Exhibit 10.111
RESIDENTIAL MANAGEMENT AGREEMENT
THIS RESIDENTIAL MANAGEMENT AGREEMENT ("Agreement") is made and
entered into as of the 15th day of July 1987, by and between AVENUE ASSOCIATES
LIMITED PARTNERSHIP, a District of Columbia limited partnership ("Owner"), and
CROW-WASH1NGTON OFFICE MANAGEMENT COMPANY, INC., a Texas corporation
("Manager").
W I T N E S S E T H :
WHEREAS, Owner is the owner of a parcel of land located on
Pennsylvania Avenue, N.W., Washington, D.C. between 7th, 0xx xxx X Xxxxxxx, X.X.
("Property") and proposes to construct thereon two (2) multi-use structures
including retail, residential and commercial space and a parking garage(s)
("Buildings") (the Property and the Buildings being collectively referred to as
the "Premises"); and
WHEREAS, Owner has agreed to appoint Manager as the sole and
exclusive managing agent for the residential portion of the Buildings and
Manager has agreed to serve as such, all subject to the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, one Dollar
($1.00), the terms set forth below, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Manager and Owner
hereby agree as follows:
ARTICLE I
ESTABLISHMENT OF MANAGERIAL RESPONSIBILITY
Section 1.1 Appointment of Manager. Owner hereby appoints Manager,
and Manager hereby accepts appointment, on the terms and conditions hereinafter
provided, as sole and exclusive Manager of the residential portion of the
Premises.
ARTICLE II
SERVICES TO BE PERFORMED BY MANAGER
Section 2.1 Preparation of Annual Budget. (a) Within ninety (90)
days after the certificate of occupancy permitting occupancy of the residential
portion of either of the Buildings is obtained and on or before every August 1
during the term hereof, Manager shall prepare and deliver to Owner an operating
and capital budget in form satisfactory to Owner in preliminary draft form
setting forth an itemized statement of the estimated receipts and
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disbursements (capital, operating and other) for the next fiscal year. Such
preliminary budget shall include a rent roll for the residential portion of the
Buildings, taking into account, without limitation, the general condition of the
residential portion of the Premises, rate of completion of any contemplated
repairs to the residential portion of the Premises, the then current occupancy
level, lease expirations, the physical condition of the residential portion of
the Buildings and rentals charged in the competing buildings in the area. Each
such preliminary budget shall also include suggested leasing guidelines
(including rental rates, terms, parameters for tenant creditworthiness,
escalation clauses, remodeling and parking charges, and other pertinent matters)
to serve as a basis for negotiating with prospective or renewal residential
tenants, a schedule of proposed job descriptions and requirements for any and
all independent contractors and employees of Manager serving the residential
portion of the Premises, a reasonable estimate of wage rates and all other
compensation to be paid such contractors and employees.
(b) After review and approval by Owner in accordance with Section
2.05 of the Joint Venture Agreenent of Market Square Associates ("Joint Venture
Agreement"), Manager shall refine each such preliminary budget into final draft
form not later than thirty (30) days after delivery of such preliminary budget;
following its approval in final form by Owner, said budget (hereinafter called
an "Annual Budget") shall constitute a standard to which Manager shall adhere.
Notwithstanding the foregoing, sums shown in the Annual Budget for tenant
improvement work are for illustrative purposes only and no sums for tenant
improvement work will be spent except on a lease-by-lease basis as approved by
Owner. Except with the prior consent, which will not be unreasonably withheld or
delayed, of Owner or in the case of emergency repairs Permitted under Section
2.4 hereof, no expense or cost may be incurred or commitment made by Manager in
connection with the maintenance, repair or operation of the residential portion
of the Premises in excess of ten percent (10%) of each base item and in the
aggregate five percent (5%) over the Annual Budget for operating expenses
("Excess Payment"); no overspending of the individual items or the aggregate
amount of the Annual Budget for capital expenses is permitted by this Section.
The making of any Excess Payment by Manager shall not be in default under this
Agreement; provided, however, the amount of such Excess Payment shall be an
obligation of Manager and shall not be paid from funds of Owner and Owner shall
be under no obligation to reimburse Manager for such expenditures unless such
excess Payment is subsequently approved by Owner in its reasonable discretion.
