MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") made in Atlanta, Georgia between
The Thicket Apartments, L.P. ("Owner") and Vinings Properties, Inc., ("Agent") a
Georgia corporation, shall become effective as of the 25th day of June, 1996.
NOW THEREFORE in consideration of the promises and the mutual covenants
contained herein, Owner appoints Vinings Properties, Inc. as the exclusive
property manager for the property known as The Thicket Apartments located in
Georgia and consisting of 254 units.
ARTICLE I
Definition
1.01 Budget: A written estimate or projection of all receipts and
expenditures for the operation of the Property during a Fiscal Year, including,
without limitation, all estimated rentals (including ancillary income) and all
estimated repairs, maintenance and capital repairs.
1.02 Property: The property represented is as follows: consisting of 254
units, located in Atlanta, Georgia.
1.03 Fiscal Year: Each calendar year ending December 31, all or a part of
which falls within the term of this Agreement.
1.04 Gross Receipts: All Gross Receipts of every kind and nature derived
from the operation of the Property during a specified period determined on a
cash basis, including, without limitation, laundry income and recreation area
fees; excluding only: (a) security deposits (to the extent not applied to
delinquent rents or damages); (b) proceeds from a sale or refinance; (c)
proceeds from insurance payments for reimbursement of loss or damage to the
Property, except that insurance payments for "Lost Rent" will be considered as
part of Gross Receipts; (d) condemnation awards or payments received in lieu of
condemnation of the Property, or any part thereof; and (e) any trade discounts
and rebates received in connection with the purchase of Personal Property or
services in connection with the operation of the Property.
1.05 Personal Property: All equipment, supplies, furnishings, furniture and
all other items of Personal Property now or hereafter owned by Owner and located
upon or used, or useful for, or necessary or adapted for the operation of the
Property.
1.06 Property: The Land, the Building and the Personal Property,
collectively.
ARTICLE II
Term of Agreement
The initial term of this Agreement is two (2) years, commencing on June 25,
1996 and ending on June 24, 1998. Either party shall have the right to cancel
this Agreement upon sixty (60) days written notice to the other party at any
time. At the end of the initial term, this Agreement shall continue for an
additional one year period until such time that a new Agreement is executed. If
the Agreement is cancelled by the Owner at any time other than at the end of the
initial term or the extended term, a cancellation fee equal to one months fee
will become due and payable.
ARTICLE III
Appointment
Owner hereby grants to Agent the sole and exclusive right to manage and
operate the Property, subject to the terms and provisions of this Agreement.
During the term of this Agreement, Owner shall not participate in the day-to-day
operation of the Property and shall not at any time directly order or instruct
any employees or other personnel engaged in the management or operation of the
Property. Owner, however, reserves the right to participate in the approval of
all policy matters not specifically covered in this Agreement.
ARTICLE IV
Management
4.01 Costs of Operation: All costs incurred by Agent in connection with the
management and operation of the Property shall be borne by Owner, including, but
not limited to, copies, phone charges, postage, and computer charges, etc.
except for the following costs which shall be borne by Agent:
(a) costs relating to bookkeeping services required to be performed by
Agent hereunder; and
(b) salaries and payroll expenses of executives, personnel and
employees of Agent other than budgeted salaries, expenses and benefits of
personnel employed for the operation or management of the Property in
accordance with Section 4.04 hereof.
