1
Exhibit 10.18
DATED, October 27, 1999
PIONEER POLSKI FUNDUSZ NIERUCHOMOSCI S.A
-and-
PIONEER REAL ESTATE ADVISORS POLAND SP. Z O.O.
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INVESTMENT ADVISORY AGREEMENT
-in relation to-
The Pioneer Polski Fundusz Nieruchomosci S.A.
real estate portfolio in the Republic of Poland
-----------------------------------------------------
Xxxxxxx Xxxxxxx Sp. z o.o.
Warsaw Financial Center
xx. Xxxxxx Xxxxxx 00
00-000 Xxxxxx
T x00 (00) 000 0000
F x00 (00) 000 0000
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THIS AGREEMENT is made the 27th day of October 1999
BETWEEN:
1. PIONEER POLSKI FUNDUSZ NIERUCHOMOSCI S.A a joint stock company
incorporated under the laws of the Republic of Poland with its seat in
Warsaw (the "FUND")
and
2. PIONEER REAL ESTATE ADVISORS POLAND Sp. z o.o., a company incorporated
with limited liability under the laws of the Republic of Poland with its
seat in Warsaw (the "INVESTMENT ADVISOR")
WHEREBY IT IS AGREED AS FOLLOWS:
1. In this Agreement the following expressions have the meanings ascribed to
them below:-
1.1. "RENT"
A sum payable by an occupational tenant or other user or occupier of
any property (or a part thereof) included in the Portfolio for the
use of such property. For the avoidance of doubt this shall include
separate fees payable in respect of car parking spaces and/or
turnover rents. As a turnover rent is meant a rent based as a
percentage of the sales turnover of the Tenant.
1.2. "ANCILLARY FEES"
Closing fees, consulting fees, advisory fees, transaction fees,
break-up fees and directors fees paid to the Investment Advisor by
any Portfolio company, other than amounts in reimbursement of
out-of-pocket expenses and fees earned by the Investment Advisor or
its Affiliates pursuant to other agreements with the Fund.
1.3. "FUND DOCUMENTS"
the Statute of the Fund, a revised and restated Subscription and
Shareholders' Agreement, Investment Advisory Agreement, Pioneer
Group Letter Agreement, Strategic Advisory Agreement, Umbrella
Services Agreement.
1.4. "INVESTMENT ADVISOR"
Where the context so requires, references to the Investment Advisor
shall include its officers, shareholders and employees.
1.5. "STRATEGIC ADVISOR"
means Pioneer Real Estate Advisors, Inc., a corporation incorporated
with limited liability in the State of Delaware, United States of
America.
1.6. "TENANTS"
All persons occupying by virtue of Leases one or several properties
(or a part thereof) comprised in the Portfolio.
1.7. "SENIOR INVESTMENT ADVISOR"
Xx Xxxx Xxxx Xxxxx or such other person appointed by the Investment
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Advisor from time to time.
1.8. "PURCHASERS"
Persons to whom the Fund shall sell or attempt to sell any
properties forming part of the Portfolio, and their authorised
representatives and advisors.
1.9. "TERM"
The period commencing at midnight on October 27, 1999 and ending at
midnight on the date of distribution of all the assets of the Fund
between the Shareholders.
1.10. "SERVICE CHARGE"
A charge payable by any Tenant of a property in the Portfolio under
the terms of its lease for the provision by the Fund of services for
the Portfolio including the Fund's costs and expenses of managing
the Portfolio and any other fees and expenses to the extent
permitted by the Leases.
1.11. "FEES"
The fees specified in the SCHEDULE 1 to this Agreement.
1.12. "AFFILIATE"
means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with
such Person. For the purposes of this Agreement. "CONTROL" shall
mean the ability to direct the activities of the controlled Person
by lawful means.
1.13. "PERSON"
means and includes (i) an individual, (ii) a legal entity,
organisation, partnership, registered partnership or limited
partnership, and (iii) the State Treasury or a local authority
("GOVERNMENTAL AUTHORITY") or any department or agency thereof.
1.14. "PORTFOLIO"
All such properties and/or companies ("PORTFOLIO COMPANIES")
(including without limitation land and buildings and other
facilities and improvements, agreements rights and interests
relating thereto) as the Fund owns or shall own during the Term in
the Republic of Poland. References to the Portfolio in this
agreement shall (where the context so requires) include references
to individual properties comprised therein or held by Portfolio
Companies from time to time and to part or parts thereof.
1.15. "FUND'S REPRESENTATIVE"
Any one of not less than two people nominated in writing by the Fund
to the Investment Advisor from time to time, to whom the Investment
Advisor can look for instructions.
1.16. "RESERVES"
Those amounts considered prudent by the Investment Advisor to be
maintained (in the Designated Account) with respect to the Portfolio
for the operation, maintenance and improvement thereof from time to
time.
