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MANAGEMENT AGREEMENT
THIS AGREEMENT is made as of the T6 day of October, 2006 by and between the
REDEVELOPMENT AGENCY OF THE CITY OF ARCADIA, a public agency, whose
principal address is 240 W. Huntington Drive, Arcadia, California 91007 (hereinafter referred to
as "City") and BRAUN PROPERTY MANAGEMENT, a California corporation, doing business
as America West Management, whose principal address is 5901 Enema Rd., Suite C -5, Goleta,
California 93117 (hereinafter referred to as "Manager ").
RECITALS
(a) City is the owner of a self service storage facility commonly known as "Arcadia
Self Storage" and located in the City of Arcadia at 35 W. Huntington Drive
( "Facility "). The business conducted at the Facility includes the rental of storage
units and the provision of related products and services in the same scope and
manner as of the Effective Date of this Agreement (`Business ").
(b) Manager is the former operator of the Business and has significant knowledge and
experience in the management and operation of all aspects thereof.
(c) City desires to engage Manager as the operator of the Facility and manager of the
Business and Manager is willing to provide such services on the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises and covenants herein
contained, the parties hereto agree for themselves and their respective successors and assigns, as
follows:
1. Purpose of Agreement. City hereby engages Manager as the operator of the
Facility and Manager of the Business and Manager agrees that it shall provide the services
described herein in a diligent and professional Wanner and shall use commercially reasonable
efforts to promote the Business and to operate it in an efficient and profitable manner, subject to
the establishment of financial and operational goals and directives by City.
2. Responsibilities of Manager. Subject to the budgeting and approval rights of City
as set forth herein, Manager shall be responsible for providing the following services in
connection with the operation of the Facility and the management of the Business:
(a) Manager shall provide all staff necessary for the operation of the Facility,
which staff shall be under the sole and exclusive control of Manager and shall be employees of
Manager in accordance with Section 16. Manager shall be responsible for the hiring, training
supervision and termination of all such staff,
(b) Manager shall provide all services necessary for the management of the
Business, including without limitation, setting policies, rules and procedures for the leasing,
rental and termination of storage units, collecting deposits and rental payments regarding same,
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sale and stocking of any packing materials or other product inventory (if applicable), obtaining
liability and property insurance in commercially reasonable amounts acceptable to City and
keeping accurate books and records of the revenue and expenses of the Business;
(c) Manager shall provide and/or contract for all services necessary for the
operation of the Facility, including without limitation, janitorial and security services,
maintenance and cleaning of rental units and supervision of all necessary repairs to the Facility;
(d) Manager shall provide the financial reports set forth in Section 12; and
(e) Manager shall comply with the directives of City for the management and
operation of the Facility and the Business, provided that such directives shall be commercially
reasonable and in compliance with applicable law.
3. Operating Budget.
(a) Within ten (10) days following the Effective Date, Manager shall submit
an operating budget to City for its approval (`Budget "). The Budget shall set forth in reasonable
detail Manager's estimate of (i) expected revenue from the operation of the Business based on
current expectations and historical performance, but adjusted to take into consideration City
directives concerning the scope of operation of the Business (such as the removal of certain
services or the retention of units in vacant condition); (ii) normal recurring expenses in the
operation of the Facility and the Business, including without limitation, staff salaries, benefits
and costs, supplies, liability and property insurance premiums, taxes and assessments (but only
after consulting City to determine if such taxes and assessments apply to City as a municipality),
utilities, advertising and necessary service providers such as security, maintenance or janitorial;
and (iii) provision for normal non - recurring expenses such as Facility maintenance and repair.
(b) Manager shall submit a new Budget no later than thirty (30) days prior to
each anniversary of the Effective Date (or at such interim times as may be necessary due to a
material change in the assumptions upon which the Budget is based) for approval by City.
