RI Q4 2011 Exhibit 10.53






Exhibit 10.53
MEMORANDUM OF UNDERSTANDING
 (Gross-up Methodology for BD1 and BD2 Portfolios) 


THIS MEMORANDUM OF UNDERSTANDING (this “Memorandum”) dated this 7th day of October, 2008 is made by and between BANK OF AMERICA, N.A., a national banking association (“BofA”) and FIRST STATES GROUP, L.P., a Delaware limited partnership (“FSG”) for and on behalf of each affiliate of FSG that, as of the date hereof, leases premises to BofA under a master lease or a continuing term master lease (each a “Master Lease” and collectively the “Master Leases”) in any property which was identified as a “Property” under that certain (i) Master Lease Agreement dated June 30, 2003 between First States Investors 5000A, LLC, a Delaware limited liability company, as landlord, and BofA, as tenant (collectively, “BD1 Properties”), and (ii) Master Lease Agreement dated October 1, 2004 between First States Investors 5200, LLC, a Delaware limited liability company, as landlord, and BofA, as tenant (collectively, “BD2 Properties”, and hereinafter the BD1 Properties and the BD2 Properties shall each be referred to as a “Property” and collectively as the “Properties”), which includes those affiliates identified on Exhibit A attached hereto (collectively, “FSG Affiliates”). 
BACKGROUND 
A.BofA, FSG and certain of the FSG Affiliates are parties to a certain Settlement Agreement, Mutual Release and Agreement to Modify Leases dated as of January 23, 2007, but with an effective date of January 1, 2007 (“Settlement Agreement”). 
B.Pursuant to Section 4.2 of the Settlement Agreement, the parties agreed to work together in good faith to establish a mutually acceptable revised “gross-up” methodology to be used to calculate Operating Expenses under the BD1 Leases and BD2 Leases (as such terms are defined in the Settlement Agreement).
C.Since execution of the Settlement Agreement, certain of the Properties were transferred to various FSG Affiliates (collectively, “Transferred Properties”) and, in connection therewith, the BD1 Leases and the BD2 Leases were terminated with respect to such Transferred Properties, and BofA and such FSG Affiliates entered into the Master Leases with respect to such Transferred Properties. 
D.BofA and FSG (for and on behalf of the FSG Affiliates), have established a mutually acceptable revised “gross-up” methodology for the Master Leases (including the BD1 Leases and the BD2 Leases ), all as described more particularly below. 
AGREEMENT 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound hereby, covenant and agree as follows: 
1.Capitalized Terms. All capitalized terms not otherwise defined herein shall have the meanings provided in each of the applicable Master Leases. 


















2.Gross-Up Methodology.  (a) Attached hereto as Exhibit B is a schedule that identifies the percentage of certain Operating Expenses that BofA and FSG agree are fixed and therefore not subject to being “grossed-up” under Section 2.2(e) of the Master Leases, and the percentage of such operating expenses that BofA and FSG agree are variable and are therefore subject to being “grossed-up” under Section 2.2(e) of the Master Leases (“Gross-Up Schedule”), all in accordance with the terms of this Paragraph 2.  BofA and FSG (for and on behalf of the FSG Affiliates) each agree that the Gross-Up Schedule shall be utilized when calculating adjustments to Operating Expenses under Section 2.2(e) of each of the Master Leases for calendar years 2007, 2008, 2009, and 2010.  BofA and FSG further agree that such Gross-Up Schedule shall continue to be utilized during each calendar year after calendar year 2010 to calculate adjustments to Operating Expenses under Section 2.2(e) of each of the Master Leases until such time, if ever, that a Gross-Up Modification occurs in accordance with subsection(b)below. 
(b)BofA or FSG may modify and/or discontinue the use of the Gross-Up Schedule under one or more of the Master Leases with respect to one or more of the Properties at any time or times during the Term after calendar year 2010, if BofA or FSG determines, in its sole discretion, that the Gross-Up Schedule does not accurately reflect the adjustments to Operating Expenses as contemplated in Section 2.2(e) of such Master Lease or Master Leases (“Gross-Up Modification”), by delivering to the other written notice in accordance with the terms of the applicable Master Lease or Master Leases (“Gross-Up Modification Notice”) on or before June 1 of the calendar year immediately prior to the calendar year in which the Gross-Up Modification shall occur. Any such Gross-Up Modification shall commence January 1st of the calendar year immediately following the calendar year in which a Gross-Up Modification Notice is delivered (e.g., if a Gross-Up Modification Notice is delivered on or before June 1, 2010, the Gross-Up Modification shall commence on January 1, 2011; and if a Gross-up Modification Notice is delivered on or before June 1, 2011 the Gross-Up Modification shall commence on January 1, 2012, etc.); provided, however, that any such Gross-Up Modification shall be subject to the dispute resolution procedures set forth in Article 12 of the applicable Master Lease in the event of a disagreement between BofA and First States as to the new “gross-up” methodology utilized in connection with the Gross-Up Modification. 
(c)BofA and FSG each hereby agree that this Memorandum, and the “grossup” methodology established hereunder, shall be applicable only with respect to Properties that are owned by FSG or any of the FSG Affiliates, and that such “gross-up” methodology shall not apply to any of the Properties that are, from time to time, sold by FSG or any of the FSG Affiliates to a third party purchaser (“Third Party Purchaser") and/or with respect to any Separate Lease entered into by such Third Party Purchaser, as landlord, and BofA, as tenant. 
3.Settlement Agreement.  BofA and FSG (for and on behalf of the FSG Affiliates) hereby acknowledge and agree that this Memorandum evidences the revised “gross-up” methodology established in accordance with Section 4.2 of the Settlement Agreement, and that no further written agreements or amendments relating to the “gross-up” methodology are required under the Settlement Agreement. 

