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SERVICES AGREEMENT

Consulting Services Agreement

SERVICES AGREEMENT | Document Parties: AMERICAN REALTY CAPITAL ADVISORS II, LLC | AMERICAN REALTY CAPITAL II, LLC | GRUBB & ELLIS HEALTHCARE REIT, INC | Grubb & Ellis Realty Investors, LLC You are currently viewing:
This Consulting Services Agreement involves

AMERICAN REALTY CAPITAL ADVISORS II, LLC | AMERICAN REALTY CAPITAL II, LLC | GRUBB & ELLIS HEALTHCARE REIT, INC | Grubb & Ellis Realty Investors, LLC

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Title: SERVICES AGREEMENT
Governing Law: Delaware     Date: 4/9/2009
Law Firm: Cox Castle    

SERVICES AGREEMENT, Parties: american realty capital advisors ii  llc , american realty capital ii  llc , grubb & ellis healthcare reit  inc , grubb & ellis realty investors  llc
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SERVICES AGREEMENT

THIS SERVICES AGREEMENT (this “ Agreement ”) is made and entered into as of April 3, 2009 (the “ Effective Date ”), by and between AMERICAN REALTY CAPITAL II, LLC, a Delaware limited liability company (“ ARC II ”) and GRUBB & ELLIS HEALTHCARE REIT, INC., a Maryland corporation (the “ REIT ”), with respect to the following recitals:

R E C I T A L S

A. The REIT intends to file with the Securities and Exchange Commission (the “ SEC ”) a Registration Statement on Form S-11 (the “ Registration Statement ”) in connection with a follow-on offering (the “ Follow-On Offering ”) of up to $2,200,000,000 in shares of common stock (the “ Shares ”) to be offered to the public.

B. The REIT intends to continue to qualify as a real estate investment trust for federal income tax purposes and to invest its funds in investments permitted by the terms of the REIT’s Articles of Incorporation and Section 856 through 860 of the Internal Revenue Code.

C. Realty Capital Securities, LLC, a Delaware limited liability company (“ RCS ”), a wholly-owned subsidiary of ARC II will be engaged by the REIT as its agent and exclusive dealer manager in connection with the Follow-On Offering to solicit and to cause other securities brokers to solicit subscriptions for the Shares pursuant to the terms and conditions of an Exclusive Dealer Manager Agreement (the “ Dealer Manager Agreement ”) entered into by and between RCS and the REIT, concurrently herewith.

D. The REIT’s current Amended and Restated Advisory Agreement (the “ Advisory Agreement ”) dated November 14, 2008 with Grubb & Ellis Healthcare REIT Advisor, LLC, a Delaware limited liability company (the “ REIT Advisor ”) and Grubb & Ellis Realty Investors, LLC, a Virginia limited liability company (“ GERI ”) expires on September 20, 2009, unless earlier terminated (except with respect to certain provisions therein that survive expiration or termination). The REIT desires to enter into this Agreement to supplement and augment its internal capacity.

E. Prior to the effectiveness of the Follow-On Offering, the REIT will change its name to “Healthcare Trust of America, Inc.”

F. The REIT desires to avail itself of the experience, sources of information, advice, assistance and certain facilities available to ARC II, and to have ARC II undertake the duties and responsibilities herein set forth, on behalf of, and subject to the supervision of the REIT, all as provided herein.

G. ARC II is willing to undertake to render such services, subject to the supervision of the REIT, on the terms and conditions hereinafter set forth.

NOW, THEREFORE, of the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged by the parties, the parties hereby agree as follows:

A G R E E M E N T

1.  Scope of Services . The REIT hereby appoints ARC II to provide, and ARC II hereby agrees to provide, subject to the terms and conditions of this Agreement, the below-referenced general consulting services, and other specific services as ARC II and the REIT may agree upon from time to time during the term of this Agreement.

(a) General Consulting Services . ARC II shall provide general consulting services to the REIT in connection with the operations of the REIT, including, but not limited to: (i) creating a website that allows for investor access to account information; (ii) engaging and negotiating with certain vendors that will provide transfer agent and escrow services, (iii) augmenting, if needed, a public company-ready management team; (iv) assisting and cooperating with the REIT’s self-management program; and (v) performing such other services as set forth on Exhibit A attached hereto (collectively, “ General Consulting Services ”).

