Contract analysis

Section 1.1 — Defined Terms As used in this Agreement, the following terms shall have the meanings set forth below. Capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Operating Agreement. "Approved Annual Budget" means the annual operating budget and capital budget for the Property for each Fiscal Year, as prepared by Manager and approved by the members of Owner i

Section 1.2 — Interpretation and Cross-References (a) All capitalized terms used but not specifically defined in this Agreement shall have the meanings ascribed to such terms in the Operating Agreement. (b) Unless the context otherwise requires, (i) words importing the singular include the plural and vice versa, (ii) words importing a gender include each gender, (iii) references to "including" or "includes" shall mea

ARTICLE 2 TERM AND TERMINATION

Section 2.1 — Initial Term The term of this Agreement (the "Term") shall commence on the Effective Date and, unless sooner terminated in accordance with the provisions hereof, shall continue for a period of three (3) years from the Effective Date (the "Initial Term"). The estimated commencement date of the Initial Term is September 2028, subject to the actual date of Substantial Completion.

Section 2.2 — Renewal Terms Upon the expiration of the Initial Term, this Agreement shall automatically renew for successive periods of one (1) year each (each, a "Renewal Term"), unless either Party provides the other Party with written notice of non-renewal at least ninety (90) days prior to the expiration of the then-current Term (whether the Initial Term or any Renewal Term). The Initial Term and any Renewal Term

Section 2.3 — Termination by Owner Owner may terminate this Agreement at any time during the Term under any of the following circumstances: (a) Termination Without Cause. Owner may terminate this Agreement at any time, without cause, upon thirty (30) days' prior written notice to Manager. Any termination without cause by Owner shall be subject to the payment of the Termination Fee, if applicable, as set forth in Sect

Section 2.4 — Termination by Manager Manager may terminate this Agreement at any time during the Term under any of the following circumstances: (a) Termination Without Cause. Manager may terminate this Agreement at any time, without cause, upon ninety (90) days' prior written notice to Owner. (b) Termination for Owner's Failure to Fund. Manager may terminate this Agreement immediately upon written notice to Owner if

Section 2.5 — Effect of Termination Upon termination or expiration of this Agreement for any reason, the following provisions shall apply: (a) Delivery of Records. Manager shall promptly deliver to Owner or Owner's designee all books of account, records, files, correspondence, tenant files, lease files, keys, access cards, security codes, passwords, and all other documents, instruments, and materials in Manager's pos

Section 2.6 — Termination Fee In the event that Owner terminates this Agreement without cause pursuant to Section 2.3(a) (other than in connection with the removal of Fairwater HP Manager, LLC as Managing Member pursuant to the Operating Agreement), Owner shall pay to Manager a termination fee in an amount equal to the Management Fee paid or payable with respect to the six (6) calendar months immediately preceding th

Section 2.7 — Survival The following provisions of this Agreement shall survive the expiration or termination of this Agreement for any reason: (a) the indemnification obligations set forth in Article 10; (b) the confidentiality obligations set forth in Article 13; (c) the final accounting obligations set forth in Section 2.5(c); (d) the transition cooperation obligations set forth in Section 2.5(e); (e) the Terminat

ARTICLE 3 DUTIES AND AUTHORITY OF MANAGER

Section 3.1 — General Management Duties Manager shall manage, operate, and maintain the Property in a first-class manner consistent with the standards and practices customarily observed at comparable Class A mixed-use multifamily properties in the Baltimore metropolitan area. Manager shall devote such time, attention, and resources as are reasonably necessary to ensure the efficient and effective operation of the Pro

Section 3.2 — Specific Management Responsibilities Without limiting the generality of Section 3.1, Manager shall have the following specific management responsibilities:

Section 3.2.1 — Leasing and Marketing. (a) Manager shall develop, implement, and manage comprehensive marketing and leasing programs for the residential units and retail spaces at the Property, including digital marketing, social media campaigns, broker outreach, on-site leasing office operations, and such other marketing activities as Manager deems appropriate and as are consistent with the Approved Annual Budget. (

Section 3.2.2 — Maintenance and Repairs. (a) Manager shall perform, or cause to be performed, all routine maintenance, preventive maintenance, repairs, janitorial services, landscaping, snow removal, pest control, and common area upkeep necessary to maintain the Property in first-class condition and in compliance with all applicable codes, laws, and regulations. (b) Manager shall develop and implement a preventive ma

Section 3.2.3 — Personnel. (a) Manager shall hire, train, supervise, compensate, provide benefits to, and, when necessary, discipline or terminate all on-site property management staff required for the efficient operation of the Property, including a senior property manager, assistant property manager(s), leasing agent(s), maintenance technicians, concierge staff, and such other personnel as Manager deems appropriate

Section 3.2.4 — Tenant Relations. (a) Manager shall respond promptly and professionally to all tenant inquiries, complaints, maintenance requests, and service requests. Manager shall maintain a work order system and shall track response times and completion rates for all service requests. Manager shall use commercially reasonable efforts to respond to routine maintenance requests within twenty-four (24) hours and to

Section 3.2.5 — Vendor and Contractor Management. (a) Manager shall solicit competitive bids from qualified vendors and contractors for all material service contracts relating to the Property, including, without limitation, contracts for security services, janitorial services, landscaping and grounds maintenance, elevator maintenance, HVAC maintenance, pest control, trash removal, amenity management, and utilities. (

Section 3.2.6 — Compliance and Regulatory. (a) Manager shall ensure that the Property is operated and maintained in compliance with all applicable federal, state, and local laws, codes, ordinances, and regulations, including, without limitation, the Baltimore City Building Code, Fire Code, and Housing Code, applicable zoning laws and regulations, the conditions of the Planned Unit Development approval (Ordinance No.

