Document:

EX-10.12 MANAGEMENT & LEASING AGREEMENT

 

Exhibit
10.12

OLMOS CREEK SHOPPING CENTER

MANAGEMENT AND LEASING AGREEMENT

     This Shopping Center Management and Leasing Agreement (hereinafter the “Agreement”),
entered into as of the 26 day of January, 2007, by and between AmREIT Olmos Creek, LP, a Texas
limited partnership (hereinafter “Owner”) and AmREIT Realty Investment Corporation, a Texas
corporation (hereinafter “Agent”);

W I T N E S S E T H:

     WHEREAS, Owner has purchased the certain tract or parcel of land more particularly described
on Exhibit “A” attached hereto and incorporated herein by reference (the “Property”) which
Property has been developed as a retail shopping center (hereinafter “Shopping Center”), and
desires to enter into this Agreement for the purpose of delegating to Agent any or all of the
powers and authority of Owner in any way relating to (i) the management and operation of the
Shopping Center and (ii) the leasing of any and all space within the Shopping Center (all of the
aforementioned being collectively called “Duties”).

     NOW, THEREFORE, for the consideration and mutual covenants specified herein, Owner hereby
retains and employs Agent for the purpose of performing the Duties, and Agent accepts the
employment and agrees to perform the Duties, upon the terms hereinafter set forth:

ARTICLE I

AGENCY

     Section 1.01 Delegation of Authority. Owner hereby grants and delegates to Agent all
of the authority, powers and duties of the Owner specified herein. It is the express intent of
this Agreement that Agent is to have the full powers, authority and obligations of Owner in
managing and leasing the Shopping Center pursuant to the terms and conditions of this Agreement.
The foregoing notwithstanding, the parties agree that Agent shall obtain the written approval of
Owner to each lease (and the re-negotiation of any lease) for premises in the Shopping Center
prior to executing the Lease on behalf of Owner.

     Section 1.02 Contracts with Other Entities. Agent is hereby authorized to contract
with and employ the services of various entities and service providers, at Agent’s sole
discretion, to assist Agent in the performance of the Duties and other services in connection with
the operation and management of the Shopping Center, the charges and costs for of which shall be
included, and no greater than, the amounts to be paid by Owner to Agent as provided below.

1

 

ARTICLE II

DUTIES

     Owner hereby grants and delegates to Agent the authority and power to manage and lease the
Shopping Center, including without limitation Agent’s authority and power on behalf of Owner to
perform the same, including, without limitation, the following:

     (a) Repairs: To cause to be paid by Owner all costs and expenses from the
operation of the shopping center (i) to maintain, or cause to be maintained, the Shopping
Center and common areas thereof to the same extent the Owner is required to do same; (ii)
to make, or cause to be made and supervised, repairs and minor operations required for the
installation of tenants; (iii) to purchase supplies required for the operation and
maintenance of the Shopping Center after prior approval by Owner, and (iv) to cause all
repairs and/or emergency repairs if, in the opinion of Agent, such repairs are necessary to
protect the Shopping Center or any part thereof from damage or to maintain services of the
tenants as called for by their lease agreements. Owner empowers Agent to authorize
emergency repairs without prior consent by Owner.

     (b) Employees: All persons so selected and employed as a result of this
Agreement by Agent shall be deemed to be employees of Agent and as such shall be covered by
Agent’s worker’s compensation insurance. Owner shall have the right to request proof of
insurance at Owner’s discretion.

     (c) Service Contracts: To enter into contracts, subject to prior approval by
Owner, for any service that Agent shall deem advisable for the successful performance of the
duties hereunder, provided that any costs and expenses required to be paid shall be paid or
caused to be paid directly to such service provider by Owner.

     (d) Miscellaneous Powers: To exercise any other powers, duties and authority
which Agent deems to be incidental and necessary for the successful completion of the Duties
as contemplated by this Agreement.

     (e) Covenants: Agent covenants to use due diligence and care in the exercise
the power and duties conferred upon and assumed by Agent in this Article II hereof.

     (f) Direct Payment by Owner: Notwithstanding anything contained herein to the
contrary, Owner shall be directly liable for all costs and expenses for utilities,
maintenance, repair, taxes and insurance of the Shopping Center, which shall all be invoiced
to Owner directly by such service providers, taxing authorities and insurance companies,
respectively.

2

 

ARTICLE III

COMPENSATION

     Section 3.01 Leasing Fee. When Agent is the only real estate agent responsible for
causing a tenant to execute a lease for space in the Shopping Center, Owner shall pay to Agent as
compensation for the leasing services rendered under this Agreement, an amount equal to four
percent (4%) of the total rent payable under the lease (the “Leasing Fee”). (For the purposes of
this Section 3.01, the term “total rent payable under the lease” shall mean only the rent payable
under the lease and shall not include additional charges such as common area maintenance charges,
tax charges, insurance charges or other charges generally know as additional rent.) When there is
another real estate agent who represents a tenant and together with the Agent is responsible for
causing a tenant to execute a lease for space in the Shopping Center, Owner shall pay to Agent a
Leasing Fee of six percent (6%), and Agent shall be responsible for compensating the other agent.
Agent shall be paid a Leasing Fee of two percent (2%) or an amount equal to $2.00 per square foot
of the tenant’s space, whichever is greater, when an existing tenant renews its lease. Existing
tenant’s lease negotiations shall be handled by Owner.

     Section 3.02 Management Fee. The Owner shall pay to Agent as compensation for the
management services rendered under this Agreement the greater of $500.00 or 4% of all rents,
expense reimbursements and miscellaneous revenues. The Owner shall also pay to Agent as
compensation for the management services rendered under this Agreement a fee equal to 15% of
common area maintenances charges. The Management Fee is earned monthly and is due not later than
fifteen (15) days following the end of the month. A vacancy in the Property or failure by a tenant
to pay rent does not excuse payment of the minimum Management Fee.

ARTICLE IV

TERM AND TERMINATION

     Section 4.01 Term. The Term of this Agreement shall commence on the date Owner
acquires title to the Property and continue for one (1) month hereafter, unless terminated as
hereinafter specified or by operation of law (herein referred to as the “Term of this Agreement”).
Upon the completion of the Term of this Agreement, the Agreement shall continue in full force and
effect on a month to month basis. In the event either party chooses to terminate this Agreement
after the completion of the Term of this Agreement, such party must first issue written notice of
such termination to the other party at least thirty (30) days prior to the date upon which the
terminating party designates as the date this Agreement shall terminate. In the event the
terminating party issues the aforesaid notice to the other party, this Agreement shall terminate
on the date which is designated in the aforesaid notice.

3

 

     Section 4.02 Termination by Agent. Notwithstanding anything to the contrary contained
herein, Agent shall hereafter have the right to terminate this Agreement at a time chosen by Agent
in its sole discretion. In the event Agent chooses to terminate this Agreement, Agent must first
issue written notice of such termination to Owner at least thirty (30) days prior to the date upon
which Agent designates as the date this Agreement shall terminate. In the event Agent issues the
aforesaid notice to Owner, this Agreement shall terminate on the date which is designated by Agent
in the aforesaid notice to Owner.

     Section 4.03 Termination by Owner. Owner may terminate this Agreement for “Reasonable
Cause”, as defined in Section 4.04 hereof, but only after first issuing written notice to Agent
describing the acts (or failure to act) by Agent which Owner deems to be the Reasonable Cause for
termination, which written notice shall stipulate that Agent shall have thirty (30) consecutive
days after receipt of said notice to commence to cure and thereafter diligently proceed to
substantially cure the Reasonable Cause for termination set forth in said written notice to Agent.
If Agent fails to commence to cure the matter referred to as the Reasonable Cause within said
thirty (30) day period, then upon Owner’s issuance of written notice to Agent after the expiration
of said thirty (30) day period, this Agreement shall terminate, become null and void and of no
further force and effect. In such case Owner will select or designate a new Agent hereunder, which
designation shall be in the sole discretion of Owner.

     Section 4.04 Reasonable Cause. For purposes of this Agreement, “Reasonable Cause” is
hereby defined as Agent’s failure to reasonably perform its duties and obligations in accordance
with the terms and provisions of this Agreement, after Agent has actual notice that it has failed
to reasonably perform any of said duties and obligations, or in the event Agent is adjudicated
bankrupt or insolvent.

     Section 4.05 Orderly Transition. In the event this Agreement is terminated by either
party, Agent covenants and agrees to act in good faith in making an orderly transition to its
successor agent of the duties performed hereunder; provided, however, that Agent shall not be
obligated to incur and costs in connection with such transition. In connection with this
transaction, Agent further covenants and agrees to provide Owner with any and all documents and
records maintained by Agent during the term of this Agreement incidental to the performance of its
duties hereunder.

     Section 4.06 Continuing Obligation by Owner. Upon any such termination of this
Agreement as herein above provided, the obligations of Agent to Owner shall likewise terminate
upon the effective date of such termination; provided, however, that Owner shall remain obligated
to pay Agent all fees earned by Agent up to and inclusive of the date of such termination,
including without limitation, the Leasing Fee which is to be paid for rents collected subsequent
to the date this Agreement is terminated.

4

 

ARTICLE V

ASSIGNMENT

     This Agreement or any of the rights of the parties hereto shall not be assigned to any third
parties unless said assignment is agreed to in writing between all of the parties hereto.

ARTICLE VI

INDEMNIFICATION

     Agent shall not be liable to Owner or to Owner’s partners, officer, directors, employees,
agents, contractors, vendors, suppliers, invitees licensees for any damage to property or personal
injury, including death, caused by any act, omission, or neglect of Agent or any of Agent’s
officers, directors, or employees (“Agent Parties”) and Owner agrees to release, defend, indemnify
and forever hold harmless Agent and the Agent Parties from and against all claims for damage.
Owner further agrees to release, defend, indemnify and forever hold harmless Agent and the Agent
Parties from and against all loss, damage, claim, or expense (including attorneys’ fees) arising
out of or in any way connected with the management and operation of the Shopping Center except to
the extent that such loss, damage claim or expense results from the gross negligence or willful
misconduct of Agent or any of the Agent Parties. Agent shall grant same indemnity clause to Owner.

ARTICLE VII

GENERAL

     Section 7.01 Notices. All notices to be sent shall be sent to the parties at the
addresses shown under their names on the signature pages hereof. By giving to the other parties at
least ten (10) days written notice thereof, the parties hereto and their respective successors and
assigns shall have the right from time to time and at any time during the term of this Agreement
to change their respective addresses, and each shall have the right to specify as its address any
other address within the United States of America.

     Section
7.02 Governing Laws. This Agreement and the obligations of the parties
hereunder shall be interpreted, construed, and enforced in accordance with the laws of the State
of Texas.

     Section 7.03 Entire Agreement. This Agreement contains the entire agreement between
the parties hereto relative to the management, leasing and development of the Shopping Center. No
variations, modifications or changes herein or hereof shall be binding upon any party hereto
unless set forth in a document duly executed by or on behalf of such party.

5

 

     Section 7.04 Waiver. No consent or waiver, express or implied, by either party, to or
of any breach or default by the others in the performance by the other of its obligations hereunder
shall be deemed or construed to be a consent or waiver, to or of any other breach or default in the
performance by such other party of such other breach or default or any other obligations of any
party hereunder. Failure on the part of any party to complain of any act or failure to act of any
of the other parties or to declare the other parties in default, irrespective of how long such
failure continues, shall not constitute a waiver of such party of its rights hereunder.

     Section 7.05 Severability. If any provision of this Agreement or the application
thereof to any person or circumstance shall be invalid or unenforceable to any extent, the
remainder of this Agreement and the application of such provisions to other persons or
circumstances shall not be affected thereby and shall be enforced to the greatest extent permitted
by law.

     IN WITNESS WHEREOF, the parties hereto have affixed their respective signatures hereto, as of
the date first written above.

	 	 	 	 	 	 	 
	 	 	OWNER	 	 
	 
	 	 	 	 	 	 
	 	 	AmREIT OLMOS CREEK, LP, 
	 	 	a Texas limited partnership
	 
	 	 	 	 	 	 
	 	 	By:	 	AmREIT Olmos Creek
GP, Inc., its general partner
	 	 	 	 	a Texas limited liability company
	 
	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Brett Treadwell
	 

	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Brett Treadwell
	 

	 	 	 	Title:
	 	Vice President

	 	 	 	 	 	 	 
	 	 	AGENT	 	 
	 
	 	 	 	 	 	 
	 	 	AmREIT Realty Investment Corporation, a Texas corporation
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Brett Treadwell	 	 
	 	 	 	 	 
	 

	 	Name:
	 	Brett Treadwell	 	 
	 

	 	Title:
	 	Vice President	 	 

6

 

EXHIBIT A

PROPERTY

TRACT I: Lot 1, Block 2, NCB 17842, OLMOS CREEK OFFICE PARK, City of San Antonio, Bexar County,
Texas, according to plat recorded in Volume 9506, Pages 103-105, Deed and Plat Records, Bexar
County, Texas.

TRACT II: Lot 2, Block 2, NCB 17842, OLMOS CREEK OFFICE PARK, City of San Antonio, Bexar County,
Texas, according to plat recorded in Volume 9506, Pages 103-105, Deed and Plat Records, Bexar
County, Texas.

TRACT III: Lot 7, Block 1, New City Block 17841, OLMOS CREEK BUSINESS PARK, UNIT 2, City of San
Antonio, Bexar County, Texas, together with easement rights in and to that 35’ General Access
Easement appurtenant thereto, both as shown on plat recorded in Volume 9537, Page 165, Deed and
Plat Records, Bexar County, Texas.

