LEASING AND MANAGEMENT AGREEMENT
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REAL ESTATE MANAGEMENT AND LEASING AGREEMENT
REAL ESTATE MANAGEMENT AND LEASING AGREEMENT made as of the 28th day of April,
2003, between PREIT-RUBIN, INC., a Pennsylvania Corporation having an address at
The Bellevue, Suite 300, 200 South Broad Street, Philadelphia, Pennsylvania
19102 (hereinafter referred to as the "Agent"), and New Castle Associates, a
Pennsylvania limited partnership (hereinafter referred to as the ("Owner").
W I T N E S S E T H :
In consideration of the covenants herein contained, the parties hereto,
intending to be legally bound, covenant and agree as follows:
ARTICLE I
APPOINTMENT AND AUTHORITY OF THE AGENT
1.1 The Owner hereby appoints the Agent as the exclusive managing and leasing
agent for the Cherry Hill Mall in Cherry Hill, New Jersey (the "Premises"), and
hereby authorizes the Agent to exercise such powers with respect to the Premises
as may be necessary for the performance of the Agent's obligations under Article
II, and the Agent accepts such appointment on the terms and conditions
hereinafter set forth for a term as provided in Article VII. Agent shall have no
right or authority, expressed or implied, to commit or otherwise obligate Owner
in any manner whatsoever except to the extent specifically provided in this
Agreement. Not later than forty-five (45) days prior to the effective date of
this Agreement, Owner shall deliver to Agent such information, documents and
certificates regarding the Premises as Agent shall reasonably request,
including, but not limited to the following:
(a) A current and complete rent roll.
(b) The current operating budget and capital budget for the past and
current calendar year.
(c) Income cash flow report and variances from budget for prior and
current calendar year.
(d) A current list of all employees, titles, salaries/wages employed
on site at the Premises.
(e) A current list of brokers actively engaged in leasing the
Premises.
(f) Copies of all existing lease documents.
(g) All leases currently in dispute or litigation.
(h) All files on any litigation and/or disputes regarding any and
all matters, including, but not limited to: parts, equipment,
furnishings, real property, easements, taxes, third party
contracts, employer-employee relations, and the like.
(i) Legal descriptions of the Premises. .
(j) Mortgagees' names and addresses; lien holders, and the like.
(k) Site plans and specs.
(l) An inventory of Owner's personal property on Premises, all
tools, equipment and supplies.
(m) List of vendors.
(n) All pertinent books and records relating to the management,
operation and leasing of the Premises.
(o) Third party contracts in force.
(p) List of security deposits held, on a tenant by tenant basis.
Not later than the effective date of this agreement, Owner shall wire
transfer to the Bank Account (hereafter defined) sufficient working capital to
enable Agent to operate and maintain the Premises during the first thirty (30)
days. Within thirty (30) days after the effective date of this Agreement, Owner
shall deliver to Agent original executed copies of all existing leases and
operating agreements in effect with respect to the Premises. If requested by
Agent, Owner shall arrange for the present property manager to meet with Agent's
employees at the Premises or Agent's home office to review all of the above and
to assist Agent in connection with the transition of the management of the
Premises.
ARTICLE II
THE AGENT'S AGREEMENTS
2.1 The Agent, on behalf of the Owner, shall implement or cause to be
implemented the decisions of the Owner relating to the Premises and within the
scope of Agent's obligations as specified in this Agreement and shall conduct
the ordinary and usual business affairs of the Owner with respect to the
Premises solely as provided in this Agreement. The Agent agrees to use
reasonable efforts to:
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(a) contract, for periods limited to the Owner's possession of the
Premises, but not in excess of one year, (without Owners prior
consent), in the name and at the expense of the Owner, for gas,
electricity, water, and such other services as are being
currently furnished to the Premises. Service contracts shall be
written to include a thirty (30) day notice of cancellation by
the Owner wherever possible.
(b) at the expense of the Owner, select, employ, pay, supervise,
direct and discharge an on-site manager, accountant and staff as
well as all other employees necessary for the operation and
maintenance of the Premises, in number and at initial wages not
in excess of those shown on Exhibit A attached hereto or those
required under any union contract then in effect, plus Agent's
standard fringe benefit package, including bonus, to carry
Workers' Compensation Insurance (and, when required by law,
compulsory Non-Occupational Disability Insurance) covering such
employees, and to use reasonable care in the selection and
supervision of such employees. The Agent shall be responsible
for complying with all laws and regulations and collective
bargaining agreements affecting such employment, and Agent shall
negotiate with labor unions lawfully entitled to represent
employees at the premises. The Agent will be and will continue
throughout the term of this Agreement to be an Equal Opportunity
Employer. All persons employed in connection with the operation
and maintenance of the Premises shall be employees of the Agent,
Agent's affiliates or Agent's contractors, and not of Owner. The
Agent shall be reimbursed by the Owner in amounts not exceeding
those which are in accordance with the approved budget for all
expenses properly incurred by it for compensation of all
employees necessary for the operation and maintenance of the
Premises, including, without limitation, direct payroll, fringe
benefits, including bonus, employer's payroll taxes such as the
employer's contribution to FICA, unemployment compensation,
employer's contribution to any pension plan which is identified
by the Agent to the Owner (including, without limitation, any
withdrawal liability imposed on the Agent as a result of this
Agreement pursuant to the Multi-Employer Pension Plan Amendments
Act of 1980), the cost of employee benefits required by law,
workers compensation premiums, and any sums required to be paid
to such employees under collective bargaining agreements made
pursuant to the National Labor Relations Act.
