AMENDED AND RESTATED ADVISORY
AGREEMENT
THIS
AMENDED AND RESTATED ADVISORY AGREEMENT (this “
Agreement ”), dated as of November 14, 2008 and
effective as of October 24, 2008 (the “ Effective
Date ”), is by and among GRUBB & ELLIS HEALTHCARE
REIT, INC. , a Maryland corporation (the “ Company
”), GRUBB & ELLIS HEALTHCARE REIT HOLDINGS, LP , a
Delaware limited partnership (the “ Partnership
”), GRUBB & ELLIS HEALTHCARE REIT ADVISOR, LLC , a
Delaware limited liability company (the “ Advisor
”) and, solely for purposes of Sections 17 and 37
of this Agreement, GRUBB & ELLIS REALTY INVESTORS, LLC ,
a Virginia limited liability company (“ GERI ”)
and amends, restates, and supersedes in its entirety that certain
Advisory Agreement dated September 20, 2006, as amended by a
First Amendment to Advisory Agreement dated November 16, 2006
(collectively, the “ Original Advisory
Agreement” ) executed by the Company, Partnership,
Advisor and GERI. From and after the execution and delivery of this
Agreement, the Original Advisory Agreement shall be of no further
force and effect.
WITNESSETH
WHEREAS, the Company has filed with the
Securities and Exchange Commission a Registration Statement on Form
S-11 (File No. 333-133652) (the “ Registration
Statement ”) covering the initial public offering of its
common stock, par value $0.01 per share (the “ Shares
”);
WHEREAS, the Company has qualified as a REIT (as
defined below), and intends to continue to invest its funds in
investments permitted by the terms of the Company’s Articles
of Incorporation and Sections 856 through 860 of the Code (as
defined below);
WHEREAS, the Company is the general partner of
the Partnership and intends to continue to conduct all of its
business and make all of its investments in Properties and Real
Estate Related Securities through the Partnership;
WHEREAS, the Company and the Partnership desire
to avail themselves of the experience, sources of information,
advice, assistance and certain facilities available to the Advisor
(as defined below) 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:
1. Definitions . As used in this Agreement, the following terms
have the definitions hereinafter indicated:
Acquisition Expenses . Any and all expenses incurred by the Company,
the Partnership, the Advisor, or any Affiliate of either in
connection with the selection, evaluation, acquisition and
development of, and investment in Properties, whether or not
acquired or made so long as the Board of the Company approved the
acquisition of the Properties, including, but not limited to, legal
fees and expenses, travel and communications expenses, cost of
appraisals and surveys, nonrefundable option payments on property
not acquired, accounting fees and expenses, computer use related
expenses, architectural, engineering and other property reports,
environmental and asbestos audits, title insurance and escrow fees,
loan fees or points or any fee of a similar nature paid to a third
party, however designated, transfer taxes, and personnel and
miscellaneous expenses related to the selection, evaluation and
acquisition of properties.
Acquisition Fee . The Acquisition Fee payable to the Advisor as
defined in Section 8(a) .
Advisor . Grubb & Ellis Healthcare REIT Advisor,
LLC, a Delaware limited liability company, any successor advisor to
the Company and the Partnership to which Grubb & Ellis
Healthcare REIT Advisor, LLC or any successor advisor subcontracts
substantially all of its functions.
Affiliate or Affiliated
. An Affiliate of another Person
includes only the following: (i) any Person directly or
indirectly owning, controlling, or holding with the power to vote
ten percent (10%) or more of the outstanding voting securities of
such other Person; (ii) 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; (iii) any Person directly or indirectly controlling,
controlled by, or under common control with such other Person;
(iv) any executive officer, director, trustee, or general
partner of such other Person; and (v) any legal entity for
which such Person acts as an executive officer, director, trustee,
or general partner. An entity shall not be deemed to control or be
under common control with an Advisor-sponsored program unless
(i) the entity owns ten percent (10%) or more of the voting
equity interests of such program or (ii) a majority of the
board of directors (or equivalent governing body) of such program
is comprised of Affiliates of the entity.
Appraised Value . Value according to an appraisal made by an
Independent Appraiser.
Articles of Incorporation
. The Articles of Incorporation of
the Company under Title 2 of the Corporations and Associations
Article of the Annotated Code of Maryland dated as of
April 20, 2006, as amended from time to time.
Asset Management Fee . The Asset Management Fee payable to the
Advisor as defined in Section 8(b) .
