AMENDED AND RESTATED
MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT ("Agreement") is made
and entered into on March 30, 1998, by and between Philips International
Realty, L.P. (the "Partnership") and Philips International Realty Corp. (the
"Company" and together with the Partnership, the "Owner") and Philips
International Holding Corp. (the "Manager").
WHEREAS, pursuant to the Management Agreement, dated as of December
31, 1997, by and between Manager and Owner (the "Original Agreement"), Manager
agreed to provide certain management services to Owner and the properties of
Owner; and
WHEREAS, Manager and Owner wish to amend and restate the terms and
provisions of the Original Agreement in its entirety, all upon the terms and
provisions, and subject to the conditions, set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein set forth, and for other good and valuable consideration,
Manager and Owner agree as follows:
1. ENGAGEMENT: Owner hereby engages Manager, and Manager
hereby accepts such engagement from Owner, for the term, at the compensation,
and upon all of the other terms and conditions set forth herein as sole and
exclusive manager of its properties , whether now owned or in the future owned
(collectively, the "Properties" and each a "Property").
2. TERM: The initial term of this Agreement ("Initial Term")
shall commence as of December 31, 1997, and shall continue for three (3)
years, provided, however, that the term shall continue for consecutive periods
of one (1) year each unless terminated by any
party to this Agreement within thirty (30) days prior to the expiration of the
Initial Term or any subsequent annual period.
3. MANAGEMENT FEES: During the term hereof, Manager shall
receive, as compensation for the performance of its services required
hereunder ("Management Fees"), a sum equal to 3% of gross rental income
derived from the Properties for the calendar year. Management Fees shall be
payable on the first day of each month, except that Management Fees for the
first month of the Initial Term shall be payable on the last day of the first
calendar month in which this Agreement is executed and shall be based upon
actual receipts obtained during such calendar month with an adjustment being
made if such calendar month is less that thirty (30) days. Actual receipts for
the first calendar month shall be utilized for purposes of fixing monthly
installments for the first quarterly period of the Initial Term, which monthly
installments shall be reconciled quarterly thereafter based upon actual
receipts for the prior quarterly period. In addition, Manager shall be
entitled to reimbursement of all reasonable out-of-pocket expenses. The
monthly installments may be deducted by Manager from receipts.
3A. LEASING COMMISSIONS: Manager shall also be
entitled to customary
market level leasing commissions ("Leasing Commissions") for space that it
leases at the Properties whether or not Manager is the procuring broker, it
being understood that Manager shall be the exclusive agent for the Property.
3B. CONSTRUCTION SUPERVISORY FEE: Manager shall also
be entitled to a construction supervisory fee at the customary market level
with regard to any tenant improvements and construction matters relating to
the Properties; provided, however, that such fee shall not exceed 10% of the
cost of such project.
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4. MANAGEMENT SERVICES AND POWERS: In consideration of the
Management Fees to be paid by Owner hereunder, Manager agrees as follows:
4.1 Under the supervision of the executive officers of
the Owner, Manager shall manage the business and affairs of the Owner and
shall be responsible for the day-to-day operations of the Properties. Manager
shall furnish the services of its organization and exert its reasonable
efforts in operating, maintaining and managing the Properties. Everything done
by Manager in the performance of its obligations hereunder and all expenses
incurred shall be for and on behalf of Owner and for Owner's account, except
as expressly otherwise provided herein, and Owner agrees to reimburse Manager
for all such expenses which are properly incurred hereunder in the performance
of Manager's duties.
4.2 Notwithstanding the authority granted herein,
Manager shall confer fully and freely with Owner in the performance of its
duties, and shall keep Owner informed regarding the Properties. After
consultation with and approval by Owner, Manager shall use its reasonable
efforts to enforce the collection of all rentals and receipts and shall give
receipts for all services or income of any nature from the operation of the
Properties.
4.3 Manager shall, after consultation with and
approval by Owner, oversee the construction of improvements and additions to
the Properties.
4.4 Manager shall market the space at the Properties,
including vacant space, and after consultation and approval by Owner, shall
make all decisions regarding leasing such spaces, including renewing and
terminating leases for such spaces.