(c) make all ordinary repairs and replacements (except those
excluded by this Agreement), do all decorating and landscaping,
and purchase all supplies necessary for the proper operation of
the Premises and the fulfillment of the Owner's obligations
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under the leases affecting the Premises and compliance with all
governmental and insurance requirements; provided that the Agent
shall not make any purchase or do any work, the cost of which
shall exceed the amount set forth in Exhibit B without
obtaining, in each instance, the prior consent of the Owner,
except (i) in circumstances which the Agent shall deem to
constitute an emergency requiring immediate action for the
protection of the Premises or of tenants or other persons or to
avoid the suspension of necessary services or (ii) where the
expense is authorized by the approved budget. The Agent shall
notify the Owner of the necessity for, the nature of, and the
cost of any such emergency repairs or compliance. If Owner shall
require, Agent shall submit, for Owner's prior written approval,
a list of contractors and subcontractors performing tenant work,
repairs, alterations or services at the Premises, under Agent's
direction.
It is understood that if the Agent is requested by Owner to undertake
the making or supervision of extensive repairs (such as re-roofing the Premises
or a major portion thereof), alterations, renovations or reconstruction of the
Premises or any part thereof that Owner shall pay Agent therefor pursuant to ss.
4.3 hereof and that such work is otherwise not required to be contracted for by
Agent. The Owner shall receive the benefit of all discounts and rebates obtained
by the Agent in its operation of the Premises.
If the Agent desires to contract for repair, construction, or any other
service described in this subsection (c) with a party with respect to which any
partner or shareholder of the Agent holds a beneficial interest, such interest
shall be disclosed to and approved by the Owner before such services are
procured. The cost of any such services shall likewise be at competitive rates
notwithstanding that tenants of the Premises may be required to pay such costs.
The Agent shall not employ any corporation or other entity in which the Agent
(or any subsidiary, affiliate, or related corporation) shall have a financial
interest for the purpose of making repairs and alterations or performing other
services to the Premises, unless such work is done at a tenant's request and at
tenant's sole expense (such work being hereinafter referred to as "Tenant
Work"). The Agent, or general contractor working under the supervision of the
Agent, is authorized to make and install such Tenant Work, and Agent may collect
from such tenant or such general contractor, for its sole account, its charge
for supervisory overhead on all such Tenant Work. The Agent shall hold the Owner
harmless from any and all claims which may be advanced by any such tenant in
connection with Tenant Work performed by the Agent or under the Agent's
supervision. The Agent, however, shall not require any tenant to use the Agent,
its subsidiaries, affiliates or related corporations or its general contractor
to perform such Tenant Work.
(d) handle promptly complaints and requests from tenants, notify the
Owner promptly (together with copies of supporting
documentation) of any notice of violation of any governmental
requirements, any material defect in the Premises and any fire
or other damage to the Premises.
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(e) notify the Owner's general liability insurance carrier and the
Owner promptly of any bodily or personal injury or property
damage occurring to or claimed by any tenant or third party on
or with respect to the Premises and to forward promptly to the
carrier any summons, subpoena, or other like legal document
served upon the Agent relating to actual or alleged potential
liability of the Owner, the Agent or the Premises.
(f) request from tenants any certificates of insurance and renewals
thereof required to be furnished by the terms of leases, copies
of which will be provided to the Owner upon request.
(g) receive and collect rent and all other monies payable to the
Owner by all tenants and licensees in the Premises and to
deposit the same promptly in the bank (the "Bank") named in
Exhibit B in a bank account (the "Bank Account") in the name of
Agent, as Agent for the Owner, which Bank Account shall be used
exclusively for such funds. In the event state law requires
tenant security deposits be held in a separate account, such
account shall be established by the Agent as approved by the
Owner.
The Owner or the Owner's designated representative will be a signatory
on the Bank Account, but need not co-sign each check.
(h) collect such rent and other charges from tenants in a timely
manner and to pursue Owner's legal remedies for non-payment of
same, including the termination of leases for tenants in default
by the institution of legal action. Agent shall refer all such
matters requiring legal services to Agent's approved attorneys
listed on Exhibit B hereto or, at Agent's option, have such
legal work performed by Agent's in-house attorneys or
paralegals. The fees for all such legal services shall be paid
for by Owner, including (i) negotiation of leases, including
department store leases and reciprocal easement agreements; (ii)
preparation and negotiations of construction contracts for
renovations of the Premises; (iii) suits to enforce leases; (iv)
bankruptcy claims involving tenants; (v) negotiations with labor
unions; (vi) environmental matters and (vii) any other legal
action approved by Owner. With respect to lease preparation and
negotiation performed by Agent's in-house attorneys or
paralegals, Owner shall reimburse Agent for the salary, fringe
benefits, allocable share of rent and other office overhead, in
an amount equal to Fifteen Hundred ($1,500.00) Dollars for each
lease so prepared and negotiated, or such reasonable higher
charge as is justified because of the complexity of the lease in
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question. For lease assignments, lease amendments and lease
surrenders, the reimbursement shall be Five Hundred ($500.00)
Dollars; and for all other legal work performed by Agent's
in-house attorneys or paralegals, the amount of the
reimbursement shall be Two Hundred ($200.00) Dollars per hour
for Agent's in-house attorneys and Seventy-Five ($75.00) Dollars
per hour for all work performed by Agent's in-house paralegals.
Such attorneys and paralegals shall keep time records
substantiating the hours charged and on request such records may
be inspected by Owner. Agent may deduct the amount to be
reimbursed from the Bank Account. With respect to any litigation
involving sums due from tenants, Agent is authorized to
compromise such litigation without Owner's consent so long as
such compromise does not involve a forgiveness of sums due by
such tenant in excess of Fifteen Thousand ($15,000.00) Dollars.
