Document:

ex10-3.htm

    
      EXHIBIT
10.3

      
        

        

      

      
        SCHAWK,
INC.

         

        ______________________________

         

        THIRD
AMENDMENT

        Dated as
of January 12, 2010

         

        to

         

        NOTE
PURCHASE AGREEMENT

        Dated as
of December 23, 2003

         

        ______________________________

         

         

         

        Re:
$15,000,000 4.90% Series 2003-A Senior Notes, Tranche A,

        Due
December 31, 2013

        and

        $10,000,000
4.98% Series 2003-A Senior Notes, Tranche B,

        Due April
30, 2014

        of

        Schawk,
Inc.

         

        

        
          

          

        

        

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        THIRD
AMENDMENT TO NOTE AGREEMENT

         

        THIS
THIRD AMENDMENT dated as of January 12, 2010 (the or this “Third Amendment”) to
the Note Purchase Agreement dated as of December 23, 2003 is between SCHAWK,
INC., a Delaware corporation (the “Company”), and each of the institutions which
is a signatory to this Third Amendment  (collectively, the
“Noteholders”).

         

        RECITALS:

         

        A.           The
Company and each of the Noteholders have heretofore entered into the Note
Purchase Agreement dated as of December 23, 2003, as amended, modified and
supplemented by that certain first amendment to Note Agreement dated January 28,
2005 and that certain second amendment to Note Agreement dated June 11, 2009
(the “Note Agreement”).  The Company has heretofore issued the
$15,000,000 4.90% Series 2003-A Senior Notes, Tranche A, Due December 31, 2013
and the $10,000,000 4.98% Series 2003-A Senior Notes, Tranche B, Due April 30,
2014 (collectively, the “Notes”) pursuant to the Note Agreement.

         

        B.           The
Company and the Noteholders now desire to amend the Note Agreement in the
respects, but only in the respects, hereinafter set forth.

         

        C.           Capitalized
terms used herein shall have the respective meanings ascribed thereto in the
Note Agreement unless herein defined or the context shall otherwise
require.

         

        D.           All
requirements of law have been fully complied with and all other acts and things
necessary to make this Third Amendment  a valid, legal and binding
instrument according to its terms for the purposes herein expressed have been
done or performed.

         

        NOW,
THEREFORE, upon the full and complete satisfaction of the conditions precedent
to the effectiveness of this Third Amendment set forth in Section 3.1 hereof,
and in consideration of good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged, the Company and the Noteholders do
hereby agree as follows:

         

        SECTION
1.   AMENDMENTS
TO NOTE AGREEMENT.

         

        Section
1.1    Section 8.8 of the Note Agreement, Pro Rata Prepayments,
shall be and is hereby amended in its entirety to read as follows:

         

        “Section
8.8  Reserved.”

         

        Section
1.2.  The introductory phrase of Section 9.6 of the Note Agreement
shall be and is hereby amended in its entirety to read as follows:

         

        The
Company will cause any Subsidiary which is required by the terms of the Bank
Credit Agreement to become, or otherwise becomes, a party to, or otherwise
guarantee, Debt in respect of the Bank Credit Agreement or which becomes a party
to, or otherwise guaranties, any other Debt of the Company, to enter into the
Subsidiary Guaranty and 

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        deliver
to each of the holders of the Notes (concurrently with the incurrence of any
such obligation pursuant to the Bank Credit Agreement or with respect to such
other Debt) the following items:

         

        Section
1.3.  Each occurrence of the parenthetical phrase “(as defined in the
Bank Credit Agreement)” set forth in Section 9.6 of the Note Agreement shall be
and is hereby amended in its entirety to read as follows: “(as defined in the
Bank Credit Agreement as in effect on the Amendment No. 3 Effective
Date)”.

         

        Section
1.4.  Section 10.6 of the Note Agreement shall be and is hereby amended in
its entirety to read as follows:

         

        “Section
10.6. Restricted
Payments.  The Company shall not declare or make any Restricted
Payment, except Restricted Payments in an amount not to exceed $5,000,000 in the
aggregate during any fiscal year of the Company and except Restricted Payments
by a Subsidiary to the Company or another Subsidiary; provided, however, that in no
event shall any Restricted Payments (other than Restricted Payments to the
Company) be declared or made if either a Default or an Event of Default shall
have occurred and be continuing at the date of declaration or payment thereof or
would result therefrom.”

         

        Section
1.5  Section 10.7 of the Note Agreement shall be and is hereby amended
in its entirety to read as follows:

         

        “Section
10.7.  Conduct of Business;
Subsidiaries; Acquisitions.  Neither the Company nor any of its
Subsidiaries shall engage in any business other than the businesses engaged in
by the Company on the date hereof and any business or activities which are
substantially similar, related or incidental thereto or logical extensions
thereof.  The Company shall not create, acquire or capitalize any
Subsidiary after the date hereof unless (i) no Event of Default or Default which
is not being cured shall have occurred and be continuing or would result
therefor; (ii) after such creation, acquisition or capitalization, all of the
representations and warranties contained herein shall be true and correct in all
material respects (unless such representation and warranty is made as of a
specific date, in which case, such representation or warranty shall be true in
all material respects as of such date); and (iii) after such creation,
acquisition or capitalization the Company shall be in compliance with the terms
of Sections 9.6 and 9.9 hereof.  The Company shall not make any
Acquisitions, other than Acquisitions meeting the following requirements or
otherwise approved by the Required Holders (each such Acquisition constituting a
“Permitted Acquisition”):

         

        (a)           no
Default or Event of Default shall have occurred and be continuing or would
result from such Acquisition or the incurrence of any Debt in connection
therewith;

         

        (b)           after
giving effect to such transaction, the aggregate of all Foreign Subsidiary
Investments would not exceed the Permitted Foreign Subsidiary Investment
Amount;

         

        
          
            
            

          

          
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        (c)           in
the case of an Acquisition of Capital Stock of an entity, the Acquisition shall
be of at least fifty-one percent (51%) of the Capital Stock of such entity, and
such acquired entity shall be (i) merged with and into the Company immediately
following such Acquisition, with the Company being the surviving corporation
following such merger or (ii) the results of operations of such entity shall be
reported on a consolidated basis with the Company and its consolidated
Subsidiaries;

         

        (d)           the
purchase is consummated pursuant to a negotiated acquisition agreement on a
non-hostile basis;

         

        (e)           the
Company shall deliver to the holders of the Notes a certificate from one of the
Authorized Officers, demonstrating to the satisfaction of the Required Holders
that after giving effect to such Acquisition and the incurrence of any Debt
permitted by Section 10.1 in connection therewith, on a pro forma basis using
historical audited or reviewed unaudited financial statements obtained from the
seller(s) in respect of each such Acquisition as if the Acquisition and such
incurrence of Debt had occurred on the first day of the twelve-month period
ending on the last day of the Company’s most recently completed fiscal quarter,
the Company would have been in compliance with the financial covenants in
Section 10.19 and that an Event of Default has not otherwise
occurred;

         

        (f)           the
purchase price for the Acquisition (including the incurrence or assumption of
any Debt in connection therewith) shall not, when aggregated with the purchase
price and such Debt for all other Acquisitions during any rolling period of
twelve consecutive months, exceed without the prior written consent of the
Required Holders the Maximum Acquisition Amount; and

         

        (g)           the
businesses being acquired shall be substantially similar, related or incidental
to, or a logical extension of, the businesses or activities engaged in by the
Company on the date hereof.”

         

        Section
1.6    Section 10.15 of the Note Agreement shall be and is
hereby amended in its entirety to read as follows”

         

        “Section
10.15.  Hedging
Obligations.  The Company shall not and shall not permit any of
its Subsidiaries to enter into any interest rate, commodity or foreign currency
exchange, swap, collar, cap or similar agreements evidencing Hedging
Obligations, other than interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar, agreements entered into by the Company or any
Subsidiary pursuant to which the Company or any Subsidiary has hedged its actual
interest rate, foreign currency or commodity exposure.”

         

        Section
1.7.  Section 10.17 of the Note Agreement shall be and is hereby
amended in its entirety to read as follows:

         

        “Section
10.17.  Most
Favored Lender.  If the Company, or any of its Subsidiaries,
enters into (i) any amendment, restatement, supplement, waiver or modification
to the Bank Credit Agreement (or the documents related to any
extension,

         

        
          
            
            

          

          
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        refinancing,
refunding or renewal thereof) or the 2005 Note Agreement that amends, restates,
supplements or modifies any of the covenants, events of default or related
definitions used in the Bank Credit Agreement (or the documents related to any
extension, refinancing, refunding or renewal thereof) or in the 2005 Note
Agreement or (ii) any document related to any extension, refinancing, refunding
or renewal thereof that includes covenants, events of default or related
definitions, such that , in any case, any of such covenants, events of default
or related definitions are more restrictive than, or in addition to (the “More
Restrictive Provisions”), the covenants, events of default or related
definitions contained in this Agreement, then (a) the Company will give the
holders of the Notes prior written notice thereof, (b) this Agreement shall be
deemed to be automatically amended to add the More Restrictive Provisions hereto
and otherwise afford the holders of the Notes with the benefit thereof without
any action by the Company or any holder of any Note, provided that the Required
Holders may elect in writing not to have any one or more More Restrictive
Provisions added to this Agreement, and (c) the Company shall, upon the request
of the holders of the Notes (i) enter into an amendment to this Agreement, in
form and substance satisfactory to the holders of the Notes, to evidence the
addition of such More Restrictive Provisions (other than any More Restrictive
Provisions that the Required Holders elect in writing to exclude) to this
Agreement for the benefit of holders of the Notes, and (ii) agree to satisfy any
conditions precedent to the effectiveness of such amendment.”

