EXHIBIT
L
ASSET MANAGEMENT AGREEMENT
TABLE OF CONTENTS
1. DEFINITIONS L-4
2. DUTIES OF THE ASSET MANAGER L-8
2.1. GENERAL L-8
2.2. ANNUAL STRATEGIC PLAN L-8
2.3. ASSET MANAGEMENT L-9
2.4. GENERAL ADMINISTRATIVE DUTIES L-9
2.5. REAL ESTATE INVESTMENT ADVICE L-9
2.6. SHORT-TERM INVESTMENTS L-9
2.7. AGENCY L-10
2.8. RETENTION OF SERVICES L-10
2.9. BANK ACCOUNTS L-10
2.10. BOOKS AND RECORDS L-10
2.11. APPRAISALS AND REPORTING L-11
2.12. REPORTS L-11
2.13. FINANCING AND SECURITIES ISSUANCE L-11
2.14. INCOME QUALIFICATION L-12
2.15. EXPERTS L-12
3. COMPENSATION L-12
3.1. ASSET MANAGEMENT FEE L-12
3.2. ACQUISITION FEES L-12
3.2.1. INITIAL ACQUISITIONS L-12
3.2.2. SUBSEQUENT ACQUISITIONS L-13
3.3. DISPOSITION FEE L-13
3.4. PAYMENT FOR ADDITIONAL SERVICES L-13
3.5. EXPENSES OF THE ASSET MANAGER L-13
3.6. REIMBURSABLE EXPENSES L-13
4. RESTRICTIONS L-14
5. TERMINATION; TERM L-15
5.1. TERMINATION L-15
5.2. NON-CURABLE TERMINATING EVENTS L-15
5.3. CURABLE DEFAULTS L-15
5.3.1. WRITTEN NOTICE L-15
5.3.2. ADJUDICATED DEFAULT L-16
6. ACTION UPON TERMINATION OR CANCELLATION L-17
7. LIABILITY AND INDEMNIFICATION OF ASSET MANAGER L-17
7.1. LIMITATION OF LIABILITY L-17
7.2. INDEMNIFICATION L-18
7.2.1. ASSET MANAGER HELD HARMLESS L-18
7.2.2. INDEMNIFICATION NOT ALLOWED L-18
7.2.3. NOTICE L-18
7.2.4. OBLIGATIONS OF OWNER CUMULATIVE L-19
7.3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER L-19
8. MISCELLANEOUS PROVISIONS L-20
8.1. ENTIRE AGREEMENT L-20
8.2. BINDING; ASSIGNMENT L-20
8.3. NO PARTNERSHIP OR JOINT VENTURE L-20
8.4. SEVERABILITY L-20
8.5. POLICY AND FINANCIAL INFORMATION L-21
8.6. DOCUMENTS; NOTICES L-21
8.7. HEADINGS L-22
8.8. GOVERNING LAW L-22
8.9. DIRECTOR ACTION L-22
8.10. OTHER ACTIVITIES L-22
8.11. AUTHORITY TO ACT L-22
8.12. COUNTERPARTS L-23
ASSET MANAGEMENT AGREEMENT
THIS ASSET MANAGEMENT AGREEMENT, dated as of the 31st day of
October 2002, is made by and between CBCI INCOME AND GROWTH
FUND, LLC, a Minnesota Limited Liability Company (the "Owner"),
and CBCI FUND MANAGEMENT I, INC., a Minnesota corporation (the
"Asset Manager").
WHEREAS, the Owner is organized under the laws of the State of
Minnesota for the purposes of owning, leasing, operating and
selling non-residential real estate for the production of
income;
WHEREAS, the Owner desires to avail itself of the experience,
sources of information, advice, assistance and certain
facilities of, or available to, the Asset Manager and to have
the Asset Manager undertake the duties and responsibilities
hereinafter set forth, on behalf of and subject to the
supervision of the Owner, as provided in this Asset Management
Agreement; and
WHEREAS, the Asset Manager is willing to undertake to render
such services, subject to the supervision of the Owner, on the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, it is hereby agreed as follows:
1. DEFINITIONS
As used in this Asset Management Agreement, the following terms
shall have the meanings set forth below.
