Document:

Exhibit
10.3

 

Property
Management Agreement

 

for

 

Spicewood
Springs Apartments

 

Jacksonville,
Florida

 

 

Table
of Contents

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  Article 1.

  	
  Retention of
  Manager; General Definitions

  	
  3

  
	
  1.1

  	
   

  	
  Retention of Manager

  	
  3

  
	
  1.2

  	
   

  	
  General
  Definitions

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 2.

  	
  Manager’s
  Responsibilities

  	
  6

  
	
  2.1

  	
   

  	
  General
  Responsibilities

  	
  6

  
	
  2.2

  	
   

  	
  Manager’s
  Personnel; Independent Contractor.

  	
  6

  
	
  2.3

  	
   

  	
  Executive
  Personnel; Property Manager

  	
  7

  
	
  2.4

  	
   

  	
  Schedule of
  Employees

  	
  7

  
	
  2.5

  	
   

  	
  Compliance
  with Laws, Licenses, Mortgages, Etc.

  	
  7

  
	
  2.6

  	
   

  	
  Security

  	
  9

  
	
  2.7

  	
   

  	
  Energy
  Management

  	
  9

  
	
  2.8

  	
   

  	
  Annual
  Business Plan.

  	
  9

  
	
  2.9

  	
   

  	
  Service
  Contracts.

  	
  10

  
	
  2.10

  	
   

  	
  Collection
  of Rents and Other Income

  	
  10

  
	
  2.11

  	
   

  	
  Competitive
  Bidding

  	
  11

  
	
  2.12

  	
   

  	
  Repairs

  	
  11

  
	
  2.13

  	
   

  	
  Leases.

  	
  11

  
	
  2.14

  	
   

  	
  Notices to
  Owner

  	
  13

  
	
  2.15

  	
   

  	
  Property Tax
  Appeals

  	
  14

  
	
  2.16

  	
   

  	
  No Other
  Fees

  	
  14

  
	
  2.17

  	
   

  	
  REIT Status

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 3.

  	
  Insurance
  and Claims

  	
  14

  
	
  3.1

  	
   

  	
  Owner’s
  Insurance and Rights

  	
  14

  
	
  3.2

  	
   

  	
  Manager’s
  Insurance

  	
  15

  
	
  3.3

  	
   

  	
  Indemnification.

  	
  15

  
	
  3.4

  	
   

  	
  Contractors’
  and Subcontractors’ Insurance

  	
  16

  
	
  3.5

  	
   

  	
  Waiver of
  Subrogation

  	
  17

  
	
  3.6

  	
   

  	
  Service
  Contracts

  	
  17

  
	
  3.7

  	
   

  	
  Claims

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 4.

  	
  Financial
  Reporting and Record Keeping

  	
  17

  
	
  4.1

  	
   

  	
  Financial
  Controls

  	
  17

  
	
  4.2

  	
   

  	
  Financial
  Reports: General Requirements

  	
  18

  
	
  4.3

  	
   

  	
  Periodic
  Statements.

  	
  19

  
	
  4.4

  	
   

  	
  Supporting
  Documentation

  	
  19

  
	
  4.5

  	
   

  	
  Annual
  Financial Reports

  	
  20

  
	
  4.6

  	
   

  	
  Transfer of
  Funds

  	
  20

  
	
  4.7

  	
   

  	
  Owner’s
  Property

  	
  21

  
	
  4.8

  	
   

  	
  Books and
  Records

  	
  21

  
					

 

ii

 

	
  Article 5.

  	
  Owner’s
  Right to Audit

  	
  22

  
	
  5.1

  	
   

  	
  Right to
  Audit

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 6.

  	
  Bank
  Accounts

  	
  22

  
	
  6.1

  	
   

  	
  Operating
  Account

  	
  22

  
	
  6.2

  	
   

  	
  Security
  Deposit Account

  	
  22

  
	
  6.3

  	
   

  	
  Change of
  Banks

  	
  22

  
	
  6.4

  	
   

  	
  Access to
  Account

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 7.

  	
  Payment of
  Expenses

  	
  23

  
	
  7.1

  	
   

  	
  Costs
  Eligible for Payment from Operating Account

  	
  23

  
	
  7.2

  	
   

  	
  Non-Reimbursable
  Costs

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 8.

  	
  Insufficient
  Gross Income

  	
  25

  
	
  8.1

  	
   

  	
  Priorities

  	
  25

  
	
  8.2

  	
   

  	
  Statement of
  Unpaid Items

  	
  26

  
	
  8.3

  	
   

  	
  Segregation
  of Accounts

  	
  26

  
	
  8.4

  	
   

  	
  Cash Flow
  Forecasting

  	
  26

  
	
  8.5

  	
   

  	
  Manager Not
  Obligated to Fund

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 9.

  	
  Sale or
  Financing of Property

  	
  26

  
	
  9.1

  	
   

  	
  Cooperation
  with Broker

  	
  26

  
	
  9.2

  	
   

  	
  No
  Sales/Brokerage Commissions

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 10.

  	
  Cooperation

  	
  27

  
	
  10.1

  	
   

  	
  Cooperation

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 11.

  	
  Compensation

  	
  27

  
	
  11.1

  	
   

  	
  Compensation

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 12.

  	
  Termination

  	
  29

  
	
  12.1

  	
   

  	
  Termination

  	
  29

  
	
  12.2

  	
   

  	
  Termination
  Without Notice.

  	
  29

  
	
  12.3

  	
   

  	
  Final
  Accounting

  	
  30

  
	
  12.4

  	
   

  	
  Obligation
  to Vacate: Orderly Transition

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 13.

  	
  Subsidiaries
  and Affiliates

  	
  30

  
	
  13.1

  	
   

  	
  Subsidiaries
  and Affiliates

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 14.

  	
  Notices

  	
  30

  
	
  14.1

  	
   

  	
  Notices.

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 15.

  	
  Certain
  Representations and Covenants

  	
  31

  
	
  15.1

  	
   

  	
  Manager
  Representations

  	
  31

  
	
  15.2

  	
   

  	
  Non-Competition

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  Article 16.

  	
  Miscellaneous

  	
  32

  
	
  16.1

  	
   

  	
  Word
  Meanings

  	
  32

  
					

 

iii

 

	
  16.2

  	
   

  	
  Assignment

  	
  32

  
	
  16.3

  	
   

  	
  Binding
  Provisions

  	
  32

  
	
  16.4

  	
   

  	
  Nondiscrimination

  	
  32

  
	
  16.5

  	
   

  	
  Applicable
  Law

  	
  33

  
	
  16.6

  	
   

  	
  Separability
  of Provisions

  	
  33

  
	
  16.7

  	
   

  	
  Section
  Titles

  	
  33

  
	
  16.8

  	
   

  	
  Further
  Assurances

  	
  33

  
	
  16.9

  	
   

  	
  Entire
  Agreement

  	
  33

  
	
  16.10

  	
   

  	
  Waiver

  	
  33

  
	
  16.11

  	
   

  	
  Agreement in
  Counterparts

  	
  34

  
	
  16.12

  	
   

  	
  Attorneys’
  Fees

  	
  34

  
	
  16.13

  	
   

  	
  Time Periods

  	
  34

  
	
  16.14

  	
   

  	
  Modification
  of Agreement

  	
  34

  
	
  16.15

  	
   

  	
  Time of the
  Essence

  	
  34

  
	
  16.16

  	
   

  	
  Construction
  of Agreement

  	
  34

  
	
  16.17

  	
   

  	
  Consent and
  Approvals

  	
  34

  
	
  16.18

  	
   

  	
  Use of
  Owner’s Name Prohibited

  	
  34

  
	
  16.19

  	
   

  	
  Exculpation

  	
  34

  
	
  16.20

  	
   

  	
  Confidentiality

  	
  35

  
	
  16.21

  	
   

  	
  No Joint
  Venture

  	
  35

  

 

	
  Exhibits

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Reporting Package

  	
   

  
	
  B

  	
   

  	
  Executive Personnel and
  Property Manager

  	
   

  
	
  C

  	
   

  	
  Reimbursable Employee
  Expense Schedule

  	
   

  
	
  D

  	
   

  	
  Annual Business Plan

  	
   

  
	
  E

  	
   

  	
  List of Service
  Contracts

  	
   

  
	
  F

  	
   

  	
  Affiliates of Manager

  	
   

  
	
  G

  	
   

  	
  Competing Property In
  Which Manager has an Interest

  	
   

  
	
  G-1

  	
   

  	
  Manager’s Other
  Properties

  	
   

  
	
  H

  	
   

  	
  Periodic Statements

  	
   

  
	
  I

  	
   

  	
  Capitalization Policy

  	
   

  
	
  J

  	
   

  	
  Chart of Accounts

  	
   

  

 

iv

 

Property
Management Agreement

 

This Property Management
Agreement is made and entered into as of this 1st day of May, 2006, by and
between BC-BAINBRIDGE SPICEWOOD LLC, a Delaware limited liability company (the “Owner”)
and STEVEN D. BELL AND COMPANY, a North Carolina corporation (the “Manager”).

 

Background

 

A.            Owner
owns the Property (defined herein).

 

B.            Manager
is skilled and experienced in the management, operation, leasing and
supervision in properties similar to the Property in the geographic area where
the Property is located.

 

C.            Owner
desires to engage Manager as an independent contractor on the terms and
conditions set forth below and Manager desires to accept such engagement.

 

NOW,
THEREFORE, in consideration of the mutual covenants set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Owner and Manager agree as
follows:

 

The
balance of this page has been intentionally left blank.

 

1

 

Part
I - Basic Data

 

The following defined
terms shall have the meaning set forth below:

 

“Commencement Date” – May 1, 2006.

 

“Management Fee Percentage” – 3%

 

“Manager’s Notice
Address” –

 

100 Old Roswell Lakes
Parkway

Suite 220

Roswell, Georgia  30076

 

“Owner’s Notice
Address”

 

BC-Bainbridge Spicewood LLC

c/o Boston Capital
Corporation

One Boston Place – Suite
2100

Boston,
Massachusetts  02108

Attn:  Mark W. Dunne

 

and

 

Goodwin Procter LLP

Exchange Place

Boston,
Massachusetts  02109-2881

Attn:  Andrew C. Sucoff, Esq.

 

“Payroll Fee
Percentage” - 1%

 

“Property” – that certain property consisting
of the multi-family apartment complex known as Spicewood Springs Apartments
located in the City of Jacksonville, County of Duval, State of Florida,
together with all personal property of Owner attached thereto, located thereon
or used in connection therewith.

 

The
balance of this page has been intentionally left blank.

 

2

 

Part
II - Standard Terms

 

Article 1. Retention of
Manager; General Definitions

 

1.1           Retention of Manager. Owner hereby
retains Manager to perform the services described below in accordance with the
terms and conditions of this Agreement, utilizing trained, experienced
personnel and employing professional real estate management practices and
techniques. Manager accepts the relationship of trust and confidence
established between it and Owner by this Agreement and covenants to use its
best skill and prudent business judgment in furthering the interests of Owner. Manager
will act in a fiduciary capacity for the benefit of Owner with respect to the
proper protection of and accounting for the Property. Manager’s duties and
responsibilities will commence on the Commencement Date and shall continue
until the expiration or earlier termination of this Agreement in accordance
with Article 12.

