MANAGEMENT AGREEMENT
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This MANAGEMENT AGREEMENT made in Atlanta, Georgia between The Thicket
Apartments, L.P. ("Owner"), and VIP Management, LLC, ("Agent") a Georgia Limited
Liability Company, shall become effective as of January 1, 1999.
NOW THEREFORE in consideration of the promises and mutual covenants
contained herein, Owner appoints VIP Management, LLC as the exclusive Property
management and leasing Agent for the Property as defined below.
ARTICLE I
Definition
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1.01 Affiliate. (a) Any person directly or indirectly controlling,
controlled by or under common control with another person; (b) any person owning
or controlling 10% or more of the outstanding voting securities of such other
person; and (c) any officer, manager, director, partner or trustee of such
person. The term "person" means an individual, corporation, partnership, limited
liability company, association, joint stock company, trust or unincorporated
organization.
1.02 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 projects.
1.03 Fiscal Year. Each calendar year ending December 31, all or a part
of which falls within the term of this Agreement, unless otherwise stipulated
herein.
1.04 Gross Receipts. All Gross Receipts of every kind and nature
derived from the operation of the Property during a specified period, without
limitation, laundry income, application fees, late fees, 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 of the
Property: (c) proceeds from insurance for the reimbursement of loss or damage to
the Property, or any part thereof, except that insurance payments for loss of
rents will be considered as part of Gross Receipts; (c) condemnation awards or
payments received in lieu of condemnation of the Property, or any part thereof;
and (d) 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 254 unit apartment community known and doing
business as The Thicket Apartments, located at 10 Thicket Way, Decatur, Georgia
30035. The term Property used herein includes all of the Land, Building(s) and
the Personal Property collectively associated with the above mentioned apartment
community.
ARTICLE II
Term of Agreement
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2.01 The initial term of this Agreement is two (2) years, commencing on
January 1, 1999 and ending on December 31, 2000. This Agreement shall
automatically renew for consecutive one (1) year periods, under the same terms
and conditions as the initial term, unless either party delivers written notice
of non-renewal, at least sixty (60) days prior to the expiration date of the
initial term or subsequent renewal term.
2.02 This contract is exclusive and non-cancelable except as stipulated
herein. This contract may only be immediately terminated, with notice in
writing, under one or more of the following conditions:
(a) mutual agreement of Owner and Agent;
(b) sale or transfer of ownership in an arms length transaction;
(c) gross violation by the Agent of the terms and responsibilities outlined
in this agreement;
(d) any criminal action or gross negligence on the part of the Agent,
its employees or assigns including such acts as fraud,
misappropriation of funds, etc.;
(e) in the event a petition of bankruptcy is filed by or against
either the Agent or Owner, or in the event either makes an
assignment for the benefit of creditors or takes advantage of any
insolvency act.
2.03 If this Agreement is cancelled at any time or for any reason, other than at
the end of the initial term or subsequent renewal term, with the exception of
2.02(c) or 2.02(d) above, a cancellation fee equal to two months fee will become
due and payable.
ARTICLE III
Appointment
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Owner hereby grants to Agent, or an Affiliate, the sole and exclusive
right to manage, lease 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.
ARTICLE IV
Management
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4.01 Costs of Operation: All costs incurred by Agent in connection with
the management, leasing and operation of the Property shall be borne by Owner,
including, but not limited to, copies, phone charges, postage, payroll
processing, 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
hereunder that are performed at the Agent's home office; and
(b) Salaries and payroll expenses of multi-site and home office
Employees of Agent; however budgeted salaries, expenses and benefits of
personnel employed for the operation or management of the Property in accordance
with Section 4.04 hereof shall be paid by the Owner.
4.02 General Management Duties: Agent shall use diligence to manage,
lease 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;
(b) Pay all expenses of the property, to the extent funds are
available, in a timely fashion from funds collected and deposited into Property
back accounts;
(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
(e) 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 the end of each Fiscal Year, a proposed
budget with respect to the operation and management of the Property for the
ensuing Fiscal Year. Such Budget shall include all Gross Receipts expected to be
collected, as well as all cash expenditures of the property including but not
limited to all salaries and benefits, leasing and advertising costs,
administrative costs, maintenance and repair items, utilities, taxes and
insurance, debt service and capital or replacement reserve items. 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 line item in an expense classification, on a year
to date basis, (e.g., cleaning expenses, H.V.A.C. expenses, etc.) or in excess
of five percent (5%) of the aggregate expenditures in each expense
classification, on a year to date basis. 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 the
following:
(a) Site Manager: A person who is experienced in the administration and
operation of residential Property.
