MANAGEMENT AGREEMENT
Exhibit
10.8
This MANAGEMENT
AGREEMENT is made and entered into as of July 15, 2015 (this
“Agreement”),
by and between SeD MARYLAND
DEVELOPMENT, LLC, a Maryland limited liability company (the
“Developer”)
and SeD DEVELOPMENT MANAGEMENT,
LLC, a Delaware limited liability company (the
“Manager”).
RECITALS
WHEREAS, the
Developer is developing 197 acres of land located in Xxxxxxxxx
County, Maryland, into 853 units, consisting of single family lots,
townhomes, multi-family units, and assisted living units (the
“Project”);
WHEREAS, the
Developer wishes to engage the Manager to manage the Project
including the assets, operations and affairs of the Developer;
and
WHEREAS, the
Manager desires to accept such engagement on the terms and
conditions hereinafter set forth.
AGREEMENT
NOW, THEREFORE, in
consideration of the mutual agreements herein set forth, the
parties hereto agree as follows:
1.
Definitions.
(a) The following terms
shall have the meanings set forth in this
Section 1(a):
“Affiliate” shall mean,
with respect to any Person, any Person controlling, controlled by,
or under common Control with, such Person.
“Agreement” has the meaning
assigned in the first paragraph.
“Base Management Fee” means
5% (five percent) of the gross revenue (including reimbursements)
of the Project. The Base Management Fee shall be earned and paid in
the following manner:
●
USD$38,650.00
(thirty eight thousand six hundred fifty United States dollars)
monthly, beginning on the Commencement Date. The Base Management
Fees accrued from the Commencement Date through the Closing Date
shall be payable in arrears in cash on the first day of the month
after the Closing Date, or on October 1, 2015, whichever date is
sooner. Thereafter, until termination of this Agreement, the Base
Management Fee shall be payable in cash in monthly installments on
the first day of the month. If applicable, the initial and final
installments of the Base Management Fee shall be pro-rated based on
the number of days during the initial and final month,
respectively, that this Agreement is in effect.
●
When the gross
revenue of the Project shall be determined, the parties will make
adjustments as necessary to ensure proper payment of the Base
Management Fee. To the extent there was an underpayment of the Base
Management Fee, the additional amounts shall be paid by Developer
to Manager. To the extent there was an overpayment of the Base
Management Fee, the additional amounts shall be returned by Manager
to Developer. Reimbursements pursuant to this provision shall be
made with 60 days of the revenue determination.
“Commencement Date” means the
effective date of this Agreement.
“Closing” means the acquisition by Developer (or its
transferee) of the land underlying the Project and entitlements for
the 853 units which make up the Project.
“Closing Date” means on or
before August 31, 2015.
“Developer Indemnified
Party” has the meaning assigned in
Section 11(b).
“Confidential Information”
means all non-public information, written or oral, obtained by the
Manager in connection with the services rendered
hereunder.
“Compliance Policies” means
the compliance policies and procedures of the Manager, as in effect
from time to time.
“Control” shall mean the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of another Person,
whether by contract, voting equity, legal right or
otherwise.
“Date of Termination” means
the date in which this Agreement is terminated or expires without
renewal.
“Dedicated Employees” has
the meaning assigned in Section 3(a).
“Developer” has the meaning
assigned in the first paragraph of this Agreement.
“Development Guidelines”
means the general criteria, parameters and policies relating to the
Project as established by the Developer with the assistance of the
Manager, as the same may be modified from
time-to-time.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“Final Quarter” means the
last fiscal quarter ending prior to the effective date of any
termination or non-renewal of this Agreement.
“GAAP” means generally
accepted accounting principles in effect in the U.S. on the date
such principles are applied consistently.
“Governing Instruments”
means, with respect to any Person, the charter and bylaws in the
case of a corporation, the certificate of limited partner (if
applicable) and partnership agreement in the case of a general or
limited partner, or the articles or certificate of formation and
operating agreement in the case of a limited liability company, in
each case, as amended, restated or supplemented from time to
time.
“Incentive Compensation”
means a performance incentive fee, payable to the Manager upon any
profit distributions to the Developer, and calculated as 20% of all
profit distributed to Developer above a 30% Internal Rate of Return
on the Project. The Internal Rate of Return shall be calculated on
a pre-tax basis.
“Indemnification
Obligations” has the meaning assigned in
Section 11(b).
“Indemnitee” has the
meaning assigned in Section 11(d).
“Indemnitor” has the
meaning assigned in Section 11(d).
“Judicially Determined” has
the meaning assigned in Section 11(a).
“Manager” has the meaning
assigned in the first paragraph of this Agreement.
“Operating Agreement”
means an Operating Agreement adopted by the Developer, as amended
from time to time.
“Person” means any
individual, corporation, partner, joint venture, limited liability
partner, estate, trust, unincorporated association, any federal,
state, county or municipal government or any bureau, department or
agency thereof and any fiduciary acting in such capacity on behalf
of any of the foregoing.
“Principal Transaction” has
the meaning assigned in Section 3(d).
“Records” has the meaning
assigned in Section 6(a).
“Representatives” means
collectively the Manager’s Affiliates, officers, directors,
employees, agents and representatives.
“SEC” means the United
States Securities and Exchange Commission.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Subsidiary” means
any subsidiary of the Developer.
“Tax Preparer” has the
meaning assigned in Section 7(c).
(a) Appointment. The Developer hereby
appoints the Manager to manage, operate and administer the Project,
operations and affairs of the Developer and its Subsidiaries
subject to the further terms and conditions set forth in this
Agreement, and the Manager hereby agrees to use its commercially
reasonable efforts to perform each of the duties set forth herein
in accordance with the provisions of this Agreement.
