This Consulting Services Agreement involves
Title: AMENDED AND RESTATED ADVISORY AGREEMENT
Governing Law: Delaware Date: 7/27/2016
AMENDED AND RESTATED ADVISORY AGREEMENT
STEADFAST APARTMENT REIT III, INC.,
STEADFAST APARTMENT REIT III OPERATING PARTNERSHIP, L.P.,
STEADFAST APARTMENT ADVISOR III, LLC
TABLE OF CONTENTS
AMENDED AND RESTATED ADVISORY AGREEMENT
THIS AMENDED AND RESTATED ADVISORY AGREEMENT (this “ Agreement ”), dated as of the 25th day of July , 2016, is entered into by and among Steadfast Apartment REIT III, Inc., a Maryland corporation (the “ Company ”), Steadfast Apartment REIT III Operating Partnership, L.P., a Delaware limited partnership (the “ Operating Partnership ”), and Steadfast Apartment Advisor III, LLC, a Delaware limited liability company (the “ Advisor ”). Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.
W I T N E S S E T H
WHEREAS, the Company intends to qualify as a REIT and to invest its funds in investments permitted by the terms of the Articles of Incorporation and Sections 856 through 860 of the Code;
WHEREAS, the Company is the general partner of the Operating Partnership, and the Company intends to conduct all of its business and make all or substantially all Investments through the Operating Partnership;
WHEREAS, the Company and the Operating Partnership desire to avail themselves of the knowledge, experience, sources of information, advice, assistance and certain facilities available to the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board, all as provided herein; and
WHEREAS, the Advisor is willing to undertake to render such services, subject to the supervision of the Board, 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, intending to be legally bound, hereby agree as follows:
Acquisition Expenses means any and all expenses, excluding Acquisition Fees and Loan Coordination Fees, incurred by the Company, the Operating Partnership, the Advisor, or any of their Affiliates in connection with the selection, evaluation, acquisition, origination or development of any Investments, whether or not acquired or originated, as applicable, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, nonrefundable option payments on properties or other investments not acquired, accounting fees and expenses, title insurance premiums, and the costs of performing due diligence.
Acquisition Fee means the fees payable to the Advisor pursuant to Section 9(a), plus all other fees and commissions, excluding Acquisition Expenses, in connection with making or investing in any Investment or the purchase, development or construction of any Real Estate Asset by the Company. Included in the computation of such fees or commissions shall be any real estate commission, origination fee, selection fee, development fee, construction fee, nonrecurring management fee, loan fees or points or any fee of a similar nature, however designated. Excluded shall be development fees and construction fees paid to Persons not Affiliated with the Advisor in connection with the actual development and construction of a Real Estate Asset.
Adjusted Market Value means the market value of the outstanding Shares, measured by taking the average closing price for a single Class A Share, a single Class R Share and a single Class T Share over a
period of 30 consecutive trading days, with such period beginning 180 days after Listing, multiplied, respectively, by the number of Class A Shares, Class R Shares and Class T Shares outstanding on the date of measurement.
Advisor means Steadfast Apartment Advisor III, LLC, a Delaware limited liability company, any successor advisor to the Company and the Operating Partnership to which Steadfast Apartment Advisor III, LLC or any successor advisor subcontracts substantially all of its functions. Notwithstanding the foregoing, a Person hired or retained by Steadfast Apartment Advisor III, LLC to perform property management and related services for the Company or the Operating Partnership that is not hired or retained to perform substantially all of the functions of Steadfast Apartment Advisor III, LLC with respect to the Company or the Operating Partnership as a whole shall not be deemed to be an Advisor.
Affiliate or Affiliated means, with respect to any Person, (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 its outstanding voting securities are directly or indirectly owned, controlled or held, with the 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 of such other Person. An entity shall not be deemed to control or be under common control with a program sponsored by the Sponsor unless (A) the entity owns 10% or more of the voting equity interests of such program or (B) a majority of the Board (or equivalent governing body) of such program is composed of Affiliates of the entity or general partner.
Articles of Incorporation means the Second Articles of Amendment and Restatement of the Company, as amended or restated from time to time.
Average Invested Assets means, for a specified period, the average of the aggregate book value of the assets of the Company invested, directly or indirectly, in Investments before deducting depreciation, bad debts or other non-cash reserves, computed by taking the average of such values at the end of each month during such period.
Board means the board of directors of the Company, as of any particular time.
Bylaws means the bylaws of the Company, as amended or restated from time to time.
