SUB-ADVISORY AGREEMENT
Exhibit 10.1(b)
EXECUTION COPY
This SUB-ADVISORY AGREEMENT is made as of July 10, 2006 (this “Agreement”) by and among Crystal
River Capital, Inc., a Maryland corporation (the “Company”), Hyperion Brookfield Crystal River
Capital Advisors, LLC, a Delaware limited liability company (the “Manager”), and Brookfield Crystal
River Capital L.P., a Manitoba limited partnership (the “Sub-Advisor”).
WITNESSETH:
WHEREAS, pursuant to the terms of a Management Agreement, dated as of March 15, 2005 (the
“Management Agreement”), between the Company and the Manager, the Company has retained the Manager
for the purpose of providing day-to-day management and administrative services to the Company;
WHEREAS, the Company and the Manager desire to retain the Sub-Advisor for the purpose of
providing advisory services to the Company in connection with the Company’s investment, directly or
indirectly, in (i) commercial real property or non-securitized commercial real estate financing
instruments, (ii) power generation assets, (iii) timberlands, (iv) other physical infrastructure
assets, (v) private equity investment funds and (vi) any other alternative asset category
designated by the Board of Directors (as hereinafter defined), all as hereinafter further provided;
and
WHEREAS, the Sub-Advisor is willing to render such services on the terms and conditions
hereinafter set forth;
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:
1. Definitions.
(a) “Affiliate” shall mean, with respect to any Person, any Person Controlling, Controlled by,
or under common Control with, such Person, but for purposes of Section 11 of this Agreement, with
respect to the Sub-Advisor shall not include the Manager, any Person controlled by the Manager or
any director or officer of the Manager in such capacity.
(b) “Agreement” has the meaning assigned thereto in the introductory paragraph hereof.
(c) “Alternative Assets” means (i) electric power generation facilities (including
hydroelectric, gas- and coal- fired power plants and wind and emerging alternative forms of power
generating facilities), and debt or equity securities issued by, or other equity interests
(including joint venture interests) in, companies primarily engaged in the operation or development
of such facilities, (ii) timberlands and timber, directly or through freehold or leasehold
interests, and debt or equity securities issued by, or other equity interests (including joint
venture interests) in, companies primarily engaged in the ownership or operation of
timberlands, (iii) other physical infrastructure assets and debt or equity securities issued
by, or other equity interests (including joint venture interests) in, companies primarily engaged
in the operation or development of physical infrastructure assets, (iv) private equity investment
funds, including any sponsored by Affiliates of the Sub-Advisor, and (v) any other alternative
asset category designated by the Board of Directors.
(d) “Applicable Asset” means any particular asset in which the Company invests or that is
proposed for investment by the Sub-Advisor, in either case that falls into the category of a
Commercial Real Estate Asset or an Alternative Asset.
(e) “Bankruptcy” shall mean, with respect to any Person, (a) the filing by such Person of a
voluntary petition seeking liquidation, reorganization, arrangement or readjustment, in any form,
of its debts under Title 11 of the United States Code or any other federal, state or foreign
insolvency law, or such Person’s filing an answer consenting to or acquiescing in any such
petition, (b) the making by such Person of any assignment for the benefit of its creditors, (c) the
expiration of sixty days after the filing of an involuntary petition under Title 11 of the United
States Code, an application for the appointment of a receiver for a material portion of the assets
of such Person, or an involuntary petition seeking liquidation, reorganization, arrangement or
readjustment of its debts under any other federal, state or foreign insolvency law, provided that
the same shall not have been vacated, set aside or stayed within such sixty-day period or (d) the
entry against it of a final and nonappealable order for relief under any bankruptcy, insolvency or
similar law now or hereafter in effect.
(f) “Board of Directors” means the Board of Directors of the Company. Unless otherwise
specified herein, and except as prohibited or restricted by law or the articles of incorporation or
by-laws of the Company as from time to time in effect, any reference herein to any action, approval
or authorization of the Board of Directors shall include action, approval or authorization of (i) a
committee of the Board of Directors duly authorized by the Board of Directors to act on its behalf
in respect of such action, approval or authorization or (ii) a committee of the Company established
by the Board of Directors and including at least one director and such other individuals serving as
officers of, or otherwise associated with, the Company, the Manager, the Sub-Advisor and/or any
other sub-advisor to the Company retained by the Company as are selected by the Board of Directors.