4.02 General Management Duties: Agent shall use diligence to manage and
operate the Property in a professional manner, and shall consult with Owner and
keep Owner advised as to all major or extraordinary matters and without
limitation, at Owner's expense, perform the following services and duties for
Owner in a faithful, diligent and efficient manner:
(a) Maintain businesslike relations with tenants of the Property whose
service requests shall be received, considered and recorded in systematic
fashion in order to show the action taken with respect to each. Complaints
of a serious nature shall, after thorough investigation, be reported to
Owner with appropriate recommendations;
(b) Collect all rents and other sums and charges due from tenants,
subtenants, licensees and concessionaires of the Property and, if required,
retain attorneys or collection agencies for such purpose;
(c) Prepare or cause to be prepared for execution and filing all
forms, reports and returns required by all federal, state and local laws in
connection with unemployment insurance, worker's compensation, insurance,
disability benefits, Social Security and other similar taxes now in effect
or hereafter imposed, and also any other requirements relating to the
employment of personnel for the Property; however, Agent shall not be
obligated to prepare any of Owner's local, state, or federal income tax
returns;
(d) Pay all sums and make all deposits becoming due and payable under
the provisions of any ground lease or any loan secured by a mortgage or
trust deed against the Property, or any part thereof, and otherwise perform
all covenants and obligations required to be performed under the provisions
of any such ground lease, mortgage or trust deed (to the extent that the
performance of such covenants and obligations are within the control of
Agent); and
(f) Perform such other acts and deeds as are reasonable, necessary and
proper in the discharge of its management duties under this Agreement.
4.03 Budgets: Agent shall prepare and submit for approval of Owner not
later than thirty (30) days prior to each Fiscal Year, a proposed budget with
respect to the operation and management of the Property for the ensuing Fiscal
Year. In the event Owner, in Owner's sole and reasonable judgement, disapproves
of any proposed Budget submitted by Agent, Owner shall give Agent written notice
thereof, in which event Agent shall make all revisions thereto which Owner shall
direct and resubmit the proposed Budget to Owner for approval. In the absence of
such written notice of disapproval within thirty (30) days after delivery of the
Budget to Owner, the Budget shall be deemed to have been approved by Owner. Each
approved Budget shall constitute the control instrument under which Agent shall
operate for the Fiscal Year covered thereby. Approval of the Budget shall be
deemed to be approval by Owner of all items specified therein. Agent shall not
incur or permit to be incurred, expenses in any approved Budget (excluding
utility expenses, general real estate taxes, insurance premiums, financing costs
and emergency expenses) in excess of ten percent (10%) of the amount set forth
in the Budget for any single expense classification (e.g., cleaning expenses,
H.V.A.C. expenses, etc.) or in excess of five percent (5%) of the aggregate
expenditures therein. Except as set forth herein and in Section 4.06, there
shall be no variance from any approved Budget, without the prior written consent
of Owner.
4.04 Property Personnel: In accordance with approved Budgets, Agent shall,
at Owner's expense, hire, employ, supervise and discharge all employees required
in connection with the operation and management of the Property. All employees
working on the property are considered to be employees of the Owner and not the
Agent even though salaries and benefits may be paid through a master agency
account. All salaries, taxes, insurance and other benefits paid to such
employees through a master agency account shall be reimbursed immediately and
shall not be considered an expense of the management company. The Agent shall
not grant any non-budgeted employee fringe benefits and plans not required by
laws or union contract without written consent of Owner. Agent will not
discriminate against any employee or applicant for employment because of race,
creed, color, sex or national origin. Said employees shall include those persons
as Agent reasonably deems necessary and as approved in the budget.
4.05 Contracts and Supplies: Agent shall, at Owner's expense, upon the best
terms available, enter into contracts on behalf of Owner for the furnishing to
the Property of required utility services, heating and air conditioning services
and other maintenance, security protection, pest control, and any other services
and concessions which are required in connection with the maintenance and
operation of the Property. Agent shall also place purchase orders for supplies
and Personal Property as are necessary to properly maintain the Property. All
such contracts and orders shall be subject to the limitations set forth in the
approved Budget. When taking bids or issuing purchase orders, Agent shall use
its best efforts to secure for and credit to Owner, any discounts, commissions
or rebates obtainable as a result of such purchases or services. Agent shall use
its best efforts to make purchases and (where necessary or desirable) get bids
for necessary labor and materials at the lowest possible cost as in its
judgement is consistent with good quality, workmanship and service standards.
Agent shall not incur any obligation to any person or entity in which Agent or
any of Agent's officers has a financial interest at a price or fee higher than
that which would have been charged as a result of bona fide arms-length
negotiations.
