Exhibit 99.5
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (this "Management Agreement") is dated as of
December 5, 2001 and entered into by and between Lexington Acquiport Company
II, LLC, a Delaware limited liability company (the "Company"), and Lexington
Realty Advisors, Inc., a Delaware corporation (the "Asset Manager").
WHEREAS, the Company owns or will own net-leased real estate properties
in the United States of America (collectively, the "Tranche II Properties") and
owns or will own loans ("Tranche II LSL Loans") made to one or more limited
liability companies (each, an "LXP LLC") to finance a part of the purchase price
for net-leased real estate properties (each an "Tranche II LSL Property") in the
United States of America being acquired by limited liability companies (each, a
"Special Purpose LLC") the sole member of which is a LXP LLC; and
WHEREAS, the Company desires to have the Asset Manager undertake the
duties and responsibilities hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the Company and the Asset Manager
agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms used
in this Management Agreement shall have the meanings ascribed to such terms in
that certain Operating Agreement of Lexington Acquiport Company II, LLC dated as
of even date herewith between Lexington Corporate Properties Trust, a Maryland
real estate investment trust, as a managing member ("LXP"), and The Comptroller
of the State of New York, as Trustee of the Common Retirement Fund, as a
non-managing member (the "Fund") (as such Operating Agreement may be amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Operating Agreement").
2. Obligations of the Asset Manager. The Asset Manager shall perform on
behalf of the Company those duties and responsibilities of the Manager in
respect of the evaluation of Proposed Tranche II Properties and the acquisition
of Approved Tranche II Properties, and the evaluation of Tranche II LSL
Properties and the making of Tranche II LSL Loans, as contemplated by Section
3.6 of the Operating Agreement, and in respect of the management of the Tranche
II Properties and Tranche II LSL Loans, that may be delegated to the Asset
Manager pursuant to Section 3.1(b) of the Operating Agreement. With respect to
the management of the Tranche II Properties, the Asset Manager shall perform the
duties and responsibilities described in Appendix 1 attached hereto and made a
part hereof. With respect to the management of the Tranche II LSL Loans, the
Asset Manager shall perform the duties and responsibilities described in
Appendix 1 attached hereto and made a part hereof. Additionally, the Asset
Manager shall prepare or cause to be prepared reports and statements as is, and
in the manner, required by the Operating Agreement. The Asset Manager shall
maintain appropriate books of account and records relating to services performed
pursuant hereto, which books of account and records shall be available for
inspection by representatives of the Company upon reasonable notice during
normal business hours, and from time to time or at any time requested by the
Company, make reports to the Company of the Asset Manager's performance of the
foregoing services. In performing the foregoing services, the Asset Manager
shall not, and shall have no power or authority to, (i) bind the Company, or to
enter into any contract or other agreement in the name of or on behalf of the
Company, unless specifically authorized in writing to do so by the Company, (ii)
amend, cancel or alter any of the organizational documents of the Company, or
(iii) do any act not authorized pursuant to this Management Agreement, unless
specifically authorized to do so in writing by the Company or specifically
authorized to do so by the Operating Agreement. Any and all approvals required
from the Company pursuant to this Management Agreement may be given or withheld
by the Company in its absolute and sole discretion.
3. No Partnership or Joint Venture. The Company and the Asset Manager
are not partners or joint venturers with each other and the terms of this
Management Agreement shall not be construed so as to make them such partners or
joint venturers or impose any liability as such on either of them.
4. Employees of Asset Manager. All persons engaged in the performance
of the services to be performed by the Asset Manager hereunder shall be
employees of LXP; provided, however, that, employees and officers of LXP may
also be employees and officers of the Company. All of the Asset Manager's
employees shall be covered by workers' compensation insurance in the manner
required by law.
5. Limitation on the Asset Manager's Liability.
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(a) Except as provided in Section 5(b) below, the Asset Manager
and its directors, officers and employees shall not be liable,
responsible or accountable in damages or otherwise to the Company or
either Member for (a) any loss or liability arising out of any act or
omission by the Asset Manager so long as any such act or omission did
not constitute (i) a breach of this Management Agreement or of the
Operating Agreement which breach had or has a material adverse effect
on the Company and, if capable of cure, is not cured within fifteen
(15) days after notice thereof is delivered to the Asset Manager by the
Company, (ii) gross negligence or willful misconduct or (iii) fraud or
bad faith on the part of the Asset Manager or (b) any acts or omissions
by third parties selected by the Asset Manager in good faith and with
reasonable care to perform services for the Company.
(b) Notwithstanding the limitation contained in Section 5(a)
above, the Asset Manager shall be liable, responsible and accountable
in damages or otherwise to the Company and the Fund for any act or
omission on behalf of the Company and within the scope of authority
conferred on the Asset Manager (i) which act or omission was negligent
(including any negligent misrepresentation) and violated any law,
statute, regulation or rule relating to Shares or any other security of
LXP or (ii) to the extent the Company or the Fund is charged with
liability for, or suffers or incurs loss, liability, cost or expense
(including reasonable attorneys' fees) as a result of, such act or
omission and such act or omission was negligent and related to Shares
or such other security of LXP.
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6. Company's Professional Services. The Company may independently
retain legal counsel and accountants to provide such legal and accounting advice
and services as the Company shall deem necessary or appropriate.