Olmas
Creek Center
San Antonio, Bexar County, Texas

A-1EX-10.13 MANAGEMENT & LEASING AGREEMENT

 

Exhibit
10.13

	 	 	 
	 

	 	Management and
	 

	 	Leasing Agreement
	 
	 	 
	 

	 	dated as of December 7, 2006
	 
	 	 
	 

	 	between
	 
	 	 
	 

	 	AMREIT SSPF PRESTON TOWNE CROSSING, LP,
	 
	 	 
	 

	 	Owner
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	AMREIT REALTY INVESTMENT CORPORATION,
	 
	 	 
	 

	 	Manager

 

 

	 	 	 	 	 	 	 	 	 
	Contents	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	MANAGEMENT AND LEASING AGREEMENT	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	1. 	 	 	 	Definitions and Interpretation

	 	 	1	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	1. 1. Interpretation

	 	 	5	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	1. 2 Accounting Terms and Determinations

	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	2. 	 	 	 	Appointment and General Provisions

	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.1. Appointment

	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.2. Management Duties and Authority

	 	 	6	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.3. Independent Contractor

	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.4. Licenses

	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.5. Cooperation

	 	 	7	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.6. Indemnification

	 	 	8	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.7. Sale and Financing

	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	2.8. Representatives

	 	 	9	 
	 	 	 	 	 
	 	 	 	 
	3. 	 	 	 	Management Obligations and Authority

	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.1. Property Management Generally

	 	 	10	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.2. Management Employees

	 	 	12	 
	 
	 	 	 	 	3.3. Rent Collection and Services with Respect to Leases

	 	 	13	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.4. Services with Respect to Contracts

	 	 	16	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.5. Services with Respect to Legal Requirements and Insurance Requirements

	 	 	18	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.6. Records and Reports

	 	 	19	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.7. Bank Accounts

	 	 	26	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.8. Payment of Expenses and Capital Expenditures

	 	 	28	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.9. Services with Respect to Financing

	 	 	30	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.10. Notification of Sale or Financing Transaction

	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.11. Inspections

	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	3.12. Limitation of Authority

	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	4. 	 	 	 	Services with Respect to Property Sales and Post Sale-Closing

	 	 	31	 
	 	 	 	 	 
	 	 	 	 
	5. 	 	 	 	Insurance

	 	 	32	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.1. Owner’s Insurance

	 	 	32	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	5.2. Manager’s Insurance

	 	 	34	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.3. Blanket Insurance

	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.4. Policies

	 	 	35	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.5. Payment of Premiums by Owner

	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.6. Claims

	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	5.7. Subrogation

	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	6.	 	 	Manager’s Compensation

	 	 	36	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.1. Management Fees

	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.2. Leasing Commissions and Expenses Generally

	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.3. Leasing Commissions on Approved Leases

	 	 	37	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.4. Leasing Commissions on Extensions and Renewals

	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.5. Definition of Base Rent

	 	 	39	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.6. Cooperating Brokers, Finders and Other Persons

	 	 	40	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.7. Leasing Commissions Payable After Termination

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.8. No Duplication

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	6.9. No Other Fees

	 	 	41	 
	 	 	 	 	 
	 	 	 	 
	 	7.	 	 	Term

	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	7.1. Term

	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	7.2. Extension

	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	7.3. Termination

	 	 	42	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	7.4. Determination of Fees

	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	8.	 	 	Miscellaneous

	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.1. Notices

	 	 	44	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.2. Representations and Warranties of Manager

	 	 	45	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.3. No Partnership, etc

	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.4. Severability

	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.5. Modification

	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.6. Successors and Assigns

	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.7. Limitation of Liability

	 	 	46	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.8. Governing Law/Consent to Jurisdiction/Waiver of Trial by Jury

	 	 	47	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.9. Confidentiality

	 	 	48	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.10. Counterparts

	 	 	49	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	8.11. Exclusive Benefit

	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	8.12. Attorney’s Fees

	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	 	 	 	 	813. Competing Properties

	 	 	49	 
	 	 	 	 	 
	 	 	 	 
	Exhibits	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	Description of the Land	 	Exhibit A

	Intentionally Omitted	 	Exhibit B

	Sample Budget Package	 	Exhibit C

	Intentionally Omitted	 	Exhibit D

	Property Management Procedures	 	Exhibit E

	Sample Reporting Package	 	Exhibit F

	UBTI Questionnaire	 	Exhibit G

 

 

MANAGEMENT AND LEASING AGREEMENT

     MANAGEMENT
AND LEASING AGREEMENT (this “Agreement”) dated as of December 7, 2006 by and
between AMREIT SSPF PRESTON TOWNE CROSSING, LP, a Delaware limited partnership, having an office
c/o J.P. Morgan Investment Management Inc., 245 Park Avenue, New
York, New York 10167 (“Owner”),
and AMREIT REALTY INVESTMENT CORPORATION, a Texas corporation having an office at 8 Greenway Plaza,
Suite 1000, Houston, Texas 77046 (“Manager”).

WITNESSETH:

     WHEREAS, Owner is owner of the Property (described herein) commonly known as Preston Towne
Crossing located at Preston Road and West Park Boulevard, Plano, Texas.

     WHEREAS, Owner desires to appoint Manager as an independent contractor to manage and lease
the Property, and Manager desires to accept such appointment, upon the terms, covenants,
conditions and provisions of this Agreement.

     NOW, THEREFORE, in consideration of the premises, mutual covenants and agreements set forth
in this Agreement and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, and intending to be legally bound hereby, Owner and Manager hereby
covenant and agree as follows:

	1.	 	Definitions and Interpretation

     In this Agreement, unless otherwise specified, the following terms have the following
meanings:

“Affiliate” means with respect to any Person, any relative of the Person in question, if such
Person is an individual, or any other Person directly or indirectly controlled by, controlling or
under common control with the Person in question, or any Person who owns, directly or indirectly,
ten percent (10%) or more of the equity interest of the Person in question. For the purposes of
this definition, “control” when used with respect to any specified Person means the power to
direct the management and policies of that Person, directly or indirectly, whether through the
ownership of voting securities or other beneficial interest, by contract or otherwise; and the
terms “controlling” and “controlled” have the meanings correlative to the foregoing.

“Agreement” is defined in the Preamble.

“Approved Leasing Program” is defined in subsection 3.3(a).

“Auditor” is defined in subsection 3.6(k).

“Base Rent” is defined in Section 6.5.

 

 

“Budget” is defined in subsection 3.6(d).

“Business Day” means any day other than Saturday, Sunday or any other day on which banks or
savings and loans associations in New York, New York and Houston, Texas, are not open for
business.

“Capital Event” means any sale, Financing, Casualty or Condemnation that occurs during the Term
hereof with respect to which net capital proceeds are received by Owner.

“Capital Expenditures” means capital expenditures as determined under GAAP, except to the extent
otherwise set forth in this Agreement. Capital Expenditures will be reported on the cash basis of
accounting. Capital Expenditures shall include tenant improvements, building improvements, and
capitalizable costs related to executed Leases, including Leasing Commissions and legal fees.

“Cash Flow” means, for any period, Gross Revenue collected less Operating Expenses, Debt Service,
and Capital Expenditures paid during each period.

“Casualty” means any damage to, or destruction of the Property or any part thereof from a fire or
other casualty.

“Concentration Account” is defined in subsection 3.7(a).

“Condemnation” means any condemnation or other taking or temporary or permanent requisition of the
Property, any part thereof, any interest therein or any right appurtenant thereto, or any change of
grade affecting the Property, as the result of the exercise of any right of condemnation or eminent
domain. A conveyance in lieu or in anticipation of condemnation shall be deemed to be a
Condemnation.

“Contracts” means the agreements, contracts, documents and obligations (other than the Leases) now
or hereafter in effect and relating to the Property.

“Controlled Disbursement Account” is defined in subsection 3.7(a).

“Damages” is defined in subsection 2.6(a).

“Debt Service” means all sums payable under any Financing, including, without limitation, Interest
Expense.

“Default” means any condition or event which with the giving of notice or the lapse of time after
notice would, unless cured or waived, become an Event of Default.

“Depository” is defined in subsection 3.7(a).

“Event of Default” is defined in subsection 7.3(b).

“Financing” means any financing or refinancing by debt, sale and leaseback or other form of
financing with respect to the Property or any debt or other similar monetary obligation of
Owner.

2

 

“Financing Documents” means all agreements, instruments, certificates and documents evidencing,
securing or otherwise relating to any Financing.

“Fiscal Year” means a calendar year or other period as defined by Owner, except that the first
Fiscal Year shall commence on the date hereof and end on the next succeeding December 31, and the
last Fiscal Year shall commence on the January 1st immediately preceding the date this Agreement
expires or terminates and shall end on such expiration or termination date.

“GAAP” means generally accepted accounting principles, consistently applied.

“Gross Receipts” is defined in subsection 6.1(c).

“Gross Revenues” means, for any period of reference, the gross revenues of any kind whatsoever
derived on an accrual basis of accounting, as applicable, from or in respect of the Property,
including, without limitation, all income and revenue derived from all sources whatsoever as a
result of the operation of the Property, all rents and other moneys due from tenants or licensees
as billed in accordance with the Leases, including percentage and overage rents, operating expense
pass-throughs, real estate taxes and common area maintenance charges, all refunds, rebates and
recoveries of items, if any, previously charged as deductions from gross revenue, but excluding
any proceeds of any Capital Event relating to the Property or any personal property (other than
rent loss insurance under the property, casualty or boiler policies which shall be included).

“Improvements” means the buildings, structures and other improvements now or hereafter located on
the Land.

“Initial Term” is defined in Section 7.1.

“Insurance Requirements” means all terms of any insurance policy covering or applicable to the
Property, all requirements of the issuer of any such policy and all orders, rules, regulations and
requirements of the National Board of Fire Underwriters (or any other body exercising similar
functions) now or hereafter applicable to the Property, any adjoining vaults, sidewalks, streets
or way, or any use or condition of any thereof.

“Interest Expense” means all interest payments due under any Financing.

“JPMIM” means J.P. Morgan Investment Management Inc. and any successor thereto by merger,
consolidation or in connection with the sale of all or substantially all of its assets.

“Land” means the parcel or parcels of land described in Exhibit A, located in the County of
Collin and State of Texas.

“Leases” means all leases, subleases, licenses, franchises, concessions and other occupancy
agreements now or hereafter in effect and relating to the Property, including all renewals,
extensions, amendments and other modifications thereof and all guarantees of the obligations

3

 

of the Tenants thereunder.

“Leasing Budget” is defined in subsection 3.6(d).

“Leasing Commissions” is defined in Section 6.2.

“Legal Requirements” means all Permits, laws, codes, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, directions and requirements of, and agreements with, governmental
bodies, agencies or officials, now or hereafter applicable to the Property, and adjoining vaults,
sidewalks, streets or right of ways or any use or condition of any thereof, including, but not
limited to all applicable environmental laws.

“Lien” means (a) any mortgage, deed of trust, deed to secure debt, lien, pledge, charge, security
interest or other encumbrance with respect to the Property (including any installment sale,
conditional sale or other title retention agreement); and (b) any easement, right of way,
servitude, reservation, restriction, possibility of reverter, license agreement, option, cloud,
claim, defect, or other title exception with respect to the Property.

“Lock Box” is defined in subsection 3.7(a).

“Lock Box Account” is defined in subsection 3.7(a).

“Management Fee” is defined in subsection 6.1(a).

“Manager” is defined in the Preamble.

“Manager Indemnified Party” is defined in subsection 2.6(b).

“Modified Accrual Basis” is defined in subsection 3.6(h).

“Morgan” means JPMorgan Chase Bank, N.A., and its successors by merger, consolidation, or in
connection with the sale of all or substantially all of its assets, as trustee, agent or
investment advisor/manager of various collective investment funds, employee benefit plans
foundations, separate accounts, endowments or other investors.

“Non-Discretionary Items” means all real estate taxes, insurance premiums and utilities relating
to the Property.

“Notice” is defined in Section 8.1.

“Operating Expenses” means, for any period, all accrual based expenses exclusive of Interest
Expense, if applicable, and Capital Expenditures incurred with respect to the Property in
accordance with the terms of this Agreement.

“Owner” is defined in the Preamble.

“Owner’s Account” is defined in subsection 3.7(b).

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“Owner Indemnified Party” is defined in subsection 2.6(a).

“Permits” means all licenses, authorizations, certificates, variances, consents, approvals and
other permits now or hereafter relating to the Property or the use, operation, management or
leasing thereof.

“Person” means any individual, corporation, partnership, limited liability company, association,
trust or other entity or organization, including a government or political subdivision or agency
or instrumentality thereof.

“Property” means the Land and the Improvements, and their respective appurtenances, commonly known
as Preston Towne Crossing.

“Restoration” means the protection of the Property after any Casualty or Condemnation and the
restoration, repair, replacement, rebuilding or demolition of the Property after such Casualty or
Condemnation to the extent decided by Owner.

“Security Deposit Account” is defined in subsection 3.7(a).

“Standard Lease Form” means the form of lease pursuant to which any portion of the Property shall
be leased, which shall be attached to the Approved Leasing Program and approved by Owner.

“Tenants” means the tenants, subtenants, licensees, franchisees, concessionaires and other
occupants under the Leases.

“Term” means, unless this Agreement is sooner terminated pursuant to the provisions hereof, the
Initial Term and, any extension of the Initial Term.

“Variance Threshold” means an increase in any individual line-item of expense (other than Capital
Expenditures) set forth in the then current Budget for a Fiscal Year up to the greater of five
percent (5%) of such individual line-item of expense and Ten Thousand Dollars ($10,000) (provided
that the overall Budget for such Fiscal Year (excluding therefrom Capital Expenditures) is not
increased by more than five percent (5%)).

	1.1.	 	Interpretation.

        In this Agreement, unless otherwise specified, (i) singular words include the plural and
plural words include the singular; (ii) words which import a number of constituent parts, things
or elements, including the terms “Land”, “Improvements” and “Property” shall be construed as
referring separately to each constituent part, thing or element thereof, as well as to all of such
constituent parts, things or elements as a whole; (iii) words importing any gender include the
other genders; (iv) references to any Person include such Person’s successors and assigns; (v) the
word “successors”, when it refers to an individual, includes the heirs, devisees, legatees,
executors, administrators and personal representatives of such individual; (vi) references to any
statute or other law include all rules, regulations and orders adopted or made thereunder and all
statutes or other laws amending, consolidating or

5

 

replacing the statute or law referred to; (vii) references to any agreement or other document
include all subsequent amendments or other modifications thereof entered into in accordance with
the provisions thereof; (viii) the words “approve”, “consent” or “agree”, and any derivations
thereof or words of similar import, mean the prior written approval, consent or agreement of the
Person holding the right to approve, consent or agree; (ix) the words “include” and “including”,
and words of similar import, shall be deemed to be followed by the words “without limitation”; (x)
the words “hereto”, “herein” and “hereunder”, and words of similar import, refer to this Agreement
in its entirety; (xi) the Schedules and Exhibits hereto are part of this Agreement and are
incorporated herein by reference; (xii) the words “Article”, “Section”, “Schedule” or “Exhibit”
refer to the articles, sections, schedules and exhibits of and to this Agreement; (xiii) headings
of Articles, Sections, Schedules, Exhibits and paragraphs are inserted as a matter of convenience
and shall not affect the construction of this Agreement; and (xiv) no inference in favor or against
any Person shall be drawn from the fact that such Person or its attorneys drafted any portion
hereof.

	1.2.	 	Accounting Terms and Determinations.

        In this Agreement, unless otherwise specified, (i) all accounting terms used herein shall be
interpreted, (ii) all accounting determinations hereunder shall
be made and (iii) books, records,
financial statements and reports required to be kept and delivered hereunder shall be kept and
prepared in accordance with GAAP, except for changes directed or approved by Owner
contemporaneously herewith or subsequently. Changes from GAAP are detailed in subsection 3.6(h).

	2.	 	Appointment and General Provisions

	2.1.	 	Appointment.

        Subject to the provisions of this Agreement, Owner hereby appoints Manager as an independent
contractor to manage, operate, maintain, repair and lease, on an exclusive basis, the Property
while this Agreement remains in effect, and Manager hereby accepts such appointment.

	2.2.	 	Management Duties and Authority.

	 	(a)	 	During the Term of this Agreement, and subject to the provisions of this
Agreement and the written directions of Owner as herein provided, Manager shall
manage, operate, maintain, repair and lease the Property on behalf of Owner in a
first class manner consistent with the Budget (to the extent Owner provides the funds
required therefor) and in a manner intended to maximize the Cash Flow and the long
term preservation of the value of the Property and the investment goals and
objectives of Owner, subject to and within the Budget. During the Term of this
Agreement and subject to the provisions hereof and the Budget (to the extent Owner
provides the funds requested therefor), Manager shall provide all services reasonably
necessary, proper, desirable or appropriate for the successful management,
maintenance, repair, leasing and

6

 

	 	 	 	operation of the Property, including the duties and services specified in this
Agreement.
	 
	 	(b)	 	In connection with the performance of its duties and obligations under this
Agreement, (i) Manager shall be entitled to rely upon any and all written approvals or
instructions delivered by Owner to Manager, (ii) Manager shall not be liable for its
failure to act, or delay in acting, when and to the extent Manager’s obligation or
authority to act is limited by the provisions of this Agreement requiring the written
approval of or direction from Owner and such written approval or direction is not
provided or is not timely provided, and (iii) Manager shall not be liable for its
failure to act, or delay in acting, when and to the extent Manager’s failure to act,
or delay in acting, is caused by Owner’s failure to provide, or delay in providing,
funds necessary to manage, operate, maintain, repair, and lease the Property in
accordance with the terms of this Agreement and the Budget.
	 
	 	(c)	 	Notwithstanding the provisions of Section 8.1, Manager acknowledges and agrees
that any requirement for written approval or instruction by Owner pursuant to this
Agreement may be given by e-mail correspondence.

