SW3191101_Management & Accounting Agreement_20231212

Avril Cambridge Village
MANAGEMENT AND ACCOUNTING SERVICES AGREEMENT
THIS MANAGEMENT AND ACCOUNTING SERVICES AGREEMENT executed as of the
1S` day of November, 2022, by and among DENVER-SI, LLC, an Indiana limited liability company
("Owner"),PEDCOR HOMES CORPORATION,an Indiana corporation("Manager"),and PEDCOR
INVESTMENTS, A LIMITED LIABILITY COMPANY, a Wyoming limited liability company
("PILLC").
WITNESSETH:
WHEREAS,the following facts are true:
A. Owner is the owner of certain real estate upon which apartment buildings containing
two hundred forty-seven(247)units have been constructed in the Town of Denver,County of Lincoln,
State of North Carolina, and such property is more commonly known as "Avril Cambridge Village"
(the"Project").
B. Owner wishes to employ Manager to manage the Project and PILLC to provide certain
accounting services associated with Project in accordance with the terms of this Agreement.
NOW, THEREFORE,it is agreed as follows:
1. Employment of Manager. Owner hereby employs Manager to manage and operate the
Project. Manager agrees to accept such employment and to manage and maintain the Project as a
residential rental project consistent with the standards of management utilized by Manager in managing
other similar properties in the State of North Carolina. Manager agrees to make available to Owner
the full benefit of its experience and judgment.
2. Term. This Agreement shall become effective and Manager's and P1LLC's authority,
duties,responsibilities and compensation hereunder shall be deemed to have commenced as of the date
of this Agreement and shall continue for two (2)years or until the Project is sold to an independent
third party in an arm's length transaction,whichever occurs first. Owner and Manager may terminate
this Agreement at any time during the first two(2)years for cause,and thereafter,for any reason,upon
sixty(60)days' written notice to the other party. If neither party terminates within sixty(60) days of
contract expiration,this Agreement will automatically be extended on a year-to-year basis(subject to
the sixty (60) day termination notice by either party as described above). A termination of this
Agreement as to Manager shall also terminate this Agreement to PILLC.
3. Duties of Manailer. The duties of Manager to be performed in the management and
operation of the Project include the following:
(a) To negotiate leases for the Project for and on behalf of Owner and use its best efforts
on behalf of Owner to maintain high occupancy so that the Project may be operated
profitably.The terms and provisions of all leases, including the rental amount,shall be
subject to the approval of Owner.

(b) From time to time, Manager will propose advertising plans to Owner for Owner's
approval which may be instigated at Owner's expense.
(c) To use its best efforts to collect all rents and other sums due Owner in the ordinary
course of business, to employ such lawyers and accountants and other professional
persons as may be necessary and to proceed in the name of Owner against any person,
firm,or corporation indebted to the Owner for rentals or otherwise.
(d) To maintain a separate bank account in which all receipts from the Project will be
deposited and from which all payments with respect to the Project will be made.
Manager shall pay all mortgage or debt payments required and other authorized items
of costs or expense. From time to time,at the direction of Owner,if funds are available,
Manager shall distribute amounts to Owner.
(e) To pay all taxes and insurance premiums when due to the extent that funds are available
and to promptly notify Owner if additional funds are required.
(f} To repair and maintain the Project in a neat and first-class manner. For any item of
repair or replacement not budgeted costing in excess of Three Thousand and No/100
Dol(ars($3,000.00)(except for emergencies,in which case,Manager may make repairs
in excess of the aforementioned amount), such expenditure must be specifically
authorized in advance by Owner.
(g) To employ such professional services, including lawyers, accountants, surveyors,and
engineers,on behalf of Owner as may be required in the ordinary course of the business
of operating the Project.
(h) To prepare an annual budget of expense to be incurred in the promotion, operation,
repair,and maintenance of the Project and to deliver the same to Owner for its approval
within sixty(60)days following the end of each calendar year. A copy of such budget
shall be delivered simultaneously to the limited partners of the Owner.
(i) To secure approval from the Owner for any disposition of property included in the
Project.
It is understood by Owner that nothing contained in this Agreement shall in any way require
Manager: (i)to bear the risk of loss to the Project from damage or destruction;or(ii)to advance funds
in payment of any costs or expenses incurred in connection with the Project, it being understood that
all such expenses are the obligation of Owner. If, for any reason, Manager does make such advances,
Manager shall be promptly reimbursed by Owner.
