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EXHIBIT 10.ppp
MANAGEMENT AND LEASING FEE SUBORDINATION AGREEMENT
THIS MANAGEMENT AND LEASING FEE SUBORDINATION AGREEMENT ("Agreement") is
dated as of the 23 day of January, 1997, by and among XXXXXX PLACE ASSOCIATES,
LLC, a Delaware limited liability company ("Xxxxxx"), XXXXXX PLACE ASSOCIATES
NOMINEE CORPORATION, a Delaware corporation, the sole shareholder of which is
Xxxxxx ("Nominee"; Xxxxxx and Nominee are hereinafter referred to individually
and collectively as "Owner"), XXXXXX FUNDING CORPORATION, a Delaware corporation
("Funding"), XXXXXX FINANCING CORPORATION, a Delaware corporation ("Financing"),
THE AETNA CASUALTY AND SURETY COMPANY, a Connecticut corporation ("Aetna"), and
OVERSEAS MANAGEMENT, INC., a Delaware corporation ("Manager").
RECITALS
WHEREAS, Owner is the owner of a leasehold interest in the property and
all improvements thereon encumbered by the "Loan Documents" (as defined below)
(collectively, the "Property"); and
WHEREAS, Xxxxxx Place Associates, an Illinois general partnership ("Xxxxxx
Partnership"), as predecessor-in-interest to Xxxxxx, executed and delivered the
loan documents described in "A" attached hereto (collectively, the "Loan
Documents"). Unless otherwise defined herein, all capitalized terms used in this
Agreement shall have the meaning set forth in Exhibit "A". The loan evidenced
and secured by the Loan Documents being hereinafter referred to as the "Loan";
and Aetna, as holder of the Loan Documents, and any and all subsequent holders
of the Loan Documents shall be referred to herein as the "Holder"; and
WHEREAS, Urban Retail Properties, Co., a Delaware corporation ("URPC"), as
successor in interest to JMB Properties Urban Company, an Illinois general
partnership ("JMB Properties") and Xxxxxx Partnership have terminated that
certain Management Agreement, dated as of September 1, 1983 (the "Prior
Management Agreement"); which such termination was made with the consent of
Aetna and which such termination is effective as of the date hereof; and
WHEREAS, after the termination of the Prior Management Agreement, Xxxxxx
Partnership was merged into Xxxxxx on the date hereof with the consent of Aetna.
WHEREAS, after the merger of Xxxxxx Partnership into Xxxxxx, Overseas
Partners Capital Corp., a Delaware corporation ("Overseas"), purchased 66-2/3%
of the membership interests in Xxxxxx, and Overseas was admitted as the managing
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member of Xxxxxx with the consent of Aetna (the "Purchase Transaction"); and
WHEREAS, immediately after the Purchase Transaction and with the consent
of Aetna, Owner and Manager entered into that certain Management Agreement dated
as of the date hereof, a copy of which is attached hereto as Exhibit "B" (as
renewed, extended, amended or delegated in accordance with the terms hereof, the
"Management Agreement"), to provide for the management of the Property, which
Management Agreement provides for the payment of certain fees to Manager for the
management of the Property; and
WHEREAS, it was a condition to Aetna's consent to the foregoing
transactions that Manager, as an affiliate of Overseas, agree to accept payment
of management fees and leasing commissions under the Management Agreement as set
forth herein, and Owner and Manager agree to the payment and acceptance of
management fees and leasing commissions under the Management Agreement as set
forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Owner, Funding, Financing, Manager and Aetna hereby agree as
follows:
1. Management Fee Deferral and Payment Subordination. No 'Percentage Fee"
(as defined in Schedule 7.1 of the Management Agreement) payable pursuant to
Section 7.1 of the Management Agreement (collectively, the "Management Fees")
nor any leasing commissions payable to Owner, Manager or any affiliate thereof
relating to leases of space in the Property ("Leasing Commissions") shall be
paid to Owner, Manager or any affiliate thereof out of Proceeds (as hereinafter
defined) until Holder has received all amounts due Holder under the Loan
Documents and the rights of Owner, Manager or any affiliate thereof to payment
of such Management Fees or Leasing Commissions shall be subject and subordinate
to Holder's rights to payment under the Loan Documents as provided herein. All
Management Fees and Leasing Commissions shall be deferred and shall be payable
to Manager as provided in Section 10 hereof. In addition, until Holder has
received all amounts due to Holder under the Loan Documents, no costs and
expenses incurred by Manager under the Management Agreement which are
reimbursable by Owner thereunder (including "Reimbursable Costs", as defined in
Schedule 7.1 of the Management Agreement) shall be paid by Owner to Manager out
of the Proceeds unless such payments or reimbursements are in accordance with
the Budget (as such term is defined in the Loan Documents), and Manager's rights
to reimbursement of such costs and expenses shall be subject and subordinate to
Holder's rights to payment under the Loan Documents except to the extent such
payments or reimbursements are in accordance with the Budget.
