- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission file number 0-17651
HIGH CASH PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3347257
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
High Cash Partners, L.P.
(Sierra Marketplace)
c/o CB Commercial Real Estate Group, Inc.
5190 Neil Road, Suite 100
Reno, Nevada 89502-8500
(Address of principal executive offices)
(212) 350-9900
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
---- ----
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<PAGE>
HIGH CASH PARTNERS, L.P.
FORM 10-Q - SEPTEMBER 30, 1999
INDEX
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION....................................................................................1
ITEM 1 - FINANCIAL STATEMENTS............................................................................1
BALANCE SHEETS - September 30, 1999 and December 31, 1998.......................................1
STATEMENTS OF OPERATIONS - For the three months ended
September 30, 1999 and 1998 and for the nine months ended
September 30, 1999 and 1998............................................................2
STATEMENT OF PARTNERS' EQUITY (DEFICIT) - For the nine
months ended September 30, 1999........................................................3
STATEMENTS OF CASH FLOWS - For the nine months
ended September 30, 1999 and 1998......................................................4
NOTES TO FINANCIAL STATEMENTS...................................................................5
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS..........................................................7
PART II - OTHER INFORMATION......................................................................................10
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K..............................................................10
SIGNATURES.......................................................................................................11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
This report contains statements that constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Those statements appear in a number of places herein and include
statements regarding the intent, belief or current expectations of the
Partnership, primarily with respect to the future operating performance of the
Partnership or related developments. Any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and actual
results and developments may differ from those described in the forward-looking
statements as a result of various factors, many of which are beyond the control
of the Partnership.
ITEM 1 - FINANCIAL STATEMENTS
HIGH CASH PARTNERS, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
Real estate, net $ 15,114,325 $ 15,358,165
Cash and cash equivalents 1,309,497 4,270,688
Tenant receivables, net 97,779 63,653
Other assets 100,972 114,174
Prepaid insurance premiums 1,079 27,523
------------ ------------
$ 16,623,652 $ 19,834,203
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Mortgage loan payable $ 6,500,000 $ 6,500,000
Deferred interest payable 14,824,664 13,117,279
Accounts payable and accrued expenses 76,235 93,429
Due to affiliates 2,861 --
Tenants' security deposits payable 68,867 58,867
------------ ------------
Total liabilities 21,472,627 19,769,575
------------ ------------
Commitments and contingencies
Partners' equity (deficit)
Limited partners' equity (deficit) (96,472 units
issued and outstanding) (4,800,486) 63,981
General partners' equity (deficit) ( 48,489) 647
------------ ------------
Total partners' equity (deficit) (4,848,975) 64,628
------------ ------------
$ 16,623,652 $ 19,834,203
============ ============
</TABLE>
See notes to financial statements.
1
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- --------------------------
--------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 632,781 $ 512,577 $ 1,811,943 $ 1,772,928
Interest income 10,760 46,201 79,722 126,282
Other income 186 200 10,926 2,217
----------- ----------- ----------- -----------
643,727 558,978 1,902,591 1,901,427
----------- ----------- ----------- -----------
Costs and expenses
Mortgage loan interest 587,143 525,101 1,707,385 1,530,839
Operating 118,337 137,975 383,275 374,484
Depreciation and amortization 90,169 83,649 270,507 257,278
Partnership management fees 75,369 75,369 226,107 226,107
Property management fees 17,168 19,140 52,752 51,905
Administrative 22,958 22,647 76,168 65,727
----------- ----------- ----------- -----------
911,144 863,881 2,716,194 2,506,340
----------- ----------- ----------- -----------
Net loss $ (267,417) $ (304,903) $ (813,603) $ (604,913)
=========== =========== =========== ===========
Net loss attributable to
Limited partners $ (264,743) $ (301,854) $ (805,467) $ (598,864)
General partners (2,674) (3,049) (8,136) (6,049)
----------- ----------- ----------- -----------
$ (267,417) $ (304,903) $ (813,603) $ (604,913)
=========== =========== =========== ===========
Net loss per unit of limited partnership
interest (96,472 units outstanding) $ (2.74) $ (3.13) $ (8.35) $ (6.21)
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
2
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENT OF PARTNERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
General Limited Total
Partners' Partners' Partners'
Equity Equity Equity
(Deficit) (Deficit) (Deficit)
----------- ----------- -----------
<S> <C> <C> <C>
Balance, January 1, 1999 $ 647 $ 63,981 $ 64,628
Net loss for the nine months ended
September 30, 1999 (8,136) (805,467) (813,603)
Distributions (41,000) (4,059,000) (4,100,000)
----------- ----------- -----------
Balance, September 30, 1999 $ (48,489) $(4,800,486) $(4,848,975)
=========== =========== ===========
</TABLE>
See notes to financial statements.
3
<PAGE>
HIGH CASH PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
1999 1998
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<S> <C> <C>
Cash flows from operating activities
Net loss $ (813,603) $ (604,913)
Adjustments to reconcile net loss to net cash
provided by operating activities
Deferred interest expense 1,707,385 1,530,839
Depreciation and amortization 270,507 257,278
Changes in assets and liabilities
Tenant receivables (34,126) (42,008)
Other assets (13,465) (52,137)
Prepaid insurance premiums 26,444 (9,820)
Accounts payable and accrued expenses (17,194) (45,485)
Due to affiliates 2,861 413
Tenants' security deposits payable 10,000 3,200
----------- -----------
Net cash provided by operating activities 1,138,809 1,037,367
----------- -----------
Cash flows from Investing activities
Additions to real estate -- (26,161)
----------- -----------
Cash flows from financing activities (4,100,000) --
Distributions to partners
----------- -----------
Net (decrease) increase in cash and cash equivalents (2,961,191) 1,011,206
Cash and cash equivalents, beginning of period 4,270,688 3,052,039
----------- -----------
Cash and cash equivalents, end of period $ 1,309,497 $ 4,063,245
=========== ===========
</TABLE>
See notes to financial statements.
4
<PAGE>
HIGH CASH PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussions should be read in conjunction with
the financial statements, related footnotes and discussions contained in
the High Cash Partners, L.P. (the "Partnership") annual report on Form 10-K
for the year ended December 31, 1998. The results of operations for the
nine months ended September 30, 1999 are not necessarily indicative of the
results to be expected for the full year.
2. CHANGE IN GENERAL PARTNER OWNERSHIP, CONFLICTS OF INTEREST AND
TRANSACTIONS WITH RELATED PARTIES
On June 13, 1997, Resources High Cash, Inc. ("RHC") and Presidio AGP Corp.
("AGP") sold their general partnership interests in the Partnership to
Pembroke HCP LLC ("Pembroke HCP") and Pembroke AGP Corp. ("Pembroke AGP"),
respectively. In the same transaction, XRC Corp., the parent company of
RHC, sold its 8,361 Units to Pembroke Capital II, LLC, an affiliate of
Pembroke HCP and Pembroke AGP. Subsequently, Pembroke Capital II LLC
acquired beneficial ownership of an aggregate of an additional 5,736 Units
in the secondary market.
Prior to the sale of the general partnership interest in the Partnership to
Pembroke HCP and Pembroke AGP, Wexford Management LLC had performed
management and administrative services for Presidio, XRC and XRC's direct
and indirect subsidiaries, as well as for the Partnership. Following the
sale, an affiliate of Pembroke HCP was engaged to perform administrative
services for the Partnership. During the quarter ended September 30, 1999,
$12,000 in reimbursable payroll expenses was paid to the affiliate of
Pembroke HCP for services performed during the quarter.
The Partnership had been a party to a supervisory management agreement with
Resources Supervisory Management Corp. ("Resources Supervisory"), an
affiliate of RHC and AGP, pursuant to which Resources Supervisory performed
certain property management functions. Resources Supervisory performed such
services through June 13, 1997. Effective June 13, 1997, the Partnership
terminated this agreement and entered into a similar agreement with
Pembroke Realty Management LLC ("Pembroke Realty"), an affiliate of
Pembroke HCP and Pembroke AGP. A portion of the property management fees
payable to Resources Supervisory and Pembroke Realty were paid to an
unaffiliated management company, which had been engaged for the purpose of
performing the property management functions that were the subject of the
supervisory management agreement. For the quarters ended September 30, 1999
and 1998, Pembroke Realty was entitled to receive $17,168 and $19,140,
respectively, of which $14,307 and $15,950, respectively, was payable to
the unaffiliated management company. No leasing activity compensation was
paid to Pembroke Realty for the quarters ended September 30, 1999 or 1998.
Current fees of $2,861 payable to Pembroke Realty at September 30, 1999
were paid in the subsequent quarter.
5
<PAGE>
2. CHANGE IN GENERAL PARTNER OWNERSHIP, CONFLICTS OF INTEREST AND
TRANSACTIONS WITH RELATED PARTIES (continued)
For managing the affairs of the Partnership, the Managing General Partner
is entitled to an annual partnership management fee equal to $301,475. For
each of the quarters ended September 30, 1999 and 1998, the Managing
General Partner was entitled to a partnership management fee of $75,369.
The general partners are allocated 1% of the net income or losses of the
Partnership, which amounted to losses of $2,674 and $3,049 in the quarters
ended September 30, 1999 and 1998, respectively. They also are entitled to
receive 1% of distributions. There were no distributions in the quarters
ended September 30, 1999 and 1998.
3. REAL ESTATE
Real estate, which is the Partnership's sole asset, is summarized as
follows:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
Land $ 6,667,189 $ 6,667,189
Building and improvements 12,932,876 12,932,876
------------ ------------
19,600,065 19,600,065
Accumulated depreciation (4,485,740) (4,241,900)
------------ ------------
$ 15,114,325 $ 15,358,165
============ ============
</TABLE>
The land, building and improvements that comprise the Partnership's sole
asset are collateralized by a mortgage loan payable. In performing its
quarterly impairment review of the Partnership's property, management
determined that the aggregate undiscounted cash flows from the property
over the anticipated holding period were below its net carrying value at
March 31, 1997 and, therefore, an impairment existed. At that time,
management estimated the fair value of the property to be approximately
$15,875,000. Consequently, a write-down for impairment of $6,475,500 was
recorded as of March 31, 1997, of which $2,201,670 was allocated to land
and $4,273,830 was allocated to building and improvements. No write-down
for impairment was required during the three months ended September 30,
1999 or 1998.
