Property Management Agreement 1

Property Management Agreement



for



Bay Pointe Apartments



Jacksonville, Florida








Table of Contents



Page

Article 1. Retention of Manager; General Definitions 3
1.1 Retention of Manager 3
1.2 General Definitions 3

Article 2. Manager92s Responsibilities 6
2.1 General Responsibilities 6
2.2 Manager92s Personnel; Independent Contractor. 6
2.3 Executive Personnel; Property Manager 7
2.4 Schedule of Employees 7
2.5 Compliance with Laws, Licenses, Mortgages, Etc. 7
2.6 Security 9
2.7 Energy Management 9
2.8 Annual Business Plan. 9
2.9 Service Contracts. 10
2.10 Collection of Rents and Other Income 10
2.11 Competitive Bidding 11
2.12 Repairs 11
2.13 Leases. 11
2.14 Notices to Owner 13
2.15 Property Tax Appeals 14
2.16 No Other Fees 14
2.17 REIT Status 14

Article 3. Insurance and Claims 14
3.1 Owner92s Insurance and Rights 14
3.2 Manager92s Insurance 15
3.3 Indemnification. 15
3.4 Contractors92 and Subcontractors92 Insurance 16
3.5 Waiver of Subrogation 17
3.6 Service Contracts 17
3.7 Claims 17

Article 4. Financial Reporting and Record Keeping 17
4.1 Financial Controls 17
4.2 Financial Reports: General Requirements 18
4.3 Periodic Statements. 19
4.4 Supporting Documentation 19
4.5 Annual Financial Reports 20
4.6 Transfer of Funds 20
4.7 Owner92s Property 21
4.8 Books and Records 21




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Article 5. Owner92s Right to Audit 22
5.1 Right to Audit 22

Article 6. Bank Accounts 22
6.1 Operating Account 22
6.2 Security Deposit Account 22
6.3 Change of Banks 22
6.4 Access to Account 22

Article 7. Payment of Expenses 23
7.1 Costs Eligible for Payment from Operating Account 23
7.2 Non-Reimbursable Costs 24

Article 8. Insufficient Gross Income 25
8.1 Priorities 25
8.2 Statement of Unpaid Items 26
8.3 Segregation of Accounts 26
8.4 Cash Flow Forecasting 26
8.5 Manager Not Obligated to Fund 26

Article 9. Sale or Financing of Property 26
9.1 Cooperation with Broker 26
9.2 No Sales/Brokerage Commissions 27

Article 10. Cooperation 27
10.1 Cooperation 27

Article 11. Compensation 27
11.1 Compensation 27

Article 12. Termination 29
12.1 Termination 29
12.2 Termination Without Notice. 29
12.3 Final Accounting 30
12.4 Obligation to Vacate: Orderly Transition 30

Article 13. Subsidiaries and Affiliates 30
13.1 Subsidiaries and Affiliates 30

Article 14. Notices 30
14.1 Notices. 30

Article 15. Certain Representations and Covenants 31
15.1 Manager Representations 31
15.2 Non-Competition 31

Article 16. Miscellaneous 32
16.1 Word Meanings 32




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16.2 Assignment 32
16.3 Binding Provisions 32
16.4 Nondiscrimination 32
16.5 Applicable Law 33
16.6 Separability of Provisions 33
16.7 Section Titles 33
16.8 Further Assurances 33
16.9 Entire Agreement 33
16.10 Waiver 33
16.11 Agreement in Counterparts 34
16.12 Attorneys92 Fees 34
16.13 Time Periods 34
16.14 Modification of Agreement 34
16.15 Time of the Essence 34
16.16 Construction of Agreement 34
16.17 Consent and Approvals 34
16.18 Use of Owner92s Name Prohibited 34
16.19 Exculpation 34
16.20 Confidentiality 35
16.21 No Joint Venture 35

Exhibits

A Reporting Package
B Executive Personnel and Property Manager
C Reimbursable Employee Expense Schedule
D Annual Business Plan
E List of Service Contracts
F Affiliates of Manager
G Competing Property In Which Manager has an Interest
G-1 Manager92s Other Properties
H Periodic Statements
I Capitalization Policy
J Chart of Accounts




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Property Management Agreement





This Property Management Agreement is made and entered into as of this 1st day of May, 2006, by and between BC-BAINBRIDGE BAY POINTE LLC, a Delaware limited liability company (the " Owner ") and STEVEN D. BELL AND COMPANY, a North Carolina corporation (the " Manager ").