         

        Section
1.8  Section 10.19 of the Note Agreement shall be and is hereby
amended in its entirety as follows:

         

        “Section
10.19  Financial
Covenants.

         

        (a)           Minimum Fixed Charge
Coverage Ratio.  The Company and its consolidated Subsidiaries
shall maintain a ratio (“Fixed Charge Coverage Ratio”) of:

         

        (i)           EBITDA
during such period, to

         

        (ii)           the
sum of the amounts, without duplication, of (a) Interest Expense during such
period (net of interest income) plus (b) scheduled
principal payments of Debt not incurred under a revolving credit facility
excluding, however, principal payments of the PIK Notes and the 2005 PIK Notes
and principal payments of Withdrawal Liability plus (or minus with
respect to tax benefits) (c) Company’s income tax provision calculated in
accordance with United States GAAP for such period plus (d) scheduled
principal payments of Capital Lease Obligations during such period,

         

        which
shall not be less than the applicable ratio set forth below for each
corresponding four (4) fiscal quarter period beginning with the four (4) fiscal
quarter period ending with the end of the applicable fiscal quarter of the
Company set forth below.  As used herein, “Withdrawal Liability” means
any amounts owing by the Company to the Graphic Communications Union (“GCU”) or
a trust or fund or Plan administered by the GCU as a result of the Company
terminating its participation in a Supplemental Retirement and 

         

        
          
            
            

          

          
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        Disability
Fund for the Company’s employees at its facility in Minneapolis, Minnesota, as
described in Note 16 to the financial statements contained in the Company’s Form
10-K for the fiscal year ending December 31, 2008.  In each case, the
Fixed Charge Coverage Ratio shall be determined as of the last day of each
fiscal quarter for the four (4) fiscal quarter period ending on such day (the
“Last Twelve-Month Period”), provided, that the
Fixed Charge Coverage Ratio shall be calculated, with respect to Permitted
Acquisitions, on a pro forma basis using
historical audited and reviewed unaudited financial statements obtained from the
seller(s) in such Permitted Acquisition, broken down by fiscal quarter as if
such Permitted Acquisition (including the uses and applications of proceeds in
respect thereof and the Debt incurred in conjunction therewith) had occurred on
the first day of the Last Twelve-Month Period (the “Measurement Period”)
(excluding cost savings), provided such pro forma statements
shall be substantiated by supporting information reasonably acceptable to the
Required Holders.  Interest Expense shall be calculated for the
purpose of clause
(ii) by excluding the effect of amortization of deferred financing fees,
to the extent it is an Interest Expense.

         

        
          
            	
                    
                      Last
      Twelve Month Period Ending

                    

                  	
                    
                      Minimum
      Fixed Charge Coverage Ratio

                    

                  
	
                    March
      31, 2010

                  	
                    1.20
      to 1.00

                  
	
                    June
      30, 2010

                  	
                    1.20
      to 1.00

                  
	
                    September
      30, 2010

                  	
                    1.20
      to 1.00

                  
	
                    December
      31, 2010

                  	
                    1.20
      to 1.00

                  
	
                    March
      31, 2011

                  	
                    1.20
      to 1.00

                  
	
                    June
      30, 2011

                  	
                    1.20
      to 1.00

                  
	
                    September
      30, 2011

                  	
                    1.20
      to 1.00

                  
	
                    December
      31, 2011 and the last

                    day
      of each fiscal quarter thereafter

                    ending

                  	
                    1.25
      to 1.00

                  

          

        

         

        (b)           Maximum Cash Flow Leverage
Ratio.  The Company and its consolidated Subsidiaries shall not
permit the ratio (the “Cash Flow Leverage Ratio”) of (i) Total Funded Debt to
(ii) EBITDA to be greater than the applicable ratio set forth below for each
corresponding four (4) fiscal quarter period ending with the end of the
applicable fiscal quarter of the Company set forth below.  The Cash
Flow Leverage Ratio shall be calculated, in each case, determined as of the last
day of each fiscal quarter based upon (a) for Debt, Debt as of the last day of
each such fiscal quarter; and (b) for EBITDA, the actual amount for Last
Twelve-Month Period, provided, that the
Cash Flow Leverage Ratio shall be calculated, with respect to Permitted
Acquisitions, on a pro forma basis using
historical audited and reviewed unaudited financial statements obtained from the
seller(s) in such Permitted Acquisition, broken down by fiscal quarter in the
Company’s reasonable judgment as if such Permitted Acquisition (including the
uses and applications of proceeds in respect thereof and the Debt incurred in
conjunction therewith) had 

         

        
          
            
            

          

          
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        occurred
on the first day of the Measurement Period (excluding cost savings), provided
such pro forma statements
shall be substantiated by supporting information reasonably acceptable to the
Required Holders.

         

         

        
          
            	
                    
                      Last
      Twelve-Month Period Ending

                    

                  	
                    
                      Maximum
      Cash Flow Leverage Ratio

                    

                  
	
                    March
      31, 2010

                  	
                    2.75
      to 1.00

                  
	
                    June
      30, 2010

                  	
                    2.75
      to 1.00

                  
	
                    September
      30, 2010

                  	
                    2.75
      to 1.00

                  
	
                    December
      31, 2010

                  	
                    2.75
      to 1.00

                  
	
                    March
      31, 2011

                  	
                    2.75
      to 1.00

                  
	
                    June
      30, 2011

                  	
                    2.75
      to 1.00

                  
	
                    September
      30, 2011

                  	
                    2.75
      to 1.00

                  
	
                    December
      31, 2011 and the last day

                    of
      each fiscal quarter thereafter

                    ending

                  	
                    2.50
      to 1.00

                  

          

        

         

        (c)           Minimum Consolidated Net
Worth. The Company shall not permit its Consolidated Net Worth at any
time to be less than the sum of (a) $181,504,000 plus (b) fifty
percent (50%) of Net Income (if positive) calculated separately for each fiscal
quarter commencing with the fiscal quarter ending on December 31, 2009, plus (c)
one hundred percent (100%) of the net cash proceeds resulting from the issuance
by the Company of any Capital Stock other than shares of Capital Stock issued
pursuant to employee stock option or ownership plans commencing with the fiscal
quarter ending on December 31, 2009; provided that, to the
extent that the Company takes a write-down of goodwill or other assets, if
recognized in connection with the sale of the Schawk LA or Cactus divisions of
the Company and related losses, in any fiscal year of the Company, an aggregate
amount of up to $25,000,000 of such write-down and losses shall be deducted from
the Consolidated Net Worth that would otherwise be required to be maintained
pursuant to the terms of this Section 10.19(c).

         

        (d)           Maximum Capital
Expenditures.  The Company will not, nor will it permit any
Subsidiary to, expend, or be committed to expend, in excess of (i) an aggregate
of $18,500,000, for Capital Expenditures of the Company and its Subsidiaries
during any fiscal year of the Company and (ii) an aggregate of $40,000,000 for
Capital Expenditures of the Company and its Subsidiaries during the period from
the Amendment No. 3 Effective Date to the Revolving Loan Termination Date (as
defined in the Bank Credit Agreement).”

         

        Section
1.9  The following Defined Terms in Schedule B to the Note Agreement
shall be and are hereby amended as follows:

         

        “Bank
Credit Agreement” means the Amended and Restated Credit Agreement dated as of
January 12, 2010 by and among the Company, certain Subsidiaries of the Company
named therein, JPMorgan Chase Bank, N.A., as agent and collateral agent, and

         

        
          
            
            

          

          
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        the other
financial institutions party thereto, as amended, restated, joined, supplemented
or otherwise modified from time to time, and any renewals, extensions or
replacements thereof, in each case (x) in accordance with
the terms of Section 10.17 of this Agreement and (y) which constitute
the primary bank credit facility of the Company and its
Subsidiaries.

         

        “Debt” of
a Person means, without duplication, such Person’s (a) obligations for borrowed
money, including, without limitation, subordinated indebtedness, (b) obligations
representing the deferred purchase price of property or services (other than
accounts payable arising in the ordinary course of such Person’s business
payable on terms customary in the trade and other than earn-outs or other
similar forms of contingent purchase prices), (c) obligations, whether or not
assumed, secured by liens on or payable out of the proceeds or production from
property now or hereafter owned or acquired by such Person, (d) obligations
which are evidenced by notes, acceptances, or other instruments, (e) Capital
Lease Obligations, (f) outstanding principal balances (representing securitized
but unliquidated assets) under asset securitization agreements (including,
without limitation, the outstanding principal balance of accounts receivable
under receivables transactions) and (g) the implied debt component of synthetic
leases of which such Person is lessee or any other off-balance sheet financing
arrangements (including, without limitation, any such arrangements giving rise
to any Off-Balance Sheet Liabilities).

         

        “EBITDA”
means, for any period, on a consolidated basis for the Company and its
Subsidiaries, the sum of the amounts for such period, without duplication, of
(a) Net Income, plus (b) Interest
Expense to the extent deducted in computing Net Income, plus (c) charges
against income for foreign, federal, state and local taxes to the extent
deducted in computing Net Income, plus (d) depreciation
expense to the extent deducted in computing Net Income, plus (e) amortization
expense, including, without limitation, amortization of goodwill and other
intangible assets to the extent deducted in computing Net Income, plus (f) acquisition,
integration, transformation and restructuring charges incurred in the first
three fiscal quarters of the Company’s 2009 fiscal year and in an aggregate
amount not to exceed $3,000,000, all in accordance with Agreement Accounting
Principles to the extent deducted in computing Net Income, plus (g) other
extraordinary non-cash charges to the extent deducted in computing Net Income,
minus (h) other
extraordinary non-cash credits to the extent added in computing Net Income,
plus (i)
non-cash expenses related to stock based compensation to the extent deducted in
computing Net Income, plus (j) charges
incurred as a result of impairment of fixed assets, intangible assets and
goodwill, all to the extent deducted in computing Net Income.  EBITDA
shall be calculated on a pro forma basis giving
effect to Acquisitions and Asset Sales on a last twelve (12) months’
basis.

