Document:

Exhibit 10.45

APARTMENT
MANAGEMENT AGREEMENT

THIS
APARTMENT MANAGEMENT AGREEMENT (this “Agreement”) is
made effective for all purposes effective as of the 1st day of December,
2006, between CHASE PARK PLAZA HOTEL, LLC, a Delaware limited liability company
(“Owner”) and CWE HOSPITALITY SERVICES,
LLC, a Missouri limited liability company (“Manager”).

Article
I.

Establishment
of Agency and Rental Responsibility

1.1           Exclusive Agency:  Owner hereby appoints Manager and Manager
hereby accepts appointment for the term and on the terms and conditions set
forth herein as the sole and exclusive renting and management operating agent
of the apartments (the “Apartments”)
on Floors 3-8 of the property known as the Park Plaza, at 232 N. Kingshighway,
St. Louis, Missouri 63108 (such project(s), whether one or more, are referred
to herein collectively as the “Property”
or “Project”).  Owner warrants and represents to Manager that
Owner owns fee simple title to the Project with all requisite authority to
hereby appoint Manager and enter into this Agreement.  Manager warrants and represents that it is
now, and shall at all times while this Agreement is in force be, authorized to
do business in the state and local jurisdictions in which the Project is
located, to provide all services herein described.

1.2           Owner’s
Representatives; On-Site Manager: 
Owner shall designate two persons to serve as Owner’s representative
(each an “Owner’s Representative”
and collectively the Owner’s Representatives”)
in all dealings with Manager hereunder. 
Whenever the approval, consent or other action of Owner is called for
hereunder, such approval, consent or action shall be binding on Owner if
specified in writing and signed by at least one Owner’s Representative. The
initial Owner’s Representatives shall be Jim Gaspard and Joe Jernigan.  The Owner’s Representatives may be changed at
the discretion of Owner, at any time, and shall be effective upon Manager’s
receipt of written notice identifying the new Owner’s Representative(s).

Manager
hereby designates James L. Smith, or in his absence, Marcia Smith Niedringhaus,
as the current on-site manager for the Apartments (the “Current
On-Site Manager”).  Manager
shall not transfer or terminate the Current On-Site Manager without Owner’s
consent which shall not be unreasonably withheld.  If the Current On-Site Manager must be
replaced, Manager shall replace [him] [her] with an individual with equal (or
better) experience and expertise and reasonably approved by Owner.  Manager acknowledges and agrees that the
experience and expertise of the Current On-Site Manager is of material
consideration to Owner.

1.3           Leasing of Premises:  Manager shall perform all promotional,
leasing and management activities required to lease, manage, maintain and
operate the Apartments.  Throughout the
term of this Agreement, Manager shall use commercially reasonable efforts to
operate, maintain, manage and lease the Apartments. Subject to reimbursement by
Owner of the reasonable out-of-pocket costs thereof to the extent authorized by
the Annual Business Plan (defined below) or this Agreement, Manager shall
advertise the Apartments, or portions thereof, prepare and secure advertising
signs, space plans, circular matter, marketing brochures and other forms of
advertising. Owner shall authorize Manager pursuant to Section 2.2, to
advertise the Apartments in conjunction with institutional advertising
campaigns and allocate cost on a prorata

 

basis among the projects being
advertised (to the extent authorized by the Annual Business Plan).  Manager shall obtain credit reports on and
perform, or cause to be performed, lawful screening of, prospective
tenants.  All inquiries for any leases or
renewals or agreements for the rental of the Apartments shall be referred to
Manager and all negotiations connected therewith shall be conducted solely by
or under the direction of Manager. Manager is hereby authorized, on behalf of
Owner, to execute, deliver and renew leases (on forms approved by Owner) for
apartments and storage areas (“Leases”)
so long as each such Lease is in the ordinary course of business, for a term of
one year or less (but no less than one month) and consistent with the rent and
other guidelines approved by Owner as part of the Annual Business Plan and,
with respect to each Lease, is executed by the individual(s) who will actually
be occupying the apartment unit in question. 
Manager is authorized to utilize the services of apartment locator
services and the fees of such services (which shall be at prevailing market
rates in the vicinity of the Project) shall be operating expenses of the
Apartments and, to the extent paid and documented by Manager and authorized by
the Annual Business Plan, reimbursable by Owner.

1.4           Manager’s Standard
of Care:  In performing Manager’s
duties under this Agreement, or otherwise discharging the agency established by
this Agreement, Manager shall exercise the same degree of care, prudence, and
skill that is commensurate with the highest industry standards in the local
jurisdiction (county or city) in which the Project is located (“Industry Standard”).  Manager will not be liable to Owner for any
act or omission that is undertaken in good faith and in accordance with the
Industry Standard and a reasonable degree of care, prudence, and skill.  Manager in no event will be liable to Owner
for any consequential loss or damage, unless caused by Manager’s gross
negligence or willful misconduct, consistent with the indemnity agreement in Section
2.7 of this Agreement.  Manager will
not be liable to Owner for excusable mistake or neglect, or for any error of
judgment, so long as Manager acts in good faith and upon discovery of any such
mistake, neglect, or error, promptly undertakes such measures as reasonably may
be required to mitigate any resulting loss or damage to Owner.

1.5           Owner’s
Representations:  Owner assumes all
liability as to the quality and construction of the Property. Owner further
represents and warrants that as of the date of the execution of this Agreement
to the best of its actual knowledge and in reliance solely on information
either provided to Owner by the previous owner of the Property or obtained
during Owner’s due diligence investigation, as of the date hereof the Property
is in compliance with all applicable Federal, State and local laws, rules,
regulations, guidelines and ordinances, including but not limited to, the
Americans with Disabilities Act, the Federal Fair Housing Act, the Federal 1990
Clean Air Act, all other State and local accessibility requirements and the
applicable building code affecting the Property. Further Owner agrees to defend
and indemnify Manager against, and hold it harmless from, all actual damages,
claims, loss, cost or expense arising out of the breach of the Owner’s
foregoing representations and warranties and from any violation, breach or
failure of the Property to comply with any environmental or hazardous materials
laws, including those environmental matters enumerated in Article VI of
this agreement, rules, regulations and/or ordinances regarding the Property. Owner
shall further protect and indemnify Manager against, and hold it harmless from,
all actual damages, claims, loss, cost or expenses arising out of actual or
alleged defects, whether latent or patent, including but not limited to, water
damage, Indoor air quality issues, mold growth, structural defects, and second
hand smoke of the Property, or for any breach or alleged breach of any legal
duty or obligation which is by law or under this Agreement the responsibility
of Owner. Manager in no event will be liable to Owner for any consequential
loss or damage, unless caused by Manager’s gross negligence or

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willful misconduct, consistent
with the indemnity agreement in Section 2.7 of this Agreement.  Notwithstanding the foregoing or anything to
the contrary, in no event shall Owner be obligated, under this paragraph or any
other provisions hereof or otherwise, to indemnify, defend or save Manager
harmless from any liability, litigation, loss, cost, damage, claims or expense
arising from any breach, wrongful or unlawful act, negligence or omission of
any Manager Party.  As used herein, “Manager Party” means Manager and any of its
employees, agents directors, officers, subsidiaries, affiliates and independent
contractors.

Article
II.

Services
to be Performed by Manager

2.1           Expense of Owner:  All acts performed by Manager in the
performance of its obligations under this Agreement shall be performed as the
agent of Owner, and all obligations or expenses incurred thereby, shall be for
the account of, on behalf of, and at the expense of Owner, except as otherwise
specifically provided in this Article II and except that Owner shall not
be obligated to reimburse Manager for any expense (i) allocable to time spent
on projects other than the Project, on work otherwise unrelated to the Project
or on Manager’s general administration, (ii) any personnel other than personnel
located at the Project site and personnel spending a portion of their working
hours (to be charged on a prorata basis) at the Project site or in specifically
performing Manager’s obligations hereunder, whether on or off the Project site
or (iii) that is not authorized by the Annual Business Plan.  Manager may use employees normally assigned
to other work centers or part-time employees to properly staff the Project, on
a reduced, increased or emergency work load basis, including property, business
and assistant managers, leasing directors, administrative personnel,
maintenance employees and maintenance supervisors, whose wages and related
expenses shall be reimbursed on a prorata basis for the time actually spent at
or for the Apartments but only to the extent reflected in the Annual Business
Plan.  A property manager or business
manager at the Apartments and any other persons performing functions only at
the Apartments substantially similar to those of a business manager, including
but not limited to assistant managers, leasing directors, leasing agents, sales
directors, sales agents, bookkeepers, and other on-site administrative and/or
maintenance personnel performing work on behalf of the Property, if they are
on-site personnel, shall not be considered executive employees of Manager and
shall be collectively referred to herein as “Project
Employees”.   The staffing
plan including, without limitation, the number and positions of all Project
Employees and off-site employees and all compensation and benefits for all
Project Employees and off-site employees shall be in accordance with the Annual
Business Plan or as otherwise approved by Owner in writing.  Owner acknowledges that the following
miscellaneous documented expenses, when reasonably incurred in respect to the
performance of Manager’s obligations under this Agreement, shall be
reimbursable by Owner to the extent reflected in the Annual Business Plan
(which list of expenses is not intended to be all-inclusive): courier services,
postage, photocopies, signage, check printing, marketing expenses, bank
charges, telephone and answering service (which may be allocated on a prorata
basis among the Apartments and other projects managed by Manager). All
reimbursable payments made by Manager hereunder shall be reimbursed from funds
deposited in an account established pursuant to Section 4.2 of this
Agreement. Manager shall not be obligated to make any advance to or for the
account of Owner or to pay any sums, except out of funds held in an account
maintained under Section 4.2, nor shall Manager be obligated to incur
any liability or obligation for the account of Owner without assurance that the
necessary funds for the discharge thereof will be provided by Owner. In the
performance of its duties as agent and Manager of the Apartments,

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Manager shall act solely as the
agent of the Owner. All debts and liabilities to third persons incurred by
Manager in the course of its operation and management of the Apartments shall
be the debts and liabilities of the Owner only, and Manager shall not be liable
for any such debt or liabilities, except (i) as otherwise expressly provided
herein or (ii) to the extent Manager has exceeded its authority hereunder.

2.2           Covenants Concerning
Payment of Operating Expenses:  Owner
covenants to pay all sums for operating expenses in excess of gross receipts
required to operate the Apartments upon written notice and demand from Manager
within ten (10) days after receipt of written notice but only to the extent
such expenses are consistent with the Budget (defined below). Owner further
recognizes that the Apartments may be operated in conjunction with other
properties, and costs may be allocated or shared between such other properties
on a more efficient or less expensive basis. In such regard, Owner consents to
the allocation of costs and/or the sharing of any expenses in an effort to save
cost or operate the Apartments in a more efficient manner so long as such
allocation is done on an equitable basis and so long as the computations of
such allocations are provided to Owner pursuant to Section 2.13 hereof.

2.3           Employment of
Personnel:  Manager shall use its
diligent best efforts to investigate, hire, pay, supervise and discharge the
personnel necessary to be employed by it to properly maintain, operate and
lease the Apartments, including without limitation a property manager or
business manager at the Project. Such personnel shall in every instance be deemed
agents or employees, as the case may be, of the Manager. Owner has no right of
supervision or direction of agents or employees of the Apartments whatsoever;
however, Manager will promptly remove any Project Employee from assignment to
work at the Apartments upon the reasonable request of the Owner.  All Owner directives shall be communicated to
Manager’s senior level management employees. 
Manager and all personnel of Manager who handle or who are responsible
for handling Owner’s monies shall be bonded in favor of Owner.  Manager shall furnish the fidelity insurance
or fidelity bond described in Section 2.7(a) below at Manager’s sole
expense.  All reasonable salaries, wages
and other compensation of personnel employed by Manager, including so-called fringe
benefits, Worker’s Compensation, medical and health insurance and the like,
shall be deemed to be reimbursable expenses of Manager. With owner’s prior
written consent, Manager may allow not more than two employees who work at the
Apartments and provide services to the Apartments after normal business hours
to reside at the Apartments for reduced rents in consideration of their benefit
to Owner and the Apartments.  The
employees qualifying for such reduced rents shall be limited to the on-site
manager and maintenance personnel.

2.4           Utility and Service
Contracts: Manager shall make, at Owner’s expense and in Owner’s name or in
Manager’s name, as agent for Owner, contracts for water, electricity, gas,
fuel, oil, telephone, vermin extermination, trash removal, cable television,
security protection, internet access and other services approved by Owner
pursuant to the Annual Business Plan and deemed by Manager to be necessary or
advisable for the operation of the Apartments. Manager shall also place orders
in name of Owner for such equipment, tools, appliances, materials, and supplies
as are reasonable and necessary to properly maintain the Apartments. Manager
may make such contracts and place such orders in Owner’s name or in its own
name, as Owner’s agent. Owner agrees to pay or reimburse Manager for all
expenses and liabilities incurred by reason of this Section but only to the
extent consistent with the Budget or otherwise made with Owner’s prior
consent.  However, Manager shall not
enter into any contracts for services,

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supplies or equipment that
exceed, individually or in the aggregate, $1,000 during any 30 day period or
$5,000 during any 12 month period, without Owner’s prior written consent,
unless included in the Annual Business Plan. 
All contracts shall be cancellable by Owner without penalty on 30 days
(or less) notice.

2.5           Maintenance and
Repair of Property: Manager shall use its best diligent efforts to
maintain, at Owner’s expense, the Apartments in good condition and repair and
in accordance with standards established by Owner in writing from time to time,
including but not limited to interior and exterior cleaning, painting and
decorating, plumbing, carpentry, and such other normal maintenance and repair
work as may be reasonably desirable taking into consideration the amount
allocated therefor in the Annual Business Plan. With respect to any expenditure
not contemplated by the Annual Business Plan, Manager shall not incur any
individual item or repair or replacement in excess of Five Thousand Dollars
($5,000.00) or (with all such other un-contemplated items) more than $25,000.00
per year in the aggregate unless authorized in writing by Owner’s
Representative, excepting, however, that emergency repairs immediately
necessary for the preservation and safety of the Apartments or to avoid the
suspension of any service to the Apartments or danger of injury to persons or
material damage to property may be made by Manager without the approval of
Owner’s Representative. Owner shall not establish standards of maintenance and
repair which violate or may violate any laws, rules, restrictions or
regulations applicable to Manager or the Apartments or which expose Manager to
risk of liability to tenants or other persons. Manager shall not be obligated
by this Section to perform any major capital improvements, unless same are
approved in writing by Owner or are provided for in the Annual Business Plan.

2.6           Supervision of
Capital Improvements or Major Repairs: 
When requested by the Owner or set forth in the Annual Business Plan,
Manager, at Owner’s expense and in Owner’s name or in Manager’s name, as agent
for Owner, shall supervise the installation and construction of all capital
improvements or major repairs to the Apartments where such work constitutes
other than normal maintenance and repair, for additional compensation as set
forth in a separate written agreement signed by Owner and Manager.  In such events, Manager may, with Owner’s
prior written consent:  (i) negotiate
contracts with all necessary contractors, subcontractors, materialmen,
suppliers, architects and engineers on behalf of, and in the name of, Owner,
and (ii) compromise and settle any dispute or claim arising therefrom on behalf
of and in the name of Owner; provided that Manager shall act in good faith and
in the best interest of the Owner and will keep Owner informed thereof at all
times.  Manager will furnish all
personnel necessary for proper supervision of the work and may assign personnel
located at the Apartments to such supervisory work (and such assignment shall
not reduce or abate any other fees or compensation owed to Manager under this
Agreement).  Owner acknowledges that
Manager, or an affiliate of the Manager, may bid on any such work, and that the
Manager, or an affiliate of the Manager, may be selected to perform part or all
of the work; provided that if the Manager desires to select itself, or its
affiliate to do any work, it shall first notify the Owner of the fees and terms
upon which it, or its affiliate, proposes to contract for the work (which shall
be at prevailing market rates and terms in the area), and terms upon which at
least three independent contractors approved by Owner have offered to perform,
and shall state the reasons for preferring itself, or its affiliate, over such
independent contractors and Owner shall have ten days after its receipt thereof
to disapprove of the Manager, or its affiliate, doing such work and to request
performance by an independent contractor; and Manager will comply with Owner’s
decisions. Only Owner shall have the power to compromise or settle any dispute
or claim arising from work

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performed by the Manager, or
its affiliate; and it is expressly understood that the selection of the
Manager, or its affiliate, will not affect any fee or other compensation
expressly payable to Manager hereunder.