4.5 Manager shall enforce all warranties, if any, on
the Properties and/or the manufactured items thereon.
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4.6 Except as may be designated by the Owner in
writing from time to time, Manager shall hire, train, discharge, and supervise
all labor and employees necessary to properly maintain and operate the
Properties. The selection, terms of employment and termination thereof,
including rates of employment, and the supervision, direction, training and
assignment of duties of all such employees shall be the duty and
responsibility of and shall be determined by Manager after consultation with
Owner. Subject to Paragraph 5 herein, all costs and expenses of any persons
who are part-time or full-time employees of Manager shall be paid for solely
by Manager.
4.7 Manager, at the expense of Owner, shall cause the
Properties, and their respective appurtenances and grounds, to be operated,
maintained and repaired according to reasonable standards acceptable to Owner,
including, but not limited to, interior and exterior cleaning, painting,
plumbing, heating and ventilating systems, carpentry, masonry, decorating and
such other normal maintenance and repair work as may be necessary and proper.
Furthermore, for an additional charge as agreed upon between Owner and
Manager, Manager shall supervise any extraordinary services with respect to
the improvement of the Properties which Owner may request from time to time.
4.8 In fulfillment of its duties hereunder, Manager,
at the expense of Owner, shall purchase such supplies, equipment and services
as are necessary for the proper operation, maintenance, and repair of the
Properties, and any discounts or rebates received by Manager shall be returned
to Owner; provided, however, that no contract or agreement for this purpose
shall be made in excess of $25,000 for any one item without the consent of
Owner, except monthly or recurring operating charges or as set forth in the
budget referred to in Section 4.21 hereof. Emergency repairs, involving
manifest danger to life or property, or immediately
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necessary for the preservation and safety of the Properties, or for the safety
of it tenants or occupants, or required to avoid the suspension of any
necessary service of the Properties, may be made by Manager irrespective of
the cost limitation imposed by this subparagraph. Notwithstanding this
authority as to emergency repairs, it is understood and agreed that Manager
will, if at all possible, confer with Owner regarding such expenditure before
proceeding and in any event, promptly notify Owner of such emergency repair.
4.9 Pursuant to the budget approved by Owner, Manager,
on behalf of Owner, shall contract on favorable terms, quality and service
considered, in the name of Owner, for all services and utilities necessary for
the efficient operation and maintenance of the Properties, including, but not
limited to, security, water, electricity, gas, fuel, telephone, vermin
extermination, rubbish hauling, parking lot sweeping and maintenance, roof
maintenance, landscape maintenance and lighting maintenance. However, any such
contract which is non-cancellable having a term longer than 5 years or
requiring payments in excess of $50,000 per annum must be authorized by Owner.
4.10 Manager shall take such action as may be
necessary or desirable to comply promptly with any and all orders or
requirements affecting the Properties placed thereon by any federal, state,
county, or municipal authority having jurisdiction thereover, subject to the
same limitation contained in Subparagraph 4.8 regarding maximum amounts which
may be disbursed without Owner's written consent. Owner shall execute any and
all applications and other documents necessary for Manager to obtain and
maintain in the name of Owner all licenses and permits required of Owner or
Manager in connection with the operation and/or management of the Properties.
Manager, however, so long as Manager is not subject to civil or criminal
penalty or liability, shall not take any action under this Section so long as
Owner is contesting, or
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has, after prompt notification of the facts by Manager, affirmed its intention
to contest any such order or requirement. In such event, the Owner agrees to
indemnify the Manager from any claims, liability and expenses, including
reasonable legal fees and disbursements, resulting from such failure to
comply. Manager shall promptly notify Owner of all such orders and notices or
requirement.
