EXHIBIT 10.3
AMENDED AND RESTATED PROPERTY MANAGEMENT AGREEMENT
This AMENDED AND RESTATED PROPERTY MANAGEMENT AGREEMENT (this
"Management Agreement") is made and entered into as of the ___ day of ________,
2004, by and among ▇▇▇▇▇▇▇ COMMERCIAL PROPERTIES REIT, a Maryland real estate
investment trust ("▇▇▇▇▇▇▇ REIT"), ▇▇▇▇▇▇▇ REIT OPERATING PARTNERSHIP, L.P., a
Delaware limited partnership (sometimes referred to herein as "▇▇▇▇▇▇▇ OP" or
"Owner"), and ▇▇▇▇▇▇▇ MANAGEMENT, L.P., Texas limited partnership (the
"Manager").
WHEREAS, ▇▇▇▇▇▇▇ OP was organized to acquire, own, operate, lease and
manage real estate properties on behalf of ▇▇▇▇▇▇▇ REIT; and
WHEREAS, ▇▇▇▇▇▇▇ OP and Manager previously entered into that certain
Property and Partnership Management Agreement dated as of January 28, 1999 (the
"Original Management Agreement"); and
WHEREAS, ▇▇▇▇▇▇▇ REIT intends to raise money from the sale of its
common shares of beneficial interest to be used, net of payment of certain
offering costs and expenses, for investment in the acquisition or construction
of income-producing real estate and other real estate-related investments
(including the making or purchase of mortgage loans), some or all of which are
to be acquired and held by Owner (as hereinafter defined) on behalf of ▇▇▇▇▇▇▇
REIT; and
WHEREAS, Owner intends to continue to retain Manager to manage and
coordinate the leasing of certain of the real estate properties acquired by
Owner under the terms and conditions set forth in this Management Agreement; and
WHEREAS, the parties desire to amend and restate the Original
Management Agreement in its entirety in accordance with the terms and provisions
hereof;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound hereby, do
hereby agree, as follows:
ARTICLE I
DEFINITIONS
Except as otherwise specified or as the context may otherwise require,
the following terms have the respective meanings set forth below for all
purposes of this Management Agreement, and the definitions of such terms are
equally applicable both to the singular and plural forms thereof:
1.1 "Affiliate" means, with respect to any Person, (i) any Person directly or
indirectly owning, controlling or holding, with the power to vote, 10% or more
of the outstanding voting securities of such other Person; (ii) any Person 10%
or more of whose outstanding voting securities are directly or indirectly owned,
controlled or held, with the power to vote, by such other Person; (iii) any
Person directly or indirectly controlling, controlled by or under common control
with such other Person; (iv) any executive officer, director, trustee, trust
manager, or general partner of such other Person; and (v) any legal entity for
which such Person acts as an executive officer, director, trustee, trust
manager, or general partner.
1.2 "Gross Revenues" means all amounts actually collected as rents or other
charges for the use and occupancy of the Properties, but shall exclude interest
and other investment income of Owner and proceeds received by Owner for a sale,
exchange, condemnation, eminent domain taking, casualty or other disposition of
assets of Owner.
1.3 "Improvements" means buildings, structures, equipment from time to time
located on the Properties and all parking and common areas located on the
Properties.
1.4 "Intellectual Property Rights" means all rights, titles and interests,
whether foreign or domestic, in and to any and all trade secrets, confidential
information rights, patents, invention rights, copyrights, service marks,
trademarks, know-how, or similar intellectual property rights and all
applications and rights to apply for such rights, as well as any and all moral
rights, rights of privacy, publicity and similar rights and license rights of
any type under the laws or regulations of any governmental, regulatory, or
judicial authority, foreign or domestic and all renewals and extensions thereof.
1.5 "Lease" means, unless the context otherwise requires, any lease or sublease
made by Owner as landlord or by its predecessor.
1.6 "Management Fees" has the meaning set forth in Section 5.1 hereof.
1.7 "Owner" means ▇▇▇▇▇▇▇ REIT, ▇▇▇▇▇▇▇ OP and any joint venture, limited
liability company or other Affiliate of ▇▇▇▇▇▇▇ REIT or ▇▇▇▇▇▇▇ OP that owns, in
whole or in part, on behalf of ▇▇▇▇▇▇▇ REIT, any Properties.
1.8 "Person" means an individual, corporation, association, business trust,
estate, trust, partnership, limited liability company or other legal entity.
1.9 "Properties" means all real estate properties owned by Owner and all tracts
as yet unspecified but to be acquired by Owner containing income-producing
improvements or on which Owner will construct income-producing improvements.
1.10 "Proprietary Property" means all modeling algorithms, tools, computer
programs, know-how, methodologies, processes, technologies, ideas, concepts,
skills, routines, subroutines, operating instructions and other materials and
aides used in performing the duties set forth in Article 2 that relate to
management advice, services and techniques regarding current and potential
Properties, and all modifications, enhancements and derivative works of the
foregoing.
ARTICLE II
APPOINTMENT OF MANAGER; SERVICES TO BE PERFORMED
2.1 Appointment of Manager. Owner hereby engages and retains Manager as the
manager and as tenant coordinating agent of the Properties, and Manager hereby
accepts such appointment on the terms and conditions hereinafter set forth; it
being understood that this Management Agreement shall cause Manager to be, at
law, Owner's agent upon the terms contained herein.