Cause means with respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct, gross negligence or negligent breach of a fiduciary duty by the Advisor, or a material breach of this Agreement by the Advisor.
Class A Shares means the shares of the Company’s Class A common stock, par value $0.01 per share.
Class R Shares means the shares of the Company’s Class R common stock, par value $0.01 per share.
Class T Shares means the shares of the Company’s Class T common stock, par value $0.01 per share.
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.
Company means Steadfast Apartment REIT III, Inc., a Maryland corporation.
Competitive Real Estate Commission means a real estate or brokerage commission for the purchase or sale of property that is reasonable, customary and competitive in light of the size, type and location of the property.
Contract Sales Price means the total consideration received by the Company for the sale of an Investment.
Cost of Investments means the sum of (i) with respect to acquisition or origination of an Investment to be wholly owned, directly or indirectly, by the Company, the amount actually paid or budgeted to fund the acquisition, origination, development, construction, renovation, upgrade or improvement (i.e., value-enhancement) of the Investment, inclusive of expenses associated with the making of such Investment and the amount of any debt associated with, or used to fund the investment in, such Investment, and (ii) with respect to the acquisition or origination of an Investment through any Joint Venture, the portion of the amount actually paid or allocated to fund the acquisition, origination, development, construction, renovation, upgrade or improvement of the Investment, inclusive of expenses associated with the making of such Investment, plus the amount of any debt associated with, or used to fund the investment in, such Investment that is attributable to the Company’s investment in such Joint Venture.
Dealer Manager means Steadfast Capital Markets Group, LLC (or any successor thereto) or such other Person or entity selected by the Board to act as the dealer manager for a Public Offering.
Dealer Manager Fee means (i) 3.0% of Gross Proceeds from the sale of each Class A Share in a Public Offering and (ii) 2.5% of Gross Proceeds from the sale of each Class T Share in a Public Offering, in each case payable to the Dealer Manager for serving as the dealer manager of such Public Offering, a portion of which is reallowable to Participating Dealers, and excluding the Gross Proceeds received by the Company pursuant to the Company’s distribution reinvestment plan.
Director means a member of the Board.
Disposition Fee means the fees payable to the Advisor pursuant to Section 9(c).
Distribution and Shareholder Servicing Fee means (i) 0.67%, annualized, of the purchase price per Class R Share (or, once reported, the amount of the estimated value per share) for each Class R Share purchased in a Public Offering (excluding the Company’s distribution reinvestment plan) payable to the Dealer Manager and (ii) 1.125%, annualized, of the purchase price per Class T Share (or, once reported, the amount of the estimated value per share) for each Class T Share purchased in a Public Offering (excluding the Company’s distribution reinvestment plan) payable to the Dealer Manager and reallowable to Participating Dealers with respect to Class T Shares sold by them.
Distributions mean any distributions of money or other property by the Company to Stockholders, including distributions that may constitute a return of capital for federal income tax purposes.
Effective Date means the commencement date of the Initial Public Offering.
Excess Amount has the meaning set forth in Section 11(d).
Expense Year has the meaning set forth in Section 11(d).
Final Liquidity Event means the sale or disposition of the entire Company or of all of its assets.
FINRA means the Financial Industry Regulatory Authority, Inc. and any successor thereto.
GAAP means generally accepted accounting principles as in effect in the United States of America from time to time.
Gross Proceeds means the aggregate purchase price of all Shares sold for the account of the Company through all Public Offerings, without deduction for Sales Commissions, Dealer Manager Fees, Distribution and Shareholder Servicing Fees or Organization and Offering Expenses. For the purpose of computing Gross Proceeds, the purchase price of any Share for which reduced Sales Commissions, Dealer Manager Fees or Distribution and Shareholder Servicing Fees are paid to the Dealer Manager or a Participating 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 Public Offering without reduction.
Indemnitee has the meaning set forth in Section 22.
Independent Director has the meaning set forth in the Articles of Incorporation.
Initial Public Offering means the initial public offering of Shares registered pursuant to the Registration Statement.
Investment Management Fee means the fees payable to the Advisor pursuant to Section 9(d).
Investments means any investments by the Company or the Operating Partnership in Real Estate Assets, Real Estate-Related Assets or other investments in which the Company or the Operating Partnership may acquire an interest, either directly or indirectly, including through an ownership interest in a Joint Venture, pursuant to its Articles of Incorporation, Bylaws and the investment objectives and policies adopted by the Board from time to time, other than short-term investments acquired for the purpose of cash management.
