MANAGEMENT AGREEMENT
BETWEEN
MULTI-HOUSING INCOME REIT, INC.
AND
CASORO INVESTMENT ADVISORY FIRM, LLC
THIS MANAGEMENT AGREEMENT (this "Agreement"), dated
as of the 14th day of November 2017, (the "Effective
Date"), is entered into by and between the Multi-Housing
Income REIT, Inc., a Maryland corporation (the "Company"),
and Casoro Investment Advisory Firm, LLC, a Texas limited
liability company (the "Manager"). Capitalized terms used
herein shall have the meanings ascribed to them in Article
1 below.
WITNESSETH
WHEREAS, the Company intends to qualify as a REIT,
and to invest its funds in investments permitted by the
terms of Sections 856 through 860 of the Code;
WHEREAS, the Company desires to avail itself of the
knowledge, experience, sources of information, advice,
assistance and certain facilities available to the Manager
and to have the Manager undertake the duties and
responsibilities hereinafter set forth, on behalf of, and
subject to the supervision of, the Board of the Company, all
as provided herein; and
WHEREAS, the Manager is willing to undertake to render
such services, subject to the supervision of the Board, on
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have
the meanings specified below:
Acquisition Expenses means any and all expenses
incurred by the Company, the Manager or any of their
Affiliates in connection with the selection, evaluation,
acquisition, origination or development of any Investments,
whether or not acquired or originated, as applicable,
including, without limitation, legal fees and expenses,
travel and communications expenses, costs of appraisals,
nonrefundable option payments on properties or other
investments not acquired, accounting fees and expenses,
title insurance premiums and the costs of performing due
diligence.
Affiliate or Affiliated means, with respect to any
Person, (i) any Person directly or indirectly controlling,
controlled by, or under common control with such other
Person; (ii) any Person directly or indirectly owning,
controlling, or holding with the power to vote 10.0% or more
of the outstanding voting securities of such other Person;
(iii) any legal entity for which such Person acts as an
executive officer, director, trustee, or general partner;
(iv) any Person 10.0% or more of whose outstanding voting
securities are directly or indirectly owned, controlled, or
held, with power to vote, by such other Person; and (v) any
executive officer, director, trustee, or general partner of
such other Person. An entity shall not be deemed to control
or be under common control with a program sponsored by the
sponsor of the Company unless (A) the entity owns 10.0% or
more of the voting equity interests of such program or (B) a
majority of the Board (or equivalent governing body) of such
program is composed of Affiliates of the entity.
Asset Management Fee means fees payable to the Manager
pursuant to Section 8.01.
Board means the board of directors of the Company, as of
any particular time.
Bylaws means the bylaws of the Company, as amended from
time to time.
Charter means the articles of incorporation of the
Company, as amended from time to time.
Code means the Internal Revenue Code of 1986, as
amended from time to time, or any successor statute thereto.
Reference to any provision of the Code shall mean such
provision as in effect from time to time, as the same may be
amended, and any successor provision thereto, as interpreted
by any applicable regulations as in effect from time to
time.
Company means the Multi-Housing Income REIT, Inc., a
corporation organized under the laws of the State of Maryland.
Distribution means any distributions of money or
other property by the Multi-Housing Income REIT, Inc. to
Shareholders, including distributions that may
constitute a return of capital for federal income tax
purposes.
FINRA means the Financial Industry Regulatory Authority,
Inc.
GAAP means generally accepted accounting principles as
in effect in the United States of America from time to time.
Gross Proceeds means the aggregate purchase price of
all Shares sold for the account of the Company through an
Offering, without deduction for Organization and Offering
Expenses.
Initial Public Offering means the initial public
offering of Shares qualified on Offering Statement No.
[________] on Form 1-A.
Investments means any investments by the Company in
Properties, Loans and all other investments in which the
Company may acquire an interest, either directly or
indirectly, including through ownership interests in a Joint
Venture, pursuant to its Charter, Bylaws and the investment
objectives and policies adopted by the Board from time to
time, other than short-term investments acquired for
purposes of cash management.
Joint Venture means any joint venture, limited liability
company, partnership or other entity pursuant to which the
Company is a co-venturer or partner with respect to the
ownership of any Investments.
Loans means mortgage loans and other types of debt
financing investments made by the Company, either directly
or indirectly, including through ownership interests in a
Joint Venture, including, without limitation, mezzanine
loans, B-notes, bridge loans, convertible debt, wraparound
mortgage loans, construction mortgage loans, loans on
leasehold interests, and participations in such loans.
Manager means Casoro Investment Advisory Firm,
LLC, a Texas limited liability company.
NAV means the net asset value of the Company as
determined in accordance with the procedures outlined in the
Company's Bylaws.
Offering means any offering of Shares (including the
Initial Offering).
