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Advisory Agreement By And Among Strategic Storage Trust Iv, Inc., Strategic Storage Operating Partnership Iv, L.p. And Strategic Storage Advisor Iv, Llc Table Of Contents

Consulting Services Agreement

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STRATEGIC STORAGE TRUST IV, INC. | STRATEGIC STORAGE ADVISOR IV, LLC | STRATEGIC STORAGE OPERATING PARTNERSHIP IV, LP | STRATEGIC STORAGE TRUST IV, INC

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Title: ADVISORY AGREEMENT BY AND AMONG STRATEGIC STORAGE TRUST IV, INC., STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P. AND STRATEGIC STORAGE ADVISOR IV, LLC TABLE OF CONTENTS
Governing Law: California     Date: 7/22/2016

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Exhibit 10.2

ADVISORY AGREEMENT

BY AND AMONG

STRATEGIC STORAGE TRUST IV, INC.,

STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P.

AND

STRATEGIC STORAGE ADVISOR IV, LLC


TABLE OF CONTENTS

 

 

  

 

  

PAGE

 

ARTICLE I

  

DEFINITIONS

  

 

3

  

ARTICLE II

  

APPOINTMENT

  

 

9

  

ARTICLE III

  

AUTHORITY OF THE ADVISOR

  

 

10

  

    Section 3.1

  

General

  

 

10

  

    Section 3.2

  

Powers of the Advisor

  

 

10

  

    Section 3.3

  

Approval by Directors

  

 

10

  

    Section 3.4

  

Modification or Revocation of Authority of Advisor

  

 

10

  

ARTICLE IV

  

DUTIES OF THE ADVISOR

  

 

10

  

    Section 4.1

  

Organizational and Offering Services

  

 

10

  

    Section 4.2

  

Acquisition Services

  

 

11

  

    Section 4.3

  

Asset Management Services and Administrative Services

  

 

11

  

ARTICLE V

  

BANK ACCOUNTS

  

 

13

  

ARTICLE VI

  

RECORDS; ACCESS

  

 

13

  

ARTICLE VII

  

OTHER ACTIVITIES OF THE ADVISOR

  

 

14

  

    Section 7.1

  

General

  

 

14

  

    Section 7.2

  

Policy with Respect to Allocation of Investment Opportunities

  

 

14

  

ARTICLE VIII

  

LIMITATIONS ON ACTIVITIES

  

 

15

  

ARTICLE IX

  

FEES

  

 

15

  

    Section 9.1

  

Acquisition Fees

  

 

15

  

    Section 9.2

  

Asset Management Fee

  

 

15

  

    Section 9.4

  

Development Fee

  

 

15

  

    Section 9.5

  

Disposition Fees

  

 

16

  

ARTICLE X

  

EXPENSES

  

 

16

  

    Section 10.1

  

Reimbursable Expenses

  

 

16

  

    Section 10.2

  

Other Services

  

 

18

  

    Section 10.3

  

Timing of and Limitations on Reimbursements

  

 

18

  

    Section 10.4

  

Advisor Support of Other Organization and Offering Expenses

  

 

18

  

ARTICLE XI

  

NO PARTNERSHIP OR JOINT VENTURE

  

 

19

  

ARTICLE XII

  

RELATIONSHIP WITH DIRECTORS

  

 

19

  

ARTICLE XIII

  

REPRESENTATIONS AND WARRANTIES

  

 

19

  

    Section 13.1

  

The Company

  

 

19

  

    Section 13.2

  

The Operating Partnership

  

 

20

  

    Section 13.3

  

The Advisor

  

 

20

  

 

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ARTICLE XIV

  

TERM; TERMINATION OF AGREEMENT

  

 

21

  

    Section 14.1

  

Term

  

 

21

  

    Section 14.2

  

Termination by Any Party

  

 

21

  

    Section 14.3

  

Termination by the Advisor

  

 

21

  

    Section 14.4

  

Termination by the Company

  

 

21

  

    Section 14.5

  

Survival

  

 

21

  

ARTICLE XV

  

PAYMENTS TO AND DUTIES OF PARTIES UPON TERMINATION

  

 

21

  

    Section 15.1

  

Reimbursable Expenses and Earned Fees

  