Joint Venture means the joint venture, limited liability company, partnership or other entity pursuant to which the Company is a co-venturer or partner with respect to the ownership of any Investments.
Listing means the listing of the Shares on (i) a U.S. national securities exchange; (ii) a non-U.S. national securities exchange that is officially recognized, sanctioned or supervised by a governmental authority; or (iii) any over-the-counter market. Upon such Listing, the Shares shall be deemed “Listed.”
Loan Coordination Fee means the fees payable to the Advisor pursuant to Section 9(e).
Loans means any indebtedness or obligations in respect of borrowed money or evidenced by bonds, notes, debentures, deeds of trust, letters of credit or similar instruments, including mortgages and mezzanine loans.
NASAA REIT Guidelines means the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association as in effect on the Effective Date, as may be modified from time to time.
Net Income means, for any period, the Company’s total revenues applicable to such period, less the total expenses applicable to such period other than additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the Sale of the Company’s assets.
Net Sale Proceeds means the net cash proceeds realized from a Final Liquidity Event after deduction of all expenses incurred in connection with a Final Liquidity Event, including Dispositions Fees, or from the prepayment, maturity, workout or other settlement of any loan or other investment.
Operating Expenses means all costs and expenses incurred by the Company, as determined under GAAP, that in any way are related to the operation of the Company or its business, including fees paid to the Advisor, but excluding (i) the expenses of raising capital such as Organization 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 Shares, (ii) interest payments, (iii) taxes, (iv) non-cash expenditures such as depreciation, amortization and bad debt reserves, (v) Subordinated Participation in Net Sale Proceeds, (vi) Subordinated Incentive Listing Distribution, (vii) Subordinated Distribution Upon Termination, (viii) Disposition Fees, other than Disposition Fees paid upon the Sale of any assets other than Real Property Assets, (ix) Acquisition Fees and Acquisition Expenses, and (x) other fees and expenses connected with the acquisition, disposition, management and ownership of real estate interests, mortgages or other property (including the costs of foreclosure, insurance premiums, legal services, maintenance, repair, and improvement of property). The definition of “Operating Expenses” set forth above is intended to encompass only those expenses that are required to be treated as Total Operating Expenses under the NASAA REIT Guidelines. As a result, and notwithstanding the definition set forth above, any expense of the Company that is not part of Total Operating Expenses under the NASAA REIT Guidelines shall not be treated as part of Operating Expenses for purposes hereof.
Operating Partnership means Steadfast Apartment REIT III Operating Partnership, L.P., a Delaware limited partnership.
Operating Partnership Agreement means the Amended and Restated Limited Partnership Agreement by and among the Company, the Operating Partnership and the Advisor, as amended or restated from time to time.
Organization and Offering Expenses means any and all costs and expenses incurred by or on behalf of the Company in connection with the formation of the Company, the qualification and registration of a Public Offering, and the marketing and distribution of Shares, including, without limitation, total underwriting and brokerage discounts and commissions (including fees of the underwriters’ attorneys), expenses for printing, engraving, amending and supplementing registration statements and prospectuses, mailing and distributing costs, salaries of employees while engaged in sales activity, telephone and other telecommunications costs, all advertising and marketing expenses, information technology costs, 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 taxes and fees and accountants’ and attorneys’ fees.
Participating Dealers means broker-dealers who are members of FINRA or that are exempt from broker-dealer registration, and who, in either case, have executed participating dealer or other agreements with the Dealer Manager to sell Shares in a Public Offering.
Person means an individual, corporation, partnership, trust, joint venture, limited liability company or other entity.
Property Manager means an entity that has been retained to perform and carry out property-management services at one or more of the Real Estate Assets, excluding Persons retained or hired to perform facility management or other services or tasks at a particular Real Estate Asset, the costs for which are passed through to and ultimately paid by the tenant at such Real Estate Asset.
Prospectus means a “Prospectus” under Section 2(10) of the Securities Act, including a preliminary Prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling securities to the public.
Public Offering means a public offering of Shares pursuant to a Prospectus.
Real Estate Assets means any investment by the Company or the Operating Partnership in unimproved and improved Real Property (including, without limitation, fee or leasehold interests, options and leases) either directly or through a Joint Venture.
