ASSET MANAGEMENT AGREEMENT (Hollymead Town Center)
Exhibit 10.38
(Hollymead Town Center)
THIS ASSET MANAGEMENT AGREEMENT (this “Agreement”) is made effective as of the 2nd day of
February, 2006 (the “Effective Date”), between HM ACQUISITION GROUP LLC, a Virginia limited
liability company, having an office at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(“Owner”), and OCTAGON PARTNERS, LLC, a Virginia limited liability company having its principal
place of business at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“Manager”) and OPRE
PREFERRED INVESTMENTS, LLC, a Virginia limited liability company having its principal place of
business at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (“OPRE Preferred Investments”).
W I T N E S S E T H:
WHEREAS, Owner is the owner of real property (the “Property”) as follows:
Hollymead Town Center
Approximately 78.07 acres of real property located in the Rivanna Magisterial
District of Albemarle County, Virginia, depicted as tax Map 32, Parcels 42C,
42A, 44, 45 and 50 and Tax Map 46 Parcel 5, and as shown on the plats of
Rivanna Engineering & Servicing, PLC entitled “Plat Showing Boundary Survey”
dated August 5, 2005.
The Property is sometimes referred to as the “Project.”
WHEREAS, Owner desires to obtain the services of Manager in connection with obtaining final
zoning and site plan approval and related governmental approvals for the Project and procuring on
behalf of Owner suitable purchasers of parcels of land within the Project (all of the foregoing,
being more particularly described below, being hereinafter referred to as “Manager’s Obligations”)
and Manager desires to render such services, as more fully described herein, on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above recitals and for other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS
DEFINITIONS
SECTION 1.1 Definitions. The following terms (whether or not underscored) when used
in this Agreement, including this preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be equally applicable to the singular and
plural forms thereof):
“Affiliate” means any person or persons acting in concert in respect of the person in
question that, directly or indirectly, through one or intermediaries, Controls, is controlled by or
is under common control with such person (for purposes hereof, a “person” includes any natural
person as well as any entity such as a partnership, limited liability company or corporation).
“Asset Management Fee” means the Asset Management Fee set forth in Exhibit A.
“Budget” shall mean the Project Budget referred to in Article V.
“Control,” “Controlled by,” and “under common Control with,” as used
with respect to any person or group of persons, means the possession, directly or indirectly,
through one or more intermediaries, of the power to direct or cause the direction of the management
and policies of such person, whether through ownership of voting securities or by contract or
otherwise.
“Manager” means Octagon Partners, LLC.
“Manager Exculpated Party” means any and all direct and indirect officers, directors,
shareholders, members, managers, beneficial owners, trustees, partners, Affiliates, employees,
participants or agents of Manager.
“Manager’s Obligations” shall have the meaning set forth in the recitals to this
Agreement.
“Manager’s Representative” means as of the Effective Date, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇. and
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III (or either of them, in the case of the death or incompetency of one of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇. or ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III), in their capacities as representatives of Manager, or a
substitute Manager’s Representative(s) appointed from time to time by Manager with the consent of
Owner. Either party constituting Manager’s Representative may act on its own, without the consent
or joinder by the other party, and Owner may rely on any notice, agreement, consent, approval or
other action taken by any such party as being the notice, agreement, consent, approval or other
action of Manager.
“Owner Exculpated Party” means any and all direct and indirect officers, directors,
shareholders, members, managers, beneficial owners, trustees, partners, Affiliates, employees,
participants or agents of Owner and its affiliates.
“Owner’s Representative” means as of the Effective Date, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇, in their capacity as representatives of Owner, or a substitute Owner’s
Representative(s) as appointed from time to time by Owner. Any Owner’s Representative may act on
its own without the consent or joinder by the other party or parties, and Manager may rely on any
notice, agreement, consent, approval or other action taken by any such party as being the notice,
agreement, consent, approval or other action of Owner.
“Professionals” means any and all attorneys, architects, surveyors, engineers,
consultants and other professionals engaged to perform services with respect to the Project that
are included in the Budget.
“Profits Interest” means the Profits Interest set forth in Exhibit A.