Section 2.2 Independent Contractors. Pursuant to the Annual Budget,
Manager shall investigate, contract with, pay, supervise and discharge any
personnel required for the routine maintenance and operation of the residential
portion of the Premises on a day-to-day basis, including architects, engineers,
accountants, attorneys and others. Such personnel shall in every instance be
independent contractors or employees of Manager and shall not be employees of
Owner. After any party has been engaged to perform personal or
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professional services for Owner, Manager shall give Owner notice thereof and
Owner may require Manager to terminate the contracts of such persons serving the
Premises whom Owner, in its sole discretion, deems unsatisfactory. Except as
provided in Section 5.3 below, all salaries, wages and other compensation of
personnel contracted with by Manager hereunder shall be paid by Manager from
funds of Owner or reimbursed to Manager by Owner pursuant to the terms hereof.
Section 2.3 Service Contracts. Manager shall make, when necessary,
in the name of Owner, contracts for water, electricity, gas, fuel, oil,
telephone, vermin extermination, trash removal, janitorial service, landscaping,
security service and other necessary services, or such of them as Manager shall
deem reasonably advisable, for the residential portion of the Premises, provided
each such contract shall be for no longer than a one-year term or shall be
cancellable on no more than thirty (30) days notice after one year without
penalty. Manager shall also place orders in the name of Owner for such
equipment, tools, appliances, materials and supplies as are necessary properly
to maintain the residential portion of the Premises, subject to the limitations
of the current Annual Budget (as it is subject to the provisions of Section
2.1(b) above) approved by Owner.
Section 2.4 Maintenance and Repair of Premises. Manager shall cause
the residential portion of the Premises to be maintained in accordance with the
standards not less than those set forth in Section 2.9(h) below, including
(without limitation) the performance of ordinary alterations and improvements,
supervision of the installation and removal of tenant improvements, interior and
exterior cleaning, painting and decorating, plumbing, carpentry, and such other
normal maintenance and repair work as may be desirable, subject to limitations
of the current Annual Budget approved by Owner and any other reasonable
limitations imposed in writing by Owner in addition to those contained herein.
For any one item of repair or replacement, the expense or cost incurred shall
not exceed the amount allocated thereto in the current Annual Budget, except as
permitted by Section 2.1(b) above and further except that emergency repairs
immediately necessary to secure the preservation and safety of the residential
portion of the Premises or to avoid the suspension of any service reasonably
necessary for the operation of the residential portion of the Premises or to
avoid danger to life or property may be made by Manager without such consent or
authority contained in the current Annual Budget provided Manager shall first
make reasonable attempts to contact Owner. Notwithstanding such authority as to
emergency repairs, it is understood and agreed that Manager will confer as soon
as possible with Owner regarding every such expenditure. Manager shall assure
that any contractor performing work on the residential portion of the Premises
maintains insurance satisfactory to Owner and any mortgagee of the residential
portion of the Premises, including (but not limited to) workmen's compensation
insurance, employers' liability insurance and insurance against liability for
injury to persons and property arising out of all of contractors' operations,
any subcontractors' operations, and the use of
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owned, non-owned or hired equipment, including automotive equipment in the
pursuit of all such operations.
Section 2.5 Insurance. If requested by Owner, Manager shall
supervise the maintenance of insurance for the residential portions of the
Premises, with companies and through brokers agreed upon by Owner, of such kind
and amounts as Owner shall from time to time be required to carry pursuant to
the provisions of applicable agreements with third parties, and of such other
kind and amounts as Owner shall from time to time require.
Section 2.6 Collection of Moneys. Manager shall prepare and deliver
all rent bills and other invoices to residential tenants and shall calculate all
rent escalations and percentage rents due. Manager shall collect all rent and
other charges due from tenants, licensees, concessionaires and any others in
consequence of the authorized operation of facilities in the residential
portions of the Premises and otherwise due Owner with respect to the residential
portion of the Premises. Owner authorizes Manager to request, demand, collect,
receive and receipt for all such rent and other charges. With the prior written
consent of Owner, Manager may institute legal proceedings and engage legal
counsel in the name of Owner for the collection of overdue rents and other
charges and for the dispossession of tenants and other persons from the
residential portions of the Premises. Owner will be informed as soon as possible
respecting any legal action which may be contemplated. Any expense incurred
in connection therewith shall be paid by Owner. All moneys collected by
Manager shall be forthwith deposited in the Depository Account (defined in
SECTION 5.2 below).