4. DUE TO AFFILIATES
The amounts due to affiliates are as follows:
September 30, December 31,
1999 1998
------------ -----------
Supervisory Management Fee $ 2,861 $ -0-
============ ===========
6
<PAGE>
5. DISTRIBUTIONS
In May 1999, the Partnership effected a cash distribution of $4,100,000 in
the aggregate, or $42.07 per Unit, to Unitholders of record on May 11,
1999. On October 20, 1999, the Partnership effected a distribution of
$700,000 in the aggregate, or $7.18 per Unit.
6. SUBSEQUENT EVENT
As of October 1, 1999 a new property management company was engaged to
perform property management and leasing functions. The management and
leasing agreements are substantially similar to the agreements with the
prior property management company.
ITEM 2- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership's sole property is a community shopping center located in
Reno, Nevada containing approximately 233,000 square feet of net leasable
area.
The Partnership uses working capital reserves set aside from the net
proceeds of its public offering in 1989 and undistributed cash flow from
operations as its primary measure of liquidity. As of September 30, 1999,
working capital reserves amounted to approximately $1,300,000, which may be
used to fund capital expenditures, insurance, real estate taxes and loan
payments. All expenditures made during the quarter ended September 30, 1999
were funded from cash flow from operations.
At September 30, 1999, the total amount outstanding on the Partnership's
mortgage loan payable to Resources Accrued Mortgage Investors 2 L.P. ("RAM
2") was $21,324,664 which included deferred interest payable of
$14,824,664. The mortgage did not permit a prepayment before March 1, 1999,
and, therefore, the Partnership was not able to refinance the mortgage
before that date. It is believed that the value of the property is not
sufficient to enable the Partnership to refinance the mortgage at this
time. The mortgage matures on February 28, 2001. At that time, the total
amount outstanding on the mortgage is expected to be approximately
$25,000,000. If the value of the property at that time does not exceed
$25,000,000, the Partnership may lose its entire investment in the
property. In that connection, in the first quarter of 1997, the value of
the property was written down to $15,875,000.
The mortgage further requires the Partnership to provide RAM 2 with a
current appraisal of the Partnership's property upon RAM 2's request. If it
is determined, based upon the requested appraisal, that the sum of (i) the
principal balance of the mortgage loan plus all other then outstanding
indebtedness secured by the property and (ii) all accrued and unpaid
interest on the mortgage at 6.22% per annum, compounded monthly (that sum,
the "Measurement Amount"), exceeds 85% of the appraised value, an amount
equal to such excess would become immediately due and payable to RAM 2.
To date, the lender has not requested an appraisal. There can be no
assurance that, if the lender requests an appraisal, 85% of the appraised
value will equal the Measurement Amount. At September 30, 1999, the
Measurement Amount was approximately $13,381,000, which was approximately
$113,000, less than 85% of the $15,875,000 value to which the property was
written down in the first quarter of 1997. As interest on the mortgage
accrues, the Measurement Amount will increase, and, therefore, unless the
value of the property increases sufficiently from the value to which it was
written
7
<PAGE>
down in the first quarter of 1997, the Measurement Amount eventually will
exceed 85% of the appraised value of the property.
Until November 1997, Levitz Furniture Corporation ("Levitz") had occupied
approximately 23% of the space of the Partnership's property (i.e.,
approximately 53,000 out of approximately 233,000 square feet of net
leasable area). In November 1997, Levitz, which had filed for protection
under Chapter 11 of the Bankruptcy Code, vacated its space. Levitz ceased
paying rent to the Partnership as of April 2, 1998.
The vacancy at the Levitz space has resulted in a loss of income to the
Partnership. The vacancy at the Levitz space, as well as a vacancy in an
additional, significant space previously occupied by Good Guys, also may
have adversely affected the surrounding tenants and the Partnership's
ability to attract new tenants, particularly in light of the limited
visibility those tenants have to the main thoroughfare. See "Real Estate
Market" below. The Partnership is actively seeking a long-term credit
worthy substitute tenant. However, there can be no assurance the
Partnership will succeed in finding a long-term credit worthy substitute
tenant promptly or on terms comparable to those under the Levitz lease. In
addition, if a substitute tenant is obtained, the Partnership expects to
make substantial expenditures in order to secure the substitute tenant and
in connection with a new lease.
In that regard, the Partnership has entered into a short-term lease with an
existing tenant of the property for the Levitz space. Total rent under the
lease, which is for a term of 38 months, is $208,534 per year (i.e.,
$222,710 per year less than under the Levitz lease). The Partnership has
the right to terminate this lease upon written notice in the event that it
secures a long-term credit worthy tenant.
The level of leasing activity cannot be predicted, particularly in light of
the Levitz and Good Guys situations, and therefore, the amount of further
capital expenditures arising from leasing activity is uncertain. There can
be no assurance the Partnership will have sufficient liquidity both to make
such capital expenditures, and to make the payments that may be required
under the terms of the RAM 2 loan. If there is a default on the RAM 2 loan,
the Partnership would be materially and adversely affected. In May 1999 and
October 1999, the Partnership effected cash distributions of $4,100,000 and
$700,000, respectively, or $42.07 and $7.18 per Unit, respectively, to
Unitholders of record on May 11, 1999 and October 20, 1999, respectively.
Real Estate Market
A substantial decline in the market value of the Partnership's property
reflects real estate market conditions in the vicinity of the property.
Recently built shopping centers in the vicinity have increased competition
for tenants. This competitive factor, together with the fact that much of
the unleased space in the Partnership's property (including the Levitz
space) has only limited visibility to the main thoroughfare and the fact
that the spaces previously occupied by Levitz and Good Guys are expected to
be vacant for at least some period, have hindered the lease-up of new space
and has negatively impacted certain tenants. As a result, the Partnership's
investment in its property is at risk.
Inflation
Inflation has not had a material impact on the Partnership's operations or
financial condition in recent years and is not expected to have a material
impact in the foreseeable future.
Year 2000
Costs associated with the year 2000 conversion are not expected to have a
material effect on the Partnership.
8
<PAGE>
Results of Operations [To Be Updated]
Three months Ended September 30, 1999 Compared to Three Months Ended
September 30, 1998
The Partnership realized a net loss of $267,417 for the three months ended
September 30, 1999 compared to a net loss of $304,903 for the corresponding
1998 period, a change of $37,486. The change was primarily a result of an
increase in rental income, offset by an increase in mortgage loan interest
expense.
Revenues increased from 1998 to 1999 due to the timing of tenant real
estate tax billings, as well as an increase in base rentals.
Costs and expenses increased from 1998 to 1999 primarily due to an increase
in mortgage loan interest expense.
Mortgage loan interest expense increased due to the compounding effect from
the deferral of the interest expense on the zero coupon mortgage.
Nine months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998
The Partnership realized a net loss of $813,603 for the nine months ended
September 30, 1999 compared to a net loss of $604,913 for the corresponding
1998 period, a change of $208,690. The change was primarily a result of an
increase in mortgage loan interest expense.
Costs and expenses increased from 1998 to 1999 primarily due to an increase
in mortgage loan interest expense.
Mortgage loan interest expense increased due to the compounding effect from
the deferral of the interest expense on the zero coupon mortgage.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
10.1 Management Agreement dated September 22, 1999 between
Pembroke Supervisory Management, LLC ("Pembroke SM") and
Colliers Nevada Management, LLC ("Colliers").
10.2 Exclusive Leasing Listing Agreement dated September 9, 1999
between Pembroke SM and Colliers.
(b) Reports on Form 8-K: None.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HIGH CASH PARTNERS, L.P.
By: Pembroke HCP, LLC
Managing General Partner
By: Pembroke Companies, Inc.,
Managing Member
Dated: November 15, 1999 By: /s/ Lawrence J. Cohen
-----------------------------------
Lawrence J. Cohen
President and Principal
Financial and Accounting Officer
11
MANAGEMENT AGREEMENT
AGREEMENT, made as of the 22nd day of September, 1999, by and between
PEMBROKE SUPERVISORY MANAGEMENT, LLC (the "Supervisory Manager"), a Nevada
limited liability company with offices located at 70 East 55th Street, 7th
Floor, New York, NY 10022, and COLLIERS NEVADA MANAGEMENT, LLC (the "Managing
Agent"), a Nevada limited liability company with offices located at 5310 Kietzke
Lane, Suite 105, Reno, Nevada 89511.
W I T N E S S E T H:
WHEREAS, HIGH CASH PARTNERS (the "Owner") owns the land and buildings known
as the Sierra Marketplace located on the southeast corner of South Virginia
Street and Mona Lane in the City of Reno, Washoe County, Nevada (collectively
referred to herein as the "Project") and
WHEREAS, the Owner has retained the Supervisory Manager to operate and
manage the Project; and
WHEREAS, the Managing Agent and its managerial personnel and affiliates are
experienced in managing and operating first class commercial space; and
WHEREAS, the Supervisory Manager desires to retain the Managing Agent to
operate and manage the Project on behalf of the Supervisory Manager, and the
Managing Agent desires to be so retained, all in accordance with the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the Supervisory Manager and the Managing Agent hereby agree as
follows:
1. Retention of the Managing Agent. Pursuant to the terms provided herein
and subject to the limitations and conditions herein set forth, the Supervisory
Manager hereby appoints the Managing Agent, and the Managing Agent hereby
accepts the appointment, as the managing and operating agent of the Project with
authority to manage the day-to-day operations of the Project on behalf of the
Supervisory Manager.