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Payment of Management Fees and Leasing Commissions and reimbursement of such
costs and expenses from sources other than the Proceeds is not restricted. This
Agreement shall not be deemed to prohibit the hiring by Owner or Manager of
non-affiliated third party leasing agents with regard to leasing the Property,
or the payment of market rate fees or commissions to such leasing agents from
the Proceeds. The term "Proceeds" shall mean and refer to total income,
revenues, rentals, proceeds from sale or refinance, and other consideration
received by or for the account of Owner or any affiliate thereof relating to the
Property (which shall include income from any source, including proceeds of
casualty insurance not used to make repairs to the Property and not applied in
reduction of the outstanding principal balance of the Loan, but which shall
exclude the capital contributions made by the members in Owner).
2. Performance by Manager. Subject to paragraph 11 hereof, until the
earlier of (a) payment of the Loan in full, or (b) six (6) months after Owner
ceases to pay the scheduled payments under the Note (but in no event later than
one hundred and twenty (120) days after maturity of the Loan (whether by
acceleration or otherwise), Manager agrees to continue to perform all of its
obligations under the Management Agreement in accordance with its terms and
subject to all rights (including termination rights) of Manager thereunder,
notwithstanding that the provisions of this Agreement may prohibit or restrict
the payment of any Management Fees or Leasing Commissions thereunder. Subject to
the foregoing, no election by Owner or Manager to terminate the Management
Agreement shall become effective unless and until Owner has obtained Holder's
prior written consent to undertake Manager's property management functions or a
replacement manager has been appointed by Owner with Holder's prior written
consent, which consent may be withheld in Holder's sole and absolute discretion.
3. Trust for Prohibited Payments. Neither Manager nor any affiliate
thereof shall accept or receive any Management Fees or Leasing Commissions, nor
any reimbursement of costs and expenses from Owner if the payment of such
Management Fees or Leasing Commissions, or reimbursements of costs or expenses,
is prohibited by this Agreement. If Manager accepts or receives any payment of
Management Fees or Leasing Commissions, or reimbursements of costs or expenses,
which is prohibited under this Agreement, Manager shall segregate such
Management Fees, Leasing Commissions, or reimbursements of costs and expenses
from all other funds and shall hold such Management Fees, Leasing Commissions,
or reimbursements of costs or expenses in trust for the benefit of Holder and
immediately pay such amounts to Holder at its address indicated by the Loan
Documents.
4. Rights of Holder. Without limiting Holder's rights and remedies at law
or in equity, Holder may enforce this Agreement against Owner, Manager and any
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affiliate thereof, by injunction or action for specific performance. No right or
remedy of Holder in connection with this Agreement shall be prejudiced or
impaired in any way by any act or failure to act by Holder and, without limiting
the foregoing, Holder may, at any time and from time to time, without the
consent of or notice to Manager or any affiliate thereof and without impairing
or releasing the subordinations described herein, do any one or more of the
following: (a) change the manner, place or terms of payment of, or renew or
alter the Loan; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing the Loan; (c) release any person or
entity liable for the Loan; or (d) exercise or refrain from exercising any
rights or remedies against Owner or the Property under the Loan.
