THIS MANAGEMENT AGREEMENT (the "Agreement") is made as of the 18th day
of August, 1994, by and between Terra Vista Management, Inc., a California
corporation, (the "Manager"), and De Anza Properties - X, a California limited
partnership, (the "Owner"), in Los Angeles, California, with reference to the
A. Owner owns certain property located in the City of Irvine,
California, known as Woodbridge Meadows Apartments (hereinafter referred to as
B. De Anza Assets, Inc., a California corporation, is the
existing manager of the Property pursuant to a Management Agreement dated
October 1, 1985. De Anza Assets, Inc. is wholly owned by De Anza Group, Inc.,
which is being sold. Accordingly, De Anza Assets has withdrawn as manager,
which withdrawal has been accepted by Owner, and De Anza Assets has been
replaced by Terra Vista Management, Inc. The parties desire to enter into this
Management Agreement to reflect their obligations with respect to the ownership
and operation of the Property.
C. Owner desires that Manager maintain and operate the Property
on its behalf, and Manager desires to undertake said functions.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements set forth herein, the parties agree as follows:
1. Engagement. Owner hereby engages Manager as general
manager of the Property to the extent and subject to the conditions set forth
herein, and Manager hereby accepts such engagement.
2. Term and Termination. This Agreement shall continue
from year to year; provided, however, that Owner or Manager may, without
penalty or obligation to the other party to this Agreement, by providing sixty
(60) days' written notice to the other, terminate this Agreement with or
without cause at any time. This Agreement may be immediately canceled in the
event of the violation of any of the provisions hereof, or by Owner in the
event a petition in bankruptcy is filed by or against Manager which is not
dismissed within ninety (90) days following the date of such filing.
3. General Duties of Manager. Manager shall be directly
responsible for the day-to-day management of the Property, subject to such
general guidelines and instructions as the Owner may issue from time to time.
Notwithstanding anything to the contrary contained herein, all final decisions
respecting the management of the Property shall be made by Owner.
Manager shall at all times do and perform all things
reasonably necessary to effectuate the purposes and intentions embodied in this
Agreement so that the Property is operated at all times in a manner consistent
with prudent business practice and in accordance with any and all leases,
subleases and contracts to which the Property is subject, and any and all other
statutes, ordinances and regulations of any governmental authority having
jurisdiction over Owner, the Property or Manager.
4. Collection of Rent and Payment of Expenses. Manager
shall collect on behalf of Owner all rents and all other charges of every kind
or type whatsoever from all tenants or other occupants of the Property for
services provided in connection with, or for the use of, the Property or any
portion thereof, and shall deposit the same in depositories specifically
approved by Owner. Out of the foregoing rents and other charges collected on
behalf of Owner, Manager shall pay all expenses related to the operation and
maintenance of the Property and each of its facilities as and when the same
become due, all in accordance with specific instructions provided by Owner.
Manager may, with Owner's prior approval, and, when so
requested by Owner, shall, at Owner's expense, institute legal actions or
proceedings to collect charges, rent or other income or compensation due to
Owner with respect to the Property, or to oust persons unlawfully in possession
of any portion of the same. All such actions or proceedings and any related
counterclaim, crossclaims or other proceedings shall be at Owner's expense and
may be brought in the name of Owner or Manager.
5. Employees. Manager shall have the exclusive right to
discharge, supervise and fix the pay of such personnel as are necessary for the
efficient maintenance and operation of the Property. However, such personnel
shall be employed and paid by and shall be bonded to the satisfaction of Owner.
6. Repair and Maintenance of Property. Manager, at
Owner's expense, shall make or attend to the making of ordinary and emergency
repairs, maintenance, decorations and alterations at the Property.
7. Taxes and Insurance. Owner shall pay all taxes,
personal and real, and assessments that are attributable to the Property.
Manager shall obtain and keep in force, at Owner's expense, such fire,
comprehensive, liability and other insurance policies as are generally carried
with respect to similar facilities in amounts sufficient to protect and
maintain the Property and Owner's interest therein in a form, manner and
amount, and with companies satisfactory to Owner. Owner and Manager shall be
named as insured parties in all liability insurance policies relating to the
8. Accounting. Manager shall keep a detailed and
complete set of books and records of all the income and disbursements of the
Property in accordance with good accounting practices and Manager shall, on a
monthly basis, render to Owner each of the following:
(a) A report on all vacancies;
(b) A schedule showing all income received and
disbursements made during the preceding month, together with the balance on
hand, if any, at the end of said month; and
(c) A schedule describing the monthly and annual
budget for the Property, together with the amount expended in each category in
the preceding month and for the year to date.