         

         “Intercreditor
Agreement” means the Second Amended and Restated Intercreditor Agreement dated
as of January 12, 2010 among the Administrative Agent, the Collateral Agent and
the holders of the Notes and the holders of the 2003 Notes, as the same may be
amended, restated, supplemented or otherwise modified from time to
time.

         

        
          
            
            

          

          
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        “Interest
Expense” means, for any period, the total interest expense of the Company and
its consolidated Subsidiaries, whether paid or accrued (including the interest
component of Capital Leases, commitment fees and fees for stand-by letters of
credit, the discount with respect to asset securitization agreements and the
implied interest component of synthetic leases), all as determined in conformity
with Agreement Accounting Principles.  Interest Expense shall not
include any interest which in accordance with Agreement Accounting Principles
has been capitalized under the PIK Notes and the 2005 PIK Notes.

         

        “Permitted
Refinancing Debt” means any replacement, renewal, refinancing or extension of
any Debt permitted by this Agreement that (a) does not exceed the aggregate
principal amount (plus accrued interest and any applicable premium and
associated fees and expenses) of the Debt being replaced, renewed, refinanced or
extended, (b) does not have a Weighted Average Life to Maturity at the time of
such replacement, renewal, refinancing or extension that is less than the
Weighted Average Life to Maturity of the Debt being replaced, renewed,
refinanced or extended, (c) does not rank at the time of such replacement,
renewal, refinancing or extension senior to the Debt being replaced, renewed,
refinanced or extended, and (d) does not contain terms (including, without
limitation, terms relating to security, amortization, interest rate, premiums,
fees, covenants, event of default and remedies) materially less favorable to the
Company or to the holders of the Notes than those applicable to the Debt being
replaced, renewed, refinanced or extended.

         

         “Pledge
and Security Agreement” means that certain Amended and Restated Pledge and
Security Agreement (including any and all supplements thereto) dated as of
January 12, 2010 by and among the Domestic Note Parties and the Collateral
Agent, to the benefit of the Collateral Agent and the other holders of the
Secured Obligations.

         

        “2005
Note Agreement” means the Note Purchase and Private Shelf Agreement, dated
January 28, 2005, between the Company and the Initial Purchasers named therein,
as amended through the Amendment No. 3 Effective Date and as further amended
from time to time.

         

        Section
1.10  The following shall be added as new definitions in alphabetical
order to the Defined Terms in Schedule B to the Note Agreement:

         

         “Amendment
No. 3” shall mean that certain Third Amendment to Note Purchase Agreement dated
as of January 12, 2010 by and among the Company, each of the holders of the
Notes and the other parties a signatory thereto.

         

        “Amendment
No. 3 Effective Date” shall have the meaning set forth in Section 5 of Amendment
No. 3.

         

         “Maximum
Acquisition Amount” means, for any rolling period of twelve consecutive months,
$50,000,000.

         

        
          
            
            

          

          
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        Section
1.11  The following Defined Terms in Schedule B to the Note Agreement
shall be and are hereby deleted in their entirety: “Acceptable Bank Credit
Agreement” and “Normalization Date”.

         

        SECTION
2. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.

         

        Section
2.1    To induce the Noteholders to execute and deliver this
Third Amendment  (which representations shall survive the execution
and delivery of this Third Amendment ), the Company represents and warrants to
the Noteholders that:

         

        (a)    
this
Third Amendment  has been duly authorized, executed and delivered by
it and this Third Amendment  constitutes the legal, valid and binding
obligation, contract and agreement of the Company enforceable against the
Company in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors’ rights generally;

         

        (b)    
the Note
Agreement, as amended by this Third Amendment, constitutes the legal, valid and
binding obligation, contract and agreement of the Company, enforceable against
it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors’ rights generally;

         

        (c)    
the
execution, delivery and performance by the Company of this Third
Amendment  (i) has been duly authorized by all requisite corporate
action and, if required, shareholder action, (ii) does not require the consent
or approval of any governmental or regulatory body or agency, and (iii) will not
(A) violate (1) any provision of law, statute, rule or regulation or its
certificate of incorporation or bylaws, (2) any order of any court or any rule,
regulation or order of any other agency or government binding upon it, or (3)
any provision of any material indenture, agreement or other instrument to which
it is a party or by which its properties or assets are or may be bound, or (B)
result in a breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument referred to
in clause (iii)(A)(3) of this Section 2.1(c);

         

        (d)    
as of the
date hereof and after giving effect to this Third Amendment, no Default or Event
of Default has occurred which is continuing and no condition exists which has
resulted in, or could reasonably be expected to have, a Material Adverse
Effect;

         

        (e)    
all the
representations and warranties contained in Section 5 of the Note Agreement and
in Section 5 of the Guaranty Agreement are true and correct in all material
respects with the same force and effect as if made by the Company and the
Subsidiary Guarantors, respectively, on and as of the date hereof;

         

        (f)    
all
Subsidiaries that are required to enter into the Subsidiary Guaranty or enter
into a joinder agreement in respect of the Subsidiary Guaranty pursuant to
Section 9.6 of the Note Agreement have so entered into the Subsidiary Guaranty
or a joinder agreement in respect of the Subsidiary Guaranty and are listed on
the signature pages to this Third Amendment as Subsidiary Guarantors;
and

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        (g)    
other
than as expressly set forth in the Bank Credit Agreement or as otherwise
disclosed by the Company to the holders of the Notes on or prior to the
Amendment No. 3 Effective Date, neither the Company nor any of its Subsidiaries
on or prior to the Amendment No. 3 Effective Date has paid or agreed to pay, nor
will the Company or any of its Subsidiaries pay or agree to pay on or prior to
the Amendment No. 3 Effective Date, any fees or other compensation to the
Administrative Agent, any Bank Lender or any holder of the 2005 Notes for or
with respect to the Bank Credit Agreement or the 2005 Note Agreement Second
Amendment (other than for the reimbursement of out of pocket expenses in
connection therewith).

         

        SECTION
3. CONDITIONS
TO EFFECTIVENESS OF THIS THIRD AMENDMENT.

         

        Section
3.1    This Third Amendment  shall not become
effective until, and shall become effective when, each and every one of the
following conditions shall have been satisfied:

         

        (a)    
executed
counterparts of this Third Amendment, duly executed by the Company and the
holders of the Notes, shall have been delivered to the Noteholders;

         

        (b)    
the
Company shall have delivered to the Noteholders executed copies of (i) the
Pledge and Security Agreement, (ii) the Bank Credit Agreement, (iii) the Second
Amendment to Note Purchase and Private Shelf Agreement dated as of the date
hereof among the Company and the holders of the 2005 Notes (the “2005 Note
Agreement Second Amendment”) and (iv) the Second Amended and Restated
Intercreditor Agreement dated as of the date hereof by and among the holders of
the Secured Obligations and acknowledged by the Company, and all related
agreements, documents and instruments, in each case, in connection therewith,
all of which shall be in form and substance satisfactory to the
Noteholders;

         

        (c)    
the
Company shall have prepaid the entire aggregate outstanding principal amount of
all PIK Notes, together with accrued interest thereon to the prepayment date
which has not previously been paid by adding such interest to the principal
balance of the PIK Notes;

         

        (d)    
the
representations and warranties of the Company set forth in Section 2 hereof are
true and correct on and with respect to the date hereof;

         

        (e)    
the
Noteholders shall have received the favorable opinion of counsel to the Company
as to the matters set forth in Sections 2.1(a), 2.1(b) and 2.1(c) hereof, which
opinion shall be in form and substance satisfactory to the Noteholders;
and

         

        (f)    
the
Company agrees to pay upon demand, the reasonable fees and expenses of Choate,
Hall & Stewart, LLP, special counsel to the Noteholders, in connection with
the negotiation, preparation, approval, execution and delivery of this Third
Amendment.

         

        Upon
receipt of all of the foregoing, this Third Amendment  shall become
effective (the “Amendment No. 3 Effective Date”).

        

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

        SECTION
4.   MISCELLANEOUS.

         

        Section
4.1    This Third Amendment  shall be construed in
connection with and as part of the Note Agreement, and except as modified and
expressly amended by this Third Amendment, all terms, conditions and covenants
contained in the Note Agreement, the Guaranty Agreement and the Notes are hereby
ratified and shall be and remain in full force and effect.

         

        Section
4.2    Except as modified and expressly amended by this
Third Amendment, the execution, delivery and effectiveness of this Third
Amendment shall not (a) amend the Note Agreement, the Guaranty Agreement or any
Note, (b) operate as a waiver of any right, power or remedy of any Noteholder,
or (c) constitute a waiver of, or consent to any departure from, any provision
of the Note Agreement, the Guaranty Agreement or any Note at any
time.

         

        Section
4.3    Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Third Amendment may refer to the Note Agreement without making specific
reference to this Third Amendment  but nevertheless all such
references shall include this Third Amendment  unless the context
otherwise requires.  At all times on and after the Amendment No. 3
Effective Date, each reference to the Note Agreement in any other document,
instrument or agreement shall mean and be a reference to the Note Agreement as
modified by this Third Amendment.

         

        Section
4.4   The
descriptive headings of the various Sections or parts of this Third
Amendment  are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.