4. Relevant Documents. Promptly upon execution of this Agreement,Owner shall deliver
to Manager all of the relevant documents in Owner's possession in connection with the Project.These
include, but are not limited to, all leases, current accounting for rents collected, all surveys, title
policies, abstracts, and the like with respect to the Project, all insurance policies with respect to the
Project,all mortgage documents and other evidence of indebtedness with respect to the Project.
5. Insurance. Manager will procure or maintain on behalf of Owner,at Owner's expense,
adequate insurance against physical damage,with fire and extended coverage endorsement and against
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liability for loss, damage, or injury to property or persons which might arise out of the occupancy,
management, operation, or maintenance of the Project. Manager shall do what is necessary to have
Manager named as an additional insured. Manager will notify Owner in the event such insurance is
not in full force and effect.
6. Approval of Leases and Contracts Except to the Extent Provided in the Budget. All
contracts executed in connection with the Project (except contracts involving a sum less than Three
Thousand and No/I 00 Dollars($3,000.00)or otherwise designated in the budget)shall be submitted
to Owner for approval. The form of leases used will be approved by Owner. All rental rates shall be
approved by Owner.
7. Accounting Records/Accounting Fee. PILLC will maintain the books and records of
account for the Project in Hamilton County, State of Indiana, which shall be open to the inspection of
Owner at all reasonable business hours. The books and records will be kept in accordance with
generally accepted accounting principles("GAAP").Within thirty(30)days after each calendar month,
PILLC will provide a detailed financial report to Owner covering the prior month. Within sixty (60)
days following the end of each calendar year, PILLC will deliver to Owner a detailed financial
statement covering the profit and loss derived from the Project prepared in accordance with GAAP.
An accounting fee equal to one and half percent(1.5%)of Income (as defined in Paragraph 10)for a
calendar month will be paid to PILLC monthly for so long as PILLC provides this service. Such
accounting fee shall be in addition to the general management fees payable to Manager pursuant to
Paragraph 10 of this Agreement.
if for any reason the parties elect to defer payment of all or a portion of the foregoing
accounting fee,then the outstanding balance of the accounting fee shall bear the following interest:(A)
prior to placement in service of the last building in the Project, an annual rate of ten percent (10%)
simple interest, and (B) following placement in service of the last building in the Project, an annual
rate of six percent(6%)interest,compounded annually. All payments made on the deferred accounting
fee shall be applied first to accrued and unpaid interest thereon and then to the outstanding balance
thereof until the deferred accounting fee is paid in full.Owner shall pay PILLC deferred compensation
and any accrued interest thereon no later than five(5)years after the original due date of the payment.
8. Owner's Rieht to Audit. Owner reserves the right (through Owner's employees or
others appointed by Owner)to conduct examinations without notifications of the books and records
maintained for Owner by Manager. Should Owner discover either weaknesses in internal control or
errors in record keeping,Manager shall correct such discrepancies. Any and all such audits conducted
by Owner will be at the sole expense of Owner, provided Manager shall be liable for any short-fall
discovered in the course of the audit.
9. Final Accounting. Upon termination of this Agreement for any reason, Manager shall
deliver to Owner the following with respect to the Project:
(a) A final accounting reflecting the balance of income and expenses on the Project as of
the date of termination, to be delivered to Owner within thirty (30) days after
termination.
(b) Any balance of monies of Owner or tenant security deposits,or both,held by Manager
with respect to the Project,shall be delivered immediately upon termination.
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(c) All records,contracts,leases,receipts for deposits and unpaid bills and other papers or
documents which pertain to the Project,shall be delivered to Owner immediately upon
termination.
10. General Management Fees. As compensation for services rendered hereunder,
Manager will be paid monthly a fee in the amount of three and a half percent(3.5%)of the gross rental
income and other income from the Project actually collected and remitted during the month. Rental
and other income for the purposes of computing the general management fee will include all rent and
other income, including laundry income,from the Project except:(1)security deposits(except if such
deposits are applied as rental income upon termination of a lease);(2)rents paid more than thirty(30)
days in advance of the due date until the month in which such payments are to apply as rental income;
and(3)monies collected for capital items which are paid for by tenants("Income").