-2-
“Project” shall have the meaning set forth in the recitals to this Agreement.
“Property” shall have the meaning set forth in the recitals to this Agreement.
ARTICLE II
APPOINTMENT
APPOINTMENT
SECTION 2.1 Appointment of Manager; Manager’s Obligations. Subject to the provisions
and during the Term of this Agreement, Owner hereby appoints Manager, and Manager hereby accepts
appointment, as Owner’s asset manager for the Project to perform Manager’s Obligations. Manager
agrees to perform Manager’s Obligations so as to assist Owner in causing the site plan and zoning
for the Project to be approved by all applicable governmental bodies and to assist the Owner with
marketing the Project for sale and development in an orderly and efficient manner in accordance
with the Budget. Manager shall at all times during the performance of its duties hereunder act in
Owner’s best interest with respect to the proper protection of the Property. In this capacity,
except as disclosed to and approved by Owner in writing, Manager shall at all times deal at arm’s
length with all third parties and shall serve Owner’s interest at all times. Manager shall work
cooperatively with all Professionals engaged by Owner to assist with the performance of Manager’s
Obligations as well as with real estate brokers which are to retained by Owner in connection with
the disposition of parcels of land within the Project. Manager shall provide advisory and
consultation services as are provided for properties similar in type and location to the Property,
including, without limitation, providing advisory, consultation and other services in accordance
with this Agreement, and working with the Owner to achieve the expeditious disposition of the
Property in a manner consistent with the Owner’s business plan. Manager’s asset management duties
shall include without limitation, the duties to advise the Owner on Manager’s opinion of the best
manner to dispose of the Property, to take such actions in respect of the Property as are
reasonably requested by the Owner consistent with Manager’s duties specified herein, and to cause
the zoning and site plan for the Project to be finalized and approved within the Budget as soon as
practicable, but in no event later than December 6, 2006. Manager shall make recommendations to
Owner as to Manager’s judgment regarding each of the matters described in this Article II. In
connection with the performance by Manager of the Manager’s Obligations, Manager hereby further
agrees as follows:
SECTION 2.1.1 Records. Upon request by Owner, Manager shall promptly deliver to Owner
copies of all governmental approvals and any other documents, agreements, instruments and records
relating to the Project in Manager’s possession. All such approvals and any other documents,
agreements, instruments and records shall at all times be the property of Owner.
SECTION 2.1.2 Repairs and Maintenance. At the expense of Owner, and in accordance
with the Budget, Manager agrees to oversee keeping the Property, including all improvements,
equipment and systems thereon, in good order and repair, as applicable to properties of a similar
nature to the subject Project, oversee the making of all repairs, maintenance, improvements and
additions to the Property that are approved by Owner, as necessary or desirable for keeping the
Property in good and marketable condition.
-3-
SECTION 2.1.3 Taxes. Manager shall also oversee and monitor the prompt review,
payment and, if applicable, appeal of any taxes, assessments and other obligations which could
constitute liens against the Property.
SECTION 2.1.4 Emergency Expenditures. Manager agrees to give prompt notice to Owner
of any emergency of which Manager has knowledge requiring material repairs or expenditures and to
make reasonable efforts to secure Owner’s prior approval before making same.
SECTION 2.1.5 Notices of Claim of Injury or Damage. Upon knowledge of same (and
unless otherwise directed by Owner), Manager agrees to notify (a) Owner and any insurance carrier
of any personal injury or property damage occurring to or claimed by any third party with respect
to the Property of which Manager has knowledge and (b) Owner of any disclaimer of coverage by any
insurance carrier, and to promptly forward to Owner any summons, subpoena, or legal document served
upon Manager relating to actual or alleged potential liability of Owner or Manager.
SECTION 2.1.6 Information. Manager shall keep Owner apprised of, and shall promptly
notify Owner of, all matters coming into Manager’s knowledge that have or may have a material
adverse effect on the ownership and disposition of the Property.
