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EXHIBIT 10.rrr
CONSULTING SUBORDINATION AGREEMENT
THIS CONSULTING SUBORDINATION AGREEMENT ("Agreement") is dated as of the
23rd day of January, 1997, by and among XXXXXX PLACE ASSOCIATES, LLC, a Delaware
limited liability company ("Xxxxxx"), XXXXXX PLACE ASSOCIATES NOMINEE
CORPORATION, a Delaware corporation, the sole shareholder of which is Xxxxxx
('Nominee"; Xxxxxx and Nominee are hereinafter referred to individually and
collectively as "Owner"), XXXXXX FUNDING CORPORATION, a Delaware corporation
("Funding"), XXXXXX FINANCING CORPORATION, a Delaware corporation ("Financing"),
THE AETNA CASUALTY AND SURETY COMPANY, a Connecticut corporation ("Aetna"),
OVERSEAS MANAGEMENT, INC., a Delaware corporation ("Manager"), and URBAN RETAIL
PROPERTIES CO., a Delaware corporation ("Consultant").
RECITALS
WHEREAS, Owner is the owner of a leasehold interest in the property and
all improvements thereon encumbered by the "Loan Documents" (as defined below)
(collectively, the "Property"); and
WHEREAS, Xxxxxx Place Associates, an Illinois general partnership ("Xxxxxx
Partnership"), as predecessor-in-interest to Xxxxxx, executed and delivered the
loan documents described in "A" attached hereto (collectively, the "Loan
Documents"). Unless otherwise defined herein, all capitalized terms used in this
Agreement shall have the meaning set forth in Exhibit "A". The loan evidenced
and secured by the Loan Documents being hereinafter referred to as the "Loan";
and Aetna, as holder of the Loan Documents, and any and all subsequent holders
of the Loan Documents shall be referred to herein as the "Holder and
WHEREAS, Consultant, as successor in interest to JMB Properties Urban
Company, an Illinois general partnership ("JMB Properties") and Xxxxxx
Partnership have terminated that certain Management Agreement, dated as of
September 1, 1983 (the "Prior Management Agreement"); which such termination was
made with the consent of Aetna and which such termination is effective as of the
date hereof; and
WHEREAS, after the termination of the Prior Management Agreement, Xxxxxx
Partnership was merged into Xxxxxx on the date hereof with the consent of Aetna.
WHEREAS, after the merger of Xxxxxx Partnership into Xxxxxx, Overseas
Partners Capital Corp., a Delaware corporation ("Overseas"), purchased 66-2/3%
of
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the membership interests in Xxxxxx, and Overseas was admitted as the managing
member of Xxxxxx with the consent of Aetna (the "Purchase & Transaction"); and
WHEREAS, immediately after the Purchase Transaction and with the consent
of Aetna, Owner and Manager entered into that certain Management Agreement dated
as of the date hereof, a copy of which is attached hereto as Exhibit "B" (as
renewed, extended, amended or delegated in accordance with the terms hereof, the
"Management Agreement"), to provide for the management of the Property, which
Management Agreement provides for the payment of certain fees to Manager for the
management of the Property; and
WHEREAS, immediately after the execution of the Management Agreement and
with the consent of Aetna, Manager and Consultant entered into that certain
Agreement for Purchase of Consulting and Other Services dated as of the date
hereof, a copy of which is attached hereto as Exhibit "B" (as renewed, extended,
amended or delegated in accordance with the terms hereof, the "Consulting
Agreement"), to provide for the performance by consultant of certain consulting,
retail leasing and other services for the Property, which Consulting Agreement
provides for the payment of certain fees by Manager to Consultant for the
services rendered by Consultant thereunder; and
WHEREAS, it was a condition to Aetna's consent to the foregoing
transactions that Consultant, as an affiliate of JMB Realty Corporation, a
member of Owner, agree to accept payment of the amounts due to it under the
Consulting Agreement as set forth herein, and Owner, Manager and Consultant
agree to the payment and acceptance of the amounts due to Consultant under the
Consulting Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Owner, Funding, Financing, Aetna, Manager and Consultant hereby
agree as follows:
1. Fee Deferral and Payment Subordination. No "Percentage Fee" (as defined
in Schedule 7.1 of the Consulting Agreement.) payable pursuant to Section 7.1 of