	2.3.	 	Independent Contractor.

        Except as otherwise herein provided (including by way of illustration Manager’s execution of
contracts pursuant to subsection 3.1(b) hereinbelow), Manager’s relationship to Owner hereunder is
that of an independent contractor, and neither Manager nor Owner shall represent to any other
Person that Manager’s relationship to Owner hereunder is other than that of an independent
contractor. All persons employed by Manager or any Affiliates of Manager in connection with the
operation and maintenance of the Property shall be employees solely of Manager or its Affiliate and
not of Owner and all arrangements with such employees are solely the concern of Manager.

	2.4.	 	Licenses.

        Manager represents, warrants and covenants that it and its personnel are, and while this
Agreement remains in effect, Manager and its personnel shall continue to be, fully licensed and
qualified, to the extent required by applicable law, to perform Manager’s duties and obligations
hereunder. Manager shall fully comply with all applicable Legal Requirements relating to the
performance of its duties and obligations hereunder.

	2.5.	 	Cooperation.

        Manager shall consult with Owner at Owner’s request and to the extent necessary or
appropriate to enable Manager to perform its duties and obligations hereunder. Manager shall
conduct meetings between Owner and Manager from time to time as necessary or appropriate to enable
Manager to perform its duties and obligations hereunder or as requested by Owner. Each party shall
cooperate fully in all matters relating to the management, operation, maintenance, repair and
leasing of the Property and the defense of any claim, action or

7

 

proceeding relating thereto or to this Agreement, and Manager shall promptly respond to all
requests for information by Owner, including furnishing all documents and services relating
thereto required by Owner in connection with the operation of the Property.

	2.6.	 	Indemnification.

	 	(a)	 	Manager shall indemnify, defend and hold harmless Owner, and its stockholders,
members, partners, directors, officers, managers, employees, agents and Affiliates
(each an “Owner Indemnified Party”), from and against any and all unaffiliated
third-party claims, actions, suits, proceedings, losses, damages, liabilities, costs
and expenses, including reasonable attorneys’ fees and disbursements (“Damages”)
(including Damages relating to violations of environmental Legal Requirements), arising
out of or resulting from the acts or omissions of Manager and its directors, officers,
employees, contractors, subcontractors and agents, which constitute gross negligence,
fraud, malfeasance, breach of fiduciary duty, willful, reckless or criminal misconduct,
a breach of this Agreement or any actions of Manager beyond the scope of the authority
conferred upon Manager hereunder. Manager shall have the right to defend, and shall
defend, at its expense and by counsel of its own choosing (subject to Owner’s approval
of such counsel, not to be unreasonably withheld), against any claim or liability to
which the indemnity agreement set forth in this subsection 2.6(a) would apply.
Notwithstanding the foregoing, if (i) Manager has failed or refused to defend,
indemnify and hold harmless Owner and any Owner Indemnified Party after written notice
to Manager, (ii) an Event of Default by Manager exists, (iii) Owner or any Owner
Indemnified Party to be defended hereunder reasonably determines that a conflict of
interest exists, or (iv) Owner reasonably determines that Manager is insufficiently
liquid or creditworthy to adequately defend or pay the amount of any Damages when due,
Owner, or such Owner Indemnified Party may, in its sole and absolute discretion, engage
its own attorney and other professionals to defend or assist it with respect to such
matters, and, at the option of Owner or such Owner Indemnified Party, its attorney
shall control the resolution of such matters. Manager shall not have the authority to
settle any claim or liability that is the subject of the indemnification agreement
provided for in this subsection 2.6(a) without first obtaining Owner’s prior written
consent, such consent not to be unreasonably withheld. Manager or Owner, as applicable,
shall regularly apprise the other of the status of all proceedings.
	 
	 	(b)	 	Owner shall indemnify, defend (through attorneys selected by Owner) and hold
harmless Manager and its partners, members, stockholders, managers, directors,
officers, employees and agents (each a “Manager Indemnified Party”) from and against
any claims made by unaffiliated third parties in connection with the good faith
performance by Manager of its duties in accordance with the terms of this Agreement,
except that the obligation to indemnify, defend and hold harmless shall not apply in
the case of the acts or omissions of Manager or any Manager Indemnified Party which
constitute

8

 

	 	 	 	gross negligence, fraud, malfeasance, breach of fiduciary duty, willful, reckless or
criminal misconduct, a breach of this Agreement or any actions beyond the scope of
the authority conferred upon Manager hereunder. Owner shall have the right to
defend, and shall defend, at its expense and by counsel of its own choosing against
any claim or liability to which the indemnity agreement set forth in this subsection
2.6(b) would apply. Any settlement of any such claim or liability by Owner shall be
subject to the reasonable approval of Manager. The right of Manager or any Manager
Indemnified Party being defended hereunder to defend or settle any such claim shall
be limited to those cases where Owner has failed or refused to defend after written
notice to Owner or to where Manager or any Manager Indemnified Party to be defended
hereunder reasonably determines that a conflict of interest exists. Notwithstanding
the foregoing, if (i) Owner has failed or refused to defend, indemnify and hold
harmless Manager and any Manager Indemnified Party after written notice to Owner or
(ii) an Event of Default by Owner exists, Manager, or such Manager Indemnified Party
may, in its sole and absolute discretion, engage its own attorney and other
professionals to defend or assist it with respect to such matters, and, at the
option of Manager or such Manager Indemnified Party, its attorney shall control the
resolution of such matters. Owner shall not have the authority to settle any claim
or liability that is the subject of the indemnification agreement provided for in
this subsection 2.6(b) without first obtaining Manager’s prior written consent, such
consent not to be unreasonably withheld. Owner or Manager, as applicable, shall
regularly apprise the other of the status of all proceedings.
	 
	 	(c)	 	The provisions of this Section 2.6 shall survive the expiration or
termination of this Agreement.

	2.7.	 	Sale and Financing.

        Except as may be agreed to in writing by Owner and Manager, Manager shall not be entitled to
any compensation, commissions or other fee, with respect to any Capital Event relating to the
Property or any interest therein or any obligation or debt relating to the Property.

	2.8.	 	Representatives.

	 	(a)	 	Whenever any consent, approval or other action of Owner is required or
permitted hereunder, such consent, approval or other action shall be effective if
given or taken by Temra Wollman or such other person designated by PTC/BSQ Acquisition
Company LLC. Owner may change such representatives at any time by notice to Manager
pursuant to Section 8.1 hereof.
	 
	 	(b)	 	Whenever any consent, approval or other action of Manager is required or
permitted hereunder, such consent, approval or other action shall be effective if
given or taken by Stephen Hefner, H. Kerr Taylor, C. Chad Braun or Brett

9

 

	 	 	 	Treadwell acting individually on behalf of Manager. Such representatives may be
changed by Manager with Owner’s prior written consent, which shall not be
unreasonably withheld or delayed.

	3.	 	Management Obligations and Authority

	3.1.	 	Property Management Generally.

	 	(a)	 	Manager shall, at the expense of Owner (except as set forth herein), manage,
operate and care for the Property in a first class manner, in accordance with the
Budget (to the extent Owner provides the funds required therefor), and the Property’s
condition and the terms of any Financing (provided Manager is notified in writing of
the requirements of such Financing) and do all things necessary, desirable or
appropriate therefor or customarily performed by managing agents of properties similar
to the Property. Without limiting the generality of the foregoing, Manager shall:

	 	(i)	 	implement the Budget;
	 
	 	(ii)	 	make and renew all Contracts for water, sanitary and storm
sewer, drainage, electricity, steam, gas, telephone, fuel, cleaning, garbage
removal, pest control, security and other utilities and all other services
necessary or appropriate for the management and operation of the Property in
accordance with the Budget unless otherwise provided herein;
	 
	 	(iii)	 	purchase all supplies, inventories, provisions and equipment
necessary or appropriate for the maintenance, management and operation of the
Property in accordance with the Budget unless otherwise provided herein;
	 
	 	(iv)	 	monitor the real estate tax assessments of the Property and
the reasonableness thereof in comparison with the assessments of similar
properties; advise Owner of any material increase in real estate taxes;
consult with, and make recommendations to, Owner concerning the real estate
tax assessments of the Property and, at the expense of Owner, take such action
(or assist Owner’s tax consultant in taking such action) with respect thereto
as Owner may direct in writing;
	 
	 	(v)	 	provide regular, systematic inspections of the Property,
consult with, and make recommendations to, Owner concerning the condition of
the Property and the necessity for maintenance, repair, alteration or
Restoration thereof; at the expense of Owner, provide through Manager’s (or
its Affiliates’) employees or third party contractors all work, labor and
services necessary or appropriate to maintain and repair the Property in a
first class condition in accordance with the Budget and the requirements of
any Financing, Contract, Lease, Legal

10

 

	 	 	 	Requirement or Insurance Requirement unless otherwise provided herein; promptly
notify Owner upon learning that the condition of the Property fails to meet said
first class standard of maintenance and repair or any standard of maintenance and
repair required under any Financing, Contract, Lease, Legal Requirement or
Insurance Requirement; take such action as Owner may direct in writing with
respect to the maintenance, repair, alteration, addition or Restoration of or to
the Property; make all Contracts for such maintenance, repair, alteration,
addition or Restoration of or to the Property and monitor and enforce the
performance of such Contracts;
	 
	 	(vi)	 	promptly, and in no event later than two (2) Business Days after the date on
which Manager learns of any Casualty or Condemnation (or threatened Condemnation),
provide Owner with notice in reasonable detail of such Casualty or Condemnation (or
threatened Condemnation); and thereafter promptly investigate and consult with, and
make recommendations to, Owner with respect thereto; make (subject to Owner’s
approval) a complete and timely written report to the appropriate insurance company
as to all accidents, claims for damage relating to the ownership, operation and
maintenance of the Property, any damage or destruction to the Property and the
estimated cost of repair thereof and prepare (for Owner’s approval) any and all
reports required by any insurance company in connection therewith; and timely file
all such reports with the insurance company as required under the terms of the
applicable insurance policy and furnish a final copy of such report to Owner;
	 
	 	(vii)	 	take such actions, without regard to the funds available therefor, as
Manager in good faith believes are necessary or appropriate in light of an emergency
threatening imminent and immediate personal injury or imminent material physical
damage. Manager shall, no later than twenty-four (24) hours after the time Manager
learns of any such emergency, provide Owner with notice in reasonable detail of the
emergency and the actions taken by Manager in connection therewith;
	 
	 	(viii)	 	perform (or arrange for the performance of) the other services required to be
performed hereunder or under any Financing in accordance herewith and/or the
Financing, as applicable; and
	 
	 	(ix)	 	promptly, and in no event later than two (2) Business Days after the date on
which Manager receives any written offers for the purchase of all or any part of the
Property, notify Owner and furnish Owner said written offer.

	 	(b)	 	All Contracts and purchases made hereunder at the expense of Owner (whether or not
specifically requiring the approval of Owner pursuant hereto) shall be

11

 

	 	 	 	made in the name of Owner and executed directly by Owner or, at Owner’s written
authorization and direction, with Manager executing same solely as Owner’s agent,
and Owner shall retain title to all property purchased hereunder at the expense of
Owner. Manager shall use commercially reasonable efforts to ensure that all
Contracts made hereunder contain a provision satisfactory to Owner limiting the
liability of Owner thereunder to the Property.
	 
	 	(c)	 	All Contracts made with any Affiliate of Manager must be approved by Owner in
writing and shall be at competitive market terms and rates and not more than would be
charged by an independent third party.
	 
	 	(d)	 	Notwithstanding anything to the contrary contained herein, Manager shall not,
and shall not have the authority to, make any Contract or purchase of the type
described in this Section 3.1 (except as expressly provided in subsection 3.1(a)(vii)
above, relating to emergency circumstances) unless such Contract or purchase is:

	 	(i)	 	(A) contained within the then current Budget and, in the case
of a Contract, is terminable without termination fee, premium or penalty by
Owner upon not more than thirty (30) days notice or (B) does not provide or
allow for aggregate consideration payable thereunder in excess of $10,000; or
	 
	 	(ii)	 	is pre-approved in writing by Owner.

	 	(e)	 	In making any Contract or purchase hereunder, Manager shall use commercially
reasonable efforts to obtain favorable discounts for Owner and all such discounts,
rebates or commissions under any Contract or purchase order made hereunder shall inure
to the benefit of Owner. As provided in the Budget, and at Owner’s expense, Manager
shall make payments under any such Contract or purchase order at such date or
otherwise in compliance with such Contract or purchase order to enable Owner to take
advantage of any such discount.

	3.2.	 	Management Employees.

	 	(a)	 	Manager shall have in its employ (or provide through one or more third-party
contractors approved by Owner) at all times sufficient staff of capable personnel for
the proper leasing, management, maintenance and operation of the Property in
accordance with the terms of this Agreement. If such personnel are employees of
Manager, all matters pertaining to such personnel, including their employment,
supervision, compensation, promotion and discharge, shall be the responsibility of
Manager. All salaries, wages and other compensation of personnel employed by Manager
hereunder, including fringe benefits, shall be expenses solely of Manager (and Manager
shall be responsible for all payroll and other taxes and all other deductions paid or
made and/or required by law, and for preparing and filing all returns and other
documents required

12

 

	 	 	 	under federal or local laws), subject to subsection 3.2(b) below.
	 
	 	(b)	 	Manager shall in no event be reimbursed for any of Manager’s employees
engaged in the management, operation, or maintenance of the Property, including,
without limitation, the gross salary or wages including reasonable bonuses and
vacation pay, payroll taxes, insurance, worker’s compensation, or Manager’s standard
sick pay or benefits and payroll burdens of Manager’s employees required to properly,
adequately, safely and economically manage, operate and maintain the Property. In
addition, in no event shall Manager be reimbursed for costs associated with Manager’s
central office general and administrative personnel or Manager’s leasing personnel.
The number of the employees and amounts of their compensation may be adjusted annually
and an appropriate pro rata share therefor shall be reflected in the Budget.
	 
	 	(c)	 	Manager shall fully comply with all Legal Requirements relating to worker’s
compensation, social security, unemployment insurance, wages, hours, working
conditions and other matters pertaining to Manager’s personnel. Manager shall
indemnify, defend and hold harmless Owner and any Owner Indemnified Party from and
against any and all Damages, relating to Manager’s failure to comply with this
subsection 3.2(c), and Manager’s obligations to indemnify, defend and hold harmless
under this subsection 3.2(c) shall survive the termination or expiration of this
Agreement.
	 
	 	(d)	 	Manager shall be solely responsible for its personnel in the event of the
termination of this Agreement.
	 
	 	(e)	 	Manager shall promptly notify Owner of any pending changes in the Manager’s
business, business ownership, or in on site or off site personnel for the Property.
At Owner’s discretion Owner may approve persons presented for key positions in
leasing, operations, management/general management, and accounting.
	 
	 	(f)	 	Manager shall promptly notify Owner of any pending changes in location of
property manager facilities supporting the management of the Property.

	3.3.	 	Rent Collection and Services with Respect to Leases.

	 	(a)	 	Manager shall use commercially reasonable efforts to cause the Property to be
fully rented to qualified tenants, and in connection therewith shall: consult Owner
with respect to rental and renewal of occupancy space to qualified tenants and
propose, supervise and implement a leasing program which shall include leasing
parameters, including, rents, tenant improvement allowances, free rent periods and
other tenant concessions with respect to the Property, which leasing program shall
include the then current year’s Leasing Budget and shall be subject to the prior
written approval of Owner (once approved, the “Approved Leasing Program”); cooperate
with licensed real estate brokers having clients interested in renting space in the
Property; advertise the

13

 

	 	 	 	Property; and order and purchase all signs, renting plans, price lists, booklets, circulars
and advertising to offer space in the Property for rent, all subject to Owner’s approval
and at Owner’s expense. All Leases shall be on the Standard Form of Lease. Manager shall
revise the Standard Form of Lease at Owner’s written direction. The form, content and terms
of all Leases and the acceptability of all tenants shall be subject to approval of Owner
and all Leases shall be in Owner’s name and executed by Owner unless Owner expressly in
writing authorizes and directs Manager, as Owner’s property manager, to execute a Lease.
Manager shall cooperate with legal counsel designated and retained by Owner to negotiate
all Leases. All legal costs and expenses incurred to negotiate said Leases shall be paid by
Owner. Manager shall act as Owner’s exclusive agent in the leasing of the Property or at
the direction of Owner, Manager shall contract with a third party licensed real estate
brokerage firm to act as Owner’s exclusive agent in the leasing of the Property pursuant to
an agreement approved by Owner. Manager represents that it is duly licensed to provide such
leasing services.
	 
