MANAGEMENT AGREEMENT
AGREEMENT, made as of the 22nd day of September, 1999, by and between
PEMBROKE SUPERVISORY MANAGEMENT, LLC (the "Supervisory Manager"), a Nevada
limited liability company with offices located at 00 Xxxx 00xx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, XX 00000, and COLLIERS NEVADA MANAGEMENT, LLC (the "Managing
Agent"), a Nevada limited liability company with offices located at 0000 Xxxxxxx
Xxxx, Xxxxx 000, Xxxx, Xxxxxx 00000.
W I T N E S S E T H:
WHEREAS, HIGH CASH PARTNERS (the "Owner") owns the land and buildings known
as the Sierra Marketplace located on the southeast corner of South Virginia
Street and Xxxx Xxxx in the City of Reno, Washoe County, Nevada (collectively
referred to herein as the "Project") and
WHEREAS, the Owner has retained the Supervisory Manager to operate and
manage the Project; and
WHEREAS, the Managing Agent and its managerial personnel and affiliates are
experienced in managing and operating first class commercial space; and
WHEREAS, the Supervisory Manager desires to retain the Managing Agent to
operate and manage the Project on behalf of the Supervisory Manager, and the
Managing Agent desires to be so retained, all in accordance with the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the Supervisory Manager and the Managing Agent hereby agree as
follows:
1. Retention of the Managing Agent. Pursuant to the terms provided herein
and subject to the limitations and conditions herein set forth, the Supervisory
Manager hereby appoints the Managing Agent, and the Managing Agent hereby
accepts the appointment, as the managing and operating agent of the Project with
authority to manage the day-to-day operations of the Project on behalf of the
Supervisory Manager.
2. Performance of Services and Payment Therefor. During the term of this
Agreement, on behalf of the Supervisory Manager, the Managing Agent shall
perform the services described in this Agreement and pay all expenses required
to be paid in connection therewith, all of which shall, if reasonable, and
except as otherwise specifically provided herein, be paid from "Gross Proceeds"
and be an "Expense" (both as defined in Section 4(a)(X11)); provided, however,
that to the extent funds are not available either from Gross Proceeds or the
Supervisory Manager, the Managing Agent shall not be obligated to pay said
Expenses.
3. Term. The rights and obligations of the Managing Agent hereunder shall
commence on the date hereof and shall continue unless sooner terminated as
hereinafter provided, on December 31, 2000, (the "Expiration Date").
4. The Managing Agent's Duties.
(A) The Managing Agent shall not pay any payments or cause any payments
to be made for (i) real estate taxes applicable to the Project, (ii) insurance
coverage with respect to the Project or (iii) for debt service or ground rent
payments. Except as otherwise directed from time to time by the Supervisory
Manager, the Managing Agent (1) shall perform or cause to be performed, on
behalf of the Supervisory Manager, all of the Owner's obligations as landlord
(sometimes referred to herein as "Landlord") to the tenants ("Tenant" or
"Tenants") under the space leases for the Project ("Space Lease") that are
capable of being performed by persons other than the Landlord and (2) shall not
perform or cause to be performed any act, the performance of which would cause a
default under a Space Lease or would permit a Tenant to validly claim a
reduction in rent, a termination of its Space Lease or any other remedy under
its Space Lease. The obligations of the Managing Agent hereunder shall be
limited by the availability of funds with which to perform such obligations, and
the Managing Agent shall have no obligation to advance funds or to perform any
act or obligation if sufficient funds are not available for such purposes.
(B) In pursuance, but without limiting the generality of the foregoing,
on behalf of the Supervisory Manager, the Managing Agent shall, except as
otherwise directed from time to time by the Supervisory Manager, perform the
following services:
(I) Operate the Project in a first-class manner and shall undertake
to provide such services as are then customarily provided by operators of
similar type projects of comparable class and standing to the Project in the
same market area;
(II) Apply sound administrative, accounting, budgeting,
operational, sales, advertising, personnel and purchasing policies and practices
in such a manner as will maximize the revenues, profitability and value of the
Project consistent with the terms and conditions of this Agreement;
(III) Use its reasonable efforts to obtain the compliance of
Tenants with regard to their obligations under their Space Leases. The Managing
Agent shall not have the right, either on behalf of the Owner or the Supervisory
Manager, to enter into new Space Leases or to cancel, renew, extend or amend any
existing or new Space Lease, without, in each case, the prior written approval
of the Supervisory Manager. Unless otherwise specifically directed by the
Supervisory Manager, all Space Leases shall be in accordance with the leasing
standards then in effect and be on the approved Supervisory Manager's standard
lease form or Managing Agent's form if approved in writing by the Supervisory
Manager. All such leases and/or lease modifications shall be executed by the
Supervisory Manager unless otherwise directed, in writing, by Supervisory
Manager;
(IV) Diligently review all leases, subleases and assignments of
leases for space in the Project by a Tenant occupying space in the Project or a
prospective tenant and submit the same to Supervisory Manager for review,
approval and execution;
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(V) Upon the request of the Supervisory Manager, provide copies of
all Space Leases, subleases and assignments then in effect and/or shall deliver
to the Supervisory Manager, and to any persons designated by the Supervisory