 

21

  

    Section 15.2

  

Advisor’s Duties Upon Termination

  

 

21

  

    Section 15.3

  

Non-Solicitation

  

 

22

  

ARTICLE XVI

  

ASSIGNMENT TO AN AFFILIATE

  

 

22

  

ARTICLE XVII

  

INCORPORATION OF THE CHARTER AND THE OPERATING PARTNERSHIP AGREEMENT

  

 

22

  

ARTICLE XVIII

  

INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP

  

 

23

  

ARTICLE XIX

  

INDEMNIFICATION BY ADVISOR

  

 

23

  

ARTICLE XX

  

LIMITATION OF LIABILITY

  

 

24

  

ARTICLE XXI

  

NOTICES

  

 

24

  

ARTICLE XXII

  

MODIFICATION

  

 

24

  

ARTICLE XXIII

  

SEVERABILITY

  

 

25

  

ARTICLE XXIV

  

CONSTRUCTION/GOVERNING LAW

  

 

25

  

ARTICLE XXV

  

ENTIRE AGREEMENT

  

 

25

  

ARTICLE XXVI

  

INDULGENCES, NOT WAIVERS

  

 

25

  

ARTICLE XXVII

  

GENDER

  

 

25

  

ARTICLE XXVIII

  

TITLES NOT TO AFFECT INTERPRETATION

  

 

25

  

ARTICLE XXIX

  

EXECUTION IN COUNTERPARTS

  

 

26

  

ARTICLE XXX

  

INITIAL INVESTMENT

  

 

26

  

 

ii


ADVISORY AGREEMENT

This ADVISORY AGREEMENT, dated as of [              ], 2017, is entered into among STRATEGIC STORAGE TRUST IV, INC., a Maryland corporation (the “Company”), STRATEGIC STORAGE OPERATING PARTNERSHIP IV, L.P., a Delaware limited partnership (the “Operating Partnership”), and STRATEGIC STORAGE ADVISOR IV, LLC, a Delaware limited liability company (the “Advisor”).

W I T N E S S E T H

WHEREAS, the Company has filed with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-11 (No. [              ]) (the “Registration Statement”) covering the issuance of Common Stock, and the Company may subsequently issue additional shares of Common Stock;

WHEREAS, the Company intends to qualify as a REIT, and to invest its funds in investments permitted by the terms of the Company’s charter and Sections 856 through 860 of the Code;

WHEREAS, the Company is the general partner of the Operating Partnership;

WHEREAS, the Company and the Operating Partnership desire to avail themselves of the experience, sources of information, advice, assistance, and certain facilities available to the Advisor and its Affiliates and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Directors of the Company, all as provided herein; and

WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board of Directors, on the terms and 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 I

DEFINITIONS

As used in this Advisory Agreement, the following terms have the definitions hereinafter indicated:

“Acquisition Expenses” means expenses incurred by the Company, the Operating Partnership, the Advisor, or any of their affiliates in connection with the sourcing, selection, evaluation and acquisition of, and investment in, Properties, whether or not acquired or made, including but not limited to legal fees and expenses, travel and communications expenses, costs of financial analysis, appraisals and surveys, nonrefundable option payments on Property not acquired, accounting fees and expenses, computer use-related expenses, architectural and engineering reports, environmental reports, title insurance and escrow fees, and personnel and other direct expenses related to the selection and acquisition of Properties.

“Acquisition Fee” means any and all fees and commissions, exclusive of Acquisition Expenses, paid by any Person to any other Person (including any fees or commissions paid by or to any Affiliate of the Company or the Advisor) in connection with the making or investing in mortgage loans or the purchase, development, or construction of a Property, including, without limitation, real estate commissions, acquisition fees, finder’s fees, selection fees, Development Fees and Construction Fees

 

1


(except as provided in the following sentence), nonrecurring management fees, consulting fees, loan fees, points, or any other fees or commissions of a similar nature. Excluded shall be any commissions or fees incurred in connection with the leasing of any Property, and Development Fees or Construction Fees paid to any Person or entity not affiliated with the Advisor in connection with the actual development and construction of any Property. This fee is paid to the Advisor in the amount established pursuant to Section 9.1 for the services provided to the Company and the Operating Partnership described in Section 4.2.

