Exhibit 4
MANAGEMENT AGREEMENT
(Prudential Realty Trust Properties)
Between
PRUDENTIAL REALTY TRUST,
a Massachusetts Business Trust
as Owner
and
PREMISYS Real Estate Services, Inc.
a Pennsylvania Corporation,
as Manager
Dated May 1, 1991
TABLE OF CONTENTS
ARTICLE HEADING Page
ARTICLE I - PROPERTIES
Section 1.1 - List of Properties
1.2 - Withdrawal of a Particular Property
1.3 - Termination on Sale
ARTICLE II - COMMENCEMENT DATE
ARTICLE III - MANAGER'S RESPONSIBILITIES
Section 3.1 - Management
3.2 - Employees: Independent Contractor
3.3 - Schedule of Employees
3.4 - Compliance with Laws, Mortgages, etc.
3.5 - Approved Budgets
3.6 - Collection of Rents and Other Income
3.7 - Competitive Bidding
3.8 - Repairs
3.9 - Capital Improvements
3.10 - Service Contracts
3.11 - Non-Owned Properties
3.12 - Taxes, Mortgages
3.13 - Leasing
3.14 - Preparation of Leases
3.15 - Advertising
3.16 - Inspection of Properties
ARTICLE IV - INSURANCE
Section 4.1 - Insurance
4.2 - Property Insurance
4.3 - Additional Insurance
4.4 - Subcontractor's Insurance
ARTICLE V - FINANCIAL REPORTING AND RECORDKEEPING
Section 5.1 - Books of Accounts
5.2 - Accounting System
5.3 - Financial Reports
5.4 - Supporting Documentation
ARTICLE HEADING Page
ARTICLE V 5.5 - IRS Form 1099
5.6 - Transfer of Funds
5.7 - Accounting Principles
ARTICLE VI - OWNER'S RIGHT TO AUDIT
ARTICLE VII - BANK ACCOUNTS
Section 7.1 - Operating Account
7.2 - Security Deposit Account
7.3 - Change of Bank
7.4 - Access to Accounts
ARTICLE VIII - PAYMENT OF EXPENSES
Section 8.1 - Manager's Cost to be Reimbursed
8.2 - Costs Eligible for Payment from
Operating Account
8.3 - Non-Reimbursable Costs
ARTICLE IX - INSUFFICIENT GROSS INCOME
Section 9.1 - Priorities
9.2 - Statement of Unpaid Items
9.3 - Segregation of Accounts
ARTICLE X - COOPERATION WITH SALES BROKER
ARTICLE XI - COOPERATION IN EVENT OF LEGAL PROCEEDINGS
ARTICLE XII - COMPENSATION
ARTICLE XIII - TERMINATION
Section 13.1 - Termination on 30-day Notice
13.2 - Immediate Termination Without Prior
Notice
13.3 - Authority to Execute Termination
Notices
13.4 - Automatic Termination
13.5 - Final Accounting
ARTICLE HEADING Page
ARTICLE XIV - SUBSIDIARIES AND AFFILIATES
ARTICLE XV - NOTICES
ARTICLE XVI - MISCELLANEOUS
Section 16.1 - No Assignment
16.2 - Consents and Approvals
16.3 - Pronouns
16.4 - Amendments
16.5 - Headings
16.6 - Representations
16.7 - Indemnification by Manager
16.8 - Applicable Law
16.9 - Partial Invalidity
16.10 - Waiver of Mechanic's Lien
16.11 - Complete Agreement
SCHEDULES
A - Property Identification, Compensation Schedule
B - (Intentionally Omitted)
C - Monthly Supporting Documentation and PREMIS Equipment
D - Employees
E - Subsidiaries and Affiliates of Manager
MANAGEMENT AGREEMENT
This AGREEMENT, dated as of the first day of May, 1991 by and
between PRUDENTIAL REALTY TRUST, a Massachusetts Business Trust,
hereinafter called "Owner", and PREMISYS Real Estate Services, Inc., a
Pennsylvania corporation, hereinafter called "Manager" witnesseth that:
WHEREAS Owner owns or has the right to collect rents from and manage
certain properties described in Schedule "A" hereto affixed and made a
part hereof, and desires to engage Manager to manage and operate the
same;
NOW, THEREFORE, in consideration of the premises the parties agree
as follows:
ARTICLE I PROPERTIES
1.1 List of Properties. Listed, described and identified on
Schedule "A" hereof are the real properties to come under the terms of
the Agreement. As used in this Agreement, Schedule "A" shall also mean
the amended or revised list of all properties which may from time to time
be under the management of Manager. Each property listed in Schedule
"A", which may be amended from time to time, is hereinafter referred to
as a "Property" and more than one Property is referred to as Properties."
No parcel of real property shall be subject to the terms of this
Agreement unless listed under Schedule "A". Schedule "A" indicates the
nature of the rights of Owner with the compensation payable (as provided
in ARTICLE XII hereof) to Manager with respect to each specific Property.
Schedule "A" may be amended at any time during the continuance of this
Agreement with the mutual consent of Owner and Manager by Owner's
furnishing Manager with a current List of the Property(ies) to be added.
This list shall contain the same information as to each such Property as
in the case of other Properties previously listed under Schedule "A".
1.2 Withdrawal of a Particular Property. Owner may at any
time withdraw any Property listed on Schedule "A" by giving to the
Manager at least thirty (30) days notice in writing. Such withdrawal
shall not affect or impair any right which has accrued to either party
prior to the date when such withdrawal becomes effective. However,
termination of this entire Agreement, as provided in ARTICLE XIII hereof,
shall be distinguished from the withdrawal of individual Properties.
1.3 Termination on Sale. In addition to Owner's rights to
withdraw individual Properties upon notice, this Agreement shall
terminate automatically and immediately as to any specific Property upon
sale thereof by Owner or upon termination of the Owner's right to collect
the rents therefrom and Owner agrees to give Manager prompt notice
thereof.
