UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 2, 2021
BROOKFIELD REAL ESTATE INCOME TRUST INC.
(Exact Name of Registrant as Specified in Its Charter)
Maryland | 333-255557 | 82-2365593 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
250 Vesey Street, 15th Floor, New York, New York | 10281 | |
(Address of principal executive offices) | (Zip Code) |
(212) 417-7000
(Registrant’s telephone number, including area code)
Oaktree Real Estate Income Trust, Inc.
333 South Grand Avenue, 28th Floor
Los Angeles, CA 90071
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act |
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, Brookfield Real Estate Income Trust Inc. (the “Company”) entered into an adviser transition agreement, dated July 15, 2021 (the “Adviser Transition Agreement”), with Oaktree Fund Advisors, LLC (the “Oaktree Adviser”) and Brookfield REIT Adviser LLC (the “Adviser”), an affiliate of Brookfield Asset Management Inc. (together with its affiliates, “Brookfield”). Pursuant to the terms of the Adviser Transition Agreement, upon the Securities and Exchange Commission (the “SEC”) declaring effective the Company’s registration statement on Form S-11 (File No. 333-255557) (the “Registration Statement”) for its follow-on public offering (the “Follow-on Offering”) on November 2, 2021, the Company, among other things, (i) accepted the resignation of the Oaktree Adviser as its external adviser under the prior advisory agreement, dated April 11, 2018 (the “Prior Advisory Agreement”), between the Company and the Oaktree Adviser, and (ii) entered into a new advisory agreement (the “Advisory Agreement”), by and among the Company, Brookfield REIT Operating Partnership L.P. (the “Operating Partnership”) and the Adviser (together, with the related transactions authorized by the Company’s board of directors or otherwise completed in connection with the Company’s entry into the Adviser Transition Agreement, referred to collectively as the “Adviser Transition”).
A summary of the material transactions and actions completed in connection with the Adviser Transition are set forth below:
Advisory Agreement
On November 2, 2021, the Company entered into the Advisory Agreement. The terms of the Advisory Agreement are generally consistent with the Prior Advisory Agreement, except that (i) the monthly management fee payable to the Adviser is equal 1.25% per annum of the net asset value (“NAV”) for the Company’s Class T, Class S, Class D, Class I and Class C shares of common stock (the Company will not pay the Adviser a management fee with respect to the Class E Shares (as defined below)), (ii) the performance fee previously payable to the Oaktree Adviser under the Prior Advisory Agreement is replaced with a performance participation interest in the Operating Partnership held by Brookfield REIT OP Special Limited Partner L.P., a Delaware limited partnership and an indirect subsidiary of Brookfield (the “Special Limited Partner”) and (iii) the Adviser is entitled to reimbursement for administrative service expenses paid on the Company’s behalf.
A copy of the Advisory Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.
Dealer Manager Agreement
On November 2, 2021, the Company entered into a dealer manager agreement (the “Dealer Manager Agreement”) with Brookfield Oaktree Wealth Solutions, LLC (“BOWS”), an affiliate of Brookfield and the Adviser, pursuant to which BOWS will serve as the dealer manager for the Follow-on Offering. The New Dealer Manager Agreement is generally consistent with the Prior Dealer Manager Agreement (as defined below).
A copy of the Dealer Manager Agreement is attached hereto as Exhibit 1.1 and incorporated herein by reference.
Amended and Restated Limited Partnership Agreement of the Operating Partnership
On November 2, 2021, the Operating Partnership entered into that Second Amended and Restated Limited Partnership Agreement, by and among Brookfield REIT OP GP LLC, a wholly-owned subsidiary of the Company, as the general partner, Oaktree Real Estate Income Trust MGR, LLC, a Delaware limited liability
company, for the limited purpose of withdrawing as the general partner, the Company, as limited partner, the Special Limited Partner, and the other limited partners party thereto from time to time, which completed the Company’s UPREIT conversion. The Company is now structured as an “Umbrella Partnership Real Estate Investment Trust,” which means that it owns substantially all of its assets through the Operating Partnership.
A copy of the Amended and Restated Limited Partnership Agreement is attached hereto as Exhibit 10.2 and incorporated herein by reference.
Option Investments Sub-Advisory Agreement
On November 2, 2021, the Company entered into a sub-advisory agreement (the “Option Investments Sub-Advisory Agreement”), by and among the Company, the Adviser, the Operating Partnership and the Oaktree Adviser, pursuant to which the Oaktree Adviser will manage certain of the Company’s real estate properties (the “Equity Option Investments”) and real estate-related debt investments (the “Debt Option Investments” and, together with the Equity Option Investments, the “Oaktree Option Investments”) that the Company acquired prior to entering into the Adviser Transition Agreement. The fees paid to the Oaktree Adviser pursuant to the Option Investments Sub-Advisory Agreement will not be paid by the Company, but will instead be paid by the Adviser out of the management fee that the Company pays to the Adviser and the performance participation interest the Operating Partnership pays to the Special Limited Partner.
A copy of the Option Investments Sub-Advisory Agreement is attached hereto as 10.3 and incorporated herein by reference.
Option Investments Purchase Agreement
On November 2, 2021, the Company entered into an Option Investments Purchase Agreement, by and among the Company, the Operating Partnership, the Adviser and the Oaktree Adviser, pursuant to which the Oaktree Adviser or its affiliate will have the right to purchase the Operating Partnership’s entire interest in all of the Equity Option Investments or all of the Debt Option Investments, or both, for a period of 12 months following the earlier of (i) May 2, 2023 and (ii) the date on which the Company notifies the Oaktree Adviser that it has issued in the aggregate $1 billion of its common stock to non-affiliates pursuant to the Follow-on Offering, at a price equal to the fair value of the applicable Oaktree Option Investments, as determined in connection with the Company’s most recently determined NAV immediately prior to the closing of such purchase.
A copy of the Option Investments Purchase Agreement is attached hereto as 10.4 and incorporated herein by reference.
License Agreement
On November 2, 2021, the Company entered into a licensing agreement (the “License Agreement”), with Brookfield Office Properties Inc. a subsidiary of Brookfield (the “Licensor”), pursuant to which it has granted the Company a fully paid-up, royalty-free, non-exclusive, non-transferable license to use the name “Brookfield Real Estate Income Trust Inc.” Under this License Agreement, the Company has a right to use this name for so long as the Adviser (or another affiliate of the Licensor) serves as the Company’s adviser (or another advisory entity) and the Adviser remains an affiliate of the Licensor under the License Agreement. The License Agreement may also be earlier terminated by either party as a result of certain breaches or for convenience upon 90 days’ prior written notice, provided that upon notification of such termination by us, the Licensor may elect to effect termination of the License Agreement immediately at any time after 30 days from the date of such notification.
A copy of the License Agreement is attached hereto as 10.5 and incorporated herein by reference.
Credit Agreement
On November 2, 2021, the Company entered into a line of credit with Brookfield US Holdings Inc., an affiliate of Brookfield (the “Brookfield Lender”), providing for a discretionary, unsecured, uncommitted credit facility in a maximum aggregate principal amount of $125 million (the “Brookfield Line of Credit”). The Credit Agreement has a one-year term, subject to one-year extension options requiring approval of the Brookfield Lender. Borrowings under the Credit Agreement will bear interest at a rate of the lowest then-current rate for any similar credit product offered by a third-party lender to the Company, or, if no such rate is available, LIBOR plus 2.25%.
A copy of the Credit Agreement is attached hereto as 10.6 and incorporated herein by reference.
