ASSET MANAGEMENT AGREEMENT. CENTURION APARTMENT REAL ESTATE INVESTMENT TRUST, a trust constituted under the laws of Ontario,

Transcription

1 ASSET MANAGEMENT AGREEMENT THIS ASSET MANAGEMENT AGREEMENT made as of the 1 st day of January 2013, B E T W E E N : CENTURION APARTMENT REAL ESTATE INVESTMENT TRUST, a trust constituted under the laws of Ontario, (hereinafter called "CAREIT") OF THE FIRST PART and CENTURION APARTMENT REIT MANAGEMENT INC., a corporation incorporated under the laws of Ontario, (hereinafter called the "Advisor") OF THE SECOND PART WHEREAS the Advisor provides asset management services to a number of entities affiliated with it; AND WHEREAS CAREIT conducts the business of (a) acquiring and holding interests in single purpose limited partnerships and other entities constituted from time to time by CAREIT ( Single Purpose Entities ) to acquire, develop, operate, lease, finance and sell individual multi-unit residential apartment properties (including apartment buildings, townhouses, student residences and land lease communities in Canada) for investment purposes (collectively, the Properties ); and (b) participating in joint venture arrangements with other investors in multi-unit residential apartment, townhouse, student residence and land lease community properties for investment purposes; and (c) investing in mortgages, and requires from time to time those asset management and related services contemplated by this Agreement; NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the covenants and agreements hereinafter contained,, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree as follows: 1.1 Engagement ARTICLE 1 ENGAGEMENT The Advisor hereby agrees to perform the services described in Schedule A

2 - 2 - (collectively, the Services ) on the terms and conditions set out in this Agreement, both for CAREIT and for each Single Purpose Entity at any time adopting this Agreement and agreeing to be bound by it. The Advisor, as independent contractor, agrees to accept each such appointment and to carry out its obligations hereunder in respect of the property and assets of CAREIT and in respect of the property and assets of each such Single Purpose Entity in a competent, efficient and diligent manner and in accordance with the good property management industry practice. The parties agree to add additional schedules designated Schedule B-1, etc. from time to time to reflect any addition and removal, of one or more Single Purpose Entities from time to time, as aforesaid. The parties agree that some of the Services provided by the Advisor authorize and empower the Advisor, on behalf of CAREIT and each Single Purpose Entity to use its discretion to take avoid or mitigate risks and make decisions that expose CAREIT and each Single Purpose Entity to risk of loss, reduction in profit or loss of potential profit. Provided that the Advisor performs the Services in good faith, notwithstanding any other provision of this Agreement or any applicable statutory provisions, the Advisor shall not be liable to CAREIT, to any of its Single Purpose Entities or to any persons at any time holding ownership interests in CAREIT ( Units ), for any loss, reduction in profit or loss of potential profit, damages (including special or consequential damages) for loss arising, directly or indirectly, from any breach of this Agreement (fundamental or otherwise) or from any tortuous acts or omissions of the Advisor (or its employees or agents) that may result from the Advisor performing the Services. 1.2 Term This Agreement shall terminate in accordance with the provisions of Article 5. ARTICLE 2 FEES & EXPENSES 2.1 Asset Management & Performance Incentive Fees (1) During the term of this Agreement, CAREIT shall pay the Advisor an Acquisition Fee (the Acquisition Fee ) equal to 1.0% of the purchase price of each property acquired by CAREIT either directly or through a Single Purpose Entities (calculated without duplication) plus any applicable taxes. The Acquisition Fee is payable upon the closing of the purchase of the subject acquired property. (2) During the term of this Agreement, CAREIT shall pay the Advisor an Asset management fee equal to the lesser of (i) 1.5% of the Net Asset Value of the regular units of CAREIT, or (ii) 0.525% of Assets, where Assets are defined as balance sheet total assets at International Financial Reporting Standards (IFRS) values. The Asset management fee shall be calculated and paid monthly in arrears. (3) During the term of this Agreement, the Advisor or its designated assignee will not charge CAREIT a fee for placement of mortgage investments. Notwithstanding this, the Advisor or its designated assignee shall be entitled to earn any borrower paid fees in respect of mortgage investments made by CAREIT.

