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Exhibit 10.4

 

PROPERTY
MANAGEMENT AND LEASING AGREEMENT

FOR

ETRE PROPERTY
A-1, LLC

AT

1201 CONNECTICUT
AVENUE, NW

WASHINGTON, DC 20036

 

 

	
   

  	
   

  	
   

  

 

 

  

	

    

 

	

   TABLE OF Contents

    

    

	

    
	

    

                                                                                                                  PAGE

	

   Article 1. DEFINITIONS
	

   1

	

   1.1
	

   Definitions.
	

   1

	

   Article 2. TERM; TERMINATION
	

   3

	

   2.1
	

   Initial Term.
	

   3

	

   2.2
	

   Renewal Term.
	

   4

	

   2.3
	

   Termination.
	

   4

	

   2.4
	

   Bankruptcy Event.
	

   4

	

   2.5
	

   Effect of Expiration or Termination.
	

   5

	

   2.6
	

   Leasing Prospects.
	

   5

	

   Article 3. ENGAGEMENT OF MANAGER
	

   6

	

   3.1
	

   Engagement of Manager.
	

   6

	

   3.2
	

   Owner Information and Cooperation.
	

   6

	

   Article 4. MANAGEMENT RESPONSIBILITIES
	

   6

	

   4.1
	

   Management.
	

   6

	

   4.2
	

   Employees, Independent Contractor.
	

   6

	

   4.3
	

   Schedule of Personnel.
	

   7

	

   4.4
	

   Compliance with Laws, Agreements, Etc.
	

   7

	

   4.5
	

   Compensation; Office Expenses.
	

   8

	

   4.6
	

   Approved Budget.
	

   9

	

   4.7
	

   Collection of Rents and Other Income.
	

   9

	

   4.8
	

   Repairs.
	

   9

	

   4.9
	

   Supplies.
	

   10

	

   4.1
	

   Service Contracts.
	

   10

	

   4.11
	

   Project Construction Management Services.
	

   10

	

   4.12
	

   Taxes, Mortgages.
	

   11

	

   4.13
	

   Advances.
	

   11

	

   4.14
	

   Delegation.
	

   11

	

   Article 5. LEASING RESPONSIBILITIES
	

   12

	

   5.1
	

   Engagement.
	

   12

	

   5.2
	

   Execution of Leases.
	

   12

	

   5.3
	

   Lease Forms.
	

   12

	

   5.4
	

   Outside Brokers.
	

   12

	

   5.5
	

   Advertising.
	

   12

	

   5.6
	

   Leasing Expenses.
	

   13

	

   Article 6. INDEMNIFICATION; INSURANCE
	

   13

	

   6.1
	

   Indemnification.
	

   13

	

   6.2
	

   Notices.
	

   13

	

   6.3
	

   Owner's Insurance.
	

   14

	

   6.4
	

   Manager's Insurance.
	

   14

	

   6.5
	

   Contractors' Insurance.
	

   14

	

   6.6
	

   Waiver of Subrogation.
	

   15

	

   Article 7. FINANCIAL REPORTING AND RECORDKEEPING
	

   15

	

   7.1
	

   Books of Accounts.
	

   15

	

   7.2
	

   Financial Reports.
	

   15

	

   7.3
	

   Supporting Documentation.
	

   16

	

   7.4
	

   Accounting Principles.
	

   16

	

   Article 8. OWNER'S RIGHT TO AUDIT
	

   16

	

   8.1
	

   Right to Audit.
	

   16

	

   8.2
	

   Production of Documents.
	

   17

	

   Article 9. BANK ACCOUNTS
	

   17

	

   9.1
	

   Operating Account.
	

   17

	

   9.2
	

   Restricted Account.
	

   17

	

   9.3
	

   Transfer of Funds.
	

   17

	

   9.4
	

   Security Deposit Account.
	

   18

	

   9.5
	

   Change of Banks.
	

   18

	

   Article 10. PAYMENT OF EXPENSES
	

   18

	

   10.1
	

   Manager's Personnel Costs.
	

   18

	

   10.2
	

   Costs Eligible for Payment from Operating Account.
	

   19

	

   10.3
	

   Non-reimbursable Costs.
	

   20

	

   Article 11. INSUFFICIENT GROSS INCOME
	

   21

	

   11.1
	

   Priorities.
	

   21

	

   11.2
	

   Statement of Unpaid Items.
	

   21

	

   Article 12. SALE OF A PROPERTY
	

   21

	

   12.1
	

   Cooperation with Sales Broker.
	

   21

	

   12.2
	

   Cooperation with Owner.
	

   21

	

   12.3
	

   Inquiries and Offers to Purchase Property.
	

   21

	

   Article 13. REPRESENTATIONS AND WARRANTIES
	

   21

	

   13.1
	

   Representations and Warranties.
	

   21

	

   Article 14. NOTICES
	

   23

	

   14.1
	

   Notices.
	

   23

	

   Article 15. GENERAL PROVISIONS
	

   24

	

   15.1
	

   No Assignment.
	

   24

	

   15.2
	

   Consents and Approvals.
	

   24

	

   15.3
	

   Amendments.
	

   24

	

   15.4
	

   Headings.
	

   24

	

   15.5
	

   Complete Agreement.
	

   24

	

   15.6
	

   Survival.
	

   24

	

   15.7
	

   Payments.
	

   24

	

   15.8
	

   No Third-Party Beneficiaries.
	

   25

	

   15.9
	

   Confidentiality.
	

   25

	

   15.1
	

   Press Releases.
	

   25

	

   15.11
	

   Attorney's Fees; JURY WAIVER.
	

   26

	

   15.12
	

   Non-Solicitation.
	

   26

	

   15.13
	

   Limited Liability.
	

   26

	

   15.14
	

   Force Majeure.
	

   26

	

   15.15
	

   Governing Law.
	

   26

	

   15.16
	

   Counterparts.
	

   26

	

    
	

    
	

    

 

 

	
   

  

 

 

 

SCHEDULES

Schedule A – Legal Description

Schedule B – Schedule of Employees

Schedule C – Property Agreements

Schedule D – Owner Start Up
Information

Schedule E – Compensation

Schedule F – Form of Lease

 

 

	
   

  	
   

  	
   

  

 

 

  

	

    

 

PROPERTY MANAGEMENT AND LEASING AGREEMENT

This PROPERTY MANAGEMENT AND LEASING AGREEMENT, dated this ___ day of May, 2014 (this "Agreement") by and between ETRE PROPERTY A-1, LLC, a Delaware limited liability company (hereinafter "Owner") and JONES LANG LASALLE AMERICAS, INC., a Maryland corporation (hereinafter "Manager"). 

RECITALS

A.        Owner owns certain real property (the "Real Property") located at 1201 Connecticut Avenue, NW, District of Columbia (the "District"), and described in Schedule A attached hereto and made a part hereof.

B.         Owner desires to engage Manager as Owner's exclusive property manager and leasing agent for the Real Property and the improvements thereon (the "Property") and in connection therewith to manage, operate, maintain and lease the Property as the sole and exclusive property manager and leasing agent having responsibility therefor, on the terms and conditions hereinafter set forth.

C.         Manager is in the business of managing and leasing of similar properties to the Property, and desires to accept such engagement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

Article 1.  DEFINITIONS

1.1              Definitions.  For all purposes of this Agreement, except as otherwise expressly provided:

"Agreement" shall have the meaning set forth in the preamble.

"Approved Operating Budget" shall have the meaning set forth in Section 4.6(b). 

"Bank" shall have the meaning set forth in Section 9.2. 

"Benefit Plans" shall have the meaning set forth in Section 10.1. 

"Building Systems" shall mean the Property's mechanical, electrical, heating, ventilating and air conditioning systems, plumbing systems, sanitary systems, and sprinkler systems.

"Burden" shall have the meaning set forth in Section 10.1. 

"Cash Management Agreement" shall have the meaning set forth in Section 9.2. 

"Confidential Information" shall have the meaning set forth in Section 15.9(a). 

"Control"  shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management, policies or activities of a Person, whether through ownership of voting securities, by contract or otherwise.

"District" shall have the meaning set forth in the recitals.

	

    
	

    
	

    

 

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"Effective Gross
Income" shall mean, for any period, the aggregate amount of all
revenues from the operation of the Property during such period including,
without limitation, (i) rentals (including common area maintenance charges,
escalation, percentage rent, if any) and any other fees and charges actually
collected during such period pursuant to Leases, occupancies or other uses of
the Property; (ii) security deposits forfeited by Tenants during such period;
(iii) termination fees or other non-rental recoveries from Lease buyouts or
legal actions during such period, (iv) vending machines and garage income during
such period, if applicable; (v) proceeds from rental interruption insurance
received during such period by Owner; (vi) net income actually received during
such period from work orders, construction charges, supervisory, consent or
approval charges and license and storage fees, as applicable; and (vii) all
other net operating income actually received during such period for any services
or products furnished or billed to Tenants or any other occupants of the
Property.

"Force
Majeure" shall have the meaning set forth in Section 15.14. 

"Governmental
Authority" shall mean any court, board, agency, commission, office
or authority of any nature whatsoever or any governmental unit (federal, state,
District, county, district, municipal, city, foreign or otherwise) whether now
or hereafter in existence.

"Hazardous
Materials" shall include, without limitation, flammable,
explosives, radioactive materials, asbestos, polychlorinated biphenyls,
chemicals known to cause cancer or reproductive toxicity, pollutants,
contaminants, hazardous wastes, toxic substances or related materials, petroleum
and petroleum products, and substances declared to be hazardous or toxic under
any applicable Legal Requirement now or hereafter enacted or promulgated by any
Governmental Authority, excluding normal business products used in
non-reportable quantities and in accordance with applicable Legal
Requirements.

"Identified
Personnel" shall have the meaning set forth in Section 10.1. 

"Lease" shall mean a lease
between Owner (or Owner's predecessor) and the Tenant named therein covering the
portion of the Property described therein.

"Leasing
Commissions" shall have the meaning set forth in Section 4.5(a). 

"Legal
Requirement" shall have the meaning set forth in Section 4.4(a). 

"Lender" shall have the
meaning set forth in Section 9.2. 

"Lists" shall mean the
Specially Designated Nationals and Blocked Persons List maintained by OFAC
pursuant to the Order and/or on any other list of terrorists or terrorist
organizations maintained pursuant to any of the rules and regulations of OFAC or
pursuant to any other applicable Orders.

"Manager" shall have the meaning set
forth in the preamble.

"Minimum Working
Capital Amount" shall have the meaning set forth in Section 9.1. 

"OFAC" shall mean the
Office of Foreign Asset Control, Department of the Treasury.

"Operating
Account" shall have the meaning set forth in Section 9.1. 

"Operating
Budget" shall have the meaning set forth in Section 4.6(a). 

	
       
	
       
	
       

 

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"Operational Standard" shall have the meaning set forth in Section 4.1(b). 

"Order" shall mean Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001).

"Orders" shall mean, collectively, the Order and other similar requirements contained in the rules and regulations of OFAC and in any enabling legislation or other Executive Orders in respect thereof.

"Outside Broker" shall mean a Person who is a real estate broker licensed by the District, including agents of Manager or affiliates of Manager, other than those individuals who comprise the project team responsible for leasing the Property.

"Outside Broker Agreement" shall have the meaning set forth in Section 5.4. 

"Owner" shall have the meaning set forth in the preamble.

"Party" shall mean, as the context may require, Owner or Manager.

"Person" shall mean any corporation, partnership, limited liability company, joint venture, individual, trust, real estate investment trust, banking association, federal or state savings and loan institution and any other legal entity, whether or not a party hereto.

"Property" shall have the meaning set forth in the recitals.

"Property Agreements" shall have the meaning set forth in Section 4.4(c). 

"Prospective Tenant List" shall have the meaning set forth in Section 2.5(a)(ii)(E). 

"Real Property" shall have the meaning set forth in the recitals.

"Related Party" shall mean, relative to any Person, (x) any other Person that, directly or indirectly, owns more than ten percent (10%) of such Person or is in Control of, is Controlled by or is under common Control with such Person or (y) any officer, director, employee or agent of a Person described in clause (x) of this definition.

"Renewal Term" shall have the meaning set forth in Section 2.2. 

"Restricted Account" shall have the meaning assigned to such term in the Cash Management Agreement.

"Service Contracts" shall have the meaning set forth in Section 4.10. 

"Services" shall have the meaning set forth in Section 10.1. 

"Tenant" shall mean the Person named as such under any Lease.

"Term" shall have the meaning set forth in Section 2.1. 

Article 2.  TERM; TERMINATION

2.1              Initial Term.  Manager's duties and responsibilities under this Agreement shall begin on the [_] day of May, 2014 and shall end on May [_], 2015 (the "Term"), unless sooner terminated as provided herein.

 

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2.2             
Renewal Term.  Unless written notice to
the contrary is given by any Party hereunder not less than thirty (30) days
prior to the end of the applicable expiration date of this Agreement, this
Agreement shall automatically be renewed to the extent permitted by law for
additional successive one (1) year terms (each such renewal term, a
"Renewal Term") on its then existing terms and
conditions.

2.3             
Termination.  Notwithstanding the
provisions of Sections 2.1  and 2.2  above to the
contrary, this Agreement may be terminated, upon the occurrence of any of the
following circumstances:

(a)               
if any
Party shall default in the performance of any of its respective duties and
obligations hereunder, any non-defaulting Party may terminate this Agreement
upon thirty (30) days written notice to the defaulting Party, unless the default
is cured within said thirty (30) day period, or if the nature of the default
will not permit it to be cured within said thirty (30) day period, the
defaulting Party commences to cure such default within such thirty (30) day
period and thereafter proceeds to complete the same with reasonable
diligence;

(b)              
if Owner
shall sell the Property to an unrelated third party, this Agreement shall
terminate as of the date of consummation of the sale.  Owner shall use its
best efforts to give Manager at least sixty (60) days prior written notice of
any pending sale of the Property; or

(c)               
any Party
may, at its option and in its sole and absolute discretion, elect to terminate
this Agreement upon thirty (30) days prior written notice to the other Party and
this Agreement shall automatically terminate on the thirtieth (30th)
day after such notice is given or deemed given in accordance with this
Agreement.

2.4             
Bankruptcy Event.  Notwithstanding anything
to the contrary in this Agreement, this Agreement shall automatically terminate,
without notice, upon the occurrence of any of the following
circumstances:

(a)               
if
Manager shall admit, in writing, that it is unable to pay its debts as such
become due;

(b)              
if
Manager shall make an assignment for the benefit of creditors;

(c)               
if
Manager shall file a voluntary petition under Title 11 of the United States Code
or if such petition is filed against it, and an order for relief is entered, or
if Manager shall file any petition or answer seeking, consenting to or
acquiescing in any reorganization, arrangement, composition, other present or
future applicable federal, state, District or other statute or law, or shall
seek or consent to or acquiesce in or suffer the appointment of any trustee,
receiver, custodian, assignee, sequestrator, liquidator or other similar
official of Manager, or of all or any substantial part of its properties, or if
Manager shall take any corporate action in furtherance of any action described
in this  Section 2.4; or

(d)              
if within
sixty (60) days after the commencement of any proceeding against Manager seeking
any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any future federal bankruptcy
code or any other present or future applicable federal, state or other statute
or law, such proceeding shall not have been dismissed or stayed, or if, within
ninety (90) days after the appointment, without the consent or acquiescence by
Manager, of any trustee, receiver, custodian, assignee, sequestrator, liquidator
or other similar official of Manager or of all or any substantial part of its
properties or such appointment shall not have been vacated or stayed on appeal
or otherwise, or if, within sixty (60) days after the expiration of any such
stay, such appointment shall not have been vacated.

 

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2.5             
Effect
of Expiration or Termination. 

(a)               
Upon the
expiration or earlier termination of this Agreement for any reason:

(i)                
the
Parties shall work together in good faith and with diligence and continuity to
account to each other for all matters outstanding with respect to this
Agreement, the Property, and the management and leasing thereof;

(ii)              
Manager
shall:

(A)             
promptly
after, but in any case within thirty (30) days after such expiration or
termination, deliver to Owner a final accounting, reflecting the balance of
income, expenses, assets and liabilities of the Property as of the date of
termination;

(B)             
immediately upon such expiration or termination, deliver
to Owner any balance of monies of any Owner and/or any Tenant security deposits
held by Manager with respect to the Property;

(C)             
immediately upon such expiration or termination, deliver
to Owner all original records, Service Contracts, other contracts for the
Property, Leases, receipts for deposits, unpaid bills and other papers or
documents which pertain to the Property and/or the management and/or leasing
thereof in Manager's possession; and

(D)             
if
Manager has entered into any Service Contracts in accordance with the terms
hereof, immediately upon such expiration or termination, assign and deliver such
Service Contracts to Owner or its designee; and

(E)              
promptly
after, but in any case within thirty (30) days after such expiration or
termination, submit to Owner the list of Listed Prospects in accordance with
Section 2.6; and

(iii)            
Owner
shall:

(A)             
promptly
after delivery by Manager of the final accounting under Section 2.5(a)(ii)(A), deliver to Manager any amounts
payable to Manager thereunder pursuant hereto;

(B)             
as of the
date of such expiration or termination assume responsibility for payment of all
approved or authorized unpaid bills; and

(C)             
as of the
date of such expiration or termination, assume Manager's obligations under the
Service Contracts.

(b)              
The
expiration or earlier termination of this Agreement pursuant to the provisions
of this Article 2 shall not affect the rights of
any Party with respect to any damages it has suffered as a result of any breach
of this Agreement, nor shall it affect the rights or obligations of any Party
with respect to liability or claims accrued, or arising out of events occurring,
prior to the date of expiration or termination, all of which shall survive such
expiration or termination; provided, however, that  no Party shall have any
liability to any other Party for punitive, consequential or other exemplary
damages.

2.6             
Leasing Prospects.  In addition to all
amounts payable to Manager during the term of this Agreement, Owner shall pay
Manager any Leasing Commissions due and payable in accordance with this Section
2.6
and Schedule E hereof, with respect to any new
Leases, Lease expansions, relocations, renewals and extensions executed and
delivered by Owner and the applicable tenant within 180 days following the
expiration or earlier termination of this Agreement, provided that (i) within
thirty (30) days of the expiration or earlier termination of this Agreement,
Manager submits to Owner a written list of all prospects, if any, with whom
Manager has toured the Property or to whom Manager has submitted, prior to such
expiration or termination, a written proposal for a new Lease, Lease expansion,
relocation, renewal or extension with respect to space in the Property (the
"Listed Prospects"), and (ii) the applicable
Tenant or its affiliate is a Listed Prospect. Manager agrees that if requested
by Owner, Manager shall assist Owner in negotiating the applicable transaction
for a period of up to 180 days following expiration or earlier termination of
this Agreement.

