HomeMy WebLinkAboutContract f
CAG-99-124
MANAGEMENT 1 LEASING AGREEMENT
200 Mill Avenue South
Renton, Washington 98055
Between
City of Renton
Martin Smith Inc ("Manager")
Date: September 1, 1999
ti
•
0
SUMMARY OF
GENERAL TERMS AND FINANCIAL ISSUES
200 Mill Avenue South
PROPERTY: Pagel 200 Mill Avenue South
Renton, WA 98055
OWNER: Pagel City of Renton
MANAGER: Pagel Martin Smith Inc
TERM: Pagel Commencing September 1, 1999,
continuing month-to-month thereafter
BUDGET: Page 2
REPORTS TO OWNER: Page 2
MORTGAGE PAYMENTS: Page 4 By Owner.
R.E. TAXES: Page 4 Owner to select method.
INSURANCE: Page 5 Owner to obtain and provide.
MANAGEMENT FEE: Page 9 $1,000 per month or 4% of gross
monthly collections, whichever is greater
IMPROVEMENT FEES: Exhibit B 5%on projects over$5,000
LEASING FEES: Exhibit C See schedule of leasing fees paid
following either the initial lease-up of the
property, or at Owner's discretion
REIMBURSABLE&
Building Maint. Personnel: Exhibit D
Reimbursable Expenses: Page 10
•
TABLE OF CONTENTS
Page
RECITAL ..........................................................................................................................................1
1. Appointment as Manager; Non-Exclusive Agency.......................................................................1
2. Term.................................................................................................................................................1
2.1 Term..............................................................................................................................1
2.2 Continuing Obligations Upon Termination ....................................................................1
3. Budgets and Accounting................................................................................................................2
3.1 Preparation of Budget...................................................................................................2
3.2 Accounting....................................................................................................................2
3.3 Books and Records.......................................................................................................2
3.4 Reports to Owner..........................................................................................................2
3.5 Financial Information.....................................................................................................2
3.6 Method of Accounting...................................................................................................3
4. Leasing ............................................................................................................................................3
5. Management of Project...................................................................................................................3
5.1 Duties and Responsibilities...........................................................................................3
5.2 Mortgage Payments......................................................................................................4
5.3 Taxes Responsibility.....................................................................................................4
5.4 Insurance Responsibility...............................................................................................5
5.5 Limitation of Authority ...................................................................................................5
6. Methods of Operation.....................................................................................................................5
6.1 Contracts.......................................................................................................................5
6.2 Compliance with Laws..................................................................................................5
6.3 Employees....................................................................................................................6
6.4 Legal Counsel...............................................................................................................6
7. Financial Matters.............................................................................................................................6
7.1 Bank Accounts..............................................................................................................6
7.2 Audits............................................................................................................................7
7.3 Payments of Expenses.................................................................................................7
i
8. Indemnification and Insurance......................................................................................................7
8.1 Indemnification by Owner.............................................................................................7
8.2 Insurance......................................................................................................................8
8.3 Manager's Responsibilities ...........................................................................................8
8.4 Waiver of Subrogation ..................................................................................................8
8.5 Employee Insurance.....................................................................................................9
8.6 Security Protection; Exculpation ....................................................................................9
9. Compensation of Manager.............................................................................................................9
9.1 Management Fee..........................................................................................................9
9.2 Additional Compensation..............................................................................................9
9.3 Employee Salaries......................................................................................................10
9.4 Proration of Employee Salaries...................................................................................10
9.5 Reimbursable Expenses.............................................................................................10
9.6 Method of Payment.....................................................................................................10
10. General Provisions.......................................................................................................................11
10.1 Independent Contractor............................................................................................11
10.2 Notices......................................................................................................................11
10.3 Attorney's Fees.........................................................................................................11
10.4 Assignments .............................................................................................................11
10.5 Amendments........... .................................................................................................11
10.6 Entire Agreement......................................................................................................11
10.7 Governing Law..........................................................................................................11
10.8 Jurisdiction and Venue..............................................................................................11
10.9 Cooperation and Assistance.....................................................................................11
10.10 Waiver......................................................................................................................11
10.11 Additional Remedies................................................................................................12
10.12 Severability..............................................................................................................12
10.13 Captions...................................................................................................................12
10.14 Time of Essence......................................................................................................12
10.15 Counterparts............................................................................................................13
Exhibit"A" - Description of Project.............................................................................................14
Exhibit"B" - Fee Schedule for Supervision of Tenant Improvements & Building Capital
Projects..........................................................................................................................................15
Exhibit"C" -Schedule of Brokerage Commissions to be Paid to Manager............................16
Exhibit"D" -Sample Monthly Building Maintenance Person(s) Invoice..................................17
A9-124
MANAGEMENT I LEASING AGREEMENT
THIS AGREEMENT (the"Agreement") is dated for reference purposes as of September 1, 1999,
and is entered into by and between City of Renton ("Owner"), and Martin Smith Inc, a Washington
corporation ("Manager"), with reference to the following:
A. Owner owns that certain project more particularly described on Exhibit"A" of this Agreement
and hereinafter referred to as the"Project;" and
B. Owner desires to engage Manager as its exclusive agent to lease, manage and operate the
Project, and Manager desires to accept such engagement upon the terms set forth herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises and
covenants contained herein, Owner and Manager agree as follows:
1. Appointment as Manager; Non-exclusive Agency. Owner hereby appoints Manager as the
sole and exclusive manager of the Project and Manager hereby accepts such appointment, upon the
terms, covenants and conditions set forth herein. Owner hereby also appoints Manager as the non-
exclusive leasing agent for the Project and Manager hereby accepts such appointment, upon the terms,
covenants and conditions set forth herein.
