Engagement Letter
THIS AGREEMENT is made this ___ day of __________, 2016, by and between XYZ Capital Management, LLC (“Client”), and ___________________ (“Consultant”), who agree as follows:
1. Parties. Client is real estate investment advisor for one or more institutional investors (the “Investor”) and has recommended that Investor acquire __________________ located at __________________ (the “Property”). Client wishes to retain Consultant to provide technical services to Client. Investor will be the beneficiary of the services provided by Consultant. The services performed by Consultant pursuant to this Agreement shall be performed under the direction and management of _____________ or such other person selected by Consultant, subject to written approval by Client.
2. Scope of Work. Exhibit A attached hereto contains the scope of the work to be performed by Consultant under this Agreement. Consultant represents that such work shall be carried out in a manner at least equal to industry standards and good commercial practices of reputable architectural and engineering firms for performing similar work. Consultant shall perform its services hereunder in full compliance with federal, state, and local laws and regulations, if any there be, which apply to such performance and are in effect at the time thereof.
3. Term. Consultant shall use its best efforts to complete its Final Report (the “Report”) on or before _____________________. The term of this Agreement shall commence on the date hereof and shall continue until issuance of the Report. Client shall have the right to terminate this Agreement, at any time, in its sole discretion and with or without cause, by written notice to Consultant. Consultant shall stop work immediately upon receipt of a notice of termination and promptly deliver to Client the results of Consultant’s work to the date of termination. Client will compensate Consultant for work performed prior to the termination (including reasonable costs incurred in connection with termination) in accordance with Paragraph 4 hereof. This right to terminate shall be in addition to, and not in lieu of, any other rights and remedies Client may have at law or in equity.
4. Compensation. The compensation for Consultant’s performance of the work described in Paragraph 2 above shall be on a Lump Sum Basis. The Consultant shall receive an amount not to exceed ________________________ Dollars and NO/100s ($____________) for the work, which amounts shall include any and all costs associated for the work to be performed hereunder. The Consultant shall not receive any amount over that set forth above unless otherwise agreed to in writing by Client. The Consultant shall invoice Client upon completion of the Final Report. The invoice shall itemize and describe the services performed and identify personnel performing the services and the time expended. Payment shall be due not later than 60 days after receipt. The Consultant will maintain full and accurate records and books of account necessary to document: (1) all activities undertaken by or on behalf of Consultant in the course of performing services hereunder, and (2) all charges, expenses and disbursements incurred by Consultant, its agents or subcontractors in performing services hereunder. The Consultant will make such books and records available to Client upon prior written request during normal business hours.
5. Report. At the conclusion of Consultant’s tests, studies, investigations, and analyses for each phase of the work. Consultant shall prepare a written report (the “Report”) summarizing the findings of Consultant’s investigations, indicating areas of concern and potential problems, recommending suggested courses of remedial action and estimating the costs of such remedial action. Consultant shall provide 2 copies of the Report to Client. The Report shall be provided to Client in a draft form subject to Client’s comments and review. No Report shall be considered final unless it is reasonably satisfactory to Client. No Report shall be considered unsatisfactory because it contains factual information which, while accurate, Client is dissatisfied with. Once Client is satisfied with the Report for each phase of the work the same will be put in final form (the “Final Report”). Six complete copies of the Final Report shall be provided to Client.
6. Further Work. If, during the course of Consultant’s investigations, Consultant discovers any fact or condition which would lead Consultant to recommend further inspection, testing or analyses, Consultant shall contact Mr. John Doe at (212) 445-0209 and discuss Consultant’s findings and recommendations and give an estimate of the cost of such further work. The Client may authorize Consultant to perform such additional work by a letter to Consultant specifying the work to be performed and the maximum additional fee to be added to the amount authorized in Paragraph 4 above. In no event shall Consultant be responsible or liable for any costs, damages, claim, or other consequences arising out of Client’s decision not to accept Consultant’s recommendation for further work.
