THIRD AMENDED AND RESTATED EXPENSE SUPPORT AGREEMENT
Exhibit 10.2
THIRD AMENDED AND RESTATED EXPENSE SUPPORT AGREEMENT
This THIRD AMENDED AND RESTATED EXPENSE SUPPORT AGREEMENT (the “Agreement”) is dated as of June 12, 2020 (the “Effective Date”), by and among Black Creek Industrial REIT IV Inc., a Maryland corporation (the “Corporation”), BCI IV Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”) and BCI IV Advisors LLC, a Delaware limited liability company (the “Advisor”).
WITNESSETH
WHEREAS, the Corporation, the Operating Partnership and the Advisor are parties to the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020 (the “Advisory Agreement”) and capitalized terms not otherwise defined herein shall have the meanings given them in the Advisory Agreement;
WHEREAS, pursuant to the Advisory Agreement, the Advisor manages the day-to-day activities and implements the investment strategy of the Corporation and is paid certain fees for these services;
WHEREAS, the Corporation and the Operating Partnership have requested that the Advisor help reduce certain of the Corporation’s expenses in certain circumstances as noted in this Agreement;
WHEREAS, the Advisor, in its pursuit to carry on a viable trade or business, has agreed to help reduce certain of the Corporation’s expenses, in its ordinary course in certain circumstances as noted in this Agreement, which assistance is similar to assistance provided by other entities engaged in the Advisor’s business to affect the marketability of the corporate entity which they advise;
WHEREAS, the parties hereto originally entered into the Expense Support Agreement, dated as of October 27, 2016 and effective as of October 1, 2016 (the “Initial Agreement”); and
WHEREAS, the parties amended and restated the Initial Agreement, effective as of July 1, 2017 (the “Second Agreement”); and
WHEREAS, the parties amended and restated the Second Agreement, effective January 1, 2019 (the “Second Amended and Restated Agreement”).
NOW THEREFORE, in consideration of the covenants and the mutual promises hereinafter set forth, the parties hereto, intending to be legally bound hereby, mutually agree that, effective as of the Effective Date, the Second Agreement shall be and hereby is amended and restated as follows:
As used in this Agreement, the following terms have the definitions hereinafter indicated:
Annual Total Return Amount. The Cumulative Total Return Amount divided by the number of years, including fractional years, between the Inception Date and the date of the Liquidity Event.
Baseline Distributions. The aggregate gross cash distributions that are declared on all shares of the Corporation’s common stock for a quarter, which shall be calculated based on the aggregate distribution rate for Class I shares of the Corporation’s common stock authorized by the Board of Directors of the Corporation for such quarter.
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Beginning NAV. The NAV per share at the Inception Date. For purposes of calculating the Cumulative Total Return Amount, the Corporation’s NAV per share at the Inception Date is deemed to equal $10.00 per share.
Cumulative Total Return Amount. A cumulative, non-compounded pre-tax rate of return equal to (i) the sum of (a) the cumulative distributions per share paid to the Corporation’s stockholders since the Inception Date and (b) the Ending NAV, less the Beginning NAV, (ii) divided by the Beginning NAV.
Ending NAV. The NAV per share determined in connection with a Liquidity Event. In connection with a Listing, for purposes of determining the Cumulative Total Return Amount, the Ending NAV shall be an amount equal to the per share market value of the listed shares based upon the average closing price or, if the average closing price is not available, the average of the bid and asked prices, for the 30-day period beginning 90 days after such Listing. Upon a Liquidity Event other than a Listing, for purposes of determining the Cumulative Total Return Amount, the Ending NAV shall be an amount equal to the per share consideration received by stockholders in connection with such Liquidity Event.
Excess. An “Excess” occurs when the sum of (i) the Corporation’s FFO, before taking into consideration the impact of the fees deferred or Deficiency Support Payments received or reimbursed as discussed in Sections 2, 3, 4 and 5 of this Agreement, (ii) the Corporation’s accrued acquisition expenses (net of any acquisition expenses paid by or on behalf of the Corporation), (iii) the Performance Component of the Advisory Fee, (iv) any adjustment that has been made to FFO based on straight-line rent and amortization of above/below-market leases, (v) organization and offering expenses reimbursed by the Corporation to the Advisor, and (vi) the Fair Market Value Gain Amount for a quarter is greater than the Baseline Distributions for the record dates of that quarter.
