EXHIBIT 10.2 MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT
THIS AGREEMENT is made and entered into as of this 2nd day of
April, 1998, by and between CEDAR INCOME FUND, LTD., an Iowa
corporation, (hereinafter referred to as "OWNER") and BRENTWAY
MANAGEMENT LLC, with its principal place of business at 00 Xxxxx
Xxxxxx Xxxxxx, Xxxx Xxxxxxxxxx, XX 00000 (hereinafter referred to as
"MANAGER"). In consideration of the mutual covenants, promises and
agreements herein contained, OWNER and MANAGER do hereby covenant,
promise and agree to and with each other as follows:
W I T N E S S E T H:
1. PARTIES AND INTEREST: OWNER is or will be the owner of certain real
property which may be located the continental United States and will continue to
acquire additional property during the term of this Agreement. MANAGER has the
experience and staff necessary and suitable for the management and operation of
real estate properties in the United States and desires to undertake the
management and operation of the real estate properties of OWNER. MANAGER is an
independent contractor and OWNER shall have no voice in the selection or
discharge of MANAGER'S employees, representatives, or subcontractors, or in
their number or in the compensation to be received by them or in the period of
hours of their employment, and no control over the specific manner in which the
work shall be done, but MANAGER shall be responsible for the quality of work
done and of the materials furnished, and warrants that they shall conform to the
terms of this Agreement. OWNER and MANAGER are not, and shall not be deemed to
be, partners or joint venturers with each other.
2. TERM: OWNER does hereby designate MANAGER, and MANAGER hereby
accepts such designation, as the manager of the real estate interests of OWNER
which are from time to time included in a schedule of such properties mutually
agreed upon by OWNER and MANAGER (hereinafter referred to collectively as the
"Premises"), for a term of one (1) year commencing on the effective date hereof.
Thereafter, this Agreement shall be renewed automatically for one year periods.
This Agreement may, however, be terminated by either party at any time, with or
without cause, upon not less than sixty (60) days prior written notice given by
the OWNER by a majority of the Independent Directors (as defined in the Articles
of Incorporation of OWNER) or by MANAGER by its duly authorized representatives,
to the other party of its intention to so terminate. In the event of termination
of this Agreement, neither party shall have any further rights, obligations or
liabilities under this Agreement except those which are accrued through the
effective date of such termination; provided, however, MANAGER shall cooperate
with OWNER and take all reasonable steps requested to assist OWNER in making an
orderly transition of the property management function. OWNER AND MANAGER agree,
upon request of either party at any time during the term of this Agreement, to
acknowledge a schedule of properties covered hereby, including the legal
descriptions thereof. Nothing herein contained shall prevent the
MANAGER from engaging in other activities, including without limitation, the
management of other properties; nor shall this Agreement limit or restrict the
right of any director, officer, employee, affiliate or shareholder of the
MANAGER to engage in any other business or to render services of any kind to any
other partnership, corporation, firm, individual, trust or association.
3. SERVICES OF MANAGER: Subject to such express restrictions or
limitations on its authority and to such written instructions as may from time
to time be imposed or given by the OWNER, MANAGER shall, on behalf of and for
the account of the OWNER:
A. LEASING: Use its best efforts to lease and keep leased to
desirable tenants all space held for lease at no less than the
prevailing rental rates for similar properties in the community
in which the property is located and calculated to provide a
reasonable return an investment to OWNER, unless otherwise
approved in writing by OWNER. MANAGER shall lease the Premises
with each lease identifying the OWNER (or the trade name of the
Premises) as the titleholder of the Premises and owner of the
lease. No lease shall be for a term of sixty (60) months or
longer, including options, if any. In the event that a lease
contract contemplated to be entered into by MANAGER in the name
of OWNER is not within the limitations set forth in this sub-
paragraph 3A, such lease contract shall first be subject to the
written approval of OWNER, which approval shall not be
unreasonably withheld. MANAGER shall advise OWNER personally or
by certified mail of any such proposed lease or amendment
thereto. If OWNER fails to advise MANAGER within four (4) days
after receipt of such notice, it shall be presumed that OWNER
granted OWNER'S written approval thereto and, accordingly,
MANAGER shall be authorized to execute such lease contract in the
name of OWNER without being in violation of MANAGER'S duties
hereunder. All leases of the Premises shall remain the property
of OWNER and copies shall be promptly provided to OWNER. MANAGER
shall have the right, without prior consent, at OWNER'S expense,
to repair, alter, modify and improve (as distinguished from
expand) the existing structures, in connection with any such
lease; prior approval, however, of OWNER to be secured by MANAGER
on all such matters involving costs in excess of Twenty Thousand
Dollars ($20,000) for any one item. MANAGER may collect from
lessees, security deposits as security for the performance under
the leases, the amount of such security deposits to be for such
sum as is customary in the locality of said real estate. Failure
by MANAGER to obtain any security deposit shall not constitute
any nature of default by MANAGER hereunder. The security
deposits, as collected, shall be paid over each month to the
OWNER following the month of collection by MANAGER. Without the
specific prior written approval of OWNER, no lease with respect
to the Premises shall provide for rents the determination of
which depends in whole or in part on the net income or net
profits
derived by any person from such property and no tenant shall be
permitted to sublease any property wherein the determination of
rent depends in whole or in part on the net income or net profits
derived by any person from such property; provided, however,
leases and subleases may, except as otherwise directed by OWNER
or as otherwise provided in this Agreement, provide for rental
payments based upon a fixed percentage or percentages of
receipts or sales.
