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EXHIBIT 10.15
AGREEMENT
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THIS AGREEMENT (the "Agreement") made this 11th day of March 1999 among (i)
ASSOCIATED ESTATES REALTY CORPORATION (an Ohio corporation), ASSOCIATED ESTATES
MANAGEMENT COMPANY (an Ohio corporation), and all of their respective
subsidiaries, divisions, and/or affiliates (collectively referred to as "The
Company"), (ii) ASSOCIATED ESTATES CORPORATION, an Ohio corporation ("AEC"),
(iii) L.A.G.P., an Ohio corporation ("LAGP"), and (iv) XXXX X. XXXXXXXX AND
XXXXXX X. XXXXXXXX (collectively referred to as "Xxxxxxxx").
RECITALS
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WHEREAS, The Company acted as management agent of Longwood Apartments
("Longwood") until on or about January 13, 1999 and currently is the management
agent of Park Village Apartments ("PVA"), Jaelot Apartments ("Jaelot"), Xxxx
Xxxx Gardens Apartments ("Stow-Kent"), Park Lane Villa Apartments ("Park Lane")
and University Towers Apartments ("UT"); and Associated Estates Management
Company ("AEMC") is the management agent of Hillwood II Apartments ("Hillwood");
PVA, Jaelot, Stow-Kent, Park Lane, UT and Hillwood are sometimes referred to
individually in this Agreement as a "Project" and collectively as the
"Projects".
WHEREAS, AEC is or was a general partner in each of the separate
respective partnerships that own Longwood, PVA, Jaelot, Stow-Kent, Park Lane and
UT; and LAGP was a general partner in the entity that owns Longwood;
WHEREAS, Xxxxxxxx together with their sister Xxxxx X. Xxxxxxxx and
Xxxxxx Xxxxxxx comprise all the shareholders of AEC and LAGP and together own a
majority of the partnership interests in Hillwood;
WHEREAS, The Company in its capacity as managing agent of Longwood and
PVA advanced funds on behalf of Longwood and PVA in the amount of $3,903,683 in
order to pay for the costs of curing certain housing code violations issued by
the City of Cleveland and for other operating expenses;
WHEREAS, The Company has demanded that AEC and LAGP as former general
partners of Longwood and AEC as the current general partner of PVA, repay those
advances together with accrued interest and Xxxxxxxx has disputed The Company's
right to repayment of those advances; and
WHEREAS, The Company, AEC, LAGP and Xxxxxxxx desire to resolve that
dispute pursuant to the terms and provisions of this Agreement;
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NOW THEREFORE, in consideration of their mutual promises made in this
Agreement, and for other valuable consideration, receipt of which is hereby
acknowledged by each party, the parties, intending to be legally bound, hereby
agree as follows:
1. COMPANY REPRESENTATIONS AND WARRANTIES. As an inducement to
Xxxxxxxx, AEC and LAGP to enter into this Agreement, The Company hereby
represents and warrants as follows:
A. The total amount of advances made by The Company for
the benefit of Longwood and PVA as of March 11, 1999
is the sum of $3,942,611 ("Advance Principal"). As of
the date of this Agreement, there are no other unpaid
advances or interest thereon due with respect to any
of the Projects, except for interest in the amount of
$723,903 which has accrued for the period ending
March 11, 1999 ("Advance Interest").
B. The Company further represents and warrants that the
amounts shown in the columns headed "Adjusted Cash
Balance 01/22/99" and "Net Interest Due (to) from
Mgmt Company as of 12/31/98" in attached Schedule A
are true and accurate to the best of The Company's
knowledge and information as at 2/23/99. The Company
additionally represents that to the best of its
knowledge and information, as of 02/06/99 the amount
of trade payables as reflected on its books with
respect to PVA did not exceed $47,000.