(g) “Code” means the Internal Revenue Code of 1986, as amended.
(h) “Commercial Real Estate Assets” means (i) direct ownership of commercial real properties,
(ii) common and preferred equity securities issued by real estate investment trusts investing
primarily in commercial real properties, (iii) equity securities issued by, or other equity
interests (including joint venture interests) in, companies the principal assets of which are
commercial real properties and (iv) non-securitized commercial real estate debt financing
instruments, including whole mortgage loans, construction loans and other loans (such as “bridge”
loans, “mezzanine” loans and “B notes”) secured by commercial real properties or primarily
dependant for the repayment thereof on the operation of or other realization on commercial real
property (whether constructed or under construction).
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(i) “Company” has the meaning assigned thereto in the introductory paragraph hereof;
provided that all references herein to the Company shall, except as otherwise expressly
provided herein, be deemed to include any Subsidiaries of Crystal River Capital, Inc.
(j) “Company Account” has the meaning assigned thereto in Section 5.
(k) “Control” shall mean, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of another Person without the consent or approval
of any other Person.
(l) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
(m) “GAAP” means generally accepted accounting principles in effect in the U.S. on the date
such principles are applied consistently.
(n) “Governing Instruments” means, with respect to any Person, the articles of incorporation
and bylaws in the case of a corporation, the certificate of limited partnership (if applicable) and
partnership agreement in the case of a general or limited partnership or the articles of formation
and operating agreement in the case of a limited liability company.
(o) “Hyperion Brookfield” means Hyperion Brookfield Asset Management, Inc.
(p) “Independent Directors” means the members of the Board of Directors who are not officers
or employees of the Company, the Manager or Hyperion Brookfield and who are otherwise “independent”
in accordance with the Company’s Governing Instruments and, at any time during which any securities
of the Company are listed on the New York Stock Exchange, the rules of the New York Stock Exchange
as may be in effect from time to time.
(q) “Investment Company Act” means the Investment Company Act of 1940, as amended.
(r) “Investment Guidelines” means the general parameters and policies relating to Investments
as established by the Board of Directors as the same may be modified from time-to-time.
(s) “Investments” means the investments of the Company.
(t) “Management Agreement” has the meaning assigned thereto in the first recital hereof.
(u) “Manager” has the meaning assigned thereto in the introductory paragraph hereof.
(v) “Person” means any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county or
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municipal government or any bureau, department or agency thereof and any fiduciary acting in
such capacity on behalf of any of the foregoing.
(w) “REIT” means a corporation or trust which qualifies as a real estate investment trust in
accordance with Sections 856 through 860 of the Code and the Treasury Regulation promulgated
thereunder.
(x) “Sub-Advisor” has the meaning assigned thereto in the introductory paragraph hereof.
(y) “Sub-Advised Portfolio” has the meaning assigned thereto in Section 2(a).
(z) “Subsidiary” means any subsidiary of the Company, any partnership, the general partner of
which is the Company or any subsidiary of the Company and any limited liability company, the
managing member of which is the Company or any subsidiary of the Company.
(aa) “Treasury Regulations” means the Procedures and Administration Regulations promulgated by
the U.S. Department of Treasury under the Code, as amended.
2. Retention and Duties of Sub-Advisor.
(a) The Manager hereby retains the Sub-Advisor to advise the Company with respect to the
investment of a portion of the Company’s assets in Commercial Real Estate Assets and Alternative
Assets, to provide investment research and advice with respect to Commercial Real Estate and
Alternative Assets, to supervise and arrange the purchase or other acquisition of such investments
for, and the sale or other disposition of such investments held in, the Company’s investment
portfolio (the portion of the Company’s portfolio consisting of Commercial Real Estate Assets and
Alternative Assets is referred to herein as the “Sub-Advised Portfolio”), subject to the further
terms and conditions set forth in this Agreement (including the authorization requirements of
Section 4), and the Sub-Advisor hereby agrees to perform each of the duties set forth herein in
accordance with the provisions of this Agreement.