	 	(b)	 	Without Owner’s prior written consent, Manager shall not permit any Person to occupy any
space in the Property unless such occupancy is pursuant to a written Lease on the Standard
Form of Lease and in compliance with the leasing parameters approved under the Approved
Leasing Program. In addition, unless expressly provided in an approved Lease or Manager
otherwise has obtained Owner’s prior written consent, Manager shall not permit any Tenant to
take occupancy in any space at the Property unless such Tenant has delivered to Manager or
Owner (A) the security deposit, if any, required under the terms of such Tenant’s Lease, (B) a
current certificate of insurance in compliance with the terms and provisions of such Tenant’s
Lease, and (C) any rent required to be paid prior to the Tenant’s taking occupancy of its
demised premises. Manager shall supervise all tenant improvements and the moving in and out of
all Tenants in a manner which causes a minimum of disturbance to the operations of the other
Tenants.
	 
	 	(c)	 	Manager shall, at the expense of Owner, use commercially reasonable efforts to ensure that
the Tenants receive the services required to be provided by Owner under their Leases, to duly
and punctually observe and perform on behalf of Owner all of Owner’s obligations under the
Leases, and to enforce, preserve and keep unimpaired the rights of Owner and the obligations
of the Tenants under the Leases.
	 
	 	(d)	 	Manager shall bill the Tenants for the rents and other charges (on a monthly basis unless
otherwise provided pursuant to the terms of any Lease) payable under their Leases and shall
use commercially reasonable efforts to collect and enforce the collection of all rents and
other charges payable by the Tenants under their Leases. No later than one hundred twenty
(120) days after the end of each calendar year (or such earlier date as required pursuant to
the terms of any Lease), Manager shall prepare and submit to Tenants, the final operating

14

 

	 	 	 	expense and real estate tax expense recovery reconciliations for such year. Manager shall
have Tenants send payments directly to the Lock Box. Manager shall immediately deposit all
rents and other sums collected by Manager in the Lock Box Account.
	 
	 	(e)	 	Manager and Owner shall promptly notify the other upon learning of any monetary default or
other event of default or event which, with the giving of notice or the passage of time or
both, might constitute a default or event of default by any Tenant under its Lease. In the
event of any default or event of default by any Tenant, Manager shall consult with Owner
concerning the action to be taken with respect thereto and, at the expense of Owner, take such
action as Owner shall direct with respect to such default or event of default, including (with
the prior consent of Owner) cooperating with Owner’s counsel to institute legal proceedings in
the name of Owner for the collection of rents and other charges, payable by, and the
enforcement of the other obligations of, the Tenants under their Leases and for the
dispossession of any Tenants in default under their Leases. Owner shall designate, retain and
pay the attorneys for any such legal proceedings. Without the prior written consent of Owner,
Manager shall not settle any such legal proceedings or any claim for delinquent rents or other
charges payable by or for the enforcement of any other obligation of any Tenant under its
Lease.
	 
	 	(f)	 	Without the consent of Owner, Manager (i) shall not receive or collect any rents for more
than one month in advance (plus security deposits), (ii) shall not waive, excuse, condone,
discount, set off, compromise or in any manner release or discharge any Tenant (or any
guarantor under any guaranty of any Lease) from its obligations under its Lease (or such
guaranty); (iii) shall not cancel, terminate or consent to the surrender of any Lease; (iv)
shall not commence any action, suit or proceedings for the collection of rent, for removal or
for the dispossession of any Tenant or exercise any right of recapture provided in any Lease;
(v) shall not modify, or in any way alter the provisions of any Lease in a manner which would
reduce the rent thereunder, shorten the term thereof, impose additional obligations on the
landlord thereunder, or reduce the obligations of the Tenant thereunder; (vi) shall not
relocate any Tenant within the Property; (vii) shall not consent to any modification of the
express purposes for which any Tenant’s premises have been leased; and (viii) shall not
consent to any subletting of any part of the Property, to any assignment of any Lease by any
Tenant thereunder, or to any assignment or further subletting of any sublease.
	 
	 	(g)	 	Each of Manager and Owner shall promptly notify the other upon receiving any notice under
any Lease (and furnish a copy of the notice received by it with its notice to the other) or
upon learning of any default or event, which, with the giving of notice or passage of time or
both, might constitute a default or event of default by Owner under any Lease or in Manager’s
reasonable judgment would otherwise directly and imminently impair the rights of Owner,

15

 

	 	 	 	or directly and imminently reduce, release or discharge the obligations of any
Tenant under any Lease. In the event of any such condition, default or event of
default, Manager shall consult with Owner, and at the expense of Owner, take such
action as Owner shall direct in writing.
	 
	 	(h)	 	Manager shall be responsible, at the expense of Owner and in Owner’s name, for
the giving of all notices and statements required to be given to Tenants of the
Property under the terms of the respective Tenants’ Leases and for the giving of all
other notices necessary to accomplish the proper management of the Property in
accordance herewith.
	 
	 	(i)	 	Manager shall consider and advise Owner from time to time as to appropriate or
desirable rules and regulations or any additional rules and regulations required to be
made under the Leases with Tenants of the Property or for the better or more efficient
operation of the Property. Manager shall ensure that all Tenants of the Property are
informed with respect to such rules, regulations and notices as may be promulgated by
Owner or Manager.
	 
	 	(j)	 	Manager shall maintain accurate records of all security deposits held by
Owner, including the amount of each security deposit, the party from whom each
security deposit is collected, interest earned on each security deposit (if any), the
amount of such interest required (if applicable law so required) to be paid to each
Tenant with respect to such Tenant’s security deposit, and the date(s) upon which
Manager collected each security deposit. Manager shall deliver a monthly report to
Owner which indicates when a refund of all or any portion of a security deposit is
required and has been approved by Manager, and Manager shall keep an accurate record
of all refunds.
	 
	 	(k)	 	Manager shall perform such additional services and undertake such additional
obligations as Owner may reasonably request from time to time and as are usual and
customary for managers of properties similar to the Property and are consistent with
Manager’s obligation to manage, operate, maintain, repair and lease the Property in
accordance with the terms and provisions of this Agreement, without additional
compensation therefor.

	3.4.	 	Services with Respect to Contracts.

	 	(a)	 	Unless otherwise provided herein, Manager shall, at the expense of Owner, in
accordance with the Budget (to the extent Owner provides the funds required therefor),
duly and punctually pay and perform on behalf of Owner all of Owner’s obligations
under the Contracts and use commercially reasonable efforts to enforce, preserve and
keep unimpaired the rights of Owner and the obligations of other parties under the
Contracts.
	 
	 	(b)	 	Each of Manager and Owner shall promptly notify the other upon learning of any
default, or event of default or event which, with the giving of notice or the passage
of time or both, might constitute a default or an event of default by any

16

 

	 	 	 	other party under any Contract. In the event of any default or event of default by any
other party under any Contract, Manager shall consult with Owner concerning the action to
be taken with respect thereto and, at the expense of Owner, take such action as Owner shall
direct in writing with respect to such default or event of default.
	 
	 	(c)	 	Without the consent of Owner, Manager (i) other than as provided in Section 3.1 hereof,
shall not enter into any Contract or modify, or in any way alter, the provisions of any
Contract and (ii) shall not take any action, or omit to take any action or give any notice,
the taking, omission or giving of which might (a) result in the reduction, release or
discharge of any other party to any Contract from its obligations thereunder, (b) consent to
any other party to any Contract to assign or otherwise transfer its rights or obligations
thereunder, or (c) except in the circumstances described in subsection 3.1 (a)(vii), result
in an expenditure in excess of the budgeted amount set forth in the Budget.
	 
	 	(d)	 	Each of Manager and Owner shall promptly notify the other upon receiving any notice under
any Contract (and furnish a copy of the notice received by it with its notice to the other
party) or upon learning of any default, event of default or condition which, with the giving
of notice or the passage of time or both, would result in a default or event of default by
Owner under any Contract or otherwise impair the rights of Owner, or reduce, release or
discharge the obligations of any other Person, under any Contract. In the event of any such
notice, condition, default or event of default, Manager shall consult with Owner concerning
the action to be taken with respect thereto and, at the expense of Owner, shall take such
reasonable action with respect thereto as Owner shall direct in writing.
	 
	 	(e)	 	Manager shall not enter into any Contract on behalf of Owner unless (1) such Contract
contains a clause whereby the service provider agrees to indemnify, defend and hold Owner,
its partners, shareholders, members or other beneficial owners, and Manager (and their
respective legal and beneficial owners, shareholders, partners, members, officers, managers,
directors, agents, employees, subsidiaries, and affiliates) harmless from and against all
claims, actions, suits, proceedings, losses, damages, liabilities, costs and expenses
(including without limitation, reasonable attorneys’ fees and disbursements) arising out of,
resulting from or in connection with the acts or omissions of the service provider and its
directors, officers, employees, contractors, subcontractors and agents, which constitute
negligence, fraud, breach of the service agreement, breach of fiduciary duty, willful,
reckless or criminal misconduct or any actions of the service provider beyond the scope of
authority conferred upon the service provider pursuant to the terms of the Contract, and (2)
such Contract is terminable without a termination fee, premium or penalty in the event that
the Property is sold or the Property is foreclosed or transferred by deed in lieu of
foreclosure.

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	3.5.	 	Services with Respect to Legal Requirements and Insurance Requirements.

	 	(a)	 	Manager shall, at the expense of Owner, duly and punctually comply on behalf of
Owner with all Legal Requirements and Insurance Requirements applicable to the Property
and the management and operation thereof that are made known to Manager and obtain,
keep in force and keep unimpaired the rights of Owner under all Permits necessary or
appropriate with respect to the Property. Manager shall cooperate with Owner, PTC/BSQ
Holding Company LLC (“Parent”) and each of the members of Parent in the management and
operation of the Property in a manner intended to avoid the realization of “unrelated
business taxable income” within the meaning of Section 511 et seq. of the Internal
Revenue Code of 1986, as amended.
	 
	 	(b)	 	Manager shall use its best efforts to, and shall cooperate with Owner, Parent
and each of the members of Parent in order to, manage and operate the Property in a
manner intended to avoid the realization of “unrelated business taxable income” within
the meaning of Section 511 et. seq. of the Internal Revenue Code of 1986, as amended.
	 
	 	(c)	 	If during the Term, Manager becomes aware of the existence of hazardous
materials or wastes, toxic substances or wastes, asbestos or asbestos-bearing
materials and the like at, in, on or under the Property, Manager shall immediately
notify Owner of the condition, both orally and in writing. Owner shall exclusively
determine such further course of action with respect to such hazardous condition.
Manager shall not have the authority or the obligation to supervise or oversee any
work involving remediation of any hazardous or potentially hazardous wastes or
conditions unless specifically hired by Owner to do so pursuant to a separate
agreement between Owner and Manager. Manager shall always use its best efforts to
prevent and detect the occurrence or existence of any hazardous condition at the
Property and shall cooperate with Owner in connection therewith, provided that Owner
shall be responsible for any extraordinary costs incurred by Manager in connection
with such best efforts.
	 
	 	(d)	 	Each of Manager and Owner shall promptly notify the other upon receiving any
written notice with respect to any Legal Requirement or Insurance Requirement (and
furnish a copy of the notice received by it with its notice to the other party) or
upon learning of any default, event of default or condition which, with the giving of
notice or the passage of time or both, might constitute a default or event of default
by Owner under any Legal Requirement or Insurance Requirement or otherwise impair the
rights of Owner under any Permit. In the event of any such notice, condition, default
or event of default, Manager shall consult with Owner concerning the action to be
taken with respect thereto and, at the expense of Owner, shall take such action with
respect thereto as Owner shall direct in writing.

18

 

	 	(e)	 	As long as the failure to promptly comply with any notice concerning any Legal
Requirement or Permit shall not subject Manager to any criminal, administrative or
civil liability, Owner may stay Manager’s remedial action with respect to such
notice by instituting, or directing Manager to cooperate with legal counsel to
institute, in Owner’s name, appropriate legal or other proceedings to contest such
notice.
	 
	 	(f)	 	Manager may appear in or commence legal or other proceedings on behalf of Owner
in Owner’s name only upon the direction of Owner, it being understood that Owner will
pay any legal fees and costs in connection therewith.
	 
	 	(g)	 	Manager shall maintain current certificates of insurance from all Tenants in
compliance with types of coverage, limits of coverage and deductible limits all as
specified in the Leases.

	3.6.	 	Records and Reports.

        All reporting to Owner under this Agreement will be performed substantially in accordance
with the Property Management Procedures Exhibits delivered by Owner to Manager prior to the date
hereof, copies of which are attached hereto as Exhibit E (the “Property Management
Procedures Exhibits”). All reporting to Owner will be completed in a hard copy format and on a CD.
In addition, Manager will submit certain information electronically using the Approved Software:

	 	(a)	 	Standard Property Manager Reporting Period. Manager shall consider the
monthly reporting period to cover the current calendar month. Manager is expected to
close the reporting period as follows:

	 	1)	 	Soft close of the general ledger on the 26th day of
the month, at which time processing of receipts and disbursements will be
cutoff.
	 
	 	2)	 	During the next five (5) days, Manager will adjust Property
books and records by preparing and posting any necessary and normal
adjustments for accrued revenues and expenses and other adjustments as
necessary for the period from the 27th through the last day of the
month.
	 
	 	3)	 	Hard (final) close of the general ledger on the last of the month.
	 
	 	4)	 	Electronic transmission to Owner or Owner’s representative of
general ledger and Tenant Lease information, and any other related information
which Owner may reasonably require in writing at least five (5) days in
advance, on the last day of the month.

	 	Owner reserves the right to modify reporting requirements and due dates as it deems
necessary.
	 
	 	(b)	 	Property Management Software. Manager will use the property management

19

 

	 	 	 	software currently in use by Manager or such other software approved by Owner in its
reasonable discretion (the “Approved Software”) (provided that Management Reports Inc.
property management software (“MRI”) and Yardi Systems Inc. property management software
are hereby approved by Owner), and will provide data from such software to Owner in a
format that can be converted to use with MRI. Manager will submit, on a date to be
determined by the Owner, a monthly electronic download of selected financial and
operational data, including general ledger and lease information, using either the
distributive processing function of MRI or data extract routines identified and/or provided
by Owner. The database structure, system type, and property number will be provided by
Owner and will not be modified without the consent of Owner. Owner will provide Manager
with a standard chart of accounts, Tenant charge (billing) codes, and report formats which
are to be used unless otherwise approved in writing by Owner. Manager will submit, on a
date to be determined by Owner, a monthly electronic download of selected financial and
operational data, including general ledger and lease information. Owner reserves the right
to periodically modify its software and reporting requirements.
	 
	 	(c)	 	Distribution of Cash Flows. Manager shall remit to Owner, at a date to be determined
by Owner but no later than the 20th of the current month, the Net Cash Flow
generated from operating and investing and financing activities for the previous month in
accordance with wire transfer instructions provided by Owner.
	 