(b) Specific Services . ARC II shall provide other services to the REIT as the REIT may request during the term of this Agreement, including, without limitation: (i) property management services as more particularly described on Exhibit C attached hereto, (ii) asset acquisition, disposition and/or other related services as more particularly described on Exhibit D attached hereto; and (iii) asset accounting services (including property level accounting, preparation of payables and receivables schedules, property P&Ls, balance sheets, cash reconciliation through general ledger, excluding corporate accounting, roll up and SEC filings) as more particularly described on Exhibit E attached hereto (collectively, “ Specific Services ”). Nothing herein is intended or shall be construed to require the REIT to utilize ARC II for any or all of the Specific Services. In addition, nothing herein is intended or shall be construed to restrict the REIT’s ability to retain any other party to perform any or all of the Specific Services.

(c) Future Investment Banking Services . If, at any time during the term of this Agreement or prior to the expiration of the thirty-six (36) month period following a successful Follow-On Offering, the REIT is considering retaining an investment bank or other similar agent in connection with any merger, acquisition, private placement or sale of the REIT’s stock or bonds (primary or secondary), the REIT will endeavor to discuss such actions with ARC II prior to hiring a firm to provide such investment banking services. The REIT, however, shall be under no obligation to hire ARC II to furnish such investment banking services. In the event the REIT elects to hire ARC II for investment banking or financial advisory services, ARC II and the REIT shall negotiate in good faith to arrive at mutually acceptable terms for the specific type of engagement at prevailing market rates. Notwithstanding anything to the contrary contained in this Agreement, the REIT shall have no liability based on any actual or alleged non-compliance with this Section 1(c) .

2.

 

ARC II Compensation .

(a) ARC Subordinated Incentive Payment . The REIT agrees to pay ARC II a subordinated incentive payment (“ ASIP ”) (as set forth in Exhibit B attached hereto), if any, as consideration for ARC II (i) providing the General Consulting Services to the REIT and (ii) making itself available to provide the Specific Services in accordance with the terms and conditions of this Agreement.

(b) Specific Consulting Fees . Subject to the terms and conditions of this Agreement, the REIT, at its sole option, shall have the right to utilize ARC II to perform any or all of the Specific Services. As consideration for such services, the REIT agrees to pay ARC II, as applicable: (i) the Property Management Fee, as defined and more particularly described on Exhibit C attached hereto, (ii) the Real Estate Services Fee, as defined and more particularly described on Exhibit D attached hereto, and (iii) the Asset Accounting Fee, as defined and more particularly described on Exhibit E attached hereto.

3.

 

Third Party Costs Reimbursement . All third party costs and expenses incurred by the REIT will be paid directly by the REIT.  All third party out of pocket costs and expenses reasonably incurred by ARC II on behalf of the REIT in connection with this Agreement shall be paid directly by the REIT unless ARC II has paid such out of pocket expense, in which case the REIT shall reimburse ARC II in arrears within ten (10) days of presentation of an expense statement and certificate of payment to the REIT; provided, however , once such costs and expenses, in the aggregate, exceed $50,000.00 in any calendar year, all future non-aggregated costs and expenses during that calendar year shall be subject to approval by the REIT in its sole discretion.

 

4.

 

ARC II Solely Consulting to the REIT .

(a) The REIT agrees that ARC II has been retained pursuant to this Agreement to act solely as a consultant to provide the services set forth in Section 1 to the REIT and not as an advisor to or agent of any other person.

(b) It is specifically understood that the REIT will not base its decisions regarding whether and how to pursue any strategic alternative solely on ARC II’s advice, but will also consider the advice of the REIT’s management team, board of directors, legal, tax and other business advisors and such other factors which it considers appropriate.

(c) The REIT understands and acknowledges that ARC II does not provide tax or legal advice.

(d) ARC II, as an independent contractor under this Agreement, shall not assume the responsibilities of a fiduciary to the REIT or its stockholders in connection with the performance of ARC II’s services hereunder.

(e) Except to the extent specifically set forth in this Agreement, ARC II and the REIT, together with their respective affiliates, hereby acknowledge that the rights and obligations they have to one another under any credit or other agreement are separate from each such party’s rights and obligations under this Agreement and will not be affected by either party’s performance under this Agreement.

5.

 

Competitive Activities; Right of First Refusal .

