EX-99.4 6 a2063234zex-99_4.txt EXHIBIT 99.4 Exhibit 99.4 MANAGEMENT AGREEMENT BETWEEN CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY AND CHARTER MAC CORPORATION This MANAGEMENT AGREEMENT (this "AGREEMENT") dated as of September 13, 2001, but effective as of October 1, 2001, between CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY (the "COMPANY"), a Delaware business trust, and Charter Mac Corporation (the "INVESTMENT MANAGER"), a Delaware corporation. W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company is a Delaware business trust created in accordance with applicable provisions of the Delaware Trust Act, 12 Del. C.Sections.3801 ET. SEQ., as amended from time to time (the "TRUST ACT"); and WHEREAS, the purposes of the Company are, as determined from time to time by the board of trustees (the "BOARD OF TRUSTEES") of the Company, to engage in any lawful business or activity for which a business trust may be created under the Trust Act; and WHEREAS, the Company desires to avail itself of the experience, sources of information, advice and assistance of the Investment Manager and to have the Investment Manager undertake the duties and responsibilities hereinafter set forth, on behalf of and subject to the supervision of the Board of Trustees, as provided herein; and WHEREAS, all capitalized terms used herein, and not otherwise defined in Article 10, shall have the meanings ascribed to them in the Company's Trust Agreement; and WHEREAS, the Investment Manager is willing to render such services, subject to the supervision of the Board of Trustees, on the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the mutual covenants herein contained, it is agreed as follows: 1 DUTIES OF INVESTMENT MANAGER. The Company hereby retains the Investment Manager as the investment manager of the Company to perform the services hereinafter set forth, and the Investment Manager hereby accepts such appointment, subject to the terms and conditions hereinafter set forth. In the performance of this undertaking, subject to the supervision of the Board of Trustees and consistent with the provisions of the Trust Agreement and duly adopted resolutions of the Board of Trustees, the Investment Manager shall: (i) seek out, present and recommend to the Company, whether through its own efforts or those of third parties retained by it, suitable investment opportunities which are consistent with the Company's investment objectives and policies as adopted by the Board of Trustees from time to time, and negotiate on behalf of the Company with respect to potential investments or the disposition thereof; (ii) exercise absolute discretion, subject to the Board of Trustees' review, in decisions to originate, acquire, retain, sell or negotiate for the prepayment or restructuring of the Company's First Mortgage Bonds, SMLs, Tax Exempt Securities, mortgage and mortgage securities investments and other investments (collectively, "COMPANY INVESTMENTS"); (iii) recommend investment opportunities consistent with the Company's investment objectives and policies and negotiate on behalf of the Company with respect to potential investments or the disposition thereof; (iv) perform the duties set forth on Exhibit A in connection with servicing the Company's loan portfolio; (v) obtain for the Company such other services as may be required in acquiring or disposing of investments, including foreclosing and otherwise enforcing mortgages and other liens securing investments; (vi) obtain for the Company such services as may be required for property management, mortgage brokerage and servicing, and other activities relating to the investment portfolio of the Company; (vii) from time to time, or as requested by the Board of Trustees, make reports to the Company as to its performance of the foregoing services; (viii) perform any other powers of the Board of Trustees which are set forth in the Trust Agreement which may be delegated to it by the Board of Trustees from time to time; and (ix) do all things necessary to assure its ability to render the services contemplated herein. 2 2 FIDUCIARY RELATIONSHIP. The Investment Manager, as a result of its relationship with the Company pursuant to this Agreement, stands in a fiduciary relationship with the Shareholders of the Company. 3 NO PARTNERSHIP OR JOINT VENTURE. The Company and the Investment Manager are not partners or joint venturers with each other and nothing herein shall be construed to make them partners or joint venturers or impose any liability as such on either of them. 4 RECORDS. At all times, the Investment Manager shall keep books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Company at any time during the ordinary business hours of the Investment Manager. 