ROYALE INVESTMENTS, INC.
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is entered into between ROYALE INVESTMENTS, INC.,
a Minnesota corporation (the "Company") and GLACIER REALTY LLC (or another name
to be selected prior to execution), a Minnesota limited liability company (the
"Manager").
WHEREAS, the Company intends to continue to qualify as a real estate
investment trust ("REIT"), as defined in the Internal Revenue Code of
1986, as amended (the "Code"), and to make investments by and through
the Company of the type permitted to be made by qualified REITs under
the Code; and
WHEREAS, the Manager is a corporation organized for the purpose of
managing the assets of the Company. as to its ownership of real estate
properties and providing certain management and administrative services
in connection with the Company's business affair, and the acquisition,
administration, operation and disposition of its net-leased retail
properties which is further defined in Section 1.11; and
WHEREAS, the Company plans and intends to continue a business plan for
the investing and acquisition of net-leased retail properties and also
office properties and in connection with its investments in net-leased
retail properties the Company desires to make use of the advice and
assistance of the Manager and the sources of information and certain
facilities available to the Manager, and to have the Manager undertake
the duties and responsibilities hereinafter set forth, on behalf of and
subject to the supervision of the Board of Directors of the Company
("Directors"), all as provided for herein; and
WHEREAS, the Manager is willing to render such services, subject to the
supervision of the Directors, on the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants and
agreements hereinafter set forth, the parties agree as follows:
ARTICLE I - DUTIES OF THE MANAGER
The Manager shall use its best efforts to present to the Company a
continuing and suitable investment program consistent with the investment
policies and objectives of the Company for investment in net-leased retail
properties, subject to the supervision of the Directors and upon their
direction, and to perform the following duties:
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1.1. Investment Program. The Manager shall work with the Company to develop
and present to the Company a continuing and suitable investment program and
opportunities to make investments in net-leased retail properties consistent
with the investment policies of the Company.
1.2. Investment Advice. The Manager shall serve as the Company's investment
Manager in connection with policy decisions to be made by the Directors and, as
requested, furnish the Directors with advice with respect to the making of real
estate acquisitions, holdings, and dispositions of net-leased retail real estate
assets and investments.
1.3. Investment and General Management. The Manager shall administer the
day to-day operations of the Company as they relate to net -eased retail assets
and investments and shall investigate and evaluate investment opportunities in
net-leased retail properties and recommend them to the Directors and the
Company, (subject to the prior approval of the Directors) to investigate,
select, and conduct relations with the developers, builders, co-venturers, or
partners of or with the Company, sellers and purchasers of real estate, tenants,
banks, other lenders, borrowers, consultants, accountants, mortgage loan
originators, brokers, participants, property managers, attorneys, appraisers
insurers, and person acting in any other capacity relevant to the activities of
the Company, and as necessary, negotiate contracts with, retain, and supervise
services performed by such parties in connection with net-leased retail assets
and investments which have been or may be acquired or disposed of by the
Company.
1.4. Financial Administration. The Manager shall administer such day-to-day
bookkeeping and accounting functions relating to the income and expenses as are
required or reasonably necessary for the proper management of the net-leased
retail property portfolio of the Company and prepare or cause to be prepared
such reports as may be required by any governmental authority in connection with
the ordinary conduct of the Company's business, but excluding periodic reports,
returns, or statements required under the Securities Exchange Act of 1934, as
amended (the "Act"), the Code, the securities and tax statutes of any
jurisdiction in which the Company is obligated to file such reports or the rules
and regulations promulgated under any of the foregoing and excluding any
reporting function or reports to the Company's stockholders. The Manager shall
maintain the books of account and records relating to services performed for the
Company accessible for inspection by the Company at any time during ordinary
business hours and shall provide reasonable statements on a monthly basis. The
Manager shall also prepare by November 1 of each calendar year, an annual budget
of income and expenses which relate to the net-leased retail portion of the
Company's portfolio for review and approval of the Company and its Directors and
thereafter Manager shall implement such budget for such calendar year provided
that the changes in the total expenses of the budget for such year do not
increase more than 5%.