Average Invested Assets
. For a specified period, the
average of the aggregate Book Value of the assets of the Company
invested, directly or indirectly, in Real Estate Related Securities
or Properties, before reserves for depreciation, 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.
Board of Directors or Board
. The persons holding such office,
as of any particular time, under the Articles of Incorporation of
the Company, whether they be the Directors named therein or
additional or successor Directors.
Book Value . The value of an asset on the books of the
Company, before allowance for depreciation or
amortization.
Bylaws . The bylaws of the Company, as the same are in
effect from time to time.
Capped O&O Expenses
. All Organizational and Offering
Expenses other than selling commissions, the marketing support fee
and the due diligence reimbursement as described under “Plan
of Distribution” to the Registration Statement.
Cause . With respect to the termination of this
Agreement, fraud, criminal conduct, willful misconduct or willful
or grossly negligent breach of fiduciary duty by the Advisor, or a
material breach of this Agreement by the Advisor, provided that
(i) the Advisor does not cure any such material breach within
thirty (30) days of receiving notice of such material breach
from the Company or the Partnership, or (ii) such material
breach is not of a nature that can be remedied within such
period.
Code . 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.
Company . Grubb & Ellis Healthcare REIT, Inc., a
corporation organized under the laws of the State of
Maryland.
Competitive Real Estate
Commission . A real
estate or brokerage commission for the purchase or sale of a
property which is reasonable, customary, and competitive in light
of the size, type, and location of the property.
Contract Purchase Price
. The amount actually paid or
allocated by the Company in respect of the purchase, development,
construction or improvement of a Property, or the amount funded to
acquire or originate a Real Estate Related Security, in each case
exclusive of Acquisition Fees and Acquisition Expenses.
Contract Sales Price . The total consideration received by the
Company for the sale of a Property exclusive of the applicable
Disposition Fee.
Director . A member of the Board of Directors of the
Company.
Disposition Fee . The fee payable to the Advisor under certain
circumstances in connection with the Sale of one or more Properties
pursuant to Section 8(c) .
Distributions . Any distributions of money or other property
by the Company to owners of Shares, including distributions that
may constitute a return of capital for federal income tax
purposes.
Fiscal Year . Any period for which any income tax return is
submitted by the Company to the Internal Revenue Service and which
is treated by the Internal Revenue Service as a reporting
period.
Good Reason . With respect to the termination of this
Agreement, (i) any failure to obtain a satisfactory agreement
from any successor to the Company and the Partnership to assume and
agree to perform the Company’s and the Partnership’s
obligations under this Agreement; or (ii) any material breach
of this Agreement by the Company, provided that (x) the
Company does not cure such material breach within thirty
(30) days of receiving notice of such material breach from the
Advisor, or (y) such material breach is not of a nature that can be
remedied within such period.
Gross Income . All cash receipts derived from the operation
of any Property, excluding (i) tenant security deposits unless and
until such deposits are forfeited upon a tenant default and
(ii) proceeds from insurance claims, condemnation proceedings,
sales or refinancings.
Gross Offering Proceeds
. The aggregate purchase price of
all Shares sold for the account of the Company through an Offering,
without deduction for volume discounts or Organizational and
Offering Expenses. For the purpose of computing Gross Offering
Proceeds, the purchase price of any Share for which reduced selling
commissions are paid to the dealer manager or a soliciting dealer
(where net proceeds to the Company are not reduced) shall be deemed
to be the full amount of the offering price per Share pursuant to
the prospectus for such Offering without reduction.
Grubb & Ellis Realty Investors,
LLC . Grubb &
Ellis Realty Investors, LLC, a Virginia limited liability
company.
Independent Appraiser
. A person or entity with no
material current or prior business or personal relationship with
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 . A Director who is not and within the last two
years has not been directly or indirectly associated with the
Advisor by virtue of (i) ownership of an interest in the
Advisor or its Affiliates, (ii) employment by the Advisor or
its Affiliates, (iii) service as an officer or director of the
Advisor or its Affiliates, (iv) performance of services, other
than as a Director, for the Company, (v) service as a director
or trustee of more than three REITs advised by the Advisor, or
(vi) maintenance of a material business or professional
relationship with the Advisor or any of its Affiliates. A business
or professional relationship is considered material if the gross
income derived by the Director from the Advisor and Affiliates
(excluding fees for serving as a director of the Company or other
REIT or real estate programs organized or advised by the Advisor or
its Affiliates) exceeds five percent (5%) of either the
Director’s annual gross income during either of the last two
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 is or has been associated with the Advisor, any of
its Affiliates, or the Company.