Manager, a schedule of all then existing Space Leases, which schedule shall
provide such information concerning such Space Leases and the Tenants as the
Supervisory Manager shall request;
(VI) Supervise and be solely responsible for the hiring, directing,
promoting, discharging and the work of (1) all personnel located on-site and
performing managerial and supervisory services in or about the Project and (2)
all personnel performing on-site operating and service functions in connection
with the Project (the personnel described in (1) and (2) above, collectively
referred to herein as "Project Employees"); provided, however, that any contract
with a Project Employee shall not be made without the prior written approval of
the Supervisory Manager. All of the Project Employees shall be employees of the
Managing Agent. The Supervisory Manager reserves the right to approve all
Project Employees, if so desired. The total aggregate compensation, including
fringe benefits and severance obligations, payable with respect to Project
Employees shall constitute an Expense of the Project and shall be paid from
either (a) Gross Proceeds or (b) funds otherwise provided by the Supervisory
Manager, provided that such Project Employees are approved and listed in the
Plan (as defined in Section 4(b)(XXIII)). The Managing Agent shall prepare the
payroll for all Project Employees, and shall pay all wages, salaries, taxes and
benefits to or in respect of all Project Employees, all of which shall
constitute an Expense of the Project. The Managing Agent may from time to time
assign one or more of its other employees to the Project on a temporary basis to
function as a Project Employee of the Project if approved and listed in the
Plan. The reasonable aggregate compensation payable to such Project Employees
while assigned to the Project and on Project business shall be an Expense of the
Project;
(VII) The Managing Agent shall receive, consider, evaluate and keep
complete records with respect to, and, except as specifically limited by other
provisions of this Agreement, shall handle, compromise or settle, the complaints
of all Tenants or users of any of the services or facilities of the Project;
provided, however, the Managing Agent is not authorized to, and shall not
compromise or settle, or make any payment with respect to, any such complaint
without the prior written consent of the Supervisory Manager if such compromise,
settlement or payment would reduce Gross Proceeds or increase Expenses of the
Project;
(VIII) The Managing Agent shall, upon prior approval of Supervisory
Manager, (a) enter into contracts for services furnished to the Project such as
electricity, gas, water, telephone, cleaning, elevator and boiler maintenance,
heating and air conditioning maintenance and all other necessary utilities and
services, (b) enter into leases for personal property necessary for the
management and operation of the Project and (c) purchase all utilities,
services, material and supplies as are required to be rendered or supplied to
the Tenants pursuant to their Space Leases or any common operating agreement;
provided, however, that, unless approved in the Plan, any contract or other
agreement which exceeds the amount approved in the Plan or if not approved in
the Plan and requires the payment of $5,000 or more must have prior written
approval of the Supervisory Manager provided, however, that the Managing Agent
shall not be required to obtain the Supervisory Manager's prior approval of, nor
its signature on, any such agreement which in the reasonable determination of
the Managing Agent results from a condition of an emergency nature. The
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Managing Agent shall promptly notify the Supervisory Manager of any said
emergency and the agreement which was executed without the Supervisory Manager's
approval.
Notwithstanding the foregoing, the Managing Agent may not enter into any such
contract or other agreements without the prior approval of the Supervisory
Manager, which (a) requires or might require the incremental payment or total
contract payment of $5,000 or more during the term hereof, (b) is not terminable
without cause or penalty upon not more than thirty (30) days written notice; (c)
extends or might extend beyond the Expiration Date of this Agreement or (d)
provides or grants to any party other than the Owner or the Supervisory Manager
a right of renewal or extension; or (e) conflicts with limits of liability
provision in Section 9(E) hereof;
(IX) The Managing Agent shall cause all repairs ("Repairs"), to be
made regardless of the extent or nature of the Repair, if the Repair is
necessary to keep all parts of the Project in good condition to the extent the
Repair is not required to be made by the Tenants pursuant to their Space Leases
or any common operating agreement. Unless approved by the Supervisory Manager or
otherwise approved in the Plan, the Managing Agent shall not make or permit to
be made any Repairs to the Project (except such Repairs as may be required to
comply with the "Legal Requirements" (as defined in Section 4(b)(XIV)) or to
prevent loss of insurance described in Section 8(A) hereof) in a manner that
would, in the Supervisory Manager's reasonable judgment, impair the value or
utility of the Project, or that would permit any Tenant to claim a reduction in
rent or other charges, a termination of its Space Lease or claim any other
remedy pursuant to its Space Lease. Notwithstanding the foregoing, in the event
that the Managing Agent reasonably determines that an emergency condition exists
in or about the Project of a nature that requires immediate Repairs to be made
to preserve and protect the Project and assure its continued operation, the
Managing Agent is authorized to take all reasonable steps to make all
expenditures necessary to repair and correct such emergency conditions, whether
