LOANS,
SALE AND SERVICES AGREEMENT
AGREEMENT
dated
this 28th
day of
December, 2006 by and between Newmark & Company Real Estate, Inc. d/b/a
Newmark Knight Frank (“Newmark”),
a New
York corporation, with an office at 125 Park Avenue, New York, New York 10017;
Mack-Cali Realty, L.P, a Delaware limited partnership (“Mack-Cali”),
with
an office at 343 Thornall Street, Edison, NJ 08837, and Newmark
Knight Frank Global Management Services, LLC
(the
“Company”),
a
Delaware limited liability company, with an office located at 10 Sylvan Way,
Parsippany, New Jersey 07054.
W
I T N E S S E T H:
WHEREAS,
Newmark
and Mack-Cali are each desirous of lending money to the Company and providing
resources and services to the Company and/or the Company Subsidiaries and
the
Company is desirous of accepting such resources; and
WHEREAS,
affiliates
of each of Mack-Cali and Newmark are members of the Company.
NOW,
THEREFORE, for
ten
dollars ($10.00) and other good and valuable consideration, receipt of which
is
hereby acknowledged, the parties hereof agree as follows:
(a) Loans
to the Company.
From
time
to time but at no time after the third (3rd) year anniversary of the Effective
Date (the “Maturity
Date”),
Newmark and Mack-Cali each agree, if so requested by the Company, to lend
the
Company money to the extent that the Company determines that it and/or one
or
more of the Company Subsidiaries does not have sufficient funds and/or capital
for the Company and/or the Company Subsidiaries to operate its or their business
or operations, whichever is applicable, or to fund Tax Distributions (each,
a
“Company
Loan”).
The
Company Loans may at any time be borrowed, repaid and reborrowed; provided
that
the aggregate outstanding principal balance of all Company Loans at any one
time
shall not exceed in the aggregate Three Million Dollars ($3,000,000) during
the
three year period prior to the Maturity Date. Each of Newmark and Mack-Cali
agree (i) to fund a Company Loan on a pro-rata basis in an amount not to
exceed
One Million Five Hundred Thousand Dollars ($1,500,000), respectively (each,
a
“Newmark
Loan”
and
a
“Mack-Cali
Loan”)
and
(ii) if so requested by the Company, to pay in cash its respective pro rata
share of a Company Loan within three (3) business days of each of its receipt
of
notice from the Company that the Company is requesting a Company Loan.
Notwithstanding the foregoing, at any time that the Company is a guarantor
of
the BNY Loan pursuant to the BNY Guaranty (as defined in Section (g) hereof),
the aggregate principal balance of all Company Loans shall not exceed Two
Million Four Hundred Thousand Dollars ($2,400,000) and each of Newmark and
Mack-Cali agree to fund the Company Loans as follows: (x) with respect to
a
Newmark Loan, in an amount not to exceed One Million Five Hundred
Thousand
(b) Dollars
($1,500,000) and (y) with respect to a Mack-Cali Loan, in an amount not to
exceed Nine Hundred Thousand Dollars ($900,000). Mack-Cali and/or one of
more of
its Affiliates may fund the Mack-Cali Loan set forth in this Section (a)
to the
Company. Each of the Newmark Loans and the Mack-Cali Loans, respectively,
shall
be evidenced by an unsecured promissory grid note (the “Newmark
Note”
and
the
“Mack-Cali
Note”)
in the
principal amount outstanding under each of the Newmark Loan and Mack-Cali
Loan,
or so much thereof as may be advanced or readvanced pursuant to the terms
of
this Agreement for the purposes set forth in this Section (a), as shown on
the
schedules attached to each of the Newmark Note and Mack-Cali Note,
respectively.
(c) Repayment
of Newmark Loans and Mack-Cali Loans.
All
Newmark Loans and Mack-Cali Loans will accrue interest at the prime rate
in
effect from time to time at Citibank N.A. plus one percent (1%) from the
date of
receipt of good and available funds from either Newmark and/or Mack-Cali,
whichever is applicable, and will be repaid, pari passu from time-to-time
to
each of Newmark and Mack-Cali by way of distributions in accordance with
Section
9.7 of the Operating Agreement of the Company dated of the same date
(“Operating
Agreement”).
All
capitalized terms not defined herein shall have the same meaning given to
such
terms in the Operating Agreement. As set forth in Section (g) hereof, the
Newmark Note may be pledged as security for Newmark’s loan with the Bank of New
York. Any repayments of the Newmark Loans and the Mack-Cali Loans, respectively,
shall be applied first to accrued interest and then to outstanding principal.