2. Term.
2.1 Term. The term of this Agreement shall commence on September 1, 1999, and shall
continue from month-to-month thereafter cancelable by either party on not less than thirty(30) days' written
notice, which notice may be given at any time.
2.2 Continuing Obligations Upon Termination. Upon the termination of this Agreement by
any means:
(a) Owner shall remain bound by all contracts entered into by Manager in the
name of Owner within the limitations contained in this Agreement and shall remain obligated to
Manager for all management fees earned by Manager through the date of termination and for all
reimbursements due to Manager pursuant to this Agreement.
(b) Manager shall remain obligated:
(i) To render to Owner a final accounting of income and expenses of the
Project as provided in this Agreement.
(ii) To deliver to Owner all income and all security deposits from the
Project in Manager's possession after reimbursement of all expenses and payment of all
management fees which Manager is entitled to receive.
-1-
(iii) To deliver to Owner all keys, records, contracts, leases, receipts,
unpaid bills and other documents relative to the Project and in Manager's possession at the date
of termination.
(iv) To do all things necessary or appropriate to cause an orderly
transition of the management of the Project without detriment to the rights of Owner or to the
continued management of the Project.
3. Budgets and Accounting.
3.1 Preparation of Budget. Upon Owner's request, Manager shall prepare and submit to
Owner a proposed budget for the promotion, operation, repair and maintenance of the Project on or about
October 30, 1999. Owner will promptly consider such budget and will consult with Manager in order to
agree upon an approved budget(the"Approved Budget"). Unless an emergency exists, Manager will not
exceed the approved budget without prior written consent of Owner.
3.2 Accounting. Manager shall use diligence and employ reasonable efforts so that the
actual costs of maintaining and operating the Project shall not exceed the Approved Budget, if any. During
the fiscal year Manager shall inform Owner of major increases in costs and expenses that were not
reflected in the Approved Budget, if any.
3.3 Books and Records. Manager shall maintain adequate books and records for the
Project with sufficient supporting documentation to ensure that all entries in the books and records are
accurate and complete. Such books and records shall be maintained by Manager at its address stated
herein or at such other location as may be mutually agreed upon in writing by Owner and Manager.
Manager shall use its best efforts to exercise such control over accounting and financial transactions as is
reasonably required to protect Owner's assets from theft or fraudulent activity on the part of Manager's
associates or employees, provided that Manager shall not be responsible or in any way liable for the
protection of Owner's assets from theft or fraudulent activity on the part of Owner, or its associates, agents
and employees.
3.4 Reports to Owner. Manager shall, by the twenty-fifth (25th) day of each month,
furnish to Owner an accounting of receipts and disbursements for the immediately preceding month. Such
accounting shall show collections, delinquencies, uncollectible items, vacancies and other matters
pertaining to the management, operation and maintenance of the Project during the month. The
accounting shall also include a comparison of monthly and year-to-date actual income and expenses with
the Approved Budget, if any, for the Project. In addition, if such funds are not in the Owner's account,
upon Owner's request Manager shall either remit to Owner all unexpended funds, after deducting the
management fees and reimbursements due to Manager and a reserve for contingencies in the amount set
forth in the Approved Budget, if any, or otherwise agreed to from time to time by Owner and Manager,
along with such accounting, or retain such funds in Owner's trust account.
3.5 Financial Information. Manager shall maintain, and supply to Owner upon request,
copies of:
-2-
(a) All bank statements, bank deposit slips and bank reconciliations;
(b) Detailed cash receipts and disbursement records;
(c) Paid invoices; and
(d) Summaries of adjusting journal entries.
3.6 Method of Accounting. All financial statements and reports reasonably required by
Owner will be prepared on a cash basis in accordance with generally accepted accounting principles.