 

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Article 3.  ENGAGEMENT OF
MANAGER

3.1             
Engagement of Manager.  Subject to the terms and
agreements herein contained, Owner hereby engages Manager as the exclusive
property manager for the Property and hereby authorizes Manager to exercise such
powers with respect to the Property as are provided herein and as may be
necessary or advisable in Manager's reasonable discretion for the performance of
Manager's duties hereunder.  Manager hereby accepts such engagement on the
terms and conditions set forth herein.  Manager shall have no right or
authority, express or implied, to commit or otherwise obligate Owner or to
encumber the Property in any manner whatsoever except to the extent expressly
provided herein.

3.2             
Owner
Information and Cooperation.  Owner agrees to provide, or cooperate in the
production of, certain materials, information, reports and/or documents as may
be reasonably requested from time to time by Manager.  Such items shall
include, but are not limited to, those set forth in Schedule D, including the
questionnaires referenced therein.

Article 4.  MANAGEMENT
RESPONSIBILITIES

4.1             
Management. 

(a)               
Manager,
on behalf of Owner, shall promptly implement, or cause to be implemented, the
decisions of Owner and shall conduct the ordinary and usual business affairs of
Owner for the Property as provided in this Agreement.  Manager shall use
its best efforts to conform to all policies and programs established from time
to time by Owner and furnished in writing to Manager, and the scope of Manager's
authority shall be expressly limited in accordance with said policies;
provided, however, that  in the case of a conflict
between such policies and the terms of this Agreement, this Agreement shall
control.  Manager agrees to use its best efforts in the management,
operation, and maintenance of the Property and to comply with the conditions
herein contained.

(b)              
Manager
agrees (i) to do and perform, or cause to be done and performed, all things
necessary, required or desirable in Manager's judgment for the proper and
efficient management, operation, and maintenance of the Property as a
first-class office building, consistent with customary standards for similar
buildings in the District (the "Operational
Standard"), and (ii) to faithfully, diligently and continuously
render the services on its part to be performed hereunder during the term
hereof.  Manager shall protect and account for Owner's assets in a
commercially reasonable manner and no less than the manner in which Manager
protects and accounts for its own assets.  Manager shall deal at arm's
length with all third parties and shall serve Owner's best interests at all
times.

4.2             
Employees, Independent Contractor. 
 

 

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(a)               
Manager
shall at all times have in its employ or contract for sufficient personnel to
enable it to properly, adequately, safely and economically manage, operate,
maintain and account for the Property consistent with the Operational
Standard.  All matters pertaining to the selection, direction, employment,
supervision, compensation, promotion and discharge of such personnel shall be
the sole responsibility of Manager or Manager's subcontractor, as the case may
be, which shall be in all respects the employer of such personnel.  Manager
shall be solely responsible for complying with all applicable Legal Requirements
with respect to its employees, including but not limited to, worker's
compensation, hours of work, wages, social security, vacation time, sick leave,
unemployment insurance, the Immigration Reform and Control Act of 1986, working
conditions and any other employer-employee related issues.  All employees must be either citizens of the
United States or possess valid and appropriate work permits from the U.S.
Immigration and Naturalization Service and other applicable governmental
authorities.  All costs of such personnel (including
compensation, fringe benefits, insurance and taxes) shall be reimbursable to
Manager to the extent provided for in Section 10.1  hereof.  

(b)              
This
Agreement, as it relates to Manager's personnel arrangements, is not one of
agency by Manager for Owner, but one with Manager engaged independently in the
business of employing individuals on its own behalf as an independent
contractor, and Owner shall have no liability hereunder or otherwise with
respect thereto.

(c)               
Subject
to Owner's approval, Manager will negotiate with any union lawfully entitled to
represent such employees and may execute on behalf of the Property collective
bargaining agreements or labor contracts resulting therefrom.

4.3             
Schedule of Personnel.  Manager shall provide a
schedule of personnel (in substantially the form of Schedule B  attached hereto and made a part
hereof) to be subject to Manager's exclusive control and employed in the direct
management of the Property.  Schedule B  shall include (a) the
number of such personnel, their title and whether such personnel are directly
employed by Manager or employed by any of Manager's subcontractors,
(b) additional personnel whose costs may from time to time be charged to
the Property for services rendered to the Property, which costs may be allocated
pro rata or in such other method as Owner and Manager shall agree in writing
and, (c) personnel whose costs may not be charged pro rata without the consent
of Owner which shall include, without limitation, headquarters management
personnel, and (d) such other information as reasonably requested by
Owner.  Schedule B  shall be updated by Manager and
submitted to Owner for approval in conjunction with the proposed Operating
Budgets provided for in Section 4.6  hereof, and at such other times
as Owner may reasonably request of Manager.

4.4             
Compliance with Laws, Agreements, Etc.

(a)               
Manager,
to the extent permitted under the Approved Operating Budget and, when not so
permitted, following written authorization from Owner, shall promptly remedy any
violation of any applicable federal, District, and municipal laws, ordinances,
regulations and orders relating to the use, operation, repair and maintenance of
the Property and with the rules, regulations or orders of the local Board of
Fire Underwriters or other similar body, if any (each a "Legal
Requirement"), which comes to its attention except in cases where
Owner is contesting or intends to contest such Legal Requirements, in which case
Owner shall give Manager prior written notice of its decision to so contest, or
in those cases where Owner directs otherwise.  Manager shall give prompt
notice to Owner of any violation or notice of alleged violation of Legal
Requirements.  Owner and Manager agree to cooperate with each other to
cause the Property to be operated at all times in compliance with all applicable
Legal Requirements and shall not knowingly, directly or indirectly, suffer,
permit or make any use of the Property which is prohibited by any such Legal
Requirements.

 

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(b)              
Manager
shall promptly advise Owner in writing (i) of any information known to Manager
concerning actual or potential non-compliance with any applicable Legal
Requirements related to Hazardous Materials, occurring in, on, or at the
Property or in, on, or at any property adjacent to or in the vicinity of the
Property, together with a written report of the nature and extent of the
non-compliance and the potential damage to the Property or the property adjacent
to or in the vicinity of the Property and (ii) if Manager observes any Tenants,
or any other Persons, storing, handling, transporting, generating,
manufacturing, using, dumping, releasing or discharging any Hazardous Materials
in, on, or at the Property, and Manager shall take appropriate steps in light of
the circumstances.  The foregoing notification shall exclude the presence
of Hazardous Materials approved in advance in a Lease or other writing signed by
Owner, unless such substance has been dumped, released, or discharged at the
Property.  Notwithstanding the foregoing, it is recognized that Manager is
not an expert in environmental laws and shall not be responsible for remedying
any violations of such laws except where and to the extent such violation
results from the gross negligence, willful misconduct, fraud or bad faith of, or
is solely attributable to, Manager.  The Person responsible under
applicable Legal Requirements for remedying or remediation shall be solely
responsible therefor; provided, however, that  Manager shall assist and
cooperate with Owner in connection therewith.

(c)               
Owner has
advised Manager that the Property is currently subject to the agreements,
covenants, conditions and restrictions contained in those certain deeds,
mortgages, easements, and ordinances listed in Schedule C  attached hereto as well as to
all existing Leases (hereinafter collectively (including new Leases entered into
after the date hereof) the "Property Agreements").  Manager covenants and
agrees to use its best efforts to perform all of the obligations and duties on
the part of Owner to be performed under the Property Agreements, as well as
under any other such agreements entered into by Manager on Owner's behalf
pursuant to the terms hereof, consistent with the Operational Standard. 
Manager shall use its best efforts to fully comply with all terms and conditions
contained in any ground lease, each Lease, mortgage, deed of trust or other
security instruments affecting the Property, provided  that  Manager has actual or
constructive knowledge thereof, and provided  further, that  Manager shall not be
required to make any payment or incur any liability on account thereof except
for its gross negligence, willful misconduct, fraud or bad faith.

(d)              
Expenses
incurred in remedying violations of any Legal Requirements or Property
Agreements may be paid from the Operating Account, provided, however, that  if the funds in the
Operating Account are insufficient to remedy such violation, or if the violation
is one for which the Owner might be subject to penalty, Manager shall promptly
notify Owner by 5 p.m. on the next business day after receiving notice thereof;
and to the extent available from the Property and, subject to the Cash
Management Agreement, Owner shall make available any funds necessary to remedy
such violation.

4.5             
Compensation; Office Expenses.   

(a)               
Manager
shall receive:

(i)                
the
monthly management fee due and payable to Manager in accordance with the terms
of, and in the amounts and at the times set forth on, Schedule E; 

(ii)              
commissions for leasing and brokerage services
(collectively, "Leasing Commissions") due and payable to Manager in
accordance with the terms of, and in the amounts and at the times set forth on,
Schedule E (and Section 2.5, if applicable) ;
and

(iii)            
The
project management fees due and payable to Manager for project construction
management services performed by Manager pursuant to Section 4.11, in accordance with
the terms of, and in the amounts and at the times set forth on, Schedule
E. 

 

8

 
  

 

(b)              
Owner
shall, at its expense, provide to Manager suitable space conforming to the
Operational Standard, including equipment or office furnishings reasonably
necessary in connection with Manager's obligations hereunder free of any rent or
other charges.  Manager shall have no leasehold or other property interest
in the Property.

4.6             
Approved Budget. 

(a)               
Manager
shall prepare and submit to Owner a proposed operating budget (each, an
"Operating Budget") for the operation, repair,
improvement and maintenance of the Property (i) for the calendar year in which
this Agreement is executed and delivered by the parties hereto, no later than
fifteen (15) days after the date hereof and (ii) for each calendar year after
the calendar year in which this Agreement is executed and delivered by the
parties hereto, no later than December 1 of each such calendar year
thereafter.

(b)              
Owner
shall consult with Manager with respect to each proposed Operating Budget to
agree on an "Approved Operating Budget".  If written approval or
disapproval of the proposed Operating Budget has not been received by Manager
within thirty (30) days of its delivery to Owner, such proposed Operating Budget
shall be deemed to be the Approved Operating Budget for the applicable calendar
year.  Manager agrees to use diligence and to employ all reasonable efforts
to ensure that the actual costs of maintaining and operating the Property shall
not exceed the individual line items or the aggregate amount of the Approved
Operating Budget.  Manager shall inform Owner in writing not less than
monthly of any increases in costs and expenses that are not set forth in the
Approved Operating Budget unless a line item in the Approved Operating Budget is
increased by more than 5% in any calendar month or the aggregate amount of the
Approved Operating Budget in increased by more than $5,000 in any calendar
month, in which case, Manager shall inform Owner promptly after Manager
determines the amount of such increase.  Owner shall approve such proposed
revisions in its sole discretion; provided, however, that  if Owner does not
approve any proposed revision, the Manager shall not be obligated to perform any
obligations hereunder that require an increase in the Approved Operating Budget
to the extent that there are insufficient funds available to Manager for such
performance.

(c)               
Manager
shall secure Owner's prior written approval for any single expenditure greater
than $500 that is not set forth in the Approved Operating Budget.  In cases
of emergency, however, Manager may make expenditures for repairs which are not
set forth in the Approved Operating Budget or exceed the amount therefor as set
forth therein without Owner's prior written approval if it is necessary to
prevent damage or injury to persons or the Property; but Owner shall be informed
of any such expenditures before the end of the next business day.

4.7             
Collection of Rents and Other Income.  Manager shall
use its best efforts to diligently collect all rents (including the calculation,
notice and collection of billings under Leases resulting from increases in
operating expense "pass throughs", consumer price index, taxes and common area
maintenance charges) and any other fees and charges which may become due at any
time from any Tenant or from others for services provided in connection with or
for the use of the Property or any portion thereof and to collect and identify
any income due Owner from services provided to Tenants or other occupants of or
entrants to the Property including, without limitation, parking income, all
revenues from work orders, construction charges, loading dock and elevator
charges, supervisory or approval charges, license fees, Tenant storage, and coin
operated machines of all types to the extent located at the Property
(e.g., washers, dryers, vending machines, pay telephones,
etc.).  If a Tenant is entitled under its Lease to audit or otherwise
examine the books and records relating to passed-through expenses of the
Property, Manager shall make such books and records available to such Tenant and
shall cooperate with and monitor such audit or other examinations.  All
monies so collected shall be deposited in the Operating Account or Restricted
Account, as applicable, pursuant to the terms of the Cash Management
Agreement.  Manager may not,
without the prior written approval of Owner in its sole discretion, terminate
any Lease, lock out any Tenant, institute suit for rent or for use and
occupancy, or initiate proceedings for recovery of possession or the like. 
In connection with any collection efforts, only legal counsel or collection
firms designated by Owner shall be retained by Manager.  All legal expenses
incurred in bringing such approved suit or proceeding shall be submitted to
Owner and paid for from the Operating Account or such other account to the
extent permitted pursuant to the terms of the Cash Management
Agreement.

 

9

 
  

 

4.8             
Repairs.  Manager shall keep the
Property and all parts thereof in a clean and sightly condition in accordance
with the Operational Standard and shall use its best efforts to attend to the
making and supervision of all ordinary and extraordinary repairs, decorations,
replacements, additions, alterations and landscaping necessary or advisable in
Manager's reasonable judgment for the proper operations of the Property in
accordance with the Operational Standard, for the performance of Owner's
obligations under the Property Agreements, and to comply therewith and with all
applicable Legal Requirements, subject, in each case, to availability of funds
therefor as set forth in Approved Operating Budget.

4.9             
Supplies.  Manager shall purchase,
provide and pay, with funds in the Operating Account or such other account to
the extent permitted pursuant to the terms of the Cash Management Agreement, for
all janitorial and maintenance supplies, tools and equipment, restroom and
toilet supplies, electrical supplies and light bulbs, boiler room supplies,
paints, uniforms, stationery and office supplies incident to performance of the
obligations herein assumed by Manager, except to the extent such supplies and
materials are provided for by contract with another.  Manager shall
maintain records for all supplies, tools and equipment purchased hereunder by
Manager for use in the management, opera­tion and maintenance of the
Property.  The same shall be delivered to and stored at the Property and
shall be and remain the property of the Owner to be used only in connection with
the Property.

4.10         
Service Contracts.  Manager shall be
authorized to enter into contracts for cleaning, maintaining, repairing or
servicing the Property or any of the constituent parts of the Property as
provided in the Approved Operating Budget (each, a "Service Contract").  All service
contracts shall:  (a) be signed by Manager as agent for Owner,
(b) be assignable, at Owner's option, to Owner or any purchaser of the
Property, (c) include a provision for cancellation thereof by Owner upon
not more than thirty (30) days written notice, unless such provision is waived
in writing by Owner, and (d) require that the applicable contractor provide
evidence of the insurance required hereunder.

4.11         
Project Construction Management Services. 

(a)               
Manager
shall act as project manager for all capital improvements authorized by Owner
and set forth in the Approved Operating Budget or approved in writing by Owner,
and all extraordinary repair and maintenance to the Property approved in writing
by Owner.  Manager shall (i) review and recommend to Owner for
approval or disapproval by Owner all plans and specifications for any authorized
construction (which review shall include, but not be limited to, determination,
with the assistance of licensed architects or engineers, if necessary in
Manager's reasonable discretion, that the plans and specifications comply with
applicable Legal Requirements and the structural design of the Property),
(ii) if requested by Owner, solicit competitive bids and review such bids
in consultation with Owner, (iii) if requested and approved in writing by
Owner, enter into contracts on behalf of Owner, as Owner's agent, in form and
content satisfactory to Owner, with the bidders approved by the Owner,
(iv) schedule and coordinate the performance of all authorized
construction, (v) ensure that adequate insurance coverage is maintained
consistent with the requirements of Owner and each other party under the
Property Agreements, (vi) obtain, review and recommend for approval or
disapproval by Owner all draw requests and lien waivers from the general
contractor and all subcontractors, and (vii) obtain or cause to be obtained
all permits required for the construction, completion and occupancy of the
Property.  Progress reports shall
be provided by Manager to Owner on the first day of each and every calendar
month until such construction is completed and from time to time promptly after
request by Owner.

 

10

 
  

 

(b)              
With
respect to Tenant requests for alterations and/or improvements not provided for
in Leases, Manager shall review and consent to such work provided the applicable
Tenant agrees in writing that such alterations and improvements (i) will be
made at the Tenant's expense in accordance with all applicable Legal
Requirements, (ii) will not affect the structure of the Property and/or the
Building Systems, (iii) will not interfere with the rights of other Tenants
under their respective Leases, and (iv) will conform to the Operational
Standard and to the specifications and limitations of the Property.

(c)               
All
contracts for repairs, capital improvements, goods and services exceeding $5,000
shall be awarded on the basis of competitive bidding, solicited in the manner as
follows:

(1)              
a minimum
of two (2) written bids from qualified firms shall be obtained for each purchase
up to $10,000.  Purchases over $10,000 will require a minimum of three (3)
bids;

(2)              
each bid
will be solicited in a form prescribed by Owner so that uniformity will exist in
the bid quotes;

(3)              
Manager
may accept the low bid without prior approval from Owner, if the expenditure is
for an item in the Approved Operating Budget and will not increase the
applicable line item over the approved amount set forth therein;

(4)              
if
Manager advises acceptance of other than the lowest bidder, Manager shall
adequately support in writing its recommendations to Owner;

(5)              
Owner
shall be free to accept or reject any and all bids;

(6)              
Owner may
participate in and review the bid process and all relevant documentation and
selection of bidders; and

(7)              
Manager
may request Owner to waive competitive bidding rules.

4.12         
Taxes,
Mortgages.  If Taxes are not escrowed with the holder of a
first mortgage encumbering the Property, Manager shall, if requested by Owner in
writing, promptly obtain, verify and pay from the Operating Account bills for
real estate and personal property taxes, improvement assessments and other like
charges which are or may become liens against the Property.  At Owner's
request, Manager shall use reasonable efforts to seek reductions of taxes and
assessments attributable to, or payable for, the Property.  Manager shall
forward, within a reasonable period of time after receipt thereof a copy of such
bills to Owner such that Owner may approve Manager's payment of such bills; and,
unless such bills are being contested, Manager shall use its best efforts to pay
all such bills before any fine or penalty attaches or to permit Owner to take
advantage of any discounts.  Promptly after making any such payment,
Manager shall provide Owner with evidence of same.  If requested by Owner
in writing, Manager shall make payments from the Operating Account with respect
to any ground lease, mortgage, deed of trust or other security instrument, if
any, affecting the Property.

4.13         
Advances.  Manager shall not be
obligated to make any advance to or for the account of the Owner or to pay any
sum except out of Owner's funds held by or provided to Manager as set forth in
this Agreement, nor shall Manager be obliged to incur any liability or
obligation for the account of the Owner without assurance that the necessary
funds for the discharge thereof are available.