4.06 Alterations, Repairs and Maintenance:
(a) Agent shall, at Owner's expense, perform or cause to be performed
all necessary or desirable repairs, maintenance, cleaning, painting and
decorating, alterations, replacements and improvements in and to the
Property as are customarily made in the operation of properties of the
kind, size and quality of the Property; provided, however, that no
unbudgeted alterations, additions or improvements involving a fundamental
change in the character of any of the buildings or constituting a major new
construction program shall be made without the prior written approval of
Owner. No unbudgeted expenditures shall be made except as provided for in
Section 4.03, or unless such repairs are immediately necessary for the
preservation or the safety of the Property, or for the safety of the
tenants of the Property, or required to avoid the suspension of any
necessary service to the Property or required by any judicial or
governmental authority having jurisdiction. These repairs may be made by
the Agent without prior approval and regardless of the cost limitations
imposed by this Section 4.06(a); further, provided that Agent shall as soon
as practicable give written notice to Owner of any such emergency repairs
for which prior approval is not required.
(b) In accordance with the terms of approved Budgets or upon written
request of Owner, Agent shall, from time to time during the term hereof, at
Owner's expense, make or cause to be made all required capital
improvements, replacements or repairs to the Property; provided, however,
if Agent is required to perform extraordinary services in connection with
such improvements, repairs or replacements, which services exceed those
customarily rendered by managing agents of properties similar to the
Property, then Agent shall receive an additional fee therefore in an amount
mutually agreed upon by Owner and Agent in advance of providing such
services.
(c) Agent shall give Owner written notice of any material defect in
the Property and all parts thereof immediately after ascertainment thereof
by Agent, including without limitation, material defects in the roofs,
foundations and walls of the buildings and in the sewer, water, electrical,
structural, plumbing, heating, ventilation and air conditioning systems;
provided, however, that Agent shall have no obligation to inspect the
buildings in order to discover any such condition.
4.07 Licenses and Permits: Agent shall, at Owner's expense, obtain and
maintain in the name of Owner all licenses and permits required of Owner or
Agent in connection with the management and operation of the Property. Owner
agrees to execute and deliver any and all applications and other documents to
otherwise cooperate with Agent in applying for, obtaining and maintaining such
licenses and permits.
4.08 Compliance with Laws: Agent shall, at Owner's expense, comply with all
laws, regulations and requirements for any federal, state or municipal
government having jurisdiction respecting the use or manner of use of the
Property or the maintenance of operation thereof.
4.09 Legal Proceedings: Agent shall, at Owner's expense, institute any and
all legal and/or administrative actions or proceedings to collect charges, rents
or other income from the Property, to dispossess tenants or other persons in
possession, to cancel or terminate any lease, license or concession agreement
for the breach thereof or default thereunder by the tenant, licensee or
concessionaire and to protest increases in taxes and/or assessments levied
against the Property, or any portion thereof.
4.10 Inventory: Agent shall maintain an annual inventory of all Personal
Property.
4.11 Insurance Coverage: Owner, or Agent at the request of Owner, at
Owner's expense, shall procure and maintain throughout the term hereof, the
following insurance coverage with respect to the Property, in amounts and issued
by companies approved by Owner:
(a) fire and extended coverage insurance;
(b) worker's compensation insurance;
(c) comprehensive public liability insurance for injury or death to
persons and damage to or loss to property;
(d) burglary and theft insurance;
(e) boiler insurance (if applicable)
(f) such other insurance which Owner shall direct of as Agent shall
reasonably deem appropriate for the protection of Owner against claims,
losses and liabilities arising out of the operation and improvement of the
Property; and
(g) fidelity bond of not less than $500,000.
All such policies of insurance shall name the Owner, Agent and such
other parties as Owner shall direct as the named insureds thereunder, as
their respective interests may appear. Agent shall promptly investigate and
report to the Owner and the insurance company involved all accidents and
claims for damage relating to the ownership, operation and maintenance of
the Property and any damage or destruction to the Property.
