REAL PROPERTY MANAGEMENT AGREEMENT
REAL
PROPERTY
MANAGEMENT
AGREEMENT
THIS REAL
PROPERTY MANAGEMENT AGREEMENT (“Agreement”) is effective as of the___
day of ____________, 2009, by and between Xxxxxxx Short Term Income Properties
XX, Inc., a Maryland corporation (“Company”), and Xxxxxxx Income REIT
Management, Inc., a Texas corporation (“Manager”).
ARTICLE
I
AGENCY;
TERM
A. Appointment/Acceptance. Company
hereby appoints Manager, and Manager hereby accepts appointment, on the terms
and conditions hereinafter provided, as exclusive managing and leasing agent for
all properties acquired by Company. All properties acquired by
Company which from time to time are subject to this Agreement are hereinafter
referred to collectively as the “Properties” and individually as the
“Property.”
B. Term. Subject
to Article IV below, the term of this Agreement (the "Term") shall be a period
of one (1) year from the date first set forth above and thereafter shall be
automatically extended on an annual basis unless terminated in writing by either
Company or Manager at least thirty (30) days prior to the expiration of the Term
or extension thereof.
ARTICLE
II
MANAGER’S
DUTIES
A. Property
Management.
1. Power and
Authority. Manager shall have, and is hereby granted, full
power and authority to exercise all functions and perform all duties in
connection with the operation and management of the Properties, subject to the
right retained by Company to supervise the activities of Manager pursuant to
this Agreement. The power and authority of Manager shall include but
not be limited to:
a. Investigating,
hiring, paying, supervising and discharging all personnel necessary or
desirable, in Manager’s good faith judgment, to be employed in connection with
the maintenance and operation of the Properties. Compensation for the
service of all such employees and the cost of worker’s compensation insurance
and any benefits with respect to such employees shall be an operating expense of
the Properties. Manager, on behalf of Company, may employ affiliated
persons or entities of Manager or Company (hereinafter “Affiliates”) as long as
such employment is at rates that do not exceed commercially reasonable rates
that would be paid to an unaffiliated person or entity for similar services,
supplies, materials or other such dealings. Manager is authorized to
engage, on behalf of and at the expense of Company, professional persons (such
as lawyers and accountants) and consultants (such as tax and energy consultants)
to render services for the Properties.
b. Maintaining
business-like relations with tenants.
c. Using
good faith efforts to lease vacant space in the Properties and renew existing
leases with tenants in accordance with the current rental schedule from time to
time submitted by Manager and approved by Company (or in the absence of such
current rental schedule approved by Company, at rents reasonably determined by
Manager taking into consideration market factors then prevailing) and on such
other terms and conditions as Manager in its sole discretion shall
determine. Manager shall execute leases and rental agreements with
tenants and agreements with concessionaires in Manager’s name as agent for
Company on such terms and conditions as Manager, in its sole discretion, shall
determine. Manager shall have the right to reduce the rental rate by
an amount up to ten percent (10%) of the rental rate stipulated on the then
current rental schedule approved by Company (if any) if, in Manager’s sole
discretion, such reduction is necessary to expedite rental of such space under
the competitive rental and economic conditions then prevailing.
d. Collecting
all monthly rentals and other charges due from tenants, all rents and other
charges due from concessionaires, users of parking spaces and from users or
lessees of other facilities in the Properties. Company hereby
authorizes and directs Manager to request, demand, collect, receive and receipt
for any and all charges or rents which may at any time be or become due to
Company, and to take such legal action as necessary to evict tenants delinquent
in payment of monthly rent and to take such legal action as necessary to collect
any rentals owing from tenants.
e. Causing
the buildings, appurtenances and grounds on the Properties to be maintained
according to customary industry standards including, but not limited to,
landscaping, interior and exterior cleaning, painting and decorating, plumbing,
steam fitting, carpentry and other normal maintenance and repair work or any
extraordinary maintenance and repair work deemed necessary or desirable by
Manager, in Manager’s good faith judgment.
f. Making
contracts for water, electricity, gas, fuel, oil, telephone, pest control, trash
removal, insurance and other necessary services as Manager shall deem necessary
or desirable, in Manager’s good faith judgment. Additionally, Manager
shall place purchase orders for such equipment, tools, appliances, materials and
supplies as are necessary or desirable, in Manager’s good faith judgment, to
properly maintain the Properties. All such contracts and orders may
at Manager’s choice be made in either the name of Manager or in the name of
Company and shall be on such terms and conditions as Manager deems
advisable. Manager shall use good faith efforts to have such
contracts provide that Manager (or Company, as applicable) can terminate on
thirty (30) days notice.
g. Taking
such action as may be necessary or desirable, in Manager’s good faith judgment,
to comply with any orders or requirements affecting the Properties issued by
federal, state, county or municipal authority having jurisdiction over the
Properties. Manager shall promptly notify Company of the receipt and
contents of any such governmental orders or requirements.