         

        Section
4.5   This Third Amendment shall be governed by and construed in
accordance with the laws of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.

         

        [Signatures
on Following Page]

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

         

        The
execution hereof by you shall constitute a contract between us for the uses and
purposes hereinabove set forth, and this Third Amendment may be executed in
any number of counterparts, each executed counterpart constituting an original,
but all together only one agreement.

         

        
          
             

            
              	
                       
      

                    	
                      Very
      truly yours,

                    

            

          

           

          
            	
                     
      

                  	
                    SCHAWK,
      INC.

                  

          

           

          
            	
                     
      

                  	
                    By:

                  	
                    /s/Timothy J.
      Cunningham______________

                  

          

          
            	
                     
      

                  	
                    Timothy
      J. Cunningham

                  

          

          
            	
                     
      

                  	
                    Chief
      Financial Officer

                  

          

           

        

         

        Each of
the Subsidiary Guarantors hereby (i) consents to the foregoing Third Amendment
and ratifies the amendments contained therein, (ii) ratifies and reaffirms all
of its obligations and liabilities under each Subsidiary Guaranty (as defined in
the Note Agreement referred to in the Third Amendment) notwithstanding the Third
Amendment or otherwise, (iii) confirms that each Subsidiary Guaranty remains in
full force and effect after giving effect to the Third Amendment, (iv)
represents and warrants that there is no defense, counterclaim or offset of any
type or nature under any Subsidiary Guaranty, (v) agrees that nothing in any
Subsidiary Guaranty, the Note Agreement, the Third Amendment or any other
agreement or instrument relating thereto requires the consent of any Subsidiary
Guarantor or shall be deemed to require the consent of any Subsidiary Guarantor
to any future amendment or other modification to the Note Agreement, and (vi)
waives acceptance and notice of acceptance hereof.

         

        
           

          
            	
                     
      

                  	
                    SCHAWK
      USA, INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    SCHAWK
      WORLDWIDE HOLDINGS INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            
              
              

            

            
              12

              
                

              

            

            
              
              

            

          

           

          
            	
                     
      

                  	
                    SCHAWK
      HOLDINGS INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    SEVEN
      SEATTLE, INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    SCHAWK
      LLC

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    MIRAMAR
      EQUIPMENT, INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    SCHAWK
      DIGITAL SOLUTIONS INC.

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

          
            	
                     
      

                  	
                    KEDZIE
      AIRCRAFT LLC

                     

                    By:  SCHAWK USA Inc., its  Sole
  Member

                  

          

           

           

          
            	
                     
      

                  	
                    By:

                  	
                          
                      /s/Timothy J.
      Cunningham______________

                    

                  

          

          
            	
                     
      

                  	
                          
                      Timothy
      J. Cunningham

                    

                  

          

          
            	
                     
      

                  	
                          
                      Chief
      Financial Officer

                    

                  

          

           

           

          
            
              
              

            

            
              13

              
                

              

            

            
              
              

            

          

           

          
            
              	 Accepted
      as of the date first written above.	        
	 	 
	 	MASSACHUSETTS
      MUTUAL LIFE 
INSURANCE COMPANY

            

            
               

              
                
                  	
                        	
                          By:

                        	
                          Babson
      Capital Management LLC,
as Investment
Adviser

                        

                

              

            

            
               

              
                	
                         
      

                      	
                        By:

                      	
                        /s/John B
      Wheeler______________________

                      

              

              
                	
                         
      

                      	
                        Name: 
      John B. Wheeler

                      

              

              
                	
                         
      

                      	
                        Title: 
      Managing Director

                      

              

               

               

              
                	
                      	C.M.
      LIFE INSURANCE COMPANY

                
                   

                  
                    
                      	
                            	
                              By:

                            	
                              Babson
      Capital Management LLC,
as Investment
Adviser

                            

                    

                     

                  

                

                
                  
                    	
                             
      

                          	
                            By:

                          	
                                  
                              /s/John B
      Wheeler______________________

                            

                          

                  

                  
                    	
                             
      

                          	
                            Name: 
      John B. Wheeler

                          

                  

                  
                    	
                             
      

                          	
                            Title: 
      Managing Director

                          

                  

                   

                   

                

              

              
                	
                      	MASS
      MUTUAL ASIA LIMITED

                 

                
                  
                    	
                          	
                            By:

                          	
                            Babson
      Capital Management LLC,
as Investment
Adviser

                          

                  

                   

                  
                    	
                             
      

                          	
                            By:

                          	
                                  
                              /s/John B
      Wheeler______________________

                            

                          

                  

                  
                    	
                             
      

                          	
                            Name: 
      John B. Wheeler

                          

                  

                  
                    	
                             
      

                          	
                            Title: 
      Managing Director

                          

                  

                   

                

              

               

            

          

          
            
              
              

            

            
              14ex10-1.htm

Exhibit 10.1

 

 

Dated: April 10, 2002

 

MANAGEMENT AGREEMENT

 

THIS AGREEMENT, made and entered into as of the 1st day of November 2001, by and between FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY, A NEW JERSEY BUSINESS TRUST, (the “Trust”), having an address at 505 Main Street, Hackensack, NJ (07601), and Hekemian & Company, Inc., a New Jersey corporation, having its principal
offices located at 505 Main Street, Hackensack, NJ (07601) (the “Agent”).

 

WHEREAS, the Trust desires to obtain the assistance and services of the Agent and of the Agent’s organization in connection with the management and operation of the Trust’s assets.

 

NOW THEREFORE, in consideration of the mutual covenants herein contained said parties agree as follows:

 

W I T N E S S E T H:

 

1.           Appointment of Agent.

 

(a)           The Trust retains and hires the Agent to generally manage all or part of the Trust assets including, but not limited to, the Trust’s real property, mortgages and other assets, all as set forth in the attached Exhibit A (hereinafter collectively referred to as the
“Trust Property”) and to perform such other services as provided in this Agreement (the “Agent’s Services”).  The Agent shall be paid for all such services in accordance with this Agreement.

 

(b)           In addition, to the Agent’s being retained pursuant to subparagraph 1(a) hereof, the Trust may, in its sole discretion, retain and hire the Agent, on a non-exclusive basis,

 

	
  
	
(1)
	
to purchase, sell or exchange Trust assets including Trust Property; and

 

	
  
	
(2)
	
to perform such other services as it may assign to the Agent.

 

(c)           The Agent shall be the exclusive management agent for the Trust for those properties; (1) set forth on Exhibit A; (2) the Preakness Shopping Center, in the event the Trust acquires an interest in the Preakness Shopping Center; and (3) such other property, or an interest
therein, acquired by the Trust after November 1, 2001 which was introduced to the Trust by the Agent or the Agent and a cooperating broker except that the Trust may elect to retain a third party to manage such other property where, in the Trust’s judgment, such property is located in a geographic area where, from the Trust’s point of view, it cannot be efficiently managed by the Agent or where as a condition of the purchase of such other property the Trust is obligated to use the services of Seller
or Seller’s agent.  The Agent shall be the exclusive Agent for Non

 

  

  

  

Residential Leasing, provided however that the Trust may in its absolute discretion at any time terminate without penalty the Agent’s exclusive agency for Non-Residential Leasing, and no fees shall be due for any services rendered after the date of such Termination unless such services are expressly authorized in writing.  In
addition, the Trust in it sole discretion other than for the management services, may retain other parties to perform other non-property management services as set forth in Paragraph II of Exhibit B attached hereto, or it may perform such other non property management services through its own employees, officers and agents.

 

2.           Term.  The term of this Agreement shall be for a period commencing on November 1, 2001 through October 31, 2003 and thereafter this Agreement shall be automatically renewed for periods of two (2) years unless
either party gives not less than six (6) months prior notice to the other of such non-renewal of this Agreement. Any such notice shall be in accordance with paragraph 14 hereof.  For the purpose of this Agreement, in the event that the Trust does not renew this Agreement, such non-renewal shall be defined as “Non-Renewal” and in the event this Agreement is not renewed by the Agent or is terminated by the Agent, such non-renewal or termination shall be deemed a “Voluntary Termination”
of this Agreement.  The Trust reserves the right to renew this Agreement for the Preakness Shopping Center and other properties but not necessarily all properties (“Partial Renewal”) provided, however, notice of any Partial Renewal shall be given not less than six months prior to October 31, 2003 or any expiration date of any renewal term of this Agreement (“Notice of Partial Renewal”). In the event of a Partial Renewal, the Agent may elect not to accept same by giving notice
to the Trust not more than 30 days after the date of its receipt of the Notice of Partial Renewal, and in that event, it shall be deemed to be a Non-Renewal by the Trust and not a Voluntary Termination by Agent. In the event of any Non-Renewal, the Trust shall, at the termination date of this Agreement, pay to Agent a termination fee equal to six months Base Management Fee, as defined in subparagraph 2(d) hereof, such termination fee to be in addition to the fees for management services required to be paid by
the Trust pursuant to this Agreement up to the termination date.