Background





A. Owner owns the Property (defined herein).



B. Manager is skilled and experienced in the management, operation, leasing and supervision in properties similar to the Property in the geographic area where the Property is located.



C. Owner desires to engage Manager as an independent contractor on the terms and conditions set forth below and Manager desires to accept such engagement.



NOW, THEREFORE , in consideration of the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Owner and Manager agree as follows:



The balance of this page has been intentionally left blank.



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Part I - Basic Data



The following defined terms shall have the meaning set forth below:



" Commencement Date " 96 May 1, 2006.



" Management Fee Percentage " 96 3%



" Manager92s Notice Address " 96



100 Old Roswell Lakes Parkway

Suite 220

Roswell, Georgia 30076



" Owner92s Notice Address "



BC-Bainbridge Bay Pointe LLC

c/o Boston Capital Corporation

One Boston Place 96 Suite 2100

Boston, Massachusetts 02108

Attn: Mark W. Dunne



and



Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02109-2881

Attn: Andrew C. Sucoff, Esq.



" Payroll Fee Percentage " - 1%



" Property " 96 that certain property consisting of the multi-family apartment complex known as Bay Pointe Apartments located in the City of Jacksonville, County of Duval, State of Florida, together with all personal property of Owner attached thereto, located thereon or used in connection therewith.



The balance of this page has been intentionally left blank.



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Part II - Standard Terms





Article 1. Retention of Manager; General Definitions





1.1 Retention of Manager . Owner hereby retains Manager to perform the services described below in accordance with the terms and conditions of this Agreement, utilizing trained, experienced personnel and employing professional real estate management practices and techniques. Manager accepts the relationship of trust and confidence established between it and Owner by this Agreement and covenants to use its best skill and prudent business judgment in furthering the interests of Owner. Manager will act in a fiduciary capacity for the benefit of Owner with respect to the proper protection of and accounting for the Property. Manager92s duties and responsibilities will commence on the Commencement Date and shall continue until the expiration or earlier termination of this Agreement in accordance with Article 12.



1.2 General Definitions . As used in this Agreement, the following terms shall have the following respective meanings:



" Affiliate of Manager " shall mean any person or entity which (i) is a director, officer, partner, member or trustee of Manager, or in which Manager or any Manager Owner is a director, officer, partner, member or trustee, (ii) has any direct or indirect legal or beneficial interest in Manager, or in which Manager or any Manager Owner has any direct or indirect legal or beneficial interest, or (iii) directly or indirectly controls, is controlled by or is under common control with Manager.



" Agreement " shall mean this Property Management Agreement, which consists of Part I and Part II and such other Parts as may be attached hereto and executed by Owner and Manager, including all Schedules and Exhibits hereto, all as amended from time to time in accordance with the terms hereof.



" Annual Business Plan " shall mean the annual business plan to be prepared by Manager and approved by Owner in accordance with Section 2.9 .



" Approved Annual Business Plan " shall mean, at any time, the Annual Business Plan as then approved by Owner in accordance with Section 2.9 .



" Books and Records " shall have the meaning set forth in Section 4.8 .



" Business Day " shall mean every day that is not a Saturday, Sunday or day on which banks in Massachusetts or the state in which the Property is located are required by law or executive action to be closed for the transaction of normal banking business.



" Chart of Accounts " shall mean the form of chart of accounts approved by Owner, a copy of which is included in the Reporting Package, as the same may be modified or replaced as required by Owner from time to time.



" Competing Property " shall have the meaning set forth in Section 15.1 .



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" Damages " shall mean all claims, actions, suits, proceedings, judgments, damages, fines, penalties, losses and expenses, including reasonable attorneys92 fees, consultants92 and expert witness fees and court costs, including any such costs incurred in any bankruptcy or other legal or administrative proceeding.