2.2 General Duties. Manager shall devote its best efforts to performing its
duties hereunder to manage, operate, maintain and lease the Properties in a
diligent, careful and vigilant manner. The services of Manager are to be of
scope and quality not less than those generally performed by professional
property managers of other similar properties in the area. Manager shall make
available to Owner the full
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benefit of the judgment, experience and advice of the members of Manager's
organization and staff with respect to the policies to be pursued by Owner
relating to the operation and leasing of the Properties.
2.3 Specific Duties. Manager's duties include the following:
(a) Lease Obligations. Manager shall perform all duties of the
landlord under all Leases insofar as such duties relate to operation,
maintenance, and day-to-day management. Manager shall also provide or
cause to be provided, at Owner's expense, all services normally
provided to tenants of like premises, including where applicable and
without limitation, gas, electricity or other utilities required to be
furnished to tenants under Leases, normal repairs and maintenance, and
cleaning, and janitorial service. Manager shall arrange for and
supervise the performance of all installations and improvements in
space leased to any tenant that are either expressly required under the
terms of the lease of such space or that are customarily provided to
tenants.
(b) Maintenance. Manager shall cause the Properties to be
maintained in the same manner as similar properties in the area.
Manager's duties and supervision in this respect shall include, without
limitation, cleaning of the interior and the exterior of the
Improvements and the public common areas on the Properties and the
making and supervision of repair, alterations, and decoration of the
Improvements, subject to and in strict compliance with this Management
Agreement and the Leases. Construction activities undertaken by
Manager, if any, will be limited to activities related to the
management, operation, maintenance, and leasing of the Property (e.g.,
repairs, renovations, and leasehold improvements).
(c) Leasing Functions. Manager shall coordinate the leasing of
the Properties and shall negotiate and use its best efforts to secure
executed Leases from qualified tenants, and to execute same on behalf
of Owner, if requested, for available space in the Properties, such
Leases to be in form and on terms approved by Owner and Manager, and to
bring about complete leasing of the Properties. Manager shall be
responsible for the hiring of all leasing agents, as necessary for the
leasing of the Properties, and to otherwise oversee and manage the
leasing process on behalf of Owner.
(d) Notice of Violations. Manager shall forward to Owner
promptly upon receipt all notices of violation or other notices from
any governmental authority, and board of fire underwriters or any
insurance company, and shall make such recommendations regarding
compliance with such notice as shall be appropriate.
(e) Personnel. Any personnel hired by Manager to maintain,
operate and lease the Property shall be the employees or independent
contractors of Manager and not of Owner of such Property, ▇▇▇▇▇▇▇ OP or
▇▇▇▇▇▇▇ REIT. Manager shall use due care in the selection and
supervision of such employees or independent contractors. Manager shall
be responsible for the preparation of and shall timely file all payroll
tax reports and timely make payments of all withholding and other
payroll taxes with respect to each employee.
(f) Utilities and Supplies. Manager shall enter into or renew
contracts for electricity, gas, steam, landscaping, fuel, oil,
maintenance and other services as are customarily furnished or rendered
in connection with the operation of similar rental property in the
area.
(g) Expenses. Manager shall analyze all bills received for
services, work and supplies in connection with maintaining and
operating the Properties, pay all such bills when due, and, if
requested by Owner, pay, when due, utility and water charges, sewer
rent and assessments,
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and any other amount payable in respect to the Properties. All bills
shall be paid by Manager within the time required to obtain discounts,
if any. Owner may from time to time request that Manager forward
certain bills to Owner promptly after receipt, and Manager shall comply
with any such request. Manager shall pay all bills, assessments, real
property taxes, insurance premiums and any other amount payable in
respect to the Properties out of the Account (as hereinafter defined).
All expenses shall be billed at net cost (i.e., less all rebates,
commissions, discounts and allowances, however designed).
(h) Monies Collected. Manager shall timely collect all rent
and other monies, in the form of a check or money order, from tenants
and any sums otherwise due Owner with respect to the Properties in the
ordinary course of business. Owner authorizes Manager to request,
demand, collect and provide receipt for all such rent and other monies
and to institute legal proceedings in the name of Owner for the
collection thereof and for the dispossession of any tenant in default
under its Lease.
(i) Banking Accommodations. Manager shall establish and
maintain a separate checking account (the "Account") for funds relating
to the Properties. All monies deposited from time to time in the
Account shall be deemed to be trust funds and shall be and remain the
property of Owner and shall be withdrawn and disbursed by Manager for
the account of Owner only as expressly permitted by this Management
Agreement for the purposes of performing the obligations of Manager
hereunder. No monies collected by Manager on Owner's behalf shall be
commingled with funds of Manager. The Account shall be maintained, and
monies shall be deposited therein and withdrawn therefrom, in
accordance with the following:
(i) All sums received from rents and other income from the
Properties shall be promptly deposited by Manager in
the Account. Manager shall have the right to designate
two or more persons who shall be authorized to draw
against the Account, but only for purposes authorized
by this Management Agreement.
(ii) All sums due to Manager hereunder, whether for
compensation, reimbursement for expenditures, or
otherwise, as herein provided, shall be a charge
against the operating revenues of the Properties and
shall be paid and/or withdrawn by Manager from the
Account prior to the making of any other disbursements
therefrom.
(iii) By the 15th day after the end of each month, Manager
shall forward to Owner all monies contained in the
Account other than a reserve of $5,000 and any other
amounts otherwise provided in the budget, which shall
remain in the Account.
