Document:

Exhibit 10.2

 

FORM OF MASTER REAL ESTATE MANAGEMENT AGREEMENT

 

THIS MASTER REAL ESTATE MANAGEMENT AGREEMENT (this “Agreement”), dated as of                          , 20      , is entered into by and between INLAND CORE ASSETS REAL ESTATE TRUST, INC., a Maryland corporation (the “Company”), and INLAND CORE REAL ESTATE SERVICES LLC, a Delaware limited liability company (the “Manager”).

 

WITNESSETH:

 

WHEREAS, Company intends to operate as a “real estate investment trust” (a “REIT”), as defined in Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), for federal and state income tax purposes and expects to make investments in real estate assets of the type permitted to be made by REITs under the Code and otherwise in accordance with the Charter (as hereinafter defined) and the bylaws of Company;

 

WHEREAS, the Manager is owned indirectly by Inland Core Management I Corp., Inland Core Management II Corp., Inland Core Management III Corp., Inland Core Management IV Corp. and Inland Core Management HOLDCO LLC (collectively, the “Management Parent Entities”); and

 

WHEREAS, Company desires to have Manager manage certain Properties (as hereinafter defined), and Manager is willing to manage those Properties, on the terms and conditions herein set forth.

 

NOW THEREFORE, in consideration of the mutual covenants and conditions herein set forth, the parties hereto agree as follows:

 

1.                                       Defined Terms.  As used herein, the following capitalized terms shall have the meanings set forth below:

 

a.                                       “Affiliate” means, with respect to any other Person: any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; any Person directly or indirectly controlling, controlled by or under common control with such other Person; any executive officer, director, trustee, general partner or manager of such other Person; and any legal entity for which such Person acts as an executive officer, director, trustee, general partner or manager.

 

b.                                      “Board of Directors” means the persons holding the office of director of the Company as of any particular time under the Charter.

 

c.                                       “Business Manager” means Inland Core Business Manager & Advisor, Inc., an Illinois corporation.

 

 

d.                                      “Charter” means the articles of incorporation of the Company, as amended or restated from time to time.

 

e.                                       “Company Affiliate” has the meaning ascribed to that term in Section 3 hereof.

 

f.                                         “Core Manager” means Inland Core Management LLC, a Delaware limited liability company.

 

g.                                      “Equity Stock” means all classes or series of capital stock of the Company authorized under the Charter, including, without limit, its common stock, $.001 par value per share, and preferred stock, $.001 par value per share.

 

h.                                      “Indemnitee” has the meaning ascribed to that term in Section 5(a) hereof.

 

i.                                          “Initial Term” has the meaning ascribed to that term in Section 4(a) hereof.

 

j.                                          “Joint Venture” means a joint venture, limited liability company, corporation or partnership arrangement in which the Company, or any subsidiary thereof, is a co-venturer, member, stockholder or partner, and which acquires, owns or manages Real Estate Assets.

 

k.                                       “Liquidity Event” means a Listing or any merger, reorganization, business combination, share exchange or acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all of the Shares in one or more related transactions, or another similar transaction involving the Company, pursuant to which the Stockholders receive cash or the securities of another issuer that are listed on a national securities exchange, as full or partial consideration for their Shares.

 

l.                                          “Listing” means, in the aggregate, the filing of a Form 8-A (or any successor form) with the Securities and Exchange Commission to register any or all Shares, or the shares of common stock of any of the Company’s subsidiaries, on a national securities exchange, the approval of the original listing application related thereto by the applicable exchange and the commencement of trading in the Shares, or the shares of common stock of any of the Company’s subsidiaries, on the exchange.  Upon a Listing, the Shares, or the shares of common stock of the Company’s subsidiaries, shall be deemed “Listed.”  A Listing shall also be deemed to occur on the effective date of a merger in which the consideration received by the holders of the Shares is securities of another issuer that are listed on a national securities exchange; provided, however, that if the merger is effectuated through a wholly owned subsidiary of the Company, the consideration received by the Company shall be distributed to the holders of the Shares.

 

m.                                    “Loans” means debt financing evidenced by bonds, notes, debentures or similar instruments or letters of credit and Mortgage Loans.

 

n.                                      “Management Agreement” has the meaning ascribed to that term in Section 3 hereof.

 

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o.                                      “Mortgage Loans” means notes or other evidences of indebtedness or obligations that are secured or collateralized, directly or indirectly, by Real Property or other interests in Real Property.

 

p.                                      “Net Sales Proceeds” means the proceeds from any Sale of Real Estate Assets, less any costs incurred in selling the Real Estate Asset(s) including, but not limited to, legal fees and selling commissions and further reduced by the amount of any indebtedness encumbering the Real Estate Asset(s).

 

q.                                      “Notice” has the meaning ascribed to that term in Section 8 hereof.

 

r.                                         “Person” means any individual, corporation, business trust, estate, trust, partnership, limited liability company, association, two or more persons having a joint or common interest or any other legal or commercial entity.

 

s.                                       “Property” or “Properties” means interests in (1) Real Property, (2) long-term ground leases or (3) any buildings, structures, improvements, furnishings, fixtures and equipment, whether or not located on the Real Property, in each case owned or to be owned by the Company either directly or indirectly through one or more Affiliates, subsidiaries, Joint Ventures, partnerships or other legal entities.

 

t.                                         “Purchase Price Limit” means, at the time of calculation, 1.5% of the amount of the Company’s total assets as set forth on the Company’s most recent audited balance sheet prior to closing the applicable transaction, adjusted to give effect to any acquisitions of Real Estate Assets that were probable or completed since the date of that audited balance sheet.

 

u.                                      “Renewal Term” has the meaning ascribed to that term in Section 4(a) hereof.

 

v.                                      “Real Estate Assets” means any and all Properties and other direct or indirect investments in equity interests in or Loans secured, directly or indirectly, by or otherwise relating to Property (other than investments in bank accounts, money market funds or other current assets), including any interest in a Joint Venture, owned by the Company, directly or indirectly through one or more of its subsidiaries, Affiliates or Joint Ventures.  Notwithstanding the foregoing, “Real Estate Assets” shall not include any investments in Real Estate-Related Securities.

 

w.                                    “Real Estate Managers” has the meaning ascribed to that term in Section 6 hereof.

 

x.                                        “Real Estate-Related Security” means the real estate-related securities investments, including investments in commercial mortgage-backed securities, owned by the Company, directly or indirectly through one or more of its

 

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subsidiaries, Affiliates or Joint Ventures, but excluding, for these purposes, ownership interests in a Joint Venture.

 

y.                                      “Real Property” means land, rights or interests in land (including, but not limited to, leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on, or used in connection with, land and rights or interest in land.

 

z.                                        “Sale” means any transaction or series of transactions, regardless of whether Net Sales Proceeds are distributed to Stockholders as a result thereof, whereby: (1) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof, except for a contribution to a Joint Venture in which the Company, directly or indirectly, has, or will have, an ownership interest; (2) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (3) any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof (excluding for these purposes any Loans or Mortgage Loans); (4) the Company or any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, through any event which results in the Company or the Joint Venture, as applicable, receiving a insurance proceeds or condemnation awards; (5) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other Real Estate Asset not previously described in this definition or any portion thereof.  Notwithstanding anything to the contrary herein, the sale, grant, transfer or conveyance of any Real Estate-Related Security shall not be treated as a “Sale” hereunder.

 

aa.                                 “Securities Claims” has the meaning ascribed to that term in Section 5(b) hereof.

 

bb.                               “Shares” means the shares of common stock, par value $.001 per share, of the Company, and “Share” means one of those Shares.

 

cc.                                 “Stockholders” means recordholders of shares of Equity Stock as reflected in the Company’s books and records as of the applicable record date.

 

2.                                       Effective Date.  Effective as of the date hereof, Company hereby retains Manager to manage certain Properties to be acquired by Company or by various entities owned or controlled by Company.  This Agreement is not an exclusive management agreement and Manager acknowledges and agrees that Company may engage other management companies to manage Properties not being managed by Manager.

 

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3.                                       Terms and Conditions.  With respect to each individual Property subject to this Agreement, Manager, Company, and Affiliate of Company (“Company Affiliate”) holding title to such Property shall enter into a Real Estate Management Agreement in form and substance as attached hereto as Exhibit A (the “Management Agreement”).  The initial term of each Management Agreement shall commence on the date of acquisition by the Company Affiliate of the Property and shall end December 31 of the year in which the Property was acquired, with renewal periods as described in the Management Agreement.

 

4.                                       Term and Termination.

 

a.                                       Term.  The term of this Agreement shall begin on                          , 20      and end on December 31, 20       (the “Initial Term”).  Unless terminated as provided in Section 4(b) below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20    , and ending on December 31, 20    .

 

b.                                      Termination. This Agreement may be terminated prior to the expiration of the Initial Term or the then current Renewal Term, as follows:

 

i.                                          Either party hereto may terminate this Agreement, effective upon the expiration of the Initial Term or the current Renewal Term, as applicable, if the terminating party gives written notice of its election to terminate this Agreement to the other party not less than sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term as the case may be.  Manager, between ninety (90) and sixty (60) days prior to the expiration of the Initial Term and each Renewal Term, shall notify the independent directors of Board of Directors, of Company’s right to terminate this Agreement pursuant to this Section 4(b)(i).

 

ii.                                       This Agreement may be terminated by the Company immediately upon written notice of termination from the Company to Manager if any of the following events occur:

 

(A)                              Manager violates any provision of this Agreement and fails to cure such violation on or before thirty (30) days after receipt of written notice of such violation from Company;

 

(B)                                a court of competent jurisdiction enters a decree or order for relief in respect of Manager in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property or orders the winding up or liquidation of Manager’s affairs; or

 

(C)                                Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an

 

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involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

Manager agrees that if any of the events specified in subsections (B) and (C) of this Section 4(b)(iii) occur, it will give written notice thereof to Company within seven (7) days after the occurrence of any such event.

 

c.                                       Effect of Termination.  Upon termination of this Agreement, all Management Agreements entered into among Company, Company Affiliates and Manager shall automatically terminate.  In addition, upon termination of this Agreement, Manager shall cooperate with Company and take all reasonable steps requested by Company to assist it in making an orderly transition of the functions performed by Manager.

 

5.                                       Indemnification.

 

a.                                       Company shall indemnify Manager and its officers, directors, members, managers, employees and agents (individually an “Indemnitee”, collectively the “Indemnitees”) for any losses, liability or expense incurred by an Indemnitee and arising from this Agreement, to the same extent as Company may indemnify its officers, directors, employees under its Articles of Incorporation and Bylaws so long as:

 

i.                                          the Board of Directors has determined, in good faith, that the course of conduct that caused the loss, liability or expense was in the best interests of Company;

 

ii.                                       the Indemnitee was acting on behalf of, or performing services for, Company;

 

iii.                                    the liability or loss was not the result of negligence or misconduct on the part of the Indemnitee; and

 

iv.                                   any amounts payable to the Indemnitee are paid only out of Company’s net assets and not from any personal assets of any stockholder of the Company.

 

b.                                      Company shall not be obligated to indemnify any person seeking indemnification for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws (“Securities Claims”) unless one or more of the following conditions are met:

 

i.                                          there has been a successful adjudication for the Indemnitee on the merits of each count involving alleged Securities Claims as to such Indemnitee;

 

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ii.                                       the Securities Claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Indemnitee; or

 

iii.                                    a court of competent jurisdiction approves a settlement of the Securities Claims and finds that indemnification for the costs of settlement and related costs should be made and the court considering the request is advised of the position of the Securities and Exchange Commission and of the published opinions of any state securities regulatory authority in which securities of Company were offered and sold with respect to the availability or propriety of indemnification for Securities Claims.

 

c.                                       Company shall timely advance amounts to Indemnitees for legal and other expenses and costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

 

i.                                          the legal action relates to acts or omissions with respect to the performance of duties or services by the Indemnitee for or on behalf of Company;

 

ii.                                       the legal action is initiated by a third party who is not a stockholder of the Company and a court of competent jurisdiction specifically approves the funding of an advance; and

 

iii.                                    the Indemnitee receiving the advances undertakes to repay any monies advanced by Company, together with the applicable legal rate of interest thereon, in any case(s) in which a court of competent jurisdiction finds that such Indemnitee is not entitled to such advances.

 

6.                                       Business Combinations. If, pursuant to the direction of the Board of Directors, the Company elects to acquire the Manager and the Core Manager (together, the “Real Estate Managers”) and the Business Manager in connection with (a) a Sale of all or substantially all of the Real Estate Assets or (b) a Liquidity Event, the aggregate purchase price to be paid by the Company to acquire the Real Estate Managers and the Business Manager shall not exceed the Purchase Price Limit and that the purchase price shall be paid in the form of Shares rather than cash. For purposes of calculating the aggregate purchase price, any costs or expenses of the transaction(s) that the Company may agree to pay or reimburse for either: (i) costs and expenses the Real Estate Managers or the Business Manager have incurred on the Company’s behalf; or (ii) costs and expenses the Real Estate Managers or the Business Manager incur directly in connection with the transaction(s), and any fees or costs of the transaction or transactions, shall be excluded. Any acquisition of the Business Manager and Real Estate Managers shall be subject to the negotiation and execution of definitive agreements acceptable to both parties.

