EXHIBIT 10.12

 

**CENTURY WEST PROPERTIES, INC.**

 

**MANAGEMENT AGREEMENT**

 

In consideration ofthe covenants herein, InterGroup Corporation, hereinafter called "Owner"), and CENTURY WEST PROPERTIES, INC., (hereinaftercalled "Agent"), agree as follows:

 

1.          TheOWNER hereby employs the AGENT, as an independent contractor and not as an employee of OWNER, exclusively to rent and manage theproperties set forth on the attached ‘Property List’ upon the terms and conditions hereinafter set forth, for a periodof 12 months beginning on the 1st day of August, 2005, and ending on the  31st  day of July , 2006, and thereafterfor monthly periods from time to time, unless on or before 30 days prior to the date last mentioned above or on or before 30 daysprior to the expiration of any such renewal period, either party hereto shall notify the other in writing that it elects to terminatethis Agreement, in which case this Agreement shall be thereby terminated on said last mentioned date. In the event that Owner shallelect to terminate this agreement prior to the expiration of the initial 12 month term, Agent shall be entitled to a cancellationfee of one month management fee on any properties so terminated, with the exception of those properties listed on the PropertyList as ‘currently for sale’. Notwithstanding the foregoing, this Agreement may be terminated at any time, by eitherparty as a result of the other party’s: (a) breach of this agreement; (b) breach of fiduciary duty; (c) bankruptcy or (d)fraud, deceit, gross negligence, reckless or intentional misconduct, or knowing violation of law.

 

2.          THEAGENT AGREES:

 

2.1          Toaccept the management of the Premises, to the extent, for the period, and upon the terms herein provided and agrees to furnishthe services of its organization for the rental operation and management of the Premises.

 

2.2          Torender a monthly statement of receipts, disbursements, and Budget Variance to Owner by the 15th day of the followingmonth. The budget will be submitted to Owner for review and approval on an annual basis. Agent shall be responsible for all propertyaccounting functions with the exception of depreciation entries. Monthly reports will be on an accrual basis and will include incomestatement, balance sheet, general ledger, check register, and budget variance. Agent shall remit each month the net proceeds (providedAGENT is not required to make any mortgage, escrow, or tax payment on the first day of the following month). In case the disbursementsand charges shall be in excess of the receipts, the OWNER agrees to pay such excess promptly, but nothing herein contained shallobligate the AGENT to advance its own funds on behalf of the OWNER.

 

2.3          Toindemnify, defend and save the OWNER harmless from all suits in connection with the Premises and from liability for damage to propertyand injuries to or death of any employee or other person whomsoever arising out of or in any way related to the gross negligenceor willful acts or omissions of AGENT or of any employee of AGENT, and to carry at its own expense Employee Dishonesty InsuranceCoverage with policy limits of One Hundred Thousand Dollars ($100,000.00), and to furnish to the OWNER certificates evidencingthe existence of such insurance.

 

 

3.          THEOWNER AGREES:

 

To give the AGENT thefollowing authority and powers (all or any of which may be exercised in the name of the OWNER) and agrees to assume all expensesin connection therewith:

 

3.1          Toadvertise the Premises or any part thereof; to display signs thereon and to rent the same; to cause references of prospective tenantsto be investigated; to sign leases for terms not in excess of 12 months and to renew and/or cancel the existing leases and prepareand execute the new leases without an additional charge to the OWNER; provided, however, that the AGENT may collect credit reportfees from prospective tenants and need not account for such charges to the OWNER; to terminate tenancies and to sign and servesuch notices as are deemed needful by the AGENT; to institute and prosecute actions to oust tenants and to recover possession ofthe Premises; to sue for and recover rent; and, when expedient, to settle, compromise, and release such actions or suits, or reinstatesuch tenancies. OWNER shall reimburse AGENT for all expenses of litigation including attorneys' fees, filing fees, and court costswhich AGENT does not recover from tenants. AGENT may select the attorney of its choice to handle such litigation, subject to OWNER’Sapproval, which approval shall not be unreasonably withheld.

