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Exhibit 10.2
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CORPORATE SERVICES AGREEMENT
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THIS AGREEMENT ("Agreement") is made as of this 30th day of September,
1997 by and between Lexreit Properties, Inc., an Ohio corporation ("Company"),
and Cardinal Realty Services, Inc., an Ohio corporation ("CRSI").
R E C I T A L S
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WHEREAS, Company is a real estate investment trust and is the sole
general partner of Cardinal Properties L.P. (the "Operating Partnership"); and
WHEREAS, CRSI is the sole limited partner of the Operating Partnership;
and
WHEREAS, the Operating Partnership currently holds limited partner's
interests in approximately 62 limited partnerships and member's interests in 2
limited liability companies (with Company holding member's interests in 2
limited liability companies) (collectively, the "Partnerships"), each of which
owns and will continue to own an apartment community (collectively, the
"Properties"); and
WHEREAS, the Operating Partnership may acquire interests in additional
real properties subsequent to the date of this Agreement; and
WHEREAS, CRSI and its wholly-owned subsidiaries have the capabilities
and facilities to render the corporate services herein described and are engaged
in the business of providing administrative and real estate services for real
property owners including, without limitation, services relating to regulatory
compliance, insurance procurement and administration, information systems,
banking relations and cash management, accounting, financial reporting and other
financial services and assorted shareholder services; and
WHEREAS, Company desires to employ CRSI to perform such services;
NOW, THEREFORE, in consideration of the promises, mutual
representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
1. APPOINTMENT OF CRSI. Company hereby engages CRSI as its sole and
exclusive corporate services provider to perform the tasks enumerated in this
Agreement for the compensation and subject to the provisions set forth herein.
2. DUTIES OF CRSI. Subject to the provisions hereof, CRSI will have the
duty and authority to expeditiously and within reasonable time periods perform
the following acts and provide the following services to Company:
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(a) ACCOUNTING AND FINANCIAL REPORTING SERVICES. CRSI will
maintain at its principal offices such books and records documenting
the operations and financial condition of Company as are customarily
maintained by similarly situated Ohio corporations. CRSI will make such
books and records available for inspection by Company's Board of
Directors (the "Board") and by counsel, auditors and authorized agents
of Company, at any time or from time to time during normal business
hours. CRSI shall keep confidential any and all information obtained in
connection with the services rendered hereunder and shall not disclose
any such information to nonaffiliated persons except with the prior
consent of the Board. In addition, CRSI will maintain appropriate
systems and internal controls in connection with preparing Company's
accounting records and will provide tax planning and evaluation
services for Company, including the preparation and filing of Company's
tax returns.
(b) BANKING RELATIONS AND CASH MANAGEMENT SERVICES. CRSI will
provide banking and cash management services to Company including
reconciling Company's checking accounts and balance sheets. CRSI shall
establish and maintain one or more bank accounts (collectively, "Bank
Accounts") in the name of Company and may collect and deposit into any
such Bank Accounts, and disburse from any such Bank Accounts, any money
on behalf of Company, under such terms and conditions as the Board may
approve. Such monies shall not be commingled with CRSI's own funds.
Monies shall not be withdrawn from any such Bank Accounts to the order
or benefit of CRSI, except as otherwise provided in this Agreement or
as may otherwise be approved by the Board. Upon request, CRSI shall
render appropriate statements with respect to such Bank Accounts to the
Board and to the auditors of Company. CRSI will act on behalf of
Company in disbursing and collecting funds of Company, in paying the
debts and fulfilling the obligations of Company and in handling,
prosecuting, and settling any claims of or against Company, provided
that any fees and costs payable to independent persons incurred by CRSI
in connection with the foregoing shall be the responsibility of
Company. CRSI will, if and when applicable, negotiate on behalf of
Company with banks or other lenders for loans to be made to, or
refinanced with, Company with the Board's approval, and negotiate on
behalf of Company with investment banking firms and broker-dealers or
negotiate private or public sales of the securities of Company subject
to such guidelines as the Board shall from time to time choose to
establish but in no event in such a way so that CRSI shall be acting as
broker-dealer or underwriter.
(c) EMPLOYEE PAYROLL PROCESSING SERVICES. CRSI will provide,
or, when and if applicable, hire, employees to manage the day-to-day
affairs of Company. When and if applicable, CRSI will generate and
administrate Company's employee payroll including, without limitation,
maintaining an employee database, creating, distributing and reviewing
employee time sheets, entering and processing data, creating and
distributing employee payroll checks, preparing and distributing
payroll-
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related reports, providing audit support, when necessary, and complying
with local, state and federal tax authorities and regulatory
organizations.
(d) EMPLOYEE W-2 PREPARATION AND DISTRIBUTION. When and if
applicable, CRSI will, on an annual basis, prepare and distribute W-2
forms for Company employees.
