OPERATING EXPENSE REIMBURSEMENT AND GUARANTY AGREEMENT
Exhibit 10.1
EXECUTION COPY
THIS OPERATING EXPENSE REIMBURSEMENT AND GUARANTY AGREEMENT (the “Agreement”),
effective as of this 25th day of May, 2011, is made by and among Steadfast Income REIT, Inc., a
Maryland corporation (the “Company”), Steadfast Income Advisor, LLC, a Delaware limited
liability company (“Advisor”), Beacon Bay Holdings, LLC (“Beacon Bay”), a Delaware
limited liability company, and Xxxxxx X. Xxxxx, as an individual (“Xxxxx”).
WHEREAS, Advisor provides certain advisory services to the Company pursuant to the Amended and
Restated Advisory Agreement, dated as of May 4, 2010, by and between the Company and Advisor as
amended by Amendment No. 1, dated as of March 21, 2011 (the “Advisory Agreement”);
WHEREAS, Section 11(d) of the Advisory Agreement provides that commencing upon the fourth
fiscal quarter following the fiscal quarter ended March 31, 2010, the Company shall not reimburse
Advisor at the end of any fiscal quarter in which Operating Expenses (as defined in the Advisory
Agreement) for the four consecutive fiscal quarters then ended (the “Expense Year”) exceed
the greater of 2% of average invested assets of the Company or 25% of net income of the Company
(the “2%/25% limitation”) for such year;
WHEREAS, for the four fiscal quarters ended March 31, 2011, the Company exceeded the 2%/25%
limitation by $1,230,316 (the “March 2011 Excess Amount”), of which a portion has been
incurred directly by the Company and a portion has been reimbursed to Advisor;
WHEREAS, pursuant to Section 11(d) of the Advisory Agreement, Advisor will be required to
reimburse the Company for the March 2011 Excess Amount on or before June 30, 2011 unless the
independent directors of the Company approve the March 2011 Excess Amount;
WHEREAS, pursuant to the Company’s Second Articles of Amendment and Restatement, the
independent directors of the Company have approved the March 2011 Excess Amount subject to the
conditions set forth in this Agreement;
WHEREAS, Beacon Bay and Xxxxx will receive substantial direct and indirect benefits from the
execution and delivery of this Agreement by the Company; and
WHEREAS, as an inducement to the Company to enter into this Agreement, Beacon Bay and Xxxxx
have agreed to guaranty the Guaranteed Obligations (as hereinafter defined), on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration for the foregoing and for the mutual covenants and promises
herein set forth, the parties hereto hereby agree as follows:
1. Agreement to Reimburse. If, on the earlier of the termination date of the Advisory
Agreement or December 31, 2011 (the “Determination Date”), total Operating Expenses of the
Company exceed the 2%/25% limitation (measured for the Company’s entire operating history), then
Advisor shall promptly, but in no event later than 15 days following the Determination Date (the
“Payment Date”), reimburse the Company for the March 2011 Excess Amount to the extent
the March 31, 2011 Excess Amount is greater than an amount equal to (x) total Operating Expenses of
the Company less (y) the 2%/25% limitation, measured for the Company’s entire operating
history (such amount, the “Determination Date Payment”). The Company agrees that the March
2011 Excess Amount shall not exceed $1,230,316.
2. Reimbursement of Determination Date Payment. Within 30 days of December 31 of each
year subsequent to December 31, 2011, Advisor shall be reimbursed for the Determination Date
Payment, if any, to the extent that total Operating Expenses of the Company through such year end
date do not exceed the 2%/25% limitation from the commencement of the Company’s operations through
such year end date.
3. Ongoing Payment of Operating Expenses. From April 1, 2011 until the Company’s
Operating Expenses from the commencement of the Company’s operations are below the 2%/25%
limitation, all Operating Expenses incurred by the Company on or after April 1, 2011 will be paid
by Advisor on the Company’s behalf and the Company shall not directly pay for any Operating
Expenses incurred on or after April 1, 2011. The Company and Advisor acknowledge that for each
quarter in which Advisor pays all Operating Expenses of the Company, to the extent total Operating
Expenses during the prior four fiscal quarters exceed the 2%/25% limitation, the Company will,
subject to a determination by the independent directors of the Company that a substantial
justification for such excess exists, reimburse Advisor for such excess amount in the future when
the amount to be reimbursed does not result in the Company’s total Operating Expenses exceeding the
2%/25% limitation (measured for the Company’s entire operating history).