 

3.2          Tohire, discharge, and pay all engineers, janitors, and other employees; to make or cause to be made all ordinary repairs and replacementsnecessary to preserve the Premises in its present condition and for the operating efficiency thereof and all alterations requiredto comply with lease requirements, and to do decorating on the Premises; to negotiate contracts for nonrecurring items not exceeding$1,000.00 and to enter into agreements for all necessary repairs, maintenance, minor alterations, and utility services; and topurchase supplies and pay all bills. All contracts shall include a reasonable completion date. AGENT shall secure the approvalof the OWNER for any alterations or expenditures in excess of $1,000.00 for any one item, or eight hours labor for any one incident,except monthly or recurring operating charges and emergency repairs in excess of the maximum, if, in the opinion of the AGENT,such repairs are necessary to protect from damage or to maintain services to the tenants as called for by their tenancy.

 

3.3          Tocollect rents and/or assessments and other items due or to become due and give receipts therefor and to deposit all funds collectedhereunder in the AGENT's custodial account.

 

3.4          Tohandle tenants' security deposits and to comply, on the OWNER's behalf, with applicable state or local laws concerning the AGENT'sresponsibility for security deposits and interest thereon, if any.

 

3.5          Toexecute and file all returns and other instruments and do and perform all acts required of the OWNER as an employer with respectto the Premises under the Federal Insurance Contributions Acts, the Federal Unemployment Tax Act, and Subtitle C of the InternalRevenue Code of 1954 with respect to wages paid by the AGENT on behalf of the OWNER and under any similar federal and state lawnow or hereafter in force (and in connection therewith the OWNER agrees upon request to promptly execute and deliver to the AGENTall necessary powers of attorney, notice of appointment, and the like).

 

 

3.6          Toprepare and cause to be filed all documentation for the Premises required under the City of Los Angeles Rent Stabilization Ordinance.

 

3.7          TheAGENT shall not be required to advance any monies for the care or management of said property, and the OWNER agrees to advanceall monies necessary therefor. If the AGENT shall elect to advance any money in connection with property, the OWNER agrees to reimbursethe AGENT forthwith and hereby authorizes the AGENT to deduct such advances from any monies due the OWNER. The AGENT shall, uponinstruction from the OWNER, impound reserves each month for the payment of real estate taxes, insurance, or any other special expenditure.

 

4.          THEOWNER FURTHER AGREES:

 

4.1           Toindemnify, defend, and save the AGENT harmless from all suits in connection with the Premises and from liability for damage toproperty and injuries to or death of any employee or other person whomsoever, and to carry at his (its) own expense public liabilityinsurance naming the OWNER and AGENT and adequate to protect their interests and in form, substance, and amounts reasonably satisfactoryto the AGENT, and to furnish to the AGENT certificates evidencing the existence of such insurance. Unless the OWNER shall providesuch insurance and furnish such certificate within 30 days from the date of the Agreement, the AGENT may, but shall not be obligatedto, place said insurance and charge the cost thereof to the account of the OWNER. All such insurance policies shall provide thatthe AGENT shall receive thirty (30) days' written notice prior to cancellation of the policy. OWNER shall neither indemnify norhold AGENT harmless from or against any liability caused by the gross negligence or willful act or omission of AGENT or of anyemployee of AGENT.

 