5 LIMITATIONS. Anything else in this Agreement to the contrary notwithstanding, the Investment Manager shall refrain from any action which, in its sole judgment made in good faith, or, in the judgment of the Board of Trustees, provided that the Board of Trustees give the Investment Manager written notice to such effect, would (a) cause the Company to be classified as (i) an "investment company" for purposes of the Investment Company Act of 1940, as amended, or (ii) other than a partnership for purposes of the Code; (b) violate any law, rule, regulation or statement of policy of any governmental body or agency having jurisdiction over the Company or over its securities, (c) be prohibited by the Company's Trust Agreement; or (d) cause the Company to be classified as a "publicly traded partnership" for purposes of the Code. 6 BANK ACCOUNTS. The Investment Manager may establish and maintain one or more bank accounts in the name of the Company or in its own name as agent for the Company and may collect and deposit in and disburse from any such account, any money on behalf of the Company, under such terms and conditions as the Board of Trustees may approve, provided that no funds in such account shall be commingled with funds of the Investment Manager. From time to time and upon appropriate request, the Investment Manager shall render appropriate accounting of such collections and payments to the Board of Trustees and the auditors of the Company. 7 BOND. If required by the Board of Trustees, the Investment Manager will maintain a fidelity bond with a responsible surety company in such amounts as may be required by the Board of Trustees, covering all partners thereof together with employees and agents of the Investment Manager handling funds of the Company and investment documents or records pertaining to investments of the Company. Such bonds shall inure to the benefit of the Company in respect of losses from acts of such partners, employees and agents through theft, embezzlement, fraud, negligence, error or omission or otherwise. The premiums on such bonds shall be paid by the Company. 3 8 INFORMATION FURNISHED TO INVESTMENT MANAGER. The Board of Trustees shall, at all times, keep the Investment Manager fully informed with regard to the investment policy of the Company, including any specific types of mortgage investments, mortgage securities and other investments desired, and any criteria or conditions established by the Board of Trustees as to whether the Company will make a particular investment, the capitalization policy of the Company (including the policy with regard to the incurrence of indebtedness by the Company) and their intentions as to the future operations of the Company. In particular, the Board of Trustees shall notify the Investment Manager promptly of their intention to either sell or otherwise dispose of any of the Company's investments, to make any new investment, to incur any indebtedness or to issue any additional Shares. 9 CONSULTATION AND ADVICE. In addition to the services described above, the Investment Manager shall consult with the Board of Trustees and shall, at the request of the Board of Trustees of the Company, furnish advice and recommendations with respect to other aspects of the business and affairs of the Company. 10 DEFINITIONS. As used herein, the following terms shall have the meanings set forth below: (i) "ACQUISITION EXPENSES" shall mean expenses related to the Company's selection of, and investment in, Company Investments, whether or not acquired or made, including but not limited to advertising costs, brokerage fees, environmental, engineering and other due diligence expenses, legal fees and expenses, travel and communications expenses, cost of appraisals, accounting fees and expenses, title insurance and miscellaneous other expenses. (ii) "AFFILIATED PROGRAMS" shall mean any publicly offered Entity which is sponsored by an Affiliate of Charter Mac Corporation, a Delaware corporation. (iii) "TRUST AGREEMENT" shall mean the Amended and Restated Trust Agreement of the Company dated as of September 30, 1997, as amended and/or restated from time to time. 11 FEES AND OTHER COMPENSATION OF THE INVESTMENT MANAGER. The Investment Manager or its designees shall be entitled to receive from the Company (except those payable by others as noted below) the following fees and other compensation: (i) SALES FEES. If the Company forecloses on, or otherwise obtains direct or indirect title to, an Underlying Property and sells such property, the Investment Manager or its Affiliates shall be entitled to a real estate commission equal to the lesser of (i) 3% of the gross sales price of such property received by the Company or (ii) one-half of the normal and competitive rate customarily charged by unaffiliated parties rendering similar services, but such fees shall be paid only if the Investment Manager or its Affiliate provides a substantial amount of services in the sales effort. 