Exhibit 10.12
MANAGEMENT AGREEMENT
(ABC WEST I)
THIS MANAGEMENT AGREEMENT (this "Agreement") is executed as of
the 30th day of September, 1998, to be effective conditioned upon and as of
the date of the acquisition of the Property by Owner, by and between Oly
Stratus ABC West I Joint Venture, a Texas joint venture (hereinafter called
"Owner"), and Stratus Management L.L.C., a Delaware limited liability
company (hereinafter called "Property Manager").
W I T N E S S E T H:
WHEREAS, Owner is acquiring that certain real property located in
▇▇▇▇▇▇ County, Texas, more particularly described on Exhibit A attached
hereto and made a part hereof for all purposes, together with all of the
improvements located thereon (collectively, the "Property"), consisting of
seventy five (75) individual lots (individually, a "Lot" and collectively,
the "Lots").
WHEREAS, Owner desires to engage Property Manager to develop, manage,
maintain and operate the Property and Property Manager desires to accept
such engagement, upon the terms and conditions hereinafter set forth.
WHEREAS, Owner has provided to Property Manager, Owner's current
Business Plan (hereinafter defined) and the operating and capital budgets
approved by Owner as of the date hereof.
NOW, THEREFORE, for and in consideration of the premises and mutual
covenants and agreements contained in this Agreement and the compensation
to be paid hereunder, Owner and Property Manager hereby agree as follows:
ARTICLE I
ENGAGEMENT OF PROPERTY MANAGER
Owner hereby engages Property Manager and Property Manager hereby
accepts such engagement on the terms and conditions hereinafter provided as
manager for the Property. Property Manager shall develop, manage, maintain
and operate the Property in an efficient and first class manner consistent
with the Business Plan and Budget (hereinafter defined) and shall exercise
due diligence in all of its endeavors. All of Property Manager's duties
under this Agreement shall be subject to funds being made available to
Property Manager by Owner for the Property Manager to perform its duties.
ARTICLE II
SERVICES TO BE PERFORMED BY PROPERTY MANAGER
2.1 Expenses. All reasonable obligations or reasonable expenses
approved by Owner in writing and incurred by Property Manager in the
performance of its duties hereunder in accordance with the provisions
hereof shall be at the expense of Owner except as otherwise specifically
provided in this Agreement. Without Owner's prior written consent or as
authorized in the Business Plan or Budget, Property Manager shall not incur
any cost not specifically set forth in the most recently approved Budget.
2.2 Contracts. To the extent necessary to fulfill its obligations
under this Agreement, Property Manager shall (i) identify and, with the
prior written approval of Owner or as set forth in the Business Plan or
Budget, enter into, in Owner's name, contracts with engineers, tradesmen
and other independent contractors to perform services necessary or
advisable for the development, operation, maintenance or repair of the
Property; and (ii) with the prior written approval of Owner or as set forth
in the Business Plan or Budget, place orders, in Property Manager's name on
behalf of Owner, for such equipment, tools, appliances, materials and
supplies as are reasonable and necessary to properly develop, maintain,
manage, operate or repair the Property. Except with the prior written
consent of Owner, every contract entered into by Property Manager for or in
connection with the Property shall include as a condition thereof the right
by Owner to terminate, with or without cause, on thirty (30) days prior
written notice, without the payment of a cancellation fee. Owner shall be
obligated to pay the cost of any contract or agreement described in this
section only if such cost is provided for in the Preliminary Budget or the
most recently approved Budget or is otherwise approved by Owner in writing.
2.3 Maintenance, Repair and Sale of Property. Property Manager shall
supervise the development and sale of the Property and shall maintain the
improvements, appurtenances and grounds of the Property in accordance with
the "Management Standard" (as defined in Section 4.1hereof), including
within such maintenance, without limitation thereof, such normal
maintenance and repair work as may be necessary or, with Owner's prior
written consent, desirable.
2.4 Insurance.
(a) Owner Obligations. Owner shall cause to be placed and kept
in force all forms of insurance as Owner deems prudent and reasonable
given the nature of the Property. All insurance coverage shall be
placed with such companies, in such amounts, and with such beneficial
interests appearing therein as Owner deems prudent and reasonable
given the nature of the Property. Owner shall procure appropriate
clauses in, or endorsements on, all of the policies whereby the
insurer names Property Manager as an additional insured, and the
insurer waives subrogation and agrees to not terminate any such policy
or reduce coverage or amount without giving Owner at least thirty (30)
days prior written notice.