4. Leasing. Manager's leasing function includes the following:
(a) Manager shall use good faith efforts to renew leases of space in the
Project; to attend to the exercise by tenants or occupants of space in the Project of options to
expand, and to lease vacant space in the Project.
(b) Owner shall refer all inquiries concerning the rental of space in the Project to
Manager. All negotiations with respect to the renewal of leases of existing tenants and with
respect to leases with prospective tenants shall be conducted by Manager. All leases shall be
prepared by Manager in the name of Owner and at the expense of Owner and shall be in
accordance with such directions as Owner shall give to Manager from time to time.
Manager shall, at Owner's expense and with its reasonable approval, prepare all advertising and
promotional materials for the Project, including without limitation, exterior signage, broker flyers and
periodic mailers, which materials shall comply with all applicable laws, ordinances and regulations and
shall be subject to the prior reasonable approval of Owner.
5. Management of Project.
5.1 Duties and Responsibilities. Manager shall manage, operate and maintain the
Project in accordance with the general standards set forth in this Section 5. Without limiting the generality
of the foregoing, Manager's functions hereunder shall include the following:
(a) Manager shall use diligent efforts to collect all rents and other charges
which may become due at any time from any tenant or from others for services provided in
connection with or for the use of the Project or any portion thereof. All funds received by Manager
for or on behalf of Owner(less any sums properly deducted by Manager pursuant to any of the
provisions of this Agreement) shall be deposited in a bank selected by Owner and Manager in a
special account maintained by Manager for the deposit of funds of Owner.
(b) Manager shall, in the name of and at the expense of Owner, make or cause to
be made such ordinary repairs and alterations to the interiors of the improvements on the Project
and perform such other management functions as are customarily performed by property
managers of like premises, subject to and within the limitations of the Approved Budget, if any, for
-3-
the Project, provided, however, that Manager shall not expend more than Five Thousand Dollars
($5,000.00)for any one item of repair or alteration without Owner's prior written approval, except
emergency repairs if, in the reasonable opinion of Manager, such repairs are necessary to protect
the Project from further imminent damage or to maintain services to tenants as called for in their
leases. The authority provided to Manager in this Section shall not extend to expenditures of the
type described in Section 5.1(c) below or to expenses to refurbish, rehabilitate or remodel areas
covered by new leases. The latter expenditures are subject to the prior reasonable approval of
Owner at the time of execution of new leases in accordance with the provisions of this Agreement.
Manager shall promptly inform Owner of major increases in repair and maintenance costs not
reflected in the Approved Budget, if any.
(c) Manager shall, in the name of and at the expense of Owner, make or cause to
be made all improvements, fixturization, remodeling and refurbishing of tenant premises as
approved by Owner in connection with leases. Manager shall make recommendations, select
contractors, follow bid procedures and shall supervise all such work to obtain compliance with
contract requirements and applicable law. Manager shall have the right to take any action to
ensure that any tenant improvement work required under any approved lease will be constructed
in accordance with the terms and provisions of such lease and within reasonable time limits set
forth in such lease.
(d) Manager shall, in the name of and at the expense of Owner, contract for those
utilities and other building operation and maintenance services that Manager shall deem
advisable, provided, however, that no service contract shall be for a term not cancelable upon
thirty (30) days advance notice without the prior written approval of Owner and the cost of all such
services shall be included in the Approved Budget, if any, or otherwise approved in writing in
advance by Owner. Manager shall, at Owner's expense, purchase and keep the Project furnished
with all necessary supplies. All expenses shall be charged to Owner at net cost and Owner shall
be credited with all rebates, refunds, allowances and discounts allowed to Manager. Upon request
of Owner, all service contracts shall be subject to Owner's prior reasonable approval and to the
satisfaction of such conditions as Owner may reasonably impose.
5.2 Mortgage Payments. If requested by Owner and at Owner's sole cost and expense,
Manager shall obtain, verify and pay from Project income all bills for payments due under mortgages with
respect to the Project and Owner's personal property located therein. In such event, all such expenses
shall be included in the Approved Budget, if any, for the Project.
5.3 Taxes Responsibility. (Owner shall elect one of the following procedures by initialing
the desired procedure:
(a) Owner shall pay when due all real property and other taxes levied
assessed against the Property.
(b) Manager shall pay all real property and other taxes levied and assessed
against the Property subject to the conditions that(i) Manager shall notify Owner not less than
fifteen (15)days prior to the date on which each installment of such taxes becomes delinquent of
-4-
0
the full amount required to pay such installment, and (ii) Owner shall then promptly make available
to Manager the funds necessary to pay such installment.
