Document:

exv10w38

 

Exhibit 10.38

ASSET MANAGEMENT AGREEMENT

(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 4733 Bethesda Avenue, Suite 800, Bethesda, Maryland 20814
(“Owner”), and OCTAGON PARTNERS, LLC, a Virginia limited liability company having its principal
place of business at 210 5th Street, N.E., Charlottesville, Virginia 22902 (“Manager”) and OPRE
PREFERRED INVESTMENTS, LLC, a Virginia limited liability company having its principal place of
business at 210 5th Street, N.E., Charlottesville, Virginia 22902 (“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

     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, John P. Williamson, Jr. and
John A. Stalfort III (or either of them, in the case of the death or incompetency of one of John P.
Williamson, Jr. or John A. Stalfort 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, Peter Minshall, William
LeBlanc and Blair Fernau, 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

     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

     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

     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

     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

     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

     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

     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

     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.

4733 Bethesda Avenue

Suite 800

Bethesda, Maryland 20814

Attn: Peter C. Minshall

     If to Manager to:

Octagon Partners, LLC

210 5th Street, N.E.

Charlottesville, Virginia 22902

Attn: John P. Williamson

     If to OPRE Preferred Investments to:

OPRE Preferred Investments, LLC

c/o Octagon Partners, LLC

210 5th Street, N.E.

Charlottesville, Virginia 22902

Attn: John P. Williamson

ARTICLE X

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/ Peter Minshall
	 
	 	 	 	 
	 
	 	Name:	 	Peter Minshall
	 
	 	Title:	 	CEO
	 
	 	 	 	 
	 

 

Witness:
	 	MANAGER:

OCTAGON PARTNERS, LLC, a 

Virginia limited liability company
	 
	 	 	 	 
	 
	 	By:	 	/s/ John Stalfort
	 
	 	 	 	 
	 
	 	Name:	 	John A. Stalfort III
	 
	 	Title:	 	 
	 
	 	 	 	 
	 

 

Witness:
	 	OPRE PREFERRED INVESTMENTS:

OPRE PREFERRED INVESTMENTS, LLC,

a Virginia limited liability company
	 
	 	 	 	 
	 
	 	By:	 	/s/ John Stalfort
	 
	 	 	 	 
	 
	 	Name:	 	John A. Stalfort 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-exv10w39

 

Exhibit
10.39

ASSET MANAGEMENT AGREEMENT

(Maryland Portfolio)

     THIS ASSET MANAGEMENT AGREEMENT (this “Agreement”) is made effective as of the 29th
day of July, 2005 (the “Effective Date”), between ASSET CAPITAL PARTNERS, L.P., a Delaware limited
partnership, having an office at 4733 Bethesda Avenue, Suite 800, Bethesda, Maryland 20814
(“Owner”), and BROWNSTONE CAPITAL, LLC, a Virginia limited liability company, having an office at
4733 Bethesda Avenue, Suite 500, Bethesda, Maryland 20814 (“Manager”).

W I T N E S S E T H:

     WHEREAS, Owner is the owner (directly or through subsidiary limited liability companies (each
an “Operating Company” and together the “Operating Companies”)) of certain tracts of land (the
“Land”), together with certain buildings located thereon (the “Buildings”) and other improvements
(collectively, the “Improvements”) erected thereon, as well as related tangible and intangible
personal property related thereto (“Personal Property”), as follows:

	 	 	 	 	 
	Project	 	Land and Improvements	 	 
	Columbia Project – 5450

	 	5450 Knoll North Drive

Columbia, Maryland	 	 
	 
	 	 	 	 
	Columbia Project – 5500

	 	5500 Knoll North Drive

Columbia, Maryland	 	 
	 
	 	 	 	 
	(note: Columbia Project – 5450 and Columbia
Project – 5500 sometimes collectively referred to
as “Columbia Project”)
	 	 	 	 
	 
	 	 	 	 
	Frederick Project

	 	110 Baughman’s Lane

Frederick, Maryland	 	 
	 
	 	 	 	 
	Timonium Project

	 	2205 York Road

Timonium, Maryland	 	 

     Each of the foregoing projects (including the Land, Buildings, Improvements and Personal
Property associated therewith), is referred to as a “Project” and together as the “Projects”. The
Projects are sometimes also referred to collectively as the “Property”.