 

11

 
  

 

4.14         
Delegation.  Manager shall have the
right, from time to time, to delegate the performance of all or any portion of
its services, duties and obligations under this Agreement to any affiliate of
Manager controlled thereby; provided, however, that  (a) (notwithstanding the
foregoing, Manager shall have the right, from time to time, to delegate the
performance of all or any portion of its services, duties and obligations under
this Agreement to (i) Jones Lang LaSalle Brokerage, Inc., a Texas corporation,
or (ii) an affiliate of Manager approved by Owner in its reasonable discretion,
and (b) Owner shall not incur any additional expense for such delegation over
that which Owner would have incurred without such delegation.  In each such
event, Manager shall nevertheless remain liable to Owner for the proper
performance of its obligations under this Agreement.

Article 5.  LEASING
RESPONSIBILITIES

5.1             
Engagement.  Owner hereby engages
Manager as its exclusive broker in connection with the leasing of the
Property for the term of this Agreement as set forth in
Article 2.  During the term of this
Agreement, Owner agrees to refer to Manager all offers and inquiries by
prospective tenants or by any Outside Broker not affiliated with Manager for
space in the Property; and Manager agrees to diligently investigate and develop
such offers or inquiries, to canvas, solicit and otherwise employ its best
efforts and services to lease space in the Property.  Manager shall make
every reasonable effort to obtain and keep Tenants reasonably satisfactory to
Owner for the Property.  Manager shall, so far as reasonably possible,
procure financial references from prospective tenants, investigate such
references, and use its best judgment in the selection of prospective
tenants.  Manager agrees to perform whatever reasonable service may be
required in connection with the negotiation of leases or renewals, extensions,
modifications, or cancellations thereof.  Owner and Manager acknowledge and
agree that it is in the best interests of Owner and the Property for the Manager
to maintain continuity in the leasing plan for the Property; and, therefore,
Owner authorizes Manager actively to solicit, accept and pursue subleasing
assignments for tenants, notwithstanding the fact that such subleasing
assignments may compete with the negotiation and execution of leases for space
in the Property.

5.2             
Execution of Leases.  All leases and lease
renewals, extensions and modifications are to be prepared by Manager with the
assistance of legal counsel approved by Owner, in accordance with the leasing
guidelines (including allowances for tenant improvements) established by Owner
with respect to the Property covered by this Agreement ("Leasing
Guidelines").  All leases and lease renewals, extensions and
modifications shall be in the name of Owner and executed by Owner.

5.3             
Lease
Forms.  All new leases shall be on the form provided or
approved in writing by Owner, provided, however, that Manager shall have the
right to make any modifications and additions to (including riders) or deletions
from said form as are reasonably necessary to conclude the transaction and are
customary in the market where the applicable Property is located, so long as
such modifications are approved by Owner's legal counsel and conform to the
Leasing Guidelines.

5.4             
Outside Brokers.  Manager is hereby
authorized to cooperate with Outside Brokers in leasing space within the
Property and to enter into brokerage agreements (each, an "Outside Broker
Agreement") with such Outside Brokers on behalf of Owner as
Owner's agent.  All Outside Broker Agreements shall be subject to written
approval by Owner.  In the event that an Outside Broker shall procure a
tenant for space within the Property and such tenant enters into a lease with
the Owner, Owner shall pay the Outside Brokers and Manager any commissions due
in accordance with the Outside Broker Agreement with such Outside
Broker.

5.5             
Advertising.  Manager shall cause
advertising plans and promotional material to be prepared to market rentals of
space at the Property in accordance with the Approved Operating Budget. 
Owner's prior written approval shall be required in connection with (i) the use
or distribution of any advertising plans and
promotional material for the Property, (ii) the use Owner's name in any
advertising or promotional material, and (iii) all  announcements,
advertising, articles, promotions and marketing affecting the Property. 
Manager shall promptly comply with any request by owner for advertising
materials describe in this Section 5.5. 

 

12

 
  

 

5.6             
Leasing Expenses.  Owner shall reimburse
Manager for all reasonable third-party out-of-pocket expenses, if any, directly
related to negotiating leases for space in the Property, including, without
limitation, all reasonable attorneys fees incurred in connection
therewith.  In addition, Owner agrees to reimburse Manager for other
incidental reasonable costs relating to the leasing of space in the Property,
including without limitation, costs of postage, telephone, mailings,
presentations, reports, renting plans, descriptive brochures and other forms of
advertising of the space, all of which shall be included in the Approved
Operating Budget or otherwise approved by Owner in writing.

Article 6.  INDEMNIFICATION;
INSURANCE

6.1             
Indemnification.   

(a)               
Owner
hereby indemnifies, defends and holds Manager, its directors, officers, agents,
servants and employees harmless from and against any and all claims, demands,
causes of action, losses, damages, fines, penalties, liabilities, costs and
expenses, including reasonable attorneys' fees and court costs, arising out of
claims, demands or causes of action by third parties to which Manager may become
liable or subject in connection with the performance or nonperformance of
Manager's duties and activities within the scope of this Agreement or arising
from any action or activity on, or the condition of, the Property; except that
(x) nothing herein will be construed as Owner indemnifying Manager or its
employees, contractors or agents for any matter not set forth as an Owner
indemnity obligation under this Section 6.1(a), or against any act or omission
for which insurance protection is not available or is not required hereunder to
be carried by Owner, (y) no indemnification by Owner shall be required hereunder
to the extent covered by any liability insurance required to be maintained by
Manager with respect to the Property (without regard to any deductible or
self-insurance retention amounts) pursuant to Section 6.3, and (z) no
indemnification by Owner shall be required hereunder with respect to any such
claims, demands or causes of action if and to the extent caused by or arising
out of Manager's breach of this Agreement or its gross negligence, willful
misconduct, fraud or bad faith.  Owner's indemnification hereunder is not
intended to alter the general requirement of this Agreement that Manager shall
manage, operate and maintain the Property in a safe condition in a proper and
careful manner.

(b)              
Manager
hereby indemnifies, defends and holds Owner harmless from any and all claims,
demands, causes of action, losses, damages, fines, penalties, liabilities, costs
and expenses, inclu­ding reasonable attorney's fees and court costs, arising
out of claims, demands or causes of action by third parties (except to the
extent covered by any liability insurance required to be maintained by Owner
with respect to the Property (without regard to any deductible or self-insurance
retention amounts) pursuant to Section 6.3), sustained or
incurred by or asserted against Owner by reason of or arising out of Manager's
breach of this Agreement or its gross negligence, willful misconduct, fraud or
bad faith.

6.2             
Notices.  Should any claim, demand,
suit or any other legal proceedings be made or instituted by any person against
an indemnified party, which arise out of any of the matters relating to this
Agreement, the indemnified party shall give the indemnifying party, upon the
indemnifying partyâ€TMs request, all pertinent information and other information
reasonably necessary in the defense or other disposition thereof.  Manager
shall promptly notify Owner of any fire, material accident or other casualty,
condemnation proceedings, rezoning or other governmental order, lawsuit or
threat thereof involving the Property; and violations relative to the use,
repair and maintenance of the Property under applicable Legal
Requirements.

 

13

 
  

 

6.3             
Owner's Insurance.  Owner (or Manager at
Owner's request and expense) shall obtain and keep in force (i) insurance
against physical damage (e.g., special causes of loss (all risk), boiler and
machinery, flood, earthquake, etc.) for the full replacement cost of the
Property and all of Owner's property contained therein, and (ii) commercial
general liability insurance (including contractual liability and personal injury
coverages and such other coverages as may be appropriate), insuring against
liability for loss, damage or injury to property or persons which might arise
out of the occupancy, management, operation or maintenance of any of the
Property, in amounts customary for properties similar to the Property, but not
less than $10,000,000 in annual policy limits.  The insurance companies
issuing such insurance shall have an AM Best rating of not less than A-X. 
Manager will be named as an additional insured in all liability insurance
maintained with respect to the Property, and Manager shall be furnished a
certificate evidencing such insurance which certificate shall provide that the
insurer will endeavor to give Manager thirty (30) days prior written notice of
cancellation.  All such liability policies shall be primary and
non-contributory with any liability insurance carried by Manager with respect to
any claims arising out of the performance or non-performance of Manager's duties
and activities within the scope of this Agreement or arising from any action or
activity on, or condition of, the Property.  Manager agrees to take no
action (such as admission of lia­bility) which might bar Owner from
obtaining any protection afforded by any policy Owner may hold or which might
prejudice Owner in its defense to any claim, demand or suit within limits
prescribed by the policy or policies of insurance.  Manager shall aid and
cooperate with Owner in every reasonable way with respect to such insurance and
any loss thereunder.  All property damage and business interruption or rent
loss insurance policies shall contain appropriate clauses pursuant to which the
respective insurance carriers shall waive all rights of subrogation with respect
to losses payable under such policies; and Owner waives any claims against
Manager, its partners, directors, officers, agents, servants and employees, to
the extent losses with respect to such claims are required to be covered by
insurance under this Agreement, including any deductibles, co-insurance or
self-insurance retentions, irrespective of the cause thereof.

6.4             
Manager's Insurance.  Manager shall, at its
sole cost and expense maintain commercial general liability insurance (including
contractual liability and personal injury coverages) in the amount of not less
than $10,000,000 combined single limit.  The insurance companies issuing
such insurance shall have an AM Best rating of A-VII or better.  Owner will
be named as an additional insured on all general liability insurance maintained
by Manager with respect to this Agreement, and Manager shall furnish Owner
certificates evidencing such insurance which shall provide that the insurer will
endeavor to give Owner thirty (30) days prior written notice of cancellation,
which, notwithstanding anything to the contrary herein, may be given by email to
Jesse Stein at js@etrefinancial.com.  In addition, Manager shall maintain
worker's compensation insurance in the statutory amount (or participate in the
appropriate state fund if such insurance is not available or allowed) and
employers liability insurance in the amount of not less than $1,000,000, the
cost of which shall be reimbursable by Owner as provided herein for the
personnel identified on Schedule B  attached hereto.  Manager
and all personnel of Manager who handle or who are responsible for handling
Owner's monies shall be bonded under a fidelity bond or commercial crime
insurance.  Such bonding or commercial crime insurance shall provide
coverage in the amount that is the greater of (a) $2,000,000 or (b) the amount
which Owner and Manager estimate is equal to at least six (6) months of the
estimated gross receipts from the Property as determined by Manager and approved
by Owner.  The bond or commercial crime insurance may at Manager's option
have a Ten Thousand Dollar ($10,000) deductible clause, but Manager will pay any
loss within such deductible amount, which shall not be an operating expense
reimbursable to Manager.  The cost of the bonds or commercial crime
insurance required hereunder shall not be an operating expense reimbursable to
Manager.

6.5             
Contractors' Insurance.   

(a)               
Manager
shall require that all contractors brought onto the Property have insurance
coverage, at the contractor's expense, in the following minimum amounts unless
higher amounts and/or
coverages are required by applicable Property Agreements in which case Manager
shall require such higher amounts and additional coverages from each
contractor:

 

14

 
  

 

(i)                
Worker's
Compensation - statutory amount;

(ii)              
Employer's Liability - minimum of $500,000 each accident;
$500,000 disease, policy limit; $500,000 disease, per employee;

(iii)            
Commercial General Liability (naming Owner and Manager as
additional insureds) - $1,000,000 per occurrence Combined Single Limit;
$2,000,000 aggregate (i.e., such insurance shall include contractual liability,
personal injury protection and completed operations coverage);

(iv)            
Auto
Liability (if deemed appropriate by Manager) - $1,000,000 minimum;
and

(v)              
Property
Insurance coverage for tools and equipment brought onto and/or used on the
Property by the contractor - an amount equal to the replacement costs of all
such tools and equipment.

(b)              
Manager
must obtain the Owner's prior permission to waive any of the above requirements
or to accept lower limits.  Manager shall obtain and keep on file a
certificate of insurance for each contractor which shows that such contractor is
so insured.

(c)               
All
insurance policies required under this Section 6.5 shall contain
appropriate clauses pursuant to which the respective insurance carriers shall
waive all rights of subrogation with respect to losses payable under such
policies with respect to Owner.

6.6             
Waiver
of Subrogation.  Owner and Manager each hereby waive any right of
subrogation and right of recovery or cause of action for loss to the extent that
such injury or loss is covered by fire, extended coverage, "All Risk" or similar
policies covering real property or personal property (or which would have been
covered if Owner or Manager, as the case may be, was carrying the
insurance).  Owner and Manager each hereby waive any right of subrogation
and right of recovery or cause of action for injury including death or disease
to respective employees of either as covered by Workers' Compensation (or which
would have been covered if Owner or Manager, as the case may be, was carrying
the insurance required by this Agreement).  Said waivers shall be in
addition to, and not in limitation or derogation of, any other waiver or release
contained elsewhere in this Agreement.  Written notice of the terms of the
above mutual waivers shall be given to the insurance carriers of Owner and
Manager if necessary to ensure the enforcement of said waivers on behalf of
insurers who may otherwise assume the rights of Owner or Manager.

Article 7.  FINANCIAL REPORTING AND
RECORDKEEPING

7.1             
Books
of Accounts.  Manager, in the conduct of its responsibilities
to Owner, shall maintain adequate and separate complete books and records for
the Property, the entries to which shall be supported by sufficient
documentation to ascertain that said entries are properly and accurately
recorded to the Property.  Such books and records shall be maintained by
Manager at the Property, or such other location as may be mutually agreed upon
in writing.

7.2             
Financial Reports.  Manager shall furnish
summary reports, in form acceptable to Owner, of all transactions occurring from
and after the first day of the prescribed monthly accounting period to the last
day of the pre­scribed monthly accounting period.  These reports are to
be delivered to Owner reasonably
promptly after the end of the above described accounting period and should show
all collections, delinquencies, uncollectible items, and other matters
pertaining to the management, operations, and maintenance of the Property during
the prescribed monthly accounting period.  In addition, Manager upon
Owner's written request from time to time, shall promptly prepare such other
reports as Owner may require or desire or required to be delivered by Owner
under any Property Agreement; provided, however, that  if such reports impose
significant cost or effort on Manager, Owner shall reimburse Manager for
Manager's reasonable costs in connection with preparing such reports (Manager
represents that the financial reports required by the Lender (defined below) do
not impose significant cost or effort on Manager and that no reimbursement from
Owner shall be required therefor).  Manager shall not be responsible for
the preparation of any form, reports, income or other tax returns required to be
filed or prepared by or on behalf of Owner in connection with the Property by
any local, state, federal or other Governmental Authority, other than personal
property and sales tax reports if requested by Owner in writing.

 

15

 
  

 

7.3             
Supporting Documentation.  Manager shall keep and
make available to Owner and/or Lender, as applicable, upon request:

(a)               
all bank
statements, bank deposit slips and bank reconciliations;

(b)              
detailed
cash receipts and disbursement records;

(c)               
detailed
trial balance;

(d)              
general
ledger listing, including transaction level detail;

(e)               
all
invoices;

(f)               
supporting documentation for payroll, payroll taxes and
employee benefits of all personnel listed on Schedule B; and

(g)               
such
other documentation or information as may reasonably be requested by Owner and
or Lender.

7.4             
Accounting Principles.  All financial statements
and reports required hereafter or otherwise requested by Owner shall be prepared
(on an accrual method of accounts) in accordance with generally accepted
accounting principles or on such other method or methods as Owner may from time
to time request in writing.

Article 8.  OWNER'S RIGHT TO
AUDIT

8.1             
Right
to Audit.   

(a)               
Owner
reserves the right for Owner's employees, and others appointed by Owner, to
conduct examinations, during regular business hours and following reasonable
written notice to Manager, of the books and records maintained for Owner by
Manager no matter where the books and records are located.  Owner also
reserves the right to perform any and all additional audit tests relating to
Manager's activities (to be conducted at the Property or such other location of
the books and accounts of the Property mutually agreed upon by Owner and Manager
during regular business hours and following reasonable written notice to
Manager); provided, however, that  such audit tests are related to
those activities performed by Manager for Owner. Manager shall reasonably
cooperate with Owner so as to facilitate any audit rights provided for
hereunder.

 

16

 

  

 

(b)               Any and all such audits conducted by Owner or its agents will be at the sole expense of Owner; provided, however, that  notwithstanding the foregoing, if any such audit identifies errors or discrepancies exceeding five percent (5%) of the amount reported in such applicable annual financial report, then, in addition to reimbursement of any overpayment by Owner, Owner shall be entitled to (x) interest thereon at the prime rate reported by The Wall Street Journal plus two percent (2%) for the period commencing on the date of such overpayment through the date of payment thereof and (y) Owner's audit cost.

(c)                Should Owner's employees or agents discover either weaknesses in internal control or errors in recordkeeping, Manager shall correct such discrepancies either upon discovery or within a reasonable period of time thereafter; provided, however, that  if Owner does not object to the annual financial reports described above for any year within one (1) year after receipt thereof, such statements shall be deemed conclusive and binding on Owner and Owner may not thereafter object to the financial statements or any item therein for such year.  Manager shall inform Owner in writing of any action taken to correct such audit discrepancies.

8.2              Production of Documents.  Manager shall, upon Owner's written request from time to time, submit copies of any Lease, Service Contract, other, contract, bill, license, agreement or any other document relating to the Property or to this Agreement in Manager's possession to the Owner.

Article 9.  BANK ACCOUNTS

9.1              Operating Account.  Except as otherwise required under Section 9.2  hereof, and except as may otherwise be required under the Cash Management Agreement, a separate and exclusive operating account (the "Operating Account") shall be opened by Owner with a name designated by Owner for the Property in a bank designated by Owner.  Manager shall deposit all rents and other funds collected from the operation of the Property, including any and all advance rents, into, and shall pay the operating expenses of the Property and any other payments relative to the Property as required by the terms of this Agreement from, the Operating Account.  If more than one account is required to operate the Property, each account must have a unique name.  At all times during the term of this Agreement, Owner shall maintain funds in the Operating Account at least equal to the sum of (i) the estimated amount of the operating expenses of the Property for the prescribed monthly accounting period and (ii) known expenditures that will be paid between the 15th day and the end of the prescribed monthly accounting period (the "Minimum Working Capital Amount"); and Manager shall be relieved of its obligations hereunder to the extent Owner does not provide sufficient funds for Manager to perform such obligations.

9.2              Restricted Account.  As of the date of this Agreement, (i) Owner, Morgan Stanley Mortgage Capital Holdings LLC (together with its successors and assigns, the "Lender") and Wells Fargo Bank, National Association (together with its successors and assigns, the "Bank") are parties to that certain Deposit Account Control Agreement dated May [ ], 2014, pursuant to which Owner has established with Bank the Restricted Account, and (ii) Owner, Manager and Lender are parties to that certain Cash Management Agreement dated May [ ], 2014 with (the "Cash Management Agreement") which governs, among other things, the disbursement of funds from the Restricted Account.  Each of Owner and Manager covenant and agree to be bound by the terms of the Cash Management Agreement applicable to it during the term thereof.  For avoidance of doubt, the Cash Management Agreement shall be deemed to be in full force and effect until such time as Manager has received written notice from Lender that the Cash Management Agreement has been terminated or is no longer applicable to Owner and Manager.