	 	(d)	 	Budget. Not later than sixty (60) days prior to the beginning of each Fiscal Year,
Manager shall submit to Owner for its approval proposed annual budget prepared on a Modified
Accrual Basis for the Property for the ensuing Fiscal Year. The proposed annual budget shall
set forth on a monthly basis Manager’s good faith estimates of: (i) Gross Revenues, Operating
Expenses, and Interest Expense for the Property for such year, all in detail reasonably
satisfactory to Owner, (ii) the recommended Capital Expenditures and extraordinary expenses
for such year described in reasonable detail, (iii) the recommended leasing expenditures for
such year (the “Leasing Budget”), (iv) Cash Flow from the Property, (v) liability in the
succeeding Fiscal Year for real estate taxes, (vi) the amount of Debt Service becoming due
and payable during the next succeeding Fiscal Year in connection with all Financings or
advances in connection with the Property (to the extent such information is provided to
Manager by Owner), (vii) wages, salaries, and other compensation to be paid to employees of
Manager working at or on the Property, as well as the status of any negotiations affecting
said wages, salaries and other compensation, (viii) the extent of completion of any
uncompleted Improvements to the Property, together with a projection of the costs of
constructing such Improvements to be incurred during the next succeeding Fiscal Year, (ix)
the current legal status of pending or threatened suits concerning the Property (or any
portion thereof) of which Manager has

20

 

	 	 	 	knowledge and (x) such other information as Owner may reasonably require. The Budget shall
be in the format and detail as outlined in the sample budget package attached hereto as
Exhibit C or as required by and satisfactory to Owner. The rent roll shall be in
columnar form, with each Tenant listed separately and showing for each Tenant the (i) name
of such Tenant, (ii) floor or suite number, (iii) term of its Lease, (iv) total rent to be
collected and (v) the total rent broken down into various categories such as base rent,
storage rent, operating expense recoveries or common area charges (and the percentage of
the Tenant’s share thereof), license fees, real estate tax reimbursements (and the
percentage of the Tenant’s share thereof) and any other rent or charges. Manager shall also
submit to Owner with the submission of the Budget, a written narrative discussion of
significant events in the relevant market where the Property is located which shall
highlight the Property’s position in its relevant market and discuss matters such as
vacancy, new construction and rental trends. The proposed annual budget for any Fiscal Year
once submitted by Manager and thereafter approved by Owner, shall herein be referred to as
the “Budget.”
	 
	 	(e)	 	Quarterly Review and Reforecast. The Budget shall be revised by Manager quarterly
within forty-five (45) days after the end of each of the first, second, and third quarters of
each Fiscal Year if the overall net operating income variance on a year to date basis exceeds
fifteen percent (15%), if the capital expenditure variance exceeds ten percent (10%), or if,
in Manager’s opinion, event(s) have occurred or are anticipated to occur which will
significantly affect the Budget.
	 
	 	(f)	 	Budget Approval. Owner shall approve, disapprove or comment on the proposed annual
budget within thirty (30) days after Owner’s receipt of such proposed annual budget. Owner
may approve, disapprove or modify any proposed annual budget in whole or in part.
	 
	 	(g)	 	Operation Within Budget. Manager shall use, manage and operate the Property strictly
in accordance with the then-current Budget (subject to the Variance Threshold as provided
herein), provided that, without Owner’s prior approval, Manager may incur expenses in excess
of the Budget in the event of an emergency requiring immediate action to avoid imminent
personal injury or imminent material property damage. If the proposed annual budget or a
proposed revision to the current Budget is disapproved by Owner in whole or in part, or not
approved prior to the commencement of the ensuing Fiscal Year, Manager shall continue to
manage and operate the Property pursuant to the prior year’s Budget or the then current Budget
in the case of a proposed revision pursuant to subsection 3.6(e) (except for non-recurring
expenditures and Capital Expenditures which shall be deemed removed from such prior year’s
Budget) until Manager and Owner can resolve their differences, provided, however, that Manager
shall, unless otherwise directed by Owner, be authorized to pay, as an expense of the
Property, all Non-Discretionary Items

21

 

	 	 	 	(as defined in Section 1 of this Agreement). Manager has the authority to expend funds as
provided in Section 3.8 in accordance with the provisions of the current Budget, provided
that Manager shall not be required to expend its own funds if there are insufficient funds
available in the Concentration Account and the Controlled Disbursement Account to pay the
Operating Expenses. Manager’s failure to operate, manage, maintain, repair or lease the
Property in a first class manner and otherwise in accordance with the provisions of this
Agreement shall be excused (and Manager shall not be in default of such duties or
obligations) if Manager is prevented from or delayed in doing so due to Owner’s failure to
approve the Budget and/or Owner’s failure to provide funds for expenditures in accordance
with the approved Budget.
	 
	 	(h)	 	Books and Records.

	 	(i)	 	Manager shall maintain, and keep at its main office accurate books, records
and accounts of the management, operation and financial condition of the Property’s
operations. Such books, records and accounts shall be prepared and kept on a Modified
Accrual Basis. “Modified Accrual Basis” shall be defined as follows:

	 	1.	 	Gross Revenues on an accrual basis excluding GAAP straight line rental income
adjustment.
	 
	 	2.	 	Operating Expenses on an accrual basis.
	 
	 	3.	 	Interest Expense on an accrual basis.
	 
	 	4.	 	Mortgage principal payments on a cash basis.
	 
	 	5.       Capital Expenditures including leasing costs such as tenant improvements and
Leasing Commissions will be reflected on a cash basis.
	 
	 	6.       Depreciation and amortization expenses, with the exception of amortization of
deferred financing costs, are not to be recorded. At the discretion of Owner, Manager
may be required to separately maintain and update the depreciation, amortization, and
straight line rent schedules and make them available to Owner or Owner’s auditors or
tax preparers.

	 	(ii)	 	Owner shall at all times retain title to the information constituting such
books, records and accounts. Manager shall, during the Term, retain such books,
records and accounts. Any and all computer programs, software and hardware not the
property of Owner utilized by Manager to maintain such books, records and accounts
shall in all events remain the property of Manager.
	 
	 	(iii)	 	Upon reasonable written notice to Manager, Owner may, at its expense,

22

 

	 	 	 	Thousand Dollars ($25,000), of an individual line item of income or expense
(actual compared to Budget) for the reporting period on a monthly and Fiscal Year
to date basis;
	 
	 	(ix)	 	a detailed calculation of the Management Fee;
	 
	 	(x)	 	a current rent roll;
	 
	 	(xi)	 	a tenant billing report (billing register);
	 
	 	(xii)	 	bank statements and reconciliation for the Lock Box Account, Concentration
Account, Controlled Disbursement Account, and Security Deposit Account;
	 
	 	(xiii)	 	proof of cash (identifying opening cash balances, cash received, cash disbursed and
cash contributed or distributed during the month);
	 
	 	(xiv)	 	an aged accounts payable schedule;
	 
	 	(xv)	 	a Capital Expenditure report including (A) leasing costs which lists capital
projects budgeted, (B) budgeted amount, (C) latest estimates of cost, (D) amounts
expended to date, with narrative explanation of variances to the Budget, (E) amounts
to be spent to complete and completion status, and (F) Capital Expenditures and
leasing costs incurred but not paid;
	 
	 	(xvi)	 	a detailed trial balance;
	 
	 	(xvii)	 	a written report describing any written offers received by Manager for the purchase
of all or any part of the Property;
	 
	 	(xviii)	 	a leasing report detailing leasing activity and vacancy for the current month;
	 
	 	(xix)	 	a property summary report;
	 
	 	(xx)	 	Intentionally Omitted;
	 
	 	(xxi)	 	a depreciation and amortization expense schedule, if applicable;
	 
	 	(xxii)	 	tenant sales report, if applicable; and
	 
	 	(xxiii)	 	a schedule of all transactions with Manager or an Affiliate of Manager.

	 	(j)	 	Quarterly Reports.

	 	(i)	 	Within three (3) Business Days prior to the end of each quarter of each
Fiscal Year Manager shall furnish to Owner (i) a leasing schedule

24

 

	 	 	 	containing a summary of lease expirations by year for a ten (10) year period, (ii)
a fixed asset list of all tools, equipment, furniture, artwork, etc., located at
the Property and owned by Owner, (iii) a survey of market conditions and
competition, (iv) an update of the then current Approved Leasing Program, (v) a
completed UBTI questionnaire in the form attached hereto as Exhibit G, and
(vi) an asset overview report.
	 
	 	(ii)	 	In addition to the foregoing, Manager shall furnish to Owner, within sixty
(60) days after the end of each calendar quarter during the Term hereof, an unaudited
profit and loss statement and a balance sheet for the Property prepared in accordance
with GAAP with respect to the immediately preceding calendar quarter.
	 
	 	(iii)	 	Intentionally Omitted.

	 	(k)	 	Annual Reports.

	 	(i)	 	In addition to the regular monthly reports and quarterly reports to be
provided to Owner pursuant to the terms hereof, Manager shall furnish to Owner on an
annual basis, a report of minimum base rental payments for existing Leases year by
year for a prospective period of five (5) years with an additional amount
representing the remaining total rental payments over the Lease term exceeding that
five (5) year period. Such annual periods shall coincide with the calendar year. Such
annual reports shall be due five (5) Business Days before the annual period ending
September 30th. Owner, at its discretion, may modify the timing and
frequency of this request.
	 
	 	(ii)	 	Manager shall cooperate with Owner’s Auditor, at Owner’s discretion, in the
preparation of a year end statement of the Property in connection with the continuing
operations of the Property, including a balance sheet and the related statements of
income and cash flows, which shall be furnished not later than seventy-five (75) days
after the end of each Fiscal Year.

Each of the reports provided to Owner by Manager pursuant to this Agreement shall be prepared on a
Modified Accrual Basis, and, at the option of Owner, shall be audited by an accounting firm
selected by Owner (the “Auditor”). Owner shall be responsible for arranging for such audit and
Manager shall coordinate with Owner’s Auditor and cooperate and be responsible for the preparation
of Owner’s audited financial statements. A draft of the Auditor’s report for each Fiscal Year
shall be submitted to Owner for approval by Owner before it is finalized. The final Auditor’s
report shall be submitted to Owner within ninety (90) days following the end of each Fiscal Year.

	 	(l)	 	Tax Matters Reporting.

	 	(i)	 	Manager shall coordinate with Owner’s accountants and cooperate in

25

 

	 	 	 	the preparation of Owner’s tax return including, but not limited to,
supplying necessary information for preparation of such tax return. The tax
return will be prepared by Owner’s accountants on a timely basis and the
cost of preparation and filing of the tax return will be borne by Owner.
Owner’s accountant shall prepare, where applicable, Federal, state and
local income and net worth tax returns only.
	 
	 	(ii)	 	As requested by Owner Manager shall complete all tax related
surveys and questionnaires which Owner may annually require.
	 
	 	(iii)	 	Manager shall prepare all state and local personal property
and other tax returns, as required by law, which are not prepared by Owner’s
accountant.

	 	(m)	 	Accounting Policies and Procedures. Notwithstanding anything to the
contrary contained herein, Manager shall prepare and deliver all reports in accordance
with, and shall otherwise comply with, Owner’s accounting policies and procedures as
reasonably adopted from time to time. Manager acknowledges receipt of a copy of
Owner’s current accounting policies and procedures.
	 
	 	(n)	 	Periodic Reports/Procedures. Manager shall cooperate with Owner’s
personnel or Owner’s accounting firm in regard to random test basis procedures which
will be performed on short notice (less than thirty (30) days) in regard to the
evaluation of the Manager’s system of internal control and accuracy of financial books
and records.
	 
	 	(o)	 	Credit Feasibility. As requested by Owner, Manager may be required
to provide and update a report summarizing the credit worthiness of existing tenants
at the Property and prospective tenants prior to lease execution.
	 
	 	(p)	 	Other Reports. Such other reports as Owner may reasonably request.
	 
	 	(q)	 	Certification. All quarterly, monthly and annual reports shall be
certified by the President, Chief Financial Officer, or Vice President of the
Manager.

	3.7.	 	Bank Accounts.

	 	(a)	 	Manager shall maintain, at Owner’s specific request, a Lock Box (the “Lock
Box”) in the name of Owner for the Property for the collection of rents. In addition,
Manager shall maintain the following bank accounts in the name of Owner: a lockbox
account (the “Lock Box Account”), a concentration account (the “Concentration Account”)
with an automatic daily short-term investment sweep feature, a controlled disbursement
account (the “Controlled Disbursement Account”), and an interest bearing account for
tenant security deposits (the “Security Deposit Account”).

	 	 	The Lock Box Account, the Concentration Account, the Controlled Disbursement

26

 

	 	 	Account, and the Security Deposit Account shall be maintained in the name of Owner at a bank as
determined by Owner (the “Depository”). At Owner’s discretion, the Concentration Account, the
Controlled Disbursement Account, and the Security Deposit Account may be in the name of Manager as
managing agent for Owner. All bank accounts shall require two authorized signatories to draw on
such accounts for payments in excess of Twenty Five Thousand Dollars ($25,000). The Manager’s
representatives specified in or pursuant to subsection 2.8(b) or such other officers of Manager as
Manager shall designate, subject to Owner’s approval, shall be empowered to draw upon such
accounts. The Owner’s representatives specified in, or pursuant to, subsection 2.8(a) shall also
be, and hereby are, empowered to draw upon such accounts. In addition, Owner, acting through its
representatives specified in or pursuant to subsection 2.8(a), shall have, and is hereby granted,
the authority to terminate the authority of Manager and its officers and representatives to draw
upon such accounts. All funds deposited in such accounts or otherwise held by or in the name of
Manager for the account of Owner shall be held by Manager in trust and shall not be commingled with
Manager’s other funds. Manager shall in no event have any liability in the event that the
Depository should fail, go into receivership or conservatorship or if such funds are otherwise not
available for reasons beyond Manager’s reasonable control. Manager shall indemnify and hold
harmless Owner from and against any and all Damages occurring by reason of any unauthorized
application by Manager or its directors, officers, employees or representatives of any such funds
held for the account of Owner.

	 	(b)	 	Manager shall cause the transfer of funds in the Lock Box Account to the Concentration
Account on a daily basis. Subject to the terms of this Agreement, Manager shall cause the
transfer of funds in the Concentration Account to the Controlled Disbursement Account to the
extent necessary to pay for expenses pursuant to Section 3.8 below. Monthly, on a
pre-determined date or dates at Owner’s discretion, Manager shall cause the transfer of all of
the available excess funds in the Concentration Account to an account in the name of Owner to
be maintained at a bank determined by Owner (the “Owner’s Account”).
	 
	 	(c)	 	Manager shall ensure that security deposits are deposited promptly in the Security Deposit
Account. As needed, Manager shall withdraw such amounts from the Security Deposit Account as
are necessary to (i) repay a security deposit (or portion thereof) to a Tenant as required
pursuant to the terms of such Tenant’s Lease; and (ii) cause the transfer of a forfeited
security deposit (or portion thereof) to Owner’s Account.
	 
	 	(d)	 	Notwithstanding anything to the contrary contained herein, in the event that the Lender
shall require cash management procedures in connection with any Financing, and such
procedures are made known to Manager in writing, Manager agrees, at Owner’s expense, to
comply with such procedures and further agrees that the cash management procedures set forth
herein shall be

27

 

	 	 	 	deemed revised to the extent necessary to comply with such Lender-promulgated
procedures.