"Asset Manager" means CBCI Fund Management I, Inc., a Minnesota
corporation;
"Asset Management Fee" shall have the meaning set forth in
Section 3.1 hereof;
"Affiliate" means with respect to any Person (the "Subject
Person"), any other Person controlling, controlled by or under
common control with the Subject Person. As used in this
definition of "Affiliate," the term "control" means, with
respect to any Person, the right to the exercise, directly or
indirectly, of 50% or more of the voting rights attributable to
such Person;
"Audit Committee" means a committee of the Owner consisting of
the Special Managing Member of the Owner and an Independent
Audit Committee Member and having the duties of reviewing (i)
matters relating to the Owner's financial reporting and (ii)
transactions between the Company and its Managing Members;
"Bankruptcy" of any Person means the occurrence of any of the
following events:
(a) If such Person shall file a voluntary petition in
bankruptcy or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking
any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar
relief for itself under the present or any future
Federal bankruptcy act or any other present or future
applicable Federal, state or other statute or law
relating to bankruptcy, insolvency, or other relief for
debtors, or shall seek or consent to the appointment of
any trustee, receiver, conservator or liquidator of
such Person of all, or substantially all, of its
property; or
(b) If a court of competent jurisdiction shall enter an
order, judgment or decree approving a petition filed
against such Person seeking any reorganization,
arrangement, composition, readjustment, liquidation,
dissolution or similar relief under the present or any
future Federal bankruptcy act, or any other present or
future Federal, state or other statute or law relating
to bankruptcy, insolvency, or other relief for debtors,
and such order, judgment or decree shall remain
unvacated and unstayed for a period of ninety (90) days
from the date of entry thereof, or any trustee,
receiver, conservator or liquidator of such Person or
of all or substantially all of its property shall be
appointed without the consent of such Person and such
appointment shall remain unvacated and unstayed for a
period of ninety (90) days or if such Person shall file
an answer admitting the material allegations of a
petition filed against it in any bankruptcy,
reorganization or insolvency proceeding; or
(c) If such Person shall admit in writing its inability to
pay its debts as they mature; or
(d) If such Person shall make a general assignment for the
benefit of creditors or take any other similar action
for the protection or benefit of creditors; or
(e) If any assets of such Person are attached, seized or
subjected to a garnishment or other action by a
creditor of such Person seeking to realize upon a
judgment against such Person, and such attachment,
seizure, garnishment or other action is not vacated,
stayed or otherwise resolved within ninety (90) days
thereafter;
"Code" means the Internal Revenue Code of 1986, as amended;
"Escrow Agreement" means the escrow agreement established in
compliance with the Owner's Prospectus dated _________, 2002;
"Managing Members" means the Managing Members of the Owner;
"Indemnified Party" shall have the meaning set forth in Section
7.2.1 hereof;
"Independent Audit Committee Member" means a member of the Audit
Committee of the Owner who (i) is not, and has not for the last
12 months been, an employee or member of the Owner; (ii) is not
an Affiliate (as such term is defined below) of the Owner or an
employee of an Affiliate (as such term is defined below); (iii)
is not a member of the Immediate Family (as such term is defined
below) of any natural person described in clauses (i) and (ii)
above, and (iv) is free from any relationship that would
interfere with the exercise of independent judgment concerning
matters related to the Owner. With respect to any particular
matter, a Person is also interested if he or she has a financial
interest in the matter. For purposes of the definition of
"Independent Audit Committee Member, " an "Affiliate" means any
Person directly or indirectly controlling, controlled by, or
under common control with, such other Person; "Control" means
the power to exercise a controlling influence over the
management or policies of a company, unless such power is solely
the result of an official position with the company; and "Member
of the Immediate Family" means any parent, spouse of a parent,
child, spouse of a child, spouse, brother or sister and includes
step and adoptive relationships;
"Net Equity Value" means the net equity value of the Owner in
United States dollars for the relevant quarterly period
determined as of the end of each calendar quarter as reflected
in the most recent quarterly financial statements of Owner
(whether audited or unaudited), which financial statements
shall, to the extent necessary, be adjusted to reflect the
appraised value of the Owner Properties (which, with respect to
any property held by a joint venture between Owner and one or
more third parties, shall only include Owner's pro-rata share of
such appraised value), after deducting any mortgage and long
term indebtedness of Owner (which, with respect to any property
held by a joint venture between Owner and one or more third
parties, shall only include Owner's pro-rata share of such
indebtedness) with respect to such Owner Properties. The parties
agree that the Net Equity Value as of the date hereof based on
the current appraisals of the Owner Properties, other assets of
the Owner and the current indebtedness of the Owner is
$1,000.00. Upon receipt of any new appraisal for any of the
Owner Properties pursuant to Section 2.11 hereof or the
acquisition by the Owner of other additional assets, the Net
Equity Value shall be appropriately adjusted;
"Operating Agreement" means the Operating Agreement of CBCI
Income and Growth Fund, LLC governing its operation, management
and other activities;
"Person" means an individual, partnership, joint venture,
corporation, trust, unincorporated association or other entity;
"Owner" means CBCI Income and Growth Fund, LLC;
"Owner Property" means any real property or interest therein and
associated personal property owned by the Owner or any interest
held by the Owner in a joint venture with third parties;
"Unit" means a limited liability company unit of Owner as
described in Owner's Operating Agreement;
"Wages and Salaries" means wages, salaries and other
compensation, including so-called fringe benefits such as life,
disability, medical and health insurance pension plans, social
security taxes and workers' compensation insurance;
All accounting and financial terms, except as otherwise provided
herein, shall be determined in accordance with a basis of
presentation as agreed upon by Owner and Asset Manager from time
to time.