(i) bond the Agent and all of the Agent's employees who may handle
or be responsible for monies or property of the Owner with a
"fidelity" bond, in the amount of Two Hundred Thousand
($200,000.00) Dollars.
(j) notify the Owner immediately of any fire, accident or other
casualty, condemnation proceedings, rezoning or other
governmental order, or lawsuit or threat thereof involving the
Premises; and violations relative to the leasing, use, repair
and maintenance of the Premises under governmental laws, rules,
regulations, ordinances or like provisions. The Agent will not
bear responsibility for non-compliance unless such
non-compliance is due to the negligence of the Agent or its
employees.
(k) check tax assessments and promptly furnish Owner with copies of
all assessment notices and receipted tax bills and, if requested
by Owner, Agent agrees to retain an expert to bring an appeal at
Owner's expense before any taxing authority relative to the
Premises.
(l) subject to Owner's making funds available to do so, cause the
Premises to comply with all present and future laws, ordinances,
orders, rules, regulations and requirements of all federal,
state and local governments, courts, departments, commissions,
boards and offices, any national or local Board of Fire
Underwriters or Insurance Services offices having jurisdiction,
or any other body exercising functions similar to those of any
of the foregoing which may be applicable to the Premises or any
part thereof or to the leasing, use, repair, operation or
management thereof. Such compliance shall be undertaken in the
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name of Owner, and be at Owner's expense. Agent shall give
prompt written notice to Owner of any violation or notice of
alleged violation of such laws and Agent shall not bear
responsibility for failure of the Premises or the operation
thereof to comply with such laws unless Agent has committed
gross negligence or a willful act or omission in the performance
of its obligations under this Agreement.
2.2 The Agent agrees that on or before the twentieth (20th) day of each month to
render to Owner monthly cash basis reports itemized in reasonable detail
relating to the management and operation of the Premises for the preceding
calendar month. The names and address of the persons who shall receive said
reports are set forth in Exhibit B. Subject to the terms and provisions of this
Agreement, the Agent is authorized to pay all bills for the operation of the
Premises from the rentals and other income of the Premises, including the
Agent's fee and reimbursable items set forth in this Agreement, and the Agent
shall remit to the Owner the net receipts after such payments with such monthly
report. Prior to Owner's default or the termination of this Agreement the Owner
shall, at any time, have the right to require the transfer to the Owner of any
funds in the Bank Account considered by the Owner and Agent to be in excess of
an amount reasonably required by the Agent for disbursement purposes in
connection with the Premises. In the event Agent determines that there is not
sufficient funds in the Bank Account to pay when due all expenses of the
Premises and reimbursements due Agent, Owner shall, within five (5) days of
request, deposit into such account additional funds in the amount requested by
Agent. The Agent agrees to keep full and detailed records with respect to the
management and operation of the Premises and to retain those records for periods
specified by the Owner, not to exceed three (3) years after the year in
question. The Owner shall have the right to inspect such records and audit the
reports required by this Section during business hours for the life of this
Agreement, and at times mutually agreeable to Owner and Agent.
2.3 The Agent shall exercise reasonable diligence to exert such control over
accounting and financial transactions as is reasonably required to protect the
Owner's assets from loss or diminution due to error, negligence or willful
misconduct or wanton acts on the part of the Agent, its employees, agents or
contractors. Losses caused by failure to exercise reasonable diligence shall be
borne by Agent.
2.4 The Agent shall prepare and submit to the Owner a proposed operating and
capital budget for the promotion, operation, repair and maintenance of the
Premises for each calendar year. Preliminary and final budgets will be due
ninety (90) and sixty (60) days, respectively, prior to the end of each calendar
year. Such budgets shall be prepared on a cash basis showing a month by month
projection of income and expense and capital expenditures and shall be
accompanied by proposed leasing guidelines for the next ensuing calendar year
which shall contain a brief narrative description of the anticipated market, a
projection of cash flow for such year, listing expiring leases for the next
following year as well as project ranges of rental rates and terms for new or
renewal leases, estimates of concessions to tenants and of cost estimates of
alterations for space to be leased. The annual budget shall be deemed approved
unless Agent receives written notification of disapproval within thirty (30)
days after the date such budget was tendered to Owner for approval; Owner shall
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have the right to disapprove line items in such budget or the entire budget. In
the event of a line item disapproval, all portions of the budget not disapproved
shall automatically be deemed approved. In the event of such disapproval of the
budget or any specific line items thereof, the parties will promptly meet and
resolve such differences and Agent will promptly thereafter resubmit a revised
budget to Owner who shall have an additional ten (10) days to approve or
disapprove the same and such procedure shall continue until the budget has been
approved. If Owner shall fail to disapprove the revised budget within ten (10)
days of receipt, the same shall be deemed approved. Agent is authorized for the
account of Owner to make any expenditures or to incur any obligations or
implement any items which are included in the approved annual budget without
further approval from owner being required. Such budgets and all other financial
reporting to be prepared by Agent shall be prepared using Agent's then standard
format and software. Agent shall not be obligated to use any other financial
format or software unless same is satisfactory to Agent, Owner purchases same
for Agent and Owner pays all of the training expenses for Agent's employees
relating to such software.
