MANAGEMENT AGREEMENT
Exhibit
10.2
Execution
Copy
THIS
MANAGEMENT AGREEMENT (this “Management Agreement”) is
dated as of August 10, 2007 and entered into by and between Net Lease Strategic
Assets Fund L.P., a Delaware limited partnership (the
“Partnership”), and Lexington Realty Advisors, Inc., a Delaware
corporation (the “Asset Manager”).
WHEREAS,
the Partnership owns or will own net-leased real estate assets in the United
States of America (collectively, the “Qualified Assets”);
and
WHEREAS,
the Partnership 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 Partnership 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 Limited
Partnership Agreement of the Partnership dated as of even date herewith among
The Lexington Master Limited Partnership, a Delaware limited partnership
(“LMLP”), as a limited partner of the Partnership, LMLP GP LLC,
a Delaware limited liability company (“LMLP GP”, and together
with LMLP, collectively, the “LMLP Partners”), as a general
partner of the Partnership, Inland American (Net Lease) Sub, LLC, a Delaware
limited liability company (“Inland”), as a limited partner of
the Partnership (as such limited partnership agreement may be amended, restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, the “Partnership Agreement”).
2. Obligations
of the Asset Manager. The Asset Manager shall perform on behalf
of the Partnership those duties and responsibilities of the General Partner
in
respect of the evaluation of Proposed Qualified Assets and the acquisition
of
Approved Qualified Assets as contemplated by Section 3.6 of the Partnership
Agreement, and in respect of the management of the Qualified Assets that may
be
delegated to the Asset Manager pursuant to Section 3.1(c) of the Partnership
Agreement. With respect to the management of the Qualified Assets,
the Asset Manager shall perform the duties and responsibilities described in
Appendix 1 attached hereto and made a part hereof. In
performing its duties and responsibilities, the Asset Manager shall not, and
shall have no power or authority to, (i) bind the Partnership, or to enter
into
any contract or other agreement in the name of or on behalf of the Partnership,
unless specifically authorized in writing to do so by the Partnership, (ii)
amend, cancel or alter any of the organizational documents of the Partnership,
or (iii) do any act not authorized pursuant to this Management Agreement, unless
specifically authorized to do so in writing by the Partnership or specifically
authorized to do so by the Partnership Agreement.
3. No
Partnership or Joint Venture. The Partnership 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.
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4. Limitation
on the Asset Manager’s Liability. The Asset Manager and its
directors, officers and employees shall not be liable, responsible or
accountable in damages or otherwise to the Partnership or either Partner 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 Partnership Agreement and, if capable of cure,
is
not cured within fifteen (15) days after notice thereof is delivered to the
Asset Manager by the Partnership, (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 Partnership.
5. Partnership’s
Professional Services. The Partnership may independently retain
legal counsel and accountants to provide such legal and accounting advice and
services as the Partnership shall deem necessary or appropriate.
6. Expenses
of the Asset Manager and the Partnership.
(a) The
Asset Manager shall pay, without reimbursement by the Partnership (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 Partnership reasonably
requires, (vi) all out of pocket costs and expenses incurred in connection
with
the management of the Qualified Assets and the Partnership (other than
reasonable and customary costs and expenses of Third Parties retained in
connection with the management of the Qualified Assets and the Partnership)
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 Partnership account or pay from
its own account and be reimbursed by the Partnership for the following
Partnership costs and expenses that are incurred by the Partnership or by the
Asset Manager in the performance of its duties under this Management Agreement
or the Partnership Agreement:
(i) Permitted
Expenses;
(ii) subject
to Section 3.6(f) of the Partnership Agreement, all reasonable and customary
costs and expenses relating to Third Parties retained in connection with a
Proposed Qualified Asset or an Approved Qualified Asset as provided in Section
3.6(f) of the Partnership Agreement.
The
Asset
Manager shall not pay or be reimbursed by the Partnership for any other cost
or
expense.
(c) Except
as expressly otherwise provided in this Management Agreement or the Partnership
Agreement, the Partnership 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 Partnership and not be
paid by the Asset Manager:
(i) interest,
principal or any other cost of money borrowed by the Partnership;
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(ii) fees
and expenses paid to independent contractors, appraisers, consultants and other
agents retained by or on behalf of the Partnership and expenses directly
connected with the financing, refinancing and disposition of real estate
interests or other assets (including insurance premiums, legal services,
brokerage and sales commissions, maintenance, repair and improvement costs
and
expenses related to the Qualified Assets); and
(iii) insurance
as required by the Partnership.