ARTICLE II COMMENCEMENT DATE
Manager's duties and responsibilities under this Agreement shall
begin the 1st day of May, 1991 and shall continue until termination as
provided in Sections 1.2, 1.3 or ARTICLE XIII hereof.
ARTICLE III MANAGER'S RESPONSIBILITIES
3.1 Management. Manager shall manage, operate and maintain the
Properties listed in Schedule "A" (and any amendments to Schedule "A")
hereof in an efficient and satisfactory manner. Manager shall act in a
fiduciary capacity with respect to the proper protection of an accounting
for Owner's assets. In this capacity, manager shall deal at arms length
with all third parties and Manager shall serve Owner's interests at all
times.
Manager acknowledges that it has a substantial influence on the financial
return of the property. Manager shall operate the property in a cost
efficient manner while providing service to the tenants comparable or
better than the standard in the Park 100 market. In particular, Manager
shall maintain rent roll and process leases, pay invoices, and provide
supervisory services with respect to capital and tenant improvements and
repair and maintenance in a timely fashion.
3.2 Employees; Independent Contractor. Manager shall have in its
employ at all times a sufficient number of capable employees to enable it
to properly, adequately, safely and economically manage, operate,
maintain, and account for each Property. All matters pertaining to the
employment, supervision, compensation, promotion and discharge of such
employees are the responsibility of Manager, which is in all respects
the employer of such employees. Manager shall negotiate with any union
lawfully entitled to represent such employees and may execute in its own
name, and not as agent for Owner, collective bargaining agreements or
labor contracts resulting therefrom. Manager shall fully comply with all
applicable laws and regulations having to do with workmen's compensation,
social security, unemployment insurance, hours of labor, wages, working
conditions, the Immigration Reform and Control Act of 1986 and other
employer/employee related subjects. Manager represents that it is and
will continue to be an equal opportunity employer and must advertise as
such. This Agreement is not one of agency by Manager for Owner but one
with Manager engaged independently in the business of managing properties
on its own behalf as an independent contractor. All employment
arrangements are therefore solely its concern and Owner shall have no
liability with respect thereto.
3.3 Schedule of Employees. Manager shall provide a schedule of
employees (in the format of Schedule "D" attached) to be employed "on-
site" in the direct management of each Property subject to this
Agreement. This schedule shall include the number of employees and their
title and salary range and shall also indicate which employees are bonded
or are covered under Manager's comprehensive crime insurance policy.
Manager shall identify in the same manner those additional employees
whose salaries from time to time be charged pro rata to each Property or
Properties for direct services rendered to each Property or Properties.
Employees whose salaries are eligible to be charged pro rata include, but
are not limited to, engineers or others to be agreed upon. Employees
whose salaries may not be charged pro rata include, but are not limited
to, general management personnel, accountants and auditors. Schedule "D"
may be amended from time to time by mutual agreement.
3.4 Compliance with Laws, Mortgages, etc. Manager shall be
responsible for full compliance with federal, state and municipal laws,
ordinances, regulations and orders relative to the leasing, use,
operation, repair and maintenance of each Property and with the rules,
regulations or orders of the local Board of Fire Underwriters or other
similar body. Manager shall promptly remedy any violation of any such
law, ordinance, rule, regulation or order which comes to its attention.
Expenses incurred in remedying violations may be paid from the
Operating Account provided such expenses do not exceed $5,000.00 in any
one instance. When more than such amount is required or if the violation
is one for which the Property title holder might be subject to penalty,
Manager shall notify Owner by the end of the next business day to the end
that prompt arrangements may be made to remedy the violation.
Manager shall be responsible for full compliance with all terms and
conditions contained in any ground lease, space lease, mortgage, deed of
trust or other security instruments affecting each Property; provided,
however, except as directed pursuant to Section 3.12 below, Manager shall
not be required to make any payment or incur any liability on account
thereof.
3.5 Approved Budgets. Manager shall prepare and submit to Owner
a proposed Operating Budget and a proposed Capital Budget for the
promotion, operation, repair and maintenance of each Property for the
forthcoming calendar year. Each proposed budget shall be delivered to
Owner within ninety (90) days after the execution of this Agreement and
each subsequent proposed budget no later than October 1 of each calendar
year or, with respect to a newly added property to Schedule "A" hereof,
no later than ninety (90) days after the addition of a Property to
Schedule "A". Notwithstanding anything above to the contrary, the mid-
September PREMIS budget reforecast shall satisfy the initial ninety (90)
days budget requirement.
Owner shall consider the proposed budgets and then will consult with
Manager in the ensuing period prior to the commencement of the
forthcoming calendar year in order to agree on an "Approved Operating
Budget" and an "Approved Capital Budget."
Manager agrees to use due diligence and to employ all reasonable
efforts to ensure that the actual costs of maintaining and operating each
Property shall not exceed either Approved Budget pertaining thereto
either in total or in any one accounting category. All expenses must be
charged to the proper account as specified in the Approved Chart of
Accounts and no expense may be classified or reclassified for the purpose
of avoiding an excess in the annual budgeted amount of an accounting
category. Manager shall secure Owner's prior written approval for any
expenditure that will result in an excess of the greater of $3,000 or 5%
of the annual budgeted amount, whichever is less, in any one accounting
category of the Approved Operating Budget.
During the calendar year Manager shall inform Owner of any major
increases in costs and expenses that were not foreseen during the budget
preparation period and thus were not reflected in either Approved Budget.
3.6 Collection of Rents and Other Income. Manager shall use
diligent efforts to collect all rents (including escalation billings
resulting from tenant participation in increases in expenses, taxes and
common area maintenance charges) and other charges which may become due
at any time from any tenant or from others for services provided in
connection with or for the use of any Property or any portion thereof.
