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Exhibit 10.5
ASSET MANAGEMENT AGREEMENT
THIS
ASSET MANAGEMENT AGREEMENT, dated as of July 1, 2008, is
between
CORPORATE PROPERTY ASSOCIATES 17-GLOBAL INCORPORATED, a Maryland
corporation
("CPA: 17"), CPA:17 LIMITED PARTNERSHIP, a Delaware limited
partnership of which
CPA:17 is a general partner (the "Operating Partnership"), and W.P.
CAREY & Co.
B.V., a Netherlands company (the "Manager").
WITNESSETH:
WHEREAS, CPA: 17 intends to qualify as a REIT (as defined below),
and to
invest its funds in investments permitted by the terms of any
prospectus
pursuant to which it raised equity capital and Sections 856 through
860 of the
Code (as defined below);
WHEREAS, CPA: 17 desires to avail itself of the experience, sources
of
information, and assistance of, and certain facilities available
to, the Manager
with respect to disposition opportunities and asset management, for
properties
located outside of the United States, and to have the Manager
undertake the
duties and responsibilities hereinafter set forth, on behalf of,
and subject to
the supervision of the Board of Directors of CPA: 17, all as
provided herein;
and
WHEREAS, the Manager is willing 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 Expense. Acquisition Expense as defined under the
Advisory
Agreement.
Acquisition Fees. The Acquisition Fees as defined under the
Advisory
Agreement.
Adjusted Investor Capital. As of any date, the Initial Investor
Capital reduced by any Redemptions, other than Redemptions intended
to
qualify as a liquidity event for purposes of this Agreement, and by
any
other Distributions on or prior to such date determined by the
Board to be
from
Cash from Sales and Financings.
Adjusted Net Income. For any period, the total consolidated
revenues
recognized in such period by CPA: 17, less the total consolidated
expenses
of
CPA: 17 recognized in such period, excluding additions to reserves
for
depreciation and amortization, bad debts or other similar
non-cash
reserves; provided, however, that Adjusted Net Income for purposes
of
calculating total allowable Operating Expenses shall exclude any
gain,
losses or writedowns from the sale of CPA: 17's assets.
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Advisor. CPA: 17's external advisor. As of the date of this
Agreement,
the
Advisor is Carey Asset Management Corp.
Advisory Agreement. The Advisory Agreement, dated as of November
12,
2007, between CPA: 17 and the Advisor, as the same may be
amended,
supplemented, extended and renewed, and any successor advisory
agreement.
Affiliate. An Affiliate of another Person shall include any of
the
following: (i) any Person directly or indirectly owning,
controlling, or
holding, with power to vote ten percent or more of the outstanding
voting
securities of such other Person; (ii) any Person ten percent 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; or (v) any legal
entity
for
which such Person acts as an executive officer, director, trustee
or
general partner.
Agreement. This Asset Management Agreement.
Appraised Value. Value according to an appraisal made by an
Independent Appraiser, which may take into consideration any factor
deemed
appropriate by such Independent Appraiser, including, but not
limited to,
the
terms and conditions of any lease of a relevant property, the
quality
of
any lessee's, borrower's or other counter-party's credit and
the
conditions of the credit markets. The Appraised Value of a Property
may be
greater than the construction cost or the replacement cost of the
Property.
Articles of Incorporation. Articles of Incorporation of CPA: 17
under
the
General Corporation Law of Maryland, as amended from time to
time,
pursuant to which CPA: 17 is organized.
Asset Management Fee. The Asset Management Fee as defined in
Section
9(a)
hereof.
Average Invested Assets. The average during any period of the
aggregate book value of the assets of CPA: 17 invested, directly
or
indirectly, in Properties and in Loans, before deducting reserves
for
depreciation, bad debts, impairments, amortization and all other
similar
non-cash reserves, computed by taking the average of such values at
the end
of
each month during such period.
Board or Board of Directors. The Board of Directors of CPA: 17.
Bylaws. The bylaws of CPA: 17.
Cash from Financings. Net cash proceeds realized by CPA: 17 from
the
financing of Investments or the refinancing of any indebtedness of
CPA:17
secured by real estate located outside the United States.
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Cash from Sales. Net cash proceeds realized by CPA: 17 from the
sale,
exchange or other disposition of any of its assets located outside
the
United States after deduction of all expenses incurred in
connection
therewith. Cash from Sales shall not include Cash from
Financings.