1.17. "VENDORS"
Any Persons from whom the Fund shall acquire or seek to acquire any
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properties to form part of the Portfolio, and their authorised
representatives and advisors.
1.18. "LEASES"
All leases of land or other agreements or rights under which Tenants
lawfully occupy or use any premises contained in a property forming
part of the Portfolio whether originally granted by the Fund or a
Vendor, or created by operation of law.
1.19. "ADVISORY SERVICES"
The services described in the SCHEDULE 1 to this Agreement.
1.20. "AUTHORITIES"
The Polish Government or any of its ministries or agencies, the Tax
Chamber, Gminas, Unions of Gminas, City Authorities, and any other
bodies exercising lawful authority over any of the properties
comprised in the Portfolio.
1.21. "DESIGNATED ACCOUNT"
An account or accounts at the Fund's bank, full details of which
shall be provided by the Fund to the Investment Advisor from time to
time in writing. For the avoidance of doubt the Designated Account
shall be opened and maintained in the name and on behalf of the
Fund.
1.22. "CONTRACTORS"
Third parties providing services to the Fund on terms and conditions
which would be contracted between two independent parties in
relation to the Portfolio.
2. The Fund hereby appoints the Investment Advisor to act as the investment
advisor of the Fund in relation to its Portfolio, for the Term or until
earlier termination of this Agreement. The Investment Advisor accepts the
appointment and agrees to provide the Advisory Services on the terms and
conditions set out in this Agreement.
3. Subject to Clause 6 below, for so long as this Agreement is in force the
Fund shall pay the Investment Advisor the Fees at the times and in the
manner set out in SCHEDULE 1 to this Agreement. Save as specifically
agreed to the contrary in any other agreements with the Fund for the
provision of other services, any Ancillary Fees received by the Investment
Advisor, Pioneer Pierwsze Polskie Towarzystwo Funduszy Inwestycyjnych
S.A., any of their Affiliates, or any of their employees from any of the
Portfolio Companies shall be accounted for to the Fund, either by direct
payment or by corresponding reductions in the Fees payable from time to
time.
4. The Management Board of the Fund shall promptly provide the Investment
Advisor, on request, with all such written approvals authorisations and
powers of attorney as may be necessary or desirable to permit the
Investment Advisor to fulfil its obligations under this Agreement,
provided the Management Board complies with all contractual documents and
receives required approvals from Supervisory Board, Investment Committee
and General Meeting of Shareholders.
5. Costs and Expenses
5.1. The Fund will bear organisational and offering expenses of the Fund,
including placements fees, up to an aggregate amount equal to 1% of
the
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total commitments as prescribed in Clause 3 of the Subscription and
the Shareholders Agreement dated as of October 27, 1999
("COMMITMENTS"), as from time to time amended. Such amount will be
used to pay or to reimburse the Investment Advisor or its Affiliates
for payment of third party legal, accounting, printing and similar
offering and organisational costs, and an allocable share of the
Investment Advisor's overhead and salary expenses to the extent
attributable to the organisation of the Fund and the offering. Any
such expenses in excess of the above amounts will be borne by the
Strategic Advisor.
5.2. The Fund will bear transaction costs and expenses directly related
to the purchase, holding or sale of Portfolio Company or a Portfolio
or a part thereof, annual auditing fees of the Fund, bank charges,
legal fees and expenses (e.g. leasing fees and property and facility
management fees not reimbursed by Tenants), reasonable out-of-pocket
expenses of the Investment Committee and the Supervisory Board,
taxes payable by the Fund and nominal salaries of Management Board,
Supervisory Board and Investment Committee personnel (not to exceed
$5,000 US per member per year) (the "FUND EXPENSES").
5.3. All costs and expenses, including the Fees, all professional and
other costs relating to properties in the Portfolio, the employment
costs of building managers for such properties, and such office and
telephone expenses as it shall be necessary to incur in order to
provide such office as shall be required for the purpose of
maintaining the registration of the Fund with the Urzad Skarbowy
(tax office) or other such Authorities, shall be borne by the Fund
and paid from the Designated Account.
5.4. All third party costs and expenses in relation to properties
considered for acquisition by the Fund shall be borne by the Fund
and paid from the Designated Account.
5.5. All costs and expenses of employing a suitably qualified person to
provide leasing services to the Fund in relation to the Portfolio
shall be borne by the Fund, if provision is made for the employment
of such a person in the Fund's annual budget.
5.6. The annual budget for the Fund Expenses will be subject to the
approval of the Supervisory Board of the Fund.
5.7. If funds in the Designated Account are insufficient, the Fund shall
promptly provide the necessary funds at the Investment Advisor's
request. The Investment Advisor is not obliged to advance funds to
pay such costs and expenses. If it does so, the Fund shall promptly
reimburse the Investment Advisor on request, and shall pay interest
on funds so advanced at a rate equal to four percent (4%) above the
prime rate for unsecured short term (3 months) loans from time to
time announced by Citibank (Poland) SA in Warsaw until the date of
reimbursement.