(c) Manager shall withhold from gross revenues an amount equal to the
estimated annual real property and other taxes levied or assessed against the Property and shall
pay such taxes from this reserve prior to delinquency. If gross revenues are insufficient to allow
creation of this reserve or if this reserve is insufficient to pay such taxes, then Manager shall so
notify Owner and Owner shall then promptly make available to Manager the funds necessary to
pay such taxes.
5.4 Insurance Responsibilities. Owner shall obtain and maintain insurance with respect to
the Project with such coverages, from such companies and in such amounts as Owner may determine in
its sole discretion. Manager shall cooperate with Owner's insurance carrier in the processing of claims and
the defense and settlement of lawsuits with respect to the Project.
5.5 Limitation of Authority. Notwithstanding any provision in this Agreement to the
contrary, Manager shall not without the prior approval of Owner:
(a) Convey or otherwise transfer or pledge or encumber the Project or any
other property or asset of Owner;
(b) Institute or defend lawsuits or other legal proceedings on behalf of Owner;
(c) Pledge the credit of Owner(except for purchases made in the ordinary
course of operating the Project or as otherwise contemplated pursuant to this Agreement; or
(d) Borrow money or execute any promissory note or other obligation or deed
of trust, security agreement, guaranty or other encumbrance in the name of or on behalf of Owner.
6. Methods of Operation.
6.1 Contracts. All service contracts, all contracts for capital improvements and all
contracts for the improvement, refurbishing or remodeling of tenant spaces which (a) cover expenditures
included within the Approved Budget, if any, expenditures required by any approved lease or expenditures
which are otherwise approved in advance by Owner and (b)which meet the criteria set forth hereunder for
such contracts or are approved in advance by Owner or otherwise meet criteria established by Owner for
such contracts, shall be executed by Manager in the name of, and as agent for, Owner. Upon any
termination of this Agreement, Manager shall assign all contracts executed by Manager to Owner. Owner
will provide Manager with any additional documentation reasonably necessary to establish Manager's
authority to act as required hereunder.
6.2 Compliance with Laws. Subject to the other provisions of this Agreement, at Owner's
expense, Manager shall use reasonable efforts to cause the Project to comply with federal, state and
municipal laws, ordinances, regulations and orders relative to the leasing, use, operation, repair and
maintenance of the Project and with the rules, regulations or orders of the local Board of Fire Underwriters
-5-
i
or other similar body. Manager shall use reasonable efforts to remedy any violation of any such law,
ordinance, rule, regulation or order which comes to its attention, at Owner's expense. Expenses incurred
in so complying and in correcting any such violation shall be included in the Approved Budget, if any, or
otherwise approved in advance by Owner. At Owner's expense, Manager shall use its reasonable efforts
to comply with all terms and conditions contained in any approved lease, mortgage, deed of trust or other
security instrument affecting the Project and for remedying any breach thereof. Notwithstanding the
foregoing, however, Manager's responsibilities under this Section shall not extend to matters as to which
the expenditure of Owner's funds is required but disapproved by Owner or such funds are not made
available by Owner. Manager shall apply for and obtain and maintain in the name and at the expense of
Owner all licenses and permits required of Owner or Manager in connection with the management and
operation of the Project. Owner agrees to execute and deliver any and all applications and other
documents and to otherwise cooperate to the fullest extent with Manager in applying for, obtaining and
maintaining such licenses and permits.
6.3 Employees. Manager shall have in its employ or under separate contract at all times
a sufficient number of capable employees to enable it to properly, adequately, safely and economically
manage, operate and maintain the Project. All matters pertaining to the employment, supervision,
compensation, promotion and discharge of such employees, as well as union negotiations and compliance
with laws and regulations dealing with employee matters, are the responsibility of Manager, which is in all
respects the employer of such employees. In the event that any expenses, including salaries and any
management office maintained by Manager, are attributable in part to the Project and in part to other
properties managed by Manager, such expenses shall be prorated and apportioned between the
respective properties on a reasonable basis as agreed upon from time to time by Owner and Manager. All
employees of Manager who handle or are responsible for Owner's funds shall, if requested by Owner, be
covered by a fidelity bond. The amount of such bond shall be reasonably determined by Owner and the
premium therefor shall be a cost of the Owner.
6.4 Legal Counsel. Manager shall, at Owner's request and expense, engage counsel and
cause such legal proceedings to be instituted as may be necessary to enforce payment of rent and use
Owner's legal counsel or other legal counsel approved by Owner to institute such actions, and all
compromises shall be subject to the prior approval of Owner. Attorneys'fees and costs so incurred shall
be expenses of the Project.