7. Indemnification
by the Partnership. The Partnership shall indemnify, defend and hold
harmless the Asset Manager and its directors, officers and employees (the
“Asset Manager Indemnitees”) 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 Partnership, against personal liability, claims,
losses, damages and expenses for which the Asset Manager Indemnitees have 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 Indemnitees in connection with such
action, suit or proceeding and any appeal therefrom, unless the Asset Manager
Indemnitees (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 and, if capable of cure, is not cured
within fifteen (15) days after notice thereof from the
Partnership. The indemnification provided under this Section 7
shall (x) be in addition to, and shall not limit or diminish, the coverage
of
the Asset Manager under any insurance maintained by the Partnership and (y)
apply to any legal action, suit or proceeding commenced by a Partner or in
the
right of a Partner or the Partnership. The indemnification provided under this
Section 7 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.
8. Terms
and Termination. This Management Agreement shall remain in force
until terminated in accordance herewith. This Management Agreement
may be terminated by the Partnership at any time and for any reason immediately
upon written notice of termination from the Partnership to the Asset
Manager. This Management Agreement shall automatically expire upon
(i) the removal of LMLP GP as the General Partner of the Partnership or (ii)
the
completion of dissolution or winding up of the Partnership pursuant to Section
9.2 of the Partnership Agreement. 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 assets 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.
(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
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itself
or
for all or substantially all of its assets, 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.
(c) With
respect to any Qualified Asset, upon the sale or disposition
thereof.
9. Action
Upon Termination. After the expiration or termination of this
Management Agreement, the Asset Manager shall:
(a) Promptly
pay to the Partnership or any person legally entitled thereto all monies
collected and held for the account of the Partnership 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 Partnership 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 Partnership.
(c) Within
ten (10) days deliver to the Partnership all assets and documents of the
Partnership 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
Property Management Fee and the Partnership Management Fee which shall be
prorated on a daily basis) as to which at the time of termination it has not
yet
received payment or reimbursement, as applicable, pursuant to Section 6
and Section 10 hereof, less any damages to the Partnership caused by the
Asset Manager.
10. Management
Fees.
(a) Property
Management Fee. For all services hereunder (including leasing and
leasing supervision), the Partnership shall pay to the Asset Manager (or its
designee) an annual Property Management Fee (“Property Management
Fee”) equal to the sum of (x) three percent (3%) of actual gross
revenues for the fiscal year (or applicable portion thereof) derived from
Qualified Assets, provided the lease encumbering the Qualified Asset provides
for full recovery of the Property Management Fee from the tenant (“Gross
Revenues”), plus (y) on Qualified Assets where the lease does not
provide for full recovery of the Property Management Fee from the tenant, the
amount recoverable for the fiscal year (or applicable portion thereof) from
the
tenants of such Qualified Assets for property management expenses under such
leases (“Recoverable Amounts”), payable monthly.
(b) Partnership
Management Fee. The Partnership shall pay to the Asset Manager an
annual Partnership Management Fee (“Partnership Management
Fee”) equal to Inland’s Percentage Interest multiplied by three hundred
seventy five thousandths of a percent (0.375%) of the Equity Capital for a
fiscal year (pro rated for partial years), payable monthly and adjusted as
provided herein. Within thirty (30) days of the Partnership’s receipt
of
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the
annual reports described in Section 4.3 of the Partnership Agreement
for a fiscal year, the Asset Manager shall provide to the Partnership a written
statement of reconciliation setting forth (x) the Equity Capital for such
fiscal year (or partial year) and the Partnership Management Fee payable to
the
Asset Manager in connection therewith, pursuant to this Agreement, (y) the
Partnership Management Fee already paid by the Partnership to the Asset Manager
during such fiscal year (or partial year), and (z) either the amount owed
to the Asset Manager by the Partnership (which shall be the excess, if any,
of
the Partnership Management Fee payable to the Asset Manager for such fiscal
year
(or partial year) pursuant to this Agreement over the Partnership Management
Fee
actually paid by the Partnership to the Asset Manager for such fiscal year
(or
partial year)) or the amount owed to the Partnership by the Asset Manager (which
shall be the excess, if any, of the Partnership Management Fee actually paid
by
the Partnership to the Asset Manager for such fiscal year (or partial year)
over
the Partnership Management Fee payable to the Asset Manager for such fiscal
year
pursuant to this Agreement). The Asset Manager or the Partnership, as
the case may be, shall pay to the other the amount owed pursuant to clause
(z)
above within five (5) Business Days of the receipt by Inland of the written
statement of reconciliation described in this Section 10.