2.7           Insurance:

(a)           Manager’s Insurance.  Manager will maintain or cause to be
maintained the following insurances with companies of its own choice and at its
own expense (except with respect to worker compensation insurance for Property
personnel only):

(i)            Worker Compensation
Insurance - as required by applicable law

(ii)           Employer’s Liability
Insurance - with limits of not less than $500,000 per occurrence;

(iii)          Business Automobile
Liability Insurance – $1,000,000 each accident, to be written on a standard ISP
Business Auto coverage form (with no standard coverage on this form excluded by
endorsement and including uninsured/underinsured motorist coverage) and
covering owned, hired or borrowed and non-owned automobiles;

(iv)          Employee health
insurance - consistent with the Budget;

(v)           Fidelity insurance
(including Employee Dishonesty) insurance and/or a fidelity bond with limits
and deductibles as may be reasonably determined by Manager and reasonably
approved by Owner; and

(vi)          Umbrella Liability
Insurance - Not less than $9,000,000.

On or before the commencement of the term of
this Agreement, and thereafter prior to the expiration of any policy providing
the foregoing coverage, Manager shall deliver to Owner on the appropriate ACORD
form a certificate or certificates evidence that such coverage is and will
remain in effect.

(b)           Owner’s Insurance.  Owner shall obtain and keep in force adequate
all-risk property insurance and commercial general liability insurance for the
Property including coverage against liability for loss, theft, damage or injury
to property or persons that may arise out of the occupancy, management,
operation, maintenance or condition of the Premises; provided, however, that
general liability insurance shall be maintained in an amount not less than
$5,000,000.  Manager shall be named an
additional insured party under such commercial general liability insurance
policy and, upon request, Owner will promptly provide Manager with a
certificate of insurance evidencing such coverage and Manager’s inclusion as an
additional insured thereon.

(c)           Insurance Policy
Requirements.  All insurance coverage
required hereunder shall be written on an occurrence basis and shall be placed
with such companies, in such amounts (except as set forth above) and with such
beneficial interest appearing therein as shall be acceptable to Owner, and
shall be in conformity with the requirements of any mortgage on the
Project.  Owner and Manager will provide
the other with certificates of insurance that are satisfactory to the other for
the insurance required under this Agreement. 
The minimum A.M.

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Best’s rating of each insurer
shall be A-VII.  Qualified Self Insured
Workers’ Compensation Groups not rated by A.M. Best are acceptable.  The insurance policies referenced above shall
provide that notice of default or cancellation shall require a minimum of
thirty days (30) prior written notice to Manager and Owner.

(d)           Owner, on behalf of
itself and its insurance carriers hereby waives all claims and causes of action
against Manager in respect of damage to the Apartments caused by casualty (an “Insurable Casualty”) insurable (whether
insured or not) under the terms of all-risk property insurance policies and
endorsements obtainable in the State of Missouri on commercially reasonable
terms, whether or not such casualty is a result of the negligence, fault or
neglect of any Manager Party. Owner agrees that no insurance carrier of Owner’s
shall ever have a claim against Manager for an Insurable Casualty to the
Apartments, whether by assignment, subrogation, or otherwise, unless due to
Manager’s breach of this Agreement or the intentional misconduct or gross
negligence of any Manager Party.

(e)           Owner assumes all risks
in connection with the adequacy of any of Owner’s insurance coverage, and
waives any claim against Manager for any liability, cost of expense arising out
of any uninsured casualty affecting the Property, in part or in full, of any
nature whatsoever, unless due to Manager’s breach of this Agreement or the
intentional misconduct or gross negligence of any Manager Party.

(f)            Manager shall use its
diligent efforts to investigate and, at Owner’s request, shall make a written
report to the insurance company as to all accidents, claims for damage relating
to the ownership, operation and maintenance of the Apartments, any damage or
destruction to the Apartments and the estimated cost of repair thereof, and
shall prepare and provide Owner copies of any and all reports for any insurance
company in connection therewith that are filed by Manager.  Manager shall promptly notify Owner of any
such accidents, claims or damage/destruction. 
All such reports filed by Manager with the insurance company shall be
timely filed as required under the terms of the insurance policy involved.  Manager, if approved in writing by Owner, is
authorized to settle any and all claims against insurance companies arising out
of any policies, including the execution of proofs of loss, the adjustment of
losses, signing of receipts and collection of monies on Owner’s behalf.  Manager is further authorized to contract for
the maintenance and repair of any damage or casualty, subject to Owner’s prior
written approval and to the other conditions herein set forth. In such event
Manager shall be responsible for all costs incurred by Manager in adjusting
such loss and contracting for repairs to the Apartments provided there are
insurance proceeds available for such additional fee that exceed the cost of
repairing the damage or restoring the loss. 
Nothing in this Section 2.7 nor any insurance obtained or applied
for by Owner or Manager shall be construed or implying that Owner or Manager is
subject to a liability it would not otherwise be subject to.  No claims against Owner or the Property will
be settled by Manager without Owner’s prior written consent.

(g)           Owner and Manager
mutually agree for the benefit of each other to look only to the appropriate
insurance coverages in effect pursuant to this Agreement in the event any demand,
claim, action, damage, loss, liability or expense occurs as a result of injury
to person or damage to property, regardless whether any such demand, claim,
action, damage, loss, liability or expense is caused or contributed to, by or
results from the negligence of Owner or Manager or their respective
subsidiaries, affiliates, employees, directors, officers, agents or independent
contractors and regardless whether the injury to person or damage to property
occurs in and

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about the Apartments or
elsewhere as a result of the performance of this Agreement.  Except for claims that are covered by the
indemnity contained in Section 2.7(j) below, Owner agrees that Owner’s
insurance shall be primary without right of subrogation against Manager with
respect to all claims, actions, damage, loss or liability in or about the
Apartments. Nevertheless, in the event such insurance proceeds are insufficient
to satisfy (or such insurance does not cover) the demand, claim, action, loss,
liability or expense, Owner agrees, at its expense, to indemnify and hold
Manager and its subsidiaries, affiliates, officers, directors, employment,
agents or independent contractors harmless to the extent of the excess
liability unless due to Manager’s breach of this Agreement or the intentional
misconduct or gross negligence of any Manager Party.  For purposes of this Section, any deductible
amount under any policy of insurance shall not be deemed to be included as part
of collectible insurance proceeds.

(h)           In no event shall
Manager have any liability to Owner or others for any acts of vandalism,
trespass or criminal activity of any kind by tenants or third parties on or
with respect to the Apartments and Owner’s insurance shall be primary insurance
without right of subrogation against Manager regarding claims arising out of or
resulting from acts of vandalism, trespass or criminal activity.

(i)            Owner shall protect
and indemnify Manager against and hold it harmless from all damages, claims,
loss cost or expenses, arising out of actual or alleged defects whether latent
or patent, relating to the Project, including but not limited to water damage,
indoor air quality issues, mold growth, structural defects, or second hand
smoke, or any breach or alleged breach of any legal duty or obligation which is
by law, or pursuant to this Agreement, the responsibility of Owner, except
where arising out of the breach by Manager of this Agreement or the intentional
misconduct or negligence of any Manager Party.

(j)            Notwithstanding the
foregoing or anything contained in this Agreement to the contrary, Manager
shall indemnify, defend with counsel reasonably acceptable to Owner and hold
harmless Owner, and its partners, members, managers, representative
subsidiaries, affiliates, officers, directors, employees, agents or independent
contractors, from all demands, claims, actions, loss, liability, expense, costs
and claims of any nature which is or are not covered and fully paid by
insurance and which is determined to have resulted from the gross negligence,
willful misconduct or breach of this Agreement by any Manager Party.

2.8           Collection of Monies:  Manager shall use its diligent best efforts
to collect all rents and other charges due from tenants under Leases in respect
of the Apartments and otherwise due Owner with respect to the Apartments in the
ordinary course of business, provided that Manager does not guarantee the
creditworthiness of any tenants, users, lessees, concessionaires or
collectibility of accounts receivable from any of the foregoing.  Owner authorizes Manager to request, demand,
collect, receive and receipt for all such rent and other charges and, subject
to the terms and conditions of this Agreement, (i) institute legal proceedings
in the name of Owner, and at Owner’s expense, for the collection thereof and
dispossession of tenants and other persons from the Apartments or (ii) to
cancel or terminate any Lease, license or concession agreement for breach or
default thereunder, and such expense may include necessary reasonable legal
fees and costs for any such matter. Manager shall notify Owner before incurring
any extraordinary legal fees or expenses. 
Manager’s authority pursuant to this Section shall terminate upon
expiration of the initial term or any extended term of this Agreement and,
thereafter, Manager shall have no further right or obligation to collect any
sums pursuant to this

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Section whatsoever.  All monies collected by Manager shall be
deposited in the separate bank account referred to in Section 4.2
herein.

2.9           Manager
Disbursements:

(a)           Manager shall, from the
funds collected and deposited, cause to be disbursed regularly and punctually
(1) Manager’s compensation, together with all sales or other taxes with respect
to the Apartments (other than income) which Manager is obligated, presently or
in the future, to collect and pay to the State of Missouri or any other
governmental authority, (2) the amounts reimbursable to Manager under this
Agreement, (3) the amount of all real estate taxes and other impositions levied
on the Property by appropriate public authorities which, if not escrowed with
any mortgagee, shall be paid prior to delinquency if the payment thereof is
authorized by the Budget; and (4) amounts otherwise due and payable as
operating expenses of the Apartments authorized to be incurred under the terms
of this Agreement.  The amount and nature
of each disbursement pursuant to clauses (1) and (2) above shall be separately
specified, with reasonable detail, in the monthly reports delivered by Manager
pursuant to Section 2.13(a) hereof. 
After disbursements as herein specified and after establishing a cash
reserve to pay taxes, insurance, and/or other costs and expenses incidental to
the operation of the Apartments, including nonrecurring emergency repairs and
capital expenditures which shall become due and payable within the succeeding
calendar month and for which the cash to make such payments may not be
generated by operations during such period, all in amounts determined or
approved by Owner, any balance remaining at the end of each calendar month
during the term of this Agreement shall be disbursed or transferred as
generally or specifically directed from time to time by an Owner’s
Representative.

(b)           Manager shall comply
with the cash management provisions contained in any lockbox or cash management
agreement in favor of a first mortgagee identified to Manager in writing.

(c)           All costs, expenses,
debts and liabilities owed to third persons that are incurred for Owner or the
Apartments by Manager in accordance with the terms of this Agreement and in the
course of managing, leasing and operating the Apartments shall be the
responsibility of Owner and not Manager. Owner agrees to provide sufficient
working capital funds to Manager so that all amounts due and owing for the
Apartments may be promptly paid by Manager. Manager is not obligated to advance
any funds for the Apartments. As of the first day of each month of the term of
this Agreement, Manager will project the cash requirements for such month and
(if it shall reasonably determine that collections will be insufficient to meet
such cash requirements) request the necessary additional funds from the Owner,
which funds will be deposited with the Manager in the segregated bank account
referred to in Section 4.2 upon 10 days written notice from Manager. If
at any month end, the bank balance exceeds the projected cash requirements,
such excess shall be returned to the Owner within five days.  If at any time there is not sufficient cash
in the account with which to promptly pay the bills due and owing within 30
days thereof, the Manager will request by written notice to Owner that the
necessary additional funds be deposited in an amount sufficient to create an
operating reserve pursuant to Section 4.4. Owner will deposit the
additional funds requested by the Manager within 10 days after receipt of
written notice from Manager.

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(d)           The provisions of this Section
2.9 regarding reimbursements to Manager shall not limit Manager’s rights
under any other provisions of this Agreement.

2.10         Use and Maintenance of
Premises:  Manager agrees that it
will not knowingly permit the use of the Apartments for any purpose which might
void, increase the premiums for or adversely affect any policy of insurance
held by Owner or which might render any loss thereunder uncollectible, or which
would be in violation of any government restriction or any covenant or
restriction of any Lease. Manager shall use its diligent best efforts to
enforce and secure substantial compliance by the tenants with the terms and
conditions of their respective Leases. All costs of correcting or complying
with, and all fines payable in connection with, all orders or violations
affecting the Project placed thereon by any governmental authority or Board of
Fire Underwriters or other similar body shall be at the cost and expense of
Owner unless such costs are the responsibility of Manager under the terms of
this Agreement.

2.11         Annual Business Plan:

(a)           On or before December 1
of each calendar year during the term of this Agreement, Manager shall prepare
and submit to Owner for Owner’s approval, an “Annual
Business Plan” (herein so called and also sometimes referred to as a
“Budget”) for the Apartments for
the promotion, leasing, operations, repair and maintenance of the Apartments
for each calendar year during which this Agreement is in effect. The Annual
Business Plan shall include a detailed budget of projected income and expenses
for the Apartments for such calendar year (the “Operating Budget”) and a detailed budget of projected capital
improvements for the Apartments for such calendar year (the “Capital Budget”), and an estimate of
reserve funds needed and other information requested by Owner for such calendar
year.

(b)           Manager shall meet with
Owner to discuss the proposed Annual Business Plan and Owner shall approve or
designate changes for the proposed Annual Business Plan within 20 days after
receipt thereof. To be effective, any notice which disapproves a proposed
Annual Business Plan must contain specific objections in reasonable detail to
individual line items.  If Owner fails to
provide an effective notice disapproving a proposed Annual Business Plan within
such 20 day period, the proposed Annual Business Plan shall be deemed to be
approved. Owner acknowledges that the Operating Budget is intended only to be a
reasonable estimate of the income and expenses for the ensuing calendar year.
Manager shall not be deemed to have made any guarantee, warranty or
representation whatsoever in connection with the Operating Budget.  However, subject to availability of
Apartments and/or Owner funds, Manager shall conform to the Annual Business
Plan as approved by Owner.

(c)           Manager may revise the
Operating Budget from time to time, as necessary, to reflect any unpredicted
significant changes, variables or events or to include significant additional,
unanticipated items of revenue and expense. Any such revision shall be
submitted to Owner for approval, which approval shall not be unreasonably
withheld or conditioned.  Owner shall
approve or disapprove such revisions within 15 days after receipt thereof.   If Owner fails to provide a notice
disapproving such revisions within such 15 day period, the proposed revisions
shall be deemed to be approved.

(d)           Manager agrees to use
diligence and to employ all reasonable efforts to ensure that the actual costs
of maintaining and operating the Apartments shall not exceed the Operating

 10
 

 

Budget which is a part of the
approved Annual Business Plan either in total or in any one accounting
category.  Any expense causing or likely
to cause a variance of greater than ten percent (10%) or $2,000, whichever is
greater, in any one accounting category for the current month cumulative
year-to-date total shall be promptly explained to Owner by Manager in the next
operating statement submitted by Manager to Owner.  During the calendar year Manager shall inform
Owner of any major increases or decreases in costs, expenses, and income that
were not reflected in the Annual Business Plan.