 

7.                                       Non-Solicitation.  During the period commencing on the date on which this Agreement is entered into and ending one year following the termination of this Agreement, the Company shall not, without the Manager’s prior written consent, directly or indirectly: (a) solicit or encourage any person to leave the employment or other service of the Manager or its Affiliates; or (b) offer to hire, on behalf of the Company or any other person, firm, corporation or

 

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other business organization, any person who has left the employment of the Manager or its Affiliates, within the one year period following the termination of that person’s employment the Manager or its Affiliates; provided, however, that this Section 7 shall not prohibit: (i) solicitations directed to the general public, which are not directed to specific individuals or employees of the Manager or its Affiliates; (ii) solicitations of persons whose employment was terminated by the Manager or its Affiliates within six months of the date this Agreement is terminated; or (iii) solicitations of persons who have terminated their employment with the Manager or its Affiliates without any prior solicitation by the Company or any subsidiary thereof.  During the period commencing on the date hereof through and ending one year following the termination of this Agreement, the Company shall not, whether for its own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the relationship of the Manager with, or endeavor to entice away from the Manager, any person who during the term of the Agreement is, or during the preceding one-year period, was a client of the Manager.

 

8.                                       Notices.  All notices, requests or demands to be given under this Agreement from one party to the other (collectively, “Notices” and individually a “Notice”) shall be in writing and shall be given by personal delivery, or by overnight courier service for next Business Day delivery at the other party’s address set forth below, or by telecopy transmission at the other party’s facsimile telephone number set forth below.  Notices given by personal delivery (i.e., by the sending party or a messenger) shall be deemed given on the date of delivery. Notices given by overnight courier service shall be deemed given upon deposit with the overnight courier service and Notices given by telecopy transmission shall be deemed given on the date of transmission provided such transmission is completed by 5:00 p.m. (sending party’s local time) on a Business Day, otherwise such delivery shall be deemed to occur on the next succeeding Business Day. If any party’s address is a business, receipt, or the refusal to accept delivery, by a receptionist or by any person in the employ of such party, shall be deemed actual receipt by the party of Notices. The term, Business Day, means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.  Notices may be issued by an attorney for a party and in such case such Notices shall be deemed given by such party.  The parties’ addresses are as follows

 

	
If to Company, to:
    	
Inland   Core Assets Real Estate Trust, Inc.

2901   Butterfield Road

Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. JoAnn   M. Armenta, President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   368-2277
    
	
 
    	
 
    
	
With a copy to:
    	
Inland   Core Business Manager & Advisor, Inc.

2901   Butterfield Road

Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. Roberta   S. Matlin, Vice President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   218-4955
    

 

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If to Manager, to:  
    	
Inland   Core Real Estate Services LLC

2901   Butterfield Road

Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Larry   R. Sajdak
    
	
 
    	
Telephone:
    	
(630)   645-7258
    
	
 
    	
Facsimile:
    	
(630)   368-2218
    

 

A party’s address for Notice may be changed from time to time by notice given to the other party in the manner herein provided for giving Notice.  Copies of Notices are for informational purposes only, and a failure to give or receive copies of any Notice shall not be deemed a failure to give notice, and shall in no way adversely affect the effectiveness of such Notice given to the addressee party.

 

9.                                       Miscellaneous.

 

a.                                       Nothing contained herein shall be construed as creating any rights in persons or entities who are not the parties to this Agreement.  Manager and Company shall not be construed as joint venturers or partners of each other pursuant to this Agreement, and neither shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of Manager to Company under this Agreement is that of an independent contractor.

 

b.                                      If any provisions of this Agreement, or the application of any such provisions to parties hereto or any third party beneficiaries of this Agreement, shall be held by a court of competent jurisdiction to be unlawful or unenforceable, the remaining provisions of this Agreement shall nevertheless be valid, enforceable and shall remain in full force and effect, and shall not be affected, impaired or invalidated in any manner.  This Agreement, its validity, performance and enforcement shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to conflicts of law principles.

 

c.                                       This Agreement shall be binding upon the successors and assigns of Manager and the successors and assigns of Company.  This Agreement contains the entire Agreement of the parties relating to the subject matter hereof, and there are no understandings, representations or undertakings by either party except as herein contained. This Agreement may be modified solely by a written agreement executed by both parties hereto.

 

d.                                      If any party hereto defaults under the terms or conditions of this Agreement, the defaulting party shall pay the non-defaulting party’s court costs and reasonable attorneys’ fees incurred in the enforcement of any provision of this Agreement.

 

e.                                       Either party’s failure to exercise any right under this Agreement shall neither constitute a waiver of any other terms or conditions of this Agreement with respect to any other or subsequent breach, nor a waiver by that party of its right at any time thereafter to require exact and strict compliance with the terms of this Agreement.

 

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f.                                         All exhibits attached to this Agreement are hereby incorporated by reference.  In an event of a conflict between the exhibits and the text of this Agreement preceding this Section, the text of this Agreement preceding this Section shall control.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

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WHEREFORE, the undersigned have executed this Agreement by their duly authorized officers or representatives as of the date first above written.

 

	
COMPANY:
    	
 
    	
MANAGER:
    
	
 
    	
 
    	
 
    
	
INLAND CORE ASSETS REAL ESTATE TRUST, INC.
    	
 
    	
INLAND   CORE REAL ESTATE SERVICES LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    

 

For purposes of Section 6 only:

 

	
Inland Core Management Corp. I
    	
 
    	
Inland   Core Management Corp. II
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
Inland Core Management Corp. III
    	
 
    	
Inland   Core Management Corp. IV
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
Inland Core Management HOLDCO LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Its:
    	
 
    	
 
    	
 
    

 

 

EXHIBIT A

 

FORM OF MANAGEMENT AGREEMENT

 

See attached.

 

 

REAL ESTATE MANAGEMENT AGREEMENT

 

THIS REAL ESTATE MANAGEMENT AGREEMENT (this “Agreement”), dated as of [                    ] [    ], 20[    ], is entered into by and between [SINGLE MEMBER LLC] (“Owner”), and INLAND CORE REAL ESTATE SERVICES LLC, a Delaware limited liability company (the “Manager”).

 

WHEREAS, Owner’s ultimate parent company, Inland Core Assets Real Estate Trust, Inc. (the “Parent Company”) directly or indirectly owns or controls Owner;

 

WHEREAS, the Parent Company intends to qualify to be taxed as a real estate investment trust pursuant to the terms of its articles of incorporation (the “Articles of Incorporation”) and bylaws (the “Bylaws”), as each may be amended from time to time;

 

WHEREAS, Owner and the Parent Company desire to avail themselves of the experience, sources of information, advice, assistance and facilities available to the Manager and to have the Manager undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the board of directors of the Parent Company (the “Board of Directors”), all as provided herein; and

 

WHEREAS, the Manager is willing to undertake to render these services on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                                       Exclusive Management.  Owner hereby engages Manager exclusively, to perform or cause to be performed the services described herein for the property legally described on Exhibit A attached hereto and made a part hereof (the “Premises”), upon the terms and conditions hereinafter set forth herein and Manager accepts such exclusive engagement.

 

2.                                       Term and Termination.

 

a.                                       Term.  The term of this Agreement shall begin on [                    ] [    ], 20[    ] and end on December 31, 20[    ] (the “Initial Term”).  Unless terminated as provided in Section 2(b) below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20[    ], and ending on December 31, 20[    ].

 

b.                                      Termination. This Agreement may be terminated prior to the expiration of the Initial Term or the then current Renewal Term, as follows:

 

(i)                                     Either party hereto may terminate this Agreement, effective upon the expiration of the Initial Term or the current Renewal Term, as applicable, if the terminating party gives written notice of its election to terminate this Agreement to the other party not less than sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term as the case may be.  Manager,

 

 

between ninety (90) and sixty (60) days prior to the expiration of the Initial Term and each Renewal Term, shall notify the independent directors of Company’s board of directors, of Company’s right to terminate this Agreement pursuant to this Section 3(b)(i).

 

(ii)                                  Manager shall have the right to terminate this Agreement upon sixty (60) days written notice to Owner in the event that the Premises is no longer generating Gross Income (as hereinafter defined).

 

(iii)                               This Agreement may be terminated by the Company immediately upon written notice of termination from the Company to Manager if any of the following events occur:

 

(A)                              Manager violates any provision of this Agreement and fails to cure such violation on or before thirty (30) days after receipt of written notice of such violation from Company;

 

(B)                                a court of competent jurisdiction enters a decree or order for relief in respect of Manager in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property or orders the winding up or liquidation of Manager’s affairs; or

 

(C)                                Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

Manager agrees that if any of the events specified in subsections (B) and (C) of Section 3(b)(iii) occur, it will give written notice thereof to Company within seven (7) days after the occurrence of any such event.

 

3.                                       Manager Duties.  Owner hereby gives Manager the exclusive authority and power, as agent for Owner, to provide the services listed in this Section 3 and elsewhere in this Agreement and Owner agrees to reimburse Manager and its affiliates for all expenses paid or incurred in connection therewith.  For the avoidance of doubt, unless otherwise stated in this Agreement that such expenses are to be borne by Manager, all expenses related to the duties performed or caused to be performed by Manager herein with respect to the Premises shall be the responsibility of the Owner and reimbursed to Manager upon billing therefor if initially paid for by Manager.  Manager shall be entitled at all times to manage the Premises in accordance with

 

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Manager’s standard operating policies and procedures all in accordance with the budget approved by Owner, except to the extent that any specific provisions contained herein are to the contrary, in which case Manager shall manage the Premises consistent with such specific provisions of this Agreement.

 

a.                                       Collection of Gross Income.

 

i.                                          Manager shall collect all rents and assessments and other monies due Owner related to the Premises (all such items being referred to herein as “Gross Income”) accounting for the same.  Manager shall give Owner receipts therefor and deposit all such Gross Income collected hereunder in Manager’s custodial account established for the Premises using Owner approved software which Manager will open and maintain, in a state or national bank of Manager’s choice and whose deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent available, exclusively for the Premises and any other properties owned by Owner (or any entity that is owned or controlled by Parent Company) and managed by Manager.  Unless otherwise required by Owner, Manager shall be permitted to comingle the funds in such custodial account with funds attributable to any other properties owned by Owner or entities owned or controlled by Parent Company and managed by Manager.  Owner agrees that Manager shall be authorized to maintain a reasonable minimum balance (to be determined jointly from time to time) in the custodial account. Manager may endorse any and all checks received in connection with the operation of the Premises and drawn to the order of Owner, and Owner upon request, shall furnish Manager’s depository with an appropriate authorization for Manager to make the endorsement.

 

ii.                                       When applicable, Manager shall collect and bill for security deposits or assessments and other items, including but not limited to calculating, preparing and mailing all invoices for tenant payments for real estate taxes, property liability and other insurance, damages and repairs, common area maintenance, tax reduction fees and all other tenant reimbursements, administrative charges, proceeds of rental interruption insurance, parking fees, income from coin operated machines and other miscellaneous income as stipulated in the leases.  At the request of Owner, Manager will administer, and create if necessary, a bill-back program for tenant utility consumption unless prohibited by local law.

 

b.                                      Payment of Expenses.  From the custodial account described above, Manager shall pay all expenses of Owner with respect to the Premises from the Gross Income collected in accordance with Section 3(a)(i) hereof.  In the event that expenses paid pursuant to this Section 3(b) exceed Gross Income for any monthly period, Manager shall notify Owner of same. Owner shall pay the excess amount immediately upon request from Manager.  Nothing herein contained shall obligate Manager to advance its own funds on behalf of Owner.

 

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c.                                       Annual Budgets.  Manager shall prepare an annualized budget for the operation of the Premises and submit the same to Owner for approval (the “Annualized Budget”).  Manager will use its commercially reasonable efforts to operate the Premises pursuant to the Annualized Budget; provided, however, Manager shall have no liability to Owner for failure to meet such Annualized Budget.  The Annualized Budget shall include a comparison back to the original underwriting performed at the time of Owner’s acquisition of the Premises and prior year performance.  The first Annualized Budget has been prepared and approved for the year commencing [                    ], [    ] 20[    ] and ending on December 31, 20[    ].  Notwithstanding the period covered by the first Annualized Budget, all subsequent Annualized Budgets shall cover the period from January 1st of each year through December 31st of the same year. The proposed Annualized Budget for each calendar year shall be submitted by Manager to Owner by December 1st of the year preceding the year for which it applies, and Owner shall notify Manager within fifteen (15) days of receipt of such Annualized Budget as to whether Owner has or has not approved the proposed Annualized Budget. If Owner does not approve the proposed Annualized Budget, Owner shall notify Manager of the specifics of such disapproval within such fifteen (15) day period and Manager shall make the necessary amendments to the Annualized Budget. During the time Manager is preparing these amendments, Manager will continue to operate the Premises according to the last approved Annualized Budget. Owner’s approval of the Annualized Budget shall constitute approval for Manager to expend sums for all budgeted expenditures, without the necessity to obtain additional approval of Owner under any other expenditure limitations as set forth elsewhere in this Agreement.