(b) Duties. The Manager shall manage,
operate and administer the Developer’s day-to-day operations,
business and affairs, subject to the supervision of the Developer,
and shall have only such functions and authority as the Developer
may delegate to it, including, without limitation, the authority
identified and delegated to the Manager herein. Without limiting
the foregoing, the Manager shall oversee and conduct all the
Developer’s development activities for the Project, as
amended from time to time, and other policies adopted and
implemented by the Developer. Subject to the foregoing, the Manager
will perform (or cause to be performed) such services and
activities relating to the management, operation and administration
of the Project and assets, liabilities and business of the
Developer as is appropriate, including, without
limitation:
(i) serving as the
Developer’s consultant with respect to the periodic review of
the Project and other policies and criteria;
(ii) with respect to the
Project, any sale, exchange or other disposition of any asset by
the Developer, conducting negotiations on the Developer’s
behalf with sellers and purchasers and their respective agents,
representatives and investment bankers, and owners of privately and
publicly held real estate companies;
(iii) engaging and
supervising, on the Developer’s behalf and at the
Developer’s sole cost and expense, third party service
providers who provide legal, accounting, due diligence, transfer
agent, registrar, property management and maintenance services,
leasing services, master servicing, special servicing, banking,
investment banking, mortgage brokerage, real estate brokerage,
securities brokerage and other financial services and such other
services as may be required relating development of the Project and
to the Developer’s other business and operations as
necessary;
(iv) coordinating and
supervising, on behalf of the Developer and at the
Developer’s sole cost and expense, other third party service
providers to the Developer;
(v) providing executive
and administrative personnel, office space and office services
required in rendering services to the Developer;
(vi) administering the
Developer’s day-to-day operations and performing and
supervising the performance of such other administrative functions
necessary to the Developer’s management as may be agreed upon
by the Manager and the Developer, including, without limitation,
the collection of revenues and the payment of the Developer’s
debts and obligations and maintenance of appropriate computer
services to perform such administrative functions;
(vii) communicating on
the Developer’s behalf with the holders of any of the
Developer’s equity or debt securities as required to satisfy
the reporting and other requirements of any governmental bodies or
agencies or trading markets and to maintain effective relations
with such holders;
(viii) counseling the
Developer in connection with policy decisions to be made by the
Developer;
(ix) furnishing such
reports to the Developer that the Manager reasonably determines to
be responsive to reasonable requests for information from the
Developer regarding the Developer’s activities and services
performed for the Developer or any of its Subsidiaries by the
Manager;
(x) monitoring the
operating performance of the Project and providing periodic reports
with respect thereto to the Developer, including comparative
information with respect to such operating performance and budgeted
or projected operating results;
(xi) causing the
Developer to retain, at the sole cost and expense of the Developer,
qualified independent accountants and legal counsel, as applicable,
to assist in developing appropriate accounting procedures,
compliance procedures and testing systems with respect to financial
reporting obligations and compliance with the provisions of the
Code and the Treasury Regulations, and to conduct quarterly
compliance reviews with respect thereto;
(xii) causing the
Developer to qualify to do business in all applicable jurisdictions
and to obtain and maintain all appropriate licenses;
(xiii) assisting the
Developer in complying with all regulatory requirements applicable
to the Developer in respect of the Developer’s business
activities, including preparing or causing to be prepared all
financial statements required under applicable regulations and
contractual undertakings and all reports and documents, if any,
required under the Exchange Act and the Securities
Act;
(xiv) taking all
necessary actions to enable the Developer to make required tax
filings and reports and compliance with the provisions of the Code,
and Treasury Regulations applicable to the Developer;
(xv) handling and
resolving all claims, disputes or controversies (including all
litigation, arbitration, settlement or other proceedings or
negotiations) in which the Developer may be involved or to which
the Developer may be subject arising out of the Developer’s
day-to-day operations, subject to such limitations or parameters as
may be imposed from time to time by the Developer;
(xvi) using commercially
reasonable efforts to cause expenses incurred by or on behalf of
the Developer to be commercially reasonable or commercially
customary and within any budgeted parameters or expense guidelines
set by the Developer from time to time;
(xvii) advising on, and
obtaining on behalf of the Developer, appropriate credit facilities
or other financings for the Project consistent with the Development
Guidelines;
(xviii) advising the
Developer with respect to and structuring long-term financing
vehicles for the Developer’s portfolio of assets, and
offering and selling securities, if any, publicly or privately in
connection with any such structured financing;
(xix) performing such
other services as may be required from time to time for management
and other activities relating to the Developer’s assets as
the Developer shall reasonably request or the Manager shall deem
appropriate under the particular circumstances; and
(xx) using commercially
reasonable efforts to cause the Developer to comply with all
applicable laws.
(c) Service Providers. The Manager may
engage Persons who are non-Affiliates, for and on behalf, and at
the sole cost and expense, of the Developer to provide to the
Developer sourcing, acquisition, disposition, asset management,
property management, leasing, financing, development, disposition
of real estate and/or similar services customarily provided in
connection with the management, operation and administration of a
business similar to the business of the Developer, pursuant to
agreement(s) that provide for market rates and contain standard
market terms.
(d) Reporting Requirements.
(i) As frequently as
the Manager may deem necessary or advisable, or at the direction of
the Developer, the Manager shall prepare, or cause to be prepared,
with respect to the Project (A) reports and information on the
Developer’s operations and asset performance and
(B) other information reasonably requested by the
Developer.
(ii) The Manager shall
prepare, or cause to be prepared, at the sole cost and expense of
the Developer, all reports, financial or otherwise, with respect to
the Developer reasonably required in order for the Developer to
comply with its Governing Instruments or any other materials
required to be filed with any governmental entity or agency, and
shall prepare, or cause to be prepared, at the sole cost and
expense of the Developer, all materials and data necessary to
complete such reports and other materials including, without
limitation, an annual audit of the Developer’s books of
account by a nationally recognized independent accounting
firm.