3 - 3 - (4) During the term of this Agreement, in lieu of other performance and incentive fees not listed above, or that the Advisor and CAREIT may agree to, the Advisor shall continue to be entitled to a 5.0% interest in the distributions and the equity of CAREIT without the requirement that the Advisor contribute equity to or purchase units of CAREIT. This equity interest will continue to take the form of Class B REIT Units ( CBRU ) of CAREIT that have already been issued to, and paid for by the Advisor, whose proportion of distributions and equity are set to equal 5.0% of the REIT's distributions and equity respectively. Upon any termination of this Agreement, the CBRU's will be converted to regular Class A REIT units and that number of regular REIT units will be issued such that the Advisor owns 5.0% of all outstanding units upon such conversion. The particulars of this incentive, and any corresponding rights and responsibilities of the Class B Units are more fully detailed in the Declaration of Trust of CAREIT, which shall be the governing document for the interpretation of this clause and in the event of any conflict between this Agreement and the Declaration of Trust of CAREIT as concerns this paragraph, the Declaration of Trust will prevail. (5) During the term of this Agreement, the Advisor may provide other services to CAREIT not specifically defined in Schedule A. The Advisor shall be entitled to bill CAREIT at a rate that would be at least as favorable to CAREIT as an independent third party advisor would charge for a similar service. 2.2 Expenses Save as otherwise specifically provided in this Agreement, each party shall be responsible for paying their own expenses under the terms and conditions of this Agreement. 2.3 GST/HST CAREIT agrees to pay GST/HST on all fee payments hereunder to which goods and services or harmonized sales tax will be exigible. ARTICLE 3 REPRESENTATIONS AND WARRANTIES 3.1 CAREIT Representations and Warranties CAREIT represents and warrants to the other parties, and acknowledges that such other parties are relying on such representations and warranties, that: (a) (b) it is duly constituted and validly existing as a trust pursuant to its governing legislation; it presently holds such registrations as are necessary to perform its duties under this Agreement;

4 - 4 - (c) (d) (e) (f) it has the power and capacity to enter into this Agreement and to perform its duties and obligations hereunder; the execution and performance by it of this Agreement does not conflict with, and does not and will not result in a breach of, any agreement or other obligation to which it is a party or by which it is bound; it is not a non-resident of Canada for purposes of the Income Tax Act (Canada); and it acknowledges and confirms the statements applicable to it made in the preamble of this Agreement. 3.2 Advisor Representations and Warranties The Advisor represents and warrants to the other parties, and acknowledges that such other parties are relying on such representations and warranties, that: (a) (b) (c) (d) (e) (f) it is duly incorporated and validly existing as a corporation pursuant to the laws of the Province of Ontario; it presently holds licenses and authorities as are necessary to perform its duties under this Agreement; it has the power and capacity to enter into this Agreement and to perform its duties and obligations hereunder; the execution and performance by it of this Agreement does not conflict with, and does not and will not result in a breach of, any agreement or other obligation to which it is a party or by which it is bound; it is not a non-resident of Canada for purposes of the Income Tax Act (Canada); and it acknowledges and confirms the statements applicable to it made in the preamble of this Agreement. ARTICLE 4 COVENANTS 4.1 Covenants Each of the parties hereto covenants and agrees with the other, and acknowledges that such other party is relying on such covenants, that: (a) it will perform its obligations under this Agreement in good faith; and

