EXHIBIT 10.4
MANAGEMENT AGREEMENT
BETWEEN THE REGISTRANT
AND XXXXX MANAGEMENT COMPANY, INC.
MANAGEMENT AGREEMENT
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THIS MANAGEMENT AGREEMENT ("Agreement") is made and entered into as of the
30th day of January, 1998, by and between XXXXX REAL ESTATE INVESTMENT TRUST,
INC., a Delaware corporation ("Owner"), and XXXXX MANAGEMENT COMPANY, INC., a
Georgia corporation with offices in Norcross, Georgia ("Manager").
W I T N E S S E T H:
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WHEREAS, Owner intends to raise money from the sale of stock for the
acquisition or construction of income-producing improvements on several tracts
as yet unspecified but to be acquired by Owner (the "Owner"); and
WHEREAS, Owner intends to employ Manager to manage any leasable
improvements that may be constructed on the Owner; and
WHEREAS, Owner and Manager are entering into this Agreement to establish
the terms and conditions for such services.
NOW, THEREFORE, in consideration of the mutual convenants herein, the
parties agree as follows:
ARTICLE I.
DEFINITIONS
Except as otherwise specified or as the context may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Agreement, and the definitions of such terms are equally applicable both to
the singular and plural forms thereof:
1.1 "Gross Revenues" means all amounts actually collected as rents or
other charges for the use and occupancy of Owner, but shall exclude interest and
other investment income of Owner and proceeds received by Owner for a sale,
exchange, condemnation, eminent domain taking, casualty or other disposition of
assets of Owner.
1.2 "Improvements" means all buildings, structures and equipment from time
to time located on Owner and all parking and common areas located on Owner.
1.3 "Lease" means, unless the context otherwise requires, any lease or
sublease made by Owner as landlord or by its predecessor.
1.4 "Management Fee" means the fee payable to Manager for its services
hereunder.
1.5 "Owner" means all tracts as yet unspecified but to be acquired by
Owner containing income-producing improvements or on which Owner will construct
income-producing improvements.
ARTICLE II.
APPOINTMENT OF MANAGER; SERVICES TO BE PERFORMED
2.1 Appointment of Manager. Owner hereby engages and retains Manager as
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the sole and exclusive agent and manager of the Owner and Manager hereby accepts
such appointment on the terms and conditions hereinafter set forth, it being
understood that this Agreement shall cause Manager to be, at law, Owner's agent
upon the terms contained herein.
2.2 General Duties. Manager shall devote its best efforts to performing
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its duties hereunder to manage, operate and maintain the Owner in a diligent,
careful and vigilant manner. The services of Manager are to be of scope and
quality not less than those generally performed by professional property
managers of other similar properties in the area. Manager shall make available
to Owner the full benefit of the judgment, experience and advice of the members
of Manager's organization and staff with respect to the policies to be pursued
by Owner relating to the operation of the Owner.
2.3 Specific Duties. Manager's duties include the following:
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(a) Lease Obligations. Manager shall perform all duties of the
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landlord under all leases insofar as such duties relate to operation,
maintenance, and day-to-day management. Manager shall also provide or cause to
be provided, at Owner's expense, all services normally provided to tenants of
like premises, including where applicable and without limitation, gas,
electricity or other utilities required to be furnished to tenants under leases,
normal repairs and maintenance, and cleaning, and janitorial service. Manager
shall arrange for and supervise the performance of all installations and
improvements in space leased to any tenant which are either expressly required
under the terms of the lease of such space or which are customarily provided to
tenants.
(b) Maintenance. Manager shall cause the Owner to be maintained in
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the same manner as similar properties in the area. Manager's duties and
supervision in this respect shall include, without limitation, cleaning of the
interior and the exterior of the Improvements and the public common areas on the
Owner and the making and supervision of repair, alterations, and decoration of
the Improvements, subject to and in strict compliance with this Agreement and
the Leases. Non-budgeted expenses for any individual item of work which are not
reimbursed by a tenant shall not exceed the sum of $1,000 unless specifically
authorized in advance by Owner, provided that emergency repairs which are
immediately necessary for the preservation or safety of the Owner, or for the
safety of occupant or other persons, or required to avoid the suspension of any
necessary service of the Owner may be made by Manager without prior approval of
Owner if under the circumstances Owner cannot be conveniently notified before
the required emergency repairs must be done.
(c) Notice of Violations. Manager shall forward to Owner promptly
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upon receipt all notices of violation or other notices from any governmental
authority, and board of fire underwriters or any insurance company, and shall
make such recommendations regarding compliance with such notice as shall be
appropriate.