6. The Investment Advisor shall exercise the powers granted hereunder and
discharge its duties hereunder in the best interests of the Fund and, in
connection therewith, shall exercise the degree of care, skill and
diligence that a prudent investment advisor would exercise, having due
regard at all times to the interests of the Fund in its capacity as
landlord under the Leases and to the good name and institutional standing
of the Fund.
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7. Conflicts of Interest
7.1. The Investment Advisor hereby accepts the obligations of the Pioneer
Group, Inc. set out in the letter agreement between The Pioneer
Group, Inc. and the Fund dated the date hereof (the "PIONEER GROUP
LETTER AGREEMENT" a copy of which is appended to this agreement as
Schedule 2) as direct obligations of the Investment Advisor only
with respect to the direct actions of the Investment Advisor and not
of any Affiliates.
7.2. Subject to Clauses 6 and 8, nothing in this Agreement shall preclude
the Investment Advisor from providing independent advice on real
estate investment to third parties in the Republic of Poland.
7.3. The Investment Advisor acknowledges that the Fund will not invest in
any property owned by any of its Affiliates, or in a company any of
whose shares are held thereby directly or indirectly, or which has
borrowed funds therefrom without a prior resolution of the
Supervisory Board pursuant to Article 8.10 (r) of the Fund's
Statute.
7.4. In the event that the Investment Advisor recommends that the Fund
shall invest in a property or company advised by the Investment
Advisor or its Affiliates, it shall make full disclosure of the
terms on which such services have been provided at the time of such
recommendation.
8. Confidentiality.
8.1. For purposes of this Clause 8, the term "CONFIDENTIAL INFORMATION"
shall mean, by way of illustration and not limitation, all knowledge
or information (whether or not patentable and whether or not
copyrightable) owned, possessed or used by Investment Advisor,
including without limitation, any invention, discovery, computer
software, software documentation, data, technology, designs,
innovations, improvements, vendor information, customer information,
apparatus, equipment, trade secret, process, research, report
technical data, know-how, marketing or business plan, forecast,
unpublished financial statement, budget, license, price, cost and
employee list that is disclosed by, or on behalf of the Fund to the
Investment Advisor or that is otherwise obtained by the Investment
Advisor in the course of performance of services hereunder, as well
as all data derived therefrom.
8.2. The Investment Advisor undertakes that both during the term of this
Agreement and after its termination it will:
8.2.1. preserve and cause its employees, agents and representatives
to preserve the confidentiality of any Confidential
Information;
8.2.2. use Confidential Information only for the Investment
Advisor's activities in accordance with the terms of this
Agreement.
8.3. The Investment Advisor's obligations under this Clause 8 shall not
apply to any information that:
8.3.1. is or becomes known to the general public under
circumstances involving no breach by the Investment Advisor
or others of the terms of this Clause 8;
8.3.2. is generally disclosed to third parties by the Fund without
restriction on such third parties;
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8.3.3. is disclosed on confidential terms to lawyers or other
professional advisors of the Fund or the Investment Advisor;
8.3.4. is disclosed as required by applicable laws or regulations,
courts of competent jurisdiction, regulatory authorities,
any stock exchange on which shares of the Fund are proposed
to be offered, or in connection with any arbitration between
the parties to this agreement;
8.3.5. is disclosed in pursuance of the Investment Advisor's
obligations under Clause 6 of this Agreement.
