FORM OF
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT (this "Agreement"), dated as of ______________, by and
between ________________, a ___________ corporation ("Owner"), and ___________,
a ______ corporation ("Manager").
W I T N E S S E T H:
This Agreement covers the apartment projects listed on Exhibit A (each is
individually referred to herein as a "Project") as of the date indicated on
Exhibit A. This Agreement constitutes a separate and independent contract
between Owner and the Manager for each Project.
Owner desires to employ Manager in the management and operation of the
Project by turning over to Manager the operation, direction, management and
supervision of the Project, as outlined below, and Manager desires to assume
such duties upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants herein contained, Owner and Manager agree as follows:
ARTICLE 1
Definitions
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The following terms shall have the following meanings when used in this
Agreement:
1.1 Term. The term of this Agreement shall commence on the date hereof
and shall, subject to the provisions hereof, terminate on ___________; provided,
however, that unless either Owner or Manager delivers written notice to the
other party on or before thirty (30) days prior to the expiration of the
initial, or any renewal term, the term of this Agreement shall automatically be
extended for successive one year terms.
1.2 Fee. Through ___________, the management fee payable each month by
Owner to Manager hereunder shall be an amount equal to ______ percent (_%) of
the Gross Receipts of the Project for such month. Effective __________, the
management fee shall be ___% for Projects located in the _________ and _________
markets and ___% for all other Projects.
1.3 Depository. A Depository shall be an FDIC insured national or state
bank designated by Owner.
1.4 Working Capital Reserve. A reasonable working capital reserve for
each Project, as determined by Owner in its sole discretion, shall be delivered
by Owner to Manager concurrently with Owner's execution and delivery hereof, to
be maintained by Manager during
the term hereof, used in connection with the operation of the Project in
accordance with the terms hereof, and restored per the terms of Sections 4.4 and
4.5 hereof.
1.5 Fiscal Year. The year beginning January 1 and ending December 31,
which is the fiscal year established by Owner for the Project.
1.6 Budget. A composite of (i) an Operations Budget, which shall be an
estimate of receipts and expenditures for the operation of the Project during a
Fiscal Year, including a schedule of expected apartment rentals (excluding
security deposits) for the period in question and a schedule of expected special
repairs and maintenance projects, and (ii) a Capital Budget, which shall be an
estimate of capital replacements, substitutions of and additions to the Project
for a Fiscal Year.
1.7 Gross Receipts. The entire amount of all receipts, determined on a
cash basis, from (a) tenant rentals collected pursuant to tenant leases for each
month during the term hereof; provided, however, that there shall be excluded
from tenant rentals any tenant security deposits (except as provided below) and
any electric utility payments on behalf of tenants on all "BILLS PAID"
properties; (b) cleaning, security and damage deposits forfeited by tenants in
such period; (c) laundry and vending machine income; (d) any and all receipts
from the operation of the Project received and relating to the period in
question; (e) proceeds from rental interruption insurance, unless the entire
property is destroyed; in which event this agreement will terminate as to such
property and Owner will have no further obligation to Manager with respect to
such Project; and (f) any other sums and charges collected in connection with
termination of the tenant leases. Gross Receipts do not include the proceeds of
(i) any sale, exchange, refinancing, condemnation, or other disposition of all
or any part of the Project, (ii) any loans to the Owner whether or not secured
by all or any part of the Project, (iii) any capital contributions by the Owner,
or (iv) any insurance (other than rental interruption insurance) maintained with
regard to the Project.
1.8 Project Employees. Those persons employed by Manager as a management
staff (i.e., manager, assistant manager, leasing agents, maintenance personnel,
and other personnel necessary to be employed in order to maintain and operate
the Project).
ARTICLE 2
Duties and Rights of Manager
----------------------------
2.1 Appointment of Manager. During the Term of this Agreement, the
Manager agrees, for and in consideration of the compensation hereinafter
provided, and the Owner hereby grants to Manager the right, to supervise and
direct the leasing, management and operation of the Project. Everything
performed by Manager under this Agreement shall be done as an independent
contractor of Owner. All obligations or expenses incurred hereunder, including
the pro rata portion used in connection with or for the benefit of the Project
of all purchases of or contracts for sales or services in bulk or volume which
Manager may obtain for discount or
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convenience in connection with its operation of other apartment projects, shall
be for the account of, on behalf of, and at the expense of Owner, expect as
otherwise specifically provided; provided, however, Owner shall not be obligated
to reimburse Manager for expenses for office equipment or office supplies of
Manager (unless incurred for the Project), for any overhead expenses of Manager
incurred with respect to its general offices, costs relating to accounting
services performed hereunder, or for any salaries of employees of Manager paid
with respect to duties performed on a supervisory level (except when Manager's
supervisory employees are performing tasks otherwise performed by a resident
manager or (to the extent of the savings achieved) where specialists are
employed whose involvement creates savings in performance of required duties).