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h. Causing
to be disbursed or paid, from the monies collected from the operation of the
Properties and such other monies as may or shall be advanced by Company to
Manager: (1) salaries and any other compensation or fees due and
payable to Manager and employees of the Properties in connection with the
management of the Properties and the cost of workers’ compensation insurance
with respect to such employees; (2) payments required to be made to the holders
of any mortgages affecting the Properties; (3) current amounts due for premium
charges under contracts of insurance for fire and other hazard insurance
premiums and amounts due for ad valorem taxes or other assessments on the
Properties; (4) sums otherwise due and payable in connection with the operation
and management of the Properties, including but not limited to, utility bills,
service bills, supply bills license fees and payroll taxes; (5) repair expenses,
capital improvement costs and other sums retained for such reserves as Manager
deems necessary or desirable, in Manager’s good faith judgment, for
the prudent management and operation of the Properties; and (6) the balance of
funds, if any, shall be paid monthly to Company. Unless otherwise
agreed to in writing by Manager and Company, such payments and disbursements
shall be made by Manager in any order it may determine.
i. Verifying
appraisals and bills for real estate and personal property taxes, improvement
assessments and other like charges which are or may become liens against the
Properties. Manager may take such legal action as necessary to appeal
such tax appraisals as Manager may decide, in its reasonable judgment, to be
prudent.
2. Manager’s Right to
Subcontract. Manager reserves the right, in its sole
discretion, to subcontract some or all of the property management and leasing
functions described herein to property managers, leasing agents and certain
other third parties. However, except as expressly provided herein,
the fees to be paid to Manager under this Agreement are inclusive of fees
payable to such third parties and Manager will pay the third parties with whom
it subcontracts for these services a portion of its property management or
leasing fees.
3. Company’s Right to
Supervise. Company at all times shall have the right to
supervise Manager in its performance of any or all of these
activities. Company shall have the right, if it so elects, to direct
Manager in the conduct of any of these activities. Absent any such
direction from Company, Manager shall be entitled to perform its duties
hereunder in accordance with its own good faith judgment.
4. Agency;
Payments. Except for the employment, supervision and discharge
of personnel in connection with the maintenance and operation of the Properties,
who shall be employees of Manager and not of Company (although all costs with
respect to such employees shall, to the extent allocable to the Properties, be
deemed costs of the Properties), all action taken by Manager pursuant to the
provisions of this Agreement shall be done as agent of Company and obligations
or expenses incurred thereunder shall be for the account, on behalf and at the
expense of Company, but any such actions may be taken or made either in
Company’s name or Manager’s name. Any payments to be made by Manager
hereunder shall be made out of such monies as are available from rentals and
other collections from the Properties and such other monies as may be provided
by Company. In the event anticipated disbursements for Properties
expenses and Company management shall in any month be in excess of the
anticipated revenues, Company agrees to advance sufficient funds to meet the
obligations (including all costs with respect to the employees of the Properties
described in II(A)(1)(a) hereof, including Affiliates, the Management Fee,
reimbursement of expenses described in III(A) hereof) within five (5) days after
Manager’s request. Manager shall not be obligated to make any advance
to or for the account of Company or to pay any sum contemplated by this
Agreement except out of funds held by Manager on behalf of Company or out of
funds provided by Company to Manager, nor shall Manager be obligated to incur
any liability of or for the account of Company without assurance or proof from
Company that the necessary funds for the discharge thereof will be provided
promptly.
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5. Bank
Account. Manager shall establish and maintain, in a manner to
indicate the custodial nature thereof, with a bank, whose deposits are insured
by the Federal Deposit Insurance Corporation, a separate bank account as agent
of Company for the deposit of rentals and collections from the Properties, which
shall not be commingled by Manager with funds from other projects or other funds
of Manager or its Affiliates. Manager has authority to draw thereon
(a) for any payments to be made by Manager pursuant to the terms of this
Agreement, (b) to discharge any liabilities or obligations incurred pursuant to
this Agreement, (c) for the payment of the Management Fee described in III(A)
hereof and the various expense reimbursements due Manager
hereunder.
