PROPERTY MANAGEMENT AGREEMENT
(Villa Antigua I)
THIS AGREEMENT is made as of this 1st day of November, 1996, by and
between L'AUBERGE COMMUNITIES INC., a California corporation ("Agent"), and
CLUSTER HOUSING PROPERTIES, A CALIFORNIA LIMITED PARTNERSHIP ("Owner"), with
reference to the following:
A. Owner owns certain real property located in Scottsdale, Arizona, as
more particularly described on Exhibit "A" attached hereto (the "Site"), upon
which 88 apartment units (the "Units") have been constructed. (The Site, Units
and all improvements relating to or connected with the Units, together with all
appurtenances, fixtures and equipment and all rights and privileges now or
hereafter contained in, belonging to or in any way pertaining or beneficial to
any of the foregoing, whether or not attached to the Site or the Units, are
sometimes hereinafter collectively referred to as the "Property.")
B. Agent possesses the organization and skills necessary to
discharge its obligations hereunder.
C. Owner desires to employ Agent, and Agent desires to be employed
by Owner, for the orderly management and operation of the Property on the terms
and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows:
1. Appointment of Manager.
Owner hereby appoints Agent as Owner's exclusive
representative, manager and agent for the purposes of managing, maintaining, and
operating the Property for the account of Owner during the term of this
Agreement and upon the terms and conditions set forth below.
2. Term.
The term of this Agreement shall commence on the date first
set forth above (the "Commencement Date") and Agent's obligations ("Agent's
Management Obligations") pursuant to this Agreement shall expire in accordance
with the provisions of Paragraph 9 below.
3. Agent's Duties.
a. Agent agrees to perform the following duties on behalf
of Owner:
(i) To accept and does hereby accept the management
of the Property for the period and upon the terms herein provided, and
agrees to furnish the services of its organization for the renting,
operating and managing of the Property, and to do and perform any and
all things in and about the management, maintenance and operation of
the Property customarily performed by agents of similar properties, in
a professional, reasonable, effective and efficient manner, subject
however to the provisions of Section 3(d) below;
(ii) [Intentionally deleted];
(iii) To aid, assist and cooperate in the matter
of real property taxes and insurance claim adjustments;
(iv) Subject to the provisions of Paragraph 8
below, to care for, place and supervise all insurance coverage;
(v) Subject to the provisions of Paragraph 8 below,
to render on or before the tenth (10th) day of each calendar month
during the term hereof, statements of receipts, expenses and charges
for the previous calendar month;
(vi) [Intentionally deleted];
(vii) To hire, discharge and supervise all labor and
employees ("Project Personnel") required for the operation and
maintenance of the Property (exclusive of employees retained to
undertake the activities described in Section 3(d) below), it being
agreed that all employees shall be deemed to be employees of Agent and
not of Owner, and that Agent may perform its duties through its
attorneys, agents and employees holding such licenses as may be
necessary or appropriate for the performance of such duties, but shall
not be responsible for their acts, defaults and negligence if
reasonable care has been exercised in their appointment, supervision
and retention;
(viii) To pay all expenses, including without limitation
mortgage payments, real estate and personal property taxes, insurance
premiums, licenses, fees and payroll taxes and other obligations of
Owner, incurred in connection with the Property during the term of this
Agreement, prior to their due dates;
(ix) To account for all deposits received from
tenants, and the excess of operating revenues over the sum of operating
expenses plus reserves established by Owner (or as otherwise approved
from time to time by Owner, provided that in any event such amount
shall not be less than the amount reasonably sufficient to pay all
accounts payable of the Property), to Owner; and
(x) To enter into any laundry, laundry machine and/or
vending machine leases and other personal property leases.
b. Agent shall establish operating procedures and policies
necessary to perform Agent's Management Obligations under this Agreement.
c. Agent shall be authorized to make contracts for
electricity, gas, fuel, water, telephone, sweeping, cleaning and other similar
services or such of them as Agent, in its discretion, shall deem advisable.
d. Notwithstanding anything contained in this Section 3 or
elsewhere in this Agreement to the contrary, Agent shall not be responsible for,
nor shall Agent perform, any of the activities described in Arizona Revised
Statute ss. 32-2101.32, or any successor statute, which activities require an
Arizona real estate broker's or salesperson's license. These activities
presently include without limitation renting, offering to rent, or negotiating
the rental of real estate and collecting rents for the use of real estate. Owner
acknowledges that Agent does not have a real estate license in Arizona. Owner
and Agent further acknowledge that any natural person hired to undertake such
activities for the Property pursuant to A.R.S. ss. 32-2121.A.7 shall be employed
directly by Owner and shall be compensated directly by Owner.