9. The Investment Advisor shall:-
9.1. maintain staff with training and experience adequate for the
performance of the Investment Advisor's obligations under this
Agreement;
9.2. maintain full-time offices in Warsaw, the Republic of Poland
throughout the Term;
9.3. be responsible for its own office and administrative expenses,
including fees or other compensation paid to the Strategic Advisor,
and the salaries, travel costs, benefits and other compensation of
its employees (save to the extent that such are provided for in the
annual budget of the Fund);
9.4. ensure that the Advisory Services are provided under the supervision
of the Senior Investment Advisor;
9.5. ensure that copyright in all plans and documents prepared by or for
the Investment Advisor in connection with the Portfolio is vested in
the Fund and that all such documents (together with all accounts
schedules and other records prepared or maintained by the Investment
Advisor in relation to the Portfolio) are delivered to the Fund (or
as directed by the Fund) at the expiry or termination of this
Agreement;
9.6. accept instructions in relation to the management of the Portfolio
only from the Fund's Representative and deliver all notices,
reports, accounts and other communications to be provided to the
Fund under the terms of this Agreement to the Fund's Representative
or as s/he may direct;
9.7. inform in writing the Supervisory Board of the Fund:-
9.7.1. of any business activities in which it or its Affiliates are
involved which are not related to the Fund and which could
create an opportunity for conflicts of interest to arise in
relation to the Fund's investment activity, and
9.7.2. of any proposed Fund investments in which any Shareholder of
the Fund has a vested interest of which the Investment
Advisor is aware; and
9.8. provide copies to the Supervisory Board of the Fund of its annual
financial statements;
9.9. throughout the Term at its own expense employ as Senior Investment
Advisor an individual to be approved by the Fund (such approval is
hereby given in relation to Xx. Xxxx Xxxx Xxxxx and shall not be
unreasonably withheld in future in relation to any suitably
qualified person) PROVIDED ALWAYS that the Investment Advisor shall
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designate another of its employees acting as Senior Investment
Advisor for any period between the departure from the Investment
Advisor's employment of the Senior Investment Advisor and the
appointment of a replacement and for any period when the Senior
Investment Advisor is absent through illness or otherwise for a
period in excess of 14 working days. The Senior Investment Advisor
(or acting Senior Investment Advisor) or a person performing the
duties of the Senior Investment Advisor shall be based in Warsaw and
shall devote him or herself on at least 80% of full-time basis or
more if it is necessary for the successful operation of the Fund to
the performance of the Investment Advisor's duties under this
Agreement;
9.10. be entitled to consult the Fund's lawyers and accountants at the
Fund's expense on all matters relating to the Portfolio, where such
consultation is reasonably necessary for the proper performance by
the Investment Advisor of its duties hereunder or for the protection
of the interests of the Fund;
9.11. be entitled to represent itself to third parties as the authorised
agent of the Fund in relation to all matters pertaining to the
performance by the Investment Advisor of its obligations hereunder
and to require the Fund to grant any powers of attorney as may be
required to evidence such authority to third parties;
9.12. be entitled to rely upon the accuracy of, and act in accordance
with, information supplied to it by the Fund;
9.13. on request, prepare on behalf of the Fund and issue to its
Shareholders first draft "trial balance" financial reports within
five (5) days of the end of each quarter, on the strict
understanding that neither the Investment Advisor nor any of its
respective directors, officers and employees shall be held liable
for the accuracy or completeness thereof;
9.14. on request, prepare on behalf of the Fund and issue to its
Shareholders separate editions of the Fund's financial reports (as
required by the Fund Documents to be produced to Shareholders) which
shall, to the Investment Advisor's best efforts, comply with
International Generally Accepted Accounting Principles from time to
time.
10. The Investment Advisor will enter into a strategic advisory agreement with
the Strategic Advisor, pursuant to which the Strategic Advisor will
provide certain advisory and other services to the Investment Advisor. The
Fund shall have no direct contractual relationship with the Strategic
Advisor, who shall be a subcontractor to the Investment Advisor and
compensated by the Investment Advisor from the Fees.
11. The Investment Advisor represents and warrants to the Fund that it is duly
established, organised and existing under the laws of the Republic of
Poland and has all requisite power and authority under its Statute and the
laws of the Republic of Poland to carry out the Advisory Services and to
execute, deliver and perform this Agreement and each of the other Fund
Documents to which it is or will be a party.
12. All investment recommendations by the Investment Advisor in connection
with the Fund shall be reviewed by and shall be subject to the prior
approval of the Fund.
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13. Except as expressly authorised herein or as the Fund may delegate powers
to the Investment Advisor, the Investment Advisor shall not be authorised
to manage the affairs of, act in the name of or bind the Fund in any
manner whatsoever.
14. Termination
14.1. The Fund shall be entitled to terminate this agreement at any time
upon written notice to the Investment Advisor, accompanied by
written evidence of a resolution passed by a two thirds (2/3)
majority as provided for in the Fund's Statute of all the Fund's
Shareholders (excluding any Affiliate of the Investment Advisor),
but only either:
14.1.1. for "good cause" (xxxxx powod), which for the purposes of
this provision shall be defined as-
14.1.1.1. a material breach by the Investment Advisor of its
material obligations under this Agreement or any
negligent act which is not promptly undertaken
(using reasonable endeavours) to be cured and is
not cured within sixty (60) days of the notice
from the Fund requiring that such breach be cured;
or
14.1.1.2. wilful misconduct, gross negligence or fraud (a)
of any employee of the Investment Advisor having
remained unremedied to the entire satisfaction of
the Fund after seven (7) business days prior
notice by the Fund to the Investment Advisor, or
(b) of a senior officer of the Investment Advisor
(including without limitation any member of the
Board of Management of the Investment Advisor) in
either case in relation to this Agreement; or
14.1.1.3. the Investment Advisor or Pioneer Real Estate
Advisors, Inc. shall become insolvent. For the
purposes of this clause, a Person shall be deemed
to be insolvent if (a) he is generally unable to
meet his obligations as they generally become due
or (b) has ceased paying his current obligations
in the ordinary course of business as they
generally become due, or (c) if the aggregate of
his assets is not, at a fair valuation, sufficient
(or if disposed of by a fairly-conducted sale by
legal process would not be sufficient) to enable
payment of all his obligations, due and accruing
and remains insufficient fifteen (15) days after
written notice by the Fund of its intention to
terminate this Agreement; or
14.1.1.4. the Investment Advisor ceases to be directly or
indirectly controlled by The Pioneer Group Inc.;
14.1.1.5. if the Investment Advisor:
14.1.1.5.1. has a receiver, administrative
receiver or administrator appointed
over all or any of its assets or
undertakings; or
14.1.1.5.2. passes a resolution to wind up or has
a liquidator appointed; or
14.1.1.5.3. ceases or threatens to cease trading.