7. Expenses of the Asset Manager and the Company.
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(a) The Asset Manager shall pay, without reimbursement by the
Company (i) the salaries of all of its officers and regular employees
and all employment expenses related thereto, (ii) general overhead
expenses, (iii) record-keeping expenses, (iv) the costs of the office
space and facilities which it requires, (v) the costs of such office
space and facilities as the Company reasonably requires, (vi) all out
of pocket costs and expenses incurred in connection with the management
of the Tranche II Properties and the Company (other than reasonable and
customary costs and expenses of Third Parties retained in connection
with the management of the Tranche II Properties and the Company) and
(vii) costs and expenses relating to Acquisition Activities as set
forth in and limited by Section 3.6(f) of the Agreement.
(b) The Asset Manager shall either pay directly from a Company
account or pay from its own account and be reimbursed by the Company
for the following Company costs and expenses that are incurred by the
Company or by the Asset Manager in the performance of its duties under
this Management Agreement or the Operating Agreement:
(i) Permitted Expenses;
(ii) all reasonable and customary costs and expenses
relating to Third Parties retained in connection with a Proposed
Tranche II Property or an Approved Tranche II Property or a
Tranche II LSL Loan as provided in Section 3.6(f) of the Operating
Agreement provided, that if for any reason the Asset Manager, or
any Affiliate of LXP or the Asset Manager (instead of the Company
or an SP Subsidiary) acquires title to any Proposed Tranche II
Property or Approved Tranche II Property, the Asset Manager shall
pay all of the costs and expenses incurred or to be incurred in
connection with such Proposed Tranche II Property or Approved
Tranche II Property.
The Asset Manager shall not pay or be reimbursed by the Company for any
other cost or expense.
(c) Except as expressly otherwise provided in this Management
Agreement or the Operating Agreement, the Company shall directly pay
all of its own expenses, and without limiting the generality of the
foregoing, it is specifically agreed that the following expenses shall
be borne directly by the Company and not be paid by the Asset Manager:
(i) interest, principal or any other cost of money borrowed
by the Company;
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(ii) fees and expenses paid to independent contractors,
appraisers, consultants and other agents retained by or on behalf
of the Company and expenses directly connected with the financing,
refinancing and disposition of real estate interests or other
property (including insurance premiums, legal services, brokerage
and sales commissions, maintenance, repair and improvement costs
and expenses related to the Tranche II Properties); and
(iii) insurance as required by the Company.
8. Indemnification by the Company. The Company shall indemnify, defend
and hold harmless the Asset Manager by reason of any act or omission or alleged
act or omission arising out of the Asset Manager's activities as the Asset
Manager on behalf of the Company, against personal liability, claims, losses,
damages and expenses for which the Asset Manager has not otherwise been
reimbursed by insurance proceeds or otherwise (including attorneys' fees,
judgments, fines and amounts paid in settlement) actually and reasonably
incurred by the Asset Manager in connection with such action, suit or proceeding
and any appeal therefrom, unless the Asset Manager (A) acted fraudulently, in
bad faith or with gross negligence or willful misconduct or (B) by such act or
failure to act breached any covenant contained in this Management Agreement,
which breach had or has a material adverse effect on the Company or either
Member and, if capable of cure, is not cured within fifteen (15) days after
notice thereof from the Company. Any indemnity by the Company under this
Management Agreement shall be provided out of, and to the extent of, Company
revenues and assets only, and no Member shall have any personal liability on
account thereof. The indemnification provided under this Section 8 shall (x) be
in addition to, and shall not limit or diminish, the coverage of the Asset
Manager under any insurance maintained by the Company and (y) apply to any legal
action, suit or proceeding commenced by a Member or in the right of a Member or
the Company. The indemnification provided under this Section 8 shall be a
contract right and shall include the right to be reimbursed for reasonable
expenses incurred by the Asset Manager within thirty (30) days after such
expenses are incurred.
9. Terms and Termination. This Management Agreement shall remain in
force until terminated in accordance herewith. At the sole option of the
Company, exercisable in the Company's sole and arbitrary discretion, this
Management Agreement may be terminated at any time and for any reason
immediately upon notice of termination from the Company to the Asset Manager.
This Management Agreement shall automatically expire upon the completion of
dissolution or winding up of the Company pursuant to Section 9.2 of the
Operating Agreement or the removal or resignation of LXP as Manager. This
Management Agreement shall also terminate upon any of the following:
(a) The Asset Manager shall be adjudged bankrupt or insolvent by a
court of competent jurisdiction or an order shall be made by a court of
competent jurisdiction for the appointment of a receiver, liquidator or
trustee of the Asset Manager or of all or substantially all of its
property by reason of the foregoing, or approving any petition filed
against the Asset Manager for reorganization, and such adjudication or
order shall remain in force and unstayed for a period of 30 days.
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(b) The Asset Manager shall institute proceedings for voluntary
bankruptcy or shall file a petition seeking reorganization under the
Federal Bankruptcy Code, for relief under any law for relief of
debtors, or shall consent to the appointment of a receiver for itself
or for all or substantially all of its property, or shall make a
general assignment for the benefit of its creditors, or shall admit in
writing its inability to pay its debts generally as they become due.
10. Action Upon Termination. After the expiration or termination of
this Management Agreement, the Asset Manager shall:
(a) Promptly pay to the Company or any person legally entitled
thereto all monies collected and held for the account of the Company
pursuant to this Management Agreement, after deducting any compensation
and reimbursement for its expenses which it is then entitled to receive
pursuant to the terms of this Management Agreement.