Joint Venture . Any joint venture, partnership, limited
liability company or other Affiliate of the Company (other than the
Partnership) that owns, in whole or in part on behalf of the
Company, any Properties.
Lease Fee . The Lease Fee payable to the Advisor, an
Affiliate of the Advisor or a non-Affiliated third party as the
Property Manager as defined in Section 8(d)
.
Listing . The term “ Listing ” shall
mean that the Shares have been approved for trading on (i) the New
York Stock Exchange, the American Stock Exchange, or the Global
Market or the Global Select Market of the Nasdaq Stock Market (or
any successor to such entities) or (ii) a national securities
exchange (or tier or segment thereof) that has listing standards
that the Securities and Exchange Commission has determined by rule
are substantially similar to the listing standards applicable to
securities described in Section 18(b)(1)(A) of the Securities
Act of 1933, as amended. Upon such Listing, the Shares shall be
deemed Listed.
NASAA Guidelines . The NASAA Statement of Policy Regarding Real
Estate Investment Trusts as in effect on the date
hereof.
Net Income . 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, Net Income for
purposes of calculating total allowable Operating Expenses (as
defined herein) shall exclude the gain from the sale of the
Company’s assets.
Offering . Any offering of Shares that is registered with
the SEC, excluding Shares offered under any employee benefit
plan.
Offering Stage . The period from the commencement of the
Company’s initial public equity offering through the
termination of the Company’s last public equity offering
prior to Listing, but in no event later than September 20,
2009. For purposes of this definition, “public equity
offering” does not include offerings on behalf of selling
stockholders or offerings related to a distribution reinvestment
plan, employee benefit plan or the redemption of interests in the
Partnership.
Operating Expenses . All costs and expenses incurred by the
Company, as determined under generally accepted accounting
principles, which in any way are related to the operation of the
Company or to Company business, including fees paid to the Advisor,
but excluding (i) 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 tax incurred in connection
with the issuance, distribution, transfer, registration and Listing
of the Shares, (ii) interest payments, (iii) taxes,
(iv) non-cash expenditures such as depreciation, amortization
and bad loan reserves, (v) incentive fees paid in compliance
with Section IV.F of the NASAA Guidelines and
(vi) Acquisition Fees and Acquisition Expenses, real estate
commissions on resale of property, and other expenses connected
with the acquisition, disposition, 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).
Organizational and Offering
Expenses . Any and
all costs and expenses, including selling commissions, the
marketing support fee and the due diligence expense reimbursement,
incurred by the Advisor or any Affiliate in connection with the
formation, qualification and registration of the Company and the
marketing and distribution of the Shares, including, without
limitation, the following: total underwriting and brokerage
discounts and commissions (including fees of the
underwriter’s attorneys); printing, engraving, mailing and
distributing costs; salaries of employees while engaged in sales
activity; telephone and other telecommunications costs; all
advertising and marketing expenses (including the costs related to
investor and broker-dealer sales meetings); charges of transfer
agents, registrars, trustees, escrow holders, depositories and
experts; and fees, expenses and taxes related to the filing,
registration and qualification of the sale of the Shares under
federal and state laws, including accountants’ and
attorneys’ fees.
Partnership . Grubb & Ellis Healthcare REIT Holdings,
LP, a Delaware limited partnership formed to own and operate
properties on behalf of the Company.
Partnership Agreement
. The Agreement of Limited
Partnership of the Partnership, as amended from time to time,
between the Company, as General Partner and the Advisor, as the
initial Limited Partner.
Person . An individual, corporation, partnership,
estate, trust (including a trust qualified under Section 401(a) or
501(c)(17) of the Code), a portion of a trust permanently set aside
for or to be used exclusively for the purposes described in Section
642(c) of the Code, association, private foundation within the
meaning of Section 509(a) of the Code, joint stock company or other
entity, or any government or any agency or political subdivision
thereof, and also includes a group as that term is used for
purposes of Section 13(d)(3) of the Securities Exchange Act of
1934, as amended.
Property or Properties
. Any land, rights in land
(including leasehold interests), and any buildings, structures,
improvements, furnishings, fixtures and equipment located on or
used in connection with land and rights or interests in land, or
any portion thereof, transferred or conveyed to the Company or the
Partnership, either directly or indirectly, or such investments the
Board of Directors and the Advisor mutually designate as Properties
to the extent such investments could be classified as either
Properties or Real Estate Related Securities.