4 (ii) PROPERTY MANAGEMENT FEES. In the event the Company forecloses on, or otherwise obtains title to, an Underlying Property, the Company may be required to take over the management of such property. In such cases, the Investment Manager or its Affiliates may provide property management services at rates and on terms no less favorable to the Company than those customary for similar services, if they have such knowledge of and experience in managing properties in the area. With respect to residential properties, such fee (including all rent-up, leasing, and re-leasing fees and bonuses paid to any person) shall not exceed 5% of the gross revenues from such properties and with respect to all other properties, such fee shall not exceed 6% of the gross revenues where the Investment Manager of its Affiliates provide leasing, re-leasing and leasing related services, and 3% of gross revenues where the Investment Manager or its Affiliates do not provide such services. Notwithstanding the foregoing, the Investment Manager may be entitled to receive higher fees in the event the Investment Manager can demonstrate to the satisfaction of the Board of Trustees through empirical data that a higher competitive fee is justified for the services rendered and the type of property. Where the Investment Manager or its Affiliates provide property management services, property management fees payable to unaffiliated parties will be paid out of the fees paid to the Investment Manager or its Affiliate. Property management fees shall be payable monthly. (iii) INSURANCE BROKERAGE FEES. The Investment Manager or its Affiliates may receive an insurance brokerage fee for providing insurance brokerage services with respect to Underlying Properties if such services are required by the Company in the event of a default on a mortgage investment. With respect to any insurance brokerage fee to be paid to the Investment Manager or its Affiliates by the Company, such insurance brokerage fee will be no greater than the lowest quote obtained from two unaffiliated insurance agencies and the coverage and terms likewise will be comparable. (iv) BOND PLACEMENT FEES. The Investment Manager or its Affiliates may receive from borrowers, but not from the Company or its subsidiaries, bond placement fees equal to up to 2.0 % of the principal amount of each Company Investments acquired or invested in by the Company, its subsidiaries or other Entities to which the Company or its subsidiaries has transferred such Company Investments to facilitate financing. (v) BOND SELECTION FEES. The Investment Manager or its Affiliates shall receive bond selection fees equal to 2.00%, subject to adjustment pursuant to SCHEDULE A, of the principal amount of each Company Investment acquired or invested in by the Company, its subsidiaries or other Entities to which the Company or its subsidiaries has transferred such Company Investments to facilitate financing. Bond Selection Fees shall be payable by the Company upon the consummation of the investment. (vi) LOAN SERVICING FEES. The Investment Manager shall receive loan servicing fees equal to 0.25 % per annum based on the outstanding principal amount of Company Investments which are held by the Company or other entities to whom the Company has transferred such Company Investments to facilitate financing. Loan servicing fees shall be payable quarterly by the Company. 5 (vii) LIQUIDATION FEES. If the Company is dissolved, the Asset Manager shall receive a liquidation fee equal to 1.50% of the gross sales price of the assets sold in connection with the liquidation of the Company's directly or indirectly owned assets. Liquidation fees shall be payable by the Company upon the consummation of the liquidation. (viii) CONSTRUCTION SERVICES FEES. The Investment Manager or its Affiliates may receive from borrowers, but not from the Company or its subsidiaries, construction services fees equal to the market rate for such services. (ix) OTHER COMPENSATION. The Investment Manager or its Affiliates may provide financial guarantees (i) to the Company to facilitate leveraging by the Company, for which they shall be entitled to receive market rate fees from the Company and (ii) to the owners (or partners of the owners) of the Underlying Properties, for which they shall be entitled to receive market rate fees from the beneficiary of such financial guarantees. (x) MISCELLANEOUS SERVICES TO THE COMPANY AND THIRD PARTIES. Except as set forth in Section 11 (iv), nothing in this Agreement shall limit the Investment Manager or its Affiliates' right to provide services to the Company, to borrowers or owners of Underlying Properties or to other third parties, provided the fee charged for such services is not in excess of the competitive rate in the market. 12 STATEMENTS. Prior to the payment of any fees payable by the Company hereunder or reimbursements payable by the Company to the Investment Manager, the Investment Manager shall furnish to the Company a statement showing the computation of the fees or reimbursements, if any, payable under Section 11 or Section 13(b). 