(b) Within 90 days deliver to the Company a full account,
including a statement showing all amounts collected by the Asset
Manager and a statement of all monies disbursed by it, covering the
period following the date of the last accounting furnished to the
Company.
(c) Within ten (10) days deliver to the Company all property and
documents of the Company then in the custody of the Asset Manager.
Upon termination of this Management Agreement, the Asset Manager shall be
entitled to receive payment for any expenses and fees (including without
limitation the management fee which shall be prorated on a daily basis and
acquisition fees) as to which at the time of termination it has not yet received
payment or reimbursement, as applicable, pursuant to Section 7 and Section 11
hereof, less any damages to the Company caused by the Asset Manager.
11. Acquisition Fee and Management Fee.
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(a) Upon the acquisition of any Approved Tranche II Property
acquired by the Company or by an SP Subsidiary pursuant to Section 3.6
of the Operating Agreement (including any Approved Tranche II Property
acquired by the Company or by an SP Subsidiary contributed in whole or
in part by LXP as contemplated by the last two sentences of Section
5.1(b) of the Operating Agreement), or upon the making by the Company
of a Tranche II LSL Loan to an LXP LLC pursuant to Section 3.6 of the
Operating Agreement (including any Tranche II LSL Loan related to a
Tranche II LSL Property acquired by a Special Purpose LLC from LXP),
the Company shall pay the Asset Manager an acquisition fee equal to (x)
the purchase price of such acquired Approved Tranche II Property
multiplied by (y) three quarters of one percent (0.75%). If the Manager
shall arrange financing for the purchase of an Approved Tranche II
Property without the use of a third-party broker, then the Company
shall pay the Asset Manager a fee equal to one half of one percent
(0.50%) of the loan amount arranged.
(b) The Company shall pay to the Asset Manager an annual
management fee equal to two percent (2%) of Net Rents, payable monthly.
Such fee shall be calculated
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monthly, based on Net Rents received by the Company for such month, and
adjusted as provided in this Section 11(b). Within thirty (30) days of
the Company's receipt of the annual reports described in Section 4.3 of
the Operating Agreement for a fiscal year, the Asset Manager shall
provide to the Company a written statement of reconciliation setting
forth (a) the Net Rents for such fiscal year and the management fee
payable to the Asset Manager in connection therewith, pursuant to this
Management Agreement, (b) the management fee already paid by the
Company to the Asset Manager during such fiscal year, and (c) either
the amount owed to the Asset Manager by the Company (which shall be the
excess, if any, of the management fee payable to the Asset Manager for
such fiscal year pursuant to this Agreement over the management fee
actually paid by the Company to the Asset Manager for such fiscal year)
or the amount owed to the Company by the Asset Manager (which shall be
the excess, if any, of the management fee actually paid by the Company
to the Asset Manager for such fiscal year over the management fee
payable to the Asset Manager for such fiscal year pursuant to this
Agreement). The Asset Manager or the Company, as the case may be, shall
pay to the other the amount owed pursuant to clause (c) above within
five (5) Business Days of the receipt by the Advisor and the Fund of
the written statement of reconciliation described in this Section 11.
In addition, in those cases in which a tenant of any Tranche II
Property requests that the Company provide property management services
at such tenant's expense, Asset Manager shall be entitled to an
oversight fee for such property management services for the tenant of
such Tranche II Property equal to one half of one percent (0.50%) of
the Net Rent from such Tranche II Property ("Oversight Fee"), which
Oversight Fee shall be payable by the tenant of such Tranche II
Property, in accordance with the terms as such tenant and Asset Manager
may agree. Concurrently with the reconciliation statement required
above, the Asset Manager shall provide to the Advisor and the Fund a
written statement setting forth all Oversight Fees paid to the Asset
Manager during such fiscal year and the Net Rents relating to such
Tranche II Properties for such fiscal year.
12. Assignment. The Asset Manager may not assign or delegate any of its
rights or obligations hereunder.
13. Notices. Unless otherwise specifically provided herein, any notice
or other communication required herein shall be given in accordance with
the Operating Agreement.
14. Amendments and Waivers. No amendment, modification, termination or
waiver of any provision of this Management Agreement shall in any event be
effective without the written concurrence of the Company. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
15. Governing Law. THIS MANAGEMENT AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
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16. Entire Agreement. This Management Agreement embodies the entire
agreement of the parties with respect to the subject matter hereof and
supersedes all prior agreements, written and oral, relating to the subject
matter hereof.
17. Severability. In case any provision in or obligation under this
Management Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
18. No Waiver, etc. No waiver by the Company of any default hereunder
shall be effective unless such waiver is in writing and executed by the Company
nor shall any such written waiver operate as a waiver of any other default or of
the same default on a subsequent occasion. Furthermore, the Company shall not,
by any act, delay, omission or otherwise, be deemed to have waived any of its
rights, privileges and/or remedies hereunder, and the failure or forbearance of
the Company on one occasion shall not prejudice or be deemed or considered to
have prejudiced its right to demand such compliance on any other occasion.
19. No Third Party Beneficiary. The Asset Manager is not a third party
beneficiary of the Operating Agreement and shall have no rights or remedies
thereunder, and the parties to the Operating Agreement can amend, modify or
terminate the Operating Agreement at any time without the Asset Manager's
consent and without any liability to the Asset Manager.