Manager shall collect and identify any income due Owner from
miscellaneous services provided to tenants or the public including, but
not limited to, parking income, tenant storage, and coin operated
machines of all types (e.g., washers, dryers, vending machines, pay
telephone, etc.). All monies so collected shall be deposited in the
Depository Account. Manager may not, without the prior written approval
of Owner, terminate any lease, lock out a tenant, institute suit for rent
or for use and occupancy, or proceedings for recovery of possession. In
connection with any collection efforts only legal counsel or collection
firm designated by Owner shall be retained. All legal expenses incurred
in bringing such approved suit or proceeding shall be submitted to Owner
for its approval. Manager shall not write off any income items without
prior approval of Owner.
3.7 Competitive Bidding. All contracts for repairs, capital
improvements, goods and services exceeding $7,500.00 shall be awarded on
the basis of competitive bidding, solicited in the following manner:
(a) A minimum of two (2) written bids shall be obtained for
each purchase up to $10,000. Purchases over $10,000 will
require a minimum of three (3) bids.
(b) Each bid will be solicited in a manner so that uniformity
will exist in the bid quotes.
(c) Unless otherwise directed by Owner, Manager may accept a
low bid without prior approval from Owner, if the
expenditure is for a budget approved item and will not
result in an excess of the annual budgeted accounting
category of the applicable Approved Operating or Capital
Budget.
(d) If Manager advises acceptance of other than the lowest
bidder, Manager shall adequately support, in writing, its
recommendations to Owner.
(e) Owner shall be free to accept or reject any and all bids.
(f) Manager may request Owner to waive competitive bidding
rules.
Owner may pay for such expenses from its own resources or may
authorize payment by Manager out of the Operating Account.
3.8 Repairs. Manager shall attend to the making and supervision
of all ordinary and extraordinary repairs, decorations and alterations
subject to the limits of the approved Operating Budget. Excluded from
this provision are expenditures to refurbish, rehabilitate, remodel, or
otherwise prepare areas covered by new leases which are limited as
described in Schedule "B" #11 hereof.
In cases of emergency Manager may make expenditures for repairs
which exceed the limits in Section 3.7 hereof without prior written
approval if it is necessary to prevent damage or injury. Owner must be
informed of any such expenditures before the end of the next business
day.
3.9 Capital Improvements. The Approved Capital Budget constitutes
an initial authorization for Manager to expend money for projects. With
respect to the purchase and installation of major items (cost in excess
of $50,000.00) of new or replacement equipment, Manager shall recommend
that Owner purchase such items when Manager believes their purchase to be
necessary or desirable. Owner may arrange to purchase and install same
or may authorize Manager to do so, subject to prescribed supervision and
specification requirements and conditions and to the competitive bid
rules set forth in Section 3.7 hereof.
3.10 Service Contracts. Manager shall not enter into any contract
calling for annual payments in excess of $50,000.00 for cleaning,
maintaining, repairing or servicing any Property or any of the
constituent parts of any Property without the prior written consent of
Owner. As a condition to obtaining such consent, Manager shall supply
Owner with a copy of the proposed contract and shall state to Owner the
relationship, if any, between Manager (or the person or persons in
control of Manager) and the party proposed to supply such goods or
services, or both.
All service contracts shall: (a) be in the name of Manager as
Owner's agent, (b) be assignable, at Owner's option, to Owner or Owner's
nominee, (c) include a provision for cancellation thereof by Owner or
Manager upon not more than thirty (30) days written notice, and (d) shall
require that all contractors provide evidence of sufficient insurance.
Unless Owner specifically waives such requirements, either by memorandum
or as an amendment to the contract, all service contracts shall be
subject to bid under the procedure as specified in Section 3.7 hereof.
If a Property is withdrawn pursuant to Section 1.2 hereof or if this
Agreement is terminated pursuant to Article XIII hereof, Manager shall,
at Owner's option, assign to Owner or Owner's nominee all service
agreements pertaining to the Property or Properties.
3.11 Non-Owned Properties. If Owner does not have title to the
Property, then notwithstanding the provisions of this Agreement,
including the provisions relative to the making of repairs of maintenance
of the Properties, Manager shall not incur any expenses in any month in
excess of the income from such non-owned Property during that month. In
any case in which there is doubt, Manager shall inform Owner of the
situation so that Owner may have the opportunity of determining what
action should be taken under the circumstances.
3.12 Taxes, Mortgages. Manager, shall, if so requested, obtain
and verify bills for real estate and personal property taxes, improvement
assessments and other like charges which are or may become liens against
any Property and recommend payment or appeal as in its best judgement it
may decide. Manager shall forward such bills to Owner for payment by
Owner in such time to permit Owner to avoid penalty for late payment or
to permit Owner to take advantage of discounts. If Owner directs Manager
to make payment, Manager shall do so and shall furnish Owner with
receipted bills therefor. At the direction of Owner, Manager shall make
payments on account of any ground lease, mortgage, deed of trust or other
security instrument affecting any Property.
3.13 Leasing. Manager shall cooperate with the leasing agent for
each property in making every reasonable effort to obtain and keep
desirable tenants for each Property. Immediately following any vacancy,
or the addition to Schedule "A" of a Property in which a vacancy exists,
Manager shall assist such leasing agent in preparing adequate rental
listings, which are to be approved in writing by Owner prior to
distribution to reputable and active real estate brokers. After a
vacancy is so listed, Manager shall cooperate with such leasing agent and
with any outside brokers in a manner likely to aid in successfully
filling the vacancy. Manager agrees to perform whatever service may be
required in connection with the negotiation of leases or renewals,
extensions, modifications, or cancellations thereof. Leasing commissions
shall be approved by Owner and paid from the Operating Account.
3.14 Preparation of Leases. All leases are to be prepared by the
leasing agent in accordance with the leasing guidelines established by
Owner with respect to each Property covered by this Agreement.
3.15 Advertising. Manager shall cooperate with the leasing agent
in preparing advertising plans and promotional material to be used to
further rentals. Such plans or material shall only be used if approved
in advance in writing by Owners, and in conformance with such approval.
Manager and such leasing agent shall not use Owner's name in any
advertising or promotional material without Owner's expressed prior
written approval in each instance. Advertising and promotional materials
shall be prepared in full compliance with Federal, State and Municipal
fair housing and other laws, ordinances, regulations and orders.