Cash from Sales and Financings. The total sum of Cash from Sales
and
Cash
from Financings.
Cause. With respect to the termination of this Agreement,
fraud,
criminal conduct, willful misconduct or willful or negligent breach
of
fiduciary duty by the Manager that, in each case, is determined by
a
majority of the Independent Directors to be materially adverse to
CPA: 17,
or a
breach of a material term or condition of this Agreement by the
Manager and the Manager has not cured such breach within 30 days of
written
notice thereof or, in the case of any breach that cannot be cured
within 30
days by reasonable
effort, has not taken all necessary action within a
reasonable time period to cure such breach.
Closing Date. The first date on which Shares were issued pursuant
to
an
Offering.
Code. Internal Revenue Code of 1986, as amended.
Competitive Real Estate Commission. The real estate or
brokerage
commission paid for the purchase or sale of a property that is
reasonable,
customary and competitive in light of the size, type and location
of the
property.
Contract Sales Price. The total consideration received by CPA: 17
for
the
sale of a Property.
CPA: 17. Corporate Property Associates 17 - Global Incorporated,
a
corporation organized under the laws of the State of Maryland,
together
with
its consolidated subsidiaries (unless the context otherwise
requires).
Cumulative Return. For the period for which the calculation is
being
made, the percentage resulting from dividing (A) the total
Distributions
for
such period (not including Distributions out of Cash from Sales
and
Financings), by (B) the product of (i) either (x) until such time
as CPA:
17
has invested 90% of the net proceeds of CPA: 17's initial
Offering
(excluding net proceeds from the sale of Shares pursuant to CPA:
17's
distribution reinvestment program), the average Adjusted Investor
Capital
for
such period (calculated on a daily basis) or (y) from and after
such
time
as CPA: 17 has invested 90% of the net proceeds of CPA: 17's
initial
Offering (excluding net proceeds from the sale of Shares pursuant
to CPA:
17's
distribution reinvestment program), the net proceeds from the sale
of
Shares (excluding net proceeds from the sale of Shares pursuant to
CPA:
17's
distribution reinvestment program), as adjusted for Redemptions
other
than
Redemptions intended to qualify as a liquidity event for purposes
of
this
Agreement, and by any other Distributions on or prior to such
date
determined by the Board to be from Cash from Sales and Financings,
and (ii)
the
number of years (including fractions thereof) elapsed during
such
period. Notwithstanding the foregoing, neither the Shares
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received by the Advisor or its Affiliates for any consideration
other than
cash, nor the Distributions in respect of such Shares, shall be
included in
the
foregoing calculation.
Directors. The persons holding such office, as of any particular
time,
under the Articles of Incorporation, whether they be the directors
named
therein or additional or successor directors.
Distributions. Distributions declared by the Board.
GAAP. Generally accepted accounting principles in the United
States.
Good Reason. With respect to the termination of this Agreement,
(i)
any
failure to obtain a satisfactory agreement from any successor to
CPA:
17
or the Operating Partnership to assume and agree to perform CPA:
17's or
the
Operating Partnership's, as applicable, obligations under this
Agreement; or (ii) any material breach of this Agreement of any
nature
whatsoever by CPA: 17 or the Operating Partnership; provided that
(a) such
breach is of a material term or condition of this Agreement and (b)
CPA: 17
or
the Operating Partnership, as applicable, has not cured such
breach
within 30 days of written notice thereof or, in the case of any
breach that
cannot be cured within 30 days by reasonable effort, has not taken
all
necessary action within a reasonable time period to cure such
breach.
Gross Offering Proceeds. The aggregate purchase price of Shares
sold
in
any Offering.
Independent Appraiser. A qualified appraiser of real estate as
determined by the Board, who is not affiliated, directly or
indirectly,
with
CPA: 17, the Manager or their respective Affiliates. 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 of CPA: 17 who meets the criteria
for
an
Independent Director specified in the Bylaws.
Individual. Any natural person and those organizations treated
as
natural persons in Section 542(a) of the Code.
Initial Investor Capital. The total amount of capital invested
from
time
to time by Shareholders (computed at the Original Issue Price
per
Share), excluding any Shares received by the Manager, the Advisor
or their
respective Affiliates for any consideration other than cash.
