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Exhibit 10.6
EXCLUSIVE CLIENT AGENCY AGREEMENT
This EXCLUSIVE
CLIENT AGENCY AGREEMENT ("Agreement") is made and entered
into and declared effective as of this 9th
day of May, 2005,
BY AND BETWEEN
ADVISORS REIT I, INC.
a Maryland Corporation
hereinafter referred to as "CLIENT",
AND
JOHN T. ARNOLD ASSOCIATES, INC,
a Kansas Corporation
hereinafter referred to as
"REPRESENTATIVE".
W I T N E S S E
T H:
WHEREAS, Representative is a
real estate agency licensed in the state of
Kansas possessing certain expertise in the
acquisition, sale and leasing of
commercial real estate (the "Expertise");
and
WHEREAS, Client
intends to operate as a real estate investment trust in the
business of purchasing, leasing selling and
otherwise investing in commercial
real estate; and
WHEREAS Client
desires to retain Representative respecting its Expertise
for services related to the acquisition,
leasing and sale of commercial real
estate.
NOW, THEREFORE,
in consideration of the terms and conditions hereinafter
set forth and other good and valuable
consideration, the receipt and sufficiency
of which is hereby acknowledged, Client and
Representative agree as follows:
1. REAL PROPERTY. From time to
time, Client desires to purchase commercial
real estate (referred to herein as the
"Property" or "Properties") generally
located in the Midwestern and Southwestern
United States for up to an
approximate aggregate purchase price of
$25,000,000.00 as further described in
that certain Form S-11 Registration
Statement filed by Client with the
Securities and Exchange Commission on or
about May 12, 2005 (the "Registration
Statement") and consistent with the
criteria established hereunder.
2. CLIENT'S AGENT. Client
hereby grants to Representative and Representative
hereby accepts the exclusive right to (a)
locate and assist Client in locating
appropriate Properties for Client to
purchase or otherwise acquire an interest
in; (b) offer Client's Properties for sale
to third party buyers; (c) negotiate
the purchase or exchange sale of
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Properties on behalf of Client and (d)
engage local agents, brokers and other
real estate professionals to assist in
Representative's performance of its
obligations hereunder (the "Co-Brokers").
Representative may be offered the
opportunity to act as Client's leasing
agent on a case-by- case basis at the
sole discretion of Client.
3. TERM. This Agreement shall
be in effect commencing on the closing date of
the "minimum offering" of the shares as
described in the Registration Statement
and continue thereafter for a period of
twelve (12) months, unless sooner
terminated or extended in accordance with
the provisions of this Agreement (the
"Term"). If Representative is the
"Procuring Cause" of any transaction involving
Client which closes within six (6) months
following the termination or
expiration of this Agreement, Client shall
nevertheless pay to Representative
its Commission, if any, due under SECTION 4
herein. Representative shall not
receive any Commission from Client for any
transaction closing more than six (6)
months after the expiration or termination
of this Agreement.
4. REPRESENTATIVE'S FEE.
Representative shall receive payment in the form of a
commission (the "Commission") for its
services as follows:
(a) GENERAL. In transactions when a
Commission is being offered to
Representative pursuant to a lessor or
seller's listing agreement or is being
offered from a cooperating agency or
Representative, Client shall not be
responsible for paying any Commission to
Representative and Representative shall
look only to such lessor, seller or
cooperating agency or Representative for its
Commission, except as herein expressly
provided to the contrary.
(b) PURCHASE OR SALE. In any other
transaction for the purchase or sale of
a Property where Representative is unable
to obtain its Commission in accordance
with SUBSECTION 4 (a) above, Client shall
pay to Representative a Commission
equal to the following percentages of the
final negotiated purchase price of the
Property which shall not include any
administrative, closing, insurance or
professional costs associated with the
transaction (the "Purchase Price"): six
percent (6%) of the Purchase Price up to
$1,000,000; four percent (4%) of the
portion between $1,000,000 and $2,000,000;
and two percent (2%) for that portion
of the Purchase Price above $2,000,000 (the
"Standard REIT Commission Rate").
Provided, in any situation in which
Representative is acting as Client's
purchaser representative and the commission
payable to Representatives from any
cooperating seller's broker is less than
one half (1/2) of the amount that
Representative would receive if the
Standard REIT Commission Rate had applied,
then Client shall at closing pay
Representative the difference between such
amounts.
(c) (Notwithstanding any of the
foregoing in this SECTION 4, no commission
shall be due or payable in a given
transaction unless and until all of the
following events have occurred:
i.
Representative has
procured a ready,
willing and able buyer,
seller,
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lessee, or tenant (i.e., tenant in a
municipally-financed project), as the case
may be;
ii. Client and the
applicable seller, buyer, lessor or lessee have
executed and delivered a contract of sale,
purchase or lease, as the case may
be, the terms and conditions of which are
acceptable to Client, in Client's sole
discretion; and
iii. The closing of the sale, purchase or lease including
Seller's
receipt of any cash due at closing has
occurred.
(d) Representative's Commission shall
be the sole compensation due and
owing to Representative. Representative
shall not be entitled to reimbursement
for any expenses or any other costs
Representative incurs related to or
involving the performance of its
obligations hereunder unless approved by
Client.
(e) Payment of any commission,
referral fee or other compensation to any
Co-Brokers shall be the responsibility of
Representative.
5. OTHER BUYERS/TENANTS. Client
acknowledges that other potential
buyers/tenants may consider, make offers
on, or purchase through Representative
similar properties as Client seeks. Client
consents to Representative's
representation of such potential
buyers/tenants during the term of this
Agreement and after its expiration.
Provided, Representative shall not disclose
to anyone other than the proposed seller,
buyer, or lessee Client's identity,
Client's interest in any Property, or the
material terms of any offer made by
Client without Client's prior written
consent.
6. DUTIES AND RESPONSIBILITIES.
Representative shall perform the terms of this
Agreement, promote the interests of Client
with the utmost good faith, loyalty
and fidelity and shall present all written
offers, counter-offers and backup
offers to Client in a timely manner. In
satisfaction of his obligations under
this Agreement and the Kansas brokerage
relationships in real estate transaction
act, Representative shall provide all
information requested by Client in the
form and manner requested by Client.
Representative shall advise Client to
obtain expert advice as to material matters
about which Representative knows but
the specifics of which are beyond
Representative's Expertise. Representative
shall disclose to Client all adverse
material information actually known by
Representative, including (a) any material
limitation on the Client's ability to
perform under the terms of the contract or
lease and (b) any facts known by
Representative that contradict any
information included in a written report
regarding the physical condition of the
property which has been prepared by a
qualified third party and provided to
Client. Representative shall also account
to Client for all money or property
received by it on account of Client in a
timely manner. It is understood that
Client's targeted capitalization rate for
its portfolio is nine percent (9%) and
targeted price for properties is in the
$3 Million to $5 Million price range. In
calculating such targeted rate,
Representative acknowledges that such rates
on a property-by-property basis
shall be calculated in accordance with
industry standards which are deemed to
include:
(a) costs of property shall include
all acquisition and start-up costs,
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including but not limited to, price to seller, all commissions paid
by
Client, all due diligence expenses, tenant improvements,
lease-up
costs, and securities compliance costs directly attributable to
the
proposed acquisition (for example, costs of filing applicable Form
8-K
with Securities and Exchange Commission); and
(b) net operating income shall be
calculated based upon gross rental
income after taking into effect all direct costs attributable to
the
on-going management and ownership of the property, including but
not
limited to, allowance for vacancy, direct operating expenses,
property
management fees, maintenance expenses and allowanc