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1.5. Agent. Subject to prior approval of the Directors, the Manager shall
act as agent of the Company in making, acquiring, and disposing of net-leased
retail real estate assets and investments. The Manager shall be responsible for
disbursing and collecting the income and funds, paying the debts, and fulfilling
the obligations of the Company relating to the Company's net-leased retail
assets and (subject to approval of the Company and the Directors) handling,
prosecuting, and settling any claims of or against the Company. The Manager
.shall also investigate, select and conduct relations on behalf of the Company
with individuals, corporations, and entities in furtherance of the investment
activities of the Company.
1.6. Exchanges, Dealers. The manager shall not conduct relations on behalf
of the Company with securities exchanges or with dealers making markets in the
Company's securities.
1.7. Investment of Cash. Subject to the prior approval of the Directors,
the Manager shall invest and reinvest any monies of the Company generated from
net-leased retail assets, , and manage the Company's short-term investments
including the acquisition and sale of money market instruments provided such
instruments am consistent with the Company's policies and are only those
instruments in which a real estate investment trust is permitted to invest under
the Code from time to time.
1.8. Bank Accounts. The Manager may establish one or more reasonable bank
accounts in the name of the Company reasonably necessary for conducting expected
activities of the Company and may deposit into and disburse from such accounts
any monies on behalf of the, Company under such terms and conditions as the
Directors may approve, provided that no funds in any such account shall be
commingled with funds of the Manager, and the Manager shall from time to time as
requested by the Directors render appropriate accounting of such deposits and
payments to the Directors and to the auditors of the Company.
1.9. Offices and Personnel. Subject to Section 5.2(k), the Manager shall
provide, keep and maintain at Minneapolis, Minnesota office space, equipment,
personnel, accounting facilities, and other facilities as required for the
performance of the foregoing services and operation of the Company's business.
1.10. Reports. The Manager shall, as requested by the Directors, make
reports to the Directors on its performance of the foregoing services and
furnish advice and recommendations with respect to other aspects of the business
of the Company.
1.11. Interest of the Parties and Information Furnished Manager. The
Company and the Directors shall at all times keep the Manager fully informed
with regard to the investment policy of the Company, the capitalization policy
of the Company, and generally their then current intentions as to the future of
the Company. the Company's immediate in-
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vestment policy for the present and near future is to invest in net-leased
retail real estate, properties and office properties. This Management Agreement
is an exclusive arrangement by and between the Company and Manager only with
respect to the net-leased retail assets of the Company, whether held in the name
of the Company or any of its related or affiliated companies, partnerships,
trusts, business associations or entities; however this Management Agreement
shall not be effective for any office type assets of the Company. Net-Leased
retail assets or investments as used in this Agreement shall include any and all
such real estate assets or investments of the Company or any of its related or
affiliated companies, partnerships, trusts, business associations or entities
whose use a reasonable person would conclude are or would be intended primarily
for normal retail sales of goods or products to consumers whether or not a net
lease exists. If such a property is leased on a net or gross rental basis shall
be irrelevant and if such an asset of investment shall become vacant or unleased
shall not affect its inclusion hereunder as a net-leased retail asset or
investment and such a classification is further intended to distinguish between
other assets and investments primarily for office use. In particular, the
Directors shall notify the Manager promptly of their intention to sell or
otherwise dispose of any of the Company's net-leased retail assets, or to make
any new investment in such assets. The Company shall furnish the Manager with a
certified copy of all financial statements, a signed copy of each report
prepared by independent certified public accountants, and such other information
with regard to its affairs all as is circulated to the officers and Directors or
its committees of the Company as and when so circulated or as the Manager may
from time to time reasonably request.
1.12. Net-Leased Retail Assets and Investments. Notwithstanding any
provision of this Agreement to the contrary, the rights and obligations of the
Manager hereunder shall relate and pertain solely to net-leased retail assets
and investments and to no other properties, assets or investments of the
Company, except for the consideration payable to Manager for referrals of
non-net-leased retail assets specified in Section 4.1(a) hereof, and all
provisions of this Agreement otherwise relating to the payment of compensation
and fees to the Manager shall be specifically limited to and based solely upon
net-leased retail properties owned by the Company. The Manager shall have no
rights to exercise any power or authority over or with respect to First
Commercial, LP.