the Consulting Agreement (collectively, the "CONSULTANT FEES") nor any leasing
commissions payable to Consultant or any affiliate thereof relating to leases of
space in the Property ("Leasing Commissions") shall be paid to Consultant or any
affiliate thereof out of Proceeds (as hereinafter defined) until Holder has
received all amounts due Holder under the Loan Documents and the rights of
Consultant or any affiliate thereof to payment of such Consultant Fees or
Leasing Commissions shall be subject and subordinate to Holder's rights to
payment under the Loan Documents as provided herein. All Consultant Fees and
Leasing
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Commissions shall be deferred and shall be payable to Consultant as provided in
Section 10 hereof. In addition, until Holder has received all amounts due to
Holder under the Loan Documents, no costs and expenses incurred by Consultant
under the Consulting Agreement which are reimbursable by Manager or Owner
thereunder (including "Reimbursable Costs", as defined in Schedule 7.1 of the
Consulting Agreement) shall be paid by Owner or Manager to Consultant out of the
Proceeds unless such payments or reimbursements are in accordance with the
Budget (as such term is defined in the Loan Documents), and Consultant's rights
to reimbursement of such costs and expenses shall be subject and subordinate to
Holder's rights to payment under the Loan Documents except to the extent such
payments or reimbursements are in accordance with the Budget. Payment of
Consultant Fees and Leasing Commissions and reimbursement of such costs and
expenses from sources other than the Proceeds is not restricted. This Agreement
shall not be deemed to prohibit the hiring by Owner, Manager or Consultant of
non-affiliated third party leasing agents with regard to leasing the Property,
or the payment of market rate fees or commissions to such leasing agents from
the Proceeds. The term "Proceeds" shall mean and refer to total income,
revenues, rentals, proceeds from sale or refinance, and other consideration
received by or for the account of Owner or any affiliate thereof relating to the
Property (which shall include income from any source, including proceeds of
casualty insurance not used to make repairs to the Property and not applied in
reduction of the outstanding principal balance of the Loan, but which shall
exclude the capital contributions made by the members in Owner).
2. Performance by Consultant. Subject to paragraph 11 hereof, until the
earlier of (a) payment of the Loan in full, or (b) six (6) months after Owner
ceases to pay the scheduled payments under the Note (but in no event later than
one hundred and twenty (120) days after maturity of the Loan (whether by
acceleration or otherwise)), Consultant agrees to continue to perform all of its
obligations under the Consulting Agreement in accordance with its terms and
subject to all rights (including termination rights) of Consultant thereunder,
notwithstanding that the provisions of this Agreement may prohibit or restrict
the payment of any Consultant Fees or Leasing Commissions thereunder. Subject to
the foregoing, no election by Manager or Consultant to terminate the Consulting
Agreement shall become effective unless and until Manager has obtained Holder's
prior written consent to undertake Consultant's functions or a replacement has
been appointed by Manager with Holder's prior written consent, which consent may
be withheld in Holder's sole and absolute discretion.
3. Trust for Prohibited Payments. Neither Consultant nor any affiliate
thereof shall accept or receive any Consultant Fees or Leasing Commissions, nor
any reimbursement of costs and expenses from Owner or Manager if the payment of
such Consultant Fees or Leasing Commissions, or reimbursements of costs or
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expenses, is prohibited by this Agreement. If Consultant accepts or receives any
payment of Consultant Fees or Leasing Commissions, or reimbursements of costs or
expenses, which is prohibited under this Agreement, Consultant shall segregate
such Consultant Fees, Leasing Commissions, or reimbursements of costs and
expenses from all other funds and shall hold such Consultant Fees, Leasing
Commissions, or reimbursements of costs or expenses in trust for the benefit of
Holder and immediately pay such amounts to Holder at its address indicated by
the Loan Documents.