5. Representations and Warranties. Owner hereby represents and warrants to
Holder that the Management Agreement is the only agreement entered into by Owner
which provides for the management of all or any part of the Property, other than
the Agreement for Purchase of Consulting and Other Services, dated as of the
date hereof, by and between Manager and URPC (the "Consulting Agreement"), and
contracts for management of the parking facility which is a portion of the
Property with unaffiliated third parties ("Parking Management Agreements"), and
that no fees or charges are payable by Owner relating to the management of the
Property other than as required by the Management Agreement, the Consulting
Agreement or the Parking Management Agreements. Manager hereby represents and
warrants to Holder that the Management Agreement is the only agreement entered
into by Manager (other than the Consulting Agreement and the Parking Agreements)
which provides for the management of all or any part of the Property and that no
fees or charges are due to Manager relating to management of the Property other
than as described in the Management Agreement. Owner and Manager hereby
represent and warrant to Holder M that Manager has received, reviewed and
approved all of the Loan Documents, and 00 that no Management Fees or Leasing
Commissions have been paid to Manager or any affiliate thereof out of Proceeds.
6. Restrictive Covenants. None of Owner, Manager or any affiliate thereof
shall enter into any agreements other than the Management Agreement which
provide for the management of all or any part of the Property other than the
Consulting Agreement and the Parking Management Agreements, without Holder's
prior written consent, which Holder may not unreasonably withhold but Holder may
condition its consent to any such agreement upon the execution by the parties
thereto and the delivery to Holder of an agreement acceptable to Holder that is
substantially in the form of this Agreement. None of Owner, Manager or any
affiliate thereof shall enter into any modifications, amendments or supplements
to the Management Agreement that would have a material adverse effect upon
Holder's rights under the Loan Documents, or that would violate or conflict with
the
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provisions of this Agreement without Holder's prior written consent, which
consent Holder may withhold in its sole and absolute discretion and Holder may
condition its consent to any such modification, amendment, or supplement upon
the reaffirmation by Owner and Manager of this Agreement in form and substance
acceptable to Holder.
7. Events of Default. Default by any or all of Owner, Manager or any
affiliate thereof in the performance of any obligation contained herein or the
violation by any or all of Owner, Manager or any affiliate thereof of any
restriction contained herein shall constitute an Event of Default hereunder.
Notwithstanding the foregoing, provided that no event requiring consent of
Holder under the Loan Documents has occurred without Holder's consent first
having been obtained, a default in an obligation other than either an obligation
to pay money or a covenant which restricts Owner, Manager or any affiliate
thereof from making any payment of money to any person (a "Non Monetary
Default") shall not constitute an Event of Default unless and until the "Notice
Period" (as hereinafter defined) for such Non Monetary Default shall have
expired without the default having been cured. The Notice Period for a Non
Monetary Default shall commence when notice thereof has been delivered to Owner
and Manager, and shall end thirty (30) days later, provided, however, that in
the case of a Non Monetary Default not capable of being cured within thirty (30)
days, the Notice Period shall be extended for as long as necessary to complete
such cure provided that Owner or Manager, as applicable, is proceeding
continuously with due diligence to complete such cure. Notwithstanding said
qualification on the definition of an Event of Default, Owner and Manager shall
not be entitled to notice or an opportunity to cure any Non Monetary Default
which occurs after, and within twelve consecutive months of, Owner's or
Manager's receipt of notices from Holder concerning two prior Non Monetary
Defaults.
8. Accounting. Owner and Manager shall provide Holder on or before each
May 15, August 15, November 15 and February 15 during the term hereof with an
accounting (each, an "Accounting"), in form and substance acceptable to Holder
and including the calculations by which the amount of Management Fees and
Leasing Commissions were determined, setting forth the amount of Management Fees
and the amount of Leasing Commissions which would have been paid to Manager by
Owner but for the terms of this Agreement. Each Accounting shall specify all
Management Fees and all Leasing Commissions earned during the immediately
preceding calendar quarter, the date each such Management Fee or Leasing
Commission would have been paid but for the terms of this Agreement, and the
cumulative amount of Management Fees and Leasing Commissions owing to Manager
since the delivery of the Management Agreement, together with the cumulative six
percent (6.0%) non-compounded return on any such amount
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described in paragraph 1 0 hereof. Each Accounting shall be certified by Owner
and Manager to have been prepared in accordance with the terms of this
Agreement and to be true, accurate and complete in all material respects.
9. Holder's Audit Rights.
(a) Holder may notify Owner within sixty (60) days after receipt of any
Accounting that Holder disputes or questions any computation or item contained
in such Accounting. If Holder so notifies Owner, the parties shall meet in good
faith within twenty (20) days after Holder's notice to Owner to resolve such
disputed items among themselves. If, despite such good faith efforts, the
parties are Unable to resolve the dispute at such meeting or within ten (10)
days thereafter, the items shall be resolved by an independent certified public
accountant who shall be designated by Holder (and reasonably approved by Owner
and Manager) within fifteen (15) days after such ten (10) day period. The
determination of such accountant shall be final, and such accountant shall
endeavor to render a determination within twenty (20) days after appointment.