 

d.                                      Non-Budgeted Expenses over $20,000.  Manager shall secure the approval of, and execution of appropriate agreements by, Owner for any non-budgeted and non-emergency/contingency capital items, alterations or other expenditures in excess of Twenty Thousand Dollars ($20,000.00) for any one item, securing for each item at least three (3) written bids, if practicable, or providing evidence satisfactory to Owner that the agreed amount is lower than industry standard pricing, from responsible contractors. Manager shall have the right from time to time during the term hereof, to contract with and make purchases from entities or affiliates of such entities providing services to the Parent Company and third party agents; provided that contract rates and prices are competitive with other available sources. Manager, at any time, and from time to time, may request and receive the prior written authorization of Owner for any one or more purchases or other expenditures, notwithstanding that Manager may otherwise be authorized hereunder to make such purchases or expenditures.

 

e.                                       Third-Party Agreements.  Owner hereby appoints Manager as Owner’s authorized agent for the purpose of executing, as agent for Owner, any agreements with third-parties necessary for operation of the Premises.  For example, and not in limitation of the foregoing, Manager shall negotiate and enter into contracts for services and items in the Annualized Budget relating to the Premises.

 

f.                                         Manager Employees.  Manager shall hire, supervise, discharge and pay salary and benefit expenses for all employees of Manager or Manager’s sole member, as Manager determines necessary to perform Manager’s duties described in this Agreement

 

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including, but not limited to managers, assistant managers, leasing consultants, engineers, janitors and maintenance supervisors.  All expenses of such employment, including but not limited to, wages, salaries, insurance, benefits, employment related taxes, overhead and other governmental charges, shall be deemed operational expenses of the Premises and Owner shall reimburse Manager for such expenses which may be charged to Owner on a per square foot or per unit basis, as applicable.  Notwithstanding the foregoing, salaries and benefits of Manager’s employees who also serve as the one of the Parent Company’s executive officers or as an executive officer of the Manager shall not be reimbursed by the Owner.  The number and classification of employees serving the Premises shall be as determined by Manager to be appropriate for the proper operation of the Premises; provided that Owner may request changes in the number or classification of employees, and Manager shall make all requested changes unless in its judgment the resulting level of operation or maintenance of the Premises will be inadequate. [Manager shall honor any collective bargaining contract covering employment at the Premises which is in effect upon the date of execution of this Agreement; provided that Manager shall not assume or otherwise become a party to any collective bargaining contract for any purpose whatsoever and all personnel subject to a collective bargaining contract shall be considered the employees of the Owner and not Manager (delete bracketed text if not applicable to Premises)].

 

g.                                      Insured Losses.

 

i.                                          Manager shall be responsible for taking all steps necessary to file any claim for insured losses or damages; provided that Manager will not make any adjustments or settlements in excess of $50,000.00 without Owner’s prior written consent.

 

ii.                                       Manager shall coordinate with the appropriate insurance company or companies, if applicable, to process claims.

 

iii.                                    Manager shall administer compliance of insurance provisions of tenant leases for all vendors and commercial tenants, including confirming insurance requirements for any special events at the Premises and obtaining certificates of insurance.

 

iv.                                   At the request of Owner, Manager shall assist Owner’s insurance consultants with any necessary insurance matters.

 

v.                                      Manager shall attend Owner’s meetings regarding loss control and claims.

 

h.                                      Monthly Remittance.  Manager shall remit to Owner the excess of Gross Income over expenses paid pursuant to Section 3(b) hereof (“Net Proceeds”) for each month as directed by Owner at the address as stated in Section 7 hereof.

 

i.                                          Reporting.  Upon the request of Owner, Manager shall render reports for the Premises.  Such reports may include specific and detailed line item information for budget comparison, expense detail, payables and receivables information, leasing

 

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progress, marketing information, peer comparison and all other measurements of the key performance indications of the Premises.

 

j.                                          Litigation.  Manager shall institute and prosecute actions to evict tenants and to recover possession of the Premises or portions thereof, and in the name of Owner to sue for and recover rent and other sums due; and to settle, compromise and release such actions or suits, or reinstate such tenancies; provided, however, if the tenancy subject to such proceedings is of a term greater than fourteen (14) months, Manager shall obtain Owner’s consent prior to instituting any such proceedings.  Manager and Owner shall concur on the selection of the attorney to handle any such litigation.

 

k.                                       Replacements and Repairs.  Pursuant to the Annualized Budget and at Owner’s cost, and when required, Manager shall make or cause to be made all ordinary repairs and replacements necessary to preserve the Premises in its present condition, in all material respects, and for the operating efficiency thereof.  Manager shall also perform all alterations required to comply with any lease requirements, work with municipalities to comply with any code or lender requirements, attend lender inspections and assist with the lender reserve requirement processes.

 

l.                                          Leasing Services.

 

i.                                          Manager shall perform leasing services for the Premises, including, but not limited to, hiring all third-party brokers, negotiating contracts with such brokers, tracking leasing progress on all assets and determining when to terminate and replace third-party brokers.  Commissions paid to third-party brokers shall be an expense of the Premises and charged to Owner.

 

ii.                                       Manager shall establish a leasing committee comprised of Manager employees to oversee the leasing services rendered to Owner under this Agreement (the “Leasing Committee”).  The Leasing Committee shall hold monthly meetings to which Owner may attend (the “Leasing Committee Meetings”).

 

iii.                                    Manager shall monitor current market conditions, meet with tenants, brokers and future prospects and visit competitive properties in the surrounding area.  Manager shall report findings at the Leasing Committee Meetings.

 

iv.                                   From time to time, Manager shall attend conferences related to the asset class of the Premises, including, but not limited to, ICSC, BOMA, NAREIT, NAA, NMHC and NAIOP, as applicable.  If requested by Owner, Manager shall appropriately staff booths (as arranged for by the Parent Company) for Owner at such conferences to represent Owner’s interests and coordinate all necessary marketing materials and events to maximize Owner’s exposure at such conferences.

 

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v.                                      Manager shall negotiate all letters of intent for new leases (when applicable) and administer existing leases, including, but not limited to, processing assignments, renewal agreements and lease amendments.

 

vi.                                   Manager shall evaluate leasing activity of Premises and identify potential re-developments or re-configurations, including, but not limited to, a discussion of all proposals that have been sent, targeted tenants, interested and uninterested party discussions with the Leasing Committee.

 

vii.                                Manager shall track all leasing calls and inquiries.

 

viii.                             Manager shall prepare and maintain leasing reports as required by Owner which shall track performance of leasing activity.

 

ix.                                     Manager shall review tenant credit reports for new tenants and assignments and subleases.  When applicable, such review may include, but not be limited to, preparing full financial packages of review of both corporate and individual financial investigations, net worth analysis, net present value calculations and any other financial measures requested by the Owner.  Manager shall be entitled to charge tenant for credit check fees and lease assignment and sublet fees (if provided by applicable lease) and shall not be required to remit such fees to Owner but may retain such fees.

 

x.                                        If a proposed new lease for the Premises is outside the parameters set by the Annualized Budget, Manager shall complete analysis of credit and financials of the tenant under such proposed lease for the Leasing Committee’s review and approval at the Leasing Committee Meeting.

 

xi.                                     If the Premises is a retail property, Manager shall review leases on an on-going basis for relocation clauses, co-tenancy clauses, exclusives and building restrictions to determine and avoid any conflicts.  Manager shall also monitor tenant progress to make recommendations to Leasing Committee on renewal of tenants and proper tenant mix.  Additionally, Manager shall perform an on-going market review to determine market rates for leasing at Premises and make recommendations to Owner for changes in budgeted lease rates.

 

xii.                                  With respect to replacing tenants, Manager shall provide consultation to Owner regarding tenant mix (if the Premises has more than one tenant), market analysis, comparison information and site visits for leasing potential.

 

xiii.                               If the Premises is a retail property, Manager shall schedule and attend meetings on a regular basis with all major retailers for portfolio review and additional leasing opportunities.  In preparation for such meetings, Manager shall perform a full analysis of tenant performance on a site by site basis for sales, profitability, expansions, space modifications and tenant merchandising assistance.

 

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m.                                    Construction Management.

 

i.                                          Manager shall oversee capital expenditure execution and projection.

 

ii.                                       Manager shall oversee construction management of all new tenant build-outs and provide assistance with out-parcel development.

 

iii.                                    Manager shall review and approve architectural plans for space and signage on the Premises.

 

iv.                                   Manager shall monitor the environmental needs of the Premises including, but not limited to, the administration of operation and maintenance programs.  If applicable, Manager shall supervise any remediation projects.

 

n.                                      Operations.

 

i.                                          As requested by Owner and if available for the Premises, Manager shall obtain and administer bulk purchasing and cost efficiency programs for utilities.

 

ii.                                       Manager shall create preventative maintenance programs for the Premises and oversee crisis management for flood, fire, and hurricanes, etc.

 

o.                                      Marketing.

 

i.                                          At the request of Owner, Manager shall create a marketing program for the Premises, including, but not limited to, preparing and maintaining a website.

 

ii.                                       If the Premises is a retail property, at the request of Owner, Manager shall:

 

A.                                   Devote specialty leasing staff to Premises to generate additional revenue through seasonal, temporary and kiosk leasing and finding and development of incubator tenants.

 

B.                                     Organize events for charity programs as well as community events to increase traffic and sales.

 

C.                                     Sponsor program and gift cards for the Premises where it is necessary to improve sales and revenue for the Premises.

 

D.                                    Advertise the Premises including, but not limited to, printing and sending coupons and mailers for the Premises.

 

E.                                      Organize tenant training through merchant or association meetings.

 

iii.                                    If the Premises is a multi-family property, at the request of Owner, Manager shall:

 

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A.                                   Advertise the Premises, including, but not limited to advertising through signage, on websites, in local newspapers and rental guides, and with area referral services.

 

B.                                     Establish a marketing committee comprised of Manager employees (the “Marketing Committee”) who will meet monthly to discuss marketing strategy and implement such strategy.

 

C.                                     Prepare weekly status reports that will summarize the rental activity of the Premises for the previous week.

 

p.                                      Real Estate Consultative Services.

 

i.                                          Upon request of Owner, Manager shall explore strategic alternatives for the Premises.  In addition, Manager shall use a budget and forecasting tool, e.g., Cougar software, to assist in continuous review of Premises performance.

 

ii.                                       Manager shall attend committee meetings at the request of Owner.

 

iii.                                    Manager shall provide oversight and management for the disposition of the Premises if requested by Owner.

 

iv.                                   At the request of Owner, Manager shall perform additional tasks such as evaluating best use; taking calls for offers to purchase the Premises, determining potential out-parcel development, and reviewing additional GLA capabilities.

 

v.                                      Manager shall assist Owner in analyzing the Premises for potential asset impairment issues.

 

vi.                                   If applicable, Manager shall work with Owner on CAM payment best-practice compliance and review of business intelligence and information management systems.

 

q.                                      Electronic Document Management.  Manager shall organize all documents related to the Premises, including, but not limited to leases, contracts, invoices checks and receipts, in an electronic format with constant real time information for Owner’s access.

 

r.                                         Internal Controls/Sarbanes-Oxley Compliance.  If requested by Owner, Manager shall:

 

i.                                          Dedicate staff to monitor and review all incoming invoices, leases, and other control points and procedures dictated by Parent Company’s auditing firm according to Owner’s internal control matrix (the “Internal Control Matrix”) as updated from time to time by Owner.

 

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ii.                                       Attend bi-weekly meetings with Owner to review Internal Control Matrix.

 

iii.                                    Coordinate audits of leases.

 

iv.                                   Travel to satellite offices to insure internal control compliance and perform random spot checking.

 

v.                                      Adhere to all policies stated in Internal Control Matrix.

 

s.                                       Tenant Credit Monitoring.  Where applicable, Manager shall:

 

i.                                          Continuously monitor retailers of the Premises that are distressed, weak, or bankrupt and calculate Z-scores and Frisk scores for all distressed tenants (which evaluate a publicly-traded company’s credit and anticipates bankruptcy).

 

ii.                                       Monitor gross sales of retail tenants.

 

iii.                                    Perform tenant surveys to foster tenant retention and identify problems.

 

iv.                                   Dedicate staff to pursue difficult collection accounts, monitor bankruptcies and resolve material disputes.

 

t.                                         Master Leases and Earnouts.  If the Premises is subject to a so-called Master Lease or Earnout arrangement, Manager shall dedicate a staff member to monitor and invoice all of the Master Leases.  Such staff member shall resolve issues concerning monthly billings, track new tenant move-in dates and authorize release and close-out of Master Lease escrows.  In addition, Manager shall reconcile all Master Lease accounts on a monthly basis.  Manager shall also coordinate all aspects of Earnouts.

 

u.                                      Post-Closing and New Building/Tenant Set-Up Duties.  Manager shall coordinate any existing post-closing items including, but not limited to, the transfer of all utilities from the previous owner of the Premises, CAM reconciliations and prorations, if applicable, and bringing tenants into Owner’s software system.  In addition, Manager shall send tenants welcoming letters which include, the direction to pay all future rents to Manager, wiring instructions, a form W-9, notification from the previous owner about the sale, a letter of introduction to property management and lease assignment and related documents, as requested.

