Sub-Advisory Agreement between American Realty Capital Income Properties Advisors, LLC and Northcliffe Sub-Advisor, LLC October 1, 2010
between
American
Realty Capital Income Properties Advisors, LLC
and
Northcliffe
Sub-Advisor, LLC
Table
of Contents
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Page
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Article
1 – Definitions
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1
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Article
2 – Appointment
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2
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Article
3 – Duties of the Sub-Advisor
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3
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Article
4 – Authority and Certain Activities of Sub-Advisor
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3
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Article
5 – Assignment of Payments
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3
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5.1
Acquisition Fees
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3
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5.2
Asset Management Fee
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4
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5.3
Property Management Fees
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4
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5.4
Oversight Fees
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4
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5.5
Disposition Fees
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4
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5.6
Financing Fees
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5
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5.7
Subordinated Share of Cash from Sales, Settlements and
Financings
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5
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5.8
Subordinated Incentive Fee
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5
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5.9
Subordinated Performance Fee Due Upon Termination
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5
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5.10
Expense Reimbursements
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5
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5.11
Assignments
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Article
6 – Expenses and Reimbursements
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5
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6.1
Organization and Offering Expenses
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5
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6.2
Operating Expenses
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6
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6.3
All Other Expense Reimbursements
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6
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Article
7 – Voting and Other Agreements
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7
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7.1
Purchase of Shares
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7
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7.2
Election of Directors
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7
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7.3
Other Voting of Shares
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7
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7.4
Major Decisions
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7
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Article
8 – Relationship Of Sub-Advisor and Advisor and their Affiliates; Other
Activities of the Advisor and Sub-Advisor
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8
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8.1
Relationship
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8
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8.2
Time Commitment
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9
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8.3
Advisor and Sub-Advisor Meetings
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9
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8.4
Investment Opportunities and Allocation
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9
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8.5
Prospectus Guidance
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11
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Article
9 – Dealer Manager
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11
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Article
10 – The ARC Names
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11
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Article
11 – Other Agreements
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11
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11.1
[Reserved]
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11
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11.2
Property Level Agreements
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11
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11.3
Advisor, Advisory Agreement and Dealings with Company
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11
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Article
12 – Certain Transfers
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12
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12.1
Transfers
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12
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12.2
Prohibited Transfers
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12
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Article
13 – Representations, Warranties, and Agreements
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13
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Article
14 – Term And Termination of the Agreement
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16
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14.1
Term
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16
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i
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14.2
Termination
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16
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14.3
Survival upon Termination
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17
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14.4
Payments on Termination and Survival of Certain Rights and
Obligations
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17
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Article
15 – Assignment
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18
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Article
16 – Indemnification and Limitation Of Liability
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18
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Article
17 – Miscellaneous
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18
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17.1
Notices
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18
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17.2
Modification
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19
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17.3
Severability
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19
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17.4
Construction
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19
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17.5
Entire Agreement
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19
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17.6
Waiver
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19
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17.7
Gender
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20
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17.8
Titles Not to Affect Interpretation
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20
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17.9
Counterparts
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20
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ii
This
Sub-Advisory Agreement, dated as of October 1, 2010 (the “Agreement”), is between,
American Realty Capital Income Properties Advisors, LLC, a Delaware limited
liability company (the “Advisor”) and Northcliffe
Sub-Advisor, LLC, a Delaware limited liability company (the “Sub-Advisor”).
W
I T N E S S E T H
WHEREAS,
Corporate Income Properties – ARC, Inc., a Maryland corporation (the “Company”) has appointed
Advisor as its advisor pursuant to the Advisory Agreement between the Company
and the Advisor, dated as of even date herewith (as the same may be amended,
restated or otherwise modified from time to time in accordance with its terms,
the “Advisory
Agreement”);
WHEREAS,
the Advisor desires to avail itself of the knowledge, experience, contacts,
sources of information, advice, assistance and certain facilities available to
the Sub-Advisor and to have the Sub-Advisor undertake the duties and
responsibilities hereinafter set forth, on behalf of the Advisor, and subject to
the supervision of, the Board of Directors of the Company, all as provided
herein; and
WHEREAS,
the Sub-Advisor is willing to undertake such duties and responsibilities,
subject to the supervision of the Board of Directors of the Company, on the
terms and subject to the conditions hereinafter set forth.
NOW,
THEREFORE, in consideration of the foregoing and of the mutual covenants and
agreements contained herein, the Parties hereto agree as follows:
Article
1
Definitions
Capitalized
and other terms that are defined in the Advisory Agreement but not otherwise
defined in this Agreement have the respective meanings ascribed to such terms in
the Advisory Agreement, a copy of which is attached hereto as Appendix
A.
The
following defined terms used in this Agreement shall have the meanings specified
below:
“Advisor” has the meaning set
forth at the head of this Agreement.
“Advisory Agreement” has the
meaning set forth in the recitals.
“Affiliate” has the meaning set
forth in the Advisory Agreement. For the avoidance of doubt, none of the
Company, the Sub-Advisor, any subsidiary of the Company, any subsidiary of the
Sub-Advisor and any other Person controlled by, controlling or under common
control with American Realty Capital Income Properties Advisors, LLC or
Northcliffe Sub-Advisor, LLC shall be an Affiliate of the Advisor.
1
“Agreement” has the meaning set
forth in the preamble.
“Company” has the meaning set
forth in the recitals hereto.
“Dealer Manager” means Realty
Capital Securities, LLC, a Delaware limited liability company, in its capacity
as dealer manager pursuant to the Dealer Manager Agreement.
“Dealer Manager Agreement”
means that dealer manager agreement, dated as of even date herewith, between the
Company and the Dealer Manager, providing for the distribution of the
Shares.
“Effective Date” means the
initial Effective Date (as defined in the Dealer Manager
Agreement).
“Excluded Services” has the
meaning set forth in Article 2 of this
Agreement.