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IN WITNESS WHEREOF, the parties hereto have caused this Management
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
COMPANY LEXINGTON ACQUIPORT COMPANY II,
LLC, a Delaware limited liability company
By: LEXINGTON PROPERTIES CORPORATE
TRUST, a Maryland real estate investment trust,
the managing member
By: /s/ Patrick Carroll
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Name: Patrick Carroll
Its: Chief Financial Officer
ASSET MANAGER LEXINGTON REALTY ADVISORS, INC.
By: ___________________________________
Name:
Its:
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APPENDIX 1 TO THE
MANAGEMENT AGREEMENT
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PROPERTY MANAGEMENT RESPONSIBILITIES
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A. The Asset Manager shall perform its duties and obligations under
Section 2 of the Management Agreement with respect to the management of the
Tranche II Properties in accordance with the following standards:
1. Management of the Tranche II Properties. Asset Manager shall devote
its commercially reasonable efforts, consistent with first class professional
management, to manage the Tranche II Properties, and shall perform its duties
with respect thereto under the Management Agreement in accordance with the
Operating Agreement and Annual Plan and in a reasonable, diligent and careful
manner so as to manage and supervise the operation, maintenance, leasing and
servicing of each Tranche II Property in a manner that is comparable to similar
properties in the market area in which such Tranche II Property is located. The
services of Asset Manager hereunder are to be of a scope and quality not less
than those generally performed by professional managers of other similarly
situated properties in the market area in which each Tranche II Property is
located. Asset Manager shall make available to the Company the full benefit of
the judgment, experience and advice of the members of Asset Manager's
organization and staff with respect to the policies to be pursued by the Company
in operating the Tranche II Properties, and will perform such services as may be
requested by the Company within the scope of the Management Agreement in
operating, maintaining, leasing, and servicing each Tranche II Property.
2. Specific Duties of Asset Manager. Without limiting the duties and
obligations of Asset Manager under any other provisions of the Management
Agreement, Asset Manager shall have the following duties and perform the
following services with respect to management of the Tranche II Properties:
2.1 Repairs and Maintenance. In accordance with and subject to the
Operating Agreement and the Annual Plan, Asset Manager shall cause to be made,
or ensure that the tenant makes, all repairs and shall cause to be performed, or
ensure that the tenant performs, all maintenance on the buildings, appurtenances
and grounds of each Tranche II Property as are required to maintain each Tranche
II Property in such condition and repair (and in compliance with applicable
codes) that is comparable to similarly situated properties in the market area in
which such Tranche II Property is located, and such other repairs as may be
required to be made under the leases governing each Tranche II Property. Asset
Manager shall to the extent it deems necessary arrange for periodic inspections
of the Tranche II Properties by independent contractors.
2.2 Leasing Supervision Activities.
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(a) Leasing Supervision. Asset Manager shall supervise all leasing
activities, for the purpose of leasing the available space in the Tranche II
Properties to tenants upon such terms and conditions as shall be consistent with
the Operating Agreement and the Annual Plan.
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(b) Generally. In the performance of Asset Manager's duties under
this Section 2.2, Asset Manager shall (i) develop and coordinate advertising,
marketing and leasing plans for space at each Tranche II Property that is vacant
or anticipated to become vacant; (ii) cooperate and communicate with leasing
specialists, consultants and third-party brokers in the market, and solicit
their assistance with respect to new tenant procurement; and (iii) notify the
Company in writing of all offers for tenancy at each Tranche II Property which
Asset Manager believes are made in good faith, including the identification and
fee schedules of procuring brokers, if any.
(c) Negotiation of Leases. Asset Manager shall negotiate all
tenant leases, extensions, expansions and other amendments and related
documentation on the Company's behalf in accordance with the Operating Agreement
and the Annual Plan. All such documentation shall be prepared at the Company's
expense by counsel acceptable to or designated by the Company, and shall be
executed by the Company. The terms of all such documentation are to be approved
by the Company pursuant to such reasonable procedures as may be requested by the
Company from time to time. Notwithstanding the foregoing, (x) Asset Manager
shall not, for any reason, have the power or authority to execute any such
documentation on behalf of the Company or otherwise bind the Company without the
Company's prior written consent, and (y) the Company reserves the right to deal
with any prospective tenant to procure any such lease, extension, expansion or
other amendment or related documentation.
(d) Third Party Brokers. Asset Manager shall encourage third-party
real estate brokers to secure tenants for the Tranche II Properties, and
periodically notify such brokers of the spaces within the Tranche II Properties
that are available for lease.
(e) Compensation for Third-Party Brokers. Asset Manager shall
negotiate and enter into on behalf of the Company a commission agreement with
third party brokers providing for a leasing commission to be paid at prevailing
market rates, subject to prevailing market terms and conditions. Such leasing
commission shall be paid by the Company.
2.3 Rents, Billings and Collections. Asset Manager shall be
responsible for the monthly billing of rents and all other charges due from
tenants to the Company with respect to each Tranche II Property. Asset Manager
shall use its commercially reasonable efforts to collect all such rents and
other charges when due. Asset Manager shall notify the Company and the Advisor
of all tenant defaults as soon as reasonably practicable after occurrence, and
shall provide the Company and the Advisor with Asset Manager's best judgment of
the appropriate course of action in remedying such tenant defaults.
2.4 Obligations Under Leases. Asset Manager shall supervise and
use its commercially reasonable efforts to cause the Company to perform and
comply, duly and punctually, with all of the obligations required to be
performed or complied with by the Company under all leases and all laws,
statutes, ordinances, rules, permits and certificates of occupancy relating to
the operation, leasing, maintenance and servicing of the Tranche II Properties,
including, without limitation, the timely payment by the Company of all sums
required to be paid thereunder.
