EXHIBIT 10.44
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT (the "AGREEMENT") is made as of the 31st day
of December, 1985, between TOPANGA PLAZA PARTNERSHIP ("OWNER"), a California
general partnership, and MAY CENTERS, INC. ("MANAGER"), a Missouri corporation.
RECITALS
A. Owner is the owner of certain lands situated in the City of Los
Angeles, County of Los Angeles and State of California (the "SHOPPING CENTER
PARCEL"), more particularly described in Exhibit "A", attached hereto and
made a part hereof, which have been developed as an enclosed, regional
shopping center (the "SHOPPING CENTER") presently operating under the name
"Topanga Plaza".
B. Owner is a California general partnership composed of JMB Income
Properties, Ltd.-XII, an Illinois limited partnership ("PROPERTIES"), and
Topanga Center, Inc., a Delaware corporation ("TCI").
C. Manager is experienced in the operation and management of shopping
centers.
D. Owner and Manager are entering into this Agreement to establish the
terms and conditions under which Manager shall operate and manage the
Shopping Center on behalf of Owner.
AGREEMENTS
In consideration of the mutual promises contained herein, Owner and
Manager covenant and agree as follows:
ARTICLE I
EMPLOYMENT OF MANAGER; DEFINITIONS
SECTION 1.1. Owner employs Manager as its sole and exclusive agent to
perform the services described in this Agreement. Manager accepts such
employment and agrees to perform such services as an independent contractor.
Owner authorizes Manager to exercise all powers with respect to the Shopping
Center as may be reasonably necessary or proper for the performance of
Manager's duties under the terms of this Agreement.
SECTION 1.2. As used in this Agreement, the following capitalized terms
shall have the meanings indicated below:
(a) "AFFILIATE" shall have the meaning set forth in Section 7.1 hereof.
(b) "AGREEMENT" shall have the meaning set forth in the Preamble hereto;
(c) "APPROVED BUDGET" shall have the meaning set forth in Section 2.1(c)
hereof.
(d) "APPROVED LEASING PLAN" shall have the meaning set forth in
Section 2.1(c) hereof.
(e) "CPI INDEX" shall have the meaning set forth in Section 16.2 hereof.
(f) "CO-PARTNER" shall have the meaning set forth in Section 1.7E of
the Partnership Agreement.
(g) "DIRECT PAYROLL EXPENSES" shall have the meaning set forth in
Section 5.1(a) hereof.
1.
(h) "EXISTING NOTE" shall have the meaning set forth in Section 1.7F
of the Partnership Agreement.
(i) "FIRST PARTY" shall have the meaning set forth in Section 16.4.
(j) "INDIRECT PAYROLL COSTS" shall have the meaning set forth in
Section 5.1(b) hereof.
(k) "INVESTOR" shall have the meaning set forth in Section ______ of
the Partnership Agreement.
(l) "LEASING PLAN" shall have the meaning set forth in Section 2.1.
(m) "MAJOR DECISIONS" shall have the meaning set forth in Section 16.2.
(n) "MANAGEMENT EXPENSES" shall have the meaning set forth in Section 5.1
hereof.
(o) "MANAGER" shall have the meaning set forth in the Preamble hereto;
(p) "MAY AFFILIATE" shall have the meaning set forth in Section 1.7M of
the Partnership Agreement.
(q) "NON-DISCRETIONARY EXPENDITURE" shall have the meaning set forth in
Section 6.5A(4) of the Partnership Agreement.
(r) "NOTICE" shall have the meaning set forth in Section 8.1.
(s) "OWNER" shall have the meaning set forth in the Preamble.
(t) "OWNER'S ALLOCABLE SHARE" shall have the meaning set forth in
Section 5.1 hereof.
(u) "OWNER'S OVERHEAD SHARE" shall have the meaning set forth in
Section 5.1(c) hereof.
(v) "PARTNERS" shall have the meaning set forth in Section 1.7P of the
Partnership Agreement.
(w) "PARTNERSHIP AGREEMENT" shall have the meaning set forth in
Section 1.7R of the Partnership Agreement.
(x) "PROPERTIES" shall have the meaning set forth in Recital Paragraph B.
(y) "RENT SCHEDULE" shall have the meaning set forth in Section 2.1.
(z) "SECOND PARTY" shall have the meaning set forth in Section 16.4.
(aa) "SHOPPING CENTER" shall have the meaning set forth in Recital
Paragraph A.
(bb) "SHOPPING CENTER BUDGET" shall have the meaning set forth in
Section 2.1.
(cc) "SHOPPING CENTER PARCEL" shall have the meaning set forth in Recital
Paragraph A.
(dd) "TCI" shall have the meaning set forth in Recital Paragraph B.
(ee) "THRESHOLD AMOUNT" shall have the meaning set forth in Section 16.2.
ARTICLE II
MANAGER'S OBLIGATIONS
SECTION 2.1. Manager shall perform the following services with respect
to the Shopping Center:
(a) Manager shall maintain liaison with the design, engineering,
construction staffs and other special consultants engaged by Owner.
2.
(b) Manager shall submit to Owner from time to time and, when required
under the terms of this Agreement, request Owner's approval of Manager's
recommendations for the operation of the Shopping Center, including, but not
limited to:
(i) the number and type of employees to be employed;
(ii) procedures for the collection of rents and other charges;
(iii) maintenance, repair and expansion of the Shopping Center;
(iv) an insurance program for the Shopping Center; and
(v) marketing and promotion of the Shopping Center and the
establishment of such merchants' association or promotion and marketing funds
as Manager shall deem appropriate.