(b) Subject to the further terms and conditions set forth in this Agreement, the Sub-Advisor
will perform (or cause to be performed) such services and activities relating to the Sub-Advised
Portfolio as is appropriate, including:
(i) supervising and managing the investment and reinvestment of, the Sub-Advised Portfolio
and, in connection therewith, making recommendations relating to the purchase and sale of
Applicable Assets for the Company and to the vote, exercise of consents, and exercise of all other
rights appertaining to such assets owned by the Company;
(ii) supervising continuously the investment program of the Company as such program pertains
to Commercial Real Estate Assets and Alternative Assets and the composition of the Sub-Advised
Portfolio; and
(iii) arranging for the sale of Applicable Assets, or for further investment in Applicable
Assets, held in the Sub-Advised Portfolio.
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(c) In the performance of its duties under this Agreement, the Sub-Advisor shall at all times
conform to, and act in accordance with, to the extent applicable any requirements imposed by (i)
the provisions of the Investment Advisers Act of 1940, as amended (the “Act”), and any rules or
regulations in force thereunder, (ii) the Investment Guidelines and other policies adopted and
implemented by the Board of Directors of the Company; (iii) any other written directions of the
Board of Directors or authorized officers of the Company; and (iv) any other applicable provision
of law, including federal, state, county or city regulations.
(d) The Board of Directors will have sole and absolute discretion to determine the amount or
percentage of the Company’s assets to be invested in Commercial Real Estate Assets and Alternative
Assets. From time to time, the Board of Directors may, subject to the Investment Guidelines,
determine to increase or decrease the amount or percentage of the Company’s assets to be invested
in Commercial Real Estate Assets or Alternative Assets. If the Board of Directors determines to
increase such amount or percentage, the Sub-Advisor shall recommend for investment such additional
funds in Applicable Assets as soon as practicable, or at such later time as the Board of Directors
may, subject to the Investment Guidelines, direct, after (i) notice of such increase is given to
the Sub-Advisor and (ii) such additional funds are made available for investment. If, on the other
hand, the Board of Directors determines to decrease such amount or percentage, the Sub-Advisor
shall, as soon as practicable, or at such later time as the Board of Directors may direct, after
notice of such decrease is given to the Sub-Advisor, liquidate that portion of the Sub-Advised
Portfolio required for the Sub-Advised Portfolio to represent the desired amount or percentage of
the Company’s assets and cause the proceeds of liquidation of such assets to be available to the
Company.
(e) Financing assets in the Sub-Advised Portfolio and related hedging of exposure, if any,
will be undertaken by the Manager in consultation with the Sub-Advisor.
(f) The Sub-Advisor is authorized, for the purchase and sale of the securities in the
Sub-Advised Portfolio, to employ such securities brokers or dealers as may, in the judgment of the
Sub-Advisor, implement the policy of the Company to obtain the best net results taking into account
such factors as price, including dealer spread, the size, type and difficulty of the transaction
involved, the firm’s general execution and operational facilities and the firm’s risk in
positioning the securities involved. Consistent with this policy, the Sub-Advisor is authorized to
direct the execution of the Sub-Advised Portfolio transactions to dealers and brokers furnishing
statistical information or research deemed by the Sub-Advisor to be useful or valuable to the
performance of its investment advisory functions for the Sub-Advised Portfolio. In addition, the
Sub-Advisor may give proper instructions to any custodian of the Company’s assets in connection
with the purchase or sale of Applicable Assets. The Manager, upon the Sub-Advisor’s request, shall
confirm such authority of such custodian.
(g) The Sub-Advisor shall assist the Manager in the preparation of ongoing reports to the
Board of Directors that review the Company’s acquisitions of Applicable Assets, portfolio
composition and characteristics, credit quality, performance and compliance with the Investment
Guidelines and policies approved by the Board of Directors.
(h) The Sub-Advisor shall cooperate with the Manager and the Company in all matters pertaining
to its performance hereunder and under agreements among the Manager,
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the Company and other sub-advisors, including, without limitation: (i) timely reporting of all
transaction information; (ii) responding in a timely manner to all reasonable requests for
information from the Manager and the Company and (iii) meeting with staff of the Manager and the
Company as requested.