7. Financial Matters.
7.1 Bank Accounts. Manager shall establish an operating account or accounts for the
Project at such bank(s), under such designation(s) and with such authorized signatures of Manager as
Owner may direct from time to time and all funds collected from the operation of the Project that Manager
receives shall be deposited in the account(s)so established and all expenses of the Project shall be
disbursed from such accounts(s). Manager shall not commingle its own funds or funds of any other
property or Owner with Project funds. If required by Washington law or by Owner, a separate account(s)
for tenant security deposits shall be established in the same manner as provided in the preceding sentence
and shall be maintained as required by Washington law or Owner. Owner will provide whatever signing
authority is necessary for Manager to fulfill its obligations under this Agreement.
-6-
7.2 Audits. Owner reserves the right to audit all books and records maintained by
Manager with respect to the Project. All audits shall be at Owner's cost, shall be conducted during normal
business hours and shall be conducted at Manager's office where such books and records are located.
Any audit may be conducted by Owner's employees or by independent persons engaged by Owner. Any
discrepancies noted in any audit shall be promptly corrected.
7.3 Payments of Expenses. If gross income from the Project is not sufficient to pay bills
and charges incurred, available funds shall be applied to bills and charges of third parties. After
exhausting available funds, Manager shall submit to Owner a statement of remaining unpaid bills and
Owner shall provide sufficient funds to pay the same through a process approved in advance between
Manager and Owner.
8. Indemnification and Insurance.
8.1 Indemnification. Except as limited below, Manager shall indemnify and save harmless
Owner, its officers, employees, subcontractors and agents from all claims, actions, liability and damages of
any nature arising out of any act or omission of Manager, its employees, subcontractors or agents in
connection with this Agreement.
Except as limited below, Manager shall release Owner, its officers, and employees from all
liability for loss or damage arising out of any act or omission of Manager, its employees, subcontractors, or
agents in connection with this Agreement.
If a claim or legal action which is covered by this Agreement is asserted or brought against
Owner, Manager shall pay any and all reasonable legal expenses that Owner shall incur in connection with
such claim or action. The right to choose which attorneys shall represent Owner in any such claim or legal
action shall be at the sole discretion of Owner; however, Manager is liable to pay for such legal expense
only to the extent that they are reasonable.
This indemnification and release shall not apply to the extent any liability for loss or
damage is caused by the sole negligence of Owner. In the event a claim or legal action is covered by
RCW 4.24.115, Manager shall not be obligated to pay Owner the portion of Owner's liability and legal
expenses which corresponds to the degree of negligence attributed to Owner; however, Manager shall be
obligated to pay Owner the portion of Owner's liability and legal expenses which corresponds to the degree
of negligence or liability, if strict liability, attributed to Manager, its employees, subcontractors and agents.
This indemnification and release shall not apply to the extent that any liability, loss, cost,
and/or damage herein covered results from the gross negligence or willful misconduct of Owner, its
officers, or employees.
Manager waives any immunity under industrial insurance, Title 51 RCW, it may have to
claims brought against it by Owner in connection with this Agreement.
Owner and Manager specifically agree that this Agreement does not contemplate or
anticipate that Manager shall recover lost profits or damages for other work that Manager may not perform
-7-
as a result of any breach by Owner of this Agreement or any act or omission of Owner in connection with
this Agreement.
The term "legal expenses" as used in this provision shall include, but not be limited to,
reasonable attorneys'fees, paralegal and legal support staff expenses, cost of arbitration, mediation,
expert witnesses, exhibits, reasonable investigations, and reimbursement for all time, expense, and
overhead of all Owner's personnel or consultants assisting in the defense of legal action or in responding ,
to or investigating a claim or demand.
8.2 Insurance. Manager agrees to carry commercial general liability insurance, property
damage insurance, and contractual liability insurance (specifically insuring the indemnity provisions
contained in Section 8.1 above)for the project in minimum coverage amounts of at least$1,000,000 for
combined bodily injury and property damage. The owner shall be named as additional insured on such
policy.
Manager is authorized to purchase, in the amount of at least$1,000,000, an Owner's, Landlord's and
Tenant's Liability Policy(or like coverage) which shall be primary to both the Owner's and Manager's
general liability coverage. Both the Owner and the Manager shall be named insureds on the policy.
The cost of such policy shall not exceed $2,500 per annum without Owner's prior approval.
8.3 Manager's Responsibilities. Owner's obligations under Sections 8.1(a) and 8.2 are
upon the condition that Manager:
(a) Notifies Owner within ten (10) business days after Manager receives notice of
any such loss, damage or injury.
(b) Takes no action (such as admission of liability)which bars Owner from
obtaining any protection afforded by any policy Owner may hold or which prejudices Owner in its
defense to a claim based on such loss, damage or injury.
(c) Agrees that Owner shall have the exclusive right, at its option, to conduct
the defense of any claim, demand or suit within limits prescribed by the policy or policies of
insurance.