9.3              Transfer of Funds.  During the term of the Cash Management Agreement, the provisions thereof shall be applicable to transfers of amounts on deposit in the Restricted Account.  To the extent 

that the Cash
Management Agreement is no longer in effect and deposits are being made into the
Operating Account, (x) on the 15th day of every prescribed monthly accounting
period, Manager shall remit to Owner ninety percent (90%) of the cash balance in
the Operating Account after deducting the Minimum Working Capital Amount, (y) on
the last day of the prescribed accounting period, Manager shall remit to Owner
all funds in excess of the Minimum Working Capital Amount by deposit to the
account to be designated by Owner upon the expiration or earlier termination of
the Cash Management Agreement, and (z) the schedule for transfer of funds may be
changed from time to time by written instructions from the Owner not less than
ten (10) days after the date on which such written instructions are received or
deemed received by Manager in accordance with Section 14.1. 

 

17

 

  

 

9.4             
Security Deposit Account.  Where law or any Lease
requires that Tenant security deposits be separately maintained, a separate
account (or separate interest bearing account) will be opened by Manager for
each such security deposit at a bank approved by Owner.  Such account shall
be maintained in accordance with applicable Legal Requirements and the Cash
Management Agreement and will be used only for maintaining such Tenant security
deposit.  The name of each such account shall be designated by Owner in
writing.  Manager shall maintain detailed records of all security deposits
deposited in each such account, and such records will be open for inspection by
Owner's employees or appointees.  Manager shall comply with all statutory
requirements, if any, relating to the return of Tenant security deposits. 
The portion of any security deposit to be applied against the obligations of the
Tenant under its Lease shall be deposited into the Restricted Account until such
time as Manager has received written notice from Lender that the Cash Management
Agreement has been terminated or is no longer applicable to Owner and Manager in
which case such amounts shall be deposited into the Operating
Account.

9.5             
Change
of Banks.  Subject to the rights of Lender under the Cash
Management Agreement, Owner may direct Manager from time to time to change a
depository bank or the depository arrangements set forth herein; provided, however, that  Manager shall not honor any such
direction until it has received written notice from Lender that the Cash
Management Agreement has been terminated or is no longer applicable to Owner and
Manager.

Article 10.  PAYMENT OF
EXPENSES

10.1         
Manager's Personnel Costs.  Upon payment by Manager,
Manager shall be reimbursed by Owner from an
account as designated in the Cash Management Agreement for costs of (i) the base
salaries and wages of Manager's employees that relate to the period of time
during which services are performed with respect to the Property (the
"Services"), and (ii) the pro rata amount
of the vested deferred compensation incentives of the applicable employees of
the Manager attributable for the applicable pay period that relate to the
Services, required payroll taxes, insurance, worker's compensation, the
employer-portion of the premiums for any fully-insured benefits, payroll and
benefits administration fees provided, however, that the foregoing amounts shall
not exceed amounts that are generally paid for the corresponding categories of
expenses to other employees in the same position as the employees identified on
Schedule B (collectively, the
"Identified Personnel") with, either at Manager or at
property management companies similar to Manager (all items in this clause,
(ii), are collectively referred to as "Burden"), in each case, based on the
allocations and Identified Personal on Schedule B  with respect to the amounts
described above, as may be revised by mutual written agreement of Manager and
Owner from time to time; provided, however, in no event shall Owner be
responsible to reimburse Manager for any amounts with respect to which Manager
has or will receive payment or reimbursement from any other third party. 
Prior to the execution of this Agreement, Manager shall disclose to Owner the
payments expected to be reimbursed as described above.  To the extent
Manager at any time receives reimbursement with respect to the overpayment of
any amount identified above, or with respect to any payment, benefit or amount
received in error by any Identified Personnel, Manager shall promptly, and in
no event later than
ten (10) days, remit such reimbursement to Owner.  Such reimbursement shall
be due on the date of payment of any such expenses by Manager and shall be made
through an ACH Electronic Funds Transfer or other such electronic payment
method.  Owner acknowledges that, from time to time, it may be necessary or
appropriate for employees of Manager whose compensation is reimbursed by Owner
pursuant to this Section 10.1, including the general manager,
to engage in activities generally related to Manager's business but not directly
related to the services performed by Manager at the Property, including personal
development, personnel management, best practice and professional management
training and conferences and business development, and Owner consents to such
activities.  Manager shall disclose to Owner on a quarterly basis the
number of hours of each such employee committed to such activities.  In
addition, Manager shall be entitled to reimbursement for any and all claims,
liabilities or obligations relating to the Burden, with respect to Identified
Personnel, that relate to the Services, arising out of or relating to the
provisions of the Employee Retirement Income Security Act of 1974 and the
Multi-Employer Pension Plan Amendments Acts of 1980, as both may be amended,
replaced or supplemented (collectively, "ERISA").  Manager agrees to
indemnify and hold harmless the Owner and its officers, directors, employees and
agents from and against any and all damages, costs, liabilities, losses or
expenses (including reasonable counsel fees) incurred by Owner that, directly or
indirectly, arise out of, result from or relate to (i) the administration or
sponsorship of any employee benefit plan under which the benefits are provided
to the Identified Personnel (the "Benefit Plans"), provided, however,
that this clause (i) shall not be interpreted to limit Owner's obligations under
ERISA as it applies to the funding of benefits under the terms of the applicable
Benefit Plans that relate to the Services, (ii) breach of fiduciary
responsibility with respect to the Benefit Plans, (iii) the payment of claims
under the Benefit Plans, (iv) the failure of Manager to make timely payment of
salaries and wages and to satisfy all withholding and tax reporting obligations
with respect thereto, and (v) the terms and conditions of employment of the
Identified Personnel with the Manager.  For the avoidance of doubt, Owner
shall not be responsible for any claims, liabilities or obligations described in
the immediately preceding sentence that existed or relate to any period prior to
the date of this Agreement or any period following the termination of this
Agreement.

 

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10.2         
Costs
Eligible for Payment from Operating Account.   

(a)               
Manager
shall pay from amounts received by it from the Operating Account or such other
account to the extent permitted pursuant to the terms of the Cash Management
Agreement, all expenses properly incurred by Manager to the extent expressly set
forth in the Approved Operating Budget and authorized under this Agreement and
the Cash Management Agreement, including, without limitation, the following
expenses with respect to the Property:

(i)                
cost to
correct any violation of a Lease or applicable Legal Requirements, if
any;

(ii)              
actual
and reasonable costs of making all repairs, replacements, additions, decorations
and alterations properly incurred by Manager pursuant to this
Agreement;

(iii)            
cost
incurred by Manager in connection with all Service Contracts properly entered
into pursuant to this Agreement;

(iv)            
cost of
collection of delinquent rentals collected through a collection agency or other
third party;

(v)              
legal
fees of attorneys provided that Owner has approved (x) such attorneys in writing
in advance of retention and (y) the amount of the legal fees to be paid to such
attorneys;

 

19

 
  

 

(vi)            
cost of
capital expenditures made pursuant to the Approved Operating Budget;

(vii)          
cost of
printed checks for each bank account required by Owner and cost of printed forms
and supplies required for use at a Property;

(viii)        
reasonable training expenses for any personnel listed on
Schedule B below the level of Assistant General Manager;

(ix)            
Leasing
Commissions;

(x)              
cost of
Owner-approved advertising and promotional material;

(xi)            
all
compensation payable to Manager pursuant to this Agreement;

(xii)          
utility
costs;

(xiii)        
insurance
costs (except premiums for insurance Manager is obligated to maintain at its
expense under Section 6.3  hereof);

(xiv)        
costs of
supplies purchased pursuant to Section 4.8; 

(xv)          
costs of
industry association (e.g. BOMA, ICSC and REB) dues;

(xvi)        
costs of
Manager's accounting services provided to the Property, to the extent permitted
under Section 7.2; and

(xvii)       if requested by Owner,
costs of insurance required to be maintained by Owner pursuant to
Section 6.2  hereof.

(b)              
As soon
as practical, Manager will introduce an Electronic Invoice Presentation (EIP)
system to manage accounts payable at the Property.  The cost of
implementing and managing an EIP system, not to exceed $2.50 per invoice, is a
reimbursable operating expense.

(c)               
If
applicable, the Manager will purchase a budgeting software package (e.g. Kardin)
for use at the Property. The cost of purchasing, implementing and managing such
budgeting software, not to exceed $2,500 annually, is a reimbursable operating
expense.

(d)              
In the
event that Manager has advanced any of its own funds for the payment of any
expenses properly incurred by Manager pursuant to this Agreement, reimbursement
to Manager of any such advanced funds shall be due within fifteen (15) business
days of presentation of Manager's invoice setting forth all such expenses for
which Manager seeks reimbursement.

10.3         
Non-reimbursable Costs.  The following expenses or
costs incurred by or on behalf of Manager in connection with the management and
leasing of any particular Property shall be at the sole cost and expense of
Manager and shall not be reimbursed by Owner:

(a)               
the costs
of gross salary and wages, payroll taxes, insurance, workmen's compensation, and
other benefits of Manager's personnel not identified in Schedule
B
(except as provided in Section 10.2  above);

 

20

 
  

 

(b)              
local
travel and entertainment expenses unless expressly set forth in the applicable
Approved Operating Budget or otherwise approved in advance by Owner;

(c)               
the costs
attributable to losses to the extent arising from a breach or default on the
part of Manager, its agents or employees or the gross negligence, willful
misconduct, fraud or bad faith on the part of Manager, its agents or employees;
and

(d)              
the costs
of insurance required to be maintained by Manager at its own expense
hereunder.

Article 11.  INSUFFICIENT GROSS
INCOME

11.1         
Priorities.  If at any time the cash
flow from the Property shall not be sufficient to pay the bills and charges
which may be incurred with respect to the Property, or if such cash flow is
insufficient to pay the combined sum of both bills and charges, Manager shall
first be entitled to receive reimbursement for all personnel costs as provided
in Section 10.1  above, and thereafter Manager
shall consult with Owner in order to determine the priority for payment of all
remaining bills and charges.  If cash flow from the Property is
insufficient to fully fund Manager's personnel costs, Owner shall promptly
advance sufficient funds to the Operating Account to permit reimbursement of
Manager as provided in Section 10.1  above.

11.2         
Statement of Unpaid Items.  Manager shall promptly
submit to Owner a statement of all remaining unpaid bills in order to determine
the appropriate action to be taken.

Article 12.  SALE OF A
PROPERTY

12.1         
Cooperation with Sales Broker.  If Owner executes a
listing agreement with a broker (other than Manager) for sale of the Property,
Manager shall cooperate with such broker to the end that the respective
activities of Manager and broker may be carried on without friction and without
interference with Tenants and other occupants of the Property.  Manager
will permit the broker to exhibit the Property.  Nothing herein contained
shall preclude Manager from being either a cooperating or listing broker in
connection with any sale of the Property.

12.2         
Cooperation with Owner.  Manager will cooperate
with Owner in support of Owner's obligations regarding due diligence of the
Property under any purchase and sale agreement and/or the negotiation thereof
for the sale of the Property.  Manager shall only act pursuant to written
direction from Owner, its representatives, or agents and, notwithstanding any
other provision of this Agreement, Owner shall take sole responsibility for
compliance with its obligations under any such purchase and sale
agreement.  Owner shall provide Manager with the necessary and appropriate
guidance and direction with regard to any due diligence efforts related to the
Property.

12.3         
Inquiries and Offers to Purchase Property.  This is not an
exclusive right to sell listing agreement.  Manager shall promptly refer to
Owner all inquiries and offers to purchase the Property.  Manager shall not
be entitled to and shall not accept any portion of a commission, override, or
referral fee associated with the sale of the Property (regardless of whether or
not such Party is the procuring cause) from any Person without the prior written
agreement of the Owner.

Article 13.  REPRESENTATIONS AND
WARRANTIES

13.1         
Representations and Warranties.    As a material
inducement to Owner to enter into this Agreement Manager represents and
warrants, as to itself:

 

21

 
  

 

(a)               
Manager
is duly organized, validly existing and in good standing under the laws of and
is qualified to do business in the state where the Property is located. 
Manager has all power and authority required to execute, deliver and perform
this Agreement;

(b)              
Manager
is experienced in the business of managing properties similar to the Property or
leasing space in properties similar to the Property, as applicable, and in each
case, in accordance with the Operational Standard;

(c)               
the
execution, delivery and performance of this Agreement have been duly authorized
by all necessary action on the part of Manager;

(d)              
this
Agreement constitutes a legal, valid and binding agreement Manager enforceable
against it in accordance with its terms except as limited by bankruptcy,
insolvency, receivership and similar laws of general application;

(e)               
during
the entire term of this Agreement Manager shall cause all persons performing
licensable activities to have and to maintain in full force and effect all
licenses which are required by applicable Legal Requirements, and all permits
necessary to perform its obligations under this Agreement, and shall pay all
taxes, fees, or charges imposed on the business engaged in by Manager
hereunder;

(f)               
Manager
has no real or apparent conflict of interest pertaining to this Agreement. 
Manager will not act as a principal for its own account in any transaction
involving the sale or lease of all or any portion of the Property by Owner, nor
on behalf of any entity in which Manager has a financial or ownership interest,
unless full written disclosure is made;

(g)               
Manager's
status under this Agreement is that of an independent contractor and not as an
agent or employee of Owner;

(h)              
Manager  is in compliance with all Legal Requirements, including
the Orders;

(i)                
on the date hereof and during the term of this Agreement,
neither Manager  nor any employees of Manager: 

(i)                
is involved in the management or leasing of the Property,
as applicable, is listed on the Lists;

(ii)              
has been arrested on money laundering or for predicate
crimes to money laundering, convicted or pled nolo contendere to charges
involving money laundering or predicate crimes to money laundering;

(iii)            
has been determined by competent authority to be subject
to the prohibitions contained in the Orders;

(iv)            
is owned or controlled by, nor acts for or on behalf of,
any Person on the Lists or any other Person who has been determined by competent
authority to be subject to the prohibitions contained in the Orders;

(v)              
shall transfer or permit the transfer of any interest in
Manager or to any Person who is listed on the Lists;

 

22

 
  

 

(vi)            
shall knowingly enter into contracts on behalf of the
Property with any Person who is listed on the Lists or who is engaged in illegal
activities; or

(vii)          
shall lease space in the Property, or consent to an
assignment or sublease of space in the Property, to any Person who is listed on
the Lists or who is engaged in illegal activities, and Manager  shall immediately notify Owner if it becomes
aware of any Person leasing or attempting to lease space in the Property who is
listed on the Lists or who is engaged in illegal activities;

(viii)    
if Manager  obtains knowledge that it or any of its Related Parties
become listed on the Lists or are indicted, arraigned, or custodially detained
on charges involving money laundering or predicate crimes to money laundering,
Manager shall immediately notify Owner; upon receipt of knowledge of such
events, Manager  shall with respect to any employees, immediately remove
such employee from employment at or in connection with the Property, and with
respect to any other Related Parties, Manager  shall have thirty (30) days (or any shorter
period under applicable Legal Requirements) to remove such party from any
interest in Manager; and

(ix)      
Manager  shall conduct such due diligence as may be reasonably
required to comply with its obligations under this Section 13.1(i).  Manager  shall maintain in its files copies of such due
diligence, and shall provide a copy of same to Owner upon request.

Article 14.  NOTICES

14.1         
Notices.  All notices, demands,
consents and reports provided for in this Agreement shall be in writing and
shall be given to the Owner or Manager at the address set forth below or at such
other address as they individually may specify thereafter in writing:

OWNER:                    
c/o ETRE Financial, LLC

44 Wall
Street

New York, NY
10005

Attn.: Jesse
Stein

(212) 388-6850 ext.2
(tele.)

(646) 349-1980
(fax)

with
a copy
to:            
Clifford Chance US LLP

31 West 52nd
Street

New York, NY
10019

Attn.: Jay L.
Bernstein, Esq.

(212) 878-8527
(tele.)

(212) 878-8375
(fax)

MANAGER:               
JONES LANG LASALLE AMERICAS, INC. 

1801
K Street NW, Suite 1000

Washington, CD 20006

Attention:  Meredith Roark

 

with
copies
to:            
JONES LANG LASALLE AMERICAS, INC.
200 East Randolph Drive
Chicago,
IL  60601
Attention:  William T.  Krouch

 

 

23

 
  

 

JONES
LANG LASALLE AMERICAS, INC.
200 East Randolph
Chicago, IL 
60601
Attention:  General Counsel - Americas

Such notice or other
communication may be mailed by United States registered or certified mail,
return receipt requested, postage prepaid and may be deposited in a United
States Post Office or a depository for the receipt of mail regularly maintained
by the Post Office.  Such notices, demands, consents and reports may also
be delivered by hand, by overnight courier service or by any other method or
means permitted by law.  For purposes of this Agreement, notices will be
deemed to have been given upon receipt whether given by personal delivery,
overnight courier service or the United States mails as provided
above.

Article 15.  GENERAL
PROVISIONS

15.1         
No
Assignment.  This Agreement and all rights hereunder shall not
be assignable by any Party (except as may be required by any Person holding a
first mortgage lien on the Property) and except that, subject to the
requirements of any Person holding a first mortgage lien on the Property,
Manager  may assign this Agreement to any
Related Party of Manager; provided, however, that  such Related Party shall enter
into an assumption agreement in form and content reasonably satisfactory to
Owner.

15.2         
Consents and Approvals.  Owner's consents or
approvals may be given only by representatives of Owner from time to time
designated in writing by Owner's representatives located at the address provided
in or pursuant to Section 15.1. 

15.3         
Amendments.  Except as otherwise
herein provided, any and all amendments, additions or deletions to this
Agreement shall be null and void unless approved by each of the parties in
writing.

15.4         
Headings.  All headings herein are
inserted only for convenience and ease of reference and are not to be considered
in the construction or interpretation of any provision of this
Agreement.

15.5         
Complete Agreement.  This Agreement and the
Schedules attached hereto and by this reference made a part hereof, constitute
the entire agreement between the parties with respect to the activities noted
herein and supersedes and takes the place of any and all previous discussions
and agreements between the Parties relating to the Property.

15.6         
Survival.  The provisions of
Articles 2, 7, 8, 9, 10, 11  and Sections
4.2, 4.5, 4.7  (as to amounts received by
Manager after the expiration or termination of this Agreement), 5.2(b), 5.2(c), 5.4, 6.1  , 6.2  (as to notices
received after the expiration or earlier termination of this Agreement),
6.6, 7.2  (with respect to accounting
matters prior to the expiration or earlier termination of this Agreement),
7.3  (with respect to accounting
matters prior to the expiration or earlier termination of this Agreement),
15.6, 15.9    (but only for two
(2) years after the expiration or earlier termination of this Agreement),
15.11, 15.12  (but only for one (1) year after
the expiration or earlier termination of this Agreement), 15.13, and 15.14  of this Agreement shall survive
the expiration or termination of the term of this Agreement.

