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EXHIBIT 10.3
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ASSET MANAGEMENT AGREEMENT
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THIS AGREEMENT is made as of this 30th day of September, 1997 by and
between [ ], a(n) [(U.S. STATE) (LIMITED PARTNERSHIP OR LIMITED LIABILITY
COMPANY)] (the "Company"), and Cardinal Realty Services, Inc., an Ohio
corporation ("CRSI").
R E C I T A L S
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WHEREAS, Lexreit Properties, Inc., an Ohio corporation ("Lexreit"), is
a real estate investment trust and is the sole general partner of Cardinal
Properties L.P. (the "Operating Partnership"); and
WHEREAS, CRSI is the sole limited partner of the Operating Partnership;
and
WHEREAS, the Operating Partnership holds CRSI's interests in various
limited partnerships and limited liability companies, including the Company
(collectively, the "Partnerships"), each of which owns and will continue to own
an apartment community (individually, a "Property"); and
WHEREAS, the general partner or managing member of each Partnership,
including the Company, is and will continue to be directly or indirectly, CRSI;
and
WHEREAS, Lexreit is the limited partner or member of each Partnership,
including the Company; and
WHEREAS, CRSI and its wholly-owned subsidiaries are engaged in the
business of providing administrative and real estate services for real property
owners; and
WHEREAS, the Company desires to employ CRSI to perform the asset
management services herein described;
NOW, THEREFORE, in consideration of the promises, mutual
representations, warranties, covenants and agreements contained herein, the
parties agree as follows:
1. APPOINTMENT OF CRSI. The Company hereby engages CRSI, as its sole
and exclusive asset management services provider, to perform the tasks
enumerated in this Agreement for the compensation and subject to the provisions
set forth herein.
2. DUTIES OF CRSI. Subject to the provisions hereof, CRSI will have the
duty and authority to expeditiously and within reasonable time periods perform
the following acts and provide the following services to the Company:
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(a) PREPARATION AND DISTRIBUTION OF REPORTS. CRSI will prepare
and distribute reports to the Company regarding the Company's
operations, finances, management and all other matters that have or may
have an effect on the Company's interest in the Property.
(b) ALLOCATION AND DISTRIBUTION OF FUNDS. CRSI will allocate
and distribute Company funds to the partners or members, as the case
may be, in accordance with the terms of the governing documents.
(c) INTERNAL AUDIT SERVICES. CRSI will, on an annual basis,
systematically inspect, or cause to be inspected, the account records
and the transactions that underlie the Company's financial statements.
(d) TAX PREPARATION SERVICES. CRSI will prepare, or cause to
be prepared, and file tax returns on behalf of the Company, and CRSI
will supervise, prepare, review and distribute copies of the Company's
tax returns to the Company. CRSI will also supervise, prepare, review
and distribute copies of K-1 forms to the partners or members.
(e) REAL ESTATE TAX SERVICES. CRSI will perform certain
services in connection with the real estate taxes of the Property,
including but not limited to: (i) analyzing how the levied real estate
taxes relate to the valuation of the Property; (ii) recommending
whether the Company should file an appeal regarding the assessed
valuation of the Property or the amount of real estate taxes levied in
connection therewith; (iii) filing and prosecuting, if appropriate,
said appeal with the pertinent governmental authority and seeking a
reduction of the amount of the assessed value of the Property; (iv)
completing and signing the requisite documents in connection with the
performance of any of such real estate tax services; (v) retaining
professional real estate appraisers or other professionals, or both,
whose services are required in order to file an appeal for reducing the
assessed value of the Property; and (vi) negotiating, if applicable, a
settlement with the subject governmental authority of any appeal
relating to the real estate taxes subject to the terms set forth in
this Agreement.
(f) EMPLOYEE PAYROLL PROCESSING SERVICES. CRSI will generate
and administer the Company's employee payroll including, without
limitation, maintaining an employee database, creating, distributing
and reviewing employee time sheets, entering and processing data,
creating and distributing employee payroll checks, preparing and
distributing payroll-related reports and complying with local, state
and federal tax authorities and regulatory organizations.
(g) EMPLOYEE W-2 PREPARATION AND DISTRIBUTION. CRSI will, on
an annual basis, prepare and distribute W-2 forms to the Company
employees.
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(h) REGULATORY COMPLIANCE. CRSI will obtain, or cause to be
obtained, on behalf of the Company all appropriate federal, state or
local licenses and will monitor and maintain compliance of the Company
with all appropriate federal, state and local laws, rules and
regulations. CRSI will participate in, and retain and supervise all
independent third parties, as needed, for, the Company's required
governmental filings.
(i) INSURANCE ADMINISTRATION. CRSI will administer insurance
matters for the Company, including procuring insurance with respect to
the Property, negotiating insurance premium payments and handling all
insurance claims.