 

1.2           General
Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:

 

“Affiliate of Manager” shall mean any person or
entity which (i) is a director, officer, partner, member or trustee of Manager,
or in which Manager or any Manager Owner is a director, officer, partner,
member or trustee, (ii) has any direct or indirect legal or beneficial interest
in Manager, or in which Manager or any Manager Owner has any direct or indirect
legal or beneficial interest, or (iii) directly or indirectly controls, is
controlled by or is under common control with Manager.

 

“Agreement” shall mean this Property Management
Agreement, which consists of Part I and Part II and such other Parts
as may be attached hereto and executed by Owner and Manager, including all
Schedules and Exhibits hereto, all as amended from time to time in accordance
with the terms hereof.

 

“Annual Business Plan” shall mean the annual
business plan to be prepared by Manager and approved by Owner in accordance
with Section 2.9.

 

“Approved Annual Business Plan” shall mean, at
any time, the Annual Business Plan as then approved by Owner in accordance with
Section 2.9.

 

“Books and Records”  shall have the meaning set forth in Section 4.8.

 

“Business Day” shall mean every day that is not
a Saturday, Sunday or day on which banks in Massachusetts or the state in which
the Property is located are required by law or executive action to be closed
for the transaction of normal banking business.

 

“Chart of Accounts” shall mean the form of
chart of accounts approved by Owner, a copy of which is included in the
Reporting Package, as the same may be modified or replaced as required by Owner
from time to time.

 

“Competing Property” shall have the meaning set
forth in Section 15.1.

 

3

 

“Damages” shall mean all claims, actions,
suits, proceedings, judgments, damages, fines, penalties, losses and expenses,
including reasonable attorneys’ fees, consultants’ and expert witness fees and
court costs, including any such costs incurred in any bankruptcy or other legal
or administrative proceeding.

 

“Environmental
Laws” herein shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq., Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq.,
Clean Air Act, 42 U.S.C. Section 7401 et seq., Clean Water Act, 33 U.S.C.
Section 1251, et seq., Safe Drinking Water Act, 14 U.S.C. Section 300f, et
seq., Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq., Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C, Section 136 et seq.,
Atomic Energy Act of 1954, 42 U.S.C. Section 2014 et seq., and any similar
federal, state or local Laws, and all regulations, guidelines, directives and
other requirements thereunder, all as may be amended or supplemented from time
to time.

 

“Environmental
Liabilities” herein shall mean conditions that involve the presence
(whether actual or alleged) of any Hazardous Substance, conditions that are
subject to any Environmental Laws, and all claims relating thereto.

 

“Executive Personnel” shall have the meaning
set forth in Section 2.3.

 

“Final Accounting” shall have the meaning set
forth in Section 12.3.

 

“GAAP” shall mean generally accepted accounting
principles consistently applied.

 

“Gross Salaries” shall have the meaning set
forth in Section 11.1.

 

“Hazardous Materials”
shall mean any hazardous, toxic or dangerous substance, material, or waste as
defined for purposes of the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. 9601, et  seq.,
or any other federal, state or local law, ordinance, or regulation applicable
to the Property and establishing standards and/or requirements for liability,
storage, uncontrolled loss, seepage, filtration, disposal, removal, use or
existence of a hazardous, toxic or dangerous substance, material or waste,
including, without limitation, petroleum or petroleum products, asbestos,
radon, polychlorinated biphenyls and all of those chemicals, substances,
materials, controlled substances, objects, conditions, wastes, living organisms
or combinations thereof which are now or become in the future listed, defined
or regulated in any manner by any federal, state or local law based upon its
being, directly or indirectly, hazardous to human health or safety or to the
environment due to its radioactivity, ignitability, corrosivity, reactivity,
explosivity, toxicity, carcinogenicity, mutagenicity, phytoxicity,
infectiousness or other harmful or potentially harmful properties or effects.

 

“Insurance Requirements” shall mean all requirements
of any insurance policy covering the Property or the use thereof, all
requirements of the issuer of any such policy, and all requirements, orders,
rules or regulations of the National Board of Fire Underwriters (or similar
agencies) applicable to the Property.

 

“Investor” shall mean BCMR Jacksonville LLC, a Delaware
limited liability company,

 

4

 

and its successors and assigns as the “Investor” under that certain Limited
Liability Company Agreement of BC-Bainbridge LLC, a Delaware limited liability
company, dated as of May 21, 2003.

 

“Legal Requirements” shall mean all federal,
state and municipal laws, rules or regulations applicable to the Property or
the operation, occupancy, leasing, maintenance and repair thereof.

 

“Licenses” shall mean all permits, licenses, certificates,
approvals, consents and other entitlements required for the operation,
occupancy, leasing, maintenance and repair of the Property.

 

“Manager” shall have the meaning set forth in
the introductory paragraph.

 

“Management Fee” shall mean the product of (x)
the Management Fee Percentage times (y) all Rents actually collected for each
month during the term of this Agreement.

 

“Management Fee Percentage” shall have the
meaning set forth in Part I.

 

“Manager Owner” shall mean any person or entity
that owns, directly or indirectly, 25% or more of the legal or beneficial
ownership interests in Manager.

 

“Monthly Statement” shall have the meaning set
forth in Section 4.3.

 

“Operating Account” shall have the meaning set
forth in Section 6.1.

 

“Operating Budget” shall have the meaning set
forth in Section 2.9(b).

 

“Owner” shall have the meaning set forth in the
introductory paragraph.

 

“Owner Related Entities” shall mean Owner, its
direct and indirect legal and beneficial owners, and all officers, directors,
trustees, employees, advisors and agents of Owner and all of Owner’s direct and
indirect legal and beneficial owners.

 

“Payroll Fee Percentage” shall have the meaning
set forth in Part I.

 

“Payroll Handling Fee” shall mean the product
of (x) the Payroll Fee Percentage times (y) Gross Salaries for each month
during the term of this Agreement.

 

“Property Manager” shall have the meaning set
forth in Section 2.3.

 

“Reimbursable Employee Expense Schedule” shall
have the meaning set forth in Section 2.4.

 

“REIT” shall have the meaning set forth in Section 2.17.

 

“Rents” shall have the meaning set forth in Section 11.1.

 

“Reporting Package” shall mean the sample
reports prepared by Manager and attached

 

5

 

hereto as Exhibit A, as modified or supplemented as required
by Owner from time to time in accordance with Article
4.

 

“SEC” shall have the meaning set forth in Section 2.17.

 

“Service Contracts” shall have the meaning set
forth in Section 2.9.

 

Article 2. Manager’s
Responsibilities

 

2.1           General
Responsibilities. Subject to the provisions of this Agreement, Manager
shall manage, operate and maintain the Property in a first-class manner and in
accordance with the Approved Annual Business Plan. Manager shall perform its
duties hereunder:  (a) in accordance with
the terms of this Agreement; (b) in compliance with all applicable laws, rules
and regulations, including the Legal Requirements; and (c) in accordance with
the standards and practices of prudent and qualified managers that manage
properties similar to the Property on behalf of institutional owners or
investors.

 

2.2           Manager’s
Personnel; Independent Contractor.

 

(a)           Manager
shall have in its employ at all times a sufficient number of capable employees
to enable it to properly, adequately, safely and economically manage, operate,
maintain and account for the Property and otherwise perform its obligations
hereunder in accordance with the terms of this Agreement and Approved Annual
Business Plan.

 

(b)           All
matters relating to the employment, supervision, compensation, promotion and
discharge of such employees are the responsibility of Manager (with respect to
which Manager shall exercise reasonable care); Manager is in all respects the
employer of such employees. Manager shall negotiate with any union lawfully
entitled to represent such employees and may execute in its own name, and not
as agent for Owner, collective bargaining agreements or labor contracts resulting
therefrom. Manager represents that it is and will continue to be an equal
opportunity employer and that it shall advertise as such. This Agreement is not
one of agency by Manager for Owner, but one with Manager engaged independently
in the business of managing properties as an independent contractor. All
employment arrangements are therefore solely Manager’s responsibility and Owner
shall not have any liability with respect thereto. Except as set forth in Section 2.4 below, nothing contained
herein shall be deemed to permit Manager to charge Owner, or to use the income
of the Property to pay, for the services of Manager’s employees.

 

(c)           Manager
shall fully comply with all applicable laws, rules, regulations and orders
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 the Owner Related Entities
from and

 

6

 

against all Damages
arising out of or relating to Manager’s failure to comply with this Section 2.2. Manager’s indemnification
obligations under this Section 2.2(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.

 

2.3           Executive
Personnel; Property Manager. Exhibit B
sets forth the name of:  (a) the senior
executive personnel of Manager who will be responsible for the performance of
Manager’s duties under this Agreement (the “Executive Personnel”); and
(b) Manager’s on-site property manager (the “Property Manager”). Any
change in the Executive Personnel or Property Manager shall be subject to Owner’s
prior approval, which shall not be unreasonably withheld or delayed.

 

2.4           Schedule
of Employees. Attached hereto as Exhibit C is a schedule (the “Reimbursable
Employee Expense Schedule”) that sets forth:  (a) a list of Manager’s employees (including
the Property Manager) who shall be employed on-site in the direct management
and operation of the Property; (b) the respective titles and salary of each
such employee; (c) the length of time that each such employee has been employed
by Manager; (d) whether each such employee works full or part-time (and if they
work part-time, the number of hours they work per week); (e) the cost of salary,
wages and bonus that may be charged to the Property for each such employee; and
(f) whether each such employee is bonded or covered under Manager’s
comprehensive crime insurance policy. The Reimbursable Employee Expense
Schedule shall also identify any employees of Manager who are not located at
the Property but whose salaries may be charged to the Property pro rata based
upon services actually rendered by such employees directly to the Property (in
which event the Reimbursable Employee Expense Schedule shall set forth the
salaries of such offsite employees and the maximum percentage thereof that may
be charged to the Property). In no event shall Manager be entitled to charge to
the Property any employee-related expenses: 
(i) that relate to general or supervising management personnel,
accountants or auditors; (ii) for which a separate fee is charged by Manager
pursuant to this Agreement or otherwise; or (iii) that are not specifically set
forth on the approved Reimbursable Employee Expense Schedule. The expenses
chargeable to the Property pursuant to the Reimbursable Employee Expense
Schedule may be modified from time to time only as part of the Approved Annual
Business Plan or as otherwise agreed upon by Owner and Manager in writing.

 

2.5           Compliance
with Laws, Licenses, Mortgages, Etc.

 

(a)           Manager
will be responsible (at Owner’s expense) for compliance with the Legal
Requirements and Insurance Requirements. Manager, with the prior approval of
Owner (and at Owner’s expense), will promptly remedy any violation of any such
requirements, provided that in the case of emergency, or imminent threat to the
health, safety or welfare of tenants or any other person, or if so ordered by a
governmental authority, Manager shall promptly remedy such violation, provided
sufficient funds are available, and notify Owner as soon as practical, and in
any event no later than the end of

 

7

 

the next Business Day. Manager
shall notify Owner and recommend any repairs or changes to the Property or
operation thereof which will be required under proposed changes in laws,
ordinances and regulations. Notwithstanding the foregoing, Manager shall obtain
Owner’s prior written approval before engaging any legal counsel or commencing
or appearing in any legal proceeding on behalf of Owner.