or not these emergency repairs have been provided for in the Plan. All Repairs
shall be expeditiously completed in a good and workmanlike manner in conformance
with plans and specifications, if any, therefor and shall be in compliance with
all Legal Requirements and shall conform to requirements of all Space Leases,
and any mortgage or agreement affecting the Project including the requirements
of all insurance policies affecting the Project;
(X) Unless approved in the Plan or otherwise approved by the
Supervisory Manager, the Managing Agent shall not perform, or permit to be
performed, any Landlord preparation work as required by any Space Lease
("Landlord Preparation Work"), and shall not permit any Tenant improvements
permitted or required by any Space Lease ("Tenant Improvements") (except such
Tenant Improvements as may be required to comply with the Legal Requirements) to
be made, in a manner that would impair the value or utility of the Project or
that would permit any Tenant to claim a reduction in rent or other charges, a
termination of its Space Lease or claim any other remedy pursuant to its Space
Lease;
(XI) If the replacement and/or restoration of fixtures, equipment
and other ordinary Project capital replacement items or improvements which are
not Landlord Preparation Work, Tenant Improvements or Repairs (collectively,
"Capital Replacements") becomes necessary or desirable and is approved subject
to the conditions contained in this Agreement including, without limitation, the
Capital Replacements required to be made in order to comply with any Legal
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Requirement or the requirements of any Space Lease, and any other agreement or
mortgage affecting the Project hereunder, the Managing Agent shall include in
the Monthly Statement (as defined in Section 6C) for the month in which the
Capital Replacement occurs, the cost therefor and a statement as to whether such
Capital Replacement may be eligible for any investment tax credit. Unless made
as a result of a condition which in the reasonable determination ofthe Managing
Agent is of an emergency nature, the Managing Agent shall not make, or cause to
be made, any Capital Replacements without first obtaining the written approval
of the Supervisory Manager. The Managing Agent shall promptly notify the
Supervisory Manager of said emergency and the agreement which was executed
without the Supervisory Manager's approval. All Capital Replacements approved by
the Supervisory Manager shall be made, or caused to be made, by the Managing
Agent expeditiously, in a good and workmanlike manner, in conformance with any
plans and specifications, if any, therefor and in compliance with all Legal
Requirements and the requirements of the Space Leases, and any mortgage or
agreement affecting the Project including the requirements of any insurance
policies affecting the Project;
(XII) The Managing Agent shall collect, on behalf of the Owner, all
Gross Proceeds and shall deposit all such Gross Proceeds along with any monies
furnished by the Supervisory Manager as working funds and all other monies
received by the Managing Agent relating to the Project in a separate
non-commingled interest bearing account maintained in a bank approved by the
Supervisory Manager (the "Bank Account"), held in the name of the Managing Agent
as agent for Supervisory Manager. "Gross Proceeds" shall mean all amounts
collected by the Managing Agent from or in connection with the management and
operation of the Project or are in any way incidental to the foregoing (other
than any security deposits), including, without limitation, base rents,
percentage rents, and all additional charges collected and pursuant to the Space
Leases, and all other additional amounts collected under the Space Leases,
attributable to common area maintenance charges, real estate taxes and other
operating expenses and assessments (collectively, "Escalators"), condemnation
awards, insurance proceeds and real estate tax refunds and rebates of other
operating expenses. All Gross Proceeds collected and any and all items paid by
the Managing Agent arising by virtue of the management of the Project shall be
deposited to and paid from the Bank Account. The Managing Agent shall use Gross
Proceeds to pay all expenses (collectively "Expenses") relating to the
management, operation, leasing, maintenance and administration of the Project,
including any compensation payable to the Managing Agent pursuant to Section 7
hereof, other than expenses, which pursuant to the terms of this Agreement, are
payable by the Managing Agent from its own funds. The excess, if any, of Gross
Proceeds over Expenses ("Gross Operating Cash Flow") for any calendar month
shall be paid to the Supervisory Manager in the manner set forth in Section 6(C)
hereof;
(XIII) The Managing Agent shall cause to be paid, out of Gross
Proceeds, as required for the operation of the Project, on or before the last
day on which they may be paid without penalty, all taxes (other than real estate
taxes or other taxes billed together with real estate taxes), assessments,
levies, fees, water, sewer and other utility rents and charges and all other
governmental charges, and all fines, penalties and court disbursements, that are
imposed or levied upon, or assessed against or measured by, the Project or any
portion thereof. If any amount levied or assessed against the Project, or any
part thereof, or payable in connection with the operation of the Project,
becomes due and payable and may legally be paid in installments, the Managing
Agent
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shall pay such amount in installments, unless an interest charge is imposed in
connection with installment payments, in which event Managing Agent shall obtain
direction from the Supervisory Manager as to whether such amount shall be paid
in a lump sum or in installments.