(d) Cooperates with Owner in disposition of claims, including furnishing all
available information to Owner's carrier.
8.4 Waiver of Subrogation. Owner shall include in both its policy of fire and extended
coverage insurance covering the Project and the furniture, fixtures, equipment and personal property
located thereon and in its policy of commercial general liability insurance appropriate clauses pursuant to
which the respective insurance carriers shall waive all rights of subrogation with respect to losses payable
under such policies. Manager shall include in both its policy of fire and extended coverage insurance, if
any, covering its furniture, fixtures, equipment and personal property located at the Project and its policy of
commercial general liability insurance, appropriate clauses pursuant to which the respective insurance
i
-8-
carriers shall waive all rights of subrogation with respect to losses payable under such policies. Owner and
Manager release each other, and their respective directors, officers, employees and agents, from any
claims for damage to the Project and the furniture, fixtures, equipment and personal property located
thereon and for injury to, or death of, any person or persons that are caused by or result from risks insured
against under any insurance policies required to be carried by either Owner or Manager, irrespective of
whether any such insurance policies are in force at the time of any such damage, injury or death and
collectible.
8.5 Employee Insurance. If requested by Owner, Manager shall require that all
contractors and service companies operating in or on the Project maintain such industrial insurance,
worker's compensation, employer's liability and commercial general liability insurance as may be required
by Owner, including any special coverages required by Washington law or Owner in connection with
hazardous operations.
8.6 Security Protection: Exculpation. Owner, in Owner's sole discretion, may elect to
provide security protection for the Project, or any part thereof. Owner shall select any such security service
and determine the level of security protection for the Project. Manager shall not be liable for damage to
personal property or injury to, or death of, persons caused by or resulting from any failure or insufficiency
of such security protection.
9. Compensation of Manager.
9.1 Management Fee. For its services hereunder, Manager shall be paid a monthly
management fee of One Thousand Dollars ($1,000) per calendar month or 4% of gross receipts,
whichever is greater.
The term "gross receipts"for all purposes under this Agreement shall be defined
as: (i) rent, including percentage rent, received from tenants or occupants of space in the Project, (ii)
receipts from tenants or occupants of space in the Project for lease rental escalations, late charges and/or
cancellation fees, (iii) receipts from tenants or occupants of space in the Project for reimbursable operating
expenses, (iv) receipts from concessions granted or services provided at the Project;(v) receipts from any
parking garage or facility at the Project, (vi) other miscellaneous operating receipts, (vii) proceeds from rent
or business interruption insurance, and (viii) receipts from tenants for reimbursable common area
maintenance charges.
The term "gross receipts"for all purposes under this Agreement shall be defined
to exclude: (i) tenants' security deposits until the same are forfeited by the person making such deposits,
(ii) proceeds of casualty insurance covering the Project payable in connection with destruction of the
Project, (iii) any award or payment made by any governmental authority in connection with the exercise of
any right of eminent domain, and (iv) leasehold taxes collected as part of the rent.
9.2 Additional Compensation. In addition to the monthly management fee provided
for in Section 9.1 hereof, Manager shall be entitled to: (a)compensation for the supervision of tenant
improvements based on the schedule as set forth in Exhibit"B (b)compensation for the supervision of
-9-
r
building capital improvements based on such schedule, and (c) brokerage commissions as set forth in
Exhibit"C"with respect to renewal of leases, expansions, or leases of vacant space in the Project.
9.3 Employee Salaries. Manager shall make disbursements and deposits for all
compensation and other amounts payable with respect to persons employed by Manager in the operation
of the Project, or performing special services from time to time at the request of Owner. The amounts so
payable shall include, without limitation, unemployment insurance, social security, industrial insurance,
worker's compensation and other charges imposed by a governmental authority or provided for in a union
agreement. Manager shall maintain complete payroll records. All payroll costs, including without limitation,
those set forth on the sample monthly building maintenance person invoice attached hereto Exhibit"D"or
enumerated herein, are operating expenses to be reimbursed by Owner to Manager.
9.4 Proration of Employee Salaries. Manager shall identify its employees whose salaries
may from time to time be charged pro rata to the Project for direct services rendered to the Project.
Employees whose salaries are eligible to be charged pro rata include, without limitation, engineers,
maintenance personnel or others to be agreed upon by Owner and Manager. Employees whose salaries
may not be charged pro rata include, without limitation, general management personnel, accountants and
auditors. In the event that employees of Manager other than those identified from time to time perform
services for the Project upon request of Owner, an appropriate portion of such employee's compensation
and the expenses related thereto shall be included within the coverage of this Section 9.4.