(j) Ownership Agreements. Manager has received copies of (and
will be provided with copies of future) the Declaration of Trust,
Agreements of Limited Partnership, Joint Venture Partnership Agreements
and Operating Agreements, each as may be amended from time to time, of
Owner, as applicable (the "Ownership Agreements") and is familiar with
the terms thereof. Manager shall use reasonable care to avoid any act
or omission that, in the performance of its duties hereunder, shall in
any way conflict with the terms of Ownership Agreements.
(k) Signs. Manager shall place and remove, or cause to be
placed and removed, such signs upon the Properties as Manager deems
appropriate, subject, however, to the terms and conditions of the
Leases and to any applicable ordinances and regulations.
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2.4 Approval of Leases, Contracts, Etc. In fulfilling its duties to Owner,
Manager may and hereby is authorized to enter into any leases, contracts or
agreements on behalf of Owner in the ordinary course of the management,
operation, maintenance and leasing of the Property.
2.5 Accounting, Records and Reports.
(a) Records. Manager shall maintain all office records and
books of account and shall record therein, and keep copies of, each
invoice received from services, work and supplies ordered in connection
with the maintenance and operation of the Properties. Such records
shall be maintained on a double entry basis. Owner and persons
designated by Owner shall at all reasonable time have access to and the
right to audit and make independent examinations of such records, books
and accounts and all vouchers, files and all other material pertaining
to the Properties and this Management Agreement, all of which Manager
agrees to keep safe, available and separate from any records not
pertaining to the Properties, at a place recommended by Manager and
approved by Owner.
(b) Monthly Reports. On or before the 15th day after the end
of each month during the term of this Management Agreement, Manager
shall prepare and submit to Owner the following reports and statements:
(i) rental collection record;
(ii) monthly operating statement;
(iii) copy of cash disbursements ledger entries for such
period, if requested;
(iv) copy of cash receipts ledger entries for such period,
if requested;
(v) the original copies of all contracts entered into by
Manager on behalf of Owner during such period, if
requested; and
(vi) copy of ledger entries for such period relating to
security deposits maintained by Manager, if requested.
(c) Budgets and Leasing Plans. Not later than November 15 of
each calendar year, Manager shall prepare and submit to Owner for its
approval an operating budget and a marketing and leasing plan on each
Property for the calendar year immediately following such submission.
In connection with any acquisition of a Property by Owner, Manager
shall prepare a budget and marketing and leasing plan for the remainder
of the calendar year. The budget and marketing and leasing plan shall
be in the form of the budget and plan approved by Owner prior to the
date thereof. As often as reasonably necessary during the period
covered by any such budget, Manager may submit to Owner for its
approval an updated budget or plan incorporating such changes as shall
be necessary to reflect cost over-runs and the like during such period.
If Owner does not disapprove any such budget within 30 days after
receipt thereof by Owner, such budget shall be deemed approved. If
Owner shall disapprove any such budget or plan, it shall so notify
Manager within said 30-day period and explain the reasons therefor. If
Owner disapproves of any budget or plan, Manager shall submit a revised
budget or plan, as applicable, within 10 (ten) days of receipt of the
notice of disapproval, and Owner shall have 10 (ten) days to provide
notice to Manager if it disapproves of any such revised budget or plan.
Manager will not incur any costs other than those estimated in any
budget except for:
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(i) tenant improvements and real estate commissions
required under a Lease;
(ii) maintenance or repair costs under $5,000 per Property;
(iii) costs incurred in emergency situations in which action
is immediately necessary for the preservation or safety
of the Property, or for the safety of occupants or
other persons (or to avoid the suspension of any
necessary service of the Property);
(iv) expenditures for real estate taxes and assessment; and
(v) maintenance supplies calling for an aggregate purchase
price less than $25,000 per annum for all Properties.
Budgets prepared by Manager shall be for planning and informational
purposes only, and Manager shall have no liability to Owner for any
failure to meet any such budget. However, Manager will use its best
efforts to operate within the approved budget.
(d) Legal Requirements. Manager shall execute and file when
due all forms, reports, and returns required by law relating to the
employment of its personnel. Manager shall be responsible for notifying
Owner in the event it receives notice that any Improvement on a
Property or any equipment therein does not comply with the requirements
of any statute, ordinance, law or regulation of any governmental body
or of any public authority or official thereof having or claiming to
have jurisdiction thereover. Manager shall promptly forward to Owner
any complaints, warnings, notices or summonses received by it relating
to such matters. Owner represents that to the best of its knowledge
each of its Properties and any equipment thereon will upon acquisition
by Owner comply with all such requirements. Owner authorizes Manager to
disclose the ownership of the Property by Owner to any such officials.
Owner agrees to indemnify, protect, defend, save and hold Manager and
its stockholders, officers, directors, employees, managers, successors
and assigns (collectively, the "Indemnified Parties") harmless of and
from any and all Losses (as defined in Section 3.5(a) hereof) that may
be imposed on them or any or all of them by reason of the failure of
Owner to correct any present or future violation or alleged violation
of any and all present or future laws, ordinances, statutes, or
regulations of any public authority or official thereof, having or
claiming to have jurisdiction thereover, of which it has actual notice.