4.11 Manager shall, after consultation with and
approval by Owner and at the expense of Owner, cause to be placed and kept in
force all forms of insurance needed to adequately protect Owner and as
required by law and the underlying mortgages affecting the Properties,
including, where appropriate, but not limited to, worker's compensation
insurance, public liability insurance, auto, flood, plate glass, office
equipment and personal property insurance, boiler insurance, fire and extended
coverage insurance, and burglary and theft insurance. All of the various types
of insurance coverages required for the benefit of Owner shall be placed in
such amounts, with such companies and with such beneficial interests appearing
therein as shall be acceptable to Owner; provided, however, that Manager shall
be named as a named insured in all policies related to public liability
insurance. Proof of all such insurance shall be delivered to Owner in a form
acceptable to Owner. Manager agrees to cooperate with any independent
insurance broker or consultant that Owner may designate or approve and engage
for the purposes of effecting insurance. Manager shall promptly investigate
and make a full written report as to all accidents or claims for damage
relating to the ownership, operation, and maintenance of the Properties,
including any damage or destruction to the Properties, the estimated cost of
repair, and shall cooperate and make any and all reports required by any
insurance company in connection therewith.
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4.12 Manager shall establish and maintain, in a bank
of Owner's selection, a bank account for each Property for the deposit of the
monies collected from the Properties ("Bank Account"). Manager shall have the
authority to draw on the Bank Account consistent with the requirements of
Owner for any payments which Manager must make to discharge any liabilities or
obligations incurred pursuant to this Agreement, all of which payments shall
be subject to the limitations of this Agreement.
4.13 From the funds collected and deposited in the
Bank Account, Manager shall cause to be disbursed regularly and punctually all
expenses authorized in this Agreement.
4.14 Manager shall keep accurate, complete and
separate books and records in accordance with accepted accounting standards
and procedures, showing income and expenditures in connection with the
operation and maintenance of the Properties and Owner's business, such that
any accounts payable, other obligations, cash, accounts receivable, and other
assets pertaining thereto can be identified and the amount determined at all
times. Owner shall have the right at any time, through its representatives, to
inspect any books and records of Manager which in its opinion may verify the
financial or monthly reports, including, but not limited to, all checks,
bills, vouchers, statements, cash receipts, correspondence, leases, subleases
and all other books and records in connection with the management of the
Properties.
4.15 Manager shall prepare and deliver to Owner (i)
such financial reports and statements as Owner may reasonably require and (ii)
data and information reasonably necessary for compliance with the requirements
and requests of the Securities and Exchange Commission. Notwithstanding the
foregoing, Manager may designate third party professionals
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to assist in the preparation of the foregoing items at Owner's cost and
expense, as Manager may deem necessary.
4.16 Manager shall provide Owner with such general
support services as are reasonably requested by Owner, including without
limitation, general accounting, bookkeeping and back office support services.
4.17 Manager shall, to the extent necessary, refer all
matters requiring legal or accounting services to qualified professionals
approved by Owner.
4.18 Manager shall ▇▇▇▇ or cause to be billed all
Tenants and occupants for all rent and other charges and when and if directed
by Owner, serve notices upon tenants to quit and surrender their premises.
4.19 Manager shall maintain and submit to the Owner, a
record of all complaints of tenants and consider, and when reasonable and/or
when directed by Owner attend to such complaints.
4.20 Manager shall cause to be prepared and filed when
necessary forms for unemployment insurance, withholding and social security
taxes and all other tax and other forms relating to employment and the
maintenance and operation of the Properties and Owner's business required by
and federal, state or municipal authority.
4.21 Manager shall prepare and submit annually to
Owner for its approval an operating budget setting forth anticipated income
and expenses for the ensuing fiscal year.
4.22 Manager shall ascertain the assessed valuation
for the Properties and after consultation with and approval by Owner,
institute and prosecute with attorneys approved by Owner, tax certiorari
proceedings.
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4.23 Manager shall use its reasonable efforts to keep
the space rented to desirable tenants on such terms as may be approved by
Owner. The Manager is authorized to enlist the services of outside brokers on
behalf of the Owner in connection with the rental of such space; provided,
however, that any fees due such outside brokers shall be paid by Owner and the
use of such outside brokers shall not affect Manager's right to receive
Leasing Commissions pursuant to Section 3A of this Agreement.
4.24 Manager may generally do such other acts, not
contrary to the intent of the provisions hereof, as it deems necessary or
desirable for the proper performance of its duties hereunder.