Offering Expense Savings shall have the meaning ascribed
to that term in Section 8.02.
Offering Statement means the offering statement
filed by the Company with the SEC on Form 1-A (Reg.
No. [ ]), as amended from time to time, in
connection with the Initial Public Offering.
Operating Expenses means all third party charges and
out-of-pocket costs and expenses incurred by the Manager or
its Affiliate that are related to the operations of the
Company, including, without limitation, those related to (i)
forming and operating subsidiaries, (ii) Acquisition
Expenses, (iii) the acquisition, ownership, management,
financing, hedging of interest rates on financings, or sale
of investments, (iv) meetings with or reporting to
Shareholders, (v) accounting, auditing, research,
consulting, tax return preparation, financial reporting, and
legal services, risk management services and insurance,
including without limitation to protect the Company, the
Manager, its Affiliates, and Shareholders in connection with
the performance of activities related to the Company, (vi)
the Company's indemnification pursuant to Article 15 of this
Agreement, (vii) litigation, (viii) borrowings of the
Company, (ix) liquidating the Company, (x) any taxes, fees
or other governmental charges levied against the Company and
all expenses incurred in connection with any tax audit,
investigation, settlement or review of the Company, (xi)
travel costs associated with investigating and evaluating
investment opportunities (whether or not consummated) or
making, monitoring, managing or disposing of investments,
and (xii) the costs of any third parties retained to provide
services to the Company.
Organization and Offering Expenses means all third-party
charges and out-of-pocket costs and expenses incurred by the
Company, the Manager and its Affiliates in connection with
the formation of the Company, the Offering of Shares, and the
admission of investors in the Company, including, without
limitation, travel, legal, accounting, filing, advertising
and all other expenses incurred in connection with the offer
and sale of interests in the Company.
Person means an individual, corporation, partnership,
estate, trust (including a trust qualified under Section
401(a) or 501(c) (17) of the Code), a portion of a trust
permanently set aside for or to be used exclusively for the
purposes described in Section 642(c) of the Code,
association, private foundation within the meaning of Section
509(a) of the Code, joint stock company or other entity, or
any government or any agency or political subdivision
thereof, and also includes a group as that term is used for
purposes of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended.
Property or Properties means any real property or
properties transferred or conveyed to the Company, either
directly or indirectly, including through ownership interests
in a Joint Venture.
Property Manager means an entity that has been retained
to perform and carry out property management services at one
or more of the Properties, excluding persons, entities or
independent contractors retained or hired to perform facility
management or other services or tasks at a particular
Property, the costs for which are passed through to and
ultimately paid by the tenant at such Property.
REIT means a "real estate investment trust" under
Sections 856 through 860 of the Code.
SEC means the United States Securities and Exchange
Commission.
Shares means shares of common stock of the Company, par
value $.01 per share.
Shareholders means the registered holders of the Shares.
Termination Date means the date of termination of the
Agreement determined in accordance with Article 13 hereof.
ARTICLE 2
APPOINTMENT
The Company hereby appoints the Manager to serve as its
Manager and asset manager on the terms and conditions set
forth in this Agreement, and the Manager hereby accepts such
appointment.
ARTICLE 3
DUTIES OF
THE ADVISOR
The Manager is responsible for managing, operating,
directing and supervising the operations and administration
of the Company and its assets. The Manager undertakes to use
its commercially reasonable efforts to present to the
Company potential investment opportunities, to make
investment decisions on behalf of Company subject to the
limitations in the Company's Charter, the direction and
oversight of the Board and Section 4.03 hereof, and to
provide the Company with a continuing and suitable
investment program consistent with the investment objectives
and policies of the Company as determined and adopted from
time to time by the Board. Subject to the limitations set
forth in this Agreement, including Article 4 hereof, and the
continuing and exclusive authority of the Board over the
management of the Company, the Manager shall, either
directly or by engaging an Affiliate or third party, perform
the following duties:
3.1 Offering Services. The Manager shall manage and supervise:
(i) Development of the Initial Public Offering and any
subsequent Offering approved by the Board, including the
determination of the specific terms of the securities to be
offered by the Company, preparation of all offering and related
documents, and obtaining all required regulatory approvals of
such documents;
(ii) Preparation and approval of all marketing materials
contemplated to be used by the Manager or others relating to the
Offering;
(iii) Negotiation and coordination with the transfer
agent for the receipt, collection, processing and acceptance of
subscription agreements, commissions, and other administrative
support functions;
(iv) Creation and implementation of various technology and
electronic communications related to the Offering;
(v) All other services related to the Offering, other than
services that the Company elects to perform directly or would
require the Manager to register as a broker-dealer with the SEC,
FINRA or any state.