ARTICLE II - QUALIFICATION AS A REAL ESTATE INVESTAIENT TRUST
2.1. REIT Qualification. Notwithstanding any provision in this Agreement to
the contrary, the Manager shall refrain from any action (including without
limitation the furnishing or rendering of services to tenants of property or
managing any real property) which, in the reasonable business judgment of the
Directors of which the Manager has actual notice, would (1) materially and
adversely affect the status of the Royale Investments, Inc., an affiliate of the
Company, as a REIT, as defined in the Code, or (2) materially violate any law,
rule, regulation, or statement of policy of any governmental body or agency
having jurisdiction
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over the Company or over its securities, or (3) otherwise not be permitted by
the corporate governance documents of the Company.
2.2. Preservation of REIT Status. In the event that the terms of this
Agreement at any time shall, in the opinion of counsel for the Company, threaten
to impair the status of the Company as a REIT in a manner materially adverse to
the interests of the members of the Company, the Company shall propose such
amendment to or substitute arrangements for this Agreement, with prospective or
retroactive effect, as may in its opinion be necessary to protect and preserve
the status of the Company as a REIT provided the substantive business terms
hereof are not altered.
ARTICLE III - LIMITATION OF LIABILITY
3.1. Fidelity Bond. The Manager need not maintain a fidelity bond.
3.2. Limitation of Liability of the Manager. The Manager assumes no
responsibility other than to render the services described herein in good faith
and shall not be responsible for any action of theDirectors in following or
declining to follow any advice or recommendation of the Manager. The Manager
will not be liable to the Company, its partners, or others, except by reason of
acts constituting bad faith, misconduct, or negligence. The Company shall
reimburse, indemnify, and hold the Manager harmless for and from any and all
expenses, losses, damages, liabilities, demands, charges, and claims of any
nature whatsoever in respect to or arising from. any acts or omissions of the
Manager undertaken in good faith and pursuant to the authority granted to the
Manager by this Agreement. The Manager may consult with legal counsel (which may
be the regular counsel of the Manager or other counsel), independent public
accountants, or other professional Managers and shall not be liable for any
action taken or omitted in good faith or by the Manager in accordance with the
advice of such counsel, accountants, or Managers, provided such action is not
the result of misconduct of negligence.
ARTICLE IV - COMPENSATION
4.1. Compensation. The Company shall pay compensation to the Manager for
its services hereunder as follows:
(a) Manager's Acquisition Fee. The Manager shall be paid in connection
with and at the time of the acquisition by the Company or any of its
affiliated or related companies, partnerships, trusts, business
associations or other entities of any net-leased retail real estate
asset or investment a fee equal to 1% of the Adjusted Purchase Price
of each real estate investment; provided, however, that any other
commissions or points, to be paid to any other entities in connection
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with such a purchase shall be the responsibility of the Company, and
shall be paid by the Company. Any points, fees or commissions that may
be then or thereafter payable in connection with the securing of any
financing of the Company or its assets, which shall remain the
responsibility of the Company. Adjusted Purchase Price shall include
any and all costs relating to the purchase of any real estate
investment or asset which is capitalized pursuant to generally
accepted accounting principles, including but not limited to, the
purchase price paid to sellers, closing costs, legal fees, accounting
fees, travel expenses, property acquisition items, fees and/or
commissions paid to brokers or dealers (exclusive of the Manager's
Acquisition Fee), title insurance premiums and charges, fees and costs
of securing engineering, environmental and appraisal reports and/or
studies, similar items relating to any such asset acquisition, and any
fees or charges for securing any credit enhancement or guarantees;
however, it is the intent of the parties that any fees paid to the
Manager shall not be included in the Adjusted Purchase Price for
purposes of calculating the Manager's Acquisition Fee i.e. 1% of the
1% fee should not be charged as part of the Manager's Acquisition Fee.
In the event that Manager refers a non-net-leased retail asset or
investment to the Company and such asset or investment is acquired by
the Company or any of its affiliated or related companies,
partnerships, trusts, business associations or other entities then the
Company shall pay the Manager an Acquisition Fee; provided however
that it is the intent of the parties that the Manager shall not
actively market or search for such properties or investments in the
trade areas other than Minnesota, Wisconsin and North Dakota and such
fee shall be payable on an ad hoc basis only if such a property or
investment would not have otherwise been available to the Company at
such time except for the efforts of the Manager. The Acquisition Fee
shall be fully earned and payable at the time the closing of a
property acquisition occurs. Also, it is contemplated from time to
time that the Company may acquire a property and pay all cash for the
property before construction completion with a condition that in the
event construction is not completed and other matters submitted for
approval by the Company in a timely manner by the tenant, the Company
may require the tenant or seller of the original property to
re-acquire the property back from the Company and in the event such
events take place and any property is "put back" to such tenant or
seller of the property, the Manager shall refund any Acquisition Fee
previously paid by the Company to the Manager.