2. DUTIES OF THE ASSET MANAGER
2.1. General
The Asset Manager shall use its commercially reasonable efforts
to perform each of the duties set forth in this Asset Management
Agreement and shall have the authority to take all actions and
to execute all documents and instruments that it deems necessary
or advisable in connection with the management and operations of
the Owner and the fulfillment of its duties as set forth herein,
subject in each matter to the supervision of the Managing
Members and to the investment policies of the Owner, and with
respect to purchases, development, financing and sales of real
property, to the prior approval of the Managing Members.
2.2. Annual Strategic Plan
The Asset Manager will prepare annually a strategic plan, which
incorporates a specific business strategy, an annual operating
budget, acquisition and disposition objectives and
capitalization and funding strategies. This plan will be
presented in the fourth quarter of the year prior to the year
for which such plan applies (other than the initial year hereof)
to the Managing Members for their review and approval.
Consistent with the annual strategic plan, and subject to
supervision by the Managing Members, the Asset Manager will
provide acquisition, financing and disposition services
including the following:
(a) Investigating and selecting possible acquisitions;
performing property analyses, market and economic
surveys, on-site physical inspections; reviewing
projections of income and operating results of
prospective properties; and supervising and negotiating
the arrangement of financing;
(b) Conducting negotiations with real estate brokers,
owners of property and their agents, investment bankers
and owners of privately and publicly held real estate
companies;
(c) Engaging and supervising, on behalf of the Owner,
independent contractors that provide real estate
brokerage, investment banking, leasing, mortgage
brokerage and other financial services as may be
required relating to the Owner Properties;
(d) Negotiating on behalf of the Owner for the sale,
exchange or other disposition of any Owner Properties;
and
(e) Coordinating and managing operations of the joint
venture interests held by the Owner and conducting all
matters with the joint venture partners in the joint
ventures.
2.3. Asset Management
The Asset Manager shall coordinate and supervise on behalf of
the Owner all acquisition and disposition transactions related
to the Owner Properties. The Owner has engaged the Asset Manager
or its Affiliates to provide acquisition and disposition
services with respect to the various Owner Properties.
2.4. General Administrative Duties
The Asset Manager shall perform, or supervise the performance
of, the necessary administrative functions in the day-to-day
management of the Owner and its operations, including, without
limitation, internal and external financial reporting, property
accounting, shareholder relations, joint venture partner
relations, supervision of registrar and transfer services, and
other necessary services.
2.5. Real Estate Investment Advice
The Asset Manager shall advise the Owner with respect to policy
decisions to be made by the Managing Members, shall investigate
and evaluate investment opportunities consistent with the real
estate investment policies and the objectives of the Owner and
recommend them to the Managing Members and shall provide
research, economic and statistical data in connection with the
Owner's real estate investments and policies.
2.6. Short-Term Investments
The Asset Manager may invest and reinvest any moneys and
securities of the Owner in short-term investments pending
investment in the Owner Properties, payment of expenses and
other amounts in accordance with approved budgets, or payment of
distributions to Unit holders of the Owner. Unless a specific
policy is developed by the Asset Manager and approved by the
Managing Members, the Asset Manager may invest and reinvest any
monies and securities of the Owner, pending investment in the
Owner Properties, in accordance with policies of the Owner.