7. Confidentiality. The Consultant shall keep strictly confidential any information disclosed to the Consultant by Client, Investor or Investor’s advisors, agents, or contractors. The Consultant shall not intentionally disclose to any third party the nature or results of, or any conclusions from, any work performed by Consultant under this Agreement without first obtaining the written consent of Client. This prohibition shall not preclude the Consultant from any disclosure of confidential information which is required by law or which is the result of lawful court order or other legal process so long as Consultant notifies Client of such disclosure as soon as practical. The Consultant shall notify any third party to which a disclosure is permitted to be made that the information disclosed is confidential and that the third party shall maintain such confidentiality. No news release, public announcement, denial, or confirmation of any part of the subject matter of this Agreement, or any information obtained pursuant hereto, shall be made without Client’s prior written consent. All third-party inquiries shall be directed to Client. These confidentiality provisions do not apply to any information which, without fault on the part of Consultant, is generally known by or available to the public.
8. Insurance. The Consultant is an independent contractor and not an agent, servant or representative of Client or Investor. The Consultant represents and warrants that it shall, at all times during the term of this Agreement, maintain workers’ compensation insurance at minimum statutory limits and commercial general liability insurance in an amount not less than One Million Dollars ($1,000,000.00) each occurrence, and professional liability errors and omissions insurance in an amount not less than One Million Dollars ($1,000,000.00). The Consultant shall supply Client with certificates evidencing such insurance, adding the parties shown in Exhibit “C” hereto attached as additional insureds under the commercial general liability insurance with respect to the services to be performed by Consultant, and providing for thirty (30) days’ written notice to Client prior to cancellation or modification thereof.
9. Attorneys’ Fees. If any legal proceeding is commenced between the parties with respect to the subject matter of this Agreement, the successful party in such proceeding shall be entitled to reasonable attorneys’ fees and court costs to be determined by the court.
10. Indemnification. The Consultant shall, with respect to all work which is covered by or incidental to this Agreement, indemnify and hold Client and Investor harmless from and against any and all claims, liability, loss, damage, costs or expenses, including reasonable attorneys’ fees, awards, fines or judgments, resulting from death or bodily injury to persons, injury to property or other loss, damage or expense, arising from Consultant’s negligence. Consultant’s liability shall be limited to injury or loss caused by the negligence of Consultant, its subcontractors and/or agents hereunder and shall not exceed One Million Dollars ($1,000,000).
11. Acceptance of Risk. Consultant recognizes that, in performing work pursuant to this Agreement, its employees and subcontractors may be working with, or be exposed to, substances or conditions which are toxic or otherwise hazardous and hereby assumes all risks associated therewith, foreseen and unforeseen. Client shall notify Consultant of any known hazardous conditions prior to commencing work.
12. Governing Law. This Agreement shall be covered by and construed under the laws of the State of Illinois.
13. Entire Agreement; Modification; Waiver. This Agreement and the work authorizations to be issued by Client hereunder constitute the entire agreement of the parties and supersede any and all prior or contemporaneous written or oral negotiations, correspondence, understandings, and agreements between the parties respecting the subject matter hereof. No supplement, modification or amendment to this Agreement, other than work authorizations issued by Client hereunder, shall be binding unless executed in writing by both parties. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.
14. Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective successors and assigns. Neither party shall be entitled to assign any of its rights or obligations hereunder without the prior written consent of the other party, which may be withheld in such other party’s sole discretion.
This Agreement consists of these three pages, plus Exhibits “A”, “B,” and “C” attached hereto and made a part hereof.
Client
XYZ Capital Management, LLC
By: ____________________________
Its: ____________________________
Consultant
____________________________
By: ____________________________
Its: ____________________________
Exhibit “A”
Scope of Services
Issue a draft Report for review and discussion with XYZ Capital Management, LLC prior to issuance. Final Report will include description and opinions of the following information.
Plans and Document Review
• Completed Plans and Specifications
• The written report will include Consultants opinion of whether the plans and specifications conform to generally accepted building construction practices.
• Said report will also include Consultants opinion of whether the plans and specifications comply with all governing codes and zoning regulations. It is understood that consultant’s review is the only opinion and that actual compliance is the responsibility of the architect and/or engineers of records.
• Survey of plot including complete topography.
• Proof of conformance to building code.