4.12 Signs: Owner agrees to allow Agent to place one or more signs on or
about the Property stating that Agent is providing management for the Property,
provided that the signs and location thereof shall be subject to Owner's
approval.
4.13 Debts of Owner: In the performance of its duties as managing Agent of
the Property, Agent shall act as the agent of the Owner. All debts and
liabilities to third persons and employees of the Property incurred by Agent in
the course of its operation and management of the Property shall be the debts
and liabilities of the Owner only, and Agent shall not be liable for any such
debts or liabilities, except to the extent Agent has exceeded its authority
hereunder.
4.14 Allocation of Costs: The parties hereto acknowledge that the Property
may be operated in conjunction with other properties managed by Agent, and
certain costs may be allocated or shared among such properties.
4.15 Partnership Duties: Agent may provide other duties such as oversee
major property renovation, new construction lease up, coordinate partnership
audits, tax returns, bankruptcy filings, loan refinancings, etc. as requested by
Owner for additional fees to be mutually agreed upon by Owner and Agent.
4.16 Exclusivity: Agent is not precluded from providing management or other
services to other Owners or properties even if such properties might be in
direct competition with subject Property.
ARTICLE V
Management Fees
5.01 Compensation of Agent: As consideration for the performance by Agent
of all its management obligations under this Agreement, Owner agrees to pay
Agent a management fee each month during the term of this Agreement in an amount
not to exceed five percent (5%), of Gross Receipts. Said management fee shall be
paid not later than the 10th day of the month following the month for which such
fee is earned. Provided that Agent is not in default under this Agreement, Agent
shall be entitled to pay itself the monthly management fee herein provided from
the Property bank account referred to in Article VI hereof. In addition, Agent
shall be allowed to charge an accounting/computer fee of $5 per unit per month.
5.02 Reimbursement of Agent's Expenses: Owner agrees to reimburse Agent for
any monies which Agent may elect to advance for the account of Owner, although
Agent shall be under no obligation at any time to advance funds for the account
of the Owner. Owner shall further reimburse Agent for all of Agent's expenses
incurred in connection with the operation of the Property or as a result of
Agent's compliance with this Agreement during the preceding month, including,
without limitation copies, postage, Agent's long distance travel and long
distance phone expenses and expenses relating to the duties set forth in Article
IV herein. Agent shall be responsible for the cost of Agent's overhead and
administrative personnel.
ARTICLE VI
Procedure for Handling Receipts and Operating Capital
6.01 Bank Deposits: Agent shall maintain bank accounts as deemed
appropriate into which all monies received by Agent for or on behalf of Owner in
connection with the operation and management of the Property shall be deposited.
6.02 Disbursement of Deposits: Agent shall disburse and pay from the bank
account specified in Section 6.01 hereof, such amounts and at such times as the
same are required in connection with the management and operation of the
Property in accordance with the provision of this Agreement. As requested by
Owner, and in accordance with this Agreement and any applicable laws,
regulations, mortgages, or other limitations, Agent shall disburse any excess
funds to Owner after providing for sufficient reserves.
6.03 Authorized Signatories: Designated officers and employees of Owner and
Agent shall be the authorized signatories on the bank account established by
Agent pursuant to Section 6.01 hereof and shall have authority to make
disbursements from such account. ARTICLE VII Accounting
7.01 Books and Records: Agent shall maintain at the central office of
Agent, a comprehensive system of office records, books and accounts pertaining
to the Property, which records, books and accounts shall be available for
examination by Owner and its agents, accountants and attorneys at regular
business hours. Agent shall preserve all records, books and accounts for a
period of three (3) years.