3.16 Inspection of Properties. Each Property, whether vacant or
tenanted, shall be inspected by Manager at least once during each period
of twelve consecutive calendar months, and if tenanted, Manager shall
notify each tenant in writing of deficiencies or delinquencies, if any,
on the part of that tenant with respect to the maintenance or repair of
that portion of the Property leased to such tenant, and concurrently with
the delivery of such notice to the tenant, a copy thereof shall be
delivered to Owner. Each such notice shall demand that the tenant make
the repairs or perform the maintenance therein described within a
prescribed period which, in the judgment of Manager, is reasonable.
ARTICLE IV INSURANCE
4.1 Insurance. Owner, at its expense, shall obtain and keep in
force adequate insurance against physical damage (e.g., Fire with
extended coverage endorsement, boiler and machinery, etc.) and against
liability for loss, damage or injury to property or persons which might
arise out of the occupancy, management, operation or maintenance of any
of the Properties covered by this Agreement. Manager and its officers
and employees shall be covered as additional named insured in all
liability insurance maintained by Owner with respect to each Property,
and to the extent Owner elects to self-insure, Owner shall save Manager
harmless from any liability on account of any such loss, damage or
injury, excluding liability arising from the gross negligence, malice or
willful misconduct of Manager, its officers and employees, provided
Manager:
(a) notifies Owner and the insurance carrier within twenty-four
(24) hours after Manager receives notice of any such loss,
damage or injury;
(b) takes no action (such as admission of liability) which might
bar Owner from obtaining any protection afforded by any policy
Owner may hold or which might prejudice Owner in its defense to
a claim based on such loss, damage or injury; and
(c) agrees that Owner shall have the exclusive right, at its
option, to conduct the defense to any claim, demand or suit
within limits prescribed by the policy or policies of
insurance.
The foregoing is not intended to affect the general requirement of this
Agreement that each Property shall be managed, operated and maintained in
a safe condition and in a proper and careful manner, nor shall the
indemnification be applicable to punitive damages in any jurisdiction in
which insurance for punitive damages is not available. The Manager shall
furnish whatever information is requested by the Owner for the purpose of
establishing the placement of insurance coverage and shall aid and
cooperate in every reasonable way with respect to such insurance and any
loss covered thereunder or under Owner's indemnification. The Liability
Insurance Coverage and/or the indemnification provided for herein shall
be limited to an aggregate of $25,000,000 per occurrence.
Nothing herein shall be construed as indemnifying Manager or its
employees, contractors or agents against their negligence, malfeasance or
criminal acts or any act or omission for which insurance protection is
not available; neither is the foregoing intended to affect the general
requirement of this Agreement that each Property shall be managed,
operated and maintained in a safe condition and in a proper and careful
manner. Manager shall furnish whatever information is requested by Owner
for the purpose of establishing the placement of insurance coverages or
surety bonds and shall aid and cooperate in every reasonable way with
respect to such insurance and any loss thereunder. Owner shall include
in the standard fire and extended coverage Policy covering each Property
and its personal property, fixtures and equipment located thereon, and
Manager shall include in any fire and extended coverage policies for its
furniture, furnishings or fixtures situated at each Property appropriate
clauses pursuant to which the respective insurance carriers shall waive
all rights of subrogation with respect to losses payable under such
policies.
4.2 Property Insurance. Owner shall include in its hazard policy
covering each Property, personal property, fixtures and equipment located
thereon, and Manager shall include in any fire policies for its
furniture, furnishings and fixtures situated at each property,
appropriate clauses pursuant to which the respective insurance carriers
shall waive all rights of subrogating with respect to losses payable
under such policies.
4.3 Additional Insurance. Manager shall at all times hereunder
warrant and furnish Owner with certificates evidencing Worker's
Compensation and crime insurance in forms acceptable to Owner. Crime
insurance shall be for an amount not less than $500,000.00. The
certificates shall have attached thereto endorsements that Owner will be
given at least ten (10) days prior written notice of cancellation of or
any material change in such policies. Owner shall not reimburse Manager
for Manager's cost of such insurance, nor for any coverages that Manager
obtains for its own account.
4.4 Subcontractor's Insurance. Manager shall require that all
subcontractors brought onto any property have insurance coverage at the
subcontractor's expense, in the following minimum amounts:
(a) Workmen's Compensation: Statutory Amount
(b) Employer's Liability (in those states where it is
required): $500,000 minimum
(c) Comprehensive General Liability:
i. Bodily Injury: $500,000 per person/$1,000,000 per
occurrence
ii. Property Damage: $500,000 per claim/$1,000,000
Combined Single Limit
Manager must obtain Owner's permission to waive or alter any of the above
requirements. Higher amounts may be required if the work to be performed
is hazardous. Manager shall obtain and keep on file a Certificate of
Insurance which shows that any subcontractor is so insured.
ARTICLE V FINANCIAL REPORTING AND RECORDKEEPING
5.1 Books of Accounts. Manager, in the conduct of its
responsibilities to Owner, shall maintain adequate and separate books and
records for each Property, the entries to which shall be supported by
sufficient documentation to ascertain that said entries are properly and
accurately recorded to each Property. Such books and records shall be
maintained by Manager at Manager's address stated in ARTICLE XV hereof or
at such other location as may be mutually agreed upon in writing.
Manager shall ensure such control over accounting and financial
transactions as is reasonably required to protect Owner's assets from
theft, error or fraudulent activity on the part of Manager's employees or
other agents. Losses arising from such instances are to be borne by
Manager and shall include but not be limited to:
(a) Theft of assets by Manager's employees or other agents;
(b) Penalties, interests, or loss of vendor discounts due to
delay in payment of invoices, bills or other like charges;
(c) Overpayment or duplicate payment of invoices arising from
either fraud or error;
(d) Overpayment of labor costs arising from either fraud or
error,
(e) A sum equal to the value of any form of payment from
purveyors to Manager's employees or associates arising
from the purchase of goods or services for Owner's
Property, and
(f) Unauthorized use of facilities by Manager's employees or
associates.