(c) The following provisions shall apply to the budget and leasing
plan for the Shopping Center:
(i) Not later than November 30th of each year, Manager shall prepare
and submit for Owner's approval, which approval shall not be unreasonably
withheld or delayed, a shopping center budget ("SHOPPING CENTER BUDGET") for
the next calendar year. The Shopping Center Budget shall set forth in
reasonable detail the estimated operating receipts and expenditures of Owner
on a month-to-month basis for the period covered by the Shopping Center
Budget, and shall show amounts reserved for on-going expenses, any
anticipated extraordinary expenses, contingencies and capital expenditures
and source of funds with respect thereto (including the amount and the
approximate date funds will be needed for such expenses). The Shopping Center
Budget shall also contain, as a separate line item for informational purposes
only, an estimate of the "Management Expenses" (as defined in Section 5.1
hereof) that will be payable to Manager during the period covered by the
Shopping Center Budget. Owner may not disapprove the Shopping Center Budget
on the basis of the estimate of Management Expenses contained in the Shopping
Center Budget, nor shall the amount of Management Expenses payable during the
period covered by the Shopping Center Budget be limited by the estimate of
such expenses contained in the Shopping Center Budget. The Shopping Center
Budget shall be substantially in the form of budget attached hereto as
Exhibit "B". If Owner does not approve the most recently submitted Shopping
Center Budget or proposed revision thereof, then Manager shall continue to
operate under the most-current Approved Budget, modified as necessary to (a)
authorize Non-Discretionary Expenditures and (b) to take into account
expenditures which have already been made. The Shopping Center Budget and
amendments thereto as approved by Owner in accordance with the terms hereof
shall be herein called the "APPROVED BUDGET".
(ii) In connection with the budgeting process, but not later than
November 30th of each year, Manager shall submit for the reasonable approval
of Owner a comprehensive leasing plan and rent schedule, which shall include
a statement of the space Manager expects to be leased during such year, the
proposed tenant (if known) and the use proposed for the space to be leased,
the fixed or minimum rent and the method of calculation of percentage rent it
expects to obtain for such space, any tenant allowances and leasing
commissions and all other material financial provisions of a tenant lease.
3.
he leasing plan and rent schedule thereto, as approved by Owner in
accordance with the terms hereof, shall be herein called the "APPROVED
LEASING PLAN".
(iii) Manager shall have the right and authority to implement the
Approved Budget and Approved Leasing Plan, provided that Manager operates
within the parameters of the same. Manager shall be required to obtain the
Owner's prior written approval for actions to be taken by Manager which
deviate from the terms of the Approved Budget or Approved Leasing Plan,
provided, however, if a given action is of such a nature that Co-Partner (as
a May Affiliate) is authorized to take such action pursuant to Section
6.5A(3) or Section 6.5B(3), respectively, of the Partnership Agreement
without the prior approval of Investor, such approval may be given by
Co-Partner on behalf of Owner, and such approval may be oral.
(d) Manager shall negotiate all leases with tenants for space within
the Shopping Center and all extensions, renewals, modifications, amendments
or terminations thereof and shall submit all such agreements to Owner for
execution. All such leases, unless otherwise approved by Owner, shall be
negotiated substantially in accordance with:
(i) the Approved Leasing Plan as amended from time to time;
(ii) the standard form of lease approved by Owner and its counsel, from
time to time, subject to reasonable negotiation; and
(iii) administrative procedures established or approved by Owner for
securing Owner's approval of the business and legal terms of each lease,
processing lease data forms, and processing the final draft for tenant's and
Owner's approval, execution and delivery.
(e) Manager shall maintain a central control file of all leases
relating to the Shopping Center and shall, upon request, furnish copies of
such leases to Owner. Manager shall: (i) review plans and specifications for
tenant improvements; (ii) consult with tenants and their respective
architects, engineers, contractors and other representatives regarding
tenants' plans and specifications; and (iii) coordinate, to the extent
necessary, the construction of tenant improvements.
(f) Manager shall xxxx tenants and other occupants in the Shopping
Center for, and shall use diligent efforts to collect, all fixed rents,
percentage rents and other sums, whether payable as additional rent or
otherwise, payable by such tenants and occupants under their respective
leases and other agreements, or by other parties under license, service or
other agreements. Manager shall obtain and review statements of sales
furnished by tenants to support their payment of percentage rentals or other
sums and deductions, and shall furnish a summary of such statements to Owner
on a quarterly basis. Manager may not institute, prosecute or settle on
behalf of Owner any legal or arbitration proceedings in connection with the
tenant leases without the prior written approval by Owner, provided, however,
if Co-Partner (as a May Affiliate) is authorized to take any such action
pursuant to Sections 6.5B(3) and 6.7B(4) of the Partnership Agreement without
the prior approval of Investor, Co-Partner may give such consent on behalf of
Owner, and such consent may be oral. Manager shall keep Owner advised of
Manager's collection activities from time to time and shall notify Owner of
any claims which Manager deems to be uncollectable.
4.
(g) Manager shall use diligent efforts to enforce the performance by
tenants of all requirements of their respective leases.