 

This Agreement may also be terminated as follows:

 

(a)           By the Trust without cause, at any time upon not less than one (1) year’s prior written notice; in such event, the Trust shall, at the termination date of this Agreement, pay to the Agent a termination fee equal to one (1) year’s Base Management Fee as defined
in subparagraph 2(d) hereof, such termination fee to be in addition to the fees for management services required to be paid by the Trust pursuant to this Agreement up to the termination date. For these purposes the termination fee shall be computed by ascertaining the annual base fee paid by the Trust to the Agent over the immediate prior three (3) fiscal years of this Agreement to such termination and dividing that amount by three (3) (the “Termination Fee”);

 

For Example:

 

	
  
	
(1)
	
Base Management Fees for:

 

  

  

  

	
  
	
(a)
	
Year A
	
$750,000

 

(b)           Year B                      $800,000

 

(c)           Year C                      $850,000

 

The Base Management Fee is:

 

Years A, B, C                                or           $2,400,000 =
$800,000

     3                                                              
 3

 

	
  
	
(2)
	
The Termination Fee is $800,000

 

(b)           By the Trust, with cause, upon not less than thirty (30) days prior written notice provided however, that Agent may cure an event of cause for termination within said thirty (30) day period unless the “cause” constitutes a breach of the Agent’s fiduciary
duty, in which event the breach shall be non-curable; without in anyway limiting the term “with cause”, any material breach of this agreement by the Agent shall constitute “cause”.

 

(c)           By the Trust immediately upon a merger, consolidation, acquisition of all or substantially all of its assets, a tender offer or negotiated purchase of the shares of beneficial interest of the Trust, or any transaction where the Trust ceases to effectively exist as an
operating entity (hereinafter collectively referred to as an “M&A”).  In the event of such termination, the Trust shall pay to the Agent any and all fees or reimbursements due under this Agreement, calculated on a pro-rata basis, as of the effective date of any such M&A.  In addition, the Trust will pay to the Agent a M&A Termination Fee as defined below.

 

For the purposes of this subparagraph (2)(c) the M&A Termination Fee shall be equal to the Termination Fee times a factor of 1.25.

 

Notwithstanding the provisions of the foregoing subparagraph above, in the event of an M&A, if the Agent, or any successor entity or group in which one or more of the present shareholders of Hekemian & Co. are officers, principals or employees (“Successor Agent”), is engaged in providing management or other services,
of any kind or description whatsoever, to the successor to the Trust (the “Successor Entity”) after the M&A pursuant to an agreement of any kind or description, (“Successor Entity Management Agreement”) with respect to Trust Property or other Trust matters, then, in such event, the M&A Termination Fee shall be adjusted as follows:

 

There shall be deducted from the M&A Termination Fee, otherwise due Agent, or Successor Agent, any management fees which it earns pursuant to the Successor Entity Management Agreement during the period of one year and three months after the effective date of the M&A.

 

For these purposes, however, in the event the management fees scheduled to be paid to the Agent, or Successor Agent, pursuant to the Successor

 

  

3

  

Entity Management Agreement and such agreement provides for unequal annual fee payments, the fees due the Agent or Successor Agent shall be determined by the amount of fees which would have been due over the entire scheduled term of said agreement, but in no event more than three (3) years, divided by the number of years of the Agreement.

 

For example, if the Termination Fee is $800,000.00, as calculated in paragraph 2 (a) hereof, then the Termination Fee is $800,000 x 125% or $1,000,000.

 

If the Successor Entity Management Agreement is for a three (3) year period and provides for fees to be paid as follows:

 

Year                Fee

 

1                      300,000

 

2                      400,000

 

3                      800,000

 

The effective annual fee would be determined as follows:

 

Total Income: 1,500,000 ÷ 3 = $500,000 for one (1) year.

 

The average annual fee of $500,000 is then subject to adjustment for a period of one (1) year and three months or 500,000 x 125% equals $625,000.

 

The M&A Termination would be reduced as follows:

 

$1,000,000 less $625,000 = $375,000

 

(d)           The Base Management Fee shall be the fee the Agent receives based only upon the collection of rent for the Trust during the Trust’s fiscal year, for those properties for which the Agent’s services have been terminated pursuant to this Paragraph 2, and for
no other services such as commissions earned on the purchase or sale of Trust Property or any other miscellaneous services which Agent may provide to the Trust pursuant to this Agreement.

 

(e)           In addition to the Termination Fee or M&A Termination Fee set forth in this paragraph 2, the Agent shall be entitled to receive from the Trust or any Successor Entity, any and all commission and fees or reimbursement earned by the Agent prior to the effective date
of termination (the “Commissions and Fees”) in accordance with the schedule set forth in Exhibit B.  For the purpose of this subparagraph (e) in the case of a non-residential tenant, if the Tenant has a 5year lease for which the Agent has earned a commission with a renewal option and the Tenant exercises the option prior to or after the effective date of Termination, the Agent shall be entitled to a commission provided that the commission shall be based on a total of not more than 10 years
including the initial 5 year term.

 

  

4

  

3.           Acceptance of Appointment.  Agent hereby accepts such appointment and agrees to perform the services pertaining to said appointment and to manage and operate the Trust Property and to make all appropriate
payments due, in connection with any assets or obligations which the Agent is responsible to manage or service pursuant to this Agreement, to the extent Trust funds are available for such payments, to best of its ability, in a faithful and diligent manner.  For the purposes of this Agreement, Agent’s services hereunder shall apply only to those of the Trust Properties Agent has been designated as the Managing Agent and in which capacity it has agreed to act on behalf of the Trust except with respect
to the functions described in paragraphs (g), (n), and (p). Without limiting the generality of the foregoing, the Agent agrees to perform and the Trust hereby expressly authorizes and empowers Agent to perform the following Agent Services:

 

(a)           At Agent’s sole discretion, to locate and recommend to the Trust investments which the Agent deems suitable for the Trust based upon the then current investment policies of the Trust.

 

(b)           To rent or lease, on terms acceptable to the Trust, the residential property as listed in Exhibit A.

 

(c)           To collect and receive all rents, mortgage payments, interest and all other income from the Trust Property to which the Trust is entitled, and to account monthly to the Trust for such income. Agent shall use its best effort to collect rent and other income from the Trust
Property.  Subject to the prior approval of the Trust pursuant to a resolution of its Board of Trustees, the Agent may, compromise claims for such rent and other income and may institute legal proceedings in its own name or in the name of the Trust to collect same, to oust or dispossess tenants or others occupying from the Trust Property and also otherwise to enforce the rights of the Trust with respect thereto; Agent may, subject to the direction of the Board of Trustees, compromise or settle such
proceedings, provided, however, approval of the Board of Trustees will not be required with respect to the commencement of any action or the compromise of any claim with respect to all residential tenant disputes and for any commercial tenant dispute involving $10,000 or less.

 

(d)           To hire commencing January 1, 2002 employees for the Trust, who shall be employed solely with respect to Trust Property supervise all such employees and to purchase and to contract for all materials, supplies and services required for the operation and ordinary maintenance,
alteration, improvement and repair of the Trust Property.  Except in those case when, in the opinion of the Agent, an emergency necessitates so doing before the Trust approval can be reasonably obtained, the Agent shall not make or incur unanticipated or extraordinary repairs, alterations or improvements or expenditures without approval of the Trust.  The Agent may in connection with such unanticipated or extraordinary repairs, alterations or improvements, hire or use its employee or employees
to coordinate and expedite said work in addition to general contractors, sub-contractors and architects as it may deem necessary, in which case the salary or compensation of said employee or employees attributable to the said work shall be chargeable to the Trust.

 

  

5

  

For the purpose of this Agreement, an unanticipated or extraordinary repair, alteration improvement or expenditure shall be any expenditure which is not provided for in the capital expense budget, as provided for in subparagraph 3(n) hereof and paragraph 6 as hereinafter set forth.

 

(e)           To periodically inspect all of the Trust Property and make such recommendations for the maintenance and improvement thereof as it deems advisable.

 

(f)           To retain and to cooperate with such accountants, architects, engineers, contractors, attorneys, and others, as may be designated by the Trust for the proper operation, maintenance and preservation of the Trust Property and Trust affairs.

 

(g)           To review, and to at least once every fiscal year, to recommend to the Trust that it purchase insurance to protect the real estate interest of the Trust, including but not limited to fire insurance with extended coverage, boiler, elevator, public liability and workman’s
compensation insurance.  The Agent, upon receipt of specific instructions from the Trust, may from time to time place such insurance on behalf of the Trust.  It is specifically understood and agreed, however, that the Trust may, in its sole discretion, utilize the services of any party or parties other than the Agent, for these purposes.  Any such insurance purchased by the Agent on behalf of the Trust shall name the Trust as the insured and the Agent as an additional insured.  Agent
may receive from others and retain its customary compensation for its services as an insurance agent or broker in placing such insurance.

 

(h)           To review and present to the Trust for timely payment, all payments due for taxes, insurance, mortgage payments, and all other obligations incurred in connection with the operation, maintenance, alteration, improvement and repair of the Trust Property.

 

(i)           To review, and to at least once every fiscal year to recommend to the Trust, that it seek revision of, or appeal from, any real property tax assessment, of every kind and description, which it deems inappropriate. The Agent, upon receipt of specific instructions from
the Trust, shall prosecute any such tax appeal or appeals as may be authorized by the Trust pursuant to said instructions.  It is specifically understood and agreed, however, that the Trust may, in its sole discretion, prosecute any such tax appeals utilizing the services of any party or parties other than the Agent, for these purposes. All such actions may be taken in the name of the Trust or in Agent’s name, in the discretion of the Agent.  Agent may, pursuant to instructions from
the Trust, employ independent real estate appraisers to provide appropriate testimony in connection with such actions.  Agent may, in its discretion, pay such charges or assessments from Trust funds under protest and seek refunds thereof, and compromise or settle any proceeding or claim with respect thereto.

 

(j)           To submit periodic reports as the Trust may reasonably require as to the Trust Property.

 

  

6

  

(k)           To maintain complete and accurate records of all its transactions relating to real estate interests of the Trust and make such records available for inspection by the Trust or its representatives at reasonable times.

 

(l)           To perform such other incidental duties in connection with the proper operation, maintenance and improvement of the Trust Property as the Trust may require.

 

(m)           To use reasonable efforts to attend all complaints of tenants.