Section 2.7 MANAGER DISBURSEMENTS. Except as otherwise directed
by Owner and subject to the limitations of SECTION 2.1(B), Manager shall,
from the funds on deposit in the Operating Account (defined in SECTION 5.2
below), cause to be disbursed regularly and punctually amounts due and
payable as operating expenses of the residential portions of the Premises
authorized to be incurred under the terms of this Agreement, including
(without limitation) payment of utility bills, telephone bills, custodial
bills, trash removal bills, water and sewer rents, vault charges and leasing
commissions, payment (if directed by Owner) prior to delinquency and prior to
the addition thereof of interest or penalties of all real property taxes and
assessments and other taxes levied or assessed against the residential
portions of the Premises, all rents, insurance premiums and other impositions
applicable to the residential portions of the Premises. Manager's fees
provided for in ARTICLE IV, any reimbursement due to Manager pursuant to
SECTION 5.3, and if requested by Owner, payment of sums due on any mortgage
loan affecting the residential protions of the Premises. Manager may also pay
sums due on such mortgage loans if permitted by the terms of the Joint
Venture Agreement. After disbursement as herein specified, any balance
remaining shall be disbured or transferred as generally or specifically
directed from time to time by Owner. Manager shall have no obligation to pay
any of the aforementioned expenses or costs unless there are sufficent funds
in the Operating Account or the funds are supplied to Manager by Owner. In
the event that at any time there are insufficient funds on hand to meet such
operating expenses, Manager shall promptly notify Owner, which shall supply
such funds, and if Manager shall have advanced its own funds to meet such
expenses Owner shall promptly reimburse Manager therefor. All checks to
Manger for reimbursement of expenses and for Manger's fees and all checks for
payment of leasing commissions shall be co-signed by Owner.
Section 2.8 DISCOUNTS. Manager shall at all times be under a duty
to use its best efforts to secure for and credit to Owner any discounts,
commissions or rebates obtainable as a result of any purchase of goods or
services or as a result of other activities undertaken pursuant to this
Agreement unless otherwise directed by Owner.
Section 2.9 Miscellaneous Duties of Manager.
(a) Books and Records and Monthly Reports. Manager shall keep all
books of account and other records required by Owner, keep vouchers, statements,
receipted bills and invoices and all other records in such form as may be
required by Owner, covering all collection, disbursements, and other data in
connection with the residential portion of the Premises; permit Owner, or any
person designated by any general partner in Owner, at any reasonable time, to
audit the books, records and accounts of Manager relating to the residential
portion of the Premises, and Manager will exhibit such books, records and
accounts to any person designated by any general partner in Owner for that
purpose, which accounts and records relating to the residential portion of the
Premises, including all correspondence and leases, shall be the property of
Owner and, upon any termination of the appointment of Manager, shall be
surrendered to Owner without charge therefor within ten (10) days after such
termination date. As soon as reasonably practicable, and in any event on or
before the 15th day of each month during the term of this Agreement, Manager
shall render to Owner a detailed written report (hereinafter called the "Monthly
Report") covering the operations for the preceding full calendar month. The
Monthly Reports shall include designation of all receipts and disbursements
during such period (and shall set forth an accurate list of accounts receivable
and accounts payable) and moneys retained in the Operating Account as of the
last
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day of the preceding calendar month. Such report shall include a copy or
facsimile of all notices received from any mortgagee or land lessor with respect
to payments made to such mortgagee or land lessor in such preceding calendar
month, a brief narrative summary highlighting the past month's operation, a
statement setting forth the variances between actual operating results and the
budgeted results, and a detailed rent roll (the form of which shall be supplied
to Manager by Owner).
(b) Annual Report. Within sixty (60) days after the end of each
fiscal year, Manager shall deliver to Owner a preliminary and unaudited profit
and loss statement, balance sheet, and statement of changes in financial
position of Owner. Within one hundred twenty (120) days after the end of each
fiscal year, Manager shall deliver to Owner an audited profit and loss
statement, a balance sheet and a statement of change in financial position of
Owner, showing the results of operations of the residential portion of the
Premises for that fiscal year, all prepared in accordance with generally
accepted accrual basis accounting principles consistently applied. The audit
shall be performed by Xxxxxxx & Xxxxxxx or another firm of independent
accountants as Owner may designate. The fees and charges of all accountants
shall be an expense of Owner. Manager shall also furnish Owner, within said one
hundred twenty-day period, with a detailed list of all accounts receivable and
accounts payable as of the end of that fiscal year and with such other
information as Owner shall reasonably request. In addition, within thirty (30)
days after the end of each of the first three (3) quarters of the fiscal year,
Manager shall deliver an unaudited financial statement for the preceding quarter
consisting of a balance sheet and a statement of profit and loss.
(c) Tenant Complaints. Manager shall serve as liaison between Owner
and residential tenants and maintain business-like relations with residential
tenants, whose service requests shall be received, logged and considered in
systematic fashion (in accordance with standards used by the managers of
first-class residential projects in Washington, D.C.) in order to show the
action taken with respect to each. Complaints of a serious nature (i.e.
involving claims in excess of $1,000) shall, after thorough investigation, be
reported to Owner with appropriate recommendations. Notwithstadning anything to
the contrary set forth in this Agreement, Owner reserves the right to contact
its tenants directly, but Owner agrees to exercise this right in such manner so
as not to interfere with Manager's performance under this Agreement and to make
all such contacts as provided in the Joint Venture Agreement.