• Zoning ordinances.
• Subsurface soils investigation.
• Copy of building permit.
• Report to include Project Documentation Log listing plans received and other documents reviewed as a part of this assignment.
• Calculation of gross and leasable areas from plans.
Building Condition Review
• A description of the site improvement thereon, based upon field observation as well as review of the following information:
• Architect and engineers inspection reports and final punch lists.
• All testing and quality assurance reports.
• All certifications of completion and acceptance by the architect and engineers of record.
• General conformance of visible construction of the building(s) and site development to the construction documents, soils report, and industry standards for such construction.
• Consultant shall list the codes, regulations, and public sector criteria with which the project must comply, including special permits, and other actions of local and state authority.
• Review of existing conditions of the building exterior, roof, owner-maintained interior spaces, owner maintained mechanical/electrical systems, site drainage, parking, landscaping, site utilities; with conclusions for conceivable repairs and deficiencies along with cost allowances for the suggested repairs.
• Appropriateness of the existing building materials found in place, with regard to the need for extraordinary maintenance or low-durability potential.
• General review of common area facilities for application of the Americans with Disabilities Act (ADA) and the general and living facilities for application of the Fair Housing Accessibility Guidelines (FHAA).
• Project observations noted including date of review and parties present.
• Provide photographs and description to more clearly define examples of unique features, overall building conditions, defective conditions, and potential repair/maintenance requirements as discussed in the report.
• Verification of the number of parking spaces by manual count.
• The consultant’s inspection team shall include professionals who have a full understanding of the various construction assemblies, systems, and materials used for the type of construction and building use identified above.
Acoustical Testing
Review the STC ratings and assemblies of the common and party walls as shown on the construction documents to determine if the design conforms to the current building codes.
Provide necessary instrumentation and make measurements of sound isolation between adjacent units for two cases horizontal through a typical common party wall assembly and two cases vertically through a typical common floor assembly. This testing would follow procedures outlined in ASTM guidelines for standard test methods for measurement of airborne sound insulation in buildings (ASTM E−336 and E−413).
Make a visual examination of the existing conditions and compare observations against the building construction documents.
Prepare a report of findings.
The Building Condition Review will be performed to provide Client with a professional observation of existing condition visible on site. Destructive testing for access to concealed spaces nor the analysis of testing for the presence of noxious or toxic chemicals, or other elements including asbestos and PCBs, are not to be included in the services to be provided.
Seismic Risk Analysis
For Buildings located in Seismic Zones III and IV, the consultant shall perform a seismic risk analysis to determine the Probable Maximum Loss (PML). The Consultant shall be licensed to practice structural engineering work and specializing in PML analysis work. Their scope of services is as follows:
Scope of Services
• Perform a site inspection to observe and document existing structural deficiencies and comment on the conformance of the building to the plans and specifications.
• Research and document historic earthquake records to compile a database of events of magnitude 4.0 or larger in the vicinity of the site. List each event showing the date of occurrence, location, distance from the site, maximum ground acceleration, Richter magnitude, and Modified Mercalli Intensity.
• Research geologic conditions specific to the site region. Document major faults and identify seismic hazards.
• Determine the Maximum Probable Earthquake (MPE) based on historic records, defined as the largest earthquake which has a 10% chance of being exceeded in a 50-year time period. This is also the Uniform Building Cod (UBC) design criteria for new construction.
• Determine the Maximum Credible Earthquake (MCE), which is defined as the maximum ground motion that appears capable of occurring under the presently known geologic conditions.
• Determine the PML based on the MPE. Include backup calculations and reference the method used in the PML analysis.
Exhibit “B”
Consultant’s professional and technical staff hours for additional services will be billed according to the following rates:
Principal ____/hr.
Architect ____/hr.
Engineer, P.E. _____/hr.
Technical/Research/Clerical Services ____/hr.
Should additional services be requested by Client, in addition to services outlined herein, Consultant will be entitled to additional compensation for such services on an hourly rate basis as noted above. Direct expenses such as travel, subsistence, reproduction of additional reports and express mail charges will be billed at the actual cost.
Exhibit “C”
Additional Insureds
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