“Immediate Family Member”
means, with respect to a Key Person: (i) any of such Key Person’s parents
and siblings, spouse and descendants and any of the spouses of such descendants
(collectively, the “Individual
Group”); (ii) any trust, the beneficiaries of which consist
exclusively of one or more members of the Individual Group (collectively, the
“Family Trusts”); and
(iii) any entity which is controlled by, directly or indirectly, one or
more members of the Individual Group and/or one or more of the Family
Trusts.
“Initial Capital” has the
meaning set forth in Section 7.1 of this Agreement.
“Investment Committee” means a
committee of four persons consisting of the Chief Executive Officer of the
Advisor, the Chief Executive Officer of the Sub-Advisor, the Chief Investment
Officer of the Sub-Advisor and the President of the Advisor.
“Key Person” means (i) with
respect to the Advisor, each of Xxxxxxx Xxxxxx and Xxxxxxxx Xxxxxxxx and their
respective heirs, legal representatives and executors, and (ii) with respect to
the Sub-Advisor, each of Xxxxxx X. XxXxx and Xxxxxxxx X. Xxxxxx and their
respective heirs, legal representatives and executors.
“Offering Period” has the
meaning set forth in the Dealer Manager Agreement.
“Party” or “Parties” refer to the Advisor
or the Sub-Advisor or both, as the case may be.
“Prospectus” has the meaning
set forth in the Dealer Manager Agreement.
“Sub-Advisor” has the meaning
set forth at the head of this Agreement.
“Transfer Restriction Period”
means, with respect to the Sub-Advisor, the Offering Period plus 12 months, and
with respect to the Advisor, the Offering Period plus six months.
2
Article
2
Appointment
The
Advisor, pursuant to its authority to delegate all of its rights and powers to
manage and control the business and affairs of the Company to the Sub-Advisor
pursuant to Section 4.1 of the Advisory Agreement, hereby appoints the
Sub-Advisor to serve as the Sub-Advisor for the Company. The Sub-Advisor hereby
accepts such appointment. The Advisor delegates, and the Sub-Advisor agrees to
perform, all the duties of the Advisor set forth in the Advisory Agreement,
except those described in Section 3.1, paragraphs (3), (4), (6), (7), (8), (9),
(11), (12), (14), (15), (16), and (18) of Section 3.3(B), and Section
3.4 of the Advisory Agreement (“Excluded
Services”).
Article
3
Duties
of the Sub-Advisor
Under the
Advisory Agreement, the Advisor is responsible for managing, operating,
directing and supervising the operations and administration of the Company and
its assets except as provided in Article 2 above.
Consistent with Article 2 hereof, the
Sub-Advisor undertakes to use commercially reasonable efforts to present to the
Company potential investment opportunities and to provide the Company with a
continuing and suitable investment program consistent with the investment
objectives and policies of the Company as determined and adopted from time to
time by the Board. Subject to the limitations set forth in this Agreement and
the Advisory Agreement, including Article 4 of the Advisory Agreement,
consistent with the provisions of the Articles of Incorporation and Bylaws and
the continuing and exclusive authority of the Board over the supervision of the
Company except as provided in Article 2 above, the
Sub-Advisor shall, either directly or by engaging an Affiliate or third party,
perform the duties set forth in Article 3 of the Advisory Agreement (a copy of
which is attached hereto as Appendix A), which
duties are incorporated herein by reference as if fully set forth herein. At
such time as the Company has consolidated investment in Properties, Loans and
other Permitted Investments amounting to more than $300,000,000 at historical
cost, the Sub-Advisor shall have the right, but not the obligation, to assume
primary responsibility for performing any or all Excluded Services. The
Sub-Advisor’s right to assume Excluded Services may be exercised at any time and
from time to time by the Sub-Advisor providing to the Advisor written notice
specifically listing the Excluded Services to be assumed.
3
Article
4
Authority
and Certain Activities of Sub-Advisor
The
Sub-Advisor shall have the authority set forth in Article 4 of the Advisory
Agreement, shall have the authority to establish and maintain bank accounts as
set forth in Article 5 of the Advisory Agreement, shall maintain books and
records for the Company as set forth in Article 6 of the Advisory Agreement, and
shall abide by the limitations of Article 7 of the Advisory Agreement, all of
which (i.e.,
Articles 4 through 7 of the Advisory Agreement) are incorporated herein by
reference as if fully set forth herein.
Article
5
Assignment
of Payments
As
compensation for the services provided pursuant to this Agreement, Advisor
hereby assigns payments as follows:
5.1 Acquisition
Fees. The Advisor hereby assigns its right to receive direct
payment from the Company of 70% of all Acquisition Fees payable pursuant to
Section 8.1 of the Advisory Agreement. The Advisor will submit an invoice
to the Company, which the Sub-Advisor shall prepare, following the closing or
closings of each acquisition or origination, accompanied by a computation of the
Acquisition Fee. The portion of the Acquisition Fee payable to each of the
Advisor and Sub-Advisor then will be paid by the Company at the closing of the
applicable transaction upon receipt of the invoice by the Company as provided in
the Advisory Agreement.
5.2 Asset Management
Fees. The Advisor hereby assigns its right to receive direct
payment from the Company of 70% of all Asset Management Fees payable pursuant to
the Advisory Agreement. The Advisor will submit a quarterly invoice to the
Company, which the Sub-Advisor shall prepare and which shall include a
computation of the Asset Management Fee for the applicable period. The Asset
Management Fee shall be payable by the Company as provided in the Advisory
Agreement.
5.3 Property Management and Leasing
Fees. The Advisor hereby assigns its right to receive direct
payment from the Company of 70% of all Property Management and Leasing Fees
payable pursuant to the Advisory Agreement. The Advisor will submit a
monthly invoice to the Company, which the Sub-Advisor shall prepare and which
shall include a computation of the Property Management and Leasing Fees for the
applicable period. The Property Management and Leasing Fees shall be
payable by the Company as provided in the Advisory
Agreement. Notwithstanding the foregoing, if the receipt by the
Advisor of all or any part of the Property Management and Leasing Fees would
violate applicable law, and if applicable law would permit payment thereof to
the Sub-Advisor, then the assignment shall be deemed to be for the Property
Management and Leasing Fees (or part thereof) that would violate applicable law
if received by the Advisor. Notwithstanding the foregoing, the
Sub-Advisor may assign all or any portion of its right to receive Property
Management and Leasing Fees hereunder to such Affiliates of the Sub-Advisor as
it shall lawfully designate, and upon receipt of written notice of such
assignment, the Advisor and/or Sub-Advisor, as applicable, shall cause the
assigned portion of Property Management and Leasing Fees to be remitted directly
to the Affiliate to whom such assignment shall be made by the
Sub-Advisor.