(c) Acquisition
Fees. Upon the acquisition of any Approved Qualified Asset by the
Partnership or by an SP Subsidiary (including any Approved Qualified Asset
contributed in whole or in part by LMLP to the Partnership), Inland shall pay
the Asset Manager an acquisition fee equal to the sum of the gross purchase
price of such acquired Approved Qualified Asset multiplied by
0.425%.
11. Assignment. The
Asset Manager may not assign or delegate any of its rights or obligations
hereunder, except the Asset Manager may assign or delegate any of its rights
or
obligations hereunder to Lexington Contributions Inc., a Delaware
corporation.
12. Notices. Unless
otherwise specifically provided herein, any notice or other communication
required herein shall be given in accordance with the Partnership
Agreement.
13. 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 Partnership. Any waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which it was given.
14. 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 DELAWARE, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
15. 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.
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16. 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.
17. No
Waiver, etc. No waiver by the Partnership of any default
hereunder shall be effective unless such waiver is in writing and executed
by
the Partnership 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 Partnership 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 Partnership
on
one occasion shall not prejudice or be deemed or considered to have prejudiced
its right to demand such compliance on any other occasion.
18. No
Third Party Beneficiary. The Asset Manager is not a third party
beneficiary of the Partnership Agreement and shall have no rights or remedies
thereunder, and the parties to the Partnership Agreement can amend, modify
or
terminate the Partnership Agreement at any time without the Asset Manager’s
consent and without any liability to the Asset Manager.
19. Jurisdiction;
Venue. Each party hereto hereby irrevocably and unconditionally (a) agrees
that any action, suit or other legal proceeding brought in connection with
or
relating to this Agreement or any matter contemplated hereby shall be brought
exclusively in a court of competent jurisdiction located in New Castle County,
Delaware, whether a state or federal court, and shall not be brought in any
court or forum outside New Castle County, Delaware; (b) consents and submits
to,
and agrees that it will not assert (by way of motion, as a defense or otherwise)
that it is not subject to, personal jurisdiction in connection with any such
action, suit or proceeding in any such court; and (c) waives to the fullest
extent permitted by law, and agrees that it will not assert (by way of motion,
as a defense or otherwise), any claim that the laying of venue of any such
action, suit or proceeding in any such court is improper or that any such
action, suit or proceeding brought in any such court was brought in an
inconvenient forum or should be stayed by reason of the pendency of some other
action, suit or other legal proceeding in a court or forum other than any such
court.
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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.
| PARTNERSHIP | NET LEASE STRATEGIC ASSETS FUND L.P., a Delaware limited partnership | |
| By: | LMLP GP LLC, a Delaware limited liability company, the general partn | |
|
|
By:
|
/s/ X. Xxxxxx Eglin |
| Name: X. Xxxxxx Eglin | ||
| Title: President | ||
| ASSET MANAGER | LEXINGTON REALTY ADVISORS, INC. | |
|
|
By:
|
/s/ X. Xxxxxx Eglin |
| Name: X. Xxxxxx Eglin | ||
| Title: President | ||
|
Solely
with respect to Section
10(c):
|
|
INLAND
AMERICAN (NET LEASE) SUB, LLC
By:
Inland American Real Estate Trust, Inc.
|
|
|
By:
|
/s/ T. Xxxx Xxxxx |
| Name: Xxxx Xxxxx | |
| Its: Treasurer | |
The
undersigned hereby unconditionally and irrevocably guarantees the obligations
of
Inland American (Net Lease) Sub, LLC under Section 10(c):
|
INLAND
AMERICAN REAL ESTATE TRUST,
INC.
|
|
|
By:
|
/s/ T. Xxxx Xxxxx |
| Name: Xxxx Xxxxx | |
| Its: Treasurer | |
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APPENDIX
1
PROPERTY
MANAGEMENT RESPONSIBILITIES
The
Asset
Manager shall perform its duties and obligations under Section 2 of
the Management Agreement with respect to the management of the Qualified Assets
in accordance with the following standards:
1. Management
of the Qualified Assets. Asset Manager shall devote its
commercially reasonable efforts, consistent with first class professional
management, to manage the Qualified Assets, and shall perform its duties with
respect thereto under the Management Agreement in accordance with the
Partnership 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 Qualified Asset in a manner that is comparable to similar
properties in the market area in which such Qualified Asset 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 Qualified
Asset is located. Asset Manager shall make available to the
Partnership 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 Partnership and will perform such services as may be
requested by the Partnership within the scope of the Management Agreement in
operating, maintaining, leasing, and servicing each Qualified
Asset.