15.7         
Payments.  All fees, commissions,
and reimbursable expenses of Manager shall be due and payable by Owner to
Manager as provided in this Agreement without further requirement for any notice
or demand therefor.  Any other payment due from one party to the other
under this Agreement shall be due and payable ten (10) days following demand
therefor.  All delinquent payments hereunder shall earn interest at the
rate of one and one-half percent (1-1/2%) per month  from the date due
until paid.

 

24

 
  

 

15.8         
No
Third-Party Beneficiaries.  Neither this Agreement nor any part thereof nor
any service, relationship, or other matter alluded to herein shall inure to the
benefit of any third party, to any trustee in bankruptcy, to any assignee for
the benefit of creditors, to any receiver by reason of insolvency, to any other
fiduciary or officer representing a bankruptcy or insolvent estate of either
party, or to the creditors or claimants of such an estate.  Without
limiting the generality of the foregoing sentence, it is specifically understood
and agreed that insolvency or bankruptcy of any Party shall at the option of any
other Party void all rights of such insolvent or bankrupt party hereunder (or so
many of such rights as the other party shall elect to void).

15.9         
Confidentiality.   

(a)               
As used
herein, the term "Confidential Information" means any information which is
acquired by Manager and/or their Related Parties in carrying out its duties
under this Agreement and which had not become part of the body of public
information prior to its disclosure in violation of this Section 15.9, including without limitation
information regarding the Property or any litigation pertaining thereto;
provided, however, that, Confidential
Information shall not include information which (i) is already in Manager's possession prior to its being
furnished to Manager by or on behalf of Owner, provided  that  such information has been
lawfully received by Manager, (ii) is or becomes generally available to the public
other than as a result of a disclosure by Manager, its representatives or Related Parties, (iii) is
independently developed by Manager, its representatives or Related Parties, or
(iv) becomes available to Manager on a non-confidential basis from a source
other than Owner, its representatives or Related Parties, provided  that  such source is not
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to Owner or another Person. 
Manager shall not disclose or permit the disclosure of any
Confidential Information to anyone other than Owner, Owner's representative,
Owner's counsel, or to Persons designated by Owner's counsel, except as
reasonably required to carry out its duties under this Agreement. 
Manager shall not disclose information regarding the terms of any
pending or existing lease transaction or any other Property information without
the prior written approval of Owner.  Manager shall execute and deliver to Owner any document requested
by Owner evidencing or otherwise concerning Manager's agreement to comply with the terms of this
Section 15.9  or any other agreement binding
on Owner with respect to Confidential Information.  Manager shall immediately notify Owner of any court order or
subpoena requiring disclosure of Confidential Information, shall cooperate with
Owner's counsel in the appeal or challenge of any such order or subpoena, and
shall not disclose any Confidential Information pursuant to such court order or
subpoena until Owner has exhausted any lawful and timely appeal or challenge
that Owner elects to file or make.  Owner shall be responsible for such
Manager's reasonable fees and expenses related to the appeal or
challenge of any such order or subpoena.  All original documents shall be
retained by Owner.

(b)              
Upon
termination of this Agreement, all information in the possession of Manager relating to the Property shall be
returned to Owner; provided, however, that  Manager may retain copies of any information which Manager
reasonably considers necessary for Manager's confidential business records.  Manager shall take reasonable measures to
avoid any unintentional or inadvertent disclosure of any Confidential
Information to any unauthorized Person by its employees, agents, or
attorneys.  Manager  shall not use any Confidential
Information for its own gain.  The provisions of this Section 15.9  shall not preclude Manager from disclosing Confidential
Information relating to the Property to third parties as reasonably required to
carry out the duties of Manager under this Agreement, so long as Manager  obtains from any such Persons an
agreement that imposes the same obligations upon such Persons with respect to
Confidential Information as were imposed upon Manager under this Section 15.9. 

15.10      Press Releases.  Any press
releases, publicity statements or promotional materials regarding the engagement
of Manager hereunder shall be approved by each of the Parties in their sole
discretion and shall be issued solely by Manager on behalf of all of the Parties.  Manager  shall bear the expense of the
preparation, distribution and dissemination thereof and such expenses shall not
be an expense of the Property.

 

25

 
  

 

15.11      Attorney's Fees; JURY
WAIVER.  If either party shall institute any action or
proceeding against the other relating to the provisions of this Agreement, the
unsuccessful party in the action or proceeding shall reimburse the prevailing
party for all reasonable expenses and attorneys' fees and disbursements. 
THE PARTIES HEREBY WAIVE TRIAL BY JURY.

15.12      Non-Solicitation.  Owner agrees
not to, directly or indirectly, hire or engage, or arrange for or attempt to
arrange for or persuade any other person to hire or engage, any employee of
Manager while such employee is employed by Manager and for a period of one year
after the termination of such person's employment by Manager; including without
limitation engaging such Manager employee or former employee as an independent
contractor or as an employee of any person other than Manager or any affiliate
of Manager.  In addition to all other remedies available to Manager for
breach of this provision, Owner agrees to pay Manager, as liquidated damages and
not as a penalty, the sum of $100,000 for each employee hired directly or
indirectly by Owner or any other person in violation of this Section 15.12. 

15.13      Limited Liability.  Each party's
liability hereunder shall be limited to its assets; and no partner, director,
officer, agent, servant, employee, representative or affiliate of either party
shall have any personal liability in connection with this Agreement. 
Neither party shall be liable to the other for, and each party hereby waives any
and all rights to claim against the other party, any special, indirect,
incidental, consequential, punitive or exemplary damages in connection with this
Agreement, including, but not limited to, lost revenue or profits, even if a
party has knowledge of the possibility of such damages; and, excluding Manager's
indemnification obligations as set forth above, in no event shall Manager's
liability to Owner hereunder exceed the greater of (i) the aggregate fees paid
to it by Owner during the previous eighteen (18) months, and (ii)
$1,000,000.

15.14      Force Majeure.  Owner and
Manager shall not have any liability hereunder in the event that Owner or
Manager is unable to fulfill, or is delayed in fulfilling, any of its
obligations hereunder by reason of fire or other casualty, act of God, war, riot
or other civil commotion, strike, lock-out or other labor trouble, governmental
preemption of priorities or other controls in connection with a national or
other public emergency, or shortages of fuel, supplies or labor resulting
therefrom, or any other cause, whether similar or dissimilar, which is beyond
the control of Owner or Manager, as the case may be ("Force Majeure"); provided, however, that  the financial inability of Owner
or Manager, as the case may be to perform its obligations hereunder shall in no
event be deemed to constitute Force Majeure, irrespective of the cause of such
financial inability, and provided further, that the party prevented or
delayed from acting due to a Force Majeure event shall continue its obligations
hereunder as soon as commercially reasonable following the Force Majeure
event.

15.15      Governing Law.  This Agreement
shall be governed by, and construed under, the laws of the District.

15.16      Counterparts.  This Agreement
may be executed in one or more counterparts, each of which shall be deemed to be
an original instrument, but all of which shall constitute but one and the same
Agreement.

[Signatures on Next Page] 

 

26

 
  

 

IN WITNESS WHEREOF the
parties hereto have executed this Agreement the date and year first above
written.

OWNER:

ETRE PROPERTY A-1, LLC, 

a
Delaware limited liability company

By:                                                                              
 
Name: 
Title:

MANAGER: 

JONES LANG LASALLE AMERICAS, INC., 

a
Maryland corporation

By:                                                                              
 
Name
Title:

By:                                                                              
 

Name:  

Title:    Broker of Record for Washington,
D.C.

 

27

 
  

 

SCHEDULE A 
LEGAL DESCRIPTION

All that certain lot
or parcel of land situated, lying and being in the City of Washington, District
of Columbia and being more particularly described as follows:

Part of Lots Eleven
(11) and Twelve (12) in A. Jardin and George H. Williams' subdivision of Square
One Hundred Fifty-nine (159), as per plat recorded in Liber W.B.M. at folio 21
in the Office of the Surveyor for the District of Columbia; also Lots Forty-nine
(49) and Fifty (50) in Mariana V. Lothrop's subdivision of lots in Square 159,
as per plat recorded in Liber 12 at folio 173 of said Surveyor's Office Records,
all of said parcel being more particularly described as follows:

Beginning at the
Southwesterly corner of Lot 12, being the intersection of the Northerly line of
Rhode Island Avenue with the Easterly line of Connecticut Avenue, thence
Northwesterly with the line of Connecticut Avenue, a distance of 87.22 feet;
thence Easterly and parallel with the line of Rhode Island Avenue, a distance of
80.80 feet to the Westerly line of Lot 50; thence Northerly with said Westerly
line of Lot 50 a measured distance of 22.03 feet to the Northwest corner of said
Lot; thence Easterly with the Northerly lines of Lots 50 and 49, being also
partly along the Southerly line of an alley (closed), a distance of 100.00 feet
to the Westerly line of an 18-foot public alley; thence Southeasterly along the
Westerly line of said alley, a distance of 109.21 feet to the Northerly line of
Rhode Island Avenue, being also the Southeasterly corner of Lot 49; thence
Westerly along the Northerly line of Rhode Island Avenue, a distance of 180.00
feet to the Southwesterly corner of Lot 12 and the place of
beginning.

Note: Said land is now
known for assessment and taxation purposes as Lot 855 in Square 159.

 

28

 
  

 

SCHEDULE B 
PROPERTY PERSONNEL

	
       
	
       
	
       

 

29

 
  

 

SCHEDULE C 
PROPERTY AGREEMENTS

	
       
	
       
	
       

 

30

 

  

 

SCHEDULE D 

OWNER START UP INFORMATION

	

    
	

    
	

    

 

31

 

  

 

SCHEDULE E 
COMPENSATION

	
       
	
       
	
       

 

32

 
  

 

SCHEDULE F 
FORM OF LEASE

	
       
	
       
	
       

 

33exhibit105.htm - Generated by SEC Publisher for SEC Filing

Exhibit 10.5

 

ETRE REIT, LLC

2014 NON-MANAGEMENT DIRECTOR
COMPENSATION PLAN

 

1.       PURPOSE.
The Plan is intended to provide incentives to non-management directors of the
Company, to encourage a proprietary interest in the Company, to encourage the non-management
directors to remain in the service of the Company, to attract new directors with
outstanding qualifications, and to afford additional incentive to non-management
directors to increase their efforts in providing significant services to the
Company and the Series. In furtherance thereof, the Plan permits awards of
equity-based incentives to Directors of the Company. 

2.       DEFINITIONS.
As used in this Plan, the following definitions apply: 

"Act"
shall mean the Securities Act of 1933, as amended. 

"Administrative
Agent" shall mean ETRE Asset Management LLC, a Delaware limited
liability company, together with its successors and assigns.

"Award
Agreement" shall mean a written agreement evidencing a Grant pursuant
to the Plan. 

"Board"
shall mean the Board of Directors of the Company and each Series. 

"Cause"
shall mean, with respect to a Director, unless otherwise provided in an
applicable Award Agreement, a termination of service, based upon a finding by
the Company, acting in good faith, after the occurrence of any of the following:
(1) the Director is convicted or charged with a criminal offense; (2) the Director's
intentional violation of law in connection with any transaction involving the
purchase, sale, loan or other disposition of, or the rendering of investment
advice with respect to, any security, futures or forward contract, insurance
contract, debt instrument, financial instrument or currency; (3) the Director's
dishonesty, bad faith, gross negligence, willful misconduct, fraud or willful
or reckless disregard of duties in connection with the performance of any
services on behalf of the Company or any Series or the Director's engagement in
conduct which is injurious to the Company or any Series, monetarily or
otherwise; (4) the Director's intentional breach of any material provision of
an Award Agreement or any other agreements of the Company or any Series; (5)
the Director's material violation of any written policies adopted by the
Company  governing the conduct of persons performing services on behalf of the
Company or any Series or the Director's non-adherence to the Company's policies
and procedures or other applicable Company compliance manuals; (6) the taking
of or omission to take any action that has caused or substantially contributed
to a material deterioration in the business or reputation of the Company or any
Series, or that was otherwise materially disruptive of their business or
affairs; provided, however, that the term Cause shall not include
for this purpose any mistake of judgment made in good faith with respect to any
transaction respecting an investment made by any Series; (7) the failure by the
Director to devote a sufficient portion of time to performing services for the
Company or any Series without the prior written consent of the Company, other
than by reason of death or Disability; (8) the obtaining by the Director of any
material improper personal benefit as a result of a breach by the Director of
any covenant or agreement (including, without limitation, a breach by the Director
of the Company's code of ethics or a material breach by the Director of other
written policies furnished to the Director relating to personal investment
transactions or of any covenant, agreement, representation or warranty
contained in any limited liability company agreement); or (9) the Director's
suspension or other disciplinary action against the Director by an applicable
regulatory authority; provided, however, that if a failure,
breach, violation or action or omission described in any of clauses (4) to (6)
is capable of being cured, the Director has failed to do so after being given
notice and a reasonable opportunity to cure. As used in this definition, "material"
means more than de minimis. 

1

 

 

 

"Change in Control" means unless
otherwise provided in an Award Agreement the happening of any of the following:
 

(i)           any
"person," including a "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act, but excluding the Company, any
entity controlling, controlled by or under common control with the Company, any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any such entity, and, with
respect to any particular Director, the Director and any "group" (as
such term is used in Section 13(d)(3) of the Exchange Act) of which the Director
is a member), is or becomes the "beneficial owner" (as defined in
Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities of
the Company representing 50% or more of either (A) the combined voting power of
the Company's then outstanding securities or (B) the then outstanding Shares of
all Series (in either such case other than as a result of an acquisition of
securities directly from the Company); or 

(ii)          any
consolidation or merger of the Company where the shareholders of the Company,
immediately prior to the consolidation or merger, would not, immediately after
the consolidation or merger, beneficially own (as such term is defined in Rule
13d-3 under the Exchange Act), directly or indirectly, shares representing in
the aggregate 50% or more of the combined voting power of the securities of the
corporation issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any); or  

(iii)         there
shall occur (A) any sale, lease, exchange or other transfer (in one transaction
or a series of transactions contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of the Company, other than a
sale or disposition by the Company of all or substantially all of the Company's
assets to an entity, at least 50% of the combined voting power of the voting
securities of which are owned by "persons" (as defined above) in
substantially the same proportion as their ownership of the Company immediately
prior to such sale or (B) the approval by shareholders of the Company of any
plan or proposal for the liquidation or dissolution of the Company. 

Notwithstanding the
foregoing, no event or condition shall constitute a Change in Control to the
extent that, if it were, a 20% tax would be imposed under Section 409A of the
Code; provided  that, in such a case, the event or condition shall
continue to constitute a Change in Control to the maximum extent possible (e.g.,
if applicable, in respect of vesting without an acceleration of distribution)
without causing the imposition of such 20% tax. 

"Code"
shall mean the Internal Revenue Code of 1986, as amended. 

"Committee"
shall mean the Compensation Committee of the Company or any subcommittee of the
Board as appointed by the Board in accordance with Section 4 of the Plan; provided,
however, that the Committee shall at all times consist of two or more
persons who, at the time of their appointment, each qualified as a "Non-Employee
Director" under Rule 16b-3(b)(3)(i) promulgated under the Exchange Act. 

"Common
Shares" shall mean any common shares of any Series of the Company,
either currently existing or designated hereafter pursuant to the Operating
Agreement.  

"Company"
shall mean ETRE REIT, LLC, a Delaware series limited liability company. 

"DER"
shall mean a right awarded under Section 10 of the Plan to receive (or have
credited) the equivalent value (in cash or Shares) of dividends paid on Common
Shares of a Series. 

2

 

 

 

"Director" shall mean a Non-Management
Director to whom Options, Restricted Shares, Phantom Shares, DERs, or other
equity-based awards are granted hereunder.

"Disability"
shall mean, unless otherwise provided by the Committee in the Director's Award
Agreement, the occurrence of an event which would entitle the Director to the
payment of disability income under an approved long-term disability income plan
or a long-term disability as determined by the Committee in its absolute
discretion pursuant to any other standard as may be adopted by the Committee.
Notwithstanding the foregoing, no circumstances or condition shall constitute a
Disability to the extent that, if it were, a 20% tax would be imposed under
Section 409A of the Code; provided  that, in such a case, the event or
condition shall continue to constitute a Disability to the maximum extent
possible (e.g., if applicable, in respect of vesting without an
acceleration of distribution) without causing the imposition of such 20% tax. 

"dividend"
shall mean a distribution on
or in respect of any Shares.

"Exchange
Act" shall mean the Securities Exchange Act of 1934, as amended. 

"Exercise
Price" shall mean the price per Common Share, determined by the Board
or the Committee, at which an Option may be exercised. 

"Fair
Market Value" shall mean the value of one Common Share of a Series,
determined as follows: 

(i)           If
the Shares of such Series are then listed on a national stock exchange, the
closing sales price per Share on the exchange on the date in question (or, if
no such price is available for such date, for the last preceding date on which
there was a sale of Shares on such exchange), as determined by the Committee. 

(ii)          If
the Shares of such Series are not then listed on a national stock exchange but
are then traded on an over-the-counter market, the average of the closing bid
and asked prices on the date in question for the Shares in such
over-the-counter market (or, if no such average is available for such date, for
the last preceding date on which there was a sale of Shares in such market), as
determined by the Committee. 

(iii)         If
neither (i) nor (ii) applies, such value as the Committee in its discretion may
in good faith determine. Notwithstanding the foregoing, where the Shares of
such Series are listed or traded, the Committee may make discretionary
determinations in good faith where the Shares have not been traded for 10
trading days. 

Notwithstanding the
foregoing, with respect to any "stock right" within the meaning of
Section 409A of the Code, Fair Market Value shall not be less than the "fair
market value" of the Common Shares of such Series determined in accordance
with the final regulations promulgated under Section 409A of the Code.

"Grant"
shall mean the issuance of a Non-qualified Share Option, Restricted Share,
Phantom Share, DER, or other equity-based grant as contemplated herein or any
combination thereof as applicable to a Director. The Committee will determine
the eligibility of Directors based on, among other factors, the position and
responsibilities of such individuals, the nature and value to the Company or a
Series of such individuals' accomplishments and potential contribution to the
success of the Company or a Series whether directly or through its
subsidiaries. 

3

 

 

 

"Non-Management Director" shall mean
(a) (i) a member of the Board and (ii) with respect to a Series, any person who
has been designated pursuant to the terms of the Operating Agreement as a
specific director to be associated with such Series, in each case, that is (b)
not an officer of (i) the Company or (ii) the Administrative Agent or its
affiliates.

"Non-qualified
Share Option" shall mean an Option not described in Section 422(b) of
the Code.

