will promptly notify
Manager thereof, consult with Manager on the advisability of taking steps to
resist or narrow such request and cooperate with Manager in any attempt it may
make to obtain an order or other assurance with confidential treatment will be
accorded to the Manager Confidential Information disclosed.
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to
be executed as of the date first above written.
OWNER: CENTERMARK PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
MANAGER: CENTERMARK MANAGEMENT
COMPANY
By: Westfield Services, Inc.,
a general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Executive Vice President
47
EXHIBIT A
OTHER MANAGEMENT AGREEMENTS
Separate Management Agreements, each dated as of the date hereof, with respect
to each of the following shopping centers:
Enfield Square
Connecticut Post Mall
Trumbull Mall
South Shore Mall
Eagle Rock Plaza
Eastland Shopping Center
Mid Rivers Mall
▇▇▇▇▇▇▇▇▇▇ Mall
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ Center