4. Deferral of Acquisition Fee. To the extent there remains any obligation of Advisor
to reimburse the Company for the March 2011 Excess Amount during the Company’s fourth fiscal
quarter ending December 31, 2011 (the “Fourth Quarter”), the Company shall offset, as a
reduction of such obligation, any acquisition fees to be actually paid to Advisor pursuant to the
Advisory Agreement during the Fourth Quarter. For purposes of the preceding sentence, any
acquisition fees deferred pursuant to the Advisory Agreement shall not be considered as an offset
of the amount to be paid by Advisor on the Determination Date.
5. Beacon Bay Guaranty.
(a)
Beacon Bay hereby absolutely, irrevocably and unconditionally guarantees (the “Guaranty”),
as a primary obligor and not merely as a surety: (i) due and punctual payment of all amounts due
and payable by Advisor to the Company and its successors or assigns under this Agreement, when and
as the same shall become due and payable; and (ii) all expenses, including, without
limitation, reasonable attorneys’ fees and disbursements, that are incurred by the Company in the
enforcement of the Guaranty (the “Guaranteed Obligations”). Payment by Beacon Bay
under the Guaranty shall be made in immediately available funds no later than three business days
following the Payment Date if the Determination Date Payment has not been received by the Company.
This Guaranty and the obligations of Beacon Bay under this Guaranty constitute an absolute, present
and continuing guaranty of payment and performance and not of collectibility. The obligations of
Beacon Bay under this Guaranty are in no way conditioned or contingent upon any action or omission
by the Company or upon any other action, occurrence, or circumstance whatsoever. It is expressly
understood and agreed that the obligations of Beacon Bay hereunder are
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and shall be absolute under any and all circumstances and shall not be subject to any
counterclaim, setoff, deduction or defense. Beacon Bay agrees that its liability hereunder shall be
direct and immediate as a primary obligation and liability, irrespective of whether Advisor has
commenced the exercise of any remedies under this Agreement. The Company may, at its option,
proceed directly and at once, without notice, against Beacon Bay to collect and recover the full
amount of the Guaranteed Obligations, or any portion thereof, without proceeding against Advisor or
any other person or entity.
(b) Beacon Bay agrees that the Guaranty under this Section 5 shall continue to be effective or
be reinstated, as the case may be, if at any time all or part of any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be returned by the Company or any other
person upon the insolvency, bankruptcy or reorganization of the Advisor or otherwise.
(c) Beacon Bay hereby waives (i) diligence, promptness, presentment, demand for payment or
performance and protest and notice of protest, notice of acceptance and any other notice in respect
of the Guaranteed Obligations or any part of them, (ii) any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate guarantors or sureties
(other than the defense of indefeasible payment in full of the Guaranteed Obligations) or which may
conflict with the terms hereof and (iii) any defense arising by reason of any disability or other
defense or equitable or legal discharge of the Advisor.
6. Secondary Guaranty.
(a) Xxxxx hereby absolutely, irrevocably and unconditionally guarantees (the “Secondary
Guaranty”), as a primary obligor and not merely as a surety: (i) due and punctual payment of
all Guaranteed Obligations; and (ii) all expenses, including, without limitation, reasonable
attorneys’ fees and disbursements, that are incurred by the Company in the enforcement of the
Guaranty and the Secondary Guaranty. Payment by Xxxxx under the Secondary Guaranty shall be made
promptly upon demand therefor by the Company in immediately available funds. This Secondary
Guaranty and the obligations of Xxxxx under this Secondary Guaranty constitute an absolute guaranty
of payment and performance and not of collectibility. It is expressly understood and agreed that
the obligations of Xxxxx hereunder are and shall be absolute under any and all circumstances and
shall not be subject to any counterclaim, setoff, deduction or defense.
(b) Xxxxx agrees that the Guaranty under this Section 6 shall continue to be effective or be
reinstated, as the case may be, if at any time all or part of any payment of any of the Guaranteed
Obligations is rescinded or must otherwise be returned by the Company or any other person upon the
insolvency, bankruptcy or reorganization of the Advisor or otherwise.
(c) Xxxxx hereby waives (i) diligence, promptness, presentment, demand for payment or
performance and protest and notice of protest, notice of acceptance and any other notice (other
than as set forth in clause (d) below) in respect of the Guaranteed Obligations or any part of
them, (ii) any defenses or benefits that may be derived from or afforded by law which limit the
liability of or exonerate guarantors or sureties (other than the defense of indefeasible payment in
full of the Guaranteed Obligations) or which may conflict with the terms hereof and (iii) any
defense arising by reason of any disability or other defense or equitable or legal discharge of the
Advisor.