2. Performance of Services and Payment Therefor. During the term of this
Agreement, on behalf of the Supervisory Manager, the Managing Agent shall
perform the services described in this Agreement and pay all expenses required
to be paid in connection therewith, all of which shall, if reasonable, and
except as otherwise specifically provided herein, be paid from "Gross Proceeds"
and be an "Expense" (both as defined in Section 4(a)(X11)); provided, however,
that to the extent funds are not available either from Gross Proceeds or the
Supervisory Manager, the Managing Agent shall not be obligated to pay said
Expenses.
3. Term. The rights and obligations of the Managing Agent hereunder shall
commence on the date hereof and shall continue unless sooner terminated as
hereinafter provided, on December 31, 2000, (the "Expiration Date").
<PAGE>
4. The Managing Agent's Duties.
(A) The Managing Agent shall not pay any payments or cause any payments
to be made for (i) real estate taxes applicable to the Project, (ii) insurance
coverage with respect to the Project or (iii) for debt service or ground rent
payments. Except as otherwise directed from time to time by the Supervisory
Manager, the Managing Agent (1) shall perform or cause to be performed, on
behalf of the Supervisory Manager, all of the Owner's obligations as landlord
(sometimes referred to herein as "Landlord") to the tenants ("Tenant" or
"Tenants") under the space leases for the Project ("Space Lease") that are
capable of being performed by persons other than the Landlord and (2) shall not
perform or cause to be performed any act, the performance of which would cause a
default under a Space Lease or would permit a Tenant to validly claim a
reduction in rent, a termination of its Space Lease or any other remedy under
its Space Lease. The obligations of the Managing Agent hereunder shall be
limited by the availability of funds with which to perform such obligations, and
the Managing Agent shall have no obligation to advance funds or to perform any
act or obligation if sufficient funds are not available for such purposes.
(B) In pursuance, but without limiting the generality of the foregoing,
on behalf of the Supervisory Manager, the Managing Agent shall, except as
otherwise directed from time to time by the Supervisory Manager, perform the
following services:
(I) Operate the Project in a first-class manner and shall undertake
to provide such services as are then customarily provided by operators of
similar type projects of comparable class and standing to the Project in the
same market area;
(II) Apply sound administrative, accounting, budgeting,
operational, sales, advertising, personnel and purchasing policies and practices
in such a manner as will maximize the revenues, profitability and value of the
Project consistent with the terms and conditions of this Agreement;
(III) Use its reasonable efforts to obtain the compliance of
Tenants with regard to their obligations under their Space Leases. The Managing
Agent shall not have the right, either on behalf of the Owner or the Supervisory
Manager, to enter into new Space Leases or to cancel, renew, extend or amend any
existing or new Space Lease, without, in each case, the prior written approval
of the Supervisory Manager. Unless otherwise specifically directed by the
Supervisory Manager, all Space Leases shall be in accordance with the leasing
standards then in effect and be on the approved Supervisory Manager's standard
lease form or Managing Agent's form if approved in writing by the Supervisory
Manager. All such leases and/or lease modifications shall be executed by the
Supervisory Manager unless otherwise directed, in writing, by Supervisory
Manager;
(IV) Diligently review all leases, subleases and assignments of
leases for space in the Project by a Tenant occupying space in the Project or a
prospective tenant and submit the same to Supervisory Manager for review,
approval and execution;
2
<PAGE>
(V) Upon the request of the Supervisory Manager, provide copies of
all Space Leases, subleases and assignments then in effect and/or shall deliver
to the Supervisory Manager, and to any persons designated by the Supervisory
Manager, a schedule of all then existing Space Leases, which schedule shall
provide such information concerning such Space Leases and the Tenants as the
Supervisory Manager shall request;
(VI) Supervise and be solely responsible for the hiring, directing,
promoting, discharging and the work of (1) all personnel located on-site and
performing managerial and supervisory services in or about the Project and (2)
all personnel performing on-site operating and service functions in connection
with the Project (the personnel described in (1) and (2) above, collectively
referred to herein as "Project Employees"); provided, however, that any contract
with a Project Employee shall not be made without the prior written approval of
the Supervisory Manager. All of the Project Employees shall be employees of the
Managing Agent. The Supervisory Manager reserves the right to approve all
Project Employees, if so desired. The total aggregate compensation, including
fringe benefits and severance obligations, payable with respect to Project
Employees shall constitute an Expense of the Project and shall be paid from
either (a) Gross Proceeds or (b) funds otherwise provided by the Supervisory
Manager, provided that such Project Employees are approved and listed in the
Plan (as defined in Section 4(b)(XXIII)). The Managing Agent shall prepare the
payroll for all Project Employees, and shall pay all wages, salaries, taxes and
benefits to or in respect of all Project Employees, all of which shall
constitute an Expense of the Project. The Managing Agent may from time to time
assign one or more of its other employees to the Project on a temporary basis to
function as a Project Employee of the Project if approved and listed in the
Plan. The reasonable aggregate compensation payable to such Project Employees
while assigned to the Project and on Project business shall be an Expense of the
Project;
(VII) The Managing Agent shall receive, consider, evaluate and keep
complete records with respect to, and, except as specifically limited by other
provisions of this Agreement, shall handle, compromise or settle, the complaints
of all Tenants or users of any of the services or facilities of the Project;
provided, however, the Managing Agent is not authorized to, and shall not
compromise or settle, or make any payment with respect to, any such complaint
without the prior written consent of the Supervisory Manager if such compromise,
settlement or payment would reduce Gross Proceeds or increase Expenses of the
Project;
(VIII) The Managing Agent shall, upon prior approval of Supervisory
Manager, (a) enter into contracts for services furnished to the Project such as
electricity, gas, water, telephone, cleaning, elevator and boiler maintenance,
heating and air conditioning maintenance and all other necessary utilities and
services, (b) enter into leases for personal property necessary for the
management and operation of the Project and (c) purchase all utilities,
services, material and supplies as are required to be rendered or supplied to
the Tenants pursuant to their Space Leases or any common operating agreement;
provided, however, that, unless approved in the Plan, any contract or other
agreement which exceeds the amount approved in the Plan or if not approved in
the Plan and requires the payment of $5,000 or more must have prior written
approval of the Supervisory Manager provided, however, that the Managing Agent
shall not be required to obtain the Supervisory Manager's prior approval of, nor
its signature on, any such agreement which in the reasonable determination of
the Managing Agent results from a condition of an emergency nature. The
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Managing Agent shall promptly notify the Supervisory Manager of any said
emergency and the agreement which was executed without the Supervisory Manager's
approval.
Notwithstanding the foregoing, the Managing Agent may not enter into any such
contract or other agreements without the prior approval of the Supervisory
Manager, which (a) requires or might require the incremental payment or total
contract payment of $5,000 or more during the term hereof, (b) is not terminable
without cause or penalty upon not more than thirty (30) days written notice; (c)
extends or might extend beyond the Expiration Date of this Agreement or (d)
provides or grants to any party other than the Owner or the Supervisory Manager
a right of renewal or extension; or (e) conflicts with limits of liability
provision in Section 9(E) hereof;
(IX) The Managing Agent shall cause all repairs ("Repairs"), to be
made regardless of the extent or nature of the Repair, if the Repair is
necessary to keep all parts of the Project in good condition to the extent the
Repair is not required to be made by the Tenants pursuant to their Space Leases
or any common operating agreement. Unless approved by the Supervisory Manager or
otherwise approved in the Plan, the Managing Agent shall not make or permit to
be made any Repairs to the Project (except such Repairs as may be required to
comply with the "Legal Requirements" (as defined in Section 4(b)(XIV)) or to
prevent loss of insurance described in Section 8(A) hereof) in a manner that
would, in the Supervisory Manager's reasonable judgment, impair the value or
utility of the Project, or that would permit any Tenant to claim a reduction in
rent or other charges, a termination of its Space Lease or claim any other
remedy pursuant to its Space Lease. Notwithstanding the foregoing, in the event
that the Managing Agent reasonably determines that an emergency condition exists
in or about the Project of a nature that requires immediate Repairs to be made
to preserve and protect the Project and assure its continued operation, the
Managing Agent is authorized to take all reasonable steps to make all
expenditures necessary to repair and correct such emergency conditions, whether
or not these emergency repairs have been provided for in the Plan. All Repairs
shall be expeditiously completed in a good and workmanlike manner in conformance
with plans and specifications, if any, therefor and shall be in compliance with
all Legal Requirements and shall conform to requirements of all Space Leases,
and any mortgage or agreement affecting the Project including the requirements
of all insurance policies affecting the Project;
(X) Unless approved in the Plan or otherwise approved by the
Supervisory Manager, the Managing Agent shall not perform, or permit to be
performed, any Landlord preparation work as required by any Space Lease
("Landlord Preparation Work"), and shall not permit any Tenant improvements
permitted or required by any Space Lease ("Tenant Improvements") (except such
Tenant Improvements as may be required to comply with the Legal Requirements) to
be made, in a manner that would impair the value or utility of the Project or
that would permit any Tenant to claim a reduction in rent or other charges, a
termination of its Space Lease or claim any other remedy pursuant to its Space
Lease;
(XI) If the replacement and/or restoration of fixtures, equipment
and other ordinary Project capital replacement items or improvements which are
not Landlord Preparation Work, Tenant Improvements or Repairs (collectively,
"Capital Replacements") becomes necessary or desirable and is approved subject
to the conditions contained in this Agreement including, without limitation, the
Capital Replacements required to be made in order to comply with any Legal
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Requirement or the requirements of any Space Lease, and any other agreement or
mortgage affecting the Project hereunder, the Managing Agent shall include in
the Monthly Statement (as defined in Section 6C) for the month in which the
Capital Replacement occurs, the cost therefor and a statement as to whether such
Capital Replacement may be eligible for any investment tax credit. Unless made
as a result of a condition which in the reasonable determination ofthe Managing
Agent is of an emergency nature, the Managing Agent shall not make, or cause to
be made, any Capital Replacements without first obtaining the written approval
of the Supervisory Manager. The Managing Agent shall promptly notify the
Supervisory Manager of said emergency and the agreement which was executed
without the Supervisory Manager's approval. All Capital Replacements approved by
the Supervisory Manager shall be made, or caused to be made, by the Managing
Agent expeditiously, in a good and workmanlike manner, in conformance with any
plans and specifications, if any, therefor and in compliance with all Legal
Requirements and the requirements of the Space Leases, and any mortgage or
agreement affecting the Project including the requirements of any insurance
policies affecting the Project;
(XII) The Managing Agent shall collect, on behalf of the Owner, all
Gross Proceeds and shall deposit all such Gross Proceeds along with any monies
furnished by the Supervisory Manager as working funds and all other monies
received by the Managing Agent relating to the Project in a separate
non-commingled interest bearing account maintained in a bank approved by the
Supervisory Manager (the "Bank Account"), held in the name of the Managing Agent
as agent for Supervisory Manager. "Gross Proceeds" shall mean all amounts
collected by the Managing Agent from or in connection with the management and
operation of the Project or are in any way incidental to the foregoing (other
than any security deposits), including, without limitation, base rents,
percentage rents, and all additional charges collected and pursuant to the Space
Leases, and all other additional amounts collected under the Space Leases,
attributable to common area maintenance charges, real estate taxes and other
operating expenses and assessments (collectively, "Escalators"), condemnation
awards, insurance proceeds and real estate tax refunds and rebates of other
operating expenses. All Gross Proceeds collected and any and all items paid by
the Managing Agent arising by virtue of the management of the Project shall be
deposited to and paid from the Bank Account. The Managing Agent shall use Gross
Proceeds to pay all expenses (collectively "Expenses") relating to the
management, operation, leasing, maintenance and administration of the Project,
including any compensation payable to the Managing Agent pursuant to Section 7
hereof, other than expenses, which pursuant to the terms of this Agreement, are
payable by the Managing Agent from its own funds. The excess, if any, of Gross
Proceeds over Expenses ("Gross Operating Cash Flow") for any calendar month
shall be paid to the Supervisory Manager in the manner set forth in Section 6(C)
hereof;
(XIII) The Managing Agent shall cause to be paid, out of Gross
Proceeds, as required for the operation of the Project, on or before the last
day on which they may be paid without penalty, all taxes (other than real estate
taxes or other taxes billed together with real estate taxes), assessments,
levies, fees, water, sewer and other utility rents and charges and all other
governmental charges, and all fines, penalties and court disbursements, that are
imposed or levied upon, or assessed against or measured by, the Project or any
portion thereof. If any amount levied or assessed against the Project, or any
part thereof, or payable in connection with the operation of the Project,
becomes due and payable and may legally be paid in installments, the Managing
Agent
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shall pay such amount in installments, unless an interest charge is imposed in
connection with installment payments, in which event Managing Agent shall obtain
direction from the Supervisory Manager as to whether such amount shall be paid
in a lump sum or in installments.