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(d) Personnel. In the event Owner notifies Manager of the necessity
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of Manager employing additional personnel to manage the Owner, Manager shall
cause to be hired personnel to maintain and operate the Owner. The persons so
hired shall be the employees or independent contractors of Manager and not of
Owner. Manager shall use due care in the selection and supervision of such
employees or independent contractors and shall not pay such employees or
independent contractors out of operating revenues from the Owner. Manager shall
be responsible for the preparation of and shall timely file all payroll tax
reports and timely make payments of all withholding and other payroll taxes with
respect to each employee.
(e) Utilities and Supplies. Manager shall, on behalf of Owner, enter
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into or renew contracts for electricity, gas, steam, landscaping, fuel, oil,
maintenance and other services as are customarily furnished or rendered in
connection with the operation of similar rental property in the area, or as it,
in its reasonable judgment, shall deem prudent, provided that Manager shall
submit to Owner for its approval such contracts for items of expense which are
not reimbursable by tenants. Unless Owner notifies Manager of its disapproval
of any such contract within 10 days after receipt thereof, Owner shall be deemed
to have approved such contract. Manager shall also purchase all supplies which
Manager shall deem necessary to maintain and operate the Owner, provided that no
such purchase which is not in the ordinary course of business or which is of a
nature not reimbursed by tenants shall be made by Manager without the prior
consent of Owner. The non-budgeted purchase of supplies calling for an
aggregate purchase price in excess of $1,000, which amount is not reimbursed by
tenants, shall not be made without the prior consent of Owner.
(f) Expenses. Manager shall analyze all bills received for services,
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work and supplies in connection with the maintaining and operating the Owner,
pay all such bills, and, if requested by Owner, pay, when due, utility and water
charges, sewer rent and assessments, and any other amount payable in respect to
the Owner. All bills shall be paid by Manager within the time required to
obtain discounts, if any. Owner may from time to time request that Manager
forward certain bills to Owner promptly after receipt, and Manager shall comply
with any such request. It is understood that the payment of real property taxes
and assessment and insurance premiums will be paid out of the Account (as
hereinafter defined) by Manager at the direction of Owner. All expenses shall
be billed at net cost (i.e., less all rebates, commissions, discounts and
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allowances, however designed).
(g) Monies Collected. Manager shall collect all rent and other monies
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from tenants and any sums otherwise due Owner with respect to the Owner in the
ordinary course of business. In collecting such monies, Manager shall inform
tenants of the Owner that all remittances are to be in the form of a check or
money order. Owner authorizes Manager to request, demand, collect and receipt
for all such rent and other monies and to institute legal proceedings in the
name of Owner for the collection thereof and for the dispossession of any tenant
in default under its lease. Manager shall not, however, compromise with any
tenant or waive Owner's rights under any lease without Owner's consent.
(h) Banking Accommodations. Manager shall establish and maintain a
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separate checking account (the "Account"). All monies deposited from time to
time in the Account shall be deemed to be trust funds and shall be and remain
the property of Owner and shall be withdrawn and disbursed by Manager for the
account of Owner only as expressly permitted by this Agreement for
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the purposes of performing the obligations of Manager hereunder. No monies
collected by Manager on Owner's behalf shall be commingled with funds of
Manager. The Account shall be maintained, and monies shall be deposited therein
and withdrawn therefrom, in accordance with the following:
(i) All sums received from rents and other income from the Owner
shall be promptly deposited by Manager in the Account. Manager shall
have the right to designated two or more persons who shall be
authorized to draw against the Account, but only for purposes
authorized by this Agreement.
(ii) All sums due to Manager hereunder, whether for compensation,
reimbursement for expenditures, or otherwise, as herein provided,
shall be a charge against the operating revenues of the Owner and
shall be paid and/or withdrawn by Manager from the Account prior to
the making of any other disbursements therefrom.
(iii) By the 20th day of each month, Manager shall forward to
Owner net operating proceeds from the preceding month, retaining at
all times, however a reserve of $3,000.
(i) Tenant Complaints. Manager shall maintain business-like relations
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with the tenants of the Owner.
(j) Ownership Agreement. Manager has received a copy of Owner's
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Agreement of Limited Ownership (the "Ownership Agreement") and is familiar with
the terms thereof. Manager shall use reasonable care to avoid any act or
omission which, in the performance of its duties hereunder, shall in any way
conflict with the terms of the Ownership Agreement.