Investment. An investment made by CPA:17, directly or indirectly,
in a
Property, Loan or, subject to Section 4(b) Other Permitted
Investment.
Loan Refinancing Fee. The Loan Refinancing Fee as defined in
Section
9(b)
hereof.
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Loans. The notes and other evidences of indebtedness or
obligations
acquired or entered into by CPA: 17 as lender which are secured
or
collateralized by personal property, or fee or leasehold interests
in real
estate or other assets, in each case located outside the United
States,
including but not limited to first or subordinate mortgage
loans,
construction loans, development loans, loans secured by capital
stock or
any
other assets or form of equity interest and any other type of loan
or
financial arrangement, such as providing or arranging for letters
of
credit, providing guarantees of obligations to third parties, or
providing
commitments for loans. The term "Loans" shall not include leases,
which are
not
recognized as leases for Federal income tax reporting purposes.
Long term Net Leased Property. Long term Net Leased Property as
defined under the Advisory Agreement.
Manager. W.P. Carey & Co. B.V., a company organized under the
laws of
The
Netherlands.
Market Value. The value calculated by multiplying the total number
of
outstanding Shares by the average closing price of the Shares over
the 30
trading days beginning 180 calendar days after the Shares are first
listed
on a
national security exchange or included for quotation on Nasdaq, as
the
case
may be.
Nasdaq. The national automated quotation system operated by the
National Association of Securities Dealers, Inc.
Offering. The offering of Shares pursuant to a Prospectus.
Operating Expenses. All consolidated operating, general and
administrative expenses paid or incurred by CPA: 17, as determined
under
GAAP, except the following (insofar as they would otherwise be
considered
operating, general and administrative expenses under GAAP): (i)
interest
and
discounts and other cost of borrowed money; (ii) taxes (including
state
and
Federal income tax, property taxes and assessments, franchise taxes
and
taxes of any other nature); (iii) expenses of raising capital,
including
Organization and Offering Expenses, printing, engraving, and
other
expenses, and taxes incurred in connection with the issuance
and
distribution of CPA:
17's Shares and Securities; (iv) Acquisition Expenses,
real
estate commissions on resale of property and other expenses
connected
with
the acquisition, disposition, origination, ownership and operation
of
Investments, including the costs of foreclosure, insurance
premiums, legal
services, brokerage and sales commissions, maintenance, repair
and
improvement of property; (v) Acquisition Fees payable to the
Advisor or any
other party; (vi) Subordinated Disposition Fees payable to the
Manager or
any
other party under this Agreement and the corresponding fees payable
to
the
Advisor under the Advisory Agreement or to any other party;
(vi)
distributions paid by the Operating Partnership to the Special
General
Partner under the agreement of limited partnership of the
Operating
Partnership in respect of gains realized on dispositions of
Investments;
(vii) amounts paid to effect a redemption or repurchase of the
special
general partner interest held by the Special General Partner
pursuant to
the
agreement of limited partnership of the Operating Partnership;
and
(viii) non-cash items, such as depreciation, amortization,
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depletion, and
additions to reserves for depreciation, amortization,
depletion, losses and bad debts. Notwithstanding anything herein to
the
contrary, Operating Expenses shall include the Asset Management Fee
and any
Loan
Refinancing Fee, in each case payable under this Agreement and
the
corresponding fees payable under the Advisory Agreement and, solely
for the
purposes of determining compliance with the 2%/25% Guidelines,
distributions of profits and cash flow made by the Operating
Partnership to
the
Special General Partner pursuant to the agreement of limited
partnership of the Operating Partnership, other than
distributions
described in clauses (vi) and (vii) of this definition.
Organization and Offering Expenses. Organization and Offering
Expenses
as
defined under the Advisory Agreement.
Original Issue Price. For any share issued in an Offering, the
price
at
which such Share was initially offered to the public by CPA:
17,
regardless of whether
selling commissions were paid in connection with the
purchase of such Shares from CPA: 17.
Other Permitted Investment Asset. An asset, other than cash,
cash
equivalents, short term bonds, auction rate securities and similar
short
term
investments, acquired by CPA: 17 for investment purposes that is
not a
Loan
or a Property but that is attributable to an investment or
activities
of
CPA: 17 outside the United States and is consistent with the
investment
objectives and policies of CPA: 17.