3.2 Acquisition Services. The Manager shall:
(i) Approve and oversee the Company's overall investment
strategy, which will consist of elements such as investment
selection criteria, diversification strategies and asset
disposition strategies;
(ii) Serve as the Company's investment and financial
manager with respect to sourcing, underwriting, acquiring,
financing, originating, servicing, investing in and managing a
diversified portfolio of commercial properties and other real
estate-related assets;
(iii) Adopt and periodically review the Company's
investment guidelines;
(iv) Structure the terms and conditions of the Company's
acquisitions, sales and joint ventures;
(v) Enter into leases and service contracts for the
properties and other Investments;
(vi) Approve and oversee the Company's debt financing
strategies;
(vii) Approve joint ventures, limited partnerships and
other such relationships with third parties;
(viii) Approve any potential liquidity transaction;
(ix) Obtain market research and economic and statistical
data in connection with the Company's Investments and investment
objectives and policies;
(x) Oversee and conduct the due diligence process related
to prospective Investments;
(xi) Prepare reports regarding prospective Investments
which include recommendations and supporting documentation
necessary for its' investment committee to evaluate the proposed
Investments; and
(xii) Negotiate and execute approved Investments and
other transactions.
3.3 Asset Management Services. The Manager shall:
(i) Investigate, select, and, on behalf of the Company,
engage and conduct business with such Persons as the Manager
deems necessary to the proper performance of its obligations
hereunder, including but not limited to consultants,
accountants, lenders, technical advisors, attorneys, brokers,
underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers,
insurance agents, developers, construction companies, property
managers and any and all Persons acting in any other capacity
deemed by the Manager necessary or desirable for the performance
of any of the foregoing services;
(ii) Monitor applicable markets and obtain reports (which
may be prepared by the Manager or its Affiliates) where
appropriate, concerning the value of Investments of the Company.
(iii) Monitor and evaluate the performance of
Investments of the Company, provide management services to the
Company and perform and supervise the various management and
operational functions related to the Company's Investments;
(iv) Formulate and oversee the implementation of strategies
for the administration, promotion, management, operation,
maintenance, improvement, financing and refinancing, marketing,
leasing and disposition of Investments on an overall portfolio
basis;
(v) Coordinate and manage relationships between the
Company and any Joint Venture partners; and
(vi) Calculate the Company's NAV in accordance with the
procedures outlined in the Company's Bylaws on a quarterly basis
following the first anniversary of the commencement of the
Initial Public Offering.
3.4 Accounting and Other Administrative Services. The Manager
shall:
(i) Manage and perform the various administrative
functions necessary for the management of the day-to-day
operations of the Company;
(ii) Provide or arrange for administrative services and
items, legal and other services, office space, office
furnishings, personnel and other overhead items necessary and
incidental to the Company's business and operations;
(iii) Provide financial and operational planning
services and portfolio management functions;
(iv) Maintain accounting data and any other information
concerning the activities of the Company as shall be needed to
prepare and file all periodic financial reports and returns
required to be filed with the SEC and any other regulatory
agency, including annual financial statements;
(v) Maintain all appropriate books and records of the
Company;
(vi) Oversee tax and compliance services and risk
management services and coordinate with appropriate third
parties, including independent accountants and other
consultants, on related tax matters;
(vii) Supervise the performance of such ministerial and
administrative functions as may be necessary in connection with
the daily operations of the Company;
(viii) Provide the Company with all necessary cash
management services;
(ix) Manage and coordinate with the transfer agent the
Distribution process and payments to Shareholders;
(x) Evaluate and obtain adequate insurance coverage based
upon risk management determinations;
(xi) Provide the officers of the Company and the Board with
timely updates related to the overall regulatory environment
affecting the Company, as well as managing compliance with such
matters;
(xii) Evaluate the Company's corporate governance
structure and appropriate policies and procedures related
thereto; and
(xiii) Oversee all reporting, record keeping, internal
controls and similar matters in a manner to allow the Company to
comply with applicable law.
3.5 Shareholder Services. The Manager shall:
(i) Determine the Company's Distribution policy;
(ii) Approve amounts available for redemptions of shares of
the Company's common stock; and
(iii) Manage communications with the Shareholders,
including answering phone calls, preparing and sending written
and electronic reports and other communications.
3.6 Financing Services. The Manager shall:
(i) Identify and evaluate potential financing and
refinancing sources, engaging a third-party broker if necessary;
(ii) Negotiate terms, arrange and execute financing
agreements;
(iii) Manage relationships between the Company and its
lenders, as applicable; and
(iv) Monitor and oversee the service of the Company's debt
facilities and other financings.
3.7 Disposition Services. The Manager shall:
(i) Consult with the Board and provide assistance with the
evaluation and approval of potential asset dispositions, sales
or other liquidity events; and
(ii) Structure and negotiate the terms and conditions of
transactions pursuant to which Investments may be sold.