4
5.4 Oversight Fees. The
Advisor hereby assigns its right to receive direct payment from the Company of
70% of all Oversight Fees payable pursuant to the Advisory
Agreement. The Advisor will submit a monthly invoice to the Company,
which the Sub-Advisor shall prepare and which shall include a computation of the
Oversight Fees for the applicable period. The Oversight Fees shall be
payable by the Company as provided in the Advisory
Agreement. Notwithstanding the foregoing, if the receipt by the
Advisor of all or any part of the Oversight Fees would violate applicable law,
and if applicable law would permit payment thereof to the Sub-Advisor, then the
assignment shall be deemed to be for the Oversight Fees (or part thereof) that
would violate applicable law if received by the Advisor.
5.5 Disposition
Fees. The Advisor hereby assigns its right to receive direct
payment from the Company of 70% of all Disposition Fees payable pursuant to the
Advisory Agreement; provided , however , that if the
receipt by the Advisor of all or any part of a Disposition Fee for any
particular transaction would violate applicable law, and if applicable law would
permit payment thereof to the Sub-Advisor, then the assignment shall be deemed
to be for the Disposition Fee (or part thereof) associated with that particular
transaction that would violate applicable law if received by the Advisor. The
portion of the Disposition Fee payable to each of the Advisor and the
Sub-Advisor shall be paid by the Company as provided in the Advisory
Agreement.
5.6 Financing Fees. The
Advisor hereby assigns its right to receive direct payment from the Company of
70% of all Financing Fees payable to the Advisor pursuant to the Advisory
Agreement; provided , however , that if the
receipt by the Advisor of a Financing Fee for any particular transaction would
violate applicable law, and if applicable law would permit payment thereof to
the Sub-Advisor, then the assignment shall be deemed to be for the Financing Fee
(or part thereof) associated with that particular transaction that would violate
applicable law if received by the Advisor.
5.7 Subordinated Share of Cash from
Sales, Settlements and Financings. The Advisor hereby assigns
its right to receive direct payment from the Company of 70% of all Subordinated
Share of Cash from Sales, Settlements and Financings payable pursuant to the
Advisory Agreement.
5.8 Subordinated Incentive
Fee. The Advisor hereby assigns its right to receive direct
payment from the Company of 70% of all Subordinated Incentive Fees payable
pursuant to the Advisory Agreement, in whatever form payable by the Company
(i.e., cash, Shares or a promissory note).
5.9 Subordinated Performance Fee Due Upon
Termination. The Advisor hereby assigns its right to receive
direct payment from the Company of 70% of the Subordinated Performance Fee Due
Upon Termination payable pursuant to the Advisory Agreement, in whatever form
payable by the Company (i.e., cash, Shares or a promissory note).
5
5.10 Expense
Reimbursements. Subject to Article 6 of this
Agreement and Article 9 of the Advisory Agreement, the Advisor hereby assigns
its right to receive direct payment from the Company of expense reimbursements
the Sub-Advisor incurs on behalf of the Company or in connection with the
services the Sub-Advisor provides to the Company pursuant to this
Agreement.
5.11 Assignment. With respect to
payment of any fees under Article 5 and notwithstanding the foregoing, the
Sub-Advisor may assign all or any portion of its right to receive fees hereunder
to such Affiliates of the Sub-Advisor as it shall lawfully designate, and upon
receipt of written notice of such assignment, the Advisor and/or Sub-Advisor, as
applicable, shall cause the assigned portion of Property Management and Leasing
Fees to be remitted directly to the Affiliate to whom such assignment shall be
made by the Sub-Advisor.
Article
6
Expenses
and Reimbursements
6.1 Organization and Offering
Expenses. Up to the Effective Date, the Advisor shall advance
to the Company all Organization and Offering Expenses in excess of the Initial
Capital, subject to reimbursement as hereinafter described. The advances shall
be made at such times and in such amounts as reasonably requested by the
Company. All Organization and Offering Expenses shall be reimbursed to the
Advisor out of net proceeds of the Offering subject to the following
limitations.
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(A)
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The
Company shall not reimburse the Advisor to the extent such reimbursement
would cause the total amount spent by the Company on Organization and
Offering Expenses (excluding underwriting and brokerage discounts and
commissions but including third party due diligence fees as set forth in
detailed and itemized invoices) to exceed 2.5% of Gross Proceeds raised in
an Offering as of the termination of such
Offering.
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(B)
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Within
60 days after the end of the month in which an Offering terminates, the
Advisor shall reimburse the Company for Organization and Offering Expenses
(excluding underwriting and brokerage discounts and commissions, but
including third-party due diligence fees as set forth in detailed and
itemized invoices) exceeding 2.5% of Gross Proceeds raised in such
Offering.
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(C)
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The
Company shall not reimburse the Advisor for any Organization and Offering
Expenses that the Conflicts Committee determines are not fair and
commercially reasonable to the
Company.
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(D)
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The
Company shall not make any reimbursement for any of the following
Organization and Offering Expenses incurred by the Dealer Manager that are
to be paid out of the Dealer Manager’s
fee:
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(1)
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participating
broker-dealer expense reimbursements (including meals with financial
advisors and participating broker-dealer client
seminars);
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(2)
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sales
seminars sponsored by participating
broker-dealers;
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(3)
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promotional
items;
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(4)
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marketing
support;
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6
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(5)
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expenses
in connection with bona fide training and educational
meetings;
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(6)
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wholesaling
commissions, wholesaling salaries and wholesaling expense reimbursements
(including travel, meals and lodging in connection with the
Offering);
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(7)
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occasional
meals and entertainment expenses of participating broker-dealers;
and
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(8)
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legal
fees and expenses of the Dealer Manager associated with FINRA-related
filings or the drafting and review of any dealer manager agreements,
participating broker-dealer agreements and due diligence
agreements.