(b) Property Manager Obligations. Property Manager shall
promptly investigate and make a full and timely written report to
Owner and, if Owner requests, to Owner's insurance company as to all
accidents, claims for damages relating to the ownership, operation and
maintenance of the Property and any damage or destruction to the
Property and the estimated cost of repair thereof and shall prepare
any and all reports required by Owner and, if Owner requests, by its
insurance company in connection therewith. All such reports shall be
timely filed with the insurance company as required under the terms of
the insurance policy involved. Without obtaining the prior written
approval of Owner, which may be granted or withheld in Owner's sole
discretion, Property Manager shall not settle any claims against
insurance companies arising out of any policies or take any other
action in connection with such settlements, including the execution of
proofs of loss, the adjustment of losses, signing of receipts and
collection of money. The cost of the insurance and the payment of all
premiums therefor shall be the sole responsibility of, and at the sole
expense of, Owner. Property Manager shall assist Owner in completing
any insurance applications, questionnaires, etc. reasonably requested
by Owner or Owner's insurance agent or insurance company.
2.5 Operating Budgets; Business Plans. Notwithstanding the delivery
of the approved Budget and Business Plan, unless some or all of the
obligations of this Section 2.5 are specifically waived in writing by
Owner, Property Manager shall prepare the items described herein.
(a) Preliminary Budgets. Within thirty (30) days of the date
this Agreement is fully executed, Property Manager shall prepare and
deliver to Owner, for Owner's approval, a proposed budget and
operating plan for the upcoming one hundred twenty (120) days, which
budget and operating plan shall reflect thereon projections of all
receipts (if any) and operating costs and expenses, capital
expenditures and reserves that Property Manager, in the exercise of
good business judgment, believes will be received or necessary to be
incurred, as the case may be, to develop and maintain the Property
during such one hundred twenty (120) days. Within ninety (90) days of
the date this Agreement is fully executed, Property Manager shall
further prepare and deliver to Owner an additional proposed budget and
operating plan (such proposed budget and operating plan, together with
the foregoing budget and operating plan, the "Preliminary Budget" and
the "Preliminary Plan", respectively), for the upcoming calendar year,
which budget and operating plan shall reflect thereon projections of
all receipts (if any) and operating costs and expenses, capital
expenditures and reserves that Property Manager, in the exercise of
good business judgment, believes will be received or necessary to be
incurred, as the case may be, to develop and maintain the Property
during such calendar year.
(b) Annual Budgets. Thereafter, on or prior to October 31st of
each calendar year during the Term (as defined in Section 4.4) hereof,
beginning on the first October 31st, after the date hereof, Property
Manager shall submit to Owner, for Owner's approval, proposed budgets
and operating plans for the Property on an annual basis for the
upcoming calendar year, which proposed budgets and operating plans
shall reflect thereon projections of all receipts (if any) and
operating costs and expenses, capital expenditures and reserves that
Property Manager, in the exercise of good business judgment, believes
will be received or necessary to be incurred, as the case may be, to
develop and maintain the Property during such calendar year. Such
proposed budgets and operating plans (including the Preliminary Budget
and the Preliminary Plan) shall be submitted by Property Manager
solely as good faith estimates, without warranty of their accuracy or
attainability; provided, however, that, except as otherwise expressly
provided in this Agreement, Property Manager shall not be reimbursed
by Owner for, and Property Manager hereby expressly indemnifies Owner
against, any loss, expense or claim in connection with any
unauthorized expenditure or liability incurred by any action taken by
Property Manager. Property Manager shall use its best efforts to
manage the development of the Property in a manner consistent with,
and subject to, both the total cost limitations and categories in the
most recently approved Budget.
(c) Contents. Without limiting the foregoing, each Budget and
Business Plan (including the Preliminary Budget and the Preliminary
Plan) shall include between them: (i) a projected income statement
for the Property, (ii) a projected balance sheet for the Property,
(iii) a schedule of projected operations and cash flow, (iv) a
reasonable estimate and projected budget of gross receipts and
operating expenses, itemized in a manner acceptable to Owner, (v) a
projected budget for capital expenditures and replacements, (vi) an
identification of staffing to be employed, (vii) a separate estimate
of the Property Management Fee (as defined in Section 31.), (viii) a
narrative description of the program for the development and marketing
of the Property, and (ix) any and all other matters reasonably
requested by Owner.
(d) Owner Approval. Owner shall, within thirty (30) days after
receipt of a proposed Budget and Business Plan (including the
Preliminary Budget and the Preliminary Plan), approve or disapprove
such Budget and Business Plan in its sole discretion. As used herein,
the terms "Business Plan" and "Budget" shall refer to the currently
approved Budget and Business Plan approved by Owner as amended and/or
modified from time to time. Owner shall provide Manager written
notice of its approval or disapproval; provided, that in the event
Owner fails to do so, the Budget or Business Plan, as the case may be,
from the previous year shall control until a new budget or business
plan is approved. Within fifteen (15) days after Owner submits any
objection to the proposed budget or business plan, Manager will submit
a revised budget or business plan to Owner, as the case may be. If
Owner does not approve such revised budget or business plan within
fifteen (15) days of its submission to Owner, the budget or business
plan as the case may be, from the previous year shall control until a
new budget or business plan is approved.