(a) During the term of this Agreement, ARC II and its affiliates hereby agree not to provide any General Consulting Services or Specific Services to any real estate investment trust, tenancy-in-common program, fund or other real estate company primarily engaged in the acquisition, leasing, operation or management of medical office buildings or healthcare-related facilities of the type described in the prospectus contained in the Registration Statement covering the offering of Shares, as finally amended at the effective date of the Registration Statement in the section entitled “Investment Objectives, Strategy and Criteria–Real Property Investments–Medical Office Buildings and Healthcare-Related Facilities.”

(b) During the term of this Agreement, if ARC II or one of its affiliates identifies an opportunity to make an investment in one or more office buildings or other facilities for which greater than fifty percent (50%) of the gross rentable space at such office buildings or other facilities or notes secured by such office buildings or other facilities is leased to, or is reasonably expected to be leased to, one or more medical or healthcare-related tenants, which it proposes to acquire or recommends to purchase either directly or indirectly through an affiliate or in a joint venture or other co-ownership arrangement, for itself or for any other ARC II-sponsored or managed program, then ARC II agrees that it shall provide the REIT with the first opportunity to purchase such investment and that it shall provide all necessary information to the REIT in order to enable the REIT to determine whether to proceed with such investment. In the event that the REIT does not approve proceeding with the investment within thirty (30) days of receipt of such information from ARC II, the ARC II may proceed with the investment opportunity for its own account or offer the investment opportunity to any other person or entity.

6.

 

Liability .

(a) No ARC II partner, stockholder, officer, director, employee, investment advisor, or any successor in interest of any of them (collectively, the “ ARC II Parties ”) shall have any personal or other liability of any kind under this Agreement, and the REIT hereby expressly waives and releases such liability on behalf of itself and all persons claiming by, through or under the REIT. The limitations of liability contained in this Section 5(a) shall inure to the benefit of ARC II’s and the ARC II Parties’ present and future partners, beneficiaries, officers, directors, trustees, stockholders, agents and employees, and their respective partners, heirs, successors and assigns.

(b) No REIT partner, stockholder, officer, director, employee, investment advisor, or any successor in interest of any of them (collectively, the “ REIT Parties ”) shall have any personal or other liability of any kind under this Agreement, and ARC II hereby expressly waives and releases such liability on behalf of itself and all persons claiming by, through or under ARC II. The limitations of liability contained in this Section 5(b) shall inure to the benefit of the REIT’s and the REIT Parties’ present and future partners, beneficiaries, officers, directors, trustees, stockholders, agents and employees, and their respective partners, heirs, successors and assigns.

7.

 

Insurance; Fidelity Bonds .

(a) Insurance . ARC II shall procure and maintain, at its sole expense, insurance coverages in amounts and for such duration as are reasonably required by the REIT (the “ Coverages ”). The Coverages shall, at a minimum, be not less than those coverages typically maintained by third party consultants/service providers for real estate investment trusts of similar size and engaged in similar operations. The Coverages shall include, but shall not be limited to, commercial general liability, follow form excess or umbrella liability, automobile liability, workers’ compensation/employer’s liability, professional liability, employment practices liability, fiduciary liability and crime. The REIT shall be included as an additional insured on the commercial general liability and follow form excess or umbrella liability insurance by endorsements reasonably acceptable to the REIT. All Coverages shall be subject to the REIT’s review and approval, which approval shall not be unreasonably withheld. Prior to commencement of the services under this Agreement, ARC II shall deliver to the REIT certificates of insurance evidencing each of the required Coverages and shall deliver the additional insured endorsements required hereunder. At the written request of the REIT, ARC II shall promptly provide complete, true and correct copies of each and all of its insurance policies affording the required Coverages.

(b) Fidelity Bonds . If required by the REIT, ARC II will maintain a fidelity bond with a responsible surety company in such amounts as may be reasonably required by the REIT, covering all members or partners thereof together with employees and agents of ARC II handling funds of the REIT and investment documents or records pertaining to investments of the REIT. Such bonds shall inure to the benefit of the REIT in respect of losses from acts of such partners, employees and agents through (but not limited to) theft, embezzlement, fraud, negligence, error or omission or otherwise. The premiums on such bonds shall be paid by ARC II.

(c) Deductibles and Self-Insured Retentions . ARC II shall be solely responsible for timely payment of any and all deductibles and self-insured retentions applicable to the Coverages and the fidelity bonds.