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 Qualified
Assets:
2.1 Repairs
and Maintenance. In accordance with and subject to the
Partnership 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 Qualified Asset as are required to maintain each Qualified
Asset 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 Qualified Asset is located, and such other repairs as may be required
to be
made under the leases governing each Qualified Asset. Asset Manager shall to
the
extent it deems necessary arrange for periodic inspections of the Qualified
Assets by independent contractors.
2.2 Leasing
Supervision Activities.
(a) Leasing
Supervision. Asset Manager shall supervise all leasing
activities, for the purpose of leasing the available space in the Qualified
Assets to tenants upon such terms and conditions as shall be consistent with
the
Partnership Agreement and the Annual Plan.
(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
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leasing
plans for space at each Qualified Asset 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 Partnership in writing of all
offers for tenancy at each Qualified Asset 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
Partnership’s behalf in accordance with the Partnership Agreement
and the Annual Plan. All such documentation shall be prepared at the
Partnership’s expense by counsel acceptable to or designated by the Partnership,
and shall be executed by the Partnership. The terms of all such documentation
are to be approved by the Partnership pursuant to such reasonable procedures
as
may be requested by the Partnership 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 Partnership or
otherwise bind the Partnership without the Partnership’s prior written consent,
and (y) the Partnership 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 Qualified Assets, and periodically
notify such brokers of the spaces within the Qualified Assets that are available
for lease.
(e) Compensation
for Third-Party Brokers. Asset Manager shall negotiate and enter
into on behalf of the Partnership 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 Partnership.
2.3 Rents,
Xxxxxxxx and Collections. Asset Manager shall be responsible for
the monthly billing of rents and all other charges due from tenants to the
Partnership with respect to each Qualified Asset. Asset Manager shall
use its commercially reasonable efforts to collect all such rents and other
charges when due. Asset Manager shall notify the Partnership of all tenant
defaults as soon as reasonably practicable after occurrence, and shall provide
the Partnership 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 Partnership to perform and
comply, duly and punctually, with all of the obligations required to
be performed or complied with by the Partnership under all leases and all laws,
statutes, ordinances, rules, permits and certificates of occupancy relating
to
the operation, leasing, maintenance and servicing of the Qualified Assets,
including, without limitation, the timely payment by the Partnership of all
sums
required to be paid thereunder.
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2.5 The
Partnership’s Insurance. The Asset Manager shall cause to be
placed and kept in force all forms of insurance required by the Partnership
Agreement and the Annual Plan or required by any mortgage, deed of trust or
other security agreement covering all or any part of any Qualified
Asset. 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 Partnership, with limits, values and deductibles
established by the Partnership and with such beneficial interests appearing
therein as shall be acceptable to the Partnership and otherwise be in conformity
with the requirements of the Partnership Agreement and the Annual
Plan. Should the Partnership 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 Partnership
will provide the Asset Manager with a certificate of insurance evidencing such
coverage. The Asset Manager shall duly and punctually pay on behalf of the
Partnership with funds provided by the Partnership 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 Partnership to provide insurance certificates
to tenants thereunder, the Asset Manager shall obtain such insurance
certificates from the Partnership, 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 Partnership, as to all accidents, claims or damage of which the Asset
Manager has knowledge relating to the operation and maintenance of each
Qualified Asset, any damage or destruction to each Qualified Asset, 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 Partnership, which consent may be withheld by the Partnership
in
its sole discretion.
2.6 Insurance.
(a) The
Asset Manager or the General Partner or LMLP will obtain and maintain on the
Asset Manager’s behalf, at the Asset Manager’s or the General Partner’s or
LMLP’s expense, the following insurance:
(i) Commercial
Liability Insurance (Primary) written on an
occurrence form is to have limits of not less than One Million Dollars
($1,000,000) per occurrence with a per location Aggregate of not less than
Two
Million Dollars ($2,000,000) (i.e. $1,000,000/$2,000,000). In addition to the
stipulations outlined above, the insurance policy is to include coverage for
Contractual Liability, Products-Completed Operations, Personal & Advertising
Injury and will also cover injury to subcontractor's officers, employees,
agents, subcontractors, invitees and guests and their personal property. The
Partnership is to be endorsed as an additional insured on the Asset Manager's
policy and such insurance will be endorsed as primary and
non-contributory with any other insurance available to Partnership.