Manager shall operate the Business and the Facility consistent with the Budget. Any non•
recurring item of expense in excess of $500 or recurring item of expense in excess of $1,000
annually which is not included in the current Budget shall squire the pre - approval of City,
provided, however, that pre - approval of an item shall not be necessary where the same is
immediately required by law, or under circumstances which Manager deems to be an emergency,
and City pre - approval cannot reasonably be obtained.
(c) Manager shall use its best efforts to manage cash flow such that revenue
from the operation of the Business will be sufficient to cover all Budgeted expenses and the
compensation of Manager set forth in Section 5 below, provided, however, that City shall
ultimately be responsible for all costs and expenses of operating the Business and Manager does
not guarantee the performance or profit projected in the Budget. In the event that working
capital is necessary for the operation of the Business, Manager shall make a written working
capital request, which request shall set forth the amount of funds requested together with a
supporting schedule showing the anticipated cash flow and revenue shortfall.
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4. Authority of Manager. In accordance with carrying out the responsibilities of
Manager set forth in Section 2 above, the Manager is specifically authorized as follows:
(a) Manager is authorized to collect all rents, security deposits, and other
income generated from the Business in the name of City and to maintain an operating bank
account to which all rents and other income shall be deposited and from which all bills, expenses
and payments are to be made. Manager is authorized to retain rental and other income deposits
in the aforementioned operating account and to retain the security deposits in a separate Trustee
account;
(b) Manager is authorized, when necessary and in accordance with applicable
law, to effect the collection of delinquent accounts, to terminate or dispossess tenants four units
for non - payment or failure to adhere to rules and policies for the use of the Facility; transfer and
dispose of personal property from disposed tenants or which is abandoned and removal of
unauthorized persons from the Facility. Manager may employ counsel as directed by City as a
budgetary expense or use City's designated counsel;
(c) Manager is authorized to make all necessary disbursement from the
operating account for all costs and expenses authorized in the Budget or otherwise pursuant to
Section 3(b) in the administration and operation of the Facility and the Business. In the event
that any time there are insufficient funds available in the operating account to pay such expenses,
Manager shall immediately make a request for working capital pursuant to Section 3(c); and
(d) Manager is authorized to contract with service providers to provide
services which have been approved in the Budget or otherwise pursuant to Section 3(b), provided
however, that Manager shall not enter into any contract which is not terminable on thirty (30)
days written notice without the approval of City.
Compensation of Manager.
(a) In consideration of the obligations and services of Manager hereunder,
Manager shall be entitled to a monthly fee for the operation of the Facility and the management
of the Business which is equal to the greater of (i) six percent (6 %) of the gross income collected
from the operation of the Business; or (ii) Fifteen Hundred Dollars ($1,500.00. Manager shall
have the right to deduct said fee from the operating account on or before the 15` of the following
month. If there are insufficient funds to pay the monthly fee from the operating account, then
City shall pay the shortfall within ten (10) days written notice from Manager;
(b) In addition to the monthly fee, Manager shall be entitled to $125.00 per
hour for (i) oversight of major rehabilitation projects, including, but not limited to, fire or natural
disaster restoration, major damage restoration, re- roofing, pest control tent fumigation, etc.,
provided, however, that any such project on which Manager shall be entitled to an hourly fee
shall be subject to the pre - approval of City; and (ii) any participation by Manager in Court
proceedings or for the preparation thereof as requested by counsel for City. Manager will
account for time through log entries presented to City along with monthly financial reports,
which entries shall be subject to review and approval by City. Following the receipt of approval,
Manager may disburse approved fees from the operating account.
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- • •
(c) Except as set forth herein, Manager shall not be entitled to any
compensation for its services hereunder and shall not allocate any overhead or administrative
expenses to the Business unless expressly approved in the Budget.