 

(b)           Manager
shall, at Owner’s expense, obtain and maintain all Licenses. Manager shall
provide Owner with copies of all completed initial or renewal License
applications for Owner’s prior approval and signature, if necessary, not less
than thirty (30) days prior to the date such applications are due. All Licenses
shall be obtained in Owner’s name.

 

(c)           Except
as otherwise specifically directed by Owner, Manager will be responsible (at
Owner’s expense) for compliance with all contracts and agreements relating to
the Property, including any ground lease, space lease, covenant, condition and
restriction, reciprocal easement agreement, and mortgage, deed of trust or
other security instruments affecting the Property, provided that Manager has
copies of such agreements.

 

(d)           Manager
shall, at Manager’s individual, non-reimbursable expense, maintain its legal
existence and good standing and
obtain and maintain in effect all licenses and permits necessary or desirable
to carry out its duties hereunder.

 

(e)           Manager
shall, at Owner’s expense, make commercially reasonable efforts to ensure that
all employees and/or contractors who perform work at or for the Property have
all required Licenses and comply with all Legal Requirements.

 

(f)            Manager
shall not knowingly permit the storage, disposal, transportation, abatement, or
removal of Hazardous Materials below, at, on, about, to, from or affecting the
Property except, in each case, in full compliance with Environmental Laws. Manager
shall ensure that all Hazardous Materials, if any, used by Manager or permitted
by Manager to be used at the Property are only in an amount necessary and
customarily used for the cleaning of residential apartment buildings. To the
extent actually known to Manager, Manager shall give Owner prompt written
notice of (i) any presence of Hazardous Materials at the Property other than as
permitted in this Section 2.5(f),
(ii) any release of Hazardous Materials at the Propert, or (iii) any required
or desirable clean-up or other remediation or any other condition respecting
the Property and shall cooperate with and assist Owner in cleaning-up, remediating
or otherwise resolving the problem. Manager shall comply with all Environmental
Laws in managing the Property (and shall recommend to Owner any actions
necessary on the part of Owner or Manager to ensure compliance with all
Environmental Laws). Manager shall implement any special programs respecting
compliance with Environmental Laws or respecting Environmental Liabilities
established by Manager in its performance of its obligations under this
Agreement and pursuant to reasonable and appropriate protocols established by
Manager from time to time, as approved in advance by Owner, or as may be
otherwise established by Owner or Owner’s expert consultants at Owner’s expense
in accordance with the Approved Annual Business Plan. Owner shall have the
right to attend all meetings with

 

8

 

regulatory agencies
concerning Environmental Liabilities affecting the Property, and Manager shall
be responsible for consulting with Owner in making all decisions concerning
responses to such regulatory agency activities.

 

(g)           The
Manager shall, at Owner’s expense, implement and maintain an ongoing
environmental auditing program reasonably satisfactory to Owner and any lender
to Owner pursuant to which it shall conduct periodic investigations regarding
the compliance of activities at the Property with applicable environmental
laws, and the existence of and potential for contamination. The results of such
environmental audit shall be provided to the Owner. Without limiting the foregoing,
Manager shall be responsible for maintaining and ensuring compliance with all
operations and maintenance manuals, programs and procedures with respect to all
customary environmental issues, including but not limited to, mold, lead paint
and asbestos, if any.

 

(h)           Manager
shall comply with all aspects of the Sarbanes-Oxley Act of 2002 by developing,
documenting, and adhering to an effective system of internal controls. Owner
shall assist Manager in assessing the documentation and effectiveness of Owner’s
internal controls.

 

2.6           Security.
Subject to the Approved Annual Business Plan, Manager shall, at Owner’s
expense, maintain or cause to be maintained a security program adequate for the
needs of the Property. Manager shall promptly notify Owner of any incidents or
conditions which reflect on or affect the adequacy of the security provisions
for the Property, and shall make recommendations to Owner with respect to
security matters. Armed guards shall not be used to provide security at the
Property.

 

2.7           Energy
Management. Subject to the Approved Annual Business Plan, Manager shall
exercise best efforts to provide appropriate energy management and shall
utilize utility conservation techniques.

 

2.8           Annual
Business Plan.

 

(a)           On
or before November 15th of each year during the term of this Agreement, Manager
shall prepare and submit to Owner for Owner’s prior approval an annual business
and leasing plan in accordance with the requirements of Exhibit D hereto (as such Exhibit D may be modified by Owner
from time to time) (the “Annual Business Plan”). The Annual Business
Plan shall be a comprehensive plan for the management, operation, leasing,
repair, maintenance and promotion of the Property and for the other matters set
forth on Exhibit D. It will
include a 5 year capital plan and a market analysis including projected
population, employment, and rental growth. Manager shall consult the Owner
concerning the proposed Annual Business Plan and shall promptly incorporate
therein such changes as Owner may direct. The Annual Business Plan, and all
budgets contained therein, shall be in a form consistent with the Reporting
Package.

 

9

 

(b)           Manager
shall:  (i) perform its duties hereunder
in accordance with the Approved Annual Business Plan; and (ii) use all
reasonable efforts to ensure that the actual costs of maintaining and operating
the Property do not exceed the operating budget (the “Operating Budget”)
which is a part of the Approved Annual Business Plan either in total or in any
one accounting category. All actual expenses must be charged to the proper
account on a basis consistent with the Operating Budget classifications and
Reporting Package. No expense may be reclassified except as needed to correct
an inadvertent error. Manager will secure Owner’s prior approval for any
expenditure that will result in a variance of the greater of $5,000 or 5% of the annual budgeted amount in any one
accounting line item of the Operating Budget.

 

(c)           Owner
shall have the right to require changes in the Approved Annual Business Plan
from time to time; provided, however, that Owner shall provide Manager with at
least fifteen (15) days’ notice of such changes.

 

2.9           Service
Contracts.

 

(a)           To
the extent permitted by the Approved Annual Business Plan (so that, among other
things, the expense thereof does not exceed the corresponding amount set forth
in the Operating Budget), and subject to Section 2.11,
Manager (without the prior consent of Owner, provided that the form of the
contract has been approved by Owner) shall negotiate and enter into bona fide
contracts with parties that are not Affiliates of Manager for terms no longer
than one (1) year for electricity, gas, fuel, water, telephone, window
cleaning, ash or rubbish hauling, vermin extermination, janitorial services,
landscape maintenance and such other maintenance services for the Property as
Manager shall reasonably determine to be advisable (“Service Contracts”).
All Service Contracts:  (i) shall be in
the name of Manager as agent for Owner, (ii) shall be freely assignable, at
Owner’s option, to Owner’s nominee and (iii) shall be terminable by Owner, at
Owner’s election, upon no more than thirty (30) days’ notice without penalty or
premium. Each Service Contract shall provide that the service provider
thereunder must obtain the insurance described in Section 3.4
hereof and must provide satisfactory evidence of such insurance to Manager. Unless
Owner specifically waives such requirement, all Service Contracts shall be
subject to bid every three (3) years or more frequently if deemed necessary by
Owner. Notwithstanding the foregoing, Manager shall not, without the prior
written consent of Owner, enter into any Service Contract unless provided for
in the Approved Annual Business Plan.

 

(b)           Exhibit E lists all Service Contracts in existence as of the date of
this Agreement and, for each such contract, accurately sets forth the contract
date, the name of the service provider, the nature of the service and the
length and economic terms of the contract. Manager shall annually, each
November, update Exhibit E so that it contains an accurate and
complete description of Service Contracts affecting the Property.

 

2.10         Collection
of Rents and Other Income. Subject to Section 2.13(b),
Manager will use diligent efforts to collect all rents and other charges which
may become due at any time from 

 

10

 

any
tenant or from others in connection with or for the use of the Property and
will use its best efforts to ensure tenants’ compliance with their respective
leases. Manager will collect and identify any income from miscellaneous
services provided to tenants or the public from parking income, furniture
rental, cleaning services, tenant storage and coin-operated machines of all
types. All rents and other monies collected will be deposited in the Operating
Account. Manager will not write off any income items without Owner’s prior
approval.

 

2.11         Competitive
Bidding. All contracts for repairs, capital improvements, goods and
services will be awarded at no higher than prevailing market rates and, as to
amounts exceeding $5,000, will (unless otherwise required or permitted by
Owner) be awarded on the basis of competitive bidding conducted in a manner
satisfactory to Owner and in accordance with the Approved Annual Business Plan.

 

2.12         Repairs.
Manager shall, at Owner’s expense, make all ordinary and extraordinary repairs,
decorations and alterations of the Property, subject to the limits of the
Approved Annual Business Plan. Manager shall not make expenditures for capital
improvements unless the same are specifically set forth in the Approved Annual
Business Plan or are otherwise approved by Owner. Manager may not make
expenditures for any repair which exceed $5,000 unless approved by Owner or specifically set forth in the
Approved Annual Business Plan; provided, however, Manager may make expenditures
for repairs without Owner’s prior approval if it is necessary to prevent
imminent damage to the Property or the health or safety of any person on or
about the Property or if Owner is threatened with immediate criminal or civil
liability. Owner must be informed of any such expenditures as quickly as
possible, and in any event not
later than the end of the next Business Day.

 

Manager shall provide
regular and systematic inspections of the buildings, building systems, grounds
and parking areas in order to comply with any requirements concerning the
management or maintenance of the Property imposed upon the Property or Owner by
law, ordinance, or regulation of governmental authority and shall promptly
notify Owner in writing of any manner in which the Property is not in
compliance. An annual report on the condition of the property together with a
five (5) year capital plan shall be included in the Annual Business Plan.

 

2.13         Leases.

 

(a)           Manager
shall use all reasonable efforts to cause the Property to be fully leased to
desirable tenants in accordance with the Approved Annual Business Plan and, in
connection, therewith, shall:

 

(i)            consult
with Owner with respect to the rental rates and renewal rates of space at the
Property in preparation of the Approved Annual Business Plan;

 

(ii)           use
all reasonable efforts to obtain and keep desirable tenants for the Property in
accordance with the Approved Annual Business Plan;

 

11

 

(iii)          assist
and cooperate with any leasing agent engaged by Owner and with other licensed
real estate brokers that may have clients interested in leasing space at the
Property;

 

(iv)          ensure
the Property is staffed during customary business hours by Manager’s leasing
representatives;

 

(v)           provide
the full range of pro-active tenant services customarily provided to tenants of
first class buildings similar to the Property, including:  (1) regularly scheduled meetings with tenants
using designated tenant representatives as deemed necessary; (2) prompt
responses to all tenant complaints, inquiries and requests; (3) periodic
inspections of the Property; and (4) maintenance of a tenant log that sets
forth tenant complaints and concerns and tracks the manner in which such
complaints and concerns are resolved;

 

(vi)          subject
to Section 2.13(b) below, use
all reasonable efforts to duly and punctually observe and perform on Owner’s
behalf and, subject to the Approved Annual Business Plan, at Owner’s expense,
all of Owner’s obligations under all leases, and to preserve and keep
unimpaired the rights of Owner and the obligations of tenants under such
leases; and

 

(vii)         subject
to Section 2.13(b) below, promptly
enforce the obligations of tenants under leases and the obligations of
contractors, suppliers and similar third parties providing services or goods to
the Property.