(b) Annual Management Fee. The Manager shall be paid, for the services the
Manager renders to the Company pursuant to this Agreement, an annual
management fee, payable monthly, which fee shall be comprised of (i) a
net mini-
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mum annual amount of $250,000 plus (ii) 1% of the first $35 million of
Average Invested Assets relating to net-leased retail assets acquired
by or invested in by the Company or its related or affiliated
companies, partnerships, rings, business associations, or entities
after the date hereof and 6/10 of 1% of the next $40 million of such
Average Invested Assets, and 4/10 of 1% of such Average Invested
Assets in excess of $75 million (the "Management Fee"). Such annual
fee shall be payable monthly in the amount of $20,833 in advance, plus
an amount equal to 1/12 of the annual fee referenced in Section 4. 1
(b)(ii) based on the monthly Average Investment Assets. For purposes
of this Agreement, monthly "Average Invested Assets" of the Company
shall be deemed to mean the aggregate book value of the net-leased
retail assets of the Company invested, directly or indirectly, in
equity interests in and loans secured by net-leased retail real estate
(only for such assets so invested in or acquired by the Company after
the date hereof) but all before reserves for depreciation or bad debts
or other similar cash or non-cash reserves, computed by taking the
monthly average of such values at the beginning and the end of each
month during such period. It is the intent of the parties that such
$250,000 net minimum annual fee shall continue and such fee shall be
increased only pursuant to the schedule specified in Section
4.1(b)(ii) hereof with respect to net-leased retail assets or
investments of the Company acquired or invested in after the date
hereof.
(c) Disposition Fee. The Manager shall be paid for services rendered in
connection with and at the time of the sale or other disposition of
any individual net-leased real estate asset or investment a fee equal
to 1% of the sale or disposition price with respect to such real
estate asset or investment provided, however, that if all or a
substantial portion of all of the net-leased real estate properties,
assets or investments of the Company are being sold or disposed of
(other than by termination of this Agreement pursuant to Section 7.2
hereof) the Disposition Fee shall be 3% of the sale or disposition
price of such real estate investment. It is the intent of the parties
that if all or a substantial portion of the net-leased real estate
assets, properties or investments are sold in a single transaction or
serial or sequential transactions, the Termination Fee specified in
Section 7.2 should be due and payable and that the 1% Disposition Fee
should be payable only if the individual assets, properties or
investments are not part of a course of action, considering all
surrounding facts and circumstances, to sell or dispose of all or a
substantial portion of the real estate assets, properties or
investments. To the extent it is necessary to engage independent real
estate brokers to sell any such assets, the aggregate of the
Disposition Fee for the Manager and any commission or fee to any
independent broker may not exceed
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6% of the sale price and to the extent the independent broker's
commission is more than 3%, the Manager's Disposition Fee portion
shall be reduced accordingly so that the total Disposition Fees to the
Manager and any commission or fee to any independent broker are 6%.
The Management Fee payable" monthly and the scheduled percentage portion
referenced in Section 4.1(b)(ii) shall be estimated for the upcoming month and
shall be finally computed within thirty (30) days following the end of each
month by the Company's accountants or by the Manager and shall be then adjusted
in the following month as shall be appropriate. A copy of such computations
shall promptly be delivered to the Manager or calculated by the Manager and
shall be paid as a monthly expense by the Manager out of Company's funds.
4.2. Use of Affiliates. The Manager has the right to use affiliates and
personnel of affiliates, in its sole discretion, and is not required to perform
all duties with its own employees.
4.3. Additional Services. If the Company shall request the Manager to
render services to the Company other than those required to be rendered by the
Manager hereunder, such additional services, if performed, shall be compensated
separately on terms to be agreed upon from time to time between the Manager and
the Company, which terms shall not exceed either (1) the terms under which the
Manager or such affiliate is then performing similar services for others or (2)
the terms under which qualified unaffiliated persons are then performing such
services for comparable organizations.