B. BOOKS AND RECORDS: The term "Agreement Year" as used herein shall
mean the calendar year ending December 31st of each year. The
first Agreement Year shall be the period beginning on the date
hereof and ending December 31, 1998, and the last Agreement Year
shall be the period beginning January 1st of the last year of the
term of this Agreement and ending with the last day of the term
of this Agreement.
MANAGER shall maintain in manner and form consistent with
generally accepted methods of accounting at its office, during
each Agreement Year and retain such for a period of three (3)
consecutive years thereafter, complete and accurate general books
of account, which will reflect all receipts derived from the
operation of the Premises by MANAGER during such Agreement Year,
including but not limited to, original invoices, sales and other
records provided by lessees, sales and occupation tax returns, if
any, relating to MANAGER'S operation of the Premises, and all
other original records pertaining to the business of operating
the Premises and other pertinent papers and documents which will
enable the OWNER to determine the gross receipts derived by the
MANAGER from the Premises. All of the aforementioned records
shall be open to the inspection and audit by the OWNER or its
agents at all reasonable times during ordinary business hours. On
termination of this Agreement, all records shall be delivered to
the OWNER at the Premises. OWNER and MANAGER recognize that
OWNER, itself, may have records pertaining to the Premises as to
which MANAGER does not have actual knowledge, and nothing in this
paragraph shall be interpreted to impose any duty on MANAGER with
respect to such records or any other records of a type which
would not be kept by a reasonably prudent property manager.
MANAGER shall establish a bank account into which receipts
relating to the Premises of the OWNER transmitted to MANAGER or
collected by MANAGER shall be deposited. From the funds in such
bank account, MANAGER shall pay the following types of expenses
associated with operation of the Premises (it being understood
that nothing herein shall be interpreted to impose on MANAGER
liability for the payment of any of such expenses from MANAGER'S
own funds): on-site salary expenses of every kind and nature,
utility charges, custodial service, management fees hereunder to
MANAGER and all other recurring-type charges relating to the
operation of the Premises (all of the aforesaid being herein
sometimes referred to as "Premises Operating Expenses"). MANAGER
shall submit to OWNER on or before the tenth (10th) day of each
month during the term hereof (including the tenth (10th) day of
the month following the end of the term) at the place then fixed
for the payments hereunder, a check in a sum equal to all funds,
if any, in the bank account for the Premises except a nominal sum
to pay obligations due prior to receipt of additional rentals,
and a written statement, certified by MANAGER to be true and
correct to the best of his knowledge and belief, showing in
reasonably accurate detail, the amount of aforesaid receipts and
the amount of Premises Operating Expenses disbursed from such
bank account and the resulting difference for the preceding
month. MANAGER shall submit to the OWNER on or before the
thirtieth (30th) day following the end of each Agreement Year, at
all places then fixed for payments, a complete statement of the
aforesaid annual figures for the preceding Agreement Year in
reasonable detail certified by MANAGER. Relative to the authority
of MANAGER to pay from the bank account Premises Operation
Expenses (as hereinabove referred to), such authority of MANAGER
shall be limited as stated in subparagraph 3D hereof.