2.7. Agency
The Asset Manager shall act as agent of the Owner in making,
acquiring, financing and disposing of investments, disbursing
and collecting the Owner's funds, paying the debts and
fulfilling the obligations of the Owner, supervising the
performance of the managers of the Owner Properties and
handling, prosecuting and settling any claims of or against the
Owner, the Managing Members, holders of the Owner's securities
or the Owner's representatives or properties.
2.8. Retention Of Services
The Asset Manager may retain for and on behalf of the Owner such
services of accountants, legal counsel, appraisers, insurers,
brokers, transfer agents, registrars, developers, investment
bankers, financial asset managers, banks, other lenders and such
others as the Asset Manager deems necessary or advisable in
connection with the management and operations of the Owner and
the fulfillment of the Asset Manager's duties as set forth
herein.
2.9. Bank Accounts
The Asset Manager may establish one or more bank accounts in the
name of the Owner or in its own name and may deposit into and
disburse from such accounts any moneys on behalf of the Owner,
provided that no funds in any such account shall be commingled
with funds of the Asset Manager, and the Asset Manager shall, as
requested by the Managing Members, render appropriate
accountings to the Managing Members of such deposits and
disbursements.
2.10. Books And Records
The Asset Manager shall maintain all accounting and reporting
systems, books and records of the Owner, including books of
account and records relating to services performed by the Asset
Manager, and shall make such books and records accessible for
inspection by the Managing Members at any time during ordinary
business hours.
2.11. Appraisals And Reporting
As frequently as the Asset Manager may deem necessary or
advisable and as frequently as may be required by the Audit
Committee, the Asset Manager shall, at the cost and expense of
Owner, prepare, or cause to be prepared, with respect to each of
the Owner Properties (a) an appraisal prepared by an independent
real estate appraiser, (b) reports and information on the
Owner's operations and asset performance and (c) other
information reasonably requested by the Owner. All appraisals
prepared pursuant to clause (a) above shall be performed by such
real estate appraisers as may be mutually agreed upon by the
Owner and the Asset Manager. Notwithstanding anything to the
contrary contained herein, the Owner and the Asset Manager agree
that appraisals will be performed with respect to each
individual Owner Property not less than once every five years,
which appraisals may be performed on a rolling basis, and that
an appraisal shall be performed with respect to an Owner
Property upon the completion of any redevelopment of such Owner
Property.
2.12. Reports
The Asset Manager shall prepare, or cause to be prepared, all
reports, financial or otherwise, with respect to the Owner
reasonably required by the Managing Members or required by the
Independent Audit Committee Member in order for it to comply
with its Operating Agreement or any securities laws applicable
to it; all tax returns and any other reports or other materials
required to be filed with any governmental body or agency; and
shall prepare, or cause to be prepared, all materials and data
necessary to complete such reports and other materials
including, without limitation, an annual audit of the Owner's
books of account by an independent accounting firm.
2.13. Financing And Securities Issuance
The Asset Manager shall provide services to the Owner in
connection with negotiations by the Owner with investment
banking firms, securities brokers or dealers and other
institutions or investors in connection with the sale of
securities of the Owner and the securing of loans for the Owner.
2.14. Income Qualification
In the performance of its duties and responsibilities hereunder,
the Asset Manager will refrain from any action (a) which, in its
judgment, would cause the gross income of the Owner to lose its
character as "qualifying income" as defined under Section
7704(d)(1)of the Code, (b) which, in its judgment, would cause
the Owner to lose its tax status as a partnership,(c) which
would violate any law, rule or regulation of any governmental
body or agency having jurisdiction over the Owner or its
securities, the violation of which could have a material adverse
effect on the Owner, or (d) which would otherwise not be
permitted by the Operating Agreement of the Owner.
2.15. Experts
In performing its duties under this Article 2, the Asset Manager
shall be entitled to reasonably rely on qualified experts hired
by the Asset Manager. Any cost or expenses incurred in
connection with the hiring of the aforementioned experts shall
be borne by the Owner.
3. COMPENSATION
3.1. Asset Management Fee
Commencing from the date funds are released to Owner under the
Escrow Agreement, the Owner shall pay to the Asset Manager a
monthly Asset Management Fee equal to .04167% (for an annual
Asset Management Fee of .50%) of the Net Equity Value of the
Owner. The Asset Management Fee shall be paid in U.S. dollars
and shall be payable in arrears within 15 days of the end of
each preceding month.