(e) INFORMATION SYSTEMS. CRSI will procure and maintain such
information systems for Company as necessary for the day-to-day
management of Company affairs, including, without limitation,
maintaining appropriate systems and internal controls.
(f) REGULATORY COMPLIANCE. CRSI will communicate on behalf of
Company with shareholders and other persons, and prepare and file all
statements (including registration statements) and reports (including
those statements and reports required pursuant to the Securities and
Exchange Act of 1934, as amended, and the Securities Act of 1933, as
amended), as required to satisfy the continuous reporting and other
requirements of applicable laws and of any governmental bodies or
agencies, including to maintain effective relations with the
shareholders and otherwise to provide investor services and, when and
if applicable, to administer and manage the issuance and/or
registration of any shares or other securities of Company. In addition,
CRSI will obtain on behalf of Company all appropriate federal, state or
local licenses and will monitor and maintain compliance of Company with
all appropriate federal, state and local laws, rules and regulations.
(g) SHAREHOLDER AND INVESTMENT SERVICES. CRSI will assist the
Company with respect to, and execute pursuant to the Board's
instructions (where applicable) and administer, all of the obligations
of Company to its shareholders, including, without limitation, payment
of dividends. CRSI will, from time to time, provide recommendations to
the Board with respect to various matters, including, but not limited
to, capital expenditures, acquisitions and other strategies. In order
to facilitate the investment of the funds of Company and enable it to
avail itself of investment opportunities as they arise, under and in
accordance with such limitations and guidelines as the Board shall from
time to time choose to establish, CRSI shall have the power and
authority to make and dispose of such investments (including disposing
of interests in the Partnerships or Properties and acquiring of
interests in additional partnerships or properties) and to make and
terminate commitments for such investments, on behalf of and in the
name of Company, without further or express authority from the Board;
provided, however, that the Board shall have the power to revoke,
suspend, modify, or limit the aforementioned power and authority at any
time or from time to time, but not retroactively. CRSI shall use its
best efforts to assure that the policies from time to time specified by
the Board with regard to the protection of Company's investments are
carried out.
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(h) INSURANCE PROCUREMENT AND ADMINISTRATION. CRSI and Company
will work together to obtain insurance for Company and to negotiate
insurance premiums for Company, including the procurement of insurance
for Company's directors. CRSI will maintain and administer all
insurance policies of Company, including, without limitation, filing
all insurance applications and filing and collecting proceeds of, any
claims thereunder. Copies of all such insurance policies shall be
furnished to CRSI, Company and, upon request, the Board.
(i) MISCELLANEOUS SUPPLIES AND FACILITY CHARGES. CRSI will
provide to Company certain miscellaneous supplies and services,
including, without limitation, services and supplies relating to the
maintenance of Company's operating facilities. Such miscellaneous
supplies and facility charges will be paid to CRSI by Company as such
charges are incurred.
3. COMPANY'S OBLIGATIONS. In connection with the employment of CRSI,
Company hereby agrees that it will perform or comply with the following:
(a) TRANSMITTAL OF FINANCIAL INFORMATION. Company will fully
and accurately complete, transmit and make available to CRSI all
reports and other documentation required by CRSI to fulfill its
obligations in accordance with the terms of this Agreement;
(b) LEGAL, ACCOUNTING AND OTHER THIRD PARTY OBLIGATIONS.
Company will be responsible for payment of all legal, accounting and
other matters requiring the engagement of third parties by CRSI
pertaining to the Partnerships or the Properties of Company other than
those matters which solely affect or involve CRSI or its duties and
obligations pursuant to this Agreement. Company will promptly notify
CRSI of all legal matters of which Company becomes aware regardless of
materiality. Company will be responsible for paying for its fees and
costs payable to third parties for legal, accounting and other third
party services directly to the party which is engaged (whether by
Company or by CRSI on Company's behalf) to perform such services.
4. COMPENSATION. In consideration for providing the services as
described above, CRSI will be paid on an annual basis $350,000, payable in equal
monthly installments prior to the first day of each month. In addition, Company
will pay CRSI the supplies and facilities charges as set forth in Section 2(i)
above. CRSI will have no liability for payment of any fees, charges or other
sums that may become due and payable to any third parties, whether pursuant to
any contracts or agreements between CRSI (as agent or on behalf of Company) and
such third parties, or otherwise.
5. SPECIAL SERVICES. Company will pay for any special services that it
may request and that are not provided by CRSI under the terms of this Agreement.
Payment for such services will be
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at the normal price and terms pursuant to which CRSI provides such services, or,
if CRSI does not normally provide such services, at such price and terms as
Company and CRSI mutually agree upon.
