Property Management Agreement

PROPERTY MANAGEMENT AGREEMENT


THIS AGREEMENT, dated this 15th day of December, 1995, by and between MURRAY INCOME PROPERTIES II, LTD., hereinafter called "Owner", and Murray Realty Investors IX, Inc., hereafter called "Manager."


WITNESSETH:


WHEREAS, Owner owns and has the right to collect rents from and manage the Property hereinafter described, and desires to engage Manager to manage and operate such Property.


NOW, THEREFORE, in consideration of the premises, the parties agree as follows:


ARTICLE I


PROPERTY


1.1 Property: The Property which is the subject of this Agreement is 1202 Industrial Place (the "Building") which with outer improvements is located and situated on the real property described on Schedule "A" attached hereto and made a part hereof (the "Land"). The Building, the Land and other improvements located on the Land and all appurtenances thereto are hereinafter collectively referred to as the "Property".


ARTICLE II


COMMENCEMENT DATE


2.1 Manager's duties and responsibilities under this Agreement shall begin as of the 1st day of January, 1996, and shall continue until termination as provided in Article XIII hereof.


ARTICLE III


MANAGER'S RESPONSIBILITIES


3.1 Management. Manager shall manage, operate and maintain the Property in an efficient and satisfactory manner consistent with Owner's instruction and subject to Owner's payment of the costs related thereto as hereinafter set out.


3.2 Employees: Independent Contractor. Manager shall have in its employ at all times a sufficient number of capable employees to enable it to properly, adequately, safely and economically manage, maintain the Property. All matters pertaining to the employment, supervision, compensation, promotion and discharge of such employees are the responsibility of Manager, which is in all respects the employer of such employees. Manager shall fully comply with all applicable laws and regulations having to do with workers' compensation, social security, unemployment insurance, hours of labor, wages, working conditions and other employer-employee related subjects. This Agreement is not one of agency by Manager for Owner but one with Manager engaged independently in the business of managing properties on its own behalf, as an independent contractor. All employment arrangements are therefore solely Manager's concern and Owner shall have no liability with respect thereto.


3.3 Employee Staffing. Owner and Manager shall mutually agree on the appropriate number of "on-site" employees whose salaries may be charged to the Property for services rendered to the Property. This employee staffing plan shall be reflected in the approved Operating Budget and shall be subject to modification from time to time upon the mutual agreement of Owner and Manager.


3.4 Compliance with Laws, Mortgages, etc. Manager shall at Owner's expense comply with all federal, state and municipal laws, ordinances, regulations and orders relative to the management, operation, repair and maintenance of the Property and with the rules, regulations or order of the local Board of Fire Underwriters or other similar body. Manager shall promptly remedy any violation of any such law, ordinance rule, regulation or order which comes to its attention.


Expenses incurred in remedying violations may be paid from the Operating Account established by Owner pursuant to the terms of Section 7.1 hereof; provided, such expenses do not exceed $3,000 in any one instance. When more than such amount is required or if the violation is one for which the Property title holder might be subject to penalty, Manager shall promptly notify Owner so that prompt arrangements may be made to remedy the violation at Owner's expense.


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Manager shall be responsible for compliance with all terms and conditions contained in any space lease, mortgage, deed of trust or other security instruments affecting the Property; provided, however, Manager shall not be required to make any payment or incur any liability on account thereof.


3.5 Approved Budgets. Manager shall, within ten (10) days after execution of this Agreement, prepare and submit to Owner an Operating Budget and a Capital Budget for the promotion, operation, repair and maintenance of the Property for the 1996 calendar year. The Manager shall submit a proposed budget in subsequent years no later than October 1 of each year.


Owner will consider the proposed budgets and then will consult Manager in the ensuing period prior to the commencement of the forthcoming calendar year in order to agree on an "Approved Operating Budget" and an "Approved Capital Budget".


Manager agrees to use diligence and to employ all reasonable efforts to ensure that the actual costs of maintaining and operating the Property shall not exceed the Approved Budget pertaining thereto, either in total or in any one accounting category. All expenses must be charged to the proper account as specified in the Approved Chart of Accounts and no expense may be classified or reclassified for the purpose of avoiding an excess in the annual budgeted amount of any accounting category. Manager shall secure Owner's prior written approval for any expenditure that will result in an excess of the greater of $1,5000,000 or ten percent (10%) of the annual budgeted amount in any one accounting category of the Approved Operating Budget.


During the calendar year, Manager shall inform Owner of any major increases in costs and expenses that were not foreseen during the budget preparation period and thus were not reflected in either Approved Budget.