     WHEREAS, Owner desires to obtain the services of Manager in connection with the asset
management of certain aspects of the development, leasing, management, operation, disposition and
strategic planning for the Property (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

     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):

     “Acquisition Fee” means the Acquisition Fee set forth in Exhibit “A”.

     “Additional Incentive Disposition Fee” means the Additional Incentive Disposition Fee
set forth in Exhibit “A”.

     “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”.

     “Budgets”, including “Development Budget(s)”, “Operating Budget(s)”
and “Capital Budget(s)” shall have the meaning set forth in Article V.

     “Business Plan” shall have the meaning set forth in Article 2.2.2.

     “Change of Control” of Manager shall be deemed to have occurred if (i) except if the
same occurs as a result of the death or incompetence of the Manager Representatives, the Manager
Representatives named herein own, directly or indirectly, in the aggregate less than fifty percent
(50%) of the beneficial interest in Manager; (ii) neither of the Manager Representatives name
herein Control Manager; or (iii) neither of the Manager Representatives named herein has primary
asset management responsibility for the Property on behalf of Manager.

     “Construction Agreement” or “Construction Contract” means any construction contract(s)
and/or construction management agreement(s) entered into (or intended to be entered into) between
Owner and the Contractor, as the same may be amended or otherwise modified from time to time.

     “Contractor” means any general contractor and/or construction management firm under
the Construction Contract.

-2-

 

     “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.

     “Incentive Disposition Fee” means the Incentive Disposition Fee set forth in
Exhibit “A”.

     “Leases” means leases and other agreements relating to the occupancy of space within
the Property.

     “Leasing Agreement” means the leasing agreement(s) entered into (or intended to be
entered into) by Owner and the Leasing Agent, as the same may be amended or otherwise modified from
time to time.

     “Leasing Agent” means the leasing agent(s) under the Leasing Agreement.

     “Manager” means Brownstone Capital, 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, Shawn Krantz and Stephen
Carboni (or either of them, in the case of the death or incompetency of one of Shawn Krantz or
Stephen Carboni), 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.

     “Owner’s Representative” means as of the Effective Date, Peter Minshall, William
LeBlanc and Blair Fernau, 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.

     “Payoff Option” shall have the meaning set forth in Exhibit “B” to this
Agreement.

-3-

 

     “Permitted Variances” means, with respect to any line item on any approved Budget for
a Project, and with respect to any annual period, a deviation that is not greater than the lesser
of (i) Five Thousand and 00/100 Dollars ($5,000) or (ii) two percent (2%) of the amount shown in
such line item.

     “Professionals” means any and all attorneys, architects, engineers, consultants and
other professionals involved in any Work.

     “Projects” 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.

     “Property Management Agreement” means the property management agreement(s) entered
into between Owner and the Property Manager, as same may be amended or otherwise modified from time
to time.

     “Property Manager” means the property manager(s) under the Property Management
Agreement.

     “Redevelopment Work” means the Work involved in the redevelopment and construction,
including related tenant improvement work, with respect to the respective Projects more
particularly described in the Development Budgets and Business Plans for each of the Projects.

     “Service Contracts” means any and all service contracts that are required in the
ordinary course of business of operating a Project in a manner applicable to buildings of a similar
nature to the subject Project and which provide for services that are included in an approved
Operating Budget, including, without limitation, contracts for electricity, gas, telephone,
cleaning, security, vermin extermination and other services which are required under any of the
Leases or to comply with any legal requirements.

     “Work” means any and all repairs, construction, alterations, renovations or work
performed at the Property, including, without limitation, tenant improvements.