If for any reason the parties elect to defer payment of all or a portion of the foregoing
management fee,then the outstanding balance of the management fee shall bear the following interest:
(A)prior to placement in service of the last building in the Project,an annual rate of ten percent(10%)
simple interest, and (B)following placement in service of the last building in the Project, an annual
rate of six percent (6%) interest, compounded annually. All payments made on the deferred
management fee shall be applied first to accrued and unpaid interest thereon and then to the outstanding
balance thereof until the deferred management fee is paid in full. The Owner will pay any deferred
compensation and any interest accrued on the deferred compensation no later than five(5)years after
the original due date of the payment.
11. Leasing Commissions. Owner will pay or reimburse Manager for all leasing costs
incurred in the ordinary course of business of leasing the Project.
12. Employees: Independent Contractors. Manager shall have in its employ at all times a
sufficient number of capable employees or subcontractors to enable it to properly,adequately,safely,
and economically, as to Manager, manage, operate, and maintain the Project and, as to PILLC, to
maintain the books and records of account and perform the other accounting services for the Project as
described in Paragraph 7. All matters pertaining to the employment, supervision, compensation,
promotion,and discharge of such employees or subcontractors are the responsibility of Manager and
PILLC as to their respective employees and subcontractors, which are, in all respects, the employers
of such employees and subcontractors. Manager and PILLC shall fully comply with all applicable
laws and regulations having to do with workmen's compensation, social security, unemployment
• insurance, hours of labor, wages, working conditions, and other employer/employee related subjects.
All employment arrangements are solely the concern of Manager and PILLC, and Owner shall have
no liability with respect thereto.
13. Fair Housing. It is understood and agreed that the property will always be managed in
compliance with The Fair Housing Act,as amended.
14. Ex lenses. All expenses incurred in connection with the leasing, operation, and
maintenance of the Project shall be the sole responsibility of Owner. Fees for professional services
incurred in connection with the operation of the project shall be paid by Owner.
15. Status of Mana:zer. It is understood and agreed that Manager and PILLC are each an
independent contractor and this Agreement is not intended to provide or create any master/servant or
landlord/lessee relationship between Manager, PILLC,and Owner. Manager and P1LLC each agree
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to indemnify and save harmless Owner from any acts beyond the scope of their authority provided
herein not otherwise authorized or ratified by the Owner. Manager agrees that it is not entitled to and
will not take any tax position that is inconsistent with being a service provider to Owner with respect
to the managed property. For example, Manager will not take any depreciation or amortization,
investment tax credit, or deduction for any payment as rent with respect to the managed property.
Owner shall approve(i)the annual budget for the Project,(ii)capital expenditures with respect to the
Project,(iii)each disposition of property that is part of the Project,(iv)rates charged for the use of the
Project (which approval may be demonstrated by expressly approving such rates or a general
description of the methodology for setting such rates,or by requiring the Manager charge rates that are
reasonable and customary as specifically determined by,or negotiated with,an independent third party
(such as a medical insurance company). The parties acknowledge that Manager and PILLC do not
have any role or relationship with Owner that, in effect,substantially limits Owner's ability to exercise
its rights under this Agreement.
16. Assignment. Manager and PILLC shall have no right to assign their respective rights
or obligations under this Agreement and any assignment shall be void without the prior written consent
of Owner.
17. Amendment. This Agreement constitutes the entire agreement between the parties and
may not be amended without the written consent of Owner and Manager.
18. Notices. Unless otherwise specifically provided,all notices or communications to be
delivered to any party hereunder shall be delivered or mailed to(a)Manager at One Pedcor Square,
770 3`d Avenue,S.W.,Carmel, Indiana 46032,(b)PILLC at One Pedcor Square,770 3rd Avenue,S.W.,
Carmel, Indiana 46032,and(c)Owner at One Pedcor Square, 770 3`d Avenue, S.W.,Carmel,Indiana
46032.
[Signature page follows.]
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EXECUTED effective as of the day and year noted above.
DENVER-SI,LLC,
an Indiana limited liability company
By:
Margaret S.Hu gate, na r \
PEDCOR HOMES CORPORATION,
an Indiana corporation
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By:
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PEDCOR INVESTMENTS, A LIMITED
LIABILITY COMPANY, a Wyoming limited
• liability company
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