Owner shall also have no obligation to reimburse Manager for that portion of the
salary of a resident manager which represents payment for services rendered in
respect to apartment projects other than the Project.
2.2 General Operation. Subject to the limitations imposed by the Budget
from time to time, Manager shall operate the Project in the same manner as is
customary and usual in operation of comparable facilities, and shall provide
such services as are customarily provided by operators of apartment projects of
comparable class and standing consistent with the Project's facilities. In
addition to the other obligations of Manager set forth herein, Manager shall
render the following services and perform the following duties for Owner in a
faithful, diligent and efficient manner: (a) maintain businesslike relations
with tenants whose service requests shall be received, considered and recorded
in systematic fashion in order to show the action taken with respect to each;
(b) collect all monthly rentals due from tenants and rent from users or lessees
of other non-dwelling facilities in the Project, if any; request, demand,
collect, receive and receipt for any and all charges or rents which become due
to Owner, and at Owner's expense take such legal action as may be necessary or
desirable to evict tenants delinquent in payment of monthly rental or other
charges (security deposits, late charges, etc.); (c) prepare or cause to be
prepared for execution by the Owner all forms, reports and returns, if any,
required to be filed by the Owner under applicable federal, state or local laws
and any other requirements relating to the employment of personnel (anything
contained herein to the contrary notwithstanding, however, Manager shall not be
obligated to prepare any of Owner's state or federal income tax returns); (d)
use all reasonable efforts at all times during the term of this Agreement to
operate and maintain the Project according to the highest standards achievable
consistent with the operation of comparable quality units; (e) maintain the
Project as a safe and secure environment and notify Owner of any security risks
or issues related to the Project that become known to Manager; (f) advertise
when necessary, at Owner's expense, the availability for rental of the Project
units and display "for rent" or other similar signs upon the Project, it being
understood that Manager may install one or more signs on or about the Project
stating that same is under management of Manager and may use, in a tasteful
manner, Manager's name and logo in any display advertising which may be done on
behalf of the Project; and (g) sign, renew and cancel tenant leases for the
Project, in compliance with standards established by Owner under the provisions
of written apartment leases to bona fide individuals, for monthly rentals and
otherwise on terms established by criteria approved from time to time by Owner,
based upon Manager's recommendations; provided, however, that Project Employees
may occupy apartment units on a month-to-month basis with or without an executed
tenant lease.
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2.3 Budget.
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(a) Manager shall submit for Owner's approval no later than one hundred
twenty (120) days prior to the beginning of each successive Fiscal Year the
Budget for the ensuing Fiscal Year. The Budget shall be approved or rejected by
Owner within thirty (30) days after receipt. If Owner fails to approve or
disapprove the Budget within such period, the Budget shall be deemed to be
approved. In the event Owner rejects the Budget, Owner and Manager shall
jointly prepare the Budget as soon as may be reasonably possible. Until a new
Budget is approved, Manager shall operate on the Budget approved for the prior
Fiscal Year, with the exception of expenses for personnel, which must be
increased based upon existing competitive conditions, and expenses relating to
taxes, insurance and utilities. The Budget shall reflect the schedule of
monthly rents proposed for the new fiscal year and shall also constitute a major
control under which Manager shall operate the Project, and there shall be no
substantial deviations therefrom except as permitted by Section 2.6(a).
Consequently, without the prior consent of Owner, no expenses may be incurred or
commitments made by Manager in connection with the maintenance and operation of
the Project which exceed the total expenses allocated for the period in question
in the approved Budget by more than ten percent (10%). The limitation in the
preceding sentence, with respect to incurring any expense not covered by the
Budget, shall not apply to expenses relating to taxes, insurance or utilities or
expenditures required due to emergencies which threaten life or property or
could result in civil or criminal liability for Owner and/or Manager. Manager
makes no guaranty, warranty or representation whatsoever in connection with the
accuracy of any Budget, and Owner agrees that they are intended as good faith
estimates only.