Subject to Section 9.7 of the Operating Agreement, each of the outstanding
portion of the Newmark Loans and the Mack-Cali Loans, respectively, shall
be
repaid by the Company on or prior to the Maturity Date. The Newmark Loans
and
Mack-Cali Loans may be prepaid at any time, and from time to time, without
any
penalty or premium. Any and all amounts paid or repaid to Newmark and Mack-Cali
in respect of the Company Loans must be paid or repaid in equal amounts to
each
of Newmark and Mack-Cali.
(d) Expenses;
Newmark Services.
The
Company shall reimburse Newmark for all disbursements made on behalf of the
Company and/or the Company Subsidiaries for actual out-of-pocket costs incurred
by Newmark on behalf of the Company in accordance with the terms of this
Agreement. In addition, Newmark shall provide the following services to the
Company, at the request of the Company, and the Company shall pay Newmark
for
such services, as follows:
(i)
Marketing
& Research:
Such
costs include corporate advertising and other related costs deemed to benefit
Newmark and the Newmark Affiliates. Allocation of such corporate advertising,
web site development, and marketing costs such as special events shall be
based
upon the proportion of Company Net Operating Income to total Newmark Net
Operating Income. Such costs shall be capped at $65,000 during 2007. Allocation
of costs relating to specific projects for the Company shall be on the basis
of
actual time spent by Newmark staff and charged at cost. The Newmark Marketing
Department shall provide the Company with an estimate of the costs
relating
to
specific projects for the Company, and the costs of such services shall be
charged to the Company pursuant to the mutual agreement of the Company and
Newmark.
(ii)
Payroll
Processing:
Payroll
processing shall be charged by Newmark based upon the number of employees
of the
Company and Newmark’s actual cost to provide such processing.
(iii)
Microsoft
Enterprise License Fee:
Newmark
shall provide access to its Microsoft Enterprise software, and charge the
Company the additional cost incurred by Newmark in providing such
access.
(e) General
Standard of Service.
Except
as otherwise agreed by the parties hereto, Newmark agrees that the nature
of the
quality, service level and standard of care applicable to the delivery of
the
Newmark Services hereunder shall be substantially the same as that of the
services which Newmark provides from time to time throughout its businesses.
Subject to the express obligations of Company under this Agreement, the
management and control over the provision of the Newmark Services shall reside
solely with Newmark. If the Company becomes aware of a material deficiency
in
the performance of any Newmark Service provided or procured by Newmark, the
Company may deliver Newmark a written notice of the level of service breach
to
Newmark. Upon receipt of such notice, Newmark shall use its reasonable best
efforts to remedy such breaches as soon as reasonably possible.
(f) Trademark
Issues.The
Company acknowledges the value and good will associated with the trademark
“Newmark Knight Frank.” Newmark represents to the Company that it owns the name
“Newmark” and has a license to use the name “Knight Frank” and “Newmark Knight
Frank”, and that it has the authority to grant to the Company, and does grant to
the Company, a nonexclusive royalty-free license to use (and/or to have any
Company Subsidiary use) the name “Newmark Knight Frank” and the associated good
will in the name “Newmark Knight Frank” in connection with the Company’s and/or
the Company Subsidiaries’ business in accordance with Section 2.3 of the
Operating Agreement. In connection therewith, the Company agrees to defend,
indemnify and hold Newmark and Knight Frank, their officers, owners, affiliates,
agents and employees, harmless from any and all claims arising out of the
unauthorized use by the Company and/or the Company Subsidiaries of the
trademarks “Newmark” or “Newmark Knight Frank”. The license granted to the
Company hereunder to use the trademarks “Newmark” and “Newmark Knight Frank”
shall be restricted to the Company and/or the Company Subsidiaries only and
shall continue until the later of (a) the dissolution of the Company and
the
winding up of its affairs (and all other reasonable incidental purposes in
connection therewith) following a Dissolution Event pursuant to Article XIV
of
the Operating Agreement; (b) the dissociation of NKFFM Limited Liability
Company, or such other Newmark Affiliates holding Company membership interests
from the Company, and (c) the termination of the Operating Agreement, following
which time the license to use the name “Newmark Knight Frank” shall
automatically be terminated. Newmark shall defend, indemnify and hold the
Company
(g) and/or
the Company Subsidiaries, their respective officers, managers, members,
affiliates, agents and employees, harmless from any claims by any third parties
relating to the ownership and proper use by the Company and/or the Company
Subsidiaries, whichever is applicable, of the trademarks “Newmark” or “Newmark
Knight Frank” unless such claim is caused by the unauthorized actions of the
Company and/or the Company Subsidiaries.