(h) Manager shall cause the Shopping Center to be maintained in good
sanitary, orderly and safe operating condition and repair at Owner's cost,
subject to the terms of the Approved Budget, and shall supervise the
maintenance thereof. Manager shall, subject to the terms of the Approved
Budget, (i) hire such persons, firms or corporations and purchase or lease
such equipment and supplies at reasonable rates and costs as may be necessary
or desirable to accomplish such purposes, and (ii) negotiate and administer
contracts with third parties for electricity, gas, fuel supply, water,
telephone, window washing, exterminating, equipment maintenance, trash
handling and other contracts relating to the operation or maintenance of the
Shopping Center to the extent that such services are not provided by Manager;
however, Manager shall not enter into any agreement with an Affiliate of
Manager or of Investor or Co-Partner without the prior written consent of
Owner, provided, however, that if Co-Partner (as a May Affiliate) is
authorized to do so pursuant to Section 6.6B(2) of the Partnership Agreement
without the prior consent of Investor, then Co-Partner may give such approval
and such approval may be oral.
(i) Manager shall maintain the books, records and accounts of Owner and
shall prepare and submit to Owner, within 45 days after the end of the
just-concluded quarter, financial reports on the operation of the Shopping
Center relating to such quarter. Such reports shall include, without
limitation: income and expense statements, containing monthly and
year-to-date information; statements listing rent delinquencies; leasing
status report; statements reconciling material variances between the actual
receipts and expenditures and the amount projected for such items as set
forth in the applicable Approved Budget; and such other statements and
reports as may be reasonably requested by Owner. Such financial reports shall
be substantially in the form attached hereto as Exhibit "C". In addition,
Manager shall assist Owner and Owner's accountants in preparing such annual
financial reports and tax returns as may be required by Owner. Owner shall
have the right to examine such books and records at any time during normal
business hours at Manager's place of business and make copies thereof.
(j) Manager shall advise Owner as to insurance coverage and shall
procure insurance coverage for the Shopping Center in accordance
with Article 15 hereof.
(k) Manager shall organize and administer periodic meetings with Owner
in order to review the status of the Shopping Center and establish direction
as necessary.
(l) If directed by Owner, Manager shall explore, from time to time, the
feasibility of expanding the Shopping Center or of developing additional
improvements on the Shopping Center Parcel, and shall make such proposals to
Owner as Manager shall deem appropriate in connection therewith. Co-Partner
(as a May Affiliate) shall be entitled to give such authorization to Manager
without the consent of Investor to the extent permitted in Section 6.4E(3) of
the Partnership Agreement. Manager shall implement all decisions of Owner in
connection with the exploration of the expansion of the Shopping Center.
5.
(m) Manager shall assist, if requested by Owner in a writing signed by
both Partners, in any application by Owner for a zoning change or other
application made by Owner to any governmental authority relating to the
Shopping Center.
(n) Manager shall establish, supervise and assist the advertising and
promotional program for the Shopping Center, subject to the then-Approved
Budget and Owner's recommendations in connection therewith.
(o) Manager shall establish, supervise and assist in the formation of
such merchants' associations or promotion and marketing funds, as deemed
appropriate by Manager, and shall assist in the administration thereof,
subject to the then-Approved Budget and Owner's recommendations in connection
therewith.
(p) Manager shall review, from time to time, the tax assessments levied
upon the Shopping Center and shall recommend to Owner, when deemed
appropriate by Manager in the exercise of Manager's reasonable business
judgment, that proceedings be instituted by Owner to contest or appeal such
assessments.
(q) Manager shall deposit all funds received by Manager for Owner
pursuant to this Agreement in the central bank account maintained by
Co-Partner (as a May Affiliate) pursuant to Section 5.4B of the Partnership
Agreement. Manager shall keep Owner informed at all times with respect to the
bank in which such account is maintained, the name in which such account is
kept, the number of such account and the names and titles of officers or
employees of Manager who may draw upon such account. Officers or employees of
Manager approved by Owner shall disburse from such account funds necessary
for the operation and maintenance of the Shopping Center, including all
Management Expenses in accordance with the terms of the then-Approved Budget
and Section 2.1(c) hereof. Employees of Manager who handle or are responsible
for the handling of Owner's funds shall be bonded by a fidelity bond
acceptable both to Manager and Owner, provided, however, Manager may elect,
in lieu of such bond, to indemnify Owner and the Partners thereof against
loss, theft, embezzlement or other fraudulent acts on the part of Manager's
employees, subject to Owner's prior written approval of the form and
substance of the indemnity agreement.
(r) Manager shall use its reasonable efforts which it believes necessary
in the exercise of its reasonable business judgment to comply with and
perform all covenants, obligations and limitations, and to make the payment
of all amounts, subject to the terms of the then-Approved Budget, imposed by
law or by any contract, instrument or encumbrance to which the Shopping
Center or Owner and Manager shall be subject during the Term, including, but
not limited to, the tenant leases executed in compliance with the
then-Approved Leasing Plan or Section 2.1(c)(iii) or (d) hereof or as
otherwise approved in writing by Owner and all mortgages and deeds of trust
(including, but not limited to, the Existing Notes and other loan documents
related thereto).
(s) Manager shall pay and discharge to the extent permitted by the
then-Approved Budget or pursuant to Section 2.1(c)(iii), out of the funds
relating to the Shopping Center which are deposited in the account referred to
6.
in Section 2.1(q) hereof, all costs, expenses, liabilities and obligations of
or relating to the Shopping Center or any part thereof at or before the time
or times the same shall be due, including, but not limited to, the following:
(i) The payment of all business taxes, and all state and local taxes
based in whole or in part on gross income or adjusted gross income, and all
real and personal property taxes and assessments of every kind or description
whatsoever, whether general, special, ordinary or extraordinary, which are
assessed or levied against the Shopping Center or any part thereof, or which
become payable, during or with respect to the Term or any part thereof.
(ii) The payment of all charges for or related to utilities.