(d) Returns Required by Law. Except when same are legally required
to be filed by Owner, Manager shall execute and file punctually, when due, all
forms, reports, and returns required by law relating to the employment of
personnel and the operation of the residential portion of the Premises,
including all property, franchise and other tax returns. If directed in writing
by Owner, all of such tax returns shall be reviewed by Xxxxxxx & Xxxxxxx or such
other firm of independent accountants as shall be designated by Owner. Returns
shall
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be furnished to Owner in sufficient time that they may be reviewed by Owner and
filed without the necessity for extensions of time for filing.
(e) Compliance with Legal Requirements. Manager shall take such
action as may be necessary to comply with any and all orders or requirements
affecting the residential portion of the Premises by any federal, state, county,
municipal or other authority having jurisdiction thereover, and orders of the
board of fire underwriters or other similar bodies, subject to the same
limitations contained in Section 2.4 hereof in connection with the making of
repairs and alterations. Manager, however, shall not take any such action as
long as: (i) Owner is contesting any such order or requirement, (ii) Owner
requests Manager not to take such action, and (iii) Owner indemnifies Manager
from and against any civil liability incurred by Manager in failing to take such
action; provided, however, that if failure to comply with any such order or
requirement would or might expose Manager to criminal liability, Manager shall,
without approval of Owner, cause the same to be complied with. Manager shall
promptly, and in no event later than the close of the next business day
following its receipt, give written notice to Owner of any such order or notice
of requirements.
(f) Claims for Tax Abatements and Eminent Domain Awards. When
requested by Owner from time to time, Manager shall, without charge or
reimbursement, except for out-of-pocket expenses (including attorneys' fees),
render advice and assistance to Owner in the negotiation and prosecution of all
claims for the abatement of property and other taxes affecting the residential
portion of the Premises and for awards for taking by eminent domain affecting
the residential portion of the Premises.
(g) Supervision of Repairs and Alterations. Manager shall supervise
the performance of all matters coming within the terms of this Agreement,
including direct observation, inspection and supervision of all repairs,
decorations, alterations and improvements during the progress thereof and shall
make final inspection of the completed work and approve bills for payment.
Manager shall obtain the necessary receipts, releases, waivers, discharges and
assurances to keep the residential portion of the Premises free from mechanics'
and materialmen's liens and other claims.
(h) Management of Premises. Manager shall, generally, take all
actions reasonably necessary to protect and preserve the residential portion of
the Premises and to manage and operate the residential portion of the Premises
in an efficient first-class manner consistent with similar buildings in the
downtown Washington, D.C. market to maximize net operating income and shall, at
all times, maintain an organization sufficient to enable it to perform all of
its obligations and functions under this Agreement.
(i) Tenant Improvements. Manager shall supervise tenant finishing
work and alterations when new tenants take occupancy in the Building and shall
supervise and
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inspect modifications and alterations to existing tenant space when requested
for and paid for by existing tenant. Manager shall contract for tenant finishing
work required under leases executed by Owner after the Conversion Date as
defined in Section 2.1 of the Building Loan Agreement. Any sums payable by
tenants to Manager for supervision of such work shall be in addition to, and not
in lieu of, the fees otherwise due to Manager under this Agreement; provided,
however, that the payment of such a fee by a tenant to Manager may not be
subsidized by another lease consession granted by Owner to the tenant if the
effect of such a concession would be to otherwise reduce Manager's fees
hereunder.
ARTICLE III
TERM
Section 3.1 Term. The term of this Agreement shall commence on the
execution of this Agreement (the "Commencement Date"), and shall expire on the
fifteenth (15th) anniversary of the date the first certificate of occupancy
permitting occupancy of the residential portion of the Buildings is issued,
unless this Agreement is sooner terminated pursuant to Section 3.2 hereof.
Notwithstanding the foregoing sentence, Manager acknowledges that the term of
this Agreement may be limited by law upon the conversion of all or a portion of
the Buildings to condominium or cooperative status and that, in such event, the
term of this Agreement (or, if permitted by applicable law, only the term of
this Agreement as it pertains to the converted portion of the Buildings) shall
automatically expire on the latest date permitted by applicable law at such time
(but subject to the expiration date set forth in the first sentence of this
Section). In the event it is necessary or advisable for Owner (as declarant of
the condominium or cooperative regime or as the controlling unit owner therein)
to terminate this Agreement upon or following the creation of such a regime and
in connection with such creation, Owner shall immediately enter into a new
management agreement with Manager if so permitted by applicable law and as
identical as is possible to this Agreement for the maximum term permissible (but
subject to the expiration date set forth in the first sentence of this Section).