(e) Reliance by Manager. In
performing its duties under this Section 2(c), the Manager
shall be entitled to rely on qualified experts and professionals
(including, without limitation, accountants, legal counsel and
other professional service providers) hired by the Manager at the
Developer’s sole cost and expense.
(f) Use of the Manager’s
Funds. The Manager shall not be required to
expend money in connection with any expenses that are required to
be paid for or reimbursed by the Developer pursuant to
Section 9 of this Agreement in excess of that contained in any
applicable Developer Account or otherwise made available by the
Developer to be expended by the Manager hereunder.
(g) Payment and Reimbursement of
Expenses. The Developer shall pay all expenses,
and reimburse the Manager for the Manager’s expenses incurred
on its behalf, in connection with any such services to the extent
such expenses are payable or reimbursable by the Developer to the
Manager pursuant to Section 9.
3.
Dedication;
Other Activities.
(a) Devotion of Time. The
Manager, directly or indirectly through its Affiliates, will in
line with the needs of the progress of the project, provide a
management team (including, without limitation, a chief executive
officer and president, a chief financial officer, a chief
Development officer, a controller and a secretary) along with
appropriate support personnel, to deliver the management services
to the Developer hereunder. The members of such management team
shall devote such of their working time and efforts to the
management of the Developer as the Manager deems reasonably
necessary and appropriate for the proper performance of all of the
Manager’s duties hereunder, commensurate with the level of
activity of the Developer from time to time; provided, however, that the Manager
shall have the right, but not the obligation, to provide a
dedicated or partially dedicated chief financial officer, chief
operating officer, controller, internal legal counsel, property
managers and/or property management oversight professionals to the
Developer. To the extent the Manager elects to provide the
Developer with a dedicated or partially dedicated chief financial
officer, controller, internal legal counsel, property managers
and/or property management oversight professionals, each of whom
will be an employee of the Manager or one of its Affiliates, such
personnel are referred to herein as “Dedicated Employees.” The
Developer shall have the benefit of the Manager’s reasonable
judgment and effort in rendering services and, in furtherance of
the foregoing, the Manager shall not undertake activities which, in
its reasonable judgment, will materially adversely affect the
performance of its obligations under this Agreement.
(b) Other Activities. Except to the extent
set forth in Section 3(a) above, and subject to the
Developer’s conflicts of interest policy as it may exist from
time to time, and the Developer’s Development Guidelines,
nothing herein shall prevent the Manager or any of its Affiliates
or any of the officers, directors or employees of any of the
foregoing, from engaging in other businesses or from rendering
services of any kind to any other Person, including, without
limitation, investing in, or rendering advisory services to others
investing in, any type of real estate, real estate related
Development or non-real estate related Development or other
mortgage loans (including, without limitation, Developments that
meet the principal Development objectives of the Developer),
whether or not the Development objectives or policies of any such
other Person are similar to those of the Developer or in any way
bind or restrict the Manager, or any of its Affiliates, officers,
directors or employees from buying, selling or trading any
securities or commodities for their own accounts or for the account
of others for whom the Manager or any of its Affiliates, officers,
directors or employees may be acting; provided, however, none of the Manager,
or any of its Affiliates, for so long as this Agreement is in
effect, will sponsor or manage any permanent capital vehicle that
invests primarily in single-family residential properties as rental
properties.
(c) Cross Transactions. Cross transactions
are transactions between the Developer or one of its subsidiaries,
on the one hand, and an account (other than the Developer or one of
its subsidiaries) that is managed or advised by the Manager, or one
of the Managers’ or Affiliates, on the other hand (each a
“Cross
Transaction”). The Manager is authorized to execute
Cross Transactions for the Developer in accordance with applicable
law and the Manager’s Compliance Policies. The Developer
acknowledges that the Manager has a potentially conflicting
division of loyalties and responsibilities regarding each party to
a Cross Transaction. The Developer may at any time, upon written
notice to the Manager, revoke its consent to the Manager to execute
Cross Transactions.
(d) Principal Transactions. Principal
transactions are transactions between the Developer or one of its
subsidiaries, on the one hand, and the Manager, or any of their
Affiliates (or any of the related parties of the foregoing (each a
“Principal
Transaction”). The Manager is only authorized to
execute Principal Transactions with the prior approval of the
Developer and in accordance with applicable law. Such prior
approval shall include approval of the pricing methodology to be
used, including with respect to assets for which there are no
readily available market prices.
(e) Officers, Employees, Etc. The
Manager’s or its Affiliates’ members, partners,
officers, employees and agents may serve as directors, officers,
employees, agents, nominees or signatories for the Developer or any
Subsidiary, to the extent permitted by their Governing Instruments,
as may be amended from time to time, or by any resolutions duly
adopted by the Developer pursuant to the Developer’s
Governing Instruments. When executing documents or otherwise acting
in such capacities for the Developer or such other Subsidiary, such
Persons shall use their respective titles with respect to the
Developer or such Subsidiary.
4.
Agency;
Authority.
(a) The Manager shall
act as the agent of the Developer in originating, acquiring,
structuring, financing, managing, renovating, disbursing and
collecting the Developer’s funds, paying the debts and
fulfilling the obligations of the Developer, supervising the
performance of professionals engaged by or on behalf of the
Developer and handling, prosecuting and settling any claims of or
against the Developer, or the Developer’s representatives or
assets.