13 EXPENSES OF THE COMPANY. (a) The Company shall pay all of its expenses. Without limiting the foregoing, it is specifically agreed that the following expenses of the Company shall be paid by the Company and shall not be borne by the Investment Manager unless such expense is a fee or other service for which the Investment Manager is otherwise receiving a fee from the Company: (i) the cost of money borrowed by the Company; (ii) all taxes applicable to the Company including, without limitation, taxes on income and on assessments of real property; (iii) fees and expenses paid to independent contractors, unaffiliated mortgage servicers, consultants, managers and other agents employed by or on behalf of the Company; (iv) Acquisition Expenses and expenses directly connected with the ownership and disposition of investments or other property, and with the investment in or 6 purchase of Company Investments (including the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, maintenance, repair and improvement of property); (v) expenses of maintaining and managing real estate equity interests, processing and servicing mortgage and other loans and managing the Company's other investments; (vi) insurance coverage in connection with the business of the Company (including officers' and trustees' liability insurance); (vii) the expenses of dissolving and liquidating the Company or revising, amending or modifying its organizational documents; (viii) expenses connected with payments of dividends or interest or distribution in cash or any other form made or caused to be made by the Board of Trustees to Shareholders; (ix) all expenses connected with communications to Shareholders and other bookkeeping and clerical work necessary in maintaining relations with the Shareholders, including the cost of printing and mailing certificates for securities, proxy solicitation materials and reports to holders of the Company's securities; (x) the cost of any accounting, statistical or bookkeeping equipment necessary for the maintenance of the books and records of the Company; (xi) transfer agent's and registrar's fees and charges; and (xii) other legal, accounting and auditing fees and expenses as well as any costs incurred in connection with any litigation in which the Company is involved and in the examination, investigation or other proceedings conducted by any regulatory agency with respect to the Company. (b) Subject to Section 14, the Company shall reimburse the Investment Manager and its Affiliates for (i) the actual costs to the Investment Manager or its Affiliates of goods, materials and services used for and by the Company obtained from unaffiliated parties; (ii) administrative services necessary to the operation of the Company; (iii) the costs of personnel employed by the Investment Manager and directly involved in the organization and business of the Company (including persons who may be employees or officers of the Investment Manager and its Affiliates) and for legal, accounting, transfer agent, reinvestment and redemption plan administration, data processing, duplicating and investor communications services performed by employees or officers of the Investment Manager and its Affiliates which could be performed directly for the Company by independent parties and (iv) any travel expenses incurred in connection with the services provided hereunder and for advertising expenses incurred by the Investment Manager in seeking any investments or seeking the disposition of any investments 7 held by the Company. The amounts charged to the Company for services performed shall not exceed the lesser of (a) the actual cost of such services, or (b) the amount which the Company would be required to pay to independent parties for comparable services. 14 LIMITATIONS ON REIMBURSEMENTS. The amounts reimbursed to the Investment Manager pursuant to Section 13(b), together with the amounts reimbursed to Related Charter, LP under the management agreement between the Company and Related Charter, LP, shall not exceed $432,365.00 per annum, subject to (i) annual increases following the first anniversary of the date hereof and each year thereafter based upon increases in the Consumer Price Index for All Urban Consumers, N.Y., N.Y. -Northeastern N.J. (Base Year 1982-1984 = 100) specified for "All Items" as issued by the Bureau of Labor Statistics, U.S. Department of Labor (or comparable substitute index) and (ii) proportionate increase as the Company's assets increase based upon the amount of the Company's Total Invested Assets from time to time. 15 OTHER ACTIVITIES OF INVESTMENT MANAGER. (a) Nothing in this Agreement shall prevent the Investment Manager or any of its Affiliates from engaging in other business activities related to tax-exempt bonds, real estate, mortgage investments or other investments whether similar or dissimilar to those made by the Company or from acting as manager to any other person or entity having investment policies whether similar or dissimilar to those of the Company. However, before the Investment Manager, the officers or directors of the Investment Manager or any persons controlled by the Investment Manager or its officers and directors may take advantage of an opportunity for their own account or present or recommend it to others (except as set forth in Section 15(b)), they are obligated to present an investment opportunity to the Company if (i) such opportunity is compatible with the Company's investment objectives and policies, (ii) such opportunity is of a character which could be taken by the Company, and (iii) the Company has the financial resources to take advantage of such opportunity. (b) (i) If an Affiliated Program with similar investment objectives to those of the Company has funds available for investment at the same time as the Company, and/or an investment is potentially suitable for more than one such Entity, the