Within ten (10) days after the expiration or earlier termination of this
Agreement, Manager shall deliver to Owner all books, records and materials
relating to the residential portion of the Premises.
Section 3.2 Termination for Cause. During the term of this
Agreement, this Agreement may be terminated by Owner for cause, as "cause" is
hereafter defined. In the event that Owner believes there is cause for the
termination of this Agreement, Owner shall deliver written notice to Manager
specifying which of the items enumerated below constitutes cause for the
termination of this Agreement. This Agreement shall terminate thirty (30) days
after delivery of such written notice to Manager if Manager fails to cure the
item specified within such period, except that such thirty (30) day period shall
be extended if a cure is not
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possible within such period but is possible within a reasonable period and
Manager commences such cure and thereafter prosecutes it diligently to
completion. "Cause" for termination by Owner shall include the continuation of
any of the following beyond the aforesaid grace period.
(a) Default shall be made in the performance or observance by
Manager of any covenant, condition or term in this Agreement;
(b) Manager shall fail to exercise the level of managerial skill,
knowledge and judgment required for the operation of a major residential
building;
(c) Manager shall engage in conduct constituting fraud, breach of
its fiduciary obligations, or misappropriation of funds;
(d) Manager shall institute proceedings to be adjudicated a
voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent seeking
reorganization, re-adjustment, arrangement, composition or similar relief under
the federal bankruptcy laws, or any other similar applicable federal or state
law, or shall consent to or fail reasonably to oppose any such proceeding, or
shall consent to the appointment of a receiver or liquidator or trustee or
assignee in bankruptcy or insolvency of it or of a substantial part of its
property, or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due, or
corporate action shall be taken by Manager in furtherance of any of the
aforesaid purposes;
(e) A decree or order by a court of competent jurisdiction shall
have been entered adjudging Manager bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, readjustment, arrangement,
composition or similar relief for Manager under the federal bankruptcy laws, or
any other similar applicable federal or state law, and such decree or order
shall have continued undischarged or unstayed for a period of ninety (90) days;
or a decree or order of a court having jurisdiction for the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of
Manager or a substantial part of its property, or the winding up or liquidation
of its affairs, shall have been entered, and such decree or order shall have
remained in force, undischarged and unstayed for a period of ninety (90) days;
(f) Developer shall become a Defaulting Venturer (as defined in the
Joint Venture Agreement) and shall remain a Defaulting Venturer beyond the
expiration of any applicable grace period;
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(g) Subject to the provisions of Section 3.1 and if the third-party
elects to terminate this Agreement, Owner shall sell the residential portion of
the Premises to a third-party which is not an "Affiliate" (as defined in the
Joint venture Agreement) of Owner and any of its partners in an arm's-length
transaction;
(h) Crow-Pennsylvania Avenue Limited Partnership ("Crow-PA") is a
joint venturer in Market Square Associates, Market Square Associates is the sole
(or managing) general partner of Owner, and (i) Owner is in default (beyond the
expiration of any applicable notice and/or grace period) under the terms of the
loan documents of even date herewith between Owner and DIHC Finance Corporation
for any reason which is the fault of Crow-PA (as opposed to being the fault of
DIHC Market Square, Inc.) or (ii) there is a default (beyond the expiration of
any applicable notice and/or grace period) under the terms of that certain
Guaranty of completion, of even date herewith, for the benefit of DIHC Finance
Corporation, DIHC Market Square, Inc., and Market Square Associates;
(i) The indirect interest of Crow-PA in Owner shall be less than
five percent (5%). For example (and not by limitation), if the direct interest
of Crow-PA in Market Square Associates is 7.14%, and the direct interest of
Market Square Associates in Owner is 70%, then said indirect interest shall be
deemed to be 5% and any further dilution of Crow-PA's interest in Market Square
Associates shall result in a lesser indirect interest in Owner.
Nothwithstanding anything to the contrary set forth in the preamble
of this Section 3.2, no cure period shall be afforded for defaults under Section
3.2(c) (except for breach of fiduciary duty not constituting fraud or
misappropriation of funds) and the only cure period for defaults under Section
3.2(e) shall be the period specified therein.
In the event of any dispute between the partners in the general
partner in Owner or between DIHC Market Square, Inc. and Manager as to whether
or not Owner has "cause" to terminate this Agreement pursuant to the provisions
of this Section 3.2, such dispute shall be determined by arbitration pursuant to
Article VI hereof.