(XIV) The Managing Agent shall comply with, and shall cause the
Project to comply with, all laws, codes, ordinances, regulations and other
governmental. rules now or hereafter in force (collectively, the "Legal
Requirements") that are applicable to the Project or the occupancy, use or
condition thereof, including, without limitation, the curing of any violation of
any Legal Requirements. If such compliance necessitates the making of any
Repairs, then the Managing Agent shall comply with the provisions set forth in
Section 4(B)(VII) and 4(B)(IX) hereof, and if such compliance necessitates the
making of any Capital Replacements, then the Managing Agent shall follow the
procedures set forth in Section 4(B)(XI) hereof, provided, however, that, in the
case of an emergency or failure to comply promptly with (including to cure any
violation of) any Legal Requirement which (a) shall expose either the Owner or
the Supervisory Manager to criminal liability or (b) shall constitute an event
of default under any Space Lease and any mortgage or other agreement affecting
the Project, the Managing Agent shall cause compliance or the curing of the
violation without awaiting the Supervisory Manager's consent and shall promptly
inform the Supervisory Manager of any action taken or being taken by it in
connection with such compliance or cure. Unless otherwise directed by the
Supervisory Manager, the Managing Agent shall, to the extent the Managing Agent
deems appropriate, in consultation with the Supervisory Manager, protest or
litigate to final decision in the appropriate court or forum the application of
any alleged Legal Requirement or the violation of any Legal Requirement
adversely affecting the Project. Any counsel engaged under this subparagraph
shall be subject to the approval of the Supervisory Manager, and no settlement
shall be entered into in any matter without the Supervisory Manager's written
consent;
(XV) Use its best efforts to prevent any liens, charges or
encumbrances (collectively, "Liens") from being filed against the Project which
arise from any maintenance, repairs, alterations, improvements, renewals or
replacements in or to the Project. The Managing Agent shall use its best efforts
to cause the prompt release of any Liens (other than a lien resulting from any
action taken by the Owner, Supervisory Manager or taken by the Managing Agent at
the Supervisory Manager's written direction);
(XVI) Give prompt notice to the Supervisory Manager of any defaults
by any of the Tenants under their Space Leases and shall, unless notified in
writing to the contrary by the Supervisory Manager, institute in its own name or
in the name of the Supervisory Manager or the Owner, any necessary legal actions
or proceedings to collect all charges, rents, other Gross Proceeds and monetary
damages from the Tenants or other persons in possession or to cancel or
terminate any Space Lease or to dispossess the Tenants or other persons in
possession on grounds of nonpayment of any amount due (or on grounds of any
other failure to perform) under the applicable Space Lease or otherwise enforce
the provisions of the Space Leases. The selection of any counsel engaged under
this subparagraph shall be subject to the prior written approval of the
Supervisory Manager, and no settlement shall be entered into in any matter
without the Supervisory Manager's written approval;
(XVII) Shall advertise and promote the business of the Project (and
shall institute and supervise a leasing and marketing program); provided,
however, that, unless otherwise
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provided for by the Supervisory Manager, the Managing Agent shall not, without
the Supervisory Manager's approval, expend, or commit to expend for such
activities more than the amount approved in the Plan therefor during any year
during the term of this Agreement;
(XVIII) Subject to compliance with the provisions of the Space
Leases and any mortgage or agreement affecting the Project, at the Supervisory
Manager's written request, contest in good faith any tax, assessment, levy,
attachment, charge, fee, Legal Requirement or lien relating to the Project which
it believes to be unjustified; provided, however, that such contest shall not
(a) subject the Project or any part thereof or any proceeds therefrom to the
risk of sale or forfeiture, (b) interfere with the use of occupancy of the
Project or (c) subject the Owner or the Supervisory Manager to the risk of any
criminal or civil liability.
(XIX) To the extent required to be obtained or maintained by the
Owner or Supervisory Manager of the Project, obtain and maintain, on behalf of
the Owner or Supervisory Manager, all licenses, permits and approvals necessary
or desirable for the use, operation, maintenance and management of the Project;
(XX) Keep the Supervisory Manager informed of any significant
change in the rules and regulations relating to the use, operation and
maintenance of the Project, including any change in any Legal Requirements;
(XXI) Collect all security deposits entitled to be received by the
landlord under the Space Leases and shall promptly deposit the same in the Bank
Account or such other account as may be required by the Space Leases and shall
maintain said accounts pursuant to local law;
(XXII) Promptly after receipt thereof, deliver to the Supervisory
Manager a copy of any notice or other communication received by the Managing
Agent from any public official or agency, or any Tenant under any of the Space
Leases relating to any matter that would constitute (with or without the giving
of notice or the passage of time, or both) a default under any Space Lease or
any mortgage or other agreement affecting the Project.
(XXIII) Within thirty (30) days following the Commencement Date of
this Agreement and as directed by the Supervisory Manager on an ongoing basis,
prepare and submit to the Supervisory Manager, for the Supervisory Manager's
approval, a Leasing and Operating Plan (the "Plan") for the Project covering the
period from the Commencement Date through the Expiration Date of the first
fiscal year and each fiscal year thereafter, which Plan shall be prepared in a
manner which will enable the Project to be operated by the Managing Agent as a
first-class commercial property and shall include, but not be limited to, the
items set forth on Exhibit "A" annexed hereto and made a part hereof. Upon
Supervisory Manager's review and comments, all changes necessary will be
submitted by Managing Agent in the revised Plan. Such Plan will be in effect
upon Supervisory Manager's written approval.
5. Condemnation and Casualty . In the event all or any portion of the
Project (i) is damaged as a result of fire or other casualty (a "Casualty") or
(ii) taken or condemned in any
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eminent domain, condemnation, compulsory acquisition or like proceeding by any
competent authority for any public or quasi-public use or purpose (a
"Condemnation"), the Managing Agent shall give the Supervisory Manager prompt
written notice thereof. The Owner, the Supervisory Manager or the Managing Agent
shall not have any obligation to restore, repair, rebuild, alter, replace, or
modify the Project or any part thereof affected by a Casualty or Condemnation,
and the Supervisory Manager shall have the right to terminate this Agreement
pursuant to the provisions of Section 10(F) hereof.