After approval of each such budget by the Owner, the Agent agrees to
use diligence and to employ all reasonable efforts so that the actual costs of
operating the Premises shall not exceed said approved budget by more than ten
(10%) percent per year without the Owner's approval. The Agent shall promptly
notify the Owner if the Agent reasonably anticipates any such line item
exceeding one hundred ten (110%) percent of the amount therefor in the approved
budget.
2.5 Agent agrees, for itself and all persons retained or employed by Agent in
performing its services, to hold in confidence and not to use or disclose to
others any confidential or proprietary information of Owner heretofore or
hereafter disclosed to Agent including, but not limited to, any data,
information, plans, programs, processes, costs, operations or tenants which may
come within the knowledge of Agent in the performance of or as a result of its
services, except where Owner specifically authorizes Agent to disclose any of
the foregoing to others or such disclosure reasonably results from the
performance of Agent's duties hereunder or is required to be disclosed pursuant
to litigation.
2.6 The Agent agrees to use its best efforts to have the Premises rented to
desirable tenants, satisfactory to the Owner considering the nature of the
Premises, and in connection therewith to negotiate business terms for relocation
and/or expansions, new leases and renewals of leases at appropriate times, it
being understood that all inquiries to the Owner with respect to leasing any
portion of the Premises shall be referred to the Agent. At least once per year
Owner and Agent shall meet and mutually develop a "leasing game plan" for the
ensuing calendar year which game plan shall specify projected vacancies,
projected rentals and other pertinent terms of new leases or lease renewals,
costs to be incurred in obtaining tenants and other relevant matters. Owner
hereby authorizes Agent to implement the approved leasing game plan and to
negotiate and execute leases in accordance therewith and confirms that any
leases so executed shall be deemed approved by Owner and Owner shall pay Agent
the leasing commission set forth in this Agreement with respect to each lease
executed by a tenant consistent with the leasing game plan. Agent is hereby
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given the exclusive right to lease the Premises on behalf of Owner and Owner
shall pay to Agent the leasing commission set forth in Exhibit B regardless of
who may negotiate the same, including Owner. All leases and renewals shall be
prepared by the Agent on the Agent's form lease, and such leases shall either be
executed by Agent on behalf of Owner or, at Agent's option shall be executed by
the Owner. The Agent agrees it will observe the specific leasing guidelines, if
any, set forth in the approved budget or otherwise made known to the Agent in
writing by the Owner. In the event the Agent shall have a prospective tenant
reference from another property in the local market area where the Premises are
located in which the Agent has a beneficial interest or which the Agent manages,
the Agent shall declare its potential conflict of interest to the Owner, and the
Owner shall determine if negotiations shall be undertaken by the Agent, the
Owner, or a third party appointed by the Owner. References of prospective
tenants, as well as their varying use requirements, shall be investigated by the
Agent.
2.7 Anything in the Agreement to the contrary notwithstanding:
(a) Nothing in this Agreement shall require Agent to take any action
(and Agent will not be in default for failure to take any
action) to the extent and wherever there is provided a
limitation on Agent's ability to expend funds or incur
obligations with respect to the Premises.
(b) Unless expressly provided, Agent shall not be responsible or
obligated to advance its own funds for any purpose in the
performance of Agent's duties under this Agreement.
(c) Agent shall not be obligated to pay or perform any liability or
obligation or take any action under this Agreement which is to
be done at the expense of Owner or for which Agent is entitled
to reimbursement from Owner unless funds for such purpose are
available in the Bank Account or have otherwise been made
available to Agent by Owner.
(d) Wherever Agent is obligated to use its "best efforts or
reasonable efforts" under this Agreement such term is intended
to signify and shall mean that Agent shall exercise its
professional skill and expertise with diligence and in a
commercially reasonable manner and consistent with high quality
practice for the management of similar buildings located in the
geographic area in which the Premises are situate. However, such
a standard shall not impose additional duties or obligations on
Agent not set forth in this Agreement, such as, by way of
example, an obligation to advance Agent's funds or to commence
litigation against third parties, or to take extraordinary
actions or to perform services not customarily provided by
managers of comparable buildings in the local geographic area.
Nothing in this Agreement shall require Agent to perform the
obligations of others or exercise any efforts (other than
reasonable efforts) to cause them to perform such obligations.
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(e) Everything done by Agent in the performance of its obligations
under this Agreement and all expenses incurred pursuant hereto
shall be for and on behalf of Owner and for its account and at
its expense. Except as otherwise expressly provided herein, all
debts and liabilities incurred to third parties in accordance
with the annual budget and in the ordinary course of business of
managing the Premises are and shall be obligations of Owner, and
Agent shall not be liable for any such obligations by reason of
its management, supervision or operation of the Premises for
Owner.
ARTICLE III
THE OWNER'S AGREEMENTS
3.1 The Owner, at its option, may pay directly all taxes, special assessments,
ground rents, insurance premiums and mortgage payments, in which event Owner
shall notify Agent of such.
3.2 The Owner shall carry (or cause to be carried) insurance upon the Premises
and shall look solely to such insurance for indemnity against any loss or damage
to the Premises except when caused by the willful act or omission or gross
negligence of the Agent or its employees, agents, contractors or subcontractors.
However, Agent shall not be liable to Owner for any loss or damage to the
Premises even if caused by the willful act or omission or gross negligence of
Agent or its employees, agents, contractors or subcontractors to the extent any
such loss or damage is covered or should have been covered by Owner's insurance.