3.2. Acquisition Fees
3.2.1. Initial Acquisitions
For its services provided to Owner in the selection, analysis,
and other services relating to the acquisition of any Owner
Properties, the Owner shall pay to the Asset Manager an
Acquisition Fee equal to 1% of the purchase price of any Owner
Property acquired by the Owner until such time as all of the
Limited Member Capital (as described in the Owner's Operating
Agreement in Sections 4.2.1 as adjusted by Section 4.2.5), shall
have been applied to acquire properties, joint venture
interests, or other Owner Property.
3.2.2. Subsequent Acquisitions
Subsequent to expending all Limited Member Capital as
contemplated in Section 3.2.1 above, the Acquisition Fee
applicable to any acquisitions of Owner Property shall be 3% of
the purchase price of such Owner Property.
3.3. Disposition Fee
For its services provided to Owner in the sale, disposition, or
refinancing of any Owner Property, Owner shall pay to the Asset
Manager a Disposition Fee equal to 3% of the gross proceeds of
sale of the Owner Property.
3.4. Payment For Additional Services
If the Owner shall request the Asset Manager to render services
to the Owner other than those required to be rendered by the
Asset Manager hereunder, such additional services, if performed,
shall be compensated separately on terms to be agreed upon from
time to time between the Asset Manager and the Owner, which
terms shall not be less favorable to the Owner than the terms
under which similar services are performed in the open
marketplace.
3.5. Expenses Of The Asset Manager
Without regard to the amount of compensation received hereunder
by the Asset Manager, the Asset Manager shall bear the following
expenses:
(a) Wages and Salaries of the Asset Manager's officers and
employees that relate to the day-to-day operational and
accounting services required by this agreement,
including any compensation of the Independent Audit
Committee Member; and
(b) Overhead expenses of the Asset Manager directly related
to the items contemplated in 3.5(a) above.
3.6. Reimbursable Expenses
The Asset Manager shall pay, or cause to be paid out of the
assets of the Owner, the following operating expenses of the
Owner and, if the Asset Manager advances money for such
expenses, it shall be entitled to reimbursement by the Owner
therefor:
(a) travel and other out-of-pocket expenses incurred by
officers and employees of the Asset Manager in
connection with the purchase, financing, refinancing or
sale of an Owner Property;
(b) costs of legal, accounting, tax, administrative and
other similar services rendered for the Owner by
Persons retained by the Asset Manager or, if provided
by the Asset Manager's employees (other than with
respect to operational accounting services provided by
the Owner's employees), in amounts not greater than
those that the Asset Manager determines in good faith
would have been charged by unrelated third Persons
performing similar services;
(c) all other costs and expenses relating to the Owner's
operations, including without limitation the costs and
expenses of acquiring, owning, protecting, maintaining,
developing and disposing of the Owner's investments,
including appraisal, reporting, audit and legal fees;
(d) all insurance costs incurred in connection with the
operation of the Owner;
(e) expenses connected with communications to holders of
securities of the Owner and the other bookkeeping and
clerical work necessary in maintaining relations with
holders of securities of the Owner, including without
limitation expenses incurred in connection with any
distribution reinvestment plan.
(f) expenses relating to any office or office facilities
maintained for the Owner or the Owner Properties
separate from the office or offices of the Asset
Manager.
4. RESTRICTIONS
The Asset Manager shall not consummate any transaction that
would involve the sale by the Owner of property to an Asset
Manager or any Affiliate thereof.
Other than advances of expenses pursuant to Article 3 hereof,
the Owner may not make loans to, or borrow money from, the Asset
Manager or any Affiliate thereof unless such loans or borrowings
are authorized in Owner's Operating Agreement.
All other material transactions between the Owner and the Asset
Manager, or any Affiliate thereof, shall require approval by the
Managing Member (including the Audit Committee as required by
the Owner's Operating Agreement or securities laws applicable to
the Owner.
5. TERMINATION; TERM
5.1. Termination
The term of this Asset Management Agreement shall commence on
the date hereof and shall continue until terminated pursuant to
this Article.