2.6 Property Account and Owner Account.
(a) Owner Account. Property Manager shall establish and
maintain in a banking or other financial institution approved by Owner
or set forth in the Business Plan from time to time throughout the
term of this Agreement, a separate bank or similar account in the name
of Owner for the deposit of moneys of Owner received, if any, with
respect to the Property (the "Owner Account"). Property Manager shall
also establish such other special bank or similar accounts as may be
approved by Owner. All revenue from the Property shall be promptly
deposited in the Owner Account.
(b) Property Account. Operating expenses of the Property shall
be paid by the Property Manager from an account established in a
financial institution approved by Owner to process funds as described
in Section 2.7 (the "Property Account")
2.7 Disbursements by Owner to Property Manager.
(a) Monthly Payments. On or before the twentieth (20th) day of
each calendar month, Property Manager shall deliver to Owner a written
request for disbursement, setting forth, in reasonable detail, the
costs and expenses reasonably estimated to be paid by Property Manager
for the upcoming calendar month, together with any other working
capital needs of the Property for the upcoming calendar month, in each
case, in accordance with the Budget (the "Required Monthly Funds").
Property Manager shall also submit reasonable substantiation as
requested by Owner for all requested disbursements. In the event that
any requested disbursement is not consistent with, or in compliance
with, the Budget, Property Manager shall set forth such requested
disbursements in a separate report and shall set forth a brief
explanation for the reason for such discrepancy. On or before the
first day of the month for which the particular request for the
Required Monthly Funds is made, Owner shall transfer, via wire
transfer, from the Owner Account to the Property Account designated by
Property Manager the Required Monthly Funds approved by Owner.
(b) Emergency Withdrawals. Property Manager shall only be
entitled to make withdrawals from the Property Account in accordance
with the Budget or the Business Plan or in connection with a bona fide
emergency due to casualty or act of God under circumstances in which
it would be unreasonable to seek to obtain Owner's approval, in which
case Property Manager shall be entitled to exceed, by a reasonable
amount, the amounts set forth in the Budget in order to address such
bona fide emergency situation; provided that as soon as practicable
after such emergency, Property Manager shall fully inform Owner of the
circumstances surrounding such situation and obtain, on a "going-
forward" basis only, Owner's approval with respect to Property
Manager's handling of similar emergency events at the Property in the
future. It is understood that any action taken by Property Manager
under this Section 2.7(b) in connection with any particular emergency
event shall be considered as being within Property Manager's scope of
authority under this Agreement but shall not create any precedent or
duty on the part of Property Manager or Owner to take any action in
connection with any future event. Nothing contained in this Section
2.7(b) or elsewhere in this Agreement is intended to provide any
benefit to any third parties who are not parties hereto or successors
or permitted assigns of parties hereto or impose upon Property Manager
or Owner any duty or obligation to any third parties who are not
parties hereto or successors or permitted assigns of parties hereto,
nor shall it have the effect of giving, any enforceable rights to any
third parties who are not parties hereto or successors or permitted
assigns of parties hereto, whether such claims are asserted as third
party beneficiary rights or otherwise. The Owner and Property Manager
hereby acknowledge and agree that, if the Owner fails to deposit funds
in the Property Account in an amount sufficient to fund the expenses
authorized in the Budget, Property Manager shall not be required to
incur any out of pocket costs in order to perform Property Manager's
obligations under this Agreement.
2.8 Costs Not Reimbursed to Property Manager. Unless otherwise
provided herein, Owner shall not be obligated to reimburse Property Manager
for the payment by Property Manager of (a) any expense for office equipment
or office supplies of Property Manager other than those used on the
Property and approved in writing by Owner; (b) any overhead expenses of
Property Manager incurred in its general offices; (c) unless otherwise
consented to by Owner in writing, any salaries, wages and expenses for any
personnel, including, without limitation, personnel spending all or a
portion of their working hours at or providing services to the Property
specifically performing Property Manager's duties hereunder; (d) the cost
of fidelity insurance; (e) any accounting costs or overhead costs incurred
in connection with the preparation and delivery of the statements and
reports required hereunder; or (f) any travel costs incurred by Property
Manager not specifically provided for in the Budget.
2.9 Records; Reporting.
(a) Records. All statements, receipts, invoices, checks,
leases, contracts, worksheets, financial statements, books and
records, and all other instruments and documents relating to or
arising from the development, operation or management of the Property
shall be the property of Owner; provided, that throughout the term of
this Agreement, all of such items shall be maintained by Property
Manager in a manner consistent with the terms of this Agreement and
with books and records customarily maintained by managing agents of
properties similar in location, size and revenue to the Property.