"Operating
Agreement" shall mean the First Amended and Restated Limited Liability
Company Agreement of the Company, as it may be amended, modified, supplemented
or restated from time to time. 

"Option"
shall mean a Non-qualified Share Option, to purchase, at a price and for the
term fixed by the Committee in accordance with the Plan, and subject to such
other limitations and restrictions in the Plan and the applicable Award
Agreement, a number of Shares of a Series determined by the Committee. 

"Optionee"
shall mean any Director to whom an Option is granted, or the Successors of the
Optionee, as the context so requires. 

 "Performance
Goals" has the meaning set forth in Section 12. 

"Phantom
Share" shall mean a right, pursuant to the Plan, of the Director to
payment of the Phantom Share Value. 

"Phantom
Share Value", per Phantom Share, shall mean the Fair Market Value of a
Share of the applicable Series or, if so provided by the Committee, such Fair
Market Value to the extent in excess of a base value established by the
Committee at the time of grant. 

"Plan"
shall mean the Company's 2014 Non-Management Director Compensation Plan, as set
forth herein, and as the same may from time to time be amended. 

 "Purchase
Price" shall mean the Exercise Price times the number of Shares with
respect to which an Option is exercised. 

"Restricted
Share" shall mean an award of Shares of a Series that are subject to
restrictions hereunder.

"Series"
shall mean a series of the Company, either currently existing or designated
hereafter pursuant to the Operating Agreement.

"Shares"
shall mean Common Shares of the Company, adjusted in accordance with Section 14
of the Plan (if applicable).

"Subsidiary"
shall mean any corporation, partnership, limited liability company or other
entity at least 50% of the economic interest in the equity of which is owned,
directly or indirectly, by the Company, any Series or by another subsidiary. 

"Successors
of the Optionee" shall mean the legal representative of the estate of
a deceased Optionee or the person or persons who shall acquire the right to
exercise an Option by bequest or inheritance or by reason of the death of the
Optionee. 

"Termination
of Service" shall mean the time when the directorship between the
Director and the Company and/or the Series is terminated for any reason, with
or without Cause, including, but not limited to, any
termination by resignation, discharge, death or retirement. The Committee, in
its absolute discretion, shall determine the effects of all matters and
questions relating to Termination of Service, including, but not limited to,
the question of whether any Termination of Service was for Cause and all
questions of whether particular leaves of absence constitute Terminations of
Service. For this purpose, the service relationship shall be treated as
continuing intact while the Director is on military leave, sick leave or other bona
fide leave of absence (to be determined in the discretion of the Committee). 

4

 

 

 

3.       EFFECTIVE DATE.
The effective date of the Plan is ____, 2014. The Plan shall not become
effective unless and until it is approved on or prior to the effective date by
the requisite percentage of the holders of the Common Shares of the Company
then outstanding. The Plan shall terminate on, and no award shall be granted
hereunder on or after, the one-year anniversary of the earlier of the approval
of the Plan by (i) the Board or (ii) the shareholders of the Company; provided,
however, that the Board may at any time prior to that date terminate the
Plan. 

4.       ADMINISTRATION.
 

(a)          Membership
on Committee. The Plan shall be administered by the Committee appointed by the
Board. If no Committee is designated by the Board to act for those purposes or
the Board otherwise so elects, the full Board shall have the rights and
responsibilities of the Committee hereunder and under the Award Agreements. 

(b)          Committee
Meetings. The acts of a majority of the members present at any meeting of the
Committee at which a quorum is present, or acts approved in writing by a
majority of the entire Committee, shall be the acts of the Committee for
purposes of the Plan. If and to the extent applicable, no member of the
Committee may act as to matters under the Plan specifically relating to such
member. 

(c)          Grant
of Awards. 

(i)           The
Committee shall from time to time at its discretion select the Directors who
are to be issued Grants and determine the number and type of Grants to be
issued under any Award Agreement to a Director. In particular, the Committee
shall (A) determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Grants awarded hereunder (including, but not limited to the
performance goals and periods applicable to the award of Grants); (B) determine
the time or times when and the manner and condition in which each Option shall
be exercisable and the duration of the exercise period; and (C) determine or
impose other conditions to the Grant or exercise of Options under the Plan as
it may deem appropriate. The Committee may establish such rules, regulations
and procedures for the administration of the Plan as it deems appropriate,
determine the extent, if any, to which Options, Phantom Shares, Shares (whether
or not Restricted Shares), DERs or other equity-based awards shall be forfeited
(whether or not such forfeiture is expressly contemplated hereunder), and take
any other actions and make any other determinations or decisions that it deems
necessary or appropriate in connection with the Plan or the administration or
interpretation thereof. The Committee shall also cause each Option to be
designated a Non-qualified Share Option. The Director shall take whatever
additional actions and execute whatever additional documents the Committee may
in its reasonable judgment deem necessary or advisable in order to carry or
effect one or more of the obligations or restrictions imposed on the Director
pursuant to the express provisions of the Plan and the Award Agreement. DERs
will be exercisable separately or together with Options, and paid in cash or
other consideration at such times and in accordance with such rules, as the
Committee shall determine in its discretion. Unless expressly provided
hereunder, the Committee, with respect to any Grant, may exercise its
discretion hereunder at the time of the award or thereafter. The Committee
shall have the right and responsibility to interpret the Plan and the
interpretation and construction by the Committee of any provision of the Plan
or of any Grant thereunder, including, without limitation, in the event of a
dispute, shall be final and binding on all Directors and other
persons to the maximum extent permitted by law. Without limiting the generality
of Section 23, no member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Grant
hereunder. 

5

 

 

 

(ii)          Notwithstanding
clause (i) of this Section 4(c), unless otherwise required by law or exchange
listing rules, any award under the Plan to a Director who is a member of the
Committee shall be made by the full Board, but for these purposes the directors
of the Company who are on the Committee shall be required to be recused in
respect of such awards and shall not be permitted to vote.  

(d)          Awards.

(i)           Agreements.
Grants to Directors shall be evidenced by written Award Agreements in such form
as the Committee shall from time to time determine (which Award Agreements need
not be in the same form as any other Award Agreement evidencing Grants under
the Plan and need not contain terms and conditions identical to those
applicable to any other Grant under the Plan or to those applicable to any
other Directors). Such Award Agreements shall comply with and be subject to the
terms and conditions set forth below. 

(ii)          Number
of Shares and Specification of Series. Each Grant issued to a Director shall
state the number of Shares to which it pertains or which otherwise underlie the
Grant and shall provide for the adjustment thereof in accordance with the
provisions of Section 14 hereof.  Each Grant issued to a Director shall state
the Series to which it pertains.

(iii)         Grants.
Subject to the terms and conditions of the Plan and consistent with the Company's
intention for the Committee to exercise the greatest permissible flexibility
under Rule 16b-3 under the Exchange Act in awarding Grants, the Committee shall
have the power: 

(1)       to determine from time to time the Grants to
be issued to Directors under the Plan and to prescribe the terms and provisions
(which need not be identical) of Grants issued under the Plan to such persons; 

(2)       to construe and interpret the Plan and the
Grants thereunder and to establish, amend and revoke the rules, regulations and
procedures established for the administration of the Plan. In this connection,
the Committee may correct any defect or supply any omission, or reconcile any
inconsistency in the Plan, in any Award Agreement, or in any related
agreements, in the manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective. All decisions and determinations by
the Committee in the exercise of this power shall be final and binding upon the
Company, the Series and the Directors; 

(3)       to amend any outstanding Grant, subject to
Section 16, and to accelerate or extend the vesting or exercisability of any
Grant (in compliance with Section 409A of the Code, if applicable) and to waive
conditions or restrictions on any Grants, to the extent it shall deem
appropriate; 

(4)       to determine the circumstances, if any, upon
which an award made under the Plan shall be subject to forfeiture in whole or
in part as a result of a breach by the Director of a provision or covenant to
which the Director is subject; and 

6

 

 

 

(5)       generally to
exercise such powers and to perform such acts as are deemed necessary or
expedient to promote the best interests of the Company with respect to the
Plan. 

(iv)         Any
Grant awarded after the effective date of this Plan is subject to mandatory
repayment by the Director to the Company and/or the applicable Series to the
extent the Director is or in the future becomes subject to any Company and/or
Series "clawback" or recoupment policy or as otherwise required by
applicable law. 

5.       PARTICIPATION.
 

(a)          Eligibility.
Only Directors shall be eligible to receive Grants under the Plan. 

(b)          Limitation
of Ownership. No Grants shall be issued under the Plan to any person who after
such Grant would beneficially own more than 9.8% of the outstanding Common
Shares of a Series of the Company, unless the foregoing restriction is
expressly and specifically waived by action of the independent directors of the
Board. 

(c)          Share
Ownership. For purposes of Section 5(b) above, in determining share ownership a
Director shall be considered as owning the shares owned, directly or
indirectly, by or for his brothers, sisters, spouses, ancestors and lineal
descendants. Shares owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be considered as being owned proportionately
by or for its shareholders, partners or beneficiaries. Shares with respect to
which any person holds an Option shall be considered to be owned by such
person. 

(d)          Outstanding
Shares. For purposes of Section 5(b) above, "outstanding Common Shares of
a Series" shall include all shares actually issued and outstanding
immediately after the issue of the Grant to the Director. With respect to the share
ownership of any Director, "outstanding Common Shares of a Series"
shall include shares authorized for issue under outstanding Options held by
such Director, but not options held by any other person. 

6.       SHARES.
Subject to adjustments pursuant to Section 14, no Grant may cause the total
number of Common Shares subject to all outstanding awards to exceed 0.25% of the issued and outstanding Common
Shares of all Series on a fully diluted basis (assuming, if applicable, the
exercise of all outstanding Options and the conversion of all warrants and
convertible securities into Common Shares). 
Notwithstanding the first sentence of this Section 6, (i) Shares that have been
granted as Restricted Shares or that have been reserved for distribution in
payment for Options or Phantom Shares but are later forfeited or for any other reason
are not payable under the Plan; and (ii) Shares as to which an Option is
granted under the Plan that remains unexercised at the expiration, forfeiture
or other termination of such Option, may be the subject of the issue of further
Grants. Common Shares issued hereunder may consist, at the applicable time, in
whole or in part, of authorized and unissued shares, treasury shares or
previously issued Shares under the Plan. The certificates for Shares issued
hereunder may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer hereunder or under the Award Agreement, or
as the Committee may otherwise deem appropriate. Shares subject to DERs, other
than DERs based directly on the dividends payable with respect to Shares
subject to Options or the dividends payable on a number of Shares corresponding
to the number of Phantom Shares awarded, shall be subject to the limitation of
this Section 6. Notwithstanding the limitations above in this Section 6, there
shall be no limit on the number of Phantom Shares or DERs to the extent they
are paid out in cash that may be granted under the Plan. If any Phantom Shares
or DERs are paid out in cash, the underlying Shares may again be made the
subject of Grants under the Plan, notwithstanding the first sentence of this
Section 6. 

7

 

 

 

7.       TERMS
AND CONDITIONS OF OPTIONS.  

(a)          Each
Award Agreement with a Director shall state the Exercise Price. The Exercise
Price for any Option shall not be less than the Fair Market Value of a Share of
the applicable Series on the date of Grant.

(b)          Medium
and Time of Payment. Except as may otherwise be provided below, the Purchase
Price for each Option granted to a Director shall be payable in full in United
States dollars upon the exercise of the Option. In the event the Company
determines that it and/or the applicable Series is required to withhold taxes
as a result of the exercise of an Option, as a condition to the exercise
thereof, a Director may be required to make arrangements satisfactory to the
Company to enable it and/or the applicable Series to satisfy such withholding
requirements in accordance with Section 20.  If the applicable Award Agreement
so provides, or the Committee otherwise so permits, the Purchase Price may be
paid in one or a combination of the following, taking into account the desired
accounting treatment and compliance with applicable law: 

(i)           by
a certified or bank cashier's check; 

(ii)          by
the surrender of Common Shares in good form for transfer, owned by the person
exercising the Option and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Common Shares,
as long as the sum of the cash so paid and the Fair Market Value of the Common
Shares so surrendered equals the Purchase Price; 

(iii)         by
reduction of the Shares issuable upon exercise of the Option; 

(iv)         by
cancellation of indebtedness owed by the applicable Series to the Director; 

(v)          subject
to Section 16(e), by broker-assisted cashless exercise using a broker reasonably
acceptable to the Company, pursuant to which the Director delivers to the
Company, on or prior to the exercise date, the Director's instruction directing
and obligating the broker to (a) sell Shares (or a sufficient portion of the
Shares) acquired upon exercise of the Option and (b) remit to the Company a
sufficient portion of the sale proceeds to pay the aggregate purchase price, no
later than the third trading day after the exercise date; 

(vi)         subject
to Section 16(e), by a loan or extension of credit from the applicable Series
evidenced by a full recourse promissory note executed by the Director. The
interest rate and other terms and conditions of such note shall be determined
by the Committee (in which case the Committee may require that the Director
pledge his or her Shares to the applicable Series for the purpose of securing
the payment of such note, and in no event shall the share certificate(s)
representing such Shares be released to the Director until such note shall have
been paid in full); or 

(vii)        by
any combination of such methods of payment or any other method acceptable to
the Committee in its discretion. 

Except in the case of
Options exercised by certified or bank cashier's check, the Committee may
impose such limitations and prohibitions on the exercise of Options as it deems
appropriate, including, without limitation, any limitation or prohibition
designed to avoid accounting consequences which may result from the use of Common
Shares as payment upon exercise of an Option. Any fractional Common Shares
resulting from a Director's election that are accepted by the Company shall in
the discretion of the Committee be paid in cash. 

8

 

 

 

(c)          Term and Nontransferability of Grants and
Options. 

(i)           Each
Option under this Section 7 shall state the time or times which all or part
thereof becomes exercisable, subject to the restrictions set forth in clauses
(ii) through (v) below.

(ii)          No
Option shall be exercisable except by the Director or a transferee permitted
hereunder. 

(iii)         No
Option shall be assignable or transferable, except by will or the laws of
descent and distribution of the state wherein the Director is domiciled at the
time of his death; provided, however, that the Committee may (but
need not) permit other transfers, where the Committee concludes that such
transferability (i) does not result in accelerated taxation and (ii) is
otherwise appropriate and desirable. 

(iv)         No
Option shall be exercisable until such time as set forth in the applicable
Award Agreement (but in no event after the expiration of such Grant). 

(v)          No
modification of an Option shall, without the consent of the Optionee or as
required by applicable law or regulation or to meet the requirements of any
accounting standard or to correct an administrative error, materially impair
the rights of an Optionee under any Option previously granted. 

(d)          Termination
of Service, other than by Death, Disability, or for Cause. Unless otherwise
provided in the applicable Award Agreement, upon any Termination of Service for
any reason other than his or her death or Disability, an Optionee shall have
the right, subject to the restrictions of Section 4(c) above, to exercise his
or her Option at any time within 90 days after Termination of Service, but only
to the extent that, at the date of Termination of Service, the Optionee's right
to exercise such Option had accrued pursuant to the terms of the applicable
Award Agreement and had not previously been exercised or forfeited; provided,
however, that, unless otherwise provided in the applicable Award
Agreement, if there occurs a Termination of Service for Cause, any Option not
exercised in full prior to such termination shall be canceled. 

(e)          Death
of Optionee. Unless otherwise provided in the applicable Award Agreement, if
the Optionee of an Option dies while a Director or within 90 days after any
Termination of Service other than for Cause, and has not fully exercised the
Option, subject to the restrictions of Section 4(c) above, the Option may be
exercised at any time within 12 months after the Optionee's death (or 12 months
after the Optionee's Termination of Service, if sooner) by the Successor of the
Optionee, but only to the extent that, at the date of death, the Optionee's
right to exercise such Option had accrued pursuant to the terms of the
applicable Award Agreement and had not previously been exercised or forfeited. 

(f)           Disability
of Optionee. Unless otherwise provided in the Award Agreement, upon any
Termination of Service for reason of his or her Disability, an Optionee shall have
the right, subject to the restrictions of Section 4(c) above, to exercise the
Option at any time within 12 months after Termination of Service, but only to
the extent that, at the date of Termination of Service, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the applicable Award
Agreement and had not previously been exercised or forfeited. 

(g)          Rights
as a Shareholder. An Optionee, a Successor of the Optionee, or the holder of a
DER shall have no rights as a shareholder with respect to any Shares covered by
his or her Grant until, in the case of an Optionee, the date of the issuance of
a share certificate for such Shares. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions or other rights for which the record date is prior to the date
such share certificate is issued, except as provided in Section 14. 

9

 

 

 

(h)          Modification, Extension and Renewal of Option.
Within the limitations of the Plan, the Committee may modify, extend or renew
outstanding Options or accept the cancellation of outstanding Options (to the
extent not previously exercised) for the granting of new Options in
substitution therefor (but not including repricings, in the absence of shareholder
approval). The Committee may modify, extend or renew any Option granted to any Director,
taking into consideration Rule 16b-3 under the Exchange Act and Section 409A of
the Code. The foregoing notwithstanding, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Option previously granted. 

(i)           Stock
Appreciation Rights. The Committee, in its discretion, may (taking into
account, without limitation, the application of Section 409A of the Code, as
the Committee may deem appropriate), also permit the Optionee to elect to
exercise an Option by receiving Shares, cash or a combination thereof, in the
discretion of the Committee and as may be set forth in the applicable Award
Agreement, with an aggregate Fair Market Value (or, to the extent of payment in
cash, in an amount) equal to the excess of the Fair Market Value of the Shares
with respect to which the Option is being exercised over the aggregate Purchase
Price, as determined as of the day the Option is exercised. 

(j)           Deferral.
The Committee may establish a program (taking into account, without limitation,
the application of Section 409A of the Code, as the Committee may deem
appropriate) under which Optionees will have Phantom Shares subject to Section 9
credited upon their exercise of Options, rather than receiving Shares at that
time. 

(k)          Other
Provisions. The Award Agreement authorized under the Plan may contain such
other provisions not inconsistent with the terms of the Plan (including,
without limitation, restrictions upon the exercise of the Option) as the
Committee shall deem advisable. 

8.       PROVISIONS
APPLICABLE TO RESTRICTED SHARES.  

(a)          Vesting
Periods. In connection with the grant of Restricted Shares, whether or not Performance
Goals apply thereto, the Committee shall establish one or more vesting periods
with respect to the Restricted Shares granted, the length of which shall be
determined in the discretion of the Committee and set forth in the applicable
Award Agreement. Subject to the provisions of this Section 8, the applicable
Award Agreement and the other provisions of the Plan, restrictions on Restricted
Shares shall lapse if the Director satisfies all applicable service
requirements through the end of the applicable vesting period.