(XIV) The Managing Agent shall comply with, and shall cause the
Project to comply with, all laws, codes, ordinances, regulations and other
governmental. rules now or hereafter in force (collectively, the "Legal
Requirements") that are applicable to the Project or the occupancy, use or
condition thereof, including, without limitation, the curing of any violation of
any Legal Requirements. If such compliance necessitates the making of any
Repairs, then the Managing Agent shall comply with the provisions set forth in
Section 4(B)(VII) and 4(B)(IX) hereof, and if such compliance necessitates the
making of any Capital Replacements, then the Managing Agent shall follow the
procedures set forth in Section 4(B)(XI) hereof, provided, however, that, in the
case of an emergency or failure to comply promptly with (including to cure any
violation of) any Legal Requirement which (a) shall expose either the Owner or
the Supervisory Manager to criminal liability or (b) shall constitute an event
of default under any Space Lease and any mortgage or other agreement affecting
the Project, the Managing Agent shall cause compliance or the curing of the
violation without awaiting the Supervisory Manager's consent and shall promptly
inform the Supervisory Manager of any action taken or being taken by it in
connection with such compliance or cure. Unless otherwise directed by the
Supervisory Manager, the Managing Agent shall, to the extent the Managing Agent
deems appropriate, in consultation with the Supervisory Manager, protest or
litigate to final decision in the appropriate court or forum the application of
any alleged Legal Requirement or the violation of any Legal Requirement
adversely affecting the Project. Any counsel engaged under this subparagraph
shall be subject to the approval of the Supervisory Manager, and no settlement
shall be entered into in any matter without the Supervisory Manager's written
consent;
(XV) Use its best efforts to prevent any liens, charges or
encumbrances (collectively, "Liens") from being filed against the Project which
arise from any maintenance, repairs, alterations, improvements, renewals or
replacements in or to the Project. The Managing Agent shall use its best efforts
to cause the prompt release of any Liens (other than a lien resulting from any
action taken by the Owner, Supervisory Manager or taken by the Managing Agent at
the Supervisory Manager's written direction);
(XVI) Give prompt notice to the Supervisory Manager of any defaults
by any of the Tenants under their Space Leases and shall, unless notified in
writing to the contrary by the Supervisory Manager, institute in its own name or
in the name of the Supervisory Manager or the Owner, any necessary legal actions
or proceedings to collect all charges, rents, other Gross Proceeds and monetary
damages from the Tenants or other persons in possession or to cancel or
terminate any Space Lease or to dispossess the Tenants or other persons in
possession on grounds of nonpayment of any amount due (or on grounds of any
other failure to perform) under the applicable Space Lease or otherwise enforce
the provisions of the Space Leases. The selection of any counsel engaged under
this subparagraph shall be subject to the prior written approval of the
Supervisory Manager, and no settlement shall be entered into in any matter
without the Supervisory Manager's written approval;
(XVII) Shall advertise and promote the business of the Project (and
shall institute and supervise a leasing and marketing program); provided,
however, that, unless otherwise
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provided for by the Supervisory Manager, the Managing Agent shall not, without
the Supervisory Manager's approval, expend, or commit to expend for such
activities more than the amount approved in the Plan therefor during any year
during the term of this Agreement;
(XVIII) Subject to compliance with the provisions of the Space
Leases and any mortgage or agreement affecting the Project, at the Supervisory
Manager's written request, contest in good faith any tax, assessment, levy,
attachment, charge, fee, Legal Requirement or lien relating to the Project which
it believes to be unjustified; provided, however, that such contest shall not
(a) subject the Project or any part thereof or any proceeds therefrom to the
risk of sale or forfeiture, (b) interfere with the use of occupancy of the
Project or (c) subject the Owner or the Supervisory Manager to the risk of any
criminal or civil liability.
(XIX) To the extent required to be obtained or maintained by the
Owner or Supervisory Manager of the Project, obtain and maintain, on behalf of
the Owner or Supervisory Manager, all licenses, permits and approvals necessary
or desirable for the use, operation, maintenance and management of the Project;
(XX) Keep the Supervisory Manager informed of any significant
change in the rules and regulations relating to the use, operation and
maintenance of the Project, including any change in any Legal Requirements;
(XXI) Collect all security deposits entitled to be received by the
landlord under the Space Leases and shall promptly deposit the same in the Bank
Account or such other account as may be required by the Space Leases and shall
maintain said accounts pursuant to local law;
(XXII) Promptly after receipt thereof, deliver to the Supervisory
Manager a copy of any notice or other communication received by the Managing
Agent from any public official or agency, or any Tenant under any of the Space
Leases relating to any matter that would constitute (with or without the giving
of notice or the passage of time, or both) a default under any Space Lease or
any mortgage or other agreement affecting the Project.
(XXIII) Within thirty (30) days following the Commencement Date of
this Agreement and as directed by the Supervisory Manager on an ongoing basis,
prepare and submit to the Supervisory Manager, for the Supervisory Manager's
approval, a Leasing and Operating Plan (the "Plan") for the Project covering the
period from the Commencement Date through the Expiration Date of the first
fiscal year and each fiscal year thereafter, which Plan shall be prepared in a
manner which will enable the Project to be operated by the Managing Agent as a
first-class commercial property and shall include, but not be limited to, the
items set forth on Exhibit "A" annexed hereto and made a part hereof. Upon
Supervisory Manager's review and comments, all changes necessary will be
submitted by Managing Agent in the revised Plan. Such Plan will be in effect
upon Supervisory Manager's written approval.
5. Condemnation and Casualty . In the event all or any portion of the
Project (i) is damaged as a result of fire or other casualty (a "Casualty") or
(ii) taken or condemned in any
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eminent domain, condemnation, compulsory acquisition or like proceeding by any
competent authority for any public or quasi-public use or purpose (a
"Condemnation"), the Managing Agent shall give the Supervisory Manager prompt
written notice thereof. The Owner, the Supervisory Manager or the Managing Agent
shall not have any obligation to restore, repair, rebuild, alter, replace, or
modify the Project or any part thereof affected by a Casualty or Condemnation,
and the Supervisory Manager shall have the right to terminate this Agreement
pursuant to the provisions of Section 10(F) hereof.