4.2          Topay all expenses incurred by the AGENT, including, but not limited to, reasonable attorneys' fees and AGENT's costs in connectionwith any claim, proceeding, or suit involving alleged violation by the AGENT or the OWNER, or both, of any law pertaining to fairemployment, fair credit reporting, environmental protection, rent control, taxes, or fair housing, including, but not limited toany law prohibiting, or making illegal, discrimination on the basis of race, sex, creed, color, religion national origin, or mentalor physical handicap, provided, however, that the OWNER shall not be responsible to the AGENT for any such expenses in the eventthe AGENT is finally adjudicated to have personally, and not in a representative capacity, violated any such law. Counsel engagedby AGENT shall represent OWNER and AGENT to the extent possible, and if their interests are or become adverse, OWNER shall be notifiedin writing to obtain counsel to represent OWNER alone. Nothing contained herein shall obligate the AGENT to employ counsel to representthe OWNER in any such proceeding or suit: however, should AGENT elect to employ counsel to represent OWNER, OWNER shall have theright to consent to such employment. The OWNER also agrees to pay reasonable expenses (or an apportioned amount of such expenseswhere other employers of AGENT also benefit from the expenditure) incurred by the AGENT in obtaining legal advice regarding compliancewith any law affecting the premises or activities related thereto.

 

4.3          Toindemnify, defend, and save the AGENT harmless from all claims, investigations, and suits, or from actions or failures to actof the OWNER, with respect to any alleged or actual violation of state or federal labor laws, it being expressly agreed and understoodthat as between the OWNER and the AGENT, all persons employed in connection with the Premises are employees of the OWNER, notthe AGENT. Notwithstanding the foregoing, AGENT shall at all times comply with the requirements of all Federal, State and Locallabor laws, statutes and regulations in the performance of AGENT’s duties hereunder.

 

 

5.          THEOWNER AGREES TO PAY THE AGENT EACH MONTH:

 

5.1          FORMANAGEMENT (a): For Properties with Resident Management: Four percent (4.0%) of the monthly gross receipts from the operation ofthe Premises during the period this Agreement remains in full force and effect. Gross receipts are all amounts received from theoperation of the Premises including rents, parking fees, storage fees, laundry income, and fees. (b) For Properties without ResidentManagement: Four and one-half percent (4.5%) of same.

 

5.2          FORAN ON SITE MANAGER: The actual cost of providing an on site manager as is or may be required by federal or state law, or in theopinion of the AGENT, is necessary to carry on the activities or the operation of the Premises. The prior approval of OWNER shallbe required for the hiring of an on site manager, and the prior approval of OWNER shall be required to remove or terminate anyon site manager.           

 

5.3          FORLEASING: The actual cost or proportionate share of the actual cost AGENT incurs to hire, train and equip personnel to lease apartments,including, but not limited to: advertising, signage, commissions;

 

5.4          FORMAINTENANCE: The actual cost incurred to provide personnel when needed to do routine and customary maintenance to the property.Major improvements (i.e. roofing, re-piping, major landscaping, building painting, soft story retrofit, etc.) in excess of $3,000will be performed by qualified contractors and billed at lowest responsible price plus 5% for AGENT’s overhead and supervision.Major remodels, in which the scope of work includes conceptual development, interior/exterior design, and color and material specificationsin addition to project supervision, shall include an overhead/supervision charge of 10% of the direct remodel costs.

 

5.5          FOROTHER SERVICES: To provide other occasional or emergency services as may be required for the operation of the property that wouldbe too costly or impractical to contract to others.

 

6.          ITIS MUTUALLY AGREED THAT:

 

6.1          TheOWNER expressly withholds from the AGENT any power or authority to make any structural changes in any building or to make any othermajor alterations or additions in or to any such building or equipment therein, or to incur any expense chargeable to the OWNERother that expenses related to exercising the express powers above vested in the AGENT without the prior written direction of theOWNER, except such emergency repairs as may be required because of danger to life or property or which are immediately necessaryfor the preservation and safety of the Premises or the safety of the tenants and occupants thereof or are required to avoid thesuspension of any necessary service to the Premises.

 

 

6.2          TheAGENT does not assume and is given no responsibility for compliance of any construction on the Premises or any equipment thereinwith the requirements of any statute, ordinance, law, or regulation of any governmental body or of any public authority or officialthereof having jurisdiction, except to notify the OWNER promptly or forward to the OWNER promptly any complaints, warnings, notices,or summonses received by it relating to such matters. The OWNER represents that to the best of his (its) knowledge the Premisesand such equipment comply with all such requirements and authorizes the AGENT to disclose the ownership of the Premises to anysuch officials and agrees to indemnify and hold harmless the AGENT, its representatives, servants, and employees, of and from allloss, cost, expense, and liability whatsoever which may be imposed on them or any of them by reason of any present or future violationor alleged violation of such laws, ordinances, statutes, or regulations.