2.12         Records Reporting:  Manager shall maintain at the regular
business office of Manager or at such other address as Manager shall advise
Owner in writing separate Apartments books and journals and orderly files for
the Apartments, containing rental records, insurance policies, leases,
correspondence, receipts, bills and vouchers, service and supply contracts, and
all other documents and papers pertaining directly to the Apartments or the
operation thereof.  All corporate
statements, receipts, invoices, checks, leases, contracts, worksheets,
financial statements, books and records, and all other instruments and
documents relating to or arising from the operation or management of the
Apartments shall be and remain the property of Owner and Owner shall have the
right to inspect and to copy all such matters, at Owner’s sole cost and
expense, at all reasonable times during the term of this Agreement. All such
records, including leases, rent rolls, and other related documents, shall upon
termination of this Agreement either remain at the Apartments or be delivered
as directed by Owner.

2.13         Financial Reports:

(a)           Monthly Reports:  On or before the fifteenth day of each month
during the term of this Agreement, Manager shall deliver to Owner’s
Representative the following financial reports for the Apartments for the
preceding calendar month:  monthly and
year to date statement of operations (or profit and loss statement) comparing
actual to budget, year to date variance explanations, balance sheet, a
statement of cash flows, rent roll, leasing activity reports, accounts
receivable schedule and narrative on any delinquencies, security deposit
listing, and narrative or commentary on Apartments activity.  All notices from any mortgagee claiming any
default in any mortgage on the Project, and any other notice from any mortgagee,
whether or not of a routine nature, shall be promptly delivered by Manager to
Owner’s Representative.

(b)           Annual Report:  Within 90 days after the end of each calendar
year, Manager shall deliver to Owner’s Representative a final report containing
the reports described in Section 2.13(a) above and showing the results
of operations for the calendar year or portion thereof during which the
provisions of this Agreement were in effect.

(c)           GAAP.  The reports described in Sections 2.13(a)
and (b) above shall be prepared in accordance with GAAP.

(d)           Returns Required by
Law:  Manager shall execute and file
punctually when due all forms, reports and returns required by law relating to
the employment of personnel, and also any income and expense reports for the
Apartments, when and as required by law or applicable code.

2.14         Compliance with Legal
Requirements: Owner acknowledges that Manager does not hold itself out to
be an expert or consultant with respect to, or represent that, the Project

 11
 

 

currently complies with
applicable ordinances, regulations, rules, statutes, or laws of governmental
entities having jurisdiction over the Project or the requirements of the Board
of Fire Underwriters or other similar bodies (collectively, “Governmental Requirements”). Manager shall
take such action as may be reasonably necessary to comply with any Governmental
Requirements applicable to Manager or the Apartments, including the collection
and payment of all sales and other taxes (other than income taxes) which may be
assessed or charged by the State of Missouri or any governmental entities in
connection with Manager’s Compensation. 
If Manager discovers the Apartments do not comply with any Governmental
Requirements, Manager shall with Owner’s prior written approval take such
action as may be reasonably necessary to bring the Apartments into compliance
with such Governmental Requirements, subject to the limitation contained in Section
2.5 of this Agreement regarding the making of alterations and repairs.
Manager, however, shall not take any such action as long as Owner is contesting
or has affirmed its intention to contest and promptly institute proceedings
contesting any such order or requirement. If, however, failure to comply
promptly with any such order or requirement would or might expose Manager to
civil or criminal liability, Manager shall have the right, but not the
obligation, after giving Owner at least 5 days prior written notice, to cause
the same to be complied with and Owner agrees to indemnify and hold Manager
harmless for taking such actions and to promptly reimburse Manager for
reasonable expenses incurred thereby. Manager shall promptly, and in no event
later than 72 hours from the time of receipt, notify Owner’s Representative in
writing of all such orders or notices. The Manager also shall not be liable for
any effort or judgment or for any mistake of fact of law, or for anything which
it may do or refrain from doing hereinafter, except in cases of breach of this
Agreement, willful misconduct or gross negligence of any Manager Party.

ARTICLE III.

Manager’s
Compensation, Term

3.1           Management Fee:  The “Management
Fee” or the “Base Fee”
shall equal three percent (3%) of Gross Collections.  The Base Fee shall begin accruing on the date
of this Agreement and shall be payable in monthly installments for the prior
calendar month (pro-rated for any partial calendar month).  If, for any calendar year, the amount of the
installments of the Base Fee paid to Manager shall be less than or more than
the actual Base Fee payable for such year, based upon the final determination
of Gross Collections for such year in the year-end statement, then, within
fifteen (15) days after the delivery of such year-end statement to Owner,
Manager shall withdraw from the operating accounts for the Apartments the net
amount of any such underpayment or, if overpaid, pay into the operating
accounts for the Apartments the net amount of overpayment. The term “Gross Collections” shall mean all amounts
actually collected as rents or other charges for use and occupancy of apartment
units, leases of other non-dwelling facilities in the Project to tenants under
Leases of the Apartments, and concessionaires (if any) in respect of the
Apartments, including forfeited security deposits, application fees, late
charges, income from coin operated machines, proceeds from rental interruption
insurance, and other miscellaneous income collected with respect to the
Apartments; but shall exclude all other receipts, including but not limited to,
income derived from interest on investments or otherwise, proceeds of claims on
account of insurance policies (other than rental interruptions insurance),
abatement of taxes, amounts allocated by Manager that are attributable to
services provided by Manager directly to tenants of the Apartments, awards
arising out of eminent domain proceedings, and discounts and dividends on
insurance policies.  Manager shall take
care that expenses of the Apartments are paid timely, so as to avoid late fees,
interest and other penalties

 12
 

 

(“Penalties”).  Manager shall be responsible for any
Penalties incurred by reason of Manager’s negligent or other wrongful failure
to make timely payments; provided, however, that Manager shall have no
obligation to advance its own funds to make such payments.

3.1           Term.      This Agreement shall be
effective upon full execution and delivery as of the date hereof.  The term of this Agreement (the “Term”) shall commence on the date of this
Agreement and continue until the earlier of (a) the date upon which the last
residential tenant in occupancy at the Apartments as of the date of this
Agreement vacates the Apartments, or (b) one (1) year after the date of this
Agreement, unless this Agreement shall be sooner terminated pursuant to a right
specifically provided for in this Agreement.

Article
IV.

Procedures
for Handling Receipts and Operating Capital

4.1           Security Deposits:  A separate interest bearing account shall be
opened by Manager for tenant security deposits and shall be accounted for and
handled by Manager as required by law, the Leases and any first mortgage on the
Project. Owner agrees to indemnify and hold harmless Manager, and Manager’s
representatives, officers, directors and employees for any loss or liability
with respect to any use by Owner of the tenant security deposits that is
inconsistent with the terms of the Lease and applicable laws.

4.2           Separation of Owner’s
Monies:  Manager shall establish and
maintain, in a bank of Manager’s choice and reasonably acceptable to Owner,
whose deposits are insured by the Federal Deposit Insurance Corporation (an “Acceptable Bank”), and in a manner to
indicate the custodial nature thereof, a separate bank account for the deposit
of all monies of Owner. Manager shall also establish such other special bank
accounts as may be reasonably required by Owner.  Notwithstanding the foregoing, Manager shall
comply with the cash management provisions contained in any lockbox or cash
management agreement in favor of a first mortgagee identified to Manager in
writing.

4.3           Depository Accounts:  Owner and Manager agree that Manager shall
have no liability for loss of funds of Owner contained in the bank accounts for
the Project maintained by Manager pursuant to this Agreement due to insolvency
of the bank or financial institution in which its accounts are kept, whether or
not the amounts in such accounts exceed the maximum amount federal or other
deposit insurance applicable with respect to the financial institution in
question, provided that Manager takes timely steps to transfer Owner’s funds to
another Acceptable Bank if Manager has reason to know that the depository bank
is in financial difficulties or if Owner directs a change in bank.

4.4           Working Capital:  In addition to the funds derived from the
operation of the Apartments, Owner shall furnish and maintain in the operating
accounts of the Apartments such other funds (if any) in excess of funds from
the Apartments income, as may be necessary to discharge financial commitments
required to efficiently operate the Apartments and to meet all payrolls and
satisfy, before delinquency, and to discharge all accounts payable. Manager
shall have no responsibility or obligation with respect to the furnishing of
any such funds. Nevertheless, Manager shall have the right, but not the
obligation, upon giving Owner at least 10 days prior written notice, to advance
funds on behalf of Owner to satisfy obligations of Owner in connection with
this Agreement and the Apartments. 
Manager shall keep appropriate records to

 13
 

 

document all reimbursable
expenses paid by Manager, which records shall be made available for inspection
by Owner or its agents on request. Owner agrees to reimburse Manager with
interest upon demand for money paid in connection with the Apartments and this
Agreement.

4.5           Authorized Signatures:
Any persons from time to time designated by Manager shall be authorized
signatories on all bank accounts established by Manager pursuant to this
Agreement and shall have authority to make disbursements from such accounts.
Funds may be withdrawn from all bank accounts established by Manager, in
accordance with this Article IV, only upon the signature of an
individual who has been granted that authority by Manager and funds may not be
withdrawn from such accounts by Owner unless Manager is in default hereunder,
or unless this Agreement is terminated or finally expires, or unless Manager
becomes subject to an Event of Bankruptcy. 
In no event shall any funds or property of Owner be deemed an asset of
or the property of Manager, for any purposes.

Article
V.

Environmental
Matters

5.1           Environmental
Representations and Indemnification: 
Owner hereby warrants and represents to Manager that to Owner’s actual
knowledge, the Project has not previously been nor is presently being used to
treat, deposit, store, dispose of, or place any hazardous substance on the
Project, or any part thereof. In the event a release of any hazardous substance
on the Project occurs, or is threatened, prior to the termination of this
Agreement, which release or threatened release, in Manager’s sole opinion, may
subject Manager to liability or claims under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.A. Section 9607;
under any law of the State of Missouri, or any ordinance of the city of St. Louis,
or any other Governmental Requirement (collectively, “Environmental Laws”), Manager shall be
entitled to immediately terminate this Agreement. Furthermore, Owner hereby
agrees to indemnify and hold Manager harmless from any claims, liabilities,
causes of Action, and other expenses which may be incurred by Manager,
including reasonable attorneys’ fees, due to any violation of the Environmental
Laws at the Project unless the violation of the Environmental Laws is directly
attributable to an act or omission of any Manager Party or a breach by Manager
of its duties and obligations under this Agreement.

Article
VI.

Additional
Provisions; Cooperation of Parties

6.1           Information.  Manager agrees to keep Owner informed with
respect to all material occurrences and facts which arise during the
performance of Manager’s duties and to meet and confer with Owner on matters of
an emergency nature at any reasonable time or times requested by Owner.

6.2           Manager Employees.  Manager shall hire in its own name all
managerial personnel necessary for the efficient discharge of its duties
hereunder.

6.3           Engineering/Maintenance.  Manager will provide consultation on routine
problems and repairs of a mechanical nature; and periodic, routine inspection
of the operating mechanical equipment of the Property; and routine supervision
of the on-site personnel and contractors by a suitably experienced person in
Manager’s employment. If it becomes necessary

 14
 

 

to make extraordinary repairs
or engage in an extensive reconstruction, rehabilitation or conversion of the
Property, experts approved by Owner shall be retained by and at the expense of
Owner.

6.4           Emergency Contact.  Manager will be available on a 24-hour basis,
7 days per week, with respect to emergencies, and will establish emergency procedures
that shall assure, at a minimum, that telephone contact with a designated
employee or representative of Manager may be made by Owner, provide that a
responsible representative of Manager will respond within a reasonable period
of time after being notified of the emergency, and contain written procedures
which shall include listing of names and telephone numbers of designated
persons capable of dealing with emergencies.

6.5           Employer Forms
Preparation.  Manager shall prepare
for execution all forms, reports and returns required by law in connection with
the employment of personnel including unemployment insurance, Worker’s
Compensation Insurance, disability benefits, Social Security, federal and state
withholding taxes and other similar taxes now in effect or hereafter imposed,
if any (but specifically excluding any income tax or personal property tax
returns).

6.6           Owner’s Right to
Audit.  Manager agrees that Owner,
Owner’s employees or others appointed by Owner, shall have the right to conduct
examinations at reasonable times during regular business hours, of the accounts
and records maintained for Owner by Manager and to perform any and all audit
tests relating to Manager’s activities provided only that such audit tests are
related to those activities performed by Manager for Owner.

6.7           Real Property Tax
Assessment Notices.  Manager shall
cause notices of real property tax assessments to be sent to Owner; and Manager
shall have no duty with respect thereto except that pursuant to mutual
agreement Manager will advise Owner with regard to the merits of appealing such
assessment notices and, if requested by Owner, handle such appeal. Owner shall
provide Manager with copies of real estate tax bills promptly so that payment
can be made timely.

6.8           Final Accounting.  Upon the expiration or termination of this
Agreement, the parties shall account to each other with respect to all matters
outstanding as of the date of such expiration or termination.  Manager shall, upon termination hereof,
cooperate fully with Owner to facilitate an orderly transition and prompt
turnover of Owner’s and the Apartments’ books and records to ensure continuity
of management. All records, correspondence and other written materials relative
to Owner or the Apartments, except those as are customarily maintained as
Manager’s property, are the property of Owner; and Manager shall treat as
confidential all such documents.

6.9           Binding Effect.  This Agreement shall inure to the benefit of
and constitute a binding obligation upon the parties hereto, their respective
successors and permitted assigns.

6.10         Subordination.  Manager agrees to execute and deliver to
Owner, within ten (10) days after receipt, any agreement reasonably necessary
to subordinate this Agreement and Manager’s rights hereunder to any deed of
trust or other financing obtained by Owner for the Property.  Manager shall comply with the cash management
provisions contained in any lockbox or cash management agreement in favor of a
first mortgagee identified to Manager in writing.

 15
 

 

Article
VII.

Project
Development Phase

7.1           Acknowledgment of
Redevelopment Project.  Owner has
informed Manager that Owner intends to redevelop the Project.  In connection with such redevelopment, Owner
intends to redevelop the Project such that a portion of the Project shall be
sold as for-sale residential condominiums, Floors 6-8 of the Project shall be
redeveloped as corporate apartments, and Floors 3-5 of the Project shall be
redeveloped for hotel use.  During the
redevelopment phase (the “Redevelopment Phase”),
the Apartments will close and not be available for Lease.

7.2           Management Agreement
Provisions Superseded. 
Notwithstanding anything to the contrary in this Agreement, prior to the
Redevelopment Phase, Manager shall have no obligation to:  (a) promote the Apartments or any new Lease
of any of the Apartments, (b) pursue any new Leases not effective as of the
date of this Agreement, (c) maintain any part of the Apartments that is not
subject to a Lease, other than common corridors through with tenants under
Leases may pass, (d) make any capital improvements or engage in any major
repairs, (e) prepare any Annual Business Plan (and as a result, Manager shall
be entitled to incur such expenses as Manager deems reasonably appropriate to
maintain the occupied Apartments prior to the Redevelopment Phase), (f) deliver
any operating or financial statements except for monthly operating statements
prior to the Redevelopment Phase, or (g) undertake any other action under this
Agreement that is not reasonably necessary to operate and maintain the
Apartments subject to Leases prior to the Redevelopment Phase.

Article
VIII.