Investment Manager and its Affiliates shall review the investment portfolio of each such Entity and shall make the decision as to which such Entity will acquire the investment on the basis of such factors as it deems reasonable in light of each Entity's then current situation, including, without limitation, the effect of the acquisition on each such Entity's portfolio and objectives, the amount of funds available and the then length of time such funds have been available for investment, and the cash requirements of each such Entity. If funds should be available to two or more Affiliated Programs to purchase a given investment and the other factors enumerated above have been evaluated and deemed equally applicable to each Entity, then the Investment Manager or its Affiliates will acquire such investment for the Affiliated Programs on a basis of rotation with the initial order of priority determined by the dates of formation of the Entities. (ii) Notwithstanding the foregoing, nothing herein shall be construed to require CentRe Mortgage Capital, L.L.C. ("CentRe") or CreditRe Mortgage Capital, L.L.C. ("CreditRe"), each of which is an Affiliate of the Investment Manager, or any other such 8 Affiliate which is a successor to CentRe or CreditRe or conducts substantially the same business as CentRe or CreditRe, to present any investment opportunity to the Company. 16 TERM; TERMINATION OF AGREEMENT. (a) This Agreement shall continue in force for a period of one year from the date hereof and thereafter it may be renewed by the Company from year to year, subject to the approval of a majority of the Board of Trustees. Notice of renewal shall be given in writing by the Company to the Investment Manager not less than 60 days before the expiration of this Agreement or of any extension thereof. Notwithstanding any other provision to the contrary, this Agreement shall be terminable (i) with or without Cause by the Investment Manager at any time; or (ii) for Cause by a majority of the Independent Trustees at any time, each without penalty, and each upon 60 days' prior written notice prior to the non-terminating party. In the event of the termination of this Agreement, the Investment Manager will cooperate with the Company and take all reasonable steps requested to assist the Board of Trustees in making an orderly transition of the management function. 17 AMENDMENTS. 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, or otherwise as provided herein. 18 ASSIGNMENT. This Agreement may not be assigned by the Investment Manager without the written consent of the Company, except to an Affiliate of the Investment Manager. Any assignee of the Investment Manager shall be bound hereunder to the same extent as the Investment Manager. This Agreement shall not be assigned by the Company without the written consent of the Investment Manager, except to a corporation, association, trust or other organization which is a successor to the Company. Such successor shall be bound hereunder to the same extent as the Company. Notwithstanding anything to the contrary contained herein, the economic rights of the Investment Manager hereunder, including the right to receive all compensation hereunder, may be sold, transferred or assigned by the Investment Manager without the consent of the Company. 19 ACTION UPON TERMINATION. From and after the effective date of termination of this Agreement, pursuant to Section 16 hereof, the Investment Manager shall not be entitled to compensation for further service rendered hereunder but shall be paid all compensation and reimbursed for all expenses accrued through the date of termination. The Investment Manager shall forthwith upon such termination: (i) pay over to the Company all moneys collected and held for the account of the Company pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled; 9 (ii) deliver to the Company 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 Company; and (iii) deliver to the Company all property and documents of the Company then in the custody of the Investment Manager. 20 INCORPORATION OF THE TRUST AGREEMENT. To the extent the Trust Agreement imposes obligations or restrictions on the Investment Manager or grants the Investment Manager certain rights which are not set forth in this Agreement, the Investment Manager shall abide by such obligations or restrictions and such rights shall inure to the benefit of the Investment Manager with the same force and effect as if they were set forth herein. 21 STANDARD OF CARE. (a) The Investment Manager assumes no responsibility under this Agreement other than to render the services called for hereunder in good faith, and shall not be responsible for any action of the Company in following or declining to follow any advice or recommendations of the Investment Manager. Neither the Investment Manager nor its directors, officers, partners, members, and employees shall be liable to the Company, the Shareholders, the Trustees or to any successor or assignee of the Company, except by reason of acts constituting bad faith, gross negligence or reckless disregard of their duties. This shall in no way affect the standard for indemnification but shall only constitute a standard of liability. The duties to be performed by the Investment Manager pursuant to this Agreement may be performed by it or by officers, directors or by Affiliates of the foregoing under the direction of the Investment Manager or delegated to unaffiliated third parties under its direction. (b) The Investment Manager shall look solely to the assets of the Company for satisfaction of all claims against the Company, and in no event shall any Shareholder or Trustee of the Company have any personal liability for the obligations of the Company under this Agreement. 