	3.8.	 	Payment of Expenses and Capital Expenditures.

	 	(a)	 	Manager shall pay all expenses of operating the Property from the Controlled
Disbursement Account including, without limitation, Operating
Expenses, Debt Service and
Capital Expenditures, to the extent there are sufficient funds in such Controlled
Disbursement Account to pay such amounts. All such expenses shall be paid in the order
provided for in subsection 3.8(c) below. At the discretion of Owner, Capital
Expenditures may be required to be approved by Owner prior to payment or be funded
separately by Owner. If Owner elects to fund the Capital Expenditures separately,
Capital Expenditures are to be requested based on actual expenditures and supported by
actual invoices. If and when a requisition is made, Manager must provide the following:

	 	(i)	 	an itemization by category of the Capital Expenditure;
	 
	 	(ii)	 	within each Capital Expenditure type (i.e. tenant
improvements, Leasing Commissions or building improvements) a brief summary by
Tenant or type of improvement which indicates what was previously spent, the
current request and the estimated amount to complete the project;
	 
	 	(iii)	 	a comparison to the original Budget with an explanation for
any variance; and
	 
	 	(iv)	 	copies of supporting invoices.

	 	(b)	 	If the funds on deposit in the Concentration Account and the Controlled
Disbursement Account are insufficient or projected to be insufficient to cover the
amounts necessary to pay the Operating Expenses, Debt Service and Capital Expenditures
for such month, Manager shall promptly notify Owner, and Owner shall, in its sole and
absolute discretion, make up such negative cash flow by depositing an amount equal to
the deficit in the Concentration Account. If requested by Owner in writing, Manager
may, but shall not be obligated to, advance Manager’s own funds on behalf of Owner to
make up any negative cash flow; and, if Manager makes any such advance from Manager’s
own funds at the request of Owner, Owner shall reimburse Manager for any such advance
plus interest thereon at the rate per annum publicly announced by the Depository as
its base or prime rate, from the date of such advance to but not including the date of
such reimbursement.
	 
	 	(c)	 	Manager shall use the Controlled Disbursement Account to pay when due the
following items in the following order of priority (to the extent there are sufficient
funds in such Controlled Disbursement Account to pay such amounts):

28

 

	 	(i)	 	all real estate taxes as and when they become due, and, in any event before
the date on which interest and/or any penalty becomes payable with respect thereto
and, if directed by Owner, insurance premiums as and when they become due and
payable with respect to the Property;
	 
	 	(ii)	 	if applicable, Debt Service;
	 
	 	(iii)	 	all utility charges as and when they become due and payable with respect to
the Property;
	 
	 	(iv)	 	all proper charges due and payable under the Contracts;
	 
	 	(v)	 	all amounts necessary to purchase supplies, tools, uniforms and other
materials necessary for the proper maintenance and operation of the Property;
	 
	 	(vi)	 	all other fees, costs and expenses payable pursuant to this Agreement,
including the Management Fee and other amounts due to Manager under this Agreement;
and
	 
	 	(vii)	 	all Capital Expenditures for such period.

	 	 	 	To the extent there are not sufficient Funds in the Controlled Disbursement Account to pay
the amounts owing to Manager under subsection 3.8(c)(vi) above, Owner shall be obligated
to pay such amounts, which obligation shall survive the expiration or termination of this
Agreement.

	 	(d)	 	Subject to the immediately succeeding sentence and subsection 3.2(b), Owner shall reimburse
Manager for all actual out-of-pocket expenses incurred and paid by Manager in connection with
the management, maintenance, repair and operation of the Property pursuant to the Budget. Such
expenses shall not include (except as specifically provided herein or in the Schedules
attached hereto) (i) the Manager’s central office overhead or other central office general,
leasing or administrative personnel or other expenses, (ii) travel expenses to and from the
Property, (iii) the costs of providing the reports and documents to be provided pursuant to
the provisions hereof, other than the costs and expenses incurred by Manager’s on-site staff
and the Auditor’s services hereunder, (iv) costs and expenses (including overhead)
attributable to services rendered by off site personnel of Manager or its Affiliates in
connection with the management, leasing and operation of the Property, except to the extent
such services are expressly set forth in, and are in accordance with, the Budget, or (v) costs
and expenses of Manager set forth in subsection 3.2(b).
	 
	 	(e)	 	Except as provided in subsection 3.1(b)(vii), Manager shall not make any disbursements
without Owner’s approval, for those costs and expenses which would result in variances of
actual Fiscal Year to date expenses exceeding the

29

 

	 	 	 	budgeted amounts (subject to the Variance Threshold) set forth in the then current
Budget.

	3.9.	 	Services with Respect to Financing.

	 	(a)	 	Manager shall, at the expense of Owner, in accordance with the Budget, duly
and punctually pay and perform on behalf of Owner all of those Owner’s obligations so
requested by Owner for any Financing, to the extent Manager is informed in writing of
such requirements, and use its commercially reasonable efforts to comply with all of
the terms and provisions of the Financing Documents.
	 
	 	(b)	 	Each of Manager and Owner shall promptly notify the other upon learning of any
default, or event of default or event which, with the giving of notice or the passage
of time or both, might constitute a default or an event of default under any Financing.
Manager shall consult with Owner concerning the action to be taken with respect thereto
and, at the expense of Owner, take such action as Owner shall direct.
	 
	 	(c)	 	Without the consent of Owner, Manager (i) shall not modify, or in any way
alter, the provisions of any Financing Documents and (ii) shall not take any action,
or omit to take any action or give any notice, the taking, omission or giving of which
might result in the occurrence of a default by Owner under any Financing Documents.
	 
	 	(d)	 	Each of Manager and Owner shall promptly notify the other upon receiving any
notice under any Financing (and furnish a copy of the notice received by it with its
notice to the other party) of any default, event of default or condition which, with
the giving of notice or the passage of time or both, might result in a default or
event of default by Owner under any Financing. Manager shall consult with Owner
concerning the action to be taken with respect thereto and, at the expense of Owner,
shall take such action as Owner shall direct.
	 
	 	(e)	 	Manager shall prepare all information, schedules and reports and provide any
and all materials required by (or requested by Lender and approved by Owner) any
Financing Documents, including, without limitation, preparing rent rolls, obtaining
tenant estoppel certificates, providing copies of Leases, preparing historic income
and expense data for Financings and providing debt covenant compliance information
including, but not limited to, rent rolls, annual Budget, audited financial
statements, debt service coverage ratio calculations.

	3.10.	 	Notification of Sale or Financing Transaction.
	 
	 	 	Notwithstanding anything to the contrary set forth in this Agreement, it shall be a
material covenant of Manager under this Agreement that Manager deliver a written notice to
J.P. Morgan Investment Management Inc., 245 Park Avenue, New York, New York 10167, Attn:
Benjamin G. Gifford (Fax: (212) 648-2261) and Temra

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	 	 	Wollman (Fax: (212) 648-2266) promptly upon becoming aware that any Person (including,
without limitation, any employee or agent of Owner) is offering or otherwise marketing the
Property for sale or offering the Property as collateral in connection with or arising from
any financing transaction. Manager’s failure to comply with the foregoing covenant shall
constitute a material default under this Agreement, entitling Owner to terminate this
Agreement upon notice to Manager.
	 
	3.11.	 	Inspections.
	 
	 	 	Manager acknowledges that during the Term, designated representatives of firms other than
Owner or affiliated companies, may, with Owner’s prior written consent, have reason to
review and examine during normal business hours the accounting books and records, the Lease
files, revenue, operating expenses, Tenant sales information, and other property data that
is under the control of Manager, and Manager will reasonably cooperate with these
designated representatives. Manager further acknowledges that these services are included
within the scope of this Agreement and that no additional fees are required over and above
the basic management fee contained within this Agreement.
	 
	3.12.	 	Limitation of Authority.
	 
	 	 	Notwithstanding any provision of this Agreement to the contrary, Manager shall not, without
prior approval by Owner: (a) convey, transfer, assign, pledge, hypothecate or encumber or
otherwise Lien any property or asset of Owner; (b) except as expressly provided herein,
retain attorneys on behalf of Owner; (c) enter into any dealings concerning the Property or
with Tenants of space in the Property for Manager’s own account; (d) pledge the credit of
Owner, except for purchases made in the ordinary course of business of operating the
Property or as otherwise contemplated pursuant to this Agreement in conformity with the
Budget; and (e) borrow money or execute any promissory note or other obligation or
mortgage, security agreement or other encumbrance in the name of or on behalf of Owner. The
limitations set forth in this Section 3.12 shall be in addition to all other restrictions
on the authority of Manager set forth in this Agreement.
	 
	4.	 	Services with Respect to Property Sales and Post Sale-Closing.
	 
	 	 	In regard to any potential sale of the Property, Manager shall cooperate with Owner during
the due diligence process and, as reasonably necessary, perform the following duties and
obligations during and after the sale process:

	 	(i)	 	Prepare current rent rolls, copies of Leases, historic income
and expense data and such other materials necessary to offer the Property for
sale.
	 
	 	(ii)	 	Process information requests as necessary and as requested by
Owner, or due diligence requests of potential buyers, including access to
Lease files, financial statements, service contracts, and supporting billing
and

31

 

	 	 	 	disbursement documentation.
	 
	 	(iii)	 	Prepare and provide schedules and support for closing
adjustments including revenue and expense prorations and, if necessary,
reconciliations of estimated billed recoverable expenses versus actual.
	 
	 	(iv)	 	Prepare final accounting for the sale of the Property and, as
necessary, participate in the fieldwork and preparation of the financial
statements or audited financial statements to be prepared by the Auditor. The
fieldwork would include, but not be limited to, providing access to the •
Property’s books and records and having qualified personnel available to
answer any questions which may arise during the fieldwork.
	 
	 	(v)	 	As necessary Manager shall prepare the final expense and
recoverable expense reconciliations regarding the proration of revenues and
expenses for the sale of the Property.
	 
	 	(vi)	 	Manager shall process any invoices, if applicable and as
approved by Owner, for payments made relating to property expenses for a
period of ninety (90) days after the sale date.
	 
	 	(vii)	 	Manager shall prepare, upon the request of Owner, a final
schedule of distributions to be made.
	 
	 	(viii)	 	After processing property disbursements and distributions, Manager shall
close all bank accounts for which it has authorization.

	 	 	These post-closing duties and obligations may span a period covering approximately ninety
(90) days. The Management Fees covering the period of the Owner’s interest in the property
will represent the only compensation which Manager will receive for

these services.
	 
	5.	 	Insurance
	 
	5.1.	 	Owner’s Insurance.

        Owner shall maintain in full force and effect with respect to the Property and any personal
property of Owner located at the Property and used in connection therewith, insurance policies
satisfactory to Owner issued by insurance companies, which have an A.M. Best General
Policyholder’s Service rating of not less than “A-,
VIII” (or otherwise satisfactory to Owner),
which are licensed, or approved to do business, in the state in which the Property is located and
which are otherwise satisfactory to Owner. At the request of Owner, Manager shall obtain same at
Owner’s expense, subject to the review and acceptance of all coverage by Owner. If requested by
Owner, such policies shall provide the following coverages:

	 	(a)	 	All Risk property damage insurance including, without limitation, fire,
flood, sprinkler leakage, water damage and earthquake, if applicable and available at

32

 

	 	 	 	commercially reasonable rates, in an amount and with an agreed amount endorsement
sufficient to prevent Owner from becoming a co-insurer in any loss under the policy or
equal to the replacement cost of the Property, the lesser of the two, and a deductible
approved by Owner. The policies of insurance carried in accordance with this subsection
5.1(a) shall contain (i) a replacement cost endorsement without deduction for depreciation
or obsolescence and (ii) a waiver of subrogation clause, all in form satisfactory to Owner.
	 
	 	(b)	 	Rental value insurance on the Property, if applicable, with a minimum twelve (12) month
indemnity period.
	 
	 	(c)	 	Business Interruption Insurance, if applicable, on an eighty percent (80%) Gross Earnings
Form, with a minimum twelve (12) month indemnity period and including ordinary payroll
coverages.
	 
	 	(d)	 	Commercial General and Excess Liability Insurance, written on an occurrence basis, including
blanket contractual liability, products and completed operations and personal injury coverage
with a combined single limit for any one occurrence of $15,000,000 or such higher limit as
Owner may from time to time request. Such requirement may be satisfied by a layering of
Commercial General Liability, Umbrella and Excess Liability policies, but in no event will
the liability insurance be written for an amount less than $15,000,000 combined single limit
for bodily injury and property damage liability.
	 
	 	(e)	 	Boiler and Machinery Breakdown Direct Damage Insurance and third party liability coverage
(if not covered under the Commercial General Liability Policy) with full comprehensive
coverage on a repair and replacement basis for all HVAC equipment, electrical equipment,
boilers and machinery which form a part of the Property including Business Interruption
Coverage for Loss of Rental Income in connection therewith in accordance with subsection
5.1(c) hereof.
	 
	 	(f)	 	During the course of any construction or repair of Improvements or during the course of
Restoration on the Property (other than Tenant leasehold Improvements), Builder’s Risk
Insurance on a completed value basis and on a non reporting form against “all risks of
physical loss,” including flood (if available at commercially reasonable rates), earthquake
(if available at commercially reasonable rates), collapse and transit coverage (if available
at commercially reasonable rates), during construction of such Improvements or Restoration,
with deductibles satisfactory to Owner, covering the replacement cost value of work performed
and the equipment, supplies and materials furnished (unless such equipment, supplies and
materials are required to be insured by contractors or vendors) and rent loss insurance for a
period not less than twelve (12) months in an amount satisfactory to Owner. Such policy of
insurance shall contain a “permission to occupy upon completion of work or occupancy”
endorsement, a waiver of coinsurance or an agreed amount

33

 

endorsement and an agreement by the insurer that following a loss, the
insurer will pay to the insured (i) the full value of the loss (less the
deductible) provided Owner is required to or elects to rebuild or (ii) the
actual cash value of the loss in the event Owner is not required to or does
not elect to rebuild.

	 	(g)	 	Such other insurance with respect to the Property, in such amounts as
Owner (or any lender in connection with a Financing) from time to time may
require against such other insurable hazards which at the time are commonly
insured against in respect of property similar to the Property.

Manager shall submit all insurance policies it obtains on behalf of Owner pursuant
to this Section 5.1 for Owner’s review and approval.

5.2. Manager’s Insurance.

     Manager shall, at the expense of Manager, maintain in full force and effect
insurance policies with respect to the employees of Manager satisfactory to Owner issued
by insurance companies which have an A.M. Best General Policyholder’s Service rating of
not less than “A-,VIII” which are licensed in the state in which the Property is located
and which are otherwise satisfactory to Owner. Such policies shall provide the following
coverage:

	 	(a)	 	Worker’s compensation and employer’s liability insurance subject to
the statutory limits of the state in which the Property is located. Manager
shall provide Owner with a certificate evidencing such coverage with the
following provisions: (i) coverage for injury, death or occupational disease
of Manager’s employees arising out of or in the scope of employment; and (ii)
employees’ liability insurance with a limit of at least $1,000,000 per each
accident and per each employee.
	 
	 	(b)	 	Comprehensive automobile liability insurance covering owned,
non-owned, and hired vehicles in an amount not less than $1,000,000 combined
single limit for bodily injury and property damage. Such requirements may be
satisfied by layering of comprehensive automobile liability, umbrella and
excess liability policies.
	 
	 	(c)	 	Fidelity bond and computer crime insurance with an annual limit of a
minimum of $5,000,000 for each director, officer, employee or agent of
Manager associated with the management of the Property including the handling
of receipts and disbursements.
	 
	 	(d)	 	Commercial general and umbrella liability insurance, written on an
occurrence basis, in an amount not less than $1,000,000 and $10,000,000,
respectively. Such umbrella liability insurance shall apply in excess of the
commercial general liability insurance and the insurance required in
subsections 5.2(a) and 5.2(b).
	 
	 	(e)	 	Professional liability insurance with an annual limit not less than $5,000,000

34

 

	 	 	 	per occurrence and in the aggregate with an extended period of indemnity. Such
insurance policy shall survive the termination or expiration of this Agreement for a
minimum two (2) years following the expiration or termination of this Agreement.

