Exhibit 10.3

LaSalle Investment Management, Inc.

200 East Randolph Drive

Chicago, Illinois 60601

June 16, 2004

U.S. Trust Company, N.A.

225 High Ridge Road

Stamford, Connecticut 06905

 

Re: Excelsior/LaSalle Property Fund, Inc.

Gentlemen:

Once again, we are pleased to have been offered the opportunity to work with
U.S. Trust Company, N.A. (“U.S. Trust”) in connection with the organization and
operation of Excelsior/LaSalle Property Fund, Inc., a Maryland corporation (the
“Fund”), which will be an open-ended, diversified real estate fund marketed
primarily to high net worth individuals. It is anticipated that the parties will
work together in drafting and negotiating the Fund’s offering materials and
organizational documents and the terms under which LaSalle Investment
Management, Inc. (“LaSalle”) will act as the advisor to the Fund. It is also
anticipated that LaSalle will undertake to cause the Fund to acquire a suitable
portfolio of real estate investments (“Pre-Closing Investments”) prior to the
initial closing of the Fund (“Initial Closing”), and in connection therewith,
LaSalle or its affiliate, LaSalle U.S. Holdings, Inc. (“LUSHI”), will fund 100%
of the equity and transaction costs required to acquire the properties,
contributing up to $50 million of equity capital towards those investments in
the aggregate. It is understood that LaSalle and U.S. Trust intend to negotiate,
as a condition precedent to the Initial Closing, a letter agreement (the “Side
Letter”) setting forth the terms and conditions of our respective commitments to
one another in connection with the Initial Closing and the redemption of LUSHI’s
interests in the Fund and that the terms of the Side Letter will supersede the
preliminary intent of the parties with respect to such matters expressed herein.
In consideration of each party’s agreement to undertake such negotiations and
LaSalle’s agreement to undertake to cause the Fund to acquire such Pre-Closing
Investments, the parties agree as follows:

1. Conduct of Parties. U.S. Trust agrees to use its good faith efforts to
prepare the offering materials of the Fund (including, without limitation, an
offering memorandum and the exhibits thereto), commence the marketing of
interests in the Fund, and consummate the Initial Closing as soon as
practicable. LaSalle agrees to use its good faith efforts to cause the Fund to
acquire the Pre-Closing Investments prior to the Initial Closing as soon as
practicable. The parties acknowledge and agree that (a) there is no assurance
that any Pre-Closing Investments will be acquired and LaSalle shall have no
liability to U.S. Trust for any failure to acquire Pre-Closing

 

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Investments if such failure results from any reason other than LaSalle’s bad
faith, and (b) there is no assurance that any interests in the Fund will be sold
and U.S. Trust shall have no liability to LaSalle for any failure to sell
interests in the Fund if such failure results from any reason other than U.S.
Trust’s bad faith.

2. Initial Acquisition Fee. Upon the Initial Closing, the Fund shall redeem all
of LaSalle’s (or LUSHI’s) equity capital invested in the Fund, or repay all
outstanding indebtedness of the Fund to LaSalle (or LUSHI), as of such date in
excess of $10 million in the aggregate, subject to such terms, conditions and
limitations as the parties may agree in the Side Letter. At such time, the Fund
shall pay to LaSalle an acquisition fee with respect to each of the properties
owned or acquired by the Fund as of the date of the Initial Closing (the
“Initial Acquisition Fee”); provided, that such payment is permitted by the
terms of any other indebtedness or equity capital provided to the Fund. The
Initial Acquisition Fee shall be an amount equal to one-half percent (0.5%) of
the total project capitalization (including debt and equity) of each of the
properties owned or acquired by the Fund as of the date of the Initial Closing.
The Initial Acquisition Fee shall be paid to LaSalle in cash at the Initial
Closing.

3. Exclusivity of U.S. Trust. Commencing upon the date of execution of this
letter agreement (the “Letter Agreement”) by U.S. Trust and until the Initial
Closing:

 

  (a) U.S. Trust will not, directly or indirectly, through any subsidiary,
affiliate or otherwise, (i) form, accept subscriptions for, or otherwise sponsor
any investment vehicle which is marketed primarily to “accredited investors”
within the meaning of Regulation D under the Securities Act of 1933, as amended,
and which has investment objectives substantially similar to those contemplated
for the Fund (a “Competing Fund”), or (ii) hire or engage any person other than
LaSalle to act as an investment advisor or manager with respect to the Fund; and

 

  (b) U.S. Trust will immediately notify LaSalle regarding any contact between
U.S. Trust or its representatives and any person (other than LaSalle) regarding
any offer, proposal or inquiry by such person relating to (i) the formation,
organization or sponsorship of a Competing Fund, or (ii) the engagement of such
person to act as an investment advisor or manager with respect to the Fund.

4. Exclusivity of LaSalle. Commencing upon the date of execution of this Letter
Agreement by LaSalle and until the Initial Closing:

 

  (a) LaSalle will not, directly or indirectly, through any subsidiary,
affiliate or otherwise, (i) form, accept subscriptions for, or otherwise sponsor
any Competing Fund, or (ii) accept an engagement to act as an investment advisor
or manager with respect to any Competing Fund; and

 

  (b) LaSalle will immediately notify U.S. Trust regarding any contact between
LaSalle or its representatives and any person (other than U.S. Trust) regarding
any offer, proposal or inquiry by such person relating to (i) the formation,
organization or sponsorship of a Competing Fund, or (ii) the engagement of
LaSalle to act as an investment advisor or manager with respect to any Competing
Fund.

5. Remedies. Each party acknowledges that in the event of a breach of the

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covenants contained in Section 3 or 4 hereof by such party, the non-breaching
party will have no adequate remedy at law and such non-breaching party shall be
entitled to immediate injunctive and other equitable relief without the
necessity of showing actual monetary damages.

6. Termination of Letter Agreement. The parties agree that in the event that as
of March 31, 2005 the Fund shall have not consummated the Initial Closing,
either party shall have the right to terminate this Letter Agreement upon
delivery of ninety (90) days’ prior written notice to the other party.

If you are in agreement with the foregoing, please sign in the space provided
below.

 

Very truly yours, LASALLE INVESTMENT MANAGEMENT, INC. By:  

/s/ C. Allan Swaringen

Name:   C. Allan Swaringen Its:   Managing Director

Accepted and Agreed this 22nd day of June, 2004:

 

U.S. TRUST COMPANY, N.A. By:  

/s/ Douglas A. Lindgren

Name:   Douglas A. Lindgren Its:   Managing Director