The Advisor and its Affiliates shall be paid for services rendered by the Advisor under this Agreement as follows:
(a) The Advisor or its Affiliates shall receive an Acquisition Fee payable by the Company as compensation for services rendered in connection with the investigation, selection and acquisition of Real Estate Assets and Real Estate-Related Securities (by purchase, investment, merger or exchange) (i) acquired during the period of time beginning on the Effective Date and ending on the date of termination of this Agreement using (A) funds from any source received during the period of time beginning on the Effective Date and ending on the date of termination of this Agreement or (B) Shares or units of limited partnership interest of the Partnership for which an agreement for the issuance of such Shares or units was entered into during the period of time beginning on the Effective Date and ending on
the date of termination of this Agreement, and (ii) acquired after the date of termination of this Agreement using (A) funds from any source received during the period of time beginning on the Effective Date and ending on the date of termination of this Agreement or (B) Shares or units of limited partnership interest of the Partnership for which an agreement for the issuance of such Shares or units was entered into during the period of time beginning on the Effective Date and ending on the date of termination of this Agreement, including any acquisitions funded with net proceeds from a Sale. The total Acquisition Fees paid to the Advisor or its Affiliates shall not exceed (i) 1.0% of the Contract Purchase Price of Properties acquired directly or indirectly by the Company, and (ii) 1.0% of the origination price or purchase price of (A) Real Estate-Related Securities and (B) Real Estate Assets other than Properties, originated or acquired by the Company. At the Advisor’s discretion, a portion of the Acquisition Fee may be paid to third-party developers for services rendered. Acquisition Fees shall be payable on the acquisition of a specific Property, on the acquisition of a portfolio of Properties through a purchase of assets, controlling securities or by Joint Venture, by a merger or similar business combination or other comparable transaction, on the completion of development of a Property or Properties for the Company, or on the origination or acquisition of Real Estate-Related Securities or Real Estate Assets other than Properties. However, the total of all Acquisition Fees and Acquisition Expenses payable with respect to any Real Estate Assets and Real Estate-Related Securities shall not exceed 6.0% of the Contract Purchase Price of such Real Estate Assets or Real Estate-Related Securities, or in the case of a loan, 6.0% of the funds advanced, unless fees in excess of such amount are approved by a majority of the Directors not interested in such transaction and by a majority of the Independent Directors not interested in such transaction and which transaction is determined to be commercially competitive, fair and reasonable to the Company. Notwithstanding anything to the contrary herein, in the event the Advisor’s
obligations in Section 2 herein terminate or are waived by the Company, the Advisor may, in its sole discretion, waive all or a portion of its rights under this Section 9(a).
(b) The Advisor shall receive as compensation for services rendered in connection with the management of the Company’s assets the Asset Management Fee. The amount of the Asset Management Fee shall be equal to 0.30% of Average Invested Assets, calculated monthly not to exceed one-twelfth of 0.30% of the Average Invested Assets of the Company as of the last day of the immediately preceding quarter. The Asset Management Fee shall be payable monthly in arrears by the Company in cash equal to 0.25% of Average Invested Assets and in Shares equal to 0.05% of Average Invested Assets, and may be deferred, in whole or in part, from time to time, by the Advisor (without interest). For purposes of this Section 9(b), Shares shall be issued at the then-current issue price under the Company’s distribution reinvestment plan or, in the event that the Company has no distribution reinvestment plan, at the fair market value of the Shares as reasonably determined by the Board of Directors, including a majority of the Independent Directors.
(c) [Reserved.]
(d) If the Advisor or an Affiliate provides a substantial amount of the services in connection with the Sale of one or more Properties, the Advisor or an Affiliate shall receive a Property Disposition Fee equal to the lesser of (i) one-half of a Competitive Real Estate Commission or (ii) 1.75% of the Contract Sales Price of such Property or Properties. The Property Disposition Fee may be paid in addition to real estate commissions paid to non-Affiliates; provided, however, that the total real estate commissions paid to all Persons by the Company with respect to the Sale of such Property or Properties shall not exceed an amount equal to the lesser of (i) 6.0% of the Contract Sales Price of the Property or Properties or (ii) the Competitive Real Estate Commission.