Fair Market Value Gain Amount. An amount equal to up to the total net realized and unrealized fair market value gain on the Corporation’s real property investments, derivative instruments, and debt for a quarter. The Advisor, in its reasonable discretion, shall determine the amount of such gain to be included in the calculation of an “Excess” or a “Shortfall” (each as defined below) each quarter; provided, that, in no event shall the Advisor determine to include an amount of such gain that causes the Corporation’s NAV per share, as calculated in accordance with the Corporation’s Valuation Procedures for such quarter, to decrease below the lesser of (i) $10.00 per share and (ii) the most recent NAV Calculation per share.
FFO. Funds from Operations, as reported in the Corporation’s periodic reports filed with the Securities and Exchange Commission.
Inception Date. November 1, 2017, which is the date on which the Corporation first issued shares of its common stock to third-party retail investors pursuant to its initial public offering.
Shortfall. A “Shortfall” occurs when the sum of (i) the Corporation’s FFO, before taking into consideration the impact of the fees deferred or Deficiency Support Payments received or reimbursed as discussed in Sections 2, 3, 4 and 5 of this Agreement, (ii) the Corporation’s accrued acquisition expenses (net of any acquisition expenses paid by or on behalf of the Corporation), (iii) the Performance Component of the Advisory Fee, (iv) any adjustment that has been made to FFO based on straight-line rent and amortization of above/below-market leases, (v) organization and offering expenses reimbursed by the Corporation to the Advisor, and (vi) the
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Fair Market Value Gain Amount for a quarter is less than the Baseline Distributions for the record dates of that quarter.
Total Return Hurdle. A non-compounded, pre-tax annual rate of return equal to 5%.
In calculating the amounts as defined in each of the terms “Excess” and “Shortfall”, each of subsections (ii), (iii), (iv), and (v) in the respective definition of such terms, shall be a positive number if it was a deduction in calculating the Corporation’s FFO, and conversely shall be a negative number if it was an addition in calculating the Corporation’s FFO. For example, if straight-line rent and amortization of above/below-market leases was an addition in calculating the Corporation’s FFO, then it would be a negative number in calculating “Excess” and “Shortfall” above.
Any amount of the Fixed Component deferred pursuant to this Section 2 shall be referred to hereinafter as a “Deferred Fixed Component Amount.” All Deferred Fixed Component Amounts shall be subject to conditional reimbursement in accordance with the terms of Section 5 of this Agreement.
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5.CONDITIONAL REIMBURSEMENT. Deferred Fixed Component Amounts and Aggregate Deficiency Support Payments (collectively referred to hereinafter as “Reimbursable Amounts”) shall be reimbursed by the Corporation to the Advisor subject to the following terms and conditions: |
| a. | Expiration of Reimbursable Amounts. Reimbursable Amounts shall, pursuant to Section 5(c) hereof, be reduced on a dollar for dollar basis upon their reimbursement by the Corporation to the Advisor. Except as described in Section 5(d) of this Agreement, any Reimbursable Amount not reimbursed by the Corporation to the Advisor within four years after the end of the calendar quarter in which such Reimbursable Amount originated shall be deemed expired, and the Corporation’s obligation to reimburse such Reimbursable Amount to the Advisor shall be cancelled, but only as to that portion of the Reimbursable Amount. |
| b. | Dollar Amount of Reimbursements. Except as described in Section 5(d) of this Agreement, if, in a given calendar quarter, there exists an Excess, then the Corporation shall make a reimbursement to the Advisor in an amount equal to the lesser of (i) the amount of the Excess for that quarter, or (ii) the sum of all Reimbursable Amounts that have not expired or been repaid. |
| c. | Priority of Reimbursements. Except as described in Section 5(d) of this Agreement, any reimbursement made by the Corporation to the Advisor pursuant to Section 5(b) shall be applied to Reimbursable Amounts that have not expired or been repaid in the order of oldest to newest. |
| d. | Reimbursement Upon Liquidity Event. In connection with the completion of a Liquidity Event, the Corporation shall reimburse the Advisor for any Reimbursable Amounts that have not been repaid pursuant to Section 5(a), including Reimbursable |