(b)          Grant
of Restricted Shares. Subject to the other terms of the Plan, the Committee
may, in its discretion as reflected by the terms of the applicable Award
Agreement: (i) authorize the granting of Restricted Shares to Directors; (ii)
provide a specified purchase price for the Restricted Shares (whether or not
the payment of a purchase price is required by any state law applicable to the
Company); (iii) determine the restrictions applicable to Restricted Shares and
(iv) determine or impose other conditions to the grant of Restricted Shares
under the Plan as it may deem appropriate. 

(c)          Certificates.

(i)           Each
Director granted Restricted Shares may be issued a share certificate in respect
of Shares of Restricted Shares awarded under the Plan. Any such certificate
shall be registered in the name of the Director. Without limiting the
generality of Section 6, in addition to any legend that might otherwise be
required by the Board or the Company's Operating Agreement, bylaws or other
applicable documents, the certificates for Restricted Shares issued hereunder
may include any legend which the Committee deems appropriate to reflect any
restrictions on transfer hereunder or under the applicable Award
Agreement, or as the Committee may otherwise deem appropriate, and, without
limiting the generality of the foregoing, shall bear a legend referring to the
terms, conditions, and restrictions applicable to such Grant, substantially in
the following form: 

10

 

 

 

THE
TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING FORFEITURE) OF THE ETRE REIT,
LLC 2014 NON-MANAGEMENT DIRECTOR COMPENSATION PLAN, AND AN AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER AND ETRE REIT, LLC. COPIES OF SUCH
PLAN AND AWARD AGREEMENT ARE ON FILE IN THE OFFICES OF ETRE REIT, LLC, 44 WALL
STREET, NEW YORK, NY 10005. 

(ii)          The
Committee may require that any share certificates evidencing such Shares be
held in custody by the Company until the restrictions hereunder shall have
lapsed and that, as a condition of any grant of Restricted Shares, the Director
shall have delivered a stock power, endorsed in blank, relating to the shares covered
by such Grant. If and when such restrictions so lapse, the share certificates
shall be delivered by the Company to the Director or his or her designee as
provided in Section 8(d). 

(iii)         For
purposes of clarity, nothing contained in the Plan shall preclude the use of
non-certficated evidence of ownership that the Committee determines to be
appropriate, including book entry. 

(d)          Restrictions
and Conditions. Unless otherwise provided by the Committee in an Award
Agreement, the Restricted Shares awarded pursuant to the Plan shall be subject
to the following restrictions and conditions: 

(i)           Subject
to the provisions of the Plan and the applicable Award Agreement, during a
period commencing with the date of such Grant and ending on the date the period
of forfeiture with respect to such Shares lapses, the Director shall not be
permitted voluntarily or involuntarily to sell, transfer, pledge, anticipate,
alienate, encumber or assign Restricted Shares awarded under the Plan (or have
such Shares attached or garnished). Subject to the provisions of the applicable
Award Agreement, the period of forfeiture with respect to Shares granted
hereunder shall lapse as provided in the applicable Award Agreement.
Notwithstanding the foregoing, unless otherwise expressly provided by the
Committee, the period of forfeiture with respect to such Shares shall only
lapse as to whole Shares. 

(ii)          Except
as provided in the foregoing clause (i), or in Section 14, the Director shall
have, in respect of the Restricted Shares, all of the rights of a shareholder of
such Shares of the Company, including the right to vote the Shares and receive
dividends. Certificates for Shares (not subject to restrictions hereunder)
shall be delivered to the Director or his or her designee (or where permitted,
transferee) promptly after, and only after, the period of forfeiture shall
lapse without forfeiture in respect of such Restricted Shares. 

(iii)         Termination
of service. Unless otherwise provided in the applicable Award Agreement, if the
Director has a Termination of Service for any reason, then (A) all Restricted Shares
still subject to restriction shall thereupon, and with no further action, be
forfeited by the Director, and (B) the applicable Series shall pay to the Director
as soon as practicable (and in no event more than 30 days) after such
termination an amount equal to the lesser of (x) the amount paid by the Director,
if any, for such forfeited Restricted Shares as contemplated by Section 8(b),
and (y) the Fair Market Value on the date of termination of the forfeited Restricted
Shares. 

9.       PROVISIONS
APPLICABLE TO PHANTOM SHARES.  

11

 

 

 

(a)          Grant of Phantom Shares. Subject to the
other terms of the Plan, the Committee shall, in its discretion as reflected by
the terms of the applicable Award Agreement: (i) authorize the Granting of
Phantom Shares to Directors and (ii) determine or impose other conditions to
the grant of Phantom Shares under the Plan as it may deem appropriate. 

(b)          Term.
The Committee may provide in an Award Agreement that any particular Phantom
Share shall expire at the end of a specified term. 

(c)          Vesting.

(i)           Subject
to the provisions of the applicable Award Agreement and Section 9(c)(ii),
Phantom Shares shall vest as provided in the applicable Award Agreement. 

(ii)          Unless
otherwise determined by the Committee in an applicable Award Agreement, in the
event that a Director has a Termination of Service, any and all of the Director's
Phantom Shares which have not vested prior to or as of such termination shall
thereupon, and with no further action, be forfeited and cease to be
outstanding, and the Director's vested Phantom Shares shall be settled as set
forth in Section 9(d). 

(d)          Settlement
of Phantom Shares. 

(i)           Except
as otherwise provided by the Committee, each vested and outstanding Phantom
Share shall be settled by the transfer to the Director of one Share of the
applicable Series; provided, however, that, the Committee at the
time of grant (or, in the appropriate case, as determined by the Committee,
thereafter) may provide that a Phantom Share may be settled (A) in cash at the
applicable Phantom Share Value, (B) in cash or by transfer of Shares as elected
by the Director in accordance with procedures established by the Committee (if
any) or (C) in cash or by transfer of Shares as elected by the Company and the
applicable Series. 

(ii)          Each
Phantom Share shall be settled with a single-sum payment by the applicable
Series; provided, however, that, with respect to Phantom Shares
of a Director which have a common Settlement Date (as defined below), the
Committee may permit the Director to elect in accordance with procedures
established by the Committee (taking into account, without limitation, Section
409A of the Code, as the Committee may deem appropriate) to receive installment
payments over a period not to exceed 10 years. 

(iii)         (1)        Except
as otherwise provided by the Committee, the settlement date with respect to a Director
is the first day of the month to follow the Director's Termination of Service ("Settlement
Date").  

(2)       Notwithstanding Section 9(d)(iii)(1), the
Committee may provide that distributions of Phantom Shares can be elected at
any time in those cases in which the Phantom Share Value is determined by
reference to Fair Market Value of the applicable Shares to the extent in excess
of a base value, rather than by reference to unreduced Fair Market Value. 

(3)       Notwithstanding the foregoing, the
Settlement Date, if not earlier pursuant to this Section 9(d)(iii), is the date
of the Director's death. 

(iv)         Notwithstanding
any other provision of the Plan (taking into account, without limitation, Section
409A of the Code, as the Committee may deem appropriate), a Director may
receive any amounts to be paid in installments as provided in Section 9(d)(ii)
or deferred by the Director as provided in Section 9(d)(iii)
in the event of an Unforeseeable Emergency. For these purposes, an "Unforeseeable
Emergency" shall have the meaning provided in Section 409A of the Code
and the regulations thereunder, as determined by the Committee in its sole
discretion, provided  that such Unforeseeable Emergency must cause a
severe financial hardship to the Director resulting from (x) a sudden and
unexpected illness or accident of the Director or "dependent," as
defined in Section 152(a) of the Code, of the Director, (y) loss of the Director's
property due to casualty, or (z) other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the Director.
The circumstances that will constitute an Unforeseeable Emergency will depend
upon the facts of each case, but, in any case, payment may not be made to the
extent that such hardship is or may be relieved: 

12

 

 

 

(1)       through reimbursement or compensation by
insurance or otherwise; 

(2)       by liquidation of the Director's assets, to
the extent the liquidation of such assets would not itself cause severe
financial hardship; or 

(3)       by future cessation of the making of
additional deferrals with respect to Phantom Shares. 

Without limitation, the
need to send a Director's child to college or the desire to purchase a home
shall not constitute an Unforeseeable Emergency. Distributions of amounts
because of an Unforeseeable Emergency shall be permitted to the extent
reasonably needed to satisfy the emergency need.

(e)          Other
Phantom Share Provisions. 

(i)           Except
as permitted by the Committee, rights to payments with respect to Phantom
Shares granted under the Plan shall not be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, garnishment, levy, execution, or other legal or equitable process,
either voluntary or involuntary; and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, attach or garnish, or levy or execute on
any right to payments or other benefits payable hereunder, shall be void. 

(ii)          A
Director may designate in writing, on forms to be prescribed by the Committee,
a beneficiary or beneficiaries to receive any payments payable after his or her
death and may amend or revoke such designation at any time. If no beneficiary
designation is in effect at the time of a Director's death, payments hereunder
shall be made to the Director's estate. If a Director with a vested Phantom
Share dies, such Phantom Share shall be settled and the Phantom Share Value in
respect of such Phantom Shares paid, and any payments deferred pursuant to an
election under Section 9(d)(iii) shall be accelerated and paid, as soon as
practicable (but no later than 60 days) after the date of death to such Director's
beneficiary or estate, as applicable.

(iii)         The
Committee may (taking into account, without limitation, Section 409A of the
Code, as the Committee may deem appropriate) establish a program under which
distributions with respect to Phantom Shares may be deferred for periods in
addition to those otherwise contemplated by the foregoing provisions of this
Section 9. Such program may include, without limitation, provisions for the
crediting of earnings and losses on unpaid amounts and, if permitted by the
Committee, provisions under which Directors may select from among hypothetical
investment alternatives for such deferred amounts in accordance with procedures
established by the Committee. 

(iv)         Notwithstanding
any other provision of this Section 9, any fractional Phantom Share will be
paid out in cash at the Phantom Share Value as of the Settlement Date. 

13

 

 

 

(v)          No Phantom Share shall give any Director
any rights with respect to Shares or any ownership interest in the Company
associated with any Series. Except as may be provided in accordance with
Section 10, no provision of the Plan shall be interpreted to confer upon any Director
of a Phantom Share any voting, dividend or derivative or other similar rights
with respect to any Phantom Share. 

(f)           Claims
Procedures. 

(i)           The
Director, or his beneficiary hereunder or authorized representative, may file a
claim for payments with respect to Phantom Shares under the Plan by written
communication to the Committee or its designee. A claim is not considered filed
until such communication is actually received. Within 90 days (or, if special
circumstances require an extension of time for processing, 180 days, in which
case notice of such special circumstances should be provided within the initial
90-day period) after the filing of the claim, the Committee will either: 

(1)       approve the claim and take appropriate steps
for satisfaction of the claim; or 

(2)       if the claim is wholly or partially denied,
advise the claimant of such denial by furnishing to him or her a written notice
of such denial setting forth (A) the specific reason or reasons for the denial;
(B) specific reference to pertinent provisions of the Plan on which the denial
is based and, if the denial is based in whole or in part on any rule of
construction or interpretation adopted by the Committee, a reference to such
rule, a copy of which shall be provided to the claimant; (C) a description of
any additional material or information necessary for the claimant to perfect
the claim and an explanation of the reasons why such material or information is
necessary; and (D) a reference to this Section 9(f) as the provision setting
forth the claims procedure under the Plan.

(ii)          The
claimant may request a review of any denial of his or her claim by written
application to the Committee within 60 days after receipt of the notice of
denial of such claim. Within 60 days (or, if special circumstances require an
extension of time for processing, 120 days, in which case notice of such
special circumstances should be provided within the initial 60-day period)
after receipt of written application for review, the Committee will provide the
claimant with its decision in writing, including, if the claimant's claim is
not approved, specific reasons for the decision and specific references to the
Plan provisions on which the decision is based. 

10.     PROVISIONS
APPLICABLE TO DIVIDEND EQUIVALENT RIGHTS.  

(a)          Grant
of DERs. Subject to the other terms of the Plan, the Committee shall, in its
discretion as reflected by the terms of the Award Agreements, authorize the
granting of DERs to Directors based on the dividends declared on Common Shares
of a Series, to be credited as of the dividend payment dates, during a
specified period determined by the Committee, which may be, for example,
between the date a Grant is issued or vests, and the date such Grant is
exercised, vests or expires. Such DERs shall be converted to cash or additional
Shares by such formula and at such time and subject to such limitation as may
be determined by the Committee.  If a DER is granted in respect of another
Grant hereunder, then, unless otherwise stated in the Award Agreement, or, in
the appropriate case, as determined by the Committee, in no event shall the DER
be in effect for a period beyond the time during which the applicable related
portion of the underlying Grant has been exercised or otherwise settled, or has
expired, been forfeited or otherwise lapsed, as applicable.

(b)          Certain
Terms. 

14

 

 

 

(i)           The term of a DER shall be set by the
Committee in its discretion. 

(ii)          Payment
of the amount determined in accordance with Section 10(a) shall be in cash, in Common
Shares or a combination of the both, as determined by the Committee at the time
of grant. 

(c)          Other
Types of DERs. The Committee may establish a program under which DERs of a type
whether or not described in the foregoing provisions of this Section 10 may be
granted to Directors. For example, without limitation, the Committee may grant
a DER in respect of each Share subject to an Option or with respect to a
Phantom Share, which right would consist of the right (subject to Section 10(d))
to receive a cash payment in an amount equal to the dividend distributions paid
on a Share from time to time.

(d)          Deferral.

(i)           The
Committee may (taking into account, without limitation, Section 409A of the
Code, as the Committee may deem appropriate) establish a program under which Directors
(i) will have Phantom Shares credited, subject to the terms of Sections 9(d)
and 9(e) as though directly applicable with respect thereto, upon the granting
of DERs, or (ii) will have payments with respect to DERs deferred. 

(ii)          The
Committee may establish a program under which distributions with respect to
DERs may be deferred. Such program may include, without limitation, provisions
for the crediting of earnings and losses on unpaid amounts, and, if permitted
by the Committee, provisions under which Directors may select from among
hypothetical investment alternatives for such deferred amounts in accordance
with procedures established by the Committee. 

11.     OTHER
EQUITY-BASED AWARDS. The Board shall have the right to grant other awards
based upon the Common Shares of a Series having such terms and conditions as
the Board may determine, including, without limitation, the grant of Shares of
a Series based upon certain conditions, the grant of securities convertible
into Common Shares of a Series, and the grant of restricted stock units.

12.       PERFORMANCE
GOALS. The Committee, in its discretion, may grant performance-based grants
("Performance-Based Grants") and (i) establish one or more
performance goals ("Performance Goals") as a precondition to
the issuance or vesting of Grants, and (ii) provide, in connection with the
establishment of the Performance Goals, for predetermined Grants to those Directors
(who continue to meet all applicable eligibility requirements) with respect to whom
the applicable Performance Goals are satisfied. The Performance Goals may be
based upon the criteria set forth in Exhibit A hereto which is hereby
incorporated herein by reference as though set forth in full. 

13.       TERM OF PLAN.
Grants may be granted pursuant to the Plan until the expiration of one year
from the effective date of the Plan. 

14.       RECAPITALIZATION
AND CHANGES OF CONTROL.  

(a)          Subject
to any required action by shareholders and to the specific provisions of
Section 15, if (i) the Company shall at any time be involved in a merger,
consolidation, dissolution, liquidation, reorganization, exchange of shares,
sale of all or substantially all of the assets or shares of the Company or a
transaction similar thereto, (ii) any share dividend, share split, reverse share
split, share combination, reclassification, recapitalization or other similar
change in the capital structure of the Company, or any distribution to holders
of Common Shares of a Series other than cash dividends, shall occur or (iii)
any other event shall occur which in the judgment of the Committee necessitates
action by way of adjusting the terms of the outstanding Grants, then: 

15

 

 

 

(i)           the maximum aggregate number of Shares
which may be made subject to Options and DERs under the Plan, the maximum
aggregate number and kind of Restricted Shares that may be granted under the
Plan, the maximum aggregate number of Phantom Shares and other Grants which may
be granted under the Plan shall be appropriately adjusted by the Committee in
its discretion; and 

(ii)          the
Committee shall take any such action as in its discretion shall be necessary to
maintain each Directors' rights hereunder (including under their applicable
Award Agreements) so that they are, in their respective Options, Phantom Shares
and DERs (and, as appropriate, other Grants under Section 11), substantially
proportionate to the rights existing in such Options, Phantom Shares and DERs
(and other Grants under Section 11) prior to such event, including, without
limitation, adjustments in (A) the number of Options, Phantom Shares and DERs
(and other Grants under Section 11) granted, (B) the number and kind of shares
or other property to be distributed in respect of Options, Phantom Shares and
DERs (and other Grants under Section 11, as applicable, (C) the Exercise Price,
Purchase Price and Phantom Share Value, and (D) performance-based criteria
established in connection with Grants; provided  that, in the discretion
of the Committee, the foregoing clause (D) may also be applied in the case of
any event relating to a Subsidiary if the event would have been covered under
this Section 14(a) had the event related to the Company. 

To the extent that such
action shall include an increase or decrease in the number of Shares (or units
of other property then available) subject to all outstanding Grants, the number
of Shares (or units) available under Section 6 above shall be increased or
decreased, as the case may be, proportionately. 

(b)          Any
Shares or other securities distributed to a Director with respect to Restricted
Shares or otherwise issued in substitution of Restricted Shares pursuant to
this Section 14 shall be subject to the applicable restrictions and
requirements imposed by Section 8, including depositing the certificates
therefor with the Company together with a stock power and bearing a legend as
provided in Section 8(c)(i).

(c)          If
the Company shall be consolidated or merged with a corporation or other entity,
each Director who has received Restricted Shares that is then subject to
restrictions imposed by Section 8(d) may be required to deposit with the
successor corporation the certificates for the stock or securities or the other
property that the Director is entitled to receive by reason of ownership of Restricted
Shares in a manner consistent with Section 8(c)(ii), and such stock, securities
or other property shall become subject to the restrictions and requirements
imposed by Section 8(d), and the certificates therefor or other evidence
thereof shall bear a legend similar in form and substance to the legend set
forth in Section 8(c)(i).

(d)          The
judgment of the Committee with respect to any matter referred to in this
Section 14 shall be conclusive and binding upon each Director without the need
for any amendment to the Plan. 

(e)          Subject
to any required action by shareholders, if the Company is the surviving company
in any merger or consolidation, the rights under any outstanding Grant shall
pertain and apply to the securities to which a holder of the number of Shares
subject to the Grant would have been entitled. Subject to the terms of any
applicable Award Agreement, in the event of a merger or consolidation in which
the Company is not the surviving company, the date of exercisability of each
outstanding Option and settling of each Phantom Share or, as applicable, other
Grant under Section 11 (in each case whether or not vested), shall be
accelerated to a date prior to such merger or consolidation, unless the
agreement of merger or consolidation provides for the assumption of the Grant
by the successor to the Company. 