10. Insurance. On City's behalf, Manager shall obtain and maintain public liability,
elevator, property insurance, and such other insurance as may be recommended by Manager and
approved by City, in such amounts and from such carriers as are approved by the City's risk
manager. All such policies shall name City as the primary insured, with Manager and its
subsidiaries and affiliates who are performing services under this Agreement as additional
insureds. The public liability, elevator, and property insurance must contain a severability of
interest clause and coverage for personal injury insurance. A certificate of each policy issued by
the carrier shall be delivered promptly to City by Manager. It is understood and agreed that with
respect to any insurance provided hereunder and whether covering City's or Manager's interest,
the City shall be responsible for the payment of all premiums thereon as part of the Budget. All
dividends or return premiums in connection with such insurance shall be paid to the City.
11, Indemnity.
(a) City shall indemnity, defend and hold harmless Manager from any
Damages (as defined below) arising (i) as a result of the breach of this Agreement by City; or (i)
in connection with the performance of Manager's duties and responsibilities hereunder with
respect to the Business or occurring at or upon the Facility or elsewhere when Manager is
carrying out the provisions of this Agreement or acting under the express or implied directions of
the City; except to the extent that such damages or injuries are the result of (x) the negligent acts,
omissions or willful misconduct of Manager, its agents or employees; or (y) due to Manager's
failure or refusal to comply with or abide by any rule, order determination, ordinance or law of
any Federal, State or Municipal Authority.
(b) Manager shall indemnity, defend and hold harmless City from any
Damages arising as a result of (i) Manager's breach of this Agreement; (ii) any action exceeding
the scope of Manager's authority under this Agreement; (iii) any and all taxes, labor claims and
liabilities associated with Manager's employees used in connection with the Business; and (iv)
the negligent acts, omissions or willful misconduct of Manager, its agents or employees, except
to the extent that such damages or injuries are the result of (x) acts or omissions were carried out
under the express instructions of City; or (y) due to City's failure or refusal to comply with or
abide by any rule, order determination, ordinance or law of any Federal or State Authority.
(c) Definition of Damages. The term "Damages" shall mean all liabilities,
demands, claims, actions or causes of action (including without limitation, actions for personal
injury, property damage and wrongful death) regulatory, legislative or judicial proceedings or
investigations, assessments, levies, taxes, losses, fines, penalties, damages, costs and expenses,
including, without limitation, reasonable attorneys', accountants', investigators', and experts'
fees and expenses sustained or incurred in connection with the defense or investigation of any
such liability.
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(d) Notice; Third Party Claims.
(1) Whenever any claim shall arise for indemnification under this
Paragraph 11, the party entitled to indemnification ( "indemnified part y") shall promptly notify,
in writing, the other party or parties from whom indemnity may be sought under this Paragraph
11 ( "indemnifying party'), of the claim and, when known, the facts constituting the basis for
such claim; provided, however, that the indemnified party's failure to give such notice shall not
affect any rights or remedies of such indemnified party hereunder with respect to indemnification
for Damages except to the extent that the indemnifying party is prejudiced thereby.
(2) In the event of any claim for indemnification hereunder resulting
from or in connection with any claim or legal proceeding by a third party, the notice to the
indemnifying party shall specify, if known, the amount or any estimate of the amount of the
liability arising therefrom. Neither the indemnified party nor any indemnifying party shall settle
or compromise any claim by a third party for which the indemnified party is entitled to
indemnification hereunder, without the prior written consent of the other party, unless suit shall
have been instituted against the indemnified party and the indemnifying party shall not have
taken control of such suit after notification thereof as provided hereinafter.
(3) Upon receipt of a claim, the indemnifying party shall promptly
undertake the defense of the claim with counsel reasonably acceptable to the indemnified party.
At its own expense, the indemnified party shall have the right to participate in the defense with
counsel of its own choice. If the indemnified party has assumed the defense of any such claim or
legal proceeding on account of the indemnifying party's failure or refusal to prosecute such
claim or legal proceeding, then all costs and expenses incurred by the indemnified party in
connection with such assumption shall constitute Damages. Each party agrees to cooperate fully
with the other, such cooperation to include, without limitation, attendance at depositions and the
provision of relevant documents as may be reasonably requested by the hdemnifying party;
provide d, however, that the indemnifying party will hold the indemnified party harmless from all
of its expenses and costs, including attorneys' fees and costs, as and when incurred in connection
with such cooperation by the indemnified party.