Brookfield Portfolio Contributions
On November 2, 2021, Brookfield contributed its interests in certain real estate property investments (collectively, the “Brookfield Portfolio”) to the Operating Partnership in exchange for (a) shares of the Company’s common stock and partnership units in the Operating Partnership (“Operating Partnership Units”) and (b) the assumption of certain property-level debt related to the Brookfield Portfolio, equal to the appraised value of the contributions as of a current date prior to the closing of the contributions. The Brookfield Portfolio is described below:
Principal Place
On November 2, 2021, the Company entered into that certain Contribution Agreement (this “PP Contribution Agreement”), by and among BUSI II-C L.P., a Delaware limited partnership, and the Operating Partnership, in the presence of Brookfield REIT Lux S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), pursuant to which the Company acquired a 20% ownership interest in Principal Place, an office asset located in London, United Kingdom through an indirect interest in the joint venture that owns the property (the “Principal Place Acquisition”). The purchase price was calculated using the GBP to USD exchange rate as of November 2, 2021. The total consideration paid to Brookfield was $99.8 million, comprised of the issuance of $74.8 million of Class E Operating Partnership units and the issuance of $25.0 million of Class E Shares.
Domain and The Burnham
On November 2, 2021, the Operating Partnership entered into that certain Contribution Agreement, (the “Multifamily Contribution Agreement”), by and among BOP Nest Domain JV LLC, a Delaware limited liability company, BOP Nest Nashville JV LLC, a Delaware limited liability company, BOP Nest Domain LLC, a Delaware limited liability company, and BOP Nest Nashville LLC, a Delaware limited liability company, pursuant to which the Company acquired (i) a 100% ownership interest in Domain, a 324-unit apartment building in Kissimmee, Florida, for $74.1 million (exclusive of closing costs and other prorations), comprised of an assumption of $48.7 million of property-level debt and the issuance to Brookfield of Class E Operating Partnership units with an aggregate value of $26.8 million, and (ii) a 100% ownership interest in The Burnham, a 328-unit apartment building in Nashville, Tennessee, for $129.0 million (exclusive of closing costs and other prorations), comprised of an assumption of $83.9 million of property-level debt and the issuance to the Brookfield of Class E Operating Partnership units with an aggregate value of $46.7 million.
Copies of the PP Contribution Agreement and the Multifamily Contribution Agreement are attached hereto as Exhibits 10.7 and 10.8, respectively, and incorporated by reference.
The foregoing descriptions are a summary of terms of the agreements and do not purport to be a complete statement of the parties’ rights and obligations thereunder. The foregoing descriptions are qualified in their entirety by reference to the full text of the applicable agreement, which are included as exhibits to this Current Report on Form 8-K (the “Current Report”).
Item 1.02 Termination of a Material Definitive Agreement.
Advisory Termination Agreement
In connection with the Adviser Transition, the Company and the Oaktree Adviser entered into that certain Termination Agreement, dated November 2, 2021, pursuant to which the Oaktree Adviser resigned as the investment adviser under Prior Advisory Agreement and the Company accepted such resignation, and the parties agreed to terminate the Prior Advisory Agreement, without payment of any penalty. The Company and Oaktree Adviser agreed that the Oaktree Adviser was entitled to a prorated management fee and performance fee (as defined in the Prior Advisory Agreement) through the date of termination.
Dealer Manager Termination Agreement
In connection with the Adviser Transition, the Company and Independent Brokerage Solutions LLC (formerly, SDDco Brokerage Advisors, LLC) (the “Former Dealer Manager”) entered into that certain Termination Agreement, dated November 2, 2021, pursuant to which the parties agreed to terminate that certain Amended and Restated Dealer Manager Agreement, dated February 5, 2019, by and between the Company and the Former Dealer Manager (the “Prior Dealer Manager Agreement”), without payment of any penalty.
Item 2.01 Completion of Acquisition or Disposition of Assets.
Brookfield Portfolio Acquisition
In connection with the Adviser Transition, on November 2, 2021, the Company completed the acquisition of the Brookfield Portfolio. The information set forth above under Item 1.01 relating to the Company’s acquisition the Brookfield Portfolio is hereby incorporated by reference into this Item 2.01.
Ezlyn Disposition
In connection with Adviser Transition, on November 2, 2021, the Company sold (the “Ezlyn Disposition”) its 90% interest in the joint venture with Holland Partner Group (the “Ezlyn Joint Venture”), which owns a fee simple interest in a multifamily asset located in Westminster, Colorado (“Ezlyn”), to OP/Oaktree Ezlyn JV, LLC, a Delaware limited liability company and an affiliate of Oaktree (“Buyer LLC”), pursuant to a membership interest purchase agreement (the “Ezlyn Purchase Agreement”). In consideration for the Ezlyn Disposition, the Company received aggregate consideration equal to approximately $42.4 million, payable in (a) approximately $8.6 million in cash and (b) a preferred membership interest in Buyer LLC with an aggregate liquidation preference equal to approximately $33.8 million (subject to certain prorations as of the closing date). An affiliate of Oaktree (the “Ezlyn Manager”) owns 100% of the outstanding common membership interest in and acts as the manager of Buyer LLC, which entitles it to manage the day-to-day affairs of Buyer LLC subject only to the Company’s consent with respect to certain major decisions as set forth in the limited liability company agreement of Buyer LLC. The Company’s preferred membership
interest in Buyer LLC entitles it to a priority distribution (prior to any distributions on the common membership interest) equal to approximately 80% of the cash flows of Buyer LLC’s interest in the Ezlyn Joint Venture (the “Priority Distribution”). In addition, upon (a) the sale of Buyer LLC’s interest in the Ezlyn Joint Venture, (b) the sale by the Ezlyn Joint Venture of the Ezlyn Property or (c) any refinancing of the Ezlyn Property, Buyer LLC will be required to use the proceeds from such sale or refinancing to redeem (in full or part), the Company’s preferred membership interest at a price equal to the liquidation preference plus an amount equal to any accrued and unpaid Priority Distribution to, but excluding, the date of redemption. The Company’s preferred membership interest has a perpetual term, subject to the Company’s right, beginning on November 30, 2024, to require Buyer LLC to purchase the Company’s preferred membership interest for a price equal to the liquidation preference, plus an amount equal to any accrued and unpaid Priority Distribution to, but excluding, the date of repurchase.
In addition, pursuant to the terms of the Ezlyn Purchase Agreement, beginning on January 2, 2022, the Ezlyn Manager will have the right, but not the obligation, to purchase the Company’s preferred membership interest in Buyer LLC for a price equal to the liquidation preference, plus an amount equal to any accrued and unpaid Priority Distribution to, but excluding, the date of purchase.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth above under Item 1.01 relating to the Brookfield Line of Credit is hereby incorporated by reference into this Item 2.03 insofar as it relates to the creation of a direct financial obligation.
Item 3.02 Unregistered Sales of Equity Securities.
The information set forth above under Item 1.01 relating to the Principal Place Acquisition is hereby incorporated by reference into this Item 3.02. Pursuant to the terms of the PP Contribution Agreement, the Company issued $25.0 million of Class E Shares to Brookfield. The offer and sale of shares to Brookfield is claimed to be exempt from the registration provisions of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of New Directors
As previously disclosed, on July 14, 2021, in connection with the Adviser Transition, the Company’s board of directors increased the size of the board of directors from seven directors to 13 directors, and elected the following individuals to fill the six vacancies created by such increase, in each case effective as of the November 2, 2021:
Name |
Age |
Position |
||||||
Brian W. Kingston | 47 | Chairman of the Board | ||||||
Zachary B. Vaughan | 43 | Director | ||||||
Lori-Ann Beausoleil | 58 | Independent Director | ||||||
Richard W. Eaddy | 59 | Independent Director | ||||||
Thomas F. Farley | 65 | Independent Director | ||||||
Lis S. Wigmore | 58 | Independent Director |
Biographical information with respect to each these individuals is set forth below.