4. Rights of Holder. Without limiting Holder's rights and remedies at law
or in equity, Holder may enforce this Agreement against Owner, Manager,
Consultant and any affiliate thereof, by injunction or action for specific
performance. No right or remedy of Holder in connection with this Agreement
shall be prejudiced or impaired in any way by any act or failure to act by
Holder and, without limiting the foregoing, Holder may, at any time and from
time to time, without the consent of or notice to Owner, Manager and Consultant
and without impairing or releasing the subordinations described herein, do any
one or more of the following: (a) change the manner, place or terms of payment
of, or renew or alter the Loan; (b) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing the Loan; (c) release
any person or entity liable for the Loan; or (d) exercise or refrain from
exercising any rights or remedies against Owner or the Property under the Loan.
5. Representations and Warranties. Consultant hereby represents and
warrants to Holder that no agreements have been entered into by Consultant which
provide for the management of all or any part of the Property. Consultant hereby
represents and warrants to Holder (i) that Consultant has received, reviewed and
approved all of the Loan Documents, and (ii) that no Consultant Fees or Leasing
Commissions have been paid to Manager or any affiliate thereof out of Proceeds.
6. Restrictive Covenants. Consultant nor any affiliate thereof shall enter
into any agreements which provide for the management of all or any part of the
Property, without Holder's prior written consent, which Holder may not
unreasonably withhold but Holder may condition its consent to any such agreement
upon the execution by the parties thereto and the delivery to Holder of an
agreement acceptable to Holder that is substantially in the form of this
Agreement. Consultant nor or any affiliate thereof shall not enter into any
modifications, amendments or supplements to the Consulting Agreement that would
have a material adverse effect upon Holder's rights under the Loan Documents, or
that would violate or conflict with the provisions of this Agreement without
Holder's prior written consent, which consent Holder may withhold in its sole
and absolute discretion and Holder may condition its consent to any such
modification, amendment, or supplement upon the reaffirmation by Owner, Manager
and
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Consultant of this Agreement in form and substance acceptable to Holder.
7. Events of Default. Default by any or all of Owner, Manager, Consultant
or any affiliate thereof in the performance of any obligation contained herein
or the violation by any or ail of Owner, Manager, Consultant or any affiliate
thereof of any restriction contained herein shall constitute an Event of Default
hereunder.
Notwithstanding the foregoing, provided that no event requiring consent
of Holder under the Loan Documents has occurred without Holder's consent first
having been obtained, a default in an obligation other than either an obligation
to pay money or a covenant which restricts Owner, Manager, Consultant or any
affiliate thereof from making any payment of money to any person (a "Non
Monetary Default") shall not constitute an Event of Default unless and until the
"Notice Period" (as hereinafter defined) for such Non Monetary Default shall
have expired without the default having been cured. The Notice Period for a Non
Monetary Default shall commence when notice thereof has been delivered to Owner,
Manager and Consultant, and shall end thirty (30) days later, provided, however,
that in the case of a Non Monetary Default not capable of being cured within
thirty (30) days, the Notice Period shall be extended for as long as necessary
to complete such cure provided that Owner, Manager or Consultant, as applicable,
is proceeding continuously with due diligence to complete such cure.
Notwithstanding said qualification on the definition of an Event of Default,
Owner, Manager and Consultant shall not be entitled to notice or an opportunity
to cure any Non Monetary Default which occurs after, and within twelve
consecutive months of, Owner's, Manager or Consultant's receipt of notices from
Holder concerning two prior Non Monetary Defaults.
8. Accounting. Owner, Manager and Consultant shall provide Holder on or
before each May 15, August 15, November 15 and February 15 during the term
hereof with an accounting (each, an "Accounting"), in form and substance
acceptable to Holder and including the calculations by which the amount of
Consultant Fees and Leasing Commissions were determined, setting forth the
amount of Consultant Fees and the amount of Leasing Commissions which would have
been paid to Consultant by Manager or Owner but for the terms of this Agreement.
Each Accounting shall specify all Consultant Fees and all Leasing Commissions
earned during the immediately preceding calendar quarter, the date each such
Management Fee or Leasing Commission would have been paid but for the terms of
this Agreement, and the cumulative amount of Consultant Fees and Leasing
Commissions owing to Consultant since the delivery of the Consulting Agreement,
together with the cumulative six percent (6.0%) non-compounded return on any
such amount described in paragraph 10 hereof. Each Accounting shall be certified
by Owner, Manager and Consultant to have been prepared in
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accordance with the terms of this Agreement and to be true, accurate and
complete in all material respects.