" Environmental Laws " herein shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et seq., Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., Clean Air Act, 42 U.S.C. Section 7401 et seq., Clean Water Act, 33 U.S.C. Section 1251, et seq., Safe Drinking Water Act, 14 U.S.C. Section 300f, et seq., Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq., Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C, Section 136 et seq., Atomic Energy Act of 1954, 42 U.S.C. Section 2014 et seq., and any similar federal, state or local Laws, and all regulations, guidelines, directives and other requirements thereunder, all as may be amended or supplemented from time to time.



" Environmental Liabilities " herein shall mean conditions that involve the presence (whether actual or alleged) of any Hazardous Substance, conditions that are subject to any Environmental Laws, and all claims relating thereto.



" Executive Personnel " shall have the meaning set forth in Section 2.3 .



" Final Accounting " shall have the meaning set forth in Section 12.3 .



" GAAP " shall mean generally accepted accounting principles consistently applied.



" Gross Salaries " shall have the meaning set forth in Section 11.1.



" Hazardous Materials " shall mean any hazardous, toxic or dangerous substance, material, or waste as defined for purposes of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. 9601, et seq ., or any other federal, state or local law, ordinance, or regulation applicable to the Property and establishing standards and/or requirements for liability, storage, uncontrolled loss, seepage, filtration, disposal, removal, use or existence of a hazardous, toxic or dangerous substance, material or waste, including, without limitation, petroleum or petroleum products, asbestos, radon, polychlorinated biphenyls and all of those chemicals, substances, materials, controlled substances, objects, conditions, wastes, living organisms or combinations thereof which are now or become in the future listed, defined or regulated in any manner by any federal, state or local law based upon its being, directly or indirectly, hazardous to human health or safety or to the environment due to its radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity, mutagenicity, phytoxicity, infectiousness or other harmful or potentially harmful properties or effects.



" Insurance Requirements " shall mean all requirements of any insurance policy covering the Property or the use thereof, all requirements of the issuer of any such policy, and all requirements, orders, rules or regulations of the National Board of Fire Underwriters (or similar agencies) applicable to the Property.



" Investor " shall mean BCMR Jacksonville LLC, a Delaware limited liability company,



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and its successors and assigns as the "Investor" under that certain Limited Liability Company Agreement of BC-Bainbridge LLC, a Delaware limited liability company, dated as of May 21, 2003.



" Legal Requirements " shall mean all federal, state and municipal laws, rules or regulations applicable to the Property or the operation, occupancy, leasing, maintenance and repair thereof.



" Licenses " shall mean all permits, licenses, certificates, approvals, consents and other entitlements required for the operation, occupancy, leasing, maintenance and repair of the Property.



" Manager " shall have the meaning set forth in the introductory paragraph.



" Management Fee " shall mean the product of (x) the Management Fee Percentage times (y) all Rents actually collected for each month during the term of this Agreement.



" Management Fee Percentage " shall have the meaning set forth in Part I.



" Manager Owner " shall mean any person or entity that owns, directly or indirectly, 25% or more of the legal or beneficial ownership interests in Manager.



" Monthly Statement " shall have the meaning set forth in Section 4.3 .



" Operating Account " shall have the meaning set forth in Section 6.1 .



" Operating Budget " shall have the meaning set forth in Section 2.9(b) .



" Owner " shall have the meaning set forth in the introductory paragraph.



" Owner Related Entities " shall mean Owner, its direct and indirect legal and beneficial owners, and all officers, directors, trustees, employees, advisors and agents of Owner and all of Owner92s direct and indirect legal and beneficial owners.



" Payroll Fee Percentage " shall have the meaning set forth in Part I.



" Payroll Handling Fee " shall mean the product of (x) the Payroll Fee Percentage times (y) Gross Salaries for each month during the term of this Agreement.



" Property Manager " shall have the meaning set forth in Section 2.3 .



" Reimbursable Employee Expense Schedule " shall have the meaning set forth in Section 2.4 .



" REIT " shall have the meaning set forth in Section 2.17 .



" Rents " shall have the meaning set forth in Section 11.1 .



" Reporting Package " shall mean the sample reports prepared by Manager and attached



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hereto as Exhibit A, as modified or supplemented as required by Owner from time to time in accordance with Article 4.