Property Management Fee
. The Property Management Fee
payable to the Advisor, an Affiliate of the Advisor or a
non-Affiliated third party as the Property Manager as defined in
Section 8(d) .
Property Manager . Any entity that has been retained to perform
and carry out property rental, leasing, operation and management
services at one or more of the Properties, excluding persons,
entities or independent contractors retained or hired to perform
facility management or other services or tasks at a particular
Property.
REIT . A real estate investment trust under
Sections 856 through 860 of the Code.
Real Estate Related Securities
. Any real estate related securities
investments transferred or conveyed to the Company or the
Partnership, either directly or indirectly, or such investments the
Board of Directors and the Advisor mutually designate as Real
Estate Related Securities to the extent such investments could be
classified as either Real Estate Related Securities or
Properties.
Sale or Sales . (i) Any transaction or series of
transactions whereby: (A) the Company or the Partnership
(except as described in other subsections of this definition)
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
Company or the Partnership (except as described in other
subsections of this definition) sells, puts, transfers, conveys, or
relinquishes its ownership of all or substantially all of the
interest of the Company or the Partnership in any joint venture in
which it is a co-venturer or partner; (C) any joint venture (except
as described in other subsections of this definition) in which the
Company or the Partnership as 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 Company or the Partnership directly or
indirectly (except as described in other subsections of this
definition) sells, grants, conveys or relinquishes its interest in
any loan or mortgage or any portion thereof (including with respect
to any mortgage or loan, all payments thereunder or in satisfaction
thereof other than regularly scheduled interest payments) of
amounts owed pursuant to such loan or mortgage and any event which
gives rise to the payment of a significant amount of insurance
proceeds or condemnation or similar award; or (E) the Company
or the Partnership directly or indirectly (except as described in
other subsections of this definition) sells, grants, transfers,
conveys or relinquishes its ownership of any other Property not
previously described in this definition or any portion thereof, but
(ii) not including any transaction or series of transactions
specified in clause (i)(A), (i)(B), (i)(C), (i)(D) or (i)(E) above
in which the proceeds of such transaction or series of transactions
are reinvested in one or more Properties within one hundred eighty
(180) days thereafter.
Stockholders . The registered holders of the
Shares.
Total Development Cost
. With regard to any Property
acquired by the Company prior to or during the development or
acquisition stages, all costs and expenses paid or incurred by the
Company that are in any way related to the development of such
Property, including, but not limited to, land and construction
costs.
2%/25% Guidelines . The requirement pursuant to the NASAA
Guidelines that, in any twelve (12)-month period, total Operating
Expenses not exceed the greater of two percent (2%) of the
Company’s Average Invested Assets during such twelve
(12)-month period or twenty-five percent (25%) of the
Company’s Net Income over the same twelve (12)-month
period.
2. Appointment . The Company and the Partnership appoints the
Advisor to serve as its advisor and asset manager as of the
Effective Date, on the terms and conditions set forth in this
Agreement, and the Advisor accepts such appointment as of the
Effective Date.
3. Duties and Authority of the
Advisor . The Advisor
undertakes to use its reasonable efforts (1) to present to the
Company and the Partnership potential investment opportunities in
order 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
and (2) to manage, administer, promote, maintain, and improve
the Properties on an overall portfolio basis in a diligent manner.