The fees of such accountant shall be paid by Holder unless such review shall
indicate that the disputed Accounting set forth Management Fees and/or Leasing
Commissions in excess of actual Management Fees and/or Leasing Commissions by
four percent (4%) or more, in which case Owner shall pay all such fees. Any
adjustment in the amount of Management Fees and/or Leasing Commissions shall be
reflected in the Accounting immediately following such disputed Accounting.
(b) Owner and Manager shall keep and maintain at all times full and
accurate books of account and records adequate to correctly reflect all items
required in order to calculate Management Fees and Leasing Commissions. All such
books and records shall be kept at Overseas Management, Inc., 000 Xxxxxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000, or at such office in the
Commonwealth of Massachusetts as Owner may reasonably select, provided Owner
gives Holder prior written notice thereof. Such books and records shall be
available until at least five (5) years after repayment in full of the Loan.
Holder shall have the right to inspect, copy and audit such books of account and
records at Holder's expense, during reasonable business hours, and upon
reasonable notice to Owner whether such books and records are in the possession
of Owner or any agent of Owner, for the purpose of verifying the accuracy of any
Accounting. All statements required under this Agreement shall be in addition to
any other financial or operating statements required by Holder from Owner
pursuant to the Loan Documents.
10. Payment of Management Fees and Leasing Commissions. All Management
Fees and Leasing Commissions, together with a six percent (6%) noncompounded
return thereon (calculated for each unpaid amount of Management
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Fees or Leasing Commissions from the date such Management Fees would have been
paid pursuant to the Management Agreement or the date such leasing commissions
were earned, as applicable, but for the terms of this Agreement), may be paid by
Owner to Manager from Proceeds only after repayment in full of the Loan,
provided, however, that Leasing Commissions considered in calculation of the
Xxxxxx Return (as defined in that certain Equity Payment Agreement dated as of
March 1, 1992, by,and among Xxxxxx Partnership, Aetna, Funding and Financing)
shall not exceed five dollars ($5.00) per leased square foot.
11. Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of Owner, Manager and Holder and their respective
successors, assigns and transferees; provided, however, that notwithstanding
anything to the contrary contained in the Management Agreement or Section 2
hereof, the Management Agreement and Section 2 hereof and all of Owner's and
Manager's rights and interests thereunder may not be assigned without the
Holder's prior written consent other than pursuant to the Consulting
Agreement, and shall automatically terminate upon any judicial or nonjudicial
foreclosure of the Mortgage or the acceptance of a deed in lieu of foreclosure
by the Holder or the appointment of a receiver to manage the Property (except
for rights and obligations relating to acts or events occurring prior to such
termination).
12. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the Commonwealth of Massachusetts.
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13. Notices. All notices hereunder shall be in writing and shall be given
personally or by United States certified or registered mail (return receipt
requested) addressed as follows:
Owner and Funding:
Xxxxxx Place Associates, LLC
c/o Overseas Partners Capital Corp.
000 Xxxxxxxxx Xxxxxx Xxxxx Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Legal Department
with a copy to:
Overseas Partners Capital Corp., Xxxxx Xxxxx Xxxxx
X.X. Xxx XX 0000
8 Xxxxxx Street
Xxxxxxxx XX GX Bermuda
Attention: Xxxxx X. Xxxxxx, President
with a copy to:
JMB Realty Corporation
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Legal Department
Aetna and Financing:
The Aetna Casualty and Surety Company
Xxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
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Manager:
Overseas Management, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Legal Department
with a copy to:
Overseas Partners Capital Corp. Xxxxx Xxxxx Xxxxx
X.X. Xxx XX 0000
8 Xxxxxx Street
Xxxxxxxx XX GX Bermuda
Attention: Xxxxx X. Xxxxxx, President
Notices given in accordance herewith shall be deemed delivered upon personal
delivery or on the date of delivery shown on the return receipt, as applicable.
Any party may change its address for notices by a notice given in accordance
with this Section 13.