SECTION 2.1.7 Assistance with Proposed Sale. Manager agrees to cooperate with and
assist Owner in any attempt(s) by Owner to sell or otherwise transfer any or all of its interest in
any portion of the Property, including selecting real estate brokers and evaluating offers, without
any claim for separate compensation therefore (other than the Profits Interest described herein, if
applicable).
SECTION 2.1.8 Damage and Destruction. Manager will promptly report and forward to
Owner information regarding any casualty affecting the Property of which Manager is aware. In
connection with any such casualty, Manager shall oversee such actions in connection therewith as
are approved or requested by Owner.
SECTION 2.1.9 Third Party Contracts. Manager shall advise Owner as to the necessity
or desirability of entering into agreements at Owner’s expense and in form and substance acceptable
to Owner, with third parties, to perform the duties Manager reasonably deems necessary with respect
to the Property.
SECTION 2.1.10 Permits and Approvals. Manager shall oversee all filings and
applications for permits, certificates and other similar approvals or documentation with all
authorities having jurisdiction over the Property.
ARTICLE III
AUTHORITY OF MANAGER
AUTHORITY OF MANAGER
SECTION 3.1 General Construction of Agreement. Manager shall not have authority to
act on behalf of Owner or to bind Owner to any obligation to any third party, without the express
written authorization of Owner, which authorization may be delivered in the form of an email or
facsimile. Owner and not Manager shall have final approval (in its sole discretion) over, and
shall execute, all agreements binding on Owner with respect to the Property, unless Owner
-4-
provides Manager with express written authorization to execute any agreement on behalf of or
otherwise bind Owner, which authorization may be delivered in the form of an email or facsimile.
ARTICLE IV
EXPENSES AND OTHER OBLIGATIONS OF OWNER
EXPENSES AND OTHER OBLIGATIONS OF OWNER
SECTION 4.1 General Expenses of Manager to be Paid by Owner. Except as otherwise
expressly provided herein, Owner shall not be obligated to reimburse out-of-pocket expenses
incurred by Manager in connection with the performance of its obligations under this Agreement.
Notwithstanding anything to the contrary in the foregoing, Manager shall be reimbursed for
specific expenses related to the Project set forth in the Budget or otherwise mutually and
reasonably agreed to from time to time by Manager and Owner.
ARTICLE V
BUDGETS AND REPORTS
BUDGETS AND REPORTS
SECTION 5.1 Project Budget. Manager agrees to maintain the Project and perform its
obligations in accordance with the Budget attached hereto as Exhibit B and not to permit
expenditures relating to the Project except within the categories and amounts contained in such
Budget, unless Manager first obtains Owner’s written approval of such expenditure. Manager shall
inform Owner of any significant increases or decreases in costs and expenses relating to the
Project that were not foreseen during the Budget preparation period and thus were not reflected in
the Budget, and in turn to propose changes to the Budget for Owner’s approval.
SECTION 5.2 Reports. Manager shall provide to Owner, upon Owner’s reasonable request,
a written description of all actions taken by Manager in connection with Manager’s performance of
Manager’s Obligations and of all material developments at the Project during the preceding week.
ARTICLE VI
INDEMNIFICATION
INDEMNIFICATION
SECTION 6.1 Indemnification. Manager agrees to indemnify and save Owner and each
Owner Exculpated Party harmless from and against all claims, loss, cost, liability and expense,
including, but not limited to, reasonable counsel fees and disbursements, that arise our of (a) any
act constituting theft, fraud, willful misconduct or gross negligence on the part of Manager and/or
Manager’s members, managers, officers, employees, agents and/or representatives, or (b) any action
or omission by Manager in breach of this Agreement. Except for the matters covered by Manager’s
indemnity set forth in this Section 6.1, Owner shall indemnify, defend and hold harmless Manager
and Manager Exculpated Parties from any claim, loss, cost, liability and expense, including, but
not limited to, reasonable counsel fees and disbursements, relating to the Property that results
from Owner’s acts or omissions or from Manager’s performance of Manager’s Obligations hereunder in
accordance with the terms hereof, provided Manager:
-5-
(i) was acting in good faith, with the belief that such conduct complied with the requirements
of this Agreement, and was not engaged in fraud, intentional misrepresentation, gross negligence or
theft;
(ii) notifies Owner and any insurance carrier (as required) promptly after Manager becomes
aware of any such loss, damage or injury;
(iii) takes no action (such as admission of liability) that bars Owner from obtaining any
protection afforded by any insurance policy Owner may hold or that might prejudice Owner in its
defense to a claim based on such loss, damage or injury; and
(iv) agrees that Owner shall have the exclusive right, at its option, to conduct the defense
to any claim, demand or suit; provided, that Manager shall have the right to participate in such
defense at Manager’s sole cost and expense.