To the extent any loss or damage to the Premises is covered or should have been
covered by Owner's insurance, Agent is released from liability therefor and
Owner waives its right of subrogation against Agent. The Owner shall purchase,
or have Agent purchase for Owner and at Owner's expense, and maintain policies
of commercial general liability insurance, including personal injury liability
and contractual liability, in an amount determined by Agent but, in any event
not less than $5,000,000.00 combined single limit for bodily injury and property
damage. Said policies shall name the Agent as an additional insured thereunder
and will be primary to any other available insurance. The Owner shall advise the
Agent as to the name and address of any insurance carriers for insurance placed
by Owner directly. If Owner desires Agent to purchase property damage or
liability insurance for the Premises, Owner shall pay Agent an annual fee
representing a pro rata share of the fee Agent pays to participate in its group
insurance coverage pool.
3.3 Owner agrees (a) to indemnify, hold and save Agent free and harmless from
any claim for damages or injuries to persons or property resulting from: (1)
Agent carrying out the provisions of this Agreement or acting under direction of
Owner, (2) Owner's failure or refusal to comply with or abide by any rule,
order, determination, ordinance or law of any federal, state or municipal
authority, (3) Owner's failure or refusal to comply with or abide by or perform
its obligations set forth in this Agreement, (4) any latent building defects or
other defect or dangerous condition which a visual inspection would fail to
disclose or any unsafe or dangerous condition or characteristic of the Premises
resulting from the design or initial construction of the Premises (including,
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but not limited to, security systems, door locks, location of trash receptacles,
ingress & egress routes and recreational structures), (5) any defects,
conditions or situations with respect to the Premises which Agent has disclosed
to Owner and requested Owner's permission to correct or rectify, (6) the willful
misconduct or criminal activity of any third person or agency, except as to
Agent and its employees, agents and representatives with respect to the Premises
or (7) the negligent or willful acts of Owner or Owner's representatives,
officers, employees and agents; and (b) to defend promptly and diligently at
Owner's expense, any claim, action or proceeding against Agent and/or Agent and
Owner, jointly or severally, arising out of or connected with any of the
foregoing, and to hold harmless and fully indemnify Agent from any judgment,
loss or settlement on account thereof. The undertaking of Owner as set forth
above shall survive the expiration or earlier termination of this Agreement as
to all liabilities accruing during the term hereof.
3.4 If Owner requests Agent to perform certain designated additional management
services and the parties agree to the exact nature, scope and time frame for the
performance thereof, then Owner shall pay the Agent the agreed upon fee for
Agent's performance of such services, such payment to be made within twenty (20)
days after receipt of a bill therefor. Such payment shall be made in addition to
the fees and reasonable expenses otherwise stated herein. In performing any
specialized management services for Owner, Agent shall not be liable to Owner
for errors, accuracies, mistakes or the consequences thereof, relating to the
performance of such services provided Agent has performed the services in good
faith. Owner hereby waives, releases and discharges Agent from all errors,
inaccuracies, mistakes and the consequences thereof relating to the performance
of such services, except to the extent Agent has not performed such services in
good faith.
3.5 The Owner hereby irrevocably appoints Agent as the sole and exclusive broker
for any sale and/or re-financing of the Premises and agrees to pay Agent a fee
of one (1%) percent of the principal amount of any refinancing and a sales
commission of two (2%) percent of the gross sales price for the Premises, each
such fee to be paid at the closing involved. Such fee shall include Agent's fee
for any due diligence work required to accomplish such refinancing and/or sale.
3.6 Owner agrees to make available to Agent, free of charge, an on-site office
to be utilized in connection with Agent's leasing of the Premises. In addition,
Owner shall reimburse Agent monthly for all travel expenses, leasing and
marketing materials, demographic and marketing studies signage and advertising
incurred by Agent during the performance of its obligations under this
Agreement. Agent shall have the right to install signage on the Premises in
furtherance of its obligation to lease the Premises. Owner shall cause the
Premises to participate in Agent's wide area network data transmission system
and shall lease or purchase for the Premises any wiring, phone, computers,
routers or software upgrades that Agent deems necessary to access the system.
3.7 Agent has afforded Owner the benefit of Agent's blanket policy of workmen's
compensation insurance. Such policy provides that Agent is required to pay in
full, in advance, the annual premium for such policy. Owner shall reimburse
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Agent, on demand, its share of such premium, such share being determined by the
actual payroll and rate classifications statutorily mandated in the state where
the Premises is located. Owner acknowledges that should this contract be
terminated during the policy year, there shall be no proration of Owner's
premium payment as between Owner and Agent unless or until Agent receives a
refund for the unused portion of such premium from the insurance carrier.
ARTICLE IV
MANAGEMENT AND OTHER FEES
4.1 As the management fee for the services performed pursuant to Article II, the
Owner agrees to pay the Agent at the rate specified in Exhibit B and Exhibit C.
Said fee shall be payable monthly, in arrears, on the first (1st) day of each
calendar month. Agent shall withdraw said fee and all of its reimbursable
expenses from the Bank Account for the Premises and shall account for same as
provided for in Section 2.2 hereof.
4.2 With respect to any space occupied by the Owner, the Agent shall be entitled
to no leasing commissions but shall be entitled to a management fee as though
the Owner were paying rent at the average square foot rental rate being paid for
comparable space in the Premises.
4.3 If Owner requests Agent to perform supervisory or administrative services
with respect to any renovation, expansion, tenant fit-out work or other repair
or construction project at the Premises which would involve "hard" costs in
excess of One Hundred Thousand ($100,000.00) Dollars, Owner shall pay Agent a
construction management fee equal to five (5%) percent of the "hard" costs of
such work, such fee to be paid in three equal installments, one-third upon the
commencement of such work, the second third upon fifty (50%) percent completion
and a final payment upon substantial completion of the project. In addition, and
whether or not Agent is paid the above specified supervisory fee, Owner shall
reimburse Agent for the reasonable fees and disbursements of any architect,
engineer, on-site manager and/or on-site job accountant engaged to monitor or
perform any portion of such work.