Owner and Property Manager shall have the right to inspect and to copy
all such items, at such party's expense, at all reasonable times, and
from time to time, during the term of this Agreement. Upon the
termination of this Agreement, all of such books, records and all
other information relating to the Property promptly shall be delivered
to Owner; provided, however, that at Property Manager's sole expense,
Property Manager or its representatives shall have the right, for a
reasonable period of time not to exceed three (3) years following such
termination, to inspect such books, records and other information for
data that directly relates to the period during which Property Manager
managed the Property and to make copies thereof, at the offices of
Owner upon reasonable advance notice to Owner.
(b) Statements. Property Manager shall prepare and deliver to
Owner on a monthly and on a calendar quarterly basis, Property
Manager's written estimates of the amounts, if any, by which any
categories of the Preliminary Budget or the Budget must be adjusted to
adequately fund the development, operation and maintenance of the
Property for the then current month or quarter as the case may be,
although Owner shall be under no obligation to change the Preliminary
Budget or the Budget. Such reports shall include the following
information: (i) a statement of operations on the Property during such
month or quarter as the case may be, and the cost thereof, (ii) a
statement of year-to-date operations on the Property, and the cost
thereof, (iii) a statement of the actual cost of operations on the
Property during such month or quarter as the case may be compared to
the Preliminary Budget or the Budget which identifies any variance
between such costs and the Preliminary Budget or the Budget, and (iv)
a description and explanation of such variances. Property Manager
also shall furnish Owner, within thirty (30) days after Owner's
request, such further information covering the operation and
maintenance of the Property as Owner may reasonably require,
including, but not limited to, the following: (i) income statement
(accrual basis for taxes and insurance), month and year-to-date versus
Budget; (ii) variance report (narrative form, month and year-to-date),
(iii) balance sheet, (iv) general ledger, (v) rent roll (including
security deposit listing), (vi) accounts receivable aging report,
(vii) bank reconciliation for each account, (viii) calculation of
Property Management Fee, (ix) schedule of reserve and escrow accounts,
(x) schedule of capital expenditures, (xi) a re-forecast report, on a
quarterly basis, of current full year operations compared to the
Budget with explanations for all material variances, (xii) a marketing
qualitative summary of property operations for the preceding month
including comments on revenues, expenses, marketing, leases,
competition, legal and other issues affecting the Property, and (xiii)
any and all other reports reasonably requested by Owner.
(c) Annual Accounting Report. Property Manager agrees (i) to
deliver to owner, within twenty (20) days after the end of each fiscal
year, an annual accounting report (including balance sheet, income
statement and other financial statements), showing the results of
gross receipts, gross operating expenses, net operating income, net
cash flow and the Property Management Fee which would be payable if
the Agreement were terminated as of the end of such fiscal year and
any other information necessary to make the computations required
hereby or which may be requested by Owner, all for such fiscal year
and (ii) to cooperate fully with Owner, at no additional expense to
Property Manager, but without limiting Property Manager's obligations
under Section 2.9(e), in supplying all of the information and
documentation necessary for a nationally recognized firm of certified
public accountants selected by Owner (the "Auditor") to prepare and
deliver to Owner an audit of the annual accounting report provided by
Property Manager to Owner pursuant to this Section 2.9(c) within
forty-five (45) days after the end of each fiscal year.
(d) Additional Fiscal Reports. Property Manager shall, upon the
request of Owner, prepare for Owner or assist Owner in the preparation
of such additional financial reports with respect to the Owner or the
Property as Owner may reasonably request or may be required in the
preparation of the audited annual accounting to be prepared pursuant
to this Section 2.9. Property Manager acknowledges and agrees that
the Property Management Fee to be paid under this Agreement includes
compensation to Property Manager for the preparation of papers and
schedules reasonably necessary for the Auditor to conduct its review
of the Property's books and records. To the extent such papers and
schedules are not properly prepared, Property Manager agrees to
reimburse Owner for the reasonable additional cost and expense
incurred by Owner for the Auditor to prepare such papers or schedules.
(e) No Liability for Returns Required by Law. Property Manager
shall be responsible for preparing and filing any forms, reports or
returns (except Owner's tax returns) that may be required by law
relating to the Property. Property Manager shall also be responsible
for any forms, reports or returns that may be required by law relating
to any of Property Manager's employees.
2.10 Compliance with Legal Requirements. Property Manager shall take
such action as may be necessary to comply with any and all orders or
requirements affecting the Property by any federal, state, county or
municipal authority having jurisdiction thereover. Property Manager,
however, shall not take any such action as long as Owner is contesting, or
has affirmed Owner's intention to contest and institutes proceedings
contesting, any such order or requirement, except that if failure to comply
promptly with any such order or requirement would or might expose Property
Manager to criminal liability, Property Manager shall comply with same.
Property Manager shall promptly notify Owner in writing of all such orders
and notices or requirements. Nothing contained herein shall require
Property Manager to employ counsel to represent Owner in any such
proceeding or suit.