ARTICLE II

APPOINTMENT

     SECTION 2.1 Appointment of Manager. 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 Property to perform Manager’s Obligations. Manager agrees to perform
Manager’s Obligations so as to assist Owner in causing the Property to be operated, maintained,
listed, leased and renovated, and if applicable, offered for sale, in an orderly and efficient
manner, in accordance with the Business Plan, and the Operating Budget, Capital Budget, and
Development Budget for each Project, and otherwise, as applicable to buildings of a nature similar
to each Project in the market where such Project is located. Manager shall at all times during the
performance of its duties hereunder, act in Owner’s 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

-4-

 

serve Owner’s interest at all times. Manager shall work cooperatively with the Property
Manager, independent leasing agents (including Leasing Agent), the construction management firm (or
general contractor), and, if applicable, real estate brokers, which are to retained by Owner in
connection with the property management, leasing, Work, Redevelopment Work and disposition of
Projects. Manager shall provide advisory, consultation and asset management services reasonably
necessary 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 redevelopment, leasing and disposition of the
Property in a manner consistent with the 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 redevelop, manage, lease, hold, make collections from, resolve any matters regarding, and
dispose of, the Property, to take such actions in respect of the Property as are reasonably
requested by the Owner consistent with its duties specified herein, and to use all reasonable
efforts to assist Owner in causing the Property to be operated consistently with the approved
Budgets. In addition, Manager’s asset management obligations shall include the responsibility for
making recommendations to Owner as to Manager’s judgment regarding each of the foregoing matters
described in this Article II.

     SECTION 2.2 Duties and Powers of Manager Operations. Without limiting the generality
of the provisions of Section 2.1 of this Agreement, Manager agrees, and is hereby granted
the authority to do the following:

     SECTION 2.2.1 Books and Records. Owner, directly or through the Property Manager,
shall maintain the books and records for the Projects. Manager understands that separate and
complete records for each Project will be maintained. Manager shall promptly deliver to Owner
copies of any source materials in Manager’s possession. All records shall at all times be the
property of Owner. Upon termination of this Agreement, Manager shall deliver to Owner copies of
all such records and source materials in Manager’s possession.

     SECTION 2.2.2 Reports and Budgets. Manager agrees (i) to review and make itself
available to Owner to discuss or analyze Monthly Statements of operations provided by the Property
Manager, (ii) to prepare and/or oversee preparation and updates for Owner of the Business Plan
(which shall be comprised of the Argus financial models for the Projects), and Development Budget,
and to oversee preparation and updates for Owner of any Operating Budget and any Capital Budget,
and proposed amendments thereto, in accordance with Article V, and (iii) propose and
recommend changes to the Business Plan or any Budget, property leasing and redevelopment
strategies, sales positioning of the Property and other strategic plans concerning the Property
from time to time as appropriate. Manager shall submit to Owner periodically, in a timely manner,
any original invoices and other evidence of and support for amounts due and payable on account of
the Property in its possession, along with Manager’s written authorization for payment.

     SECTION 2.2.3 Leasing of Space. Manager agrees to use its commercially reasonable and
good faith efforts to oversee the leasing of each of the Projects in a manner consistent with the
Business Plan to tenants acceptable to Owner and, in connection therewith, Manager shall act as
leasing advisor (including review, analysis and assistance in negotiation of lease terms), and
advise Owner in all matters regarding the retention of the Leasing Agent. Owner and not

-5-

 

Manager shall have final approval (in its sole discretion) over, and shall execute all Leases
(including amendments), unless otherwise agreed in writing. Manager shall submit to Owner
periodically, in a timely manner, monthly leasing activity reports. No additional compensation
shall be due or payable to Manager on account of its leasing responsibilities.

     SECTION 2.2.4 Compliance with Lease Terms. Manager agrees to use its commercially
reasonable and good faith efforts to oversee the management and conduct of the operations of the
Property in compliance with all Leases, to consult with Owner regarding the breach of any tenant’s
obligations as required by such tenant’s Lease, and at the direction of Owner, to otherwise
undertake, oversee and coordinate such actions as may be necessary to exercise Owner’s rights under
any such Lease.

