EXHIBIT 10.3
FORM OF MANAGEMENT AGREEMENT BETWEEN
REGISTRANT AND XXXXX MANAGEMENT COMPANY, INC.
MANAGEMENT AGREEMENT
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THIS AGREEMENT is made and entered into as of the _____ day of ____________,
______, between XXXXX REAL ESTATE FUND ___, L.P., a Georgia limited partnership
("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 :
- - - - - - - - - -
WHEREAS, Owner intends to raise money from the sale of limited partnership
interests for the acquisition or construction of income-producing improvements
on several tracts as yet unspecified but to be acquired by Owner (the
"Partnership Properties"); and
WHEREAS, Owner intends to employ Manager to manage any leasable improvements
that may be constructed on the Partnership Properties; 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 covenants 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 Partnership Properties, but shall exclude
interest and other investment income of Owner and proceeds received by Owner
from 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 Partnership Properties and all parking and common areas located
on Partnership Properties.
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 "Partnership Properties" 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 the
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sole and exclusive agent and manager of the Partnership Properties 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 its
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duties hereunder to manage, operate and maintain the Partnership Properties 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 Partnership Properties.
2.3 Specific Duties. Manager's duties include the following:
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(a) Lease Obligations. Manager shall perform all duties of the landlord
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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 Partnership Properties to be
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maintained in 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 Partnership Properties 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 Partnership Properties, or for the safety of occupant or other persons,
or required to avoid the suspension of any necessary service
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of the Partnership Properties 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 upon
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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.
(d) Personnel. In the event Owner notifies Manager of the necessity of
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Manager employing additional personnel to manage the Partnership Properties,
Manager shall cause to be hired personnel to maintain and operate the
Partnership Properties. 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 Partnership Properties. 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 Partnership Properties,
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 maintaining and operating the Partnership
Properties, 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 Partnership Properties. 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,
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commissions, discounts and allowances, however designed).
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(g) Monies Collected. Manager shall collect all rent and other monies from
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tenants and any sums otherwise due Owner with respect to the Partnership
Properties in the ordinary course of business. In collecting such monies,
Manager shall inform tenants of the Partnership Properties 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 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 Partnership
Properties shall be promptly deposited by Manager in the Account. Manager
shall have the right to designate 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 Partnership Properties 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 with
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the tenants of the Partnership Properties.
(j) Partnership Agreement. Manager has received a copy of Owner's Agreement
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of Limited Partnership (the "Partnership 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 Partnership Agreement.
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(k) Signs. Manager shall place and remove, or cause to be placed and
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removed, such signs upon the Partnership Properties 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 Owner
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such procedures with respect to Partnership Properties 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
Partnership Properties) on behalf of Owner in the ordinary course of the
management, operation and maintenance of the Partnership Properties 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 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 Partnership
Properties 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. Manager shall maintain all office records and books of
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account and shall record therein, and keep copies of, each invoice received for
services, work and supplies ordered in connection with the maintenance and
operation of the Partnership Properties. Such records shall be maintained on a
double entry basis. Owner and persons designated by Owner shall at all
reasonable times 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 Partnership Properties and this Agreement, all
of which Manager agrees to keep safe, available and separate from any records
not pertaining to Partnership Properties, at a place recommended by Manager and
approved by Owner.
(b) Monthly Reports. On or before the 15th day of each month following the
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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;
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(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 Partnership Properties 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.
(d) Returns Required by Law. Manager shall execute and file when due all
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forms, reports, and returns required by law relating to the employment of its
personnel.
(e) Notices. Promptly after receipt, Manager shall deliver to Owner all
notices from any tenant, or any governmental authority, that are not of a
routine nature. Manager shall also report expeditiously to Owner notice of any
extensive damage to any part of the Partnership Properties.
ARTICLE III.
EXPENSES
3.1 Owner's Expenses. Except as otherwise specifically provided, all costs
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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 Partnership
Property, to the extent permitted by the Statement of Policy Regarding Real
Estate Programs adopted by the North American Securities Administrators
Association, Inc. on October 9 and 12, 1988, effective January 1, 1989, as
amended. All costs and expenses for which
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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. Manager shall, out of its own funds, pay all of its
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general overhead and administrative expenses.
ARTICLE IV.
MANAGER'S COMPENSATION
4.1 Management Fee. Commencing on the date hereof, Owner shall pay Manager,
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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 Partnership Properties, 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 Partnership Properties 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 the cost of
such audit.
ARTICLE V.
INSURANCE AND INDEMNIFICATION
5.1 Insurance to be Carried.
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(a) The Partnership Properties 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 Partnership 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 Partnership Property is located,
employer's liability insurance applicable to and covering all employees of
Manager at the Partnership Properties 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.
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5.2 Cooperation with Insurers. Manager shall cooperate with and provide
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reasonable access to the Partnership Properties 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 Partnership Properties, and any
damage or destruction to the Partnership Properties 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 Partnership Properties, 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 or 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 and
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shall continue until terminated in accordance with the earliest to occur of the
following:
(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;
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(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 Partnership Properties.
(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 Partnership Properties, except personal property paid for and
owned by Manager. Manager shall also, for a period of sixty (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 Partnership Properties.
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(c) Manager shall render to Owner an accounting of all funds of 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
Partnership Properties 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 respective 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 FUND ___, L.P.
c/x Xxxxx Partners, L.P.
General Partner
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 in interest of the Limited Partners of Owner and only by an instrument
in writing signed by the party against whom enforcement of the amendment is
sought.
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7.6 Headings. The headings of the various subdivisions of this Agreement are
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for reference only and shall not define or limit any of the terms or provisions
hereof.
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 and
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all agreements between Owner and Manager respecting the management of the
Partnership Properties. There are no representations, agreements, arrangements
or understandings, oral or written, between Owner and Manager relating to the
management of the Partnership Properties that are not fully expressed herein.
7.9 Disputes. If there shall be a dispute between Owner and Manager relating
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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 terms
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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 Partnership Properties or the
business of Owner.
7.11 Independent Contractor. Manager and Owner shall not be construed as
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joint venturers or partners 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 Manager to Owner under this Agreement is
that of an independent contractor.
(THE REMAINDER OF THIS PAGE WAS INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
OWNER MANAGER
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XXXXX REAL ESTATE FUND __, X.X. XXXXX MANAGEMENT COMPANY, INC.
A Georgia Limited Partnership A Georgia Corporation
By: XXXXX PARTNERS, L.P.
A Georgia Limited Partnership
General Partner By:_____________________________________
Xxx X. Xxxxx, III
President
By: XXXXX CAPITAL, INC., Attest:
A Georgia Corporation
General Partner
By:______________________________________
Name:____________________________________
Title:___________________________________
By:_____________________
Xxx X. Xxxxx, III
President
Attest:
By:__________________________
Name:________________________
Title:_______________________
By:______________________________
XXX X. XXXXX, III
General Partner
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