2. COMPANY COVENANTS, The Company agrees as follows:
A. Notwithstanding anything to the contrary contained in
any of the respective management agreements between
The Company and the respective owners of PVA, Jaelot,
Stow-Kent, Park Lane, UT and Hillwood, The Company
agrees not to make any further advances on behalf of
those Projects without prior written notice to the
respective owner(s) of the Project(s) and to
Xxxxxxxx, and without prior written approval of the
respective owner(s) of the Project(s). Nothing in the
foregoing sentence is intended to (i) create or imply
any legal obligation on the part of The Company or
any of its affiliates to advance any funds on behalf
of any of those Projects; or (ii) prohibit The
Company from incurring liabilities on behalf of any
Project in the ordinary course of business (subject
to all of the provisions of this Agreement) in
contemplation of the future receipt of Section 8
subsidies, tenant rents or reimbursements from
replacement reserves, including without limitation,
costs for utilities, repairs, maintenance, property
personnel, security and other Project costs.
B. The Company further agrees that any positive cash
balances for any Project will not be used by The
Company as a payment of any obligation of any other
Project or as a set off against any negative cash
balances for any other Project without first
providing written notice to the respective owner(s)
of the Project(s) and to Xxxxxxxx, and without prior
written approval from the respective owner(s) of the
applicable Project(s).
C. Subject to applicable regulations of the United
States Department of Housing and Urban Development
("HUD"), The Company agrees to notify Xxxxxxxx prior
to soliciting bids for construction work at any
Project where the cost of such work is expected to
exceed the sum of $10,000. Subject to applicable
regulations of HUD, The Company further agrees that
it will not recommend, execute, or otherwise award,
any contract or agreement for any such construction
work in excess of $10,000 without providing prior
written notice to the respective owner(s) of the
Project(s) and to Xxxxxxxx, and without prior written
approval of the respective owner(s) of the
Project(s). Moreover, The Company will include in its
bidding solicitation process for such work any
qualified contractor recommended by Xxxxxxxx.
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D. The Company hereby agrees that it will not incur any
obligation in excess of $10,000 on behalf of the
respective owner(s) of the Project(s) without prior
written notice to the respective owner(s) of the
Project(s) and to Xxxxxxxx, and without prior written
approval of the respective owner(s) of the
Project(s).
E. The Company hereby agrees to protect, defend,
indemnify, and hold harmless (i) Xxxxxxxx, and their
heirs, personal representatives, successors and
permitted assigns (as the case may be), and (ii)
LAGP, AEC, the owners of the Projects, and their
respective officers, directors, shareholders,
partners, principals, and agents, from any loss,
liability or expense arising out of any failure of
The Company to abide by (1) its agreement not to make
any further advances on behalf of the Projects
without prior written notice and approval as
contained in paragraph 2.A of this Agreement, or (2)
its agreement not to incur any obligation in excess
of $ 10,000 on behalf of the respective owner(s) of
the Projects without prior written notice and
approval as contained in paragraph 2.D of this
Agreement.
3. LONGWOOD INDEMNIFICATION AND RELEASE.
A. The Company agrees to protect, indemnify, defend and
hold harmless (i) Xxxxxxxx, and their heirs, personal
representatives, successors and permitted assigns (as
the case may be), and (ii) AEC, LAGP, their officers,
directors, shareholders, partners, principals and
agents from all past, present, or future claims,
liabilities, losses, costs, damages, expenses, fines
or penalties arising out of or in connection with (i)
the Longwood housing code violations and any criminal
enforcement proceedings in connection therewith
issued or initiated by the City of Cleveland
currently pending before the Cleveland Housing Court;
and (ii) any unpaid vendor or utility bills incurred
at Longwood. The Company shall undertake, conduct and
control, through counsel of its own choosing and at
its expense, the settlement or defense of any such
matters and the indemnified parties shall cooperate
with The Company in connection therewith. To the best
of The Company's knowledge, there are no other
material liabilities or obligations chargeable to
AEC, LAGP, or Xxxxxxxx arising out of the management
or operation of Longwood.