Events
of Default; Termination

8.1           Events of Default.  The following shall constitute an “Event of Default” by either party:

(a)           The failure of the
defaulting party to pay to the non-defaulting party when due any sum which may
become due hereunder within fifteen (15) days after receipt by the defaulting
party of a notice from the non-defaulting party specifying such failure;

(b)           The failure by the
defaulting party timely to perform, keep or fulfill any of the material terms,
covenants, undertakings, obligations or conditions set forth in this Agreement
and the continuance of such failure for a period of thirty (30) days after
receipt by the defaulting party of notice thereof from the non defaulting party
specifying such failure, provided that in the event such failure is amenable to
cure and is of a nature that it cannot, with due diligence, all commercially
reasonable efforts, and in good faith, be cured within thirty (30) days, it
shall not constitute an event of default unless such defaulting party fails to
proceed promptly and with due diligence, all commercially reasonable efforts,
and in good faith to cure the same, and thereafter to prosecute the curing of
such failure with due diligence and in good faith (it being intended that, in
connection with a failure not susceptible of being cured with diligence and in
good faith within thirty (30) days, the time of such defaulting party within
which to cure the same shall be extended for such period as may be necessary
for the curing thereof with due diligence, all commercially reasonable efforts
and in good faith);

 16
 

 

(c)           If the defaulting party
shall apply for or consent to the appointment of a receiver, trustee or
liquidator of such party or of all or a substantial part of its assets, file a
voluntary petition in bankruptcy or admit in writing its inability to pay its
debts as they come due, make a general assignment for the benefit of creditors,
file a petition or an answer seeking reorganization or agreement with creditor
or take advantage of any insolvency law, or file an answer admitting the
material allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or if an order, judgment or decree
shall be entered by any court of competent jurisdiction, on the application of
a creditor, adjudicating such party a bankrupt or insolvent or approving a
petition seeking reorganization of such party or appointing a receiver, trustee
or liquidator of such party or of all or a substantial part of its assets, and
such order, judgment or decree shall continue unstayed and in effect for a
period of ninety (90) consecutive days.

8.2           Right to Termination.  If an Event of Default shall occur, the non
defaulting party may, at its option, give to the defaulting party notice of
intention to terminate this Agreement after the expiration of a period of
thirty (30) days from the date of such notice if the default has not been cured
prior to expiration of such thirty (30) day period, and, upon expiration of
such period, this Agreement shall terminate on the date specified in the
notice.  Such termination shall be
without prejudice to any right to any and all remedies (including specific
performance and other equitable relief or any and all right to damages) which
the non-defaulting party may have against the defaulting party under applicable
law or equity subject to the terms of this Agreement.

8.3           Injunction and
Specific Performance.  In the event
of any breach of the covenants by Owner or Manager contained in this Agreement,
the other party shall be entitled to relief by injunction or a suit for
specific performance and, if appropriate and otherwise permitted pursuant to
this Agreement, to all other available legal or equitable rights or remedies.

8.4           Termination on
Transfer.  Upon thirty (30) days advance notice to
Manager, Owner shall have the right to terminate this Agreement in conjunction
with a transfer of the Property
or of all of the ownership interests in Owner, whether in an
arm’s-length transaction to any entity which is not an affiliate of Owner or to
an affiliate of the Owner, or if the Smith Investor (as such term is defined in
the Limited Liability Company Agreement of Owner (the “Owner LLC Agreement”))
ceases to be a member of Owner and in connection therewith the Smith Investor
is paid all amounts due to the Smith Investor under the Owner LLC Agreement in
connection therewith.  If this Agreement
is so terminated, then Manager shall be paid all management fees accrued
through the date of termination and all other amounts due to Manager under this
Agreement.

8.5           Operator Principal.  If neither James L. Smith nor Marcia Smith
Niedringhaus maintains an active role in the management of Manager, then upon
not less than sixty (60) days prior written notice, Owner may elect to
terminate this Agreement; provided however, that Owner shall not have the right
to terminate this Agreement pursuant to this Section and this Agreement shall
continue in effect if (i) both of James L. Smith and Marcia Smith Niedringhaus
are precluded from maintaining an active role as described above by reason of
the death or disability of such individuals, and (ii) within ninety (90) days
after receipt by Manager of notice of termination under this Section, the
holders of the membership interests in Manager (including heirs of James L.
Smith or Marcia Smith Niedringhaus) submit as a replacement for James L.

 17
 

 

Smith and Marcia Smith Niedringhaus an
experienced apartments manager (subject to Owner’s approval, not to be
unreasonably withheld or delayed).

Article
IX.

Miscellaneous

9.1           Assignment:  This Agreement shall be binding on and inure
to the benefit of the parties and their respective successors and assigns.  Owner shall also have the right to assign this
Agreement collaterally in connection with any mortgage loan on the
Project.  Manager shall not have the
right to (and it will not) assign or transfer any of its rights, duties or
obligations hereunder.

9.2           Notices:  Any notice, request, consent, approval or
other communication required or permitted to be given by any provision of this
Agreement shall be in writing and sent by registered or certified U.S. Mail,
return receipt requested, or by receipted courier service, charges prepaid and
addressed as follows, or to such other address as the recipient party may from
time to time specify by notice to the other party:

	
  If to Owner:

  	
   

  	
   

  	
  Chase Park Plaza Hotel,
  LLC

  
	
   

  	
   

  	
   

  	
  15601 Dallas
  Parkway, Suite 600

  
	
   

  	
   

  	
   

  	
  Addison, Texas
  75001

  
	
   

  	
   

  	
   

  	
  Attn: Joe
  Jernigan

  
	
   

  	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
   

  	
  Powell Coleman LLP

  
	
   

  	
   

  	
   

  	
  8080 North
  Central Expressway, Suite 1380

  
	
   

  	
   

  	
   

  	
  Dallas, Texas
  75206

  
	
   

  	
   

  	
   

  	
  Attn: Patrick M.
  Arnold, Esq.

  
	
   

  	
   

  	
   

  	
   

  
	
  If to Manager:

  	
   

  	
   

  	
  CWE Hospitality
  Services, LLC

  
	
   

  	
   

  	
   

  	
  212 N.
  Kingshighway, Suite 1023

  
	
   

  	
   

  	
   

  	
  St. Louis,
  Missouri 63108

  
	
   

  	
   

  	
   

  	
  Attn: James L.
  Smith

  
	
   

  	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  	
  Sonnenschein, Nath
  & Rosenthal LLP

  
	
   

  	
   

  	
   

  	
  One Metropolitan
  Square, Suite 3000

  
	
   

  	
   

  	
   

  	
  St. Louis,
  Missouri 63102

  
	
   

  	
   

  	
   

  	
  Attn: Jennifer
  A. Marler, Esq.

  

 

Any such notice shall be deemed to be
delivered, given, and received for all purposes as of (A) the actual date of
delivery, as shown on the postal or courier service receipt, if delivered
before 5:00 pm, recipient’s local time, on a business day (and, otherwise, on
the first business day after the date of actual delivery), or (B) the next
business day after being deposited with a nationally recognized overnight
delivery service.

9.3           Entire Agreement:  This Agreement shall constitute the entire
agreement between the parties hereto and no modification thereof shall be
effective unless in writing executed by the parties hereto.

 18
 

 

9.4           No Partnership:  Nothing contained in this Agreement shall
constitute or be construed to be or create a partnership or joint venture
between the Owner, its successors or assigns, on the one part, and Manager, its
successors and assigns, on the other part. 
Manager shall be deemed an independent contractor.  Owner shall not be obligated to pay Manager’s
overhead expenses of personnel that are not an employee assigned full time to
the Project.

9.5           No Third Party
Beneficiary:  Neither this Agreement
nor any part hereof nor any service relationship shall inure to the benefit of
any third party, to any trustee in bankruptcy, to any assignee for the benefit
of creditors, to any receiver by reason of insolvency, to any other fiduciary
or officer representing a bankrupt or insolvent estate of either party, or to
the creditors or claimants of such an estate. Without limiting the generality of
the foregoing sentence, it is specifically understood and agreed that
insolvency or bankruptcy of either party hereto shall, at the option of the
other party, void all rights of such insolvent or bankrupt party hereunder (or
so many of such rights as the other party shall elect to void), except the
rights of Owner to receive and the obligations of Manager to deliver to Owner
all funds, books and records, Leases, contracts, and other property and
information of Owner or concerning the Property as herein required.

9.6           Severability:  If any one or more of the provisions of this
Agreement, or the applicability of any such provision to a specific situation
shall be held invalid or unenforceable by a court of competent jurisdiction,
such provision should be modified to the minimum extent necessary to make it or
its application valid and enforceable, and the validity and enforceability of
all other provisions of this Agreement and all other applications of such
provisions shall not be affected thereby.

9.7           Captions, Plural
Terms:  Unless the context clearly
requires otherwise, the singular number herein shall include the plural, the
plural number shall include the singular and any gender shall include all
genders. Titles and captions herein shall not affect the construction of this
Agreement.

9.8           Attorneys’ Fees:  Should either party employ an attorney to
enforce any of the provisions of this Agreement, or to recover damages for
breach of this Agreement, the non-prevailing party in any action agrees to pay
to the prevailing party all reasonable costs, damages and expenses, including
reasonable attorneys’ fees, expended or incurred by the prevailing party in
connection therewith.

9.9           Signs:  Manager shall have the right to place signs
on the Project during the term hereof in accordance with applicable
Governmental Requirements stating that Manager is the manager and leasing agent
for the Apartments.

9.10         Survival of
Indemnities:  The indemnification
obligations of the parties to this Agreement shall survive the termination of
this Agreement to the extent of any claim or cause of action based on an event
occurring prior to the date of termination.

9.11         Governing-Law Venue:  This Agreement shall be construed under and
in accordance with the laws of the State of Missouri and is fully performable
in St. Louis County, Missouri.

 19
 

 

9.12         Competitive Projects:  Manager may, individually or with others,
engage or possess an interest in any other project or venture of every nature
and description, including but not limited to, the ownership, financing,
leasing, operation, management, brokerage and sale of real estate projects
including apartment projects other than the Project, whether or not such other
venture or projects are competitive with the Project and Owner shall not have
any claim as to such project or venture or to the income or profits derived
therefrom.

9.13         Interest:  Any amount payable to Manager under this
Agreement which is not paid within ten (10) days after Owner’s receipt from
Manager of written notice of such overdue amount shall accrue interest at the
lesser of WSJ Prime plus two percent per annum or the maximum lawful rate.

9.14         No Interest in Real
Property:  Manager’s interest under
this Agreement is not, and shall not be deemed to be, an interest in real
property or coupled with any interest in the real property.  This Agreement shall not, and shall not be
deemed to, create a landlord-tenant relationship or run with the land.

9.15         Counterparts:  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original.

9.16         REIT
Compliance.

(a)           Manager
agrees that, as of the date hereof, (i) Manager is an independent contractor, “within
the meaning of Section 856(d)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”), with respect to Behringer
Howard Opportunity REIT I, Inc. (“BH”) and (ii)
BH does not directly or indirectly (through Owner or otherwise) derive or
receive any income from Manager (whether it be interest income, dividend
income, rent income or any other type of income).  Manager further agrees that it shall maintain
such status as an independent contractor from which BH does not directly or
indirectly derive any income throughout the term of this Agreement.

(b)           Manager
acknowledges that it is a limited liability company that is treated as a
partnership for federal income tax purposes. 
Manager agrees that, during the term of this Agreement, Manager shall
not, without the written consent of Owner, (i) change its ownership in
such a manner that it is disregarded as an entity separate from its owner
within the meaning of Treas. Reg. § 301.7701(b)(2)(i)(C), (ii) convert into
another form of entity, (iii) merge or otherwise combine with any other entity,
(iv) acquire an interest in another entity or (v) otherwise change its
ownership in such a manner that could cause Manager to fail Section 9.16(a).

(c)           Manager
represents that, as of the date of this Agreement, the Apartments are operated
in such a manner that the amounts paid pursuant to the Leases constitute qualifying
“rents from real property” within the meaning of Section 856(d) of the
Code.  Manager further represents that
the landlord under the Leases is not obligated under the terms of such Leases
to provide services to the tenants other than customary services in the
geographic market in which the Property is located (within the meaning of
Treas. Reg. § 1.856-4(b)) (“Customary Services”).  Manager further represents that the only
service provided to any tenants of the

 20
 

 

Leases that may not be a Customary Service is
maid service provided once a week to tenants of certain corporate apartments.

(d)           Manager
shall take all actions reasonably requested by Owner that Owner determines may
be necessary to ensure that all amounts paid to Owner pursuant to the Leases
qualify as “rents from real property” pursuant to Section 856(d) of the Code
with respect to Owner.  Manager shall
operate the Property so that no services other than Customary Services are
provided to tenants without the express written consent of Owner.  Manager shall operate the Property such that
all amounts payable by the tenants of the Leases shall be paid to CWE
Hospitality Services, LLC, as Manager, and Manager shall remit the appropriate
amounts to the appropriate parties. 
Amounts that are paid as rents under the Leases and that qualify as “rents
from real property” as defined in Section 856(d), shall be remitted to
Owner.  Amounts attributable to parking
charges shall be remitted to Kingsdell L.P., the tenant under the Hotel
Lease.  Any maid service provided to a
tenant of the Property shall be provided by employees of Manager and Manager
shall retain all amounts attributable to the performance of such service.  With respect to such maid service, (i) the
costs of such service must be borne by Manager, (ii) a separate charge must be
made for such service, (iii) the amount of the separate charge must be received
and retained by Manager and (iv) such charge must be adequate compensation to
Manager for such service.  Any other
service other than a Customary Service that is provided to a tenant of the
Property shall be provided by (i) employees of Manager, in which case
Manager shall retain all amounts attributable to the performance of such
service; (ii) an independent contractor with respect to BH from which BH
does not directly or indirectly derive any income or (iii) a taxable REIT
subsidiary, as defined in Section 856(l) of the Code, with respect to BH.  With respect to such services other than
Customary Services, (i) the cost of such service must be borne by the service
provider, (ii) a separate charge must be made for such service, (iii) the
amount of the separate charge must be received and retained by the service
provider and (iv) such charge must be adequate compensation for such service.

9.17         Sarbanes-Oxley.  Manager shall use commercially reasonable
efforts to assist Owner in establishing procedures and controls (not to be
inconsistent with the rights and obligations of Manager under this Agreement)
to comply with, and to evidence compliance with, the Sarbenes-Oxley Act of
2002, as now or hereafter amended, as such statue relates to financial
reporting in respect of the Apartments. 
Within fifteen (15) days after written notice from Owner, Manager will
provide Owner with such customary and reasonable certifications as Owner may
reasonably request to enable Owner to meet its financial certification
obligations under such statute as such statute relates to financial reporting
in respect of the Apartments; provided, however, that such certifications may be
given by Manager to its actual knowledge without any duty of investigation if
such a qualification would not unduly interfere with Owner meeting such
financial certification obligations.  Any
and all costs and expenses incurred by Manager related to this Section 9.17
shall be reimbursed by Owner to Manager and shall not constitute operating
expenses or be included in the calculation of Gross Collections (i.e., such
costs shall be borne by Owner as ownership costs); provided, however, that to
the extent Manager incurs Sarbanes-Oxley compliance costs to satisfy the
requirements of other companies for which Manager performs services, Manager
shall reasonably allocate such costs among such companies and Owner.

 21
 

 

SIGNATURE PAGE

IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed by their duly authorized representatives.

	
   

  	
  CHASE PARK PLAZA HOTEL, LLC

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard
  Opportunity OP I LP, a

  Texas limited partnership,

  
	
   

  	
   

  	
  Authorized Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer Harvard
  Opportunity

  REIT I, Inc., a Maryland

  corporation, Its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen,
  III

  	
   

  
	
   

  	
   

  	
   

  	
  Gerald J. Reihsen, III

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President

  

 

 22
 

 

SIGNATURE PAGE

IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed by their duly authorized representatives.