5 - 5 - (b) it shall immediately notify the other parties of the occurrence of any event, which pursuant to applicable law, would disqualify it from performing its duties hereunder or of any investigation of any of its activities by any applicable regulatory authority. ARTICLE 5 TERM AND TERMINATION 5.1 Term of Agreement and Termination (1) This Agreement shall terminate on the earliest of the following dates (the Termination Date ): (a) (b) (c) (d) December 31, 2017, and unless cancelled in writing, this Agreement shall automatically renew for further periods of 5 years with each period being a Renewal Period; if the Advisor or CAREIT (as the case may be) is in material breach of any of the provisions of this Agreement and such breach has not been cured within 30 days after notice thereof given to the other party (CAREIT or the Advisor, as the case may be); at any time, upon 180 days prior written notice by the Advisor to CAREIT; if either party becomes bankrupt or insolvent or makes a general assignment for the benefit of its creditors or a receiver is appointed for such party or in respect of a substantial portion of such party s assets. (2) Upon any such termination, CAREIT agrees to pay the Advisor all fees, and to the Advisor, an amount equal to all Incentive Fees to the Termination Date as more particularly described in Section 2.1(5). 6.1 Indemnification ARTICLE 6 INDEMNITY The parties hereby agree to indemnify and hold harmless each other from and against any and all claims, actions, suits, losses (other than loss of profits), damages, demands, judgments, fines, costs, amounts paid in settlement, debts, liabilities, cost and expenses, including with limitation reasonable solicitors fees and disbursements (collectively referred to as a Claim ), to which either party may become subject or otherwise involved with in any capacity, insofar as the Claim relates to, is caused by, results from, arises out of, is based upon, directly or indirectly, or is a consequence of any breach of or default under any representation, warranty, covenant or agreement of a party in this Agreement or any other act or omission by such party in connection with the subject matter of this Agreement; provided that the party seeking indemnification

6 - 6 - provides the other party written notice of such Claim and the other party has a right to participate in the defense of any such Claim. Notwithstanding the foregoing, it is agreed that the indemnifying party will not be liable to the party seeking indemnification for any Claim arising as a result of the fraud, misrepresentation knowingly made, willful misconduct, negligence or intentional misconduct of the party seeking indemnification. 7.1 Entire Agreement ARTICLE 7 MISCELLANEOUS This Agreement and the schedules referred to herein constitute the entire agreement between the parties hereto relating to the subject matter hereof and supersede all prior agreements, representations, warranties, statements, promises, information, arrangements, understandings, negotiations and discussions, whether written or oral, express or implied, of the parties hereto pertaining to the subject matter hereof. No amendment, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any provision of this Agreement shall be deemed or shall constitute a waiver of any other provision nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. 7.2 Governing Law This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the Province of Ontario and the federal laws of Canada applicable in such province. 7.3 Binding Effect Assignabilitv. Etc. This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and any permitted assigns. 7.4 Severability If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof and each provision is hereby declared to be separate, severable and distinct. 7.5 No Waiver The failure of any party to insist upon strict adherence to any provision of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to such provision or any other provision of this Agreement. No purported waiver shall be effective as against any party unless consented to in writing by such party. The waiver by any party of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent or other breach.

7 Currency All amounts payable under this Agreement are in Canadian currency. 7.7 Time of the Essence 7.8 Notice Time shall be of the essence of this Agreement and any party hereof. Any demand or notice to be given by any party hereto to the other party shall be in writing and may be given by personal delivery or except during any period when postal service is interrupted, by prepaid registered mail or by telex, telecopy or by other means of instantaneous transmission that produces a permanent copy ("other communication") addressed as follows: Centurion Apartment Real Estate Investment Trust at: C/O: CAREIT 25 Sheppard Avenue West, Suite 710 Toronto, ON M2N 6S6 Centurion Apartment REIT Management at: C/O: Centurion Apartment REIT Management Inc. 25 Sheppard Avenue West, Suite 710 Toronto, ON M2N 6S6 and any notice given by registered mail shall be deemed to have been received by the party to whom it was addressed on the date falling two (2) business days following the date upon which such notice sent by registered mail has been deposited in the post office with postage and cost of registration prepaid and if personally delivered to an adult during normal business hours, when so delivered, and if given by such other communication during normal business hours on a business day, on the date of transmission, and if not given during normal business hours, on the next business day, provided that any of the above-named parties may change the address designated from time to time, by notice in writing to the other party hereto. 7.9 Further Assurances Each party shall do, execute, acknowledge and deliver, or cause to be done, executed, acknowledged and delivered, such further acts, deeds, transfers and assurances as are reasonably required for the purpose of accomplishing and effecting the intention of this Agreement.