" SEC " shall have the meaning set forth in Section 2.17 .



" Service Contracts " shall have the meaning set forth in Section 2.9 .



Article 2. Manager92s Responsibilities





2.1 General Responsibilities . Subject to the provisions of this Agreement, Manager shall manage, operate and maintain the Property in a first-class manner and in accordance with the Approved Annual Business Plan. Manager shall perform its duties hereunder: (a) in accordance with the terms of this Agreement; (b) in compliance with all applicable laws, rules and regulations, including the Legal Requirements; and (c) in accordance with the standards and practices of prudent and qualified managers that manage properties similar to the Property on behalf of institutional owners or investors.



2.2 Manager92s Personnel; Independent Contractor .



(a) 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, operate, maintain and account for the Property and otherwise perform its obligations hereunder in accordance with the terms of this Agreement and Approved Annual Business Plan.



(b) All matters relating to the employment, supervision, compensation, promotion and discharge of such employees are the responsibility of Manager (with respect to which Manager shall exercise reasonable care); Manager is in all respects the employer of such employees. Manager shall negotiate with any union lawfully entitled to represent such employees and may execute in its own name, and not as agent for Owner, collective bargaining agreements or labor contracts resulting therefrom. Manager represents that it is and will continue to be an equal opportunity employer and that it shall advertise as such. This Agreement is not one of agency by Manager for Owner, but one with Manager engaged independently in the business of managing properties as an independent contractor. All employment arrangements are therefore solely Manager92s responsibility and Owner shall not have any liability with respect thereto. Except as set forth in Section 2.4 below, nothing contained herein shall be deemed to permit Manager to charge Owner, or to use the income of the Property to pay, for the services of Manager92 s employees.



(c) Manager shall fully comply with all applicable laws, rules, regulations and orders relating to worker92s compensation, social security, unemployment insurance, wages, hours, working conditions and other matters pertaining to Manager92s personnel. Manager shall indemnify, defend and hold harmless the Owner Related Entities from and



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against all Damages arising out of or relating to Manager92s failure to comply with this Section 2.2. Manager92s indemnification obligations under this Section 2.2(c) shall survive the termination or expiration of this Agreement.



(d) Manager shall be solely responsible for its personnel in the event of the termination of this Agreement.



2.3 Executive Personnel; Property Manager . Exhibit B sets forth the name of: (a) the senior executive personnel of Manager who will be responsible for the performance of Manager92s duties under this Agreement (the " Executive Personnel "); and (b) Manager92s on-site property manager (the " Property Manager "). Any change in the Executive Personnel or Property Manager shall be subject to Owner92s prior approval, which shall not be unreasonably withheld or delayed.



2.4 Schedule of Employees . Attached hereto as Exhibit C is a schedule (the " Reimbursable Employee Expense Schedule ") that sets forth: (a) a list of Manager92s employees (including the Property Manager) who shall be employed on-site in the direct management and operation of the Property; (b) the respective titles and salary of each such employee; (c) the length of time that each such employee has been employed by Manager; (d) whether each such employee works full or part-time (and if they work part-time, the number of hours they work per week); (e) the cost of salary, wages and bonus that may be charged to the Property for each such employee; and (f) whether each such employee is bonded or covered under Manager92s comprehensive crime insurance policy. The Reimbursable Employee Expense Schedule shall also identify any employees of Manager who are not located at the Property but whose salaries may be charged to the Property pro rata based upon services actually rendered by such employees directly to the Property (in which event the Reimbursable Employee Expense Schedule shall set forth the salaries of such offsite employees and the maximum percentage thereof that may be charged to the Property). In no event shall Manager be entitled to charge to the Property any employee-related expenses: (i) that relate to general or supervising management personnel, accountants or auditors; (ii) for which a separate fee is charged by Manager pursuant to this Agreement or otherwise; or (iii) that are not specifically set forth on the approved Reimbursable Employee Expense Schedule. The expenses chargeable to the Property pursuant to the Reimbursable Employee Expense Schedule may be modified from time to time only as part of the Approved Annual Business Plan or as otherwise agreed upon by Owner and Manager in writing.