Brian W. Kingston serves as the Company’s Chairman of the board of directors and has served as a Managing Partner and Chief Executive Officer of Brookfield’s Real Estate Group and Brookfield Property Partners L.P. since 2015. Mr. Kingston joined Brookfield in 2001. Under his leadership, Brookfield has conducted a wide range of mergers and acquisitions, including investments in Forest City Realty Trust, Inc., General Growth Properties, Inc. and Canary Wharf Group plc. Mr. Kingston previously led Brookfield’s Australian business activities from 2001 to 2010, holding the positions of Chief Executive Officer of Brookfield Office Properties Australia, Chief Executive Officer of Prime Infrastructure and Chief Financial Officer of Multiplex. Mr. Kingston holds a Honors Bachelor of Commerce in from Queens University. Mr. Kingston is a valuable member of the Company’s board of directors because of his vast real estate experience, his history with Brookfield and his leadership of Brookfield’s Real Estate Group.
Zachary B. Vaughan serves as the Company’s Director and Chief Executive Officer and has served as a Managing Partner in Brookfield’s Real Estate Group since 2017 and oversees Brookfield’s open-ended real estate activities globally, including investments, portfolio management and new fund formation. Prior to that, he was Head of Europe, based in London, overseeing all of Brookfield’s real estate activities in the region. Mr. Vaughan joined Brookfield in 2012 and has been involved in numerous mergers and acquisitions, including investments in Thayer Lodging Group, Inc., Center Parcs UK, Gazeley, Student Roost, MPG Office Trust, Inc., Associated Estates Realty Corporation and the Interhotels Group. Prior to joining Brookfield, Mr. Vaughan worked at Canada Pension Plan Investment Board (CPPIB) and Reichmann International as Director of Acquisitions. Mr. Vaughan holds a B.A. in Honors Economics from The University of Western Ontario. Mr. Vaughan is a valuable member of the Company’s board of directors because of his extensive real estate and investment experience, his history with Brookfield and his leadership of Brookfield’s Real Estate Group.
Lori Ann Beausoleil serves as one of the Company’s independent directors and has served as a member of the board of trustees of Canadian Apartment Properties Real Estate Investment Trust (TSX: CAR.UN), WPT Industrial Real Estate Investment Trust (TSX: WIR.U; WIR.UN); and Slate Office REIT (TSX: SOT.UN) since June 2021, February 2021 and January 2021, respectively. Ms. Beausoleil brings over 35 years of financial and real estate experience and is a member of the Canadian Chartered Professional Accountants and the Chartered Professional Accountants of Ontario. From 1999 to 2021, Ms. Beausoleil was a Partner at PricewaterhouseCoopers Canada, where she was a National Leader of the Compliance, Ethics and Governance practice and a Real Estate Advisory Partner, also previously served as the Canadian Real Estate leader and the firm’s Chief Diversity and Inclusion Officer. Ms. Beausoleil is a member of the board of directors and chair of the audit committee of a charitable organization, Black Opportunity Fund. Ms. Beausoleil holds a Bachelor of Commerce from the University of Toronto. Ms. Beausoleil is a valuable member of the Company’s board of directors because of her significant experience in the real estate industry, including having served as both an executive officer and a member of the board of directors of other public REITs, as well as her extensive experience with accounting and financial reporting matters.
Richard W. Eaddy serves as one of the Company’s independent directors and has served as a Senior Managing Director at Savills plc (LSE: SVS) in its brokerage/advisory practice since July 2008. Mr. Eaddy has over 30 years of experience in real estate, and ten of those years he spent holding full-time state and city-appointed government offices, including serving as project manager for the Grand Central Terminal redevelopment from 1992 to 1996, Executive Director and Chief Executive Officer of Harlem CDC from 1996 to 1998, and Deputy Borough President of the Bronx from 1998 to 2001. In addition, he has held numerous positions in the private and nonprofit sectors, managing commercial projects and initiatives throughout New York City and has been involved with various real estate projects throughout the city. Mr. Eaddy currently serves as a member of the NYC Planning Commission and serves on the board of numerous civic and philanthropic organizations, including the Skyscraper Museum, the Community Service Society of New York, the Bowery Residents’ Committee and Madison Square Boys and Girls Club. In addition, Mr. Eaddy is a member of the Real Estate Board of New York (“REBNY”) and was a co-recipient of
REBNY’s 2021 Edward S. Gordon Memorial Award for Most Ingenious Deal of the Year. Mr. Eaddy holds M.S. in Real Estate Development from Columbia University and a B.A. in Social Studies and Theater from Wesleyan University. Mr. Eaddy is a valuable member of the Company’s board of directors and has a unique insight into its investment activities because of his extensive experience in the real estate industry.
Thomas F. Farley serves as one of the Company’s independent directors and is a corporate director with over 40 years of real estate industry experience. He has served as chair of the board of trustees of Slate Office REIT (TSX: SOT.UN) since January 2021 and as a member of its board of trustees since June 2017. Mr. Farley has also served as a member of the board of trustees of Slate Grocery REIT (TSX: SGR.UN; SGR.U) since 2014, and as chair of its board of trustees from 2014 to 2020. Prior to these positions, Mr. Farley was chair of the board of directors of Brookfield Canada Office Properties and President and Global Chief Operating Officer of Brookfield Office Properties from 2010 to 2014. Further, he served as chair of the board of directors of Brookfield Johnson Controls from 2003 to 2014. Mr. Farley received a Certificate in Real Estate Finance (CRF) designation from the Real Estate Institute of Canada, he completed the executive management program of the American Management Institute and holds a B.A. from the University of Victoria. Mr. Farley is a valuable member of the Company’s board of directors because of his significant experience in the real estate industry and his experience as a member of the board of directors of several other public REITs.
Lis S. Wigmore serves as one of the Company’s independent directors and has served as a member of the board of directors, chair of the governance and compensation committees, and a member of the investment committee of Artis Real Estate Investment Trust (TSX: AX.UN) since 2020. She served as the chair of governance at Pinchin Ltd. from 2018 to 2021, and served as a member of the board of directors of Pure Industrial Real Estate Trust from 2017 to 2018, Invesque Inc from 2018 to 2019, and Fred Victor from 2013 to 2019. She was also Chief Operating Officer of IPC US Real Estate Investment Trust from 2001 to 2007. Ms. Wigmore holds a M.B.A. from York University (Schulich), a C.Dir. from DeGroote School of Business and Certificate in Cyber-Risk from the Software Institute at Carnegie Mellon University. Ms. Wigmore is a valuable member of the Company’s board of directors because of her more than 30 years of real estate experience.
Messrs. Kingston and Vaughan are affiliates of Brookfield and therefore may be deemed to have indirect interests in the transactions described in Item 1.01 of this Current Report.
Indemnification Agreements with Independent Directors
In connection with the appointments of the new independent directors, the Company entered into an indemnification agreement (the “Indemnification Agreement”) with each of Mses. Beausoleil and Wigmore and Messrs. Eaddy and Farley (the “Indemnitee”). The Indemnification Agreement provides that, subject to certain limitations set forth therein, the Company will indemnify the Indemnitee to the fullest extent permitted by Maryland law and the Company’s charter, for amounts incurred as a result of the Indemnitee’s service in his or her role as a director of the Company. The Indemnification Agreement further provides that, subject to the limitations set forth therein, the Company will advance all reasonable expenses to the Indemnitee in connection with proceedings covered by the Indemnification Agreement.