5.2. Non-Curable Terminating Events
The Owner may terminate this Asset Management Agreement on not
less than 30 days written notice to the Asset Manager upon the
occurrence of any of the following events:
(a) The Bankruptcy of the Asset Manager;
(b) An act of fraud, embezzlement or theft, (which, in the
case of theft, constitutes a felony) against Owner or
its Affiliates which causes it material injury and is
perpetrated by Asset Manager in its corporate capacity
(as distinguished from the acts of any employees of
Asset Manager that are taken without the approval or
complicity of the board of directors of the Asset
Manager);
5.3. Curable Defaults
5.3.1. Written Notice
Either the Owner or the Asset Manager may terminate this Asset
Management Agreement by written notice to the other party in the
event that the other party shall default (the "Defaulting
Party") in the performance or observance of any material term,
condition or covenant contained in this Asset Management
Agreement or shall fail to perform or observe the same in
accordance with the required standard under this Asset
Management Agreement and such default shall continue for a
period of thirty (30) days after written notice thereof shall
have been delivered by the non-defaulting party (the "Non-
Defaulting Party") specifying such default and requesting that
the same be remedied in such thirty-day period (a "Default
Notice") .
The Defaulting Party shall be deemed to have complied with a
Default Notice given under this Section 5.3.1 if the default is
such that it cannot reasonably be remedied within thirty (30)
days, and the Defaulting Party shall, in good faith, have
commenced to remedy the default specified therein as soon as is
practicable after receiving such Default Notice and shall
thereafter have diligently prosecuted the cure to its
completion.
5.3.2. Adjudicated Default
A Non-Defaulting Party shall have the right to terminate this
Asset Management Agreement based on a default by a Defaulting
Party under this Section 5.3.2 only if such default is
determined to constitute an Adjudicated Default as provided
below. If a Non-Defaulting Party believes that the other party
has defaulted in the performance of a material obligation under
this Asset Management Agreement, and that such default remains
uncured following the delivery of a default notice and the
expiration of the applicable cure period provided in Section
5.3.1, then such Non-Defaulting Party may deliver a written
notice to the other party setting forth its intention to
terminate this Asset Management Agreement pursuant to this
Section (a "Termination Notice"). If the Defaulting Party
desires to contest such termination, then the Defaulting Party
shall so notify the Non-Defaulting Party within ten (10)
Business Days after receipt of the Termination Notice, and
authorized agents of each party shall meet promptly and
negotiate in good faith in order to resolve such dispute. If
such agents are unable to resolve the dispute within thirty (30)
days after the Defaulting Party's receipt of the Termination
Notice, then the Defaulting Party may institute an action in the
appropriate judicial forum within thirty (30) days thereafter to
determine whether the Defaulting Party has defaulted in the
performance of a material obligation hereunder. An "Adjudicated
Default" shall be deemed to have occurred if:
(a) the parties' respective agents are unable to resolve
such dispute and the Defaulting Party does not
institute a judicial proceeding within thirty (30) days
after its receipt of a Termination Notice;
(b) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of a
material obligation hereunder, and the Defaulting Party
does not deliver a notice of appeal to the appropriate
parties within the applicable appeal period; or
(c) a court renders a final decision finding that the
Defaulting Party has defaulted in the performance of~
material obligation hereunder and an appeal is
perfected by the Defaulting Party within the applicable
appeal period, and a second court renders a final
decision finding that the Defaulting Party has
defaulted in the performance of a material obligation
hereunder. Notwithstanding anything to the contrary
contained herein, the provisions of this subparagraph
(c) relating to an Adjudicated Default shall not apply
to the termination events set forth in subparagraph (b)
hereof.
6. ACTION UPON TERMINATION OR CANCELLATION
The Asset Manager shall immediately upon termination of this
Asset Management Agreement:
(a) pay over to the Owner all moneys collected and held for
the account of the Owner pursuant to this Asset
Management Agreement, after deducting any accrued
compensation and reimbursement for its expenses to
which it is then entitled;
(b) deliver to the Owner a full accounting, including a
statement showing all payments collected by it and a
statement of all moneys held by it, covering the period
following the date of the last accounting furnished to
the Owner;
(c) deliver to the Owner all property and documents of the
Owner then in the custody of the Asset Manager; and
(d) cooperate with the Owner and take all reasonable steps
requested to assist the Managing Members in making an
orderly transition of the Asset Management function.
7. LIABILITY AND INDEMNIFICATION OF ASSET MANAGER
7.1. Limitation Of Liability
The Asset Manager shall have no responsibility other than to
render the services and take the actions described herein in
good faith and with the exercise of due care and shall not be
responsible for any action of the Managing Members in following
or declining to follow any advice or recommendation of the Asset
Manager. The Asset Manager, except by reason of its own gross
negligence or willful misconduct, shall not be liable for any
action taken, omitted or suffered to be taken by it in good
faith and believed by it to be authorized or within its
discretion or rights or powers conferred upon it by this Asset
Management Agreement or in reasonable reliance upon the written
opinion of counsel of recognized expertise.
