MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") made in Atlanta, Georgia
between Vinings Communities, L.P. ("Owner") and Vinings Properties, Inc.,
("Agent") a Georgia corporation, shall become effective as of the 19th day of
December, 1997.
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 Windrush Apartments located in DeKalb
County, Georgia and consisting of 202 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: Windrush
Apartments consisting of 202 units, located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇, and as more fully described in Exhibit A attached hereto.
.
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
December 19, 1997 and ending on December 31, 1999. 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 canceled 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, payroll processing, 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, except as specified in Article V, Section 5.01; 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;
(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 shall be in
compliance with all applicable federal, state, and local employment laws. 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
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, including all bookkeeping functions and costs
associated with preparing monthly financial statements and other required
reports.
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.
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Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To Owner: Vinings Communities, L.P.
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Attn: ▇▇▇▇▇ ▇. ▇▇▇▇
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: VININGS COMMUNITIES, L.P.
By: Vinings Investment Properties Trust, General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Chief Executive Officer & President
AGENT: VININGS PROPERTIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Director of Property Management