9.5 Reimbursable Expenses. Manager shall be entitled to all reimbursable expenses,
including without limitation, out-of-pocket expenses incurred by building engineers and maintenance
personnel, telephone and pager costs, copying costs, personal delivery costs, costs of uniforms, mileage
and other similar expenses incident to operation of the Project and with the prior approval of Owner, the
cost of out-of-town travel, incurred by Manager in performing its duties pursuant to this Agreement.
9.6 Method of Payment. Payment of reimbursement of the amounts described in Section
9.1 through 9.5 above shall be as follows:
(a) The management fee and any additional compensation shall be calculated
and paid monthly and such amounts shall be shown in Manager's submission of its monthly
accounting to Owner. Manager shall submit a monthly invoice covering its management fee and
reimbursable expenses to Owner for payment.
(b) Employee expenses and reimbursable expenses pursuant to Sections 9.3, 9.4
and 9.5 shall be reimbursed to Manager at the time incurred by Manager and Manager may
reimburse such expenses from time to time from Project operating funds under its possession or
control. A detailed summary of such reimbursable expenses shall be included on Manager's
monthly accounting to Owner.
(c) In the event there shall not be sufficient Project operating funds on hand to
pay the fees of Manager and reimburse it for its expenses, Owner shall promptly pay to Manager
any such amounts due to Manager.
-10-
10. General Provisions.
10.1 Independent Contractor. It is expressly understood and agreed that Manager will act
as an independent contractor in the performance of this Agreement. No provisions hereunder shall be
intended to create a partnership or a joint venture with respect to the Project or otherwise.
10.2 Notices. All notices, demands and reports provided for in this Agreement shall be in
writing and shall be personally served or sent by first class mail, postage prepaid to the parties at their
respective addresses for notice set forth after their signatures to the Agreement or to such other address
as either may provide to the other by written notice. Valid notices may also be sent via a reputable
overnight delivery service or by telecopy(so long as the original of said telecopy is mailed the next day).
For purposes of this Agreement notices will be deemed to have been "given" upon personal delivery
thereof or forty-eight(48) hours after having been deposited in the United States mail postage prepaid and
properly addressed with respect to notice so mailed or upon receipt with respect to notices sent via
overnight delivery service or telecopy.
10.3 Attorneys' Fees. If any suit or action is instituted in connection with any controversy
arising out of this Agreement, the prevailing party shall be entitled to recover, in addition to costs, damages
or other relief, such sum as the court may adjudge reasonable as attorneys'fees in such suit or action and
on any appeal from any judgment or decree entered therein.
10.4 Assignments. This Agreement and the rights and obligations hereunder shall not be
assignable by either party hereto without the written consent of the other; provided, however, that the
foregoing shall not extend to assignments required by any insurance carrier in any matter relating to
subrogation and Manager shall have the right to assign this Agreement to any entity which it controls, is
controlled by or with which it is under common control.
10.5 Amendments. Except as otherwise provided herein, all amendments to this
Agreement shall be in writing and executed by the party to be charged.
10.6 Entire Agreement. This Agreement and the Exhibits attached hereto and made a
part of hereof, comprise the entire agreement of the parties with respect to the matters contained herein.
10.7 Governinq Law. This Agreement is executed with respect to a Project located in the
State of Washington and shall be governed by and construed in accordance with the laws of the State of
Washington.
10.8 Jurisdiction and Venue. In the event any action is brought to enforce this
Agreement, the parties agree to be subject to exclusive in personam jurisdiction in the Superior Court for
the State of Washington or in the United States District Court for the Western District of Washington and
agree that in any such action venue shall lie exclusively at Seattle, Washington.
10.9 Cooperation and Assistance. Should any claim, demand, action or other legal
proceeding arising out of matters covered by this Agreement be made or instituted by any third party
-11-
C i
against a party to this Agreement, the other party to this Agreement shall furnish such information and
reasonable assistance in defending such proceeding as may be requested by the party against whom such
proceeding is brought.
10.10 Waiver. No consent or waiver, express or implied, by any party to or of any breach
of default by the other party in the performance by such other party of the obligations thereof under this
Agreement shall be deemed or construed to be a consent or waiver to or of any other breach or default in
the performance by such other party under this Agreement. Failure on the part of either party to complain
of any act or failure to act of the other party or to declare the other party in default, irrespective of how long
such failure continues, shall not constitute a waiver by such party of the rights thereof under this
Agreement.
10.11 Additional Remedies. The rights and remedies of the parties under this Agreement
shall not be mutually exclusive; that is, the exercise of one or more of the provisions hereof shall not
preclude the exercise of any of the provisions hereof.
10.12 Severability. If any provision hereof or the application thereof to any party or
circumstances shall to any extent be invalid or unenforceable, the remaining provisions hereof, or the
application of such provision to said party or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby and each other provision of this Agreement shall be valid and
enforceable to the extent permitted by law.