12. Financial Reports. Manager shall deliver to City, no later than the 151h day of
each month, a statement showing all receipts and disbursements reflecting the financial condition
of the Business for the immediately preceding month, plus a copy of the general ledger, an
accounts receivable breakdown showing all monies past due from tenants and a copy of the bank
reconciliation statement. At such time, unless otherwise instructed, Manager shall forward to
City the balance in the operating account after all necessary charges have been made and a
reasonable reserve has been set aside for payment of anticipated future expenses. A
representative of Manager shall inspect the Facility at least once per month and Manager shall
furnish City with a quarterly report containing an analysis of such matters as marketing strategies
and future repair requirements. .
13. Effective Date and Term This agreement shall become effective on October
2006 ( "Effective Date ") and shall remain in effect for ninety (90) days from the Effective Date.
Thereafter, either party shall have the right to terminate this Agreement, whether for cause or
otherwise, at any time upon thirty (30) days prior written notice to the other party hereto.
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14. Representatives. The designated representative of the City to whom the Manager
shall report shall be Don Penman, Deputy Executive Director of Agency. The designated
representative of Manager to whom the City shall make all requests regarding the operation of
the Business and the Facility shall be Dan Braun. Each party may change their designated
representative upon written notice to the other party.
15. Notices. All notices referred to herein, shall be deemed to be sufficiently given if
in writing and personally delivered or sent by commercial overnight courier to the City or to the
Manager, as the case may be, at their respective business addresses first hereinabove given or at
such other address or addresses as either party shall hereafter designate by written notice.
16. Independent Contractor Status. For all purposes, Manager's status under this
agreement shall be that of an independent Contractor, and not that of an agent of City. Manager
warrants and represents that it has complied with all Federal, state, and local laws regarding
business permits and licenses that may be required for it to perform the services hereunder as an
independent contractor. Manager shall solely be responsible for deducting or withholding all
federal, state and local payroll taxes with respect to all employees of Manager working at the
Facility. In accordance with the terms of this agreement and the understanding of the parties, no
employee of Manager shall be treated as an employee of City, nor be eligible for, nor entitled to,
and shall not participate in, any of City's pension, health, or other fringe benefit plans. Manager
will obtain workers' compensation insurance for or on behalf of all employees of Manager
working at the Facility and shall furnish proof of such coverage in the form of a copy of the
certificate of workers' compensation insurance to City (subject to reimbursement for the cost of
such insurance pursuant to the Budget).
17. Miscellaneous.
(a) This Agreement contains the entire understanding of the parties and it may
not be changed or modified orally but only by written instrument in accordance with the laws in
the State of California.
(b) This Agreement shall be binding on the parties hereto, their successors and
assigns. This agreement shall be construed and interpreted in accordance with the laws in the
State of California.
(c) If any provision of this Agreement is held to be invalid or unenforceable,
such validity or unenforceability shall not invalidate this Agreement as a whole, but this
Agreement shall be construed as though it did not contain the particular provision held to be
invalid or unenforceable and the rights and obligations of the parties shall be construed and
enforced only to such extent as shall be permitted by the law.
(d) The Manager shall have the right to delegate selected duties on or about
the Facility arising out of or in connection with this Agreement to corporate subsidiaries or
affiliates which are under the control of Manager.
[signature page follows]
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IN WITNESS WHEREOF, the parties have hereunto set their hands on the day and year
first written above.
CITY:
REDEVELOPMENT AGENCY OF THE CITY OF
ARCADIA, a public agency
B u
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William R. Kelly, Executive Director
APPROVED AS TO FORM:' 106
City A
Glen W. price, Besj Best & Krieger LLP
MANAGER:
BRAUN PROPERTY MANAGEMENT,
a California corporation, dba /N
MANAGEMENT
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By: 1 C. 13„-__
Daniel E. Braun, Secretary
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