(i) The Sub-Advisor shall not be required to expend money in excess of that contained in any
applicable Company Account or otherwise made available by the Company to be expended by the
Sub-Advisor hereunder.
(j) In performing its duties under this Section 2, the Sub-Advisor shall be entitled to rely
on qualified experts and professionals (including, without limitation, accountants, legal counsel
and other professional service providers) hired by the Sub-Advisor at the Company’s sole cost and
expense.
(k) The Company shall pay all expenses, and reimburse the Sub-Advisor for the Sub-Advisor’s
expenses incurred on its behalf, in connection with any such services to the extent such expenses
are reimbursable by the Company to the Sub-Advisor pursuant to Section 9 herein.
3. Dedication; Other Activities.
(a) The Sub-Advisor shall cause its officers and employees to devote such of their time to the
provision of services to the Company as the Sub-Advisor deems reasonably necessary and appropriate
for the proper performance of all of the Sub-Advisor’s duties hereunder. The Company shall have
the benefit of the Sub-Advisor’s reasonable judgment and effort in rendering services and, in
furtherance of the foregoing, the Sub-Advisor shall not undertake activities which, in its
reasonable judgment, will substantially adversely affect the performance of its obligations under
this Agreement.
(b) Except to the extent set forth in clause (a) above, nothing herein shall prevent the
Sub-Advisor or any of its Affiliates or any of the officers and employees of any of the foregoing
from engaging in other businesses or from rendering services of any kind to any other Person,
including investment in, or advisory services to others investing in, any type of real estate, real
estate-related investment or non-real estate-related investment, including investments which meet
the principal investment objectives of the Company.
4. Agency; Authority. Subject to Section 7(a), the Sub-Advisor shall act as the agent of
the Company in originating, acquiring, financing and disposing of Applicable Assets and, in
connection therewith, disbursing and collecting the Company’s funds, paying the debts and
fulfilling the obligations of the Company, supervising the performance of professionals engaged by
or on behalf of the Company and handling, prosecuting and settling any claims of or against the
Company, the Board of Directors, holders of the Company’s securities or the Company’s directors,
officers, employees or other representatives or assets and the Sub-Advisor shall have the right to
exercise all powers and authority which are reasonably necessary and customary to perform its
obligations under this Agreement; provided, however, that, except as otherwise provided by
directions or in accordance with guidelines adopted by the Board of Directors, the acquisition or
other investment of the Sub-Advised Portfolio in an Applicable
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Asset, the sale or other disposition of an Applicable Asset and any Material Transaction (as
hereinafter defined) in respect of an Applicable Asset shall require the prior authorization of the
Board of Directors. A “Material Transaction” shall mean any transaction defined as such by the
Board of Directors.
5. Custody of Applicable Assets. Nothing in paragraph 4 hereof shall be deemed to authorize
the Sub-advisor to take or receive physical possession or custody of any assets of the Company
including, Applicable Assets or cash, it being intended that sole responsibility for safekeeping of
such assets shall rest with such custodians as designated by the Company.
6. Book and Records; Confidentiality.
(a) The Sub-Advisor shall maintain appropriate books of account, records data and files
(including without limitation, computerized material) (collectively, “Records”) relating to the
Company’s investments in Applicable Assets or otherwise generated or obtained by the Sub-Advisor in
performing its obligations under this Agreement, and such Records shall be accessible for
inspection by representatives of the Company at any time during normal business hours. The
Sub-Advisor shall have full responsibility for the maintenance, care and safekeeping of all
Records.
(b) The Sub-Advisor shall keep confidential any nonpublic information obtained in connection
with the services rendered under this Agreement and shall not disclose any such information (or use
the same except in furtherance of its duties under this Agreement), except: (i) to the Manager and
Hyperion Brookfield; (ii) with the prior written consent of the Board of Directors; (iii) to legal
counsel, accountants and other professional advisors; (iv) to appraisers, financing sources and
others in the ordinary course of the Company’s business of investing in Applicable Assets; (v) to
governmental officials having jurisdiction over the Company; (vi) in connection with any
governmental or regulatory filings of the Company or (vii) as required by law or legal process to
which the Sub-Advisor or any Person to whom disclosure is permitted hereunder is a party. The
foregoing shall not apply to information which has previously become available through the actions
of a Person other than the Sub-Advisor not resulting from Sub-Advisor’s violation of this Section
6(b). The provisions of this Section 6(b) shall survive the expiration or earlier termination of
this Agreement for a period of one year.