No provision contained herein shall be construed so as to obligate Owner to indemnify Manager
against any theft, fraud, willful misconduct or gross negligence by Manager and/or Manager’s
members, managers, officers, employees, agents and/or representatives.
SECTION 6.2 Survival of Indemnifications. The indemnifications set forth in this
Article VI shall survive the expiration or earlier termination of this Agreement.
SECTION 6.3 Insurance. Owner shall maintain, and name Manager as an additional
insured under, policies of comprehensive general liability insurance as is customary for properties
of the type as the Property.
SECTION 6.4 Waiver of Subrogation. Any insurance carried by either party with respect
to the Property or any occurrence thereon shall, if it can be so written without additional
premiums or with an additional premium that the other party agrees to pay, include a clause or
endorsement denying to the insurer rights of subrogation against the other party to the extent
rights have been waived by the insured hereunder prior to the occurrence of injury or loss. Each
party, notwithstanding any provisions of this Agreement to the contrary, hereby waives any right or
recovery against the other of injury or loss due to hazards covered by such insurance containing
such waiver of subrogation.
ARTICLE VII
COMPENSATION
COMPENSATION
As its sole compensation, payment and commissions for the performance of Manager’s
Obligations, Manager shall be entitled to receive the fees and other benefits described on
Exhibit A.
ARTICLE VIII
TERM OF AGREEMENT
TERM OF AGREEMENT
SECTION 8.1 Term of Agreement. This Agreement shall continue in force with respect to
the Project (the “Term”) until the earliest to occur of (i) the sale, transfer, conveyance or other
disposition of the Property by Owner and the payment of all fees payable by Owner to Manager
-6-
as described on Exhibit A; and (ii) the earlier termination of this Agreement pursuant
to the terms hereof. Manager may terminate this Agreement at any time upon sixty (60) days’ prior
written notice to Owner.
SECTION 8.2 Termination. Notwithstanding anything to the contrary contained in this
Agreement, Owner shall have the right to terminate this Agreement (i) upon any default or breach by
Manager of its obligations hereunder or other violation by Manager of the terms of this Agreement,
if Manager has not cured such default, breach or violation within thirty (30) days of receipt of
written notice of such default, breach or violation or (ii) immediately if Manager shall engage in
fraud, deceit, willful or intentional misconduct, gross negligence, embezzlement, misappropriation
of funds, or violation of law. In the case of defaults described in clause (i) that cannot
reasonably be cured within the thirty (30) day period described in clause (i), and provided Manager
commences such cure within such thirty (30) day period and thereafter diligently pursues such cure,
such thirty (30) day period shall be extended by the reasonable period required to effect such cure
(however, such extension of the 30-day period shall in no event exceed 60 days).
SECTION 8.3 Obligations Under Termination. Upon termination of this Agreement for any
reason, or the expiration of the term according to the terms of this Agreement, the relationship
created hereby shall immediately cease and Manager shall have no further right to act for Owner or
pursue any of the activities described in this Agreement. In the event of termination, Manager
agrees to fulfill all reporting, bookkeeping and related functions hereunder through termination.