6. Fiscal Matters.
(A) The Managing Agent shall provide for appropriate accounting and cost
control systems and personnel to be maintained at the Managing Agent's general
offices to allow Managing Agent to maintain the books of account of the Project
and to prepare and transmit the statements and reports required pursuant to this
Section and the other reports, etc., as requested by Supervisory Manager. In
addition, the Managing Agent shall cause, if required by law, such personnel to
prepare and file all necessary reports with respect to withholding taxes, social
security taxes, unemployment insurance, disability insurance, the Fair Labor
Standards Acts and all other applicable laws and regulations and all other
statements and reports pertaining to labor employed on the Managing Agent's
payroll in or about the Project, which reports shall be in a form satisfactory
to the Supervisory Manager. The Managing Agent shall also cause such personnel
to prepare and file all necessary reports and returns with respect to sales
taxes, use taxes, personal property taxes and all other taxes relating to the
Project other than real estate taxes, which will be paid (and the necessary
returns prepared) directly by the Supervisory Manager. The Managing Agent shall
establish and supervise all bookkeeping and clerical services in connection with
the operation of the Project. The Managing Agent shall be solely responsible and
liable for, and shall bear and timely pay, all costs and expenses incurred in
connection with this Section 6(A) and shall not be paid or reimbursed, either by
the Supervisory Manager or from Gross Proceeds, for such costs and expenses
except to the extent set forth on Exhibit "C". The Owner, the Supervisory
Manager, its independent accounting firm and any other person designated by the
Owner or the Supervisory Manager shall have the right and privilege of examining
said books and records at any reasonable time, the cost of which shall be paid
from Gross Proceeds. Upon the termination of this Agreement, the Managing Agent
shall promptly transfer to the Supervisory Manager the originals of all such
books and records, as well as all leases, leasing records, correspondence with
tenants, personnel records and any and all other documents, instruments and
correspondence relating to the Project. All books and records relating to the
Project shall be retained for a period of at least four (4) years following the
fiscal year to which they pertain or for such longer period of time as is
consistent with industry standards.
(B) By the 25th day of each calendar month during the term of this
Agreement, the Managing Agent shall remit by wire transfer or immediately
available federal funds to the Supervisory Manager, such amount, if any, as
shall be designated from time to time (the "Advance Payment"). If Gross Proceeds
shall not be sufficient to enable the Managing Agent to make the Advance Payment
and discharge all Expenses then due, the Managing Agent shall immediately notify
the Supervisory Manager and shall follow the Supervisory Manager's directions in
connection with such shortfall; provided, however, that the Managing Agent shall
not be required to use its own funds to cover any such shortfall.
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(C) On or prior to the 7th day of each calendar month during the term
hereof, the Managing Agent shall render to the Supervisory Manager, and to any
person designated by the Supervisory Manager, a statement (the "Monthly
Statement") in the form set forth in Exhibit "A" annexed hereto and made a part
hereof reporting the income and expenses for the immediately preceding calendar
month including a comparison to the Plan. Together with the Monthly Statement,
the Managing Agent shall include the original bills for all payments made during
the immediately preceding calendar month and shall simultaneously wire transfer
to Supervisory Manager funds in the amount, if any, by which Gross Operating
Cash Flow for the immediately preceding month exceeds the Advance Payment for
such immediately preceding month.
(D) The Managing Agent shall, promptly following the Owner's request
therefor, render to the Supervisory Manager, and to such persons as may be
reasonably designated by the Supervisory Manager, any other statements or
reports requested by the Supervisory Manager including but not limited to, the
reports noted in Exhibit "B." The charges for such Additional reports are listed
on Exhibit "B."
(E) At the Supervisory Manager's request, an audit or review of the
Project books and records shall be performed by a firm of independent certified
public accountants selected by the Supervisory Manager. Any costs and expenses
incurred in connection therewith shall be Expenses of the Project; provided,
however, that, if such audit or review reveals that the Managing Agent has
misappropriated or improperly applied any funds, then the Managing Agent shall
be responsible and liable for, and shall bear and timely pay, all costs and
expenses in connection with such audit or review and shall not be paid or
reimbursed by the Supervisory Manager or from Gross Proceeds for such costs and
expenses.
7. Management Fee. In full consideration for the services of the Managing
Agent hereunder the Managing Agent shall be entitled to receive the Management
Fee. The Management Fee for each calendar month during the term hereof shall be
separately computed, invoiced and paid to the Managing Agent from the Bank
Account prior to the end of such calendar month in an amount equal to 2.25% of
the collected Gross Proceeds less any amounts included in Gross Proceeds which
represent condemnation awards, insurance proceeds, real estate tax refunds and
rebates of other operating expenses or sales or rent taxes collected on behalf
of taxing authorities.
8. Insurance.
(A) During the term hereof, the Supervisory Manager on behalf of the
Owner shall be responsible for procuring to the extent reasonably available, all
insurance policies required to be procured with respect to the Project under the
Space Leases or any other agreement or mortgage affecting the Project or which
are provided for in the Plan, said premiums to be considered an expense of the
Project. The Managing Agent will notify Supervisory Manager of any special
insurance requirements pursuant to the Space Leases. All liability insurance
policies maintained by Owner or Supervisory Manager with respect to the Project
shall include the Managing Agent as an additional named insured and certificates
of insurance evidencing such coverage shall be provided to Managing Agent upon
request.
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(B) The Managing Agent shall not obtain or carry separate insurance
concurrent in form, or contributing in the event of loss, with that required
hereunder, unless the Owner and the Supervisory Manager is a named insured
therein. The Managing Agent shall pay for such insurance from its own funds and
shall not be reimbursed therefor from the Supervisory Manager or from Gross
Proceeds.
(C) The Managing Agent shall obtain and maintain throughout the term of
this Agreement, a fidelity bond in an amount of $ 1,000,000 for the full
protection of the interests of the Owner, the Supervisory Manager and the
Managing Agent.
(D) The Supervisory Manager shall give to the Managing Agent, and the
Managing Agent shall give to the Supervisory Manager, appropriate notice of any
claims made against the Project, the Supervisory Manager or the Managing Agent,
and the Managing Agent shall cooperate fully with the Supervisory Manager and
with any insurance carrier to the end that all such claims will be promptly
investigated and defended.
9. Indemnity and Related Matters.
(A) The Supervisory Manager agrees to indemnify and hold the Managing
Agent free and harmless from any liability, including any costs and expenses
incident thereto, for injury to persons or damage to property by reason of any
cause whatsoever, in or about the Project, as a result of the performance of
this Agreement by the Managing Agent, its agents, employees or independent
contractors, irrespective of whether negligence on the part of the Managing
Agent, its agents, employees or independent contractors is alleged.
(B) Except as otherwise provided in this Agreement, the Supervisory
Manager agrees to reimburse the Managing Agent for any money which the Managing
Agent is required to pay out for any reason whatsoever whether the payment is
for, or the result of (i) costs, charges or debts incurred or assumed by the
Managing Agent in connection with the operation of the Project, (ii) judgments,
settlements or expenses in defense of any claim, civil or criminal action,
proceeding, charge or prosecution made, instituted or maintained against the
Managing Agent or employees, agents or connection with the Project.
(C) Notwithstanding the foregoing or anything else contained herein to
the contrary, the Supervisory Manager shall not reimburse the Managing Agent or
be liable to indemnify and hold the Managing Agent harmless from any liability
or cost described in Section 9(A) and (B) and not covered by insurance, which
results from, (i) the willful misconduct, gross negligence or criminal conduct
of the Managing Agent or employees, agents, or independent contractors of the
Managing Agent, (ii) any breach of this Agreement by Managing Agent, or (iii)
any act of agent which is outside the scope of Managing Agent's authority under
this Agreement, and the Managing Agent shall indemnify the Supervisory Manager
and Owner (and each partner therein, any legal representative, heir, estate,
successor or assign of any such partner or any officer, director, shareholder or
partner in any such partner and any other principal of the Supervisory Manager
or the Owner whether disclosed or undisclosed) against such liabilities and
costs, including legal fees and any other costs and expenses incident thereto.
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(D) The Supervisory Manager agrees to defend promptly and diligently, at
the Supervisory Manager's expense, any claim, action or proceeding brought
against the Managing Agent, Supervisory Manager and the Owner, jointly or
severally, arising out of or connected with any of the matters referred to in
Section 9(A) and (B), unless covered by Section 9(C) and to hold harmless and
fully indemnify the Managing Agent from any judgment, liability, loss or
settlement on account thereof.
(E) Notwithstanding anything to the contrary contained in this
Agreement, neither the Supervisory Manager, nor any officer, director,
shareholder, agent or employee thereof, nor the Owner, nor any partner in the
Owner or the Supervisory manager, nor any legal representative, heir, estate,
successor or assign of any such partner or any officer, director, shareholder or
partner in any such partner nor any other principal in Owner or Supervisory
Manager whether disclosed or undisclosed, shall have any personal liability with
respect to the performance by the Supervisory Manager of any of its obligations
under this Agreement. If any breach shall occur by the Supervisory Manager
hereunder, the Managing Agent shall proceed solely against the Gross Proceeds,
and shall not seek or claim recourse against the Supervisory Manager, the Owner
or any other person or party hereinabove named or referred to in this Section
9(E) as being exculpated from personal liability.
10. Default and Termination. It shall be an event of default ("Event of
Default") or a cause for termination hereunder if any one or more of the
following events shall occur:
(A) If either party (the "Defaulting Party") shall breach or fail to
perform any term, covenant or condition contained in this Agreement;
(B) If any Party shall voluntarily or involuntarily be dissolved; apply
for or consent to the appointment of a receiver, trustee or liquidator of all or
a substantial part of its assets; file a voluntary petition in bankruptcy or
otherwise voluntarily avail itself of any federal or state laws for the relief
of debtors; admit in writing its inability to pay its debts as they become due;
make a general assignment for the benefit of creditors; file a petition or an
answer seeking reorganization or arrangement with creditors or to take advantage
of any insolvency law or file an answer admitting the material allegations of
any petition filed against it in any bankruptcy, reorganization or insolvency
proceeding; if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of any one or more creditors of such
Defaulting Party, adjudicating it bankrupt or insolvent or approving a petition
seeking reorganization or appointing a receiver, trustee or liquidator of all or
a substantial part of its assets, and such order, judgment or decree shall
become final; or if within 60 days after the commencement of any proceeding
against the Defaulting Party seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future applicable federal, state or other bankruptcy or
insolvency statute or law, such proceeding shall not have been dismissed;
(C) If Managing Agent shall assign, transfer, subcontract or create any
other transfer by operation of law or otherwise transfer its rights under this
Agreement without first obtaining Supervisory Manager's written approval.