(b) In the event there shall be a substantial discrepancy between the
results of operations for any month and the estimated results of operations for
such month as set forth in the budget, Manager shall upon request furnish to
Owner within twenty (20) days after the expiration of such month a written
explanation as to why the discrepancy occurred. If substantial variations have
occurred or are anticipated by Manager during the course of any Fiscal Year,
Manager, upon Owner's reasonable request, shall prepare and submit to Owner a
revised forecast of annual income and expenses for the remainder of the Fiscal
Year based on actual year-to-date income and expenses and Manager's forecast of
income and expenses for the remainder of the Fiscal Year.
2.4 Manager and Other Personnel.
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(a) Manager shall investigate, hire, train, instruct, pay, promote,
discharge and supervise the work of the Project Employees and shall supervise,
through the Project Employees, the hiring, promotion, discharge and work of all
other operating and service employees of Manager performing services in or about
the Project, all in the name of Manager. Since some of the Project Employees
may need to reside at the Project and be available full time in order to perform
properly the duties of his/her employment, it is further understood and agreed
that the Project Employees (including his/her spouse and dependent children), in
addition to their salary and fringe benefits, may receive the normal maintenance
customarily provided managers,
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assistant managers, leasing agents, and maintenance personnel of an apartment
project, including employee housing, use of all Project facilities and
reimbursement for any and all expenses which such persons may reasonably incur
in the performance of their duties. Any such housing allowance that is provided
will be considered as a payroll cost under the Budget, and the amount of housing
allowance will be credited as apartment rental income.
(b) The Project Employees shall be employees of Manager. Owner shall
reimburse Manager monthly, in advance, for the total aggregate compensation,
including salary and fringe benefits, payable with respect to the Project
Employees, any temporary employees residing at the Project and, on an agreed
basis, the Project's proportionate share of such costs relating to roving
maintenance, off-site operating staff and similar personnel. The term "fringe
benefits" as used herein shall mean and include the employer's contribution of
F.I.C.A., unemployment compensation and other employment taxes, workmen's
compensation, group life and accident and health insurance premiums, performance
bonuses, and disability and other similar benefits paid or payable by the
employer with respect to employees in other apartment projects operated by
Manager.
2.5 Contracts and Supplies. Manager shall, except as provided herein, in
the name of and on behalf of Owner and at Owner's expense, and without
compensation directly or indirectly to Manager, except as expressly set forth
herein or agreed to by Owner or Manager, consummate arrangements with
concessionaires, licensees, tenants or other intended users of the facilities of
the Project, shall, except as provided herein, on Owner's behalf, enter into
contracts for the furnishing to the Project of electricity, gas, water, steam,
telephone, cleaning, vermin extermination, furnace and air conditioning
maintenance, security protection, pest control and any other utilities, services
and concessions which are provided in connection with the maintenance and
operation of an apartment project in accordance with standards comparable to
those prevailing in other similar apartment projects, and shall place purchase
orders for such equipment, tools, appliances, materials and supplies as are
necessary to properly maintain the Project.
2.6 Alterations, Repairs and Maintenance.
(a) Manager shall make or install, or cause to be made and installed, or
do or cause to be done at Owner's expense and in the name of Owner, all
necessary or desirable repairs, interior and exterior cleaning, painting and
decorating, plumbing, alterations, replacements, improvements and other normal
maintenance and repair work on and to the Project as are customarily made by
Manager in the operation of apartment projects; provided, however, that no
unbudgeted expenditure in excess of $5,000.00 per item or a total of $20,000.00
annually may be made for such purposes without the prior approval of Owner,
unless emergency repairs involving manifest danger to life or property are
immediately necessary for the preservation of the safety of the Project, or to
avoid criminal or civil liability or for the safety of the tenants, or are
required to avoid the suspension of any necessary service to the Project, in
which event such expenditures may be made by the Manager without prior approval
and irrespective of the
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cost limitations imposed by this Section 2.6, provided that Owner is immediately
thereafter given notice of such situation and all costs so incurred.
(b) In accordance with the terms of the Budget or after consultation
with, and written approval by, Owner (except in the case of emergency, in which
case such consultation shall be by telephone), Manager shall, at Owner's
expense, from time to time during the term hereof, make all required capital
replacements or repairs to the Project. Subject to obtaining Owner's prior
written approval in regard to sums necessary to cover costs of such capital
replacements or repairs, Manager shall first use any excess funds held pursuant
to Section 4.5 and then funds furnished by Owner.