5. COSTS AND EXPENSES:
5.1 Owner shall pay for all ordinary and necessary
expenses of the Properties, including, without
limitation, the following:
(i) all direct payroll and benefits for on-site Owner
employees;
(ii) all maintenance repairs to the Properties;
(iii) all utilities;
(iv) all taxes, principal and interest on all loans
secured by the Properties;
(v) insurance, professional services; and
(vi) all independent contractors (e.g., carpenters,
electricians, landscaping etc.) who are employed to
render services at the Properties.
5.2 Subject to Section 10 hereof, Manager shall not be
liable to any third parties for debts, liabilities or obligations of the
Properties or arising in the course of
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business of the Properties or by virtue of its management, supervision,
control or operation of the Properties.
6. RELATIONSHIP OF THE PARTIES: All duties to be performed
by the Manager under this Agreement shall be for and on behalf of Owner, in
the name of Owner and for Owner's account. In taking any action pursuant to
this Agreement, Manager shall be acting as Owner's agent. This Agreement shall
not be construed to create a partnership, joint venture, employer-employee, or
any other relationship by and between Owner and Manager other than that of
principal and agent. Manager shall not bear any portion of the losses, costs
or expenses from the operation of the Properties nor shall it be entitled to
any of the profits therefrom.
7. TERMINATION:
7.1 This Agreement shall immediately terminate, at
Owner's option, upon delivery of written notice thereof to Manager, at any
time after: (a) all or substantially all of the Properties are sold, condemned
or the improvements thereon are destroyed (if destroyed, the termination shall
occur only if Owner decides not to rebuild), (b) Manager is dissolved, becomes
insolvent or is adjudicated bankrupt or makes a general assignment of its
assets for the benefit of its creditors, or (c) Manager commits gross
negligence or willful misconduct in the performance or nonperformance of its
duties hereunder. In addition, Owner shall have the right to terminate this
Agreement at any time upon thirty (30) days written notice to the Manager in
the event that Owner elects to have the services performed by the Manager
pursuant to this Agreement performed by the Owner's own employees (i.e., to
perform such management functions on an "in-house" basis). In the alternative,
Owner may elect to have certain services performed by the
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Manager pursuant to this Agreement performed on an "in-house" basis without
termination of this Agreement but rather with an adjustment of the Management
Fees payable hereunder.
7.2 Upon termination of this Agreement, it is agreed
that: (a) all of the books and records in the possession of Manager pertaining
to the operation of the Properties, together with any other property of the
Owner in Manager's possession, shall be immediately delivered to Owner, and
(b) the agency created hereby shall immediately cease, and Manager shall have
no further right to act for Owner.
8. GRANT OF OPTIONS: In connection with the services to be
provided hereunder, the Company agrees to grant to the Manager or its designee
or designees options issued pursuant to the Company's 1997 Stock Option and
Long-Term Incentive Plan (the "Option Plan") to purchase 54,400 shares of the
Company's Common Stock, par value $.01 per share, at an exercise price of
$50.00 per share, subject to re-pricing in the event of a public offering or
certain private offerings of the Company's Common Stock at the per share
offering price. The options will be granted pursuant to the terms and
conditions of the Option Plan and shall expire ten (10) years from the date of
the grant. The options shall vest and become immediately exercisable over
three (3) years with one-third (1/3) of the shares vesting on each of the
first, second and third anniversaries of the date of the grant. In the event
that any option or a portion thereof expires or terminates for any reason
without having been exercised or vested in full, the underlying shares covered
by such option shall be available for future grants under the Option Plan.
9. ASSIGNMENT: Except as herein provided, neither this
Agreement nor any right pursuant hereto or interest herein shall be assignable
by Manager or Owner.