 

4.                                       SubManager.  Notwithstanding anything to the contrary contained in this Agreement, Owner acknowledges and agrees that any of the duties of Manager as contained herein may be delegated by Manager and performed by an affiliate of Manager or third-party agent (a “SubManager”) with whom Manager contracts in writing for the purpose of performing such duties. Owner specifically grants Manager the authority to enter into management agreements with any SubManager; provided that Owner shall have no liability or responsibility to any SubManager for the payment of the SubManager’s fee or for reimbursement to the

 

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SubManager of its expenses or to indemnify the SubManager in any manner for any matter; and provided  further that Manager shall require such Sub-Manager, in the written agreement setting forth the duties and obligations of such SubManager, to indemnify Owner for all loss, liability, damage or claims incurred by Owner as a result of the delegation of duties by Manager to SubManager. Owner further acknowledges and agrees that Manager may assign this Agreement and all of Manager’s rights and obligations hereunder, to another management entity that is then managing other property for Owner or the Parent Company (“Successor Manager”). Owner specifically grants Manager the authority to make such an assignment of this Agreement to a Successor Manager.

 

5.                                       Indemnification.

 

(a)                                  Company shall indemnify Manager and its officers, directors, members, managers, employees and agents (individually an “Indemnitee”, collectively the “Indemnitees”) for any losses, liability or expense incurred by an Indemnitee and arising from this Agreement, to the same extent as Company may indemnify its officers, directors, employees under its Articles of Incorporation and Bylaws so long as:

 

(i)                                     the Company’s board of directors has determined, in good faith, that the course of conduct that caused the loss, liability or expense was in the best interests of Company;

 

(ii)                                  the Indemnitee was acting on behalf of, or performing services for, Company;

 

(iii)                               the liability or loss was not the result of negligence or misconduct on the part of the Indemnitee; and

 

(iv)                              any amounts payable to the Indemnitee are paid only out of Company’s net assets and not from any personal assets of any stockholder of the Company.

 

(b)                                 Company shall not be obligated to indemnify any person seeking indemnification for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws (“Securities Claims”) unless one or more of the following conditions are met:

 

(i)                                     there has been a successful adjudication for the Indemnitee on the merits of each count involving alleged Securities Claims as to such Indemnitee;

 

(ii)                                  the Securities Claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Indemnitee; or

 

(iii)                               a court of competent jurisdiction approves a settlement of the Securities Claims and finds that indemnification for the costs of settlement and related costs should be made and the court considering the request is advised of the position of the Securities and Exchange Commission and of the published opinions of any state securities regulatory authority in which securities of

 

11

 

Company were offered and sold with respect to the availability or propriety of indemnification for Securities Claims.

 

(c)                                  Company shall timely advance amounts to Indemnitees for legal and other expenses and costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

 

(i)                                     the legal action relates to acts or omissions with respect to the performance of duties or services by the Indemnitee for or on behalf of Company;

 

(ii)                                  the legal action is initiated by a third party who is not a stockholder of the Company and a court of competent jurisdiction specifically approves the funding of an advance; and

 

(iii)                               the Indemnitee receiving the advances undertakes to repay any monies advanced by Company, together with the applicable legal rate of interest thereon, in any case(s) in which a court of competent jurisdiction finds that such Indemnitee is not entitled to such advances.

 

6.                                       Management Fees.  For the services other than those described in Section 3(l)(Leasing Services) and 3(m)(Construction Management), Owner agrees to pay Manager, monthly, a management fee hereunder for the services provided by Manager hereunder performed, directly or through its affiliates, agents or Sub-Managers, in an amount equal to [up to: One and nine-tenths percent (1.9%) for single tenant properties; three and nine-tenths percent (3.9%) for multi-tenant properties — unless otherwise approved by Parent Company’s Board of Directors including a majority of Parent Company’s independent directors ] of the Gross Income for the month in which the management fee is paid (the “Management Fee”), which shall be deducted monthly by Manager and retained by Manager from Gross Income prior to payment to Owner of Net Proceeds; provided, however, Owner shall authorize the payment and amount of the monthly fee to Manager prior to the remittance of Net Proceeds to Owner.  Owner agrees to pay additional fees for services rendered under 3(l)(Leasing Services) and 3(m)(Construction Management), such additional fees are hereinafter referred to as the “Leasing Services Fees” and the “Construction Management Fees”.  The Leasing Services Fees and the Construction Management Fees shall be based upon prevailing market rates applicable to the geographic market of the Premises.  Manager shall charge Construction Services Fees only on projects having a total project cost in excess of ten thousand dollars ($10,000).  The Construction Management Fees shall be calculated on the total project cost as budgeted by Owner and Manager and the start of such construction project.  Owner acknowledges and agrees that Manager may pay or assign all or any portion of its Management Fee to a SubManager as described in Section 4 hereof.

 

7.                                       Intentionally Omitted.

 

8.                                       No Structural Alterations.  Owner expressly withholds from Manager any power or authority to make any structural changes to any building on the Premises or to make any other major alterations or additions in or to any such building or equipment therein.  Without the prior written direction from Owner, Manager shall not incur any expense chargeable to

 

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Owner, other than expenses its duties under this Agreement, except in the event where Manager makes all emergency repairs as may be required to ensure the safety of persons or property which are immediately necessary for the preservation and safety of the Premises or the safety of the tenants and occupants thereof or are required to avoid the suspension of any necessary services to the Premises.

 

9.                                       Notice of Non-Compliance with Laws.  Manager shall be responsible for notifying Owner in the event Manager receives a material written notice that any building on the Premises or any equipment therein does not comply with the requirements of any constitutional provision, statute, ordinance, law or regulation of any governmental body or any order or ruling of any public authority or official thereof having or claiming to have jurisdiction thereover (collectively, “Governmental Requirements”). Manager shall promptly forward to Owner any material written complaints, warnings, notices or summonses received by the Manager relating to these matters. Owner represents to Manager that to the best of Owner’s knowledge the Premises, the structures thereon and all equipment servicing the Premises and structures thereon are in current compliance with all Governmental Requirements. In connection with any inquiry by any public authority or official, Manager is authorized to disclose name and address of the Owner. In the event it is alleged or charged that any building on the Premises or any equipment therein or any act or failure to act by Owner with respect to the Premises or the sale, rental, or other disposition thereof fails to comply with, or is in violation of any Governmental Requirements, and the Manager, in its sole and absolute discretion, considers that the action or position of Owner with respect thereto may result in damages, fines, prosecutions or other liabilities to the Manager, Manager shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon delivery of the notice to Owner.  Manager’s termination of this Agreement pursuant to this Section 9 shall not release the indemnities of Owner set forth in this Agreement and shall not terminate any liability or obligation of Owner to Manager for any payment, reimbursement, or other sum of money then due and payable to the Manager hereunder, which shall be paid by Owner to Manager forthwith or by Manager’s deduction thereof from Gross Proceeds.

 

10.                                 Payment of Fees and Actions upon Termination.

 

a.                                       The Manager shall not be entitled to compensation after the date of termination of this Agreement for further services hereunder, but shall be paid all compensation accruing to the date of termination. Upon termination of this Agreement, the Manager shall:

 

i.                                          pay over to Owner all monies collected and held for the account of Owner pursuant to this Agreement, after deducting any accrued compensation and reimbursement for expenses to which the Manager is entitled;

 

ii.                                       deliver to Owner a full accounting, including a statement showing all payments collected by the Manager and a statement of all money held by the Manager, covering the period following the date of the last accounting furnished to Owner;

 

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iii.                                    deliver to Owner all property and documents of Owner or Parent Company then in the custody of the Manager; and

 

iv.                                   cooperate with Owner and take all reasonable steps requested by Owner to assist it in making an orderly transition of the functions performed by the Manager.

 

b.                                      Upon termination, Owner shall specifically assume in writing all obligations under any third-party agreements entered into by Manager pursuant to Section 3(e) on behalf of Owner.

 

11.                                 Survival.  All provisions of this Agreement that require Owner or Parent Company to have insured, or to protect, defend, save, hold and indemnify Indemnified Parties or to compensate or reimburse Manager shall survive any expiration or termination of this Agreement and if Manager is or becomes involved in any claim, proceeding or litigation by reason of having been Manager of Owner, such provisions shall apply as if this Agreement were still in effect.

 

12.                                 Insurance.  Owner agrees that Manager shall be listed as an additional insured on all insurance policies related to the Premises.  Owner hereby authorizes Manager to take all steps necessary to cause Manager to be named as an additional insured including, but not limited to, obtaining evidence of such additional insured status from Inland Insurance and Risk Management Services, Inc..

 

13.                                 Notices.  All notices, requests or demands to be given under this Agreement from one party to the other (collectively, “Notices” and individually a “Notice”) shall be in writing and shall be given by personal delivery, or by overnight courier service for next Business Day delivery at the other party’s address set forth below, or by telecopy transmission at the other party’s facsimile telephone number set forth below.  Notices given by personal delivery (i.e., by the sending party or a messenger) shall be deemed given on the date of delivery. Notices given by overnight courier service shall be deemed given upon deposit with the overnight courier service and Notices given by telecopy transmission shall be deemed given on the date of transmission provided such transmission is completed by 5:00 p.m. (sending party’s local time) on a Business Day, otherwise such delivery shall be deemed to occur on the next succeeding Business Day. If any party’s address is a business, receipt, or the refusal to accept delivery, by a receptionist or by any person in the employ of such party, shall be deemed actual receipt by the party of Notices. The term, Business Day, means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.  Notices may be issued by an attorney for a party and in such case such Notices shall be deemed given by such party.  The parties’ addresses are as follows

 

	
If to Company, to:
    	
Inland   Core Assets Real Estate Trust, Inc.
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. JoAnn   M. Armenta, President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   368-2277
    

 

14

 

	
With a copy to:
    	
Inland   Core Business Manager & Advisor, Inc.
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. Roberta   S. Matlin, Vice President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   218-4955
    
	
 
    	
 
    	
 
    
	
If to Manager, to:
    	
Inland   Core Real Estate Services LLC
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Larry   R. Sajdak
    
	
 
    	
Telephone:
    	
(630)   645-7258
    
	
 
    	
Facsimile:
    	
(630)   368-2218
    

 

A party=s address for Notice may be changed from time to time by notice given to the other party in the manner herein provided for giving Notice.  Copies of Notices are for informational purposes only, and a failure to give or receive copies of any Notice shall not be deemed a failure to give notice, and shall in no way adversely affect the effectiveness of such Notice given to the addressee party.

 

14.                                 Miscellaneous.

 

a.                                       Nothing contained herein shall be construed as creating any rights in persons or entities who are not the parties to this Agreement.  Manager and Owner shall not be construed as joint venturers or partners of each other pursuant to this Agreement, and neither shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of Manager to Owner under this Agreement is that of an independent contractor.

 

b.                                      If any provisions of this Agreement, or the application of any such provisions to parties hereto, shall be held by a court of competent jurisdiction to be unlawful or unenforceable, the remaining provisions of this Agreement shall nevertheless be valid, enforceable and shall remain in full force and effect, and shall not be affected, impaired or invalidated in any manner.  This Agreement, its validity, performance and enforcement shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to conflicts of law principles.

 

c.                                       This Agreement shall be binding upon the successors and assigns of Manager and the successors and assigns of Owner and Parent Company.  This Agreement contains the entire Agreement of the parties relating to the subject matter hereof, and there are no understandings, representations or undertakings by either party except as herein contained. This Agreement may be modified solely by a written agreement executed by both parties hereto.

 

d.                                      If any party hereto defaults under the terms or conditions of this Agreement, the defaulting party shall pay the non-defaulting party’s court costs and 

 

15

 

reasonable attorneys’ fees incurred in the enforcement of any provision of this Agreement.

 

e.                                       Either party’s failure to exercise any right under this Agreement shall neither constitute a waiver of any other terms or conditions of this Agreement with respect to any other or subsequent breach, nor a waiver by that party of its right at any time thereafter to require exact and strict compliance with the terms of this Agreement.

 

f.                                         All exhibits attached to this Agreement are hereby incorporated by reference.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

16

 

WHEREFORE, the undersigned have executed this Agreement by their duly authorized officers or representatives as of the date first above written.

 

	
MANAGER:
    	
 
    	
OWNER:
    
	
 
    	
 
    	
 
    
	
INLAND   CORE REAL ESTATE SERVICES LLC, a Delaware limited liability company
    	
 
    	
[SINGLE   MEMBER LLC]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    

 

 

	
 
    	
 
    	
PARENT   COMPANY (limited to obligations in Section 5 hereof):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
INLAND   CORE ASSETS REAL ESTATE TRUST, INC., a Maryland corporation
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    

 

17

 

Exhibit A

Legal Description

 

See attached.

 

18Exhibit 10.3

 

FORM OF MASTER REAL ESTATE MANAGEMENT AGREEMENT

 

THIS MASTER REAL ESTATE MANAGEMENT AGREEMENT (this “Agreement”), dated as of                           , 20      , is entered into by and between INLAND CORE ASSETS REAL ESTATE TRUST, INC., a Maryland corporation (the “Company”), and INLAND CORE MANAGEMENT LLC, a Delaware limited liability company (the “Manager”).