ARTICLE 4
AUTHORITY OF ADVISOR
4.1 Powers of the Manager. Subject to the express
limitations set forth in this Agreement and the continuing and
exclusive authority of the Board over the management of the
Company, the power to direct the management, operation and
policies of the Company, including making, financing and
disposing of Investments, and the performance of those services
described in Article 3 hereof, shall be vested in the Manager,
which shall have the power by itself and shall be authorized and
empowered on behalf and in the name of the Company to carry out
any and all of the objectives and purposes of the Company and to
perform all acts and enter into and perform all contracts and
other undertakings that it may in its sole discretion deem
necessary, advisable or incidental thereto to perform its
obligations under this Agreement. The Manager shall have the
power to delegate all or any part of its rights and powers to
manage and control the business and affairs of the Company to
such officers, employees, Affiliates, agents and representatives
of the Manager or the Company as it may deem appropriate. Any
authority delegated by the Manager to any other Person shall be
subject to the limitations on the rights and powers of the
Manager specifically set forth in this Agreement or the Charter.
4.2 Approval by the Board. Notwithstanding the foregoing, the
Manager may not take any action on behalf of the Company without
the prior approval of the Board or duly authorized committees
thereof if the Charter or Maryland General Corporation Law
require the prior approval of the Board. If the Board or a
committee of the Board must approve a proposed investment,
financing or disposition or chooses to do so, the Manager will
deliver to the Board or committee, as applicable, all documents
required by it to evaluate such investment, financing or
disposition.
4.3 Modification or Revocation of Authority of Manager. The
Board may, at any time upon the giving of notice to the Manager,
modify or revoke the authority or approvals set forth in Article
3 and this Article 4 hereof; provided, however, that such
modification or revocation shall be effective upon receipt by
the Manager and shall not be applicable to investment
transactions to which the Manager has committed the Company
prior to the date of receipt by the Manager of such
notification.
ARTICLE 5
BANK ACCOUNTS
The Manager may establish and maintain one or more bank
accounts in its own name for the account of the Company or in
the name of the Company and may collect and deposit into any
such account or accounts, and disburse from any such account or
accounts, any money on behalf of the Company, under such terms
and conditions as the Board may approve, provided that no funds
shall be commingled with the funds of the Manager. The Manager
shall from time to time render appropriate accountings of such
collections and payments to the Board and the independent
auditors of the Company.
ARTICLE 6
RECORDS AND ACCESS
The Manager, in the conduct of its responsibilities to the
Company, shall maintain adequate and separate books and records
for the Company's operations in accordance with GAAP, which
shall be supported by sufficient documentation to ascertain that
such books and records are properly and accurately recorded.
Such books and records shall be the property of the Company and
shall be available for inspection by the Board and by counsel,
auditors and other authorized agents of the Company, at any time
or from time to time during normal business hours. The Manager
shall at all reasonable times have access to the books and
records of the Company
ARTICLE 7
LIMITATION ON ACTIVITIES
Notwithstanding any provision in this Agreement to the
contrary, the Manager shall not take any action that, in its
sole judgment made in good faith, would (i) adversely affect the
ability of the Company to qualify or continue to qualify as a
REIT under the Code unless the Board has determined that the
Company will not seek or maintain REIT qualification for the
Company, (ii) subject the Company to regulation under the
Investment Company Act of 1940, as amended, (iii) violate any
law, rule, regulation or statement of policy of any governmental
body or agency having jurisdiction over any of the Company, the
Shares, or other securities of the Company, (iv) require the
Company or the Manager to register as a broker-dealer with the
SEC or any state, or (v) violate the Charter or Bylaws.
In the event an action that would violate (i) through (v) of the
preceding sentence but such action has been ordered by the
Board, the Manager shall notify the Board of the Manager's
judgment of the potential impact of such action and shall
refrain from taking such action until it receives further
clarification or instructions from the Board. In such event, the
Manager shall have no liability for acting in accordance with
the specific instructions of the Board so given.
ARTICLE 8
FEES AND OTHER
COMPENSATION
The Company shall pay the Manager as compensation for the
services described in Article 3 hereof a quarterly fee (the
"Asset Management Fee") in an amount equal to an annualized rate
of 1.00%, which, until one year after the commencement of the
Initial Public Offering will be based on (i) the Company's Gross
Proceeds as of the end of each fiscal quarter, plus (minus) (ii)
any earnings (loss) through the end of such fiscal quarter,
minus (iii) any distributions paid through the end of such
fiscal quarter; and thereafter will be based on the Company's
NAV at the end of each fiscal quarter.