(k) Signs. Manager shall place and remove, or cause to be placed and
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removed, such signs upon the Owner as Manager deems appropriate, subject,
however, to the terms and conditions of the Leases and to any applicable
ordinances and regulations.
(l) Other Services. Manager shall recommend from time to time to
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Owner such procedures with respect to Owner as Manager may deem advisable for
the most efficient and economic management services which normally are performed
in connection with the operation of first-class office and commercial buildings
or other buildings, as applicable, and perform all services normally provided to
similar premises, without additional charges to Owner.
2.4 Approval of Leases, Contracts, Etc. Manager shall not approve the
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execution of or otherwise enter into or bind Owner with respect to leases or any
contract or agreement without the prior consent of Owner; provided that without
such consent, except to the extent required under Section 2.3(e), Manager may
enter into any contracts or agreements (excluding Leases of space in the Owner)
on behalf of Owner in the ordinary course of the management, operation and
maintenance of the Owner for the obtaining of utility, maintenance or other
services to tenant; and further provided that without such consent, Manager may
enter into any contracts or agreements on behalf of Owner, in the case of
casualty, breakdown in machinery or other similar emergency, if in
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the opinion of Manager emergency action or immediate approval for the
commencement of repairs is necessary to prevent additional damage or greater
total expenditure or to protect the Owner from damage or prevent default on the
part of Owner under any of the Leases, in which event such action taken shall be
taken concurrently with prompt notice to Owner.
2.5 Accounting, Records and Reports.
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(a) Records. Managers shall maintain all office records and books of
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account and shall record therein, and keep copies of, each invoice received from
services, work and supplies ordered in connection with the maintenance and
operation of the Owner. Such records shall be maintained on a double entry
basis. Owner and persons designated by Owner shall at all reasonable time have
access to and the right to audit and make independent examinations of such
records, books and accounts and all vouchers, files and all other material
pertaining to the Owner and that Agreement, all of which Manager agrees to keep
safe, available and separate from any records not pertaining to Owner, at a
place recommended by Manager and approved by Owner.
(b) Monthly Reports. On or before the 15th day of each month
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following the month for which such report or statement is prepared and during
the term of this Agreement, Manager shall prepare and submit to Owner the
following reports and statements:
(i) Rental collection record in a form to be agreed upon by
Manager and Owner;
(ii) Monthly operating statement in a form to be agreed upon by
Manager and Owner;
(iii) Copy of cash disbursements ledger entries for such month;
(iv) Copy of cash receipts ledger entries for such month;
(v) The original copies of all contracts entered into by Manager
on behalf of Owner during such month; and
(vi) Copy of ledger entries for such month relating to security
deposits maintained by Manager.
(c) Budgets and Leasing Plans. Not later than 30 days before the
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anniversary of this Agreement and any extensions thereof, Manager shall prepare
and submit to Owner for its approval an operating budget and a marketing and
leasing plan on the Owner for the calendar year immediately following such
submission. The budget and leasing plan shall be in the form of the budget and
plan approved by Owner prior to the date thereof. As often as reasonably
necessary during the period covered by any such budget, Manager may submit to
Owner for its approval an updated budget or plan incorporating such changes as
shall be necessary to reflect cost over-runs and the like during such period.
If Owner does not disapprove any such budget within 30 days after receipt
thereof by Owner, such budget shall be deemed approved. If Owner shall
disapprove any such budget or plan, it shall so notify Manager within said 30-
day period and explain the reasons therefor.
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(d) Returns Required by Law. Managers shall execute and file when due
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all forms, reports, and returns required by law relating to the employment of
its personnel.
(e) Notices. Promptly after receipt, Manager shall deliver to Owner
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all notices, from any tenant, or any governmental authority, that are not a
routine nature. Managers shall also report expeditiously to Owner notice of any
extensive damage to any part of the Owner.
ARTICLE III.
EXPENSES
3.1 Owner's Expenses. Except as otherwise specifically provided, all
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costs and expenses incurred hereunder by Manager shall be for the account of and
on behalf of Owner. Such costs and expenses may include salaries and other
employee-related expenses, and all legal, travel and other out-of-pocket
expenses which are directly related to the management of specific Ownership
Property, to the extent permitted by the Statement of Policy Regarding Real
Estate Investment Trusts adopted by the North American Securities Administrators
Association, Inc. All costs and expenses for which Owner is responsible under
this Agreement, shall be paid by Manager out of the Account. In the event said
account does not contain sufficient funds to pay all said expenses, Owner shall
fund all sums necessary to meet such additional costs and expenses.