4.4 Owner shall pay Agent Five Hundred ($500.00) Dollars to review the plans and
specifications prepared by each tenant doing alterations or renovations to its
space, to verify that such plans are acceptable to landlord and consistent with
any landlord design criteria applicable to the Premises. In the event Agent
utilizes Agent's own in-house architect or engineer in lieu of retaining the
services of an independent architect or engineer, the amount of such
reimbursement shall be based upon the approximate hourly wage and other benefits
paid by Agent to such architect or engineer.
4.5 Owner shall pay Agent for implementing a year round program of short term
specialty retail leasing, including Christmas kiosks, carts, in line temporary
space and special events, twenty-five (25%) percent of the gross annual income
collected by Agent with respect to the leasing of such specialty retail units.
Such amount may be deducted by Agent from Owner's operating funds on a monthly
basis, as earned. Owner acknowledges that Agent will allocate to the marketing
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fund/merchant's association, as applicable, certain costs of Agent's marketing
program maintained from Agent's home office. Such charge shall not be billed to
Owner but rather to such fund in an amount which will reasonably allocate to the
Premises its proportionate share of the cost involved in maintaining Agent's
home office marketing operation applicable to the Premises and similar
properties managed by Agent for others.
4.6 Owner authorizes Agent to institute a satellite communication marketing
program for the Premises and if such program is successful, Owner shall pay
Agent twenty (20%) percent of the income generated therefrom during the term of
each such contract, payable in full upon the date Owner receives its first
payments for each such contract executed.
ARTICLE V
LEASING COMMISSION
5.1 As leasing commissions for (a) all leases, expansions and renewals executed
and (b) with respect to a person or entity procured by Agent that is ready,
willing and able to lease upon the terms set forth in the leasing game plan,
during the term of this Agreement, which, for purposes of calculating Owner's
obligation for leasing commissions will include the six (6) month period set
forth below, the Owner agrees to pay the Agent at the rate specified in Exhibit
B. Commissions will be based on base rents including CPI inflators payable to
Owner, percentage rent and all additional rental payable by the tenant. When
leases are negotiated by third party broker, the Agent shall cooperate with such
brokers. The Owner shall pay the commission due any such third party broker so
long as the Owner has approved in advance the use of such broker and the
commission to be paid such broker and such payment shall not reduce the fees
provided herein payable to Agent. The leasing commission will be paid to Agent
if within a period of six (6) months after the expiration of the term of this
Agreement Owner leases all or any portion of the Premises, irrespective of the
terms of such lease, to any prospect introduced to the Premises by Agent prior
to the expiration of the term, provided that Agent shall have informed Owner in
writing of the name of the prospect within thirty (30) days after the expiration
of the term hereof. With respect to all such pending leases, Agent is authorized
by Owner to continue negotiations and documentation on all such deals. In
addition, in the event Owner sells the Premises, at the time of such sale Owner
shall pay Agent the leasing commission due for any lease approved by Owner and
submitted to the tenant even if such lease is then unsigned.
ARTICLE VI
AGENT'S EXPENSES
6.1 Except to the extent approved in the annual budget or otherwise provided
herein, the following expenses or costs incurred by or on behalf of the Agent in
connection with the management of the Premises shall be the sole cost and
expense of the Agent and shall not be reimbursable by the Owner:
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(a) Cost of gross salary and wages, payroll taxes, insurance,
worker's compensation, pension benefits, and any other benefits
of the Agent's home office or regional home office personnel,
except for those costs specifically identified in Exhibit C.
(b) General agency bookkeeping accounting and reporting services as
such services are considered to be within the reasonable scope
of the Agent's responsibility to the Owner, except for those
costs specifically identified in Exhibit C.
(c) Cost of forms, stationery, ledgers, and other supplies and
equipment used in the Agent's home office or regional home
office.
(d) Cost of all incentive compensation, profit sharing or any pay
advances by the Agent to the Agent's employees.
(e) Cost of automobile purchase and/or rental, except if furnished
by the Owner.
(f) Cost attributable to losses arising from criminal acts or fraud
on the part of the Agent's associates or employees.
(g) Cost of comprehensive crime insurance purchased by the Agent for
its own account.
ARTICLE VII
DURATION, TERMINATION, DEFAULT
7.1 This Agreement shall become effective on the date specified in Exhibit B and
shall be for the term therein specified and shall continue thereafter from month
to month until terminated by at least thirty (30) days prior written notice.
7.2 In the event a party hereto (the "Defaulting Party") (a) materially defaults
in the performance of its obligations under this Agreement and such default
remains uncured for more than twenty (20) days' after such party's receipt of
written notice from the other party hereto, except for defaults not susceptible
to cure within twenty (20) days, provided as to such defaults the Defaulting
Party commences to cure within such twenty (20) day period and diligently
prosecutes each cure; or (b) makes an assignment for the benefit of creditors;
or (c) has appointed a receiver, liquidator or trustee of its property; or (d)
is adjudicated to be a bankrupt or insolvent; or (e) has filed by or against it
any petition for the bankruptcy, reorganization or arrangement of the Defaulting
Party or, if such appointment, adjudication or petition be involuntary and not
consented to by the Defaulting Party and fails to proceed diligently to have the
same discharged or dismissed, then the other party hereto may forthwith
terminate this Agreement upon giving ten (10) days' written notice to the
Defaulting Party.