ARTICLE 9
EXPENSES
9.1 General. In addition to the compensation paid to the
Manager pursuant to Article 8 hereof, the Company shall pay
directly or reimburse the Manager for all Operating Expenses
paid or incurred by the Manager or its Affiliates on behalf of
the Company or in connection with the services provided to the
Company pursuant to this Agreement, including, but not limited
to:
(i) All Organization and Offering Expenses; provided,
however, that to the extent such reimbursement would cause the
total amount spent by the Company on Organization and Offering
Expenses in connection with an Offering to exceed 3.0% of the
Gross Proceeds raised as of the date of the reimbursement,
future Asset Management Fees otherwise payable by the Company to
the Manager pursuant to Section 8.01 shall be reduced by the
amount of such excess;
(ii) Acquisition Expenses incurred in connection with the
selection and acquisition of Investments, including such
expenses incurred related to assets pursued or considered but
not ultimately acquired by the Company;
(iii) The actual out-of-pocket cost of goods and
services used by the Company and obtained from entities not
Affiliated with the Manager;
(iv) Interest and other costs for borrowed money or
securitization transactions, including discounts, points and
other similar fees;
(v) Taxes and assessments on income or Properties, taxes
as an expense of doing business and any other taxes otherwise
imposed on the Company and its business, assets or income;
(vi) Out-of-pocket costs associated with insurance required
in connection with the business of the Company or by its
officers and Board;
(vii) Expenses of managing, improving, developing,
operating and selling Investments owned, directly or indirectly,
by the Company, as well as expenses of other transactions
relating to such Investments, including but not limited to
prepayments, maturities, workouts and other settlements of Loans
and other Investments;
(viii) All out-of-pocket expenses in connection with
payments to the Board and meetings of the Board and
Shareholders;
(ix) Out-of-pocket expenses of providing services for and
maintaining communications with Shareholders, including the cost
of preparation, printing, and mailing annual reports and other
Shareholder reports, proxy statements and other reports required
by governmental entities;
(x) Audit, accounting and legal fees, and other fees for
professional services relating to the operations of the Company
and all such fees incurred at the request, or on behalf of, the
Board or any other committee of the Board;
(xi) Out-of-pocket costs for the Company to comply with all
applicable laws, regulations and ordinances;
(xii) Expenses connected with payments of Distributions
made or caused to be made by the Company to the Shareholders;
(xiii) Expenses of organizing, domesticating, merging,
liquidating or dissolving the Company or of amending the
Charter, or the Bylaws; and
(xiv) All other out-of-pocket costs incurred by the
Manager in performing its duties hereunder.
9.2 Timing of and Additional Limitations on Reimbursements.
Expenses incurred by the Manager on behalf of the Company
and reimbursable pursuant to this Article 9 shall be reimbursed
no less than monthly to the Manager. The Manager shall prepare a
statement documenting the expenses of the Company during each
quarter and shall deliver such statement to the Company within
45 days after the end of each quarter.
Personnel and related employment costs incurred by the
Manager or its Affiliates in performing the services described
in Article 3 hereof, including salaries and wages, benefits and
overhead of all employees directly involved in the performance
of such services, shall be paid for by the Manager and are not
subject to reimbursement by the Company
ARTICLE 10
OTHER SERVICES
Should (i) the Company request that the Manager or any
manager, officer or employee thereof render services for the
Company other than as set forth in this Agreement or (ii) there
are changes to the regulatory environment in which the Manager
or Company operate that would increase significantly the level
of services performed such that the costs and expenses borne by
the Manager for which the Manager is not entitled to separate
reimbursement for personnel and related employment direct costs
and overhead under Article 9 of this Agreement would increase
significantly, such services shall be separately compensated at
such rates and in such amounts as are agreed by the Manager and
the Board, subject to the limitations contained in the Articles
of Incorporation, and shall not be deemed to be services
pursuant to the terms of this Agreement.