C. MAINTENANCE:
MANAGER shall use its best efforts, at OWNER'S expense (but
subject to the limitations hereinafter set forth), at all times
during the term of this Agreement, to keep the Premises, both
exterior and interior, structural and otherwise, in good repair,
subject to ordinary wear and tear or casualty occurring without
the fault of MANAGER, and make all repairs and replacements, both
exterior and interior, structural and otherwise; and MANAGER
shall use its best efforts, at OWNER'S expense (subject however,
to the limitations hereinafter set forth) to satisfy each and
every obligation, duty or payment required of the lessor on the
leases or any substitute leases entered into during the term of
this Agreement except in the event of a default by the tenant
under any such lease. MANAGER shall also use its best efforts, at
OWNER'S expense (subject, however, to the limitations hereinafter
set forth), to keep the Premises in a clean condition, and not
permit or allow any refuse or debris to accumulate thereon, or
upon the sidewalks, alleys or streets adjoining the same, and
remove any obstruction from the sidewalks adjoining the Premises.
MANAGER shall exercise reasonable efforts to see that no article
deemed extra-hazardous on account of fire or other dangerous
properties, nor any explosive, shall be brought on or into the
Premises, except that this provision shall not apply to articles
usually held for storage in substantially similar building.
D. AUTHORITY:
All of the duties of MANAGER pursuant to this Agreement shall be
fulfilled at OWNER'S expense and the funds of OWNER shall be
utilized by MANAGER for the purpose of fulfilling such
responsibilities subject, however, to the following limitations:
(i) MANAGER is authorized to enter into any agreement, verbal
or written, for performance of its responsibilities if the
consideration payable by OWNER pursuant to such agreement
is Twenty Thousand One Hundred and 00/100 Dollars
($20,100.00) or less; however, MANAGER may enter into such
agreements where the consideration payable pursuant
thereto is more than Twenty Thousand and 00/100 Dollars
($20,000.00), if in MANAGER'S opinion such repairs are
emergency repairs necessary to protect the Premises,
fulfill obligations to OWNER under leases or rental
agreements or prevent bodily injury.
(ii) If any written contract for the performance of such
responsibility is in the name of OWNER (other than any
lease authorized herein to be executed by MANAGER on
behalf of OWNER), then irrespective of the amount payable
pursuant thereto, only an authorized agent of OWNER shall
be authorized to execute any such contract (and for these
purposes MANAGER shall not be deemed to be an authorized
agent of OWNER).
(iii) If any contract for performance of the aforesaid duties is
not cancellable by MANAGER on sixty (60) days' notice or
less, then MANAGER shall not enter into such contract
without the prior written approval of OWNER,
notwithstanding that the consideration payable thereunder
may be Twenty Thousand Dollars ($20,000.00) or less. The
preceding provisions do not relate to the contractual
authority of MANAGER as to signing leases of building
space in the Premises.
(iv) If any contract for performance of the aforesaid duties is
cancellable by MANAGER on sixty (60) days' notice or less,
then MANAGER may enter into such contract without the
prior written approval of Owner, subject, however, to the
limitations contained in subparagraph 3(D) (i).
E. EMPLOYEES: MANAGER shall engage and discharge such employees as
it deems necessary for the operation and maintenance of the
Premises. Such employees shall be deemed employees of the
MANAGER, or such local agent or agents as may be retained by the
MANAGER and not in the employ of the OWNER. The MANAGER at its
expense shall retain adequate fidelity insurance on those of its
employees who handle funds or assets of the OWNER. The OWNER
shall reimburse MANAGER for all salary expenses, benefits and
moving and traveling expenses, except for those personnel of
MANAGER performing property management functions operating out of
the home office of the MANAGER.
F. WORKER'S COMPENSATION: MANAGER agrees to provide and OWNER agrees
to reimburse MANAGER for all premiums, contributions and taxes
for Worker's Compensation insurance, unemployment insurance, and
for old age pensions, annuities and retirement benefits, now or
hereafter imposed by or pursuant to federal or state laws, which
are measured by the wages, salaries or other remuneration paid to
persons employed by MANAGER in connection with the performance of
the Management Agreement except as it relates to personnel of
MANAGER performing property management functions operating out of
the home office of MANAGER. MANAGER agrees to carry Worker's
Compensation insurance and Employer's Liability insurance in
accordance with the laws of the states in which the OWNER owns
real estate to be at all times in force and OWNER agrees to
reimburse MANAGER for the cost thereof.
G. CODE REQUIREMENTS: MANAGER, at OWNER'S expense, shall use its
best efforts to comply in all material respects with all building
codes, zoning and licensing requirements, and other requirements
of the duly constituted federal, state and local governmental
authorities with respect to the Premises. MANAGER may, in its
discretion, appeal from any requirement it deems unwarranted and
it may compromise or settle any dispute regarding such
requirements.