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Section 3.3 Payment to Manager in Event of Termination. In the event
this Agreement is terminated under Section 3.2 hereof, Manager shall be entitled
only to that portion of the management fee earned pursuant to Article IV of this
Agreement through the date of such termination, in full satisfaction of Owner's
obligation to Manager under this Agreement.
ARTICLE IV
COMPENSATION
Section 4.1. Management Fee. (a) During the term of this Agreement,
if the residential units are operated on a rental basis, Owner shall pay Manager
monthly in arrears on the last day of each month a residential management fee
equal to four percent (4%) of all residential rents and forfeited residential
security deposits collected by it during that month. Upon receipt of the fee,
Manager shall promptly pay DIHC Management Corporation 12.5% of such amount as a
consulting fee. If the residential units are operated on a condominium or
cooperative basis, Owner shall pay Manager a monthly fee based on then-current
market rates for such services as they may mutually agree (or as may be
determined by arbitration as set forth below if allowed by law).
(b) The fee set forth in Section 4.1(a) shall be unchanged for the
first twelve and one-half (12-1/2) years of the term hereof. In the event
Manager desires to increase said fee at that time, Manager shall give Owner
thirty (30) days notice of the increase requested and evidence of the then
current market rates justifying said increase. In the event Owner denies or
fails to approve the requested increase within the thirty (30) day period, then
the increase shall be deemed denied and Manager may resign as managing agent at
any time. In the event Owner approves the requested increase, the increased
fee(s) shall be effective as of the date requested by Manager.
ARTICLE V
MISCELLANEOUS
Section 5.1 Use and Maintenance of Premises. Manager agrees to use
best efforts not to permit the use of the residential portion of the Premises
for any purpose which might void any policy of insurance held by Owner or
Manager or render any loss thereunder uncollectible, or which would be in
violation of any law, ordinance, bylaw or governmental or other restrictions. It
shall be the duty of Manager at all times during the term of this Agreement to
operate and maintain the residential portion of the Premises in a first-class
manner consistent with the expressed plan of Owner and the budgetary constraints
set by Owner. Full compliance by the residential tenants with the terms and
conditions of their
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respective leases shall be pursued, and to this end, Manager shall see that all
residential tenants are informed with respect to rules, regulations and notices
contained therein. Manager shall be expected to perform such other acts and
deeds as are reasonable, necessary and proper in the discharge of its duties
under this Agreement.
Section 5.2 Separation of Owner's Moneys. Owner shall establish and
maintain a bank account at a financial institution in the Baltimore, Maryland or
Washington, D.C. metropolitan areas of Owner's choosing for the deposit of all
revenues arising out of the residential portion of the Premises (the "Depository
Account"). Manager shall promptly deposit all (the "Depository Account").
Manager shall promptly deposit all revenues, as same are collected, in the
Depository Account and only the authorized representatives of Owner shall be
able to withdraw funds from the Depository Account. Manager shall establish and
maintain an additional account at a financial institution in the Baltimore,
Maryland or Washington, D.C. metropolitan areas of Owner's choosing for the
purpose of maintaining those funds necessary to the operation of the residential
portion of the Premises (the "Operating Account"). Owner shall from time to
time, upon the advice of Manager, deposit into the Operating Account sufficient
funds to cover the cost and expense of the maintenance and operation of the
residential portion of the Premises. Funds may be withdrawn from the Operating
Account upon the signature of duly authorized representatives of Manager or
Owner. Manager shall not deposit in the Depository Account or Operating Account
any funds belonging to Market Square Associates or any person or entity other
than Owner and shall not commingle funds between Owner, Market Square
Associates, or any other person or entity.
Section 5.3 Expenses of Manager. Owner shall reimburse Manager for
direct expenses of manager incurred solely on account of the residential portion
of the Premises for the payment of any proper obligation or necessary expense
connected with the maintenance and operation of the residential portion of the
Premises, including the wages, salary and other compensation of any approved
full-time on-site property manager(s), all reasonable costs incurred in the
operation of a residential management office in the Building, including office
rental, personnel positions, supplies, postage, equipment and telephone, and all
travel and entertainment costs reasonably incurred by Manger related to its
management services. As a consultant, DIHC Management Corporation shall also be
entitled to reimbursement by Owner of its reasonable travel costs incurred in
connection with the Premises. All payments to be made by Manager hereunder shall
be made by check drawn on the Operating account, except for xxxxx cash items not
exceeding Two Hundred Dollars ($200.00), which may be paid from a fund to be
maintained by Manager for such purposes. Manager shall not be obligated to make
any advance to or for the account of Owner or to pay any sums except out of
funds held in the Operating Account, nor shall Manager be obligated to incur any
liability or obligation for the account of Owner without assurance that the
necessary funds for the discharge thereof will be provided. Any reimbursement to
Manager hereunder shall be in addition to, and not in lieu of, Manager's fees
under Article IV hereof.