7.2. Indemnification
7.2.1. Asset Manager Held Harmless
The Owner shall reimburse, indemnify and hold harmless the Asset
Manager and its directors, officers, shareholders, agents and
employees, and each other Person, if any, controlling the Asset
Manager (an "Indemnified Party"), to the full extent lawful,
from and against any and all losses, claims, damages or
liabilities of any nature whatsoever with respect to or arising
from any acts or omissions of the Asset Manager in its capacity
as such, except with respect to losses, claims, damages or
liabilities with respect to or arising out of the Asset
Manager's gross negligence or willful misconduct or fraud.
7.2.2. Indemnification Not Allowed
Notwithstanding the indemnification provisions in Section 7.2.1
above, indemnification will not be allowed for any liability
imposed by judgment, and costs associated therewith, including
attorneys' fees, arising from or out of a violation of state or
federal securities laws associated with the offer and sale of
Owner shares. Indemnification will be allowed for settlements
and related expenses of lawsuits alleging securities law
violations, and for expenses incurred in successfully defending
such lawsuits, provided that a court either (i) approves the
settlement and finds that indemnification of the settlement and
related costs should be made; or (ii) approves indemnification
of litigation costs if a successful defense is made. If
indemnification is unavailable as a result of this Section
7.2.2, the Owner shall contribute to the aggregate losses,
claims, damages or liabilities to which the Asset Manager or its
officers, directors, agents, employees or controlling Persons
may be subject in such amount as is appropriate to reflect the
relative benefits received by each of the Owner and the party
seeking contribution on the one hand and the relative faults of
the Owner and the party seeking contribution on the other, as
well as any other relevant equitable considerations.
7.2.3. Notice
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action, such Indemnified Party shall, if a
claim in respect thereof is to be made against the Owner, notify
the Owner in writing of the commencement thereof; but the
omission so to notify the Owner shall not relieve Owner from any
liability that it may have to any Indemnified Party pursuant to
this Article 7, unless the failure to so notify would itself
constitute gross negligence or willful misconduct. In case any
such action shall be brought against an Indemnified Party and it
shall notify the Owner of the commencement thereof, the Owner
shall be entitled to participate therein and, to the extent that
it shall wish, to assume the defense thereof, with counsel
satisfactory to such Indemnified Party and, after notice from
the Owner to such Indemnified Party of its election so to assume
the defense thereof, the Owner shall not be liable to such
Indemnified Party under Section 7.2.1 hereof for any legal
expenses of other counsel subsequently incurred by such
Indemnified Party, unless (i) the Owner and the Indemnified
Party shall have mutually agreed to the retention of such
counselor, (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Owner and the
Indemnified Party and representation of both parties by the same
counsel would be inappropriate in the reasonable opinion of the
Indemnified Party, due to actual or potential differing
interests between them.
7.2.4. Obligations Of Owner Cumulative
The obligations of the Owner under this Article 7 shall be in
addition to any liability which the Owner otherwise may have.
7.3. Representations, Warranties And Covenants Of Owner
The Owner represents and warrants as of the date hereof that:
(a) the Owner has full authority to enter into this Asset
Management Agreement and to be bound by it;
(b) the execution and performance of this Asset Management
Agreement by the Owner will not conflict with, or
result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result
in any violation of, any agreement or instrument to
which the Owner is subject; and
(c) the terms of this Asset Management Agreement are in
conformity with the applicable laws governing the
Owner.
The Owner shall promptly advise the Asset Manager in writing of
any agreements or changes in any agreements, instruments,
governing law, regulations or interpretations thereof affecting
the investments of the Owner or the duties, responsibilities,
liabilities or obligations of the Asset Manager.
8. MISCELLANEOUS PROVISIONS
8.1. Entire Agreement
This Asset Management Agreement constitutes the entire agreement
between the parties with respect to the subject matter thereof.
Any modification or amendment of this Asset Management Agreement
shall be in writing executed by each of the parties.