(b) In performing the
services set forth in this Agreement, as an agent of the Developer,
the Manager shall have the right to exercise all powers and
authority which are reasonably necessary and customary to perform
its obligations under this Agreement, including the following
powers, subject in each case to the terms and conditions of this
Agreement, including, without limitation, the Development
Guidelines: to purchase, exchange or otherwise acquire and to sell,
exchange or otherwise dispose of, the Project in a public or
private sale; to execute Cross Transactions; to execute Principal
Transactions; to borrow and, for the purpose of securing the
repayment thereof, to pledge, mortgage or otherwise encumber the
Project; to purchase, take and hold Project subject to mortgages,
liens or other encumbrances; to extend the time of payment of any
liens or encumbrances which may at any time be encumbrances upon
the Project,
irrespective of by whom the same were made; to foreclose, to reduce
the rate of interest on, and to consent to the modification and
extension of the maturity of any Project, or to accept a deed in
lieu of foreclosure; to join in a voluntary partition of the
Project; to cause to be demolished any structures on the Project;
to cause renovations and capital improvements to be made to the
Project; to abandon any Project deemed to be worthless; to enter
into joint ventures or otherwise participate in investment vehicles
investing in Project; to cause the Project to be leased, operated,
developed, constructed or exploited; to cause the Developer to
indemnify third parties in connection with contractual arrangements
between the Developer and such third parties; to obtain and
maintain insurance in such amounts and against such risks as are
prudent in accordance with customary and sound business practices
in the appropriate geographic area; to cause any property to be
maintained in good state of repair and upkeep; and to pay the
taxes, upkeep, repairs, carrying charges, maintenance and premiums
for insurance; to use the personnel and resources of its Affiliates
in performing the services specified in this Agreement; to hire
third party service providers subject to and in accordance with
Section 2; to designate and engage all third party
professionals and consultants to perform services (directly or
indirectly) on behalf of the Developer or its Subsidiaries,
including, without limitation, accountants, legal counsel and
engineers; and to take any and all other actions as are necessary
or appropriate in connection with the Developer’s
Project.
(c) The Manager shall
be authorized to represent to third parties that it has the power
to perform the actions which it is authorized to perform under this
Agreement.
5.
Bank
Accounts.
At the direction of
the Developer, the Manager may establish and maintain as an agent
on behalf of the Developer one or more bank accounts in the name of
the Developer or any other Subsidiary (any such account, a
“Developer
Account”), collect and deposit funds into any such
Developer Account and disburse funds from any such Developer
Account, under such terms and conditions as the Developer may
approve. The Manager shall from time-to-time render appropriate
accountings of such collections and payments to the Developer and,
upon request, to the auditors of Developer.
(a) Books and Records. The Manager shall
maintain appropriate books of account, records data and files
(including without limitation, computerized material)
(collectively, “Records”) relating to the
Developer and the Project generated or obtained by the Manager in
performing its obligations under this Agreement, and such Records
shall be accessible for inspection by representatives of the
Developer or any Subsidiary at any time during normal business
hours upon ten business days advance written notice. The Manager
shall have full responsibility for the maintenance, care and
safekeeping of all Records. The Manager agrees that the Records are
the property of the Developer and the Manager agrees to deliver the
Records to the Developer within 14 days after receipt of a written
request of the Developer.
(b) Confidentiality. The Manager shall keep
confidential any and all non-public information, written or oral,
obtained by it in connection with the services rendered hereunder
and shall not disclose Confidential Information, in whole or in
part, to any Person other than to its Affiliates, officers,
directors, employees, agents or representatives who need to know
such Confidential Information for the purpose of rendering services
hereunder or with the consent of the Developer, except: (i) to
Singapore eDevelopment Limited and its Affiliates; (ii) in
accordance with any advisory agreement; (iii) to legal
counsel, accountants and other professional advisors; (iv) to
appraisers, creditors, financing sources, trading counterparties,
other counterparties, third party service providers to the
Developer, and others (in each case, both those actually doing
business with the Developer and those with whom the Developer seeks
to do business) in the ordinary course of the Developer’s
business; (v) to governmental or regulatory officials having
jurisdiction over the Developer; (vi) in connection with any
governmental or regulatory filings of the Developer ; or
(vii) to respond to requests from judicial or regulatory or
self-regulatory organizations and as required by law or legal
process to which the Manager or any Person to whom disclosure is
permitted hereunder is a party. If, failing the entry of a
protective order or the receipt of a waiver hereunder, the Manager
is, in the opinion of counsel, required to disclose Confidential
Information, the Manager may disclose only that portion of such
information that its counsel advises is legally required without
liability hereunder; provided, that the Manager agrees to exercise
commercially reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information.
Notwithstanding anything herein to the contrary, each of the
following shall be deemed to be excluded from provisions hereof:
any Confidential Information that (A) is available to the
public from a source other than the Manager not resulting from the
Manager’s violation of this Section 6, (B) is
released in writing by the Developer to the public or to persons
who are not under similar obligation of confidentiality to the
Developer, or (C) is obtained by the Manager from a
third-party not known by the Manager to be in breach of an
obligation of confidence with respect to the Confidential
Information disclosed. The Manager agrees to inform each of its
Representatives of the non-public nature of the Confidential
Information and to direct such Persons to treat such Confidential
Information in accordance with the terms hereof. The provisions of
this Section 6 shall survive the expiration or earlier
termination of this Agreement for a period of one
year.
7.
Obligations
of Manager; Restrictions.
(a) Internal Control. The Manager shall
(i) establish and maintain a system of internal accounting and
financial controls designed to provide reasonable assurance of the
reliability of financial reporting, the effectiveness and
efficiency of operations and compliance with applicable laws,
(ii) maintain records for the Project on a GAAP basis,
(iii) develop accounting entries and reports required by the
Developer to meet its reporting requirements under applicable laws,
(iv) consult with the Developer with respect to proposed or
new accounting/reporting rules identified by the Manager or the
Developer and (v) prepare quarterly and annual financial
statements as soon as practicable after the end of each such period
as may be reasonably requested and general ledger journal entries
and other information necessary for the Developer’s
compliance with applicable laws and in accordance with GAAP and
cooperate with the Developer’s independent accounting firm in
connection with the auditing or review of such financial
statements, the cost of any such audit or review to be paid by the
Developer.