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14.1.2. in the event that the following benchmarks have not been met
by the specified dates (whether or not by any fault on the
part of the Investment Advisor):-
14.1.2.1. if as of October 27, 2001 at least one third of
the Fund's capital shall have been invested
pursuant to Article 6 (a) and/or (c) of the
Statute of the Fund; or
14.1.2.2. if as of October 27, 2002 at least two-thirds of
the Fund's capital shall have been invested
pursuant to Article 6 (a) and/or (c) of the
Statute of the Fund;
14.1.3. in the event that none of The Pioneer Group, Inc. or any of
its Affiliates any longer hold Class B shares in the Fund;
14.1.4. in the event of a material breach by a Pioneer entity (as
defined in the Subscription and Shareholders' Agreement) or
its Affiliate of its/their material obligation/obligations
under the Fund Documents which is not cured within (sixty)
60 days of notice from the Fund to that Pioneer entity
requiring that such breach be cured;
14.1.5. if any Property Management Agreement in the form of Schedule
3 to the Umbrella Services Agreement (where a Investment
Advisor's Affiliate is the Managing Agent) or any
Development Management Agreement in the form of Schedule 4
to the Umbrella Services Agreement (where a Investment
Advisor's Affiliate is the Development Manager) is
terminated by the Fund for good cause (as defined under the
relevant Agreement).
14.2. In the event this Agreement is terminated other than for one or more
of the reasons listed under Clause 14.1.1 above, the Investment
Advisor shall be entitled to retain a percentage of the Incentive
Fee equal to a fraction, the numerator of which is the total cost of
all the investments made by the Fund prior to the effective date of
termination, plus the total cost of all the investments made
thereafter to the extent that the Investment Advisor identified (by
submitting a proposal to the Investment Committee) such investments
prior to such date, and the denominator of which is the total cost
of all investments made by the Fund, in each case determined as of
the date of payment of any amount of the Incentive Fee.
14.3. The Investment Advisor shall be entitled to terminate this Agreement
at any time upon ninety (90) days written notice to the Fund in the
event that the Fund shall be in material breach of any of its
monetary obligations under this Agreement and such breach shall not
have been cured within 90 days of a written notice from the
Investment Advisor to the Fund (copied to the members of the
Supervisory Board of the Fund) requiring such breach to be cured and
upon one hundred and eighty (180) days written notice to the Fund in
the event that the Fund shall be in material breach of any of its
non-monetary obligations under this Agreement and such breach shall
not have been cured within 180 days of a written notice from the
Investment Advisor to the Fund (copied to the members of the
Supervisory Board of the Fund) requiring such breach to be cured.
14.4. Any termination of this Agreement under the terms of this clause 14
shall
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be without prejudice to the rights of either party hereto subsisting
at the date of such termination.
15. The Fund shall indemnify the Investment Advisor against all claims, costs,
losses and other liabilities whatsoever arising in connection with the
Portfolio or the management thereof, except insofar as they arise from
fraud, wilful misconduct or negligence of the Investment Advisor.
16. This Agreement is personal to the Fund and the Investment Advisor and is
not assignable.
17. In this Agreement any words importing one gender include all other genders
and words importing the singular include the plural and vice versa.
18. If at any time the Fund or the Investment Advisor are two or more
individuals the terms the "FUND" and the "INVESTMENT ADVISOR" include the
plural number and obligations expressed or implied to be made by or with
such party are deemed to be made by or with such individuals jointly and
severally.
19. Governing Law
This Agreement shall be governed in all respects by the Laws of the
Republic of Poland.
20. Arbitration
Any claims or disputes between the parties arising out of or relating to
this Agreement, which cannot be resolved in an amicable fashion shall be
settled by an ad hoc arbitration court sitting in Warsaw, the Republic of
Poland (the "ARBITRATION COURT"). The arbitration proceedings shall be
conducted in accordance with the Rules of Arbitration of the United
Nations Commission on International Trade Law (the "UNCITRAL ARBITRATION
RULES") in force at the time of submittal of the dispute to arbitration.
The proceedings shall be conducted in the English language. There shall be
one arbitrator appointed jointly by such of the Parties as are in dispute.