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Amounts that have been deemed expired pursuant to Section 5(a); provided that the Corporation shall reimburse the Advisor under this Section 5(d) only if the Annual Total Return Amount exceeds the Total Return Hurdle; and provided further that the amount of the reimbursement shall equal the lesser of (i) the sum of all Reimbursable Amounts that have not been repaid pursuant to Section 5(a), including Reimbursable Amounts that have been deemed expired pursuant to Section 5(a), or (ii) the maximum amount permitted to be reimbursed without causing the Annual Total Return Amount to be less than the Total Return Hurdle. The Corporation shall pay such reimbursement to the Advisor prior to any payment of any other distribution to any other party in connection with the Liquidity Event. After the Corporation has reimbursed the Advisor to the extent permissible under this Section 5(d), the Corporation shall have no further obligation to pay, and the Advisor shall have no further right to receive, any additional reimbursement of any Reimbursable Amounts. | ||
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| e. | Termination Without Cause. In the event of a termination of the Advisory Agreement by the Corporation without Cause and not in connection with the completion of a Liquidity Event, any Reimbursable Amounts that have not expired or been repaid pursuant to Section 5(a) shall become immediately due and payable. |
| f. | Non-Interest Bearing. The Corporation’s obligation to reimburse the Advisor the Reimbursable Amounts pursuant to this Section 5 shall be a non-interest bearing obligation. |
| g. | No Clawback. The Advisor’s obligations in the event of a Shortfall are limited solely to those obligations described in Sections 2, 3 and 4 of this Agreement. The occurrence of a Shortfall in any given calendar quarter shall not entitle the Corporation to receive any refund of any amounts previously reimbursed pursuant to this Section 5 or of any amount of the Fixed Component (or other amounts) previously paid by the Corporation to the Advisor except as specified in Section 2(b) of this Agreement. Notwithstanding this Section 5(g), the terms of Section 12 of the Advisory Agreement shall continue to apply to all reimbursements of Total Operating Expenses paid to the Advisor; provided, however, that if Section 12 of the Advisory Agreement prohibits the payment of all or a portion of a reimbursement payable by the Corporation to the Advisor pursuant to this Section 5 for a calendar quarter, then such reimbursement shall be deemed to have been earned by the Advisor in such calendar quarter and any portion of the reimbursement that is not permitted to be paid to the Advisor pursuant to Section 12 of the Advisory Agreement shall be paid by the Corporation in the next calendar quarter in which Section 12 of the Advisory Agreement permits such reimbursement. |
| h. | Termination of Advisory Agreement. Except as described in Sections 5(d) and 5(e) hereof, in the event of a termination or expiration of the Advisory Agreement, any Reimbursable Amounts that have not expired or been repaid pursuant to Section 5(a) will not become immediately due and payable. Notwithstanding the foregoing, the agreements contained in this Section 5 shall survive any such termination or expiration of the Advisory Agreement and shall remain operative and in full force and effect. |
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and attested by their duly authorized officers, on June 12, 2020.
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By: |
| /s/ Xxxxxx X. XxXxxxxxx |
Name: |
| Xxxxxx X. XxXxxxxxx |
Title: |
| Managing Director, Chief Financial Officer |
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BCI IV OPERATING PARTNERSHIP LP | ||
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By: Black Creek Industrial REIT IV Inc., its Sole General Partner | ||
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By: |
| /s/ Xxxxxx X. XxXxxxxxx |
Name: |
| Xxxxxx X. XxXxxxxxx |
Title: |
| Managing Director, Chief Financial Officer |
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BCI IV ADVISORS LLC | ||
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By: BCI IV Advisors Group LLC, its Sole Member | ||
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By: |
| /s/ Xxxx X. Xxxxxx |
Name: |
| Xxxx X. Xxxxxx |
Title: |
| Manager |
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