“Advisor” means the Person responsible for directing or performing the day-to-day business affairs of the Company and the Operating Partnership, including a Person to which an Advisor subcontracts substantially all such functions. The Advisor is Strategic Storage Advisor IV, LLC or any Person which succeeds it in such capacity.

“Advisory Agreement” means this advisory agreement among the Company, the Operating Partnership, and the Advisor pursuant to which the Advisor will direct or perform the day-to-day business affairs of the Company and the Operating Partnership, as it may be further amended or restated from time to time.

“Affiliate” or “Affiliated” means, as to any individual, corporation, partnership, trust, limited liability company, or other legal entity (other than the Company): (a) any Person or entity, directly or indirectly owning, controlling, or holding with power to vote ten percent (10%) or more of the outstanding voting securities of another Person or entity; (b) any Person ten percent (10%) or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held, with power to vote, by such other Person; (c) any Person or entity directly or indirectly through one or more intermediaries controlling, controlled by, or under common control with another Person or entity; (d) any officer, director, general partner, or trustee of such Person or entity; and (e) if such other Person or entity is an officer, director, general partner, or trustee of a Person or entity, the Person or entity for which such Person or entity acts in any such capacity.

“Appraised Value” means value according to an appraisal made by an Independent Appraiser.

“Assets” means any and all GAAP assets including but not limited to all real estate investments (real, personal or otherwise), tangible or intangible, owned or held by, or for the account of, the Company or the Operating Partnership, whether directly or indirectly through another entity or entities, including Properties.

“Average Invested Assets” means, for a specified period, the average of the aggregate GAAP basis book carrying values of the Assets invested, directly or indirectly, in equity interests in and loans secured, directly or indirectly, by real estate before reserves for depreciation or bad debts or other similar non-cash reserves, computed by taking the average of such values at the end of each month during such period.

“Asset Management Fee” means the monthly fee paid to the Advisor in the amount established pursuant to Section 9.2 for the services provided to the Company and the Operating Partnership described in Section 4.3.

“Board of Directors” or “Board” means the individuals holding such office, as of any particular time, under the Charter of the Company, whether they are the Directors named therein or additional or successor Directors.

 

2


“Bylaws” means the bylaws of the Company, as the same may be amended from time to time.

“Capped O&O Expenses” means all Organizational and Offering Expenses (excluding Sales Commissions and the dealer manager fee) in excess of 3.5% of the Gross Proceeds raised in a completed Offering other than Gross Proceeds from Stock sold pursuant to the Distribution Reinvestment Plan.

“Charter” means the charter of the Company, including the articles of incorporation and all articles of amendment, articles of amendment and restatement, articles supplementary, and other modifications thereto as filed with the State Department of Assessments and Taxation of the State of Maryland.

“Class W Shares” means Class W shares of the Company’s Common Stock.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute thereto. Reference to any provision of the Code shall mean such provision as in effect from time to time, as the same may be amended, and any successor provision thereto, as interpreted by any applicable regulations as in effect from time to time.

“Common Stock” means shares of the Company’s common stock, $0.001 par value per share, the terms and conditions of which are set forth in the Charter.

“Common Stockholders” means holders of shares of Common Stock.

“Company” means Strategic Storage Trust IV, Inc., a corporation organized under the laws of the State of Maryland.

“Competitive Real Estate Commission” means a real estate or brokerage commission paid (or, if no commission is paid, the amount that customarily would be paid) for the purchase or sale of a Property that is reasonable, customary and competitive in light of the size, type, and location of the Property.

“Construction Fee” means a fee or other remuneration for acting as general contractor and/or construction manager to construct, supervise, or coordinate leasehold or other improvements or projects, or to provide major repairs or rehabilitation for a Property.

“Contract Purchase Price” means the amount actually paid or allocated in respect of the purchase, development, construction, or improvement of a Property, exclusive of Acquisition Fees and Acquisition Expenses.

“Contract Sales Price” means the total consideration provided for in the sales contract for the sale of a Property.

“Dealer Manager” means Select Capital Corporation, an Affiliate of the Advisor, or such other Person or entity selected by the Board of Directors to act as the dealer manager for the offering of the Stock. Select Capital Corporation is a member of the Financial Industry Regulatory Authority.