Real Estate-Related Assets means any investments by the Company or the Operating Partnership in, or origination of, mortgage loans and other types of real estate-related debt financing, including, without limitation, mezzanine loans, bridge loans, convertible mortgages, construction mortgage loans, loans on leasehold interests and participations in such loans, as well as real estate debt securities and equity securities of other real estate companies and REITs.
Real Property means real property owned from time to time by the Company or the Operating Partnership, either directly or through joint venture arrangements or other partnerships, which consists of (i) land only, (ii) land, including the buildings and improvements located thereon, (iii) buildings and improvements only, or (iv) such investments the Board and the Advisor mutually designate as Real Property to the extent such investments could be classified as Real Property.
Registration Statement means the registration statement filed by the Company with the SEC on Form S-11 (Reg. No. 333-207952), as amended from time to time, in connection with the Initial Public Offering.
REIT means a “real estate investment trust” under Sections 856 through 860 of the Code.
Sale or Sales means any transaction or series of transactions whereby: (i) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Investment or portion thereof, including the lease of any Real Property consisting of a building only, and including any event with respect to any Real Property which gives rise to a significant amount of insurance proceeds or condemnation awards; (ii) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company or the Operating Partnership in any Joint Venture in which it is a co-venturer or partner; (iii) any Joint Venture directly or indirectly (except as described in other subsections of this definition) in which the Company or the Operating Partnership as a co-venturer or partner sells, grants, transfers, conveys, or relinquishes its ownership of any Investment or portion thereof, including any event with respect to any Real Property which gives rise to a significant amount of insurance proceeds or similar awards; (iv) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, conveys or relinquishes its interest in any Real Estate-Related Assets or portion thereof (including with respect to any Real Estate-Related Investment, all payments thereunder or in satisfaction thereof other than regularly scheduled interest payments) and any event which gives rise to a significant amount of insurance proceeds or similar awards; (v) the Company or the Operating Partnership directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any other asset not previously described in this definition or any portion thereof; or (vi) any other transaction or series of transactions that the Board deems to be a Sale.
Sales Commissions means (i) 7.0% of Gross Proceeds from the sale of each Class A Share in a Public Offering and (ii) 3.0% of Gross Proceeds from the sale of each Class T Share in a Public Offering, in each case payable to the Dealer Manager, all of which are reallowable to Participating Dealers with respect to Shares sold by them, and excluding the Gross Proceeds received by the Company pursuant to the Company’s distribution reinvestment plan.
SEC means the U.S. Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Shares means the shares of the Company’s common stock, par value $0.01 per share.
Special Committee has the meaning as provided in Section 14.
Sponsor means Steadfast REIT Investment, LLC, a Delaware limited liability company.
Stockholders means the registered holders of the Shares.
Stockholders’ 6.0% Return means, as of any date, an aggregate amount equal to a 6.0% annual cumulative, non-compounded return of the Total Investment Amount. For purposes of calculating the Stockholders’ 6.0% Return, the aggregate of all Stockholders’ capital shall be deemed to have been invested collectively on one date, the aggregate average investment date, being a day of a month determined by the average weighted month of all Shares sold on a monthly basis.
Subordinated Distribution Upon Termination means the distribution payable to Advisor pursuant to Section 20(b).
Subordinated Incentive Listing Distribution means the distribution payable to Advisor pursuant to Section 9(g).
Subordinated Participation in Net Sale Proceeds means the distribution payable to Advisor pursuant to Section 9(f).
Termination Date means the date of termination of this Agreement.
Total Investment Amount means the amount equal to the original issue price paid by Stockholders in the Public Offering multiplied by the number of Shares issued in the Public Offering, reduced by the weighted average original issue price of the Shares sold in the Public Offering (excluding the Company’s distribution reinvestment plan) multiplied by the total number of Shares repurchased by the Company pursuant to the Company’s share repurchase program.
Value of Investments means the Cost of Investments until such Investments are valued by an independent third-party appraiser or qualified independent valuation expert.
2%/25% Guidelines has the meaning set forth in Section 11(d).
2.APPOINTMENT. The Company and the Operating Partnership hereby appoint the Advisor to serve as their advisor on the terms and conditions set forth in this Agreement, and the Advisor hereby accepts such appointment.
3.DUTIES OF THE ADVISOR. The Advisor is responsible for managing, operating, directing and supervising the operations and administration of the Company and its Investments. The Advisor undertakes to present to the Company potential investment opportunities, to make investment decisions on behalf of the Company subject to the limitations in the Articles of Incorporation and the direction and oversight of the Board and to provide the Company with 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 performance of this undertaking, subject to the supervision of the Board and consistent with the provisions of the Articles of Incorporation, Bylaws and the Operating Partnership Agreement, the Advisor shall perform the duties described in this Section 3.