5.2 Accounting Classification. Manager shall utilize the
Prudential Real Estate Management Information System (PREMIS) for the
financial reporting of each Property. Owner will provide the necessary
equipment pursuant to Schedule "C". Owner will also provide the
necessary training and operating manuals. Owner reserves the right to
replace PREMIS at its discretion and substitute a replacement system
therefor.
5.3 Financial Reports. Manager shall furnish reports of all
transactions occurring from the 16th day of the prior month to the 15th
day of the current month. Such reports are to be received by Owner no
later than seven (7) calendar days after the end of the above described
accounting period and must show all collections delinquencies,
uncollectible items, vacancies, the amount of Manager's fees and other
matters pertaining to the management, operation, and maintenance of
each Property during the month. Said reports shall include the items
listed on Schedule "C" attached hereto and made a part hereof. In
addition, Manager shall prepare forms prescribed by Owner to facilitate
the input of financial information into Owner's accounting system.
5.4 Supporting Documentation. As additional support to the
above described monthly reports, Manager shall provide the items listed
on Schedule "C" attached hereto.
5.5 IRS Form 1099. On Owner's behalf, Manager shall comply with
all applicable provisions of the Internal Revenue Service Code and
Regulations with respect to IRS Form 1099. Manager shall retain a copy
of each completed Form 1099 for its files.
5.6 Transfer of Funds. Manager shall transfer funds from the
Operating Account to Owner based upon instructions and schedules
provided by the Owner. These instructions and schedules may be changed
from time to time by written notice from Owner.
5.7 Accounting Principles. All financial statements and reports
required by Owner shall be prepared in accordance with generally
accepted accounting principles, with the exception that the statements
may be prepared on a cash basis or a modified accrual basis, as
directed by Owner.
ARTICLE VI OWNER'S RIGHT TO AUDIT
Owner reserves the right for Owner's employees, or others
appointed by Owner, to conduct examinations, without notification, of
the books and records maintained for Owner by Manager no matter where
books and records are located. Owner also reserves the right to
perform any and all additional audit tests relating to Manager's
activities either at the Property or at any office of the Manager;
provided such audit tests are related to those activities performed by
Manager for Owner.
Should Owner's employees or appointees discover either weaknesses
in internal control or errors in recordkeeping, Manager shall correct
such discrepancies either upon discovery or within a reasonable period
of time. Manager shall inform Owner in writing of the action taken to
correct such audit discrepancies.
Any and all such audits conducted either by Owner's employees or
appointees shall be at the sole expense of Owner.
ARTICLE VII BANK ACCOUNTS
7.1 Operating Account. Manager shall deposit all rents and
other funds collected from the operation of each Property, including
any and all advance rents, and shall pay out the operating expenses
thereof and any other payments relating to each such property as
required by this Agreement from an account or accounts (the "Operating
Account") for each Property in the name of:
PREMISYS Real Estate Services, Inc., REP ACCOUNT
Said bank shall be informed in writing that the funds are held in
trust for Owner, who shall designate the number of Operating Accounts
required to be maintained by manager.
7.2 Security Deposit Account Where law requires that tenant
security deposits be separately maintained, a separate account (or
separate interest-bearing account) shall be opened by Manager at a bank
approved by Owner. Such account shall be maintained in accordance with
applicable law. Such account shall be used only for maintaining tenant
security deposits and shall be designated:
PREMISYS Real Estate Services, Inc., REP ACCOUNT - SECURITY
Said bank shall be informed in writing that the funds are held in
trust for Owner. A separate account such as the one designated above
shall be created and maintained by Manager for each Property. Manager
shall maintain detailed records of all security deposits deposited in
each account, and such records shall be open for inspection by Owner's
employees or appointees. Manager shall obtain approval of Owner prior
to the return of such deposits to any particular tenant when the amount
of such return, in any single instance, exceeds $10,000,00.
7.3 Change of Bank. Owner may direct Manager to change a
depository bank or the depository arrangements.
7.4 Access to Accounts. Through the use of signature cards,
authorized representatives of Owner shall be permitted access to any
and all funds in the bank accounts described in Sections 7.1, and 7.2
above. Manager's authority to draw against such accounts may be
terminated at any time by Owner without notice to Manager.
ARTICLE VIII PAYMENTS OF EXPENSES
8.1 Manager's Costs to be Reimbursed. After initial payment by
Manager, Manager may be reimbursed out of the Operating Account for
costs of the gross salary and wages or pro rata share thereof, payroll
taxes, insurance, worker's compensation and other benefits of Manager's
employees required to properly, adequately, safely and economically
manage, operate and maintain each Property subject to this Agreement,
provided that such employees have been identified and enumerated on
Schedule "D" of this Agreement.
8.2 Costs Eligible for Payment from Operating Account. Manager
may pay the following expenses directly from the Operating Account
subject to the conditions outlined in ARTICLE III hereof:
(a) Cost to correct any violation of Federal, State and Municipal
laws, ordinances, regulations and orders relative to the
leasing, use, repair and maintenance of any Property, or
relative to the rules, regulations or orders of the local
Board of Fire Underwriters or other similar body, provided
such cost is not the result of Manager's negligence.
(b) Actual and reasonable cost of making all repairs, decorations
and alterations provided such cost is not the result of
Manager's negligence.
(c) Cost incurred by Manager in connection with all service
agreements approved by Owner.
(d) Cost of collection of delinquent rentals collected through a
collection agency which has been approved in writing in
advance by Owner.
(e) Legal fees of attorneys provided such attorneys have been
approved (or designated as provided in Article 3.6 hereof) by
Owner in writing in advance of retention and the specific
amount of such attorney's fee has been approved of by Owner
in writing in advance of payment.
(f) Cost of capital expenditures subject to the restrictions
in Article 3.9 hereof.