7.3 This Agreement shall terminate at the election of the Owner upon thirty (30)
days' written notice to the Agent if the Premises are sold by the Owner to a
non-affiliated third party purchaser or automatically if the Premises were
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acquired by the owner on foreclosure of a mortgage and are subsequently
redeemed. In the event the Premises are sold by the Owner to a non-affiliated
third party purchaser and this Agreement is not thereby terminated by the Owner,
the Agent shall have the right to terminate this Agreement upon sixty (60) days
prior written notice. The Term "non-affiliate" as used herein shall mean any
entity which is not an "affiliate" as such term is defined in Section 8.1
hereof. Upon termination of this Agreement for any reason, the Agent shall
deliver the following to the Owner or the Owner's duly appointed agent on or
before thirty (30) days following the termination date:
(a) A final accounting, reflecting the balance of income and expense
for the Premises as of the date of termination;
(b) Any balance or monies due to the Owner or tenant security
deposits, or both, held by the Agent with respect to the
Premises except for reasonable amounts to pay for services
already provided; and
(c) All records, contracts, drawings, leases, correspondence,
receipts for deposits, unpaid bills, summary of all leases in
existence at the time of termination, and all other papers or
documents which pertain to the Premises. Such data and
information and all such documents shall, at all times, be the
property of the Owner.
7.4 Notwithstanding termination of this Agreement by the Owner, the Owner shall
reimburse the Agent within thirty (30) days after receipt of documents from the
Agent supporting such expenses, for all sums as may be necessary to satisfy
known obligations which the Agent has incurred for the Owner's accounts as
authorized under this Agreement, including all severance payments relating to
employees at the Premises who are not retained by Owner. In addition, after any
termination by the Owner, the Owner and the Agent will as promptly as possible
settle any outstanding balances with each other and render final accounts as to
any items overlooked or treated incorrectly in any previous settlement,
accounting or remittance. Upon any termination of this Agreement, Agent shall
assign to Owner or Owner's nominee all service, supply and other contracts and
agreements pertaining to the Premises entered into by Agent in accordance with
this Agreement and thereupon Owner shall be fully responsible and liable for the
performance of all obligations of Agent under all such contracts and agreements
occurring after the date of such assignment and Agent shall have no further
responsibility or liability with respect thereto. Owner shall indemnify and hold
Agent harmless with respect to all such contracts. Any termination permitted
hereunder shall not prejudice Agent's right to receive amounts to which Agent is
entitled hereunder on account of services rendered by Agent prior to said
termination.
7.5 The parties agree that it is not within the intention of the Agreement that
the Agent be required to advance its own funds to assist with the maintenance or
operation of the Premises or, except as provided in Paragraph 6.1 hereof, to
compensate personnel employed by the Agent hereunder. Nevertheless, if the Agent
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does in good faith advance its own funds for purposes authorized herein or for
emergency repairs, the Owner shall promptly reimburse the Agent without interest
upon receipt of proper documentation.
7.6 In the event Owner sells the Premises to a nonaffiliated third party and
simultaneously elects to cancel this Agreement in accordance with Section 7.3
hereof, together with such notice of termination the Owner shall pay to Agent
the following sums as and for a cancellation fee:
None
ARTICLE VIII
ASSIGNMENT
8.1 This Agreement shall be unassignable by Agent (except that without Owner's
consent Agent may assign this Agreement to a parent, successor by merger,
subsidiary or affiliate of Agent) and can be changed only by a writing signed by
both parties. As used herein, the terms "subsidiary" or "affiliate" shall mean a
corporation which directly or indirectly controls or is controlled by Agent. For
this purpose "control" shall mean the possession, directly or indirectly, of the
power to direct the management policies of such corporation, whether through the
ownership of voting rights or by contract or otherwise.
ARTICLE IX
MISCELLANEOUS
9.1 The Owner's Representative ("Owner's Representative") whose name and address
are set forth on Exhibit B shall be the duly authorized representative of the
Owner for the purpose of this Agreement. Any statement, notice, recommendation,
request, demand, consent or approval under this Agreement shall be in writing
and shall be deemed given (a) by the Owner when made by the Owner's
Representative and delivered personally to the Agent, if an individual, or to an
officer of the Agent, if a corporation, or when mailed, addressed to the Agent,
at the address set forth above, and (b) by the Agent when delivered personally
to or when mailed addressed to the Owner's Representative at the address set
forth in Exhibit B. Either party may, by written notice, designate a different
address.
9.2 The Agent shall, at its own expense, qualify to do business and obtain and
maintain such licenses, directly in its name or through affiliation with other
licensed persons or entities, as may be required for the performance by the
Agent of its services.
9.3 Each provision of this Agreement is intended to be severable. If any term or
provision hereof shall be determined by a court of competent jurisdiction to be
illegal or invalid for any reason whatsoever, such provision shall be severed
from this Agreement and shall not affect the validity of the remainder of this
Agreement.
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9.4 In the event one of the parties hereto shall institute an action or
proceeding against the other party relating to this Agreement, the unsuccessful
party in such action or proceeding shall reimburse the successful party for its
disbursements incurred in connection therewith and for its reasonable attorney's
fees.
9.5 No consent or waiver, expressed or implied, by either party hereto of any
breach or default by the other party in the performance by the other of its
obligations hereunder shall be valid unless in writing, and no such consent or
waiver shall be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance by such other party of the same or any
other obligation of such party hereunder. Failure on the part of either party to
complain of any act or failure to act of the other party or to declare the other
party in default, irrespective of how long such failure continues, shall not
constitute a waiver by such party of its rights hereunder. The granting of any
consent or approval in any one instance by or on behalf of Owner shall not be
construed to waive or limit the need for such consent in any subsequent
instance.