Person. An Individual, corporation, partnership, joint venture,
association, company, trust, bank, or other entity, or government
or any
agency or political subdivision of a government.
Preferred Return. A Cumulative Return of five percent computed
from
the
Closing Date through the date as of which such amount is being
calculated.
Property or Properties. CPA: 17's partial or entire interest in
real
property (including leasehold interests) located outside the United
States
and
personal or mixed property connected therewith. An investment
which
obligates CPA: 17 to acquire a Property will be treated as a
Property for
purposes of this Agreement.
Property Management Fee. A fee for property management services
rendered by the Advisor or its Affiliates in connection with assets
of CPA:
17
acquired directly or through foreclosure.
Prospectus. Any prospectus pursuant to which CPA: 17 offers Shares
in
a
public offering, as the same may at any time and from time to time
be
amended or supplemented after the effective date of the
registration
statement in which it is included.
Redemptions. An amount determined by multiplying the number of
Shares
redeemed by the Original Issue Price.
REIT. A real estate investment trust, as defined in Sections
856-860
of
the Code.
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Securities. Any stock, shares (other than currently outstanding
Shares
and
subsequently issued Shares), voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or
unsecured,
convertible, subordinated or otherwise or in general any
instruments
commonly known as "securities" or any certificate of interest,
shares or
participation in temporary or interim certificates for receipts
(or,
guarantees of, or warrants, options or rights to subscribe to,
purchase or
acquire any of the foregoing), which subsequently may be issued by
CPA: 17.
Shareholders. Those Persons who at the time any calculation
hereunder
is
to be made are shown as holders of record of Shares on the books
and
records of CPA: 17.
Shares. All of the shares of common stock of CPA: 17, $.001 par
value,
and
any other shares of common stock of CPA: 17.
"Special General Partner." W. P. Carey Holdings, LLC and any
permitted
transferee of the special general partnership interest under the
agreement
of
limited partnership of the Operating Partnership.
Sponsor. W.P. Carey & Co. LLC and any other Person directly
or
indirectly instrumental in organizing, wholly or in part, CPA: 17
or any
person who will control, manage or participate in the management of
CPA:
17,
and any Affiliate of any such person. Sponsor does not include a
person
whose only relationship to CPA: 17 is that of an independent
property
manager and whose only
compensation is as such. Sponsor also does not
include wholly independent third parties such as attorneys,
accountants and
underwriters whose only compensation is for professional
services.
Subordinated Acquisition Fee. The Subordinated Acquisition Fee
as
defined under the Advisory Agreement.
Subordinated Disposition Fee. The Subordinated Disposition Fee
as
defined in Section 9(d) hereof.
Termination Date. The effective date of any termination of this
Agreement.
Two Percent/25% Guidelines. 2%/25% Guidelines." The requirement,
as
provided for in Section 13 hereof, that, in any 12-month period
ending on
the
last day of any fiscal quarter, Operating Expenses under this
Agreement
and
the Advisory Agreement not exceed the greater of two percent of
CPA:
17's
Average Invested Assets during such 12-month period or 25% of
CPA:
17's
Adjusted Net Income over the same 12-month period.
2.
APPOINTMENT. CPA: 17 hereby appoints the Manager to serve as its
manager
on the terms and conditions set forth in this Agreement, and the
Manager hereby
accepts such appointment.
3.