“Development Fee” means a fee for the packaging of a Property, including negotiating and approving plans, and undertaking to assist in obtaining zoning and necessary variances and financing for the specific Property, either initially or at a later date.

 

3


“Director” means an individual who is a member of the Board of Directors.

“Disposition Fee” means the fee paid to the Advisor in connection with the sale of a property as described in Section 9.4 of this Advisory Agreement.

“Distribution Reinvestment Plan” means the distribution reinvestment plan of the Company approved by the Board and as set forth in the Prospectus.

“Distributions” means any dividends or other distributions of money or other property paid by the Company to the holders of Common Stock or preferred stock, including dividends that may constitute a return of capital for federal income tax purposes.

“Excess Amount” has the meaning set forth in Section 10.3(b) hereof.

“Excess Expense Guidelines” has the meaning set forth in Section 10.3(b) hereof.

“Expense Year” has the meaning set forth in Section 10.3(b) hereof.

“GAAP” means generally accepted accounting principles consistently applied as used in the United States.

“Gross Proceeds” means the aggregate purchase price of all Stock sold for the account of the Company, including Stock sold pursuant to the Distribution Reinvestment Plan, without deduction for Sales Commissions, volume discounts, fees paid to the Dealer Manager, or other Organization and Offering Expenses. Gross Proceeds does not include Stock issued in exchange for OP Units.

“Independent Appraiser” means a person or entity, who is not an Affiliate of the Advisor or the Directors, who is engaged to a substantial extent in the business of rendering opinions regarding the value of assets of the type held by the Company, and who is a qualified appraiser of real estate as determined by the Board. Membership in a nationally recognized appraisal society such as the American Institute of Real Estate Appraisers or the Society of Real Estate Appraisers shall be conclusive evidence of such qualification.

“Independent Director” means a Director who is not, and within the last two (2) years has not been, directly or indirectly associated with the Advisor or the Sponsor by virtue of (a) ownership of an interest in the Advisor, the Sponsor or their Affiliates, (b) employment by the Advisor, the Sponsor or their Affiliates, (c) service as an officer or director of the Advisor, the Sponsor or their Affiliates, (d) performance of services, other than as a Director, for the Company, (e) service as a director or trustee of more than three (3) real estate investment trusts organized by the Advisor or the Sponsor or advised by the Advisor, or (f) maintenance of a material business or professional relationship with the Advisor, the Sponsor or any of their Affiliates. A business or professional relationship is considered material if the gross revenue derived by the Director from the Advisor, the Sponsor and Affiliates exceeds five percent (5%) of either the Director’s annual gross revenue during either of the last two (2) years or the Director’s net worth on a fair market value basis. An indirect relationship shall include circumstances in which a Director’s spouse, parents, children, siblings, mothers- or fathers-in-law, sons- or daughters-in-law or brothers- or sisters-in-law are or have been associated with the Advisor, the Sponsor, any of their Affiliates or the Company or the Operating Partnership.

“Initial Public Offering” means the offering and sale of Common Stock of the Company pursuant to the Company’s first effective registration statement covering such Common Stock filed under the Securities Act.

 

4


“Joint Venture” or “Joint Ventures” means those joint venture or general partnership arrangements in which the Company or the Operating Partnership is a co-venturer or general partner which are established to acquire Properties.

“NASAA” means the North American Securities Administrators Association, Inc.

“NASAA Net Income” means for any period, the total revenues applicable to such period, less the total expenses applicable to such period excluding additions to reserves for depreciation, bad debts or other similar non-cash reserves; provided, however, NASAA Net Income for purposes of calculating total allowable Operating Expenses shall exclude the gain from the sale of the Company’s or the Operating Partnership’s Assets.

“NASAA REIT Guidelines” means the Statement of Policy Regarding Real Estate Investment Trusts published by the NASAA, as revised and adopted by the NASAA membership on May 7, 2007, as may be amended from time to time.

“Offering” means an offering of Stock that is registered with the SEC, excluding Stock offered under any employee benefit plan.