16

 

 

 

(f)           To the extent that the foregoing
adjustment related to securities of the Company, such adjustments shall be made
by the Committee, whose determination shall be conclusive and binding on all
persons. 

(g)          Except
as expressly provided in this Section 14, a Director shall have no rights by
reason of subdivision or consolidation of shares of stock of any class, the
payment of any stock dividend or any other increase or decrease in the number
of shares of stock of any class or by reason of any dissolution, liquidation,
merger or consolidation or spin-off of assets or stock of another corporation,
and any issue by the Company of shares of any class, or securities convertible
into shares of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number of Shares subject to a Grant or the
Exercise Price of Shares subject to an Option. 

(h)          Grants
made pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business assets. 

(i)           Upon
the occurrence of a Change in Control: 

(i)           The
Committee as constituted immediately before the Change in Control may make such
adjustments as it, in its discretion, determines are necessary or appropriate
in light of the Change in Control (including, without limitation, the
substitution of stock other than shares of the Company as the stock optioned
hereunder, and the acceleration of the exercisability or vesting of awards
granted under the Plan, cancellation of any Options or stock appreciation
rights in return for payment equal to the Fair Market Value of Shares subject
to an Option or stock appreciation right as of the date of the Change in
Control less the Exercise Price applicable thereto (which amount may be zero)
and settling of each vested Phantom Share or, as applicable, other Grant under
Section 11 (in each case whether or not vested)), if any, provided  that
the Committee determines that such adjustments do not have a substantial
adverse economic impact on the Director as determined at the time of the
adjustments. 

(ii)          Notwithstanding
the provisions of Section 9, the Settlement Date for Phantom Shares shall be
the date of such Change in Control and all amounts due with respect to Phantom
Shares to a Director hereunder shall be paid as soon as practicable (but in no
event more than 30 days) after such Change in Control, unless such Director
elects otherwise in accordance with procedures established by the Committee. 

15.       EFFECT OF
CERTAIN TRANSACTIONS. In the case of (i) the dissolution or liquidation of
the Company, (ii) a merger, consolidation, reorganization or other business
combination in which the Company is acquired by another entity or in which the
Company is not the surviving entity, or (iii) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions contemplated or
arranged by any party as a single plan) of all or substantially all of the
assets of the Company, the Plan and the Grants issued hereunder shall terminate
upon the effectiveness of any such transaction or event, unless provision is
made in connection with such transaction for the assumption of Grants
theretofore granted, or the substitution for such Grants of new Grants, by the
successor entity or parent thereof, with appropriate adjustment as to the
number and kind of shares and the per share exercise prices, as provided in
Section 14. In the event of such termination, all outstanding Options and
Grants shall be exercisable to the extent then vested (taking into account any
accelerated vesting provided by the Committee) for at least ten days prior to
the date of such termination. 

16.       SECURITIES LAW
REQUIREMENTS.  

17

 

 

 

(a)          Legality of Issuance. The issuance of any
Shares pursuant to Grants under the Plan and the issuance of any Grant shall be
contingent upon the following: 

(i)           the
obligation of the Company to sell Shares with respect to Grants issued under
the Plan shall be subject to all applicable laws, rules and regulations,
including all applicable federal and state securities laws, and the obtaining
of all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee; 

(ii)          the
Committee may make such changes to the Plan as may be necessary or appropriate
to comply with the rules and regulations of any government authority or to
obtain tax benefits applicable to stock options; and 

(iii)         each
grant of Options, Restricted Shares, Phantom Shares (or issuance of Shares in
respect thereof), DERs (or issuance of Shares in respect thereof), or other
Grant under Section 11 (or issuance of Shares in respect thereof), is subject
to the requirement that, if at any time the Committee determines, in its
discretion, that the listing, registration or qualification of Shares issuable
pursuant to the Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the
issuance of Options, Restricted Shares, Phantom Shares, DERs, other Grants or
other Shares, no payment shall be made, or Phantom Shares or Shares issued or
grant of Restricted Shares or other Grant made, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions in a manner acceptable to the Committee. 

(b)          Restrictions
on Transfer. Regardless of whether the offering and sale of Shares under the
Plan has been registered under the Act or has been registered or qualified
under the securities laws of any state, the Company may impose restrictions on
the sale, pledge or other transfer of such Shares (including the placement of
appropriate legends on share certificates) if, in the judgment of the Company
and its counsel, such restrictions are necessary or desirable in order to
achieve compliance with the provisions of the Act, the securities laws of any
state or any other law. In the event that the sale of Shares under the Plan is
not registered under the Act but an exemption is available which requires an
investment representation or other representation, each Director shall be
required to represent that such Shares are being acquired for investment, and
not with a view to the sale or distribution thereof, and to make such other
representations as are deemed necessary or appropriate by the Company and its
counsel. Any determination by the Company and its counsel in connection with
any of the matters set forth in this Section 16 shall be conclusive and binding
on all persons. Without limiting the generality of Section 6, share certificates
evidencing Shares acquired under the Plan pursuant to an unregistered
transaction shall bear a restrictive legend, substantially in the following
form, and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law: 

"THE
SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT"). ANY TRANSFER OF SUCH SECURITIES
WILL BE INVALID UNLESS A REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS
TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH REGISTRATION
IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY WITH THE ACT." 

(c)          Registration
or Qualification of Securities. The Company may, but shall not be obligated to,
register or qualify the issuance of Grants and/or the sale of Shares under the
Act or any other applicable law. The Company shall not be obligated to take any
affirmative action in order to cause the issuance of Grants or the sale of
Shares under the Plan to comply with any law. 

18

 

 

 

(d)          Exchange of Certificates. If, in the
opinion of the Company and its counsel, any legend placed on a share certificate
representing Shares sold under the Plan is no longer required, the holder of
such certificate shall, with the permission of the Committee, be entitled to
exchange such certificate for a certificate representing the same number of Shares
but lacking such legend.

(e)          Certain
Loans. Notwithstanding any other provision of the Plan, the Company and the
Series shall not be required to take or permit any action under the Plan or any
Award Agreement which, in the good-faith determination of the Company, would
result in a material risk of a violation by the Company of Section 13(k) of the
Exchange Act. 

17.       COMPLIANCE
WITH SECTION 409A OF THE CODE.  

(a)          Any
Award Agreement issued under the Plan that is subject to Section 409A of the
Code shall include such additional terms and conditions as may be required to
satisfy the requirements of Section 409A of the Code. 

(b)          Notwithstanding
any other provision of the Plan, the Board and the Committee shall administer
the Plan, and exercise authority and discretion under the Plan, to satisfy the
requirements of Section 409A of the Code or any exemption thereto. Nothing
contained herein is intended to provide assurances or an indemnity to any Director
regarding his personal tax treatment. 

(c)          Notwithstanding
anything in the Plan or in any Award Agreement to the contrary, to the extent
that any amount or benefit that would constitute non-exempt "deferred
compensation" for purposes of Section 409A of the Code would otherwise be
payable or distributable, or a different form of payment (e.g., lump sum
or installment) would be effected, under the Plan or any Award Agreement by
reason of the occurrence of a Termination of Service, such amount or benefit
will not be payable or distributable to the Director, and/or such different
form of payment will not be effected, by reason of such circumstance unless the
circumstances giving rise to such Termination of Service meets the description
or definition of "separation from service" in Section 409A of the
Code.  This provision does not prohibit the vesting of any Award upon a
Termination of Service, however defined. If this provision prevents the payment
or distribution of any amount or benefit, or the application of a different
form of payment of any amount or benefit, such payment or distribution shall be
made at the time and in the form that would have applied absent the Termination
of Service. 

   (d)        Notwithstanding
anything in the Plan or in any Award Agreement to the contrary, if any amount
or benefit that would constitute non-exempt "deferred compensation"
for purposes of Section 409A would otherwise be payable or distributable under
this Plan or any Award Agreement by reason of a Termination of Service during a
period in which the Director is a "specified employee" (as defined in
Section 409A of the Code), then, subject to any permissible acceleration of
payment by the Committee under Treas. Reg. Section 1.409A-3(j)(4)(ii) (domestic
relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi) (payment
of employment taxes):  (i) the amount of such non-exempt deferred compensation
that would otherwise be payable during the six-month period immediately
following the Termination of Service will be accumulated through and paid or
provided on the first day of the seventh month following the Termination of
Service (or, if the Director dies during such period, within 30 days after the
Director's death); and (ii) the normal payment or distribution schedule for any
remaining payments or distributions will resume at the end of such delay
period. 

   (e)        If,
pursuant to an Award, a Director is entitled to a series of installment
payments, such Director's right to the "series of installment payments"
(as described in Treas. Reg. Section 1.409A-2(b)(2)(iii)) shall be treated as a
right to a series of separate payments and not to a single payment. 

19

 

 

 

 

18.       AMENDMENT OF
THE PLAN.  The Board may from time to time, with respect to any Shares at
the time not subject to Grants, suspend or discontinue the Plan or revise or
amend it in any respect whatsoever, taking into account applicable laws,
regulations, exchange and accounting rules. The Board may otherwise amend the
Plan as it shall deem advisable, except that no amendment may materially impair
the rights of a Director under an award previously granted without the Director's
consent, unless effected to comply with applicable law or regulation or to meet
the requirements of any accounting standard or to correct an administrative
error. 

19.       APPLICATION OF
FUNDS. The proceeds received by the Company from the sale of Common Shares pursuant
to the exercise of an Option, the sale of Restricted Shares or in connection
with other Grants under the Plan will be used for general corporate purposes. 

20.       TAX WITHHOLDING.
Each Director shall, no later than the date as of which the value of any Grant
first becomes includable in the gross income of the Director for federal income
tax purposes, pay to the Company and/or the applicable Series, or make
arrangements satisfactory to the Company regarding payment of any federal,
state or local taxes of any kind that are required by law to be withheld with
respect to such income. To the extent permitted by the Committee from time to
time, a Director may elect to have such tax withholding satisfied, in whole or
in part, by (i) authorizing the Company and/or the applicable Series to
withhold a number of Shares to be issued pursuant to a Grant equal to the Fair
Market Value thereof as of the date withholding is effected that would satisfy
the withholding amount due or (ii) transferring to the Company and/or the
applicable Series Shares owned by the Director with a Fair Market Value equal
to the amount of the required withholding tax. Notwithstanding anything
contained in the Plan to the contrary, the Director's satisfaction of any
tax-withholding requirements imposed by the Committee shall be a condition
precedent to the Company's and/or the applicable Series' obligation as may otherwise
by provided hereunder to provide Shares to the Director, and the failure of the
Director to satisfy such requirements with respect to a Grant shall cause such
Grant to be forfeited. 

21.       NOTICES.
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Board or mailed to its principal office, addressed to the
attention of the Board; and if to the Director, shall be delivered personally
or mailed to the Director at the address appearing in the records of the Company.
Such addresses may be changed at any time by written notice to the other party
given in accordance with this Section 21.

22.       RIGHTS TO
EMPLOYMENT OR OTHER SERVICE. Nothing in the Plan or in any Grant issued
pursuant to the Plan shall confer on any individual any right to continue in
the service of the Company or a Series or interfere in any way with the right
of the Company, the Series and the members of the Company to terminate the
individual's service at any time. 

23.       EXCULPATION
AND INDEMNIFICATION. To the maximum extent permitted by law, the Company
and the Series shall indemnify and hold harmless the members of the Board and
the members of the Committee, in each case as constituted from time to time,
from and against any and all liabilities, costs and expenses incurred by such
persons as a result of any act or omission to act in connection with the
performance of such person's duties, responsibilities and obligations under the
Plan, other than such liabilities, costs and expenses as may result from the
gross negligence, bad faith, willful misconduct or criminal acts of such
persons. 

24.       NO FUND
CREATED. Any and all payments hereunder to any Director under the Plan
shall be made from the general funds of the applicable Series, no special or
separate fund shall be established or other segregation of assets made to
assure such payments, and the Phantom Shares (including for purposes
of this Section 24 any accounts established to facilitate the implementation of
Section 9(d)(iii)) and any other similar devices issued hereunder to account
for Plan obligations do not constitute Common Shares and shall not be treated
as (or as giving rise to) property or as a trust fund of any kind; provided,
however, that the Company may establish a mere bookkeeping reserve to
meet its or the Series' obligations hereunder or a trust or other funding
vehicle that would not cause the Plan to be deemed to be funded for tax
purposes or for purposes of Title I of the Employee Retirement Income Security
Act of 1974, as amended. The obligations of the Company and the Series under
the Plan are unsecured and constitute a mere promise by the Company and the
Series to make benefit payments in the future and, to the extent that any
person acquires a right to receive payments under the Plan from the Company or
a Series, such right shall be no greater than the right of a general unsecured
creditor of the Company or such Series. Without limiting the foregoing, Phantom
Shares and any other similar devices issued hereunder to account for Plan
obligations are solely a device for the measurement and determination of the
amounts to be paid to a Director under the Plan, and each Director's right in
the Phantom Shares and any such other devices is limited to the right to
receive payment, if any, as may herein be provided. 

20

 

 

 

25.       NO FIDUCIARY
RELATIONSHIP. Nothing contained in the Plan (including without limitation
Section 9(e)(iii)), and no action taken pursuant to the provisions of the Plan,
shall create or shall be construed to create a trust of any kind, or a
fiduciary relationship between the Company, the Series, or the officers of the
Company and/or associated with a Series or the Committee, on the one hand, and
the Director, the Company, the Series or any other person or entity, on the
other. 

26.       CAPTIONS.
The use of captions in the Plan is for convenience. The captions are not
intended to provide substantive rights. 

27.       GOVERNING LAW.
THE PLAN SHALL BE GOVERNED BY THE LAWS OF DELAWARE, WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICT OF LAWS. 

28.     REGIONAL
VARIATION. The Committee reserves the right to authorize the establishment
of, and to grant Awards pursuant to, annexes, sub-plans or other supplementary
documentation as the Committee deems appropriate in light of local law, rules
and customs.

29.     INVALIDITY OF
PROVISIONS. If any provision of the Plan is or becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not be affected thereby. 

21

 

 

 

EXHIBIT A

PERFORMANCE CRITERIA

Performance
Based Grants may be payable upon the attainment of objective performance goals
that are established by the Committee and relate to one or more Performance
Criteria, in each case on specified date or over any period, up to 10 years, as
determined by the Committee. Performance Criteria may be based on the
achievement of the specified levels of performance under one or more of the
measures set out below relative to the performance of one or more other
corporations or indices. 

"Performance
Criteria" means the following business criteria (or any combination
thereof) with respect to one or more of the Company, any Series or any division
or operating unit thereof: 

 i)          
pre-tax income, 

ii)          
after-tax income, 

iii)          net income (meaning net income as
reflected in the Company's or the Series' financial reports for the applicable
period, on an aggregate, diluted and/or per share basis, or economic net
income), 

iv)
         operating income or profit, 

v)           cash flow, free cash flow, cash flow
return on investment (discounted or otherwise), net cash provided by
operations, or cash flow in excess of cost of capital, 

vi)
         earnings per share (basic or diluted), 

vii)
        return on equity, 

viii)
       returns on sales or revenues, 

ix)
         return on invested capital or assets (gross or net), 

x)           cash,
funds or earnings available for distribution, 

xi)
         appreciation in the fair market value of the Common Shares of a Series,

xii)
        operating expenses, 

xiii)
       implementation or completion of critical projects or processes, 

xiv)
       return on investment,

xv)         total return to shareholders associated
with a Series (meaning the aggregate Common Share price appreciation and
dividends paid (assuming full reinvestment of dividends) during the applicable
period), 

xvi)        net earnings growth, 

xvii)       stock appreciation (meaning an increase in
the price or value of the Common Shares of a Series after the date of grant of
an award and during the applicable period), 

22

 

 

 

xviii)      related return
ratios, 

xix)        increase in revenues, 

xx)                     the Company's or a Series' published
ranking against its peer group of real estate investment trusts based on total shareholder
return, 

xxi)        net earnings, 

xxii)       changes (or the absence of changes) in the
per share or aggregate market price of the Common Shares of a Series, 

xxiii)      number of securities sold, 

xxiv)      earnings before or after any one or more of
the following items: interest, taxes, depreciation or amortization, as
reflected in the Company's or a Series' financial reports for the applicable period,

xxv)       total revenue growth (meaning the increase
in total revenues after the date of grant of an award and during the applicable
period, as reflected in the Company's or a Series' financial reports for the
applicable period), 

xxvi)       economic value created,

xxvii)     operating margin or profit margin, 

xxviii)    cost targets, reductions and savings,
productivity and efficiencies, 

xxix)      strategic business criteria, consisting of
one or more objectives based on meeting objectively determinable specified
market penetration, geographic business expansion, investor satisfaction,
employee satisfaction, human resources management, supervision of litigation,
information technology, and goals relating to acquisitions, divestitures, joint
ventures and similar transactions, and budget comparisons, 

xxx)                   objectively determinable
personal professional objectives, including any of the foregoing performance
goals, the implementation of policies and plans, the negotiation of
transactions, the development of long term business goals, formation of joint
ventures, research or development collaborations, and the completion of other
corporate transactions, and 

xxxi)      any combination of, or a specified increase
or improvement in, any of the foregoing. 

 Where
applicable, the Performance Goals may be expressed in terms of attaining a
specified level of the particular criteria or the attainment of a percentage
increase or decrease in the particular criteria, and may be applied to one or
more of the Company, a Series, or a division or operating unit thereof, or may
be applied to the performance of the Company or a Series relative to a market
index, a group of other companies or a combination thereof, all as determined
by the Committee. 

The
Performance Goals may include a threshold level of performance below which no
payment shall be made (or no vesting shall occur), levels of performance at
which specified payments shall be made (or specified
vesting shall occur), and a maximum level of performance above which no
additional payment shall be made (or at which full vesting shall occur). 

23

 

 

 

Except
as otherwise expressly provided, all financial terms are used as defined under U.S.
Generally Accepted Accounting Principles ("GAAP") and all
determinations shall be made in accordance with GAAP, as applied by the Company
in the preparation of its periodic reports to shareholders. 

Unless
the Committee provides otherwise at the time of establishing the performance
goals, for each fiscal year of the Company or a Series, the Committee shall have
the authority to make equitable adjustments to the Performance Goals in
recognition of unusual or non-recurring events affecting the Company or a
Series or the financial statements of the Company or such Series and may
provide for objectively determinable adjustments, as determined in accordance
with GAAP, to any of the Performance Criteria described above for one or more
of the items of gain, loss, profit or expense: (A) determined to be
extraordinary or unusual in nature or infrequent in occurrence, (B) related to
the disposal of a segment of a business, (C) related to a change in accounting
principle under GAAP or a change in applicable laws or regulations, (D) related
to discontinued operations that do not qualify as a segment of a business under
GAAP, and (E) attributable to the business operations of any entity acquired by
the Company or a Series during the fiscal year. 

  

24

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