ARTICLE III
AUTHORITY GRANTED TO MANAGER AND CERTAIN OWNER OBLIGATIONS
3.1 Authority As To Tenants, Etc. Owner agrees and does hereby give Manager the
following exclusive authority and powers (all of which shall be exercised either
in the name of Manager, as Manager for Owner, or in the name or Owner entered
into by Manager as Owner's authorized agent, and Owner shall assume all expenses
in connection with such matters):
(a) to advertise each Property or any part thereof and to
display signs thereon, as permitted by law;
(b) to lease the Properties to tenants;
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(c) to pay all expenses of leasing such Property, including
but not limited to, newspaper and other advertising, signage, banners,
brochures, referral commissions, leasing commissions, finder's fees and
salaries, bonuses and other compensation of leasing personnel
responsible for the leasing of the Property;
(d) to cause references of prospective tenants to be
investigated, it being understood and agreed by the parties hereto that
Manager does not guarantee the creditworthiness or collectibility of
accounts receivable from tenants, users or lessees; and to negotiate
new Leases and renewals and cancellations of existing Leases that shall
be subject to Manager obtaining Owner's approval;
(e) to collect from tenants all or any of the following: a
late rent administrative charge, a non-negotiable check charge, credit
report fee, a subleasing administrative charge and/or broker's
commission; and Manager need not account for such charges and/or
commission to Owner;
(f) to terminate tenancies and to sign and serve in the name
of Owner of each Property such notices as are deemed necessary by
Manager;
(i) to institute and prosecute actions to evict tenants and
to recover possession of the Property or portions
thereof;
(ii) with Owner's authorization, to ▇▇▇ for and in the name
of Owner and recover rent and other sums due; and to
settle, compromise, and release such actions or suits,
or reinstate such tenancies. All expenses of litigation
including, but not limited to, attorneys' fees, filing
fees, and court costs that Manager shall incur in
connection with the collecting of rent and other sums,
or to recover possession of any Property or any portion
thereof, shall be deemed to be an operational expense
of the Property. Manager and Owner shall concur on the
selection of the attorneys to handle such litigation.
3.2 Operational Authority. Owner agrees and does hereby give Manager the
following exclusive authority and powers (all of which shall be exercised either
in the name of Manager, as Manager for Owner, or in the name or Owner entered
into by Manager as Owner's authorized agent, and Owner shall assume all expenses
in connection with such matters):
(a) to hire, supervise, discharge, and pay all labor required
for the operation and maintenance of each Property including but not
limited to on-site personnel, managers, assistant managers, leasing
consultants, engineers, janitors, maintenance supervisors and other
employees required for the operation and maintenance of the Property,
including personnel spending a portion of their working hours (to be
charged on a pro rata basis) at the Property. All expenses of such
employment shall be deemed operational expenses of the Property.
(b) to make or cause to be made all ordinary repairs and
replacements necessary to preserve each Property in its present
condition and for the operating efficiency thereof and all alterations
required to comply with lease requirements, and to decorate the
Property;
(c) to negotiate and enter into, as Manager of the Property,
contracts for all items on budgets that have been approved by Owner,
any emergency services or repairs for items not exceeding $5,000,
appropriate service agreements and labor agreements for normal
operation of the Property, which have terms not to exceed three years,
and agreements for all budgeted
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maintenance, minor alterations, and utility services, including, but
not limited to, electricity, gas, fuel, water, telephone, window
washing, scavenger service, landscaping, snow removal, pest
exterminating, decorating and legal services in connection with the
Leases and service agreements relating to the Property, and other
services or such of them as Manager may consider appropriate; and
(d) to purchase supplies and pay all bills.
Manager shall use its best efforts to obtain the foregoing services and
utilities for the Property under terms that are as cost-effective and otherwise
favorable to Manager as possible for the quality of services and utilities
required. Owner hereby appoints Manager as Owner's authorized Manager for the
purpose of executing, as Manager for said Owner, all such contracts. In
addition, Owner agrees to specifically assume in writing all obligations under
all such contracts so entered into by Manager, on behalf of Owner of the
Property, upon the termination of this Agreement, and Owner shall indemnify,
protect, save, defend and hold Manager and the other Indemnified Parties
harmless from and against any and all Losses resulting from, arising out of or
in any way related to such contracts and that relate to or concern matters
occurring after termination of this Agreement, but excluding matters arising out
of Manager's willful misconduct, gross negligence and/or unlawful acts. Manager
shall secure the approval of, and execution of appropriate contracts by, Owner
for any non-budgeted and non-emergency/contingency capital items, alterations or
other expenditures in excess of $5,000 for any one item, securing for each item
at least three written bids, if practicable, or providing evidence satisfactory
to Owner that the contract amount is lower than industry standard pricing, from
responsible contractors. Manager shall have the right from time to time during
the term hereof, to contract with and make purchases from Affiliates of Manager,
provided that contract rates and prices are competitive with other available
sources. Manager may at any time and from time to time request and receive the
prior written authorization of Owner of the Property of any one or more
purchases or other expenditures, notwithstanding that Manager may otherwise be
authorized hereunder to make such purchases or expenditures.
3.3 Rent and Other Collections. Owner agrees and does hereby give Manager the
exclusive authority and powers (all of which shall be exercised either in the
name of Manager, as Manager for Owner, or in the name or Owner entered into by
Manager as Owner's authorized agent, and Owner shall assume all expenses in
connection with such matters) to collect rents and/or assessments and other
items, including but not limited to tenant payments for real estate taxes,
property liability and other insurance, damages and repairs, common area
maintenance, tax reduction fees and all other tenant reimbursements,
administrative charges, proceeds of rental interruption insurance, parking fees,
income from coin operated machines and other miscellaneous income, due or to
become due and give receipts therefor and to deposit all such Gross Revenue
collected hereunder in the Account. Manager may endorse any and all checks
received in connection with the operation of any Property and drawn to the order
of Owner, and Owner shall, upon request, furnish Manager's depository with an
appropriate authorization for Manager to make such endorsement. Manager shall
also have the exclusive authority to collect and handle tenants' security
deposits, including the right to apply such security deposits to unpaid rent,
and to comply, on behalf of Owner of the Property, with applicable state or
local laws concerning security deposits and interest thereon, if any. Manager
shall not be required to advance any monies for the care or management of any
Property. Owner agrees to advance all monies necessary therefor. If Manager
shall elect to advance any money in connection with a Property, Owner agrees to
reimburse Manager forthwith and hereby authorizes Manager to deduct such
advances from any monies due Owner. In connection with any insured losses or
damages relating to any Property, Manager shall have the exclusive authority to
handle all steps necessary regarding any such claim; provided that Manager will
not make any adjustments or settlements in excess of $10,000 without Owner's
prior written consent.