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6.2 Operating
Expenses. The Sub-Advisor shall advance to the Company or
shall otherwise pay all Operating Expenses, as incurred. Such Operating Expenses
shall be reimbursed to the Sub-Advisor in the manner described in Article 9 of
the Advisory Agreement.
6.3 All Other Expense
Reimbursements. All other expenses shall be advanced to the
Company or otherwise paid in the proportion of 30% by the Advisor and 70% by the
Sub-Advisor, and all reimbursements of such expenses will be apportioned between
the Advisor and Sub-Advisor in the same proportions.
Article
7
Voting
and Other Agreements
7.1 Purchase of
Shares. The Advisor and Sub-Advisor will acquire Shares from
the Company in the following amounts (the “Initial
Capital”): Advisor - $60,000; Sub-Advisor - $140,000. The
Shares shall be purchased from the Company at a price of $10.00 per
Share.
7.2 Election of
Directors. The Advisor and Sub-Advisor each agrees, with
respect to any Shares now or hereinafter owned by it, to vote such Shares in
favor of the Advisor’s nominee for the Board and the Sub-Advisor’s nominees for
the Board. As of the date hereof, the Advisor’s nominee for the Board is
Xxxxxxxx Xxxxxxxx, and the Sub-Advisor’s nominee is Xxxxxx X.
XxXxx.
7
7.4 Major Decisions.
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(A)
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Subject
to Sections
7.3(C) and 7.3(D) with
respect to the Company, all major decisions of the Company set forth below
in clauses
(A)(1) through (A)(6) (“Major Decisions”) shall
be subject to the Company’s Articles of Incorporation and joint approval
by the Advisor and Sub-Advisor. For the avoidance of doubt, Major
Decisions specifically exclude any decisions regarding the day-to-day
operations of the Company, the decision-making authority for which has
been delegated to the Sub-Advisor pursuant to this Agreement. Major
Decisions shall consist of the
following:
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(1)
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Retention
of investment banks for the
Company;
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(2)
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Marketing
methods for the Company’s sale of
Shares;
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(3)
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Extending,
initiating or terminating the Initial Public Offering or any subsequent
Offering of the Shares;
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(4)
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Issuing
press releases involving the major decisions of the Company or the Advisor
or Sub-Advisor or their Affiliates with respect to the business or
operations of the Company; provided , that
the Sub-Advisor need not obtain consent to any press releases regarding
acquisitions or dispositions of Properties, Loans or other Permitted
Investments; and provided further, however , that
notwithstanding the immediately preceding proviso, any mention of the
Advisor or its Affiliates in such press releases regarding acquisitions or
dispositions shall be pre-approved by the
Advisor;
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(5)
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Selling
substantially all of the Company’s assets and properties, effecting a
Listing or consummating an Other Liquidity Event;
and
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(6)
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Merging
or otherwise engaging in any change of control transaction for the
Company.
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Notwithstanding
anything in this Agreement to the contrary, if the Parties do not agree to
any action constituting a Major Decision that is described in any of clauses (A)(1)
through (A)(6) above
and that has been proposed by either Party, the Parties shall meet (in
person or by phone) to discuss the issue in dispute in good faith over the
five-business day period beginning with the delivery of notice of the
proposed action to the other Party.
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8
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(C)
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This
subparagraph (c) shall apply to acquisitions and dispositions of
Properties, Loans and Permitted Investments. The parties
acknowledge that the Advisor and the Sub-Advisor shall establish and
administer the Investment Committee. The Investment Committee
shall be responsible for recommending and approving or authorizing on
behalf of the Company, within the guidelines set forth herein, all
acquisitions and dispositions of Properties, Loans and Permitted
Investments. The Investment Committee shall act upon majority
vote of its members. However, in the event of a deadlock or tie
in the vote of the members of the Investment Committee with respect
to a proposed transaction, the Investment Committee will have no
authority to approve, and a majority of the independent directors must
approve, the proposed transaction. Notwithstanding anything in
this Agreement to the contrary, (but subject to Section 7.3(D)
and to the limitations of authority on the Investment Committee imposed
herein or by the Company’s Articles of Incorporation, bylaws or duly
adopted resolution of the Board), (1) unanimous or joint approval of the
Advisor and the Sub-Advisor shall not be required for any acquisition or
disposition of any Property, Loan or Permitted Investment, (2) the
Investment Committee shall not have the authority to authorize, approve or
consummate, without the affirmative action of the Board of Directors, any
acquisition or disposition of any Property, Loan or Permitted Investment
(or group of Properties, Loans or Permitted Investments to be acquired or
sold in a single transaction) that would involve the investment or
disposition of more than the lesser of $50,000,000 or 25% of the Company’s
assets or
that is the subject of either a joint venture between the Company and an
affiliate of either the Advisor or Sub-Advisor or that an affiliate of the
Advisor or Sub-Advisor is pursuing independent of the Company, (3) the
Sub-Advisor and the Advisor shall discuss each proposed acquisition or
disposition transaction (either in person or by phone) prior to either
Party making any recommendation of the proposed transaction to the Board
of Directors, and (4) the Sub-Advisor and the Advisor shall each give due
consideration to the opinions of the other Party. Ordinarily, such
discussions shall begin at least five business days before a
recommendation is made to the Board of Directors; however, if in the sole
discretion of the Sub-Advisor it is in the best interest of the Company to
make a recommendation to the Board of Directors more promptly, then the
Sub-Advisor may do so. In the event the Parties do not agree as to whether
to recommend the proposed transaction to the Board of Directors, the
Sub-Advisor’s decision shall govern. With respect to any
purchase or disposition transaction that is within the Investment
Committee’s transaction limits as stated in this subparagraph (C), the
Investment Committee’s authority is conditioned upon the Sub-Advisor
providing to the Board of Directors at least five business days before
execution of any definitive agreement with respect to a transaction (or at
least five business days before a definitive agreement becomes binding and
enforceable against the Company with no termination right) a summary of
the material terms and conditions and expected financial impact of the
transaction and the material risks of the
transaction.