3.2 Manager's Expenses. Managers shall, out of its own funds, pay all of
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its general overhead and administrative expenses.
ARTICLE IV.
MANAGER'S COMPENSATION
4.1 Management Fee. Commencing on the date hereof, Owner shall pay
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Manager, as compensation for its services hereunder, an amount equal to two and
one-half percent (2.5%) of the Gross Revenues paid monthly from the rental
income received from Owner, over the term of this agreement ("Management Fee").
4.2 Audit Adjustment. If any audit of the records, books or accounts
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relating to the Owner discloses an overpayment or underpayment of Management
Fees, Owner or Manager shall promptly pay to the other party the amount of such
overpayment or underpayment, as the case may be. If such audit discloses an
overpayment of Management Fees for any fiscal year of more than the correct
Management Fees for such Fiscal year, Manager shall bear cost of such audit.
ARTICLE V.
INSURANCE AND INDEMNIFICATION
5.1 Insurance to be Carried.
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(a) The Owner shall be insured by Owner against such hazards as Owner
shall deem appropriate, but in any event insurance sufficient to comply with the
Leases and the
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Ownership Agreement shall be maintained. All liability policies shall provide
sufficient insurance satisfactory to both Owner and Manager and shall contain
waivers of subrogation for the benefit of Manager.
(b) Manager shall obtain and keep in full force and effect, in
accordance with the laws of the state in which each Ownership Property is
located, employer's liability insurance applicable to and covering all employees
of Manager at the Owner and all persons engaged in the performance of any work
required hereunder, and Manager shall furnish Owner certificates of insurers
naming Owner as a co-insured and evidencing that such insurance is in effect.
If any work under this Agreement is subcontracted as permitted herein, Manager
shall include in each subcontract a provision that the subcontractor shall also
furnish Owner with such a certificate.
5.2 Cooperation with Insurers. Manager shall cooperate with and provide
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reasonable access to the Owner to representatives of insurance companies and
insurance brokers or agents with respect to insurance which is in effect or for
which application has been made. Manager shall use its best efforts to comply
with all requirements of insurers.
5.3 Accidents and Claims. Manager shall promptly investigate and shall
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report in detail to Owner all accidents, claims for damage relating to the
Ownership, operation or maintenance of the Owner, and any damage or destruction
to the Owner and the estimated costs of repair thereof, and shall prepare for
approval by Owner all reports required by an insurance company in connection
with any such accident, claim, damage, or destruction. Such reports shall be
given to Owner promptly and any report not so given within 10 days after the
occurrence of any such accident, claim, damage or destruction shall be noted in
the monthly report delivered to Owner pursuant to section 2.5(b). Manager is
authorized to settle any claim against an insurance company not exceeding $500
arising out of any policy and, in connection with such claim, to execute proofs
of loss and adjustments of loss and to collect and receipt for loss proceeds.
If a claim against an insurance company exceeds $500, Manager shall take no
action specified in the immediately preceding sentence with respect thereto
without the approval of Owner.
5.4 Indemnification. Manager shall hold Owner harmless from and indemnify
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and defend Owner against any and all claims or liability for any injury or
damage to any person or property whatsoever for which Manager is responsible
occurring in, on, or about the Owner, including, without limitation, the
Improvements when such injury or damage shall be caused by the negligence of
Manager, its agents, servants, or employees, except to the extent that Owner
recovers insurance proceeds with respect to such matter. Owner will indemnify
and hold Manager harmless against all liability for injury to persons and damage
to property caused by Owner's negligence and which did not result from the
negligence of misconduct of Manager, except to the extent Manager recovers
insurance proceeds with respect to such matter.
ARTICLE VI.
TERM, TERMINATION
6.1 Term. This Agreement shall commence on the date first above written
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and shall continue until terminated in accordance with the earliest to occur of
the following:
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(a) One year from the date of the commencement of the term hereof.