	
  

  	
  CWE HOSPITALITY
  SERVICES, LLC, a

  Missouri limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L.
  Smith

  
	
   

  	
  James L. Smith,
  President

  

 

 23Exhibit
10.46

APARTMENT
MANAGEMENT AGREEMENT

THIS
APARTMENT MANAGEMENT AGREEMENT (this “Agreement”) is
made effective for all purposes effective as of the 1st day of December,
2006, between THE PRIVATE RESIDENCES, LLC, a Delaware limited liability company
(“Owner”) and CWE HOSPITALITY SERVICES,
LLC, a Missouri limited liability company (“Manager”).

Article
I.

Establishment of Agency and Rental Responsibility

1.1           Exclusive Agency:  Owner hereby appoints Manager and Manager
hereby accepts appointment for the term and on the terms and conditions set
forth herein as the sole and exclusive renting and management operating agent
of the apartments (the “Apartments”)
on Floors 9-15 (no Floor 13), Floors 17-27 and a portion of Floor 28 of the
property known as the Park Plaza, at 232 N. Kingshighway, St. Louis, Missouri
63108 (such project(s), whether one or more, are referred to herein
collectively as the “Property” or “Project”). 
Owner warrants and represents to Manager that Owner owns fee simple
title to the Project with all requisite authority to hereby appoint Manager and
enter into this Agreement.  Manager
warrants and represents that it is now, and shall at all times while this
Agreement is in force be, authorized to do business in the state and local
jurisdictions in which the Project is located, to provide all services herein
described.

1.2           Owner’s
Representatives; On-Site Manager: 
Owner shall designate two persons to serve as Owner’s representative
(each an “Owner’s Representative”
and collectively the Owner’s Representatives”)
in all dealings with Manager hereunder. 
Whenever the approval, consent or other action of Owner is called for
hereunder, such approval, consent or action shall be binding on Owner if
specified in writing and signed by at least one Owner’s Representative. The
initial Owner’s Representatives shall be Jim Gaspard and Joe Jernigan.  The Owner’s Representatives may be changed at
the discretion of Owner, at any time, and shall be effective upon Manager’s
receipt of written notice identifying the new Owner’s Representative(s).

Manager
hereby designates James L. Smith, and in his absence, Marcia Smith
Niedringhaus, as the current on-site manager for the Apartments (the “Current On-Site Manager”). 
Manager shall not transfer or terminate the Current On-Site Manager
without Owner’s consent which shall not be unreasonably withheld.  If the Current On-Site Manager must be
replaced, Manager shall replace him with an individual with equal (or better)
experience and expertise and reasonably approved by Owner.  Manager acknowledges and agrees that the
experience and expertise of the Current On-Site Manager is of material
consideration to Owner.

1.3           Leasing of Premises:  Manager shall perform all promotional,
leasing and management activities required to lease, manage, maintain and
operate the Apartments.  Throughout the
term of this Agreement, Manager shall use commercially reasonable efforts to
operate, maintain, manage and lease the Apartments. Subject to reimbursement by
Owner of the reasonable out-of-pocket costs thereof to the extent authorized by
the Annual Business Plan (defined below) or this Agreement, Manager shall
advertise the Apartments, or portions thereof, prepare and secure advertising
signs, space plans, circular matter, marketing brochures and other forms of
advertising. Owner shall authorize Manager pursuant to Section 2.2, to
advertise the Apartments in conjunction with institutional advertising
campaigns and allocate cost on a prorata

 

basis among the projects being advertised (to
the extent authorized by the Annual Business Plan).  Manager shall obtain credit reports on and
perform, or cause to be performed, lawful screening of, prospective
tenants.  All inquiries for any leases or
renewals or agreements for the rental of the Apartments shall be referred to
Manager and all negotiations connected therewith shall be conducted solely by
or under the direction of Manager. Manager is hereby authorized, on behalf of
Owner, to execute, deliver and renew leases (on forms approved by Owner) for apartments
and storage areas (“Leases”) so
long as each such Lease is in the ordinary course of business, for a term of
one year or less (but no less than one month) and consistent with the rent and
other guidelines approved by Owner as part of the Annual Business Plan and,
with respect to each Lease, is executed by the individual(s) who will actually
be occupying the apartment unit in question. 
Manager is authorized to utilize the services of apartment locator services
and the fees of such services (which shall be at prevailing market rates in the
vicinity of the Project) shall be operating expenses of the Apartments and, to
the extent paid and documented by Manager and authorized by the Annual Business
Plan, reimbursable by Owner.

1.4           Manager’s Standard of
Care:  In performing Manager’s duties
under this Agreement, or otherwise discharging the agency established by this
Agreement, Manager shall exercise the same degree of care, prudence, and skill
that is commensurate with the highest industry standards in the local
jurisdiction (county or city) in which the Project is located (“Industry Standard”).  Manager will not be liable to Owner for any
act or omission that is undertaken in good faith and in accordance with the
Industry Standard and a reasonable degree of care, prudence, and skill.  Manager in no event will be liable to Owner
for any consequential loss or damage, unless caused by Manager’s gross
negligence or willful misconduct, consistent with the indemnity agreement in Section
2.7 of this Agreement.  Manager will
not be liable to Owner for excusable mistake or neglect, or for any error of
judgment, so long as Manager acts in good faith and upon discovery of any such
mistake, neglect, or error, promptly undertakes such measures as reasonably may
be required to mitigate any resulting loss or damage to Owner.

1.5           Owner’s
Representations:  Owner assumes all
liability as to the quality and construction of the Property. Owner further
represents and warrants that as of the date of the execution of this Agreement
to the best of its actual knowledge and in reliance solely on information
either provided to Owner by the previous owner of the Property or obtained
during Owner’s due diligence investigation, as of the date hereof the Property
is in compliance with all applicable Federal, State and local laws, rules,
regulations, guidelines and ordinances, including but not limited to, the
Americans with Disabilities Act, the Federal Fair Housing Act, the Federal 1990
Clean Air Act, all other State and local accessibility requirements and the
applicable building code affecting the Property. Further Owner agrees to defend
and indemnify Manager against, and hold it harmless from, all actual damages,
claims, loss, cost or expense arising out of the breach of the Owner’s foregoing
representations and warranties and from any violation, breach or failure of the
Property to comply with any environmental or hazardous materials laws,
including those environmental matters enumerated in Article VI of this
agreement, rules, regulations and/or ordinances regarding the Property. Owner
shall further protect and indemnify Manager against, and hold it harmless from,
all actual damages, claims, loss, cost or expenses arising out of actual or
alleged defects, whether latent or patent, including but not limited to, water
damage, Indoor air quality issues, mold growth, structural defects, and second
hand smoke of the Property, or for any breach or alleged breach of any legal
duty or obligation which is by law or under this Agreement the responsibility
of Owner. Manager in no event will be liable to

 2
 

 

Owner for any consequential loss or damage,
unless caused by Manager’s gross negligence or willful misconduct, consistent
with the indemnity agreement in Section 2.7 of this Agreement.  Notwithstanding the foregoing or anything to
the contrary, in no event shall Owner be obligated, under this paragraph or any
other provisions hereof or otherwise, to indemnify, defend or save Manager
harmless from any liability, litigation, loss, cost, damage, claims or expense
arising from any breach, wrongful or unlawful act, negligence or omission of
any Manager Party.  As used herein, “Manager Party” means Manager and any of its
employees, agents directors, officers, subsidiaries, affiliates and independent
contractors.

ARTICLE II.

Services to be Performed by Manager

2.1           Expense of Owner:  All acts performed by Manager in the
performance of its obligations under this Agreement shall be performed as the
agent of Owner, and all obligations or expenses incurred thereby, shall be for
the account of, on behalf of, and at the expense of Owner, except as otherwise
specifically provided in this Article II and except that Owner shall not
be obligated to reimburse Manager for any expense (i) allocable to time spent
on projects other than the Project, on work otherwise unrelated to the Project
or on Manager’s general administration, (ii) any personnel other than personnel
located at the Project site and personnel spending a portion of their working
hours (to be charged on a prorata basis) at the Project site or in specifically
performing Manager’s obligations hereunder, whether on or off the Project site
or (iii) that is not authorized by the Annual Business Plan.  Manager may use employees normally assigned
to other work centers or part-time employees to properly staff the Project, on
a reduced, increased or emergency work load basis, including property, business
and assistant managers, leasing directors, administrative personnel,
maintenance employees and maintenance supervisors, whose wages and related
expenses shall be reimbursed on a prorata basis for the time actually spent at
or for the Apartments but only to the extent reflected in the Annual Business
Plan.  A property manager or business
manager at the Apartments and any other persons performing functions only at
the Apartments substantially similar to those of a business manager, including
but not limited to assistant managers, leasing directors, leasing agents, sales
directors, sales agents, bookkeepers, and other on-site administrative and/or
maintenance personnel performing work on behalf of the Property, if they are
on-site personnel, shall not be considered executive employees of Manager and
shall be collectively referred to herein as “Project
Employees”.   The staffing
plan including, without limitation, the number and positions of all Project
Employees and off-site employees and all compensation and benefits for all
Project Employees and off-site employees shall be in accordance with the Annual
Business Plan or as otherwise approved by Owner in writing.  Owner acknowledges that the following
miscellaneous documented expenses, when reasonably incurred in respect to the
performance of Manager’s obligations under this Agreement, shall be
reimbursable by Owner to the extent reflected in the Annual Business Plan
(which list of expenses is not intended to be all-inclusive): courier services,
postage, photocopies, signage, check printing, marketing expenses, bank
charges, telephone and answering service (which may be allocated on a prorata
basis among the Apartments and other projects managed by Manager). All
reimbursable payments made by Manager hereunder shall be reimbursed from funds
deposited in an account established pursuant to Section 4.2 of this
Agreement. Manager shall not be obligated to make any advance to or for the
account of Owner or to pay any sums, except out of funds held in an account
maintained under Section 4.2, nor shall Manager be obligated to incur
any liability or obligation for the

 3
 

 

account of Owner without assurance that the
necessary funds for the discharge thereof will be provided by Owner. In the
performance of its duties as agent and Manager of the Apartments, Manager shall
act solely as the agent of the Owner. All debts and liabilities to third persons
incurred by Manager in the course of its operation and management of the
Apartments shall be the debts and liabilities of the Owner only, and Manager
shall not be liable for any such debt or liabilities, except (i) as otherwise
expressly provided herein or (ii) to the extent Manager has exceeded its
authority hereunder.

2.2           Covenants Concerning
Payment of Operating Expenses:  Owner
covenants to pay all sums for operating expenses in excess of gross receipts
required to operate the Apartments upon written notice and demand from Manager
within ten (10) days after receipt of written notice but only to the extent
such expenses are consistent with the Budget (defined below). Owner further
recognizes that the Apartments may be operated in conjunction with other
properties, and costs may be allocated or shared between such other properties
on a more efficient or less expensive basis. In such regard, Owner consents to
the allocation of costs and/or the sharing of any expenses in an effort to save
cost or operate the Apartments in a more efficient manner so long as such
allocation is done on an equitable basis and so long as the computations of
such allocations are provided to Owner pursuant to Section 2.13 hereof.

2.3           Employment of
Personnel:  Manager shall use its
diligent best efforts to investigate, hire, pay, supervise and discharge the
personnel necessary to be employed by it to properly maintain, operate and
lease the Apartments, including without limitation a property manager or
business manager at the Project. Such personnel shall in every instance be
deemed agents or employees, as the case may be, of the Manager. Owner has no
right of supervision or direction of agents or employees of the Apartments
whatsoever; however, Manager will promptly remove any Project Employee from
assignment to work at the Apartments upon the reasonable request of the
Owner.  All Owner directives shall be
communicated to Manager’s senior level management employees.  Manager and all personnel of Manager who
handle or who are responsible for handling Owner’s monies shall be bonded in
favor of Owner.  Manager shall furnish
the fidelity insurance or fidelity bond described in Section 2.7(a)
below at Manager’s sole expense.  All
reasonable salaries, wages and other compensation of personnel employed by
Manager, including so-called fringe benefits, Worker’s Compensation, medical
and health insurance and the like, shall be deemed to be reimbursable expenses
of Manager. With owner’s prior written consent, Manager may allow not more than
two employees who work at the Apartments and provide services to the Apartments
after normal business hours to reside at the Apartments for reduced rents in
consideration of their benefit to Owner and the Apartments.  The employees qualifying for such reduced
rents shall be limited to the on-site manager and maintenance personnel.

2.4           Utility and Service
Contracts: Manager shall make, at Owner’s expense and in Owner’s name or in
Manager’s name, as agent for Owner, contracts for water, electricity, gas,
fuel, oil, telephone, vermin extermination, trash removal, cable television,
security protection, internet access and other services approved by Owner
pursuant to the Annual Business Plan and deemed by Manager to be necessary or
advisable for the operation of the Apartments. Manager shall also place orders
in name of Owner for such equipment, tools, appliances, materials, and supplies
as are reasonable and necessary to properly maintain the Apartments. Manager
may make such contracts and place such orders in Owner’s name or in its own
name, as Owner’s

 4
 

 

agent. Owner agrees to pay or reimburse
Manager for all expenses and liabilities incurred by reason of this Section but
only to the extent consistent with the Budget or otherwise made with Owner’s
prior consent.  However, Manager shall
not enter into any contracts for services, supplies or equipment that exceed,
individually or in the aggregate, $1,000 during any 30 day period or $5,000
during any 12 month period, without Owner’s prior written consent, unless
included in the Annual Business Plan. 
All contracts shall be cancellable by Owner without penalty on 30 days
(or less) notice.

2.5           Maintenance and
Repair of Property: Manager shall use its best diligent efforts to
maintain, at Owner’s expense, the Apartments in good condition and repair and
in accordance with standards established by Owner in writing from time to time,
including but not limited to interior and exterior cleaning, painting and
decorating, plumbing, carpentry, and such other normal maintenance and repair
work as may be reasonably desirable taking into consideration the amount
allocated therefor in the Annual Business Plan. With respect to any expenditure
not contemplated by the Annual Business Plan, Manager shall not incur any
individual item or repair or replacement in excess of Five Thousand Dollars
($5,000.00) or (with all such other un-contemplated items) more than $25,000.00
per year in the aggregate unless authorized in writing by Owner’s
Representative, excepting, however, that emergency repairs immediately
necessary for the preservation and safety of the Apartments or to avoid the
suspension of any service to the Apartments or danger of injury to persons or
material damage to property may be made by Manager without the approval of
Owner’s Representative. Owner shall not establish standards of maintenance and
repair which violate or may violate any laws, rules, restrictions or
regulations applicable to Manager or the Apartments or which expose Manager to
risk of liability to tenants or other persons. Manager shall not be obligated
by this Section to perform any major capital improvements, unless same are
approved in writing by Owner or are provided for in the Annual Business Plan.