 

WITNESSETH:

 

WHEREAS, Company intends to operate as a “real estate investment trust” (a “REIT”), as defined in Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), for federal and state income tax purposes and expects to make investments in real estate assets of the type permitted to be made by REITs under the Code and otherwise in accordance with the Charter (as hereinafter defined) and the bylaws of Company;

 

WHEREAS, the Manager is owned indirectly by Inland Core Management I Corp., Inland Core Management II Corp., Inland Core Management III Corp., Inland Core Management IV Corp. and Inland Core Management HOLDCO LLC (collectively, the “Management Parent Entities”); and

 

WHEREAS, Company desires to have Manager manage certain Properties (as hereinafter defined), and Manager is willing to manage those Properties, on the terms and conditions herein set forth.

 

NOW THEREFORE, in consideration of the mutual covenants and conditions herein set forth, the parties hereto agree as follows:

 

1.             Defined Terms.  As used herein, the following capitalized terms shall have the meanings set forth below:

 

a.                                       “Affiliate” means, with respect to any other Person: any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled or held, with the power to vote, by such other Person; any Person directly or indirectly controlling, controlled by or under common control with such other Person; any executive officer, director, trustee, general partner or manager of such other Person; and any legal entity for which such Person acts as an executive officer, director, trustee, general partner or manager.

 

b.                                      “Board of Directors” means the persons holding the office of director of the Company as of any particular time under the Charter.

 

c.                                       “Business Manager” means Inland Core Business Manager & Advisor, Inc., an Illinois corporation.

 

 

d.                                      “Charter” means the articles of incorporation of the Company, as amended or restated from time to time.

 

e.                                       “Company Affiliate” has the meaning ascribed to that term in Section 3 hereof.

 

f.                                         “Equity Stock” means all classes or series of capital stock of the Company authorized under the Charter, including, without limit, its common stock, $.001 par value per share, and preferred stock, $.001 par value per share.

 

g.                                      “Indemnitee” has the meaning ascribed to that term in Section 5(a) hereof.

 

h.                                      “Initial Term” has the meaning ascribed to that term in Section 4(a) hereof.

 

i.                                          “Joint Venture” means a joint venture, limited liability company, corporation or partnership arrangement in which the Company, or any subsidiary thereof, is a co-venturer, member, stockholder or partner, and which acquires, owns or manages Real Estate Assets.

 

j.                                          “Liquidity Event” means a Listing or any merger, reorganization, business combination, share exchange or acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all of the Shares in one or more related transactions, or another similar transaction involving the Company, pursuant to which the Stockholders receive cash or the securities of another issuer that are listed on a national securities exchange, as full or partial consideration for their Shares.

 

k.                                       “Listing” means, in the aggregate, the filing of a Form 8-A (or any successor form) with the Securities and Exchange Commission to register any or all Shares, or the shares of common stock of any of the Company’s subsidiaries, on a national securities exchange, the approval of the original listing application related thereto by the applicable exchange and the commencement of trading in the Shares, or the shares of common stock of any of the Company’s subsidiaries, on the exchange.  Upon a Listing, the Shares, or the shares of common stock of the Company’s subsidiaries, shall be deemed “Listed.”  A Listing shall also be deemed to occur on the effective date of a merger in which the consideration received by the holders of the Shares is securities of another issuer that are listed on a national securities exchange; provided, however, that if the merger is effectuated through a wholly owned subsidiary of the Company, the consideration received by the Company shall be distributed to the holders of the Shares.

 

l.                                          “Loans” means debt financing evidenced by bonds, notes, debentures or similar instruments or letters of credit and Mortgage Loans.

 

m.                                    “Management Agreement” has the meaning ascribed to that term in Section 3 hereof.

 

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n.                                      “Mortgage Loans” means notes or other evidences of indebtedness or obligations that are secured or collateralized, directly or indirectly, by Real Property or other interests in Real Property.

 

o.                                      “Net Sales Proceeds” means the proceeds from any Sale of Real Estate Assets, less any costs incurred in selling the Real Estate Asset(s) including, but not limited to, legal fees and selling commissions and further reduced by the amount of any indebtedness encumbering the Real Estate Asset(s).

 

p.                                      “Notice” has the meaning ascribed to that term in Section 8 hereof.

 

q.                                      “Person” means any individual, corporation, business trust, estate, trust, partnership, limited liability company, association, two or more persons having a joint or common interest or any other legal or commercial entity.

 

r.                                         “Property” or “Properties” means interests in (1) Real Property, (2) long-term ground leases or (3) any buildings, structures, improvements, furnishings, fixtures and equipment, whether or not located on the Real Property, in each case owned or to be owned by the Company either directly or indirectly through one or more Affiliates, subsidiaries, Joint Ventures, partnerships or other legal entities.

 

s.                                       “Purchase Price Limit” means, at the time of calculation, 1.5% of the amount of the Company’s total assets as set forth on the Company’s most recent audited balance sheet prior to closing the applicable transaction, adjusted to give effect to any acquisitions of Real Estate Assets that were probable or completed since the date of that audited balance sheet.

 

t.                                         “Renewal Term” has the meaning ascribed to that term in Section 4(a) hereof.

 

u.                                      “Real Estate Assets” means any and all Properties and other direct or indirect investments in equity interests in or Loans secured, directly or indirectly, by or otherwise relating to Property (other than investments in bank accounts, money market funds or other current assets), including any interest in a Joint Venture, owned by the Company, directly or indirectly through one or more of its subsidiaries, Affiliates or Joint Ventures.  Notwithstanding the foregoing, “Real Estate Assets” shall not include any investments in Real Estate-Related Securities.

 

v.                                      “Real Estate Managers” has the meaning ascribed to that term in Section 6 hereof.

 

w.                                    “Real Estate-Related Security” means the real estate-related securities investments, including investments in commercial mortgage-backed securities, owned by the Company, directly or indirectly through one or more of its

 

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subsidiaries, Affiliates or Joint Ventures, but excluding, for these purposes, ownership interests in a Joint Venture.

 

x.                                        “Real Property” means land, rights or interests in land (including, but not limited to, leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on, or used in connection with, land and rights or interest in land.

 

y.                                      “Sale” means any transaction or series of transactions, regardless of whether Net Sales Proceeds are distributed to Stockholders as a result thereof, whereby: (1) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof, except for a contribution to a Joint Venture in which the Company, directly or indirectly, has, or will have, an ownership interest; (2) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (3) any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof (excluding for these purposes any Loans or Mortgage Loans); (4) the Company or any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, through any event which results in the Company or the Joint Venture, as applicable, receiving a insurance proceeds or condemnation awards; (5) the Company directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other Real Estate Asset not previously described in this definition or any portion thereof.  Notwithstanding anything to the contrary herein, the sale, grant, transfer or conveyance of any Real Estate-Related Security shall not be treated as a “Sale” hereunder.

 

z.                                        “Securities Claims” has the meaning ascribed to that term in Section 5(b) hereof.

 

aa.                                 “Services Manager” means Inland Core Real Estate Services LLC, a Delaware limited liability company.

 

bb.                               “Shares” means the shares of common stock, par value $.001 per share, of the Company, and “Share” means one of those Shares.

 

cc.                                 “Stockholders” means recordholders of shares of Equity Stock as reflected in the Company’s books and records as of the applicable record date.

 

2.             Effective Date.  Effective as of the date hereof, Company hereby retains Manager to manage certain Properties to be acquired by Company or by various entities owned or controlled by Company.  This Agreement is not an exclusive management agreement and

 

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Manager acknowledges and agrees that Company may engage other management companies to manage Properties not being managed by Manager.

 

3.             Terms and Conditions.  With respect to each individual Property subject to this Agreement, Manager, Company, and Affiliate of Company (“Company Affiliate”) holding title to such Property shall enter into a Real Estate Management Agreement in form and substance as attached hereto as Exhibit A (the “Management Agreement”).  The initial term of each Management Agreement shall commence on the date of acquisition by the Company Affiliate of the Property and shall end December 31 of the year in which the Property was acquired, with renewal periods as described in the Management Agreement.

 

4.             Term and Termination.

 

a.             Term.  The term of this Agreement shall begin on                             , 20       and end on December 31, 20         (the “Initial Term”).  Unless terminated as provided in Section 4(b) below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20    , and ending on December 31, 20    .

 

b.             Termination. This Agreement may be terminated prior to the expiration of the Initial Term or the then current Renewal Term, as follows:

 

i.              Either party hereto may terminate this Agreement, effective upon the expiration of the Initial Term or the current Renewal Term, as applicable, if the terminating party gives written notice of its election to terminate this Agreement to the other party not less than sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term as the case may be.  Manager, between ninety (90) and sixty (60) days prior to the expiration of the Initial Term and each Renewal Term, shall notify the independent directors of Board of Directors, of Company’s right to terminate this Agreement pursuant to this Section 4(b)(i).

 

ii.             This Agreement may be terminated by the Company immediately upon written notice of termination from the Company to Manager if any of the following events occur:

 

(A)                              Manager violates any provision of this Agreement and fails to cure such violation on or before thirty (30) days after receipt of written notice of such violation from Company;

 

(B)                                a court of competent jurisdiction enters a decree or order for relief in respect of Manager in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property or orders the winding up or liquidation of Manager’s affairs; or

 

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(C)                                Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

Manager agrees that if any of the events specified in subsections (B) and (C) of this Section 4(b)(iii) occur, it will give written notice thereof to Company within seven (7) days after the occurrence of any such event.

 

c.             Effect of Termination.  Upon termination of this Agreement, all Management Agreements entered into among Company, Company Affiliates and Manager shall automatically terminate.  In addition, upon termination of this Agreement, Manager shall cooperate with Company and take all reasonable steps requested by Company to assist it in making an orderly transition of the functions performed by Manager.

 

5.             Indemnification.

 

a.             Company shall indemnify Manager and its officers, directors, members, managers, employees and agents (individually an “Indemnitee”, collectively the “Indemnitees”) for any losses, liability or expense incurred by an Indemnitee and arising from this Agreement, to the same extent as Company may indemnify its officers, directors, employees under its Articles of Incorporation and Bylaws so long as:

 

i.              the Board of Directors has determined, in good faith, that the course of conduct that caused the loss, liability or expense was in the best interests of Company;

 

ii.             the Indemnitee was acting on behalf of, or performing services for, Company;

 

iii.            the liability or loss was not the result of negligence or misconduct on the part of the Indemnitee; and

 

iv.            any amounts payable to the Indemnitee are paid only out of Company’s net assets and not from any personal assets of any stockholder of the Company.

 

b.             Company shall not be obligated to indemnify any person seeking indemnification for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws (“Securities Claims”) unless one or more of the following conditions are met:

 

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i.              there has been a successful adjudication for the Indemnitee on the merits of each count involving alleged Securities Claims as to such Indemnitee;

 

ii.             the Securities Claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Indemnitee; or

 

iii.            a court of competent jurisdiction approves a settlement of the Securities Claims and finds that indemnification for the costs of settlement and related costs should be made and the court considering the request is advised of the position of the Securities and Exchange Commission and of the published opinions of any state securities regulatory authority in which securities of Company were offered and sold with respect to the availability or propriety of indemnification for Securities Claims.

 

c.             Company shall timely advance amounts to Indemnitees for legal and other expenses and costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

 

i.              the legal action relates to acts or omissions with respect to the performance of duties or services by the Indemnitee for or on behalf of Company;

 

ii.             the legal action is initiated by a third party who is not a stockholder of the Company and a court of competent jurisdiction specifically approves the funding of an advance; and

 

iii.            the Indemnitee receiving the advances undertakes to repay any monies advanced by Company, together with the applicable legal rate of interest thereon, in any case(s) in which a court of competent jurisdiction finds that such Indemnitee is not entitled to such advances.

 

6.             Business Combinations. If, pursuant to the direction of the Board of Directors, the Company elects to acquire the Manager and the Services Manager (together, the “Real Estate Managers”) and the Business Manager in connection with (a) a Sale of all or substantially all of the Real Estate Assets or (b) a Liquidity Event, the aggregate purchase price to be paid by the Company to acquire the Real Estate Managers and the Business Manager shall not exceed the Purchase Price Limit and that the purchase price shall be paid in the form of Shares rather than cash. For purposes of calculating the aggregate purchase price, any costs or expenses of the transaction(s) that the Company may agree to pay or reimburse for either: (i) costs and expenses the Real Estate Managers or the Business Manager have incurred on the Company’s behalf; or (ii) costs and expenses the Real Estate Managers or the Business Manager incur directly in connection with the transaction(s), and any fees or costs of the transaction or transactions, shall be excluded.  Any acquisition of the Business Manager and Real Estate Managers shall be subject to the negotiation and execution of definitive agreements acceptable to both parties.

 

7.             Non-Solicitation.  During the period commencing on the date on which this Agreement is entered into and ending one year following the termination of this Agreement, the Company shall not, without the Manager’s prior written consent, directly or indirectly: (a) solicit

 

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or encourage any person to leave the employment or other service of the Manager or its Affiliates; or (b) offer to hire, on behalf of the Company or any other person, firm, corporation or other business organization, any person who has left the employment of the Manager or its Affiliates, within the one year period following the termination of that person’s employment the Manager or its Affiliates; provided, however, that this Section 7 shall not prohibit: (i) solicitations directed to the general public, which are not directed to specific individuals or employees of the Manager or its Affiliates; (ii) solicitations of persons whose employment was terminated by the Manager or its Affiliates within six months of the date this Agreement is terminated; or (iii) solicitations of persons who have terminated their employment with the Manager or its Affiliates without any prior solicitation by the Company or any subsidiary thereof.  During the period commencing on the date hereof through and ending one year following the termination of this Agreement, the Company shall not, whether for its own account or for the account of any other person, firm, corporation or other business organization, intentionally interfere with the relationship of the Manager with, or endeavor to entice away from the Manager, any person who during the term of the Agreement is, or during the preceding one-year period, was a client of the Manager.