22 INDEMNIFICATION OF INVESTMENT MANAGER. a. The Company shall indemnify the Investment Manager and its Affiliates for any loss arising out of any of their acts or omissions in connection with this Agreement; provided that (i) the Board of Trustees must have determined, in good faith, that such course of conduct was in the best interests of the Company and did not constitute negligence or misconduct by the Investment Manager or its Affiliates; (ii) such conduct was within the scope of authority of the Investment Manager; and (iii) any such indemnification shall be recoverable only from the assets of the Company and not from the assets of the Shareholders or the Trustees. Notwithstanding the foregoing, the Investment Manager or its Affiliates shall not be indemnified for any liability, loss or damage incurred by the Investment Manager or its Affiliates in connection with any claim or settlement involving allegations that federal or state securities laws were violated by the Investment Manager or its Affiliates unless: (a) the Investment Manager or its Affiliates seeking indemnification are successful in defending such action on the merits of each count involving securities law violations; or (b) such claims have been dismissed with prejudice on the merits by 10 a court of competent jurisdiction; or (c) a court of competent jurisdiction approves a settlement of the claims against the Investment Manager or its Affiliates seeking indemnification involving securities law violations and finds that indemnification of the settlement and related costs should be made; or (d) indemnification is specifically approved by a court of competent jurisdiction in each such case. 23 NOTICES. Any notice, report or other communication required or permitted to be given hereunder shall be in writing, and shall be given by delivering such notice by hand or by certified mail, return receipt requested, postage pre-paid, at the following addresses of the parties hereto: COMPANY: Charter Municipal Mortgage Acceptance Company 625 Madison Avenue New York, New York 10022 Attention: Stuart J. Boesky Managing Trustee with a copy to: Mark Schonberger, Esq. Paul, Hastings, Janofsky & Walker LLP 399 Park Avenue New York, New York 10022 INVESTMENT MANAGER: Charter Mac Corporation 625 Madison Avenue New York, New York 10022 Attention: President with a copy to: Mark Schonberger, Esq. Paul, Hastings, Janofsky & Walker LLP 399 Park Avenue New York, New York 10022 Either party may at any time change its address for the purpose of this Section 23 by like notice. 11 24 HEADINGS. The section headings herein have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. [SIGNATURE PAGE FOLLOWS] 25 GOVERNING LAW. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York as at the time in effect. IN WITNESS WHEREOF, the undersigned have caused this Agreement to be signed as of the day and year first above written. CHARTER MUNICIPAL MORTGAGE ACCEPTANCE COMPANY By: /s/ Stuart J. Boesky --------------------- Stuart J. Boesky Managing Trustee CHARTER MAC CORPORATION By: /s/ Alan P. Hirmes ------------------ 12 EXHIBIT A LOAN SERVICING DUTIES Investment Manager shall perform the following services and duties with respect to servicing of Company Investments: (a) Investment Manager shall maintain with accuracy such records and books of account as are customarily maintained by services in connection with mortgage loans similar to the Company Investments. (b) Investment Manager shall use its best efforts to make collections on all payments due and to monitor the payment of amounts payable on each Company Investment (including the payment of base interest, contingent interest and deferred interest). Investment Manager shall make regular reports to the Company on such collections and payments and shall upon request of the Company advise as to the status of each Company Investment or any matter relating thereto. (c) Investment Manager shall make remittance to the Company of any payments and collections received under the Company Investment in accordance with instructions of the Company or as otherwise agreed by the parties. (d) Investment Manager shall maintain (or monitor the maintenance of) for each Company Investment appropriate real estate tax and insurance impound accounts as well as replacement reserve accounts pursuant to the terms of the applicable building loan agreements, construction facility agreements, mortgages, loan agreements or similar governing loan documents ("LOAN DOCUMENTS"). (e) Investment Manager shall report with reasonable promptness to the Company with respect to