(j) LOAN ADMINISTRATION. CRSI will administer and monitor the
Company's existing loan or loans, which are secured by the Property,
and will, when applicable, negotiate loans to refinance the Company's
outstanding indebtedness for the Property.
(k) REAL ESTATE SERVICES. When and if the Company offers the
Property for sale, CRSI will serve as a real estate broker and exert
reasonable efforts to consummate said sale.
3. COMPANY'S OBLIGATIONS. In connection with the employment of CRSI,
the Company hereby agrees that it will perform or comply with the following:
(a) TRANSMITTAL OF FINANCIAL INFORMATION. The Company will
fully and accurately complete all daily reports and other documentation
required by CRSI to fulfill its obligations in accordance with the
terms of this Agreement. The Company will transmit such reports and
documents to CRSI.
(b) LEGAL, ACCOUNTING AND OTHER THIRD PARTY OBLIGATIONS. The
Company will be responsible for payment of all legal, accounting and
other matters requiring the engagement of third parties by CRSI
pertaining to the Company or the Property other than those matters
which solely affect or involve CRSI or its duties and obligations
pursuant to this Agreement. The Company will promptly notify CRSI of
all legal matters of which the Company becomes aware regardless of
materiality. The Company will be responsible for paying for its fees
and costs payable to third parties for legal, accounting and other
third party services directly to the party which is engaged (whether by
the Company or by CRSI on the Company's behalf) to perform such
services.
4. CUSTODY AND CONTROL OF THE COMPANY'S CASH. The Company authorizes
CRSI to retain custody and control of its cash on hand (the "Funds") and invest
the Funds, in the Company's name, in either demand or overnight commercial paper
facilities, or both (the "CP Facilities"). CRSI agrees to make the Funds
immediately available to the Company on an as-needed basis. As
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consideration for CRSI's services as described above (in addition to the
compensation set forth in Section 5), CRSI will retain all interest accruing on
the Funds under the CP Facility.
5. COMPENSATION; OUTSOURCING.
(a) In consideration for providing the services as described
herein, in addition to the interest accruing on the Funds under the CP
Facility (as described in Section 4), CRSI will be paid on a monthly
basis a fee equal to (i) an asset management fee of one percent (1%) of
the gross monthly revenues collected by the Company; plus (ii) a
payroll processing fee of $43. Furthermore, CRSI will be paid on an
annual basis (i) a W-2 form preparation and distribution fee in an
amount equal to $1.50 per employee; plus (ii) an insurance
administration fee in an amount equal to $12 per apartment unit; plus
(iii) a tax preparation fee of $1,000; plus (iv) an audit preparation
fee of $1,000 if any loan documents or other agreements executed by the
Company relating to its Property require an annual audit. In addition,
if applicable, CRSI will be paid (i) a real estate tax appeals fee in
an amount equal to forty percent (40%) of first year savings along with
a maintenance fee of $100; (ii) a loan negotiation fee in an amount
equal to one percent (1%) of the face amount of any new or refinanced
loan with respect to the Property; and (iii) a real estate commission
fee in an amount equal to six percent (6%) of the sale price (inclusive
of any fees payable to outside brokers retained by the seller) in the
event of a change in control (as defined in Section 7(b)) of the
Company.
(b) With respect to any of the services to be provided by CRSI
hereunder, CRSI may, at its option, outsource the provision of such
services to third party service providers, and CRSI is hereby
authorized to take such actions as are necessary to outsource such
services. In the event that any services are outsourced, the Company
will be responsible for paying the charges of any third party service
provider. The Company shall not be obligated to pay any fees due to
CRSI hereunder for such services as are outsourced pursuant to this
Section 5(b).
6. SPECIAL SERVICES. The Company will pay for any special services
which it may request and which are not provided by CRSI under the terms of this
Agreement. Payment for such services will be at the normal price and terms
pursuant to which CRSI provides such services, or, if CRSI does not normally
provide such services, at such price and terms as the Company and CRSI mutually
agree upon.
7. TERM
(a) Unless terminated earlier pursuant to Section 9 of this
Agreement, the term of this Agreement will continue for a period of
three (3) years from the date hereof and will renew automatically for
sequential one (1) year periods unless the Company or CRSI, or both,
provides written notice to the other, six (6) months prior to the
expiration of the then current term, of its desire to terminate this
Agreement.
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(b) Notwithstanding subparagraph (a) of this Section 7, CRSI
may, at its option, terminate this Agreement upon ninety (90) days
written notice to the Company in the event of a "change in control" of
the Company. For purposes of this Agreement, a "change in control" of
the Company means that (i) the Company has sold, or otherwise disposed
of, all or substantially all of the assets of the Property; or (ii) the
Company ceases to own a majority interest of the Property.