4.4. Placement and Loan Fees. Subject to the prior approval of the
Directors, the Manager may negotiate its own placement fees, loan fees, loan
origination fees, or similar fees with developers of properties in which the
Company invests. Any such fee may not, however, be higher than such loan fee or
other similar fee being paid to the Company on the same transaction unless the
Manager discloses such fee to the Company and the Directors approve such fee.
The Manager shall be entitled to placement fees, loan fees, loan origination
fees, or other similar fees for securing mortgage loan commitments or other
secured or unsecured loans to the Company from third parties on terms and fees
to be negotiated between the Company and the Manager from time to time on an ad
hoc, basis.
4.5. Fees - General. Notwithstanding anything therein to the contrary, the
Manager may elect at its sole discretion, to defer (without any accrual of
interest) all or any portion of any fees to which it is entitled to such future
date as shall be determined by the Manager.
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ARTICLE V - EXPENSES AND LIMITATIONS
5.1. Expenses of the Manager. Without regard to the compensation the
Manager receives from the Company pursuant to this Agreement, the Manager shall
bear the following expenses incurred in connection with the performance of its
duties under this Agreement.
(a) employment expenses of the personnel employed by the Manager,
including but not limited to salaries, wages, payroll taxes, and the
cost of employee benefit plans;
(b) subject to Section 5.2(e), travel and other expenses of directors,
officers, and employees of the Manager, except expenses of such
persons for travel expenses and other costs of attendance of such
officers, directors and employees of the Manager who are also
officers, directors or employees of the Company for attending the
National Association of Real Estate Investment Trusts ("NAREIT")
conferences, seminars, and meetings and similar conferences, seminars,
and meetings of real estate industry associations or other groups
relevant to the Company's business;
(c) subject to Section 5.2(k), rent, telephone, utilities, office
furniture, equipment and machinery (including computers, to the extent
utilized), and other office expenses of the Manager, except to the
extent such expenses relate solely to an office maintained by the
Company separate from the office of the Manager, and
(d) subject to Section 5.2 (e), miscellaneous administrative expenses
incurred in supervising and monitoring real property (other than fees
and costs of third parties for inspecting Properties and creating or
updating engineers' or environmental reports or appraisals or other
reports or analyses relating to the assets of the Company) and other
investments of the Company or relating to performance by the Manager
of its obligations hereunder.
5.2. Expenses of the Company. Except as otherwise expressly provided in
this Agreement, the Company shall pay all its expenses not assumed by the
Manager as set forth in Section 5.1, and without limiting the generality of the
foregoing it is specifically agreed that the following expenses of the Company
(reference in this Section to the Company shall include its related and
affiliated companies, partnerships, trusts, business associates or entities)
shall be paid by the Company and shall not be paid by the Manager:
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(a) the cost of borrowed money, including the repayment of funds borrowed
by the Company, interest thereon and all other costs, fees and
expenses in connection with such borrowings;
(b) taxes on income and taxes and assessments on real property, if any,
and all other taxes applicable to the Company and its investments;
(c) legal, auditing, accounting, underwriting, brokerage, listing,
reporting, registration, and other fees, and printing, engraving, and
other expenses and taxes incurred in connection with the issuance,
distribution, transfer, trading, registration, and stock exchange
listing of the Company's, the Directors' or affiliates of the
Company's securities or good faith attempts thereof, whether or not
such issuance, distribution, transfer, trading, registration or
listing shall materialize or be implemented;
(d) fees and expenses paid to the Directors, independent Managers,
consultants, managers, local property managers, or management firms,
and other agents employed by or on behalf of the Company including
third party inspectors, engineers, environmental people or entities,
and appraisers who create or update reports or inspections or other
reports or analyses relating to the assets of the Company;
(e) expenses directly connected with the acquisition, disposition, and
ownership of real estate interests or other property (including the
costs of foreclosure, insurance premiums, legal services, brokerage
and sales commissions, maintenance, repair, improvement, and local
management of property) including but not limited to travel and other
expenses incurred by Directors, officers, partners, employees of the
Company or Directors, officers, directors or employees of the Manager
which shall be deemed expenses directly connected with the
acquisition, disposition, inspection and ownership of real estate
interests or other property, whether incurred prior to closing of any