(t) Manager shall perform such other services as may be necessary or
proper to operate the Shopping Center in the manner contemplated by this
Agreement.
ARTICLE 3
TERM
SECTION 3.1 The term of this Agreement shall begin as of the date
hereof and shall continue through December 31, 2000, and thereafter shall
continue on a year-to-year basis, unless terminated by the parties in the
manner provided in Article 4.
ARTICLE 4
TERMINATION
SECTION 4.1 This Agreement may be terminated, at the option of
Manager, by delivering to Owner written notice of such termination not less
than 45 days prior to the effective date of such termination. This Agreement
may also be terminated, at the sole option of Owner, and exercised by Investor
on behalf of Owner, giving Manager written notice of such termination upon
the occurrence of any of the following:
(a) Manager commits a material default hereunder, if such default is
not cured within thirty days after receipt by Manager of a written notice
setting forth and describing such default, or, if such default cannot be
cured within 30 days, the curing of such default is not commenced within said
30 days and thereafter diligently prosecuted to the curing thereof. If, after
receipt of such written notice of default, Manager shall dispute that it is
in material default of this Agreement, Manager may initiate arbitration
proceedings, in the manner set forth in Section 16.3 hereof, to resolve the
dispute. The time available to Manager to cure the default claimed in such
notice shall not begin to run until a final determination has been made in
such proceedings.
(b) Manager shall make an assignment for the benefit of creditors,
apply for the appointment of a trustee, liquidator or receiver of any
substantial part of its assets, or commence any proceeding relating to
itself under any bankruptcy, reorganization, arrangement or similar law; or
any such application is filed or proceeding is commenced against Manager and
Manager indicates its consent thereto, or an order is entered appointing any
such trustee, liquidator or receiver or approving a petition in any such
proceedings and such order remains in effect for more than 90 days; or
Manager shall admit in writing its inability to pay its debts as they become
due.
(c) Co-Partner ceases to be a May Affiliate.
7.
(d) Upon the sale of the Shopping Center by Owner.
(e) In the event that Manager has willfully and intentionally
overcharged Owner for Management Expenses during any fiscal year during the
Term.
SECTION 4.2. Within 45 days following the termination of this
Agreement, Owner shall pay to Manager all compensation that may be due and
payable as of the effective date of such termination. Manager shall deliver
to Owner or Owner's designee, within 45 days after the effective date of such
termination:
(a) all property of Owner which Manager has in its possession;
(b) a final accounting showing the balances of income and expenses as
of the date of termination; and
(c) all other information reasonably necessary to terminate Manager's
duties under this Agreement in an orderly and systematic manner.
ARTICLE 5
COMPENSATION
SECTION 5.1 Subject to the terms of Sections 5.2 and 5.3 hereof, Owner
shall reimburse Manager, as compensation for the services provided by Manager
under this Agreement, for the following costs and expenses (the "MANAGEMENT
EXPENSES") incurred by Manager or its Affiliates in performing Manager's
obligations under this Agreement: all "Direct Payroll Costs" (as defined in
Section 5.1(a) hereof), plus all "Indirect Payroll Costs" (as defined in
Section 5.1(b) hereof), plus the "Owner's Share" (as defined in Section
5.1(c) hereof) of the general overhead expenses of Manager and its
Affiliates. Manager shall only be entitled to compensation as and to the
extent set forth in this Section 5.1 and Section 5.2 hereof. Without
limitation on the generality of the foregoing, neither Manager nor any
Affiliate of Manager shall be entitled to any leasing commissions in
connection with the Shopping Center, but Manager shall be entitled to recover
the Management Expenses relating to the leasing of space in the Shopping
Center. Manager shall not enter into a general brokerage or leasing agreement
with respect to the leasing of the Shopping Center. Such reimbursements shall
be made pursuant to the following terms and conditions:
(a) "DIRECT PAYROLL COSTS" shall mean the wages or salaries (including
taxes and employee benefits, but excluding therefrom expenses of the computer
information service group and expenses of other support groups, if and to the
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below) paid by Manager or its Affiliates to their off-site
personnel computed on the basis of the hours of service provided by such
personnel in performing Manager's obligations under this Agreement as
indicated by written records of such time kept on a regular and consistent
basis.
(b) "INDIRECT PAYROLL COSTS" shall mean the "Owner's Allocable Share"
of the wages or salaries (including taxes and employee benefits) paid by
Manager or its Affiliates to personnel for services which are not allocated
by Manager or its Affiliates to any specific projects or properties as set
forth in subparagraph (a) above (excluding therefrom expenses of the computer
information services group and expenses of other support groups, if and to the
8.
extent such expenses are included as general overhead expenses pursuant to
subparagraph (c) below). The "OWNER'S ALLOCABLE SHARE" of such costs for a
given period shall be calculated by multiplying the amount of such costs by a
fraction, the numerator of which shall be the Direct Payroll Costs charged by
Manager or its Affiliates during such period, and the denominator of which
shall be the total of all direct payroll costs which were incurred by Manager
and its Affiliates during such period with respect to all shopping centers
and properties which are managed by Manager.
(c) The "OWNER'S OVERHEAD SHARE" of general overhead expenses
(including therein expenses of the computer information service group and
other support groups [except to the extent included as Direct Payroll Costs
or Indirect Payroll Costs], which shall be calculated in accordance with the
accounting procedures uniformly used by Manager in connection with all the
shopping centers and properties owned and managed by Manager) shall be
determined in compliance with the applicable terms of this Section 5.1(c).