(h) Brokerage
Fees.
The
following rules shall apply when brokers associated with Newmark and/or Newmark
Affiliates (other than the Company, as well as one of more of the Company
Subsidiaries) and the Company and/or one or more of the Company Subsidiaries
jointly “pitch” business to a prospective client. The term “Newmark” shall also
apply to Newmark Affiliates (other than the Company, as well as one of more
of
the Company Subsidiaries), where applicable.
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RESULT
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FEE
ALLOCATION
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1. Both
brokerage and facilities management assignments are awarded to
the Company
and a standard fee is paid for each assignment.
|
Newmark
and the Company shall each retain their respective fees.
|
|
2. Both
brokerage and facilities management assignments are awarded and
the
Company gets less than a standard fee.
|
Newmark
and the Company shall each retain their respective fees. The shortfall
between the facilities management fee and a standard fee shall
be paid
“off the top” of the revenues for the transaction.
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|
3. Both
a brokerage and facilities management assignment is awarded, but
no
separate fee is paid for facilities management.
|
The
Company shall receive the standard fee as an allocation paid “off the top”
of the revenues for the transaction.
|
|
4. Brokerage
assignment only is awarded.
|
The
Company shall receive 5% of the brokerage fee, in an amount not
to exceed
$50,000. If significant ongoing work is provided to the client,
a
supplemental standard fee shall be paid to the Company.
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5. The
Company assignment only is awarded.
|
Newmark
shall receive 5% of the facilities management per square foot fee,
in an
amount not to exceed $50,000. If future brokerage business is secured,
the
Company shall receive an allocation of brokerage fees on a sliding
scale
as follows:
5%
of fees in year 1, 4% in year 2, 3% in year 3, 2% in year 2, 1%
in year
1.
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6. No
assignment is awarded.
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Unless
otherwise agreed, Newmark shall not be responsible for any fees
or
expenses incurred by the Company, other than architectural fees
which will
be assumed by Newmark.
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Further,
(i) if either Newmark or the Company has an existing client relationship
and the
other party is awarded an assignment, the referring party shall receive 5%
of
receiving parties’ fee (facilities management per square foot fee or brokerage
fee) in year 1, 4% in year 2, 3% in year 3, 2% in year 2, 1% in year 1; and
(ii)
when fee sharing is involved, payments shall be made when fees are received
from
the client.
The
parties acknowledge that nothing contained herein shall in any way modify
the
terms of the agreement between the Company and Newmark with respect to the
provision of services to Panasonic.
As
a
condition for the Company to receive any portion of the brokerage fees as
set
forth above, the Company shall be duly licensed as a real estate
broker.
(i) Bank
of New York Loan.Newmark
has an agreement with the Bank of New York (“BNY”)
for a
revolving loan (the “BNY
Loan”),
which
was created for the purpose of acquiring and/or creating new affiliated
offices. To
the
extent that Newmark shall draw-down on the BNY Loan in order to fund the
Newmark
Loan, the Newmark Note shall reflect the aggregate principal amount outstanding
under the BNY Loan (the “Company
BNY Loan Amount”)
or so
much thereof as may be advanced or readvanced pursuant to the terms of the
BNY Loan for the purposes set forth in Section (a) hereof, as shown on
Schedule
A
attached
to the Newmark Note. The Company hereby agrees that it will guarantee the
obligations of Newmark to BNY under the BNY Loan for the Company BNY Loan
Amount
pursuant to a guaranty (the “BNY Guaranty”). If any event of default occurs
under the BNY Loan and to the extent that BNY makes a demand for performance
under the BNY Guaranty, Newmark shall indemnify and hold the Company and
its
officers, directors, members, managers, independent contractors and employees
harmless from any liability, loss, cost, obligation or expense, including
reasonable attorneys’ fees and court costs, resulting therefrom; provided,
however,
that
Newmark shall not have any such indemnification obligation with respect to
any
event of default under the BNY Loan if such event of default arises, or is
continuing (in each case, in whole or in part) as a result of a Company default
under the Newmark Note. Mack-Cali shall have no personal obligation with
respect
to the BNY Guaranty, or otherwise to BNY in respect of the BNY Loan or the
BNY
Loan Amount. Newmark agrees that is shall use its best efforts to cause BNY
to
release the Company from the BNY Guaranty.