 

(b)           Without
the consent of Owner, Manager:  (i) shall
not receive or collect any rents for more than one month in advance; (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
ejectment 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; (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; (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; (ix) shall not permit any person to occupy space at the Property
without a lease entered into in accordance with the terms of this Agreement;
and (x) shall not retain any legal counsel or collection agency to act on
behalf of Owner or Manager in connection with any lease of space at the Property.
Notwithstanding the foregoing, if the Property consists of residential
apartments, Manager may, without Owner’s prior consent, enter into, modify,
terminate and enforce residential leases, provided that all such actions shall
be consistent with the Approved Annual Business Plan.

 

12

 

(c)           Unless
otherwise approved by Owner, all leases shall be:  (i) on a standard form of lease approved by
Owner; (ii) not be for a term longer than fourteen (14) months; (iii) prepared
in accordance with leasing guidelines approved by Owner; and (iv) executed by
Manager, as agent for Owner.

 

(d)           Manager
shall meet with Owner from time to time as may be requested by Owner to advise
Owner as to the status of the leasing activities for the Property and to
apprise Owner of its marketing program and any alternative leasing. Manager
shall assist Owner in connection with all matters and questions pertaining to
its activities hereunder.

 

(e)           In
the performance of its obligations under this Agreement, Manager will comply
with the provisions of any federal, state or local law prohibiting
discrimination in housing on the basis of race, color, creed, handicap or
national origin, including Title VI of the Civil Rights Act of 1964 (Public Law
88-352, 78 Stat. 241), all requirements imposed by or pusuant to the
Regulations of the Secretary (24 CFR, Subtitle A, Part I) issued pursuant to
said Title VI, regulations issued pursuant to Executive Order 1063, and Title
VIII of the Civil Rights Act. Manager shall not discriminate against any tenant
or applicant for tenancy at the Property on the basis of race, creed, color,
religion, sex, martial status, sexual orientation, or national origin.

 

2.14         Notices
to Owner. Manager shall promptly notify Owner in writing if Manager becomes
aware of any of the following:

 

(a)           any
default or alleged default by Owner under any lease;

 

(b)           any
litigation or potential litigation affecting the Property or Owner, or any
litigation affecting Manager that could reasonably be expected to have a
material and adverse effect on Manager;

 

(c)           any
casualty, loss, injury, claim or other event relating to the Property that
might result in a claim under any applicable insurance policies;

 

(d)           any
actual or threatened condemnation of the Property or any portion thereof;

 

(e)           any
violation or alleged violation of any Legal Requirements or Insurance
Requirements;

 

(f)            any
involuntary lien filed against the Property; and

 

(g)           any
material increases or decreases in costs, expenses or income not reflected in
the Approved Annual Business Plan.

 

13

 

2.15         Property
Tax Appeals. At the direction of, and with the approval of the Owner,
Manager shall engage a tax appeal professional to annually review the tax
assessment for the Property in order to determine whether to appeal such
assessment and request an abatement.

 

2.16         No Other
Fees. Notwithstanding anything to the contrary contained in this
Agreement,  Manager shall not be entitled
to any leasing commission, construction management fee or other form of
compensation, other than the Management Fee and Payroll Handing Fee, by reason
of the leasing, supervisory or other services performed by Manager under this
Agreement.

 

2.17         REIT
Status. Manager acknowledges that Owner has informed Manager that an
affiliate of Owner intends, either now or in the future, to qualify as a “real
estate investment trust” within the meaning of Section 856 of the Internal
Revenue Code of 1986 et  seq, as amended (a “REIT”), and
that such entity’s ability to qualify as a REIT will depend principally upon
the nature of Owner’s operations. Accordingly, the Manager agrees, that the
Property shall be operated so as to enable Owner’s affiliate to qualify for
REIT status. In connection therewith and without limiting the foregoing, Owner
acknowledges that Owner has reviewed, is familiar with, and will use diligent
efforts to cause the Property to comply with, the provisions of Article 10 of
the Limited Liability Company Agreement of BC-Bainbridge LLC dated as of May
21, 2003. In addition, Manager agrees to provide such information, reports,
audits, certificates, and questionnaires as may be reasonably requested by
Owner in connection with qualification as a REIT and in connection with any and
all filings by the REIT with the Securities and Exchange Commission (“SEC”)
relating in whole or in part to the Property.

 

Article 3. Insurance and
Claims

 

3.1           Owner’s
Insurance and Rights. Manager, as an operating expense of the Property payable
from the Operating Account, will obtain and keep in force adequate property and
commercial liability insurance covering Owner as primary insured and, with respect to liability
insurance, Manager as additional insured, and otherwise in accordance with any
loan documents related to any financing to which Owner or the Property is
subject. Manager shall provide Owner with copies of policies or certificates of
insurance relating to the Property. Such insurance may be blanketed with other
insurance carried by Manager or any Affiliate of Manager, in which case a pro
rata share of the premiums will be chargeable to the Property as an operating
expense. Manager or Manager’s insurer will have the exclusive right
(chargeable, at Owner’s option, as an operating expense of the Property) to
conduct the defense of any claim, demand or suit arising out of the ownership,
operation or management of the Property. Nothing herein will be construed as
indemnifying Manager or its employees, contractors or agents against any act or
omission for which insurance protection is not available or is not required
hereunder to be carried by Owner and procured by Manager; neither is the
foregoing intended to affect the general requirement of this Agreement that the
Property will be managed, operated and maintained in a safe condition and in a
proper and careful manner. Owner will furnish whatever information is
reasonably requested by Manager for the purpose of placement of insurance
coverages and will aid and cooperate in every reasonable way with respect to
such insurance and any claim or loss thereunder. Owner will cooperate with
Manager and Manager’s insurance carrier on loss control inspections, responding
to recommendations and other safety issues.

 

14

 

3.2           Manager’s
Insurance. Manager will maintain (as an operating expense of the Property
with respect to on-site employees only) Workers’ Compensation and similar
insurance as required by law. Manager may maintain, at Manager’s expense, Commercial
General Liability Insurance. Manager will maintain the following insurance at
its own expense (not chargeable to the Property):

 

(a)           Employer’s
Liability - $500,000 each accident; $500,000 disease - policy limit; $500,000
disease - each employee.

 

(b)           Automobile
Liability - As to any vehicle owned, non-owned or hired by Manager, $1,000,000
covering losses due to the insurer’s liability for bodily injury or property
damage.

 

(c)           Medical
Expenses - $5,000 per person per accident.

 

(d)           Uninsured/Underinsured
Motorists’ Coverage for any owned car - $1,000,000.

 

(e)           Comprehensive
crime (including Employee Dishonesty) insurance with limits and terms
acceptable to Owner or a fidelity bond acceptable to Owner.

 

(f)            Excess
Liability Coverage - $5,000,000.

 

The minimum A.M. Best’s rating of each insurer shall
be A-IX. Manager will furnish Owner with certificates of insurance
simultaneously with the execution of this Agreement and whenever coverage is renewed or replaced, evidencing the
aforesaid coverages, which will include provisions to the effect that Owner
will be given at least 30 days’ prior written notice of cancellation or
non-renewal of or any material change in any of the aforesaid policies. Owner,
and any lender of Owner, if applicable, will be named as an additional insured
with respect to all insurance policies required under (b) and (d) above and as
loss payee as respects (c) above. All liability policies shall contain
endorsements that (i) delete any employee exclusion on personal injury coverage,
(ii) include employees as additional insureds and (iii) contain
cross-liability, waiver of subrogation and such other provisions as Owner may
reasonably require. Such insurance shall also include broad form contractual
liability insurance insuring all of Manager’s indemnification obligations under
this Agreement.

 

3.3           Indemnification.

 

(a)           Except
to the extent attributable to Owner’s gross negligence or willful misconduct, Manager
shall indemnify, hold harmless, protect and defend (with counsel approved by
Owner) the Owner Related Entities from and against all Damages in any manner
related to, arising out of or resulting from:

 

(i)            any
failure of Manager or Manager’s agents, servants or employees

 

15

 

to perform their
obligations under this Agreement;

 

(ii)           any
acts of Manager or Manager’s agents, servants or employees beyond the scope of
its authority under this Agreement; or

 

(iii)          any
negligence, willful misconduct or other wrongful acts or omissions of Manager
or Manager’s agents, servants or employees.

 

If the circumstances or events described in clauses
(i) through (iii) are covered by Owner’s commercial general liability
insurance, then Manager’s obligations under this Section 3.3 shall apply only to the extent Owner’s
Damages are not fully paid by Owner’s commercial general liability insurance. Notwithstanding
any other provisions of this Agreement to the contrary, Manager’s obligations
under this Section 3.3 shall
survive the expiration, termination or cancellation of this Agreement.

 

(b)           Subject
to Section 16.19, Owner shall
protect, defend, indemnify and hold harmless Manager from and against any and
all Damages arising out of the performance by Manager of its obligations and
duties hereunder in accordance with the terms hereof with respect to the
Property; provided, however, that Owner does not hereby agree, and shall not be
obligated, to so indemnify Manager from any Damages arising out of any act or
omission of Manager or any of its agents, officers, employees or
representatives, which act or omission constitutes gross negligence, willful
misconduct, is in breach of this Agreement or is outside the scope of Manager’s
authority as provided herein or any Damages for which Manager is covered by
insurance, or for which Manager would be covered by insurance if it maintained
the insurance required by this Agreement.

 

3.4           Contractors’
and Subcontractors’ Insurance. Manager will require that all parties
performing work on or with respect to the Property, including, contractors,
subcontractors and service vendors, maintain insurance coverage at such parties’
expense, in the following minimum amounts:

 

(a)           Workers’
Compensation - Statutory amount.

 

(b)           Employer’s
Liability - $500,000 each accident; $500,000 disease-policy limit; $500,000
disease - each employee.

 

(c)           Automobile
Liability - $1,000,000 covering losses due to the insurer’s liability for
bodily injury or property damage.

 

(d)           Medical
Expenses - $5,000 per person per accident.

 

(e)           Uninsured/Underinsured
Motorists’ Coverage- $1,000,000.

 

(f)            Commercial
General Liability:  Bodily injury and
property damage -

 

16

 

$1,000,000 combined
single limit with Contractual Liability coverage.

 

(g)           Excess
Liability Coverage - $5,000,000 or such greater amount as is needed for the
specific job.

 

(h)           Transit
Coverage - As needed for the specific job.