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(d) Notwithstanding anything to the contrary contained in this Section 6 or elsewhere in this
Agreement, Xxxxx shall have no liability under this Section 6 until the Company has provided notice
to Xxxxx pursuant to Section 8 hereof that Beacon Bay has failed to perform, or is unable to
perform (as determined by a majority of the independent directors of the Company in their sole and
absolute discretion), its obligations under the Guaranty, which notice shall be conclusive and
binding upon Xxxxx. Xxxxx agrees that upon receipt of such notice, his liability hereunder shall
be direct and immediate as a primary obligation and liability, irrespective of whether Advisor has
commenced the exercise of any remedies under this Agreement and the Company may, at its option,
proceed directly and at once, without notice, against Xxxxx to collect and recover the full amount
of the Guaranteed Obligations, or any portion thereof, without proceeding against Advisor or any
other person or entity.
7. Termination. This Agreement shall terminate when all conditions and obligations
set forth herein have been satisfied by the parties hereto.
8. Notice.
(a) The parties hereto agree and acknowledge that notices, demands and other communications
sent in accordance with this Section 8 by the Chairman of the Audit Committee (as authorized by a
majority of the independent directors of the Company) shall constitute notice by the Company.
(b) All notices, requests, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given and delivered if by overnight delivery, by a
nationally-recognized carrier; if by mail, by first class certified mail, postage prepaid, or
delivered personally; or if sent by facsimile, with transmission confirmed by a printout from the
facsimile machine and simultaneously followed by the original communications by first class
certified mail, postage prepaid:
If to the Company, Advisor, Beacon Bay and/or Xxxxx:
c/o Steadfast Companies
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx del Rio
00000 Xxx Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx del Rio
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in each case with a copy to:
Xxxxx Equity Partners, LLC
0000 Xxxx Xxxxx Xxxxxxx, Xxx. 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000.
Telephone: (000) 000-0000 xxx 00
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
0000 Xxxx Xxxxx Xxxxxxx, Xxx. 000
Xxxxxx xxx Xxx, Xxxxxxxxxx 00000.
Telephone: (000) 000-0000 xxx 00
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx
and:
Xxxxxx & Bird LLP
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX. 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, XX. 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx X. Xxxxxxxx
or to such other address or addresses as may hereafter be specified by notice given by any of the
above to the others. Notices given by United States certified mail as aforesaid shall be effective
on the third business day following the day on which they were deposited in the mail. Notices
delivered in person or by overnight courier shall be effective upon delivery. Notices given by
facsimile shall be effective when transmitted, provided facsimile notice is confirmed by telephone
and is transmitted on a business day during regular business hours.
9. Miscellaneous.
(a) This Agreement shall be governed by the laws of the state of Delaware. In the event that
any provision hereof would, under applicable law, be invalid or unenforceable in any respect, such
provision shall be construed by modifying or limiting it so as to be valid and enforceable to the
maximum extent compatible with, and permissible under, applicable law. The invalidity or
unenforceability of any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and effect.
(b) This Agreement may not be assigned by any party hereto unless agreed to in writing by each
other party to this Agreement.
(c) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to a written agreement of all of the parties to this Agreement.
(d) This Agreement may be executed in multiple counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. This Agreement
shall be effective when one or more counterparts shall bear the signature of each party.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above
written.
| COMPANY: | ||||||
| STEADFAST INCOME REIT, INC, a Maryland corporation | ||||||
| By: | /s/ Xxxxx Xxxxxxx
|
|||||
| Name: | Xxxxx Xxxxxxx | |||||
| Title: | Treasurer | |||||
| ADVISOR: | ||||||
| STEADFAST INCOME ADVISOR, LLC, a Delaware limited liability company | ||||||
| By: | /s/ Xxx Xxxxx del Rio
|
|||||
| Name: | Xxx Xxxxx del Rio | |||||
| Title: | Manager | |||||
| BEACON BAY: | ||||||
| BEACON BAY HOLDINGS, LLC, a Delaware limited liability company | ||||||
| By: | /s/ Xxxxxx X. Xxxxx
|
|||||
| Name: | Xxxxxx X. Xxxxx | |||||
| Title: | Manager | |||||
| XXXXX: | ||||||
| /s/ Xxxxxx X. Xxxxx | ||||||
| Xxxxxx X. Xxxxx | ||||||
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