(g) Cost of printed checks for each bank account required by
Owner.
(h) Cost of cash register, adding machines, and other
equipment of such type and use (excluding all electronic
data processing equipment except as may be approved in
writing by Owner) located at a Property and owned by the
Owner.
(i) Leasing commissions payable to third parties.
(j) Cost of service contracts approved by Owner and cost of
on-site utilities used by Manager in connection herewith.
(k) Cost of Owner-approved advertising.
(l) Cost of printed forms and supplies required for use at a
Property.
(m) Manager's fee (to be paid no earlier than the 15th for
the month).
8.3 Non-Reimbursable Costs. The following expenses or costs
incurred by or on behalf of Manager in connection with the
management and leasing of any particular Property shall be at the
sole cost and expense of Manager and shall not be reimbursed by
Owner:
(a) Cost of gross salary and wages, payroll taxes, insurance,
workmen's compensation, and other benefits of Manager's
employees, except those identified in Schedule "D" hereof
as reimbursable.
(b) General accounting and reporting services which are
considered to be within the reasonable scope of Manager's
responsibility to Owner.
(c) Cost of forms, papers, ledgers, and other supplies and
equipment used in Manager's office at any location of the
Property or Properties.
(d) Cost of electronic data processing equipment except as
may be approved in writing by Owner, or pro rata charge
therefor, whether located at a Property or at Manager's
office of the Property or Properties..
(e) Cost of electronic data processing, or any pro rata
charge therefor, for data processing provided by computer
service companies.
(f) Political or charitable contributions, except that
certain charitable contributions may be made with prior
written consent of Owner.
(g) Cost of advances made to employees and cost of travel by
Manager's employees or agents to and from each Property.
(h) Cost of attributable to losses arising from negligence or
fraud on the part of Manager, Manager's associates or
Manager's employees or agents.
(i) Cost of comprehensive crime insurance or fidelity bond
purchased by Manager for its own account.
(j) Training expenses.
(k) Employment fees, unless specifically approved by Owner.
ARTICLE IX INSUFFICIENT GROSS INCOME
9.1 Priorities. If at any time the gross income from any
particular Property shall not be sufficient to pay the bills and
charges which may be incurred with respect to such Property, or if
such gross income is insufficient to pay the combined sum of both
bills and charges, items will be paid out of the Operating Account
in the following order of priority:
(a) First, bills and charges of third parties, including any
mortgage payment if so directed by Owner.
(b) Second, bills and charges, if any, incurred by Manager
for Manager's services provided to Owner exclusive of
Manager's fee.
9.2 Statement of Unpaid Items. After Manager has paid, to
the extent of available gross income, all bills and charges based
upon the ordered priorities set forth in Section 9.1, Manager shall
submit to Owner a statement of all remaining unpaid bills. Owner
shall provide sufficient monies to pay any unpaid expenses.
9.3 Segregation of Accounts. In each instance where Manager
manages several Properties for Owner, Manager shall segregate the
income and expenses of each Property so that gross income from each
property will be applied only to the bills and charges from that
Property.
ARTICLE X COOPERATION WITH SALES BROKER
If Owner executes a listing agreement with a broker for the
sale of any of the Properties, Manager shall cooperate with such
broker to the end that the respective activities of Manager and
broker may be carried on without friction and without interference
with tenants and occupants. Manager shall permit the broker to
exhibit any particular Property during reasonable business hours,
provided the broker has secured Manager's permission in advance.
Manager agrees that failure on its part to extend cooperation to a
broker desiring to show a property is a material default on its
part under this Agreement and is grounds (although none is needed)
for immediate termination of this Agreement.
ARTICLE XI COOPERATION IN EVENT OF LEGAL PROCEEDINGS
Should any claims, demands, suits or other legal proceedings
be made or instituted by any person against Owner or the title
holder of Property which arise out of any of the matters relating
to this Agreement, Manager shall give Owner all pertinent
information and reasonable assistance in the defense or other
disposition thereof.
ARTICLE XII COMPENSATION
Manager shall receive remuneration for its services in
managing and leasing the respective Properties in accordance with
the terms and tenor of this Agreement. Either or both of the
following fees may be specified:
(a) An Annual Fee, independent of income, payable in equal
monthly installments. The amount of such fee, if any is
payable, shall be shown in Schedule "A" hereof.
(b) A Management Fee based on income, amounting to a
percentage of the rents actually collected and remitted
during the month. Such percentage shall be shown in
Schedule "A" hereof. Rent for the purpose of Management
Fee computation shall include all income except:
(1) Security deposits unless and not until such
deposits are applied as rental income upon
termination of a lease;
(2) Rents paid more than thirty (30) days in advance of
the due date until the month in which such payments
are to apply as rental income; and
(3) Monies collected for capital items which are paid
for by tenants.
ARTICLE XIII TERMINATION
13.1 Termination on 30-day Notice. In addition to the
provisions of Articles 1.2 and 1.3 hereof, either party may
terminate this Agreement without cause by giving the other party at
least thirty (30) days notice in writing.
13.2 Immediate Termination With Notice. In addition to the
provisions of Section 13.4 hereof, Owner may immediately terminate
this Agreement by the service upon Manager of a written notice to
that effect. In such case, if Manager is entitled to a Management
Fee pursuant to ARTICLE XII hereof, Owner shall pay Manager an
amount equal to the next monthly installment of the Management Fee;
or if Manager is entitled to a Management Fee pursuant to Section
XII (b) hereof, Owner shall pay Manager the Management Fee which
would normally have accrued to it on the collection of rents during
the ensuing thirty (30) days immediately following the termination
date. The foregoing provisions for payment in lieu of actual
management fee shall apply only in the case of immediate
termination pursuant to this Section 13.2.
13.3 Authority to Execute Termination Notices. Notice of
termination for the purpose of either Section 13.1 or 13.2 hereof
must be signed by persons holding a rank or position in the Owner's
company equal to or higher than that of the individuals who signed
this Agreement on behalf of Owner.