 

The minimum A.M. Best’s rating of each insurer shall
be A-IX. Manager must obtain Owner’s written permission to waive any of the
above requirements. Higher amounts may be required by Owner if the work to be
performed is deemed by Owner to be hazardous. Manager will obtain and keep on
file a certificate of insurance which shows that each such party is so insured.
Owner, and any lender of Owner, if applicable, will be named as an additional
insured with respect to Contractors’ and Subcontractors’ Auto Liability,
Commercial General Liability and Excess Liability policies. Manager must obtain
indemnification and hold harmless provisions in favor of Owner and Manager.

 

3.5           Waiver
of Subrogation. Insofar as, and to the extent that, the following provision
may be effective without invalidating or making it impossible to obtain
insurance, Manager and Owner agree that with respect to any hazard, liability,
casualty or other loss or claim which is covered by insurance then being
carried by either Owner or Manager:  (a)
the party carrying such insurance and suffering such loss releases the other
party of and from any and all claims with respect to such loss to the extent of
the insurance proceeds paid with respect thereto and specifically excepting
from such release any deductible required to be paid therewith; and (b) their
respective insurance companies shall have no right of subrogation against the
other or their respective agents, contractors, employees, licensees or invitees
on account thereof.

 

3.6           Service
Contracts. Manager shall use all reasonable efforts to include in all
Service Contracts provisions requiring the service provider to indemnify,
defend (with counsel approved by Owner), protect and hold harmless the Owner
Related Entities from all Damages in any manner arising from or related to the
acts or omissions of such service provider or its employees, agents or
contractors.

 

3.7           Claims.
Manager shall promptly investigate and make a full and timely report to Owner
of any casualty, accident, injury or other similar matter affecting the
Property. Manager shall also file such reports in a timely manner to the
applicable insurance carriers in accordance with the terms and conditions of
the relevant policies. Manager shall cooperate with and assist Owner and the
applicable insurance carrier in connection with the investigation and
processing of insurance claims affecting the Property.

 

Article 4. Financial Reporting
and Record Keeping

 

4.1           Financial
Controls. Manager will ensure such control over accounting and financial
transactions as is reasonably required to protect Owner’s assets from theft,
negligence or fraudulent activity on the part of Manager’s employees or other
agents. Uninsured losses

 

17

 

arising
from theft, gross negligence or fraud of Manager, its employees or agents are
to be borne by Manager in its individual capacity and not as an operating
expense of the Property.

 

4.2           Financial
Reports:  General Requirements. All
financial reports provided by Manager shall be subject to the following
requirements:

 

(a)           All
such reports shall comply with the terms of this Agreement, the Reporting
Package and the Approved Annual Business Plan and shall be in such medium
(e.g., computer disks or hard copy) as Owner may require;

 

(b)           Manager
will maintain, on a system and in a manner approved by Owner, current data on
rent rolls and financial and operating information in order to enable Owner to
maintain its financial systems and database;

 

(c)           Monthly
financial statements for the Property shall be closed or “cut-off” on the 20th
of each month.

 

(d)           Unless
Owner otherwise agrees, all reports shall be prepared in accordance with GAAP; Manager will ensure that books and
records are prepared timely and accurately on an accrual basis in accordance
with GAAP and presented in the format(s) required by Owner as of the date
such reports are due under this Agreement. Additionally, Manager will
ensure that proper policies and procedures will be followed and documented and
that data and other information will be maintained in accordance with all SEC
requirements, including, but not limited to, those requirements with respect to
internal controls under Section 404 of the Sarbanes-Oxley Act of 2002.

 

(e)           All
such reports shall be certified by Manager’s chief financial officer or
controller.

 

(f)            Manager
will ensure that depreciation and amortization have been recorded in accordance
with Owner’s capitalization policy attached hereto as Exhibit I.

 

(g)           In
the event of any conflict between the reporting requirements set forth in this
Agreement and those required by the Reporting Package or the Approved Annual
Business Plan, the Reporting Package or Approved Annual Business Plan, as
applicable, shall control, except with respect to reports required by Section 4.3. Owner may, upon not less than sixty (60) days’
notice to Manager, make changes in or additions to the Reporting Package. Owner
retains the right to modify such exhibits at any time immediately upon notice
to the extent required to enable Owner and its affiliates to meet the reporting
requirements of all regulatory authorities to which Owner and its affiliates
may be subject.

 

(h)           Manager
will utilize Owner’s Chart of Accounts attached hereto as Exhibit J.

 

18

 

4.3           Periodic
Statements.

 

(a)      Weekly
reports – No later than Tuesday of each week, Manager shall provide Owner with
a weekly leasing report setting forth the information required by Exhibit H.

 

(b)      Monthly
reports – On or before the first (1st) business day of each month,
Manager shall provide Owner with a monthly statement setting forth the
information required by Exhibit H
as well as any additional information that may be required by the Reporting
Package or the Approved Annual Business Plan (the “Monthly Statement”).

 

(c)      Quarterly
Statements – No later than the first (1st) business day of each
quarter, Manager will provide to Owner, quarterly financial statements for the
previous quarter as required by Exhibit H in
the format requested by Owner

 

(d)      If
requested by the Owner, Manager shall submit quarterly re-projections of the
budget no later than 15 days after the end of the quarter.

 

Unless Owner otherwise
agrees, Manager will ensure that books and records are prepared timely and
accurately on an accrual basis in accordance with GAAP.

 

4.4           Supporting
Documentation. As additional support to the Monthly Statements, Manager
will, at Owner’s request, provide copies of the following:

 

(a)           A
current leasing summary and detailed leasing activity report;

 

(b)           An
occupancy/leasing recap, including occupancy by unit type, actual versus budget
occupancy, and economic occupancy;

 

(c)           Detailed
cash receipts and disbursements journals;

 

(d)           General
ledgers;

 

(e)           Invoices
for capital expenditures and nonrecurring items;

 

(f)            Journal
entries;

 

(g)           Paid
bills if and when requested;

 

(h)           Detailed
trial balance (if available);

 

(i)            Supporting
documentation for payroll, payroll taxes and employee

 

19

 

benefits;

 

(j)            Supporting
schedules for balance sheet accounts;

 

(k)           A
review and analysis of all recovery income accruals;

 

(l)            All
bank statements and reconciliations;

 

(m)          An
aged accounts receivable listing and detailed allowance for doubtful accounts,
with an explanation of all significant delinquencies and status of collection
efforts and recommendations for write-off or reserves where appropriate;

 

(n)           An
accounts payable listing;

 

(o)           A
rent roll;

 

(p)           A summary of any comparable projects within
the competitive market in which the Property is located for which Manager or
any Affiliate of Manager provides leasing or management services or in which
Manager or any Affiliate of Manager has a direct or indirect legal, economic or
beneficial interest, except for those projects (if any) set forth on Exhibit G; and

 

(q)           An
annual inventory of personal property owned or leased in connection with the
Property.

 

4.5           Annual
Financial Reports. Manager shall cooperate with Owner’s accountants in the
preparation of financial statements, state and federal tax returns, and any
related management or audit letters or similar reporting or regulatory
requirements applicable to Owner and its affiliates, including, without
limitation, in connection with qualifying as a REIT as set forth in Exhibit H. Such materials are to be issued within sixty (60)
days after the end of each calendar year or on such other schedule as Owner may
reasonably require. At Owner’s request, Manager will engage an independent
third party firm to audit the annual records, as well as prepare partnership
tax returns at the Owner’s expense.

 

4.6           Transfer
of Funds. On or before the fifth (5th) day of every month, Manager will
remit to Owner all cash balances derived from the rents or otherwise arising
from the ownership, use or operation of the Property or the provision of
services at the Property, after deducting (a) an amount agreed to by Owner for
the Property’s working capital, and (b) known expenditures that will be paid
between that date and the fifteenth (15th) day of the same month, provided that
the same are consistent with the approved Operating Budget. The amount so remitted
will be delivered to Owner, independent of required financial reports, in the
most expeditious manner possible as directed by Owner. The schedule for the
transfer of funds and the balance permitted to remain in the Operating Account
may be changed from time to time by written instructions

 

20

 

from
Owner. At Owner’s option, the final monthly remittance will be net of the
Management Fee and/or Payroll Handling Fee.

 

4.7           Owner’s
Property. All books, records, computer disks containing Property
information, invoices and other documents received and/or maintained by Manager
pursuant to this Agreement are and will remain the property of Owner, and shall
be made available to Owner at any time with reasonable notice. Manager may
retain a copy of such information but it shall be kept confidential.

 

4.8           Books
and Records. Manager shall maintain separate and accurate books, records,
files and accounts for the Property (collectively, the “Books and Records”)
in a good and orderly fashion. The Books and Records shall be the exclusive
property of Owner, shall be kept at the Property or at Manager’s Notice Address
(or such other location as Owner may approve) and shall include the following:

 

(a)           Tenant
files, including executed leases, lease abstracts, lease amendments, original
insurance certificates, correspondence, and current rent rolls;

 

(b)           Maintenance
and repair files;

 

(c)           Accounting
books and records and supporting documentation;

 

(d)           Construction
files, competitive bid records, including site plans, as-built drawings, tenant
space plans, construction specifications, and capital improvements schedules
and information;

 

(e)           Operation
files, including HVAC maintenance schedules, warranties, and operation manuals;

 

(f)            Service
contracts, including cleaning, maintenance, landscaping, snow removal, trash
removal, etc.;

 

(g)           Permits
and licenses ( including certificates of occupancy for all tenant spaces);

 

(h)           Copies
of insurance policies or certificates; and

 

(i)            Such
other information relating to the Property as Owner requests from time to time.

 

 

21

 

Article 5. Owner’s Right to
Audit

 

5.1           Right
to Audit. Owner will at all times and without notification have the right to conduct audits and
examinations of, and to make copies of, the Books and Records, no matter where
such Books and Records are located. Such right may be exercised through any
agent or employee of Owner, or any certified public accountant designated by
Owner. Owner will also have the right to perform any and all additional audit
tests relating to Manager’s activities either at the Property or at any office
of the Manager. Should Owner discover either weaknesses in internal control or
errors in record keeping, Manager will correct such discrepancies promptly upon
Owner’s request and will inform Owner, in writing, of the action taken to correct
such audit discrepancies. All audits conducted by Owner will be at the sole
expense of Owner.

 

Article 6. Bank Accounts

 

6.1           Operating
Account. Manager will deposit all rents and other funds collected from the
operation of the Property in an interest-bearing account established for the
Property (the “Operating Account”) in a financial institution approved
by Owner. Any such rents and other funds received by Manager on or before 2:00
p.m. on a Business Day shall be deposited on that same day. Any such rents or
other funds received after 2:00 p.m. or on a day that is not a Business Day
shall be deposited on the next Business Day. Such account shall be in the name
of the Owner and shall have such withdrawal restrictions as Owner’s may
require. Owner will be given written notice of the account number and location
of the Operating Account. In accordance with Article 7,
Manager will pay out of the Operating Account the operating expenses of the
Property and any other payments relating to the Property required by the terms
of this Agreement or set forth in the Approved Annual Business Plan. If more
than one account is required to operate the Property, each account will have a
distinct name.