The President of the London Court of International Arbitration in London,
England shall act as appointing authority under the UNCITRAL Arbitration
Rules if the Parties in dispute fail to appoint the arbitrator jointly
within the limits specified in the UNICITRAL Arbitration Rules. If the
President of the London Court of International Arbitration will refuse or
fail to appoint the arbitrator, either Party may request the
Secretary-General of the Permanent Court of Arbitration at The Hague to
designate an appointing authority in London, England, which shall then
appoint the arbitrator. In case either Party challenges the appointed
arbitrator, then the decision on the challenge shall be made by the
appointing authority and in case any Party shall file an objection that
the arbitrator has no jurisdiction or has exceeded its jurisdiction then
the appointing authority shall rule on the objection.
21. Entire Agreement
21.1. Any amendments to this Agreement shall be made in writing and signed
by each of the parties to be valid.
21.2. This Agreement, the Schedules hereto, and all documents and
agreements entered into or to be entered into pursuant thereto,
represent the entire understanding and agreement between the parties
with respect to the subject matter of this Agreement.
21.3. From the date hereof this Agreement supersedes any and all prior
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agreements between the parties, which said agreements (if any) are
hereby terminated and of no further force and effect.
22. Severability
Any provision of this Agreement that is prohibited or unenforceable under
the laws of any jurisdiction which affects the performance or
enforceability of this Agreement shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
23. Waiver
Any of the provisions of this Agreement may be waived by the party or
parties entitled to the benefit thereof. No waiver of any provision shall
be construed as a waiver of any other provision. Any waiver must be in
writing to be valid.
24. Counterparts
This Agreement has been signed in two English and Polish language copies,
one for each of the parties. In the event of any discrepancies between the
English and Polish versions, English version shall prevail.
25. Interpretation
25.1. The Index and Article headings contained in this Agreement are for
convenience only and shall not affect the construction of this
Agreement;
25.2. The schedule is deemed to be incorporated into this Agreement, and a
reference to this "AGREEMENT" includes a reference to the schedule;
25.3. References to any funds being "INVESTED" shall mean "INVESTED OR
COMMITTED TO BE INVESTED".
26. Notices
Unless provided otherwise all notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been
given or made if in writing and delivered personally or sent by telefax,
reputable overnight courier (including but not limited to DHL or Federal
Express), registered or certified mail (postage pre paid, return receipt
requested) to the parties at the following addresses:
IF TO THE FUND:-
PIONEER POLSKI FUNDUSZ NIERUCHOMOSCI S.A.
Plac Trzech Krzyzy 0,
00-000 Xxxxxx, Xxxxxx
Att: "Zarzad"
Telephone: x00 (00) 000 00 00
Telefax:: x00 (00) 000 00 00
WITH A COPY TO
Pioneer Real Estate Advisors, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00-000, XXX
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Att. Xx Xxxx X. Xxxxxx III
Telephone: x0(000) 000 00 00
Telefax:: x0(000) 000 00 00
Towarzystwo Obrotu Nieruchomosciami AGRO S.A.
00 Xxxxxxxx Xx.
00-000 Xxxxxx, Xxxxxx
Att.: Mr. Jan Xxxxxxxx Xxxxxxx
the President of the Board of Management
Tel.: + 00(00) 000 0000
Fax: + 00(00) 000 0000
CADIM Servotech B.V.
800, Square Victoria, Suite 0000
X.X.X. 000
Xxxxxxxx, Xxxxxx, Xxxxxx X0X 0X0
Att.: V.P. Legal
Tel.: (000) 000-0000
Fax: (000) 000-0000
cc:
CADIM Servotech B.V.
Xxxxxxxxxxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Att.: Mr. J. Xxxxxxx Xxxxxxxx
Tel.:
Fax:
Xxxxxxx Xxxxx
1 Place Ville Xxxxx, 37 floor
H3B 3P4 Xxxxxxxx, Xxxxxx, Xxxxxx
Tel.: (000) 000 0000
Fax: (000) 000 0000
Xxxxx Xxxxxx and Partners
0 Xxxxx Xx.
00-000 Xxxxxx, Xxxxxx
Tel.: + 00 00 000 00 00
Fax: + 00 00 000 00 00
European Bank for Reconstruction and Development
Xxx Xxxxxxxx Xxxxxx
Xxxxxx, XX0X 0XX
Great Britain
Att.: Operation Administrative Unit
Tel.: + 00 00 000 00 000
Fax: + 00 00 000 00 000
Fundacja na Rzecz Nauki Polskiej
xx. Xxxxxxx 00
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 14 of 22
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02-548 Warszawa, Polska
Att.: Xx. Xxxxxx X. Xxxxxxx
IF TO THE INVESTMENT ADVISOR:
Pioneer Real Estate Advisors Poland Sp. Z O.O.