7.02 Periodic Statements; Audits:
(a) On or before fifteen (15) days following the end of each month
during the term of this Agreement, Agent shall deliver or cause to be
delivered to Owner, and any other parties requested, basic financial
statement information as agreed upon by Owner and Agent for the preceding
calendar month and the Fiscal Year to date;
(b) Within sixty (60) days after the end of each Fiscal Year, Agent
will have prepared and delivered to Owner, at Owner's expense, an income
and expense statement showing the results of operation of the Property
during the preceding Fiscal Year, which statement shall be prepared (and at
Owner's request certified) by a certified public accountant as designated
by Agent. At Owner's request and at Owner's expense, Agent shall prepare
financial reports and perform bookkeeping services in addition to those
provided herein. Agent shall prepare any other report which is customary in
the industry at the request of Owner - all other special reports or tax
returns will be prepared for an additional fee at the request of Owner.
ARTICLE VIII
Indemnification
Owner agrees as follows: (a) to hold and save Agent free and harmless from
damages as a result of injuries to person or property by reason of any cause
whatsoever either in and about the Property or elsewhere when Agent is carrying
out the provisions of this Agreement; (b) to reimburse Agent, upon demand, for
any money which the Agent is required to pay for any reason whatsoever in
connection with the Property, including payment for operating expenses,
attorneys' fees or costs, fees and judgements in connection with the defense of
any claim, civil or criminal action, proceeding, charge, or prosecution made,
instituted or maintained against Agent or Owner, jointly or severally, affecting
or due to the condition or use of the Property, or acts or omissions of Agent,
agents and employees of Agent, Owner against any employees of Owner, or arising
out of or based upon any law, regulation requirement, contract, or award
relating to the hours of employment, working conditions, wages and/or
compensation of employees or former employees of Agent, or any other cause in
connection with the Property; and (c) to defend promptly and diligently, at
Owner's sole expense, any claim, action or proceeding in connection with any of
the foregoing; and (d) to hold harmless or fully indemnify Agent from any
judgement, loss or settlement on account thereof, including reasonable
attorneys' fees. It is expressly understood and agreed that the foregoing
provisions shall survive the termination of this Agreement to the extent the
cause arose prior to termination. Notwithstanding the foregoing, Owner shall not
be required to indemnify Agent against damages suffered as a result of gross
negligence or willful misconduct on the part of Agent, its agent, or employees.
ARTICLE IX
Miscellaneous Provisions
9.01 Notices: Any notice or communication hereunder must be in writing, and
shall be personally delivered or mailed by registered or certified mail, return
receipt requested, and if mailed shall be deemed to have been given and received
two (2) days after its mailing. Such notices or communications shall be given to
the parties hereto at their following addresses:
To Agent: Vinings Properties, Inc.
3111 Paces Mill Road, A-200
Atlanta, Georgia 30339
Attn: Martin H. Petersen
To Owner: The Thicket Apartments, L.P.
3111 Paces Mill Road, A-200
Atlanta, Georgia 30339
Attn: Peter D. Anzo
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 communications shall be given.
9.02 Severability: If any term, covenant or condition of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
held to be invalid or unenforceable, the remainder of this Agreement, 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 shall
be valid and shall be enforced to the fullest extent permitted by law.
9.03 Attorney's Fees: Should either party retain 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 all reasonable costs, damages
and expenses, including attorney's fees, expended or incurred in connection
therewith.
9.04 Total Agreement: This agreement is a total and complete integration of
any and all representations and agreements existing between Agent and Owner and
supersedes any prior oral or written representations and agreements between
them.
9.05 Article and Section Headings: Article and section headings contained
in this Agreement are for reference only, and shall not be deemed to have any
substantive effect of to limit or define the provisions contained therein.
9.06 Successors and Assigns: This Agreement shall be binding upon and shall
insure to the benefit of the parties hereto and their respective successors and
permitted assigns; provided, however, that Agent shall not have the right to
assign this Agreement without the prior written consent of Owner.
9.07 Governing Law: This Agreement shall be construed in accordance with
the laws of the State of Georgia.
IN WITNESS WHEREOF, this Agreement has been executed in Atlanta, Georgia,
effective as of the date first above written.
OWNER: The Thicket Apartments, L.P.
By /s/Peter D. Anzo
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Peter D. Anzo
AGENT: Vinings Properties, Inc.
By /s/Martin H. Petersen
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Martin H. Petersen