 

8.             Notices.  All notices, requests or demands to be given under this Agreement from one party to the other (collectively, “Notices” and individually a “Notice”) shall be in writing and shall be given by personal delivery, or by overnight courier service for next Business Day delivery at the other party’s address set forth below, or by telecopy transmission at the other party’s facsimile telephone number set forth below.  Notices given by personal delivery (i.e., by the sending party or a messenger) shall be deemed given on the date of delivery. Notices given by overnight courier service shall be deemed given upon deposit with the overnight courier service and Notices given by telecopy transmission shall be deemed given on the date of transmission provided such transmission is completed by 5:00 p.m. (sending party’s local time) on a Business Day, otherwise such delivery shall be deemed to occur on the next succeeding Business Day. If any party’s address is a business, receipt, or the refusal to accept delivery, by a receptionist or by any person in the employ of such party, shall be deemed actual receipt by the party of Notices. The term, Business Day, means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.  Notices may be issued by an attorney for a party and in such case such Notices shall be deemed given by such party.  The parties’ addresses are as follows

 

	
If to Company, to:
    	
Inland   Core Assets Real Estate Trust, Inc.
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. JoAnn   M. Armenta, President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   368-2277
    
	
 
    	
 
    
	
With a copy to:
    	
Inland   Core Business Manager & Advisor, Inc.
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. Roberta   S. Matlin, Vice President
    
	
 
    	
Telephone:
    	
(630)   218-8000
    
	
 
    	
Facsimile:
    	
(630)   218-4955
    

 

8

 

	
If to Manager, to:
    	
Inland   Core Management LLC
    
	
 
    	
2901   Butterfield Road
    
	
 
    	
Oak   Brook, IL 60523
    
	
 
    	
Attention:
    	
Larry   R. Sajdak
    
	
 
    	
Telephone:
    	
(630)   645-7258
    
	
 
    	
Facsimile:
    	
(630)   368-2218
    

 

A party’s address for Notice may be changed from time to time by notice given to the other party in the manner herein provided for giving Notice.  Copies of Notices are for informational purposes only, and a failure to give or receive copies of any Notice shall not be deemed a failure to give notice, and shall in no way adversely affect the effectiveness of such Notice given to the addressee party.

 

9.             Miscellaneous.

 

a.             Nothing contained herein shall be construed as creating any rights in persons or entities who are not the parties to this Agreement.  Manager and Company shall not be construed as joint venturers or partners of each other pursuant to this Agreement, and neither shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of Manager to Company under this Agreement is that of an independent contractor.

 

b.             If any provisions of this Agreement, or the application of any such provisions to parties hereto or any third party beneficiaries of this Agreement, shall be held by a court of competent jurisdiction to be unlawful or unenforceable, the remaining provisions of this Agreement shall nevertheless be valid, enforceable and shall remain in full force and effect, and shall not be affected, impaired or invalidated in any manner.  This Agreement, its validity, performance and enforcement shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to conflicts of law principles.

 

c.             This Agreement shall be binding upon the successors and assigns of Manager and the successors and assigns of Company.  This Agreement contains the entire Agreement of the parties relating to the subject matter hereof, and there are no understandings, representations or undertakings by either party except as herein contained. This Agreement may be modified solely by a written agreement executed by both parties hereto.

 

d.             If any party hereto defaults under the terms or conditions of this Agreement, the defaulting party shall pay the non-defaulting party’s court costs and reasonable attorneys’ fees incurred in the enforcement of any provision of this Agreement.

 

e.             Either party’s failure to exercise any right under this Agreement shall neither constitute a waiver of any other terms or conditions of this Agreement with 

 

9

 

respect to any other or subsequent breach, nor a waiver by that party of its right at any time thereafter to require exact and strict compliance with the terms of this Agreement.

 

f.              All exhibits attached to this Agreement are hereby incorporated by reference.  In an event of a conflict between the exhibits and the text of this Agreement preceding this Section, the text of this Agreement preceding this Section shall control.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

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WHEREFORE, the undersigned have executed this Agreement by their duly authorized officers or representatives as of the date first above written.

 

	
COMPANY:
    	
MANAGER:
    
	
 
    	
 
    
	
INLAND   CORE ASSETS REAL ESTATE TRUST, INC.
    	
INLAND   CORE MANAGEMENT LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    

 

For purposes of Section 6 only:

 

	
Inland   Core Management Corp. I
    	
Inland   Core Management Corp. II
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
Inland   Core Management Corp. III
    	
 
    	
Inland   Core Management Corp. IV
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
Inland   Core Management HOLDCO LLC
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    	
 
    
	
Its:
    	
 
    	
 
    	
 
    

 

 

EXHIBIT A

 

FORM OF MANAGEMENT AGREEMENT

 

See attached.

 

 

REAL ESTATE MANAGEMENT AGREEMENT

 

THIS REAL ESTATE MANAGEMENT AGREEMENT (this “Agreement”), dated as of [                    ] [    ], 20[    ], is entered into by and between [SINGLE MEMBER LLC] (“Owner”), and INLAND CORE MANAGEMENT LLC, a Delaware limited liability company (the “Manager”).

 

WHEREAS, Owner’s ultimate parent company, Inland Core Assets Real Estate Trust, Inc. (the “Parent Company”) directly or indirectly owns or controls Owner;

 

WHEREAS, the Parent Company intends to qualify to be taxed as a real estate investment trust pursuant to the terms of its articles of incorporation (the “Articles of Incorporation”) and bylaws (the “Bylaws”), as each may be amended from time to time;

 

WHEREAS, Owner and the Parent Company desire to avail themselves of the experience, sources of information, advice, assistance and facilities available to the Manager and to have the Manager undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the board of directors of the Parent Company (the “Board of Directors”), all as provided herein; and

 

WHEREAS, the Manager is willing to undertake to render these services on the terms and conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.             Exclusive Management.  Owner hereby engages Manager exclusively, to perform or cause to be performed the services described herein for the property legally described on Exhibit A attached hereto and made a part hereof (the “Premises”), upon the terms and conditions hereinafter set forth herein and Manager accepts such exclusive engagement.

 

2.             Term and Termination.

 

a.         Term.  The term of this Agreement shall begin on [                    ] [    ], 20[    ] and end on December 31, 20[    ] (the “Initial Term”).  Unless terminated as provided in Section 2(b) below, the term shall thereafter automatically renew for successive one-year periods (each, a “Renewal Term”), with the first such one-year renewal period commencing on January 1, 20[    ], and ending on December 31, 20[    ].

 

b.             Termination. This Agreement may be terminated prior to the expiration of the Initial Term or the then current Renewal Term, as follows:

 

(i)            Either party hereto may terminate this Agreement, effective upon the expiration of the Initial Term or the current Renewal Term, as applicable, if the terminating party gives written notice of its election to terminate this Agreement to the other party not less than sixty (60) days prior to the expiration of the Initial Term or the current Renewal Term as the case may be.  Manager, between ninety (90) and sixty (60) days prior to the expiration of the Initial Term

 

 

and each Renewal Term, shall notify the independent directors of Company’s board of directors, of Company’s right to terminate this Agreement pursuant to this Section 3(b)(i).

 

(ii)           Manager shall have the right to terminate this Agreement upon sixty (60) days written notice to Owner in the event that the Premises is no longer generating Gross Income (as hereinafter defined).

 

(iii)          This Agreement may be terminated by the Company immediately upon written notice of termination from the Company to Manager if any of the following events occur:

 

(A)          Manager violates any provision of this Agreement and fails to cure such violation on or before thirty (30) days after receipt of written notice of such violation from Company;

 

(B)           a court of competent jurisdiction enters a decree or order for relief in respect of Manager in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property or orders the winding up or liquidation of Manager’s affairs; or

 

(C)           Manager commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Manager or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts, as they become due.

 

Manager agrees that if any of the events specified in subsections (B) and (C) of Section 3(b)(iii) occur, it will give written notice thereof to Company within seven (7) days after the occurrence of any such event.

 

3.             Manager Duties.  Owner hereby gives Manager the exclusive authority and power, as agent for Owner, to provide the services listed in this Section 3 and elsewhere in this Agreement and Owner agrees to reimburse Manager and its affiliates for all expenses paid or incurred in connection therewith.  For the avoidance of doubt, unless otherwise stated in this Agreement that such expenses are to be borne by Manager, all expenses related to the duties performed or caused to be performed by Manager herein with respect to the Premises shall be the responsibility of the Owner and reimbursed to Manager upon billing therefor if initially paid for by Manager.  Manager shall be entitled at all times to manage the Premises in accordance with Manager’s standard operating policies and procedures all in accordance with the budget

 

2

 

approved by Owner, except to the extent that any specific provisions contained herein are to the contrary, in which case Manager shall manage the Premises consistent with such specific provisions of this Agreement.

 

a.         Collection of Gross Income.

 

i.              Manager shall collect all rents and assessments and other monies due Owner related to the Premises (all such items being referred to herein as “Gross Income”) accounting for the same.  Manager shall give Owner receipts therefor and deposit all such Gross Income collected hereunder in Manager’s custodial account established for the Premises using Owner approved software which Manager will open and maintain, in a state or national bank of Manager’s choice and whose deposits are insured by the Federal Deposit Insurance Corporation to the maximum extent available, exclusively for the Premises and any other properties owned by Owner (or any entity that is owned or controlled by Parent Company) and managed by Manager.  Unless otherwise required by Owner, Manager shall be permitted to comingle the funds in such custodial account with funds attributable to any other properties owned by Owner or entities owned or controlled by Parent Company and managed by Manager.  Owner agrees that Manager shall be authorized to maintain a reasonable minimum balance (to be determined jointly from time to time) in the custodial account. Manager may endorse any and all checks received in connection with the operation of the Premises and drawn to the order of Owner, and Owner upon request, shall furnish Manager’s depository with an appropriate authorization for Manager to make the endorsement.

 

ii.             When applicable, Manager shall collect and bill for security deposits or assessments and other items, including but not limited to calculating, preparing and mailing all invoices for tenant payments for real estate taxes, property liability and other insurance, damages and repairs, common area maintenance, tax reduction fees and all other tenant reimbursements, administrative charges, proceeds of rental interruption insurance, parking fees, income from coin operated machines and other miscellaneous income as stipulated in the leases.  At the request of Owner, Manager will administer, and create if necessary, a bill-back program for tenant utility consumption unless prohibited by local law.

 

b.         Payment of Expenses.  From the custodial account described above, Manager shall pay all expenses of Owner with respect to the Premises from the Gross Income collected in accordance with Section 3(a)(i) hereof.  In the event that expenses paid pursuant to this Section 3(b) exceed Gross Income for any monthly period, Manager shall notify Owner of same. Owner shall pay the excess amount immediately upon request from Manager.  Nothing herein contained shall obligate Manager to advance its own funds on behalf of Owner.

 

c.         Annual Budgets.  Manager shall prepare an annualized budget for the operation of the Premises and submit the same to Owner for approval (the “Annualized

 

3

 

Budget”).  Manager will use its commercially reasonable efforts to operate the Premises pursuant to the Annualized Budget; provided, however, Manager shall have no liability to Owner for failure to meet such Annualized Budget.  The Annualized Budget shall include a comparison back to the original underwriting performed at the time of Owner’s acquisition of the Premises and prior year performance.  The first Annualized Budget has been prepared and approved for the year commencing [                    ], [    ] 20[    ] and ending on December 31, 20[    ].  Notwithstanding the period covered by the first Annualized Budget, all subsequent Annualized Budgets shall cover the period from January 1st of each year through December 31st of the same year. The proposed Annualized Budget for each calendar year shall be submitted by Manager to Owner by December 1st of the year preceding the year for which it applies, and Owner shall notify Manager within fifteen (15) days of receipt of such Annualized Budget as to whether Owner has or has not approved the proposed Annualized Budget. If Owner does not approve the proposed Annualized Budget, Owner shall notify Manager of the specifics of such disapproval within such fifteen (15) day period and Manager shall make the necessary amendments to the Annualized Budget. During the time Manager is preparing these amendments, Manager will continue to operate the Premises according to the last approved Annualized Budget. Owner’s approval of the Annualized Budget shall constitute approval for Manager to expend sums for all budgeted expenditures, without the necessity to obtain additional approval of Owner under any other expenditure limitations as set forth elsewhere in this Agreement.

 

d.         Non-Budgeted Expenses over $20,000.  Manager shall secure the approval of, and execution of appropriate agreements by, Owner for any non-budgeted and non-emergency/contingency capital items, alterations or other expenditures in excess of Twenty Thousand Dollars ($20,000.00) for any one item, securing for each item at least three (3) written bids, if practicable, or providing evidence satisfactory to Owner that the agreed amount is lower than industry standard pricing, from responsible contractors. Manager shall have the right from time to time during the term hereof, to contract with and make purchases from entities or affiliates of such entities providing services to the Parent Company and third party agents; provided that contract rates and prices are competitive with other available sources. Manager, at any time, and from time to time, may request and receive the prior written authorization of Owner for any one or more purchases or other expenditures, notwithstanding that Manager may otherwise be authorized hereunder to make such purchases or expenditures.