(b) Insurance. At the cost of the
Developer, the Manager shall obtain, as soon as reasonably
practicable, and shall thereafter maintain insurance coverage which
is customarily carried by managers performing functions similar to
those of the Manager under this Agreement with respect to assets
similar to the assets of the Developer, in an amount which is
comparable to that customarily maintained by other managers or
servicers of similar assets.
(c) Tax Filings. The Manager shall
(i) assemble, maintain and provide to the firm designated by
the Developer to prepare tax returns on behalf of the Developer and
its subsidiaries (the “Tax
Preparer”) information and data required for the
preparation of federal, state, local and foreign tax returns, any
audits, examinations or administrative or legal proceedings related
thereto or any contractual tax indemnity rights or obligations of
the Developer and its subsidiaries and supervise the preparation
and filing of such tax returns, the conduct of such audits,
examinations or proceedings and the prosecution or defense of such
rights, (ii) provide factual data reasonably requested by the
Tax Preparer or the Developer with respect to tax matters,
(iii) assemble, record, organize and report to the Developer
data and information with respect to the Project relative to taxes
and tax returns in such form as may be reasonably requested by the
Developer, (iv) supervise the Tax Preparer in connection with
the preparation, filing or delivery to appropriate persons, of
applicable tax information reporting forms with respect to the
Project and the Common Shares (including, without limitation,
information reporting forms, whether on Form 1099 or otherwise with
respect to sales, interest received, interest paid, dividends paid
and other relevant transactions); it being understood that, in the
context of the foregoing, the Developer shall rely on its own tax
advisers in the preparation of its tax returns and the conduct of
any audits, examinations or administrative or legal proceedings
related thereto and that, without limiting the Manager’s
obligation to provide the information, data, reports and other
supervision and assistance provided herein, the Manager will not be
responsible for the preparation of such returns or the conduct of
such audits, examinations or other proceedings.
8.
Compensation.
(a) For the
services rendered under this Agreement, the Developer shall pay the
Base Management Fee and the Incentive Compensation to the Manager.
The Manager will not receive any compensation for the period prior
to the Commencement Date other than expenses incurred and
reimbursed pursuant to Section 9 hereof.
(b) The Base
Management Fees shall be payable in cash as provided in the
definition of “Base Management Fee”.
(c) The Incentive
Compensation shall be payable in cash as provided in the definition
of “Incentive Compensation”.
(a) The Developer shall
bear all of its operating expenses, except those specifically
required to be borne by the Manager under this Agreement. The
expenses required to be borne by the Developer include, but are not
limited to:
(i) issuance and
transaction costs incident to the origination, acquisition,
disposition and financing of the Project;
(ii) legal, regulatory,
compliance, tax, accounting, consulting, auditing, administrative
fees and expenses and fees and expenses for other similar services
rendered to the Developer by third-party service providers retained
by the Manager;
(iii) the costs
associated with the establishment and maintenance of any credit
facilities and other indebtedness of the Developer (including
commitment fees, accounting fees, legal fees, closing costs,
etc.);
(iv) expenses associated
with securities offerings of the Developer;
(v) expenses relating
to the payment of distributions;
(vi) expenses connected
with communications and in complying with the continuous reporting
and other requirements of the Exchange Act, the SEC and other
governmental bodies;
(vii) transfer agent,
registrar and exchange listing fees, if applicable;
(viii) the costs of
printing and mailing reports and other materials to the
Developer;
(ix) costs associated
with any computer software or hardware, electronic equipment, or
purchased information technology services from third party vendors
that is used solely for the Developer;
(x) costs and out of
pocket expenses incurred by directors, officers, employees or other
agents of the Manager for travel on the Developer’s
behalf;
(xi) the portion of any
costs and expenses incurred by the Manager or its Affiliates with
respect to market information systems and publications, research
publications and materials that are allocable to the
Developer;
(xii) settlement,
clearing, and custodial fees and expenses;
(xiii) all taxes and
license fees;
(xiv) all insurance costs
incurred with respect to insurance policies obtained in connection
with the operation of the Developer’s business, including but
not limited to insurance covering activities of the Manager, its
Affiliates and any of their employees relating to the performance
of the Manager’s duties and obligations under this
Agreement;
(xv) costs and expenses
incurred in contracting with third parties for the servicing,
special servicing and property management of assets of the
Developer;
(xvi) all other actual
out of pocket costs and expenses relating to the Developer’s
business and operations, including, without limitation, the costs
and expenses of originating, acquiring, owning, rehabilitating,
protecting, maintaining, developing and disposing of Developer
assets, including appraisal, reporting, audit and legal
fees;
(xvii) any judgment or
settlement of pending or threatened proceedings (whether civil,
criminal or otherwise) against the Developer or any Subsidiary, or
against any trustee, director or officer of the Developer or of any
Subsidiary in his capacity as such for which the Developer or any
Subsidiary is required to indemnify such trustee, director or
officer by any court or governmental agency, or settlement of
pending or threatened proceedings;
(xviii) the costs of
maintaining compliance with all federal, state and local rules and
regulations, including securities regulations, or any other
regulatory agency, all taxes and license fees and all insurance
costs incurred on the Developer’s behalf;
(xix) expenses relating
to any office or office facilities, including disaster backup
recovery sites and facilities, maintained expressly for the
Developer and separate from offices of the Manager;
(xx) the costs of the
wages, salaries and benefits incurred by the Manager with respect
to any Dedicated Officers that the Manager elects to provide to the
Developer pursuant to Section 3(a) above; provided that (A) if the Manager elects
to provide a partially dedicated chief financial officer, chief
operating officer, controller, internal legal counsel, property
managers and/or property management oversight professionals to the
Developer rather than a fully dedicated chief financial officer,
chief operating officer, controller, internal legal counsel,
property managers and/or property management oversight
professionals, the Developer shall be required to bear only a
pro rata portion of the
costs of the wages, salaries and benefits incurred by the Manager
with respect to such personnel based on the percentage of their
working time and efforts spent on matters related to the Developer
and (B) the amount of such wages, salaries and benefits paid or
reimbursed with respect to the Dedicated Employees shall be subject
to the approval of the Developer; and
(xxi) all other costs and
expenses approved by the Developer.