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(D) If Managing Agent shall fail to pay any amount or deliver any report
as required under this Agreement or fails to comply with any obligations or
shall act outside the authorities established hereunder;
(E) Upon the occurrence of an Event of Default, the non-defaulting party
("Non- Defaulting Party") shall have the right to terminate this Agreement (i)
if the Event of Default is non-monetary in nature and the Defaulting Party fails
to remedy any such Event of Default within twenty (20) days after its receipt of
notice of default; provided, however, that if such Event of Default cannot
reasonably be remedied within said period, then such additional period as may
reasonably be required to remedy the same will be granted to the Defaulting
Party, if the Defaulting Party shall promptly commence and use its best efforts
to remedy the default upon receipt of the Non-Defaulting Party's notice and
shall continue therewith with due diligence or (ii) if the Event of Default is
monetary in nature and the Defaulting Party does not cure such Event of Default
within two (2) days after its receipt of notice of such default;
(F) Notwithstanding any provision contained herein to the contrary, if
after a Condemnation or Casualty, the Owner elects not to undertake a
restoration of the Project, the Supervisory Manager shall have the right to
terminate this Agreement without penalty upon thirty (30) days prior notice to
the Managing Agent; provided, however, if the Supervisory Manager so elects to
terminate this Agreement, the Managing Agent, if requested by the Supervisory
Manager, shall assist the Supervisory Manager in completing and filing any claim
forms required to be completed and filed, and in complying with any other
procedures required to be complied with, in order to enable the Owner to receive
any Condemnation award or insurance proceeds the Owner is entitled to receive in
connection with any such Casualty or Condemnation, and the Supervisory Manager
shall pay the Managing Agent a reasonable fee, to be agreed upon between the
Supervisory Manager and the Managing Agent, for so assisting the Supervisory
Manager;
(G) No termination of this Agreement, by operation of law or otherwise,
shall relieve the parties hereto of their obligations hereunder accruing prior
to the date of the termination of this Agreement, including, without limitation,
any obligations to indemnify any person pursuant to Section 9 hereof;
(H) Upon any termination of this Agreement, whether pursuant to Section
10, by operation of law or otherwise, the Managing Agent shall forthwith (i)
surrender and deliver to the Supervisory Manager all Gross Proceeds of the
Project and other monies of the Project on and in any Bank Account, including
any amounts in the Bank Account, (ii) deliver to the Supervisory Manager as
received any monies which would be Gross Proceeds under this Agreement but
received after such termination, (iii) deliver to the Supervisory Manager all
materials and supplies, keys, contracts and documents, and such other accounting
papers and records pertaining to this Agreement as the Supervisory Manager shall
request, including all books and records maintained for the Project, and (iv)
confirm the assignment to the Supervisory Manager, of any and all rights the
Managing Agent may have in and to any existing contracts, licenses and permits
relating to the operation and maintenance of the Project, as the Supervisory
Manager shall require. The Managing Agent hereby grants a power of attorney
(coupled with an interest) to the Supervisory Manager to endorse any checks
received in connection with the Project, and hereby assigns to the Supervisory
Manager,
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effective upon the date of such termination, any and all existing contracts,
licenses and permits relating to the operation and management of the Project;
(I) The terms of this Article shall not be deemed to impair the right of
any party to exercise any right or remedy, whether for damages, injunction,
specific performance or otherwise, upon any breach or termination hereof,
(J) Within fifteen (15) days of any termination of this Agreement, the
Managing Agent shall render to Supervisory Manager, and to such persons as may
be designated by the Supervisory Manager, a full accounting to the date of
termination, of all monies received by the Managing Agent in connection
herewith;
(K) Supervisory Manager, at its discretion, may cancel this Agreement
upon thirty (30) days written notice to Managing Agent for any reason whatsoever
(or for no reason).
11. Notices. All notices, consents, approvals or other communications
provided for in this Agreement to be given by the Managing Agent to the
Supervisory Manager shall be in writing and shall be personally served or sent
by facsimile transmission:
TO THE SUPERVISORY MANAGER:
Pembroke Supervisory Management, LLC
70 East 55th Street, 7th Floor
New York, NY 10022
Attention: Lawrence J. Cohen
All notices, consents, approvals or other communications provided for in
this Agreement to be given by the Supervisory Manager to the Managing Agent
shall be in writing and shall be personally served or sent by facsimile
transmission:
TO THE MANAGING AGENT:
Colliers Nevada Management, LLC
5310 Kietzke Lane, Suite 105
Reno, NV 89511
With a copy to:
Marcus Clark
Colliers Nevada Management, LLC
53 10 Kietzke Lane, Suite 105
Reno, Nevada 89511
Fax Number: (775) 823-4680
13
<PAGE>
12. Relationship and Further Actions.
(A) The Managing Agent and the Supervisory Manager intend that this
Agreement establish no relationship between them other than that of Managing
Agent and Supervisory Manager, respectively. The Managing Agent and the
Supervisory Manager shall not be construed as joint ventures or partners of each
other and neither shall have the power to bind or obligate the other except as
set forth in this Agreement.
(B) The parties hereto agree to execute all contracts, agreements and
documents and to take all actions necessary to comply with the provisions of
this Agreement and the intent hereof.
13. Applicable Law. The interpretation, validity and performance of this
Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of laws or principles thereof. If any of the terms
and provisions hereof shall be held invalid or unenforceable for any reason,
such invalidity or unenforceability shall in no event affect any of the other
terms or provisions hereof, all such other terms and provisions to be valid and
enforceable to the fullest extent permitted by law.
14. Successors and Assigns.
(A) The Managing Agent shall not assign or in any manner sell or
transfer any of its rights and interests as Managing Agent hereunder without the
prior written approval of the Supervisory Manager, nor shall any of the Managing
Agent's obligations hereunder be transferable on the Managing Agent's part, by
operation or law or otherwise, without the prior written approval of the
Supervisory Manager.
(B) The terms, provisions, covenants, undertakings, agreements,
obligations and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the successors and the permitted assigns of the parties
hereto.
(C) If at any time prior to the Expiration Date, the Owner or any other
person or entity shall succeed to the rights of the Supervisory Manager, the
Managing Agent agrees at the election and upon request of any such person, to
fully and completely attorn, from time to time, to and recognize such person as
the Supervisory Manager under this Agreement upon the terms and conditions of
this Agreement. Upon such attornment this Agreement shall continue in full force
and effect as a direct agreement between the Managing Agent and such successor
Supervisory Manager who shall not be (i) liable for any previous act or omission
of any prior Supervisory Manager and (ii) subject to any offsets or defenses
which may have theretofore accrued to the Managing Agent against any prior
Supervisory Manager.
15. Hazards. Owner and Supervisory Manager agree to provide Managing Agent
with any information Owner and Supervisory Manager may have regarding Hazards in
the Property. Hazards shall include, but are not limited to, asbestos, PCB
transformers, other toxic or hazardous substances, underground storage tanks,
and health and safety hazards. Managing Agent shall notify
14
<PAGE>
Owner and Supervisory Manager if Managing Agent becomes aware of any Hazards in,
on or about the Property. Owner and Supervisory Manager understand that Managing
Agent is not a licensed or qualified expert on Hazards. Therefore, Managing
Agent shall not be responsible for discovering Hazards, in, on or about the
Property, causing the Property to comply with laws regarding Hazards, or
supervising technical work on Hazards. Owner and Supervisory Manager understand
that the laws regarding the disclosure of Hazards to tenants, buyers and other
persons may be ambiguous and subject to conflicting interpretations. Therefore,
if hazards are discovered in, on or about the Property and Managing Agent in
good faith disagrees with Owner's instructions regarding such disclosures, then
Managing Agent may terminate this Agreement upon sixty(60) days written notice
to Owner and Supervisory Manager.
16. General Provisions.
(A) The Supervisory Manager represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. The Managing Agent represents it has full power and authority to execute
this Agreement and be bound by and perform the terms hereof. On request, each
party shall furnish the other evidence of such authority.
(B) Any change to or modification of this Agreement or any waiver of any
provision hereof must be in writing signed by both parties hereto. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original. The captions for each Section are intended for convenience
only.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective the day and year first above written.
Owner:
HIGH CASH PARTNERS, L.P.
By: Pembroke HCP, LLC, General Partner
By: Pembroke Companies, Inc., Member
By:
--------------------------------
Lawrence J. Cohen, President
Supervisory Manager:
PEMBROKE SUPERVISORY MANAGEMENT, LLC
By: Pembroke Companies, Inc., Member
By:
------------------------------------
Lawrence J. Cohen, President
Managing Agent:
COLLIERS NEVADA MANAGEMENT, LLC
By:
------------------------------------
Marcus S. Clark
16
<PAGE>
EXHIBIT "A"
FORM OF MONTHLY OPERATING STATEMENT
(SEE ATTACHED)
To include the following reports:
1. Variance Analysis with explanations
2. General Ledger
3. Accounts Payable Report (if available)
4. Billing and Collection Report (Rent Roll)
5. Accounts Receivable Aging Report and Analysis with explanations
6. Consolidated Cash Flow
7. Cash Disbursement Journal
17
<PAGE>
Exhibit "C"
Gross Proceeds
The term "Gross Proceeds" shall include those items described in
Section 4(12) of this Agreement. For purposes of determining the Management Fee,
rent shall not include (i) fire loss or other insurance proceeds, capital
improvements, remodeling and tenant change costs (including any overhead factor
payable by tenants), (ii) security deposits except for the portion applied to
past due rent; (iii) prepaid rents except for the portion applied to the then
current month; or (iv) sums collected or paid for sales, excise or use taxes.
18
EXCLUSIVE LEASING LISTING AGREEMENT
-----------------------------------
THIS EXCLUSIVE LEASING LISTING AGREEMENT (the "Agreement") is entered into
as of September 9, 1999, by and between PEMBROKE SUPERVISORY MANAGEMENT LLC
("Agent") and COLLIERS INTERNATIONAL ("Broker"), with reference to the following
facts:
A. High Cash Partners, L.P. ("Landlord") is the current owner of the building
commonly known as Sierra Marketplace located at 3652 South Virginia, Reno,
Nevada 89502, (the "Building") and has retained Agent to perform leasing
services with respect to the Building.