(a) Offering Services . The Advisor shall manage and supervise, in connection with any Public Offering:
(i)the development of the Initial Public Offering and any subsequent Public Offering approved by the Board, including the determination of the specific terms of the securities to be offered by the Company, preparation of all offering and related documents, and obtaining all required regulatory approvals of such documents;
(ii)along with the Dealer Manager, the approval of the Participating Dealers and negotiation of the related selling agreements;
(iii)along with the Dealer Manager, the coordination of the due diligence process relating to Participating Dealers and their review of the Registration Statement and other Public Offering documents;
(iv)along with the Dealer Manager, the preparation of all marketing materials contemplated to be used by the Dealer Manager or others relating to any Public Offering;
(v)along with the Dealer Manager, the negotiation and coordination with the transfer agent for the receipt, collection, processing and acceptance of subscription agreements, commissions, and other administrative support functions;
(vi)along with the Dealer Manager, the creation and implementation of various technology and electronic communications related to any Public Offering; and
(vii)all other services related to any Public Offering, other than services that (a) are to be performed by the Dealer Manager, (b) the Company elects to perform directly or (c) would require the Advisor to register as a broker-dealer with the SEC, FINRA or any state.
(b) Acquisition Services . The Advisor shall:
(i) subject to Section 4 hereof and the investment objectives and policies of the Company: (a) locate, analyze and select potential investments; (b) structure and negotiate the terms and conditions of transactions pursuant to which such investments will be made; and (c) acquire such investments on behalf of the Company;
(ii) oversee the due diligence process related to prospective Investments;
(iii) prepare reports regarding prospective Investments which include recommendations and supporting documentation necessary for the Board to evaluate the prospective Investments; and
(iv) obtain reports (which may be prepared by the Advisor or its Affiliates), where appropriate in the judgment of the Advisor, concerning the value of prospective Investments.
(c) Investment Management Services . The Advisor shall:
(i)serve as the Company’s investment and financial advisor and obtain certain market research and economic and statistical data in connection with the Investments and investment objectives and policies;
(ii)investigate, select and, on behalf of the Company, 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, lenders, technical advisors, attorneys, brokers, underwriters, corporate fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers, insurance agents, developers, construction companies, Property Managers and any and all Persons acting in any other capacity deemed by the Advisor necessary or desirable for the performance of any of the foregoing services;
(iii)monitor applicable markets and obtain reports where appropriate in the judgment of the Advisor, concerning the value of the Investments;
(iv)monitor and evaluate the performance of the Investments, provide daily investment management services to the Company and perform and supervise the various investment management and operational functions related to the Investments;
(v)formulate and oversee the implementation of strategies for the administration, promotion, management, operation, maintenance, improvement, financing and refinancing, marketing, leasing and disposition of Investments on an overall portfolio basis;
(vi)oversee the performance by the Property Managers of their duties, including collection and proper deposits of rental payments and payment of Real Estate Asset expenses and maintenance;
(vii)conduct periodic on-site property visits (as the Advisor deems reasonably necessary) to some or all of the Real Estate Assets to inspect the physical condition of the Real Estate Assets and to evaluate the performance of the Property Managers;
(viii)review, analyze and comment upon the operating budgets, capital budgets and leasing plans prepared and submitted by each Property Manager and aggregate these property budgets into the Company’s overall budget;
(ix)coordinate and manage relationships between the Company and any Joint Venture partners; and
(x)provide financial and operational planning services and investment portfolio management functions, including, without limitation, the planning and implementation of establishing the Company’s net asset value and obtaining appraisals and valuations with respect to Investments.