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(D)
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Notwithstanding
the provisions of this Section 7.3 or
any other provision in this Agreement to the contrary, in all events,
including Major Decisions, the Company will be managed under the direction
of the Board of Directors.
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(E)
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Notwithstanding
anything in this Agreement to the contrary (but subject to Section
7.3(D)), the Sub-Advisor shall have sole authority to act on behalf
of the Company regarding amending the Advisory
Agreement.
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9
Article
8
Relationship
of Sub-Advisor and Advisor and their Affiliates;
Other
Activities of the Advisor and Sub-Advisor
8.1 Relationship. The
Advisor and the Sub-Advisor are not partners or joint venturers with each other,
and nothing in this Agreement shall be construed to make them such partners or
joint venturers. Except as set forth in Section 8.4 , nothing
herein contained shall prevent the Advisor or Sub-Advisor from engaging in or
earning fees from other activities, including, without limitation, the rendering
of advice to other Persons (including other REITs) and the management of other
programs advised, sponsored or organized by the Advisor or Sub-Advisor,
respectively, or any of their Affiliates, nor shall this Agreement limit or
restrict the right of any manager, director, officer, member, partner, employee
or equity holder of the Advisor or Sub-Advisor or their Affiliates to engage in
or earn fees from any other business or to render services of any kind to any
other Person. The Sub-Advisor may, with respect to any investment in which the
Company is a participant, also render advice and service to each and every other
participant therein, and earn fees for rendering such advice and service.
Specifically, it is contemplated that the Company may enter into Joint Ventures
or other similar co-investment arrangements with certain Persons, and pursuant
to the agreements governing such Joint Ventures or other similar co-investment
arrangements, the Advisor or the Sub-Advisor may be engaged to provide advice
and service to such Persons, in which case, the Advisor or the Sub-Advisor, as
applicable, will earn fees for rendering such advice and service. Each of the
Advisor and the Sub-Advisor shall promptly disclose to the Board the existence
of any condition or circumstance, existing or anticipated, of which it has
knowledge, that creates or which would reasonably result in a conflict of
interest between its obligations to the Company and its obligations to or its
interest in any other Persons (it being understood and agreed that the
conditions and circumstances referred to in the second paragraph of Section 8.4(A) are
deemed to have been disclosed to the Board for purposes of this Section
8.1).
8.3 Advisor and Sub-Advisor
Meetings. The Parties shall meet on a regular basis (frequency
to be determined) to discuss and consult with one another regarding the Company
and its assets and opportunities. Advisor and Sub-Advisor shall cause their
respective principals to meet (in person or by phone) with representatives of
each other upon the request of either Party. The Parties will provide each other
information regarding the operations and acquisitions of the Company as
reasonably requested by the other. Each of Advisor and Sub-Advisor shall have
direct access to the books and records of the Company and of each attorney,
accountant, servicer and other contracting party of the Company (except to the
extent such attorney represents either Party with respect to this
Agreement).
10
8.4 Investment Opportunities and
Allocation.
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(A)
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If
an investment opportunity becomes available to the Company that meets the
investment criteria and is otherwise suitable, under all the factors
considered by the Sub-advisor or Advisor, for both the Company and any
Affiliates of the Advisor or Sub-Advisor, and for which any such Affiliate
has sufficient uninvested funds and a desire to acquire such investment,
then the Sub-Advisor will seek to collaborate with such Affiliate for the
purchase of such investment, either in a joint venture or some other form
of joint ownership. If the parties are unable to collaborate or joint
venture the investment, then they will be free to compete with each other
for the purchase of such
investment.
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Notwithstanding
the preceding, however, the Advisor or any Affiliate of the Advisor shall be
permitted to pursue any opportunity or to offer any opportunity to a third party
in respect of (i) any net leased retail, office and industrial property or other
property consistent with the investment policies of American Realty Capital
Trust, Inc., (ii) any commercial real estate or other real estate investment
that relates to office, retail, multi-family residential, industrial and hotel
property types, located primarily in the New York metropolitan area or other
property consistent with the investment policies of American Realty Capital New
York Recovery REIT, Inc., or (iii) any investment to be made by a contemplated
non-traded REIT (the “ Identified REIT ”) that the
Advisor reasonably determines does not conflict with the stated investment
policies and objectives of the Company.
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(B)
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Notwithstanding
the preceding, the restrictions in clauses (A) and
(B) will
commence upon commencement of the Offering Period and will cease to be
effective upon termination of the Offering Period or, if later, the time
when all equity raised during the Offering Period has been substantially
invested or committed to
investment.
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(C)
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Except
as provided in this Section 8.4,
none of the Advisor and the Sub-Advisor nor any of their respective
Affiliates shall be obligated generally to present any particular
investment opportunity to the
Company.
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11
8.5 Prospectus
Guidance. Sub-Advisor has read and will abide by the
Prospectus with respect to the Company’s investment objectives, targeted assets
and investment restrictions, targeted markets, leverage, distribution policy,
and investor profile except to the extent directed by the Board.
Article
9
Dealer
Manager
The
Parties agree to use their best efforts to cause the Company, subject to
approval by the Company’s Board of Directors, to enter into the Dealer Manager
Agreement with the Dealer Manager on terms consistent with the “Plan of
Distribution” section of the Prospectus.
Article
10
The
Northcliffe and ARC Names
The
Parties acknowledge and reaffirm the rights and obligations set forth with
respect to their proprietary interests in their respective names as set forth in
Article 12 of the Advisory Agreement.
Article
11
Other
Agreements
11.1 [Reserved].