6. Fiscal Matters.
(A) The Managing Agent shall provide for appropriate accounting and cost
control systems and personnel to be maintained at the Managing Agent's general
offices to allow Managing Agent to maintain the books of account of the Project
and to prepare and transmit the statements and reports required pursuant to this
Section and the other reports, etc., as requested by Supervisory Manager. In
addition, the Managing Agent shall cause, if required by law, such personnel to
prepare and file all necessary reports with respect to withholding taxes, social
security taxes, unemployment insurance, disability insurance, the Fair Labor
Standards Acts and all other applicable laws and regulations and all other
statements and reports pertaining to labor employed on the Managing Agent's
payroll in or about the Project, which reports shall be in a form satisfactory
to the Supervisory Manager. The Managing Agent shall also cause such personnel
to prepare and file all necessary reports and returns with respect to sales
taxes, use taxes, personal property taxes and all other taxes relating to the
Project other than real estate taxes, which will be paid (and the necessary
returns prepared) directly by the Supervisory Manager. The Managing Agent shall
establish and supervise all bookkeeping and clerical services in connection with
the operation of the Project. The Managing Agent shall be solely responsible and
liable for, and shall bear and timely pay, all costs and expenses incurred in
connection with this Section 6(A) and shall not be paid or reimbursed, either by
the Supervisory Manager or from Gross Proceeds, for such costs and expenses
except to the extent set forth on Exhibit "C". The Owner, the Supervisory
Manager, its independent accounting firm and any other person designated by the
Owner or the Supervisory Manager shall have the right and privilege of examining
said books and records at any reasonable time, the cost of which shall be paid
from Gross Proceeds. Upon the termination of this Agreement, the Managing Agent
shall promptly transfer to the Supervisory Manager the originals of all such
books and records, as well as all leases, leasing records, correspondence with
tenants, personnel records and any and all other documents, instruments and
correspondence relating to the Project. All books and records relating to the
Project shall be retained for a period of at least four (4) years following the
fiscal year to which they pertain or for such longer period of time as is
consistent with industry standards.
(B) By the 25th day of each calendar month during the term of this
Agreement, the Managing Agent shall remit by wire transfer or immediately
available federal funds to the Supervisory Manager, such amount, if any, as
shall be designated from time to time (the "Advance Payment"). If Gross Proceeds
shall not be sufficient to enable the Managing Agent to make the Advance Payment
and discharge all Expenses then due, the Managing Agent shall immediately notify
the Supervisory Manager and shall follow the Supervisory Manager's directions in
connection with such shortfall; provided, however, that the Managing Agent shall
not be required to use its own funds to cover any such shortfall.
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(C) On or prior to the 7th day of each calendar month during the term
hereof, the Managing Agent shall render to the Supervisory Manager, and to any
person designated by the Supervisory Manager, a statement (the "Monthly
Statement") in the form set forth in Exhibit "A" annexed hereto and made a part
hereof reporting the income and expenses for the immediately preceding calendar
month including a comparison to the Plan. Together with the Monthly Statement,
the Managing Agent shall include the original bills for all payments made during
the immediately preceding calendar month and shall simultaneously wire transfer
to Supervisory Manager funds in the amount, if any, by which Gross Operating
Cash Flow for the immediately preceding month exceeds the Advance Payment for
such immediately preceding month.
(D) The Managing Agent shall, promptly following the Owner's request
therefor, render to the Supervisory Manager, and to such persons as may be
reasonably designated by the Supervisory Manager, any other statements or
reports requested by the Supervisory Manager including but not limited to, the
reports noted in Exhibit "B." The charges for such Additional reports are listed
on Exhibit "B."
(E) At the Supervisory Manager's request, an audit or review of the
Project books and records shall be performed by a firm of independent certified
public accountants selected by the Supervisory Manager. Any costs and expenses
incurred in connection therewith shall be Expenses of the Project; provided,
however, that, if such audit or review reveals that the Managing Agent has
misappropriated or improperly applied any funds, then the Managing Agent shall
be responsible and liable for, and shall bear and timely pay, all costs and
expenses in connection with such audit or review and shall not be paid or
reimbursed by the Supervisory Manager or from Gross Proceeds for such costs and
expenses.
7. Management Fee. In full consideration for the services of the Managing
Agent hereunder the Managing Agent shall be entitled to receive the Management
Fee. The Management Fee for each calendar month during the term hereof shall be
separately computed, invoiced and paid to the Managing Agent from the Bank
Account prior to the end of such calendar month in an amount equal to 2.25% of
the collected Gross Proceeds less any amounts included in Gross Proceeds which
represent condemnation awards, insurance proceeds, real estate tax refunds and
rebates of other operating expenses or sales or rent taxes collected on behalf
of taxing authorities.