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3.4 Payment of Expenses. Owner agrees and does hereby give Manager the exclusive
authority and power (all of which shall be exercised either in the name of
Manager, as Manager for Owner, or in the name or Owner entered into by Manager
as Owner's authorized agent, and Owner shall assume all expenses in connection
with such matters) to pay all expenses of the Property from the Gross Revenue
collected in accordance with Section 3.3 above, from the Account. It is
understood that the Gross Revenue will be used first to pay the compensation to
Manager as contained in Article 5 below, then operational expenses and then any
mortgage indebtedness, including real estate tax and insurance impounds, but
only as directed by Owner in writing and only if sufficient Gross Revenue is
available for such payments. Nothing in this Agreement shall be interpreted in
such a manner as to obligate Manager to pay from Gross Revenue, any expenses
incurred by Owner prior to the commencement of this Agreement, except to the
extent Owner advances additional funds to pay such expenses.
3.5 Certain Owner Indemnification Obligations.
(a) On Termination. In the event this Agreement is terminated
for any reason prior to the expiration of its original term or any
renewal term, Owner shall indemnify, protect, defend, save and hold
Manager and all of the other Indemnified Parties harmless from and
against any and all claims, causes of action, demands, suits,
proceedings, loss, judgments, damage, awards, liens, fines, costs,
attorney's fees and expenses, of every kind and nature whatsoever
(collectively, "Losses"), that may be imposed on or incurred by Manager
by reason of the willful misconduct, gross negligence and/or unlawful
acts (such unlawfulness having been adjudicated by a court of proper
jurisdiction) of Owner.
(b) Property Damage, Etc. Owner agrees to indemnify, defend,
protect, save and hold Manager and all of the other Indemnified Parties
harmless from any and all Losses in connection with or in any way
related to the Property and from liability for damage to the Property
and injuries to or death of any person whomsoever, and damage to
property; provided, however, that such indemnification shall not extend
to any such Losses arising out of the willful misconduct, gross
negligence and/or unlawful acts (such unlawfulness having been
adjudicated by a court of proper jurisdiction) of Manager or any of the
other Indemnified Parties. Manager shall not be liable for any error of
judgment or for any mistake of fact or law, or for any thing that it
may do or refrain from doing, except in cases of willful misconduct,
gross negligence and/or unlawful acts (such unlawfulness having been
adjudicated by a court of proper jurisdiction).
3.6 Environmental Matters. Owner hereby warrants and represents to Manager that
to the best of Owner's knowledge, no Property, upon acquisition by Owner, nor
any part thereof, will be used to treat, deposit, store, dispose of or place any
hazardous substance that may subject Manager to liability or claims under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.A. Section 9607) or any constitutional provision, statute, ordinance, law,
or regulation of any governmental body or of any order or ruling of any public
authority or official thereof, having or claiming to have jurisdiction
thereover. Furthermore, Owner agrees to indemnify, protect, defend, save and
hold Manager and all of the other Indemnified Parties from any and all Losses
involving, concerning or in any way related to any past, current or future
allegations regarding treatment, depositing, storage, disposal or placement by
any party other than Manager of hazardous substances on the Property.
3.7 Legal Status of Properties. Owner represents that to the best of its
knowledge each Property and any equipment thereon, when acquired by Owner, will
comply with all legal requirements and authorizes Manager to disclose the
identity of the Owner of the Property to any such officials and agrees to
indemnify, protect, defend, save and hold Manager and the other Indemnified
Parties harmless of and from any and all Losses that may be imposed on them or
any of them by reason of the failure of Owner to correct any present or future
violation or alleged violation of any and all present or future laws,
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ordinances, statutes, or regulations of any public authority or official
thereof, having or claiming to have jurisdiction thereover, of which it has
actual notice. In the event it is alleged or charged that any Improvement or any
equipment on a Property or any act or failure to act by Owner with respect to
the Property or the sale, rental, or other disposition thereof fails to comply
with, or is in violation of, any of the requirements of any constitutional
provision, statute, ordinance, law, or regulation of any governmental body or
any order or ruling of any public authority or official thereof having or
claiming to have jurisdiction thereover, and Manager, in its sole and absolute
discretion, considers that the action or position of Owner, with respect thereto
may result in damage or liability to Manager, Manager shall have the right to
cancel this Agreement at any time by written notice to Owner of its election so
to do, which cancellation shall be effective upon the service of such notice.
Such cancellation shall not release the indemnities of Owner set forth in this
Agreement and shall not terminate any liability or obligation of Owner to
Manager for any payment, reimbursement, or other sum of money then due and
payable to Manager hereunder.
3.8 Extraordinary Payments. Owner agrees to give adequate advance written notice
to Manager if Owner desires that Manager make any extraordinary payment, out of
Gross Revenue, to the extent funds are available after the payment of Manager's
compensation as provided for herein and all operational expenses, of mortgage
indebtedness, general taxes, special assessments, or fire, boiler or any other
insurance premiums.