Upon termination, Manager shall at the sole cost and expense of Owner, also forthwith (i) deliver
to Owner all monies of Owner on hand, (ii) deliver to Owner, as received, any monies due Owner
under this Agreement, (iii) deliver to Owner (in accordance with Owner’s reasonable instructions),
all materials and supplies, keys, copies of contracts, agreements and documents, and copies of such
other accounting papers, books and records pertaining to the Property as Owner may request, (iv)
deliver to Owner or Owner’s duly appointed agent, all records, contracts, receipts, unpaid bills,
and all other papers or documents that pertain to the Property in Manager’s possession or control,
and (vi) perform any other actions, or deliver any other documents, reasonably required hereunder
upon termination of this Agreement, including facilitating an orderly transition of asset
management to a new asset manager of the Property. This Section 8.3 shall survive the
expiration or earlier termination of this Agreement.
SECTION 8.4 Payment of Compensation After Termination. Manager shall not be entitled
to the payment of any Asset Management Fee that is payable with respect to the period after this
Agreement is terminated, other than any accrued and unpaid Asset Management Fee with respect to the
period prior to the effective date of such termination. However, notwithstanding anything to the
contrary in this Agreement (including the previous provisions of this Article 8), the Owner’s
obligation to pay the Profits Interest as described in Exhibit A shall survive the
expiration of the Term or the termination of this Agreement for any reason.
ARTICLE IX
NOTICES
NOTICES
All notices required or permitted to be given pursuant to this Agreement shall be in writing
and shall be considered as properly given or made (i) upon the date of personal delivery
-7-
(if notice is delivered by personal delivery), (ii) on the date of delivery, as confirmed by
electronic answerback (if notice is delivered by facsimile transmission), (iii) on the day one
business day after deposit with a nationally recognized overnight courier service (if notice is
delivered by nationally recognized overnight courier service), or (iv) on the date shown on the
certified mail receipt for acceptance or refusal of delivery following mailing from within the
United States by first class United States mail, postage prepaid, certified mail return receipt
requested (if notice is given in such manner), and in any case addressed to the parties at the
addresses set forth below (or to such other addresses as the parties may specify by due notice to
the other):
If to Owner:
c/o Asset Capital Partners, L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
If to Manager to:
Octagon Partners, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
If to OPRE Preferred Investments to:
OPRE Preferred Investments, LLC
c/o Octagon Partners, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
c/o Octagon Partners, LLC
▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
ARTICLE X
MISCELLANEOUS
MISCELLANEOUS
SECTION 10.1 Entire Agreement. This Agreement is the entire agreement between the
parties with respect to the subject matter hereof, and no alteration, modification or
interpretation hereof shall be binding unless in writing and signed by both parties.
SECTION 10.2 Severability. If any provision of this Agreement or application to any
party or circumstances shall be determined by any court of competent jurisdiction to be invalid or
unenforceable to any extent, the remainder of this Agreement or the application of such provision
to such person or circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be valid and shall be
enforced to the fullest extent permitted by law.
-8-
SECTION 10.3 Applicable Law. This Agreement shall be construed and enforced in
accordance with the laws of the State in which the Property is located.
SECTION 10.4 Assignability. This Agreement may not be assigned by either party
without the prior written consent of the other. It is agreed, however, that a sale of all or
substantially all of the capital stock, partnership interests or assets of, or a merger of other
business combination transaction involving, Asset Capital Corporation, Inc. or Asset Capital
Partners, L.P. shall not be subject to the consent of the Manager.
SECTION 10.5 Limited Authority. Manager’s authority shall be derived wholly from this
Agreement, and Manager has no authority to act for, bind or represent Owner except as herein
specified.
SECTION 10.6 Successors Bound. This Agreement shall be binding upon and inure to the
benefit of Manager and Owner and their respective permitted assigns.
SECTION 10.7 No Partnership or Joint Venture. Nothing contained herein shall be
deemed to constitute Owner and Manager as partners or joint venturers.
SECTION 10.8 Time. Time is of the essence with respect to this Agreement.
SECTION 10.9 Limitation of Recourse. Notwithstanding anything to the contrary
contained herein no Owner Exculpated Party shall have any liability hereunder.