DUTIES OF THE MANAGER. During the term of this Agreement, the
Manager
agrees, for and in consideration of the compensation set forth
below, to
supervise and direct the management and operation of the Properties
on behalf of
CPA: 17 and for the account of CPA:
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17, in an efficient and satisfactory manner consistent with like
quality
properties and at all times maintain or contract for systems and
personnel
sufficient to enable it to carry out all of its duties, obligations
and
functions under this Agreement. In performance of this undertaking,
subject to
the supervision of the Board and consistent with the provisions of
the Articles
of Incorporation and Bylaws of CPA: 17 and any Prospectus pursuant
to which
Shares are offered, the Manager shall, with respect to the
Properties, either
directly or by engaging an Affiliate:
(a) demand, collect and receive (i) all rents, utility charges,
common
area charges, insurance charges, VAT payments and real estate and
personal
property tax and assessment charges, (ii) all other pass-through or
bill-back
charges, sums, costs or expenses of any nature whatsoever payable
by tenants
under the terms of any or all of the leases and any other
agreements relating to
all or any portion of the Properties, and (iii) all other revenues,
issues and
profits accruing from the Properties and any covenant calculations
and insurance
certificates;
(b) calculate and administer rent calculations; maintain and
review
tenant covenant calculations; calculate and submit lender covenant
calculations;
and maintain letters of credits and security deposit
information;
(c) serve as primary contact to all tenants, field inquiries
and
requests; process easements and landlord lien waivers; manage third
party asset
managers and coordinate loan closings with third party asset
managers; inspect
at-risk properties, oversee inspections by lenders and third-party
property
inspection firms, and coordinate site visits and reports; ascertain
necessary
repair and monitor deferred maintenance, and ensure tenant
compliance; schedule
and coordinate tenant improvement projects and leasing efforts;
create expense
budgets for vacant properties as needed and pro forma expense
budgets for
at-risk properties; assist in executing redevelopment strategies;
provide or
source technical expertise when necessary relating to building
issues;
formulate, structure and oversee redevelopment projects; and meet
with tenants
to discuss potential needs;
(d) assess residual risk and long term viability on all
Properties;
perform credit analysis of tenant businesses and economic analysis
of holding
and selling Properties; maximize returns for CPA: 17 through early
renewals or
sales of Properties; manage bankruptcy process and monitor credit
quality of
portfolios; restructure leases as necessary; execute opportunistic
mortgage
refinancing; coordinate with annual third party appraisers in
valuation process;
and assess and manage market risks and risks associated with legal,
tax, and
corporate structure;
(e) supervise the performance of such ministerial and
administrative
functions as may be necessary in connection with the daily
operations of the
Properties, including but not limited to, overseeing and training
for
international compliance functions and staffing; overseeing and
ensuring tax,
legal, and regulatory compliance; ensuring timely completion of all
obligations
by tenants; and ensuring smooth integration of new investments into
asset
management platform;
(f) from time to time, or at any time reasonably requested by
the
Board or management of CPA: 17, make reports of its performance of
services to
CPA: 17 under this
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Agreement, including the State of the Assets and bi weekly status
reports to be
provided to CPA: 17's management;
(g) provide CPA: 17 with such accounting data and any other
information requested by CPA: 17 concerning the investment
activities of CPA: 17
as shall be required to prepare and to file all periodic financial
reports and
returns required to be filed with the Securities and Exchange
Commission and any
other regulatory agency, including annual financial statements;
(h) perform corporate secretarial work including, but not limited
to,
tracking of dates of required filings and annual general meetings
for
subsidiaries of CPA: 17; obtaining and coordinating all relevant
materials
needed for audit and/or statutory filing, including approvals of
financial
information, auditor's representation letters, and minutes and
resolutions;
preparing financial analyses of recurring payments; maintaining
information for
compliance reports; organizing, planning, and presenting
International State of
the Assets meetings; and preparing International Asset Operating
Committee
Memos;
(i) do all
things necessary to assure its ability to render the
services described in this Agreement;
(j) obtain for, or provide to, CPA: 17 such services as may be
required in disposing of Investments;
Notwithstanding anything to the contrary in this Agreement, CPA:
17
acknowledges that the Manager does not have an office in the United
States and
intends to conduct its business in a manner that will not cause
Manager to be
deemed to be engaged in a United States trade or business or have a
permanent
establishment in the United States.
4. AUTHORITY OF MANAGER.
(a) Pursuant to the terms of this Agreement (and subject to the
restrictions included in Paragraphs (b) of this Section 4 and in
Section 7
hereof), and subject to the continuing and exclusive authority of
the Board over
the management of CPA: 17, the Board hereby delegates to the
Manager the
authority to: (1) arrange for refinancing, or assess changes in the
asset or
capital structure of, and dispose of or otherwise deal with,
Properties; (2)
enter into leases and service contracts for Properties, and perform
other
property level operations; (3) oversee non-affiliated property
managers and
other non-affiliated Persons who perform services for CPA: 17; (4)
undertake
accounting and other record-keeping functions at the Property
level; and (5)
perform its duties set forth in Section 3.
(b) The Manager shall be authorized to perform the services
contemplated by this Agreement with respect to Investments other
than Properties
and Loans; provided, however, that if fees for such services will
be different
from the fees contemplated by Section 9 of this Agreement, such
fees shall be
approved in advance by a majority of the Independent Directors