Plac Trzech Krzyzy 0,
00-000 Xxxxxx, Xxxxxx
Attn: Xx Xxxx Xxxx Xxxxx
Telephone: x00 (00) 000 00 00
Tel./fax: x00 (00) 000 00 00
WITH A COPY TO
The Pioneer Group
00 Xxxxx Xxxxxx
Xxxxxx XX 00000
The United States of America
Attn: Xx Xxx Xxxxx
Telephone: x(0) 000 000-0000
Telefax: x(0) 000 000-0000
WITH A COPY TO
Pioneer Real Estate Advisors, Inc.
00 Xxxxx Xxxxxx
Xxxxxx, XX 00-000, XXX
Att. Xx Xxxx X. Xxxxxx III
Telephone: x0 (000) 000 00 00
Telefax:: x0 (000) 000 00 00
All notice and communications shall be deemed delivered on the day of the
receipt thereof by the addressee. All notice and communications shall be copied
to all the shareholders of the Fund.
AS WITNESS the hands of authorised signatories for the Fund and the Investment
Advisor today.
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 15 of 22
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PIONEER POLSKI FUNDUSZ NIERUCHOMOSCI S.A.
Signature: /s/ Xxxxxx Xxxxxxx-Xxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxx-Xxxxxxx
Title: Vice President of the Management Board
Signature: /s/ Xxxx Xxxxxx
-----------------------------------
Name: Xxxx Xxxxxx
Title: Member of the Management Board
PIONEER REAL ESTATE ADVISORS POLAND SP. Z O.O.
Signature: Xxxx Xxxx-Xxxxx
-----------------------------------
Name: Xxxx Xxxx-Xxxxx
Title: Member of the Management Board
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 16 of 22
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SCHEDULE 1
SERVICES AND FEES
I. ADVISORY SERVICES
Subject to the supervision of the Investment Committee and Supervisory
Board of the Fund, the Investment Advisor shall provide fund management
services to the Fund including services set out below:
1. Identifying and evaluating investment opportunities in the Republic of
Poland which comply with the Investment Guidelines (attached as Exhibit to
the Subscription and Shareholders' Agreement) and the Environmental
Procedures set forth in Annexes A & B to this Schedule 1, including
without limitation (a) analysing and investigating investment
opportunities; (b) structuring investments held directly by the Fund; (c)
structuring investments held in Portfolio Companies; (d) negotiating,
structuring and supervising the documentation of debt financing, or
refinancing for Fund investments, (e) conducting due diligence,
negotiating the terms of, and supervising the preparation and review of,
all documents required to complete investment transactions of the Fund;
and
2. Developing and implementing accounting and information management systems,
including systems to maintain detailed accounts of income and expenses in
relation to individual properties comprising the Portfolio; and
3. Monitoring the performance of investments of the Fund and providing advice
to the Fund with respect to corporate and financial matters and overall
strategic advice, including in connection with any refinancing or
restructuring of any Fund investment; also, where appropriate (a)
negotiating any active role in the management of Portfolio Companies,
including having representatives of the Investment Advisor or Strategic
Advisor serve on the boards or directors or other corporate governance
bodies of Portfolio Companies, and (b) providing advice to the management
of Portfolio Companies, with respect to corporate and financial matters
and overall strategic advice, including in connection with any refinancing
or restructuring of a Portfolio Company's capital structure; and
4. Evaluating, structuring and supervising the timing and method of
disposition or liquidation of investments of the Fund; and
5. Providing portfolio management services to the Fund, including strategic
advice relating to the balance of commercial, retail, residential and
industrial real estate included in the Portfolio; and
6. Preparing or providing assistance to the Fund in the preparation of the
Fund's Annual Budget, annual financial statements, investment reports and
annual environmental reports (as contemplated in the Environmental
Procedures attached hereto).
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 17 of 22
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II. FEES
1. THE ADVISORY FEE
1.1. During the Investment Period, as defined in the Subscription and
Shareholders Agreement, the Investment Advisor will be entitled to
an annual base advisory fee equal to 2 % of the Fund's "Net Capital"
(as hereinafter defined). "NET CAPITAL" means the sum of (i) total
Commitments, as specified in Article 3 of the Subscription and
Shareholders Agreement (which shall be reduced, after the last day
on which Commitments can be called for, by the amount of Commitments
which are not called for), (ii) the amount of the net capital gains
of the Fund which are reinvested in real estate investments or any
Portfolio Company, and (iii) net ordinary income reinvested in real
estates by the Fund or any Portfolio Company, minus the sum of (a)
the cost basis of investments which have been disposed of, the
proceeds of which are distributed to the Shareholders, (b) realised
losses on Fund investments and (c) the amount of Commitment
cancelled and/or returned pursuant to the terms of the Subscription
and Shareholders' Agreement dated October 27th 1999. The base
advisory fee is payable quarterly in advance on the last day of the
calendar quarter preceding the calendar quarter for which the
payments is made. Base advisory fee will be paid out of Fund
revenues or paid-in Commitments. Commitments mean the amounts
expressed in United States Dollars committed by the Shareholders in
the Fund for investment into the Fund pursuant to the Subscription
and Shareholders Agreement referred to above.