SECTION 10.10 No Sales Agreement. Manager is not authorized to list the Property for
sale or to negotiate with prospective purchasers of the Property without the Owner’s express prior
written consent; however, Manager shall deliver to Owner any unsolicited offers to purchase all or
any portion of the Property. If Owner should sell the Property or enter into an agreement with a
prospective purchaser with respect to a sale of the Property, then, with the exception of the Asset
Management Fee and Profits Interest described on Exhibit A hereto, Manager shall not be
entitled to any sales brokerage commission, finder’s fee or any other compensation unless Owner has
entered into a separate written listing agreement or sales broker agreement with Manager.
[Signatures on Following Page]
-9-
IN WITNESS WHEREOF, Owner and Manager have executed this Agreement as of the Effective Date.
| Witness: |
OWNER: HM ACQUISITION GROUP, LLC, a Virginia limited liability company |
|||
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Title: | CEO | |||
Witness: |
MANAGER: OCTAGON PARTNERS, LLC, a Virginia limited liability company |
|||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III | |||
| Title: | ||||
Witness: |
OPRE PREFERRED INVESTMENTS: OPRE PREFERRED INVESTMENTS, LLC, a Virginia limited liability company |
|||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III | |||
| Title: | ||||
-10-
SCHEDULE OF EXHIBITS
EXHIBIT A: Fee Schedule
EXHIBIT B: Project Budget
-11-
EXHIBIT A
Compensation Schedule
| I. | Asset Management Fee. |
A. Asset Management Fee. Manager shall be entitled to receive a monthly asset
management fee in the amount of Twenty Thousand Dollars ($20,000.00) per month, commencing on the
acquisition date of the Property and continuing until the earlier of (i) the sale by Owner in one
or more parcels of least 31 acres of the land contained on the Property and (ii) June 1, 2006.
After the first to occur of clause (i) or (ii) above, Manager shall be entitled to receive a
monthly asset management fee in the amount of Ten Thousand Dollars ($10,000.00) per month.
B. Payment of Asset Management Fee. The Asset Management Fee shall be payable to the
Manager on or before the tenth day of the month (for the prior month). The Asset Management Fee
shall be prorated for any partial calendar month of the Term.
| II. | Profits Interest. |
OPRE Preferred Investments, LLC shall be entitled
to receive a profits interest equal to forty
percent (40%) of the Net Cash Flow (as defined below) received by the Owner with respect to the
Project after (i) repayment of all outstanding principal and all interest owing or paid on all
indebtedness of the Owner with respect to the Property that is outstanding on the date of this
Agreement, or such indebtedness of the Owner with respect to the Property that results from a
recapitalization by Owner of the Property so long as the principal amount of such new indebtedness
does not exceed the amount of indebtedness outstanding immediately prior to such recapitalization
and the annual rate of interest on such new indebtedness does not exceed 10% (any such indebtedness
is referred to hereafter as “Indebtedness Encumbering the Property”), (ii) Owner has received
cumulative Net Cash Flow equal to Owner’s Invested Equity (as defined below) and (iii) Owner has
received Net Cash Flow equal to a cumulative 15% annual return, compounded annually, on the Owner’s
Invested Equity.
A. For purposes of this Agreement, the following terms shall have the following meanings:
(1) “Net Cash Flow” shall mean the cash generated by the Project, including as a
result of any sale of all or any portion of the Project, that is available for distribution to the
Owner after payment of all operating expenses, taxes, insurance, interest expense, commissions,
closing costs, marketing expenses, prorations and adjustments, attorneys’ and professional fees and
expenses, and other costs and expenses incurred by Owner, including a reasonable reserve for
outstanding liabilities and obligations of Owner related to operation of the Project and the sale
thereof.
(2) “Owner’s Invested Equity” shall mean the aggregate amount invested by Owner in
the Project, including but not limited to all acquisition costs, capital improvements and interest
payments on the Indebtedness Encumbering the Property, and all amounts expended in
A-1-
maintaining, improving, operating, owning and selling the Property, including all amounts paid
to Manager as fees or reimbursements.
III. In the event of any dispute regarding the determination and/or payment of the Profits
Interest, the prevailing party in any arbitration or litigation shall be reimbursed by the other
party for reasonable attorneys’ fees, experts witness fees and court costs incurred with respect to
such dispute.
A-2-