“Operating Expenses” means all direct and indirect costs and expenses incurred by the Company, as determined under GAAP, which in any way are related to the operation of the Company or to Company business, including advisory fees, but excluding (a) the expenses of raising capital such as Organizational and Offering Expenses, legal, audit, accounting, underwriting, brokerage, listing, registration, and other fees, printing and other such expenses and taxes incurred in connection with the issuance, distribution, transfer, registration and listing of the Stock on a national securities exchange, (b) interest payments, (c) taxes, (d) non-cash expenditures such as depreciation, amortization and bad debt reserves, (e) Acquisition Fees and Acquisition Expenses, (f) real estate commissions on the Sale of Property, and other expenses connected with the acquisition and ownership of real estate interests, mortgage loans, or other property (such as the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property) and (g) any incentive fees which may be paid in compliance with the NASAA REIT Guidelines. The definition of “Operating Expenses” set forth above is intended to encompass only those expenses which are required to be treated as Operating Expenses under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company which is not an Operating Expense under the NASAA REIT Guidelines shall not be treated as an Operating Expense for purposes hereof.

“Operating Partnership” means Strategic Storage Operating Partnership IV, L.P., a Delaware limited partnership.

“Operating Partnership Agreement” means the First Amended and Restated Limited Partnership Agreement of the Operating Partnership, as amended and restated from time to time.

“OP Unit” means a unit of limited partnership interest in the Operating Partnership.

“Organizational and Offering Expenses” means any and all costs and expenses incurred by the Company, the Advisor, or any Affiliate of either in connection with and in preparing the Company for registration of and subsequently offering and distributing its Stock to the public, which may include but are not limited to total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), legal, accounting and escrow fees, expenses for printing, engraving, amending, supplementing and mailing, distribution costs, compensation to employees while engaged in registering, marketing and wholesaling the Stock, telegraph and telephone costs, all advertising and marketing

 

5


expenses (including the costs related to investor and broker-dealer sales meetings), charges of transfer agents, registrars, trustees, escrow holders, depositories, experts, and fees, expenses and taxes related to the filing, registration and qualification of the sale of the Securities under Federal and State laws, including accountants’ and attorneys’ fees and other accountable offering expenses. Organization and Offering Expenses may include, but are not limited to: (a) amounts to reimburse the Advisor for all marketing related costs and expenses such as compensation to and direct expenses of the Advisor’s employees or employees of the Advisor’s Affiliates in connection with registering and marketing the Stock; (b) travel and entertainment expenses related to the offering and marketing of the Stock; (c) facilities and technology costs and other costs and expenses associated with the offering and to facilitate the marketing of the Stock including web site design and management; (d) costs and expenses of conducting training and educational conferences and seminars; (e) costs and expenses of attending broker-dealer sponsored retail seminars or conferences; and (f) payment or reimbursement of bona fide due diligence expenses.

“Other Organization and Offering Expenses” means Organization and Offering Expenses with respect to an Offering, other than Sales Commissions, dealer manager fees, stockholder servicing fees, and dealer manager servicing fees relating to the Initial Public Offering.

“Person” shall mean any natural person, partnership, corporation, association, trust, limited liability company, or other legal entity.

“Property” or “Properties” means the real properties or real estate investments which are acquired by the Company either directly or through the Operating Partnership, Joint Ventures, partnerships, or other entities.

“Property Manager” means any entity that has been retained to perform and carry out at one or more of the Properties property management services.

“Prospectus” means any document, notice, or other communication satisfying the standards set forth in Section 10 of the Securities Act of 1933, and contained in a currently effective registration statement filed by the Company with, and declared effective by, the SEC, or if no registration statement is currently effective, then the Prospectus contained in the most recently effective registration statement.

“Public Offering” means the Initial Public Offering or any subsequent offering of Stock that is registered with the SEC, excluding Stock offered under any employee benefit plan.

“Registration Statement” means a registration statement filed by the Company with the Securities and Exchange Commission on Form S-11, as amended from time to time, in connection with a Public Offering.

“REIT” means a corporation, trust or association which is engaged in investing in equity interests in real estate (including fee ownership and leasehold interests and interests in partnerships and Joint Ventures holding real estate) or in loans secured by mortgages on real estate or both and that qualifies as a real estate investment trust under the REIT Provisions of the Code.