6. Operating
Budget. On or before December 1 of each year, Manager shall
prepare and submit to Company for its consent an operating budget with respect
to the Properties for the next ensuing calendar year (the
“Budget”). If Company does not consent to the Budget submitted by
Manager then, pending such consent or the submission to Manager by Company of an
alternative Budget, Manager shall be authorized to rely on the Budget for the
prior year, but with a four percent (4%) increase in each line
item.
7. Discretion. Manager
shall have and is hereby granted sole and complete discretion to exercise the
powers and functions granted herein and Manager shall not be required to consult
with Company or obtain Company’s approval before taking any action permitted
hereunder; provided, however, except in cases of emergency, Manager shall not
incur any obligation in excess of $10,000.00 without the consent of
Company. The approval by Company of a Budget shall be deemed the
consent of Company to the expenses indicated on such Budget. For
these purposes, an “emergency” shall be deemed to exist if in the good faith
judgment of Manager, prompt maintenance or repairs are needed in order to
prevent death, bodily injury or material property damage.
8. Records. Manager
shall maintain, or cause to be maintained, books of account of all receipts and
disbursements from the management of the Properties. Manager shall
provide monthly statements to Company containing occupancy information and
collection and disbursement reports. Manager shall allow Company’s
accountant or other representatives to review the books and records of the
Properties during reasonable business hours. Manager also shall
provide Company with an annual report for the Properties containing information
about occupancy and receipts and disbursements for the immediately preceding
calendar year.
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ARTICLE
III
COMPENSATION OF
MANAGER
A. Property
Management.
1. Management
Fee. Company shall pay to Manager, as base compensation for
Manager’s duties and obligations under this Agreement, a property management fee
(the “Management Fee”) equal to five percent (5%) of the Effective Gross
Revenues (as hereinafter defined) for the management of retail centers,
office/warehouse buildings, industrial properties and flex properties and 3 to
4% of the Effective Gross Revenues for office buildings, based upon the square
footage and gross property revenues of the buildings. Company will pay a 4% fee
for the management of office buildings under 100,000 square feet in size or with
gross annual revenues under $1,000,000 and a 3% fee for the management of office
buildings of 100,000 square feet or more in size and gross annual revenues of
$1,000,000 or more. Company shall pay the Management Fee to the Manager within
ten (10) days after the end of each calendar month, based upon the Effective
Gross Revenues during said calendar month. For purposes of this
Agreement, “Effective Gross Revenues” shall mean all payments actually collected
from tenants and occupants of the Properties, exclusive of (a) security and
deposits (unless and until such deposits have been applied to the payment of
current or past due rent) and (b) payments received from tenants in
reimbursement of expenses of repairing damage caused by tenants.
2. Leasing
Fee. If Manager provides leasing services with respect to a
Property, Company shall pay to Manager a leasing fee (the “Leasing Fee”) in an
amount equal to the leasing fees charged by unaffiliated persons rendering
comparable services in the same geographic location of the applicable
property. The Leasing Fee shall be payable upon execution of each
lease.
3. Construction Management
Fee. In the event that Manager supervises the construction or
installation of tenant improvements at one or more of the Properties, Company
shall pay Manager a construction management fee equal to 8% of the costs of the
tenant improvements.
4. Oversight
Fee. In the event that Company contracts directly with a
third-party property manager in respect of a Property, Company shall pay Manager
an oversight fee equal to 1% of the Effective Gross Revenues of the Property
managed. In no event will the Company pay both a property management
fee and an oversight fee to Manager with respect to any particular
property.
5. Disposition
Fee. If Manager provides a substantial amount of services, as
determined by Company’s independent directors, in connection with the sale of
one or more assets, Manager will receive a disposition fee equal to (1) in the
case of the sale of real property, the lesser of: (A) one-half of the aggregate
brokerage commission paid (including the disposition fee) or, if none is paid,
the amount that customarily would be paid, or (B) 3% of the sales price of each
property sold, and (2) in the case of the sale of any asset other than real
property, 3% of the sales price of such asset.