ARTICLE 11
REIT MATTERS
Manager acknowledges that it has been advised that the
Company has elected or may elect to be characterized as a REIT,
and agrees that the business and affairs of the Company shall be
managed with a view to minimizing (i) the amount of gross income
received by the Company (directly or indirectly) that would not
constitute (A) "rents from real property" as defined in Section
856 of the Code or (B) interest, dividends, gain from sales or
other types of income, in each case, described in Section
856(c)(3) of the Code, (ii) the amount of any income received by
the Company (directly or indirectly) from any "prohibited
transactions" as defined in Section 857(b)(6)(B)(iii) of the
Code (together with the income described in clause (i) of this
sentence, "Bad REIT Income") and (iii) the amount of assets held
by the Company (directly or indirectly) that are not "real
estate assets" or other types of assets described in Section
856(c)(4)(A) of the Code ("Bad REIT Assets"). Manager and the
Company agree that the Company shall be entitled to exercise any
vote, consent, election or other right under this Agreement with
a view to avoiding (or minimizing) the amount of Bad REIT Income
or Bad REIT Assets of the Company or any material risk that a
the Company could be disqualified as a real estate investment
trust under the Code or could be subject to any additional taxes
under Section 857 of the Code or Section 4981 of the Code, in
each case, without regard to whether conducting the business of
the Company in such manner would maximize either pre-tax or
after-tax profit of Manager or the Company. Without the prior
written consent of the Company, Manager, with respect to the
Company, shall not (i) enter into any lease pursuant to which
the determination of any rent to be received (directly or
indirectly) by the Company depends in whole or in part on the
income or profits of any person (other than amounts based upon a
fixed percentage or percentages of receipts or sales); (ii)
enter into any lease pursuant to which the Company shall receive
(directly or indirectly) rents attributable to personal property
except for a lease pursuant to which the personal property is
leased in connection with the lease of real property and the
rent attributable to the personal property for any taxable year
does not exceed 15% of the total rent for such year with respect
to such lease; (iii) enter into any arrangement pursuant to
which the Company would receive (directly or indirectly) any
"impermissible tenant service income" within the meaning of
Section 856(d)(7) of the Code; (iv) undertake any sales or
dispositions of property as a dealer for federal income tax
purposes which sales would be treated as "prohibited
transactions" pursuant to Section 857(b)(6)(B)(iii) of the Code;
or (v) otherwise engage in any transaction which would, or
likely would, result in the Company receiving more than a de
minimis amount of Bad REIT Income or owning more than a de
minimis amount of Bad REIT Assets.
In structuring the Company transactions, Manager and the
Company shall consider the use of a taxable REIT subsidiary
(each a "TRS") or an affiliate of a TRS (together with a TRS,
each a "TRS Entity") to own or lease all or portions of the
Property or to perform certain services with respect to the
Property to minimize the impact of Bad REIT Income. In
connection therewith, the Company shall, in its sole discretion,
have the unilateral right to (x) lease all or any portion of
the Property (a "TRS Lease") to a TRS Entity or (y) enter into a
services agreement with a TRS Entity to have such TRS Entity
perform certain services (including, but not limited to, any
non-customary services) with respect to the Property (the "TRS
Services Agreement"). Upon such election by the Company, Manager
will cooperate to facilitate the implementation of the TRS Lease
or TRS Services Agreement, including, without limitation,
entering into an agreement to provide similar services (but not
duplicative) to such TRS Entity as under this Agreement, and any
corresponding amendment to this agreement to take into account
such TRS Entity, and the Company shall have the right to cause
such TRS Entity to pay its allocated share of the fees and
expenses payable to Manager hereunder. The form of such
agreement, and any corresponding amendments to this Agreement,
shall be reasonably satisfactory to Manager and the Company.
Manager shall provide any information related to the Company
and/or any Property that is reasonably requested by the Company
with respect to REIT qualification matters of the Company.
ARTICLE 12
RELATIONSHIP OF MANAGER AND MULTI-HOUSING INCOME
REIT, INC.; OTHER
ACTIVITIES OF THE MANAGER
12.1 Relationship. The Company and the Manager are not partners
or joint venturers with each other, and nothing in this
Agreement shall be construed to make them such partners or joint
venturers. Nothing herein contained shall prevent the Manager
from engaging in other activities, including, without
limitation, the rendering of advice to other Persons (including
to other REITs) and the management of other programs advised,
sponsored or organized by the Manager or its Affiliates. Nor
shall this Agreement limit or restrict the right of any manager,
director, officer, employee or shareholder of the Manager or its
Affiliates to engage in any other business or to render services
of any kind to any other Person. The Manager may, with respect
to any investment in which the Company are a participant, also
render advice and service to each and every other participant
therein. The Manager shall promptly disclose to the Board the
existence of any condition or circumstance, existing or
anticipated, of which it has knowledge, that creates or could
create a conflict of interest between the Manager's obligations
to the Company and its obligations to or its interest in any
other Person.
12.2 Time Commitment. The Manager shall, and shall cause its
Affiliates and their respective employees, officers and agents
to, devote to the Company such time as shall be reasonably
necessary to conduct the business and affairs of the Company in
an appropriate manner consistent with the terms of this
Agreement. The Company acknowledge that the Manager and its
Affiliates and their respective employees, officers and agents
may also engage in activities unrelated to the Company and may
provide services to Persons other than the Company or any of
their Affiliates.