8. Insurance.
(A) During the term hereof, the Supervisory Manager on behalf of the
Owner shall be responsible for procuring to the extent reasonably available, all
insurance policies required to be procured with respect to the Project under the
Space Leases or any other agreement or mortgage affecting the Project or which
are provided for in the Plan, said premiums to be considered an expense of the
Project. The Managing Agent will notify Supervisory Manager of any special
insurance requirements pursuant to the Space Leases. All liability insurance
policies maintained by Owner or Supervisory Manager with respect to the Project
shall include the Managing Agent as an additional named insured and certificates
of insurance evidencing such coverage shall be provided to Managing Agent upon
request.
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(B) The Managing Agent shall not obtain or carry separate insurance
concurrent in form, or contributing in the event of loss, with that required
hereunder, unless the Owner and the Supervisory Manager is a named insured
therein. The Managing Agent shall pay for such insurance from its own funds and
shall not be reimbursed therefor from the Supervisory Manager or from Gross
Proceeds.
(C) The Managing Agent shall obtain and maintain throughout the term of
this Agreement, a fidelity bond in an amount of $ 1,000,000 for the full
protection of the interests of the Owner, the Supervisory Manager and the
Managing Agent.
(D) The Supervisory Manager shall give to the Managing Agent, and the
Managing Agent shall give to the Supervisory Manager, appropriate notice of any
claims made against the Project, the Supervisory Manager or the Managing Agent,
and the Managing Agent shall cooperate fully with the Supervisory Manager and
with any insurance carrier to the end that all such claims will be promptly
investigated and defended.
9. Indemnity and Related Matters.
(A) The Supervisory Manager agrees to indemnify and hold the Managing
Agent free and harmless from any liability, including any costs and expenses
incident thereto, for injury to persons or damage to property by reason of any
cause whatsoever, in or about the Project, as a result of the performance of
this Agreement by the Managing Agent, its agents, employees or independent
contractors, irrespective of whether negligence on the part of the Managing
Agent, its agents, employees or independent contractors is alleged.
(B) Except as otherwise provided in this Agreement, the Supervisory
Manager agrees to reimburse the Managing Agent for any money which the Managing
Agent is required to pay out for any reason whatsoever whether the payment is
for, or the result of (i) costs, charges or debts incurred or assumed by the
Managing Agent in connection with the operation of the Project, (ii) judgments,
settlements or expenses in defense of any claim, civil or criminal action,
proceeding, charge or prosecution made, instituted or maintained against the
Managing Agent or employees, agents or connection with the Project.
(C) Notwithstanding the foregoing or anything else contained herein to
the contrary, the Supervisory Manager shall not reimburse the Managing Agent or
be liable to indemnify and hold the Managing Agent harmless from any liability
or cost described in Section 9(A) and (B) and not covered by insurance, which
results from, (i) the willful misconduct, gross negligence or criminal conduct
of the Managing Agent or employees, agents, or independent contractors of the
Managing Agent, (ii) any breach of this Agreement by Managing Agent, or (iii)
any act of agent which is outside the scope of Managing Agent's authority under
this Agreement, and the Managing Agent shall indemnify the Supervisory Manager
and Owner (and each partner therein, any legal representative, heir, estate,
successor or assign of any such partner or any officer, director, shareholder or
partner in any such partner and any other principal of the Supervisory Manager
or the Owner whether disclosed or undisclosed) against such liabilities and
costs, including legal fees and any other costs and expenses incident thereto.
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(D) The Supervisory Manager agrees to defend promptly and diligently, at
the Supervisory Manager's expense, any claim, action or proceeding brought
against the Managing Agent, Supervisory Manager and the Owner, jointly or
severally, arising out of or connected with any of the matters referred to in
Section 9(A) and (B), unless covered by Section 9(C) and to hold harmless and
fully indemnify the Managing Agent from any judgment, liability, loss or
settlement on account thereof.
(E) Notwithstanding anything to the contrary contained in this
Agreement, neither the Supervisory Manager, nor any officer, director,
shareholder, agent or employee thereof, nor the Owner, nor any partner in the
Owner or the Supervisory manager, nor any legal representative, heir, estate,
successor or assign of any such partner or any officer, director, shareholder or
partner in any such partner nor any other principal in Owner or Supervisory
Manager whether disclosed or undisclosed, shall have any personal liability with
respect to the performance by the Supervisory Manager of any of its obligations
under this Agreement. If any breach shall occur by the Supervisory Manager
hereunder, the Managing Agent shall proceed solely against the Gross Proceeds,
and shall not seek or claim recourse against the Supervisory Manager, the Owner
or any other person or party hereinabove named or referred to in this Section
9(E) as being exculpated from personal liability.
10. Default and Termination. It shall be an event of default ("Event of
Default") or a cause for termination hereunder if any one or more of the
following events shall occur:
(A) If either party (the "Defaulting Party") shall breach or fail to
perform any term, covenant or condition contained in this Agreement;
(B) If any Party shall voluntarily or involuntarily be dissolved; apply
for or consent to the appointment of a receiver, trustee or liquidator of all or
a substantial part of its assets; file a voluntary petition in bankruptcy or
otherwise voluntarily avail itself of any federal or state laws for the relief
of debtors; admit in writing its inability to pay its debts as they become due;
make a general assignment for the benefit of creditors; file a petition or an
answer seeking reorganization or arrangement with creditors or to take advantage
of any insolvency law or file an answer admitting the material allegations of
any petition filed against it in any bankruptcy, reorganization or insolvency
proceeding; if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of any one or more creditors of such
Defaulting Party, adjudicating it bankrupt or insolvent or approving a petition
seeking reorganization or appointing a receiver, trustee or liquidator of all or
a substantial part of its assets, and such order, judgment or decree shall
become final; or if within 60 days after the commencement of any proceeding
against the Defaulting Party seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under the
present or any future applicable federal, state or other bankruptcy or
insolvency statute or law, such proceeding shall not have been dismissed;
(C) If Managing Agent shall assign, transfer, subcontract or create any
other transfer by operation of law or otherwise transfer its rights under this
Agreement without first obtaining Supervisory Manager's written approval.