11.2 Property Level Agreements. As
soon as practicable following the date that is six months after the initial
closing of the Initial Public Offering, the Parties agree to use their best
efforts to cause the Company, subject to approval by the Company’s Board of
Directors, to enter into a Master Property Management and Leasing Agreement with
an Affiliate of the Sub-Advisor consistent with the description of the same in
the Prospectus. Advisor shall have the right to review and comment upon such
master agreement, and to approve such master agreement (such approval not to be
unreasonably withheld), prior to submission to the Board. Advisor agrees that it
shall have no right in the fees generated pursuant to such master
agreement.
11.3 Advisor, Advisory Agreement and
Dealings with Company.
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(A)
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Advisor
agrees to inform and make Sub-Advisor a party to all negotiations between
Advisor and the Company regarding any proposed amendment of the Advisory
Agreement. No amendment to the Advisory Agreement will be agreed upon or
permitted if such amendment would impact the rights or obligations of the
Sub-Advisor without the Sub-Advisor’s consent and
signature.
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12
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(B)
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Advisor
agrees to allow Sub-Advisor to present and recommend to the Company all
investment opportunities recommended by
Sub-Advisor.
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Article
12
Certain
Transfers
12.1 Transfers. The Parties have
selected one another based on the experience and personnel of each other and
their Affiliates. Accordingly, each Party agrees that it is mutually desirable
to restrict changes in ownership of each Party. Each Party agrees to amend, to
the extent necessary, its governing documents to restrict transferability of any
direct or indirect interest in such Party by such Party’s Key Persons unless
both Parties jointly agree as otherwise permitted by this Article 12 ; provided , however , that any
transfer of an interest in either Party by any of such Party’s Key Persons, by
any entity controlled by a Key Person of such Party or by any Immediate Family
Member of a Key Person of such Party shall be permitted without any approval so
long as (i) the transferee of such interest is an Immediate Family Member
of a Key Person of such Party, and (ii) one or more of the Key Persons of
such Party retain management and voting control over such interest held by such
transferee at all times after the applicable transfer occurs.
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(A)
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Except
for Permitted Transfers and other transfers made in accordance with, and
as permitted by, this Agreement, neither Party (1) will allow any
direct or indirect transfer of interests therein by its applicable Key
Persons, and (2) will directly or indirectly transfer any part of its
direct or indirect ownership interest in the Company (if any), whether in
each such case voluntarily or by foreclosure, assignment in lieu thereof
or other enforcement of a pledge, hypothecation or collateral assignment
without the prior approval of the other
Party.
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(B)
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“Permitted Transfer” (for
which no approval by the other Party shall be required) means either of
the following:
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(1)
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any
transfer of all or any portion of the direct or indirect interest in the
Company held by a Party (if any) to any Affiliate of such Party; provided ,
however ,
that in each such case the transferee executes an instrument agreeing to
be bound by the provisions of this Agreement to the extent applicable to
the transferor; and
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(2)
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any
transfer of all or any portion of the direct or indirect interest in a
Party held, directly or indirectly, by such Party’s Key Persons or
Immediate Family Members; provided ,
however ,
that either (a) either or both of such Party’s Key Persons remain
involved with the material decision-making and actions of such Party for
the applicable Transfer Restriction Period (for the sake of clarity, after the
applicable Transfer Restriction Period, each Party is permitted to allow
the effecting of a transfer of all or any portion of the direct or
indirect interest in such Party without regard to the continued
involvement of such Party’s Key Persons) or (b) in the case of the
Advisor, the transfer occurs after the Offering Period and the applicable
transferee agrees to cede any decision making and governance authority
relating to the Company (including making Major Decisions) to the
Sub-Advisor.
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13
Article
13
Representations,
Warranties, and Agreements
13.1 The
Advisor and the Sub-Advisor each hereby represents and warrants to, and agrees
with, the other as follows:
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(A)
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Such
Party is duly formed and validly existing under the laws of the
jurisdiction of its organization;
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(B)
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Such
Party has full power and authority to enter into this Agreement and to
conduct its business to the extent contemplated in this
Agreement;
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(C)
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This
Agreement has been duly authorized, executed and delivered by such Party
and constitutes the valid and legally binding agreement of such Party,
enforceable in accordance with its terms against such Party, except as
such enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws relating to creditors’ rights generally, and by
general equitable principles.
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(D)
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The
execution and delivery of this Agreement by such Party and the performance
of its duties and obligations hereunder do not result in a breach of any
of the terms, conditions or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, credit agreement, note or other
evidence of indebtedness, or any lease or other agreement, or any license,
permit, franchise or certificate to which such Party is a party or by
which it is bound or to which its properties are subject or require any
authorization or approval under or pursuant to any of the foregoing, or
violate any statute, regulation, law, order, writ, injunction, judgment or
decree to which such Party is
subject;
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(E)
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Such
Party is not aware of any facts pertaining to such Party or its Affiliates
that would cause such Party, or any of such Party’s Affiliates, to be
unable to discharge timely the obligations of such Party or its Affiliates
under this Agreement or the obligations of the Company under any agreement
to which any of them is a party;
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(F)
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To
the knowledge of such Party, no consent, approval or authorization of, or
filing, registration or qualification with, any court or governmental
authority on the part of such Party is required for the execution and
delivery of this Agreement by such Party and the performance of its
obligations and duties hereunder and such execution, delivery and