5.3. Blanket Insurance.

     Manager may effect any coverage required under this Article 5 under a blanket insurance
policy satisfactory to Owner, provided that (i) any such policy of blanket insurance either shall
specify therein, or the insurer under such policy shall certify to Owner, (A) the maximum amount
of the total insurance afforded by the blanket policy allocated to the Property and (B) any
sub-limits in such blanket policy applicable to the Property, which amounts shall not be less than
the amounts required pursuant to this Article 5; (ii) any such policy of blanket insurance shall
comply in all respects with the other provisions of this Article 5; and (iii) the protection
afforded under any policy of blanket insurance hereunder shall be no less than that which would
have been afforded under a separate policy or policies relating only to the Property.

5.4. Policies.

	 	(a)	 	The insurance maintained under Section 5.1 shall name Owner as the Insured,
and Manager as additional insured as their interests may appear. Such insurance may
also be extended to name other persons as Owner may specify, from time to time, as
additional insureds as their interests may appear.
	 
	 	(b)	 	The insurance maintained under Section 5.2 shall name Manager as the insured
thereunder. The insurance maintained under subsections 5.2(b) and (d) shall name Owner
and such other persons as Owner may specify, from time to time, as additional insureds
as their interests might appear.
	 
	 	(c)	 	All insurance maintained under this Article 5 shall provide that (i) no
cancellation or reduction thereof shall be effective until at least thirty (30) days
after receipt by Owner and Manager of written notice thereof; and (ii) all losses
shall be payable notwithstanding any act or negligence of Manager or any Tenant or
their partners, directors, officers, employees or agents which might, absent such
agreement, result in a forfeiture of all or part of such insurance payment and
notwithstanding (a) the occupation or use of the Property for purposes more hazardous
than permitted by the terms of such policy, or (b) any foreclosure or other action or
proceeding taken pursuant to the provision of any mortgage with respect to the
Property or (c) any change in title or ownership of the Property. In the event of a
Financing all insurance shall comply with the terms of such Financing.
	 
	 	(d)	 	Manager shall furnish to Owner, without notice or demand, not later than
fifteen (15) days prior to the expiration date of each policy required to be
maintained hereunder, certificates of insurance or other evidence satisfactory to
Owner of the renewal thereof, and evidence satisfactory to Owner of

35

 

	 	 	 	payment of the premiums therefor. Upon Owner’s request, Manager shall deliver a
copy of each policy certified to be a true copy by the insurer or insurance broker
with respect to such policy.

5.5. Payment of Premiums by Owner.

     If Manager fails to maintain the insurance required to be maintained under this Article 5
(including the insurance on behalf of Owner that Owner may request pursuant to Section 5.1) or
fails to deliver evidence of insurance, Owner may, but shall not be obligated to, obtain such
insurance and pay the premiums therefor and in the case of the insurance described in Section 5.2
or the duplication of any other insurance described in Article 5, Manager shall, on demand,
reimburse Owner for all sums advanced and expenses incurred in connection therewith other than in
connection with insurance on behalf of Owner.

5.6. Claims.

     In the event of a loss related to the Property under any of the insurance policies described
in Section 5.1 and subsections 5.2(b), and (d), Manager shall, if Manager has knowledge of the
loss, promptly and timely after learning of same, file a claim on behalf of Owner (and Manager if
such party is also an insured) and use its commercially reasonable efforts and due diligence to
monitor such claim on behalf of such insured party and cooperate fully with any appointed
representatives, consultants and adjusters retained by or on behalf of the insurance companies’
interests.

5.7. Waiver.

     Owner shall waive all rights of claims against Manager under its property insurance policies
referred to in Section 5.1 and represents to Manager that such waiver of claims will not affect
the effectiveness of coverage of such policies; and Owner will obtain an endorsement, if
necessary, to confirm that the waiver of claims herein granted will in no manner affect the
coverage of such policies.

6. Manager’s Compensation

6.1. Management Fees.

	 	(a)	 	Owner shall pay Manager, and Manager shall accept, as compensation for
Manager’s management services during the Term a fee (“Management Fee”) on a monthly
basis in an amount equal to four percent (4%) of Gross Receipts actually collected by
Manager during that month.
	 
	 	(b)	 	The Management Fee for any month shall be paid as an Operating Expense on or
prior to the last day of the month to which it relates. Subject to Section 3.8(c),
Manager is hereby authorized to pay itself the Management Fee from the Controlled
Disbursement Account. To the extent there are insufficient funds in the Controlled
Disbursement Account, after compliance with the payment priority subsections of said
Section 3.8(c), to pay the Management

36

 

	 	 	 	Fee, Owner shall be obligated to pay the Management Fee.
	 
	 	(c)	 	For the purposes of this Section 6.1, the term “Gross Receipts” shall mean all
amounts actually collected as rents or other charges for use or occupancy of space or
facilities in the Property, including furniture rental, forfeited security deposits
(but only to the extent such forfeited security deposits are applied against rents owed
under the Lease in question and are not used for other purposes), percentage rent,
common area charges, reimbursements for utilities, reimbursement for taxes, tenants’
charges, late charges and other miscellaneous income with respect to the Property, but
excluding other receipts, such as (i) all amounts collected from any parking facility,
interest or investment income, (ii) security deposits (unless and until applied against
rents as provided above), (iii) insurance proceeds (except for rent loss insurance
proceeds), (iv) tax refunds, (v) Condemnation awards, (vi) dividends on insurance
policies, (vii) any lease buy out, pick up or any other consideration received by Owner
for accepting a surrender or other termination or cancellation of a Lease, voluntary or
otherwise; and (viii) proceeds of any other Capital Event.

6.2. Leasing Commissions and Expenses Generally.

     Owner shall pay, and Manager shall accept, the leasing commissions (the “Leasing
Commissions”) and expenses hereinafter specified as and for Manager’s full compensation and
reimbursement for the leasing/brokerage services to be rendered and the expenses to be incurred by
it hereunder in connection with the leasing of the Property.

6.3. Leasing Commissions on Approved Leases.

	 	(a)	 	If a new Lease with a new Tenant is approved by Owner and the same is executed
and delivered while this Agreement is in effect by or on behalf of both the Tenant and
Owner, then Owner shall pay to Manager within the times hereinafter specified, a
Leasing Commission with respect to such Lease to be determined and computed as
follows:

	 	(i)	 	an amount equal to (A) if no cooperating broker is involved,
the lesser of the market rate or four percent (4%) and (B) if a cooperating
broker is involved, the lesser of the market rate or two percent (2%), of the
Base Rent payable under, and during the first ten (10) years of the non
cancelable primary term of such Lease, other than upon the extension or
renewal thereof.
	 
	 	(ii)	 	No commission is payable for primary lease terms in excess
often (10) years.

	 	(b)	 	The Leasing Commission described in subsection 6.3(a) shall be payable as
follows:

37

 

	 	(i)	 	Fifty percent (50%) of such commission shall be due and payable upon
the execution and delivery of the Lease by or on behalf of both the Tenant
and Owner; and
	 
	 	(ii)	 	Fifty percent (50%) of such commission shall be due and
payable when tenant improvements, if any, have been completed, the Tenant
occupies the leased space, a certificate of occupancy has been issued for the
leased space and a copy has been delivered to Owner and the Tenant commences
payment of regularly scheduled monthly rent.

	 	(c)	 	Unless otherwise agreed for a specific Lease, if a Lease provides that the
Tenant shall have the right to cancel the Lease prior to the expiration of the term
thereof, the Leasing Commission described in subsection 6.3(a) shall be determined and
computed only upon the non-cancelable portion of the term. If the Tenant elects not to
cancel the Lease and if the right to cancel relates to the first five (5) years of the
term, an additional Leasing Commission determined and computed for the balance of the
primary term as described in subsection 6.3(a) shall be payable when the right to
cancel expires, but if the right to cancel relates to a period after the first five
(5) years of the term, the Tenant’s election not to cancel shall be treated as an
extension of the Lease, and an additional Leasing Commission determined and computed
as described in Section 6.4 shall be payable when the option to cancel expires.
	 
	 	(d)	 	In addition, Owner shall reimburse Manager for:

	 	(i)	 	the reasonable actual out-of pocket costs of all advertising
plans and promotional materials approved by Owner; and
	 
	 	(ii)	 	the cost of all reasonable attorneys’ fees incurred in the
leasing of any space at the Property, provided that, in each case, the use of
outside attorneys and fees payable thereto have been approved in advance by
Owner (such attorneys to be retained and paid by Owner).

Manager shall not be entitled to reimbursement from Owner for any costs or expenses of any
kind or nature, except to the extent specifically set forth in this Section 6.3 (D).

6.4. Leasing Commissions on Extensions and Renewals.

     With respect to an extension or renewal of a Lease, whether under a Lease with an existing
Tenant, or a modification or extension of an existing Lease, and when the Tenant occupies the
leased space with respect to such extension, then Owner shall pay to Manager a Leasing Commission
with respect to any such extension or renewal equal to fifty percent (50%) of the Leasing
Commission that would have been determined and computed to be payable for a new Lease with a new
Tenant under subsection 6.3(a) with respect to the Base Rent due during the extension or renewal
term; provided that, regardless of whether a co-broker was involved, such Leasing Commission shall
be calculated as if no co-broker was involved. The Leasing Commissions payable by Owner pursuant
to this Section 6.4 shall be

38

 

payable one hundred percent (100%) upon the execution and delivery of the applicable Lease
amendment or renewal by or on behalf of both the Tenant and Owner (including, if applicable, by
Manager on behalf of Owner in accordance with the provisions hereof).

6.5. Definition of Base Rent.

     For the purpose of computing any Leasing Commission due and payable hereunder, the term “Base
Rent” shall mean the fixed rent stated in the Lease in question (regardless of how such rent is
denominated), but excluding the following items of additional rent (regardless of how such items
are denominated and whether or not they are identified separately from the fixed rent under such
Lease or payable as part of, or an increase in, the fixed rent):

	 	(a)	 	any additional rent payable pursuant to any escalation provision in such Lease
and representing the Tenant’s share of Owner’s operating costs and expenses, real
estate taxes, utilities, insurance and the like or any increase therein, including any
escalation provision which is determined on the basis of any consumer price or other
index;
	 
	 	(b)	 	any additional rent representing reimbursement to Owner for electricity, gas,
oil or other utility charges or service paid by Owner in respect to the Tenant’s
leased space which are not to be provided by Owner during regular building hours
pursuant to the applicable standard form of lease;
	 
	 	(c)	 	any additional rent representing (i) special tenant services, which in the
judgment of Owner, exceed those normal services provided to all Tenants or (ii) an
amortization of the Tenant’s contribution to the Owner for tenant finish which is
non-standard tenant finish or unique to a specific Tenant’s use or occupancy, or any
increase in the base rent (over the prevailing base rent quoted by Owner to other
prospective Tenants) which represents an amortization of the cost of such tenant
finish;
	 
	 	(d)	 	reimbursements to Owner for advances made pursuant to a Lease;
	 
	 	(e)	 	rent for parking;
	 
	 	(f)	 	any additional rent payable for space based upon a percentage of sales or
gross receipts, except that, in the case of a Lease which provides that only a
percentage rent and no base rent, is payable either for a specified period of time or
for the entire term of such Lease, the base rent shall be deemed to be the amount to
be determined by Owner and Manager in good faith prior to entering into any such
Lease;
	 
	 	(g)	 	any damages, penalty payment, service charge, late charge or cancellation
policy and/or interest relating to any of the foregoing;

39

 

	 	(h)	 	rent for services or facilities available to a Tenant at locations other than
the Tenant’s leased space at the Property (including any storage space rental);
	 
	 	(i)	 	rentals payable upon continuation of a Lease on a month-to-month basis;
	 
	 	(j)	 	any consideration received by Owner for the sale or lease of any personal
property or fixtures used in connection with the Property;
	 
	 	(k)	 	amounts payable, by reason of direct payment by a Tenant for electricity,
heat, air conditioning, utilities, supplies and/or other goods and services;
	 
	 	(1)	 	any lease buy-out, pick-up or any other consideration received by Owner for
accepting a surrender or other termination or cancellation of a lease, voluntary or
otherwise;
	 
	 	(m)	 	any sublease or other profits received by Owner as a result of subleasing or
assignments done by a tenant;
	 
	 	(n)	 	any security deposit or payment of rent in advance as security; and

	 
	 	(o)	 	any other rent which is not base rent.

6.6. Cooperating Brokers, Finders and Other Persons.

	 	(a)	 	In the case of each Lease entered into with the participation of a cooperating
broker Owner shall pay or cause to be paid the Leasing Commissions set forth in a
separate agreement between Owner and the cooperating broker. Any payment of a Leasing
Commission to Manager or a cooperating broker shall include and cover any salesperson
of either of them who may be entitled to share in such commission.
	 
	 	(b)	 	Except as specified in subsection 6.6(a) with respect to a Leasing Commission
which is to be paid to a cooperating broker, and except as provided for in the last
sentence of subsection 3.3(a), if applicable, Manager shall be solely responsible for
commissions, fees, charges and expenses of all brokers, sales persons, finders and
other persons involved in procuring or producing Tenants for, or negotiating Leases
with respect to, the Property; and Manager shall indemnify, defend and hold harmless
Owner from and against any and all claims for commissions, fees, charges or expenses
of any and all brokers, sales persons, finders and other persons, and any and all
Damages, relating thereto, except in any such case, to the extent of Owner’s wrongful
acts or omissions. The provisions of this subsection 6.6(b) shall survive the
expiration or termination of this Agreement.

40

 

6.7. Leasing Commissions Payable After Termination.

     Manager shall be entitled to receive the Leasing Commissions specified herein with respect to
any Lease or renewal, extension or expansion of an existing Lease for which it commenced
negotiations during the Term, provided that (a) Manager lists such Lease in a certificate delivered
to Owner within ten (10) days after the termination of this Agreement and (b) such Lease or
renewal, extension or expansion of an existing Lease is executed and delivered by the Tenant and
Owner within ninety (90) days after the termination of this Agreement. Owner shall negotiate in
good faith with the Tenant or prospective Tenant in question in an effort to consummate the
extension or expansion of Lease in question within said ninety (90) day period. Except as expressly
provided in this Section 6.7, no Leasing Commission shall be payable to Manager with respect to (i)
any new Lease entered into after the termination or expiration of this Agreement or (ii) any
renewal, extension or expansion option contained in any Lease if such option is exercised by the
Tenant after the termination or expiration of this Agreement. Notwithstanding the foregoing or
anything to the contrary contained herein, no Leasing Commissions provided for in this Section 6.7
shall be payable to Manager if this Agreement is terminated as a result of (a) the sale of the
Property to a third party or (b) Manager’s default hereunder (but in each case without affecting
Manager’s right to receive commissions earned prior to the date of termination).

6.8. No Duplication.

     No fees or reimbursement of expenses paid by Owner hereunder shall be duplicative of any
other amounts paid by Owner under this Agreement, or any other agreement to which Manager or any
Affiliate of Manager and Owner or any Affiliate of Owner are parties.

6.9. No Other Fees.

     Manager acknowledges and agrees that it shall not be entitled to any fees or commissions for
the performance of its duties and obligations under this Agreement except for the Management Fee,
and the Leasing Commissions.

7. Term

7.1. Term.

     The Term shall commence as of the date hereof and shall expire on the first (1st) anniversary
of the date hereof (the “Initial Term”), unless extended or sooner terminated as hereinafter
provided.

7.2.
Extension.

     After the expiration of the Initial Term, subject to termination under Section 7.3, the term
of this Agreement shall be automatically extended for an additional one (1) year period.