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(D) If Managing Agent shall fail to pay any amount or deliver any report
as required under this Agreement or fails to comply with any obligations or
shall act outside the authorities established hereunder;
(E) Upon the occurrence of an Event of Default, the non-defaulting party
("Non- Defaulting Party") shall have the right to terminate this Agreement (i)
if the Event of Default is non-monetary in nature and the Defaulting Party fails
to remedy any such Event of Default within twenty (20) days after its receipt of
notice of default; provided, however, that if such Event of Default cannot
reasonably be remedied within said period, then such additional period as may
reasonably be required to remedy the same will be granted to the Defaulting
Party, if the Defaulting Party shall promptly commence and use its best efforts
to remedy the default upon receipt of the Non-Defaulting Party's notice and
shall continue therewith with due diligence or (ii) if the Event of Default is
monetary in nature and the Defaulting Party does not cure such Event of Default
within two (2) days after its receipt of notice of such default;
(F) Notwithstanding any provision contained herein to the contrary, if
after a Condemnation or Casualty, the Owner elects not to undertake a
restoration of the Project, the Supervisory Manager shall have the right to
terminate this Agreement without penalty upon thirty (30) days prior notice to
the Managing Agent; provided, however, if the Supervisory Manager so elects to
terminate this Agreement, the Managing Agent, if requested by the Supervisory
Manager, shall assist the Supervisory Manager in completing and filing any claim
forms required to be completed and filed, and in complying with any other
procedures required to be complied with, in order to enable the Owner to receive
any Condemnation award or insurance proceeds the Owner is entitled to receive in
connection with any such Casualty or Condemnation, and the Supervisory Manager
shall pay the Managing Agent a reasonable fee, to be agreed upon between the
Supervisory Manager and the Managing Agent, for so assisting the Supervisory
Manager;
(G) No termination of this Agreement, by operation of law or otherwise,
shall relieve the parties hereto of their obligations hereunder accruing prior
to the date of the termination of this Agreement, including, without limitation,
any obligations to indemnify any person pursuant to Section 9 hereof;
(H) Upon any termination of this Agreement, whether pursuant to Section
10, by operation of law or otherwise, the Managing Agent shall forthwith (i)
surrender and deliver to the Supervisory Manager all Gross Proceeds of the
Project and other monies of the Project on and in any Bank Account, including
any amounts in the Bank Account, (ii) deliver to the Supervisory Manager as
received any monies which would be Gross Proceeds under this Agreement but
received after such termination, (iii) deliver to the Supervisory Manager all
materials and supplies, keys, contracts and documents, and such other accounting
papers and records pertaining to this Agreement as the Supervisory Manager shall
request, including all books and records maintained for the Project, and (iv)
confirm the assignment to the Supervisory Manager, of any and all rights the
Managing Agent may have in and to any existing contracts, licenses and permits
relating to the operation and maintenance of the Project, as the Supervisory
Manager shall require. The Managing Agent hereby grants a power of attorney
(coupled with an interest) to the Supervisory Manager to endorse any checks
received in connection with the Project, and hereby assigns to the Supervisory
Manager,
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effective upon the date of such termination, any and all existing contracts,
licenses and permits relating to the operation and management of the Project;
(I) The terms of this Article shall not be deemed to impair the right of
any party to exercise any right or remedy, whether for damages, injunction,
specific performance or otherwise, upon any breach or termination hereof,
(J) Within fifteen (15) days of any termination of this Agreement, the
Managing Agent shall render to Supervisory Manager, and to such persons as may
be designated by the Supervisory Manager, a full accounting to the date of
termination, of all monies received by the Managing Agent in connection
herewith;
(K) Supervisory Manager, at its discretion, may cancel this Agreement
upon thirty (30) days written notice to Managing Agent for any reason whatsoever
(or for no reason).
11. Notices. All notices, consents, approvals or other communications
provided for in this Agreement to be given by the Managing Agent to the
Supervisory Manager shall be in writing and shall be personally served or sent
by facsimile transmission:
TO THE SUPERVISORY MANAGER:
Pembroke Supervisory Management, LLC
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxxx X. Xxxxx
All notices, consents, approvals or other communications provided for in
this Agreement to be given by the Supervisory Manager to the Managing Agent
shall be in writing and shall be personally served or sent by facsimile
transmission:
TO THE MANAGING AGENT:
Colliers Nevada Management, LLC
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxx, XX 00000
With a copy to:
Xxxxxx Xxxxx
Colliers Nevada Management, LLC
53 00 Xxxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxx 00000
Fax Number: (000) 000-0000
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12. Relationship and Further Actions.