2.7 Licenses and Permits. Manager shall apply for, obtain, and maintain,
in the name and at the expense of Owner, all licenses and permits (including
deposits and bonds) required of Owner or Manager in connection with the
management and operation of the Project. Owner agrees to execute and deliver
any and all applications and other documents and to otherwise cooperate to the
fullest extent with Manager in applying for, obtaining and maintaining such
licenses and permits.
2.8 Compliance with Laws. Manager, at Owner's expense, shall use all
reasonable efforts to cause all such acts and things to be done in and about the
Project as Owner and/or Manager shall deem necessary, and Owner covenants
throughout the term of this Agreement at its expense to comply with all laws,
regulations and requirements of any federal, state or municipal government
having jurisdiction respecting the use or manner of use of the Project or the
maintenance or operation thereof.
2.9 Legal Proceedings. Manager shall institute, in its own name or in the
name of Owner, but in any event at the expense of Owner, any and all legal
actions or proceedings which Manager deems reasonable to collect charges, rent
or other income from the Project or to dispossess tenants or other persons in
possession, or to cancel, terminate, or enforce any lease, license or concession
agreement for the breach thereof or default thereunder by the tenant, licensee
or concessionaire.
2.10 Debts of Owner. In the performance of its duties as Manager, Manager
shall act solely on behalf of Owner in Manager's capacity as an independent
contractor. Except as provided in Section 2.1, all debts and liabilities to
third persons incurred by Manager (which are consistent with the terms and
conditions of this Agreement), in the course of its operation and management of
the Project shall be the debts and liabilities of the Owner only, and Manager
shall not be liable for (and is hereby indemnified in respect of) any such debts
or liabilities, except to the extent Manager has exceeded its authority
hereunder.
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ARTICLE 3
Management Fees
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3.1 Management Fee and Other Reimbursable Expenses. Owner shall pay to
Manager, during the term hereof, the Fee for the month on or before the 10th day
of each month. At such time as the Fee is paid, Owner shall also reimburse
Manager for the expenses identified on Exhibit B actually incurred by Manager
during the prior month.
3.2 Place of Payment. All sums payable by Owner to Manager hereunder
shall be payable to Manager at: Six Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx
00000, unless the Manager shall from time to time specify a different address in
writing.
ARTICLE 4
Procedure for Handling Receipts and Operating Capital
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4.1 Bank Deposits. All monies received by Manager for or on behalf of
Owner shall be deposited by Manager with the Depository. Manager shall maintain
separate accounts for such funds consistent with the system of accounting of the
Project. All funds on deposit shall be and remain under the sole and exclusive
control of Manager, subject to the provisions hereof. Concurrently, with its
execution and delivery hereof, Owner has deposited with Manager the Working
Capital Reserve. All monies of Owner held by Manager pursuant to the terms
hereof shall be held by Manager in trust for the benefit of Owner to be held and
disbursed as herein provided, and shall not, unless Owner otherwise has agreed
or directed, be commingled with the funds of any other person, including Manager
or any affiliate of Manager. However, Owner has specifically approved the use
of Manager's Central Disbursement account and the movement of Owner's funds into
that account when payments are made. Except as otherwise provided herein, the
Manager shall be strictly liable for the proper application of all funds of
Owner held by Manager in accordance with the terms of this Agreement.
4.2 Security Deposits. Subject to Owner's direction, a portion of
security deposits collected in connection with the leasing of apartment units
shall be delivered to Owner who shall make same available to Manager for return
to tenants in accordance with their respective tenant leases to the extent Gross
Receipts are insufficient to repay same. Manager shall comply with all
applicable laws with respect to such security deposits. All funds held by
Manager representing security deposits shall at all times be the property of
Owner, subject to all applicable laws with respect thereto.
4.3 Disbursement of Deposits. Manager shall disburse and pay all funds on
behalf of and in the name of Owner in such amounts and at such times as the same
are required in connection with the ownership, maintenance and operation of the
Project on account of all taxes, assessments and charges of every kind imposed
by any governmental authority having jurisdiction over the Project, and all
costs and expenses of maintaining, operating and
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supervising the operation of the Project, including, but not limited to,
salaries, fringe benefits and expenses of the Project Employees, insurance
premiums, legal and external accounting fees and the cost and expense of
utilities, services and concessions. If Owner requests Manager to place or
create any services for the Project which are not generally provided at other
comparable apartment complexes managed by Manager, Owner shall reimburse Manager
for any costs of Manager's staff allocable to the placement and/or creation of
such services.