each Company Investment (i) any fact or circumstance that may impair the lien priority of the any security granted in respect of such Company Investment, (ii) any sale, refinancing, casualty (in excess of $10,000) or abandonment with respect to the related Underlying Property and (iii) any event of default under the related Loan Document or any event which, upon the passage of time, would become an event of default under the related Loan Document. (f Promptly after any officer, employee or representative of Investment Manager who would normally be aware of this Agreement in the ordinary course of his or her duties shall have received knowledge of the occurrence of an event of default under any Loan Document relating to a Company Investment or an event which, upon the passage of time would become an event of default under any Loan Document relating to a Company Investment, Investment Manager shall evaluate the status of the Company Investment and the related Underlying Property, including, without limitation, alternative measures for the exercise of rights and remedies. Investment Manager shall communicate promptly such evaluation to the Company. Investment Manager shall not be obligated to take any action under the related Loan Documents until and unless it shall have received prior A-1 authorization and instruction to do so from the Company and it is so authorized under the Loan Documents. (g Other duties of Investment Manager with respect to the servicing of Company Investment are generally as follows: - Maintain accurate books and records of account as are customarily maintained by a loan servicer in connection with similar mortgage loans. - Prepare monthly bills to borrowers in accordance with Loan Documents for payment of principal, interest, premium, net project revenues and deposits into the tax, insurance and replacement reserves and other required reserves, all as more fully set forth in the Loan Documents. - Review tax and insurance escrows as necessary and cause to be adjusted monthly escrow payments in accordance with terms of Loan Documents. - Cause tax and insurance payments to be made promptly when due or otherwise as provided in the Loan Documents. - Review and process requests of borrowers for withdrawals from replacement reserve accounts and other requests for consents and approvals in accordance with terms of Loan Documents. - Maintain monthly, quarterly and annual loan history schedules for each Company Investment - Prepare quarterly reports for the Company, or otherwise as reasonably requested, which outline the status of each Company Investment including outstanding loan balances and reserve balances. - Prepare year-end reports for each borrower outlining total interest and total principal paid for the year as well as transaction activity and balances for all required reserves held under the Loan Documents. - Prepare and deliver year-end IRS Form 1099's to borrowers. - Notify and report to the Company promptly, as may come to Investment Manager's attention, generally and specifically, any circumstances that may impair lien priority in respect of any collateral held under the Loan Documents, sale/refinancing/casualty and/or event of default under Loan Documents. - Advise the Company promptly of delinquency or default under Loan Documents as such comes to the attention of Investment Manager. A-2 - Prepare and forward delinquency and default notices, if so authorized under the applicable Loan Documents, and follow-up as necessary. - Ensure adequate insurance coverage at closing and determine the appropriate initial deposits into tax and insurance escrows. - Coordinate all modifications, work-outs and restructurings, interfacing with third parties including attorneys, engineers, accountants, asset managers and borrowers, as required and as directed by the Company. - Use best efforts to obtain monthly quarterly and year end audited financial statements from the borrowers as required under the Loan Documents. - Review and approve annual operating budgets for each Underlying Property as delivered by borrowers. - Track and review monthly, quarterly, and annual financial performance of each property utilizing financial statements submitted by the Underlying Property, comparing the Underlying Property's actual operations to approved budgeted expectations, prior years operations and local market trends. - Track occupancy and unit rent levels of each Underlying Property. - Maintain Loan Documents and document custody. - Oversee loan compliance for each Company Investment. - Cause periodic management review of each Underlying Property. - Interface and coordinate with inspecting engineers for periodic physical reviews as necessary of each Underlying Property. - Monitor and maintain security and escrows for guarantees, as applicable. - Handle disbursements and release of security in conformance with Loan Documents. - Cause to be delivered updated title reports, as required from time to time under Loan Documents. - Prepare pay-off letters, as required. (h Investment Manager may perform additional duties with respect to Company Investment as the Company and the Investment Manager may mutually agree. A-3