Owner acknowledges that Manager owns and manages other properties and shopping
centers in addition to the Shopping Center and that Manager will allocate
various general overhead expenses between the Shopping Center and such other
properties and to any other businesses engaged in by Manager. So long as
Manager manages at least 10 shopping centers, the Owner's Share of such
general overhead expenses shall be computed on the basis of an overhead
factor, expressed as a multiple of Direct Payroll Costs and Indirect Payroll
Costs, which is reasonably determined by Manager to uniformly and equitably
distribute 100% (but not more than 100%) of such general overhead expenses to
all shopping centers and other properties managed by Manager and to any
other businesses engaged in by Manager. If, at any time during the term of
this Agreement, Manager shall no longer manage at least 10 shopping centers,
the Owner's Share of such general overhead expenses shall not exceed, in any
event, an amount which is reasonably necessary for the operation of the
Shopping Center in the manner contemplated by this Agreement.
(d) Owner acknowledges and agrees that Manager may use the corporate
legal staff of Manager or its Affiliates to provide services on behalf of the
Owner. Notwithstanding the provisions to the contrary set forth in this
Section 5.1, Owner shall pay to Manager for such legal services the billing
rate which is uniformly charged by Manager for such services (which rate, as
of the date hereof, is $50.00 per hour).
(e) Manager acknowledges that the provisions of this Section 5.1 reflect
the method of computing management fees used by Manager in managing the
Shopping Center during 1985. Manager shall have the right, from time to time,
to modify the methods of allocating and determining Management Expenses,
provided that the method of allocation, as modified, shall uniformly and
equitably allocate its total costs, expenses and overhead attributable to the
various properties managed by Manager and the other businesses engaged in by
Manager; but before making any such modification, Manager shall submit the
same to Investor for approval, but Investor shall not have the right to
object to such modification unless the same results in a disproportionate
allocation of costs, expenses and overhead to the Business Property.
9.
(f) Manager shall furnish Owner with an accounting of all reimbursable
costs and expenses no later than 90 days after the end of the fiscal year of
Owner. Such an accounting shall be made in compliance with Manager's standard
practices for calculating the costs of its management services and shall
otherwise be reasonably satisfactory in form and substance to Owner.
(g) JMB, acting on behalf of Owner, shall have the right to cause an
audit to be made of the Management Expenses reimbursed to Manager under this
Agreement. No such audit shall be conducted more frequently than one time in
any single calendar year. Such an audit shall be conducted not later than one
year following the end of the year during which such Management Expenses were
incurred. The audit shall be conducted by Peat, Xxxxxxx, Xxxxxxxx & Co. or
another independent, certified public accounting firm selected by JMB on
behalf of Owner and reasonably approved by Manager. Manager shall provide the
accountant with such supporting data concerning the Management Expenses under
audit as may be reasonably requested by such accountant within 30 days after
receipt of written request therefor. If, as a result of such an audit, JMB
claims that Management Expenses paid to Manager were in excess of those
permitted hereunder, JMB shall deliver written notice thereof to Manager,
setting forth in reasonable detail the basis of the dispute. Manager shall
then have a period of 30 days following receipt of such notice in which to
either reimburse Owner for the portion of Management Expenses in dispute or
submit the dispute to arbitration pursuant to Section 16.3. If the arbitrator
finds that any of the Management Expenses in dispute were paid in violation
of the terms hereof, then Manager shall refund to Owner, within 30 days
following receipt by Manager of the arbitrator's decision, the amount of
Management Expenses which were found by the arbitrator to be improper, plus
interest thereon at the rate of 10% per annum from the date such Management
Expenses were improperly paid to Manager until the date of such refund. If
the amount of any refund required under this Section 5.1(g) exceeds the total
amount of Management Expenses paid during the period under audit by more than
5% of the total amount of such Management Expenses, then Manager shall
reimburse to JMB all of JMB's reasonable costs and expenses incurred in such
audit; such reimbursement shall be made concurrently with the refund of the
applicable Management Expenses.
SECTION 5.2 REIMBURSEMENT OF OUT-OF-POCKET COSTS. If Manager advances
its own funds in the performance of its duties hereunder, it shall be
entitled to reimbursement from the income of the Shopping Center for the
amount so advanced. Such out-of-pocket costs shall include, without
limitation, the salary and benefits and other payroll costs of on-site
personnel. If such personnel devote time to more than one center or property
managed by Manager, Owner shall not be required to reimburse Manager for more
than Owner's fair and equitable share of such costs and expenses, fairly
determined.
SECTION 5.3. It is expressly understood and agreed that the manner in
which the Management Expenses are calculated is designed solely to reimburse
Manager for the costs it incurs in managing and operating the Shopping Center
in accordance with the terms of this Agreement and, accordingly, such
10.
calculation shall not result in Manager's receiving any profit or incurring
any loss in the performance of its obligations hereunder. Manager shall act
in good faith in fairly allocating its total costs among the Shopping Center,
and other properties and shopping centers managed by Manager and the other
businesses (if any) of Manager. Management Expenses shall not be increased or
otherwise affected by reason of Manager's failure to be reimbursed for direct
payroll costs, indirect payroll costs or general overhead expenses associated
with any other shopping centers and other properties managed by or other
businesses engaged in by Manager.
ARTICLE 6
MANAGER'S STAFF
SECTION 6.1 In order to perform the services required by this
Agreement, it will be necessary for Manager to employ certain key personnel.