6. Reimbursement of
Expenses. Company, within fifteen (15) days of a request by
Manager, shall reimburse Manager for all reasonable and necessary expenses
incurred or monies advanced by Manager on behalf of Company in connection with
the management and operation of the Properties, including the wages and salaries
and other employee-related expenses of all employees of Manager or its
subcontractors who are engaged in the operation, management, maintenance or
access control of the Properties, including taxes, insurance and benefits
relating to such employees, and travel and other out-of-pocket expenses that are
directly related to the management of a specific Property or Properties..
Company will also reimburse fees and expenses of third-party professionals and
consultants related to the management and operation of the Properties, subject
to the limitations on fees and reimbursements contained in Company’s
charter.
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B. Miscellaneous. The
fees and reimbursements set forth in III are cumulative; and the obligations of
Company pursuant to III shall survive the termination of this
Agreement.
ARTICLE
IV
TERMINATION
A. Termination. Notwithstanding
anything herein to the contrary, but subject to Article IV(B) below, this
Agreement may be terminated at any time without cause or penalty by: (a) either
party upon sixty (60) days prior written notice to the other party or (b) by
mutual consent of the parties. The parties may terminate this
Agreement in its entirety or with regard to a specific Property or
Properties
B. Default. Notwithstanding
anything herein to the contrary, either party shall have the right (without
limitation of its other rights and remedies) to terminate this Agreement in the
event of a default by the other party if such default is not cured within thirty
(30) days after written notice is given to the other party (provided that if
such default cannot reasonably be cured within such thirty (30) day period, the
cure period shall be extended as may reasonably be required provided that the
party obligated to cure such default endeavors with diligence to do
so). Additionally, Company shall have the right (without limitation
of its other rights and remedies) to immediately terminate this Agreement at any
time upon thirty (30) days written notice to Manager in the event of Manager’s
fraud, gross malfeasance, gross negligence or willful misconduct.
C. Termination
Payments. Upon termination in whole or as to any Properties,
Company and Manager shall immediately account to each other with respect to all
matters outstanding and all sums owing each other as of the effective date of
termination. Manager shall be entitled to retain copies of such books
and records pertaining to such Properties as Manager deems appropriate, provided
Manager shall bear the cost of such photocopying.
ARTICLE
V
INSURANCE; INDEMNIFICATION
OF MANAGER
A. Insurance. Except
as otherwise agreed in writing between the parties hereto, Manager shall
maintain (subject to reimbursement as an expense of the Properties) adequate
worker’s compensation insurance covering all personnel employed by Manager and
working at or engaged in the operation of the Properties, all risk casualty
insurance, and public liability insurance for the Properties with a broad form
comprehensive general liability endorsement, in such amounts as Manager may deem
appropriate. Any and all other insurance maintained for the
Properties shall be the sole responsibility of Company. Each party
shall provide the other with copies of all insurance policies maintained by such
party with respect to the Properties.
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B. Indemnification. Manager
shall have no liability to Company for any loss suffered by Company which arises
out of any action or inaction of Manager if Manager, in good faith, determined
that such course of conduct was in the best interest of Company and such course
of conduct did not constitute the negligence or misconduct of
Manager. Company shall indemnify Manager against all claims, actions,
damages, losses, judgments, liabilities, costs and expenses (including
attorneys’ fees) and amounts paid in settlement of any claims sustained by
Manager in connection with the management of the Properties and the management
services provided pursuant to this Agreement, provided that the same were not
the result of negligence or misconduct on the part of Manager (collectively,
“Unauthorized Acts”). Manager shall indemnify Company against all
claims, actions, damages, losses, judgments, liabilities, costs and expenses
(including attorneys’ fees) and amounts paid in settlement of any claims
sustained by Company arising out of or in connection with Unauthorized
Acts. Indemnities herein contained shall not apply to any claim with
respect to which the indemnified party is covered by insurance, provided that
the foregoing exclusion does not invalidate the indemnified party’s insurance
coverage. The indemnification provisions set forth herein shall
survive termination of this Agreement.
C. Waiver. Notwithstanding
anything herein to the contrary, each party hereby waives any claim against the
other to the extent recoverable by insurance carried or required to be carried
by the claimant hereunder.
ARTICLE
VI
MISCELLANEOUS
A. Binding Obligation;
Assignment. This Agreement shall inure to the benefit of and
constitute a binding obligation upon the parties hereto and their respective
successors and assigns. Subject to VI(G), no party may assign its
rights or delegate its duties hereunder without the prior written consent of the
other party, such consent not to be unreasonably withheld.
B. Entire
Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters set forth herein, and
shall not be changed, modified or amended, except by an instrument in writing
after this date signed by both of the parties hereto with the same formalities
as the execution of this Agreement.