     SECTION 2.2.5 Collections; Disbursements. Manager shall monitor and report the
collection of all Income, insurance proceeds and condemnation awards (including the Property
Manager’s receipt of same) based on the reports from Property Manager. Manager shall be
responsible for investigating and recommending approval for all Property related disbursements
requiring Owner approval under the Property Management Agreement, and shall submit all original
invoices and other documentation in Manager’s possession to Owner in a timely fashion.

     SECTION 2.2.6 Defaults Under Leases. Manager shall promptly notify Owner of any
material defaults by tenants under their Leases. Manager may, at Owner’s expense, with Owner’s
prior approval, engage counsel and cause such legal proceedings to be initiated and prosecuted as
may be necessary to enforce the Leases.

     SECTION 2.2.7 Service Contracts. Manager, in coordination with Property Manager,
agrees to oversee the process of selection of contractors and the review, evaluation and
negotiation on behalf of Owner of all Service Contracts. Owner and not Manager shall have final
approval (in its sole discretion) over, and shall execute, all Service Contracts and amendments,
unless otherwise agreed in writing.

     SECTION 2.2.8 Repairs and Maintenance. At the expense of Owner, and in accordance
with the approved Budgets, Manager agrees to oversee keeping the Property, including all
Improvements, equipment and systems, in good order and repair, as applicable to properties of a
similar nature to the subject Project, oversee in coordination with Property Manager the making of
all repairs that are the obligations of Owner to tenants and all repairs, maintenance, decorations,
replacements, substitutions, improvements and additions to the Property necessary or desirable for
keeping the Property in such condition.

     SECTION 2.2.9 Taxes and Insurance. At the expense of Owner, and in accordance with
approved Budgets, Manager agrees to undertake the review and evaluation of appropriate casualty,
public liability and other insurance coverages necessary or appropriate for the conduct of Owner’s
business. 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 2.2.10 Emergency Expenditures. Manager agrees to give prompt notice to Owner
of any emergency of which Manager has knowledge requiring material repairs or

-6-

 

expenditures and to make reasonable efforts to secure Owner’s prior approval before making same,
but Manager may cause same to be made on its good faith judgment.

     SECTION 2.2.11 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 tenant or 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, Manager or the
Property Manager.

     SECTION 2.2.12 Construction and Renovation. Manager shall monitor the design, bidding
and construction of any improvements, including tenant improvement work and periodically notify
Owner of construction progress. See also Section 2.3, below.

     SECTION 2.2.13 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, operation, maintenance or repair of the Property.

     SECTION 2.2.14 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 of the Projects, including selecting real estate brokers and evaluating offers, without any
claim for separate compensation therefore (other than the Incentive Disposition Fee and the
Additional Incentive Disposition Fee described herein).

     SECTION 2.2.15 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 2.2.16 Third Party Contracts. Manager shall advise Owner as to the necessity
or desirability of entering into agreements (including the Property Management Agreement and the
Leasing Agreement) 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.
Manager shall include in the Operating Budget estimated costs it has established for any such third
party contracts.

     SECTION 2.3 Duties and Powers of Manager – Redevelopment. Manager shall coordinate
and oversee the construction manager/general contractor whose responsibility it will be to monitor
the design and construction of Work and Redevelopment Work, including, but not limited to:
scheduling meetings between architects, engineers, space planners, and tenants (or prospective
tenants); obtaining Owner’s or tenants’ written approval of working drawings (as applicable);
coordinating and directing pre-bid conferences with contractors; establishing a project time
schedule; administering and coordinating job site construction meetings as necessary to ensure the
timely flow of information among Owner, tenants, contractors, professsionals, space planners and
contractors (as applicable); obtaining and reviewing all necessary lien releases; reviewing all
payment requests pursuant to the contract documents; inspecting the