13.4 Automatic Termination. Dissolution or termination of
the corporate or partnership existence of Manager by merger,
consolidation or otherwise; or termination or suspension of
Manager's real estate brokerage license, if such license is
required as a condition to managing the Property; or death of
Manager, if a partnership; or cessation on Manager's part to
continue to do business; or failure of Manager to properly deal
with and account for trust funds; or bankruptcy, insolvency, or
assignment for the benefit of the creditors of Manager shall effect
an immediate, automatic termination of this Agreement without
notice. Action having for its purpose a reorganization or
reconstitution of Manager shall likewise effect an immediate
termination, at the election of Owner.
13.5 Final Accounting. Upon termination of this Agreement
for any reason or the withdrawal of any Property, Manager shall
deliver to Owner the following with respect to each Property or
with respect to the Property withdrawn, as the case may be:
(a) A final accounting, reflecting the balance of income and
expenses on each such Property, as of the date of
termination or withdrawal, to be delivered within thirty
(30) days after such termination or withdrawal.
(b) Any balance or monies of Owner or tenant security
deposits, or both, held by Manager with respect to each
such Property, to be delivered immediately upon such
termination or withdrawal.
(c) All records, contracts, leases, receipts for deposits,
unpaid bills and other papers or documents which pertain
to each such Property, to be delivered immediately upon
such termination or withdrawal. Upon such termination or
withdrawal Owner shall assume responsibility for payment
of all approved or authorized unpaid bills.
ARTICLE XIV SUBSIDIARIES AND AFFILIATES
On Schedule "E" hereof, Manager has set forth all of its
subsidiary corporations, if any, and all persons, corporations or
other entities, if any, controlling Manager and all persons,
corporations or other entities, if any, owned or controlled by such
persons, corporations or other persons, if any, which control
Manager. During the continuance of this Agreement, Manager shall
promptly notify Owner of any changes or additions to the
information required to be set forth on Schedule "E" hereof. Any
contract or lease of any kind whatsoever between Manager and any
persons, corporation or other entity listed or to be listed on
Schedule "E" shall be subject to the prior written approval of
Owner, and at Owner's sole discretion approval may be withheld.
ARTICLE XV NOTICES.
All notices, demands, consents and reports provided for in
this Agreement shall be in writing and shall be served upon Owner
or Manager at the addresses set forth below or at such other
address as they individually may hereafter specify in writing:
OWNER: The Prudential Insurance Company of America
c/o The Prudential Property Company
One Prudential Plaza, Suite 1200
Chicago, Illinois 60601
Attention: Vice President,
Prudential Property Company
MANAGER: PREMISYS Real Estate Services, Inc.
2500 City West Blvd., Suite 1300
Houston, TX 77042
Attention: Joe M. Hudec, President
Such notices, demands, consents and reports shall either be
mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or delivered by hand or by any
other means permitted by law. For purposes of this Agreement,
notices shall be deemed to have been served upon personal delivery
thereof or forty-eight (48) hours after having been deposited in
the United States mails as provided above.
ARTICLE XVI MISCELLANEOUS
16.1 No Assignment. This Agreement and all rights hereunder,
shall not be assignable by either party hereto (except as may be
required by a surety company in a matter of subrogation).
16.2 Consent and Approvals. Owner's consents or approvals
may be given only by representatives of Owner from time to time
designated in writing by Owner's Vice President located at the
address provided in or pursuant to ARTICLE XV hereof. All such
consents or approvals shall be in writing.
16.3 Pronouns. The pronouns used in the Agreement referring
to the Manager shall be understood and construed to apply whether
Manager be an individual, co-partnership, corporation or an
individual or individuals doing business under a firm or trade
name.
16.4 Amendments. Except as otherwise herein provided, any
and all amendments, additions or deletions to this Agreement shall
be null and void unless approved by the parties in writing. If,
however, the only change made is in Manger's commission or fee, the
new commission or fee shall become effective upon written notice
thereof by Owner to Manager. Upon receipt of such notice by
Manager, Schedule "A" hereof shall be deemed to have been amended
to conform. A change in the Leasing Guidelines set forth in
Schedule "B" hereof and in the Monthly Report Forms set forth in
Schedule "C" hereof may similarly be made by Owner. A change in
Schedule "E" may similarly be made by Manager.
16.5 Headings. All headings herein are inserted only for
convenience and ease of reference and are not to be considered in
the construction or interpretation of any provision of this
Agreement.
16.6 Representations. Manager represents and warrants that
it is fully qualified and licensed, to the extent required by law,
to manage real estate in the state and locations contemplated
hereunder and perform all obligations assumed by Manager hereunder.
Manager agrees to comply with all such laws now or hereafter in
effect.
16.7 Indemnification by Manager. Manager shall indemnify,
defend and hold Owner, its officers and employees harmless from any
and all claims, demands, causes of action, losses, damages, fines,
penalties, liabilities, costs and expenses, including attorney's
fees and court costs, (except to the extent covered by insurance
carried by Owner pursuant to Article IV hereof) sustained or
incurred by or asserted against Owner, its officers or employees by
reason of or arising out of Manager's, its employees, agents' or
contractors' malfeasance or criminal acts or breach of the duties
or obligations required by this Agreement.
16.8 Applicable Law. The Agreement, its interpretation and
enforcement shall be governed by the laws of the state in which
property is located.
16.9 Partial Invalidity. If any term, covenant, condition or
provision of this Agreement or the application thereof to any
person or circumstance shall, to any extent be invalid,
unenforceable or violate a party's legal rights then such term,
covenant, condition or provision shall be deemed to be null and
void and unenforceable, however, all other provisions of this
Agreement, or the application of such term or provision to persons
or circumstances other than those to which are held invalid,
unenforceable or violative of legal rights, shall not be affected
thereby, and each and every other term, condition, covenant and
provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
16.10 Waiver of Mechanic's Lien. Manager does hereby
forever waive and release, and agrees to defend, hold harmless and
indemnify Owner against, any lien or claim or right to lien under
the statutes of the state in which the Properties are located
relative to mechanics' liens, on account of labor, material or
services furnished by Manager, or anyone claiming such lien by,
through or under Manager with respect to the Property.