8 Heading and Interpretation The division of this Agreement into articles, sections, subsections and paragraphs and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to an article, section, subsection or paragraph refers to the specified article, section, subsection or paragraph of this Agreement. The terms "this Agreement", "hereof", "herein", "hereunder" and similar expressions refer to this Agreement and not to any particular article, section, subsection, paragraph or portion hereof and include any agreement or instrument supplementary or ancillary hereto. The parties hereto acknowledge that their respective legal counsel have reviewed and participated in settling the terms of this Agreement, and the parties agree that any rule of construction to the effect that any ambiguity is to be resolved against the drafting party shall not be applicable in the interpretation of this Agreement Number and Gender In this Agreement, unless there is something in the subject matter or context inconsistent therewith: (a) (b) (c) words importing the singular number include the plural and such words shall be construed as if the plural had been used; words importing the plural include the singular and such words shall be construed as if the singular had been used; and words importing the use of any gender shall include all genders where the context or party referred to so requires, and the rest of the sentence shall be construed as if the necessary grammatical and terminological changes had been made Counterparts, Facsimile Delivery This Agreement may be executed in counterparts, each of which shall constitute an original and all of which when taken together shall constitute one and the same instrument. Delivery of an executed signature page by facsimile transmission shall be as effective as delivery of a manually executed counterpart of this Agreement.

9 - 9 - IN WITNESS WHEREOF the parties hereto have executed this Asset Management Agreement as of the date hereof. CENTURION APARTMENT REAL ESTATE INVESTMENT TRUST By: (Signed) G. Ross Amos Name: Title: G. Ross Amos Trustee CENTURION APARTMENT REIT MANAGEMENT INC. By: (Signed) Gregory G. Romundt Name: Gregory G. Romundt Title: President

10 SCHEDULE A SERVICES Services for the purpose of the Agreement shall include, without limitation: 1. Services Provided Directly by the Advisor: The Agent, in its sole judgment, exercised in good faith, from time to time shall for CAREIT, and for each Single Purpose Entity at any time adopting this Agreement: provide ongoing analysis of the market in Ontario and elsewhere for multiunit residential rental properties provide acquisition, disposition and asset management advice to CAREIT and to one or more of the Single Purpose Entities perform due diligence on any properties being considered for acquisition for CAREIT directly or through one or more of the Single Purpose Entities hire and manage specialists, consultants, advisors or other like persons reasonably required from time to time in furtherance and support of the Services; provided that the fees and out-of-pocket costs of each such specialist, consultant and advisor will be for the account of CAREIT and the relevant Single Purpose Entity(ies) and not to the account of the Advisor prepare and distribute annual estimate on a Property-by-Property basis of the amount to be reserved from the revenues of the Property in question for any necessary capital repairs establish and maintain commercial bank overdraft line of credit to protect each Single Purpose Entity against overdraft charges use cash reserves from the Properties to manage the cash flow requirements of individual Single Purpose Entities, including the invoice and collection of interest on any short term loans made to individual Single Purpose Entities from such cash reserves consider, and implement, in its discretion, as aforesaid, interest rate, currency, commodity and other financial risks hedges and other policies to manage (increasing, maintaining or decreasing) risk exposure for the Single Purpose Entities on a consolidated basis open and manage any investment, banking, trading or brokerage account required for it to manage the aforementioned financial risks hedges use commercially reasonable efforts to arrange with third party lenders short and long term financing for one or more Properties or for CAREIT

11 provided the foregoing shall in no circumstances constitute an undertaking by the Advisor to make any loan to any of CAREIT or any Single Purpose Entity at any time in any amount. supply a minimum of two (2) persons to serve as Trustee's on the Board of Trustees of CAREIT if there are five or fewer Trustee's and up to four (4) if there are nine (9) or ten (10) Trustee and up to five if there are eleven (11) Trustees. So long as Centurion Apartment REIT Management Inc. (CARMI) serves as the Asset Manager of CAREIT, CARMI shall be obligated to provide these persons and CAREIT is obligated to accept these persons as Trustee's

12 SCHEDULE B-1 SINGLE PURPOSE ENTITIES Centurion Apartment Properties I Limited Partnership Centurion Apartment Properties II Limited Partnership