However, this Agreement will be automatically extended for an additional one
year period at the end of each year unless Owner or Manager gives sixty (60)
days written notice of its intention to terminate the Agreement;
(b) Sixty (60) days after prior written notice of intention to
terminate the Agreement given by Owner or Manager:
(c) Upon any change in control of Manager, unless Owner consents to
such change; or
(d) Immediately upon the occurrence of any of the following:
(i) A decree or order is rendered by a court having jurisdiction
(A) adjudging Manager as bankrupt or insolvent, or (B) approving as
properly filed a petition seeking reorganization, readjustment,
arrangement, composition or similar relief for Manager under the
federal bankruptcy laws or any similar applicable law or practice, or
(C) appointing a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of Manager or a substantial part of the
property of Manager, or for the winding up or liquidation of its
affairs, or
(ii) Manager (A) institutes proceedings to be adjudicated a
voluntary bankrupt or an insolvent, (B) consents to the filing of a
bankruptcy proceeding against it, (C) files a petition or answer or
consent seeking reorganization, readjustment, arrangement, composition
or relief under any similar applicable law or practice, (D) consents
to the filing of any such petition, or to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or
insolvency for it or for a substantial part of its property, (E) makes
an assignment for the benefit of creditors, (F), is unable to or
admits in writing its inability to pay its debts generally as they
become due unless such inability shall be the fault of Owner, or (G)
takes corporate or other action in furtherance of any of the aforesaid
purposes.
Upon termination, the obligations of the parties hereto shall cease,
provided that Manager shall comply with the provisions hereof applicable in the
event of termination and shall be entitled to receive all compensation which may
be due Manager hereunder up to the date of such termination, and provided,
further, that if this Agreement terminates pursuant to clause (d) above, Owner
shall have other remedies as may be available at law or in equity.
6.2 Manager's Obligations after Termination. Upon the termination of this
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Agreement, Manager shall have the following duties:
(a) Manager shall deliver to Owner, or its designee, all books and
records with respect to the Owner.
(b) Manager shall transfer and assign to Owner, or its designee, all
service contracts and personal property relating to or used in the operation and
maintenance of the Owner, except personal property paid for and owned by
Manager. Manager shall also, for a period of sixty
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(60) days immediately following the date of such termination, make itself
available to consult with and advise Owner, or its designee, regarding the
operation and maintenance of the Owner.
(c) Manager shall render to Owner an accounting of all funds Owner in
its possession and shall deliver to Owner a statement of Management Fees claimed
to be due Manager and shall cause funds of Owner held by Manager relating to the
Owner to be paid to Owner or its designee.
ARTICLE VII.
MISCELLANEOUS
7.1 Notices. All notices, approvals, consents and other communications
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hereunder shall be in writing, and, except when receipt is required to start the
running of a period of time, shall be deemed given when delivered in person or
on the fifth day after its mailing by either party by registered or certified
United States mail, postage prepaid and return receipt requested, to the other
party, at the addresses set forth after their respect name below or at such
different addresses as either party shall have theretofore advised the other
party in writing in accordance with this Section 7.1.
Owner: XXXXX REAL ESTATE INVESTMENT TRUST, INC.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Manager: XXXXX MANAGEMENT COMPANY, INC.
0000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
7.2 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of Georgia.
7.3 Assignment. Manager may delegate partially or in full its duties and
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rights under this Agreement but only with the prior written consent of Owner.
Except as provided in the immediately preceding sentence, this Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective successors and assigns.
7.4 No Waiver. The failure of Owner to seek redress for violation or to
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insist upon the strict performance of any covenant or condition of this
Agreement, shall not constitute a waiver thereof for the future.
7.5 Amendments. This Agreement may not be amended without the vote of a
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majority of interest of the Limited Owners of Owner and only by an instrument in
writing signed by the party against whom enforcement of the amendment is sought.
7.6 Headings. The headings of the various subdivisions of this Agreement
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are for reference only and shall not define or limit any of the terms or
provisions hereof.
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7.7 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
7.8 Entire Agreement. This Agreement contains the entire understanding
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and all agreements between Owner and Manager respecting the management of the
Owner. There are no representations, agreements, arrangements or
understandings, oral or written, between Owner and Manager relating to the
management of the Owner that are not fully expressed herein.
7.9 Disputes. If there shall be a dispute between Owner and Manager
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relating to this Agreement resulting in litigation, the prevailing party in such
litigation shall be entitled to recover from the other party to such litigation
such amount as the court shall fix as reasonable attorneys' fees.
7.10 Activities of Manager. The obligations of Manager pursuant to the
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terms and provisions of this Agreement shall not be construed to preclude
Manager from engaging in other activities or business ventures, whether or not
such other activities or ventures are in competition with the Owner or the
business of Owner.
7.11 Independent Contractor. Manager and Owner shall not be construed as
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joint venturers or Owners of each other pursuant to this Agreement, and neither
shall have the power to bind or obligate the other except as set forth herein.
In all respects, the status of Manger to Owner under this Agreement is that of
an independent contractor.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
Xxxxx Real Estate Investment Trust, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
Xxxxx Management Company, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: Executive Vice President
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