9. Books and Records. Manager shall keep adequate books
and records in connection with all matters arising under the terms of this
Agreement. During regular business hours, Manager shall allow Owner or any of
its duly authorized representatives access to Manager's records and
correspondence pertaining to any transaction arising out of this Agreement. At
the close of each fiscal year of Owner, Manager shall allow the books and
records which are the subject of this paragraph to be examined and audited by a
certified public accountant selected by Owner. In the event of the termination
of this Agreement, Manager shall turn over to Owner all records and
correspondence as may be reasonably necessary to assist Owner to carry to
completion any lease or other transaction and all contracts, records and
documents directly pertaining to the Property.
10. Compensation. Owner shall pay to Manager as
compensation for its services under this Agreement a sum equivalent to 5% of
the aggregate gross receipts from the operation of the Property (excluding all
receipts from utilities or from taxes of any kind or type). The foregoing
compensation shall be payable at the beginning of each monthly accounting
period and shall be calculated on the basis of the budgeted gross receipts (as
determined by Owner) from the operation of the Property during that period.
The total amount of compensation earned by Manager hereunder shall, as soon as
possible after the end of each calendar year during the term of this Agreement,
be calculated on the basis of the actual gross receipts from the operation of
the Property during that year, and any additional compensation that is
due to Manager (because the actual gross receipts exceeded the budgeted gross
receipts) shall be paid to it by Owner at that time. Conversely, if Manager
collected more compensation than it was entitled to receive during any such
year (because the actual gross receipts were less than the budgeted gross
receipts), Manager shall return the excess compensation to Owner (without
interest thereon); provided, however, that such compensation shall be
subordinated to the receipt (on a noncumulative basis) by the limited partners
of Owner of an annual cash distribution equal to 6% of the aggregate capital
contributions of such limited partners.
The foregoing compensation shall be payment for Manager's
conduct and supervision of the ordinary and routine operation of the Property
and is not intended to compensate Manager for any other activities it may
undertake with respect to any operation of the Property which would not be
considered ordinary and routine when compared to the services provided by
professional real property management companies for other real properties that
are comparable in size, location and nature to the Property. In the event the
nature of the Property or the business conducted thereon changes, the
compensation to be paid to Manager hereunder will be altered in a manner which
is mutually agreeable to it and Owner, but in no event shall the amount of such
compensation exceed the amount that would be charged by non-affiliated entities
rendering comparable services which could reasonably be made available to
11. Indemnification. Owner shall indemnify, defend and
hold Manager harmless from any damages, costs, expenses or obligations incurred
by Manager as a result of any actions or omissions of Manager within the scope
of its authority as provided in this Agreement, or as a result of any other
actions or obligations as Owner may specifically authorize Manager to perform,
provided performance of such acts by Manager does not constitute fraud, bad
faith or willful misconduct.
12. Miscellaneous. To the extent possible, each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law. However, if any provision hereof
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, and shall in no way affect the validity of the remainder of such
provision, or of any of the remaining provisions of this Agreement.
This Agreement shall be governed by, and construed and
enforced in accordance with, the internal laws of the State of California.
This Agreement and the rights of Owner and Manager hereunder
shall not be assignable by either of them. Manager may, however, subcontract
the performance of all or part of its duties under this Agreement to one or
more subsidiaries or affiliates of Manager or to one or more affiliated
companies or unaffiliated companies suitable to Owner, but it shall remain
responsible for such performance. The right of Manager to receive compensation
may be assigned, pledged or hypothecated at anytime without Owner's consent.
This Agreement contains the entire agreement of Owner and
Manager with respect to the subject matter hereof and may not be changed except
by an instrument executed by both of them.
IN WITNESS WHEREOF, the parties hereto have executed this Management
Agreement as of the date first above written.
OWNER: DE ANZA PROPERTIES - X
a California limited partnership
By De Anza Corporation,
Operating General Partner
By: /s/ Herbert M. Gelfand
Herbert M. Gelfand
Chairman of the Board
MANAGER: TERRA VISTA MANAGEMENT, INC.
a California corporation
By: /s/ Michael D. Gelfand
Michael D. Gelfand