Subject to certain limitations set forth therein, the Indemnification Agreement places limitations on the indemnification of the Indemnitee to the extent the Indemnitee is found to have acted in bad faith or with active and deliberate dishonesty and such actions were material to the matter that caused the loss to the Company. The Indemnification Agreement also provides that, except for a proceeding brought by the Indemnitee and certain proceedings involving separate defenses, counterclaims or other conflicts of interest, the Company has the right to defend the Indemnitee in any proceeding that may give rise to indemnification under the Indemnification Agreement.
The description of the Indemnification Agreement in this Current Report is a summary and is qualified in its entirety by the full terms of the Form of Indemnification Agreement, which the Company filed as Exhibit 10.4 to its Registration Statement on Form S-11 filed with the SEC on April 12, 2018.
Resignation of Officers and Certain Directors
As previously disclosed, in connection with the Adviser Transition, on or about July 14, 2021, each existing director of the Company tendered his/her resignation and certain existing officers of the Company were removed, in each case, effective as of November 2, 2021. The Company would like to thank each resigning director and removed officer for their significant contributions.
Appointment of New Officers
On November 2, 2021, the Company’s board of directors appointed Zachary B. Vaughan to serve as the Company’s Chief Executive Officer, Manish H. Desai to serve as the Company’s President and Chief Operating Officer and Dana E. Petitto to serve as the Company’s Chief Financial Officer, in each case, effective immediately. Biographical information for Mr. Vaughan is set forth above and for Mr. Desai and Ms. Petitto are set forth below.
Manish H. Desai has served as the Company’s President since July 2017 and has served as the Company’s Chief Operating Officer since November 2021. He previously served as a member of the Company’s board of directors from February 2018 until November 2021. Mr. Desai has also served as a Managing Director of Oaktree since 2014. Mr. Desai joined Oaktree in 2004 and has been involved in the investment and management of its real estate funds. As a Managing Director, his responsibilities include acquisitions, dispositions, financings and re-financings, asset management, development and redevelopment of all property types, with a primary focus on corporate transactions. He has worked with a number of Oaktree’s real estate portfolio companies and has served on the board of directors of STORE Capital Corp. and International Market Centers, Inc. (both specialty REITs). Prior to joining Oaktree, Mr. Desai served as an analyst for Morgan Stanley’s real estate investment strategies from 2001 to 2003, where he was involved in a number of advisory assignments, including the spin-off and restructuring of Fairmont Hotels, as well as the evaluation of numerous properties and portfolios for acquisition. Mr. Desai holds a B.A. in Public Policy with a secondary major in Economics from Stanford University.
Dana E. Petitto has served as the Company’s Chief Financial Officer since November 2021, and has served as a Managing Director of Finance in Brookfield’s Real Estate Group since 2018, where she is responsible for consolidation and reporting of the results and performance of Brookfield Property Partners L.P. Ms. Petitto joined Brookfield in 2005 and has held numerous roles across the organization during her tenure. She was initially Assistant Controller for Brookfield Office Properties, followed by Vice President and Controller and then Senior Vice President, Finance, before moving to Brookfield Property Partners L.P. in 2013, where she served as Senior Vice President, Finance until 2018. Prior to joining Brookfield, Ms. Petitto was a manager in the corporate finance department of Bristol-Myers Squibb Company from 2003 to 2005, following three years in the audit group at KPMG LLP. Ms. Petitto holds a B.S. in Accounting from the A.B. Freeman School of Business at Tulane University.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
Second Articles of Amendment
On November 2, 2021, the Company filed Second Articles of Amendment with the State Department of Assessments and Taxation of Maryland (the “SDAT”) to change its corporate legal name from “Oaktree Real Estate Income Trust, Inc.” to “Brookfield Real Estate Income Trust Inc.” (the “Second Articles of Amendment”). A copy of the Second Articles of Amendment is attached hereto as Exhibit 3.1 and incorporated herein by reference.
Articles Supplementary
On November 2, 2021, the Company filed Articles Supplementary (the “Articles Supplementary”) with the SDAT establishing and fixing the rights and preferences of the Company’s Class E common stock, par value $0.01 per share (the “Class E Shares”). A copy of the Articles Supplementary is attached hereto as Exhibit 3.2 and incorporated herein by reference.
Certificate of Correction
On November 2, 2021, the Company filed a Certificate of Correction (the “Certificate of Correction”) with the SDAT related to the Articles Supplementary for the Company’s Class C common stock correcting language relating to the conversion of shares of Class C common stock. A copy of the Certificate of Correction is attached hereto as Exhibit 3.3 and incorporated herein by reference.
Item 8.01. Other Events.
On November 2, 2021, the Company issued a press release announcing the completion of the Adviser Transition. A copy of the press release is filed as Exhibit 99.1 to this Current Report and incorporated by reference herein.
On November 2, 2021, the Company’s board of directors amended its share repurchase plan (the “Share Repurchase Plan”) to, among other things, to modify (i) price at which shares that have not been outstanding for at least one year will be repurchased from 95% to 98% of the transaction price (an “Early Repurchase Deduction”) and (ii) the circumstances under which the Company may waive the Early Repurchase Deduction.
The foregoing description is a summary of terms of the Share Repurchase Plan and does not purport to be complete. The foregoing description is qualified in its entirety by reference to the full text of the Share Repurchase Plan, which is included as Exhibit 4.1 to this Current Report and incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The financial statements of the Brookfield Portfolio required to be filed pursuant to Rule 3-14 of Regulation S-X are incorporated herein by reference to the financial information under the heading “S-X 3-14 Financial Statements of Acquired Brookfield Portfolio” included in the Company’s Registration Statement relating to the Follow-on Offering.
(b) Pro Forma Financial Information.
The pro forma financial information of the Company required to be filed in connection with the acquisitions and dispositions described in Item 2.01 in this Current Report are incorporated herein by reference to the financial information under the heading “Pro Forma Condensed Consolidated Financial Statements of Brookfield Real Estate Income Trust Inc. (Unaudited)” included in the Company’s Registration Statement relating to the Follow-on Offering.
(d) Exhibits.
* |
Portions of this exhibit have been omitted pursuant to Item 601(b)(10)(iv) of Regulation S-K. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 8, 2021
BROOKFIELD REAL ESTATE INCOME TRUST INC. | ||||
By: |
/s/ Zachary B. Vaughan |
|||
Name: | Zachary B. Vaughan | |||
Title: | Chief Executive Officer |
Exhibit 1.1
DEALER MANAGER AGREEMENT
November 2, 2021
Brookfield Oaktree Wealth Solutions LLC
250 Vesey Street, 15th Floor
New York, NY 10281
This Dealer Manager Agreement (this Agreement) is entered into by and between Brookfield Real Estate Income Trust Inc. (formerly Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company) and Brookfield Oaktree Wealth Solutions LLC, a Delaware limited liability company (the Dealer Manager).
The Company has filed one or more registration statements with the U.S. Securities and Exchange Commission (the SEC) that are listed on Schedule 1 to this Agreement (each, a Registration Statement), which Schedule 1 may be amended from time to time with the written consent of the Company and the Dealer Manager. In this Agreement, unless explicitly stated otherwise, the Registration Statement means, at any given time, each of the registration statements listed on Schedule 1, as such Schedule 1 may be amended from time to time, as each such registration statement is finally amended and revised at the effective date of such registration statement (including at the effective date of any post-effective amendment thereto).
Each Registration Statement shall register an ongoing offering (each, an Offering) of shares of one or more classes (the Shares) of the Companys common stock (Common Stock). In this Agreement, unless explicitly stated otherwise, the Offering means each Offering covered by a Registration Statement and Shares means the Shares being offered in the Offering.
The Offering is and shall be comprised of a maximum amount of Shares set forth from time to time in the applicable Prospectus (as defined below) that will be issued and sold to the public at the public offering prices per Share set forth from time to time in the Prospectus pursuant to a primary offering (the Primary Shares) and the Companys distribution reinvestment plan (the DRIP Shares). In connection with the Offering, the minimum purchase by any one person shall be as set forth in the Prospectus (except as otherwise indicated in any letter or memorandum from the Company to the Dealer Manager).