8.

 

Indemnity . The REIT and ARC II agree to the provisions with respect to the mutual indemnity and other matters set forth on Exhibit F attached hereto, the terms of which are incorporated herein in their entirety. Exhibit F is an integral part of this Agreement and shall survive any termination or expiration of this Agreement.

 

9.

 

Term; Termination .

(a) Term . The term of this Agreement shall commence as of the date first above written and, unless sooner terminated pursuant to Sections 9(b) and (c) below, shall expire three (3) years from the Effective Date (the “ Term ”).

(b) Termination by the REIT . At the sole option of the REIT, the REIT may: (i) terminate this Agreement for any reason or no reason, at any time after the one (1) year anniversary of the Effective Date upon at least ninety (90) days written notice, which notice shall not be permitted prior to the one (1) year anniversary of the Effective Date; (ii) terminate this Agreement immediately, subject to any applicable notice and cure period, for “ Cause ” (as defined below); (iii) terminate this Agreement on ten (10) days written notice if an affiliate of ARC II terminates any agreement entered into between the REIT and any affiliate of the ARC II (other than any agreement entered into for services pursuant to Section 2 of this Agreement) without cause or good reason in accordance with the terms of such agreement; (iv) terminate this Agreement on ten (10) days written notice if the REIT terminates any agreement entered into between the REIT and any affiliate of ARC II (other than any agreement entered into for services pursuant to Section 2 of this Agreement) for cause in accordance with the terms of such agreement; (v) terminate this Agreement on ten (10) days written notice if there shall have occurred any material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, or in the management or personnel of ARC II that materially adversely affects its ability to perform its services under this Agreement; (vi) terminate this Agreement if ARC II fails to maintain an adequate number of skilled employees to professionally carry out the services for which ARC II is being engaged consistent with third party service providers providing similar services to real estate investment trusts of similar size and nature as the REIT and such failure is not cured within sixty (60) days after written notice thereof from the REIT to ARC II; and (vii) terminate this Agreement on ten (10) days written notice if neither William Kahane nor Nicholas Schorsch is available to provide ongoing non-exclusive services to the REIT in accordance with this Agreement.

Cause ” shall mean any one of the following:

 

(i)

 

fraud, criminal conduct, or willful misconduct by ARC II;

 

 

(ii)

 

a material breach of this Agreement by ARC II, provided that (a) ARC II does not cure any such material breach within thirty (30) days of receiving notice of such material breach from the REIT, or (b) if such material breach is not of a nature that can be remedied within such period, ARC II does not diligently take all reasonable steps to cure such breach or does not cure such breach within a reasonable time period;

 

 

(iii)

 

if, a court of competent jurisdiction enters a decree or order for relief in respect of ARC II in any involuntary case under the applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoints a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of ARC II or for any substantial part of its property or orders the winding up or liquidation of ARC II’s affairs;

 

 

(iv)

 

if, ARC II commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, or consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of ARC II or for any substantial part of its property, or makes any general assignment for the benefit of creditors, or fails generally to pay its debts as they become due; or

ARC II agrees that if any of the events specified in subsections (iii) or (iv) above occur, it will give written notice thereof to the REIT within seven (7) days after the occurrence of such event.

(c) Termination by ARC II . At the sole option of ARC II, ARC II may (i) terminate this Agreement for any reason or no reason, at any time after the one (1) year anniversary of the Effective Date upon at least ninety (90) days written notice, which notice shall not be permitted prior to the one (1) year anniversary of the Effective Date, or (ii) terminate this Agreement for “ Good Reason ” (as defined below) immediately, subject to any applicable notice and cure period.

As used above, “ Good Reason ” shall mean fraud, criminal conduct or willful misconduct, or a material breach of this Agreement by the REIT, provided that (i) the REIT does not cure any such material breach within thirty (30) days of receiving notice of such material breach from ARC II, or (ii) if such material breach is not of a nature that can be remedied within such period, the REIT does not diligently take all reasonable steps to cure such breach or does not cure such breach within a reasonable time period.

10.