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Section 5.4 Bond. Manager shall furnish, at the expense of Manager,
a fidelity bond with a commercial surety satisfactory to Owner, in the penal
amount and form approved by Owner, conditioned upon the faithful accounting for
funds of Owner collected or received by Manager.
Section 5.5 Notices. All notices, demands, requests or other similar
communications required or permitted hereunder shall be deemed delivered when
received if sent by hand delivery (or overnight courier) or if deposited in the
United States certified or registered mail, return receipt requested, postage
prepaid, and addressed to the respective parties at the addresses specified
below, or at such other address as they shall each specify in a notice addressed
and mailed as hereinabove set forth:
To Owner: c/o DIHC Market Square, Inc.
000 Xxxxxxxx Xxxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxxxx, Xx.
with a copy to: DIHC Management Corporation
000 Xxxxxxxx Xxxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxx X. Xxxxxxxx, Xx.
To Manager: c/o Xxxxxxxx Xxxx Company
0000 00xx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Mr. T. Xxxxxxxxxxx Xxxx
with copies to: Xx. X. XxXxxxxx Xxxxxxxx
Xxxxxxxx Xxxx Company
3500 LTV Tower
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
and to: Xxxxxxx X. Xxxxx, Esq.
Xxxxx, Day, Xxxxxx & Xxxxx
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
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All notices from Owner relating to an alleged default hereunder
shall contain the following language: "A default by manager under the Agreement
would constitute an Event of Default under the Joint Venture Agreement of Market
Square Associates by Crow-Pennsylvania Avenue Limited Partnership."
Section 5.6 Entire Agreement. This Agreement constitutes the entire
agreement between owner and Manager relating in any manner to the subject matter
of this Agreement. No prior agreement or understanding pertaining to the same
shall be valid or of any force or effect, and the covenants and agreements
herein cannot be altered, changed or supplemented except in writing signed by
Owner and Manager.
Section 5.7 Governing Law. This Agreement is made pursuant to, and
all of the rights and obligations of the parties hereto and all of the terms and
conditions herein shall be construed in accordance with and governed by, the
laws of the District of Columbia.
Section 5.8 Severability. If any clause or provision of this
Agreement is illegal, invalid or unenforceable under present or future laws
effective during the term hereof, then the remainder of this Agreement shall not
be affected thereby, and in lieu of each clause a provision of this Agreement
which is illegal, invalid or unenforceable, there shall be added, as part of
this Agreement, a clause or provision as similar in terms to such illegal,
invalid or unenforceable clause or provision as may be possible and as may be
legal, valid and enforceable.
Section 5.9 Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors, heirs and assigns.
Section 5.10 Assignment by Manager. The rights and obligations of
Manager hereunder shall not be assignable without the prior written consent of
Owner.
Section 5.11 Subordination. This Agreement and all fees due from
Owner to Manager pursuant hereto shall be subject and subordinate in all
respects to (a) any mortgage or deed of trust upon the residential portion of
the Premises or any portion thereof and (b) any collateral assignment of rents
due under the leases of space in any improvements on the residential portion of
the Premises given to any lender to secure a loan the proceeds of which were
used, directly or indirectly, in connection with the residential portion of the
Premises. This provision shall be self-executing but Manager shall, upon
request, execute such instruments as may reasonably be requested by Owner or any
such mortgagee or lender to evidence such subordination.
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Section 5.12 Exculpation. Anything in this Agreement to the contrary
notwithstanding, Manager accepts and agrees that each of the covenants,
undertakings and agreements herein made on the part of Owner, while in the form
purporting to be covenants, undertakings and agreements of Owner, are,
nevertheless, made and intended not as personal covenants, undertakings and
agreements by its partners or the partners therein or for the purpose of binding
its partners personally or the assets of its partners but are made and intended
for the purpose of binding only its partners' interests, or the interests of the
partners therein, in the assets of Owner and that no personal liability or
personal responsibility is assumed by, nor shall at any time be asserted or
enforceable against the partners of Owner or the partners therein or their
respective heirs, legal representatives, successors and assigns on account of
this Agreement or on account of any covenant, undertaking or agreement of Owner
and its partners in this document contained, all such personal liability and
personal responsibility, if any, being expressly waived and released by Manager,
and Manager further agrees not to seek or enforce any judgments (including but
not limited to specific performance, deficiency judgments, and any and all other
judgments) obtained against Owner or against its partners or the partners
therein beyond the interests of the partners in the assets of Owner.