such acquisition or disposition or thereafter, and even if the closing
and acquisition or disposition shall never take place or materialize
and shall also include such out-of-pocket costs, and expenses incurred
by any such officers, employees or Directors of the Company or Manager
(if reasonably necessary or requested by the Company) in establishing
or maintaining relationships with underwriters. Any fees or similar
costs paid in securing guarantees or other credit enhancement
agreements shall be the obligation of the Company. In the event the
Manager advances such monies on behalf of the Company, they shall be
reimbursable expenses to the Manager upon demand and presentation;
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(f) insurance as required by the Directors (including director's liability
insurance, if applicable);
(g) expenses connected with payments of dividends or interest or
distributions in cash or any other form made or caused to be made by
the Company or the Directors to holders of securities of the Company,
the Directors or affiliates of the Company;
(h) all expenses connected with communications to holders of securities of
the Company or affiliates of the Company or the Directors and the
other bookkeeping and clerical work necessary in maintaining relations
with holders of securities including the cost of printing and mailing
certificates for securities and proxy solicitation materials and
reports to holders of such securities;
(i) transfer agents', registrars' and indenture trustees' fees and
charges;
(j) legal, accounting, and auditing fees and expenses of the Company,
affiliates of the Company or the Directors; and
(k) a reasonable allocation of the Manager's rent and overhead costs and
expenses reasonably necessary for the officers, Directors and agents
of the Company to conduct business in space leased or owned by the
Manager including storage of documents and files.
ARTICLE VI - OTHER ACTIVITIES OF MANAGER
6.1. Other Activities of Manager. The Manager shall not engage in other
activities or businesses similar to those to be performed pursuant hereto for
others or as an advisor or manager to any other real estate investment trust
without the consent, and approval of the Company which consent and approval
shall not be unreasonably withheld. No provision in this Agreement shall limit
or restrict the right of any present or future principal, governor, director,
officer, employee, member or shareholder of the Manager or an affiliate of the
Manager to engage in any other business or to render services of any kind to any
other corporation, partnership, individual, or other entity, including but not
limited to activities similar to those to be performed pursuant hereto or as an
advisor to a real estate investment trust. The Manager shall not, however,
disclose any confidential information of the Company to other persons or
entities, unless such information is then public knowledge through no fault of
Manager, is properly provided to the Manager without restriction by a third
party or is already in the Manager's possession at the time of receipt by the
company.
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6.2. Investment Opportunities. Manager shall act on a basis which is fair
and reasonable to the Company in selecting, from among the investment
opportunities that come to the attention of the Manager, those investment
opportunities which it offers to the Company, it being the intent of the Company
and its affiliates to invest in retail net-leased properties and investments and
office properties and investments, provided further that any opportunity for
real estate investment in a retail net-leased property shall first be offered to
the Company or in the case of office properties, they shall be first offered to
affiliates of the Company investing in office properties and if the Company or
its affiliate declines to so invest, then the Manager shall be free to offer
such retail net-leased property to others or the Manager or its present or
future principals, Directors, officers, employees, members or shareholders or
any of their affiliates may invest in such property. The Manager or its
principals, Directors, officers, employees, members or shareholders or any of
their affiliates may invest in assets, properties or other investments which are
not within the investment objectives of the Company or its affiliates which
investments objective is for the acquisition of net-leased retail properties and
office properties (which does not include traditional office-warehouse type
properties but may include "flex" type office-warehouse facilities which are
more than 20 % office space).
6.3. No Partnership or Joint Venture. The Company and the Manager are not
partners or joint venturers with each other and neither the terms of this
Agreement nor the fact that the Company and the Manager have Joint interests in
any one or more investments shall be construed to make them such partners or
joint venturers or impose any liability as such on either of them.
6.4. Signing Authority. Directors, officers, employees and agents of the
Manager or of its affiliates may serve as directors, officers, employees,
agents, nominees, or signatories of the Company. When executing documents or
otherwise acting in such capacities for the Company, such persons shall use
their respective designation or titles in the Company.