2.11 Taxes. Property Manager shall timely render the Property for
taxation, and obtain and verify bills for real estate, personal property,
and all other taxes and assessments, if any, against the Property and
promptly pay such tax bills and any other Impositions (as defined below),
and assist and cooperate with Owner in connection with all such taxes and
assessments in all ways reasonably requested by Owner including
applications or petitions of Owner for reduction of taxes or assessments.
Owner shall have the option but not obligation to employ a third party
consultant to accomplish the foregoing, in which event, Property Manager
shall assist and cooperate with such consultant. As used herein,
"Impositions" shall mean all taxes, assessments, special assessments, rents
and charges for any easement or agreement maintained as part of or for the
benefit of the Property, use and occupancy taxes and charges, water and
sewer for public and private utilities, excises, levies, license and permit
fees and other governmental charges, general and special, ordinary and
extraordinary, unforeseen and foreseen, of any kind and nature whatsoever
which at any time prior to or during the term of this Agreement may be
assessed, levied, confirmed, imposed upon or grow or become due and payable
out of or in respect of, or become a lien on (i) the Property or any part
thereof or any appurtenances thereto, or upon any personal property
located, or used in connection with, the Property, (ii) the rent, income or
other payments (if any) received by or for the account of Owner or anyone
claiming by, through or under Owner, (iii) any use or occupation of the
Property, (iv) such franchises, licenses and permits as may be appurtenant
to the use of the Property and (v) any document to which Owner is a party
transferring an interest or estate in the Property.
ARTICLE III
FEES TO PROPERTY MANAGER
In consideration for the performance of Property Manager's duties and
responsibilities under this Agreement, in exchange for its services
provided to Owner and the Property, Owner shall pay to Property Manager (i)
a management fee (the "Management Fee") equal to One Thousand Two Hundred
and No/100 Dollars ($1,200.00) for each Lot sold, which shall be payable
monthly in arrears, (ii) a sales commission (the "Sales Commission") in an
amount equal to six percent (6%) of the purchase price for each Lot sold,
if, as and when the purchase and sale of such Lot is closed, which shall be
payable at the closing of the purchase and sale of each such Lot, and (iii)
a property development fee (the "Development Fee") in an amount equal to
Sixty Thousand and No/100 Dollars ($60,000.00), which shall be payable in
installments of Five Thousand and No/100 Dollars ($5,000.00) for twelve
months to be paid on the first day of each month following the execution of
this Agreement; provided, however, that in the event all Lots within the
Property are sold prior to the expiration of the 12-month period, any
unpaid portion of the $60,000 shall be payable upon closing of the sale of
the last Lot.
ARTICLE IV
RELATIONSHIP OF PROPERTY MANAGER TO OWNER
4.1 Use and Maintenance of Premises. Property Manager shall employ
its best efforts to develop, operate and maintain the Property in a manner
(referred to herein as the "Management Standard") consistent with (i) first
class standards (consistent with the Business Plan), (ii) prudent business
and management practices applicable to the development, operation,
management and maintenance of the Property and (iii) the requirements of
any deeds of trust, certificates of occupancy, permits, licenses, consents
or other recorded or unrecorded agreements now or hereafter affecting the
Property or as required by the joint venture agreement of Owner
(collectively referred to herein as the "Key Documents"). Property Manager
shall use all contacts, discount programs and cost-savings measures at its
disposal to obtain services, products and tax and insurance rates for the
Property at the lowest cost, without sacrificing the quality of such
services or products. Property Manager shall perform such other acts and
deeds as are reasonable, necessary and proper in the discharge of its
duties under this Agreement. Property Manager may with prior written
approval of Owner obtain goods or services for the Property from direct or
indirect affiliates of Property Manager, its officers, directors,
shareholders or employees, but only if such goods and services are of at
least equal quality and of no higher prices than comparable goods and
services obtainable from unaffiliated parties and such goods and services
are otherwise competitive with comparable goods and services.
4.2 Sale or Refinancing of the Property. Upon the express request of
Owner but not otherwise, Property Manager shall assist and cooperate in any
attempt(s) by Owner to sell, finance or refinance all or any portion of the
Property. Such assistance and cooperation by Property Manager and Property
Manager's personnel shall not be deemed to create a broker-principal or
similar relationship unless Owner and Property Manager enter into a
separate written agreement engaging Property Manager as broker with respect
to all or any portion of the Property. Such assistance and cooperation
shall include, without limitation, answering prospective purchasers' or
lenders' questions about the Property or any portion thereof, preparing
rent rolls, notifying tenants about the sale of the Property and obtaining
estoppel certificates and other documents from all tenants of the Property
in the form required by the prospective purchaser or lender. Property
Manager shall also provide, promptly upon request by Owner, (a) an estoppel
certificate executed by Property Manager certifying that no uncured default
by the Owner exists under this Agreement or, if such a default(s) exists,
stating the nature thereof, (b) a certificate in favor of Owner and any
lender executed by Property Manager confirming, to the best of Property
Manager's actual knowledge, that any representations and warranties made
(or to be made) by Owner with respect to the Property, or the condition or
operation thereof, in any loan documents executed (or to be executed) by
Owner in connection with any sale, financing or refinancing of the
Property, are substantially true, correct and complete, or, if not
substantially true, correct or complete, stating with particularity why
such representations and warranties are not substantially true, correct or
complete, and (c) a subordination and attornment agreement executed by
Property Manager in accordance with the provisions of Section 5.9 of this
Agreement.