(b) Other than as
expressly provided above, the Developer will not be required to pay
any portion of the rent, telephone, utilities, office furniture,
equipment, machinery and other office, internal and overhead
expenses of the Manager and its Affiliates. In particular, the
Manager is not entitled to be reimbursed for wages, salaries and
benefits of its officers and employees, other than as described in
Section 9(a)(xx) above.
(c) Subject to any
required approval, the Manager may retain, for and on behalf, and
at the sole cost and expense, of the Developer, such services of
non-Affiliate third party accountants, legal counsel, appraisers,
insurers, brokers, transfer agents, registrars, developers,
investment banks, financial advisors, banks and other lenders and
others as the Manager deems necessary or advisable in connection
with the management and operations of the Developer. The provisions
of this Section 9 shall survive the expiration or earlier
termination of this Agreement to the extent such expenses have
previously been incurred or are incurred in connection with such
expiration or termination.
The Manager shall
prepare a statement documenting the operating expenses of the
Developer incurred during each month, and deliver the same to the
Developer within 30 days following the end of the applicable month.
Such expenses incurred by the Manager on behalf of the Developer
shall be reimbursed by the Developer within 30 days following
delivery of the expense statement by the Manager; provided,
however, that such reimbursements may be offset by the Manager
against amounts due to the Developer from the Manager. The
provisions of this Section 10 shall survive the expiration or
earlier termination of this Agreement.
(a) Pursuant to this
Agreement, the Manager will not assume any responsibility other
than to render the services called for hereunder in good faith and
will not be responsible for any action of the Developer in
declining to follow its advice or recommendations. The Manager, its
Affiliates and the officers, directors, members, shareholders,
managers, committee members, employees, agents, successors and
assigns of any of them (each, a “Manager Indemnified
Party”) shall not be liable to the Developer for any
acts or omissions arising out of or in connection with the
Developer, this Agreement or the performance of the Manager’s
duties and obligations hereunder, except by reason of acts or
omissions found by a court of competent jurisdiction upon entry of
a final judgment rendered and unappealable or not timely appealed
(“Judicially
Determined”) to be due to the bad faith, gross
negligence, willful misconduct or fraud of the Manager Indemnified
Party. Notwithstanding any of the foregoing to the contrary, the
provisions of this Section 11 shall not be construed so as to
provide for the exculpation of any Manager Indemnified Party for
any liability (including liability under Federal securities laws
which, under certain circumstances, impose liability even on
Persons that act in good faith), to the extent (but only to the
extent) that such liability may not be waived, modified or limited
under applicable law, but shall be construed so as to effectuate
the provisions of this Section 11 to the fullest extent
permitted by law.
(b) To the fullest
extent permitted by law, the Developer shall indemnify, defend and
hold harmless each Manager Indemnified Party from and against any
and all costs, losses, claims, damages, liabilities, expenses
(including reasonable legal and other professional fees and
disbursements), judgments, fines and settlements (collectively,
“Indemnification
Obligations”) suffered or sustained by such Manager
Indemnified Party by reason of (i) any acts, omissions or
alleged acts or omissions arising out of or in connection with the
Developer or this Agreement, or (ii) any and all claims,
demands, actions, suits or proceedings (civil, criminal,
administrative or investigative), actual or threatened, in which
such Manager Indemnified Party may be involved, as a party or
otherwise, arising out of or in connection with such Manager
Indemnified Party’s service to or on behalf of, or management
of the affairs or assets of, the Developer, or which relate to the
Developer; except to the extent such Indemnification Obligations
are Judicially Determined to be due to such Manager Indemnified
Party’s bad faith, gross negligence, willful misconduct or
fraud or to constitute a material breach or violation of the
Manager’s duties and obligations under this Agreement. The
termination of a proceeding by settlement or upon a plea of
nolo contendere, or its
equivalent, shall not, of itself, create a presumption that such
Manager Indemnified Party’s conduct constituted bad faith,
gross negligence, willful misconduct or fraud.
(c) The Manager hereby
agrees to indemnify the Developer, its Afilliates, and its
Subsidiaries and each of their respective directors and officers
(each a “Developer
Indemnified Party”) with respect to all costs, losses,
claims, damages, liabilities, expenses (including reasonable legal
and other professional fees and disbursements), judgments, fines
and settlements (collectively, “Indemnification
Obligations”) suffered or sustained by such Developer
Indemnified Party by reason of (i) acts or omissions or
alleged acts or omissions of the Manager Judicially Determined to
be due to the bad faith, willful misconduct or gross negligence of
the Manager, its Affiliates or their respective officers or
employees or the reckless disregard of the Manager’s duties
under this Agreement or (ii) claims by the Manager’s or
its Affiliates’ employees relating to the terms and
conditions of their employment with the Manager or its
Affiliates.