In this Agreement, unless explicitly stated otherwise, any references to the Registration Statement, the Offering, the Shares or the Prospectus with respect to each other shall mean only those that are all related to the same Registration Statement.
The Company may from time to time offer one or more classes of Shares. The differences between the classes of Shares and the eligibility requirements for each class will be described in detail in the Prospectus. The Shares are to be offered and sold to the public as described under the caption Plan of Distribution in the Prospectus.
Except as otherwise agreed by the Company and the Dealer Manager, Shares sold through the Dealer Manager are to be sold through the Dealer Manager, as the dealer manager, and the broker-dealers (each a Dealer and collectively, the Dealers) with whom the Dealer Manager has entered into or will enter into a selected dealer agreement related to the distribution of Primary Shares substantially in the form attached to this Agreement as Exhibit A (for use with independent broker-dealers) or Exhibit B (for use with wirehouses) or such other form as approved by the Company (each, a Selected Dealer Agreement) at a purchase price equal to the then-current offering price per Share (the transaction price) made available to investors on the Companys website and in the Prospectus, plus any applicable selling commissions and
dealer manager fees, subject in certain circumstances to reductions thereof as described in the Prospectus. All of the selling commissions and dealer manager fees will be reallowed by the Dealer Manager to the Dealers who sold the applicable class of Primary Shares giving rise to such selling commissions and dealer manager fees, as described more fully in the Selected Dealer Agreement entered into with each such Dealer. For stockholders who participate in the Companys distribution reinvestment plan, the cash distributions paid on the Shares of each class that each stockholder owns will be automatically invested in additional Shares of the same class. The DRIP Shares are to be issued and sold to stockholders of the Company at the transaction price of the applicable class of Shares on the date that the distribution is payable, without any applicable selling commissions and dealer manager fees.
Terms not defined herein shall have the same meaning as in the Prospectus. Now, therefore, the Company hereby agrees with the Dealer Manager as follows:
1. Representations and Warranties of the Company: The Company represents and warrants to the Dealer Manager and each Dealer participating in an Offering, with respect to such Offering, as applicable, that:
a. A registration statement on Form S-11 with respect to the Shares has been prepared by the Company in accordance with applicable requirements of the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder (collectively, the Securities Act). Copies of such Registration Statement and each amendment thereto have been or will be delivered to the Dealer Manager. The prospectus contained therein, as amended and supplemented from time to time, is hereinafter referred to as the Prospectus. As used in this Agreement, the term Registration Statement means a registration statement on Form S-11 with respect to the Shares on file with and declared effective by the SEC, as amended or replaced from time to time. Effective Date means the applicable date upon which the Registration Statement or any post-effective amendment thereto is or was first declared effective by the SEC. Filing Date means the applicable date upon which the initial Prospectus or any amendment or supplement thereto is filed with the SEC pursuant to Rule 424 under the Securities Act. The terms Registration Statement and Prospectus, in all cases, shall include the documents, if any, incorporated by reference therein.
b. As of the Effective Date or Filing Date, as applicable, the Registration Statement and Prospectus complied or will comply in all material respects with the Securities Act. The Registration Statement, as of the applicable Effective Date, does not and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; and the Prospectus as of the applicable Filing Date, does not and will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, provided, however, that the foregoing representation does not extend to such statements contained in or omitted from the Registration Statement or Prospectus that relate to the Dealer Manager or any of the Dealers, are primarily within the knowledge of the Dealer Manager or any of the Dealers or are based upon information furnished by the Dealer Manager or any of the Dealers in writing to the Company specifically for inclusion therein.
c. The documents incorporated by reference in the Registration Statement and the Prospectus, when they became effective or were filed with the SEC, as the case may be, conformed in all material respects to the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder (collectively, the Exchange Act), and none of such documents contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.
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d. The Company intends to use the funds received from the sale of the Shares as set forth in the Prospectus.
e. The Company has been duly and validly organized and formed as a corporation under the laws of the state of Maryland, with the power and authority to conduct its business as described in the Prospectus.
f. No consent, approval, authorization or other order of any governmental authority is required in connection with the execution or delivery by the Company of this Agreement or the issuance and sale by the Company of the Shares, except such as may be required under the Securities Act, by the Financial Industry Regulatory Authority, Inc. (FINRA) or applicable state securities laws.
g. Unless otherwise described in the Registration Statement and Prospectus, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against the Company at law or in equity or before or by any federal or state commission, regulatory body or administrative agency or other governmental body, domestic or foreign, that would reasonably be expected to have a material adverse effect on the business or property of the Company.
h. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Company will not conflict with or constitute a default under (i) the Companys charter or bylaws, (ii) any indenture, mortgage, deed of trust or lease to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or any of their properties is bound or (iii) any rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Company, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 5 of this Agreement may be limited under applicable securities laws.
i. The Company has full legal right, power and authority to enter into this Agreement and to perform the transactions contemplated hereby, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 5 of this Agreement may be limited under applicable securities laws.
j. At the time of the issuance of the Shares, the Shares will have been duly authorized and, when issued and sold as contemplated by the Prospectus and the Companys charter, and upon payment therefor as provided by the Prospectus and this Agreement, will be validly issued, fully paid and nonassessable and will conform to the description thereof contained in the Prospectus.
k. The Company has filed all material federal, state and foreign income tax returns that have been required to be filed, on or before the due date (taking into account all extensions of time to file) and has paid or provided for the payment of all taxes indicated by said returns and all assessments received by the Company to the extent that such taxes or assessments have become due, except where the Company is contesting such assessments in good faith.
l. The financial statements of the Company included in the Prospectus present fairly in all material respects the financial position of the Company as of the date indicated and the results of its operations for the periods specified; said financial statements have been prepared in conformity with generally accepted accounting principles applied on a consistent basis.
m. The Company has been organized in conformity with the requirements for qualification and taxation as a real estate investment trust (a REIT) under the Internal Revenue Code of 1986, as amended (the Code), and its method of operation (as described in the Registration Statement and the Prospectus) will enable the Company to continue to meet the requirements for qualification and taxation as a REIT under the Code.
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n. The Company does not intend to conduct its business so as to be an investment company as that term is defined in the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, and it will exercise reasonable diligence to ensure that it does not become an investment company within the meaning of the Investment Company Act of 1940, as amended.
o. Each independent accounting firm that has audited and is reporting upon any financial statements included in the Registration Statement or the Prospectus or any amendments or supplements thereto is, to the Companys knowledge, an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the SEC and the Public Company Accounting Oversight Board as is required by the Securities Act.
p. Any and all printed sales literature or other materials that have been approved in advance in writing by the Company and appropriate regulatory agencies for use in the Offering (Authorized Sales Materials) prepared by the Company and any of its affiliates (excluding the Dealer Manager) specifically for use with potential investors in connection with the Offering, when used in conjunction with the Prospectus, did not at the time provided for use, and, as to later provided materials, will not at the time provided for use, include any untrue statement of a material fact nor did they at the time provided for use, or, as to later provided materials, will they, at the time provided for use, omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made and when read in conjunction with the Prospectus, not misleading.