2.6           Supervision of
Capital Improvements or Major Repairs: 
When requested by the Owner or set forth in the Annual Business Plan,
Manager, at Owner’s expense and in Owner’s name or in Manager’s name, as agent
for Owner, shall supervise the installation and construction of all capital
improvements or major repairs to the Apartments where such work constitutes
other than normal maintenance and repair, for additional compensation as set
forth in a separate written agreement signed by Owner and Manager.  In such events, Manager may, with Owner’s
prior written consent:  (i) negotiate
contracts with all necessary contractors, subcontractors, materialmen,
suppliers, architects and engineers on behalf of, and in the name of, Owner,
and (ii) compromise and settle any dispute or claim arising therefrom on behalf
of and in the name of Owner; provided that Manager shall act in good faith and
in the best interest of the Owner and will keep Owner informed thereof at all
times.  Manager will furnish all
personnel necessary for proper supervision of the work and may assign personnel
located at the Apartments to such supervisory work (and such assignment shall
not reduce or abate any other fees or compensation owed to Manager under this
Agreement).  Owner acknowledges that
Manager, or an affiliate of the Manager, may bid on any such work, and that the
Manager, or an affiliate of the Manager, may be selected to perform part or all
of the work; provided that if the Manager desires to select itself, or its
affiliate to do any work, it shall first notify the Owner of the fees and terms
upon which it, or its affiliate, proposes to contract for the work (which shall
be at prevailing market rates and terms in the area), and terms upon which at
least three independent contractors approved by Owner have offered to perform,
and shall state the reasons for preferring itself, or

 5
 

 

its affiliate, over such independent
contractors and Owner shall have ten days after its receipt thereof to
disapprove of the Manager, or its affiliate, doing such work and to request
performance by an independent contractor; and Manager will comply with Owner’s
decisions. Only Owner shall have the power to compromise or settle any dispute
or claim arising from work performed by the Manager, or its affiliate; and it
is expressly understood that the selection of the Manager, or its affiliate,
will not affect any fee or other compensation expressly payable to Manager
hereunder.

2.7           Insurance:

(a)           Manager’s Insurance.  Manager will maintain or cause to be
maintained the following insurances with companies of its own choice and at its
own expense (except with respect to worker compensation insurance for Property
personnel only):

(i)            Worker Compensation
Insurance - as required by applicable law

(ii)           Employer’s Liability
Insurance - with limits of not less than $500,000 per occurrence;

(iii)          Business Automobile
Liability Insurance – $1,000,000 each accident, to be written on a standard ISP
Business Auto coverage form (with no standard coverage on this form excluded by
endorsement and including uninsured/underinsured motorist coverage) and covering
owned, hired or borrowed and non-owned automobiles;

(iv)          Employee health
insurance - consistent with the Budget;

(v)           Fidelity insurance
(including Employee Dishonesty) insurance and/or a fidelity bond with limits
and deductibles as may be reasonably determined by Manager and reasonably
approved by Owner; and

(vi)          Umbrella Liability
Insurance - Not less than $9,000,000.

On or before the commencement of the term of this Agreement, and
thereafter prior to the expiration of any policy providing the foregoing
coverage, Manager shall deliver to Owner on the appropriate ACORD form a
certificate or certificates evidence that such coverage is and will remain in
effect.

(b)           Owner’s Insurance.  Owner shall obtain and keep in force adequate
all-risk property insurance and commercial general liability insurance for the
Property including coverage against liability for loss, theft, damage or injury
to property or persons that may arise out of the occupancy, management,
operation, maintenance or condition of the Premises; provided, however, that
general liability insurance shall be maintained in an amount not less than
$5,000,000.  Manager shall be named an
additional insured party under such commercial general liability insurance
policy and, upon request, Owner will promptly provide Manager with a
certificate of insurance evidencing such coverage and Manager’s inclusion as an
additional insured thereon.

(c)           Insurance Policy
Requirements.  All insurance coverage
required hereunder shall be written on an occurrence basis and shall be placed
with such companies, in such amounts

 6
 

 

(except as set forth above) and with such
beneficial interest appearing therein as shall be acceptable to Owner,  and shall be in conformity with the
requirements of any mortgage on the Project. 
Owner and Manager will provide the other with certificates of insurance
that are satisfactory to the other for the insurance required under this
Agreement.  The minimum A.M.  Best’s rating of each insurer shall be
A-VII.  Qualified Self Insured Workers’
Compensation Groups not rated by A.M. Best are acceptable.  The insurance policies referenced above shall
provide that notice of default or cancellation shall require a minimum of
thirty days (30) prior written notice to Manager and Owner.

(d)           Owner, on behalf of
itself and its insurance carriers hereby waives all claims and causes of action
against Manager in respect of damage to the Apartments caused by casualty (an “Insurable Casualty”) insurable (whether
insured or not) under the terms of all-risk property insurance policies and
endorsements obtainable in the State of Missouri on commercially reasonable
terms, whether or not such casualty is a result of the negligence, fault or
neglect of any Manager Party. Owner agrees that no insurance carrier of Owner’s
shall ever have a claim against Manager for an Insurable Casualty to the
Apartments, whether by assignment, subrogation, or otherwise, unless due to
Manager’s breach of this Agreement or the intentional misconduct or gross
negligence of any Manager Party.

(e)           Owner assumes all risks
in connection with the adequacy of any of Owner’s insurance coverage, and
waives any claim against Manager for any liability, cost of expense arising out
of any uninsured casualty affecting the Property, in part or in full, of any
nature whatsoever, unless due to Manager’s breach of this Agreement or the
intentional misconduct or gross negligence of any Manager Party.

(f)            Manager shall use its
diligent efforts to investigate and, at Owner’s request, shall make a written
report to the insurance company as to all accidents, claims for damage relating
to the ownership, operation and maintenance of the Apartments, any damage or
destruction to the Apartments and the estimated cost of repair thereof, and
shall prepare and provide Owner copies of any and all reports for any insurance
company in connection therewith that are filed by Manager.  Manager shall promptly notify Owner of any
such accidents, claims or damage/destruction. 
All such reports filed by Manager with the insurance company shall be
timely filed as required under the terms of the insurance policy involved.  Manager, if approved in writing by Owner, is
authorized to settle any and all claims against insurance companies arising out
of any policies, including the execution of proofs of loss, the adjustment of
losses, signing of receipts and collection of monies on Owner’s behalf.  Manager is further authorized to contract for
the maintenance and repair of any damage or casualty, subject to Owner’s prior
written approval and to the other conditions herein set forth. In such event
Manager shall be responsible for all costs incurred by Manager in adjusting
such loss and contracting for repairs to the Apartments provided there are
insurance proceeds available for such additional fee that exceed the cost of
repairing the damage or restoring the loss. 
Nothing in this Section 2.7 nor any insurance obtained or applied
for by Owner or Manager shall be construed or implying that Owner or Manager is
subject to a liability it would not otherwise be subject to.  No claims against Owner or the Property will
be settled by Manager without Owner’s prior written consent.

(g)           Owner and Manager
mutually agree for the benefit of each other to look only to the appropriate
insurance coverages in effect pursuant to this Agreement in the event any
demand, claim, action, damage, loss, liability or expense occurs as a result of
injury to person or

 7
 

 

damage to property, regardless whether any
such demand, claim, action, damage, loss, liability or expense is caused or
contributed to, by or results from the negligence of Owner or Manager or their
respective subsidiaries, affiliates, employees, directors, officers, agents or
independent contractors and regardless whether the injury to person or damage
to property occurs in and about the Apartments or elsewhere as a result of the
performance of this Agreement.  Except
for claims that are covered by the indemnity contained in Section 2.7(j)
below, Owner agrees that Owner’s insurance shall be primary without right of
subrogation against Manager with respect to all claims, actions, damage, loss
or liability in or about the Apartments. Nevertheless, in the event such
insurance proceeds are insufficient to satisfy (or such insurance does not
cover) the demand, claim, action, loss, liability or expense, Owner agrees, at
its expense, to indemnify and hold Manager and its subsidiaries, affiliates,
officers, directors, employment, agents or independent contractors harmless to
the extent of the excess liability unless due to Manager’s breach of this
Agreement or the intentional misconduct or gross negligence of any Manager
Party.  For purposes of this Section, any
deductible amount under any policy of insurance shall not be deemed to be
included as part of collectible insurance proceeds.

(h)           In no event shall
Manager have any liability to Owner or others for any acts of vandalism,
trespass or criminal activity of any kind by tenants or third parties on or
with respect to the Apartments and Owner’s insurance shall be primary insurance
without right of subrogation against Manager regarding claims arising out of or
resulting from acts of vandalism, trespass or criminal activity.

(i)            Owner shall protect
and indemnify Manager against and hold it harmless from all damages, claims,
loss cost or expenses, arising out of actual or alleged defects whether latent
or patent, relating to the Project, including but not limited to water damage,
indoor air quality issues, mold growth, structural defects, or second hand
smoke, or any breach or alleged breach of any legal duty or obligation which is
by law, or pursuant to this Agreement, the responsibility of Owner, except
where arising out of the breach by Manager of this Agreement or the intentional
misconduct or negligence of any Manager Party.

(j)            Notwithstanding the
foregoing or anything contained in this Agreement to the contrary, Manager
shall indemnify, defend with counsel reasonably acceptable to Owner and hold
harmless Owner, and its partners, members, managers, representative
subsidiaries, affiliates, officers, directors, employees, agents or independent
contractors, from all demands, claims, actions, loss, liability, expense, costs
and claims of any nature which is or are not covered and fully paid by
insurance and which is determined to have resulted from the gross negligence,
willful misconduct or breach of this Agreement by any Manager Party.

2.8           Collection of Monies:  Manager shall use its diligent best efforts
to collect all rents and other charges due from tenants under Leases in respect
of the Apartments and otherwise due Owner with respect to the Apartments in the
ordinary course of business, provided that Manager does not guarantee the
creditworthiness of any tenants, users, lessees, concessionaires or
collectibility of accounts receivable from any of the foregoing.  Owner authorizes Manager to request, demand,
collect, receive and receipt for all such rent and other charges and, subject
to the terms and conditions of this Agreement, (i) institute legal proceedings
in the name of Owner, and at Owner’s expense, for the collection thereof and
dispossession of tenants and other persons from the Apartments or (ii) to
cancel or terminate any Lease, license or concession agreement for breach or
default thereunder, and such expense may include necessary

 8
 

 

reasonable legal fees and costs for any such
matter. Manager shall notify Owner before incurring any extraordinary legal
fees or expenses.  Manager’s authority
pursuant to this Section shall terminate upon expiration of the initial term or
any extended term of this Agreement and, thereafter, Manager shall have no
further right or obligation to collect any sums pursuant to this Section
whatsoever.  All monies collected by
Manager shall be deposited in the separate bank account referred to in Section
4.2 herein.

2.9           Manager
Disbursements:

(a)           Manager shall, from the
funds collected and deposited, cause to be disbursed regularly and punctually
(1) Manager’s compensation, together with all sales or other taxes with respect
to the Apartments (other than income) which Manager is obligated, presently or
in the future, to collect and pay to the State of Missouri or any other
governmental authority, (2) the amounts reimbursable to Manager under this
Agreement, (3) the amount of all real estate taxes and other impositions levied
on the Property by appropriate public authorities which, if not escrowed with
any mortgagee, shall be paid prior to delinquency if the payment thereof is
authorized by the Budget; and (4) amounts otherwise due and payable as operating
expenses of the Apartments authorized to be incurred under the terms of this
Agreement.  The amount and nature of each
disbursement pursuant to clauses (1) and (2) above shall be separately
specified,  with reasonable detail, in
the monthly reports delivered by Manager pursuant to Section 2.13(a)
hereof.  After disbursements as herein
specified and after establishing a cash reserve to pay taxes, insurance, and/or
other costs and expenses incidental to the operation of the Apartments,
including nonrecurring emergency repairs and capital expenditures which shall
become due and payable within the succeeding calendar month and for which the
cash to make such payments may not be generated by operations during such
period, all in amounts determined or approved by Owner, any balance remaining
at the end of each calendar month during the term of this Agreement shall be
disbursed or transferred as generally or specifically directed from time to
time by an Owner’s Representative.

(b)           Manager shall comply
with the cash management provisions contained in any lockbox or cash management
agreement in favor of a first mortgagee identified to Manager in writing.

(c)           All costs, expenses,
debts and liabilities owed to third persons that are incurred for Owner or the
Apartments by Manager in accordance with the terms of this Agreement and in the
course of managing, leasing and operating the Apartments shall be the
responsibility of Owner and not Manager. Owner agrees to provide sufficient
working capital funds to Manager so that all amounts due and owing for the
Apartments may be promptly paid by Manager. Manager is not obligated to advance
any funds for the Apartments. As of the first day of each month of the term of
this Agreement, Manager will project the cash requirements for such month and
(if it shall reasonably determine that collections will be insufficient to meet
such cash requirements) request the necessary additional funds from the Owner,
which funds will be deposited with the Manager in the segregated bank account referred
to in Section 4.2 upon 10 days written notice from Manager. If at any
month end, the bank balance exceeds the projected cash requirements, such
excess shall be returned to the Owner within five days.  If at any time there is not sufficient cash
in the account with which to promptly pay the bills due and owing within 30
days thereof, the Manager will request by written notice to Owner that the
necessary additional funds be deposited in an amount sufficient to create an
operating reserve pursuant to

 9
 

 

Section 4.4. Owner
will deposit the additional funds requested by the Manager within 10 days after
receipt of written notice from Manager.

(d)           The provisions of this Section
2.9 regarding reimbursements to Manager shall not limit Manager’s rights
under any other provisions of this Agreement.

2.10         Use and Maintenance of
Premises:  Manager agrees that it
will not knowingly permit the use of the Apartments for any purpose which might
void, increase the premiums for or adversely affect any policy of insurance held
by Owner or which might render any loss thereunder uncollectible, or which
would be in violation of any government restriction or any covenant or
restriction of any Lease. Manager shall use its diligent best efforts to
enforce and secure substantial compliance by the tenants with the terms and
conditions of their respective Leases. All costs of correcting or complying
with, and all fines payable in connection with, all orders or violations
affecting the Project placed thereon by any governmental authority or Board of
Fire Underwriters or other similar body shall be at the cost and expense of
Owner unless such costs are the responsibility of Manager under the terms of
this Agreement.

2.11         Annual Business Plan:

(a)           On or before December 1
of each calendar year during the term of this Agreement, Manager shall prepare
and submit to Owner for Owner’s approval, an “Annual
Business Plan” (herein so called and also sometimes referred to as a
“Budget”) for the Apartments for
the promotion, leasing, operations, repair and maintenance of the Apartments
for each calendar year during which this Agreement is in effect. The Annual
Business Plan shall include a detailed budget of projected income and expenses
for the Apartments for such calendar year (the “Operating Budget”) and a detailed budget of projected capital
improvements for the Apartments for such calendar year (the “Capital Budget”), and an estimate of
reserve funds needed and other information requested by Owner for such calendar
year.

(b)           Manager shall meet with
Owner to discuss the proposed Annual Business Plan and Owner shall approve or
designate changes for the proposed Annual Business Plan within 20 days after
receipt thereof. To be effective, any notice which disapproves a proposed
Annual Business Plan must contain specific objections in reasonable detail to
individual line items.  If Owner fails to
provide an effective notice disapproving a proposed Annual Business Plan within
such 20 day period, the proposed Annual Business Plan shall be deemed to be
approved. Owner acknowledges that the Operating Budget is intended only to be a
reasonable estimate of the income and expenses for the ensuing calendar year.
Manager shall not be deemed to have made any guarantee, warranty or
representation whatsoever in connection with the Operating Budget.  However, subject to availability of
Apartments and/or Owner funds, Manager shall conform to the Annual Business
Plan as approved by Owner.

(c)           Manager may revise the
Operating Budget from time to time, as necessary, to reflect any unpredicted
significant changes, variables or events or to include significant additional,
unanticipated items of revenue and expense. Any such revision shall be
submitted to Owner for approval, which approval shall not be unreasonably
withheld or conditioned.  Owner shall
approve or disapprove such revisions within 15 days after receipt thereof.   If Owner fails to provide a notice
disapproving such revisions within such 15 day period, the proposed revisions
shall be deemed to be approved.

 10

 

(d)           Manager agrees to use diligence and to
employ all reasonable efforts to ensure that the actual costs of maintaining
and operating the Apartments shall not exceed the Operating Budget which is a
part of the approved Annual Business Plan either in total or in any one
accounting category.  Any expense causing
or likely to cause a variance of greater than ten percent (10%) or $2,000,
whichever is greater, in any one accounting category for the current month
cumulative year-to-date total shall be promptly explained to Owner by Manager
in the next operating statement submitted by Manager to Owner.  During the calendar year Manager shall inform
Owner of any major increases or decreases in costs, expenses, and income that were
not reflected in the Annual Business Plan.