(d) The party seeking
indemnity (“Indemnitee”) will promptly
notify the party against whom indemnity is claimed (“Indemnitor”) of any claim
for which it seeks indemnification; provided, however, that the failure to
so notify the Indemnitor will not relieve Indemnitor from any
liability which it may have hereunder, except to the extent such
failure actually prejudices the Indemnitor. The Indemnitor shall
have the right to assume the defense and settlement of such claim;
provided that, Indemnitor
notifies Indemnitee of its election to assume such defense and
settlement within (30) days after the Indemnitee gives the
Indemnitor notice of the claim. In such case the Indemnitee will
not settle or compromise such claim, and the Indemnitor will not be
liable for any such settlement made without its prior written
consent. If Indemnitor is entitled to, and does, assume such
defense by delivering the aforementioned notice to Indemnitee,
Indemnitee will (i) have the right to approve
Indemnitor’s counsel (which approval will not be unreasonably
withheld or delayed), (ii) be obligated to cooperate in
furnishing evidence and testimony and in any other manner in which
Indemnitor may reasonably request and (iii) be entitled to
participate in (but not control) the defense of any such action,
with its own counsel and at its own expense.
(e) Reasonable expenses
(including attorney’s fees) incurred by an Indemnitee in
defense or settlement of a claim that may be subject to a right of
indemnification hereunder may be advanced by the Developer to such
Indemnitee as such expenses are incurred prior to the final
disposition of such claim; provided that, Indemnitee undertakes to
repay such amounts if it shall be Judicially Determined that
Indemnitee was not entitled to be indemnified
hereunder.
(f) The Manager
Indemnified Parties shall remain entitled to exculpation and
indemnification from the Developer pursuant to this Section 11
(subject to the limitations set forth herein) with respect to any
matter arising prior to the termination of this Agreement and shall
have no liability to the Developer in respect of any matter arising
after such termination unless such matter arose out of events or
circumstances that occurred prior to such termination.
12.
No
Joint Venture.
The Developer and
the Manager are not partners or joint venturers with each other and
nothing in this Agreement shall be construed to make the Developer
and the Manager partners or joint venturers or impose any liability
as such on either of them.
(a) Term. This Agreement shall remain in
full force through December 31, 2021 unless (1) both parties agree
in writing to terminate the Agreement sooner, or (2) the Agreement
is terminated by the Developer or Manager as set forth below, and
shall be renewed automatically for successive one year periods
thereafter, unless this Agreement is sooner terminated in
accordance with the terms hereof.
(b) Non-Renewal. Either party may elect not
to renew this Agreement at the expiration of the initial term or
any renewal term for any or no reason by notice to the other party
at least 180 days, but not more than 270 days, prior to the end of
the term.
(c) Termination
by the Developer.
(i) Termination by the
Developer With Cause. At the option of the Developer and at any
time during the term of this Agreement, this Agreement shall be and
become terminated upon 30 days written notice of termination from
the Developer to the Manager if any of the following events shall
occur:
A. the Manager
shall commit a material breach of any provision of this Agreement
(including the failure of the Manager to use reasonable efforts to
comply with the Developer’s Development Guidelines), which
such material breach continues and a plan to cure has not been
developed by Manager within a period of 30 days after written
notice of such breach;
B. the Manager in
its corporate capacity (as distinguished from the acts of any
employees of the Manager which are taken without the complicity of
the Developer or executive officers of the Manager) shall commit
any act of fraud, misappropriation of funds, or embezzlement
against the Developer;
(ii) Termination
by the Developer Without Cause. At the option of the Developer and
at any time during the term of this Agreement, the Developer may
terminate the Agreement without cause sixty (60) days after
Developer provides written notice of termination to the
Manager.
(d) Termination by Manager. The Manager may
terminate this Agreement effective upon 60 days’ prior
written notice of termination to the Developer in the event that
the Developer shall default in the performance or observance of any
material term, condition or covenant in this Agreement and such
default shall continue for a period of 30 days after written
notice thereof specifying such default and requesting that the same
be remedied in such 30-day period.
(e) Survival. If this Agreement is
terminated pursuant to this Section 13, such termination shall
be without any further liability or obligation of either party to
the other, except as otherwise expressly provided
herein.
14.
Action
Upon Termination or Expiration of Term.
From and after the
effective date of termination of this Agreement pursuant to
Section 13 herein, the Manager shall not be entitled to
compensation for further services under this Agreement but shall be
paid all compensation accruing to the date of termination,
reimbursement for all Expenses. For the avoidance of doubt, if the
date of termination occurs other than at the end of a month,
compensation to the Manager accruing to the date of termination
shall also include: base management fees equal to the Base
Management Fee for such final month, taking into account only the
portion of such final month that this Agreement was in effect, and
with appropriate adjustments to all relevant definitions. Upon such
termination or expiration, the Manager shall reasonably
promptly:
(a) after deducting any
accrued compensation and reimbursement for Expenses to which it is
then entitled, pay over to the Developer all money collected and
held for the account of the Developer pursuant to this
Agreement;
(b) deliver to the
Developer a full accounting, including a statement showing all
payments collected and all money held by it, covering the period
following the date of the last accounting furnished to the
Developer with respect to the Developer and through the termination
date; and
(c) deliver to the
Developer all property and documents of and material to the
Developer provided to or obtained by the Manager pursuant to or in
connection with this Agreement, including all copies and extracts
thereof in whatever form, then in the Manager’s possession or
under its control.
15.
Assignment.
The Manager may not
assign its duties under this Agreement unless such assignment is
consented to in writing by Developer. However, the Manager may
assign to one or more of its Affiliates performance of any of its
responsibilities hereunder without the approval of the Developer so
long as the Manager remains liable for any such Affiliate’s
performance.