ARTICLE IV
EXPENSES
4.1 Owner's Expenses. Except as otherwise specifically provided, all costs and
expenses incurred hereunder by Manager in fulfilling its duties to Owner shall
be for the account of and on behalf of Owner. Such costs and expenses shall
include the wages and salaries and other employee-related expenses of all
on-site and off-site employees of Manager who are engaged in the operation,
management, maintenance and leasing or access control of the Properties,
including taxes, insurance and benefits relating to such employees, and legal,
travel and other out-of-pocket expenses that are directly related to the
management of specific Properties. All costs and expenses for which Owner is
responsible under this Management Agreement shall be paid by Manager out of the
Account. In the event the Account does not contain sufficient funds to pay all
said expenses, Owner shall fund all sums necessary to meet such additional costs
and expenses.
4.2 Manager's Expenses. Manager shall, out of its own funds, pay all of its
general overhead and administrative expenses.
ARTICLE V
MANAGER'S COMPENSATION
5.1 Management Fees. Commencing on the date hereof, Owner shall pay Manager
property management and leasing fees in an amount not to exceed the fees
customarily charged in arm's length transactions by others rendering similar
services in the same geographic area for similar properties as determined by a
survey of brokers and agents in such area (the "Management Fees"). The
Management Fees shall be calculated on a monthly basis from the rental income
received from the Properties over the term of this Management Agreement.
Generally, Owner and Manager expect these fees to be between approximately two
and four percent (2.0%-4.0%) of Gross Revenues for the management of commercial
office buildings and approximately five percent (5.0%) of Gross Revenues for the
management of retail and industrial properties. Manager's compensation under
this Section 5.1 shall apply to all renewals,
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extensions or expansions of Leases that Manager has originally negotiated. In
the event Manager assists with planning and coordinating the construction of any
tenant-paid finish-out or improvements, Manager shall be entitled to receive
from any such tenant an amount equal to not greater than five percent (5.0%) of
the cost of such tenant improvements.
5.2 Leasing Fees. In addition to the compensation paid to Manager under Section
5.1 above, for the leasing of the properties, Manager shall be entitled to
receive a separate fee for the Leases of new tenants and renewals of Leases with
existing tenants in an amount not to exceed the fee customarily charged in arm's
length transactions by others rendering similar services in the same geographic
area for similar properties as determined by a survey of brokers and agents in
such area.
5.3 Audit Adjustment. If any audit of the records, books or accounts relating to
the Properties discloses an overpayment or underpayment of Management Fees,
Owner or Manager shall promptly pay to the other party the amount of such
overpayment or underpayment, as the case may be. If such audit discloses an
overpayment of Management Fees for any fiscal year of more than the correct
Management Fees for such fiscal year, Manager shall bear the cost of such audit.
ARTICLE VI
INSURANCE AND INDEMNIFICATION
6.1 Insurance to be Carried.
(a) Manager shall obtain and keep in full force and effect
insurance on the Properties against such hazards as Owner and Manager
shall deem appropriate, but in any event insurance sufficient to comply
with the Leases and Ownership Agreements shall be maintained. All
liability policies shall provide sufficient insurance satisfactory to
both Owner and Manager and shall contain waivers of subrogation for the
benefit of Manager.
(b) Manager shall obtain and keep in full force and effect, in
accordance with the laws of the state in which each Property is
located, employer's liability insurance applicable to and covering all
employees of Manager at the Properties and all persons engaged in the
performance of any work required hereunder, and Manager shall furnish
Owner certificates of insurers naming Owner as a co-insured and
evidencing that such insurance is in effect. If any work under this
Management Agreement is subcontracted as permitted herein, Manager
shall include in each subcontract a provision that the subcontractor
shall also furnish Owner with such a certificate.
6.2 Insurance Expenses. Premiums and other expenses of such insurance, as well
as any applicable payments in respect of deductibles shall be borne by Owner.
6.3 Cooperation with Insurers. Manager shall cooperate with and provide
reasonable access to the Properties to representatives of insurance companies
and insurance brokers or agents with respect to insurance that is in effect or
for which application has been made. Manager shall use its best efforts to
comply with all requirements of insurers.
6.4 Accidents and Claims. Manager shall promptly investigate and shall report in
detail to Owner all accidents, claims for damage relating to Ownership,
operation or maintenance of the Properties, and any damage or destruction to the
Properties and the estimated costs of repair thereof, and shall prepare for
approval by Owner all reports required by an insurance company in connection
with any such accident, claim, damage, or destruction. Such reports shall be
given to Owner promptly, and any report not so
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given within 10 (ten) days after the occurrence of any such accident, claim,
damage or destruction shall be noted in the monthly operating statement
delivered to Owner pursuant to Section 2.5(b). Manager is authorized to settle
any claim against an insurance company arising out of any policy and, in
connection with such claim, to execute proofs of loss and adjustments of loss
and to collect and receipt for loss proceeds.
6.5 Indemnification. Manager shall hold Owner harmless from and indemnify and
defend Owner against any and all claims or liability for any injury or damage to
any person or property whatsoever for which Manager is responsible occurring in,
on, or about the Properties, including, without limitation, the Improvements
when such injury or damage shall be caused by the negligence of Manager, its
agents, servants, or employees, except to the extent that Owner recovers
insurance proceeds with respect to such matter. Owner will indemnify and hold
Manager harmless against all liability for injury to persons and damage to
property caused by Owner's negligence and which did not result from the
negligence of misconduct of Manager, except to the extent Manager recovers
insurance proceeds with respect to such matter.