8. CRSI'S RESPONSIBILITY AND INDEMNIFICATION. CRSI's duties are only
such as are specifically provided for in this Agreement, and CRSI will incur no
liability whatsoever to the Company or any other party, except for CRSI's gross
negligence or willful misconduct. CRSI may consult with counsel and will be
fully protected in any action taken in good faith in accordance with such
advice. CRSI will be fully protected in acting in accordance with any written
instructions given to CRSI hereunder and believed by it to have been executed by
the proper parties.
The Company agrees to indemnify, defend upon request and hold CRSI and
all of its subsidiaries, affiliates, stockholders, directors, officers,
employees, agents, attorneys, consultants, independent contractors, designees,
successors and assignees, and each of such persons' spouses, family members and
representatives (the "Indemnified Parties"), harmless from and against, and to
reimburse the Indemnified Parties for, any losses and expenses which the
Indemnified Parties may suffer, sustain or incur and which arise out of or
relate to (a) any act or failure to act of the Company, any employee of the
Company or any person controlled by the Company or under contract with the
Company; (b) any breach of this Agreement; or (c) any act or failure to act of
CRSI taken in performance of or arising out of its obligations pursuant to this
Agreement, unless such act or failure to act constitutes gross negligence or
willful misconduct of CRSI.
Upon request of CRSI, the Company will immediately undertake the
defense of any legal action against or involving the Indemnified Parties, and
will retain reputable, competent and experienced counsel to represent the
interests of the Indemnified Parties approved by CRSI, which approval will not
be unreasonably withheld. The Company will not settle any legal action without
the specific prior written consent of each Indemnified Party named in the action
and CRSI, which consent may not be unreasonably withheld. The Indemnified
Parties or any of them will have the right to retain separate counsel and to
participate in the defense, compromise or settlement of the action at the
expense of the respective Indemnified Parties.
9. DEFAULT. In the event that CRSI or its successors or assigns
repeatedly, substantially and materially fails to meet the standards and
specifications hereinabove provided with respect to the services to be rendered
under this Agreement, or engages in gross negligence, fraud or willful
misconduct in the performance of its duties, the Company will be released to
secure such services from other parties provided that as long as CRSI continues
to provide services under this Agreement, it will be paid for such services in
accordance with Section 5 herein. No default will be deemed to occur, however,
until the Company has served written notice upon CRSI describing in reasonable
detail the events or occurrences giving rise to such claim of default and CRSI
has failed within thirty (30) days after receipt of such notice to cure or
remedy any such claim of default.
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The foregoing provisions notwithstanding, the Company will not have the
right to consider this Agreement breached if delays and interruptions in the
performance of the required services are the result of causes beyond the control
of CRSI or acts of God, provided that CRSI is using its reasonable best efforts,
in the case of causes beyond its control, to provide alternative sources of
services where needed.
In the event that the Company fails to perform any term or condition of
this Agreement, and fails within ten (10) days of receipt of notice from CRSI to
cure such failure, CRSI may terminate this Agreement upon written notice to the
Company.
10. NOTICES AND REQUESTS. Any notice, request or demand required may be
delivered by either party to the other in person or by registered or certified
mail to the following respective addresses and shall be deemed delivered upon
receipt:
If to Company:
To the Company
c/o Lexreit Properties, Inc.
The Huntington Center
00 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Treasurer
If to CRSI:
Cardinal Realty Services, Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxxxxxxx, Xxxx 00000
Attention: Secretary
11. MISCELLANEOUS.
(a) Should any term or provision hereof be deemed invalid,
void or unenforceable, the remainder of this Agreement will nonetheless
remain in full force and effect.
(b) The terms and conditions of this Agreement are governed by
and construed in accordance with the substantive laws of the State of
Ohio and will bind and benefit the respective parties hereto and their
successors and assigns.
(c) This Agreement contains the complete understanding of the
parties with respect to the Company's employment of CRSI to render the
services described herein and any other representations, inducements,
promises, agreements,
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arrangements or undertakings, whether oral or written, express or
implied, will have no force or effect.
(d) This Agreement may only be assigned with the prior written
consent of the other party to this Agreement.
(e) Any change, modification or discharge of the terms herein
will be valid only if in writing and executed by the Company and CRSI.
IN WITNESS WHEREOF, the Company and CRSI have set their hands and seals
to this Agreement as of the day and year first above written.
[COMPANY NAME]
CARDINAL REALTY SERVICES, INC., as General
Partner or Managing Member
By:
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Name:
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Title:
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CARDINAL PROPERTIES L.P., as Limited Partner
or Member
By: Lexreit Properties, Inc., as General Partner
By:
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Name:
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Title:
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CARDINAL REALTY SERVICES, INC.
By:
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Name:
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Title:
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