10.13 Captions. The captions appearing at the commencement of the section hereof are
descriptive only and for convenience and reference. Should there be any conflict between any such
captions in the section at the head of which it appears, the section and not such caption shall control and
govern in the construction of this Agreement.
10.14 Time of Essence. Time is of the essence with respect to all of the terms,
provisions, rights and obligations contained in this Agreement.
-12-
10.15 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which shall constitute one and the same instrument.
DATED as of the day and year first above written.
OWNER:
City of Rent
By
Je Tanner, Mdyor
f
ATTEST•
Marily J. etersen, City Clerk
MANAGER:
Ma� nc
By
Its
-13-
L
EXHIBIT"A"
LEGAL DESCRIPTION OF PROPERTY
KING COUNTY TAX ASSESSOR'S ACCOUNT NUMBER: 000720-0050-08
That portion of Henry H. Tobin donation land claim lying north of Canadian & Pacific railroad right
of way and east of plat of Town of Renton; less a portion beginning at the South West corner;
thence easterly along south line to the intersection with Commercial Waterway#2 right of way;
thence northwesterly along said right of way 53.88 feet; thence south 43Q-04'-00"west 34.10 feet;
thence on a curve to the right with a radius of 470 feet- 108.58 feet on an arc; thence south 630-
04'-00"west 191.62 feet; thence south 39.53 feet to point of beginning.
-14-
J '
EXHIBIT "B"
FEE SCHEDULE FOR SUPERVISION OF TENANT IMPROVEMENTS
AND BUILDING CAPITAL IMPROVEMENT PROJECTS
Five percent(5%) of total building capital improvement costs, excluding state sales tax, on projects
over$5,000.00. Manager shall not receive a fee for supervising construction management of any
single cosmetic change or capital improvement costs with a total cost under$5,000 or for any
tenant improvements for leases involving a cost of less than $5.00 per rentable square foot.
-15-
{
•
EXHIBIT "C"
SCHEDULE OF BROKERAGE COMMISSIONS TO BE PAID TO MANAGER
The following commissions will take effect following initial lease-up of the property, or upon Owner's
direction to Martin Smith Real Estate Services to begin leasing activity:
Renewal of existing tenant.
2.5%of gross rentals payable for such space for the first five (5) years of the renewal term and
1.25%of gross rentals for such space for the balance of the renewal term.
Expansions and new leases without representation of an outside brokerage firm.
5% of the gross rentals payable for such space for the first five (5)years of the term and
2.5% of gross rentals for such space for the balance of the term.
Expansions and new leases with representation of an outside brokerage firm.
2.5% of gross rentals payable for such space for the first five (5) years of the renewal term and
1.25%of gross rentals for such space for the balance of the renewal term.
Tenants represented by an outside brokerage firm.
Manager will be compensated as stated above, and in addition, the Tenant's broker will be
compensated as agreed by Owner on a case by case basis.
Owner understands Tenants broker in some cases may be a real estate agent of Martin Smith Inc
and said agent will be compensated as a Tenant broker.
Owner and Manager shall agree in advance on the commission rate Manager will offer to the
outside brokerage community. This commission rate will change from time to time.
-16-
1 6
t } ^ ~ r
EXHIBIT "D"
SAMPLE MONTHLY BUILDING MAINTENANCE PERSON(S) INVOICE
Property Payroll Invoice#: 5319717504
5/31/97
Martin Smith Inc
11091st Ave., Suite 500
Seattle, WA 98101
Property:
Employee Name: Engineer
Pay Period: 5116-5131/97
Pay Type Hours Rate Amount
Salary & Retro. Pay $0.00
Straight Time 3.00 $9.50 28.50
Overtime 0.00 14.25 0.00
Allocated Vacation 0.04 9.50 0.41
Holiday 0.30 9.50 2.85
Holiday Worked 0.00 19.00 0.00
Allocated Sick 0.06 9.50 0.55
�
Total $32.31
Allocated Taxes: FICA 2.44
FUTA 0.04
SUTA 0.81
SDI 1.21
Total 4.50
Allocated Benefits: Medical 7.28
Dental 1.33
Life Q§I
Total 9.28
Uniform Cleaning Allowance 0.94
Engineer Cell Phone 0.00
Misc. Direct Admin. 0.00
Mileage (@ $.30 per mile) 0.00
Direct Total 47.03
State B&O Taxes: 0.98
City Business Tax: Q ZQ
Subtotal 48.21
Administrative Expense: (14% of direct total) 6.58
Sales Tax:
Total Billing This Pay Period. $54.79
Accountant: Bryan Graham
Accounting Use Only:
GIL Code: 17-0500-100-003
Uniform 0.94
Eng.Cell Phone 0.00
Other 53.85
-17-
iL