12.3 Investment Opportunities and Allocation. The Manager shall
be required to use commercially reasonable efforts to present a
continuing and suitable investment program to the Company that
is consistent with the investment policies and objectives of the
Company, but neither the Manager nor any Affiliate of the
Manager shall be obligated generally to present any particular
Investment opportunity to the Company even if the opportunity is
of character that, if presented to the Company, could be taken
by the Company. The Company shall not make any Investment unless
the Manager has recommended the Investment to the Company. The
Manager shall be required to notify the Board at least annually
of investments that have been purchased by other entities
managed by the Manager or its Affiliates for determination by
the Board that the Manager is fairly presenting investment
opportunities to the Company. In the event an investment
opportunity is located, the allocation procedure set forth under
the caption "Conflicts of Interest and Related Party
Transactions" in the Offering Statement shall govern the
allocation of the opportunity among the Company and other
entities managed by the Manager or its Affiliates.
ARTICLE 13
TERM AND TERMINATION OF THE AGREEMENT
13.1 Term. This Agreement shall have an initial term of three
years from the Effective Date and will be automatically renewed
for an unlimited number of successive one-year terms each year
thereafter unless previously terminated in accordance with
Section 13.02 below. The Company will evaluate the performance
of the Manager annually before renewing this Agreement, and each
such renewal shall be for a term of no more than one year. Any
such renewal must be approved by the Board.
13.2 Termination by the Company. The Company may also terminate
the management agreement at any time, including during the
initial term, with 30 days' prior written notice from its Board
for cause, which is defined as:
? The Manager's continued breach of any material
provision of this Agreement following a period of 30 days
after written notice thereof (or 45 days after written
notice of such breach if the Manager, under certain
circumstances, has taken steps to cure such breach within
30 days of the written notice);
? The commencement of any proceeding relating to the
bankruptcy or insolvency of the Manager, including an order
for relief in an involuntary bankruptcy case or the Manager
authorizing or filing a voluntary bankruptcy petition;
? Any change of control of the Manager which the
Company's independent representative determines is
materially detrimental to it taken as a whole;
? The Manager committing fraud against the Company,
misappropriating or embezzling its funds, or acting, or
failing to act, in a manner constituting bad faith, willful
misconduct, gross negligence or reckless disregard in the
performance of its duties under this Agreement; provided,
however, that if any of these actions is caused by an
employee, personnel and/or officer of the Manager or one of
its Affiliates and the Manager (or such Affiliate) takes
all necessary and appropriate action against such person
and cures the damage caused by such actions within 30 days
of the Manager's actual knowledge of its commission or
omission, this Agreement shall not be terminable; in
addition, if the Manager (or such Affiliate) diligently
takes necessary and appropriate action to cure the damage
caused by such actions in the first 30 days of the
Manager's actual knowledge of its commission or omission,
the Manager (or such Affiliate) will have a total of 180
days in which to cure such damage before the management
agreement shall become terminable; or
? the dissolution of the Manager.
13.4 Payments on Termination and Survival of Certain Rights and
Obligations.
(i) After the Termination Date, the Manager shall not be
entitled to compensation for further services hereunder except
it shall be entitled to receive from the Company within 30 days
after the effective date of such termination all unpaid
reimbursements of expenses and all earned but unpaid fees
payable to the Manager prior to termination of this Agreement.
(ii) The Manager shall promptly upon termination:
(a) pay over to the Company all money collected and
held for the account of the Company pursuant to this
Agreement, if any, after deducting any accrued
compensation and reimbursement for its expenses to
which it is then entitled;
(b) deliver to the Board a full accounting, including
a statement showing all payments collected by it and a
statement of all money held by it, covering the period
following the date of the last accounting furnished to
the Board;
(c) deliver to the Board all assets and documents of
the Company then in the custody of the Manager; and
functions.
(d) cooperate with the Company to provide an orderly
transition of management and advisory functions.
ARTICLE 14
ASSIGNMENT
This Agreement may be assigned by the Manager to an
Affiliate with the approval of the Board. The Manager may assign
any rights to receive fees or other payments under this
Agreement without obtaining the approval of the Board. This
Agreement shall not be assigned by the Company without the
consent of the Manager, except in the case of an assignment by
the Company to a corporation or other organization that is a
successor to all of the assets, rights and obligations of the
Company, in which case such successor organization shall be
bound hereunder and by the terms of said assignment in the same
manner as the Company are bound by this Agreement. Nothing
herein shall be deemed to prohibit or otherwise restrict any
transfers or additional issuances of equity interests in the
Manager nor shall any such transfer or issuance be deemed an
assignment for purposes of this Article 14.
ARTICLE 15
INDEMNIFICATION AND LIMITATION OF LIABILITY
15.1 Indemnification. Except as prohibited by the restrictions
provided in this Section 15.01, Section 15.02 and Section 15.03,
the Company shall indemnify, defend and hold harmless the
Manager and its Affiliates, including their respective officers,
directors, equity holders, partners and employees, from all
liability, claims, damages or losses arising in the performance
of their duties hereunder, and related expenses, including
reasonable attorneys' fees, to the extent such liability,
claims, damages or losses and related expenses are not fully
reimbursed by insurance.