4.4 Working Capital. In addition to the funds derived from the operation
of the Project and the Working Capital Reserve, Owner shall furnish and maintain
in the operating accounts in the Depository such other funds as may be necessary
to discharge financial commitments required to efficiently operate the Project,
meet all payrolls and satisfy, before delinquency, all accounts payable.
Manager shall have no responsibility or obligation with respect to the
furnishing of such funds.
4.5 Excess Funds. Any operating funds in excess of the Working Capital
Reserve shall be utilized at Owner's option, to pay debt service or shall be
transferred to a bank account opened and maintained solely by Owner; provided,
however, that Manager shall not be required to make any such transfer if the
transfer would reduce the balance of operating funds below an amount equal to
the Working Capital Reserve. Owner shall designate the bank in which the
operating funds are maintained, and Manager shall have no liability for loss of
operating funds due to insolvency of such institution, even though the amount of
funds maintained exceeds the available federal or other deposit insurance.
4.6 Authorized Signatories. In addition to any signatory designated by
Owner, any persons from time to time designated by Manager shall be authorized
signatories on all bank accounts established by Manager hereunder and shall have
authority to make disbursements from such accounts. Funds may be withdrawn from
all bank accounts established by Manager, in accordance with this Article IV,
only upon the signature of an individual who has been granted that authority by
Manager or Owner. All persons who are authorized signatories or who in any way
handle funds for the Project shall be bonded in the minimum amount of
$500,000.00. Any expense relating to such bonds for on-site employees shall be
borne by Owner and for off-site employees by Manager.
ARTICLE 5
Accounting
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5.1 Books and Records. On behalf of Owner, Manager shall keep, or shall
supervise and direct the keeping, on an accrual basis, of a comprehensive system
of office records, books and accounts pertaining to the Project. Manager shall
use the computer accounting program designated by Owner or otherwise approved by
Owner. Such records shall be subject to examination by Owner or its authorized
agents, attorneys and accountants at all reasonable hours at the office where
such records are maintained.
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5.2 Periodic Statements; Audits.
---------------------------
(a) On or before ten (10) days following the end of each calendar month,
Manager shall deliver or cause to be delivered to Owner (i) an unaudited income
and expense statement showing the results of operation of the Project for the
preceding calendar month and the Fiscal Year to-date; (ii) a comparison of
actual income and expenses with the income and expenses projected in the Budget;
and (iii) cash balances for reserves and operating accounts as of the last day
of such month. Manager shall at its option (i) preserve all invoices for a
period for four (4) years, or (ii) at the expiration of each Fiscal Year deliver
all invoices to Owner. Such statements and computations shall be prepared from
the books of account of the Project.
(b) Within twenty (20) days after the end of such Fiscal Year, Manager
will deliver or cause to be delivered to the Owner an income and expense
statement as at the end of such Fiscal Year, and the results of operation of the
Project during the preceding Fiscal Year.
(c) In the event that Owner or Owner's Mortgagee(s) requires an audit, the
Manager shall cooperate with the auditors. Owner shall pay all costs and fees of
the external auditors.
(d) Owner may request and Manager shall provide without further cost to
Owner, when available, such monthly, quarterly and/or annual leasing and
management reports that relate to the operations of the property as Manager
customarily provides the owners of properties it manages. If additional reports
are required, Manager shall quote Owner an additional fee for providing such
additional reports and, if Owner thereafter requests such reports, Owner shall
pay Manager such additional fee.
5.3 Expenses. All costs and expenses incurred in connection with the
preparation of any statements, budgets, schedules, computations and other
reports expressly required under this Article 5 or under any other provisions of
this Agreement shall be borne by Manager. Any costs and expenses incurred in
connections with the preparation of any statement or reports not expressly
provided for under this Article V or any other provisions of this Agreement
shall be borne by Owner.
ARTICLE 6
General Covenants of Owner and Manager
--------------------------------------
6.1 Operating Expenses. Except as otherwise provided herein, Owner shall
be solely liable for the costs and expenses of maintaining and operating the
Project incurred by Owner or by Manager in accordance with the provisions of
this Agreement, and shall pay, or Manager shall pay on Owner's behalf, all such
costs and expenses, including, without limitation, the salaries of all Project
Employees.
6.2 Owner's Right of Inspection and Review. Owner and its accountants,
attorneys and agents shall have the right to enter upon any part of the Project
at all reasonable times
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during the term of this Agreement for any reason, including, without limitation,
examining or inspecting the Project or examining or making extracts of books and
records of the Project, but any inspection shall be done with as little
disruption to the business of the Project as possible. Books and records of the
Project shall be kept, beginning the date hereof, at the Project or at the
location where any central accounting and bookkeeping services are performed by
Manager, but at all times shall be the property of Owner.