6. TERM. Unless terminated earlier pursuant to Section 8 of this
Agreement, the term of this Agreement will continue for a period of three (3)
years from the date hereof and will renew automatically for sequential one (1)
year periods unless Company or CRSI, or both, provides written notice to the
other, six (6) months prior to the expiration of the then current term, of its
desire to terminate this Agreement.
7. CRSI'S RESPONSIBILITY AND INDEMNIFICATION. CRSI's duties are only
such as are specifically provided for in this Agreement, and CRSI will incur no
liability whatsoever to Company or any other party, except for CRSI's gross
negligence or willful misconduct. CRSI may consult with counsel and will be
fully protected in any action taken in good faith in accordance with such
advice. CRSI will be fully protected in acting in accordance with any written
instructions given to CRSI hereunder and believed by it to have been executed by
the proper parties.
Company agrees to indemnify, defend upon request and hold CRSI and all
of its subsidiaries, affiliates, stockholders, directors, officers, employees,
agents, attorneys, consultants, independent contractors, designees, successors
and assignees, and each of such persons' spouses, family members and
representatives (the "Indemnified Parties"), harmless from and against, and to
reimburse the Indemnified Parties for, any losses and expenses which the
Indemnified Parties may suffer, sustain or incur and which arise out of or
relate to (a) any act or failure to act of Company, any employee of Company or
any person controlled by Company or under contract with Company; (b) any breach
of this Agreement; or (c) any act or failure to act of CRSI taken in performance
of or arising out of its obligations pursuant to this Agreement, unless such act
or failure to act constitutes gross negligence or willful misconduct of CRSI.
Upon request of CRSI, Company will immediately undertake the defense of
any legal action against or involving the Indemnified Parties, and will retain
reputable, competent and experienced counsel to represent the interests of the
Indemnified Parties approved by CRSI, which approval will not be unreasonably
withheld. Company will not settle any legal action without the specific prior
written consent of each Indemnified Party named in the action and CRSI, which
consent may not be unreasonably withheld. The Indemnified Parties or any of them
will have the right to retain separate counsel and to participate in the
defense, compromise or settlement of the action at the expense of the respective
Indemnified Parties.
8. DEFAULT. In the event that CRSI or its successors or assigns
repeatedly, substantially and materially fails to meet the standards and
specifications hereinabove provided with respect to the services to be rendered
under this Agreement, or engages in gross negligence, fraud or willful
misconduct in the performance of its duties, Company will be released to secure
such services from other parties provided that as long as CRSI continues to
provide services under this Agreement, it will be paid for such services in
accordance with Section 4 herein. No default will be deemed to occur, however,
until Company has served written notice upon CRSI describing in reasonable
detail
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the events or occurrences giving rise to such claim of default and CRSI has
failed within thirty (30) days after receipt of such notice to cure or remedy
any such claim of default.
The foregoing provisions notwithstanding, Company will not have the
right to consider this Agreement breached if delays and interruptions in the
performance of the required services are the result of causes beyond the control
of CRSI or acts of God, provided that CRSI is using its reasonable best efforts,
in the case of causes beyond its control, to provide alternative sources of
services where needed.
In the event that Company fails to perform any term or condition of
this Agreement, and fails within ten (10) days of receipt of notice from CRSI to
cure such failure, CRSI may terminate this Agreement upon written notice to
Company.
9. NOTICES AND REQUESTS. Any notice, request or demand required may be
delivered by either party to the other in person or by registered or certified
mail to the following respective addresses and shall be deemed delivered upon
receipt:
If to Company:
Lexreit Properties, Inc.
The Huntington Center
41 South High Street, 24th Floor
Columbus, Ohio 43215
Attention: Treasurer
If to CRSI:
Cardinal Realty Services, Inc.
6954 Americana Parkway
Reynoldsburg, Ohio 43068
Attention: Secretary
10. MISCELLANEOUS.
(a) Should any term or provision hereof be deemed invalid,
void or unenforceable, the remainder of this Agreement will nonetheless
remain in full force and effect.
(b) The terms and conditions of this Agreement are governed by
and construed in accordance with the substantive laws of the State of
Ohio and will bind and benefit the respective parties hereto and their
successors and assigns.
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(c) This Agreement contains the complete understanding of the
parties with respect to Company's employment of CRSI to render the
services described herein and any other representations, inducements,
promises, agreements, arrangements or undertakings, whether oral or
written, express or implied, will have no force or effect.
(d) This Agreement may only be assigned with the prior written
consent of the other party to this Agreement.
(e) Any change, modification or discharge of the terms herein
will be valid only if in writing and executed by Company and CRSI.
IN WITNESS WHEREOF, Company and CRSI have set their hands and seals to
this Agreement as of the day and year first above written.
LEXREIT PROPERTIES, INC.
By:
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Name:
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Title:
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CARDINAL REALTY SERVICES, INC.
By:
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Name:
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Title:
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