B. Except for the obligations of Xxxxxxxx, AEC and LAGP
under this Agreement, The Company hereby irrevocably
waives and releases any and all past and present
claims, actions, causes of action, suits, and
defenses it may have against (i) Xxxxxxxx, and their
heirs, personal representatives, successors and
permitted assigns (as the case may be), and (ii) AEC,
LAGP and their shareholders, partners, principals,
agents, officers, directors and permitted successors
and assigns (as the case may be) arising out of or in
connection with Longwood.
C. Except for the obligations of The Company under this
Agreement, Xxxxxxxx, AEC and LAGP, on behalf of
themselves and their heirs, personal representatives,
successors & permitted assigns, officers, directors
and shareholders (as the case may be) hereby
irrevocably waive and release any and all past and
present claims, actions, causes of actions, suits and
defenses they may have against The Company, their
officers or directors arising out of or in connection
with Longwood.
4. PVA DEFENSE COSTS. The Company agrees to defend against, through
counsel of its own choosing and at its sole cost, the PVA housing code
violations and criminal enforcement proceedings in connection therewith
currently pending in the Cleveland Housing Court against PVA, AEC and others.
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5. PAYMENT OF DISPUTED CLAIM. On or before March 12,1999, Xxxxxxxx
shall provide funding to enable AEC and/or LAGP to pay Associated Estates Realty
Corporation the combined principal sum of $3,942,611 together with interest in
the amount of $723,903. The parties to this Agreement hereby represent and
warrant that all of the undersigned have the authority to sign this Agreement on
behalf of their respective entities.
7. MISCELLANEOUS. Time is of the essence of this Agreement. This
Agreement is made in the State of Ohio and shall be governed by Ohio law. This
is the entire agreement between the parties and may not be modified or amended
except by a written document signed by the party against whom enforcement is
sought. This Agreement may be signed in more than one counterpart, in which case
each counterpart shall constitute an original of this Agreement. Paragraph
headings are for convenience only and are not intended to expand or restrict the
scope or substance of the provisions of this Agreement. Whenever used in this
Agreement, the singular shall include the plural, and pronouns shall be read as
masculine, feminine, or neuter, as the context requires. The parties further
agree that any and all disputes, claims or disagreements between the parties
arising out of or from this Agreement shall be fully and finally resolved
through mandatory and binding arbitration administered by the Cleveland, Ohio
offices of the American Arbitration Association ("AAA"). Any party to this
Agreement may initiate such arbitration by filing the appropriate demand for
arbitration with the AAA, and this agreement to arbitrate shall be specifically
enforceable. The prevailing party in any arbitration (or related litigation)
arising out of or from this Agreement shall be entitled to recover from the
opposing party its reasonable attorneys' fees incurred in connection with such
arbitration (or related litigation). This Agreement may not be assigned by any
party without the prior written consent of the other parties. This Agreement is
binding on any and all subsidiaries, divisions, and affiliates of the parties,
and on any and all assignees of the parties. The parties do not intend to confer
any benefit hereunder on any person, firms, or corporation other then the
parties to this Agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
day and year first written above.
/s/ Xxxx X. Xxxxxxxx
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XXXX X. XXXXXXXX
/s/ Xxxxxx X. Xxxxxxxx
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XXXXXX X. XXXXXXXX
ASSOCIATED ESTATES REALTY CORPORATION
BY: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx his attorney in fact
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pursuant to power of attorney dated 03-11-99
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XXXXXXX X. XXXXXXXX
AS ITS PRESIDENT
ASSOCIATED ESTATES MANAGEMENT COMPANY
BY: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx his attorney in fact
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pursuant to power of attorney dated 03-11-99
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XXXXXXX X. XXXXXXXX
AS ITS PRESIDENT
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ASSOCIATED ESTATES CORPORATION
BY: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx his attorney in fact
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pursuant to power of attorney dated 03-11-99
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XXXXXXX X. XXXXXXXX
AS ITS PRESIDENT
L.A.G.P.
BY: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx his attorney in fact
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pursuant to power of attorney dated 03-11-99
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XXXXXXX X. XXXXXXXX
AS ITS PRESIDENT
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