B. Agent desires to retain Broker to act as the exclusive broker with respect to
the Building. It is contemplated that Broker will seek out tenants in the
conduct of its brokerage business and will deal with parties ("Prospective
Tenants") contemplating the leasing of space in the Building, and also to
provide a local representative to deal with existing tenants contemplating
renewals and/or expansions of their leases.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
contained herein, it is agreed as follows:
1. Available Space; Renewal Space; Expansion Space. This Agreement shall
apply (i) to that space in all of the Building which (a) as of the date of this
Agreement, is not subject to terms of any lease, license agreement or other such
document and does not comprise a common area such as the lobby areas, garages or
parking areas, elevators, stairways, vestibules, rest rooms, public corridors,
halls, and roof, or (b) as to leased space the current tenancy with respect to
which expires or is terminated, and the space is vacated, before the termination
or expiration of this Agreement (such space as described in (a) and (b) being
referred to in the aggregate as the "Available Space"), and (ii) to existing
tenants in the Building ("Existing Tenants") in the case of renewals of leases
or expansions by Existing Tenants beyond the space then leased into a portion of
the Available Space (such space being referred to as the "Renewal Space" in the
case of lease renewals and the "Expansion Space" in the case of lease
expansions). However, it is expressly understood that such "Renewal Space" or
"Expansion Space" that is subject to an existing option not negotiated by Broker
is not subject to the terms of this Agreement.
2. Term. The term of this Agreement shall commence as of the date hereof
and shall expire December 31, 2002, subject to extension by mutual agreement of
the parties, and subject to termination, as provided in Paragraph 16 hereof.
During the term hereof, Broker shall be the exclusive broker for the Building
and Broker shall earn a commission as provided herein on any lease entered with
respect to any of the Available Space, or on any renewal or expansion with
respect to Renewal Space or Expansion Space unless otherwise provided herein,
whether such lease be made or Tenant procured by Broker, or by Landlord or
Agent, or by any other person. All inquiries and offerings received by Agent
shall be referred to Broker and all negotiations shall be conducted solely by
Broker or under Broker's direction, subject to final approval by
1
<PAGE>
Agent. Agent shall cause Landlord to also refer all inquiries and offers
received by Landlord to Broker.
3. Broker's Duty and Representing Agents. Broker agrees that, during the
term of this Agreement, the primary representing agents shall be Jeff Scheneman
and Kelly Bland ("Representing Agent"). The Representing Agent's primary duty
within this Agreement (including the primary assignment of any other
representing agents or sales persons employed by Broker) shall be the leasing of
the Available Space. The Broker's primary duties shall include the leasing of
Renewal Space and Expansion Space, as well as handling any "walk-in" business
from Prospective Tenants and otherwise assisting, as reasonably requested by
Agent, in the marketing of the Available Space at the Building. Notwithstanding
the foregoing, Broker shall have no obligations to negotiate any lease nor to
devote efforts to leasing space in connection with any transaction not earning a
commission as described in Paragraph 7 below.
4. Leasing Parameters. Agent shall specify the leasing parameters for each
portion of the Available Space, the Renewal Space and the Expansion Space
subject to change from time to time at Agent's direction. All leases shall be
executed on Agent's standard form, attached hereto as Exhibit "B", with all
appropriate Riders and Exhibits attached thereto, or on such other form as the
respective Agent on behalf of Landlord may adopt from time to time. When
negotiating a lease with a Prospective Tenant, Broker shall not vary from the
parameters specified by Agent without the prior express written consent of
Agent. In any event, even if a Prospective Tenant has signed a proposed lease
complying with the leasing parameters, the lease shall not be effective unless
and until the lease has been submitted to Agent's office and has been approved
and fully executed on behalf of Landlord. Broker shall clearly explain to each
Prospective Tenant that no lease signed by Prospective Tenant shall have any
effect until the provisions of this Paragraph 4 have been satisfied.
5. Reporting.
5.1 Broker shall keep Agent fully advised as to the status of
negotiations with each Prospective Tenant. Broker shall submit a written report
to the Agent, no less frequently than monthly, itemizing each Prospective Tenant
and indicating the activity and any relevant events occurring during the
preceding month and also periodically confer with Agent concerning marketing
problems encountered and suggestions to improve the marketability of the
Available Space, progress of construction of improvements in the Available Space
for the use by Prospective Tenants, and similar matters. All advertising
relating to the Building shall be determined by and be at the expense of Agent
on behalf of Landlord, subject to written guidelines which shall be approved by
Agent. Representing Agent of Broker shall be available from time to time upon
reasonable notice to confer with Agent. Broker will assist Agent in the
preparation of its property budget as it relates to income, lease-up, market
conditions, promotions, etc. Broker's non-material failure to comply with the
requirements of this Section 5.1 shall not bar Broker from receiving commissions
that Broker is otherwise entitled to.
5.2 In the event any Prospective Tenant indicates its unwillingness to
execute a lease complying with the leasing parameters as contemplated in
Paragraph 4 above, Broker
2
<PAGE>
shall forward all offers and counteroffers to Agent. When a Prospective Tenant
has agreed to the execution of a lease, Broker shall notify the property
manager, and shall arrange to have the lease prepared. Upon execution by a
Prospective Tenant of a proposed lease, Broker shall deliver four (4) signed
copies thereof to Agent's office for approval and execution on behalf of the
Landlord.
6. Rate of Commission and Time Payment. If a binding written lease is
entered into between a Prospective Tenant and Agent on behalf of Landlord for
any portion of the Available Space or between an Existing Tenant for Renewal
Space or Expansion Space, except as expressly excluded in this Agreement, then,
with the exception of those transactions expressly excluded under Paragraph 1
and 7, Agent agrees to pay to Broker a leasing commission computed in accordance
with the schedule attached hereto as Exhibit "C."
7. Transactions Not Earning a Commission. No commission or brokerage or
other fee of any sort shall be payable by Agent to Broker by reason of (a) any
lease with Landlord, Landlord's subsidiary companies or any affiliate companies
of Landlord or Agent in any space in the Building or (b) the exercise by any
existing tenant in the Building of any option under its present lease if such
existing lease was not procured by Broker. Broker shall receive no compensation
for any leases which are presently being negotiated by Agent, which prospects
are described on Exhibit "D" hereto. No commission shall be earned or paid if
otherwise excluded in this document.
8. Sharing of Commissions. Broker and Agent acknowledge that, in certain
cases, Broker may effect the signing of a lease by Agent on behalf of Landlord
and a Prospective Tenant only with the assistance or cooperation of another
broker (an "Outside Broker"). In such a case, if the conditions set forth herein
are otherwise satisfied, Broker understands that Agent shall be obligated to pay
only one full commission referred to in Paragraph 6 above, and the Outside
Broker shall be entitled to a commission equal to 100% of the commission
referred to in Paragraph 6 above, computed as specified in Exhibit "C" to this
Agreement, which Broker agrees to share with the Outside Broker. Broker
expressly agrees that in no circumstances shall Broker or any of its principals,
or any relative of Broker, or any entity controlled by Broker and/or any of its
principals or any relatives of any of them (a "Related Broker") enter into any
agreement with an Outside Broker whereby Broker or any Related Broker shall
receive any portion of a commission earned by an Outside Broker for the leasing
of any Available Space or Renewal Space or Expansion Space, nor shall any
Related Broker be recognized as an Outside Broker.
9. Previous Space and Cash Payments. If the lease or any agreement
collateral to or affecting the lease shall provide that the Landlord or any
parent corporation or entity of the Landlord or any subsidiary or affiliated
corporations or entities of the Landlord or of such parent corporation or entity
(a) shall be required to assume any of the Prospective Tenant's obligations
under any lease covering any space occupied by the Prospective Tenant in any
other building (hereinafter referred to as "Previous Space"), or (b) shall be
required, directly or indirectly, to indemnify the Prospective Tenant as to any
obligations respecting its Previous Space; then to the extent payment is made by
Landlord under either clause (a) or (b) above, that payment shall be treated as
an abatement of rent and the provisions of Paragraph 4 of Exhibit "C" shall
apply thereto. To the extent the Previous Space becomes available to the
Landlord for assigning or
3
<PAGE>
subletting, the Previous Space shall thereupon be deemed to constitute Available
Space, the assigning or subleasing of which shall earn a commission for Broker
hereunder if the other conditions of this Agreement are satisfied.
10. No Commission If Lease Not Executed. If, for any reason whatsoever,
including but not limited to, acts, omissions, negligence or the wilful default
of the Landlord, its agents, including Agent, employees, contractors or
representatives, the lease shall not be entered into between the Landlord and
any Prospective Tenant on or before the expiration of this Agreement, then
except as provided in Paragraphs 12 and 16 below, no commission, brokerage or
other fee of any sort shall be deemed to be due or earned by Broker or any other
Broker, nor shall such commission, brokerage or other fee be paid by Agent. It
is expressly agreed that Agent on behalf of Landlord shall have the unqualified
right, in its sole and absolute discretion, to refuse to enter into any lease
for any reason whatsoever without incurring any obligation to Broker or any
other Broker for the payment of commission or otherwise.
11. No Commission on Sales of Building Complex. No commissions shall be
paid to Broker by Agent or by Agent on behalf of Landlord in the event of the
sale of the Building.
12. Pending Transactions. No later than fifteen (15) days prior to the
scheduled expiration of this Agreement, Broker will submit to Agent a listing
stating the names of Prospective Tenants with whom Broker is then engaged in
meaningful negotiations for space within the Building and specifying the areas
within the Building with respect to which the negotiations relate. If this
Agreement is not extended by mutual agreement of the parties and if a lease is
thereafter entered into with any Prospective Tenant on that list (as it may be
supplemented as of the actual expiration of this Agreement) for the space
indicated or for any space substituted, entirety or in part, for it during the
course of negotiations, Broker shall be entitled to a commission in connection
with that lease as contemplated in this Agreement, provided the lease is signed
by all parties within ninety (90) days following the expiration of this
Agreement or, if a lease is not signed by all parties within 90 days, Broker
shall be entitled to the commission if substantive negotiations are ongoing with
the Prospective Tenant at the end of such 90 day period and Agent extends this
period in writing and such extension results in an executed lease.