 

6.2           Security
Deposit Account. If required by Owner or law, tenant security deposits will
be deposited by Manager in a separate interest-bearing account established in
the name of Owner and at a financial institution approved by Owner. Except to
the extent prohibited by law or tenants’ leases, all interest earned on this
account will be distributed to Owner on a monthly basis as specified by Section 4.6. Manager agrees to handle
all tenant security deposits in accordance with all applicable laws and
regulations and in compliance with the leases of the Property.

 

6.3           Change
of Banks. Owner may direct Manager to change any depository bank or
depository arrangement. Except with the prior written approval of Owner,
Manager shall not change any depository bank or arrangement or other banking
relationship or procedure.

 

6.4           Access to Account.
Owner will have access to any and all funds in the accounts described in Sections 6.1 and 6.2. Manager’s authority to draw against
such accounts may be terminated at any time by Owner without notice to Manager.
No borrowing authority shall be permitted on any accounts established on behalf
of Owner. All funds in such accounts shall be the exclusive property of Owner.
Only such personnel specifically designated by Manager and

 

22

 

approved by Owner shall
have access to such accounts. All of Manager’s personnel who have access to
such accounts shall be bonded and insured to the benefit of Owner against theft
or fraud. No accounts maintained pursuant to this Agreement shall contain funds
from any source other than the Property, and no such accounts shall be
commingled with the funds of Manager or any other person.

 

Article 7. Payment of Expenses

 

7.1           Costs
Eligible for Payment from Operating Account. Subject to the limitations of Article 2 (including Sections 2.8(b) and 2.12), Section 7.2 and the Approved Annual
Business Plan, and except as otherwise directed by Owner, the following
expenses, to the extent incurred in accordance with this Agreement and the
Approved Annual Business Plan, shall be paid by Manager directly from the
Operating Account:

 

(a)           Third-party
debt service, payments due under any ground lease, real estate taxes, personal
property taxes, betterment assessments and similar governmental charges
properly due with respect to the Property;

 

(b)           Costs
of insurance maintained in accordance with Section 3.1;

 

(c)           Costs
to correct any violation of any Legal Requirements or Insurance Requirements;

 

(d)           Actual
costs of making all repairs, decorations and alterations and performing all
maintenance and preventive maintenance with respect to the Property;

 

(e)           Cost
of collection of delinquent rentals collected through a collection agency which
has been approved by Owner;

 

(f)            Reasonable
legal fees and expenses of attorneys incurred in the ordinary course of
business in collecting delinquent receivables;

 

(g)           Cost
of capital expenditures;

 

(h)           Leasing
commissions and consultant fees payable to third parties approved by Owner;

 

(i)            Amounts
due under Service Contracts and cost of utilities (other than costs for which
any tenant is directly responsible to the utility company);

 

(j)            Cost
of advertising approved by Owner;

 

23

 

(k)           Cost
of printed forms and supplies required for use at the Property;

 

(l)            Cost
of printed checks for each account required by Owner;

 

(m)          Cost
of salary and wages (but not bonus payments, incentive compensation or other
additional payments unless approved by Owner), payroll taxes, insurance,
worker’s compensation and other benefits, all only as specifically set forth on
the approved Reimbursable Employee Expense Schedule, but only to the extent
that such costs relate to the period of such employees’ employment in
connection with the Property;

 

(n)           The
Management Fee and Payroll Handling Fee; and

 

(o)           Any
other expenses included in the Approved Annual Business Plan.

 

7.2           Non-Reimbursable
Costs. Notwithstanding anything to the contrary in this Agreement, the following expenses or costs incurred
by or on behalf of Manager in connection with the Property will be at the sole
cost and expense of Manager and will not be reimbursed by Owner from the
Operating Account or otherwise, and Manager will indemnify and hold harmless
the Owner Related Entities from all liability for the same:

 

(a)           Cost
of salary and wages, payroll taxes, insurance, worker’s compensation and other
benefits of Manager’s management, accounting and office personnel not
reimbursable under Section 7.1(m);

 

(b)           General
accounting and reporting services which are within the scope of Manager’s
responsibilities to Owner under this Agreement;

 

(c)           Cost
of forms, papers, ledgers and other supplies, equipment, copying and telephone
of any kind used in Manager’s office at any location other than the Property;

 

(d)           Cost
of electronic data processing equipment, or any pro rata charge therefor,
whether or not located at the Property, or for data processing provided by
computer service companies;

 

(e)           Political
or charitable contributions;

 

(f)            Cost
of advances made to employees and cost of travel by Manager’s employees or
agents to and from the Property;

 

(g)           Costs
attributable to negligence, misconduct or fraud on the part of Manager,
Manager’s associates or Manager’s employees or agents, or arising from
Manager’s breach under this Agreement, including theft of assets by Manager’s

 

24

 

employees, contractors or
other agents; penalties or loss of discount due to delay in payment of bills or
invoices; overpayment or duplicate payment of invoices arising from either
fraud or error; overpayment of labor costs arising from either fraud or error;
a sum equal to the value of any form of payment from purveyors of goods or
services to any of Manager’s employees, contractors or agents arising from the
purchase of goods or services relating to the Property; and unauthorized use of
facilities by Manager’s employees, contractors or agents;

 

(h)           Cost
of comprehensive crime insurance or fidelity bonds purchased by Manager for its
own account;

 

(i)            Training
expenses except for on-site employees;

 

(j)            Employment
and employment agency fees except for on-site employees;

 

(k)           Advertising
expenses of Manager not directly related to the Property; and

 

(l)            Dues
of Manager or any of its employees in professional organizations or the cost of
any of Manager’s employees participating in industry conventions, meetings or
other functions.

 

Article 8. Insufficient Gross
Income

 

8.1           Priorities.
Manager shall promptly notify Owner if at any time the gross income from the
Property is or is expected to be insufficient to pay the bills, charges and
liabilities which may be incurred with respect to the Property. In such event,
unless Owner otherwise notifies Manager in writing, expenses will be paid out
of the Operating Account in the following order of priority:

 

(a)           First:  third-party debt service payments, ground
lease payments, real estate taxes, personal property taxes, betterment
assessments and any other charges and liabilities which could become a lien
against or result in a forfeiture of the Property;

 

(b)           Second:  cost of salary and wages, payroll taxes,
insurance, worker’s compensation and other benefits of Manager’s management,
accounting and office personnel reimbursable under Section 7.1(m) as specifically set forth on the approved
Reimbursable Employee Expense Schedule;

 

(c)           Third:     insurance
premiums due in connection with insurance maintained in accordance with Section 3.1;

 

(d)           Fourth:   bills
and charges for utilities;

 

25

 

(e)           Fifth:  other bills and charges of third parties, and
any and all claims and demands of third parties and liabilities to third
parties relating to the Property or the operation thereof which Owner in its
discretion determines to pay from the Operating Account;

 

(f)            Sixth:  bills and charges, if any, incurred by
Manager for Manager’s services provided to Owner exclusive of the Management
Fee, Payroll Handling Fee and any other fees due to Manager hereunder (if any);
and

 

(g)           Seventh:  the Management Fee, Payroll Handling Fee and
other fees due Manager hereunder (if any).

 

8.2           Statement
of Unpaid Items. Each month, after Manager has paid, to the extent of
available gross income, all bills and charges based upon the ordered priorities
set forth in Section 8.1,
Manager will submit to Owner an accounts payable listing that sets forth all
remaining unpaid bills and their due dates.

 

8.3           Segregation
of Accounts. If, pursuant to this Agreement, Manager will manage more than
one property, Manager will segregate the income and expenses of each property so that, unless Owner directs
Manager otherwise in writing, gross income from each property will be applied
only to the bills and charges from such property.

 

8.4           Cash
Flow Forecasting. Manager will prepare a detailed cash flow analysis
sufficient to provide Owner with a forecast of account deficits. Such forecasts
will be updated monthly, or more frequently as dictated by field conditions or
as directed by Owner.

 

8.5           Manager
Not Obligated to Fund. In no event shall Manager have any obligation to
advance any of its own funds in connection with the performance of its
obligations hereunder unless expressly so provided herein. Unless Owner
otherwise agrees in writing, Owner shall not be responsible for any interest on
funds advanced by Manager on Owner’s behalf.

 

Article 9. Sale or Financing
of Property

 

9.1           Cooperation
with Broker. If Owner executes a listing agreement or other brokerage
agreement with a broker (other than Manager) or an agreement directly with a
principal for the sale or financing of the Property, or any other agreement
relating to the transfer of ownership of the Property, Manager will cooperate
with such broker or principal to the end that the respective activities of
Manager and such broker or principal will be carried on without friction and
without interference with tenants and occupants. In connection with any such
sale, financing, or other transfer, Manager will:

 

(a)           use
all reasonable efforts to research and confirm the accuracy of any representations
and warranties regarding the Property that are made by Owner;

 

26

 

(b)           execute
such consents, assignments, manager estoppels, and other documents as Owner may
reasonably request;

 

(c)           provide
such other services as Owner may reasonably require; and

 

(d)           permit
the broker to show the Property (and any principal to view same) during
reasonable business hours.

 

9.2           No
Sales/Brokerage Commissions. Manager hereby acknowledges and agrees that,
unless it has been engaged by Owner pursuant to a separate written agreement
signed by Owner, Manager has not been engaged hereunder to represent Owner in
connection with any current or future sale, financing or other transfer of the
Property and has no authority to represent Owner in connection therewith or
right to any fee, commission or other form of compensation in connection with
sales, financings, or other transfers, provided Manager, as part of its
services hereunder, agrees to cooperate with Owner in consummating such
activities as set forth in Section 9.1.

 

Article 10. Cooperation

 

10.1         Cooperation.
Should any claims, demands, suits or other legal proceedings be made or
instituted by any person against or affecting Owner which arise out of any of
the matters relating to this Agreement or otherwise, Manager shall notify Owner
immediately upon becoming aware of same and Manager shall give Owner all
pertinent information possessed by Manager and reasonable assistance in the
defense or other disposition thereof. Furthermore, Should any claims, demands,
suits or other legal proceedings be made or instituted by any person against or
affecting Manager which arise out of any of the matters relating to this
Agreement or otherwise, Owner shall notify Manager immediately upon becoming
aware of same and Owner shall give Manager all pertinent information possessed
by Owner and reasonable assistance in the defense or other disposition thereof.

 

Article 11. Compensation

 

11.1         Compensation.
Owner shall pay Manager, and Manager shall accept as full compensation for
Manager’s service in managing the Property in accordance with this Agreement,
the Management Fee and the Payroll Handling Fee. Manager will have no right to
receive a Management Fee or Payroll Handling Fee after the expiration or
earlier termination of this Agreement except for fees earned through the
termination date based on Rents received by or on behalf of Owner or Gross
Salaries accrued before such expiration or earlier termination. Final payment
to Manager shall not be due until a Final Accounting as set forth in Section 12.3 is delivered in a form
reasonably acceptable to Owner and Manager’s obligations under Section 12.4 are satisfied. The
Management Fee for any partial month shall be prorated based upon the number of
days in such month. The Payroll Handling Fee for any partial month shall be
based on the Gross Salaries for such partial month.