“REIT Provisions of the Code” means Sections 856 through 860 of the Code and any successor or other provisions of the Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.

 

6


“REIT Shares Amount” has the meaning set forth in the Operating Partnership Agreement.

“Sale” or “Sales” means any transaction or series of transactions whereby: (a) the Operating Partnership sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including the lease of any Property consisting of the building only, and including any event with respect to any Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (b) the Operating Partnership sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (c) any Joint Venture in which the Operating Partnership is a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Property or portion thereof, including any event with respect to any Property which gives rise to insurance claims or condemnation awards; (d) the Operating Partnership sells, grants, conveys, or relinquishes its interest in any asset, or portion thereof, including any event with respect to any asset which gives rise to a significant amount of insurance proceeds or similar awards; or (e) the Operating Partnership sells or otherwise disposes of or distributes all of its assets in liquidation of the Operating Partnership.

“Sales Commissions” means any and all commissions payable to underwriters, dealer managers, or other broker-dealers in connection with the sale of Stock, including, without limitation, commissions payable to the Dealer Manager.

“Securities” means any class or series of units or shares of the Company or the Operating Partnership, including common shares or preferred units or shares and any other evidences of equity or beneficial or other interests, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as “Securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire, any of the foregoing.

“Securities Act” means the Securities Act of 1933, as amended.

“Sponsor” means SmartStop Asset Management, LLC, a Delaware limited liability company.

“Stock” means shares of stock of the Company of any class or series, including Common Stock, preferred stock or shares-in-trust.

“Stockholders” means the registered holders of the Company’s Stock.

“Termination Date” means the date of termination of this Advisory Agreement.

ARTICLE II

APPOINTMENT

The Company, through the powers vested in the Board of Directors including a majority of all Independent Directors, and the Operating Partnership, hereby appoints the Advisor to serve as its advisor and asset manager on the terms and conditions set forth in this Advisory Agreement, and the Advisor hereby accepts such appointment. The Advisor undertakes to use its commercially reasonable best efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide 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.

 

7


ARTICLE III

AUTHORITY OF THE ADVISOR

Section 3.1 General . All rights and powers to manage and control the day-to-day business and affairs of the Company and the Operating Partnership shall be vested in the Advisor. The Advisor shall have the power to delegate all or any part of its rights and powers to manage and control the business and affairs of the Company and the Operating Partnership to such officers, employees, Affiliates, agents, and representatives of the Advisor, the Company, or the Operating Partnership as it may from time to time deem appropriate. Any authority delegated by the Advisor to any other Person shall be subject to the limitations on the rights and powers of the Advisor specifically set forth in this Advisory Agreement, the Charter, the Bylaws, and the Operating Partnership Agreement.

Section 3.2 Powers of the Advisor . Subject to the express limitations set forth in this Advisory Agreement and subject to the supervision of the Board, the power to direct the management, operation and policies of the Company and the Operating Partnership shall be vested in the Advisor, which shall have the power by itself and shall be authorized and empowered on behalf and in the name of the Company and the Operating Partnership, as applicable, to carry out any and all of the objectives and purposes of the Company and the Operating Partnership and to perform all acts and enter into and perform all contracts and other undertakings that it may in its sole discretion deem necessary, advisable or incidental thereto to perform its obligations under this Advisory Agreement.

Section 3.3 Approval by Directors . Notwithstanding the foregoing, any investment in Properties, including any acquisition of a Property by the Company or the Operating Partnership or any investment by the Company or the Operating Partnership in a joint venture, limited partnership, or similar entity owning real properties, will require the prior approval of the Board of Directors or a committee of the Board constituting a majority of the Board. The Advisor will deliver to the Board of Directors all documents required by it to properly evaluate the proposed investment.

Section 3.4 Modification or Revocation of Authority of Advisor . The Board may, at any time upon the giving of notice to the Advisor, modify or revoke the authority or approvals set forth in Articles III and IV, provided however, that such modification or revocation shall be effective upon receipt by the Advisor and shall not be applicable to investment transactions to which the Advisor has committed the Company or the Operating Partnership prior to the date of receipt by the Advisor of such notification.