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(ii) Professional
Liability insurance covering acts, errors or omissions of the Asset Manager
shall be maintained with limits of not less than Two Million Dollars
($2,000,000) per occurrence. Coverage extensions shall include Blanket
Contractual Liability. When policies are renewed or replaced, the policy
retroactive date must coincide with the original inception date of the managers
executed contract. A claims-made policy, which is not renewed or replaced,
must
have an extended reporting period of not less than two (2) years.
(iii) When
any motor vehicles (owned, non-owned or hired) are used in connection with
the
services to be performed, the Asset Manager shall provide Comprehensive
Automobile Liability Insurance with limits of not less than One Million Dollars
($1,000,000) per occurrence CSL, for bodily injury and property damage. The
Partnership is to be endorsed as an additional insured on the Asset Manager's
policy and such insurance will be endorsed as primary and non-contributory
with
any other insurance available to the Partnership.
(iv) Umbrella
Liability coverage, if applicable, is to follow the form
of the Primary Insurance requirements outlined above.
(v) Workers
Compensation and Occupational Disease Insurance in accordance with the laws
of
the State of Illinois covering employees, directors, officers, commissioners
and
volunteers. Employer's Liability in an amount of not less than $1 MM/$1 MM/$1
MM.
(vi) The
Asset Manager shall provide Blanket Crime coverage covering all persons liable
under this Agreement, against loss by dishonesty, robbery, burglary, theft,
destruction or disappearance, computer fraud, credit card forgery and other
related crime risks. The policy limit shall be written to cover losses in the
amount of the maximum monies collected, received and/or in the Asset Manager's
care at any given time.
(vii) When
negligent, the Asset Manager shall be responsible for all loss or damage to
Partnership’s property at replacement cost.
(viii) Any
and all deductibles or self-insured retentions on referenced insurance coverages
shall be borne by the Asset Manager.
(ix) All
insurance carriers used by the Asset Manager must be licensed to conduct
business in the State of New York and shall have a BEST Rating of not less
than
an "A". Proof of this coverage(s) is to be forwarded to the Partnership (with
a
copy to each Partner) in the form of a properly executed Certificate of
Insurance.
(b) The
Asset Manager shall require all subcontractors to carry, at a minimum, the
following insurance, or the Asset Manager may provide the coverage for any
or
all of its subcontractors. The insurance carriers used must be licensed to
conduct business in the State of New York and shall have a BEST Rating of not
less than an "A". Required Subcontractor Insurance Coverages are as
follows:
(i) Workers
Compensation and Occupational Disease Insurance shall be in accordance with
the
laws of the State of Illinois along with Employer's Liability in an amount
of
not less than $500,000/$500,000/$500,000.
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(ii) Commercial
Liability Insurance (Primary) written on an occurrence form is to have limits
of
not less than One Million Dollars ($1,000,000) per occurrence with a per
location Aggregate of not less than Two Million Dollars ($2,000,000) (i.e.
$1,000,000/$2,000,000). In addition to the stipulations outlined above, the
insurance policy is to include coverage for Contractual Liability,
Products-Completed Operations, Personal & Advertising Injury and will also
cover injury to subcontractor's officers, employees, agents, subcontractors,
invitees and guests and their personal property. The Partnership is to be
endorsed as an additional insured on the subcontractor's policy and such
insurance will be endorsed as primary and non-contributory with any other
insurance available to Partnership.
(iii) When
any motor vehicles (owned, non-owned and hired) are used in connection with
the
services to be performed, the subcontractor shall provide Comprehensive
Automobile Liability Insurance with limits of not less than One Million Dollars
($1,000,000) per occurrence CSL, for bodily injury and property damage. The
Partnership is to be endorsed as an additional insured on the subcontractor's
policy and such insurance will be endorsed as primary and
non-contributory with any other insurance available to Partnership.
(iv) When
any architects, engineers, construction managers, elevator repair professionals,
etc., perform work, Professional Liability insurance covering acts, errors
or
omissions shall be maintained with limits of not less than Five Million Dollars
($5,000,000) per occurrence is required. Coverage extensions shall include
Blanket Contractual Liability. When policies are renewed or replaced, the policy
retroactive date must coincide with, or proceed, the start of Services under
this Agreement. A claims-made policy, which is not renewed or replaced, must
have an extended reporting period of two (2) years.