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4.Counterparts. This Memorandum may be executed in one or more counterparts, each of which shall be an original, but all of which when taken together shall constitute one instrument. 


IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum of Understanding to be executed by their respective duly authorized officers as of the day and year first above written. 
	
		
	FIRST STATES GROUP, L.P., a Delaware

	limited partnership

	 
	 

	By:
	First States Group, LLC, a Delaware

	 
	limited liability company, its general partner

	 
	 

	 
	By: /S/ Robert R. Foley

	 
	Name: Robert R. Foley

	 
	Title: Chief Operating Officer & Vice President

	 
	 

	BANK OF AMERICA, N.A., a

	national banking association

	 
	 

	By:
	/S/ Bernard OConnell

	 
	Name: Bernard OConnell

	 
	Title: Senior Vice President

	 
	 







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EXHIBIT A 
FSG Affiliates
First States Investors 5000A, LLC 
First States Investors 5000B, LLC 
First States Investors 5200, LLC 
First States Investors 5300, LLC 
American Financial TRS, Inc. 
First States Investors TRS, L.P. 
First States Investors GS Pool A, L.P. 
First States Investors DB I SP, L.P. 
First States Investors HFS L.P. 

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EXHIBIT B
(Page 1 of 2)


Gross-Up Schedule
	
				
	Object Account
	Description
	Fixed %
	Variable %

	50105
	Security-Contract
	100%
	0%

	50110
	Security-Other
	100%
	0%

	50205
	Eng Sal & Benefits-Ext
	70%
	30%

	50210
	Prop Mgmt-Salaries&Benefits-External
	100%
	0%

	50220
	Property Mgmt Admin Fee-External
	N/A
	N/A

	50230
	Prop Mgmt-Direct Charges-External
	100%
	0%

	50255
	Eng Sal & Benefits-Internal
	70%
	30%

	50260
	Prop Mgmt-Salaries&Benefits-Internal
	100%
	0%

	50270
	Property Mgmt Admin Fee-Internal
	100%
	0%

	50280
	Prop Mgmt-Direct Charges-Internal
	100%
	0%

	50305
	Alterations & Repairs
	80%
	20%

	50310
	Electrical Repairs
	50%
	50%

	50315
	Structural
	100%
	0%

	50320
	Roof Repairs
	100%
	0%

	50325
	Plumbing Repairs
	65%
	35%

	50330
	Concrete Masonary Repairs
	100%
	0%

	50335
	Pest Control Exp
	100%
	0%

	50340
	Water Service Contract
	100%
	0%

	50345
	Equip Management Contracts
	100%
	0%

	50350
	HVAC repairs
	50%
	50%

	50355
	General Blg Maintenance
	60%
	60%

	50360
	Maintenance Supplies
	50%
	50%

	50365
	Fire Prevention
	100%
	0%

	50370
	UPS Contracts
	100%
	0%

	50375
	Generator Contracts
	100%
	0%

	50380
	Lighting Maint & Light Bulbs
	15%
	85%

	50390
	Storm Damage
	100%
	0%

	50405
	Parking Lot/Garage Maintenance
	80%
	20%

	50410
	Parking Lot/Garage Cleaning
	80%
	20%

	50415
	Parking Lot/Garage Fees
	100%
	0%

	50505
	Rent Exp
	100%
	0%

	50515
	Rent Exp-Opex
	100%
	0%

	50520
	Rent Exp-Sales Tax
	100%
	0%

	50605
	Elevator Expense
	100%
	0%

	50610
	Elevator Service Contracts
	100%
	0%

	50615
	Elevator-repairs
	100%
	0%

	50620
	Elevator-License & Inspection Fees
	100%
	0%

	50810
	Janitorial-Cntrct Srv-Dly Clng
	15%
	85%

	50815
	Janitorial-Cntrct Srv-Wndw Clng
	100%
	0%

	50820
	Janitorial-Cntrct Srv-Spcl Cln
	15%
	85%

	50825
	Janitorial-Supplies/Matrls/Msc
	15%
	85%

	50830
	Janitorial-Trash Removal\Routn
	15%
	85%





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EXHIBIT B
(Page 2 of 2)


Gross-Up Schedule


	
				
	Object Account
	Description
	Fixed %
	Variable %

	50905
	Contract Servics-Extr Lndscpng
	100%
	0%

	50910
	Contract Servics-Intr Lndscpng
	100%
	0%

	50915
	Snow Removal
	80%
	20%

	51005
	Management Fees
	N/A
	N/A

	51105
	Real Estate Fees
	N/A
	N/A

	51110
	Real Estate Taxes-Abatement
	N/A
	N/A

	51115
	Improvement District Taxes
	N/A
	N/A

	51210
	Electric
	40%
	60%

	51220
	Water & Sewer
	50%
	50%

	51230
	Gas
	80%
	20%

	51240
	Fuel Oil
	80%
	20%

	51260
	Chilled Water
	60%
	40%

	51270
	Utility Management Costs
	100%
	0%

	51280
	Utilities-Other
	100%
	0%

	51305
	Insurace Exp
	95%
	5%

	51405
	Other Taxes
	100%
	0%

	51410
	Tenant Relations
	100%
	0%

	51415
	Card Access Costs
	100%
	0%

	51425
	Miscellaneous Occupancy
	100%
	0%









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