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10. INDEMNIFICATION: Owner agrees to indemnify, defend and
save Manager harmless from any loss, cost, damages, liability, penalties or
expenses, statutory or otherwise arising from third party claims (including
reasonable attorney fees and costs incurred by Manager in the defense or
prosecution thereof) in connection with or arising from this Agreement or with
the operation and management of the premises, and from liability for injuries
suffered by Owner's officers, directors, agents and employees or any other
persons on or about the premises, excluding Manager's employees or Manager;
provided, however, that the indemnification provisions set forth in this
Section 10 shall not apply to any such loss, cost, damage, liability, penalty
or expense to the extent it is found in a final judgment by a court of
competent jurisdiction to have resulted directly from the gross negligence or
willful misconduct of Manager. Owner agrees that Manager shall not be liable
for any error of judgment or for any mistake of fact or of law, or for
anything which it may do or refrain from doing hereunder, except in cases of
willful misconduct, gross negligence, or willful failure to comply with the
terms of this Agreement. Owner shall cause Manager to be named as a named
insured under all policies of liability insurance maintained by Owner against
claims arising at the Properties.
If any action, proceeding, or investigation is commenced, as
to which Manager proposes to demand such indemnification, it shall notify
Owner with reasonable promptness; provided, however, that any failure by
Manager to notify Owner shall not relieve Owner from its obligations hereunder
except to the extent that the Owner's ability to defend itself against such
action, proceeding, or investigation is actually, materially prejudiced as a
result of such lack of reasonably prompt notification. If Manager shall seek
indemnification under this Section 10, Owner, in the case of a third party
claim brought against Manager, shall be entitled to participate therein and,
to the extent that it wishes, to assume and direct the defense and settlement
thereof
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with counsel reasonably satisfactory to Manager. After notice from Owner to
Manager of its election to assume and direct the defense and settlement of a
third party claim brought against Manager, Owner shall not be liable to
Manager (or any of its affiliates) under this Section 10 for any legal or
other expenses subsequently incurred by Manager in connection with the defense
thereof other than reasonable costs of investigation; except that Manager
shall have the right to employ counsel to represent it if, in its reasonable
judgment, it is advisable for Manager to be represented by separate counsel,
and in that event the fees and expenses of such separate counsel shall be paid
by Manager. Notwithstanding the foregoing provisions of this Section 10, the
Owner shall not, without the prior written consent of Manager, effect any
settlement of any pending or threatened proceeding in respect of which Manager
is, or with reasonable foreseeability, could have been a party and indemnity
could have been sought hereunder by Manager for a third party claim brought
against Manager, unless such settlement includes an unconditional release of
Manager from all liability arising out of such proceeding.
11. NON-SOLICITATION: Manager agrees that during the Initial
Term and for an additional one (1) year commencing immediately thereafter,
Manager shall not, directly or indirectly, solicit any of the non-clerical
employees, agents or independent contractors of Owner, its subsidiaries or its
affiliates to end their relationship with Owner, its subsidiaries or its
affiliates, it being understood that Owner shall have the right to hire
employees of Manager.
12. BINDING: This Agreement shall inure to and be binding on
all the parties, their estates, heirs, personal representatives and assigns.
13. HEADINGS: The article and section headings in no way
define, limit, extend or interpret the scope of this Agreement, or any
particular article or section.
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14. NUMBER: When the context in which the words are used in
this Agreement indicates that such is the intent, word in singular number
shall include the plural and vice-versa.
15. VALIDITY: If any provision of this Agreement is held to
be invalid, the same shall not affect in any respect whatsoever the validity
of the remainder of this Agreement.
16. AMENDMENTS: This Agreement may be amended only by a
written instrument signed by all parties hereto.
17. ENTIRE AGREEMENT: This Agreement contains the entire
agreement between the parties hereto with respect to the matters covered
hereby, and supersedes all prior and contemporaneous oral and written
arrangements and understandings between the parties with respect to such
matters. No other agreement, statement, or promise made by either party hereto
with respect to the matters covered hereby which is not contained herein shall
be binding or valid.
18. GOVERNING LAW: This Agreement shall be construed in
accordance with the laws of the State of New York without giving effect to the
principles of conflicts of laws thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first written above.
MANAGER: Philips International Holding Corp.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
OWNER: Philips International Realty, L.P.
By: Philips International Realty Corp.,
a general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. Petra
Title: President
Philips International Realty Corp.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------
Name: ▇▇▇▇▇ ▇. Petra
Title: President
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