6.3 Indemnity. Owner, at its sole cost and expense, shall defend,
indemnify and hold harmless Manager, its partners, employees, agents,
contractors and affiliates against and from any and all claims, losses, damages,
liabilities and expenses, including, but not limited to, attorneys' fees,
arising out of injuries or damages to persons or property, by reason of any
cause whatsoever, occurring on or around the Project. If the Owner's general
liability policy does not automatically include the manager as an additional
insured, Owner agrees to list the Manager as an additional insured on any and
all liability insurance policies maintained by Owner with insurance to that
effect. The indemnity set forth herein shall not apply if the claim results from
either (i) Manager's gross negligence; (ii) Manager's willful misconduct; or
(iii) Manager's failure to comply with the provisions of this Agreement;
provided that these exceptions shall not apply with respect to any action taken
or policy implemented upon the Owner's written request after consultation with
the Manager.
6.4 Covenants Concerning Payment of Operating Expenses. Except as
otherwise provided herein, Owner covenants to pay all sums for operating
expenses in excess of Gross Receipts required to operate the Project upon
written notice and demand from Manager within ten (10) days after receipt of
written notice. Owner further recognizes that the Project may be operated in
conjunction with other phases and that costs may be allocated or shared between
such phases on a more efficient and less expensive method of operation. In such
regard, Owner consents to the allocation of costs and/or the sharing of any
expenses in an effort to save costs and operate the Project in a more efficient
manner.
ARTICLE 7
Defaults: Termination Rights
-----------------------------
7.1 Default by Manager. Manager shall be deemed to be in default
hereunder in the event Manager shall fail to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement to be kept,
observed or performed by Manager, and such default shall (i) result from
Manager's grossly negligent acts or omissions or willful misconduct; (ii)
involve Manager's misappropriation or intentional misapplication of funds
received or held by Manager hereunder; or (iii) continue for a period of ten
(10) days after written notice thereof by Owner to Manager as to any default in
payment of money or thirty (30) days after notice thereof by Owner to Manager as
to any non-monetary default, or, if such non-monetary default cannot be cured
within thirty (30) days, then such additional period as shall be reasonable
provided that Manager is capable of curing same and has continuously attempted
to cure such default.
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7.2 Remedies of Owner. Upon the occurrences of an event of default by
Manager as specified in Section 7.1 hereof, Owner shall be entitled to terminate
this Agreement and Owner shall have the right to pursue any other remedy it may
have at law or in equity, it being expressly understood that following such a
termination, Owner shall have no further obligation to pay any Fee due
hereunder, however, notwithstanding such termination, Manager shall not be
relieved of any liability arising as a result of Manager's default and the
resulting termination of this Agreement. Upon such termination, Manager shall
deliver to Owner such funds, books and records of Owner then in the possession
or control of Manager.
7.3 Defaults by Owner. Owner shall be deemed to be in default hereunder
in the event Owner shall fail to keep, observe or perform any material covenant,
agreement, term or provision of this Agreement to be kept, observed or performed
by Owner, and such default shall continue for a period of ten (10) days after
written notice thereof by Manager to Owner as to any default in payment of money
or thirty (30) days after notice thereof by Manager to Owner as to any non-
monetary default, or, if such non-monetary default cannot be cured within thirty
(30) days, then such additional period as shall be reasonable provided that
Owner is capable of curing same and has continuously attempted to cure such
default.
7.4 Remedies of Manager. Upon the occurrence of an event of default by
Owner as specified in Section 7.3 hereof, Manager shall be entitled to terminate
this Agreement and upon any such termination by Manager pursuant to this Section
7.4, Manager shall have the right to pursue any other remedy it may have at law
or in equity, except that Owner shall continue to be obligated to pay and
perform all of its obligations which have accrued as of the date of termination
and provided further that Owner shall pay Manager a termination fee for the
month in which this Agreement is terminated equal to the Fee paid for the last
full calendar month preceding the month in which the Agreement was terminated.
7.5 Expiration of Term. Upon the expiration of the Term hereof pursuant
to Section 1.10 hereof, or the earlier termination hereof pursuant to any of
Sections 7.2, 7.3 and 9.10, Manager shall deliver to Owner all funds, including
tenant security deposits, books and records of Owner then in the possession or
control of Manager, save and except such sums as are then due and owing to
Manager hereunder. Within sixty (60) days following expiration or termination,
Manager shall deliver to Owner a final accounting, in writing, with respect to
the operations of the Project.