9.6 The venue of any action or proceeding brought by either party against the
other arising out of this Agreement shall, to the extent legally permissible, be
in a court of competent jurisdiction in the Commonwealth of Pennsylvania.
9.7 This Agreement shall be construed and interpreted under and pursuant to the
laws of the Commonwealth of Pennsylvania.
9.8 Notwithstanding anything to the contrary contained herein, the parties
acknowledge that it is not within the contemplation of this Agreement or the
basic management fee set forth in ss. 4.1 herein that the Agent perform any
services with respect to the following: re-zoning of the Premises, site
acquisition of additional ground for the expansion of the Premises;
reconstruction after casualty or condemnation; leasing, management, financing or
construction relating to any proposed or implemented expansion of the Premises
or work generally classified as "development" work in connection with the same;
any due diligence work and/or preparation of estoppel certificates; removal of
asbestos or other hazardous material or above or underground storage tanks from
the Premises or supervising such work unless same have been installed by Agent
or its employees or contractors; preparation of Owner's tax returns or audited
financial statements or preparation of multi-year financial projections;
bringing or assisting in any real estate tax appeals or abatement proceedings.
9.9 This Agreement shall not be construed as creating a partnership or joint
venture between the parties. This Agreement shall inure to the benefit of and
shall be binding upon the parties hereto and their respective successors and
permitted assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OWNER:
NEW CASTLE ASSOCIATES, a Pennsylvania limited
partnership
By: PR NEW CASTLE LLC, a Pennsylvania
limited liability company, general partner
By: PREIT Associates, L.P., its sole member
By: Pennsylvania Real Estate Investment
Trust, its general partner
By: Jeffrey A. Linn
-----------------------------------
Jeffrey A. Linn, Executive
Vice President
AGENT:
PREIT-RUBIN, INC.
BY: George F. Rubin
----------------------------------
President
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EXHIBIT A to Management and Leasing Agreement
Premises:
SCHEDULE
(By Job Category and Wages)
Number of Maximum Fringe List of Number
Job Title Employees Wage/wk* Benefits Hrs./Wk
- --------- --------- -------- -------- --------------
As specified in the current years' approved budget.
*The wages listed will be in effect for the current year, after which the Agent
may grant increases consistent with Agent's standard wage review policy.
EXHIBIT B to Management and Leasing Agreement
Premises:
1. Term: Ten (10) years, plus for purposes of determining Owner's obligation
for leasing commissions, the Term will include the six (6) month period
set forth in ss. 5.1.
Effective date: April __, 2003
2. Name and Address of Owner's Representative:
Joseph Coradino
---------------
c/o PREIT Associates, L.P.
--------------------------
Suite 300, 200 South Broad Street
Philadelphia, Pennsylvania 19102
3. Limit of amount authorized for non-emergency purchases and repairs:
$ 5,000.00
4. Name of Bank:
National City Bank
------------------
Cleveland, OH 44193
-------------------
5. Description of Bank Account:
PREIT-RUBIN, Inc., Agent for Owner
6. Management Fee:
5.25% of gross cash income and receipts during the applicable period
received by Owner from the ownership and operation of the Premises
including, without limitation, all payments of rent of any kind including
minimum rent, percentage rent, utility income, expense reimbursement,
license or concession payments, miscellaneous income and any payments
under any other revenue producing contracts for the use, occupation or
other utilization of space in the Premises and insurance proceeds received
by Owner in lieu of any or all of the foregoing, excluding security
deposits, unless and until applied as rent.
7. Rate of leasing commissions, if any: Not applicable.
8. Owner's Approved Counsel: Blank Rome LLP, Philadelphia, Pennsylvania
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EXHIBIT C to Management and Leasing Agreement
Agent shall charge and Owner shall pay monthly, in arrears, the following in
addition to the management fee as described in Article IV:
1. Payroll Administration - Agent shall charge Owner a portion of
its cost of payroll administration expenses, including salary,
employer share of payroll taxes, employer cost of fringe
benefit programs, approved employee expenses, as well as data
processing costs and administration of benefit plans. The
total costs of Agent will be allocated to Owner based on a
ratio the numerator of which shall be the number of employees
of Agent directly involved with Owner's property divided by
total number of home office employees of Agent.
2. Risk Management - Agent shall charge Owner, in addition to
premiums allocated to Owner's property for specific insurance
coverage and a proportionate share of Agent's fees to third
party insurance brokers or consultants who provide the overall
insurance package to Agent the reasonable cost of managing the
insurance program of the Premises, including a proportionate
share of the salary, employer share of payroll taxes, employer
cost of fringe benefit programs and employee expenses of
Agent's risk management department.
3. Group and Regional Property Manager - Agent shall charge Owner
for its reasonable share of the salary bonus, employer share
of payroll taxes, employer cost of fringe benefits paid to
Agent's Group and/or Regional Property Manager and approved
employee expenses, it being understood that such property
manager has responsibility to supervise and direct the
operation of the on-site Property Manager.
4. ICSC Convention and Periodic Property Management Meetings -
Agent shall represent Owner and the Premises at all ICSC
functions attended by Agent for other similar properties and
Owner shall reimburse Agent for Owner's reasonable allocation
of the expenses of participating in such functions, including
travel, meals, brochures and other like expenses. In addition,
Owner shall reimburse Agent for the cost involved in having
the on-site property management staff participate in Agent's
periodic management meetings.
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