7. Restrictions; Other Obligations.
(a) The Company shall not acquire any Investment from, dispose of any Investment to, or make
any co-investment with any of its Affiliates (any of the foregoing, a “Related Person”) or any
account advised by any Related Person, or borrow funds from or lend funds to any Related Person or
invest in any investment vehicle advised by any Related Person unless such transaction is on terms
no less favorable than can be obtained on an arm’s length basis from unrelated third parties based
on any of (i) prevailing market prices, (ii) other reliable indicators of fair market value or
(iii) an independent valuation or appraisal and, in any case, has been approved in advance by a
majority of the Independent Directors.
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(b) The Sub-Advisor shall maintain “errors and omissions” insurance coverage and such other
insurance coverage which is customarily carried by property, asset and investment managers
performing functions similar to those of the Sub-Advisor under this Agreement with respect to
assets similar to the Applicable Assets of the Company, in an amount which is comparable to that
customarily maintained by other managers or servicers of similar assets.
(c) The Company and the Manager each acknowledge that Sub-Advisor is not registered under the
Act or any similar state or non-U.S. law, and is not undertaking by entering into this Agreement to
become so registered; it being understood that the Sub-Advisor shall be responsible for determining
whether its activities require any such registration. The Sub-Advisor agrees not to accept any
engagement to provide investment advisory services to any client or Person other than the Company
without the consent of the Company, which consent shall not be unreasonably withheld; it being
understood that the foregoing shall not limit in any way the activities of Brookfield Asset
Management Inc. or any of its subsidiaries or Affiliates other than the Sub-Advisor.
8. Compensation. The Manager shall pay the Sub-Advisor an annual fee equal to 20% of the
sum of the base management fees and incentive management fees received by the Manager from the
Company pursuant to the Management Agreement for the applicable year as reasonably as practicable
following receipt of such base management fees and incentive management fees. The Manager shall
make available the monthly calculation of the fee to the Sub-Advisor as reasonably as practicable
following the last day of each calendar month. The Manager shall pay the Sub-Advisor 20% of any
termination fee received by the Manager from the Company pursuant to the Management Agreement as
reasonable as practicable following receipt of any such termination fee.
9. Expenses. Each of the Company, the Manager and the Sub-Advisor shall bear all of its
respective operating expenses, except those specifically required to be borne by the Manager under
the Management Agreement and those required to be borne by the Sub-Advisor. The expenses required
to be paid by the Company include, but are not limited to:
(a) issuance and transaction costs incident to the acquisition, disposition and financing of
Investments;
(b) legal, regulatory, compliance, tax, accounting, consulting, auditing and administrative
fees and expenses;
(c) the compensation and expenses of the Company’s directors and the cost of liability
insurance to indemnify the Company’s directors and officers;
(d) the costs associated with the establishment and maintenance of any credit facilities and
other indebtedness of the Company (including commitment fees, accounting fees, legal fees, closing
costs, etc.);
(e) expenses associated with other securities offerings of the Company;
(f) expenses relating to the payment of dividends;
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(g) expenses connected with communications to holders of the Company’s securities and in
complying with the continuous reporting and other requirements of the Securities and Exchange
Commission and other governmental bodies;
(h) transfer agent and exchange listing fees;
(i) the costs of printing and mailing proxies and reports to the Company’s stockholders;
(j) costs associated with any computer software or hardware, electronic equipment, or
purchased information technology services from third party vendors that is used solely for the
Company;
(k) costs and out of pocket expenses incurred by directors, officers, employees or other
agents of the Manager for travel on the Company’s behalf;
(l) the costs and expenses incurred with respect to market information systems and
publications, research publications and materials;
(m) settlement, clearing, and custodial fees and expenses;
(n) the costs of maintaining compliance with all federal, state and local rules and
regulations, including securities regulations, or any other regulatory agency, all taxes and
license fees and all insurance costs incurred on the Company’s behalf; and
(o) expenses relating to any office or office facilities, including disaster backup recovery
sites and facilities maintained for the Company or separate from offices of the Manager or the
Sub-Advisor.