2. Representations and Warranties of the Dealer Manager. The Dealer Manager represents and warrants to the Company, with respect to the Offering, as applicable, that:
a. The Dealer Manager is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.
b. No consent, approval, authorization or other order of any governmental authority is required in connection with the execution or delivery by the Dealer Manager of this Agreement.
c. The execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms of this Agreement by the Dealer Manager will not conflict with or constitute a default under (i) the Dealer Managers charter or bylaws, (ii) any indenture, mortgage, deed of trust or lease to which the Dealer Manager or any of its subsidiaries is a party or by which the Dealer Manager or any of its subsidiaries or any of their properties is bound or (iii) any rule, regulation, writ, injunction or decree of any government, governmental instrumentality or court, domestic or foreign, having jurisdiction over the Dealer Manager, except to the extent that the enforceability of the indemnity and contribution provisions contained in Section 5 of this Agreement may be limited under applicable securities laws.
d. The Dealer Manager has full legal right, power and authority to enter into this Agreement and to perform the transactions contemplated hereby, except to the extent that the enforceability of the indemnity and/or contribution provisions contained in Section 5 of this Agreement may be limited under applicable securities laws.
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e. The Dealer Manager is, and during the term of this Agreement will be (a) duly registered as a broker-dealer pursuant to the provisions of the Exchange Act, (b) a member in good standing of FINRA and (c) a broker-dealer duly registered as such in those states where the Dealer Manager is required to be registered in order to carry out the Offering as contemplated by this Agreement and the Prospectus. Each of the Dealer Managers employees and representatives has all required licenses and registrations to act under this Agreement and to carry out the Offering as contemplated thereby. There is no provision in the Dealer Managers FINRA membership agreement that would restrict the ability of the Dealer Manager to carry out the Offering as contemplated by this Agreement and the Prospectus.
f. The Dealer Manager represents and warrants to the Company and each person that signs the Registration Statement that the information under the caption Plan of Distribution in the Prospectus and all other information furnished to the Company by the Dealer Manager in writing expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus, or any amendment or supplement thereto does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.
g. The Dealer Manager has established and implemented an anti-money laundering compliance program (the AML Program) in compliance with applicable law, including applicable FINRA Conduct Rules, the Exchange Act and the Bank Secrecy Act of 1970, as amended by the USA PATRIOT Act of 2001 (the USA PATRIOT Act) (collectively, the AML Rules). The Dealer Manager is currently in compliance with all AML Rules, including, but not limited to, the Customer Identification Program requirements under Title III of the USA PATRIOT Act.
h. The Dealer Manager has implemented and maintains in effect policies and procedures reasonably designed to ensure compliance by the Dealer Manager, its subsidiaries and their respective officers, directors, employees and agents with (i) all applicable economic sanctions or trade embargoes (Sanctions), including but not limited to those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury and the U.S. Department of State, and (ii) applicable anti-corruption or anti-bribery laws and regulations (Anti-Corruption Laws), including but not limited to the Foreign Corrupt Practices Act. The Dealer Manager is not subject to or the target of any Sanctions and is in compliance with Sanctions and Anti-Corruption Laws.
3. Covenants of the Company. The Company covenants and agrees with the Dealer Manager that:
a. It will, at no expense to the Dealer Manager, furnish the Dealer Manager with such number of printed copies of the Registration Statement, including all amendments and exhibits thereto, as the Dealer Manager may reasonably request. It will similarly furnish to the Dealer Manager and others designated by the Dealer Manager as many copies of the following documents as the Dealer Manager may reasonably request: (a) the Prospectus in preliminary and final form and every form of supplemental or amended Prospectus; (b) this Agreement; and (c) any Authorized Sales Materials (provided that the use of said Authorized Sales Materials has been first approved for use by all appropriate regulatory agencies).
b. It will furnish such proper information and execute and file such documents as may be necessary for the Company to qualify the Shares for offer and sale under the securities laws of such jurisdictions as the Dealer Manager may reasonably designate and will file and make in each year such statements and reports as may be required. The Company will furnish to the Dealer Manager upon request a copy of such papers filed by the Company in connection with any such qualification.
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c. It will: (a) furnish copies of any proposed amendment or supplement of the Registration Statement or Prospectus to the Dealer Manager; (b) file every amendment or supplement to the Registration Statement or the Prospectus that may be required by the SEC; and (c) if at any time the SEC shall issue any stop order suspending the effectiveness of the Registration Statement, it will promptly notify the Dealer Manager and, to the extent the Company determines such action is in the best interests of the Company, use its commercially reasonable efforts to obtain the lifting of such order.
d. If at any time when a Prospectus is required to be delivered under the Securities Act any event occurs as a result of which, in the opinion of either the Company or the Dealer Manager, the Prospectus would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company will promptly notify the Dealer Manager thereof (unless the information shall have been received from the Dealer Manager) and will effect the preparation of an amended or supplemental Prospectus that will correct such statement or omission. The Company will then promptly prepare such amended or supplemental Prospectus or Prospectuses as may be necessary to comply with the requirements of Section 10 of the Securities Act.
e. If at any time any event occurs that is known to the Company as a result of which any Authorized Sales Materials when used in conjunction with the Prospectus would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company will notify the Dealer Manager thereof.
f. The Company will disclose a per share estimated value of the Shares and related information in accordance with the requirements of FINRA Rule 2310(b)(5).
g. The Company will engage and maintain, at its expense, a registrar and transfer agent for the Shares.
h. Prior to first use, the Company will file and obtain clearance of the Authorized Sales Materials to the extent required by applicable SEC and state securities rules.
4. Obligations and Compensation of Dealer Manager.
a. The Company hereby appoints the Dealer Manager as its agent and principal distributor for the purpose of selling for cash to the public up to the maximum amount of Primary Shares set forth in the Prospectus (subject to the Companys right of reallocation of Primary Shares to DRIP Shares, and vice versa, as described in the Prospectus) through Dealers, all of whom shall be members of FINRA in good standing. The Dealer Manager hereby accepts such agency and distributorship and agrees to use its best efforts to sell, and cause the Dealers to sell, the Shares on said terms and conditions set forth in the Prospectus with respect to the Offering and any additional terms or conditions specified in Schedule 2 to this Agreement, as it may be amended from time to time. With respect to the Dealer Managers participation in the distribution of the Shares in the Offering, the Dealer Manager agrees to comply in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and all other state or federal laws, rules and regulations applicable to the Offering and the sale of Shares, all applicable state securities or blue sky laws and regulations, and the rules of FINRA applicable to the Offering, from time to time in effect, including, without limitation, FINRA Rules 2040, 2111, 2310, 5110 and 5141.
b. Promptly after the initial Effective Date of the Registration Statement, the Dealer Manager and the Dealers shall commence the offering of the Shares in the Offering for cash to the public in jurisdictions in which the Shares are registered or qualified for sale or in which such offering is otherwise permitted. The Dealer Manager and the Dealers will immediately suspend or terminate offering of the Shares upon request of the Company at any time and will resume offering the Shares upon subsequent request of the Company.