 

Representations and Warranties of ARC II . As an inducement to the REIT entering into this Agreement, ARC II hereby represents and warrants to the REIT that:

(a) Skilled Personnel and Adequate Staffing . ARC II has and will at all times maintain an adequate number of skilled and licensed employees to professionally carry out the services for which ARC II is being engaged consistent with third party service providers to a real estate investment trust of the size and nature as the REIT. In addition, ARC II shall at all times maintain an adequate number of skilled and licensed employees to perform any or all of the Specific Services set forth in this agreement and shall be available upon advance written notice by the REIT to have such employees, as well as all necessary systems, equipment, software and other appropriate items available to perform such services as requested by the REIT from time to time consistent with third party service providers to a real estate investment trust of the size and nature as the REIT.

(b) Standby Employees . To the extent the REIT has not elected ARC II to provide any Specific Services, ARC II shall nevertheless maintain adequate staffing levels such that ARC II can deploy an adequate amount of skilled personnel, staff and other human and physical resources to diligently pursue the completion of any such Specific Services for the REIT pursuant to the terms of this Agreement upon reasonable advance written notice, but in no event later than forty-five (45) days after such advance written notice.

(c) Completion . ARC II shall diligently pursue the completion of the services for which ARC II was engaged and shall make its personnel and the personnel of its affiliates available to the REIT to the extent necessary in order that its obligations hereunder may be fully discharged in a timely and first class manner.

(d) Time Commitment . ARC II shall fully and faithfully discharge its obligations and responsibilities, and shall devote such time and attention to the REIT’s affairs as may be necessary to carry out the services for which ARC II is engaged under this Agreement.

(e) Standard of Care . ARC II shall, at all times, have a duty to exercise good faith, in compliance with the terms of this Agreement, and shall use diligent and professional efforts in performing the services hereunder consistent with industry standards.

(f) Litigation . There is no litigation, arbitration or reference proceeding pending or, to ARC II’s knowledge, threatened against ARC II, against ARC II with respect to ARC II’s executive management team, or which could prevent or materially impair the ability of ARC II to perform its duties and obligations under this Agreement.

(g) No Violations or Investigations . No proceeding is or was pending against ARC II, nor to the knowledge of ARC II has there been any investigations or any threatened proceeding involving or alleging violations of any federal securities laws, FINRA rules, Blue Sky laws or any other applicable laws or regulations.

(h) Salaries . ARC II acknowledges the ARC II is responsible for payment of the salaries of its own employees.

(i) Financial Status . ARC II has a net worth in an amount sufficient to meet its anticipated operating expenses for the following twelve (12) month period.

11.

 

Covenants of ARC II . ARC II covenants and agrees with the REIT as follows:

(a) Key Persons . ARC II agrees to take reasonable steps to retain Nicholas S. Schorsch, and William M. Kahane (each, a “ Key Employee ,” and collectively, the “ Key Employees ”) so that they are available to provide ongoing non-exclusive services (consistent with this Agreement) for the benefit of the REIT during the term of this Agreement and for any remaining services to be provided thereafter by ARC II. The REIT acknowledges that such Key Employees are at-will employees and will, subject to the limitations set forth in Section 6 above, be providing services to other investment programs managed by ARC II and its affiliates.

(b) Maintenance of Personnel and Staff . ARC II agrees to maintain an adequate number of skilled and licensed employees to carry out professionally the services for which ARC II is being engaged consistent with third party service providers providing similar services to real estate investment trusts of similar size and nature as the REIT. In addition, ARC II shall be available upon reasonable advance written notice by the REIT to have such employees, as well as all necessary systems, equipment, software and other appropriate items available to perform such services as requested by the REIT from time to time consistent with third party service providers proving similar services to real estate investment trusts of similar size and nature as the REIT.

(c) Specific Services Agreements . To the extent the REIT: (i) requests that ARC II provide Property Management Services for the REIT, the parties shall enter into a Property Management Agreement, subject to the terms and conditions set forth on the attached Exhibit C ; (ii) requests that ARC II provide Acquisition and/or Disposition Services for the REIT, the parties shall enter into a Real Estate Services Agreement, subject to the terms and conditions set forth on the attached Exhibit D ; (iii) requests that ARC II provide Asset Accounting Services for the REIT, the parties shall enter into a Asset Accounting Services Agreement, subject to the terms and conditions set forth on the attached Exhibit E .

(d) Cooperation . ARC II shall use good faith reasonable efforts to fully cooperate with the REIT, REIT Advisor and GERI, and any other party that may be necessary


 
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