(j) Insurance.At
the
Company’s option, Newmark shall, at the Company’s cost, procure on behalf of the
Company, commercial general liability
(k) insurance,
worker’s compensation insurance, statutory disability, errors & omissions
insurance, employment practices insurance, directors and officers insurance
and
such other insurance that the Company may request, with such companies and
at
such limits as the Company shall direct. In the event of any losses,
liabilities, claims, or judgments (“Losses”) involving the Company which are
covered by insurance, then the Company shall first look to the proceeds of
any
insurance prior to making any payments towards such Losses. The cost of
insurance procured pursuant to this paragraph (h) shall not be included in
the
Overhead Costs.
(l) Mack-Cali
Expense Reimbursement. The
parties hereby acknowledge that Mack-Cali has withdrawn the aggregate amount
of
$217,859.04. for expenses advanced in connection with the build-out of the
Company’s office space at 10 Sylvan Way, Parsippany, New Jersey
(m) Mack-Cali
Services.
Commencing on the date hereof and until the earlier to occur of (i) April
1,
2007 or (ii) the Company’s completion of the transfer of services to Automatic
Data Processing, Inc., Mack-Cali shall provide or cause to be provided to
the
Company human resources services including without limitation, assisting
the
Company in the payment of payroll or wages to employees of the Company using
the
Ultipro HR/payroll software. Mack-Cali hereby agrees to allow the Company
access
to its computer systems for purposes of accessing and working on JD Edwards
documentation, for up to 30 days after the date that the Company executes
a
license with Oracle. The Company shall use its good faith efforts to reduce
or
eliminate its dependency on each service as soon as is reasonably practicable.
The Company agrees to reimburse Mack-Cali (or its affiliates) for the actual
costs of providing such services. The Company may terminate each service
upon
five (5) days prior written notice to Mack-Cali.
(n) Arbitration.
The
parties hereto agree in good faith to attempt to resolve any dispute arising
under the terms and conditions hereunder. If the parties fail to settle such
dispute, it shall be submitted to arbitration. Such arbitration, at the option
of the party claiming relief, shall be submitted to JAMS for arbitration
of the
dispute in New York City. In
the
event of any dispute between
the
parties that
is
reserved by arbitration pursuant to this Section (k), the prevailing party
in
such arbitration shall be entitled to recover from the other
party
all
fees, costs
and
expenses
(including reasonable attorneys’ fees and the costs of the arbitrator(s))
incurred
in
connection with
such
arbitration, and any arbitration award entered in such arbitration
shall
contain
a
specific provision providing for the recovery of such fees, expenses and
costs.
(o) Miscellaneous
Provisions.
(p) (1)This
Agreement constitutes the entire agreement between the parties hereof with
respect to the matters herein contained and no amendment or modification
of any
of the terms and provisions hereof shall be valid unless made pursuant to
an
instrument in writing signed by each of the parties hereof.
(2) All
of
the terms and provisions of this Agreement shall be binding upon the heirs,
distributees, successors, personal or legal representatives, administrators
and
assigns of the respective parties hereto. Rights hereunder may only be
transferred as expressly provided in this Agreement.
(3) This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Delaware, without regards to its conflict of laws
principals.
(4)
In
the
event any part or parts of this Agreement are found to be void, the remainder
of
this Agreement shall be valid and enforceable and read as if the invalid
or
unenforceable provision had been deleted.
(5) This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed to be an original but all of which together shall constitute one
instrument.
[Remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as
of the date first above written.
NEWMARK
KNIGHT FRANK GLOBAL
MANAGEMENT
SERVICES, LLC
By:
/s/ Ian Marlow
Ian Marlow
NEWMARK
& COMPANY REAL ESTATE,
INC.
d/b/a NEWMARK KNIGHT FRANK
By:
/s/ Barry Gosin
Barry Gosin
CEO & Vice President
MACK-
CALI REALTY, L.P.
By:
Mack-Cali Realty Corporation, its general partner
By:
/s/ Mitchell E. Hersh
Mitchell E. Hersh
President and Chief Executive Officer
[Signature
Page to the Loans, Sale and Services Agreement]