4. Compensation.
During the term hereof, Owner agrees to pay to Agent on the
first day of each month a management fee (the "Property Management Fee") equal
to 4% of rents collected in the preceding month (including forfeited security
deposits and nonrefundable deposits and fees) as long as Agent's Management
Obligations have not been terminated, as compensation for Agent's management
services hereunder.
5. Operating Budget; Accounting.
a. Agent shall prepare an operating budget for the Property
for each calendar year during the term of this Agreement. Such operating budget
shall be prepared in consultation with Owner.
b. All monthly accounting functions for the Property,
including without limitation rent collection and the processing and payment of
accounts payable of the Property but excluding rent collection, shall be the
responsibility of Agent at Agent's sole cost and expense.
6. Bank Account.
Agent shall establish and maintain a separate trust account in
the name of Owner for the deposit of all monies collected from or in connection
with the operation of the Property. Agent shall have the authority to draw on
this account for any payments which Agent may make solely for the discharge of
any liabilities or obligations incurred pursuant to this Agreement, and for the
payment of the Property Management Fee, all of which payments shall be subject
to the limitations of this Agreement.
7. Records; Reports; Meetings; Remittance.
a. Agent shall maintain books of account on all receipts and
disbursements incurred in the management and operation of the Property, which
records shall, at all reasonable times, be open to inspection by Owner without
prior notice.
b. During the term of this Agreement, Agent shall furnish
to Owner, the following written reports:
(i) On a monthly basis, not later than ten (10) days
following the end of each calendar month, a detailed cash operating
report, showing all receipts and disbursements for the previous month;
and
(ii) On a monthly basis, not later than ten (10) days
following the end of each calendar month, a recapitulation of
delinquent rents and a rent roll.
c. All net cash flow from operations of the Property, after
establishment of Property operating reserves, shall be remitted to Owner by the
tenth (10th) day of the following calendar month.
8. Property Personnel; Insurance.
a. Subject to the provisions of Paragraph 3(a)(vii) above,
Agent shall hire or discharge on behalf of Owner all Property Personnel required
for the operation and maintenance of the Property exclusive of employees
retained to undertake the activities described in Section 3(d) above.
b. Owner shall maintain public liability insurance and have
Agent named as an additional insured in all such policies. The maintenance of
other insurance in connection with the Property shall be the responsibility of
Owner, but, upon the request of Owner, shall be supervised and implemented by
Agent, as hereinabove provided.
9. Termination.
Agent's Management Obligations may be terminated or modified
at any time as provided below:
a. If Owner shall sell or otherwise transfer title to the
Property (except in connection with a reorganization of Owner):
(i) Agent's Management Obligations shall
automatically terminate as of the date of closing of such sale or transfer; and
(ii) Owner shall pay to Agent any accrued but unpaid
Property Management Fees owing to Agent pursuant to this Agreement up
to the date of closing of such sale or transfer.
b. Either party shall have the right, by giving written notice
to the other party, to terminate Agent's Management Obligations without cause
effective upon thirty (30) days prior written notice and with cause effective
immediately upon delivery.
c. In the event Agent's Management Obligations are terminated
pursuant to Paragraph 9.b. above, Agent's right to receive the Property
Management Fee shall terminate as of the effective date of such termination. For
purposes hereof, "cause" shall mean, in addition to any material default or
breach by Agent under this Agreement, any act or omission which constitutes
negligence, willful malfeasance or fraud.