performance shall not violate any other agreement to which such Party is
bound;
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14
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(G)
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Such
Party recognizes that Bass, Xxxxx & Xxxx PLC is representing and in
the future may represent the Sub-Advisor, its Affiliates and the Company
with respect to matters in this Agreement and on other unrelated matters,
and acknowledges that it has been notified of this representation and that
it has been suggested that it retain independent counsel in reviewing this
Agreement and the terms agreed to herein. The Advisor hereby waives all
conflicts of interest regarding Bass, Xxxxx & Xxxx PLC with respect
thereto and hereby waives all rights to disqualify Bass, Xxxxx & Xxxx
PLC from representing the Sub-Advisor, its Affiliates, and the Company in
any matter at any time;
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(H)
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Such
Party recognizes that Bass, Xxxxx & Xxxx PLC is representing and in
the future may represent the Advisor, the Dealer Manager, their Affiliates
and the Company with respect to matters in this Agreement and on other
unrelated matters, and acknowledges that it has been notified of this
representation and that it has been suggested that it retain independent
counsel in reviewing this Agreement and the terms agreed to herein. The
Sub-Advisor hereby waives all conflicts of interest regarding Bass, Xxxxx
& Xxxx PLC with respect thereto and hereby waives all rights to
disqualify Bass, Xxxxx & Xxxx PLC from representing the Advisor, the
Dealer Manager, their Affiliates and the Company in any matter at any
time;
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(I)
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Except
as specifically provided in this Agreement, such Party is not relying upon
the other Party, the Company or their respective Affiliates or advisors,
in connection with any of the matters referred to in this Agreement,
including any projections, information, due diligence, representations or
warranties (express or implied, oral or written), statements or other
matters concerning the Company, the other Party, or otherwise, and each
Party hereby confirms that it has conducted an independent investigation
of the facts regarding the same (or has chosen not to do so at such
Party’s peril);
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(J)
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The
Party is not acting as the representative or agent or in any other
capacity, fiduciary or otherwise, on behalf of another Person in
connection with the Company or the other matters referred to in this
Agreement;
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(K)
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Such
Party is aware that the other Party and/or Affiliates of such other Party
now and in the future shall be, and in the past have been, engaged in
businesses which are competitive with that of the Company. Each of the
Parties hereby acknowledges and agrees that the Parties’ obligations with
respect to all future activities which are in competition with the Company
are as set forth in Article 8
;
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(L)
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Such
Party is aware that compensation and reimbursements may be payable to
Affiliates of the Parties by the Company, as addressed in this Agreement,
the Advisory Agreement and the Dealer Manager
Agreement;
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15
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(M)
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No
Party is required to cause the controlling persons of such Party to devote
any specific portion of their time to Company business other than as
necessary to fulfill such Parties’ obligations under this Agreement and
the Advisory Agreement, as the case may be, and such controlling persons
are expected to spend substantial amounts of their time on activities that
are unrelated to the Company;
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Such
Party understands that the other Party is relying on the accuracy of the
representations set forth in this Article 13 in
entering into this Agreement;
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(O)
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Such
Party has not granted to any third party rights that would be inconsistent
with the rights granted to the other Party by this
Agreement;
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(P)
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Such
Party has all requisite licenses to do and perform all acts and receive
all fees as contemplated by this Agreement and the Advisory Agreement;
and
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(Q)
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None
of its principals has been convicted of any felony, or convicted of any
misdemeanor involving moral turpitude (including fraud), or entered a plea
of nolo contendere in connection with any felony or any such
misdemeanor.
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13.2 The
Sub-Advisor hereby represents and warrants to, and agrees with, the Advisor as
follows:
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(A)
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The
staff and employees of the Sub-Advisor and its Affiliates have the skills,
knowledge of and expertise in property selection,
acquisitions/development, financing, asset and property management, and
dispositions as to perform their respective duties and obligations
hereunder; and
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(B)
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The
Sub-Advisor is sophisticated in real estate and securities transactions,
has been granted access to such financial and other material information
concerning the Company, the other Party and the other Party’s Affiliates,
and their respective current and anticipated operations and such due
diligence materials as it deems necessary or advisable, as it has
requested or may require in connection with its investment (including an
advance of expenses that may be reimbursed) in the Company, is able,
either directly or through its agents and representatives, to evaluate
such information and any due diligence materials provided or made
available to it from time to time hereunder, and is able to bear the
financial risk of loss presented by an investment in the Company,
particularly in light of the risks that would be disclosed by a detailed
analysis thereof (its access to which, to the full extent any Party has
requested, hereby is confirmed by each
Party);
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16
Article
14
Term
and Termination of the Agreement
14.1 Term. This
Agreement shall have an initial term of one year from the date hereof and shall
be renewed for an unlimited number of successive one-year terms upon renewal of
the Advisory Agreement. This Agreement shall be co-terminus with the Advisory
Agreement and, except as otherwise provided herein (including Section 14.2 below)
or in the Advisory Agreement, this Agreement shall terminate at such time as the
Advisory Agreement terminates and the Advisory Agreement shall terminate at such
time as this Agreement terminates. Notwithstanding the foregoing, or
anything in this Agreement or the Advisory Agreement to the contrary, if the
Advisory Agreement is terminated by the Company on account of actions by the
Advisor or events affecting the Advisor described in paragraphs (B), (C), (D) or
(F)(2) below, then the Company may enter into a new advisory agreement with the
Sub-Advisor or an affiliate thereof containing the same or similar terms as
those contained herein.