3.6 Collection of Rents and Other Income. Manager shall, if requested in writing to do so by Owner, collect all rents (including escalation billings resulting from tenant participation in increase in expenses, taxes and common area maintenance charges) and other charges which may become due at any time from any tenant or from others for services provided in connection with of for the use of any Property or any portion thereof. If requested in writing to do so, Manager shall collect and identify any income due Owner from miscellaneous services provided to tenants or the public including, but not limited to, parking income, tenant storage, and coin operated machines of all types (e.g., vending machines, pay telephones, etc.). All monies so collected shall be deposited in the Operating Account established by Owner pursuant to Section 7.1 hereof. Manger may not, without the prior written approval of Owner, terminate any lease, lock out a tenant, institute suit for rent or for use and occupancy, or proceeding for recovery of possession. In connection with any collection efforts, only legal counsel or collection firms designated by Owner shall be retained. Manager shall not write off any income items without prior approval of Owner.


3.7 Competitive Bidding. All contracts for repairs, capital improvements, goods and services exceeding $3,000.00 shall be awarded on the basis of competitive bidding, solicited in the following manner:


(a) A minimum of 2 written bids shall be obtained for each purchase up
to $10,000. Purchases over $10,000 will require a minimum
of 3 bids.


(b) Each bid will be solicited on a form prescribed by Owner so that
uniformity will exist in bid quotes.


(c) Manager shall submit bid quotes with a recommendation to Owner for
written approval. If Manager advises acceptance of a bid other
than the lowest, Manager shall adequately support in writing
its recommendations to Owner.


(d) Owner shall be free to accept or reject any and all bid quotes.


(e) Manager may request Owner to waive competitive bidding rules.


(f) Contracts may be entered into with affiliates of Manager provided
Owner approved the contracts.


Owner may pay for such expenses from its own resources or may authorize payment by Manager out of the Operating Account.


3.8 Repairs. Manager shall attend to the making and supervision of all ordinary and extraordinary repairs, decorations and alterations subject to the limits of the approved Operating Budget. Excluded from this provision are expenditures to refurbish, rehabilitate, remodel, or otherwise prepare areas covered by new leases unless otherwise agreed upon in writing between the parties hereto.


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In case of emergency, Manager may make expenditures for repairs which exceed the limits in Section 3.7 hereof without prior written approval if it is necessary to prevent damage or injury.


3.9 Capital Improvements. The Approval Capital Budget constitutes an authorization for Manager to expend money for projects up to $5,000.00. With respect to the purchase and installation of major items (costs in excess of $5,000.00) of new or replacement equipment, Manager shall recommend that Owner purchase these items when Manager believes such purchase to be necessary or desirable. Owner may arrange to purchase and install the same itself or may authorize Manager to do so subject to prescribed supervision and specification requirements and conditions.


The competitive bid rules outlined in Section 3.7 hereof will be observed.


3.10 Service Contracts. Manager shall not enter into any contract for cleaning, maintaining, repairing or servicing any Property or any of the constituent parts of any Property that requires annual payments in excess of $3,000.00 without the prior written consent of Owner. As a condition to obtaining such consent. Manager shall supply Owner with a copy of the proposed contract and shall state to Owner the relationship, if any, between Manager (or the person or persons in control or Manager) and the party proposed to supply such goods or services, or both.


All service contracts shall: (a) be in the name of Manager, (b) be assignable, at Owner's option, to Owner or Owner's nominee, (c) include a provision for cancellation thereof by Owner or Manager upon not more than thirty (30) days written notice and (d) shall require that all contractors provide evidence of sufficient insurance. Unless Owner specifically waives such requirements, either by memorandum or as an amendment to the contract, all service contracts shall be subject to bid under procedures as specified in Section 3.7 hereof. If this Agreement is terminated pursuant to Article XIII hereof, Manager shall, at Owner's option, assign to Owner or Owner's nominee all service agreements pertaining to the Property.


3.11 Non-Owned Properties. If Owner does not have title to the Property, then notwithstanding the provisions of this Agreement including the provisions relative to the making of repairs or maintenance of the Property, Manager shall not incur any expenses in any month in excess of the income from the property during that month. In any case in which there is doubt, Manager shall inform Owner of the situation so that Owner may have the opportunity of determining what action should be taken under the circumstances.


3.12 Taxes, Mortgages. Manage shall, if so requested, obtain and verify bills for real estate and personal taxes, improvements, assessments and other like charges which are or may become liens against the Property and recommend payment or appeal as in its best judgment it may decide. Manager shall forward such bills to Owner for payment by Owner in such time to permit Owner to avoid penalty for late payment or to permit Owner to take advantage of discounts. Manager shall not make any payments on account of any ground lease, mortgage, deed of trust or other security instrument, if any, affecting the Property.


ARTICLE IV


INSURANCE


4.1 Insurance. Owner, at its expense, will obtain and keep in force adequate insurance against physical damage (i.e., fire with extended coverage endorsement, boiler and machinery, etc.) and against liability for loss, damage or injury to property or persons which might arise out of the occupancy, management, operation or maintenance of the Property. Manager will be covered as an additional insured in all liability insurance maintained with respect to the Property. Owner shall save Manager harmless from any liability on account of loss, damage or injury actually insured against and actually collected by Owner. Manager shall notify Owner and the insurance carrier after manager receives notice of any such loss, damage or injury and will take no action (such as admission of liability) which might bar ...