(A) The Managing Agent and the Supervisory Manager intend that this
Agreement establish no relationship between them other than that of Managing
Agent and Supervisory Manager, respectively. The Managing Agent and the
Supervisory Manager shall not be construed as joint ventures or partners of each
other and neither shall have the power to bind or obligate the other except as
set forth in this Agreement.
(B) The parties hereto agree to execute all contracts, agreements and
documents and to take all actions necessary to comply with the provisions of
this Agreement and the intent hereof.
13. Applicable Law. The interpretation, validity and performance of this
Agreement shall be governed by the laws of the State of New York without
giving effect to the conflict of laws or principles thereof. If any of the terms
and provisions hereof shall be held invalid or unenforceable for any reason,
such invalidity or unenforceability shall in no event affect any of the other
terms or provisions hereof, all such other terms and provisions to be valid and
enforceable to the fullest extent permitted by law.
14. Successors and Assigns.
(A) The Managing Agent shall not assign or in any manner sell or
transfer any of its rights and interests as Managing Agent hereunder without the
prior written approval of the Supervisory Manager, nor shall any of the Managing
Agent's obligations hereunder be transferable on the Managing Agent's part, by
operation or law or otherwise, without the prior written approval of the
Supervisory Manager.
(B) The terms, provisions, covenants, undertakings, agreements,
obligations and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the successors and the permitted assigns of the parties
hereto.
(C) If at any time prior to the Expiration Date, the Owner or any other
person or entity shall succeed to the rights of the Supervisory Manager, the
Managing Agent agrees at the election and upon request of any such person, to
fully and completely attorn, from time to time, to and recognize such person as
the Supervisory Manager under this Agreement upon the terms and conditions of
this Agreement. Upon such attornment this Agreement shall continue in full force
and effect as a direct agreement between the Managing Agent and such successor
Supervisory Manager who shall not be (i) liable for any previous act or omission
of any prior Supervisory Manager and (ii) subject to any offsets or defenses
which may have theretofore accrued to the Managing Agent against any prior
Supervisory Manager.
15. Hazards. Owner and Supervisory Manager agree to provide Managing Agent
with any information Owner and Supervisory Manager may have regarding Hazards in
the Property. Hazards shall include, but are not limited to, asbestos, PCB
transformers, other toxic or hazardous substances, underground storage tanks,
and health and safety hazards. Managing Agent shall notify
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Owner and Supervisory Manager if Managing Agent becomes aware of any Hazards in,
on or about the Property. Owner and Supervisory Manager understand that Managing
Agent is not a licensed or qualified expert on Hazards. Therefore, Managing
Agent shall not be responsible for discovering Hazards, in, on or about the
Property, causing the Property to comply with laws regarding Hazards, or
supervising technical work on Hazards. Owner and Supervisory Manager understand
that the laws regarding the disclosure of Hazards to tenants, buyers and other
persons may be ambiguous and subject to conflicting interpretations. Therefore,
if hazards are discovered in, on or about the Property and Managing Agent in
good faith disagrees with Owner's instructions regarding such disclosures, then
Managing Agent may terminate this Agreement upon sixty(60) days written notice
to Owner and Supervisory Manager.
16. General Provisions.
(A) The Supervisory Manager represents that it has full power and
authority to execute this Agreement and to be bound by and perform the terms
hereof. The Managing Agent represents it has full power and authority to execute
this Agreement and be bound by and perform the terms hereof. On request, each
party shall furnish the other evidence of such authority.
(B) Any change to or modification of this Agreement or any waiver of any
provision hereof must be in writing signed by both parties hereto. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original. The captions for each Section are intended for convenience
only.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement effective the day and year first above written.
Owner:
HIGH CASH PARTNERS, L.P.
By: Pembroke HCP, LLC, General Partner
By: Pembroke Companies, Inc., Member
By:
--------------------------------
Xxxxxxxx X. Xxxxx, President
Supervisory Manager:
PEMBROKE SUPERVISORY MANAGEMENT, LLC
By: Pembroke Companies, Inc., Member
By:
------------------------------------
Xxxxxxxx X. Xxxxx, President
Managing Agent:
COLLIERS NEVADA MANAGEMENT, LLC
By:
------------------------------------
Xxxxxx X. Xxxxx
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EXHIBIT "A"
FORM OF MONTHLY OPERATING STATEMENT
(SEE ATTACHED)
To include the following reports:
1. Variance Analysis with explanations
2. General Ledger
3. Accounts Payable Report (if available)
4. Billing and Collection Report (Rent Roll)
5. Accounts Receivable Aging Report and Analysis with explanations
6. Consolidated Cash Flow
7. Cash Disbursement Journal
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Exhibit "C"
Gross Proceeds
The term "Gross Proceeds" shall include those items described in
Section 4(12) of this Agreement. For purposes of determining the Management Fee,
rent shall not include (i) fire loss or other insurance proceeds, capital
improvements, remodeling and tenant change costs (including any overhead factor
payable by tenants), (ii) security deposits except for the portion applied to
past due rent; (iii) prepaid rents except for the portion applied to the then
current month; or (iv) sums collected or paid for sales, excise or use taxes.
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