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c. Subject to volume discounts and other special circumstances described in or otherwise provided in this Agreement and under the caption Plan of Distribution in the Prospectus, which may be amended from time to time, the Company will pay to the Dealer Manager selling commissions as described in Schedule 2 to this Agreement. The applicable selling commissions will be paid substantially concurrently with the execution by the Company of orders submitted by purchasers of any applicable class of Primary Shares and all of the selling commissions will be reallowed by the Dealer Manager to the Dealers who sold the applicable class of Primary Shares giving rise to such selling commissions, as described more fully in the Selected Dealer Agreement entered into with each such Dealer.
d. Subject to volume discounts and other special circumstances described in or otherwise provided in this Agreement and under the caption Plan of Distribution in the Prospectus, which may be amended from time to time, the Company will pay to the Dealer Manager dealer manager fees as described in Schedule 2 to this Agreement. The applicable dealer manager fees payable to the Dealer Manager will be paid substantially concurrently with the execution by the Company of orders submitted by purchasers of any applicable class of Primary Shares and all of the dealer manager fees will be reallowed by the Dealer Manager to the Dealers who sold the applicable class of Primary Shares giving rise to such dealer manager fees, as described more fully in the Selected Dealer Agreement entered into with each such Dealer.
e. Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended from time to time, and subject to the limitations set forth in Section 4.f. below, the Company will pay to the Dealer Manager a stockholder servicing fee with respect to sales of any applicable class of Shares as described in Schedule 2 to this Agreement (the Servicing Fee). The Company will pay the Servicing Fee to the Dealer Manager monthly in arrears. The Dealer Manager will reallow all of the Servicing Fee to the Dealers who sold the Shares giving rise to a portion of such Servicing Fee to the extent the Selected Dealer Agreement with such Dealer provides for such a reallowance and such Dealer is in compliance with the terms of such Selected Dealer Agreement related to such reallowance; provided, however, that upon the date when the Dealer Manager is notified that the Dealer who sold the Shares giving rise to a portion of the Servicing Fee is no longer the broker-dealer of record with respect to such Shares or that the Dealer no longer satisfies any or all of the conditions in its Selected Dealer Agreement for the receipt of the Servicing Fee, then Dealers entitlement to the Servicing Fees related to such Shares shall cease, and Dealer shall not receive the Servicing Fee for any portion of the month in which Dealer is not eligible on the last day of the month; provided, however, if there is a change in the broker-dealer of record with respect to Shares giving rise to a portion of such Servicing Fee made in connection with a change in the registration of record for such Shares on the Companys books and records (including, but not limited to, a reregistration due to a sale or a transfer or a change in the form of ownership of the account), then the Dealer shall be entitled to a pro rata portion of the Servicing Fees related to such Shares for the portion of the month for which the Dealer was the broker-dealer of record.
Thereafter, such Servicing Fees may be reallowed to the then-current broker-dealer of record of the applicable Shares if any such broker-dealer of record has been designated (the Servicing Dealer), to the extent such Servicing Dealer has entered into a Selected Dealer Agreement or similar agreement with the Dealer Manager (Servicing Agreement), such Servicing Agreement with the Servicing Dealer provides for such reallowance and the Servicing Dealer is in compliance with the terms of such agreement related to such reallowance. In this regard, all determinations will be made by the Dealer Manager in good faith in its sole discretion. The Dealer Manager may also reallow some or all of any applicable Servicing Fee to other broker-dealers who provide services with respect to the applicable Shares (who shall be considered additional Servicing Dealers) pursuant to a Servicing Agreement with the Dealer Manager to the extent such Servicing Agreement provides for such reallowance and such additional Servicing Dealer is in compliance with the terms of such agreement related to such reallowance, in accordance with the terms of such Servicing Agreement.
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In addition to the foregoing, the Company shall pay the Dealer Manager Servicing Fees earned on Shares sold in connection with the Companys initial public offering pursuant to the Companys registration statement on Form S-11 (File No. 333-223022) (the Initial Public Offering) and the Dealer Manager shall reallow such Servicing Fees to any Dealers with a Selected Dealer Agreement and any Servicing Dealers with a Servicing Dealer Agreement with the Dealer Manager.
f. The Dealer Manager shall cease receiving the Servicing Fees with respect to any Class T Share, Class S Share or Class D Share held in a stockholders account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total selling commissions, dealer manager fees and Servicing Fees paid with respect to the Shares held by such stockholder within such account would exceed, in the aggregate, 8.75% (or a lower limit as set forth in the Selected Dealer Agreement between the Dealer Manager and the applicable Dealer) of the gross proceeds from the sale of such Shares (including the gross proceeds of any Shares issued under the DRIP with respect thereto). At the end of such month, such Shares (and any Shares issued under the DRIP with respect thereto) will convert into a number of Class I Shares (including any fractional Shares) with an equivalent aggregate NAV as such Shares. In addition, the Dealer Manager will cease receiving the Servicing Fee with respect to any Shares issued in the Offering upon the earlier to occur of the following: (i) a listing of Class I Shares, (ii) the merger or consolidation of the Company with or into another entity in which the Company is not the surviving entity, or the sale or other disposition of all or substantially all of the Companys assets, in each case in a transaction in which the Companys stockholders receive cash, securities listed on a national exchange or a combination thereof, or (iii) the date following the completion of such Offering on which, in the aggregate, underwriting compensation from all sources in connection with such Offering, including selling commissions, dealer manager fees, the Servicing Fee and other underwriting compensation, is equal to 10% of the gross proceeds from Primary Shares sold in such Offering, as determined in good faith by the Dealer Manager in its sole discretion. For purposes of this Agreement, the portion of the Servicing Fee accruing with respect to any applicable class of Shares of the Companys common stock issued by the Company pursuant to a particular Offering shall be underwriting compensation with respect to such particular Offering and not with respect to any other Offering.
g. The terms of any reallowance of selling commissions, dealer manager fees and the Servicing Fee shall be set forth in the Selected Dealer Agreement or Servicing Agreement entered into with the Dealers or Servicing Dealers, as applicable. The Company will not be liable or responsible to any Dealer or Servicing Dealer for direct payment of commissions, or any reallowance of dealer manager fees or the Servicing Fee to such Dealer or Servicing Dealer, it being the sole and exclusive responsibility of the Dealer Manager for payment of commissions or any reallowance of dealer manager fees or the Servicing Fee to Dealers and Servicing Dealers. Notwithstanding the foregoing, at the discretion of the Company, the Company may act as agent of the Dealer Manager by making direct payment of commissions, dealer manager fees or Servicing Fees to Dealers on behalf of the Dealer Manager without incurring any liability.
h. In addition to the other items of underwriting compensation set forth in this Section 4, the Company or Brookfield REIT Adviser LLC (the Adviser) shall reimburse the Dealer Manager for all items of underwriting compensation referenced in the Prospectus, to the extent the Prospectus indicates that they will be paid by the Company or the Adviser, as applicable, and to the extent permitted pursuant to prevailing rules and regulations of FINRA.
i. Subject to prevailing rules and regulations of FINRA, the Company shall also pay directly or reimburse the Dealer Manager for reasonable bona fide due diligence expenses incurred by any Dealer as described in the Prospectus. The Dealer Manager shall obtain from any Dealer and provide to the Company a detailed and itemized invoice for any such due diligence expenses.
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j. The Dealer Manager shall pay its own costs and expenses incident to the performance of this Agreement.
k. Notwithstanding anything contained herein to the contrary, no payments or reimbursements made by the Company with respect to a particular Offering hereunder shall cause total organization and offering expenses, as defined under the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc. (the NASAA Guidelines) and FINRA rules, to exceed 15% of gross proceeds from such Offering.
l. The Dealer Manager and all Dealers will offer and sell the Shares at the public offering prices per Share described in the Prospectus.
m. The Dealer Manager shall (a) abide by and comply with (i) the privacy standards and requirements of the Gramm-Leach-Bliley Act of 1999 (the GLB Act), (ii) the privacy standards and requirements of any other applicable federal or state law, and (iii) its own internal privacy policies and procedures, each as may be amended from time to time; (b) refrain from the use or disclosure of nonpublic personal information (as defined under the GLB Act) of all customers who have opted out of such disclosures except as necessary to service the customers or as otherwise necessary or required by applicable law; and (c) determine which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving an aggregated list of such customers from the Soliciting Dealers (the List) to identify customers that have exercised their opt-out rights. Prior to using or disclosing nonpublic personal information of any customer for purposes other than servicing the customer, or as otherwise required by applicable law, each party will consult the List to determine whether the affected customer has exercised his or her opt-out rights. Each party understands that it is prohibited from using or disclosing any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures.
n. The Dealer Manager shall remain in compliance with all AML Rules and shall, upon request by the Company, provide a certification to the Company that, as of the date of such certification, the Dealer Manager is in compliance with all AML Rules, specifically including, but not limited to, the Customer Identification Program requirements under Title III of the USA PATRIOT Act.
o. The Dealer Manger will maintain in effect and enforce policies and procedures designed to ensure compliance by the Dealer Manager, its subsidiaries and their respective directors, officers, employees and agents with Sanctions and Anti-Corruption Laws. The Dealer Manager will not act in any manner that would result in the violation of any Sanctions or Anti-Corruption Laws by any party to this Agreement. The Dealer Manager will deliver in a timely manner all documents reasonably requested by the Company in connection with Sanctions.