H. REAL ESTATE EXPERTS. MANAGER may enlist the services of other
real estate brokers or agents in the performance of its duties
hereunder to the extent deemed necessary or appropriate. The
expense of the services will be paid by the OWNER.
I. RENT COLLECTION: MANAGER will use its best efforts to collect
rent and other income from the real estate interests of the
OWNER. MANAGER may in its discretion compromise claims for such
rent and other income and, at the expense of the OWNER, institute
legal proceedings in its own name or in the name of the OWNER to
collect the same, to oust or dispossess tenants or others
occupying such real estate interests, and otherwise to enforce
the rights of the OWNER with respect thereto and in its
discretion may compromise or settle such proceedings.
J. INSURANCE: MANAGER, at OWNER'S expense, shall at all times during
the term of this Agreement, carry such (i) general liability,
accident and property damage insurance, (with OWNER and MANAGER
as named insureds), (ii) fire, extended coverage and malicious
mischief insurance, (iii) rental insurance and (iv) such other
insurance for the protection of OWNER and MANAGER, as shall be
directed from time to time by OWNER. All such policies shall be
in the name of and made payable to OWNER.
5. COMPENSATION: OWNER hereby agrees to pay the MANAGER a monthly
management fee in the amount of five percent (5%) of Gross Income (as
hereinafter defined) derived from the operation of the Premises during the
preceding month. "Gross Income" shall mean any and all receipts from the
Premises Including: rents, percentage rents, overage rents, expense
participation rents and all rents or payments from tenants of any nature, income
from services rendered to tenants (i.e., maid service, janitorial or cleaning
service, telephone answering service, watchman or guard service, trash
collection, elevator service and similar services customarily furnished or
rendered in connection with the rental of real property), and all income from
concessions of any kind, including all coin-operated facilities on the Premises.
Also Included in Gross Income shall be any amounts collected in lieu of the
above-enumerated items such as forfeited security deposits and judgments or
awards collected in the enforcement of any lease or rental agreement.
6. LEASING COMMISSIONS: OWNER shall also pay MANAGER a leasing fee in
conjunction with leases of space in OWNER'S commercial (as opposed to
residential) properties which are procured by MANAGER. The leasing fee shall be
at the prevailing rate for similar services performed by independent qualified
persons regularly performing such services in the community in which the
property is located; provided, however, in no event shall such leasing fee
exceed six percent (6%) of the rent to be paid during the term (including any
renewals) of the lease procured. The amount and timing of payment of such
leasing fees shall be agreed to by OWNER and MANAGER prior to execution of the
lease with respect to which the leasing fee is payable. MANAGER may divide its
leasing fee with outside leasing agents or other third parties. Any division of
the leasing fee payable pursuant to this Agreement shall be disclosed to OWNER
at the time the fee is negotiated.
7. STATUS OF OWNER: In the event the terms of this Agreement at any
time shall, in the opinion of the counsel for the OWNER, impair the status of
the OWNER as a "real estate investment trust" within the meaning of Part II,
subchapter M of the Internal Revenue Code of 1954, as amended, OWNER and MANAGER
shall, within 30 days after the OWNER shall have given to the MANAGER written
notice of such impairment, negotiate such amendments as may be necessary to
restore, In the opinion of counsel for the OWNER, such status of the OWNER.
8. CONFORMITY WITH LAW: MANAGER covenants, with respect to the
Premises, and the fixtures and appurtenances thereto, that at OWNER'S expense
(subject to the limitations on MANAGER'S contractual authority as herein set
forth), MANAGER shall use due diligence to cause them to conform in all material
respects to applicable requirements of law or duly constituted authority, and to
the applicable requirements of all carriers of insurance on the Premises, and
Board of Underwriters, Rating Bureau, or similar organizations including, but
not limited to, requirements pertaining to the health, welfare, or safety of
employees or the public, such as adequate toilet facilities, fire exits, exit
signs, safe electric wiring and elevators. MANAGER shall, at OWNER'S cost and
expense (but subject to the herein set forth limitations on MANAGER'S
contractual authority), use its best efforts to make such improvements or
installations as may be necessary to satisfy this requirement and shall, at all
times during the term, promptly comply in all material respects with such
requirements whether now or hereafter in effect and whether now or hereafter
applicable for any reason whatsoever. Manager shall use due diligence to prevent
the Premises from being used for any unlawful purpose.