C. Relief. Company
and Manager each shall be entitled to injunctive and other equitable relief to
enforce the provisions of this Agreement.
D. Competitive
Activities. Manager (and any Affiliate) may acquire, own,
promote, develop, operate and manage real property (or any one or more of the
foregoing) on its own behalf or on behalf of any other person or
entity. Manager (and any Affiliate), notwithstanding the existence of
this Agreement, may engage in any activity it so chooses, whether such activity
is competitive with the Properties or Company or otherwise, without having or
incurring any obligation to offer any interest in such activities to
Company. Neither this Agreement nor any activity undertaken pursuant
hereto shall prevent Manager (and any Affiliate) from engaging in such
activities or require Manager (and any Affiliate) to permit Company to
participate in such activities, and, as a material part of the consideration for
Manager’s execution hereof, Company hereby waives, relinquishes and reserves any
such right or claim of participation.
E. Time
Obligation. Manager shall not be required to spend all of its
time in the performance of its duties hereunder, but, rather, shall spend such
time as it deems reasonably necessary for the business-like management of the
Properties.
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F. Notices. Notices
or other communications required or permitted to be given hereunder shall be
deemed duly made or given, as the case may be, if in writing, signed by or on
behalf of the person making or giving the same, and shall be deemed completed
upon the first to occur of receipt or two (2) days after deposit in the United
States mail, first class, postage prepaid, addressed to the person or persons to
whom such offer, acceptance, election, approval, consent, certification,
request, waiver, or notice is to be made or given, at their respective
addresses:
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If
to Company:
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Xxxxxxx
Short Term Income Properties XX, Inc.
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0000
Xxxxxxxxx, Xxxxx 000
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Xxxxxxx,
Xxxxx 00000
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Attention: Xxxxx
X. Xxxxxxx
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If
to Manager:
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Xxxxxxx
Income REIT Management, Inc.
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0000
Xxxxxxxxx, Xxxxx 000
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Xxxxxxx,
Xxxxx 00000
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Attention: Xxxxx
X. Xxxxxxx
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or, in
any case, at such other address as shall have been set forth in a notice sent
pursuant to the provisions of this paragraph.
G. Consents;
Approval. Wherever in this Agreement the consent or approval
of a party is required, such consent or approval shall not be withheld
unreasonably (except as expressly set forth herein to the contrary) and shall be
deemed to have been given if the party whose consent or approval is requested
does not notify in writing the party requesting such consent or approval
otherwise within ten (10) days after receipt of a written request for such
consent or approval.
H.
Counterparts. This
Agreement may be executed in multiple counterparts, each of which shall be an
original, but all of which shall constitute one instrument.
I.
Situs. This
Agreement and the rights and obligations of the parties hereto shall be governed
by and construed in accordance with the laws of the State of Texas, without
regard to the conflict of laws provisions thereof.
J.
Headings. Article
and section titles or captions contained in this Agreement are inserted only as
a matter of convenience and for reference and shall not be construed in any way
to define, limit, extend or describe the scope of any of the provisions
hereof.
K.
Definitions. The
words such as “herein,” “hereinafter,” “hereof,” and “hereunder” refer to this
Agreement as a whole and not merely to a subdivision in which such words appear
unless the context otherwise requires. The singular shall include the
plural, and the masculine gender shall include the feminine and neuter, and
vice versa, unless the
context otherwise requires.
L. Severability;
Invalidity. Each provision of this Agreement shall be
considered separable and if for any reason any provision or provisions herein
are determined to be invalid and contrary to any existing or future law, such
invalidity shall not impair the operation of or affect those portions of this
Agreement which are valid.
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M. Additional Instruments,
Acts. Each of the parties hereto shall hereafter execute and
deliver such further instruments and do such further acts and things as may be
required or useful to carry out the intent and purpose of this Agreement and as
are not inconsistent with the provisions hereof.
N. Time. Time
is of the essence with respect to the dates set forth in this
Agreement.
IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first above written
pursuant to due authority.
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COMPANY:
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XXXXXXX
SHORT TERM INCOME PROPERTIES XX, INC.
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a
Maryland corporation
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By:
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Xxxxx
X. Xxxxxxx, President
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MANAGER:
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XXXXXXX INCOME REIT MANAGEMENT,
INC.,
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a
Texas corporation
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By:
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Xxxxx
X. Xxxxxxx,
President
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