4.3 Approvals and Consents to Property Manager. Owner and Property
Manager hereby acknowledge and agree that ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III is
authorized by Owner to grant approvals and consents required under this
Agreement to Property Manager, and otherwise instruct Property Manager with
respect to Property Manager's obligations and performance under this
Agreement.
4.4 Term. This Agreement shall commence on the date hereof and
continue until such time as it is terminated as provided herein (a) for
Cause (as herein defined) or (b) upon the mutual agreement of the parties.
The entire term of this Agreement is sometimes herein referred to as the
"Term".
4.5 Termination by Owner. Owner, at its option, may terminate this
Agreement for "Cause" at any time upon giving written notice thereof. The
term Cause shall include (a) the failure of Property Manager to cure any
fraud, misrepresentation, misappropriation of funds, furnishing any
statement, report, notice, writing or schedule to Owner that Property
Manager knows, or reasonably should have known, is untrue or misleading in
any material respect on the date as of which the facts set forth therein
are stated or certified or the date such statement, report, notice, writing
or schedule is furnished to Owner, and such failure continues for a period
of ten (10) days after written notice thereof by Owner to Property Manager,
(b) the failure of Property Manager to comply with any term or condition of
this Agreement (except for breach of the Management Standard) and such
failure continues for a period of thirty (30) days after written notice
thereof by Owner to Property Manager, provided that if such default is not
reasonably susceptible of cure within thirty (30) days, then such
reasonable time so long as Property Manager is diligently prosecuting the
cure of the default, but in no event longer than ninety (90) days, (c) the
bankruptcy or insolvency of, the assignment for the benefit of creditors
by, or the appointment of a receiver for any of the property of, Property
Manager, (d) the sale of all or part of the Property; provided that in the
case of a partial sale, termination will only apply to those portions of
the Property sold, (e) the failure of Property Manager to cure an
intentional or grossly negligent or illegal act committed by Property
Manager against Owner and such failure continues for a period of ten (10)
days after written notice thereof by Owner to Property Manager, (f) the
failure of Property Manager to cure Property Manager's willful and/or
reckless misconduct that causes damage to Owner and such failure continues
for a period of ten (10) days after written notice thereof by Owner to
Property Manager, or (g) upon thirty (30) days written notice from Owner to
Property Manager in the event Property Manager fails to perform its duties
consistent with the Management Standard as determined by the management
committee of Owner.
4.6 Termination by Property Manager. Property Manager, at its
option, may terminate this Agreement for the failure of Owner to comply
with any term or condition of this Agreement and such failure continues for
a period of thirty (30) days after written notice thereof by Owner to
Property Manager, provided that if such default is not reasonably
susceptible of cure within thirty (30) days, then such reasonable time so
long as Owner is diligently prosecuting the cure of the default, but in no
event longer than ninety (90) days.
4.7 Obligations Upon Termination.
(a) Upon termination of this Agreement, each party shall
continue to be fully liable for their respective obligations which
have accrued up to and including the termination date and shall
promptly pay to the other all amounts due to the other party under the
terms of this Agreement. Such payment shall be made as soon after the
effective date of termination as such amounts are determinable. Upon
such payment, neither party shall have any further claim or right
against the other, except as expressly provided herein.
(b) In the event of termination of this Agreement, upon the
effective date of such termination, Property Manager shall (i)
surrender and deliver to Owner all income of the Property, if any, and
other monies of Owner then held by Property Manager and/or in any bank
account (including, without limitation, the Owner Account and the
Property Account) in excess of the reimbursements due and payable to
Property Manager up to and including the effective date of such
termination, (ii) deliver to Owner as received by Property Manager any
monies or other property due Owner under this Agreement but received
after such termination, and (iii) deliver to Owner everything then
held by Property Manager pertaining to the Property, including,
without limitation copies of all books, records, keys and all other
materials, property and supplies pertaining to the Property and/or
this Agreement.