ARTICLE IV

DUTIES OF THE ADVISOR

The Advisor undertakes to use its commercially reasonable best efforts to present to the Company and the Operating Partnership potential investment opportunities and to provide 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. In connection therewith, the Advisor agrees to perform the following services on behalf of the Company and the Operating Partnership.

Section 4.1 Organizational and Offering Services . The Advisor shall manage and supervise:

(a) the structure and development of any Offering, including the determination of the specific terms of the Securities to be offered by the Company;

(b) the preparation of all organizational and offering related documents, and obtaining of all required regulatory approvals of such documents;

 

8


(c) along with the Dealer Manager, approval of the participating broker dealers and negotiation of the related selling agreements;

(d) coordination of the due diligence process relating to participating broker dealers and their review of the Prospectus and other Offering and Company documents;

(e) preparation and approval of all marketing materials contemplated to be used by the Dealer Manager or others in an Offering;

(f) along with the Dealer Manager, negotiation and coordination with the transfer agent for the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions;

(g) creation and implementation of various technology and electronic communications related to an Offering; and

(h) all other services related to organization of the Company or the Offering, whether performed and incurred by the Advisor or its Affiliates.

Section 4.2 Acquisition Services . The Advisor shall:

(a) serve as the Company’s and the Operating Partnership’s investment and financial advisor and provide relevant market research and economic and statistical data in connection with the Company’s assets and investment objectives and policies;

(b) subject to Article III hereof and the investment objectives and policies of the Company: (i) locate, analyze and select potential investments; (ii) structure and negotiate the terms and conditions of transactions pursuant to which investments in Assets will be made; (iii) acquire Assets on behalf of the Company and the Operating Partnership; and (iv) arrange for financing related to acquisitions of Assets;

(c) perform due diligence on prospective investments and create due diligence reports summarizing the results of such work;

(d) prepare reports regarding prospective investments which include recommendations and supporting documentation necessary for the Board to evaluate the proposed investments;

(e) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate, concerning the value of contemplated investments of the Company and the Operating Partnership; and

(f) negotiate and execute investments and other transactions approved by the Board.

Section 4.3 Asset Management Services and Administrative Services .

(a) Asset Management and Property Related Services . The Advisor shall:

(i) negotiate and service the Company’s and the Operating Partnership’s debt facilities and other financings;

(ii) monitor applicable markets and obtain reports (which may be prepared by the Advisor or its Affiliates) where appropriate, concerning the value of investments of the Company and the Operating Partnership;

 

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(iii) monitor and evaluate the performance of investments of the Company and the Operating Partnership; provide daily management services to the Company and perform and supervise the various management and operational functions related to the Company’s and the Operating Partnership’s investments;

(iv) coordinate with the Property Manager on its duties under any property management agreement and assist in obtaining all necessary approvals of major property transactions as governed by the applicable property management agreement;

(v) coordinate and manage relationships between the Company and the Operating Partnership with any joint venture partners;

(vi) consult with the officers and Directors of the Company and provide assistance with the evaluation and approval of potential property dispositions, sales or refinancings; and

(vii) provide the officers and Directors of the Company periodic reports regarding prospective investments in Properties.

(b) Accounting, Regulatory and Other Administrative Services . The Advisor shall:

(i) maintain accounting systems, records and data and any other information requested concerning the activities of the Company and the Operating Partnership as shall be required to prepare and to file all periodic financial reports and returns required to be filed with the Securities and Exchange Commission and any other regulatory agency, including annual financial statements;

(ii) provide tax and compliance services and coordinate with appropriate third parties, including independent accountants and other consultants, on related tax matters;

(iii) maintain all appropriate books and records of the Company and the Operating Partnership;

(iv) provide the officers of the Company and the Board with timely updates related to the overall regulatory environment affecting the Company, as well as managing compliance with such matters, including but not limited to compliance with the Sarbanes-Oxley Act of 2002;

(v) consult with the officers of the Company and the Board relating to the corporate governance structure and appropriate policies and procedures related thereto;

(vi) perform all reporting, record keeping, internal controls and similar matters in a manner to allow the Company to comply with applicable law including the Sarbanes-Oxley Act of 2002;

(vii) investigate, select, and, on behalf of


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