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(A)
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This
Agreement may be terminated (1) by the Advisor upon 60 days’ prior
written notice by the Advisor to the Sub-Advisor with approval of a
majority of the Conflicts Committee (in which event the Advisory Agreement
will likewise terminate at the effective time of termination hereof), or
(2) by the Sub-Advisor upon 60 days’ prior written notice by the
Sub-Advisor to the Advisor (in which event the Advisory Agreement shall
not terminate);
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(B)
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This
Agreement may be terminated by the Sub-Advisor, if the Conflicts Committee
of the Board shall reasonably determine that the Advisor shall have
materially breached this Agreement (in which event the Advisory Agreement
will likewise terminate at the effective time of termination hereof if
such material breach shall be a failure of the Advisor to pay, or cause to
be paid, any amount owed to the Sub-Advisor pursuant to Article 5 or
Section
6.2 or Section 6.3
hereof) and may be terminated by the Advisor if the Conflicts
Committee of the Board shall reasonably determine that the Sub-Advisor
shall have materially breached this Agreement (in which event the Advisory
Agreement shall not terminate); provided ,
however ,
that the breaching party shall have 30 calendar days after the receipt of
notice of such breach from the other party to cure such
breach;
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(C)
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This
Agreement may be terminated by the Advisor if the Sub-Advisor shall be
subject to an allegation that it has committed any fraud, criminal
conduct, gross negligence or willful misconduct in any action or failure
to act undertaken by the Sub-Advisor pertaining to or having a detrimental
effect upon the ability of the Sub-Advisor to perform its respective
duties hereunder and the Conflicts Committee shall have determined, after
providing the Sub-Advisor with an opportunity for a hearing and to cure
any damage, that such allegation shall have had a material adverse effect
on the Company that can only be remedied by termination of this Agreement,
or, in any event, if and when a court or regulatory authority of competent
jurisdiction shall have returned a final non-appealable order or ruling
that the Sub-Advisor is guilty of or liable with respect to such conduct
(in either which case the Advisory Agreement shall not terminate by reason
of termination of this Agreement);
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17
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(D)
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This
Agreement may be terminated by either Party, if the other Party (1)
commences a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, (2) consents to the entry of
an order for relief in an involuntary case under any such law, (3)
consents to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) for the other Party or for any substantial part of its property,
or (4) makes any general assignment for the benefit of creditors under
applicable state law (in either which case the Advisory Agreement shall
not terminate by reason of the termination of this
Agreement);
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(E)
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This
Agreement may be terminated by either Party, if: (1) an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect has been commenced against the other Party, and such
case has not been dismissed within 60 days after the commencement thereof;
or (2) a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or similar official) has been appointed for the other Party or has taken
possession of the other Party or any substantial part of its property, and
such appointment has not been rescinded or such possession has not been
relinquished within 60 days after the occurrence thereof (in either which
case the Advisory Agreement shall not terminate by reason of termination
of this Agreement); or
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(F)
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This
Agreement may be terminated at any time within five years after the
Effective Date (1) by the Advisor if Xxxxxx X. XxXxx and Xxxxxxxx Xxxxxx
cease to be actively involved in the management of the Sub-Advisor (in
which case the Advisory Agreement shall not terminate by reason of
termination of this Agreement) and (2) by the Sub-Advisor if both Xxxxxxxx
Xxxxxxxx and Xxxxxxx X. Xxxxxx cease to be actively involved in the
management of the Advisor (in which case the Advisory Agreement shall
terminate by reason of termination of this
Agreement).
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14.3 Survival upon
Termination. Notwithstanding anything else that may be to the
contrary herein, the expiration or earlier termination of this Agreement shall
not relieve a party for liability for any breach occurring prior to such
expiration or earlier termination. The provisions of Articles 1, 5, 6, 10, 13, 14, 16, and 17 shall survive
termination of this Agreement.
18
Article
15
Assignment
This
Agreement may be assigned by the Sub-Advisor (a) to an Affiliate with the
consent of the Advisor, such consent not to be unreasonably withheld or delayed,
provided that such Affiliate remains at all times thereafter an Affiliate of
[Northcliffe Asset Management, LLC] or (b) in a manner meeting the conditions of
Section
12.2(B)(2). This Agreement shall not be assigned by the Advisor without
the consent of the Sub-Advisor, except in the case of (i) an assignment by the
Advisor to the Company whereby the Sub-Advisor becomes the advisor to the
Company or (ii) an assignment by the Advisor meeting the conditions of Section 12.2(B)(2)
..
Article
16
Indemnification
and Limitation of Liability
The
indemnification and limitation of liability provisions contained in the Advisory
Agreement apply to both the Advisor and Sub-Advisor. Both Parties agree that
neither will take any action inconsistent with such limitation of liability or
indemnification provisions.
Article
17
Miscellaneous
17.1 Notices. Any
notice, request, demand, approval, consent, waiver or other communication
required or permitted to be given hereunder or to be served upon any of the
Parties hereto (each a “ Notice ”) shall be in writing
and shall be (a) delivered in person, (b) sent by facsimile transmission (with
the original thereof also contemporaneously given by another method specified in
this Section
17.1 ), (c) sent by a nationally-recognized overnight courier service, or
(d) sent by certified or registered mail (postage prepaid, return receipt
requested), to the address of such Party set forth herein.
To the
Advisor:
American
Realty Capital Income Properties Advisors, LLC
000 Xxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention: Xxxxxxxx
X. Xxxxxxxx
Xxxxx
Xxxxxxxx
with a
copy to (which shall not constitute Notice):
Xxxx X.
Good, Esq.
Bass,
Xxxxx & Xxxx PLC
000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000-0000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
19
To the
Sub-Advisor:
Northcliffe
Sub-Advisor, LLC
000
Xxxxxxxx, 00xx
Xxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxx X. XxXxx
with a
copy to (which shall not constitute Notice):
Xxxx X.
Good, Esq.
Bass,
Xxxxx & Xxxx PLC
000
Xxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
Xxxxxxxxx 00000-0000
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
Either
Party may at any time give Notice in writing to the other Party of a change in
its address for the purposes of this Section 17.1. Each
Notice shall be deemed given and effective upon receipt (or refusal of
receipt).
17.2 Modification. This
Agreement shall not be amended, supplemented, 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.
17.3 Severability. The
provisions of this Agreement are independent of and severable 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.
17.4 Construction. 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, without regard
to the principles of conflicts of laws thereof.
17.6 Waiver. 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.
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17.7 Gender. 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.
17.8 Titles Not to Affect
Interpretation. The titles of Articles and Sections contained
in this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation
hereof.
17.9 Counterparts. This
Agreement may be executed with counterpart signature pages or 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 counterpart signature pages or counterparts hereof, individually or
taken together, shall bear the signatures of all of the Parties reflected hereon
as the signatories.
[The
remainder of this page is intentionally left blank.
Signature
page follows.]
21
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date
and year first above written.
American
Realty Capital Income Properties
Advisors,
LLC
By: /s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx, President
Xxxxxxx Xxxxxx, President
Northcliffe
Sub-Advisor, LLC
By: /s/ Xxxxxx X. XxXxx
Xxxxxx X. XxXxx, Chief Executive Officer
Xxxxxx X. XxXxx, Chief Executive Officer
[Signature
Page to Sub-Advisory Agreement between
22