-7-

 

construction of the improvements; assisting contractors in obtaining notices of completion,
certificates of occupancy, or equivalent documents; conducting final walk-throughs with Owner,
tenants, space planners and contractors (as applicable); obtaining tenants’ written acceptance and
acknowledgement of the substantial completion date of the improvements; assisting in the
preparation of a final punchlist which itemizes all work needed to be completed or requiring repair
or adjustment; and obtaining from contractors, subcontractors, material suppliers or other
consultants all such guarantees, instructions, equipment manuals, warranties and all other
pertinent documents relating to Work. In connection therewith, Manager shall:

          (a) Assist Owner (and construction manager or general contractor, in the case of Construction
Agreements other than with such parties) in reviewing and negotiating Construction Agreements;
provided, however, all Construction Agreements, and all renewals, modifications and
amendments to Construction Agreements, and all change orders in connection therewith, shall, unless
otherwise determined by Owner, be executed by Owner and Manager shall have no power or authority to
execute or approve any of the foregoing. Upon request made by Owner, Manager shall deliver to
Owner copies of all Construction Agreements and any modifications or renewals thereof or change
orders issued thereunder;

          (b) Oversee all filings and applications for permits, certificates and other similar approvals
or documentation with all authorities having jurisdiction over the Property or Work;

          (c) Assist Owner in defining the scope of work; assist in preparing and reviewing plans and
specifications, including attendance at meetings with architects and engineers; solicit bids;
coordinate schedule, ordering, and deliveries; review draw requests and make recommendations for
payment; keep Owner informed of the status of the job; and make recommendations regarding payment;
and supervise and monitor the performance of the Professionals and the overall progress of the
Work.

ARTICLE III

AUTHORITY OF MANAGER

     SECTION 3.1 General Construction of Agreement. Subject to taking action in connection
with emergencies as contemplated by Section 2.2.10, Manager shall not have authority to act on
behalf of Owner or to bind Owner to any obligation to any third party. 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 otherwise agreed in writing.

ARTICLE IV

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 Projects set forth in an appropriate approved Budget or otherwise
mutually and reasonably agreed to from time to time by Manager and Owner.

-8-

 

ARTICLE V

BUDGETS AND REPORTS

     SECTION 5.1 Budgets.

          (a) Manager agrees to oversee the preparation by Property Manager, at least annually, and
submit to Owner for its approval on or before November 1st of preceding calendar year a proposed
budget for the operation of the Property and the redevelopment of the Projects for the current
calendar year (the “Budget”). The Budget shall consist of an operating budget (the
“Operating Budget”) and a capital improvements budget (the “Capital Budget”). The
Operating Budget shall show, in reasonable detail, each line item of anticipated income and expense
(on a cash basis). The Capital Budget shall show, in reasonable detail, each line item of
anticipated capital expenditures (actual expenses for improvements, repairs, replacements and
alterations which, according to generally accepted accounting principles, consistently applied, are
required or permitted to be capitalized and amortized over time, rather than expenses in the year
paid or incurred).

          (b) Manager agrees not to authorize expenditures for the operation and maintenance or
improvement of, or otherwise relating to, the Property in any fiscal year except within the
categories and amounts contained in the Budgets for that year previously approved by Owner, unless
(i) such expenditure is specifically authorized under any of the other provisions of this
Agreement, or (ii) Manager first obtains Owner’s written approval of such expenditure. In
addition, during each calendar year, Manager shall inform Owner of any significant increases or
decreases in costs and expenses or revenues that were not foreseen during the Budget preparation
period and thus were not reflected in the Operating Budget or the Capital Budget, and in turn
propose changes to the Budgets for Owner’s approval.

          (c) Pending approval of an Operating Budget and/or a Capital Budget for any calendar year, or
if Owner shall fail to approve an Operating Budget and/or a Capital Budget for any calendar year,
then during any such period Manager shall continue to oversee the Property Manager so as to manage,
maintain, supervise, direct and operate the Property in accordance with the Operating Budget or the
Capital Budget for the immediately preceding calendar year (however, in the case of an Operating
Budget, unless Owner otherwise expressly notifies Manager otherwise, each budget item shall be
increased by 5%) until Owner approves the new Operating Budget and/or Capital Budget.