14. Termination. This Agreement shall terminate upon the full payment of
the outstanding principal balance of the Loan, all accrued interest thereon and
all other amounts payable under the Loan Documents.
15. Severability. If any of the provisions of this Agreement are held by
a court of competent jurisdiction to be unenforceable as applied to particular
facts, then all of the other provisions of this Agreement (and said provision as
applied to other facts) shall remain in full force and effect.
16. No Waiver. No party shall be deemed to have waived any of its rights
hereunder unless the waiver is express and is contained in a writing signed by
the waiving party.
17. Acknowledgement. Owner and Manager hereby acknowledge that Holder,
Funding and Financing would not consent to the transactions contemplated by the
Recitals without this Agreement and that Holder, Funding and Financing are
relying upon this Agreement in executing and delivering their written consent to
the Purchase Transaction.
18. Limitations on Liability. The obligations and liabilities of Xxxxxx
and the present or future members in Xxxxxx and the present or future
shareholders,
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officers and directors of Nominee hereunder are subject to the exculpatory
provisions and exceptions therefrom contained in Paragraph 43 of the Mortgage.
In the case of any default by Manager, the damages recoverable by Holder against
Manager shall be limited to the aggregate Management Fees paid to Manager after
the date of this Agreement, plus all costs and expenses paid to or accepted by
Manager in violation of Section 3 hereof, respectively, but there shall be no
other limitation on the equitable or legal rights or remedies of Holder.
19. Counterpart Originals. This Agreement may be executed in
counterparts, each of which shall be deemed to constitute the same agreement.
20. Consent of Funding, Financing and Aetna. Funding, as owner of the
Note and Mortgage, and Financing and Aetna, as collateral assignees of the Note
and the Mortgage, execute this Agreement to acknowledge, consent and agree to
the terms of this Agreement.
21. Termination of Prior Subordination Agreement. The parties agree that
the Prior Subordination Agreement shall be superseded and replaced in its
entirety by this Agreement effective as of the date hereof, and that the parties
to such Prior Subordination Agreement shall have no further rights or
obligations thereunder, except for rights and obligations accruing with respect
to the period prior to such termination. Notwithstanding such termination,
Owner's rights under the Equity Payment Agreement to take into account all
amounts deferred by URPC or its predecessors or paid by Owner, XXXXXX
Partnership or its affiliates from sources other than Proceeds to URPC or its
predecessors in connection with the Prior Management Agreement by reason of the
Prior Subordination Agreement into the calculation of the Xxxxxx Return pursuant
to the terms of the Prior Subordination Agreement and the Equity Payment
Agreement shall not be affected by such termination; provided, however, that for
purposes of the Equity Payment Agreement, the amounts taken into account for
purposes of the calculation of the Xxxxxx Return as a result of this Agreement
and the 'Consulting Subordination" (as defined below) shall not be counted twice
if they represent amounts paid to Manager by Xxxxxx under the Management
Agreement and then paid by Manager to URPC under the Consulting Agreement. As
used herein, the "CONSULTING SUBORDINATION" means that certain Consulting
Subordination Agreement, dated as of the date hereof, by and among Xxxxxx,
Nominee, Funding, Financing, Aetna, Manager and URPC.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
Xxxxxx:
XXXXXX PLACE ASSOCIATES, LLC,
a Delaware limited liability company
By: OVERSEAS PARTNERS CAPITAL CORP.,
a Delaware corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name: Xxxxx X. Xxxxxx
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Title: President
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Nominee:
XXXXXX PLACE ASSOCIATES NOMINEE CORPORATION,
a Delaware corporation
By: /s/ Xxxx X. Xxxxxxx
--------------------
Name: Xxxx X. Xxxxxxx
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Title: Vice President
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Funding:
XXXXXX FUNDING CORPORATION,
a Delaware corporation
By:/s/Xxxx X. Xxxxxxx
------------------
Name: Xxxx X. Xxxxxxx
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Title: Vice President
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Financing:
XXXXXX FINANCING CORPORATION,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
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Name:Xxxx Xxxxxxxxx
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Title: President
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Aetna:
THE AETNA CASUALTY AND SURETY COMPANY,
a Connecticut corporation
By: /s/Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Vice President
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Manager:
OVERSEAS MANAGEMENT, INC.,
a Delaware corporation
By: /s/Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: President
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