2.12         Records Reporting:  Manager shall maintain at the regular
business office of Manager or at such other address as Manager shall advise
Owner in writing separate Apartments books and journals and orderly files for
the Apartments, containing rental records, insurance policies, leases,
correspondence, receipts, bills and vouchers, service and supply contracts, and
all other documents and papers pertaining directly to the Apartments or the
operation thereof.  All corporate
statements, receipts, invoices, checks, leases, contracts, worksheets,
financial statements, books and records, and all other instruments and
documents relating to or arising from the operation or management of the
Apartments shall be and remain the property of Owner and Owner shall have the
right to inspect and to copy all such matters, at Owner’s sole cost and
expense, at all reasonable times during the term of this Agreement. All such
records, including leases, rent rolls, and other related documents, shall upon
termination of this Agreement either remain at the Apartments or be delivered
as directed by Owner.

2.13         Financial Reports:

(a)           Monthly Reports:  On or before the fifteenth day of each month
during the term of this Agreement, Manager shall deliver to Owner’s
Representative the following financial reports for the Apartments for the
preceding calendar month:  monthly and
year to date statement of operations (or profit and loss statement) comparing
actual to budget, year to date variance explanations, balance sheet, a statement
of cash flows, rent roll, leasing activity reports, accounts receivable
schedule and narrative on any delinquencies, security deposit listing, and
narrative or commentary on Apartments activity. 
All notices from any mortgagee claiming any default in any mortgage on
the Project, and any other notice from any mortgagee, whether or not of a
routine nature, shall be promptly delivered by Manager to Owner’s
Representative.

(b)           Annual Report:  Within 90 days after the end of each calendar
year, Manager shall deliver to Owner’s Representative a final report containing
the reports described in Section 2.13(a) above and showing the results
of operations for the calendar year or portion thereof during which the
provisions of this Agreement were in effect.

(c)           GAAP. 
The reports described in Sections 2.13(a) and (b) above
shall be prepared in accordance with GAAP.

(d)           Returns Required by Law:  Manager shall execute and file punctually
when due all forms, reports and returns required by law relating to the
employment of personnel, and also any income and expense reports for the
Apartments, when and as required by law or applicable code.

 11
 

 

2.14         Compliance with Legal Requirements:
Owner acknowledges that Manager does not hold itself out to be an expert or
consultant with respect to, or represent that, the Project currently complies
with applicable ordinances, regulations, rules, statutes, or laws of
governmental entities having jurisdiction over the Project or the requirements
of the Board of Fire Underwriters or other similar bodies (collectively, “Governmental Requirements”). Manager shall
take such action as may be reasonably necessary to comply with any Governmental
Requirements applicable to Manager or the Apartments, including the collection
and payment of all sales and other taxes (other than income taxes) which may be
assessed or charged by the State of Missouri or any governmental entities in
connection with Manager’s Compensation. 
If Manager discovers the Apartments do not comply with any Governmental
Requirements, Manager shall with Owner’s prior written approval take such
action as may be reasonably necessary to bring the Apartments into compliance
with such Governmental Requirements, subject to the limitation contained in Section
2.5 of this Agreement regarding the making of alterations and repairs.
Manager, however, shall not take any such action as long as Owner is contesting
or has affirmed its intention to contest and promptly institute proceedings
contesting any such order or requirement. If, however, failure to comply
promptly with any such order or requirement would or might expose Manager to
civil or criminal liability, Manager shall have the right, but not the
obligation, after giving Owner at least 5 days prior written notice, to cause
the same to be complied with and Owner agrees to indemnify and hold Manager
harmless for taking such actions and to promptly reimburse Manager for
reasonable expenses incurred thereby. Manager shall promptly, and in no event
later than 72 hours from the time of receipt, notify Owner’s Representative in
writing of all such orders or notices. The Manager also shall not be liable for
any effort or judgment or for any mistake of fact of law, or for anything which
it may do or refrain from doing hereinafter, except in cases of breach of this
Agreement, willful misconduct or gross negligence of any Manager Party.

ARTICLE III.

Manager’s Compensation, Term

Management
Fee:

(a)           The “Management Fee” or the “Base Fee” shall
equal three percent (3%) of Gross Collections. 
The Base Fee shall begin accruing on the date of this Agreement and
shall be payable in monthly installments for the prior calendar month
(pro-rated for any partial calendar month). 
If, for any calendar year, the amount of the installments of the Base
Fee paid to Manager shall be less than or more than the actual Base Fee payable
for such year, based upon the final determination of Gross Collections for such
year in the year-end statement, then, within fifteen (15) days after the
delivery of such year-end statement to Owner, Manager shall withdraw from the
operating accounts for the Apartments the net amount of any such underpayment
or, if overpaid, pay into the operating accounts for the Apartments the net
amount of overpayment.

(b)           The term “Gross
Collections” shall mean all amounts actually collected as rents or
other charges for use and occupancy of apartment units, leases of other
non-dwelling facilities in the Project to tenants under Leases of the
Apartments, and concessionaires (if any) in respect of the Apartments,
including forfeited security deposits, application fees, late charges, income
from coin operated machines, proceeds from rental interruption insurance, and
other miscellaneous income collected with respect to the Apartments; but shall
exclude all other

 12
 

 

receipts, including but not limited to, income derived from interest on
investments or otherwise, proceeds of claims on account of insurance policies
(other than rental interruptions insurance), abatement of taxes, amounts
allocated by Manager that are attributable to services provided by Manager
directly to tenants of the Apartments, awards arising out of eminent domain
proceedings, and discounts and dividends on insurance policies.  Manager shall take care that expenses of the
Apartments are paid timely, so as to avoid late fees, interest and other
penalties (“Penalties”).  Manager shall be responsible for any
Penalties incurred by reason of Manager’s negligent or other wrongful failure
to make timely payments; provided, however, that Manager shall have no obligation
to advance its own funds to make such payments.

3.1           Term.      This Agreement shall be effective upon full
execution and delivery as of the date hereof. 
The term of this Agreement (the “Term”)
shall commence on the date of this Agreement and continue until the earlier of
(a) the date upon which the last residential tenant in occupancy at the
Apartments as of the date of this Agreement vacates the Apartments, or (b) one
(1) year after the date of this Agreement, unless this Agreement shall be
sooner terminated pursuant to a right specifically provided for in this
Agreement.

ARTICLE IV.

Procedures for Handling Receipts and Operating Capital

4.1           Security Deposits:  A separate interest bearing account shall be
opened by Manager for tenant security deposits and shall be accounted for and
handled by Manager as required by law, the Leases and any first mortgage on the
Project. Owner agrees to indemnify and hold harmless Manager, and Manager’s
representatives, officers, directors and employees for any loss or liability
with respect to any use by Owner of the tenant security deposits that is
inconsistent with the terms of the Lease and applicable laws.

4.2           Separation of Owner’s Monies:  Manager shall establish and maintain, in a
bank of Manager’s choice and reasonably acceptable to Owner, whose deposits are
insured by the Federal Deposit Insurance Corporation (an “Acceptable Bank”), and in a manner to
indicate the custodial nature thereof, a separate bank account for the deposit
of all monies of Owner. Manager shall also establish such other special bank
accounts as may be reasonably required by Owner.  Notwithstanding the foregoing, Manager shall
comply with the cash management provisions contained in any lockbox or cash management
agreement in favor of a first mortgagee identified to Manager in writing.

4.3           Depository Accounts:  Owner and Manager agree that Manager shall
have no liability for loss of funds of Owner contained in the bank accounts for
the Project maintained by Manager pursuant to this Agreement due to insolvency
of the bank or financial institution in which its accounts are kept, whether or
not the amounts in such accounts exceed the maximum amount federal or other
deposit insurance applicable with respect to the financial institution in
question, provided that Manager takes timely steps to transfer Owner’s funds to
another Acceptable Bank if Manager has reason to know that the depository bank
is in financial difficulties or if Owner directs a change in bank.

4.4           Working Capital:  In addition to the funds derived from the
operation of the Apartments, Owner shall furnish and maintain in the operating
accounts of the Apartments such other funds (if any) in excess of funds from
the Apartments income, as may be necessary to

 13
 

 

discharge financial commitments required to
efficiently operate the Apartments and to meet all payrolls and satisfy, before
delinquency, and to discharge all accounts payable. Manager shall have no
responsibility or obligation with respect to the furnishing of any such funds.
Nevertheless, Manager shall have the right, but not the obligation, upon giving
Owner at least 10 days prior written notice, to advance funds on behalf of
Owner to satisfy obligations of Owner in connection with this Agreement and the
Apartments.  Manager shall keep
appropriate records to document all reimbursable expenses paid by Manager,
which records shall be made available for inspection by Owner or its agents on
request. Owner agrees to reimburse Manager with interest upon demand for money
paid in connection with the Apartments and this Agreement.

4.5           Authorized Signatures: Any persons
from time to time designated by Manager shall be authorized signatories on all
bank accounts established by Manager pursuant to this Agreement and shall have
authority to make disbursements from such accounts. Funds may be withdrawn from
all bank accounts established by Manager, in accordance with this Article IV,
only upon the signature of an individual who has been granted that authority by
Manager and funds may not be withdrawn from such accounts by Owner unless
Manager is in default hereunder, or unless this Agreement is terminated or
finally expires, or unless Manager becomes subject to an Event of
Bankruptcy.  In no event shall any funds
or property of Owner be deemed an asset of or the property of Manager, for any
purposes.

ARTICLE V.

Environmental Matters

5.1           Environmental Representations and
Indemnification:  Owner hereby
warrants and represents to Manager that to Owner’s actual knowledge, the
Project has not previously been nor is presently being used to treat, deposit,
store, dispose of, or place any hazardous substance on the Project, or any part
thereof. In the event a release of any hazardous substance on the Project
occurs, or is threatened, prior to the termination of this Agreement, which
release or threatened release, in Manager’s sole opinion, may subject Manager
to liability or claims under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C.A. Section 9607; under any law
of the State of Missouri, or any ordinance of the city of St. Louis, or any
other Governmental Requirement (collectively, “Environmental Laws”), Manager shall be entitled to immediately
terminate this Agreement. Furthermore, Owner hereby agrees to indemnify and
hold Manager harmless from any claims, liabilities, causes of Action, and other
expenses which may be incurred by Manager, including reasonable attorneys’
fees, due to any violation of the Environmental Laws at the Project unless the
violation of the Environmental Laws is directly attributable to an act or
omission of any Manager Party or a breach by Manager of its duties and
obligations under this Agreement.

ARTICLE VI.

Additional Provisions; Cooperation of Parties

6.1           Information.  Manager agrees to keep Owner informed with
respect to all material occurrences and facts which arise during the
performance of Manager’s duties and to meet and confer with Owner on matters of
an emergency nature at any reasonable time or times requested by Owner.

 14
 

 

6.2           Manager Employees.  Manager shall hire in its own name all
managerial personnel necessary for the efficient discharge of its duties
hereunder.

6.3           Engineering/Maintenance.  Manager will provide consultation on routine
problems and repairs of a mechanical nature; and periodic, routine inspection
of the operating mechanical equipment of the Property; and routine supervision
of the on-site personnel and contractors by a suitably experienced person in
Manager’s employment. If it becomes necessary to make extraordinary repairs or
engage in an extensive reconstruction, rehabilitation or conversion of the
Property, experts approved by Owner shall be retained by and at the expense of
Owner.

6.4           Emergency Contact.  Manager will be available on a 24-hour basis,
7 days per week, with respect to emergencies, and will establish emergency
procedures that shall assure, at a minimum, that telephone contact with a
designated employee or representative of Manager may be made by Owner, provide
that a responsible representative of Manager will respond within a reasonable
period of time after being notified of the emergency, and contain written
procedures which shall include listing of names and telephone numbers of
designated persons capable of dealing with emergencies.

6.5           Employer Forms Preparation.  Manager shall prepare for execution all
forms, reports and returns required by law in connection with the employment of
personnel including unemployment insurance, Worker’s Compensation Insurance,
disability benefits, Social Security, federal and state withholding taxes and
other similar taxes now in effect or hereafter imposed, if any (but
specifically excluding any income tax or personal property tax returns).

6.6           Owner’s Right to Audit.  Manager agrees that Owner, Owner’s employees
or others appointed by Owner, shall have the right to conduct examinations at
reasonable times during regular business hours, of the accounts and records
maintained for Owner by Manager and to perform any and all audit tests relating
to Manager’s activities provided only that such audit tests are related to
those activities performed by Manager for Owner.

6.7           Real Property Tax Assessment Notices.  Manager shall cause notices of real property
tax assessments to be sent to Owner; and Manager shall have no duty with respect
thereto except that pursuant to mutual agreement Manager will advise Owner with
regard to the merits of appealing such assessment notices and, if requested by
Owner, handle such appeal. Owner shall provide Manager with copies of real
estate tax bills promptly so that payment can be made timely.

6.8           Final Accounting.  Upon the expiration or termination of this
Agreement, the parties shall account to each other with respect to all matters
outstanding as of the date of such expiration or termination.  Manager shall, upon termination hereof,
cooperate fully with Owner to facilitate an orderly transition and prompt
turnover of Owner’s and the Apartments’ books and records to ensure continuity
of management. All records, correspondence and other written materials relative
to Owner or the Apartments, except those as are customarily maintained as
Manager’s property, are the property of Owner; and Manager shall treat as
confidential all such documents.

 15
 

 

6.9           Binding Effect.  This Agreement shall inure to the benefit of
and constitute a binding obligation upon the parties hereto, their respective
successors and permitted assigns.

6.10         Subordination.  Manager agrees to execute and deliver to
Owner, within ten (10) days after receipt, any agreement reasonably necessary
to subordinate this Agreement and Manager’s rights hereunder to any deed of
trust or other financing obtained by Owner for the Property.  Manager shall comply with the cash management
provisions contained in any lockbox or cash management agreement in favor of a
first mortgagee identified to Manager in writing.

ARTICLE VII.

Project Development

7.1           Acknowledgment of Redevelopment Project.  Owner has informed Manager that Owner intends
to redevelop the Project.  In connection
with such redevelopment, Owner intends to redevelop the Project such that a
portion of the Project, which is that part of the Project containing the
Apartments, shall be sold as for-sale residential condominiums.  All of the Apartments must be vacated in
order for the redevelopment project to commence.

7.2           Management Agreement Provisions
Superseded.  Notwithstanding anything
to the contrary in this Agreement, Manager shall have no obligation to:  (a) promote the Apartments or any new Lease
of any of the Apartments, (b) pursue any new Leases not effective as of the
date of this Agreement, (c) maintain any part of the Apartments that is not
subject to a Lease, other than common corridors through with tenants under
Leases may pass, (d) make any capital improvements or engage in any major repairs,
(e) prepare any Annual Business Plan (and as a result, Manager shall be
entitled to incur such expenses as Manager deems reasonably appropriate to
maintain the occupied Apartments prior to the Redevelopment Phase), (f) deliver
any operating or financial statements except for monthly operating statements
prior to the Redevelopment Phase, or (g) undertake any other action under this
Agreement that is not reasonably necessary to operate and maintain the
Apartments subject to Leases prior to the vacation of all Apartments.

ARTICLE VIII.