 

6.3          Inthe event it is alleged or charged that any building on the Premises or any equipment therein or any act or failure to act by theOWNER with respect to the Premises or the sale, rental, or other disposition thereof fails to comply with, or is in violation of,any of the requirements of any constitutional provision, statute, ordinance, law, or regulation of any governmental body or anyorder or ruling of any public authority or official thereof having or claiming to have jurisdiction thereover, and the AGENT, inits sole and absolute discretion, considers that the action or position of the OWNER or registered managing agent with respectthereto may result in damage or liability to the AGENT, the AGENT shall have the right to cancel this Agreement at any time bywritten notice to the OWNER of its election so to do, which cancellation shall be effective upon the service of such notice. Suchnotice may be served personally or by registered mail, on or to the person named to receive the AGENT's monthly statement at theaddress designated for such person as provided in Paragraph 2.2 above, and if served by mail shall be deemed to have been servedwhen deposited in the mails. Such cancellation shall not release the indemnities of the OWNER set forth in Paragraphs 4 and 6.2above and shall not terminate any liability or obligation of the OWNER to the AGENT for any payment, reimbursement, or other sumof money then due and payable to the AGENT hereunder.

 

7.          TheOWNER shall pay or reimburse the AGENT for any sums of money due it under this Agreement for services for actions prior to termination,notwithstanding any termination of this Agreement. All provisions of this Agreement that require the OWNER to have insured or todefend, reimburse, or indemnify the AGENT (including, but not limited to, Paragraphs 4.1, 4.2, and 4.3) shall survive any terminationand, if AGENT is or becomes involved in any proceeding or litigation by reason of having been the OWNER's AGENT, such provisionsshall apply as if this Agreement were still in effect. The parties understand and agree that the AGENT may withhold funds for thirty(30) days after the end of the month in which this Agreement is terminated to pay bills previously incurred but not yet invoicedand to close accounts.

 

8.          MISCELLANEOUS

 

8.1          ThisAgreement embodies the entire understanding of the parties, and supersedes all and any prior written or oral agreement regardingthe subject matter hereof. This agreement may not be modified or amended except by a writing signed by both parties hereto.

 

8.2          ThisAgreement shall be binding upon the successors and assigns of the AGENT, and heirs, administrators, executors, successors and assignsof the OWNER.

 

8.3          Inany action, proceeding or arbitration between OWNER and AGENT arising out of this Agreement, the prevailing party shall be entitledto reasonable attorney’s fees and costs from the non-prevailing party.

 

8.3          OWNERand AGENT each agrees to execute and deliver such additional documents and instruments and to perform such additional acts as maybe necessary or appropriate to effectuate, carry out and perform all of the terms, provisions, and conditions of this Agreementand the transactions contemplated hereby.

 

 

8.4          Exceptas otherwise provided in this Agreement, any and all notices or other communications required or permitted by this Agreement orby law to be served on, given to, or delivered to OWNER or AGENT shall be in writing and shall be deemed duly served, given, ordelivered when personally delivered to that party. In lieu of such personal delivery, written notice may be delivered by nationallyrecognized overnight courier service or by certified United States Mail, postage prepaid, addressed to such party as follows:

 

 

In the case of courier or mail, noticeshall be deemed duly served or delivered as of the date of the first attempted delivery at the address and in the manner providedherein.

 

AGREED TO THIS DATE: August 1, 2005

 

 

 

OWNER: The InterGroup Corporation, et. al.

 

By: /s/ John V. Winfield                                

 

 

 

AGENT: Century West Properties, Inc.

 

By: /s/ Kevin McCabe