1
EXHIBIT 99.2
WARNER OAKS/TERRA VISTA
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") is made as of the 18th day
of August, 1994, by and between Terra Vista Management, Inc., a California
corporation, (the "Manager"), and De Anza Properties - XII, Ltd., a California
limited partnership, (the "Owner"), in Los Angeles, California, with reference
to the following facts:
A. Owner has acquired certain improved real property located in
Woodland Hills, California, which is commonly known as Warner Oaks Apartments
(hereinafter referred to as the "Property").
B. De Anza Assets, Inc., a California corporation, is the
existing manager of the Property pursuant to a Management Agreement dated
October 1, 1985, which was amended as of June 14, 1990, to reflect an amendment
to Owner's partnership agreement. De Anza Assets, Inc. is wholly owned by De
Anza Group, Inc., which is being sold. Accordingly, De Anza Assets has
withdrawn as manager, which withdrawal has been accepted by Owner, and De Anza
Assets has been replaced by Terra Vista Management, Inc. The parties desire to
enter into this Management Agreement to reflect their obligations with respect
to the ownership and operation of the Property.
C. Owner desires that Manager maintain and operate the Property
on its behalf, and Manager desires to undertake said functions.
-1-
2
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties agree as follows:
1. Engagement. Owner hereby engages Manager as general manager
of the Property to the extent and subject to the conditions set forth herein,
and Manager hereby accepts such engagement.
2. Term and Termination. This Agreement shall continue from year
to year; provided, however, that Owner or Manager may, without penalty or
obligation to the other party to this Agreement, by providing sixty (60) days'
written notice to the other, terminate this Agreement with or without cause at
any time. This Agreement may be immediately canceled in the event of the
violation of any of the provisions hereof, or by Owner in the event a petition
in bankruptcy is filed by or against Manager which is not dismissed within
ninety (90) days following the date of such filing.
3. General Duties of Manager. Manager shall be directly
responsible for the day-to-day management of the Property, subject to such
general guidelines and instructions as the Owner may issue from time to time.
Notwithstanding anything to the contrary contained herein, all final decisions
respecting the management of the Property shall be made by Owner.
Manager shall at all times do and perform all things reasonably
necessary to effectuate the purposes and intentions embodied in this Agreement
so that the Property is operated at all times in a manner consistent with
prudent business practice and in
-2-
3
accordance with any and all leases, subleases and contracts to which the
Property is subject, and any and all other laws, statutes, ordinances and
regulations of any governmental authority having jurisdiction over Owner, the
Property or Manager.
4. Collection of Rent and Payment of Expenses. Manager shall
collect on behalf of Owner all rents and all other charges of every kind or
type whatsoever from all tenants or other occupants of the Property for
services provided in connection with, or for the use of, the Property or any
portion thereof, and shall deposit the same in depositories specifically
approved by Owner. Out of the foregoing rents and other charges collected on
behalf of Owner, Manager shall pay all expenses related to the operation and
maintenance of the Property and each of its facilities as and when the same
become due, all in accordance with specific instructions provided by Owner.
There shall be included in the operating expenses of the Property borne by
Owner the direct out-of-pocket expenses incurred by Manager or any of its
affiliates (including payments to salaried employees and payments for services
and supplies) in performing the bookkeeping, management, computer and public
relations services for Owner necessary for operation of Owner and the Property
which services, but for their performance by Manager or its affiliates, would
be required to be performed for Owner by another person; provided, however,
that such expenses to be borne by Owner shall not exceed the amount Owner would
be required to pay nonaffiliated persons for comparable services which could
reasonably be made available to Owner.
-3-
4
Manager may, with Owner's prior approval, and, when so requested by
Owner, shall, at Owner's expense, institute legal actions or proceedings
to collect charges, rent or other income or compensation due to Owner with
respect to the Property, or to oust persons unlawfully in possession of any
portion of the same. All such actions or proceedings and any related
counterclaim, crossclaims or other proceedings shall be at Owner's expense
and may be brought in the name of Owner or Manager.
5. Employees. Manager shall have the exclusive right to
discharge, supervise and fix the pay of such personnel as are necessary for the
efficient maintenance and operation of the Property. However, such personnel
shall be employed and paid by and shall be bonded to the satisfaction of Owner.
6. Repair and Maintenance of Property. Manager, at Owner's
expense, shall make or attend to the making of ordinary and emergency repairs,
maintenance, decorations and alterations at the Property.
7. Taxes and Insurance. Owner shall pay all taxes, personal and
real, and assessments that are attributable to the Property. Manager shall
obtain and keep in force, at Owner's expanse, such fire, comprehensive,
liability and other insurance policies as are generally carried with respect to
similar facilities in amounts sufficient to protect and maintain the Property
and Owner's interest therein in a form, manner and amount, and with companies
satisfactory to Owner. Owner and Manager shall be named as insured parties in
all liability insurance policies relating to the Property.