 

e.         Third-Party Agreements.  Owner hereby appoints Manager as Owner’s authorized agent for the purpose of executing, as agent for Owner, any agreements with third-parties necessary for operation of the Premises.  For example, and not in limitation of the foregoing, Manager shall negotiate and enter into contracts for services and items in the Annualized Budget relating to the Premises.

 

f.          Manager Employees.  Manager shall hire, supervise, discharge and pay salary and benefit expenses for all employees of Manager or Manager’s sole member, as Manager determines necessary to perform Manager’s duties described in this Agreement including, but not limited to managers, assistant managers, leasing consultants, engineers, janitors and maintenance supervisors.  All expenses of such employment, including but

 

4

 

not limited to, wages, salaries, insurance, benefits, employment related taxes, overhead and other governmental charges, shall be deemed operational expenses of the Premises and Owner shall reimburse Manager for such expenses which may be charged to Owner on a per square foot or per unit basis, as applicable.  Notwithstanding the foregoing, salaries and benefits of Manager’s employees who also serve as the one of the Parent Company’s executive officers or as an executive officer of the Manager shall not be reimbursed by the Owner.  The number and classification of employees serving the Premises shall be as determined by Manager to be appropriate for the proper operation of the Premises; provided that Owner may request changes in the number or classification of employees, and Manager shall make all requested changes unless in its judgment the resulting level of operation or maintenance of the Premises will be inadequate. [Manager shall honor any collective bargaining contract covering employment at the Premises which is in effect upon the date of execution of this Agreement; provided that Manager shall not assume or otherwise become a party to any collective bargaining contract for any purpose whatsoever and all personnel subject to a collective bargaining contract shall be considered the employees of the Owner and not Manager (delete bracketed text if not applicable to Premises)].

 

g.         Insured Losses.

 

i.              Manager shall be responsible for taking all steps necessary to file any claim for insured losses or damages; provided that Manager will not make any adjustments or settlements in excess of $50,000.00 without Owner’s prior written consent.

 

ii.             Manager shall coordinate with the appropriate insurance company or companies, if applicable, to process claims.

 

iii.            Manager shall administer compliance of insurance provisions of tenant leases for all vendors and commercial tenants, including confirming insurance requirements for any special events at the Premises and obtaining certificates of insurance.

 

iv.            At the request of Owner, Manager shall assist Owner’s insurance consultants with any necessary insurance matters.

 

v.             Manager shall attend Owner’s meetings regarding loss control and claims.

 

h.         Monthly Remittance.  Manager shall remit to Owner the excess of Gross Income over expenses paid pursuant to Section 3(b) hereof (“Net Proceeds”) for each month as directed by Owner at the address as stated in Section 7 hereof.

 

i.          Reporting.  Upon the request of Owner, Manager shall render reports for the Premises.  Such reports may include specific and detailed line item information for budget comparison, expense detail, payables and receivables information, leasing progress, marketing information, peer comparison and all other measurements of the key performance indications of the Premises.

 

5

 

j.          Litigation.  Manager shall institute and prosecute actions to evict tenants and to recover possession of the Premises or portions thereof, and in the name of Owner to sue for and recover rent and other sums due; and to settle, compromise and release such actions or suits, or reinstate such tenancies; provided, however, if the tenancy subject to such proceedings is of a term greater than fourteen (14) months, Manager shall obtain Owner’s consent prior to instituting any such proceedings.  Manager and Owner shall concur on the selection of the attorney to handle any such litigation.

 

k.         Replacements and Repairs.  Pursuant to the Annualized Budget and at Owner’s cost, and when required, Manager shall make or cause to be made all ordinary repairs and replacements necessary to preserve the Premises in its present condition, in all material respects, and for the operating efficiency thereof.  Manager shall also perform all alterations required to comply with any lease requirements, work with municipalities to comply with any code or lender requirements, attend lender inspections and assist with the lender reserve requirement processes.

 

l.          Leasing Services.

 

i.              Manager shall perform leasing services for the Premises, including, but not limited to, hiring all third-party brokers, negotiating contracts with such brokers, tracking leasing progress on all assets and determining when to terminate and replace third-party brokers.  Commissions paid to third-party brokers shall be an expense of the Premises and charged to Owner.

 

ii.             Manager shall establish a leasing committee comprised of Manager employees to oversee the leasing services rendered to Owner under this Agreement (the “Leasing Committee”).  The Leasing Committee shall hold monthly meetings to which Owner may attend (the “Leasing Committee Meetings”).

 

iii.            Manager shall monitor current market conditions, meet with tenants, brokers and future prospects and visit competitive properties in the surrounding area.  Manager shall report findings at the Leasing Committee Meetings.

 

iv.            From time to time, Manager shall attend conferences related to the asset class of the Premises, including, but not limited to, ICSC, BOMA, NAREIT, NAA, NMHC and NAIOP, as applicable.  If requested by Owner, Manager shall appropriately staff booths (as arranged for by the Parent Company) for Owner at such conferences to represent Owner’s interests and coordinate all necessary marketing materials and events to maximize Owner’s exposure at such conferences.

 

v.             Manager shall negotiate all letters of intent for new leases (when applicable) and administer existing leases, including, but not limited to, processing assignments, renewal agreements and lease amendments.

 

6

 

vi.            Manager shall evaluate leasing activity of Premises and identify potential re-developments or re-configurations, including, but not limited to, a discussion of all proposals that have been sent, targeted tenants, interested and uninterested party discussions with the Leasing Committee.

 

vii.           Manager shall track all leasing calls and inquiries.

 

viii.          Manager shall prepare and maintain leasing reports as required by Owner which shall track performance of leasing activity.

 

ix.            Manager shall review tenant credit reports for new tenants and assignments and subleases.  When applicable, such review may include, but not be limited to, preparing full financial packages of review of both corporate and individual financial investigations, net worth analysis, net present value calculations and any other financial measures requested by the Owner.  Manager shall be entitled to charge tenant for credit check fees and lease assignment and sublet fees (if provided by applicable lease) and shall not be required to remit such fees to Owner but may retain such fees.

 

x.             If a proposed new lease for the Premises is outside the parameters set by the Annualized Budget, Manager shall complete analysis of credit and financials of the tenant under such proposed lease for the Leasing Committee’s review and approval at the Leasing Committee Meeting.

 

xi.            If the Premises is a retail property, Manager shall review leases on an on-going basis for relocation clauses, co-tenancy clauses, exclusives and building restrictions to determine and avoid any conflicts.  Manager shall also monitor tenant progress to make recommendations to Leasing Committee on renewal of tenants and proper tenant mix.  Additionally, Manager shall perform an on-going market review to determine market rates for leasing at Premises and make recommendations to Owner for changes in budgeted lease rates.

 

xii.           With respect to replacing tenants, Manager shall provide consultation to Owner regarding tenant mix (if the Premises has more than one tenant), market analysis, comparison information and site visits for leasing potential.

 

xiii.          If the Premises is a retail property, Manager shall schedule and attend meetings on a regular basis with all major retailers for portfolio review and additional leasing opportunities.  In preparation for such meetings, Manager shall perform a full analysis of tenant performance on a site by site basis for sales, profitability, expansions, space modifications and tenant merchandising assistance.

 

m.        Construction Management.

 

i.              Manager shall oversee capital expenditure execution and projection.

 

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ii.             Manager shall oversee construction management of all new tenant build-outs and provide assistance with out-parcel development.

 

iii.            Manager shall review and approve architectural plans for space and signage on the Premises.

 

iv.            Manager shall monitor the environmental needs of the Premises including, but not limited to, the administration of operation and maintenance programs.  If applicable, Manager shall supervise any remediation projects.

 

n.         Operations.

 

i.              As requested by Owner and if available for the Premises, Manager shall obtain and administer bulk purchasing and cost efficiency programs for utilities.

 

ii.             Manager shall create preventative maintenance programs for the Premises and oversee crisis management for flood, fire, and hurricanes, etc.

 

o.         Marketing.

 

i.              At the request of Owner, Manager shall create a marketing program for the Premises, including, but not limited to, preparing and maintaining a website.

 

ii.             If the Premises is a retail property, at the request of Owner, Manager shall:

 

A.                                   Devote specialty leasing staff to Premises to generate additional revenue through seasonal, temporary and kiosk leasing and finding and development of incubator tenants.

 

B.                                     Organize events for charity programs as well as community events to increase traffic and sales.

 

C.                                     Sponsor program and gift cards for the Premises where it is necessary to improve sales and revenue for the Premises.

 

D.                                    Advertise the Premises including, but not limited to, printing and sending coupons and mailers for the Premises.

 

E.                                      Organize tenant training through merchant or association meetings.

 

iii.            If the Premises is a multi-family property, at the request of Owner, Manager shall:

 

A.                                   Advertise the Premises, including, but not limited to advertising through signage, on websites, in local newspapers and rental guides, and with area referral services.

 

8

 

B.                                     Establish a marketing committee comprised of Manager employees (the “Marketing Committee”) who will meet monthly to discuss marketing strategy and implement such strategy.

 

C.                                     Prepare weekly status reports that will summarize the rental activity of the Premises for the previous week.

 

p.                                      Real Estate Consultative Services.

 

i.                                          Upon request of Owner, Manager shall explore strategic alternatives for the Premises.  In addition, Manager shall use a budget and forecasting tool, e.g., Cougar software, to assist in continuous review of Premises performance.

 

ii.                                       Manager shall attend committee meetings at the request of Owner.

 

iii.                                    Manager shall provide oversight and management for the disposition of the Premises if requested by Owner.

 

iv.                                   At the request of Owner, Manager shall perform additional tasks such as evaluating best use; taking calls for offers to purchase the Premises, determining potential out-parcel development, and reviewing additional GLA capabilities.

 

v.                                      Manager shall assist Owner in analyzing the Premises for potential asset impairment issues.

 

vi.                                   If applicable, Manager shall work with Owner on CAM payment best-practice compliance and review of business intelligence and information management systems.

 

q.                                      Electronic Document Management.  Manager shall organize all documents related to the Premises, including, but not limited to leases, contracts, invoices checks and receipts, in an electronic format with constant real time information for Owner’s access.

 

r.                                         Internal Controls/Sarbanes-Oxley Compliance.  If requested by Owner, Manager shall:

 

i.                                          Dedicate staff to monitor and review all incoming invoices, leases, and other control points and procedures dictated by Parent Company’s auditing firm according to Owner’s internal control matrix (the “Internal Control Matrix”) as updated from time to time by Owner.

 

ii.                                       Attend bi-weekly meetings with Owner to review Internal Control Matrix.

 

iii.                                    Coordinate audits of leases.

 

9

 

iv.                                   Travel to satellite offices to insure internal control compliance and perform random spot checking.

 

v.                                      Adhere to all policies stated in Internal Control Matrix.

 

s.                                       Tenant Credit Monitoring.  Where applicable, Manager shall:

 

i.                                          Continuously monitor retailers of the Premises that are distressed, weak, or bankrupt and calculate Z-scores and Frisk scores for all distressed tenants (which evaluate a publicly-traded company’s credit and anticipates bankruptcy).

 

ii.                                       Monitor gross sales of retail tenants.

 

iii.                                    Perform tenant surveys to foster tenant retention and identify problems.

 

iv.                                   Dedicate staff to pursue difficult collection accounts, monitor bankruptcies and resolve material disputes.

 

t.                                         Master Leases and Earnouts.  If the Premises is subject to a so-called Master Lease or Earnout arrangement, Manager shall dedicate a staff member to monitor and invoice all of the Master Leases.  Such staff member shall resolve issues concerning monthly billings, track new tenant move-in dates and authorize release and close-out of Master Lease escrows.  In addition, Manager shall reconcile all Master Lease accounts on a monthly basis.  Manager shall also coordinate all aspects of Earnouts.

 

u.                                      Post-Closing and New Building/Tenant Set-Up Duties.  Manager shall coordinate any existing post-closing items including, but not limited to, the transfer of all utilities from the previous owner of the Premises, CAM reconciliations and prorations, if applicable, and bringing tenants into Owner’s software system.  In addition, Manager shall send tenants welcoming letters which include, the direction to pay all future rents to Manager, wiring instructions, a form W-9, notification from the previous owner about the sale, a letter of introduction to property management and lease assignment and related documents, as requested.

 

4.                                       SubManager.  Notwithstanding anything to the contrary contained in this Agreement, Owner acknowledges and agrees that any of the duties of Manager as contained herein may be delegated by Manager and performed by an affiliate of Manager or third-party agent (a “SubManager”) with whom Manager contracts in writing for the purpose of performing such duties. Owner specifically grants Manager the authority to enter into management agreements with any SubManager; provided that Owner shall have no liability or responsibility to any SubManager for the payment of the SubManager’s fee or for reimbursement to the SubManager of its expenses or to indemnify the SubManager in any manner for any matter; and provided  further that Manager shall require such Sub-Manager, in the written agreement setting forth the duties and obligations of such SubManager, to indemnify Owner for all loss, liability, damage or claims incurred by Owner as a result of the delegation of duties by Manager to SubManager. Owner further acknowledges and agrees that Manager may assign this Agreement

 

10

 

and all of Manager’s rights and obligations hereunder, to another management entity that is then managing other property for Owner or the Parent Company (“Successor Manager”). Owner specifically grants Manager the authority to make such an assignment of this Agreement to a Successor Manager.