          (d) At the same time that Manager submits to owner any Capital Budget or Operating Budget,
Manager shall also submit a proposed overall plan for the marketing, leasing, repair, management,
operation and maintenance of the Property during the period covered by such Budget.

          (e) Manager shall prepare or provide any other or further information, projections or
documents relating to the management, operation or maintenance of the Property as Owner may from
time to time reasonably request.

-9-

 

          (f) Manager shall submit to Owner from time to time, proposed revisions to the Budgets for
Owner’s approval, whenever Manager determines that revisions to the Budgets would be in the best
interest of Owner.

     SECTION 5.2 Business Plans. Manager agrees to prepare and submit to Owner from time
to time for Owner’s approval proposed revisions to the Business Plan whenever Manager determines
that revisions regarding the development, marketing and disposition of the Projects, including a
projected timeline for redevelopment, projected revenues and expenses and other matters relevant to
the ownership and management of the Property would be in the best interest of Owner.

     SECTION 5.3 Reports. Manager shall, within ten (10) days after the end of each
calendar month during the term of this Agreement (or, if later, within ten (10) days after the
receipt of the operating and cash flow statements from the Property Manager) provide to Owner in a
written format mutually agreed to by Owner and Manager (and based on the reports and information so
provided by the Property Manager, Leasing Agent and other applicable providers of such
information), all results of operation of the Property for the prior month and year-to-date and
other financial documentation, including matters related to the monthly cash flow reports, and to
the performance relative to the Budgets (the “Monthly Statements”). Manager shall
cooperate with the Property Manager and Owner’s accountants in the preparation of monthly and
annual financial statements and quarterly and annual tax returns for Owner in a manner reasonably
acceptable to Owner.

     SECTION 5.4 Annual Audits. Manager shall, at Owner’s request, assist Owner with
Owner’s annual review of the books and records of the Property made by a firm of certified public
accountants or other auditors selected by Owner. Manager shall assist Owner, at Owner’s request,
in obtaining information necessary for Owner’s tax advisors to prepare Owner’s tax returns. In
addition, Manager shall furnish Owner with information in Manager’s possession data and information
regarding the business of the Property as shall be required to enable Owner to prepare its Federal,
state and local income tax returns, and not otherwise available from Property Manager or Owner.
The expense of the annual review and tax returns shall be an expense of Owner.

ARTICLE VI

INDEMNIFICATION

     SECTION 6.1 Indemnification. Manager agrees to indemnify and save Owner and each
Owner Exculpated Party harmless from and against all loss, cost, liability and expense, including,
but not limited to, reasonable counsel fees and disbursements that may be occasioned by (a) any
acts constituting theft, fraud, willful misconduct or gross negligence on the part of Manager, or
manager’s failure to take appropriate action for the theft, fraud, willful misconduct or gross
negligence of Manager’s personnel and its employees, agents and/or representatives, or (b) any
action 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 loss, cost, liability and expense, including, but not
limited to, reasonable counsel fees, relating to the Property that results from

-10-

 

Manager’s performance of Manager’s Obligations hereunder in accordance with the terms hereof,
provided Manager and each of the Manager Exculpated Parties:

          (i) was acting in good faith, with the belief that such conduct complied with the requirements
of this Agreement, and was not engaged in negligence, 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.

Nothing contained herein shall be construed as indemnifying Manager against its theft, fraud,
negligence, willful misconduct or gross negligence.

     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

     As its sole compensation, payment and commissions for the performance of Manager’s
Obligations, Manager shall be entitled to receive the fees described in Exhibit “A”.