10. Settlement.
Upon the expiration or sooner termination of Agent's
Management Obligations, or in the event that, by mutual agreement of the
parties, on-site management of the Property is delegated to a third party:
a. Agent shall deliver and transfer to Owner or Owner's
designee all books, records, agreements, documents and instruments of whatsoever
nature pertaining to the Property maintained by Agent on behalf of Owner other
than those maintained by Agent in the course of its own day-to-day business, and
shall pay over to Owner or its designee all sums arising out of the operation of
the Property from the commencement of business operations thereat, including,
without limitation, all advance rent, security deposits, unused cleaning fees
and the like, less permitted expenses actually paid by such transferring party;
b. Owner shall pay to Agent any sums for which Agent is then
entitled to reimbursement hereunder, including those which Agent may have
theretofore advanced on behalf of Owner and for which Agent shall not have
theretofore received reimbursement.
11. Reimbursement.
Owner agrees to promptly reimburse Agent for any monies that
Agent may advance on behalf of or for the benefit of the Property or Owner if
such reimbursement may not reasonably be made from funds from the Property.
Notwithstanding the foregoing, Agent shall not be obligated to make any such
advances for the benefit of the Property or Owner.
12. Indemnity.
Owner hereby indemnifies and agrees to hold Agent harmless
from and against any and all suits, claims or costs incurred by Agent in any
actions brought by third parties in connection with the management of the
Property or this Agreement, and from any liability or injury suffered by third
parties in or on the Property, except for any such suits, claims or costs which
arise from or relate to any act or omission of Agent or its employees which
constitutes negligence, willful malfeasance or fraud, as to which Agent shall
indemnify and hold Owner harmless.
13. Notices.
All notices required to be given by either party to the other
shall be in writing and shall be deemed to have been properly given and
delivered when deposited in the United States mail, sent certified or
registered, return receipt requested, postage prepaid, or by commercial air
courier, addressed to the parties as follows:
If to Owner:
c/o L'Auberge Communities Inc.
5110 Langdale Way
Colorado Springs, Colorado 80906
Attention: Stephen B. Boyle
With a copy to:
Hughes Hubbard & Reed LLP
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attention: George A. Furst, Esq.
If to Agent:
L'Auberge Communities Inc.
5110 Langdale Way
Colorado Springs, Colorado 80906
Attention: Stephen B. Boyle
With a copy to:
Hughes Hubbard & Reed LLP
350 South Grand Avenue, Suite 3600
Los Angeles, California 90071-3442
Attention: George A. Furst, Esq.
Such notices shall be effective upon delivery if delivered in person and either
upon actual receipt or three (3) days after mailing, whichever is earlier, if
delivered by mail.
14. Entire Agreement.
Except as otherwise specifically set forth herein, this
Agreement is the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements between the parties
with respect thereto. There have been no representations or warranties by either
party to the other except as expressly contained herein. No claim of waiver,
modification, consent or acquiescence with respect to any provision of this
Agreement shall be made against either party except on the basis of a written
instrument executed by or on behalf of such party.
15. Successors and Assigns.
This Agreement shall be binding upon and shall inure to the
benefit of the successors and assigns of the parties hereto. Agent may not
assign any of its rights, or delegate any of its duties, under this Agreement
without the prior written consent of Owner.
16. Exhibits.
All Exhibits referred to in this Agreement are expressly
incorporated herein by reference as though set forth in full.
17. Paragraph Headings.
The headings of the several paragraphs of this Agreement are
inserted solely for convenience of reference and are not a part of and are not
intended to govern, limit or aid in the construction of any term or provision
thereof.
18. Time.
Time is of the essence in the performance of this Agreement.
19. Authority.
All parties to this Agreement warrant and represent that they
have the power and authority to enter into this Agreement in the names, titles
and capacities herein stated and on behalf of any entities, persons, estates or
firms represented or purported to be represented by such persons, and shall
deliver to the other party such corporate resolutions, powers of attorney and
such other documents or instruments as shall be reasonably necessary to evidence
such authority.
20. Governing Law.
This Agreement is to be governed by and construed in accordance
with the laws of the State of Arizona.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
effective the day and year first above written.
AGENT: OWNER:
L'AUBERGE COMMUNITIES INC., CLUSTER HOUSING PROPERTIES,
a California corporation A CALIFORNIA LIMITED PARTNERSHIP
By: By: GP L'Auberge Communities L.P.,
Stephen B. Boyle a California limited partnership,
President General Partner
By: L'Auberge Communities Inc.,
General Partner
By: ___________________
Stephen B. Boyle
President