Manager shall, at all times, employ a sufficient number of appropriately
trained, experienced and otherwise qualified personnel to enable it to
efficiently and effectively carry out its obligations pursuant to this
Agreement. Manager shall use sufficient time and effort of such personnel to
enable Manager to perform its obligations under this Agreement.
SECTION 6.2 With the prior consent of Owner, Manager shall have the
right from time to time to contract with such third parties as Manager shall
deem appropriate in performing its obligations under this Agreement, and such
consent may be given by Co-Partner without the consent of Investor to the
extent permitted by the Partnership Agreement. Whenever services of third
parties are used to perform any of the services described herein, all costs
and expenses for such services shall be paid by Owner provided that the
incurrence of such costs and expenses is in accordance with the Approved
Budget and Section 2.1(c) hereof.
ARTICLE 7
ASSIGNMENT
SECTION 7.1 Manager shall not assign, all or any part of its interest
in or obligations arising out of this Agreement except to an "Affiliate". For
purposes of this Agreement, the term "AFFILIATE" shall mean any of the
following: (a) The May Department Stores Company, a New York corporation
("MDS"); (b) any wholly owned subsidiary of MDS or Manager; or (c) any entity
in which either MDS or Manager or their respective wholly owned subsidiaries
own at least 25% of the voting control thereof and over which MDS or Manager
or their subsidiaries, as the case may be, have effective control. Any
transfer of stock or of a partnership interest in an Affiliate which reduces
the interest of MDS, Manager or their respective subsidiaries to less than
25% shall be deemed an assignment for purposes of this Section 7.1.
ARTICLE 8
NOTICES
SECTION 8.1 Every notice, demand, direction, consent, approval, request
and other communication required or permitted hereunder ("NOTICE") shall be
in writing, and shall be personally delivered or sent by overnight courier,
registered or certified United States Mail, postage prepaid, return receipt
requested, to whomever the Notice is required or permitted to be sent, and
addressed as stated below:
11.
TO MANAGER: May Centers, Inc.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Chairman
TO OWNER: Topanga Plaza Partnership
c/o May Centers, Inc.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attn: Chairman
with a copy to:
JMB Income Properties, Ltd. - XII
c/o JMB Realty Corporation
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxxx
and
Pircher, Xxxxxxx & Xxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Real Estate Notices
SECTION 8.2 Any party may change the address to which Notices served
upon it are to be sent by 10 days' prior Notice informing the other parties
of the change in address. All Notices given by United States mail as a
registered or certified matter or by overnight courier service shall be
deemed to have been given on the day the return receipt is signed and
received by the sending party, or, in the event that the addressee refuses
receipt, then on the third day after the same is either (1) deposited in the
United States mail as registered or certified matter, addressed as above
provided, with postage thereon fully prepaid or (2) delivered to a courier
service with instructions for prompt delivery of the same provided a signed
receipt evidencing delivery is obtained by such courier service within such
three-day period. Any notice not given by registered or certified mail as
aforesaid shall be deemed to be given upon receipt of the same by the party
to whom the same is to be given.
ARTICLE 9
AMENDMENT
SECTION 9.1 This Agreement shall be subject to amendment only by a
writing signed by both Partners and Manager.
ARTICLE 10
SEVERABILITY
SECTION 10.1 If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall to any extent be
held invalid or unenforceable by a court of competent jurisdiction, such
result shall not affect the other terms and provisions of this Agreement or
applications thereof which can be given effect without the relevant term,
provision or application. To this end, the parties agree that the provisions
of this Agreement are and shall be severable.
12.
ARTICLE 11
REMEDIES CUMULATIVE
SECTION 11.1 Except as otherwise provided herein, all rights,
privileges and remedies afforded the parties by this Agreement shall be
deemed cumulative, and in addition to all rights and remedies available at
law or in equity.
ARTICLE 12
SUCCESSORS AND ASSIGNS
SECTION 12.1 This Agreement shall be binding upon and inure to the
benefit of the parties and their permitted successors and assigns.
ARTICLE 13
LAW APPLICABLE
SECTION 13.1 The laws of the State of California shall govern the
enforcement and construction of this Agreement.
ARTICLE 14
CONSENT OR WAIVER
SECTION 14.1 No consent or waiver, express or implied, by either party
to this Agreement to, of or for any breach or default by the other party in
performance of its obligations hereunder shall be deemed or construed to be a
consent or waiver to or for any other breach or default in performance by
such other party of the same or any other obligation of such party hereunder.
Failure on the part of either party to complain of any act or failure of the
other party to this Agreement or to declare the other party in default,
irrespective of how long such failure continues, shall not constitute a
waiver by such party of its rights hereunder.
ARTICLE 15
INDEMNIFICATION AND INSURANCE
SECTION 15.1 Manager shall indemnify and save Owner harmless from and
against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) arising out of (a) the gross negligence,
willful misconduct or intentional torts of Manager or Manager's agents,
servants, employees or sub-contractors or (b) acts which are in breach of
Manager's duties under this Agreement or which are outside of the scope of
Manager's authority under this Agreement.
SECTION 15.2 Owner shall indemnify, defend and hold Manager harmless
from and against all damages, claims, losses, liabilities, costs and expenses
(including reasonable legal fees) incurred by Manager in connection with its
services under this Agreement, excepting only those matters within the scope
of indemnification made by Manager in Section 15.1 hereof.