The Sub-Advisor is not entitled to be reimbursed for wages, salaries and benefits of its
officers and employees. Subject to any required approval of the Board of Directors, the
Sub-Advisor may retain third parties including accountants, legal counsel, real estate
underwriters, brokers, among others, on the Company’s behalf, and be reimbursed for such services.
The provisions of this Section 9 shall survive the expiration or earlier termination of this
Agreement to the extent such expenses have previously been incurred or are incurred in connection
with such expiration or termination.
10. Expense Reports and Reimbursements. The Sub-Advisor shall prepare a statement
documenting the operating expenses of the Company incurred by the Sub-Advisor on behalf of the
Company during each fiscal quarter, and deliver the same to the Company and the Manager within 45
days following the end of the applicable fiscal quarter. Such expenses shall be reimbursed by the
Company within 45 days following delivery of the expense statement by the Sub-Advisor;
provided, however, that such reimbursements may be offset by the Sub-Advisor
against amounts due to the Company from the Sub-Advisor. The provisions of this Section 10 shall
survive the expiration or earlier termination of this Agreement.
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11. Limits of Manager Responsibility; Indemnification.
(a) Pursuant to this Agreement, the Sub-Advisor will not assume any responsibility other than
to render the services called for hereunder and will not be responsible for any action of the Board
of Directors or the Manager in following or declining to follow its advice or recommendations. The
Sub-Advisor and its Affiliates, and their respective directors, officers, managers and employees,
will not be liable to the Company, any Subsidiary, the Manager, any of their directors, officers,
stockholders, managers, owners or partners for acts or omissions performed or not performed in
accordance with and pursuant to this Agreement, except by reason of acts or omissions constituting
bad faith, willful misconduct, gross negligence or reckless disregard of the Sub-Advisor’s duties
under this Agreement.
(b) The Company hereby agrees to indemnify, defend and hold harmless the Sub-Advisor, the
Manager and their respective Affiliates, officers, directors, members, managers, employees, agents,
successors and assigns from and against all liabilities, judgments, costs, charges, losses,
expenses and claims, including attorneys’ fees, charges and expenses and expert witness fees, of
any nature, kind or description, arising out of claims by third parties based on acts or omissions
of the Sub-Advisor performed or not performed in accordance with and pursuant to this Agreement,
except (i) to the extent caused by or resulting from acts or omissions constituting bad faith,
willful misconduct, gross negligence or reckless disregard of the Sub-Advisor’s duties under this
Agreement, as determined pursuant to a final, non-appealable order of a court of competent
jurisdiction or (ii) claims by the Sub-Advisor’s employees relating to the terms and conditions of
their employment with the Sub-Advisor.
(c) The Sub-Advisor hereby agrees to indemnify the Company, the Manager and their respective
directors and officers with respect to all liabilities, judgments, costs, charges, losses, expenses
and claims, including attorney’s fees, charges and expenses and expert witness fees, of any nature,
kind or description, arising out of (i) claims by third parties based on acts or omissions of the
Sub-Advisor performed or not performed in accordance with and pursuant to this Agreement
constituting bad faith, willful misconduct, gross negligence or reckless disregard of the
Sub-Advisor’s duties under this Agreement, as determined pursuant to a final, non-appealable order
of a court of competent jurisdiction or (ii) claims by the Sub-Advisor’s employees relating to the
terms and conditions of their employment with the Sub-Advisor.
(d) The party seeking indemnity (“Indemnitee”) will promptly notify the party against whom
indemnity is claimed (“Indemnitor”) of any claim for which it seeks indemnification; provided,
however, that the failure to so notify the Indemnitor will not relieve Indemnitor from any
liability which it may have hereunder, except to the extent such failure actually prejudices
Indemnitor. The Indemnitor shall have the right to assume the defense and settlement of such
claim; provided that, Indemnitor notifies Indemnitee of its election to assume such defense and
settlement within thirty (30) days after the Indemnitee gives the Indemnitor notice of the claim.