ARTICLE VII
TERM AND TERMINATION
7.1 Term. This Agreement shall commence on the date first above written and
shall continue until the first (1st) anniversary of such date and thereafter for
successive one (1) year renewal periods, unless on or before 30 days prior to
the date last above mentioned or on or before 30 days prior to the expiration of
any such renewal period, Manager shall notify Owner in writing that it elects to
terminate this Agreement, in which case this Agreement shall be thereby
terminated on said last mentioned date. In addition, and notwithstanding the
foregoing, Owner may terminate this Agreement at any time upon delivery of
written notice to Manager not less than thirty (30) days prior to the effective
date of termination, in the event of (and only in the event of) a showing by
Owner of misconduct, negligence, or malfeasance by Manager in the performance of
Manager's duties hereunder. In addition, either party may terminate this
Agreement immediately upon the occurrence of any of the following:
(a) A decree or order is rendered by a court having
jurisdiction (i) adjudging Manager as bankrupt or insolvent, or (ii)
approving as properly filed a petition seeking reorganization,
readjustment, arrangement, composition or similar relief for Manager
under the federal bankruptcy laws or any similar applicable law or
practice, or (iii) appointing a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of Manager or a substantial part
of the property of Manager, or for the winding up or liquidation of its
affairs, or
(b) Manager (i) institutes proceedings to be adjudicated a
voluntary bankrupt or an insolvent, (ii) consents to the filing of a
bankruptcy proceeding against it, (iii) files a petition or answer or
consent seeking reorganization, readjustment, arrangement, composition
or relief under any similar applicable law or practice, (iv) consents
to the filing of any such petition, or to the appointment of a receiver
or liquidator or trustee or assignee in bankruptcy or insolvency for it
or for a substantial part of its property, (v) makes an assignment for
the benefit of creditors, (vi) is unable to or admits in writing its
inability to pay its debts generally as they become due unless such
inability shall be the fault of the other party, or (vii) takes
corporate or other action in furtherance of any of the aforesaid
purposes.
7.2 Manager's Obligations Upon Termination. Upon the termination of this
Management Agreement, Manager shall have the following duties:
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(a) Manager shall deliver to Owner or its designee, all books
and records with respect to the Properties.
(b) Manager shall transfer and assign to Owner, or its
designee, all service contracts and personal property relating to or
used in the operation and maintenance of the Properties, except
personal property paid for and owned by Manager. Manager shall also,
for a period of sixty (60) days immediately following the date of such
termination, make itself available to consult with and advise Owner, or
its designee, regarding the operation, maintenance and leasing of the
Properties.
(c) Manager shall render to Owner an accounting of all funds
of Owner in its possession and shall deliver to Owner a statement of
all Management Fees claimed to be due to Manager and shall cause funds
of Owner held by Manager relating to the Properties to be paid to Owner
or its designee.
7.3 Owner's Obligations Upon Termination. Owner shall pay or reimburse Manager
for any sums of money due it under this Agreement for services and expenses
prior to termination of this Agreement. All provisions of this Agreement that
require Owner to have insured, or to protect, defend, save, hold and indemnify
or to reimburse Manager shall survive any expiration or termination of this
Agreement and, if Manager is or becomes involved in any claim, proceeding or
litigation by reason of having been Manager of Owner, such provisions shall
apply as if this Agreement were still in effect.
The parties understand and agree that Manager may withhold funds for sixty (60)
days after the end of the month in which this Agreement is terminated to pay
bills previously incurred but not yet invoiced and to close accounts. Should the
funds withheld be insufficient to meet the obligation of Manager to pay bills
previously incurred, Owner will, upon demand, advance sufficient funds to
Manager to ensure fulfillment of Manager's obligation to do so, within ten (10)
days of receipt of notice and an itemization of such unpaid bills.
ARTICLE VIII
MISCELLANEOUS
8.1 Notices. All notices, approvals, consents and other communications hereunder
shall be in writing, and, except when receipt is required to start the running
of a period of time, shall be deemed given when delivered in person or on the
fifth day after its mailing by either party by registered or certified United
States mail, postage prepaid and return receipt requested, to the other party,
at the addresses set forth after their respect name below or at such different
addresses as either party shall have theretofore advised the other party in
writing in accordance with this Section 8.1.
Owner: ▇▇▇▇▇▇▇ REIT OPERATING PARTNERSHIP, L.P.
c/o Hartman Commercial Properties REIT
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Manager: ▇▇▇▇▇▇▇ MANAGEMENT, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
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8.2 Governing Law; Venue. This Management Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, and any action
brought to enforce the agreements made hereunder or any action which arises out
of the relationship created hereunder shall be brought exclusively in ▇▇▇▇▇▇
County, Texas.
8.3 Assignment. Manager may delegate partially or in full its duties and rights
under this Management Agreement but only with the prior written consent of
Owner. Owner acknowledges and agrees that any or all of the duties of Manager as
contained herein may be delegated by Manager and performed by a person or entity
("Submanager") with whom Manager contracts for the purpose of performing such
duties. Owner specifically grants Manager the authority to enter into such a
contract with a Submanager; provided that, unless Owner otherwise agrees in
writing with such Submanager, Owner shall have no liability or responsibility to
any such Submanager for the payment of the Submanager's fee or for reimbursement
to the Submanager of its expenses or to indemnify the Submanager in any manner
for any matter; and provided further that Manager shall require such Submanager
to agree, in the written agreement setting forth the duties and obligations of
such Submanager, to indemnify Owner for all Losses incurred by Owner as a result
of the willful misconduct or gross negligence of the Submanager, except that
such indemnity shall not be required to the extent that Owner recovers issuance
proceeds with respect to such matter. Any contract entered into between Manager
and a Submanager pursuant to this Section 8.3 shall be consistent with the
provisions of this Agreement, except to the extent Owner otherwise specifically
agrees in writing. This Management Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns.