(d) Accounting and Other Administrative Services . The Advisor shall:
(i) manage and perform the various administrative functions necessary for the management of the day-to-day operations of the Company;
(ii) from time-to-time, or at any time reasonably requested by the Board, make reports to the Board on the Advisor’s performance of services to the Company under this Agreement;
(iii) coordinate with the Company’s independent accountants and auditors to prepare and deliver to the Board’s audit committee an annual report covering the Advisor’s compliance with certain material aspects of this Agreement;
(iv) provide or arrange for administrative services and items, legal and other services, office space, office furnishings, personnel and other overhead items necessary and incidental to the Company’s business and operations;
(v) maintain accounting data and any other information concerning the activities of the Company as shall be needed to prepare and file all periodic financial reports and returns required to be filed with the SEC and any other regulatory agency, including annual financial statements;
(vi) maintain all books and records of the Company;
(vii) oversee tax and compliance services and risk management services and coordinate with third parties engaged by the Company, including independent accountants and other consultants, on related tax matters;
(viii) supervise the performance of such ministerial and administrative functions as may be necessary in connection with the daily operations of the Company;
(ix) provide the Company with all necessary cash management services;
(x) manage and coordinate with the transfer agent the Distribution process and payments to Stockholders;
(xi) at any time reasonably requested by the Board, consult with the Board and assist in evaluating and obtaining adequate property insurance coverage based upon risk management determinations;
(xii) 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;
(xiii) consult with the Board relating to the corporate governance structure and the policies and procedures related thereto; and
(xiv) oversee 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.
(e) Stockholder Services . The Advisor shall:
(i) along with the Dealer Manager, manage communications with Stockholders, including answering phone calls, preparing and sending written and electronic reports and other communications; and
(ii) along with the Dealer Manager, establish technology infrastructure to assist in providing Stockholder support and service.
(f) Financing Services . The Advisor shall:
(i) identify and evaluate potential financing and refinancing sources, engaging a third-party broker if necessary;
(ii) negotiate terms, arrange and execute financing agreements;
(iii) manage relationships between the Company and its lenders; and
(iv) monitor and oversee the service of the Company’s debt facilities and other financings.
(g) Disposition Services . The Advisor shall:
(i) consult with the Board and provide assistance with the evaluation and approval of potential Investment dispositions, sales or other liquidity events; and
(ii) structure and negotiate the terms and conditions of transactions pursuant to which Investments may be sold.
4.AUTHORITY OF ADVISOR.
(a)Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 7), and subject to the continuing and exclusive authority of the Board over the management of the Company, the Board hereby delegates to the Advisor the authority to perform the services described in Section 3. The Advisor shall have the power to delegate all or any part of its rights and powers to perform the services described in Section 3 to such officers, employees, Affiliates, agents and representatives of the Advisor or the Company as it may 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 Agreement or the Articles of Incorporation.
(b) Notwithstanding the foregoing, the Advisor may not take any action on behalf of the Company without the prior approval of the Board or duly authorized committees thereof if the Articles of Incorporation or Maryland General Corporation Law require the prior approval of the Board. The Advisor will deliver to the Board all documents and other information required by the Board to evaluate a proposed investment (and any financing related to such proposed investment).
(c)If a transaction requires approval by the Independent Directors, the Advisor will deliver to the Independent Directors all documents and other information required by them to properly evaluate the proposed transaction.
(d)The prior approval of a majority of the Independent Directors not otherwise interested in the transaction and a majority of the Board not otherwise interested in the transaction will be required for each transaction to which the Advisor or its Affiliates is a party.
(e)The Board may, at any time upon the giving of written notice to the Advisor, modify or revoke the authority or approvals set forth in Section 3 and this Section 4; provided, however, that such modification or revocation shall be effective upon receipt of such notification 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.
5.BANK ACCOUNTS. The Advisor shall establish and maintain one or more bank accounts in the name of the Company and the Operating Partnership and may collect and deposit into any such account or accounts, and disburse from any such account or accounts, any money on behalf of the Company or the Operating Partnership, under such terms and conditions as the Board may approve, provided that no funds shall be commingled with the funds of the Advisor; and the Advisor shall from time to time render, upon request by the Board, its audit committee or the auditors of the Company, appropriate accountings of such collections and payments to the Board and to the auditors of the Company.
6.RECORDS; ACCESS. The Advisor, in the conduct of its responsibilities to the Company, shall maintain adequate and separate books and records for the Company’s operations in accordance with GAAP, which shall be supported by sufficient documentation to ascertain that such books and records are properly and accurately recorded. Such books and records shall be the property of the Company and shall be available for inspection by the Board and by counsel, auditors and other authorized agents of the Company, at any time or from time to time during normal business hours. Such books and
records shall include all information necessary to calculate and audit the fees and expense reimbursements paid under this Agreement. The Advisor shall utilize procedures to attempt to ensure such control over accounting and financial transactions as is reasonably required to protect the Company’s assets from theft, error or fraudulent activity. All financial statements that the Advisor delivers to the Company