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2.5 The Company's Insurance. If requested by the Company, the
Asset Manager shall cause to be placed and kept in force all forms of insurance
required by the Operating Agreement and the Annual Plan or required by any
mortgage, deed of trust or other security agreement covering all or any part of
any Tranche II Property. The Asset Manager is to be named as an additional
insured on the general liability policies in its capacity as managing agent. All
such insurance coverage shall be placed through insurance companies and brokers
selected or approved by the Company, with limits, values and deductibles
established by the Company and with such beneficial interests appearing therein
as shall be acceptable to the Company and otherwise be in conformity with the
requirements of the Operating Agreement and the Annual Plan. Should the Company
elect to place such insurance coverage directly, the Asset Manager shall be
named as an additional insured on the general liability policies in its capacity
as managing agent and the Company will provide the Asset Manager with a
certificate of insurance evidencing such coverage. If requested to do so by the
Company, the Asset Manager shall duly and punctually pay on behalf of the
Company with funds provided by the Company all premiums with respect thereto,
prior to the time the policy would lapse due to nonpayment. If any lease
requires that a tenant maintain any insurance coverage, the Asset Manager shall
use its commercially reasonable efforts to obtain insurance certificates
annually, or more frequently, as required pursuant to the applicable leases,
from each such tenant and review the certificates for compliance with the lease
terms. If any lease requires the Company to provide insurance certificates to
tenants thereunder, the Asset Manager shall obtain such insurance certificates
from the Company, review the certificates for compliance with the lease terms,
and provide a copy thereof to tenants in accordance with their respective
leases. The Asset Manager shall promptly investigate and make a full and timely
written report to the insurance broker, with a copy to the Company, as to all
accidents, claims or damage of which the Asset Manager has knowledge relating to
the operation and maintenance of each Tranche II Property, any damage or
destruction to each Tranche II Property, and the estimated cost of repair
thereof, and shall prepare any and all reports required by any insurance company
in connection therewith. All such reports shall be filed timely with the
insurance broker as required under the terms of the insurance policy involved.
The Asset Manager shall have no right to settle, compromise or otherwise dispose
of any claims, demands or liabilities, whether or not covered by insurance,
without the prior written consent of the Company, which consent may be withheld
by the Company in its sole discretion.
2.6 Asset Manager's Insurance. The Asset Manager or the Manager or
LXP will obtain and maintain on the Asset Manager's behalf, at the Asset
Manager's or the Manager's or LXP's expense, the following insurance:
(a) Commercial general liability on an occurrence form for bodily
injury and property damage with limits of One Million Dollars ($1,000,000)
combined single limit each occurrence and Two Million Dollars ($2,000,000) from
the aggregate of all occurrences within each policy year, including but not
limited to Premises-Operation, Products/Completed Operations, Hazard and
Contractual Coverage (including coverage for the indemnity clause provided under
the Management Agreement) for claims arising out of actions beyond the scope of
Asset Manager's duties or authority under the Management Agreement.
(b) Comprehensive form automobile liability covering hired and
non-owned vehicles with limits of One Million Dollars ($1,000,000) combined
single limit per occurrence.
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(c) Employer's liability insurance in an amount not less than Five
Hundred Thousand Dollars ($500,000).
(d) Excess liability (umbrella) insurance on the above with limits
of Two Million Dollars ($2,000,000).
(e) Workers' compensation insurance in accordance with the laws of
the state with jurisdiction.
(f) Either (x) blanket crime coverage protecting the Asset Manager
against fraudulent or dishonest acts of its employees, whether acting alone or
with others, with limits of liability of not less than One Million Dollars
($1,000,000) per occurrence (any loss within any deductible shall be borne by
the Asset Manager) or (y) a fidelity or financial institution bond in an amount
no less than One Million Dollars ($1,000,000.00) bonding the employees of the
Asset Manager who handle or who are responsible for funds belonging to the
Company.
(g) Professional liability insurance covering the activities of
the Asset Manager written on a "claim made" basis with limits of at least One
Million Dollars ($1,000,000). Any loss within any deductible shall be borne by
the Asset Manager. Coverage shall be maintained in effect during the period of
the Management Agreement and for not less than two (2) years after termination
of the Management Agreement.
Each of the above policies will contain provisions giving the
Company and the Advisor at least thirty (30) days' prior written notice of
cancellation of coverage. The policies referred to in items (a) and (d) above
will name the Company and the Advisor as additional insureds, and the policies
referred to in item (f) above will name the Company as loss payee. The Asset
Manager will provide the Company and the Advisor with evidence of all required
coverages.
Such insurance shall be placed with reputable insurance companies
licensed or authorized to do business in the states in which the Tranche II
Properties are located with a minimum Best's rating of AX.
The Company and the Asset Manager agree that the insurance
policies summarized on Appendix 2 to this Exhibit B (Form of Management
Agreement) are consistent with the standards listed above with respect to the
types and amounts of insurance the Asset Manager is required to obtain.
2.7 Compliance with Insurance Policies; Compliance by Tenants with
Tenant Leases. Asset Manager shall use its commercially reasonable efforts to
prevent the use of each Tranche II Property for any purpose that might void any
policy of insurance held by the Company, or any tenant at each Tranche II
Property, that might render any loss insured thereunder uncollectible or that
would be in violation of any governmental restriction or the provisions of any
lease. Asset Manager shall use its commercially reasonable efforts to secure
full compliance by the tenants with the terms and conditions of their respective
leases, including, but not limited to, periodic maintenance of all building
systems, including individual tenant's heating, ventilation and air conditioning
systems.