In such case the Indemnitee will not settle or compromise such claim, and the Indemnitor will not
be liable for any such settlement made without its prior written consent. If Indemnitor is
entitled to, and does, assume such defense by delivering the aforementioned notice to Indemnitee,
Indemnitee will (i) have the right to approve Indemnitor’s counsel (which approval will not be
unreasonably withheld or delayed), (ii) be obligated to cooperate in
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furnishing evidence and testimony and in any other manner in which Indemnitor may reasonably
request and (iii) be entitled to participate in (but not control) the defense of any such action,
with its own counsel and at its own expense.
(e) Reasonable expenses (including attorney’s fees) incurred by an Indemnitee in defense or
settlement of a claim that may be subject to a right of indemnification hereunder may be advanced
by the Company to such Indemnitee as such expenses are incurred prior to the final disposition of
such claim; provided that, Indemnitee undertakes to repay such amounts if it shall be
determined ultimately by a court of competent jurisdiction that Indemnitee was not entitled to be
indemnified hereunder.
(f) The Sub-Advisor shall remain entitled to exculpation from the Company and the Manager and
indemnification from the Company pursuant to this Section 11 (subject to the limitations set forth
herein) with respect to any matter arising prior to the termination of this Agreement and shall
have no liability to the Company or the Manager in respect of any matter arising after such
termination unless such matter arose out of events or circumstances that occurred prior to such
termination.
12. No Joint Venture. Nothing in this Agreement shall be construed to make the Company, the
Manager and the Sub-Advisor partners or joint venturers or impose any liability as such on either
of them.
13. Term; Termination; Termination Payment.
(a) This Agreement shall become effective on the date first set forth above. This Agreement
may be terminated by the Sub-Advisor at any time without penalty upon giving the Company and the
Manager 60 days’ prior written notice (which notice may be waived by the Company), and may be
terminated by the Company at any time without penalty upon giving the Sub-Advisor 60 days’ prior
written notice (which notice may be waived by the Sub-Advisor). This Agreement shall terminate
automatically (i) immediately upon termination of the Management Agreement or (ii) in the event of
its assignment (as “assignment” is defined in the Investment Advisers Act of 1940).
(b) If this Agreement is terminated pursuant to this Section 13, such termination shall be
without any further liability or obligation of either party to the other, except as otherwise
expressly provided herein.
(c) The Company may terminate this Agreement effective 30 days after notice of termination
from the Company to the Sub-Advisor in the event that any of the following occur: (i) the
Sub-Advisor commits any act of gross negligence in the performance of its duties under this
Agreement, (ii) the Sub-Advisor commits any act of fraud, misappropriation of funds, or
embezzlement against the Company, (iii) the Sub-Advisor, in its corporate capacity (as
distinguished from the acts of any employees of the Sub-Advisor which are taken without the
complicity of any of the executive officers of the Sub-Advisor), commits any other willful and
material violation of this Agreement and such willful and material violation continues for a period
of 30 days after written notice thereof specifying such violation and requesting that the same be
remedied in such 30 day period, (iv) Brookfield Asset Management Inc. does not
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Control the Sub-Advisor, (v) the Bankruptcy of the Sub-Advisor or (vi) the dissolution of the
Sub-Advisor.
(d) Upon a termination of this Agreement pursuant to this Section 13 (other than pursuant to
Section 13(c) hereof, the Manager will continue to pay the Sub-Advisor termination fees equal to
the amount of annual investment advisory fees and termination fees that would otherwise be due and
payable pursuant to Section 8 in the absence of a termination of this Agreement until April 28,
2020 whereupon the foregoing obligation to pay termination fees shall cease.