-4-
5
8. Accounting. Manager shall keep a detailed and complete set of
books and records of all the income and disbursements of the Property in
accordance with good accounting practice; and Manager shall, on a monthly
basis, render to Owner each of the following:
(a) A report on all vacancies;
(b) A schedule showing all income received and
disbursements made during the preceding month, together with the balance on
hand, if any, at the end of said month; and
(c) A schedule describing the monthly and annual budget
for the Property, together with the amount expended in each category in the
preceding month and for the year to date.
9. Books and Records. Manager shall keep adequate books and
records in connection with all matters arising under the terms of this
Agreement. During regular business hours, Manager shall allow Owner or any of
its duly authorized representatives access to Manager's records and
correspondence pertaining to any transaction arising out of this Agreement. At
the close of each fiscal year of Owner, Manager shall allow the books and
records which are the subject of this paragraph to be examined and audited by a
certified public accountant selected by Owner. In the event of the termination
of this Agreement, Manager shall turn over to Owner all records and
correspondence as may be reasonably necessary to assist Owner to carry to
completion any lease or other transaction and all contracts, records and
documents directly pertaining to the Property.
-5-
6
10. Compensation. Owner shall pay to Manager as compensation for
its services under this Agreement a sum equivalent to 5% of the aggregate gross
receipts from the operation of the Property excluding all receipts from
utilities or from taxes of any kind or type (provided that this compensation is
no less favorable to Owner than that which it would have to pay for comparable
services which could reasonably be made available to it by non-affiliated
parties) and, if thereafter that compensation is less than the compensation
which would then have to be paid by Owner to non-affiliated parties performing
comparable services, the Operating General Partner of Owner shall have the
option under this Agreement (exercisable by three days written notice thereof
to Manager) to raise the compensation to be paid to Manager hereunder to a
level not in excess of that which would be payable by Owner for such comparable
services. No increase in Manager's compensation under this provision shall
exceed one percent of the annual gross receipts of the Property in any year.
The foregoing compensation shall be payable at the beginning of each monthly
accounting period and shall be calculated on the basis of the budgeted gross
receipts (as determined by Owner) from the operation of the Property during
that period. The total amount of compensation earned by Manager hereunder
shall, as soon as possible after the end of each calendar year during the term
of this Agreement, be calculated on the basis of the actual gross receipts from
the operation of the Property during that year, and any additional compensation
that is due to Manager (because the actual gross receipts exceeded the
-6-
7
budgeted gross receipts) shall be paid to it by Owner at that time.
Conversely, if Manager collected more compensation than it was entitled to
receive during any such year (because the actual gross receipts were less than
the budgeted gross receipts), Manager shall return the excess compensation to
Owner (without interest thereon). Compensation received by Manager hereunder
in any given calendar year shall be returned by Manager to Owner to the extent
the limited partners of Owner have not received the Priority Return described
in Section 10.1(a), as adjusted by the requirements of Section 12.3.1(a), of
the Second Amended and Restated Certificate and Agreement of Limited
Partnership of Owner (the "Certificate and Agreement") at the end of such year,
provided, however, that, except to the extent of any reduction of the fee
payable to Manager in accordance with the immediately preceding clause of this
sentence, Manager shall not be obligated to provide its own funds to pay any
return to Owner's limited partners described in Section 10.1(a) or 12.3.1(a) of
the Certificate and Agreement, and in no event will the amount payable to
Manager hereunder be reduced below zero.
11. Indemnification. Owner shall indemnify, defend and hold
Manager harmless from any damages, costs, expenses or obligations incurred by
Manager as a result of any actions or omissions of Manager within the scope of
its authority as provided in this Agreement, or as a result of any other
actions or obligations as Owner may specifically authorize Manager to perform,
provided performance of such acts by Manager does not constitute fraud, bad
faith or negligence.
-7-
8
12. Miscellaneous. To the extent possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law. However, if any provision hereof shall be held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, and shall in
no way affect the validity of the remainder of such provision, or of any of the
remaining provisions of this Agreement.
This Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of California.
This Agreement and the rights of Owner and Manager hereunder shall not
be assignable by either of them. Manager may, however, subcontract the
performance of its duties under this Agreement to one or more subsidiaries or
affiliates of Manager or to one or more affiliated companies or unaffiliated
companies suitable to Owner, but it shall remain responsible for such
performance. The right of Manager to receive compensation may be assigned,
pledged or hypothecated at any time without Owner's consent.
This Agreement, and a notice regarding payment of deferred management
fees, contain the entire agreement of Owner and Manager with respect to the
subject matter hereof and may not be changed except by an instrument executed
by both of them.
(signatures on following page)
-8-
9
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the date first above written.
OWNER: DE ANZA PROPERTIES - X
a California limited partnership
By /s/ XXXXXXX X. XXXXXXX
-------------------------------
Xxxxxxx X. Xxxxxxx
Chairman of the Board
MANAGER: TERRA VISTA MANAGEMENT, INC.
a California corporation
By: /s/ XXXXXXX X. XXXXXXX
--------------------------------
Xxxxxxx X. Xxxxxxx
President
-9-