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their permitted respective successors in
interest. Notwithstanding the foregoing, Broker shall not assign this Agreement
or any interest hereunder except to an entity formed for purposes of conducting
Broker's business. Broker acknowledges that Landlord is not a party to this
agreement and is not obligated to Broker for the payment of commissions
hereunder and agrees to look only to the assets of Agent, including but not
limited to, any commissions received by Agent from Landlord, for payment of the
commissions due or which may become due hereunder. No agreement hereafter made
shall be effective to change, modify or discharge this Agreement or constitute a
waiver of any of the provisions hereof, in whole or in part, unless it is in
writing and is signed by the party against whom enforcement of the change,
modification, discharge or waiver is sought.
4
<PAGE>
14. Cost of Suit, Attorney's Fees. If Landlord, Agent or Broker shall bring
any action against either one or both of the other parties hereto arising out of
or under this Agreement, the prevailing party shall be entitled to recover its
costs of suit including, without limitation, attorney's fees in such suit.
15. Independent Contractor. Neither this Agreement nor the relationship
between Agent and Broker shall constitute or create a partnership or joint
venture. Broker is not an employee of Agent and cannot bind Agent by its
actions. Broker is, and shall remain, an independent contractor.
16. Termination. This Agreement cannot be cancelled for the first ninety
(90) days of its term except for cause. Thereafter, this Agreement may be
terminated by either party given thirty (30) days' written notice thereof to the
other, as specified in Paragraph 18 hereof. In the event that this Agreement is
terminated by reason of Agent or Broker electing to give notice of termination,
then, within thirty (30) days of said termination, Broker will submit to Agent a
comparable listing as provided for in Paragraph 12, and the Prospective Tenants
designated therein shall be treated as pending transactions pursuant to
Paragraph 12 hereof, and Broker shall be entitled to receive commissions from
Agent with respect to said Prospective Tenants as provided herein so long as all
provisions are met.
17. Broker's Rights and Obligations on Expiration or Termination. After the
expiration or earlier termination of this Agreement, and in connection with any
canvassing or other business done by Broker with any then existing Tenant(s) of
the Building, including but not limited to, such canvassing or business which
may or does result in any such existing Tenant(s) relocating to another
Building, Broker agrees to comply with all applicable legal and professional
requirements arising out of its past relationship with Agent under this
Agreement and to otherwise act responsibly and professionally in any such
dealings with existing Tenants.
18. Notice. Notice and deliveries to Landlord, Agent and Broker shall be
addressed as follows:
To Landlord: High Cash Partners, L.P.
c/o Pembroke Supervisory Management LLC
70 East 55th Street, 7th Floor
New York, New York 10003
Attn: Lawrence J. Cohen
To Agent: Pembroke Supervisory Management LLC
70 East 55th Street, 7th Floor
New York, New York 10003
Attn: Lawrence J. Cohen
5
<PAGE>
To Broker: Colliers International
5310 Kietzke Lane, Suite 105
Reno, Nevada 89511
Attention: Marcus Clark
19. Broker's Rights and Duties Concerning Existing Tenants on Expiration or
Termination. Provided this Agreement remains in effect for at least one (1)
year, at such time as the Agreement thereafter expires or is otherwise
terminated, broker agrees that it will not actively solicit then Existing
Tenants of the Building for possible relocation to another building for a period
of one year following the expiration or other termination of the Agreement;
provided, however, that this one year restriction on Broker shall not apply to
(i) any situation where an Existing Tenant approaches Building, or (ii) any
Existing Tenants with whom Broker (including any offices of Broker or its
affiliates throughout the nation) has an existing relationship concerning
representation of such existing Tenants.
20. Hazards. Agent agrees to provide Broker with any information Agent may
have regarding Hazards in the Property. Hazards shall include, but are not
limited to, asbestos, PCB transformers, other toxic or hazardous substances,
underground storage tanks, and health and safety hazards. Broker shall notify
Agent if Broker becomes aware of any Hazards in, on or about the Property. Agent
understands that Broker is not a licensed or qualified expert on Hazards.
Therefore, Broker shall not be responsible for discovering Hazards in, on or
about the Property, causing the Property to comply with laws regarding Hazards,
or supervise technical work on Hazards. Agent understands that the laws
regarding the disclosure or Hazards to tenants, buyers and other persons may be
ambiguous and subject to conflicting interpretations. Therefore, if Hazards are
discovered in, on or about the Property and Broker in good faith disagrees with
Agent's instructions regarding such disclosures, then broker may terminate this
Agreement upon sixty (60) days written notice to Agent.
All notices required or desired to be given pursuant to this Agreement
shall be personally delivered or deposited in the United States mail, certified
mail, return receipt requested, with postage prepaid, and shall be deemed to be
given on the date delivered or forty-eight (48) hours after deposit in the
United States mail, whichever is earlier.
6
<PAGE>
IN WITNESS WHEREOF, the Parties to this Agreement acknowledge their
acceptance of its terms and conditions by signing in the space provided below.
PEMBROKE SUPERVISORY MANAGEMENT LLC
By: Pembroke Companies, Inc., member
Dated: By:
----------------------------------------
Title: President
COLLIERS INTERNATIONAL
Dated: September 9, 1999 By: /s/
----------------------------------------
Title: Vice President
7
<PAGE>
EXHIBIT "A"
-----------
COMPETITIVE PROPERTIES
----------------------
1) Smithridge Center
500 Smithridge Drive
Reno, Nevada
2) Old Town Mall
4001 South Virginia Street
Reno, Nevada
3) Southwest Pavilion
8201 South Virginia Street
Reno, Nevada
<PAGE>
EXHIBIT "B"
-----------
STANDARD FORM LEASE
-------------------
TRANSMITTED UNDER SEPARATE COVER
--------------------------------
<PAGE>
EXHIBIT "C"
-----------
COMMISSION SCHEDULE
-------------------
[PLEASE REVIEW AND CONFIRM]
---------------------------
1. Rate of Commission. Commissions earned hereunder shall be computed only upon
the Base Rent (as defined in Agent's standard form lease, Exhibit "B") with
respect to which the Prospective Tenant is unconditionally obligated as of the
execution of the lease (irrespective of any commencement date which may be set
forth in the lease), calculated as follows:
A. For Available Space and For Existing Tenants as to Expansion Space:
Office Lease: (i) 6% of the rent payable during the first five (5)
years of the term; plus (b) 3% of the rent payable during the sixth (6th) year
through the tenth (10th) year of the term; plus (c) one and one-half (1.5%) of
the rent payable during the eleventh (11th) through twentieth (20th) years of
the term;
Retail Lease: (iii) 6% of the rent payable during the first five (5)
years of the term; plus (b) 3% of the rent payable during the sixth (6th) year
through the tenth (10) year of the term; plus (c) one and one-half (1.5%) of the
rent payable during the eleventh (11th) through twentieth (20th) years of the
term.
B. For Existing Tenants as to Lease Renewals Not Pursuant to an Option:
Office Lease: (i) 3% of the rent payable during the first ten (10)
years of the term.
Retail Space: (ii) 3% of the rent payable during the first ten (10)
years of the term.
The commissions for both office and Retail shall be paid one-half upon
full lease execution, and one-half upon either occupancy by tenant or the
commencement of rental payment by tenant, whichever is earlier.
2. Exclusions. In computing the rent upon which the leasing commission is based,
the following shall be excluded:
(a) Increases in rent pursuant to any initially indeterminate rent
escalation provision in the lease whereby the Prospective Tenant is obligated to
pay increased rent, whether consisting of a share of the Landlord's increases in
taxes, costs or expenses, increases based upon the Consumer Price Index, or
otherwise;
(b) Rent upon any portion of the premises, possession of which is
retained by Landlord, as subtenant of the Prospective Tenant or otherwise;
<PAGE>
(c) Any rent based upon a percentage of income, gross receipts or other
such data;
(d) Security or other deposits;
(e) Any other sums paid or to be paid by the Prospective Tenant
pursuant to the lease and deemed to be "additional rent" thereunder, as
contemplated in Agent's standard form of lease, Exhibit "B."
3. Cancellation Clauses. Where the Tenant, or the Landlord and the Tenant, have
the right to cancel the lease at a time subsequent to the commencement of the
term but prior to the expiration date set forth in the lease, Broker shall
initially be paid a commission based on the aggregate rental for the
uncancellable portion of the term. Broker shall be paid the balance of the
commission based on the aggregate rental for the remaining portion of the lease
term so long as the cancellation option is not exercised. If the cancellation is
by mutual agreement not pursuant to a provision contained in the lease, or if
the right of cancellation is contingent on the Landlord's acts or failure to act
or otherwise within the Landlord's control, Broker shall be paid a commission
for the entire lease term. A lease shall not be deemed cancelled within the
meaning of this paragraph unless the Tenant vacates the premises. If the Tenant
remains under a new arrangement, then Broker shall be entitled to a renewal
commission for a period greater than the term of the original letting provided
Broker participates in the new negotiations.
<PAGE>
EXHIBIT "D"
-----------
PENDING LEASE NEGOTIATIONS
--------------------------
NOT APPLICABLE
--------------
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,309,497
<SECURITIES> 0
<RECEIVABLES> 199,830
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,509,327
<PP&E> 19,600,065
<DEPRECIATION> 4,485,740
<TOTAL-ASSETS> 16,623,652
<CURRENT-LIABILITIES> 147,963
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (4,848,975)
<TOTAL-LIABILITY-AND-EQUITY> 16,623,652
<SALES> 1,811,943
<TOTAL-REVENUES> 1,902,591
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,008,809
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,707,385
<INCOME-PRETAX> (813,603)
<INCOME-TAX> 0
<INCOME-CONTINUING> (813,603)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (813,603)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