14. Action Upon Termination or Expiration of Origination Period. From and after the
effective date of termination of this Agreement pursuant to Section 13, the Sub-Advisor shall not
be entitled to compensation for further services under this Agreement but, other than in the event
of a termination pursuant to Section 13(c)(i), (c)(ii) or (c)(iii), shall be paid all compensation
accruing to the date of termination, reimbursement for all operating expenses of the Company borne
by the Sub-Advisor for the benefit of the Company and a termination fee, if applicable. Upon such
termination or expiration, the Sub-Advisor shall reasonably promptly:
(a) deliver to the Board of Directors a full accounting, including a statement showing all
payments collected and all money held by it, covering the period following the date of the last
accounting furnished to the Board of Directors with respect to the Company and through the
termination date; and
(b) deliver to the Company all property and documents of the Company provided to or obtained
by the Sub-Advisor pursuant to or in connection with this Agreement, including all copies and
extracts thereof in whatever form, then in the Sub-Advisor’s possession or under its control.
15. Assignment. None of the parties hereto may assign its duties under this Agreement.
16. Notices. Unless expressly provided otherwise in this Agreement, all notices, requests,
demands and other communications required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given, made and received when delivered against receipt or upon
actual receipt of (a) personal delivery, (b) delivery by a reputable overnight courier, (c)
delivery by facsimile transmission against answerback, or (d) delivery by registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:
If to the Company:
|
Crystal River Capital, Inc. c/o Hyperion Brookfield Asset Management, Inc. Three World Financial Center 000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 10281-1010 Attn: General Counsel Facsimile: (000) 000-0000 |
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If to the Manager:
|
Hyperion Crystal River Capital Advisors, LLC c/o Hyperion Brookfield Asset Management, Inc. Three World Financial Center 000 Xxxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 10281-1010 Attn: General Counsel Facsimile: (000) 000-0000 |
|
If to the Sub-Advisor:
|
Brookfield Crystal River Xxxxxxx X. X. Xxxxx 000, XXX Xxxxx 000 Xxx Xxxxxx, X.X. Xxx 000 Xxxxxxx, Xxxxxx X0X 0X0 Attn: Legal Counsel Facsimile: (000) 000-0000 |
Any party may change the address to which communications or copies are to be sent by giving notice
of such change of address in conformity with the provisions of this Section 17 for the giving of
notice.
17. Binding Nature of Agreement; Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns as provided in this Agreement.
18. Entire Agreement; Amendments. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, inducements and conditions, express or
implied, oral or written, of any nature whatsoever with respect to the subject matter of this
Agreement. The express terms of this Agreement control and supersede any course of performance
and/or usage of the trade inconsistent with any of the terms of this Agreement. This Agreement may
not be modified or amended other than by an agreement in writing signed by the parties hereto.
19. Governing Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed, interpreted and
enforced in accordance with the laws of the State of New York.
20. Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
21. Titles Not to Affect Interpretation. The titles of sections, paragraphs and
subparagraphs contained in this Agreement are for convenience only, and they neither form a
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part of this Agreement nor are they to be used in the construction or interpretation of this
Agreement.
22. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts of this Agreement, individually or
taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories.
23. Provisions Separable. The provisions of this Agreement are independent of and separable
from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others of them may be invalid or unenforceable in
whole or in part.
24. Principles of Construction. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires. All references to
recitals, sections, paragraphs and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise specified.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.
| THE COMPANY: | ||||
| CRYSTAL RIVER CAPITAL, INC. | ||||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: Xxxx X. Xxxxx | ||||
| Title: Chief Investment Officer | ||||
| THE MANAGER: | ||||
| HYPERION BROOKFIELD CRYSTAL RIVER CAPITAL ADVISORS, LLC | ||||
| By: | /s/ Xxxx X. Xxxxxx, Xx. | |||
| Name: Xxxx X. Xxxxxx, Xx. | ||||
| Title: Executive Vice President | ||||
| THE SUB-ADVISOR: | ||||
| BROOKFIELD CRYSTAL RIVER CAPITAL L. P. | ||||
| By: | Brookfield Crystal River Capital Inc., | |||
| Its sole general partner | ||||
| By: | /s/ Xxxxx Xxxxxxxxx | |||
| Name: Xxxxx Xxxxxxxxx | ||||
| Title: President | ||||
[Signature Page to Brookfield Crystal River Capital Sub-Advisory Agreement]