9. INSURANCE CLAIMS: MANAGER shall settle and adjust any claims
against any insurance company under the fire or extended coverage policies of
insurance as described in paragraph 3J hereof, but before making final
settlement of any claim over Fifty Thousand Dollars ($50,000.00), the written
approval of OWNER shall be obtained.
10. SUBORDINATION: OWNER and MANAGER agree that this Agreement is and
shall be subordinated to any mortgages or trust deeds held by or for any bank,
insurance company, seller or accredited lending institution that may be now on
or hereafter placed upon the Premises, and to any and all advances to be made
thereunder, and to the interests thereon and all renewals, replacements and
extensions thereof.
11. CONDEMNATION: In the event of any condemnation or taking of all or
any part of the Premises, all damages shall be the exclusive property of OWNER;
provided, however, MANAGER shall be entitled to any proceeds recovered by
MANAGER in its own right on account of any damage to MANAGER'S business by
reason of such condemnation.
12. DEFAULT: If either party shall default under this Agreement, the
successful party shall be reimbursed by the other for all costs and expenses
incurred in the enforcement of any of the provisions of this Agreement,
including reasonable attorney's fees.
13. LIABILITY OF MANAGER: MANAGER and its officers, directors,
shareholders, affiliates, agents and employees shall not be liable to OWNER or
to any other person for any act or omission in the course of performance of
their duties hereunder except for their willful misfeasance, gross negligence or
reckless disregard of duty or their not having acted in good faith in the
reasonable belief that their action was in the best interests of OWNER. The
OWNER shall defend, indemnify and save harmless MANAGER and its officers,
directors, shareholders, affiliates, agents and employees from and against any
and all liabilities, claims, damages, costs and expenses (including reasonable
attorneys fees and amounts reasonably paid in settlement) incurred by reason of
or arising out of the performance or nonperformance of their duties under or by
reason of this Agreement; provided, however, there shall be no such
indemnification for liabilities, claims, damages, costs or expenses incurred by
any such person or entity by reason of their willful misfeasance, gross
negligence, reckless disregard of duty or bad faith in the conduct of their
duties under or by reason of this Agreement. This paragraph 13 shall survive the
termination of this Agreement.
14. NOTICE: Whenever, under the terms of this Agreement, any notice is
required or permitted to be served upon the other party, said notice shall be
served upon the other party by personal service or by certified mail.
Any such notice shall be deemed given when personally received by the party to
whom the notice is directed; provided, however, in the event notice is mailed,
such notice shall be deemed given when deposited in the United States Mail with
postage prepaid. Notices to each party shall be until further notification in
writing, shall be delivered to the following addresses:
To OWNER:
Cedar Income Fund, Ltd.
c/o Cedar Bay Realty Advisors, Inc.
00 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
To MANAGER:
Brentway Management LLC
00 Xxxxx Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxx, XX 00000
15. CUMULATIVE RIGHTS: The various rights and remedies of OWNER and
MANAGER provided in this Agreement shall be construed as cumulative and no one
of them is exclusive of the others or exclusive of any rights or remedies
allowed OWNER or MANAGER by law.
16. CONSENT: Neither OWNER nor MANAGER shall unreasonably withhold its
consent whenever such consent shall be required under the terms of this
Agreement.
17. PARAGRAPH HEADINGS: The paragraph headings contained herein are
inserted only as a matter of convenience and for reference and in no way define,
limit or describe the scope or intent of this Agreement or in any way affect the
terms and provisions hereof.
18. RULES OF CONSTRUCTION: Words and phrases herein shall be construed
as in the singular or plural number and as masculine, feminine or neuter gender
according to the context.
19. AMENDMENTS: This Agreement may be amended only by the mutual
consent of the parties. However, no such amendment shall become effective unless
it be reduced to an instrument in writing specifically referring to this
Agreement and signed by both parties.
20. SUCCESSORS AND ASSIGNS: The provisions of this Agreement shall be
binding upon and inure to the benefit of the immediate parties hereto and their
respective legal representatives, successors and assigns. Neither party may
assign this Agreement without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
OWNER MANAGER
CEDAR INCOME FUND, LTD. BRENTWAY MANAGEMENT LLC
BY /s/ Xxxxxx X. Xxxxxx BY /s/ Xxxxxx X. Xxxxxx
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TITLE: Vice President TITLE: President