The services of the Advisor are to be of scope and quality not less
than those generally performed by professional asset managers of
other similar property portfolios. The Advisor shall make available
the full benefit of the judgment, experience and advice of the
members of the Advisor’s organization and staff with respect
to the duties it will perform under this Agreement. The Advisor may
also engage a Property Manager, which may include Affiliates of the
Advisor, to manage, promote, and lease the Properties. To
facilitate the Advisor’s performance of these undertakings,
but subject to the restrictions included in Sections 4
and 7 and the provisions of Section 11 and to
the continuing and exclusive authority of the Board and the general
partner of the Partnership, the Company and the Partnership hereby
delegate to the Advisor the authority to, and the Advisor hereby
agrees to, either directly or by engaging an Affiliate:
(a) serve as the Company’s and the
Partnership’s investment and financial advisor and, as
requested by the Board, provide research and economic and
statistical data in connection with the Company’s assets and
investment policies;
(b) provide the daily management of the Company and
the Partnership and perform and supervise the various
administrative functions reasonably necessary for the management of
the Company and the Partnership;
(c) maintain and preserve the books and records of
the Company, including (i) a stock ledger reflecting a record
of the Stockholders and their ownership of the Company’s
Shares, (ii) acting as transfer agent for the Company’s
Shares or selecting, engaging and overseeing the performance by a
third party transfer agent, and (iii) maintaining the
accounting and other record-keeping functions at the Property and
Company levels;
(d) investigate, select, and, on behalf of the
Company and the Partnership, engage and conduct business with such
Persons as the Advisor deems necessary to the proper performance of
its obligations hereunder, including but not limited to
consultants, accountants, correspondents, lenders, technical
advisors, attorneys, brokers, underwriters, corporate fiduciaries,
escrow agents, depositaries, custodians, agents for collection,
insurers, insurance agents, banks, builders, developers, property
owners, real estate management companies, real estate operating
companies, securities investment advisors, mortgagors, and any and
all agents for any of the foregoing, including Affiliates of the
Advisor, and Persons acting in any other capacity deemed by the
Advisor necessary or desirable for the performance of any of the
foregoing services, including but not limited to entering into
contracts in the name of the Company and the Partnership with any
of the foregoing;
(e) make investments in and dispositions of Real
Estate Related Securities within the discretionary limits and
authority as granted by the Board and in accordance with the
Articles of Incorporation;
(f) consult with the officers of the Company and the
Board and assist the Board in the formulation and implementation of
the Company’s financial policies, and, as necessary, furnish
the Board with advice and recommendations with respect to the
making of investments consistent with the investment objectives and
policies of the Company and in connection with any borrowings
proposed to be undertaken by the Company and the
Partnership;
(g) select joint venture partners, structure
corresponding agreements and oversee and monitor these
relationships;
(h) recommend to the Board of Directors appropriate
transactions which would provide liquidity to the
Stockholders;
(i) oversee the performance by a third party or
Affiliated Property Manager of its duties, including collection of
payments due from third parties under contracts related to use of
any Property and other assets of the Company and payment of
Property expenses and maintenance;
(j) conduct periodic on-site visits to some or all
(as the Advisor deems reasonably necessary) of the Properties to
inspect the physical condition of the Properties and to evaluate
the performance of a third party or Affiliated Property Manager of
its duties;
(k) review, analyze and comment upon the operating
budgets, capital budgets and leasing plans prepared and submitted
by a third party or Affiliated Property Manager and aggregate these
property budgets into the Company’s overall
budget;
(l) review and analyze on-going financial
information pertaining to each Property, each Real Estate Related
Security and the overall portfolio of Properties and Real Estate
Related Securities;
(m) if a transaction requires approval by the Board
of Directors, deliver to the Board of Directors all documents
requested by them in their evaluation of the proposed investment in
the Property or the Real Estate Related Security;
(n) formulate and oversee the implementation of
strategies for the administration, promotion, management,
operation, maintenance, improvement, financing and refinancing,
marketing, leasing, and disposition of Properties on an overall
portfolio basis;
(o) subject to the provisions of
Sections 3(m) and 4 hereof, (i) locate, analyze
and select potential investments in Properties, (ii) structure
and negotiate the terms and conditions of transactions pursuant to
which investment in Properties will be made; (iii) make investments
in Properties on behalf of the Company or the Partnership in
compliance with the investment objectives and policies of the
Company; (iv) arrange for financing and refinancing and make
other changes in the asset or capital structure of, and dispose of,
reinvest the proceeds from the sale of, or otherwise deal with the
investments in, Property; (v) enter into leases, supply
agreements and other income-producing contracts relating to third
party use of any Property and other assets of the Company;
(vi) enter into service contracts for any Property, including
oversight of Affiliated companies that perform property management
services for the Company and the Partnership; (vii) if
applicable, oversee a non-Affiliated Property Manager and any other
non-Affiliated Persons who perform services for the Company; and
(viii) to the extent necessary, perform all other operational
functions for the maintenance and administration of such
Property;
(p) obtain the prior approval of the Board, any
particular Directors specified by the Board or any committee of the
Board, as the case may be, for any and all investments in
Properties;
(q) negotiate on behalf of the Company and the
Partnership with banks or lenders for loans to be made to the
Company, and negotiate on behalf of the Company and the Partnership
with investment banking firms and broker-dealers or negotiate
private sales of Shares and other securities or obtain loans for
the Company and the Partnership, but in no event in such a way so
that the Advisor shall be acting as broker-dealer or underwriter;
provided, further, that any fees and costs payable to third parties
incurred by the Advisor in connection with the foregoing shall be
the responsibility of the Company or the Partnership;
(r) on behalf of the Company and the Partnership,
maintain, with respect to any Property and to the extent available,
title insurance or other a