Section 3.2.7 — Insurance Administration. (a) Manager shall procure and maintain, or cause to be procured and maintained, at Owner's expense and as a Property operating expense, all insurance coverages required by Article 9 of this Agreement, the Operating Agreement, and any applicable loan documents, including the loan documents governing the Construction Loan from Meridian National Bank, N.A. (b) Manager shall admi

Section 3.2.8 — REIT Compliance Cooperation. (a) Manager acknowledges and agrees that Fairwater Real Estate Investment Trust is a publicly traded real estate investment trust listed on the New York Stock Exchange under the ticker symbol "FWT" and is required to comply with the provisions of Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), in order to maintain its qualification a

Section 3.3 — Limitations on Manager's Authority Notwithstanding any other provision of this Agreement, Manager shall not, without the prior written consent of Owner (and, where applicable, the prior written consent of the Capital Partner as required under the Operating Agreement): (a) Expend or commit to expenditures that would cause any line item of the Approved Annual Budget to be exceeded by more than five percen

Section 3.4 — Standard of Care Manager shall perform all of its duties and obligations under this Agreement with the degree of care, skill, and diligence customarily exercised by experienced, professional property managers managing comparable Class A mixed-use multifamily properties in the Baltimore metropolitan market. Manager's performance shall be measured against the standards of care and competence expected of a

Section 4.1 — Management Fee (a) As compensation for the management services provided by Manager under this Agreement, Owner shall pay to Manager a management fee equal to three percent (3.0%) of Effective Gross Revenue (the "Management Fee"). (b) The Management Fee shall be calculated monthly based upon the Effective Gross Revenue actually collected by Manager during the applicable calendar month. For the avoidance

Section 4.2 — Commencement of Fee (a) The Management Fee shall commence accruing on the Effective Date (i.e., the date of Substantial Completion of the Property). (b) During the lease-up period from the Effective Date through the date of Stabilization, the Management Fee shall be calculated on the actual Effective Gross Revenue collected during each calendar month. No minimum fee guarantee or supplemental management

Section 4.3 — Leasing Commissions (a) Residential Leasing. No separate leasing commission shall be payable to Manager for the leasing, renewal, or extension of residential leases at the Property. All residential leasing activities performed by Manager's on-site leasing staff are deemed included in the Management Fee. (b) Retail Leasing. Manager shall be entitled to a leasing commission for new retail leases, renewals

Section 4.4 — Construction Management / Capital Project Oversight Fee (a) For any capital improvement project, major repair project, or renovation project approved in the Approved Annual Budget or otherwise specifically authorized in writing by Owner, Manager shall be entitled to a construction/capital oversight fee equal to five percent (5.0%) of the hard costs of such project (the "Capital Oversight Fee"), in consi

Section 4.5 — Reimbursable Expenses (a) Owner shall reimburse Manager for all direct, out-of-pocket costs and expenses reasonably incurred by Manager in connection with the management and operation of the Property, including, without limitation: (i) Salaries, wages, payroll taxes, and employee benefits (including health insurance, retirement benefits, and workers' compensation insurance premiums) for all on-site prop

Section 4.6 — Disposition Fee Upon any sale, transfer, or other disposition of the Property (including any sale of one hundred percent (100%) of the membership interests in Owner), a disposition fee equal to one percent (1.0%) of the gross sale price shall be payable to Fairwater Real Estate Investment Trust (or its designee) in accordance with the terms and conditions of the Operating Agreement. Such disposition fee

Section 4.7 — No Other Compensation Except as expressly set forth in this Article 4 or in the Operating Agreement, Manager shall not be entitled to any additional compensation, fees, commissions, rebates, discounts, or other remuneration in connection with the management, operation, leasing, or maintenance of the Property. Manager shall not receive or retain any rebates, discounts, kickbacks, or other payments from a

ARTICLE 5 BUDGETS AND FINANCIAL REPORTING

Section 5.1 — Annual Budget Preparation (a) Not later than sixty (60) days prior to the commencement of each Fiscal Year (i.e., by November 1 of the preceding calendar year), Manager shall prepare and submit to Owner a proposed annual operating budget and capital budget for the Property for the ensuing Fiscal Year (the "Proposed Budget"). (b) The Proposed Budget shall be prepared in the format set forth in Exhibit C

Section 5.2 — Budget Compliance (a) Manager shall manage and operate the Property in strict accordance with the Approved Annual Budget. Manager shall use commercially reasonable efforts to achieve the revenue targets set forth in the Approved Annual Budget and to control operating expenses within the budgeted amounts. (b) Manager shall not exceed any individual line item of the Approved Annual Budget by more than fiv

Section 5.3 — Monthly Financial Reports Manager shall deliver to Owner, within twenty (20) days after the end of each calendar month, a comprehensive monthly financial reporting package in the format set forth in Exhibit D attached hereto, which shall include the following: (a) Income Statement. A statement of income and expenses for the calendar month and year-to-date, compared to the Approved Annual Budget, with do

Section 5.4 — Quarterly Reports Within thirty (30) days after the end of each fiscal quarter, Manager shall provide Owner with a quarterly summary report, which shall include the following: (a) Year-to-date financial performance compared to the Approved Annual Budget, including income, expenses, net operating income, and cash flow; (b) A narrative discussion of Property operations, including staffing, maintenance, ca