Section 5.13 Indemnity. To the extent not covered by Owner's
insurance, Manager shall indemnify Owner and save it harmless from and against
all claims, losses and liabilities arising out of damage to property, or injury
to, or death of persons (including the property and persons of the parties
hereto, and their agents, subcontractors and employees) occasioned by or in
connection with the gross negligence or willful misconduct of Manager or
Manager's employees or subcontractor's and all costs, fees and reasonable
attorneys' expenses in connection therewith.
Section 5.14 Waivers. No delay or omission by either party in
exercising any right or power accruing upon the non-compliance or failure of
performance by the other party hereto of any provisions of this Agreement shall
impair any such right or power or be construed to be a waiver thereof. A waiver
by either party of any of the covenants, conditions or agreements hereof to be
performed by the other must be in writing and signed by the party who is waiving
such covenants, conditions or agreements.
ARTICLE VI
ARBITRATION
Section 6.1 Whenever in this Agreement it is provided that a dispute
shall be determined by arbitration, the arbitration shall be conducted as
provided in this Article. The party desiring such arbitration shall give written
notice to that effect to the other, specifying the dispute to be arbitrated.
Within ten (10) days after said notice is given, the other party
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shall give written notice to the first party, specifying the name and address of
the person it proposes to act as arbitrator. If the second party fails to notify
the first party of its choice of arbitrator as aforesaid by the time above
specified, then the first party shall select the arbitrator to determine the
dispute. If the first party does not object to the arbitrator proposed by the
second party within ten (10) days after notice is given of such nomination, the
arbitrator proposed by the second party shall determine the dispute. If the
first party rejects the proposed arbitrator during said period and if they
cannot agree upon said appointment, an arbitrator shall be appointed upon their
application or upon the application of either party by the Chief Judge of the
District of Columbia Court of Appeals. The arbitrator shall decide the dispute
and tender a written decision to the parties within thirty (30) days after his
or her appointment. A decision shall be binding and conclusive upon the parties
and judgment thereon may be entered in any court having jurisdiction thereof.
Section 6.2 In designating an arbitrator and in deciding the
dispute, the arbitrator shall act in accordance with the rules then in force of
the American Arbitration Association (or any successor thereto), subject,
however, to such limitations or directions as may be placed upon him or her by
the provisions of this Agreement. Each party shall pay the fees and expenses of
its respective attorneys and both shall share equally the fee and expenses of
the arbitrator as well as any fees payable to the American Arbitration
Association or its successor. No arbitrator shall be a person who is or has been
a director, officer, shareholder, partner, associate, employee or other
principal of either party. The arbitrator shall consider all testimony and
documentary evidence which may be presented at any hearing as well as relevant
facts and data which he or she may discover by investigation and inquiry outside
of such hearings. Each party shall have the right to be represented by counsel
and to cross examine witnesses.
Section 6.3 An arbitration to determine whether or not Owner has
"cause" to terminate this Agreement under Section 3.2 hereof shall be submitted
to an arbitrator who has had at least ten (10) years experience in the
management of multi-story residential buildings in the District of Columbia.
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Section 6.4 The obligation of the parties to submit a dispute to
arbitration is limited to disputes arising under those Articles of this
Agreement which specifically provide for arbitration.
MANAGER:
XXXX-XXXXXXXXXX OFFICE
MANAGEMENT COMPANY, INC.
By: /s/ X.X. Xxxx (Seal)
----------------------------
T. Xxxxxxxxxxx Xxxx
Vice President
OWNER:
AVENUE ASSOCIATES LIMITED PARTNERSHIP
By: MARKET SQUARE ASSOCIATES
By: CROW-PENNSYLVANIA AVENUE
LIMITED PARTNERSHIP
By: XXXX-XXXXXXXXXX CBD
DEVELOPMENT
CORPORATION
By: /s/ X.X. Xxxx
----------------------------
T. Xxxxxxxxxxx Xxxx
Vice President
(Seal)
By: DIHC MARKET SQUARE, INC.
By: /s/ X.X. Xxxx
----------------------------
Xxxxxx X. Xxxxxx
President
(Seal)
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ACKNOWLEDGED AND AGREED:
DIHC MANAGEMENT CORPORATION
By: /s/ X.X. Xxxxxxxx (Seal)
--------------------------
Xxxxxxx X. Xxxxxxxx, Xx.
Senior Vice President