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2.8 Intentionally Omitted.
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2.9 Tenant Relations. Asset Manager will maintain reasonable
contact with the tenants of the Tranche II Properties and keep the Company and
the Advisor informed of the tenants' concerns, expansion or contraction plans,
changes in occupancy or use, and other matters that could have a material
bearing upon the leasing, operation or ownership of each Tranche II Property.
2.10 Compliance with Laws. Asset Manager shall use its
commercially reasonable efforts to determine such action that may be necessary,
inform the Company of action as may be necessary and, when authorized by the
Company, take such action that may be necessary to cause the Tranche II
Properties to comply with all current and future laws, rules, regulations, or
ordinances affecting the ownership, use or operation of each Tranche II
Property; provided, however, that Asset Manager need not obtain the prior
authorization of the Company to take action in case of an emergency or any
threat to life, safety or property, so long as Asset Manager shall give the
Company prompt notice of any such action taken.
2.11 Cooperation. Should any claims, demands, suits, or other
legal proceedings be made or instituted by any third party against the Company
that arise out of any matters relating to a Tranche II Property or the
Management Agreement or Asset Manager's performance hereunder, Asset Manager
shall promptly give the Company all pertinent information and assistance in the
defense or other disposition thereof; provided, however, in the event the
foregoing requires Asset Manager to incur any expenses beyond the ordinary cost
of performing its obligations under the Management Agreement, the Company shall
pay for any such out-of-pocket costs of which the Company has been advised in
writing.
2.12 Notice of Complaints, Violations and Fire Damage. Asset
Manager shall respond to complaints and requests from tenants within thirty (30)
days of Asset Manager's having received any material complaint made by a tenant
or any alleged landlord default under any lease. Additionally, Asset Manager
shall notify the Company and Advisor as soon as is reasonably practical (such
notice to be accompanied by copies of supporting documentation) of each of the
following: any notice of any governmental requirements received by Asset
Manager; upon becoming aware of any material defect in a Tranche II Property;
and upon becoming aware of any fire or other material damage to any Tranche II
Property. In the case of any fire or other material damage to a Tranche II
Property, Asset Manager shall also notify the Company's insurance broker
telephonically, so that an insurance adjuster has an opportunity to view the
damage before repairs are started, and complete customary loss reports in
connection with fire or other damage to a Tranche II Property.
2.13 Notice of Damages and Suits; Settlement of Claims. Asset
Manager shall notify the Company's general liability insurance broker and the
Company as soon as is reasonably practical of the occurrence of any bodily
injury or property damage occurring to or claimed by any tenant or third party
on or with respect to a Tranche II Property, and promptly forward to the broker,
with copies to the Company and the Advisor, any summons, subpoena or other like
legal documents served upon Asset Manager relating to actual or alleged
potential liability of the Company, Asset Manager or a Tranche II Property.
Notwithstanding the foregoing, Asset Manager shall not be authorized to accept
service of process on behalf of the
A-1-5
Company, unless such authority is otherwise imputed by law. The Asset Manager
shall have no right to settle, compromise or otherwise dispose of any claims,
demands, or liabilities, whether or not covered by insurance, without the prior
written consent of the Company, which consent may be withheld by the Company in
its sole discretion.
2.14 Enforcement of Leases. The Asset Manager shall enforce
compliance by tenants with each and all of the terms and provisions of the
leases, provided, however, that Asset Manager shall not, without the prior
written consent of the Company in each instance, which consent may be withheld
by the Company in its sole discretion, institute legal proceedings in the name
of the Company to enforce leases, collect income and rent or dispossess tenants
or others occupying a Tranche II Property or any portion thereof, or terminate
any lease, lock out a tenant, or engage counsel or institute any proceedings for
recovery of possession of a Tranche II Property if any such action by the Asset
Manager would constitute a Major Decision.
2.15 Environmental.
-------------
(a) Notice. The Asset Manager shall promptly advise the Company
and the Advisor in writing of any evidence of non-compliance with any
Environmental Laws, which Asset Manager is aware of, together with a written
report of the nature and of the non-compliance and the potential threat, if any,
to the health and safety of persons and/or damage to each Tranche II Property or
the property adjacent to or surrounding each Tranche II Property. The Company
acknowledges that (A) Asset Manager is not an environmental engineer and does
not have any special expertise in the Environmental Laws, (B) Asset Manager's
duties under this Section 2.15 are limited to the quality of reasonable
commercial care and diligence customarily applied to property managers of triple
net leased properties.
(b) Rights; Limitations. Without limiting any other provision
contained herein and subject to Section 2.14, Asset Manager shall use
commercially reasonable efforts to enforce the Company's rights under the leases
insofar as any tenant's compliance with Environmental Laws are concerned;
provided, however, Asset Manager shall hold in confidence all information
bearing on Environmental Laws and hazardous materials, except to the extent
expressly instructed otherwise in writing by the Company, or except to the
extent necessary to protect against the imminent threat to the life and safety
of persons and/or damage to a Tranche II Property or damage to the property
adjacent to or surrounding such Tranche II Property, or except to the extent
such disclosure is required by Environmental Laws, other laws, or court order.