 

(n)           To submit by, November 1 of each fiscal year, an operating budget and a capital expense budget for the Trust Property, all as more fully described in paragraph 6 of this Agreement; to provide, or cause to be provided, at reasonable cost and to supervise all services necessary
for the proper repair alteration, decoration, care, protection, management, operation and maintenance of the Trust Property, including the purchase of all equipment, tools, appliances, materials, supplies necessary for such purposes, and to pay for all such charges out of income from the Trust Property; provided, however, that the Agent shall not, except in any emergency situation, contract for any repairs, alterations, decorations, equipment tools, appliances, materials, supplies, or other items or services
not provided for in either the operating or capital budgets without the prior approval of the Trust.

 

(o)           To approve and pay out of income from the Trust Property or from funds provided from the Trust, all charges for all utility services together with all other services and commodities necessary or desirable for the care, operation or maintenance of the Trust Property.

 

(p)           In consultation with the Trust’s auditors, to maintain full books of account with correct entries of all matters relating to any and all Trust assets, including the appropriate consolidation or compilation of accounting data for Trust Property not managed by the
Agent, which books of account, together with all records, correspondence, files and of the documents relating to the operation and management of the Trust Property shall be and remain the property of the Trust, and shall, at all times, remain at Agent’s offices, and shall, at all times, be open to the inspection of the Trust or any of its auditors, Trustees, officers or duly authorized Agents.

 

(q)           in consultation with the Trust’s auditors, to furnish to the Trust, on a fiscal year and quarterly basis, operating statements for the fiscal quarter ended as soon practical thereafter in form and substance satisfactory to the Trust and its Audit Committee

 

(r)           In consultation with the Trust’s auditors, to review the quarterly financial report and draft any appropriate SEC10Q report on a quarterly basis with the Trust’s Audit Committee and auditors; to assist the appropriate officers in the preparation of all additional
reports which may be provided to the SEC including, but not limited to, 10Q; 10K; 10K-A; 8-K; 8K-A; and Proxy Statements of every kind and description; and to assist in the preparation of any reports to be provided to

 

  

7

  

Shareholders, provided, however, with respect to Trust Properties not managed by the Agent, the Trust shall be solely responsible for the accuracy and completeness of all information with respect to such reports.  The Agent will file all reports with the SEC or other regulatory bodies on behalf of the Trust only upon the
receipt of written instructions from the Trust Audit Committee, which instruction shall be given to the Agent in a timely manner.  In addition to any other fee paid to Agent hereunder, and provided the Trust designates the Agent to perform the services as provided herein and the Agent accepts said designation the Agent shall be paid the sum of $20,000 per year, payable in accord with Exhibit B attached hereto for the Agent’s assistance for all actions under this subparagraph (r).

 

The Agent will file all reports with the SEC or regulatory bodies on behalf of the Trust only upon the approval of the Trust Audit Committee.

 

(s)           For the period from the date hereof ending on December 31, 2001, to employ and pay out of income from the Trust Property of all on-site employees of Agent but only to the extent employed in the management of the Trust Property and consistent with the operating budget
adopted by the Trust.  All personnel positions created by any such staffing requirements will be Agent’s employees. Agent shall pay out of the income from the Trust Property all expenses in connection with the Agent’s employees utilized to supervise the Trust Property. Agent shall comply with applicable law in employment matters.  Commencing January 1, 2002, all such on site employees shall be direct employees of the Trust.

 

(t)           To expend monies for those items included in the approved operating budget as described in Paragraph 6 hereof without prior approval of the Trust (unless such prior approval is specifically required by another paragraph of this Agreement) and to expend such other monies
as are approved by the Trust. At the end of each quarter, should the actual cost to date plus the budgeted amount for the remainder of the fiscal year for any expense category, including the category of maintenance and repairs, exceed the total fiscal year operating budget, Agent shall so report to the Trust and request authorization to exceed the budget for that particular expense category.  Such request shall be accompanied by appropriate supporting documentation as may be required by the Trust.  The
Agent shall make no expenditure, other than emergency expenditures, for any item not so authorized, nor shall the Agent make any expenditure for any amounts in excess of what is authorized in the operating budget.

 

(u)           To use its best efforts to see that the terms and conditions of all tenant leases and related agreements thereto as well as for all operating agreements affecting the Trust Property are monitored and fully complied with.  Any material matter of non-compliance
shall be immediately brought to the attention of Trust.

 

(v)           To expend funds necessary to protect the Trust Property in the event an emergency should arise and the Trust Property would suffer any loss because of delay in making repairs; provided, however, the Agent promptly notifies any

 

  

8

  

applicable insurance carrier and the Trust making a full report to the Trust as soon as practical.

 

(w)           To verify and maintain current certificates of insurance for all tenants in accordance with the terms of their leases.

 

4.           Authorization; Indemnification.

 

(a)           The Trust hereby gives the Agent, consistent with the terms of this Agreement, the power and authority necessary to perform the foregoing services and agrees to assume the expenses and disbursements incurred in connection therewith, and agrees to indemnify and hold harmless
the Agent from contractual or other liability claims, or other damages in the performance of its duties hereunder (including reasonable attorney fees, experts fees and costs) to the extent that such liability is not covered by insurance and to the extent that it does not arise by reason of the Agent’s gross negligence, willful misconduct or actions committed by it in violation of or beyond the scope of this Agreement, and to carry, at its own expense, public liability, elevator liability, and steam boiler
insurance adequate to protect the interests of the parties hereto, which policies shall be so written as to protect the Agent in the same manner and to the same extent as the Trust. Notwithstanding anything to the contrary herein, the Trust agrees to indemnify and hold harmless Agent from any claims, liability or damages relating to or arising from discriminatory and alleged discriminatory and other employment practice to the extent Agent, at the specific direction of the Trust, hires, fires, manages, supervises
or provides administrative services of any personnel on behalf of the Trust. The Agent shall be entitled to the benefit of any insurance maintained by the Trust and shall be entitled to the advice of counsel for the Trust with respect to any actions undertaken by it or proposed to be undertaken by it under the terms of this Agreement, and shall not be liable for any action undertaken or omitted in good faith on the advice of such counsel.

 

(b)           The Agent agrees to indemnify and hold the Trust harmless from any claims or liability (including reasonable attorney fees, experts fees and costs) to the extent that such liability is not covered by insurance and was incurred by reason of the Agent’s gross negligence,
willful misconduct or actions committed by it in violation or beyond the scope of this Agreement.

 

5.           Deposits of Rent and Other Receipts.  All sums received from rents, security deposits and other receipts from the Trust Property collected by the Agent shall be deposited in, a segregated bank account or
accounts maintained by the Agent subject, however, at all times to the control of both the Agent and the Trust.  Such account or accounts shall be in such bank or banks as may from time to time be designated and approved by the Trust, in its sole discretion. For security purposes, all cash received from the Trust Property by the Agent will first be deposited in the Agent’s transfer account and a check immediately drawn against such account to the order o the Trust and deposited in the designated
account of the Trust.  All expenses referred to in this Agreement, shall be paid by check from said accounts or accounts.  If the state in which a Trust Property is located in mandates special handling of tenant security

 

  

9

  

deposits, then, such security deposits will be maintained in the manner so prescribed by such state.  Agent shall be responsible-only for-the-proper deposit of those security monies it actually receives.  Agent shall not commingle the Trust’s bank account with any account containing Agent’s own funds.

 

6.           Capital and Operating Budgets.  By November 1 of each year, Agent shall furnish to the Trust, for its approval, capital and operating budgets for next fiscal year.  The Trust shall use every effort
to approve the foregoing budgets submitted to it, reserving the right always, in its discretion, to make changes, and once approved, shall forthwith advise Agent in writing.  The operating budget, once approved by the Trust, shall become the operating budget for the Trust Property for the year as to which it applies and Agent shall operate the Trust Property within such operating budget for such year in accordance with paragraph 3(w) hereof.  If the Trust has not approved an operating budget
submitted to it prior to October 31 of the year in which submitted, then Agent shall operate the Trust Property under the prior year’s budget until notice of change and/or approval of the submitted budget is given by the Trust to the Agent in writing. Capital budgets submitted to the Trust are advisory only and all spending under capital budgets is discretionary with the Trust.  As of November 1 of each year, the Agent shall prepare and submit to the Trust the following:

 

(a)           a forecast of rents and occupancy rates for the following fiscal year;

 

(b)           a schedule of non residential leases, any vacancies, setting forth the expiration dates, rental delinquencies and base rents; and

 

(c)           any standard reports currently generated by the Agent in connection with its management of the Trust Property.

 

7.           Worker’s Compensation. The Agent shall, from the date hereof through December 31, 2001 and thereafter commencing January 1, 2002, the Trust shall carry Workers’ Compensation insurance for all employees,
utilized in connection with the management of the Trust Property, the cost of which through December 31, 2001 shall be reimbursed to the Agent by the Trust upon a submission of the requisite supporting data to the Trust. Effective January 1, 2002, the Trust shall carry its own Workmen’s Compensation insurance for all of its employees.

 

8.           Right to Place Insurance.  The Trust reserves the right at all times to maintain such insurance with respect to the Trust Property and its operations as it deems appropriate, to select all insurers and to
place all insurance policies with respect to the Trust Property.  All non-casualty insurance maintained by the Trust throughout the term of this Agreement, shall name the Agent as an additional insured.

 

9.           Limitation of Claims.

 

(a)           Agent shall not make any claim under this Agreement against the Trustees or affiliates of the Trust personally, or against the Shareholders of the Trust, and shall look solely to the Trust Property and other assets of the Trust for the payment of any claim hereunder.