Notwithstanding the foregoing, the Company shall not
indemnify the Manager or its Affiliates for any loss, liability
or expense arising from or out of an alleged violation of
federal or state securities laws by such party unless one or
more of the following conditions are met: (i) there has been a
successful adjudication on the merits of each count involving
alleged material securities law violations as to the particular
indemnitee; (ii) such claims have been dismissed with prejudice
on the merits by a court of competent jurisdiction as to the
particular indemnitee; or (iii) a court of competent
jurisdiction approves a settlement of the claims against a
particular indemnitee and finds that indemnification of the
settlement and the related costs should be made, and the court
considering the request for indemnification has been advised of
the position of the SEC and of the published position of any
state securities regulatory authority in which securities of the
Company were offered or sold as to indemnification for
violations of securities laws.
15.2 Limitation on Indemnification. Notwithstanding the
foregoing, the Company shall not provide for indemnification of
the Manager or its Affiliates for any liability or loss suffered
by any of them, nor shall any of them be held harmless for any
loss or liability suffered by the Company, unless all of the
following conditions are met:
(i) The Manager or its Affiliates have determined, in
good faith, that the course of conduct that caused the loss
or liability was in the best interests of the Company.
(ii) The Manager or its Affiliates were acting on
behalf of or performing services for the Company.
(iii) Such liability or loss was not the result of
gross negligence or willful misconduct by the Manager or
its Affiliates.
(iv) Such indemnification or agreement to hold
harmless is recoverable only out of the Company's net
assets and not from the Shareholders.
15.3 Limitation on Payment of Expenses. The Company shall pay or
reimburse reasonable legal expenses and other costs incurred by
the Manager or its Affiliates in advance of the final
disposition of a proceeding only if (in addition to the
procedures required by the Maryland General Corporation Law, as
amended from time to time) all of the following are satisfied:
(a) the proceeding relates to acts or omissions with respect to
the performance of duties or services on behalf of the Company,
(b) the legal proceeding was initiated by a third party who is
not a Securityholder or, if by a Securityholder acting in his or
her capacity as such, a court of competent jurisdiction approves
such advancement and (c) the Manager or its Affiliates undertake
to repay the amount paid or reimbursed by the Company, together
with the applicable legal rate of interest thereon, if it is
ultimately determined that the particular indemnitee is not
entitled to indemnification.
15.4 Indemnification by Manager. The Manager shall indemnify and
hold harmless the Company from contract or other liability,
claims, damages, taxes or losses and related expenses including
attorneys' fees, to the extent that such liability, claims,
damages, taxes or losses and related expenses are not fully
reimbursed by insurance and are incurred by reason of the
Manager's bad faith, fraud, misfeasance, willful misconduct,
gross negligence or reckless disregard of its duties; provided,
however, that the Manager shall not be held responsible for any
action of the Board in following or declining to follow any
advice or recommendation given by the Manager.
ARTICLE 16
MISCELLANEOUS
16.1 Notices. Any notice, report or other communication required
or permitted to be given hereunder shall be in writing unless
some other method of giving such notice, report or other
communication is required by the Charter, the Bylaws or is
accepted by the party to whom it is given, and shall be given by
being delivered by hand or by overnight mail or other overnight
delivery service to the addresses set forth herein:
To the Board, the Company: Multi-Housing
Income REIT, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Manager: Casoro Investment
Advisory Firm, LLC
c/o Casoro Capital Partners,
LLC
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇
Either party may at any time give notice in writing to the other
party of a change in its address for the purposes of this
Section 16.01.
16.2 Modification. This Agreement shall not be changed,
modified, terminated or discharged, in whole or in part, except
by an instrument in writing signed by both parties hereto, or
their respective successors or permitted assigns.
16.3 Severability. The provisions of this Agreement are
independent of and severable 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.
16.4 Construction. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the
State of Texas.
16.5 Entire Agreement. This Agreement contains the entire
agreement and understanding between 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 hereof. The
express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of
the terms hereof. This Agreement may not be modified or amended
other than by an agreement in writing.
16.6 Waiver. 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.
16.7 Gender. 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.
16.8 Titles Not to Affect Interpretation. The titles of Articles
and Sections 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 hereof.
16.9 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 hereof, individually or taken together, shall bear
the signatures of all of the parties reflected hereon as the
signatories.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date and year first above written.
Multi-Housing Income REIT, Inc.,
a Maryland corporation
By:
________________________________________
Name: ▇▇▇▇ ▇▇▇▇
Title: Chief Executive Officer
Casoro Investment Advisory Firm,
LLC, a Texas limited liability
company
By:
_______________________________________
_
Name: ▇▇▇▇ ▇▇▇▇
Title: Manager of the Manager
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