2.16 Monitoring of Tenant Improvements. The Asset Manager shall
monitor the construction and installation of material tenant improvements
undertaken by the tenant under any lease and act as the Company's liaison with
such tenant's construction managers and contractors (or other supervisors of a
tenant's build-out).
Tranche II LSL LOAN MANAGEMENT RESPONSIBILITIES
-----------------------------------------------
B. The Asset Manager shall perform its duties and obligations under
Section 2 of the Management Agreement with respect to the management of the
Tranche II LSL Loans in
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accordance with the following standards:
1. Management of the Tranche II LSL Loans. The Asset Manager shall
devote its commercially reasonable efforts, consistent with first class
professional management, to manage the Tranche II LSL Loans, and shall perform
its duties with respect thereto under the Management Agreement in accordance
with the Operating Agreement and Annual Plan and in a reasonable, diligent and
careful manner so as to (i) monitor compliance by each borrower and its
subsidiary Special Purpose LLC with the requirements of the Tranche II LSL Loan,
including without limitation compliance with and performance of their
obligations under, the applicable Tranche II LSL Note, the Pledge and the
Warrant (collectively, the "Tranche II LSL Loan Docpuments"); (ii) collect and
account for all sums payable in respect of the Tranche II LSL Loan; and (iii)
take such steps as may be necessary to enforce the provisions of the Tranche II
LSL Loan Documents. The services of Asset Manager hereunder are to be of a scope
and quality not less than those generally performed by professional managers of
other similarly situated assets in the market area in which each Tranche II LSL
Property is located. Asset Manager shall make available to the Company the full
benefit of the judgment, experience and advice of the members of Asset Manager's
organization and staff with respect to the policies to be pursued by the Company
in managing the Tranche II LSL Loans, and will perform such services as may be
requested by the Company within the scope of the Management Agreement in
managing each Tranche II LSL Loan.
2. Collection and Accounting of Funds. The Asset Manager shall be
responsible for the monthly collection of interest, principal (if any) and other
sums due from LXP LLCs with respect to each Tranche II LSL Loan. The Asset
Manager shall use its commercially reasonable efforts to collect all such
amounts when due. The Asset Manager shall notify the Company and the Advisor of
all LXP LLC defaults as soon as reasonably practicable after occurrence, and
shall provide the Company and the Advisor with the Asset Manager's best judgment
of the appropriate course of action in remedying such defaults.
3. Obligations Under Loan Documents. The Asset Manager shall
supervise and use its commercially reasonable efforts to cause each LXP LLC and
each subsidiary Special Purpose LLC to perform and comply, duly and punctually,
with all of the obligations required to be performed or complied with by each
LXP LLC and each subsidiary Special Purpose LLC under all Tranche II LSL Loan
Documents.
4. Personnel. The Asset Manager or the Manager or LXP will obtain
and maintain on the Asset Manager's behalf, at the Asset Manager's or the
Manager's or LXP's expense, either (x) blanket crime coverage protecting Asset
Manager against fraudulent or dishonest acts of its employees, whether acting
alone or with others, with limits of liability of not less than One Million
Dollars ($1,000,000) per occurrence (any loss within any deductible shall be
borne by Asset Manager) or (y) a fidelity or financial institution bond in an
amount no less than One Million Dollars ($1,000,000.00) bonding the employees of
Asset Manager who handle or who are responsible for funds belonging to the
Company. The Company and Asset Manager agree that the financial institution bond
summarized on Appendix 2 to this Exhibit B (Form of Management Agreement) is
consistent with the standards contained in this Paragraph B.4. Satisfying the
requirements of Section A.2.6 of this Appendix 1 to Exhibit B (Form of
Management Agreement) will satisfy the requirements of this Section.
A-1-7
5. Cooperation. Should any claims, demands, suits, or other legal
proceedings be made or instituted by any third party against the Company that
arise out of any matters relating to a Tranche II LSL Loan or any Tranche II LSL
Property or the Management Agreement or Asset Manager's performance hereunder,
Asset Manager shall promptly give the Company all pertinent information and
assistance in the defense or other disposition thereof; provided, however, in
the event the foregoing requires Asset Manager to incur any expenses beyond the
ordinary cost of performing its obligations under the Management Agreement, the
Company shall pay for any such out-of-pocket costs of which the Company has been
advised in writing.
6. Notice of Complaints, Violations and Fire Damage. The Asset
Manager shall respond to complaints and requests from LXP LLCs within thirty
(30) days of Asset Manager's having received any material complaint made by a
LXP LLC under any Tranche II LSL Loan Document. Additionally, Asset Manager
shall notify the Company and Advisor as soon as is reasonably practical (such
notice to be accompanied by copies of supporting documentation) of each of the
following: any notice of any governmental requirements received by Asset
Manager; upon becoming aware of any material defect in a Tranche II LSL
Property; and upon becoming aware of any fire or other material damage to any
Tranche II LSL Property. In the case of any fire or other material damage to a
Tranche II LSL Property, Asset Manager shall also notify the Company's insurance
broker telephonically, so that an insurance adjuster has an opportunity to view
the damage before repairs are started, and complete customary loss reports in
connection with fire or other damage to a Property.