9. Holder's Audit Rights.
(a) Holder may notify Owner, Manager and Consultant within sixty
(60) days after receipt of any Accounting that Holder disputes or questions any
computation or item contained in such Accounting. If Holder makes such
notification, the parties shall meet in good faith within twenty (20) days after
Holder's notice to resolve such disputed items among themselves. If, despite
such good faith efforts, the parties are unable to resolve the dispute at such
meeting or within ten (10) days thereafter, the items shall be resolved by an
independent certified public accountant who shall be designated by Holder (and
reasonably approved by Owner, Manager and Consultant) within fifteen (15) days
after such ten (10) day period. The determination of such accountant shall be
final, and such accountant shall endeavor to render a determination within
twenty (20) days after appointment. The fees of such accountant shall be paid by
Holder unless such review shall indicate that the disputed Accounting set forth
Consultant Fees and/or Leasing Commissions in excess of actual Consultant Fees
and/or Leasing Commissions by four percent (4%) or more, in which case Owner
shall pay all such fees, Any adjustment in the amount of Consultant Fees
and/or Leasing Commissions shall be reflected in the Accounting immediately
following such disputed Accounting.
(b) Owner, Manager and Consultant shall keep and maintain at all
times full and accurate books of account and records adequate to correctly
reflect all items required in order to calculate Consultant Fees and Leasing
Commissions. All such books and records shall be kept at Overseas Management,
Inc., 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000, or
at such office in the Commonwealth of Massachusetts as Owner may reasonably
select, provided Owner gives Holder prior written notice thereof. Such books and
records shall be available until at least five (5) years after repayment in full
of the Loan. Holder shall have the right to inspect, copy and audit such books
of account and records at Holder's expense, during reasonable business hours,
and upon reasonable notice to Owner whether such books and records are in the
possession of Owner or any agent of Owner, for the purpose of verifying the
accuracy of any Accounting. All statements required under this Agreement shall
be in addition to any other financial or operating statements required by Holder
from Owner pursuant to the Loan Documents.
10. Payment of Consultant Fees and Leasing Commissions. All Consultant
Fees and Leasing Commissions, together with a six percent (6%) non-compounded
return thereon (calculated for each unpaid amount of Consultant Fees or Leasing
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Commissions from the date such Consultant Fees would have been paid pursuant to
the Consulting Agreement or the date such Leasing Commissions were earned, as
applicable, but for the terms of this Agreement), may be paid by Owner or
Manager to Consultant from Proceeds only after repayment in full of the Loan,
provided, however, that Leasing Commissions considered in calculation of the
Xxxxxx Return (as defined in that certain Equity Payment Agreement dated as of
March 1, 1992, by and among Xxxxxx Partnership, Aetna, Funding and Financing)
shall not exceed five dollars ($5.00) per leased square foot. Notwithstanding
the foregoing, for purposes of the Equity Payment Agreement, the amounts taken
into account for purposes of the calculation of the Xxxxxx Return as a result of
this Agreement and the "Management Subordination" (as defined below) shall not
be counted twice if they represent amounts paid to Manager by Xxxxxx under the
Management Agreement and then paid by Manager to Consultant under the Consulting
Agreement. As used herein, the "MANAGEMENT SUBORDINATION" means that certain
Management and Leasing Fee Subordination Agreement, dated as of the date hereof,
by and among Xxxxxx, Nominee, Funding, Financing, Aetna and Manager.
11. Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors,
assigns and transferees; provided, however, that notwithstanding anything to the
contrary contained in the Consulting Agreement or Section 2 hereof, the
Consulting Agreement and Section 2 hereof and all of Owner's, Manager's and
Consultant's rights and interests thereunder may not be assigned without the
Holder's prior written consent other than pursuant to the Consulting Agreement,
and shall automatically terminate upon any judicial or nonjudicial foreclosure
of the Mortgage or the acceptance of a deed in lieu of foreclosure by the Holder
or the appointment of a receiver to manage the Property (except for rights and
obligations relating to acts or events occurring prior to such termination).
12. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
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13. Notices. All notices hereunder shall be in writing and shall be
given personally or by United States certified or registered mail (return
receipt requested) addressed as follows:
Owner and Funding:
Xxxxxx Place Associates, LLC
c/o Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Legal Department
with a copy to:
Overseas Partners Capital Corp.
Xxxxx Xxxxx Xxxxx
X.X. Xxx XX 0000
8 Xxxxxx Street
Xxxxxxxx XX GX Bermuda
Attention: Xxxxx X. Xxxxxx, President
with a copy to:
JMB Realty Corporation
000 Xxxxx Xxxxxxxx Xxxxxx Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Aetna and Financing:
The Aetna Casualty and Surety Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
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Manager:
Overseas Management, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Legal Department
with a copy to:
Overseas Partners Capital Corp.
Xxxxx Xxxxx Xxxxx
X.X. Xxx XX 0000
8 Xxxxxx Street
Xxxxxxxx XX GX Bermuda
Attention: Xxxxx X. Xxxxxx, President
Consultant:
Urban Retail Properties Co.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Notices given in accordance herewith shall be deemed delivered upon personal
delivery or on the date of delivery shown on the return receipt, as applicable.
Any party may change its address for notices by a notice given in accordance
with this Section 13.
14. Termination. This Agreement shall terminate upon the full payment of
the outstanding principal balance of the Loan, all accrued interest thereon and
all other amounts payable under the Loan Documents.
15. Severability. If any of the provisions of this Agreement are held by
a court of competent jurisdiction to be unenforceable as applied to particular
facts, then all of the other provisions of this Agreement (and said provision as
applied to other facts) shall remain in full force and effect.
16. No Waiver. No party shall be deemed to have waived any of its
rights hereunder unless the waiver is express and is contained in a writing
signed by the waiving party.
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17. Acknowledgement. Owner, Manager and Consultant hereby acknowledge that
Holder, Funding and Financing would not consent to the transactions contemplated
by the Recitals without this Agreement and that Holder, Funding and Financing
are relying upon this Agreement in executing and delivering their written
consent to the Purchase Transaction.
18. Limitations on Liability. The obligations and liabilities of Xxxxxx
and the present or future members in Xxxxxx and the present or future
shareholders, officers and directors of Nominee hereunder are subject to the
exculpatory provisions and exceptions therefrom contained in Paragraph 43 of the
Mortgage. In the case of any default by Consultant, the damages recoverable by
Holder against Consultant shall be limited to the aggregate Consultant Fees paid
to Consultant after the date of this Agreement, plus all costs and expenses paid
to or accepted by Consultant in violation of Section 3 hereof, respectively, but
there shall be no other limitation on the equitable or legal rights or remedies
of Holder.
19. Counterpart Originals. This Agreement may be executed in
counterparts, each of which shall be deemed to constitute the same agreement.
20. Consent of Funding, Financing and Aetna. Funding, as owner of the Note
and Mortgage, and Financing and Aetna, as collateral assignees of the Note and
the Mortgage, execute this Agreement to acknowledge, consent and agree to the
terms of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Xxxxxx:
XXXXXX PLACE ASSOCIATES, LLC,
a Delaware limited liability company
By: OVERSEAS PARTNERS CAPITAL CORP.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name: Xxxxx X. Xxxxxx
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Title: President
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Nominee:
XXXXXX PLACE ASSOCIATES NOMINEE CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
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Title: Vice President
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Funding:
XXXXXX FUNDING CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
------------------
Title: Vice President
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Financing:
XXXXXX FINANCING CORPORATION,
a Delaware corporation
By:/s/ Xxxx Meadelson
--------------------------------
Name: /s/ Xxxx Meadelson
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Title: President
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Aetna:
THE AETNA CASUALTY AND SURETY COMPANY,
a Connecticut corporation
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
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Title: Vice President
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Manager:
OVERSEAS MANAGEMENT, INC.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
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Title: President
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Consultant:
URBAN RETAIL PROPERTIES CO.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
------------------------------
Title: SR. V. P.
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