41

 

7.3. Termination.

	 	(a)	 	In the event of the sale of all or substantially all of the Property by Owner
(including any sale by agreement, foreclosure or otherwise), this Agreement shall
terminate upon the consummation of such sale.
	 
	 	(b)	 	If any one or more of the following events (each an “Event of Default”) shall
occur and be continuing:

	 	(i)	 	if Manager shall assign this Agreement or delegate its
duties hereunder without the consent of Owner;
	 
	 	(ii)	 	if any material license or qualification held by Manager and
necessary for the performance of its duties or services hereunder shall be
terminated or suspended, and such termination or suspension, as the case may
be, is not reversed within thirty (30) days following notice thereof by the
applicable licensing authority or Owner;
	 
	 	(iii)	 	if Manager or any of its directors, officers or employees
shall misappropriate any funds of Owner or otherwise be guilty of gross
negligence, willful misconduct, bad faith fraud, malfeasance or breach of
fiduciary duty, reckless or criminal misconduct in connection with Manager’s
duties hereunder;
	 
	 	(iv)	 	if Manager shall fail to pay any amount payable to Owner under
this Agreement when due and such default shall continue for five (5) days
after written notice thereof to Manager;
	 
	 	(v)	 	(a) if Manager shall fail to comply with any provision of this
Agreement (other than those described in subsection 7.3(b)(i) through (iv) and
(vi) through (viii)) and such Default shall continue for ten (10) days after
notice of such Default is given by Owner to Manager; (b) or, if such Default
cannot reasonably be cured within such ten (10) day period, if Manager shall
fail to commence the curing of such Default within such ten (10) day period
(and to notify Owner within such ten (10) day period that Manager has
commenced such cure and will prosecute such cure diligently and complete the
same, which notice shall specify Manager’s estimate of the time period within
which such cure will be completed) or, thereafter, shall fail to prosecute
such cure diligently and complete the same within sixty (60) days; (c) or if,
after the ten (10) day period described in clause (a) of this subsection
7.3(b)(v), Owner is subject to any criminal liability or unbonded civil
liability, or the Property is subject to any unbonded Lien or Owner or the
Property is subject to any material risk of loss by reason of Manager’s
failure to comply with such provision of this Agreement;
	 
	 	(vi)	 	if Manager shall fail to follow any lawful direction of Owner with

42

 

	 	 	 	respect to the Property which direction complies with this Agreement and such
Default shall continue for five (5) Business Days after notice of such Default
given by Owner to Manager;
	 
	 	(vii)	 	(a) if Manager shall commence a voluntary case or other proceeding seeking
liquidation, reorganization or other relief with respect to itself or its debts under
any bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidation, custodian or
other similar official of its or any substantial part of its property, or shall
consent to any such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall fail generally to pay
its debts as they become due, or shall take any corporate action to authorize any of
the foregoing; or (b) if an involuntary case or other proceeding shall be commenced
against Manager seeking liquidation, reorganization or other relief with respect to it
or its debts under any bankruptcy, insolvency, reorganization or other similar law now
or hereafter in effect or seeking the appointment of a trustee, receiver, liquidate,
custodian or other similar official of it or any substantial part of its property, and
such involuntary case or other proceeding shall remain undismissed and unstayed for a
period of ninety (90) days; or (c) if an order for relief shall be entered against
Manager under any bankruptcy, insolvency, reorganization or other similar law now or
hereafter in effect; or
	 
	 	(viii)	 	if there shall be a dissolution or termination of the corporate existence of
Manager by merger, consolidation or otherwise;

then, following the occurrence of any such Event of Default, Owner shall have the right to
terminate this Agreement by notice to Manager and to exercise any and all other rights and
remedies available under this Agreement and at law or in equity.

	 	(c)	 	Notwithstanding anything to the contrary contained herein, Owner shall have the right to
terminate this Agreement upon thirty (30) days’ prior written notice to Manager, with or
without cause.
	 
	 	(d)	 	In the case of an Event of Default under subsections 7.3 (b)(vii)(a) or (c), the notice of
termination shall be deemed to have been given upon the occurrence of such Event of Default.
	 
	 	(e)	 	Following the expiration or termination of this Agreement, Manager shall cooperate fully
with Owner and Owner’s agent and representatives to effectuate an orderly transition in
connection with the management and/or operation of the Property. Upon the expiration or
termination of this Agreement, or as otherwise provided in Article 4, Manager shall deliver
to Owner any (i) monies owed to Owner and/or tenant security deposits held or

43

 

	 	 	 	received by Manager for Owner’s account, (ii) a final accounting within thirty (30)
days after the last day of the calendar month in which such termination occurs,
(iii) all books, records, Leases, Contracts, agreements, and other documents and
instruments in Manager’s possession or control relating to the Property, or the
management or operation thereof, (iv) the unused inventory of all supplies,
materials, tools and equipment used in connection with the management and/or
operation of the Property, and (v) all keys to any locks on the Property then in the
possession of Manager, together with any plans and specifications pertaining to the
Property then in the possession of Manager. The provisions of this subsection 7.3(e)
shall survive the expiration or termination of this Agreement.

7.4. Determination of Fees.

     All fees and other sums payable by Owner to Manager hereunder (except as otherwise provided
herein) shall cease and be determined (subject to claims by Owner for Damages in connection with
defaults by Manager) as of the expiration or termination of this Agreement, but the obligation to
pay such determined but unpaid fees and reimbursements shall survive the expiration or termination
of this Agreement. Management Fees for partial months shall be pro rated on the basis of the
number of days in said month. Leasing Commissions are deemed to be earned at the time of lease
execution and shall be paid in accordance with Sections 6.3, 6.4, 6.5, 6.6 and 6.7.

8. Miscellaneous

8.1. Notices.

     All notices, requests, permissions, waivers and other communications (individually and
collectively, a “Notice”) to either party hereunder shall be in writing and, unless otherwise
specified herein, shall be delivered by hand, facsimile, United States registered or certified
mail, return receipt requested, United States Express Mail, Federal Express, Airborne Express or
any other national overnight express delivery service (in each case postage or delivery charges
paid by the party giving such communication) addressed to the party to whom such communication is
given at its address or facsimile number set forth below:

If to Owner, to:

c/o J.P. Morgan Investment Management Inc.

245 Park Avenue

New York, New York 10167

Attention: Temra Wollman

Facsimile: 212-648-2266

If to Manager, to:

44

 

8 Greenway Plaza, Suite 1000

Houston, Texas 77046 

Attention: Stephen Hefner 

Facsimile: 713-850-0498

     Unless otherwise specified herein, each such Notice addressed and given as set forth above
shall be effective (i) the date of receipt of such Notice, or attempted delivery of such Notice,
if receipt is refused; and (ii) if sent by mail as aforesaid, the date which is seventy-two (72)
hours after such Notice is deposited in the mail, postage prepaid as aforesaid. Any party listed
above may change its address under this Section 8.1 by notice to the other parties listed above
provided that no such address shall be located outside of the United States of America. As a
condition to the effectiveness of any Notice delivered by facsimile, a confirmation copy of such
Notice must also be delivered by hand, United States registered or certified mail, return receipt
requested, United States Express Mail, FedEx, Airborne Express or any other national overnight
express delivery service.

8.2. Representations and Warranties of Manager.

     Manager represents and warrants to Owner that (i) Manager is a corporation, duly organized and
validly existing and in good standing under the laws of the State of Texas and has all requisite
power and authority to carry on its business as now conducted and to execute, deliver and perform
its obligations under this Agreement; (ii) the execution, delivery and performance by Manager of
this Agreement are within its power, have been authorized by all necessary corporate action and do
not contravene any provision of its by-laws or articles of incorporation; (iii) this Agreement has
been duly executed and delivered by Manager; (iv) this Agreement is a valid and binding obligation
of, Manager; (v) the execution, delivery and performance by Manager of this Agreement do not
conflict with or result in a breach of any of the provisions of, or constitute a default under, any
bond, note or other evidence of indebtedness, indenture, mortgage, deed of trust, loan agreement or
similar instrument, any Lease or any other material agreement or contract by which Manager, or its
activities or the Property is bound or any applicable law or order, rule or regulation of any court
or governmental authority having jurisdiction over Manager, its activities or the Property; and
(vii) no order, permission, consent, approval license (other than those already held by Manager),
authorization, registration or filing by or with any governmental authority having jurisdiction
over Manager, its activities or the Property is required for the execution, delivery or performance
by Manager of this Agreement.

8.3. No Partnership, etc.

     Nothing in this Agreement shall be construed as making Owner or Manager partners, joint
ventures or members of a joint enterprise or as creating between Owner and Manager any employer
employee relationship.

8.4. Severability.

     If any provision of this Agreement or the application thereof to any Person or circumstances
shall be held invalid or unenforceable, the other provisions of this Agreement

45

 

or the application of such provision to other Persons or circumstances shall not be effected
thereby but shall continue to be valid and enforceable to the fullest extent permitted under
applicable law.

8.5.
Modification.

     Except as specified herein, no provision of this Agreement shall be modified, waived or
terminated except by an instrument in writing signed by the party against whom such modification,
waiver or termination is to be enforced.

8.6. Successors and Assigns.

	 	(a)	 	This Agreement shall be binding upon and inure to the benefit of Manager and
Owner and their respective successors and assigns, and all references in this
Agreement to “Manager” and “Owner” shall include the respective successors and
assigns of such parties.
	 
	 	(b)	 	Notwithstanding the foregoing, Manager shall not assign this Agreement or
delegate its duties and obligations hereunder without the prior written consent of
Owner, which consent may be granted or withheld in the sole and absolute discretion
of Owner.

8.7. Limitation of Liability.

     Notwithstanding anything to the contrary, if Manager shall recover any judgment against Owner
in connection with this Agreement, Manager shall look solely to Owner’s interest in the Property
for the collection or enforcement of any such judgment, and no other assets of Owner shall be
subject to levy, execution or other process for the satisfaction or enforcement of such judgment,
and neither Owner nor any Person having an interest in Owner shall be liable for any deficiency.

8.8. Governing Law/Consent to Jurisdiction/Waiver of Trial by Jury.

     THIS AGREEMENT WAS NEGOTIATED IN THE STATE OF NEW YORK, AND ENTERED INTO BY OWNER AND MANAGER
IN THE STATE OF NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED BY THIS AGREEMENT, AND IN ALL RESPECTS,
INCLUDING, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY,
PERFORMANCE AND ENFORCEABILITY, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS) AND
ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH
PARTY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY

46

 

CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT AND THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST EITHER PARTY HERETO ARISING OUT OF OR RELATING
TO THIS AGREEMENT MAY ONLY BE INSTITUTED IN A FEDERAL OR STATE COURT IN THE STATE OF NEW YORK,
COUNTY OF NEW YORK, AND EACH PARTY WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED
ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING. OWNER AND MANAGER
HEREBY IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY SUCH COURT IN ANY SUIT, ACTION OR
PROCEEDING. MANAGER DOES HEREBY DESIGNATE AND APPOINT

CT CORPORATION SYSTEM

111 EIGHTH AVENUE, 13TH FLOOR

NEW YORK, NEW YORK 10011

(212) 894-8940

     AS SUCH PARTY’S AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND
ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE
COURT IN NEW YORK, NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS
AND WRITTEN NOTICE OF SAID SERVICE MAILED OR DELIVERED TO SUCH PARTY IN THE MANNER PROVIDED HEREIN
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH PARTY (I) SHALL GIVE PROMPT NOTICE TO THE
OTHER PARTY OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER, (II) MAY AT ANY TIME AND
FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK
(WHICH SUBSTITUTE AGENT AND OFFICE SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF
PROCESS), AND (III) SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW YORK, NEW YORK, OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.

     EACH PARTY, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH ITS COUNSEL,
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY
IN ANY ACTION BROUGHT WITH RESPECT TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY COURSE OF CONDUCT, DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS
OF ANY PARTY TO THIS

47

 

AGREEMENT. EACH PARTY AGREES THAT IT SHALL NOT SEEK TO CONSOLIDATE, BY COUNTERCLAIM OR OTHERWISE,
ANY SUCH ACTION IN WHICH A JURY TRIAL HAS BEEN WAIVED WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED.

     These provisions shall not be deemed to have been modified in any respect or relinquished by
either party hereto except by a written instrument executed by such party.

8.9. Confidentiality.

     Manager covenants and agrees that references to Owner shall identify Owner as AmREIT SSPF
Preston Towne Crossing, LP. Manager covenants and agrees to obtain the approval of Owner, which
approval may be withheld in Owner’s sole discretion, before referencing or identifying Owner in
brochures, signs, tombstones, advertisements or other items placed in general circulation regarding
the Property, or any part thereof, or Manager or Owner. Manager covenants and agrees with Owner
that Manager will not disclose to any third party the participation of JPMIM or its Affiliates in
the transactions contemplated hereby (other than to any entity controlled by or under common
control with Manager or as consummation of the transactions contemplated hereby) except with the
approval of Owner or Morgan, which approval may be withheld in Owner’s or Morgan’s sole discretion.

     Each party agrees, for itself and all persons retained or employed by such party in
performing its obligations hereunder, to hold in confidence and not to use or disclose to others
any confidential or proprietary information of the other party heretofore or hereafter disclosed
to such party, except where the other party specifically authorizes such party to disclose any
such confidential or proprietary information to others or such disclosure reasonably results from
the performance of such party’s obligations hereunder. The provisions of this Section shall
survive the expiration or termination of this Agreement.

8.10. Counterparts.

     This Agreement may be signed in any number of counterparts, each of which shall be deemed to
be an original, with the same effect as if the signatures thereto and hereto were on the same
instrument.

8.11. Exclusive Benefit.

     Neither this Agreement nor any provision hereof nor any service, relationship or other matter
alluded to herein shall inure to the benefit of any third party (except a successor or assign of
Owner and its mortgagees, if any), 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 bankrupt or insolvent estate of either party, or to the creditors or claimants in
such an estate. Without limiting the generality of the foregoing sentence, it is specifically
understood and agreed that insolvency or bankruptcy of either party hereto shall, at the option of
the other party, void all rights of such insolvent or bankrupt party hereunder (or as many of such
rights as the other party shall elect to void) except to receive any moneys which are due to the
insolvent or bankrupt party.

48

 

8.12. Attorney’s Fees.

     If either party hereto shall obtain a judgment against the other party in connection with a
dispute arising under or in connection with this Agreement (whether in an action or through
arbitration), such party shall be entitled to recover its court (or arbitration) costs, and
reasonable attorneys’ fees and disbursements incurred in connection therewith and in any appeal or
enforcement proceeding thereafter, in addition to all other recoverable costs.

8.13. Competing Properties.

     Except as set forth in this paragraph, each party may own, invest in, develop, operate,
manage and/or lease properties which compete with the Property and the other party shall have no
interest in such competing properties and this Agreement shall not apply to any such competing
properties. Manager hereby covenants and agrees that so long as this Agreement remains in force,
Manager will not become manager and/or leasing agent for any other retail properties located in
the same geographic area as the Property, without giving Owner at least thirty (30) days prior
written notice.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

49

 

     IN WITNESS WHEREOF, Owner and Manager have executed and delivered this Agreement as of the
date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	AMREIT SSPF PRESTON TOWNE CROSSING, LP
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	AmREIT SSPF Preston Towne Crossing GP, LLC,

its general partner
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	PTC/BSQ Holding Company LLC, its

managing member
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	AmREIT MIG III PTC/BSQ, LLC,

its managing member
	 

	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Chad C. Braun
 

	 	 
	 

	 	Name:
	 	Chad C. Braun	 	 
	 

	 	Title:
	 	Vice President	 	 

	 	 	 	 	 	 	 
	 	 	AMREIT REALTY INVESTMENT CORPORATION
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Chad C. Braun
 

Chad C. Braun
	 	 
	 

	 	Title:
	 	Vice President	 	 

50

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