1.2. After completion of the Investment Period, the annual base advisory
fee will be reduced to 1.5% of the Fund's Net Capital.
1.3. In case a Commitment is reduced pursuant to the terms of the
Subscription and Shareholders' Agreement, the amount of the Advisory
Fee will be calculated on the amount actually subscribed by each
Shareholder. The adjustment of the Advisory Fee shall take place
after 6 months from the reduction of the subscription. In case a
Commitment is reduced due to a Shareholder's default, the annual
base Advisory Fee shall remain unchanged. However, the amount of the
Advisory Fee due from the defaulted Commitment shall only be paid
from any penalty payments received from the defaulting Shareholder.
For the avoidance of doubt the remaining Shareholders and the Fund
will not be liable to pay this proportion of the Advisory Fee, which
will be due only from the penalty paid by the defaulting
Shareholder.
2. INCENTIVE FEE
2.1. The Investment Advisor shall be entitled to an annual incentive
advisory fee (the "INCENTIVE FEE"). The Incentive Fee shall be equal
to 25% of all amounts to be available for distribution by the Fund
to its Shareholders after payment of the Incentive Fee from and
after the date on which the Incentive Fee becomes payable. (For
example purposes only: when the Incentive Fee becomes payable and
the Fund has $100 available for distribution before payment of the
Incentive Fee it shall distribute $80 to the Shareholders and $20 to
the Investment Advisor as Incentive Fee as $20 is equal to 25% of
$80, which is the amount available for distribution after payment of
the Incentive Fee).
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2.2. The Incentive Fee shall become payable on the date on which the Fund
has paid aggregate dividends or distributions for all subscribed
shares equal to US$ 28.88 per share plus a 10% per annum US$
cumulative return compounded annual thereon (i.e. return of original
investment capital plus 10% per annum preferred compounded annually
return) and otherwise referred to as IRR as described in Section II
paragraph 2.4 below.
2.3. Furthermore, the Incentive Fee shall increase to 27.5% of all
amounts available for distribution to Shareholders after payment of
the Incentive Fee on the date on which the Fund's Shareholders have
received aggregate dividends or distributions which provide a 28%
US$ internal rate of return (IRR).
2.4. For the purposes of this Agreement the IRR is the percentage rate at
which the positive (outflows from the Fund to Shareholders) or
negative (inflows from Shareholders to the Fund) cash flows to/from
the Shareholders must be discounted so that the net present value of
those cash flows would be equal to zero. The IRR shall be calculated
using the IRR function of Microsoft Excel. All cash flows shall be
recorded as of the last day of the quarter in which they are paid by
or paid to the Shareholders. Cash inflows shall include actual
capital funded by Shareholders (exclusive of any penalties) and cash
outflows shall include cash distributions made to Shareholders
inclusive of interim dividends and residual or liquidation proceeds.
2.5. Such IRR shall be calculated on the basis of the amounts paid in by
the Shareholders in the Fund and expressed in US Dollars pursuant to
the Exchange Rate as specified in the Subscription and Shareholders
Agreement, and amounts paid out to Shareholders shall be expressed
in US dollars calculated in accordance with the average exchange
rate of the National Bank of the Republic of Poland on the last
working day preceding the day of making payment (which for the
purpose of this Agreement is a day of debiting of Fund's account).
2.6. The Incentive Fee (if any) will be paid as and when corresponding
distributions are made to the Shareholders.
3. PRIORITY OF DISTRIBUTIONS
3.1. The priority of distributions from the Fund shall be as follows:
3.1.1. first, to return the original capital of the Shareholders
equal to $28.88 per share;
3.1.2. second, to provide a 10% cumulative annual return (IRR) to
the Shareholders as described in Section II paragraph 2.2
above;
3.1.3. third, to accommodate the Incentive Fee allocation as
described in Section II paragraph 2.1 above; and
3.1.4. fourth, to accommodate the Incentive Fee allocation as
described in Section II paragraph 2.3 above.
In the event that upon liquidation the Shareholders have not
received a 10% IRR and if the Investment Advisor has received
Incentive Fee distributions, the Investment Advisor undertakes to
promptly remit to the Fund, funds required to provide the
Shareholders with a 10% IRR, but in
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 19 of 22
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no event exceeding the amount of Incentive Fee received from the
Fund.
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Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 20 of 22
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ANNEX A
EBRD's ENVIRONMENTAL PROCEDURES
21
Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 21 of 22
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ANNEX B
SERVOTECH'S ENVIRONMENTAL PROCEDURES
22
Exhibit 12 INVESTMENT ADVISORY AGREEMENT Page 22 of 22
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SCHEDULE 2
PIONEER GROUP LETTER AGREEMENT