 

  

10

  

(b)           The Trust shall not make any claim under this Agreement against the officers, directors or shareholders or employees of Agent and shall look solely to the assets of Agent for the payment of any claim hereunder.

 

10.           Contractual Statement of Non-Liability.  Agent shall insert in all documents and agreements prepared or executed by it on behalf of the Trust a provision that the Trustees and the Shareholders of the Trust
shall not be personally liable thereunder and that the other parties shall look solely to the Trust assets for the payment of any claim thereunder, and reference shall be made to the Declaration of Trust by which the Trust is constituted.

 

11.           Property and Liability Incidents.  Agent shall report immediately to the local representatives of the insurance company(s) providing the property casualty and liability coverage for the Trust Property and
to the Trust, any and all accidents, damages or losses on or about the Trust Property resulting in personal injury or death, or damage to the Trust Property.  Agent shall also send to the Trust, immediately upon receipt, any and all legal or other process served on the Agent or the Trust Property which affects, or might affect, the Trust or the Trust Property.  All reports to be provided under this Paragraph 11 shall be forwarded to the President of the Trust pursuant to Paragraph 14 of this
Agreement.

 

12.           Compensation of Agent.  Owner agrees to pay to Agent as compensation for the services performed by Agent pursuant to this Agreement the amounts stipulated in Exhibit B. Such compensation may be charged
by the Agent as an operating expense against the Trust Property.  Except as provided in Exhibit B, no other management fees, or other fees or amounts, shall be payable by the Trust to Agent without the prior approval of the Trust.

 

13.           Termination and Expiration.  In the event of the termination or expiration of this Agreement:

 

(a)           All records pertaining to the operation of the Trust Property, together with any other property of the Trust in Agent’s possession, shall immediately be delivered to the Trust or its representative authorized to receive the same, the Trust rights to all of such
records shall be delivered to the Trust or its representative authorized to receive the same, the Trust’s rights to all of such records shall be independent of any obligation of the Trust under this Agreement; the Agent is, however, to be provided reasonable access to the records after they have been delivered to the Trust;

 

(b)           Agent’s right to additional compensation pursuant to this Agreement shall immediately cease, except that any compensation payable with respect to rentals already collected by Agent for the month in which this Agreement is terminated and any other amounts payable
hereunder to the Agent and properly due, may be deducted before such rents are paid to the Trust;

 

  

11

  

(c)           The Trust shall pay to the Agent, any deferred brokerage commissions which otherwise would have become payable subsequent to said termination or expiration and brokerage commissions on acquisitions or dispositions of properties by the Trust with respect to which negotiations
are pending at the time of such termination or expiration if and when such negotiations result in an acquisition or disposition; and

 

(d)           The relationship created hereby shall immediately cease and terminate, and Agent shall have no further right to act for the Trust or draw checks on the Trust’s bank account.

 

14.           Notices.  All notices given under this Agreement to either party shall be effective, for all purposes, seven (7) days after being deposited in the United State mail, as registered or certified mail, return
receipt requested, first class postage and fees prepaid, addressed as follows:

 

	
  
	
Owner:
	
FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

815 Pond Brook Road

Franklin Lakes, New Jersey 07417

Attn: Donald W. Barney, President

 

with copy to:                                         Herbert C. Klein, Esq.

C/O Nowell Amoroso Klein Bierman, P.A.

155 Polifly Road

Hackensack, NJ 07601

 

Agent:                    HEKEMIAN & CO.

505 Main Street

Hackensack, NJ 07601

Attn: Robert Hekemian, Sr., Chief Executive Officer

 

with a copy to:                                      Robert Hekemian, Jr., Executive Vice President

HEKEMIAN & CO.

505 Main Street

Hackensack, NJ 07601

 

Either party hereto may, by notice to the other party, change the address to which notices shall be sent. Additionally, Owner may give notice by hand-delivery at the above address.

 

15.           Agent’s Authority Limited.  The Agent’s authority is derived wholly from this Agreement; Agent has no authority to act for or represent the Trust except as herein specified. It is understood
and agreed that Agent is not the Agent of the Trust for the purpose of employing persons on an employer-employee basis unless directed to do so by the Trust.  Agent shalt observe all laws respecting the employment of persons and shall indemnify and hold harmless the Trust from and against any and all claims, judgements and demands asserted by third parties against the Trust alleging violations

 

  

12

  

of such laws with respect to Agent’s employees. It is furthermore understood and agreed that nothing in this Agreement is intended to create nor shall be construed to create an employer-employee relationship between the Trust and Agent. Agent’s relationship to the Trust shall at all times be that of independent contractor.

 

16.           This paragraph has been intentionally omitted.

 

17.           Posting of Signs.  The Trust hereby authorizes the Agent to affix on its properties, appropriate sign or signs indicating, as the case may be, that same are for sale, for rent, build to suit, or managed
by the Agent.

 

18.           Non-Assignability of Agreement.  The Trust has entered into this Agreement in reliance upon the experience and ability of Agent, including the individual efforts of Robert Hekemian, Sr., Robert Hekemian,
Jr., Bryan Hekemian and David Hekemian; Agent shall not assign this Agreement or any interest herein without the prior written consent of the Trust; and the Trust shall not assign this Agreement without the consent of the Agent.  Any attempted assignment without such consent shall be void. Subject to the foregoing, this Agreement shall be binding upon and shall inure to the benefit of the successors and assigns of the parties hereto. In the event that none of the above named principals of Agent are
no longer affiliated with Agent, on a full time basis, the Trust shall have the right to terminate this Agreement upon one hundred twenty (120) days prior written notice.

 

19.           Qualification as a Real Estate investment Trust.  In the event that the terms of this Agreement at any time shall impair the status of the Trust as a “real estate investment trust” within the
meaning of the Amendment to the Internal Revenue Code of 1954 #856 et seq., which became effective January 9, 1961, as now enacted or hereafter amended, the parties hereto agree to negotiate such amendments to this Agreement as may be necessary to restore or maintain such status.

 

20.           Performance of the Agent.  In the event the Trust should be dissatisfied with the performance of the Agent under this Agreement the Trust shall give written notice to the Agent of any and all deficiencies
(the “Notice”) which Notice shall be in sufficient detail, and whenever possible, the dates upon which they occurred, in order to permit the Agent to undertake the remedying thereof. The Agent will have a minimum period of sixty (60) days from receipt of Notice within which to correct any such deficiencies before the Trust exercises any right of Termination pursuant to this Agreement.

 

21.           Bids.  In all cases in which the Trust authorizes Agent to enter into contracts for any purpose hereunder, the Agent will, upon the Trust’s request, solicit bids from minimum of three (3) bidders
on a best efforts basis.

 

22.           Entire Agreement.  This Agreement together with its attached Exhibits A and B constitute. the entire agreement between the parties hereto and no modification hereof shall be effective unless made by supplemental
agreement, in writing, executed by the parties hereto.

 

  

13

  

23.           Governing Law.  This Agreement shall be governed and construed under the laws of the State of New Jersey.

 

24.           Agent’s Good Faith.  Agent, its shareholders, officers, directors and employees shall not be personally liable to the Trust for errors in judgement and acts or failure to act or omitted in the good
faith exercise of the authority conferred by this Agreement; provided, however, Agent shall employ reasonable care, skill and ability in exercising the powers granted to Agent by this Agreement, including, without limitation, the hiring, retention or supervision of its employees and Agents through December 31, 2001 and thereafter the Trust’s employees, subcontractors and Agents. The Agent shall indemnify and agree to hold the Trust harmless from and against any and all claims; demands, suits, costs (including
attorney’s fees) and judgments which any person(s) has asserted or may assert (1) predicated upon a claim that such person(s) employed directly or indirectly by Agent at or respecting the Trust Property, is an employee of the Trust prior to December 1, 2001 unless otherwise determined by a court that such person is an employee of the Trust; (2) arising out of acts or omissions to act resulting from gross negligence or intentional misconduct or willful defaults by the Agent or the employees, subcontractors
or Agents of the Agent and (3) arising out of Agent’s breach of its obligations under this Agreement.

 

25.           Owner’s Consent.  Where consent of the Owner is herein required, such consent shall be given or denied by such persons as may from time to time be appointed by the Owner to serve as its designated
representatives.

 

26.           Headings.  Paragraph titles or captions contained herein are for reference only and shall in no way define, limit or extend the scope of this Agreement.

 

27.           Merger.  This Agreement supersedes and renders void any prior understandings or agreements everted into between the parties hereto or any predecessor entity to either of the parties hereto regarding the
management of the Trust Property.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day, month and year first above written.

 

Owner

 

FIRST REAL ESTATE INVESTMENT TRUST OF NEW JERSEY

 

By:__________________________________

Name:         Donald W. Barney

Title:           President

 

 

 

  

14

  

HEKEMIAN & CO., INC.
Agent

 

By:__________________________________

Name:         Robert S. Hekemian, Jr.

Title:           Executive Vice President

 

  

15

  

EXHIBIT A

 

	
TRUST PROPERTY

	
A.           Residential Properties as of November 1, 2001:

 

	
Property and Location
	
Year Acquired
	
No. of Units

 

	
Lakewood Apts.

Lakewood, NJ

 
	
1962
	
40

	
Palisades Manor

Palisades Park, NJ

 
	
1962
	
12

	
Grandview Apts.

Hasbrouck Heights, NJ

 
	
1964
	
20

	
Heights Manor

Spring Lake Heights, NJ

 
	
1971
	
79

	
Hammel Gardens

Maywood, NJ

 
	
1972
	
80

	
Sheridan Apts.