 

27

 

“Gross Salaries”
for purposes of the Payroll Handling Fee computation will consist of the gross
salaries, wages and bonuses of employees of Manager attributable to the
Property, as and to the extent that such employee(s) are listed on the
Reimbursable Employee Expense Schedule as attributable to the Property.

 

“Rents” for the purpose of the Management Fee
computation will consist of all amounts actually received in cash for the
benefit of Owner from rental of space in the Property or provision of services
to tenants of the Property, including vending machine collections and other forms
of miscellaneous income relating to the leasing of the Property, except that
Rents shall not include:

 

(1)           Security
deposits (unless such deposits have been applied as rental income upon
termination of a lease), utility deposits or other refundable sums;

 

(2)           Funds
received from tenants as reimbursement for utility expenses paid by Owner;

 

(3)           Rents
paid in advance (including additional rent payments such as real estate taxes
and common area maintenance charges) until the month in which such payments are
applied as rental;

 

(4)           Any
interest or investment income;

 

(5)           Any
proceeds from a financing, refinancing, sale, exchange or condemnation of all
or any portion of the Property or any other real or personal property
associated therewith;

 

(6)           The
proceeds of any insurance, including rental loss or business interruption
insurance, and any other amounts paid to Owner on account of fire or other
casualty;

 

(7)           Capital
contributions or loans made to Owner;

 

(8)           Any
trade discounts and/or rebates received in connection with the operation and
maintenance of the Property or purchase of personal property associated
therewith; and

 

(9)           Any
amounts received by or on behalf of Owner before the Commencement Date.

 

Rents shall be adjusted from time to time to reflect any
amounts received as income from tenants which are subsequently reimbursed or
credited to tenants due to adjustments, and the Management Fee collected on
account of such amounts shall be adjusted accordingly.

 

Subject to Section 8.1,
Manager will pay the Management Fee and Payroll Handling Fee monthly from the
Operating Account. The Management Fee and Payroll Handling Fee for each month
will be paid no earlier than the fifteenth (15th) day of such month. If
sufficient funds are not available in the Operating Account with thirty (30)
days of when the monthly Management

 

28

 

Fee and/or Payroll Handing Fee is due, Manager shall invoice Owner for
payment.

 

Article 12. Termination

 

12.1         Termination.
The term of this Agreement will be for a period of one (1) year and will be
renewed automatically for successive periods of one (1) year each, unless
written notice of non-renewal is given by Owner to Manager at least thirty (30)
days prior to the end of the then-existing term, or by Manager to Owner at
least sixty (60) days prior to the end of the then-existing term.
Notwithstanding the foregoing, and in addition to the provisions of Section 12.2, Owner may terminate this
Agreement:  (a) for cause, immediately
upon notice at any time, or (b) without cause, by giving Manager at least
thirty (30) days’ prior notice in writing, or (c) immediately upon payment by
Owner to Manager of a termination fee equal to one (1) month’s Management Fee
(such monthly fee to be determined by calculating the average monthly
Management Fee over the prior 12-month period). Manager may terminate this
Agreement at any time with or without cause by giving Owner at least ninety
(90) days’ prior notice in writing.

 

12.2         Termination
Without Notice.

 

(a)           Without
limitation of Owner’s rights under Section 12.1,
upon the occurrence of any one or more of the following events, at the sole election of Owner and
without further notice to Manager, this Agreement will be deemed
terminated:  (i) dissolution or
termination of the legal existence of Manager, whether by merger, consolidation
or otherwise; (ii) termination or suspension of Manager’s real estate brokerage
license, if such license is required as a condition to the performance of
Manager’s duties hereunder; (iii) death or incapacity of Manager, if an
individual; (iv) death or incapacity of any individual general partner of
Manager, if a partnership; (v) cessation on Manager’s part to do business; (vi)
failure of Manager to deal properly with and account for Owner’s funds; or
(vii) the filing of proceedings by or against Manager or any general partner or
parent corporation of Manager for bankruptcy, insolvency, reorganization or
other relief of debtors, or any assignment for the benefit of the creditors of
Manager.

 

(b)           Without
limiting Owner’s rights under Section 12.1
or Subsection (a) above, at
Owner’s sole election and without further notice to Manager, this Agreement
shall terminate upon the occurrence of the following events with respect to the
Property:  (i) the sale or conveyance of
the Property, whether by foreclosure, sale by deed-in-lieu of foreclosure, the
assignment of Owner’s ownership interest to any purchaser, lender or its
designee, or otherwise; (ii) condemnation of the Property or such substantial
portion of the Property that Owner determines that the remainder cannot be
operated in a commercially reasonable manner; or (iii) the destruction of all
of the improvements comprising such Property or such a substantial portion
thereof that Owner determines that the remainder thereof cannot continue to be
operated in a commercially reasonable manner, and Owner determines in its sole
discretion not to rebuild the Property.

 

29

 

12.3         Final
Accounting. Upon termination of this Agreement, Manager will deliver to
Owner the following with respect to the Property (“Final Accounting”):

 

(a)           A
final accounting, reflecting the balance of income and expenses of the Property
as of the date of termination or withdrawal, to be delivered within thirty (30)
days after such termination;

 

(b)           Any
balance of any monies of Owner, prepaid rent or tenant security deposits, or
both, held by Manager with respect to the Property, to be delivered immediately
upon such termination; and

 

(c)           The
Books and Records and all other records, contracts, leases, tenant
correspondence, files, receipts for deposits, unpaid bills and other papers,
documents or computer disks or information which pertain in any way to the
Property, to be delivered immediately upon such termination.

 

12.4         Obligation
to Vacate:  Orderly Transition. Upon
termination of this Agreement, Manager promptly will vacate any office space
provided by Owner for the location of Manager’s personnel, and will restore any
such office space to the same condition that it was in at the time such space
was first provided to Manager, or to such better condition as may have existed
at any time during the term of this Agreement, reasonable wear and tear
excepted. Upon termination of this Agreement, Manager will cooperate in all
respects in order to effect an orderly transition of the management functions
to a new manager. Manager’s obligations under Section 12.3
and this Section 12.4 will
survive termination of this Agreement.

 

Article 13. Subsidiaries and
Affiliates

 

13.1         Subsidiaries
and Affiliates. Manager has set forth on Exhibit F
hereto all Affiliates of Manager which may compete in the state in
which the Property is located as at the date of this Agreement. Manager will
promptly notify Owner of any changes or additions to the information set forth
on Exhibit F. Any contract or
lease of any kind whatsoever between Manager and any Affiliate of Manager with
respect to the Property will be subject to the prior written approval of Owner,
which approval may be withheld at Owner’s sole discretion.

 

Article 14. Notices

 

14.1         Notices.

 

(a)           All
notices given hereunder shall be in writing and shall be delivered by hand, by
nationally recognized overnight express delivery service (all charges prepaid)
for next day delivery or by U.S. registered or certified mail, return receipt
requested (all postage prepaid), addressed to Owner or Manager at Owner’s
Notice Address or Manager’s Notice Address, respectively.

 

30

 

(b)           Any
notice or other communication sent or provided above shall be deemed given (i)
on the date of delivery, if by hand or (ii) on the date mailed, if sent by
overnight express delivery service or U.S. registered or certified mail. Such
notice shall be deemed received on the date of receipt by the addressee or the
date receipt would have been effectuated if delivery were not refused. Each
party hereto may designate a new Notice Address by written notice to the other
parties in accordance with this Section 14.1. The inability to deliver a notice
because of a change of address of which proper notice was not given shall be
deemed a refusal of such notice.

 

Article 15. Certain
Representations and Covenants

 

15.1         Manager
Representations. Manager hereby represents and warrants to Owner as
follows:

 

(a)           Manager
has all licenses, permits, authorizations and approvals necessary to allow it
to enter into this Agreement and perform its duties hereunder;

 

(b)           Neither
Manager nor, to the best of Manager’s knowledge, after reasonable inquiry, any
of its employees, has been convicted of robbery, extortion, embezzlement,
fraud, grand larceny, burglary, arson, a felony drug offense, murder, rape,
kidnapping, perjury, assault with intent to kill, a violation of the Employee
Retirement Income Security Act of 1974 or any other felonies; and

 

(c)           Except
as disclosed on Exhibit G,
neither Manager nor any Affiliate of Manager is engaged in connection with or
has an interest in, directly or indirectly, whether as an owner, ground lessee,
ground lessor, manager, leasing agent, partner, shareholder, beneficiary,
trustee, option holder, lender or otherwise, any property that is:  (i) similar to the Property; and (ii) located
within a one-quarter (1⁄4) mile radius of the Property (a “Competing Property”).
Exhibit G accurately sets
forth the nature of the interest of Manager or any Affiliate of Manager in any
Competing Property. Notwithstanding the foregoing, Manager shall provide Owner
with a list, which list shall be updated by Manager from time to time in the
event of any changes, of any property which Manager or any Affiliate of Manager
is engaged in connection with or has an interest in, directly or indirectly,
whether as an owner, ground lessee, ground lessor, manager, leasing agent,
partner, shareholder, beneficiary, trustee, option holder, lender or otherwise,
that is:  (i) similar to the Property;
and (ii) located within a five mile radius of the Property (“Manager’s Other
Properties”). Attached as Exhibit G-1
is a list of Manager’s Other Properties as of the date hereof.

 

15.2         Non-Competition.
Except for those properties (if any) set forth on Exhibit G, Manager agrees that, during the term of this
Agreement, neither Manager nor any Affiliate of Manager shall be engaged or
interested, directly or indirectly, whether as an owner, ground lessee, ground
lessor, manager, leasing agent, partner, shareholder, beneficiary, trustee,
option holder, lender or otherwise, in any Competing Property. Manager
acknowledges and agrees that

 

31

 

the foregoing
covenant:  (a) is a necessary and
reasonable protection of Owner’s interest in the Property; (b) will not prevent
Manager from earning a livelihood; and (c) may be enforced by injunction.

 

Article 16. Miscellaneous

 

16.1         Word
Meanings. Words such as “herein,” “hereinafter,” “hereof” and “hereunder”
when used in reference to this Agreement, refer to this Agreement as a whole
and not merely to a subdivision in which such words appear, unless the context
otherwise requires. The singular shall include the plural and the masculine
gender shall include the feminine and neuter, and vice versa, unless the
context otherwise requires. The word “including” shall not be restrictive and
shall be interpreted as if followed by the words “without limitation.”

 

16.2         Assignment.
Without Owner’s prior consent, which Owner may withhold in its absolute
discretion, Manager shall not transfer, assign, subcontract or delegate its
duties under this Agreement, and any attempted transfer, assignment,
subcontract or delegation without such consent shall be of no force or effect.
The services of Manager hereunder are personal in nature.

 

16.3         Binding
Provisions. Subject to Section 16.2,
the covenants and agreements contained herein shall be binding upon, and inure
to the benefit of, the heirs, legal representatives, successors and assigns of
the respective parties hereto.