ARTICLE 8
Insurance
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8.1 Owner's Insurance Coverage. Owner, at its expense, will obtain and
keep in force commercially reasonable commercial general liability insurance and
insurance against physical damage (e.g., fire and extended coverage endorsement,
boiler, and machinery, etc.) and insurance against liability for loss, damage,
or injury to property or persons which might arise out of the occupancy,
management, operation or maintenance of the Project, all as set forth on
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Exhibit C attached hereto. Manager will be covered as an additional insured in
all liability insurance maintained with respect to the Project.
The Manager shall furnish whatever information is requested by Owner for
the purpose of establishing the placement of insurance coverages and shall aid
and cooperate in every reasonable way with respect to such insurance and any
loss thereunder. Owner shall include in its hazard policy covering the Project,
the personal property, fixtures, and equipment located thereon (owned by either
Manager or Owner), appropriate clauses pursuant to which the insurance carriers
shall waive the rights of subrogation with respect to losses payable under such
policies.
8.2 Manager's Insurance Coverage. Pursuant to the provisions of Section
4.3, Manager shall provide and maintain, so long as this Agreement is in force,
workmen's compensation insurance in full compliance with all applicable state
and federal laws and regulations covering all employees of Manager performing
work in respect of the Project operations and liability insurance complying with
the terms of Exhibit D.
8.3 Subrogation and Indemnity or Deductible Provisions.
(a) Any insurance which is procured and maintained which in any way is
related to the Project or the authorized activities connected therewith is for
the sole benefit of the party securing such insurance and others named as
insureds, and Manager and Owner hereby release each other from all rights of
recovery under or through subrogation or otherwise for any loss or damage
insured under policies required by this Agreement, and agree that no insurer
shall have a right to recover any amounts paid in respect of a claim from Owner
or Manager, as the case may be, by way of subrogation to Manager's or Owner's
claim, assignment or otherwise, as the case may be. Any insurance which is
procured and maintained by Manager insuring the interest and property of Owner
may contain indemnity or deductible provisions and the cost of such provisions
shall be borne by the Owner.
(b) Each of Owner and Manager hereby waives any and all claims and demands
of whatsoever nature against the other for damages, loss or injury to the
other's property in, upon or about the Project, except for claims and demands
arising out of the gross negligence or willful misconduct of Owner, Manager, or
either of their respective agents, employees, officers or contractors.
8.4 Environmental Indemnification. Owner agrees to indemnify, defend and
hold Manager and its partners, officers, employees and agents harmless from any
claims, judgments, damages (including consequential damages), penalties, fines,
costs, liabilities (including sums paid in settlement of claims) or losses,
direct or indirect, known or unknown, including without limit, attorney's fees,
consultant fees and expert fees, which Manager may incur as a result of its
being named as a "responsible party" or a "potential responsible party" under
any federal, state or local law governing or regulating the environment for acts
arising solely from its duties as manager under this Agreement.
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ARTICLE 9
Miscellaneous Provisions
------------------------
9.1 Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the State wherein jurisdiction of the
specific property is applicable.
9.2 Notices. Owner shall designate one person as Owner's representative
in all dealings with Manager, who shall, until further notice, be the person
whose name is indicated beneath Owner's address set forth on the signature page
hereof. Any notice or communication hereunder must be in writing, and may be
given by registered or certified mail, and if given by registered or certified
mail, same shall be deemed to have been given and received when a registered or
certified letter containing such notice, properly addressed, with postage
prepaid, is deposited in the United States mail; and if given otherwise than by
registered mail, it shall be deemed to have been given when delivered to and
received by the party to whom it is addressed. Such notices or communications
shall be given to the parties hereto at the addresses set forth opposite the
names of the respective parties on the signature page hereof. Any party hereto
may at any time by giving ten (10) days' written notice to the other party
hereto designate any other address in substitution of the foregoing address to
which such notice or communication shall be given.
9.3 Severability. If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement or such other
documents, or the application of such term, covenant or condition to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term, covenant or condition of this
Agreement or such other documents shall be valid and shall be enforced to the
fullest extent permitted by law.
9.4 No Joint Venture or Partnership. Owner and Manager hereby agree that
nothing contained herein or in any document executed in connection herewith
shall be construed as making Manager and Owner joint venturers or partners. In
no event shall Manager have any obligation or liability whatsoever with respect
to any debts, obligations or liabilities of Owner.