(b) Rental Consultant: A person who is trained to lease apartments to
qualified prospective Residents, as apartments become vacant throughout the
year.
(c) Such other sales, office and maintenance personnel required to
operate and maintain the Property including air-conditioning mechanics,
electricians, plumbers, painters, carpenters, grounds keepers, janitorial and
custodial persons, as Agent reasonably deems necessary.
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, pest control, other maintenance, 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 services 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) obtain
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 (unless performed pursuant to any
lease or budget previously approved by Owner). In addition, no unbudgeted
expenditure in excess of $2,000 per item 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 are 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 the rendition of 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. Agent shall immediately inform
Owner of all notices, summons, suits, fines or violations sent to or served upon
Agent regarding the Property.
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: The Agent shall maintain a current inventory of all
Personal Property.
4.11 Insurance Coverage: Owner shall procure and maintain throughout
the term hereof, the following insurance coverages with respect to the Property:
(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 of not less than
$2,000,000 / $1,000,000 per occurrence;
(d) Burglary and theft insurance;
(e) Boiler insurance;
(f) Fidelity Bond or crime coverage of not less than $500,000;
(g) Employment practices liability insurance; and
(h) Such other insurance which Owner shall direct or as Agent
shall reasonably deem appropriate for the protection of Owner
and Agent against claims, losses and liabilities arising out
of the operation and improvement of the Property.
Agent shall, at Owner's request, procure such coverages on behalf of
Owner, at Owner's expense. All such policies of insurance shall name the Owner,
Agent and such other parties as Owner or Agent shall direct as the named insured
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 with such
costs being reimbursed to Agent.
4.15 Other Duties: Agent may provide other duties such as oversee major
property renovation, new construction or renovation lease up, coordinate
partnership audits, tax returns, bankruptcy filings, loan refinancing, 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 the subject Property.
ARTICLE V
Management Fees
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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 equal to 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 charge and collect an accounting/computer fee of five dollars
($5.00) per unit per month, to be paid in the same manner described herein.
5.02 Reimbursement of Agent's Expenses: Owner agrees to reimburse Agent
upon demand therefore for any monies that Agent may elect to advance for the
account of Owner. It is expressly understood that Agent is under no obligation
to advance any monies 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 this Agreement.
ARTICLE VI
Procedure for Handling Receipts and Operating Capital
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6.01 Bank Deposits: Agent shall establish and maintain, at cost of
Owner, separate bank accounts in the name of the Property, as Agent deems
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 by Agent.
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, Agent will disburse to Owner all funds as in the Agent's sole discretion,
after providing sufficient reserves, shall be considered available for Owner.
6.03 Authorized Signatories: Designated officers and/or Employees of
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
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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 with reasonable notice. 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 a summary of Gross Receipts and disbursements for the preceding
calendar month and the Fiscal Year to date showing variances from the approved
Budget;
(b) Within sixty (60) days after the end of each Fiscal Year, Agent
will deliver or cause to be 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. At Owner's request, such statement shall be prepared
and audited by a certified public accountant as designated by Owner. At Owner's
request and at Owner's expense, Agent shall prepare, or cause to be prepared,
other financial reports and perform other bookkeeping services in addition to
those provided herein.
ARTICLE VIII
Indemnification
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8.01 Indemnification: Owner agrees to:
a) hold and save Agent 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) 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 any of the following:
i. the condition or use of the Property;
ii. acts or omissions of Agent, employees or agents of Agent, and employees
of Owner;
iii. claims made by or against any employees of Owner;
iv. claims arising out of or based upon any law, regulation requirement,
contract, or award relating to employment, working conditions, wages and/or
compensation of employees or former employees of Owner; or
v. any other cause in connection with the Property.
c) defend promptly and diligently, at Owner's sole expense, any claim, action or
proceeding in connection with any of the foregoing;
d) 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.
8.02 Gross Negligence: 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 agents, employees or
employees of Owner.
ARTICLE IX
Miscellaneous Provisions
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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: VIP Management, LLC,
3111 Paces Mill Road, A-200
Atlanta, Georgia 30339
Attn: Douglas D. Chasick
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,
each party agrees to pay its own 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 or to limit or define the provisions contained
therein.
9.06 Successors and Assigns: This Agreement shall be binding upon and
shall inure 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 unless to an
Affiliate.
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: VIP Management, LLC
By /s/ Douglas D. Chasick
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Douglas D. Chasick