4.8 Negation of Partnership, Joint Venture or Lease. Nothing in this
Agreement shall constitute, or be construed to be or to create, a
partnership, joint venture or lease between Owner and Property Manager with
respect to the Property. In the performance of this Agreement, Property
Manager shall act solely as an independent contractor. Neither this
Agreement nor any agreements, instruments, documents or transactions
contemplated hereby shall in any respect be interpreted, deemed or
construed as making either party a partner, joint venturer, principal or
agent with, or with respect to, the other party or as creating any similar
relationship or entity, and each party hereto agrees that it will not make
any contrary assertion, contention, claim or counterclaim in any action,
suit or other legal proceedings involving Property Manager and Owner.
4.9 Indemnification. Property Manager shall be liable for and shall
indemnify and hold harmless Owner (and each partner, venturer, employee,
agent, shareholder, director and officer of Owner) from any loss, damage,
liability, cost or expense (including reasonable attorneys' fees) arising
out of (i) any actions of Property Manager not within the scope of Property
Manager's duties hereunder, (ii) any breach by Property Manager of Property
Manager's obligations hereunder or (iii) the gross negligence or willful
misconduct of Property Manager. Owner shall indemnify and hold harmless
Property Manager (and each employee, agent, director, shareholder are
officer of Property Manager) from any loss, damage, liability, cost or
expense (including reasonable attorneys' fees) arising out of (x) a breach
by Owner of Owner's obligations hereunder, (y) Owner's gross negligence or
willful misconduct or (z) actions taken by Property Manager within the
scope of Property Manager's responsibilities under this Agreement.
4.10 Owner's Limited Liability. No general or limited partner in or
of Owner, whether direct or indirect, or any disclosed or undisclosed
officers, shareholders, principals, directors, employees, partners,
servants or agents of Owner or any of the foregoing or any investment
advisor of Owner (including any assignee or successor of Owner) or other
holder of any equity interest in Owner, shall be personally liable for the
performance of Owner's obligations under this Agreement. The liability of
Owner (including any assignee or successor of Owner) for Owner's
obligations hereunder shall be limited to the equity interest of Owner in
the Property.
4.11 Property Manager's Limited Liability. No general or limited
partner in or of Property Manager, whether direct or indirect, or any
disclosed or undisclosed officers, shareholders, principals, directors,
employees, partners, servants or agents of Property Manager or any of the
foregoing or any investment advisor of Property Manager (including any
assignee or successor of Property Manager) or other holder of any equity
interest in Property Manager, shall be personally liable for the
performance of Property Manager's obligations under this Agreement.
ARTICLE V
MISCELLANEOUS
5.1 No Assignment by Property Manager Etc. Without the prior written
consent of Owner, which consent may be granted or withheld in Owner's sole
discretion, Property Manager shall not have the right to assign, transfer
or convey any of Property Manager's right, title or interest hereunder, nor
shall Property Manager have the right to delegate any of the obligations or
duties required to be kept or performed by Property Manager hereunder.
5.2 Notices. All notices, demands, consents, approvals and requests
given by either party to the other hereunder shall be in writing and sent
via the U.S. Postal Service by registered or certified mail, postage
prepaid or via a nationally recognized overnight delivery service (e.g.
Federal Express) and addressed to the appropriate party at the respective
addresses shown below. All such notices shall be deemed given on the
earlier of actual receipt or refusal of receipt by the addressee. The
respective addresses and additional notice parties are as follows:
If to Owner: Oly Stratus ABC West I Joint Venture
c/o Olympus Real Estate Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇
and to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Weil, Gotshal & ▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
If to Property Manager: Stratus Management L.L.C.
▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Armburst, ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Any party may at any time change its respective address by sending written
notice to the other parties of the change in the manner hereinabove
prescribed.
5.3 GOVERNING LAW. THIS AGREEMENT IS BEING EXECUTED AND DELIVERED AND
IS INTENDED TO BE PERFORMED IN THE STATE OF TEXAS, AND THE TERMS AND
PROVISIONS HEREOF SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS. THIS AGREEMENT IS PERFORMABLE IN, AND THE
EXCLUSIVE VENUE FOR ANY ACTION BROUGHT WITH RESPECT HERETO SHALL LIE IN,
DALLAS COUNTY, TEXAS.
5.4 Not a Third Party Beneficiary Contract. Neither this Agreement
nor any part hereof nor any service, relationship or other matter alluded
to herein shall inure to the benefit of any third party (specifically
including any lender, tenants or contractors), to any trustee in
bankruptcy, to any assignee for the benefit of creditors, to any receiver
by reason of insolvency, to any other fiduciary or officer representing a
bankruptcy or insolvent estate of either party or to the creditors or
claimants of such an estate. In addition, this Agreement shall terminate
and be of no further force or effect upon the filing of any bankruptcy
petition by or against Property Manager.
5.5 Validity. If any term or provision of this Agreement or the
application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
5.6 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the matters herein contained and
any agreement hereafter made shall be ineffective to effect any change or
modification, in whole or in part, unless such agreement is in writing and
signed by the party against whom enforcement of the change or modification
is sought. This Agreement shall bind, and inure to the benefit of, the
parties hereto and their respective successors, legal representatives and
assigns.