The Manager agrees
that any money or other property of the Developer or any Subsidiary
held by the Manager under this Agreement shall be held by the
Manager as custodian for the Developer or any Subsidiary, and the
Manager’s records shall be clearly and appropriately marked
to reflect the ownership of such money or other property by the
Developer. Upon the receipt by the Manager of a written request
signed by a duly authorized officer of the Developer requesting the
Manager to release to the Developer any money or other property
then held by the Manager for the account of the Developer under
this Agreement, the Manager shall release such money or other
property to the Developer within a reasonable period of time, but
in no event later than thirty (30) days following such
request. The Manager and its Affiliates, directors, officers,
managers and employees will not be liable to the Developer, any
Subsidiary, the Manager or any of their directors, officers,
shareholders, managers, employees, owners or partners for any acts
or omissions by the Developer in connection with the money or other
property released to the Developer in accordance with the terms
hereof. The Developer shall indemnify the Manager and its
Affiliates, officers, directors, Development and Risk Management
Committee members, employees, agents and successors and assigns
against any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever which arise in
connection with the Manager’s release of such money or other
property to the Developer in accordance with the terms of this
Section 16. Indemnification pursuant to this Section 16
shall be in addition to any right of the Manager to indemnification
under Section 16.
Unless expressly
provided otherwise in this Agreement, all notices, requests,
demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly
given, made and received when delivered against receipt or upon
actual receipt of (a) personal delivery, (b) delivery by
a reputable overnight courier, (c) delivery by facsimile
transmission but only if such transmission is confirmed,
(d) delivery by email but only if receipt of such transmission
is confirmed, or (e) delivery by registered or certified mail,
postage prepaid, return receipt requested, addressed as set forth
below:
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The
Developer:
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SeD Maryland
Development, LLC
0 Xxxxxxx Xxxxxxxxx
#00-00X,
Xxxxxx Xxxxx
0
Xxxxxxxxx
000000
Attn: Xxxx Xxxx
Lup, Singapore eDevelopment, Limited
Email: xxxxxxx@xxx.xxx.xx
0 Xxxxxxx Xxxxxxxxx
#00-00X,
Xxxxxx Xxxxx
0
Xxxxxxxxx
000000
Attn: Xxx
Xxxx
Email:
xxx@xxx.xxx.xx
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The
Manager:
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SeD Development
Management, LLC
000 0xx
Xxxxxx
Xxxxx
000
Xxxxxxxxx, XX
00000
Attn: Xxxxxxx
X. X. XxxXxxxxx
Fax: 000-000-0000
Email: xxxxxxxxxx@xxxxxxxxxxxxxxx.xxx
Hampden Square,
0000 Xxxxxxxxxx Xxxx
Xxxxx
000
Xxxxxxxx, XX
00000
Attn: Xxxx Xxxxx
Email: xxxx@000xx.xxx
with a copy
to:
Conn Xxxxxxxx,
Esq.
0000 Xxxxx Xxxxxx,
Xxxxx 000
Xxxxxx, XX
00000
Xxxx@000xx.xxx
000-000-0000
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Any party may
change the address to which communications or copies are to be sent
by giving notice of such change of address in conformity with the
provisions of this Section 17 for the giving of
notice.
18.
Binding
Nature of Agreement; Successors and Assigns.
This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives,
successors and permitted assigns as provided in this
Agreement.
19.
Entire
Agreement; Amendments.
This Agreement
contains the entire agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, inducements
and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter of this Agreement.
The express terms of this Agreement control and supersede any
course of performance and/or usage of the trade inconsistent with
any of the terms of this Agreement. This Agreement may not be
modified or amended other than by an agreement in writing signed by
the parties hereto.
20.
Governing
Law; Jurisdiction.
This Agreement and
all questions relating to its validity, interpretation, performance
and enforcement shall be governed by and construed, interpreted and
enforced in accordance with the laws of the State of Delaware
without giving effect to such state’s laws and principles
regarding the conflict of interest laws. Each of the parties hereto
irrevocably submits to the exclusive jurisdiction of the courts of
the State of Delaware and the United States District Court in
Delaware for the purpose of any action or judgment relating to or
arising out of this Agreement or any of the transactions
contemplated hereby and to the lay of venue in such
court.
21.
Waiver
of Jury Trial.
EACH PARTY HERETO
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER
THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND, THEREFORE, EACH SUCH PARTY HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN
RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
22.
Indulgences,
Not Waivers.
Neither the failure
nor any delay on the part of a party to exercise any right, remedy,
power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise
of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with
respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by
the party asserted to have granted such waiver.
23.
Titles
Not to Affect Interpretation.
The titles of
sections, paragraphs and subparagraphs contained in this Agreement
are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or
interpretation of this Agreement.
24.
Execution
in Counterparts.
This Agreement may
be executed in any number of counterparts, each of which shall be
deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and
the same instrument. This Agreement shall become binding when one
or more counterparts of this Agreement, individually or taken
together, shall bear the signatures of all of the parties reflected
hereon as the signatories.
25.
Severability.
The provisions of
this Agreement are independent of and separable from each other,
and no provision shall be affected or rendered invalid or
unenforceable by virtue of the fact that for any reason any other
or others of them may be invalid or unenforceable in whole or in
part.
26.
Principles
of Construction.
Words used herein
regardless of the number and gender specifically used, shall be
deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the
context requires. All references to recitals, sections, paragraphs
and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise
specified.
[SIGNATURE PAGE
FOLLOWS]
IN WITNESS WHEREOF,
the parties hereto have executed this Agreement as of the date
first above written.
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THE
DEVELOPER:
SeD MARYLAND
DEVELOPMENT, LLC
By: /s/ Xxxx Xxxx
Lup
Name:
Title:
CFO
THE
MANAGER:
SeD DEVELOPMENT
MANAGEMENT, LLC.
By: /s/ Xxxxxxx
Xxxxx
Name:
Title:
President
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