ARTICLE VII - TERM AND TERMINATION
7.1. Term and Renewal. This Agreement shall continue in force from the date
hereof for a five (5) year period ending , 2002 and may be terminated by either
party by written notice one hundred eighty (180) days prior to the expiration of
the initial term or renewal term, as the case may be. Absent written notice of
termination and nonrenewal as provided in this section, this Agreement shall be
automatically renewed for successive one-year terms upon the expiration of the
initial term and each renewal term. Notice of termination and nonrenewal shall
be given in writing by the Company to the Manager not less than one hundred
eighty (180) days before the expiration of the initial term of this Agreement or
of any renewal term thereof. Notwithstanding anything contained herein to the
contrary, the termination or nonrenewal of this Agreement for any- reason, by
either party, shall be subject to the Termination Fee specified in Section 7.2.
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7.2. Termination Fee. In the event that this Agreement terminates for any
reason, including but not limited to nonrenewal, the Company immediately shall
pay the Manager, in addition to any other compensation due hereunder, a
Termination Fee equal to three percent (3%) of Invested Real Estate Assets of
the Company or as related or affiliated companies, partnerships, trusts,
business associations or entities as of the date of termination by the Company
from the date of termination by the Company (as shown on the books and records
of the Company). It is the intent of the parties that the Termination Fee shall
not apply to such assets which are or were purchased by the Company, or its
related or affiliated companies partnerships, trusts, business associations or
entities as of the date hereof but shall only apply to such Invested Real Estate
Assets that are then owned and that were acquired or purchased after the date
hereof Invested Real P-state Assets shall mean the aggregate book value of the
net-leased retail assets or investments of the Company invested directly or
indirectly in equity interests in and loans secured by real estate, before
reserves for depreciation or bad debts or other similar cash or non-cash
reserves.
7.3. Assignment. In the event the Manager assigns or transfers its interest
in this Agreement, without the written consent of the Company being first
obtained, which consent will not be unreasonably withheld, or if Vernon R. Beck,
John Parsinen or John D. Parsinen, Jr. singularly or together, or their estates,
families, family members or heirs at law (or a trust, partnership or other legal
entity establishment established for the benefit of their estates, families,
family members or heirs at law) do not own and control the majority of the
voting interests of the Manager, then the Company shall have the right to
terminate this Agreement abject to the terms and conditions of Section 7.2 and
Section 7.5. Nothing contained herein shall be deemed a default hereunder or
permit the termination of this Agreement by the Company because of the transfer
or conveyance of either of said individual interest or shares in the Manager to
his estate, family, family members, or to his heirs at law, or to a trust,
partnership, or other legal entity established for the benefit of his estate,
family, family members, or heirs at law, all of which shall be permitted
hereunder. This Agreement shall not be assignable by the Company without the
prior written consent of the Manager, except in the case of any assignment by
the Company to a corporation or other organization which is the successor to the
Company, and/or which will hold title to the Company's assets including those
which am or become the subject of this Agreement, in which case such successor
shall be bound hereby and by the terms of said assignment in the same manner and
to the same extent as the Company is bound hereby and the Company shall not be
released of its primary obligations hereunder. Nothing contained herein shall
prohibit the principal, shareholders or members of the Manager from pledging
their interest or shares in the Manager.
7.4. Default or Bankruptcy of the Manager. At the sole option of the
Company, this Agreement shall terminate immediately upon written notice of such
termination from the Directors of the Company to the Manager if any of the
following events shall have occurred:
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(a) the Manager shall have materially violated any provision of this
Agreement and, after notice of such violation, shall have failed to
cure such default within sixty (60) days or in the event such default
cannot be reasonably cured within sixty (60) days, then a reasonable
period of time if the Manager is diligently pursuing a course of
action to so cure;
(b) a petition shall have been filed against the Manager for an
involuntary proceeding under any applicable bankruptcy, insolvency, or
other similar law now or hereafter in effect, and such petition shall
not have been dismissed within ninety (90) days of filing; or a court
have jurisdiction shall have appointed a receiver, liquidator,
assignee, custodian, trustee, sequestrator, or similar official of the
Manager for any substantial portion of its property, or ordered the
winding up or liquidation of its affairs; or
(c) the Manager shall have commenced a voluntary proceeding under any
applicable bankruptcy, insolvency, or other similar law now or
hereafter in effect, or shall have made any general assignment for the
benefit of creditors,, or shall have failed generally to pay its debts
as they became due.