7. Notice of Damages and Suits; Settlement of Claims. The Asset
Manager shall notify the Company's general liability insurance broker and the
Company as soon as is reasonably practical of the occurrence of any bodily
injury or property damage occurring to or claimed by any LXP LLC or Special
Purpose LLC or third party on or with respect to a Tranche II LSL Property, and
promptly forward to the broker, with copies to the Company and the Advisor, any
summons, subpoena or other like legal documents served upon Asset Manager
relating to actual or alleged potential liability of the Company, Asset Manager
or a Tranche II LSL Property. Notwithstanding the foregoing, Asset Manager shall
not be authorized to accept service of process on behalf of the Company, unless
such authority is otherwise imputed by law. Asset Manager shall have no right to
settle, compromise or otherwise dispose of any claims, demands, or liabilities,
whether or not covered by insurance, without the prior written consent of the
Company, which consent may be withheld by the Company in its sole discretion.
8. Enforcement of Tranche II LSL Loan Documents. The Asset Manager
shall enforce compliance by LXP LLCs and by Special Purpose LLCs with each and
all of the terms and provisions of the Tranche II LSL Loan Documents, provided,
however, that Asset Manager shall not, without the prior written consent of the
Company in each instance, which consent may be withheld by the Company in its
sole discretion, institute legal proceedings in the name of the Company to
enforce the Tranche II LSL Loan Documents, if such action by the Asset Manager
would constitute a Major Decision.
9. Environmental.
-------------
(a) Notice. Asset Manager shall promptly advise the Company and
the
A-1-8
Advisor in writing of any evidence of non-compliance with any Environmental
Laws, which Asset Manager is aware of, together with a written report of the
nature and of the non-compliance and the potential threat, if any, to the health
and safety of persons and/or damage to each Tranche II LSL Property or the
property adjacent to or surrounding each Tranche II LSL Property. The Company
acknowledges that (A) Asset Manager is not an environmental engineer and does
not have any special expertise in the Environmental Laws, (B) Asset Manager's
duties under this Section B.9 are limited to the quality of reasonable
commercial care and diligence customarily applied to managers of loans made to
owners of triple net leased properties.
(b) Rights; Limitations. Without limiting any other provision
contained herein and subject to Section B.8, Asset Manager shall use
commercially reasonable efforts to enforce the Company's rights under the
Tranche II LSL Loan Documents insofar as any LXP LLC's or any Special Purpose
LLC's compliance with Environmental Laws are concerned; provided, however, Asset
Manager shall hold in confidence all information bearing on Environmental Laws
and hazardous materials, except to the extent expressly instructed otherwise in
writing by the Company, or except to the extent such disclosure is required by
Environmental Laws, other laws, or court order.
A-1-9
APPENDIX 2 TO THE
MANAGEMENT AGREEMENT
--------------------
SUMMARY OF LXP INSURANCE POLICIES
---------------------------------
[APPENDIX BEGINS ON THE FOLLOWING PAGE]
INSURED:
Lexington Corporate Properties Trust
355 Lexington Avenue
New York, NY 10017
SCHEDULE OF INSURANCE
- --------------------------------------------------------------------------------
Type of Policy/Plan Term Policy # Expiration Company
- --------------------------------------------------------------------------------
GENERAL LIABILITY 1 Year 3530-93-52 1/1/00 Chubb/Aon Enterprise
General Aggregate Limit
(other than Products/
Completed Operations
Aggregate Limit $ 2,000,000
Products/Completed
Operations Aggregate
Limit $ 1,000,000
Personal & Advertising
Injury Limit $ 1,000,000
Each Occurrence Limit $ 3,000,000
Medical Expense Limit $ 10,000
Fire Damage Legal
Liability $ 100,000
Non-Owned & Hired
Automobile Liability $ 1,000,000
Employee Benefit
Liability $ 1,000,000
Deductible $ 1,000
UMBRELLA LIABILITY 1 Year 7974-09-55 1/1/00 Chubb/Aon Enterprise
Limits of Liability
- ------------------
Each Occurrence $ 5,000,000
General Aggregate $ 5,000,000
Products/Completed
Operations Aggregate $ 5,000,000
Retained Limit $ 10,000
Page 1
SCHEDULE OF INSURANCE
- ------------------------------------------------------------------------------------------------------
Type of Policy/Plan Term Policy # Expiration Company
- ------------------------------------------------------------------------------------------------------
WORKERS' COMPENSATION 1 Year 7BG 063-988-0 1/1/00 Kemper/Aon Enterprise
Workers Compensation -
Statutory Coverage
Employer Liability Limits:
- -------------------------
Bodily Injury
by Accident $ 500,000 Each Accident
Bodily Injury
by Disease $ 500,000 Each Employee
Bodily Injury
by Disease $ 500,000 Policy Limit
Exposure Basis:
- --------------
State Code Class Payroll
- -------------------------------------------------------------------
New York 8810 Clerical-NY $ 684,125
New York 8809 Executive Officers $ 491,400
Page 2
SCHEDULE OF INSURANCE
- -----------------------------------------------------------------------------------------------------------------
Type of Policy/Plan Term Policy # Expiration Company
- -----------------------------------------------------------------------------------------------------------------
FINANCIAL INSTITUTION
BOND 1 Year 856-29-98 6/3/00 National Union Fire Insurance Co
Limit Deductible
----- ----------
Aggregate Limit $1,000,000 $ -
Basic Bond Coverage $1,000,000 $ 25,000
Insuring Agreement D $1,000,000 $ 25,000
(Forgery or
Alteration)
Insuring Agreement E - $1,000,000 $ 25,000
Securities
Profession Liability
Insurance* (claims
made basis)
Aggregate Limit $1,000,000
* Currently obtaining quotes from insurance broker
Page 3