Camden, NJ

 
	
1964
	
132

	
Berdan Court

Wayne, NJ

 
	
1965
	
176

	
Westwood Hills

Westwood, NJ (1)

 
	
1994
	
210

	
(1) Trust owns a 40% interest.

 

	
B.           Non-Residential Properties as of November 1, 2001:

 

	
Property and Location
	
Year Acquired
	
Leasable Space - Approximate Square Feet

 

	
Franklin Crossing

Franklin Lakes, NJ

 
	
1966
	
87,041

	
Westwood Plaza

Westwood, NJ

 
	
1988
	
173,854

	
Westridge Square

Frederick, Maryland

 
	
1992
	
256,620

 

 

 

16

 

 

 

	
Pathmark Super Store

Patchogue, New York

 
	
1997
	
63,932

	
Glen Rock, NJ

 
	
1962
	
4,800

	
Olney, Maryland(2)

 
	
2000
	
98,848

	
(2) Trust owns a 75% interest

	
C.           Vacant Land as of July 1, 2000:

	
Location
	
Acquired
	
Current Use
	
Permitted Use Per local

Zoning Laws
	
Acreage per

Parcel

	
Franklin Lakes, NJ
	
1966
	
None
	
Residential
	
4.27

	
Rockaway, NJ
	
1964/1963
	
None
	
Residential
	
19.26

	
S. Brunswick
	
1964
	
Leased as farmland qualifying for state farmland assessment tax treatment

 
	
Industrial
	
33

	
D.           Cash and Cash Equivalents

 

  

17

  

EXHIBIT B

 

Schedule of Fees to be Paid to the Aqent

 

I.           Basic Management Fees

 

A.           Residential Properties - 5%

B.           Non-Residential Properties 5% except for the following

 

	
  
	
1)
	
Frederick, Maryland - 4% In addition, 40% of the salary and benefits of the Senior Manager of the Agent is charged to the tenants as CAM. As of the effective date of this Agreement, one half of the amount so charged as CAM shall be paid to the Agent and the balance of one half shall be paid to the Trust. Any such CAM charge prior to the effective date of this Agreement shall be the property of the Trust and shall
be paid by the Agent to the Trust.

 

	
  
	
(2)
	
The fee for Trust properties that are acquired after 10/31/01 excluding Olney, Carlyle, Lebanon and Martinsburg which will be 5%. is as follows:

 

	
  
	
i.)
	
Single tenant triple net leased property - 4%

	
  
	
ii.)
	
Multi-tenant property - 5%

 

	
  
	
C.
	
The applicable management fee for residential and Non-Residential properties as stated above is to be collected from whatever source whatsoever with the following exceptions:

 

	
  
	
§
	
Interest Income

	
  
	
§
	
Real Estate tax reimbursement from non-residential tenants

	
  
	
§
	
Insurance Recovery proceeds

	
  
	
§
	
Condemnation proceeds

	
  
	
§
	
Sale or Refinancing proceeds

	
  
	
§
	
Merchant Association dues

	
  
	
§
	
Direct reimbursement for Capital Improvements from retail tenants

	
  
	
§
	
Tenant Security Deposits, excluding Security Deposits applied against past due rent and other charges subject to Management Fees.

 

D.           The Agent may charge the following fees to residential tenants as follows:

 

	
i)
	
Application Fee:
	
$125.00

	
ii)
	
Lease cancellation fee (one month’s rent)
	
$450.00

	
iii)
	
Month to month tenancy:
	
$350.00

	
iv)
	
Returned Check (insufficient funds)
	
$  30.00

  

18

  

II.            Fees for Additional Services which may be provided by the Agent, at the discretion of Trust and only upon the express authorization of the Trust:

 

A.           Non-Residential Leasing

 

The Agent shall be the exclusive Agent for Non-Residential Leasing, provided however that the Trust may in its absolute discretion at any time terminate without penalty the Agent’s exclusive agency for Non-Residential Leasing, and no fees shall be due for any services rendered_after the date of such Termination unless such services
are expressly authorized in writing.

 

	
  
	
1)
	
Non-Anchor Tenants: A Leasing Fee of 5% of the base aggregate lease rents due for up to 10 years whether by way of initial lease term or options or renewals. The leasing fees shall be paid to the Agent upon receipt of the first month’s rent for the initial lease or upon the exercise of a lease option or upon a lease renewal. The Agent shall not be entitled to any commission or fee for any renewal of a term
if the renewal is not signed prior to the expiration of this Agreement or prior to the effective date of any termination of this Agreement. There will be no fee on exercise of options after the first 10 years provided in the original lease;

 

A Renewal Fee of 2 1/2% of the base aggregate rent due during the renewal term shall be paid to Agent after said 10 year period provided, however, the lease renewal is exercised by a Tenant during the term of this Agreement and provided further that no commission shall be paid for a period in excess of 10 years inclusive of the initial
lease term.

 

	
  
	
2)
	
Anchor-Tenants: A Leasing Fee is to be negotiated as between the Agent and the Trust prior to the execution of any lease and approved by the Board of Trustees by a specific resolution transmitted by the Board to the Agent, in writing.

 

	
  
	
3)
	
Lease Assignment review and Approval: $300 - $1,250 to be paid by Tenant.

 

B.           Acquisition/Sale of Property Fees

 

The Trust shall pay to the Agent a Fee in accordance with the following schedule (these fees are inclusive of any fee paid by the Seller/Purchaser to the Agent):

 

Up to $2,500,000 - 4.5%

Above $2,500,000 but less than $5,000,000 - 3.75%

(but in no event less than $112,500)

Above $5,000,000 but less than $10,000,000- 3.25%

  

19

  

(but in no event less than $187,500)

Above $10,000,000 but less that $15,000,000 - 3%

(but in no event less than $325,000)

Above $15,000,000 but less than $20,000,000 - 2.75%

(but in no event less than $450,000)

Above $20,000,000 - 2.5% (but in no event less than $550,000)

 

C.           Other Fees

 

1.           Mortgages

 

	
  
	
(a)
	
Mortgage Origination fee of % of 1% of the mortgage amount provided, however, there will be no mortgage origination fee for a mortgage obtained in connection with the acquisition of a property for which Agent receives an acquisition fee as herein provided.

 

	
  
	
(b)
	
Mortgage Extension Fee - 1/4% of 1% of the mortgage balance.

 

	
  
	
(c)
	
Credit Lines - 1/4% of 1% of the approved Line of Credit

 

2.           Administrative Fee

 

An Annual Administrative Fee of $85,000.00 to compensate the Agent for providing support services to the Trust. Fee will be paid in twelve equal installments.

 

The Administrative Fee shall be adjusted on November 1St of each year by adding the increase in the Consumer Price Index to said fee based upon the increase from the prior year.

 

The Consumer Price Index (“CPI”) to be used for this purpose shall be that CPI index published by the United States government Bureau of Labor statistics or any successor index thereto, for Urban Wage Earners and Clerical Workers (“CPI-W”) New York, NY. Northern N.J. (1984=100) with the year 2000 as the base year.

 

3.           Miscellaneous

 

Agent will be paid for additional services as follows:

 

	
  
	
(a)
	
Environmental matters; $125.00/hr plus out-of-pocket expenses with a cap to be determined based upon scope of work in the specific project.

 

	
  
	
(b)
	
Coordinating applications for approval of a major renovation or new construction: $125.00/hr plus out-of-pocket expenses.

 

  

20

  

	
  
	
(c)
	
Tenant improvements for retail space; no fee under $10,000; over $10,000 - 5% of construction cost with minimum fee of $2,000.

 

	
  
	
(d)
	
Reconstruction due to a fire loss: no fee for construction costs under $10,000; construction costs over $10,000 at 5% of cost with minimum fee of $2,000.

 

	
  
	
(e)
	
New Construction or Major renovations: fee to be agreed upon.

 

	
  
	
(f)
	
Condemnation proceeds shall be subject to a fee of 5% of the gross amount recovered with a maximum fee of $25,000 and a minimum of $2,500.

 

4.           In the event Agent is designated by the Trust to provide the SEC filings specified in paragraph 3(u) of the Agreement, there will be an annual fee of $20,000 due the Agent payable quarterly provided the Agent accepts said designation.

 

5.           Olney Town Center Fees

 

	
  
	
A.
	
Approvals.

 

	
  
	
(1)
	
At the election of the Trust prior to the engagement of the Agent for such purpose either (a) a fee computed at the rate of $125.00 per hour, plus a bonus of $75.00 per hour, if approvals are secured; or (b) a flat rate of $175.00 per hour.

 

	
  
	
(2)
	
Reimbursement of all out-of-pocket fees and costs;

 

	
  
	
(3)
	
The maximum fee for approvals would be $60,000.00.

 

	
  
	
B.
	
Development.

 

	
  
	
(1)
	
In the event there is a major redevelopment of the Olney Property including the acquisition and development of the existing Safeway off-site store, a fee equal to three (3%) percent of all Construction Costs. Minimum fee of $300,000.00.

 

	
  
	
C.
	
Leasing.

 

	
  
	
(1)
	
Initial Lease

 

	
  
	
(a)
	
Non-Anchor Tenants: Five (5%) percent of base aggregate lease rents up to ten (10) years;

 

  

21

  

	
  
	
(b)
	
Anchor Tenants: To be determined on a deal-by-deal basis.

 

	
  
	
(2)
	
Renewal Lease

 

	
  
	
(a)
	
Non-Anchor Tenants: Two and one-half (2.5%) percent of net aggregate base rents.

 

	
  
	
(b)
	
Anchor Tenants: None unless the is lease is renegotiated in which case the fee would be determined on a case-by-case basis.

 

6.           Fees for approval of development for properties, other than Olney, shall be established by negotiated agreement.

 

 

 

 

22

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