The Manager agrees that, if any of the events specified 'in Section 7.4 (b) or
(c) shall occur, the Manager will give written notice thereto to the Directors
within twenty business days following the occurrence of such event.
7.5. Action upon Termination. From and after the date of any termination of
this Agreement, the Manager shall be entitled to no further compensation for
services rendered hereunder in the case of termination pursuant to this Article
VII, but shall be paid, on a pro rata basis, all compensation due for services
performed prior to such termination and all compensation due pursuant to the
Termination Fee and Section 7.2. Upon such termination, the Manager immediately
shall:
(a) pay over to the Company all monies collected and held for the account
of the Company pursuant to this Agreement, after declining therefrom
any accrued compensation and reimbursements for the expenses to which
the Manager is then entitled;
(b) deliver to the Directors a full and complete accounting, including a
statement showing all sums, collected by the Manager and a statement
of all sums held by the Manager for the period commencing with the
date following the date of the Manager' s last accounting to the
Directors; and
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(c) deliver to the Company all property and documents of the Company then
in the Manager's custody or possession provided that the Manager shaft
have the right to copy and retain copies of all such documents.
Notwithstanding the foregoing, after the termination of this Agreement, the
Manager shall, upon reimbursement of its out-of-pocket costs, if any, provide
such services and documents to the Company as may be reasonably requested by the
Company to enable it to complete accounting reports, tax returns, audit
functions, Internal Revenue Service audits and other similar financial and tax
accounting functions.
7.6. Rights of Termination Cumulative. The rights of termination
specifically provided shall be considered to be cumulative and shall be in
addition to the rights of termination for breach of this Agreement otherwise
inuring to the parties by operation of law.
ARTICLE VIII - MISCELLANEOUS
8.1. Notices. Any notice, report, or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report, or other communication is accepted by the party to
whom it is given, and shall be given by being delivered at the following
addresses to the parties hereto:
The Directors and/or the Company
One Logan Square
Suite 1105
Philadelphia, PA 19103
Attn: Clay W. Hamlin III The Manager.
The Manager
Glacier Realty LLC
3430 List Place
Minneapolis, Minnesota 55416
Attn: Vernon R. Beck
with a copy to:
Parsinen Kaplan Levy Rosberg & Gotlieb P.A.
100 South Fifth Street, Suite 1100
Minneapolis, Minnesota 55402
Attention: John Parsinen
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Either party hereto may at any time give notice to the other party in writing of
a change of its address for purposes of this Section 8.1.
8.2. Amendments. This Agreement shall not be amended, changed, modified,
terminated, or discharged in whole or in part except by an instrument in writing
signed by each of the parties or their respective successors or assigns.
8.3. Successors and Assigns. This Agreement shall be binding upon the
parties, their successors or assigns and with respect to the Company shall
relate to and include the assets and/or investments of the Company and its
related or affiliated companies, partnerships, trusts, business associations or
other entities.
8.4. Governing Law. The provisions of this Agreement shall be governed by
and construed in accordance with the laws of the State of Minnesota and
Minnesota shall be the place for venuing any and all actions relative to this
Agreement. In the event a party commences litigation to enforce the terms and
conditions of this Agreement, the party successful in establishing a breach by
the other party or successfully defending against an alleged breach of this
Agreement shall be entitled to recover reasonable attorneys and witness fees and
costs and any such court having jurisdiction over such matter shall so award
such fees and costs.
8.5. Captions. The captions included in this Agreement have been inserted
for ease of reference only and shall not be construed to affect the meaning,
construction, or effect of this Agreement.
8.6. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes and cancels
any preexisting agreements with respect to such subject matter.
8.7. Separability. If any term or provision of this Agreement or the
application thereof to any person, property or circumstance shall to any extent
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons, properties and circumstances other than
those as to which it is invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
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IN WITNESS WHEREOF, the parties hereto have caused this Management
Agreement to be executed by their duly authorized officers.
Dated: October 14, 1997 ROYALE INVESTMENTS, INC.
A Minnesota corporation
By: _____________________________
Its: ________________________
GLACIER REALTY LLC
By: _____________________________
Its: ________________________