(e) The Company shall pay the Advisor a Subordinated Performance Fee in connection with any one of the following events:
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(i) Upon Listing, the Advisor shall be entitled to the Subordinated Performance Fee in an amount equal to 15.0% of the amount by which (i) the Market Value of the Company’s outstanding Shares plus distributions paid by the Company prior to Listing, exceeds (ii) the sum of the Invested Capital plus the Cumulative Return. The Company shall have the option to pay such fee in the form of cash, Shares, a non-interest bearing promissory note, or any combination of the foregoing, as agreed to by the Advisor. Absent such agreement, the fee shall be paid in cash, provided, however, that the Company shall not be required to Sell any Real Estate Asset or Real Estate-Related Securities in order to pay such fee and any shortfall may be paid by the Company with a non-interest bearing promissory note. If the Company pays such fee with a non-interest bearing promissory note, payment in full shall be made from the Net Sales Proceeds of the first Sale completed by the Company after Listing. If the Net Sales Proceeds from the first Sale after Listing are insufficient to pay the promissory note in full, then the promissory note shall be paid in part with such Net Sales Proceeds, and in part from the Net Sales Proceeds from the next successive Sales until the amount owing pursuant to such promissory note is paid in full. If the promissory note has not been paid in full within five years from the date of Listing, then the Advisor, or its successors or assigns, may elect to convert the unpaid balance into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election. If the Shares are no longer Listed at such time as the promissory note becomes convertible into Shares as provided by this paragraph, then the price per Share, for purposes of conversion, shall equal the fair market value for the Shares as determined by the Board of Directors based upon the appraised value of the Company’s Real Estate Assets and Real Estate-Related Securities as of the date of election;
(ii) Upon a Sale, the Advisor shall be entitled to the Subordinated Performance Fee in an amount equal to 15.0% of net sale proceeds remaining after the Stockholders have received the sum of the Invested Capital plus the Cumulative Return. The Company shall have the option to pay such fee in the form of cash, Shares, a non-interest bearing promissory note, or any combination of the foregoing, as agreed to by the Advisor. Absent such agreement, the fee shall be paid in cash, provided, however, that the Company shall not be required to Sell any additional Real Estate Asset or Real Estate-Related Securities in order to pay such fee and any shortfall may be paid by the Company with a non-interest bearing promissory note; or
(iii) Upon termination, unless such termination is by the Company because of a material breach of this Agreement by the Advisor or occurs upon a Change of Control, the Advisor shall be entitled to receive a payment of the Subordinated Performance Fee equal to 15.0% of the amount, if any, by which (i) the appraised value of the Company’s Real Estate Assets and Real Estate-Related Securities, valued on a portfolio basis, on the date of termination of this Agreement, less the amount of all indebtedness secured by the Company’s Real Estate Assets and Real Estate- Related Securities, plus the total distributions paid to Stockholders from the Company’s inception through the date of termination of this Agreement, exceeds (ii) the sum of
Notwithstanding the foregoing, if termination occurs upon a Change of Control, the Advisor shall be entitled to payment of the Subordinated Performance Fee equal to 15.0% of the amount, if any, by which (i) the value of the Company’s Real Estate Assets and Real Estate-Related Securities on the date of termination of this Agreement as determined in good faith by the Board of Directors, including a majority of the Independent Directors, based upon such factors as the consideration paid in connection with the Change of Control and the most recent appraised value of the Company’s Real Estate Assets and Real Estate-Related Securities, valued on a portfolio basis, less the amount of all indebtedness secured by the Company’s Real Estate Assets and Real Estate-Related Securities, plus the total distributions paid to Stockholders from the Company’s inception through the date of termination of this Agreement, exceeds (ii) the sum of the Invested Capital plus the Cumulative Return from inception through the date of termination of this Agreement. No deferral of payment of the Subordinated Performance Fee may be made under this paragraph of this Section 9(e). In the event that the Advisor disagrees with the valuation of Shares pursuant to the immediately preceding paragraph of this Section 9(e) where the Shares are not Listed for purposes of determining the number of Shares to be issued to the Advisor following the Advisor’s election to convert the balance of the Subordinated Performance Fee owed to the Advisor, then the fair market value of such Shares shall be determined by an independent expert of equity value selected by the Advisor.
Payment of a Subordinated Performance Fee may be in addition to, and shall be calculated after provision for payment of, any Acquisition Fee or Property Disposition Fee paid or payable to the Advisor. In the event a subordinated fee or distribution is owed to any predecessor advisor to the Company or the Partnership, Advisor agrees to assume such obligation from the Company and make payment to such predecessor advisor of such subordinated fee or distribution from the proceeds of any payments made to the Advisor by the Company pursuant to this Section 9(e).