8.2. Binding; Assignment
This Asset Management Agreement shall be binding on the parties
hereto. No assignment by the Asset Manager shall be effective
for any purpose without the written consent and approval of the
Owner, PROVIDED, however, that notwithstanding the foregoing
provisions of this Section 8.2, the Asset Manager shall have the
right to assign its rights and obligations under this Asset
Management Agreement without the Owner's prior consent to any
Affiliate as long as the transferee Person assumes the
obligations and liabilities of the Asset Manager hereunder from
and after the effective date of such transfer and is capable of
performing hereunder. The transfer of an interest in the Asset
Manager or any constituent shareholder of the Asset Manager
shall not be deemed an assignment of this Agreement so long as
any of the existing shareholders of Asset Manager continue to
own, directly or indirectly, at least 50% of the voting and
economic interest in the Asset Manager. Upon any such transfer,
the Asset Manager shall be released from all liabilities arising
hereunder from and after the effective date of such transfer.
8.3. No Partnership Or Joint Venture
The Owner and the Asset Manager are not, and shall not be deemed
to be, partners or joint venturers with each other.
8.4. Severability
If any term or provision of this Asset Management Agreement or
the application thereof to any Person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this
Asset Management Agreement, or the application of that term or
provision to Persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Asset Management
Agreement shall be valid and be enforced to the fullest extent
permitted by law.
8.5. Policy And Financial Information
The Managing Members shall keep the Asset Manager informed in
writing concerning the investment and financing policies of the
Owner and shall promptly notify the Asset Manager of any
intention to make any new investments, to sell or dispose of any
existing investments or to enter into any agreement or
understanding with any third party. The Owner shall furnish the
Asset Manager a certified copy of all financial statements, a
signed copy of each report prepared by independent public
accountants, a certified copy of each amendment to the Operating
Agreement of the Owner and such other information with regard to
the Owner's affairs as the Asset Manager from time to time
reasonably may request.
8.6. Documents; Notices
In order to be deemed effective, all documents to be delivered
and all notices, approvals, authorizations and/or consents to be
given or obtained by any party to this Asset Management
Agreement shall be in writing and shall be given by personal
delivery, or sent by express mail or nationally recognized
overnight courier, or by registered or certified mail, postage
prepaid, return receipt requested, or by facsimile (with
confirmed receipt), addressed as follows:
To the Asset Manager: CBCI Fund Management I, LLC
Suite 715 Plymouth Building
12 South Sixth Street
Minneapolis, Minnesota 55402
To the Owner: CBCI Income and Growth Fund, LLC
Suite 715 Plymouth Building
12 South Sixth Street
Minneapolis, Minnesota 55402
The above addresses may be changed for future communications or
delivery of notice hereunder by giving notice of such change to
the others listed above in the manner prescribed by this
Article. All notices shall be deemed effective when received by
all applicable parties at the addresses set forth above (as such
addresses may be changed by the parties in accordance herewith).
Notwithstanding the foregoing, no notice shall be deemed
ineffective because of any party's refusal to accept delivery at
the address specified for the giving of such notice in
accordance herewith.
8.7. Headings
The section headings used herein have been inserted for
convenience of reference only and shall not be considered in
interpreting this Asset Management Agreement.
8.8. Governing Law
This Asset Management Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
8.9. Director Action
Whenever action on the part of the Owner or the directors of the
Asset Manager is contemplated in this Asset Management
Agreement, unless otherwise indicated herein, action by any of
the Managing Members of Owner, or action by a majority of the
directors of the Asset Manager in any case where specifically
required hereunder, shall constitute the action provided for
herein.
8.10. Other Activities
Directors, officers, employees and agents of the Asset Manager
or any of its Affiliates may serve as Managing Members,
officers, employees, agents, nominees or signatories of the
Owner. When executing documents or otherwise acting in such
capacities for the Owner, such Persons shall use their
respective titles in the Owner. Such Persons shall receive from
the Owner no compensation for their services to the Owner in any
such capacities.
8.11. Authority To Act
The Owner shall furnish to the Asset Manager from time to time,
upon request of the Asset Manager, certified copies of
appointments or designations setting forth the names, titles and
authorities of the individuals who are authorized to act on its
behalf. The Asset Manager shall furnish to the Owner from time
to time, upon request of the Owner, certificates setting forth
the names, titles and authorities of the Persons authorized to
act on its behalf.
8.12. Counterparts
This Asset Management Agreement may be executed in counterparts
by each of the parties hereto on separate counterparts; all such
counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the Owner and the Asset Manager have
executed this Asset Management Agreement as of the day and year
first above written.
CBCI Income and Growth Fund, LLC
By: CBCI Fund Management, Inc.
Its Managing Member
By: /s/ Ronald A. Christenson
Ronald A. Christenson, President
CBCI Fund Management, Inc.
By: /s/ Ronald A. Christenson
Ronald A. Christenson, President
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