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