Events of Default; Termination

8.1           Events of Default.  The following shall constitute an “Event of Default” by either party:

(a)           The failure of the defaulting party to pay
to the non-defaulting party when due any sum which may become due hereunder
within fifteen (15) days after receipt by the defaulting party of a notice from
the non-defaulting party specifying such failure;

(b)           The failure by the defaulting party timely
to perform, keep or fulfill any of the material terms, covenants, undertakings,
obligations or conditions set forth in this Agreement and the continuance of
such failure for a period of thirty (30) days after receipt by the defaulting
party of notice thereof from the non defaulting party specifying such failure,
provided that in the event such failure is amenable to cure and is of a nature
that it cannot, with due diligence, all commercially reasonable efforts, and in
good faith, be cured within thirty (30) days, it shall not constitute an event
of default unless such defaulting party fails to proceed promptly and with due

 16
 

 

diligence, all commercially reasonable efforts, and in good faith to
cure the same, and thereafter to prosecute the curing of such failure with due
diligence and in good faith (it being intended that, in connection with a
failure not susceptible of being cured with diligence and in good faith within
thirty (30) days, the time of such defaulting party within which to cure the
same shall be extended for such period as may be necessary for the curing
thereof with due diligence, all commercially reasonable efforts and in good
faith);

(c)           If the defaulting party shall apply for or
consent to the appointment of a receiver, trustee or liquidator of such party
or of all or a substantial part of its assets, file a voluntary petition in
bankruptcy or admit in writing its inability to pay its debts as they come due,
make a general assignment for the benefit of creditors, file a petition or an
answer seeking reorganization or agreement with creditor or take advantage of
any insolvency law, or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization or insolvency
proceeding, or if an order, judgment or decree shall be entered by any court of
competent jurisdiction, on the application of a creditor, adjudicating such
party a bankrupt or insolvent or approving a petition seeking reorganization of
such party or appointing a receiver, trustee or liquidator of such party or of
all or a substantial part of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of ninety (90) consecutive
days.

8.2           Right to Termination.  If an Event of Default shall occur, the non
defaulting party may, at its option, give to the defaulting party notice of
intention to terminate this Agreement after the expiration of a period of
thirty (30) days from the date of such notice if the default has not been cured
prior to expiration of such thirty (30) day period, and, upon expiration of such
period, this Agreement shall terminate on the date specified in the
notice.  Such termination shall be
without prejudice to any right to any and all remedies (including specific
performance and other equitable relief or any and all right to damages) which
the non-defaulting party may have against the defaulting party under applicable
law or equity subject to the terms of this Agreement.

8.3           Injunction and Specific Performance.  In the event of any breach of the covenants
by Owner or Manager contained in this Agreement, the other party shall be
entitled to relief by injunction or a suit for specific performance and, if
appropriate and otherwise permitted pursuant to this Agreement, to all other
available legal or equitable rights or remedies.

8.4           Termination on Transfer.  Upon thirty (30) days advance notice to Manager, Owner shall have the
right to terminate this Agreement in conjunction with a transfer of the Property or of all of the
ownership interests in Owner,
whether in an arm’s-length
transaction to any entity which is not an affiliate of Owner or to an affiliate
of the Owner, or if the Smith Investor (as such term is defined in the Limited
Liability Company Agreement of Owner (the “Owner LLC Agreement”)) ceases to be
a member of Owner and in connection therewith the Smith Investor is paid all
amounts due to the Smith Investor under the Owner LLC Agreement in connection
therewith.  If this Agreement is so
terminated, then Manager shall be paid all management fees accrued through the
date of termination and all other amounts due to Manager under this Agreement.

8.5           Operator Principal.  If neither James L. Smith nor Marcia Smith
Niedringhaus maintains an active role in the management of Manager, then upon
not less than sixty (60) days

 17
 

 

prior written notice, Owner may elect to terminate this Agreement;
provided however, that Owner shall not have the right to terminate this
Agreement pursuant to this Section and this Agreement shall continue in effect
if (i) both of James L. Smith and Marcia Smith Niedringhaus are precluded from
maintaining an active role as described above by reason of the death or
disability of such individuals, and (ii) within ninety (90) days after receipt
by Manager of notice of termination under this Section, the holders of the
membership interests in Manager (including heirs of James L. Smith or Marcia
Smith Niedringhaus) submit as a replacement for James L. Smith and Marcia Smith
Niedringhaus an experienced apartments manager (subject to Owner’s approval,
not to be unreasonably withheld or delayed).

ARTICLE IX.

Miscellaneous

9.1           Assignment:  This Agreement shall be binding on and inure
to the benefit of the parties and their respective successors and assigns.  Owner shall also have the right to assign
this Agreement collaterally in connection with any mortgage loan on the
Project.  Manager shall not have the
right to (and it will not) assign or transfer any of its rights, duties or
obligations hereunder.

9.2           Notices:  Any notice, request, consent, approval or
other communication required or permitted to be given by any provision of this
Agreement shall be in writing and sent by registered or certified U.S. Mail,
return receipt requested, or by receipted courier service, charges prepaid and
addressed as follows, or to such other address as the recipient party may from
time to time specify by notice to the other party:

	
  If to Owner:

  	
  The Private Residences, LLC

  
	
   

  	
  15601 Dallas Parkway, Suite 600

  
	
   

  	
  Addison, Texas 75001

  
	
   

  	
  Attn: Joe Jernigan

  
	
   

  	
   

  
	
  With a copy to:

  	
  Powell Coleman LLP

  
	
   

  	
  8080 North Central Expressway, Suite 1380

  
	
   

  	
  Dallas, Texas 75206

  
	
   

  	
  Attn: Patrick M. Arnold, Esq.

  
	
   

  	
   

  
	
  If to Manager:

  	
  CWE Hospitality Services, LLC

  
	
   

  	
  212 N. Kingshighway, Suite 1023

  
	
   

  	
  St. Louis, Missouri 63108

  
	
   

  	
  Attn: James L. Smith

  
	
   

  	
   

  
	
  with a copy to:

  	
  Sonnenschein, Nath & Rosenthal LLP

  
	
   

  	
  One Metropolitan Square, Suite 3000

  
	
   

  	
  St. Louis, Missouri 63102

  
	
   

  	
  Attn: Jennifer A. Marler, Esq.

  

Any such
notice shall be deemed to be delivered, given, and received for all purposes as
of (A) the actual date of delivery, as shown on the postal or courier service
receipt, if delivered before

 18
 

 

5:00 pm, recipient’s local time, on a business day (and, otherwise, on
the first business day after the date of actual delivery), or (B) the next
business day after being deposited with a nationally recognized overnight
delivery service.

9.3           Entire Agreement:  This Agreement shall constitute the entire
agreement between the parties hereto and no modification thereof shall be
effective unless in writing executed by the parties hereto.

9.4           No Partnership:  Nothing contained in this Agreement shall
constitute or be construed to be or create a partnership or joint venture
between the Owner, its successors or assigns, on the one part, and Manager, its
successors and assigns, on the other part. 
Manager shall be deemed an independent contractor.  Owner shall not be obligated to pay Manager’s
overhead expenses of personnel that are not an employee assigned full time to
the Project.

9.5           No Third Party Beneficiary:  Neither this Agreement nor any part hereof
nor any service relationship shall inure to the benefit of any third party, to
any trustee in bankruptcy, to any assignee for the benefit of creditors, to any
receiver by reason of insolvency, to any other fiduciary or officer representing
a bankrupt or insolvent estate of either party, or to the creditors or
claimants of such an estate. Without limiting the generality of the foregoing
sentence, it is specifically understood and agreed that insolvency or
bankruptcy of either party hereto shall, at the option of the other party, void
all rights of such insolvent or bankrupt party hereunder (or so many of such
rights as the other party shall elect to void), except the rights of Owner to
receive and the obligations of Manager to deliver to Owner all funds, books and
records, Leases, contracts, and other property and information of Owner or
concerning the Property as herein required.

9.6           Severability:  If any one or more of the provisions of this
Agreement, or the applicability of any such provision to a specific situation
shall be held invalid or unenforceable by a court of competent jurisdiction,
such provision should be modified to the minimum extent necessary to make it or
its application valid and enforceable, and the validity and enforceability of
all other provisions of this Agreement and all other applications of such
provisions shall not be affected thereby.

9.7           Captions, Plural Terms: Unless the
context clearly requires otherwise, the singular number herein shall include
the plural, the plural number shall include the singular and any gender shall
include all genders. Titles and captions herein shall not affect the
construction of this Agreement.

9.8           Attorneys’ Fees:  Should either party employ an attorney to
enforce any of the provisions of this Agreement, or to recover damages for
breach of this Agreement, the non-prevailing party in any action agrees to pay
to the prevailing party all reasonable costs, damages and expenses, including
reasonable attorneys’ fees, expended or incurred by the prevailing party in
connection therewith.

9.9           Signs:  Manager shall have the right to place signs
on the Project during the term hereof in accordance with applicable
Governmental Requirements stating that Manager is the manager and leasing agent
for the Apartments.

 19

 

9.10                           Survival
of Indemnities:  The indemnification
obligations of the parties to this Agreement shall survive the termination of
this Agreement to the extent of any claim or cause of action based on an event
occurring prior to the date of termination.

9.11                           Governing-Law
Venue:  This Agreement shall be
construed under and in accordance with the laws of the State of Missouri and is
fully performable in St. Louis County, Missouri.

9.12                           Competitive
Projects:  Manager may, individually
or with others, engage or possess an interest in any other project or venture
of every nature and description, including but not limited to, the ownership,
financing, leasing, operation, management, brokerage and sale of real estate
projects including apartment projects other than the Project, whether or not
such other venture or projects are competitive with the Project and Owner shall
not have any claim as to such project or venture or to the income or profits
derived therefrom.

9.13                           Interest:  Any amount payable to Manager under this
Agreement which is not paid within ten (10) days after Owner’s receipt from
Manager of written notice of such overdue amount shall accrue interest at the
lesser of WSJ Prime plus two percent per annum or the maximum lawful rate.

9.14                           No
Interest in Real Property:  Manager’s
interest under this Agreement is not, and shall not be deemed to be, an
interest in real property or coupled with any interest in the real
property.  This Agreement shall not, and
shall not be deemed to, create a landlord-tenant relationship or run with the
land.

9.15                           Counterparts:  This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original.

9.16                           REIT
Compliance.

(a)                                  Manager
agrees that, as of the date hereof, (i) Manager is an independent contractor, “within
the meaning of Section 856(d)(3) of the Internal Revenue Code of 1986, as
amended (the “Code”), with respect to Behringer
Howard Opportunity REIT I, Inc. (“BH”) and (ii)
BH does not directly or indirectly (through Owner or otherwise) derive or
receive any income from Manager (whether it be interest income, dividend
income, rent income or any other type of income).  Manager further agrees that it shall maintain
such status as an independent contractor from which BH does not directly or
indirectly derive any income throughout the term of this Agreement.

(b)                                 Manager
acknowledges that it is a limited liability company that is treated as a
partnership for federal income tax purposes. 
Manager agrees that, during the term of this Agreement, Manager shall
not, without the written consent of Owner, (i) change its ownership in
such a manner that it is disregarded as an entity separate from its owner
within the meaning of Treas. Reg. § 301.7701(b)(2)(i)(C), (ii) convert into
another form of entity, (iii) merge or otherwise combine with any other entity,
(iv) acquire an interest in another entity or (v) otherwise change its
ownership in such a manner that could cause Manager to fail Section 9.16(a).

(c)                                  Manager
represents that, as of the date of this Agreement, the Apartments are operated
in such a manner that the amounts paid pursuant to the Leases constitute
qualifying “rents from real property” within the meaning of Section 856(d) of
the Code.  Manager further represents
that the landlord under the Leases is not obligated under the terms of such
Leases to provide services to the tenants other

 20
 

 

than customary
services in the geographic market in which the Property is located (within the
meaning of Treas. Reg. § 1.856-4(b)) (“Customary Services”).  Manager further represents that the only
service provided to any tenants of the Leases that may not be a Customary
Service is maid service provided once a week to tenants of certain corporate
apartments.

(d)                                 Manager
shall take all actions reasonably requested by Owner that Owner determines may
be necessary to ensure that all amounts paid to Owner pursuant to the Leases
qualify as “rents from real property” pursuant to Section 856(d) of the Code
with respect to Owner.  Manager shall
operate the Property so that no services other than Customary Services are
provided to tenants without the express written consent of Owner.  Manager shall operate the Property such that
all amounts payable by the tenants of the Leases shall be paid to CWE
Hospitality Services, LLC, as Manager, and Manager shall remit the appropriate
amounts to the appropriate parties. 
Amounts that are paid as rents under the Leases and that qualify as “rents
from real property” as defined in Section 856(d), shall be remitted to
Owner.  Amounts attributable to parking
charges shall be remitted to Kingsdell L.P., the tenant under the Hotel
Lease.  Any maid service provided to a
tenant of the Property shall be provided by employees of Manager and Manager
shall retain all amounts attributable to the performance of such service.  With respect to such maid service, (i) the
costs of such service must be borne by Manager, (ii) a separate charge must be
made for such service, (iii) the amount of the separate charge must be received
and retained by Manager and (iv) such charge must be adequate compensation to
Manager for such service.  Any other
service other than a Customary Service that is provided to a tenant of the
Property shall be provided by (i) employees of Manager, in which case
Manager shall retain all amounts attributable to the performance of such
service; (ii) an independent contractor with respect to BH from which BH does
not directly or indirectly derive any income; or (iii) a taxable REIT
subsidiary, as defined in Section 856(l) of the Code, with respect to BH.  With respect to such services other than
Customary Services, (i) the cost of such service must be borne by the service
provider; (ii) a separate charge must be made for such service; (iii) the amount
of the separate charge must be received and retained by the service provider;
and (iv) such charge must be adequate compensation for such service.

9.17                           Sarbanes-Oxley.  Manager shall use commercially reasonable
efforts to assist Owner in establishing procedures and controls (not to be
inconsistent with the rights and obligations of Manager under this Agreement)
to comply with, and to evidence compliance with, the Sarbenes-Oxley Act of
2002, as now or hereafter amended, as such statue relates to financial
reporting in respect of the Apartments. 
Within fifteen (15) days after written notice from Owner, Manager will
provide Owner with such customary and reasonable certifications as Owner may
reasonably request to enable Owner to meet its financial certification
obligations under such statute as such statute relates to financial reporting
in respect of the Apartments; provided, however, that such certifications may
be given by Manager to its actual knowledge without any duty of investigation
if such a qualification would not unduly interfere with Owner meeting such
financial certification obligations.  Any
and all costs and expenses incurred by Manager related to this Section 9.17
shall be reimbursed by Owner to Manager and shall not constitute operating expenses
or be included in the calculation of Gross Collections (i.e., such costs shall
be borne by Owner as ownership costs); provided, however, that to the extent
Manager incurs Sarbanes-Oxley compliance costs to satisfy the requirements of
other companies for which Manager performs services, Manager shall reasonably
allocate such costs among such companies and Owner.

 21
 

 

SIGNATURE PAGE

IN WITNESS WHEREOF, the parties hereto have
caused this instrument to be duly executed by their duly authorized
representatives.

	
   

  	
  THE PRIVATE RESIDENCES, LLC

  
	
   

  	
  a Delaware
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Behringer Harvard Opportunity OP I LP, a

  Texas limited partnership,

  Authorized Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Behringer Harvard Opportunity

  REIT I, Inc., a Maryland

  corporation, Its General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Gerald J. Reihsen, III

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   Gerald J.
  Reihsen, III

  
	
   

  	
   

  	
   

  	
   

  	
   Executive
  Vice President

  

 22
 

 

SIGNATURE PAGE

IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be duly
executed by their duly authorized representatives.

	
   

  	
  CWE HOSPITALITY SERVICES, LLC, a

  Missouri limited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L.
  Smith

  	
   

  
	
   

  	
   

  	
  James L. Smith, President

  

 

 23

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