SECTION 15.3
A. Manager shall procure and maintain, at Owner's expense, extended
coverage insurance as set forth in this Section. In the event that Manager is
unable to procure insurance which complies in all respects with this Section,
Manager shall promptly notify Owner of such failure, but in no event shall
Manager let the Business Property be uninsured. Owner shall be the primary
named insured under such policies. Manager and lenders providing financing
for the Shopping Center and certain tenants designated by Owner shall be
named as additional insureds under such policies. All such insurance shall be
13.
coordinated with the insurance required to be carried by tenants and, where
economically feasible, shall be obtained under blanket policies covering
other properties in which Owner or Manager has an interest. The amounts of
coverage and the risks insured against in the policies obtained by Manager
shall be subject to the approval of Owner but, without limiting the
foregoing, such policies shall, at a minimum, include the following:
(a) PROPERTY INSURANCE. "All-risk" property damage insurance, covering
the Business Property in an amount equal to 100% of replacement value, with a
stipulated amount or agreed valuation endorsement, such insurance to include
fire and extended coverage with vandalism, malicious mischief, and other
appropriate endorsements on the buildings, equipment, and other improvements
on the Shopping Center, and protection against damage caused by earthquake
and flood, if available, in amounts directed by Owner.
(b) PUBLIC LIABILITY INSURANCE. Broad form general public liability
insurance and automobile liability insurance with combined single-limit
liability limits of not less than $10,000,000 for bodily and personal injury
and property damage;
(c) CONTRACTUAL LIABILITY INSURANCE. Insurance for the contractual
liabilities assumed by Owner;
(d) RENTAL INCOME INSURANCE. Rental income insurance in an amount not
less than 100% of the projected rental income from the Shopping Center for
one year when fully leased; and
(e) MANDATORY INSURANCE. Workers' compensation and all other insurance
required by any ordinance, law or governmental regulation.
The policies shall not be cancelled nor shall the coverages thereunder be
reduced without at least 30 days' prior notice to each of the partners of
Owner and Manager; and, in any event, all parties insured thereunder shall
receive notice not less than 15 days prior to the expiration of such policies.
SECTION 15.4 The insurance policies required under Section 15.3 shall
contain a provision, to the extent obtainable, to the effect that such
insurance shall not be invalidated or limited if any one or more of the
insureds thereunder waives any or all claims for recovery against the other
insureds thereunder; and so long as such provision is in effect, each of
Manager and Owner hereby waives all claims for recovery from the other for
any loss or damage insured under such policies. The foregoing, however, shall
not relieve Manager from its obligation to maintain the insurance required
hereunder.
ARTICLE 16
APPROVALS
SECTION 16.1 Manager shall be authorized to take all actions on behalf
of Owner as set forth in this Agreement; provided, however, that certain
actions shall require the prior written approval of both Co-Partner and JMB,
in accordance with the terms of the Partnership Agreement, including, but not
limited to, Sections 6.4 and 6.6 hereof.
SECTION 16.2 Except as provided in Section 16.1 above or Section 16.3
below, any time a provision of this Agreement requires the approval of Owner
or any constituent partner of Owner, such approval shall not
14.
be unreasonably withheld or delayed. Except in the case of an emergency, any
such approval shall be in writing. Such approval shall be deemed to have been
given if no response shall have been given within 30 days after receipt of a
written request therefor. Any denial of approval shall state with reasonable
certainty the reason or reasons for such denial, and, if reasonably
practicable, shall state the criteria for such approval.
SECTION 16.3
A. REQUEST. In connection with an "Arbitrable Decision" (as
hereinafter defined) but no other decision or action hereunder, the Partner
("REQUESTING PARTY" who desires to make a particular decision (or any related
series thereof) which is an Arbitrable Decision, shall request in writing for
the approval of the other Partner ("NON-REQUESTING PARTY") of such matter.
(Whenever (a) a controversy has arisen between the parties with respect to
any claim by any party that consent or approval has been unreasonably
withheld or delayed and then only in those instances where this Agreement or
applicable law provides that consent or approval shall not be unreasonably
withheld or delayed, or (b) this Agreement expressly provides that a
particular decision may be subjected to arbitration such decision shall be
herein referred to as "ARBITRABLE DECISION".)
B. REPLY.
(1) NO RESPONSE. If Non-Requesting Party fails to respond (by request
for more information or otherwise) to Requesting Party's written request for
Non-Requesting Party's consent to a given Arbitrable Decision within 30 days
after delivery of such request, then Non-Requesting Party shall be deemed to
have approved or agreed with the matter set forth in such request.
(2) If Non-Requesting Party fails to approve such decision (or be
deemed to have approved it pursuant to subparagraph (1) above) within 30 days
after delivery of such request, then within seven days after the expiration
of the 30-day period, Requesting Party may request arbitration by notifying
Non-Requesting Party in writing of the following: (i) Requesting Party's
desire to arbitrate, (ii) the basis on which Requesting Party claims that the
arbitration should be decided in its favor and (iii) Requesting Party's
arguments in support thereof briefly stated (Requesting Party will not be
foreclosed from advancing other and additional arguments at the time of the
arbitration hearing). Such notice shall be hereinafter referred to as the
"ARBITRATION NOTICE". Thereafter, the following provisions shall apply:
(1) Within seven days after receipt of the Arbitration Notice,
Non-Requesting Party shall deliver a notice ("REPLY NOTICE") to Requesting
Party stating Non-Requesting Party's position on the matters set forth in the
Arbitration Notice (but Non-Requesting Party will not be foreclosed from
advancing other and additional arguments at the arbitration hearing).
(2) If there is any difference between the parties concerning the
issue or issues, and if they are unable to resolve this difference within
seven days after Requesting Party receives the Reply Notice from
Non-Requesting Party, the dispute concerning the issue or issues shall be
determined by the arbitrator(s) who shall be selected as set forth in
paragraph C below.