8.4 Third Party Leasing Services. Manager acknowledges that from time to time
Owner may determine that it is in the best interests of Owner to retain a third
party to provide certain leasing services with respect to certain Properties and
to compensate such third party for such leasing services. Upon the prior written
consent of Manager, Owner shall have the authority to enter into such a contract
for leasing services with a third party (a "Third Party Leasing Agreement");
provided that Manager shall have no liability or responsibility to Owner for any
of the duties and obligations undertaken by such party, and Owner agrees to
indemnify Manager for all Losses incurred by Manager as a result of acts of such
third party pursuant to the Third Party Leasing Agreement. To the extent that
leasing services are specifically required to be performed by a third party
pursuant to such Third Party Leasing Agreement, Manager shall have no obligation
to perform such leasing services and Owner shall have no obligation to Manager
for leasing fees pursuant to Section 5.2 hereof.
8.5 Third Party Management Services. Manager acknowledges that from time to time
Owner may acquire interests in Properties in which Owner does not control the
determination of the party that is engaged to provide property management and
other services to be provided by Manager with respect to all Properties acquired
by Owner hereunder. Upon the prior written consent of Manager, Owner shall have
the authority to acquire such non-controlling interests in Properties for which
a third party provides some or all of the services otherwise required to be
performed by Manager hereunder (a "Third Party Management Agreement"); provided
that Manager shall have no liability or responsibility to Owner for any of the
duties and obligations undertaken by such third party, and Owner agrees to
indemnify Manager for all Losses incurred by Manager as a result of the acts of
such third party pursuant to the Third Party Management Agreement. To the extent
that property management and other services are specifically required to be
performed by a third party pursuant to such Third Party Management Agreement,
Manager shall have no obligation to perform such services and Owner shall have
no obligation to Manager for compensation for such services pursuant to Article
V hereof.
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8.6 No Waiver. The failure of Owner to seek redress for violation or to insist
upon the strict performance of any covenant or condition of this Management
Agreement shall not constitute a waiver thereof for the future.
8.7 Amendments. This Management Agreement may be amended only by an instrument
in writing signed by the party against whom enforcement of the amendment is
sought.
8.8 Headings. The headings of the various subdivisions of this Management
Agreement are for reference only and shall not define or limit any of the terms
or provisions hereof.
8.9 Counterparts. This Management Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Management Agreement to produce or account for
more than one such counterpart.
8.10 Entire Agreement. This Management Agreement contains the entire
understanding and all agreements between Owner and Manager respecting the
management of the Properties. There are no representations, agreements,
arrangements or understandings, oral or written, between Owner and Manager
relating to the management of the Properties that are not fully expressed
herein.
8.11 Disputes. If there shall be a dispute between Owner and Manager relating to
this Management Agreement resulting in litigation, the prevailing party in such
litigation shall be entitled to recover from the other party to such litigation
such amount as the court shall fix as reasonable attorneys' fees.
8.12 Activities of Manager. The obligations of Manager pursuant to the terms and
provisions of this Management Agreement shall not be construed to preclude
Manager from engaging in other activities or business ventures, whether or not
such other activities or ventures are in competition with Owner or the business
of Owner.
8.13 Independent Contractor. Manager and Owner shall not be construed as joint
venturers or partners of each other pursuant to this Management Agreement, and
neither shall have the power to bind or obligate the other except as set forth
herein. In all respects, the status of Manger to Owner under this Agreement is
that of an independent contractor.
8.14 No Third-Party Rights. Nothing expressed or referred to in this Management
Agreement will be construed to give any Person other than the parties to this
Management Agreement any legal or equitable right, remedy or claim under or with
respect to this Management Agreement or any provision of this Management
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to Section 8.3.
8.15 Ownership of Proprietary Property. The Manager retains ownership of and
reserves all Intellectual Property Rights in the Proprietary Property. To the
extent that Owner has or obtains any claim to any right, title or interest in
the Proprietary Property, including without limitation in any suggestions,
enhancements or contributions that Owner may provide regarding the Proprietary
Property, Owner hereby assigns and transfers exclusively to the Manager all
right, title and interest, including without limitation all Intellectual
Property Rights, free and clear of any liens, encumbrances or licenses in favor
of Owner or any other party, in and to the Proprietary Property. In addition, at
the Manager's expense, Owner will perform any acts that may be deemed desirable
by the Manager to evidence more fully the transfer of ownership of right, title
and interest in the Proprietary Property to the Manager, including but not
limited to the execution of any instruments or documents now or hereafter
requested by the Manager to perfect, defend or confirm the assignment described
herein, in a form determined by the Manager.
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IN WITNESS WHEREOF, the parties have executed this Property Management
Agreement as of the date first above written.
▇▇▇▇▇▇▇ COMMERCIAL PROPERTIES REIT
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
▇▇▇▇▇▇▇ REIT OPERATING
PARTNERSHIP, L.P.
By: ▇▇▇▇▇▇▇ Commercial Properties REIT
General Partner
By: _____________________________
Name: ___________________________
Title: __________________________
▇▇▇▇▇▇▇ MANAGEMENT, L.P .
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
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