 

5.                                       Indemnification.

 

(a)                                  Company shall indemnify Manager and its officers, directors, members, managers, employees and agents (individually an “Indemnitee”, collectively the “Indemnitees”) for any losses, liability or expense incurred by an Indemnitee and arising from this Agreement, to the same extent as Company may indemnify its officers, directors, employees under its Articles of Incorporation and Bylaws so long as:

 

(i)                                     the Company’s board of directors has determined, in good faith, that the course of conduct that caused the loss, liability or expense was in the best interests of Company;

 

(ii)                                  the Indemnitee was acting on behalf of, or performing services for, Company;

 

(iii)                               the liability or loss was not the result of negligence or misconduct on the part of the Indemnitee; and

 

(iv)                              any amounts payable to the Indemnitee are paid only out of Company’s net assets and not from any personal assets of any stockholder of the Company.

 

(b)                                 Company shall not be obligated to indemnify any person seeking indemnification for losses, liabilities or expenses arising from, or out of, an alleged violation of federal or state securities laws (“Securities Claims”) unless one or more of the following conditions are met:

 

(i)                                     there has been a successful adjudication for the Indemnitee on the merits of each count involving alleged Securities Claims as to such Indemnitee;

 

(ii)                                  the Securities Claims have been dismissed with prejudice on the merits by a court of competent jurisdiction as to such Indemnitee; or

 

(iii)                               a court of competent jurisdiction approves a settlement of the Securities Claims and finds that indemnification for the costs of settlement and related costs should be made and the court considering the request is advised of the position of the Securities and Exchange Commission and of the published opinions of any state securities regulatory authority in which securities of Company were offered and sold with respect to the availability or propriety of indemnification for Securities Claims.

 

11

 

(c)                                  Company shall timely advance amounts to Indemnitees for legal and other expenses and costs incurred as a result of any legal action for which indemnification is being sought only if all of the following conditions are satisfied:

 

(i)                                     the legal action relates to acts or omissions with respect to the performance of duties or services by the Indemnitee for or on behalf of Company;

 

(ii)                                  the legal action is initiated by a third party who is not a stockholder of the Company and a court of competent jurisdiction specifically approves the funding of an advance; and

 

(iii)                               the Indemnitee receiving the advances undertakes to repay any monies advanced by Company, together with the applicable legal rate of interest thereon, in any case(s) in which a court of competent jurisdiction finds that such Indemnitee is not entitled to such advances.

 

6.                                       Management Fees.  For the services other than those described in Section 3(l)(Leasing Services) and 3(m)(Construction Management), Owner agrees to pay Manager, monthly, a management fee hereunder for the services provided by Manager hereunder performed, directly or through its affiliates, agents or Sub-Managers, in an amount equal to [up to: One and nine-tenths percent (1.9%) for single tenant properties; three and nine-tenths percent (3.9%) for multi-tenant properties — unless otherwise approved by Parent Company’s Board of Directors including a majority of Parent Company’s independent directors ] of the Gross Income for the month in which the management fee is paid (the “Management Fee”), which shall be deducted monthly by Manager and retained by Manager from Gross Income prior to payment to Owner of Net Proceeds; provided, however, Owner shall authorize the payment and amount of the monthly fee to Manager prior to the remittance of Net Proceeds to Owner.  Owner agrees to pay additional fees for services rendered under 3(l)(Leasing Services) and 3(m)(Construction Management), such additional fees are hereinafter referred to as the “Leasing Services Fees” and the “Construction Management Fees”.  The Leasing Services Fees and the Construction Management Fees shall be based upon prevailing market rates applicable to the geographic market of the Premises.  Manager shall charge Construction Services Fees only on projects having a total project cost in excess of ten thousand dollars ($10,000).  The Construction Management Fees shall be calculated on the total project cost as budgeted by Owner and Manager and the start of such construction project.  Owner acknowledges and agrees that Manager may pay or assign all or any portion of its Management Fee to a SubManager as described in Section 4 hereof.

 

7.                                       Intentionally Omitted.

 

8.                                       No Structural Alterations.  Owner expressly withholds from Manager any power or authority to make any structural changes to any building on the Premises or to make any other major alterations or additions in or to any such building or equipment therein.  Without the prior written direction from Owner, Manager shall not incur any expense chargeable to Owner, other than expenses its duties under this Agreement, except in the event where Manager makes all emergency repairs as may be required to ensure the safety of persons or property which are immediately necessary for the preservation and safety of the Premises or the safety of

 

12

 

the tenants and occupants thereof or are required to avoid the suspension of any necessary services to the Premises.

 

9.                                       Notice of Non-Compliance with Laws.  Manager shall be responsible for notifying Owner in the event Manager receives a material written notice that any building on the Premises or any equipment therein does not comply with the requirements of any constitutional provision, statute, ordinance, law or regulation of any governmental body or any order or ruling of any public authority or official thereof having or claiming to have jurisdiction thereover (collectively, “Governmental Requirements”). Manager shall promptly forward to Owner any material written complaints, warnings, notices or summonses received by the Manager relating to these matters. Owner represents to Manager that to the best of Owner’s knowledge the Premises, the structures thereon and all equipment servicing the Premises and structures thereon are in current compliance with all Governmental Requirements. In connection with any inquiry by any public authority or official, Manager is authorized to disclose name and address of the Owner. In the event it is alleged or charged that any building on the Premises or any equipment therein or any act or failure to act by Owner with respect to the Premises or the sale, rental, or other disposition thereof fails to comply with, or is in violation of any Governmental Requirements, and the Manager, in its sole and absolute discretion, considers that the action or position of Owner with respect thereto may result in damages, fines, prosecutions or other liabilities to the Manager, Manager shall have the right to terminate this Agreement at any time by written notice to Owner of its election to do so, which termination shall be effective upon delivery of the notice to Owner.  Manager’s termination of this Agreement pursuant to this Section 9 shall not release the indemnities of Owner set forth in this Agreement and shall not terminate any liability or obligation of Owner to Manager for any payment, reimbursement, or other sum of money then due and payable to the Manager hereunder, which shall be paid by Owner to Manager forthwith or by Manager’s deduction thereof from Gross Proceeds.

 

10.                                 Payment of Fees and Actions upon Termination.

 

a.                                       The Manager shall not be entitled to compensation after the date of termination of this Agreement for further services hereunder, but shall be paid all compensation accruing to the date of termination. Upon termination of this Agreement, the Manager shall:

 

i.                                          pay over to Owner all monies collected and held for the account of Owner pursuant to this Agreement, after deducting any accrued compensation and reimbursement for expenses to which the Manager is entitled;

 

ii.                                       deliver to Owner a full accounting, including a statement showing all payments collected by the Manager and a statement of all money held by the Manager, covering the period following the date of the last accounting furnished to Owner;

 

iii.                                    deliver to Owner all property and documents of Owner or Parent Company then in the custody of the Manager; and

 

13

 

iv.                                   cooperate with Owner and take all reasonable steps requested by Owner to assist it in making an orderly transition of the functions performed by the Manager.

 

b.                                      Upon termination, Owner shall specifically assume in writing all obligations under any third-party agreements entered into by Manager pursuant to Section 3(e) on behalf of Owner.

 

11.                                 Survival.  All provisions of this Agreement that require Owner or Parent Company to have insured, or to protect, defend, save, hold and indemnify Indemnified Parties or to compensate or reimburse Manager shall survive any expiration or termination of this Agreement and if Manager is or becomes involved in any claim, proceeding or litigation by reason of having been Manager of Owner, such provisions shall apply as if this Agreement were still in effect.

 

12.                                 Insurance.  Owner agrees that Manager shall be listed as an additional insured on all insurance policies related to the Premises.  Owner hereby authorizes Manager to take all steps necessary to cause Manager to be named as an additional insured including, but not limited to, obtaining evidence of such additional insured status from Inland Insurance and Risk Management Services, Inc..

 

13.                                 Notices.  All notices, requests or demands to be given under this Agreement from one party to the other (collectively, “Notices” and individually a “Notice”) shall be in writing and shall be given by personal delivery, or by overnight courier service for next Business Day delivery at the other party’s address set forth below, or by telecopy transmission at the other party’s facsimile telephone number set forth below.  Notices given by personal delivery (i.e., by the sending party or a messenger) shall be deemed given on the date of delivery. Notices given by overnight courier service shall be deemed given upon deposit with the overnight courier service and Notices given by telecopy transmission shall be deemed given on the date of transmission provided such transmission is completed by 5:00 p.m. (sending party’s local time) on a Business Day, otherwise such delivery shall be deemed to occur on the next succeeding Business Day. If any party’s address is a business, receipt, or the refusal to accept delivery, by a receptionist or by any person in the employ of such party, shall be deemed actual receipt by the party of Notices. The term, Business Day, means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.  Notices may be issued by an attorney for a party and in such case such Notices shall be deemed given by such party.  The parties’ addresses are as follows

 

 

	
If to Company, to:
    	
Inland Core Assets Real Estate Trust, Inc.
    
	
 
    	
2901 Butterfield Road
    
	
 
    	
Oak Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. JoAnn M. Armenta, President
    
	
 
    	
Telephone:
    	
(630) 218-8000
    
	
 
    	
Facsimile:
    	
(630) 368-2277
    
	
 
    	
 
    
	
With a copy to:
    	
Inland Core Business Manager & Advisor, Inc.
    
	
 
    	
2901 Butterfield Road
    

 

14

 

	
 
    	
Oak Brook, IL 60523
    
	
 
    	
Attention:
    	
Ms. Roberta S. Matlin, Vice President
    
	
 
    	
Telephone:
    	
(630) 218-8000
    
	
 
    	
Facsimile:
    	
(630) 218-4955
    
	
 
    	
 
    
	
If to Manager, to:
    	
Inland Core Management LLC
    
	
 
    	
2901 Butterfield Road
    
	
 
    	
Oak Brook, IL 60523
    
	
 
    	
Attention:
    	
Larry R. Sajdak
    
	
 
    	
Telephone:
    	
(630) 645-7258
    
	
 
    	
Facsimile:
    	
(630) 368-2218
    

 

A party=s address for Notice may be changed from time to time by notice given to the other party in the manner herein provided for giving Notice.  Copies of Notices are for informational purposes only, and a failure to give or receive copies of any Notice shall not be deemed a failure to give notice, and shall in no way adversely affect the effectiveness of such Notice given to the addressee party.

 

14.                                 Miscellaneous.

 

a.                                       Nothing contained herein shall be construed as creating any rights in persons or entities who are not the parties to this Agreement.  Manager and Owner shall not be construed as joint venturers or partners of each other pursuant to this Agreement, and neither shall have the power to bind or obligate the other except as set forth herein. In all respects, the status of Manager to Owner under this Agreement is that of an independent contractor.

 

b.                                      If any provisions of this Agreement, or the application of any such provisions to parties hereto, shall be held by a court of competent jurisdiction to be unlawful or unenforceable, the remaining provisions of this Agreement shall nevertheless be valid, enforceable and shall remain in full force and effect, and shall not be affected, impaired or invalidated in any manner.  This Agreement, its validity, performance and enforcement shall be construed in accordance with, and governed by, the internal laws of the State of Illinois without regard to conflicts of law principles.

 

c.                                       This Agreement shall be binding upon the successors and assigns of Manager and the successors and assigns of Owner and Parent Company.  This Agreement contains the entire Agreement of the parties relating to the subject matter hereof, and there are no understandings, representations or undertakings by either party except as herein contained. This Agreement may be modified solely by a written agreement executed by both parties hereto.

 

d.                                      If any party hereto defaults under the terms or conditions of this Agreement, the defaulting party shall pay the non-defaulting party’s court costs and reasonable attorneys’ fees incurred in the enforcement of any provision of this Agreement.

 

15

 

e.                                       Either party’s failure to exercise any right under this Agreement shall neither constitute a waiver of any other terms or conditions of this Agreement with respect to any other or subsequent breach, nor a waiver by that party of its right at any time thereafter to require exact and strict compliance with the terms of this Agreement.

 

f.                                         All exhibits attached to this Agreement are hereby incorporated by reference.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

 

16

 

WHEREFORE, the undersigned have executed this Agreement by their duly authorized officers or representatives as of the date first above written.

 

	
MANAGER:
    	
 
    	
OWNER:
    
	
 
    	
 
    	
 
    
	
INLAND CORE MANAGEMENT LLC, a
   Delaware limited liability company
    	
 
    	
[SINGLE MEMBER LLC]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
By:
    	
 
    
	
Name:
    	
 
    	
 
    	
Name:
    	
 
    
	
Its:
    	
 
    	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
PARENT COMPANY (limited to obligations in Section 5 hereof):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
INLAND CORE ASSETS REAL ESTATE TRUST, INC., a Maryland   corporation
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Its:
    	
 
    

 

17

 

Exhibit A

Legal Description

 

See attached.

 

18

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