2.5 Compliance with Laws, Licenses, Mortgages, Etc.



(a) Manager will be responsible (at Owner92s expense) for compliance with the Legal Requirements and Insurance Requirements. Manager, with the prior approval of Owner (and at Owner92s expense), will promptly remedy any violation of any such requirements, provided that in the case of emergency, or imminent threat to the health, safety or welfare of tenants or any other person, or if so ordered by a governmental authority, Manager shall promptly remedy such violation, provided sufficient funds are available, and notify Owner as soon as practical, and in any event no later than the end of



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the next Business Day. Manager shall notify Owner and recommend any repairs or changes to the Property or operation thereof which will be required under proposed changes in laws, ordinances and regulations. Notwithstanding the foregoing, Manager shall obtain Owner92s prior written approval before engaging any legal counsel or commencing or appearing in any legal proceeding on behalf of Owner.



(b) Manager shall, at Owner92s expense, obtain and maintain all Licenses. Manager shall provide Owner with copies of all completed initial or renewal License applications for Owner92s prior approval and signature, if necessary, not less than thirty (30) days prior to the date such applications are due. All Licenses shall be obtained in Owner92s name.



(c) Except as otherwise specifically directed by Owner, Manager will be responsible (at Owner92s expense) for compliance with all contracts and agreements relating to the Property, including any ground lease, space lease, covenant, condition and restriction, reciprocal easement agreement, and mortgage, deed of trust or other security instruments affecting the Property, provided that Manager has copies of such agreements.



(d) Manager shall, at Manager92s individual, non-reimbursable expense, maintain its legal existence and good standing and obtain and maintain in effect all licenses and permits necessary or desirable to carry out its duties hereunder.



(e) Manager shall, at Owner92s expense, make commercially reasonable efforts to ensure that all employees and/or contractors who perform work at or for the Property have all required Licenses and comply with all Legal Requirements.



(f) Manager shall not knowingly permit the storage, disposal, transportation, abatement, or removal of Hazardous Materials below, at, on, about, to, from or affecting the Property except, in each case, in full compliance with Environmental Laws. Manager shall ensure that all Hazardous Materials, if any, used by Manager or permitted by Manager to be used at the Property are only in an amount necessary and customarily used for the cleaning of residential apartment buildings. To the extent actually known to Manager, Manager shall give Owner prompt written notice of (i) any presence of Hazardous Materials at the Property other than as permitted in this Section 2.5(f) , (ii) any release of Hazardous Materials at the Propert, or (iii) any required or desirable clean-up or other remediation or any other condition respecting the Property and shall cooperate with and assist Owner in cleaning-up, remediating or otherwise resolving the problem. Manager shall comply with all Environmental Laws in managing the Property (and shall recommend to Owner any actions necessary on the part of Owner or Manager to ensure compliance with all Environmental Laws). Manager shall implement any special programs respecting compliance with Environmental Laws or respecting Environmental Liabilities established by Manager in its performance of its obligations under this Agreement and pursuant to reasonable and appropriate protocols established by Manager from time to time, as approved in advance by Owner, or as may be otherwise established by Owner or Owner92s expert consultants at Owner92s expense in accordance with the Approved Annual Business Plan. Owner shall have the right to attend all meetings with



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regulatory agencies concerning Environmental Liabilities affecting the Property, and Manager shall be responsible for consulting with Owner in making all decisions concerning responses to such regulatory agency activities.



(g) The Manager shall, at Owner92s expense, implement and maintain an ongoing environmental auditing program reasonably satisfactory to Owner and any lender to Owner pursuant to which it shall conduct periodic investigations regarding the compliance of activities at the Property with applicable environmental laws, and the existence of and potential for contamination. The results of such environmental audit shall be provided to the Owner. Without limiting the foregoing, Manager shall be responsible for maintaining and ensuring compliance with all operations and maintenance manuals, programs and procedures with respect to all customary environmental issues, including but not limited to, mold, lead paint and asbestos, if any.



(h) Manager shall comply with all aspects of the Sarbanes-Oxley Act of 2002 by developing, documenting, and adhering to an effective system of internal controls. Owner shall assist Manager in assessing the documentation and effectiveness o ...