 

16.4         Nondiscrimination.
Manager will not discriminate against any employee or applicant for employment
by Manager on the basis of race, creed, color, age, sex, martial status, sexual
orientation, or national origin. Manager will take affirmative action to insure
that applicants are employed, and that employees are treated during employment,
without regard to their race, creed, color, age, sex, martial status, sexual
orientation, or national origin. Such actions shall include, but not be limited
to, the following: (i) employment, upgrading, demotion or transfer; (ii)
recruitment or recruitment advertising; (iii) layoff or termination; (iv) rates
of pay or forms of compensation; and (v) selection for training, including
apprenticeship. Manager agrees to post in conspicuous places, available to
employees and applicants for employment, notices setting forth the provisions
of this Section 16.4.

 

32

 

16.5         Applicable
Law. The interpretation, construction and enforceability of this Agreement
shall be governed in all respects by the laws of the state in which the Property
is located without regard to any choice of law principles. Any legal
proceedings arising out of any of the transactions or obligations contemplated
by this Agreement may be brought in the state courts of The Commonwealth of
Massachusetts or the United States District Court for the District of
Massachusetts. The parties hereto irrevocably and unconditionally:  (a) submit to the jurisdiction of such courts
and agree to take any and all future action necessary to submit to such
jurisdiction; (b) waive any objection which they may now or hereafter have to
the venue of any suit, action or proceeding brought in such courts; and (c)
waive any claim that any such suit, action or proceeding brought in such court
has been brought in an inconvenient forum.

 

16.6         Separability
of Provisions. The parties hereto intend and believe that each provision in
this Agreement comports with all applicable local, state and federal laws and
judicial decisions. If any provision in this Agreement is, however, found by a
court of law to be in violation of any applicable local, state, or federal law,
statute, ordinance, administrative or judicial decision, or public policy, or
if in any other respect such a court declares any such provision to be illegal,
invalid, unlawful, void or unenforceable as written, then it is the intent of
all parties hereto that, consistent with and with a view towards preserving the
economic and legal arrangements among the parties hereto as expressed in this
Agreement, such provision shall be given force and effect to the fullest
possible extent, and that the remainder of this Agreement shall be construed as
if such illegal, invalid, unlawful, void, or unenforceable provision were not
contained herein, and that the rights, obligations, and interests of the
parties under the remainder of this Agreement shall continue in full force and
effect. Each provision of this Agreement shall be considered separable and if
for any reason any provision or provisions herein are determined to be invalid,
unenforceable or illegal under any existing or future law, such invalidity,
unenforceability or illegality shall not impair the operation of or affect
those portions of this Agreement which are valid, enforceable and legal.

 

16.7         Section
Titles. Section titles are for descriptive purposes only and shall not
control or alter the meaning of this Agreement as set forth in the text.

 

16.8         Further
Assurances. Manager and Owner shall execute and deliver such further
instruments and do such further acts and things as may reasonably be required
to carry out the intent and purposes of this Agreement.

 

16.9         Entire
Agreement. This Agreement and the Schedules and Exhibits attached hereto
constitute the entire agreement between the parties hereto with respect to the
transactions contemplated herein, and supersede all prior understandings or
agreements between the parties. All Exhibits and Schedules are incorporated
herein by reference and constitute a part of this Agreement.

 

16.10       Waiver.
The failure by any party hereto to insist upon or to enforce any of its rights
shall not constitute a waiver thereof, and nothing shall constitute a waiver of
such party’s right to insist upon strict compliance with the provisions hereof.
No delay in exercising any right, power or remedy created hereunder shall
operate as a waiver thereof, nor shall any single

 

33

 

or partial
exercise of any right, power or remedy by any such party preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
No waiver by any party hereto to any breach of or default in any term or
condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof. Each party hereto may waive the benefit of any provision or condition
for its benefit contained in this Agreement, but only if such waiver is
evidenced by a writing signed by such party.

 

16.11       Agreement
in Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be considered an original and all shall constitute one and
the same Agreement, binding upon all of the parties hereto, notwithstanding
that all of the parties may not be signatories to the same counterpart.

 

16.12       Attorneys’
Fees. In the event of a judicial or administrative proceeding or action by
one party against the other party with respect to the interpretation or
enforcement of this Agreement, the prevailing party shall be entitled to
recover reasonable costs and expenses including, without limitation, reasonable
attorneys’ fees and expenses, whether at the investigative, pretrial, trial or
appellate level, and whether in any arbitration or bankruptcy proceeding. The
prevailing party shall be determined based upon an assessment of which party’s
major arguments or positions prevailed.

 

16.13       Time
Periods. In the event the time for performance of any obligation hereunder
expires on a day other than a Business Day, the time for performance shall be
extended to the next day which is a Business Day.

 

16.14       Modification
of Agreement. No modification of this Agreement shall be deemed effective
unless in writing and signed by all of the parties hereto.

 

16.15       Time
of the Essence. Time is of the essence of this Agreement.

 

16.16       Construction
of Agreement. This Agreement shall not be construed more strictly against
one party than against the other merely by virtue of the fact that it may have
been prepared primarily by counsel for one of the parties. No provision of this
Agreement shall run to the benefit of or be enforceable by any party other than
the parties hereto and their permitted successors or assigns.

 

16.17       Consent
and Approvals. Owner’s consents or approvals may be given only in writing
and only by representatives of Owner from time to time designated in writing by
Owner.

 

16.18       Use
of Owner’s Name Prohibited. Without Owner’s prior approval, which Owner may
withhold in its absolute discretion, Manager will not use the name of Owner or
any Owner Related Entity, or any derivation thereof, in any manner whatsoever.

 

16.19       Exculpation.
Manager, and all persons claiming by, through or under Manager,

 

34

 

shall look solely
to Owner’s interest in the Property for the satisfaction of any claim now
existing or hereafter arising or accruing against the Owner, and in no event
shall (a) Owner be liable for any deficiency or (b) any other Owner Related
Entity ever have any liability hereunder.

 

16.20       Confidentiality.
Manager and its employees and agents agree to keep all information related to
the Property and Owner confidential, except to the extent necessary to carry
out Manager’s obligations under this Agreement or as may be required by law.

 

16.21       No
Joint Venture. Nothing in this Agreement or in the performance of any
obligations hereunder shall be deemed to create any partnership, joint venture
or similar relationship between Owner and Manager.

 

[Remainder
of page intentionally blank]

 

35

 

Part
III - Manager as Leasing Agent

 

Owner and Manager further
agree as follows, with the terms of this Part
III being deemed to supersede any inconsistent terms contained
in Part II:

 

1.             Owner
hereby retains Manager as Owner’s exclusive leasing agent in connection with the
Property. Manager represents and warrants to Owner that Manager has all
licenses and similar qualifications necessary to the performance of its leasing
services hereunder.

 

2.             The
names of the individuals who shall have primary responsibility for Manager’s
leasing services hereunder are set forth on the schedule hereto entitled “Leasing
Agent” (the “Leasing Agents”).

 

3.             In
addition to its duties under Part II
of this Agreement, Manager shall use its best efforts to lease space at the
Property to desirable tenants at the highest possible net effective rents and
otherwise in accordance with the Approved Annual Business Plan. Manager shall
perform its leasing responsibilities hereunder in accordance with the standards
and practices of prudent and qualified leasing agents that act as leasing
agents for properties similar to the Property on behalf of institutional owners
or investors. Without limiting the generality of the foregoing, Manager’s
responsibilities as leasing agent shall include the following:  (a) subject to the provisions of the Approved
Annual Business Plan or as otherwise approved by Owner, Manager shall, at
Owner’s expense, conduct such advertising, marketing and promotion of the Property
as is necessary for the successful leasing of the Property; (b) Manager shall
diligently investigate and pursue all prospective tenants and shall conduct
such canvassing and other solicitations as are necessary in connection with the
leasing of the Property; (c) Manager shall participate, at the direction of
Owner, in lease negotiations; and (d) Manager shall investigate the
creditworthiness and desirability of all proposed tenants and shall prepare a
lease and tenant credit analysis for each proposed lease.

 

4.             Manager
shall always give priority to the leasing of space at the Property that is at
least equal to the priority given by Manager to any property listed on Exhibit G or any other Competing
Property. Manager shall under no circumstances induce tenants of the Property
to move to space at any property listed on Exhibit G
or any other Competing Property.

 

5.             Notwithstanding
anything to the contrary in this Agreement, unless otherwise approved by
Owner:  (a) Manager shall not negotiate
with any prospective tenant for the lease of space at the Property at a net
effective rent below that provided for in the Approved Annual Business Plan;
(b) all leases of space at the Property shall be on a standard form of lease
approved by Owner; and (d) all leases shall be consistent with the Approved Annual
Business Plan.

 

6.             Other
than the Management Fee and Payroll Handling Fee, Manager shall not receive any
compensation for its leasing services.

 

7.             If Owner
is contacted directly by any prospective tenant of the Property, Owner shall
refer such tenant to Manager.

 

[Remainder
of page intentionally blank]

 

36

 

	
   

  	
  OWNER:

  
	
   

  	
   

  
	
   

  	
  BC-BAINBRIDGE SPICEWOOD
  LLC, a Delaware

  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BCMR Jacksonville LLC,
  a Delaware limited

  liability company, a member duly authorized

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Boston Capital Real
  Estate Investment

  Trust, Inc., a Maryland corporation, its sole

  member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Marc N. Teal

  	
   

  
	
   

  	
   

  	
  Marc N. Teal, Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MANAGER:

  
	
   

  	
   

  
	
   

  	
  STEVEN D. BELL AND
  COMPANY, a North Carolina

  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Walt Lamperski

  	
   

  
	
   

  	
   

  	
  Walt Lamperski, Senior
  Vice PresidentExhibit 10.1

 

Gaiam, Inc.

Executive Officer Salaries

 

	
   

  	
   

  	
   

  	
   

  	
  Annual

  
	
   

  	
   

  	
   

  	
   

  	
  Base

  
	
  Name

  	
   

  	
  Title

  	
   

  	
  Salary

  
	
  Jirka Rysavy

  	
   

  	
  Chariman and Chief Executive Officer

  	
   

  	
  $

  	
  300,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lynn Powers

  	
   

  	
  President, Chief Executive Officer of

  North American Operations, Secretary

  	
   

  	
  $

  	
  300,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jane Pemberton

  	
   

  	
  President of Gaiam Trade and GT Media

  	
   

  	
  $

  	
  300,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lou Weiss

  	
   

  	
  President of Gaiam Direct

  	
   

  	
  $

  	
  293,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Janet Mathews

  	
   

  	
  Chief Administrative Officer

  	
   

  	
  $

  	
  200,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Vilia Valentine

  	
   

  	
  Chief Financial Officer

  	
   

  	
  $

  	
  200,000

  

 

Ms. Powers and Ms. Mathews will
each receive a bonus of $50,000 in May 2006. 
Ms. Pemberton will receive a bonus of $150,000 during her first year of
service, to be paid in equal installments on May 1, 2007 and December 1,
2007.  Mr. Weiss’s bonus for the twelve
months ending September 30, 2006 is guaranteed to be at least 40% of his annual
base salary.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]