(v) When
the subcontractor's service agreement requires the handling of funds or valuable
papers, the subcontractor shall provide Blanket Crime coverage covering all
persons liable under this Agreement, against loss by dishonesty, robbery,
burglary, theft, destruction or disappearance, computer fraud, credit card
forgery and other related crime risks. The policy limit shall be written to
cover losses in the amount of the maximum monies collected, received and/or
in
the subcontractor's care at any given time.
(vi) The
insurance requirements under this Agreement shall be maintained in a separate
Professional Liability Policy or as an adjunct to the General Liability Policy
through endorsement. If the coverage is provided through an endorsement to
the
General Liability Policy a copy of the endorsement must be attached to the
certificate. This insurance shall cover third party assault, bodily injury,
property damage, damage to property in Subcontractor's care, custody, and
control, or personal injury arising out of the Subcontractor's wrongful act(s)
in an amount of not less than Five Million Dollars ($5,000,000). Coverage
extensions shall include Blanket Contractual Liability and include a Lost Key
Coverage Endorsement if the firm will possess keys to the property. When
policies are renewed or replaced, the policy retroactive date must coincide
with, or precede, start of Services under this Agreement. A Claims-made policy
which is not renewed or replaced must have an extended reporting period of
two
(2) years.
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(vii) The
policy must waive any right of recovery they may have against the Partnership
because of payments made for injuries or damages arising out of your ongoing
operations of "your work" done under a contract with that person or
organization.
(viii) Umbrella
Liability coverage, if applicable, is to follow the form of the Primary
Insurance requirements outlined above.
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 Qualified Asset for any purpose that might
void any policy of insurance held by the Partnership, or any tenant at each
Qualified Asset, 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.
2.8 Tenant
Relations. Asset Manager will maintain reasonable contact with
the tenants of the Qualified Assets and keep the Partnership 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 Qualified Asset.
2.9 Compliance
with Laws. Asset Manager shall use its commercially reasonable efforts to
determine such action that may be necessary, inform the Partnership of action
as
may be necessary and, when authorized by the Partnership, take such action
that
may be necessary to cause the Qualified Assets to comply with all current and
future laws, rules, regulations, or ordinances affecting the ownership, use
or
operation of each Qualified Asset; provided, however, that Asset
Manager need not obtain the prior authorization of the Partnership to take
action in case of an emergency or any threat to life, safety or property, so
long as Asset Manager shall give the Partnership prompt notice of any such
action taken.
2.10 Cooperation.
Should any claims, demands, suits, or other legal proceedings be made or
instituted by any third party against the Partnership that arise out of any
matters relating to a Qualified Asset or the Management Agreement or Asset
Manager’s performance hereunder, Asset Manager shall promptly give the
Partnership 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 Partnership shall pay for any
such out-of-pocket costs of which the Partnership has been advised in
writing.
2.11 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
Partnership 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 Qualified Asset; and upon becoming aware
of
any
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fire
or
other material damage to any Qualified Asset. In the case of any fire or other
material damage to a Qualified Asset, Asset Manager shall also notify the
Partnership’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 Qualified
Asset.
2.12 Notice
of Damages and Suits; Settlement of Claims. Asset Manager shall notify the
Partnership’s general liability insurance broker and the Partnership 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 Qualified Asset, and promptly forward to the broker, with copies to the
Partnership, any summons, subpoena or other like legal documents served upon
Asset Manager relating to actual or alleged potential liability of the
Partnership, Asset Manager or a Qualified Asset. Notwithstanding the
foregoing, Asset Manager shall not be authorized to accept service of process
on
behalf of the Partnership, 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 Partnership, which
consent may be withheld by the Partnership in its sole discretion.
2.13 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 Partnership in each instance, which consent may be withheld by the
Partnership in its sole discretion, institute legal proceedings in the name
of
the Partnership to enforce leases, collect income and rent or dispossess tenants
or others occupying a Qualified Asset 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 Qualified Asset if any such action by the Asset
Manager would constitute a Major Decision.
2.14 Environmental.
(a) Notice.
The Asset Manager shall promptly advise the Partnership 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 Qualified Asset or the property adjacent to or surrounding each
Qualified Asset. The Partnership 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 2.13, Asset Manager shall use commercially reasonable efforts
to enforce the Partnership’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 Partnership, or except to the extent
necessary to protect against the imminent threat to the life and safety of
persons and/or damage
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to
a
Qualified Asset or damage to the property adjacent to or surrounding such
Qualified Asset, or except to the extent such disclosure is required by
Environmental Laws, other laws, or court order.
2.15 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 Partnership’s liaison with such tenant’s
construction managers and contractors (or other supervisors of a tenant’s
build-out).
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