16.11 Complete Agreement. This Agreement and Schedules
"A", "B", "C", "D" and "E", attached hereto and made a part hereof,
supersedes and takes the place of any and all previous management
agreements entered into between the parties hereto relating to the
Properties covered by this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this
Agreement as of the date and year first above written.
OWNER:
ATTEST: PRUDENTIAL REALTY TRUST
S. Gilmer Towell By: /s/ Cher R. Zucker-Maltese
Name: S. Gilmer Towell Name: Cher R. Zucker-Maltese
Title: Secretary Title: Vice President
MANAGER:
PREMISYS Real Estate Services, Inc.
By: /s/Joe M. Hudec
Name: Joe M. Hudec
Title: President
PRUDENTIAL REALTY TRUST (THE TRUST) IS A VOLUNTARY ASSOCIATION
ESTABLISHED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS BY
A DECLARATION OF TRUST DATED JUNE 19, 1985, WHICH TOGETHER WITH ALL
AMENDMENTS THERETO, IS ON FILE WITH THE SECRETARY OF STATE OF THE
COMMONWEALTH OF MASSACHUSETTS. THE OBLIGATIONS OF THE TRUST ARE
NOT PERSONALLY BINDING UPON, NOR SHALL RESORT BE HAD TO THE PRIVATE
PROPERTY OF ANY OF THE TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES
OR AGENTS OF THE TRUST, BUT THE TRUST PROPERTY ONLY SHALL BE BOUND.
SCHEDULE A
Prudential Realty Trust Industrial Properties
Wholly Owned
Indianapolis, Indiana
Property No. Address
Park 100
Bldg. 1 RT01-016 8545-47 Zionsville Road
Bldg. 2 RT01-017 8501-43 Zionsville Road
Bldg. 3 RT01-018 8201-43 Zionsville Road
Bldg. 6/7/8 RT01-019 5303 West 86th Street
Bldg. 10 RT01-005 5370 West 87th Street
Bldg. 11 RT01-020 8501 Moller Road
Bldg. 12 RT01-006 5600 West 85th Street
Bldg. 14 RT01-021 8111 Zionsville Road
Bldg. 19 RT01-007 5427 West 85th Street
Bldg. 20 RT01-015 5845 West 82nd Street
Bldg. 23 RT01-009 7908 Zionsville Road
Bldg. 24 RT01-010 5639 West 79th Street
Bldg. 29 RT01-011 7951 Zionsville Road
Bldg. 30 RT01-012 8102 Zionsville Road
Bldg. 33 RT01-013 5951 West 80th Street
Bldg. 35 RT01-014 5850 West 80th Street
Bldg. 41 RT01-008 7973 Allison Avenue
Compensation Management Fee - 3% of monthly collections
Construction Management Fee - 2% of capital expenditures and
Tenant Improvements
SCHEDULE B
LEASING GUIDELINES
(Intentionally Omitted)
SCHEDULE C
MONTHLY SUPPORTING DOCUMENTATION
and
PREMIS EQUIPMENT
Items to be submitted to PPC Investment Professional:
- Explanation of any significant operating matters, with
recommended action, and budget to actual variances.
- Comments regarding collection efforts for tenants
delinquent over 90 days or in excess of $10,0000.
- Capital Expenditures Report, to include a description of
each expenditure or reclassification of fixed assets during
the month. Report should be prepared for each building and
include monthly expenditures (actual and projected) for the
entire calendar year.
- Reconciliation of each completed tenant finish project.
- Tenant Service Request Log, to include description, date of
request, and date resolved.
- Construction Service Request Log, to include description,
date of request, and date resolved.
Items to be submitted to PPC Accounting:
- all of the above, plus:
- Copies of all capital expenditure invoices
- copies of all bank statements and bank reconciliations.
- Copy of management fee invoice, including reconciliation
when fee differs from PREMIS calculated amount.
- Copies of Prudential approvals for all disbursements which
exceed limits specified in this Management Agreement.
- Copies of Prudential approvals for all leasing commission
payments.
- Copies of Manager's periodic internal reports (sales
analyses, operating statements, etc.) concerning each
property.
- Lease Activity Report/Verification of the Tenant Master
Data.
Owner shall provide Manager with the following equipment at Owner's
sole expense:
IBM 5865-2 Unit in conjunction with IBM 5394 Controller.
SCHEDULE D
EMPLOYEES
Property No: Various RT01 Properties - see Schedule A
Location: Indianapolis, Indiana
Fidelity
Bond or
No. Employee
With Wage or Dishonesty
Reimbursable Salary Coverage Reimbursable
Employee Title Title Range (Y or N) (Y or N)
On-Site:
Property Manager 1 N/A Y N
Administrative Mgr. 1 N/A Y N
Administrative Asst. 1 N/A Y N
Secretary 1 N/A Y N
Off-Site+:
General Labor Charge $12/hour as N Y
(Trash Pick-up, repair and needed
maintenance assistant labor)
Supervisory Maint. Charge $30/hour as N Y
(Repair and maintenance, needed
labor, tenant suite $40/hour OT
alteration labor) & Sundays
Fire Protection Fee $20/week per N Y
(Regular wall valve, building
underground pipe and requiring
post indicator valve this service
inspections)
+"Off-Site employee cost is to be pro-rated based upon time
actually spent "on-site", and only the pro-rated cost is
reimbursable.
The off site personnel will consist of a Maintenance Supervisor and
a general laborer. The sum of the reimbursements for these
individual services, for oversight of capital and tenant
improvements, trash pickup, repair and maintenance, and fire
protection valve checking shall not exceed 150% of the sum of the
off site personnel salary and benefit cost annually.
SCHEDULE E
SUBSIDIARIES AND AFFILIATES OF MANAGER
NONE