14A.
C. SELECTION OF ARBITRATOR; EXPENSES; LOCATION. The arbitrator shall
be a person selected from among a list obtained from the chief executive
officer of the International Council of Shopping Centers or any successor
body of comparable function, or if no such body is in existence, from the
Chief Executive Officer of the American Arbitration Association (California
Chapter) or any successor body of comparable function at the request of
either Partner. Such list shall be obtained by Requesting Partner and shall
contain the names of 10 persons who, in the opinion of said Officer, are
experienced and qualified in the operation, management and leasing of space
in large Southern California shopping malls. The arbitrator shall be chosen
from such list by the Requesting Party and Non-Requesting Party, in the
exercise of each Party's sole discretion. If the parties do not agree on a
single arbitrator, then the arbitration shall be conducted with a panel of
three arbitrators. The panel shall be chosen by Requesting Party's selecting
one arbitrator and Non-Requesting Party's selecting an arbitrator, each of
whom shall be experienced in the operation and management of regional
shopping centers; thereafter such arbitrators shall choose the third
arbitrator, who shall be a neutral arbitrator chosen from the list obtained
by the Requesting Party. If within 10 days after receipt of such list by the
Parties, a Party does not exercise its right to choose any arbitrator from
such list, then the arbitrator chosen from the list by the other Party shall
arbitrate the dispute in question. If the two arbitrators are unable to
select a neutral arbitrator with 10 days from the day on which the second
arbitrator was selected by a Party, either party may apply to the Presiding
Judge of the Los Angeles County Superior Court for designation of the neutral
arbitrator.
The costs of arbitration including, but not limited to, the fees and
expenses of the arbitrator(s) and the reasonable attorneys' fees and costs of
the prevailing party in the arbitration, shall be paid by the nonprevailing
party in the arbitration. The location of arbitration shall be Los Angeles,
California unless the parties select in writing another mutually satisfactory
location. The arbitrator(s) shall notify the parties as promptly as feasible,
but in no event later than five days after the selection of the final
arbitrator, as to the date, time, place of hearing, and any other matters
which the arbitrator deems necessary.
D. RULES; PROCEDURE. The commercial rules of the American Arbitration
Association shall be applied in any arbitration under this Agreement, to the
extent such Rules and Procedures are not inconsistent with this Section 6.10.
E. AWARD. The arbitration award shall be rendered in writing as soon
after the conclusion of the arbitration hearing as may be feasible, and in no
event later than 10 days thereafter. The arbitrator shall not have the right
to add to, subtract from, change, or otherwise alter this Agreement or any
term thereof, and particularly the arbitrator shall not have the right to
include damages as part of the award, provided, however, that the arbitrator
shall award the prevailing party reasonable attorneys' fees and costs. The
sole effect of a finding by the arbitrator (1) of the question whether an
approval was unreasonably withheld shall be that such approval shall be
deemed to have been granted, or (2) as to any other matter in favor of a
particular
14B.
Partner shall be that the disagreement shall be deemed resolved in favor of
such Partner as provided in this Agreement.
F. GENERAL. Whenever in this Agreement it is provided that a matter shall
be or may be subjected to arbitration, arbitration shall be the sole method
to be used in determining the matter so subjected to arbitration. Subject to
Section 1286.2 of the California Code of Civil Procedure, the determination
of the arbitrator(s) shall be final, conclusive and binding upon the parties
hereto, and judgment in favor of a party in accordance with such determination
may be entered in any court having jurisdiction thereof.
ARTICLE 17
MISCELLANEOUS
SECTION 17.1 All services performed by Manager at the Shopping Center
site under the provisions of this Agreement shall be deemed to be performed
for Owner and all reasonable expenses properly incurred in connection with
the performance of such services shall be the obligation of Owner.
SECTION 17.2 The following exhibits are attached to and made a part of
this Agreement:
Exhibit A - Legal Description of Shopping Center Parcel
Exhibit B - Form of Budget
Exhibit C - Form of Monthly Reports
SECTION 17.3 No present or future partner of Owner or of any
partnership which is now or hereafter a partner of Owner shall have any
personal liability for or by reason of any matter or thing whatsoever, under
or in connection with this Agreement, and Manager hereby waives and all
149
such personal liability of such general partners, provided, however, that the
foregoing shall not limit the recourse of Manager against Owner's interest in
the Shopping Center for claims under this Agreement. The limitations of
liability provided in this paragraph are in addition to, and not limitation
of, any limitation on liability applicable to Owner provided by law or in
this Agreement or by any other contract, agreement or instrument relating to
Owner.
IN WITNESS WHEREOF, the parties hereto have duly signed this Agreement
as of the day and year first above written.
OWNER:
TOPANGA PLAZA PARTNERSHIP,
a California general partnership
By Topanga Center, Inc.,
General Partner
By /s/ Xxxxx X. Xxxx, Xx.
---------------------------------
Xxxxx X. Xxxx, Xx., Vice President
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx,
Assistant Secretary
By JMB Income Properties, Ltd. - XII,
a limited partnership,
General Partner
By JMB PROPERTIES-XII, INC.,
an Illinois corporation,
General Partner
By /s/ Authorized Officer
-------------------------------
Vice President
MANAGER:
MAY CENTERS, INC.,
a Missouri corporation
By /s/ Xxxxx X. Xxxx, Xx.
---------------------------------
Xxxxx X. Xxxx, Xx.,
Vice President
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Xxxxxx X. Xxxxx,
Assistant Secretary
15.