9.5 Modification; Termination. This Agreement terminates any and all
prior management agreements between Owner and Manager, relating to the Project,
and any amendment, modification, termination or release hereof may be effected
only by a written instrument executed by Manager and Owner.
9.6 Attorneys' Fees. Should either party employ an attorney or attorneys
to enforce any of the provisions hereof or to protect its interest in any manner
arising under this Agreement, or to recover damages for the breach of this
Agreement, the non-prevailing party in any action (the finality of which is not
legally contested) agrees to pay to the prevailing party
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all reasonable costs, damages and expenses, including attorneys' fees, expended
or incurred in connection therewith.
9.7 Total Agreement. This Agreement is a total and complete integration
of any and all undertakings existing between Manager and Owner and supersedes
any prior oral or written agreements, promises or representations between them.
9.8 Competitive Projects. Manager agrees that in its management of
ventures or projects which are competitive with the Project, Manager will
exercise good faith towards and deal fairly with Owner and the Project. Manager
agrees to notify Owner of any competitive projects.
9.9 Successors and Assigns. Owner has entered into this Agreement with
Manager based on Manager's abilities and, accordingly, Manager may not assign
this Agreement without the prior written consent of Owner. Notwithstanding the
foregoing limitation on assignment, this Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their permitted successors
and assigns.
9.10 Sale of the Project. In the event the Project is sold, conveyed or
transferred during the term hereof, Owner may assign this Agreement to the
purchaser of the Project, subject to obtaining Manager's prior written consent,
or Owner may terminate this Agreement, and Owner shall pay to Manager a
termination fee equal to the Fee payable hereunder for the month prior to the
month of termination. Manager, unless otherwise agreed, shall have no duties in
connection with any such sale except reasonable cooperation with brokers and
purchasers.
9.11 Termination. The term of this Agreement shall be for a period of one
year, and shall be automatically renewed for successive periods of one year each
unless either party provides thirty (30) days' notification of its intent not to
renew. Subject to the provisions of the sentences next following, either party
may terminate this Agreement at any time with or without cause by giving the
other party at least thirty (30) days prior notice in writing. Owner recognizes
that Manager will sustain significant start-up and mobilization costs,
therefore, in the event that Owner terminates this Agreement without cause
within one (1) year from the date hereof, Manager shall be entitled to receive a
termination fee as a condition precedent to the effectiveness of such
termination, in an amount equal to three (3) times the management fee which
accrued during the thirty (30) days immediately prior to the effective date of
termination.
9.12 Prior Agreement. This Agreement supersedes and replaces all prior
agreements between Owner and Manager respecting the management of each Project
on and after the date hereof.
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ARTICLE 10
Subordination to Mortgages
--------------------------
10.1 Subordination. This Agreement and Manager's interest and rights
hereunder, are and shall be subject and subordinate at all times to the lien of
any first or second mortgage, whether now existing or hereafter created on or
against the Project, and all amendments, restatements, renewals, modifications,
consolidations, refinancings, assignments and extensions thereof ("Security
Instrument(s)") without the necessity of any further instrument or act on the
part of the Manager. Manager agrees, at the election of the holder of any such
Security Instruments (the "Secured Party"), to attorn to the Secured Party. The
term "mortgage" as used herein shall be deemed to include deeds of trust,
security assignments and any other encumbrances, and any reference to the
"holder" of a Security Instrument shall be deemed to include the beneficiary
under a deed of trust. Notwithstanding the foregoing, nothing herein shall
obligate the Manager to continue its performance under this Agreement unless it
continues to be paid in accordance with the terms of this Agreement.
10.2 Rights after Events of Default. Upon an Event of Default (as
such term is defined in any Security Instrument), the Manager shall continue to
perform its obligation under this Agreement until the earlier to occur of (a)
the termination of this Agreement with respect to the Project or the termination
of this Agreement in its entirety by the Secured Party, either of which may
occur in the Secured Party's sole discretion, or (b) the Secured Party's (or its
assignee's or nominee's) acquisition of title to the Project through the
foreclosure, a deed-in-lieu thereof, or otherwise. On and after an Event of
Default, there shall be no material changes in the terms and conditions of this
Agreement without the prior written consent of the Secured Party having been
obtained, which consent may be arbitrarily withheld.
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IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the day and year first above written.
ADDRESS: OWNER:
Six Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
By:__________________
Managing Director
ADDRESS: MANAGER:
Six Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
By:__________________
President
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