(f) In the event of the origination or refinancing of any debt financing obtained by the Company, including the assumption (directly or indirectly) of existing debt, that is used to acquire Real Estate Assets or originate or acquire Real Estate-Related Securities or is assumed (directly or indirectly)
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the Invested Capital plus the Cumulative Return from inception through the date of termination of this Agreement. The Company shall pay such Subordinated Performance Fee at such time as the Company completes the first Sale after the date of termination of this Agreement. Payment shall be made from the Net Sales Proceeds of such Sale. The Company shall have the option to pay such fee in the form of cash, Shares, a non-interest bearing promissory note, or any combination of the foregoing, as agreed to by the Advisor. Absent such agreement, the fee shall be paid in cash. If the Net Sales Proceeds from the first Sale after the date of termination of this Agreement are insufficient to pay the Subordinated Performance Fee in full, then the Subordinated Performance Fee shall be paid in part with such Net Sales Proceeds, and in part from the Net Sales Proceeds from the next successive Sales until the
Subordinated Performance Fee is paid in full. If the Subordinated Performance Fee has not been paid in full within five years from the date of termination of this Agreement, then the Advisor, its successors or assigns, may elect to convert the balance of the fee into Shares at a price per Share equal to the average closing price of the Shares over the ten trading days immediately preceding the date of such election if the Shares are Listed at such time. If the Shares are not Listed at such time, the Advisor, its successors or assigns, may elect to convert the balance of the fee into Shares at a price per Share equal to the fair market value for the Shares as reasonably determined by the Board of Directors.
in connection with the acquisition of Real Estate Assets or the origination or acquisition of Real Estate-Related Securities, and if the Advisor provides a substantial amount of services, as determined by the Independent Directors, in connection therewith, the Company will pay to the Advisor a fee (the “Financing Coordination Fee”) equal to 1.0% of the amount available to the Company and/or outstanding under such debt financing; provided, however, that the Advisor shall not be entitled to a Financing Coordination Fee in connection with any indebtedness assumed in connection with the acquisition of a Real Estate Asset or Real Estate-Related Securities if the Advisor has been paid an Acquisition Fee in respect of such indebtedness because such indebtedness is included in the Contract Purchase Price, or otherwise, and provided further that the Advisor shall not be entitled to a Financing Coordination Fee in connection with the refinancing of any loan secured by any particular Real Estate Asset or Real Estate-Related Security that was previously subject to a refinancing in which the Advisor received a Financing Coordination Fee. Financing Coordination Fees payable from loan proceeds from permanent financing will be paid to the Advisor as the Company acquires such permanent financing; provided, however, that with respect to any revolving line of credit, the Advisor will be paid a Financing Coordination Fee only in connection with amounts being drawn for the first time and not upon any re-drawing of amounts that previously were repaid by the Company. 10. EXPENSES.
(a) In addition to the compensation paid to the Advisor or an affiliate pursuant to Section 9 hereof, the Company or the Partnership shall pay directly or reimburse the Advisor for all of the expenses paid or incurred by the Advisor or an affiliate in connection with the services it provides to the Company and the Partnership pursuant to this Agreement, including, but not limited to:
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(i) the Company’s Organizational and Offering Expenses; provided, however, that within 60 days after the end of the month in which the Offering terminates, the Advisor shall reimburse the Company for any Organizational and Offering Expenses reimbursement received by the Advisor pursuant to this Section 10, to the extent that such reimbursement exceeds the maximum amount permitted under the Prospectus or, at the option of the Company, such excess shall be subtracted from the next reimbursement of expenses to be made by the Company pursuant to this Section 10. The Advisor shall be responsible for the payment of all the Company’s Organizational and Offering Expenses in excess of the maximum amount permitted under the Prospectus;
(ii) Acquisition Expenses incurred in connection with the selection, evaluation and acquisition of Properties; (iii) the actual cost of goods and services used by the Company and obtained from entities not affiliated with the
Advisor, other than Acquisition Expenses;
(iv) interest and other costs for borrowed money, including discounts, points and other similar fees; (v) taxes and assessments on income of the Company or its Real Estate Assets;
(b) Expenses incurred by the Advisor on behalf of the Company and the Partnership and payable pursuant to this Section 10 shall be reimbursed no less than monthly to the Advisor. The Advisor shall prepare a statement documenting the expenses of the Company and the Partnership and the calculation of the Asset Management Fee during each quarter, and shall deliver such statement to the Company and the Partnership within 45 days after the end of each quarter.