5.7 Attorneys' Fees. If either Owner or Property Manager employs an
attorney to enforce or defend its rights hereunder, the prevailing party
shall be entitled to recover its reasonable attorneys' fees, costs and
expenses incurred in connection with such enforcement or defense.
5.8 INDEMNIFICATION PROVISIONS. THIS AGREEMENT CONTAINS
INDEMNIFICATION PROVISIONS SPECIFICALLY DESCRIBED IN SECTIONS 2.5 AND 4.7
HEREOF.
5.9 Subordination. This Agreement and any extension hereof shall be
subordinate to any mortgage or similar security instrument now or hereafter
affecting the Property, and all renewals, modifications, consolidations,
replacements and extensions thereof (a "Mortgage"). Property Manager
further agrees to attorn to the holder of any Mortgage or similar security
instrument affecting the Property, and any successor or assignee thereof,
upon Owner's being dispossessed by such holder of Owner's interest in all
or any portion of the Property. The provisions of this Section 5.9 shall
be sellf-operative and no further instrument of subordinatiion or attornment
shall be required. Property Manager shall execute promptly any certificate
or other document that Owner or any mortgagee or other security holder may
request as to such subordination and/or attornment, which certificate or
document may include such customary and normal provisions as Owner may
determine in its sole discretion. In the event that Property Manager fails
to execute and deliver such certificate or document on or before five (5)
business days after written notice to Property Manager by Owner, then
without any further notice and opportunity to cure, such failure by
Property Manager shall be deemed to be an event for Cause hereunder.
5.10 Representations, Warranties and Covenants of Property Manager.
In order to induce Owner to enter into this Agreement, Property Manager
does hereby make the following representations, warranties and covenants:
(a) Property Manager represents and warrants to Owner that
Property Manager is a Delaware limited liability company, is duly
formed and legally existing under the laws of the state of its
formation and is duly qualified to do business in the State of Texas.
(b) Property Manager represents and warrants to Owner that
Property Manager has full power and authority to enter into this
Agreement and to carry out the transactions herein contemplated, and
that the undersigned officers of Property Manager have all necessary
authority to execute and deliver this Agreement on behalf of Property
Manager.
(c) Property Manager represents and warrants to Owner that this
Agreement has been duly executed and delivered by Property Manager and
constitutes the legal, valid and binding obligations of Property
Manager enforceable in accordance with their terms, subject to laws
applicable generally to creditor's rights.
(d) Property Manager shall deliver to Owner, upon the effective
date hereof (i) a good standing certificate from the State of Texas,
and (ii) an incumbency certificate and resolutions of Property Manager
authorizing the execution and delivery by Property Manager of this
Agreement, certified by an authorized officer of Property Manager as
being true, correct and complete.
(e) There is no claim, litigation, proceedings or governmental
investigation pending, or as far as is known to Property Manager,
threatened, against Property Manager or relating to the Property or
the transactions contemplated by this Agreement which does, or may
reasonably be expected to, affect the ability of Property Manager to
enter into this Agreement or to carry out its obligations hereunder,
and, to Property Manager's actual knowledge, there is no basis for any
such claim, litigation, proceedings or governmental investigation.
(f) Neither the consummation of the actions contemplated by this
Agreement on the part of Property Manager to be performed, nor the
fulfillment of the terms, conditions and provisions of this Agreement,
conflicts with or will result in the breach of any of the terms,
conditions or provisions of, or constitute a default under, any
agreement, indenture, instrument or undertaking to which Property
Manager is a party or by which it is bound.
(g) Property Manager has and will continue to have during the
term of this Agreement qualified personnel to implement Property
Manager's obligations hereunder.
5.11 Publicity and Public Relations. Owner shall have the exclusive
right to control, manage and monitor all publicity and public relations
with respect to the Property or Owner's ownership thereof.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]OWNER:
OLY STRATUS ABC WEST I JOINT VENTURE,
a Texas joint venture
By: Oly ABC West I, L.P.,
a Texas limited partnership,
its general partner
By: Oly Texas ▇▇ ▇▇, LLC,
a Texas limited liability company,
its sole general partner
By:/s/ ▇▇▇ ▇. ▇▇▇▇
--------------------
Name:▇▇▇ ▇. ▇▇▇▇
Title: Vice President
By: Stratus ABC West I, L.P.,
a Texas limited partnership,
its general partner
By: STRS L.L.C.,
a Delaware limited liability company,
General Partner
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, III
President and CEO
PROPERTY MANAGER:
STRATUS MANAGEMENT L.L.C.,
a Delaware limited liability company
By: Stratus Properties Inc.,
a Delaware corporation,
its sole member
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ III
President and CEO
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