ARTICLE VIII

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) three (3) years from the Effective

-11-

 

Date; (ii) the sale, transfer, conveyance or other disposition of all the Property by Owner
(this Agreement shall terminate as to any one Project upon the sale, transfer, conveyance or other
disposition of that particular Project by Owner); (iii) the earlier termination of this Agreement
pursuant to the terms hereof; or (iv) the consummation of the Payoff Option as more particularly
described in Exhibit “B”. 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 the failure of Manager
to timely cure a default in the performance of its obligations hereunder, including the failure to
deliver Budgets or Business Plans as required by this Agreement, or other violation of express
terms of this Agreement, if Manager has not cured such default within thirty (30) days of receipt
of written notice of such default, or (ii) if Manager shall engage in fraud, deceit, intentional
misconduct, embezzlement, misappropriation of funds, or knowing 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 operation of 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), unless the
Pay-Off Option has been consummated, the Owner’s obligation to pay the Incentive Disposition Fee
and the Additional Incentive Disposition Fee, both as described in Exhibit “A”, shall
survive the expiration of the Term or the termination of this Agreement for any reason.

-12-

 

ARTICLE IX

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 (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:

     Asset Capital Partners, L.P.

     4733 Bethesda Avenue

     Suite 800

     Bethesda, Maryland 20814

     Attn: William B. LeBlanc, III

     If to Manager to:

Brownstone Capital, LLC

4733 Bethesda Avenue

Suite 500

Bethesda, Maryland 20814

Attn: Stephen Carboni and Shawn Krantz

ARTICLE X

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.

     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.

-13-

 

     SECTION 10.4 Assignability. This Agreement and all rights hereunder shall not be
assigned by Owner or Manager nor shall Manager permit a “Change of Control” to occur without the
prior written approval of Owner. In the event a Change of Control, as defined in this Agreement,
occurs with respect to Manager as a result of the death or incompetence of a party, and Owner does
not approve such Change in Control, which approval will not be unreasonably withheld, then Owner
may terminate this Agreement upon thirty (30) days’ prior notice to 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 Non-Compete; Other Business; Competition; Etc. Manager and Owner each
understands and acknowledges that Affiliates of Manager or Owner may be interested, directly or
indirectly, in various other businesses and undertakings and such businesses and undertakings may
complete, either directly or indirectly, with the conduct of the business of Owner. Manager and
Owner hereby agree that (i) the assumption by Manager of its duties hereunder shall be without
prejudice to its rights (or the rights of its Affiliates) to have such other interests and
activities and to receive and enjoy profits or compensation therefrom; (ii) Manager and Owner each
waives any rights it might otherwise have to share or participate in such other interests or
activities of the other party or their respective affiliates; (iii) Owner consents to the pursuit
of other ventures by Manager, even if such other ventures are competitive with the business of
Owner.

     SECTION 10.10 Limitation of Recourse. Notwithstanding anything to the contrary
contained herein no Owner Exculpated Party shall have any liability hereunder.

     SECTION 10.11 No Sales Agreement. Manager is not authorized to list the Property for
sale or to negotiate with prospective purchasers of the Property; 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 Incentive Disposition Fee, 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]

-14-

 

     IN WITNESS WHEREOF, Owner and Manager have executed this Agreement as of the Effective Date.

	 	 	 	 	 	 	 
	 

	 	 	 	OWNER:
	 	 
	Witness

	 	 	 	ASSET CAPITAL PARTNERS, L.P., a
Delaware limited liability company	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	By: ACC GP, LLC
Its: General Partner	 	 
	 
	 	 	 	 	 	 
	/s/ S. Krantz

	 	By:
	 	/s/ William B. LeBlanc, III	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	William B. LeBlanc, III, President and Chief
Operating Officer	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	MANAGER:	 	 
	 

	 	 	 	BROWNSTONE CAPITAL, LLC, a Virginia

limited liability company	 	 
	 
	 	 	 	 	 	 
	/s/ S. Krantz

	 	By:
	 	/s/ M. Shawn Krantz	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	M. Shawn Krantz, Member	 	 
	 
	 	 	 	 	 	 
	/s/ S. Krantz

	 	By:
	 	/s/ Stephen Carboni	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stephen Carboni, Member	 	 

-15-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]