5. Indemnification.
a. To the extent permitted by the Companys charter and the provisions of Article II.G of the NASAA Guidelines, and subject to the limitations below, the Company will indemnify and hold harmless the Dealers and the Dealer Manager, their officers and directors and each person, if any, who controls such Dealer or Dealer Manager within the meaning of Section 15 of the Securities Act (the Indemnified Persons) from and against any losses, claims, damages or liabilities (Losses), joint or several, to which such Indemnified Persons may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (a)
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any untrue statement of a material fact contained (i) in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, (ii) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a Blue Sky Application) or (iii) in any Authorized Sales Materials, or (b) the omission to state in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in any Blue Sky Application or Authorized Sales Materials a material fact necessary to make the statements therein, in light of the circumstances under which they were made and when read in conjunction with the Prospectus, not misleading. The Company will reimburse the Dealer Manager and each Indemnified Person of the Dealer Manager for any legal or other expenses reasonably incurred by the Dealer Manager or such Indemnified Person in connection with investigating or defending such Loss.
Notwithstanding the foregoing provisions of this Section 5.a, the Company may not indemnify or hold harmless the Dealer Manager, any Dealer or any of their affiliates in any manner that would be inconsistent with the provisions to Article II.G of the NASAA Guidelines. In particular, but without limitation, the Company may not indemnify or hold harmless the Dealer Manager, any Dealer or any of their affiliates for liabilities arising from or out of a violation of state or federal securities laws, unless one or more of the following conditions are met:
(i) There has been a successful adjudication on the merits of each count involving alleged securities law violations;
(ii) Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or
(iii) A court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the Commission and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws.
Further, notwithstanding the foregoing provisions of this Section 5.a, the Company will not be liable in any such case to the extent that any such Loss or expense arises out of or is based upon an untrue statement or omission made in reliance upon and in conformity with written information furnished (x) to the Company by the Dealer Manager or (y) to the Company or the Dealer Manager by or on behalf of any Dealer specifically for use in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, any Blue Sky Application or any Authorized Sales Materials, and, further, the Company will not be liable for the portion of any Loss in any such case if it is determined that such Dealer or the Dealer Manager was at fault in connection with such portion of the Loss, expense or action.
The foregoing indemnity agreement of this Section 5.a is subject to the further condition that, insofar as it relates to any untrue statement or omission made in the Prospectus (or amendment or supplement thereto) that was eliminated or remedied in any subsequent amendment or supplement thereto, such indemnity agreement shall not inure to the benefit of an Indemnified Party from whom the person asserting any Losses purchased the Shares that are the subject thereof, if a copy of the Prospectus as so amended or supplemented was not sent or given to such person at or prior to the time the subscription of such person was accepted by the Company, but only if a copy of the Prospectus as so amended or supplemented had been supplied to the Dealer Manager or the Dealer prior to such acceptance.
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b. The Dealer Manager will indemnify and hold harmless the Company, its officers and directors (including any person named in the Registration Statement, with his or her consent, as about to become a director), each other person who has signed the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act (the Company Indemnified Persons), from and against any Losses to which any of the Company Indemnified Persons may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (a) any untrue statement of a material fact contained (i) in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them or (ii) in any Blue Sky Application or (iii) in any Authorized Sales Materials; or (b) the omission to state in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in any Blue Sky Application or Authorized Sales Materials a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that clauses (a) and (b) apply, to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use with reference to the Dealer Manager in the preparation of the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in preparation of any Blue Sky Application or Authorized Sales Materials; or (c) any use of sales literature not authorized or approved by the Company or any use of broker-dealer use only materials with members of the public by the Dealer Manager in the offer and sale of the Shares or any use of sales literature in a particular jurisdiction if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction; or (d) any untrue statement made by the Dealer Manager or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares; or (e) any material violation of this Agreement; or (f) any failure to comply with applicable laws governing privacy issues, money laundering abatement and anti-terrorist financing efforts, including applicable rules of the SEC, FINRA and the USA PATRIOT Act; or (g) any other failure to comply with applicable rules of FINRA or federal or state securities laws and the rules and regulations promulgated thereunder. The Dealer Manager will reimburse the Company Indemnified Persons for any legal or other expenses reasonably incurred by them in connection with investigating or defending such Loss, expense or action. This indemnity agreement will be in addition to any liability that the Dealer Manager may otherwise have.
c. Each Dealer severally will indemnify and hold harmless the Company, the Dealer Manager, each of their officers and directors (including any person named in the Registration Statement, with his consent, as about to become a director), each other person who has signed the Registration Statement and each person, if any, who controls the Company or the Dealer Manager within the meaning of Section 15 of the Securities Act (the Dealer Indemnified Persons) from and against any Losses to which a Dealer Indemnified Person may become subject, under the Securities Act, the Exchange Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon (a) any untrue statement of a material fact contained (i) in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, (ii) in any Blue Sky Application or (iii) in any Authorized Sales Materials; or (b) the omission to state in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in any Blue Sky Application or Authorized Sales Materials a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that clauses (a) and (b) apply, to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company or the Dealer Manager by or on behalf of the Dealer specifically for use with reference to the Dealer in the preparation of the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in preparation of any Blue Sky Application or Authorized Sales Materials; or (c) any use of sales literature not authorized or approved by the Company or any use of broker-dealer use only materials with members of the public by
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the Dealer in the offer and sale of the Shares or any use of sales literature in a particular jurisdiction if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction; or (d) any untrue statement made by the Dealer or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares; or (e) any material violation of this Agreement or the Selected Dealer Agreement entered into between the Dealer Manager and the Dealer; or (f) any failure or alleged failure to comply with all applicable laws, including, without limitation, laws governing privacy issues, money laundering abatement and anti-terrorist financing efforts, including applicable rules of the SEC, FINRA and the USA PATRIOT Act; or (g) any other failure or alleged failure to comply with applicable rules of FINRA or federal or state securities laws and the rules and regulations promulgated thereunder. Each such Dealer will reimburse each Dealer Indemnified Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such Loss, expense or action. This indemnity agreement will be in addition to any liability that such Dealer may otherwise have.
d. Promptly after receipt by an indemnified party under this Section 5 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 5, notify in writing the indemnifying party of the commencement thereof. The failure of an indemnified party to so notify the indemnifying party will relieve the indemnifying party from any liability under this Section 5 as to the particular item for which indemnification is then being sought, but not from any other liability that it may have to any indemnified party. In case any such action is brought against any indemnified party, and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled, to the extent it may wish, jointly with any other indemnifying party similarly notified, to participate in the defense thereof, with separate counsel. Such participation shall not relieve such indemnifying party of the obligation to reimburse the indemnified party for reasonable legal and other expenses (subject to the next paragraph) incurred by such indemnified party in defending itself, except for such expenses incurred after the indemnifying party has deposited funds sufficient to effect the settlement, with prejudice, of the claim in respect of which indemnity is sought. Any such indemnifying party shall not be liable to any such indemnified party on account of any settlement of any claim or action effected without the consent of such indemnifying party. Any indemnified party shall not be bound to perform or refrain from performing any act pursuant to the terms of any settlement of any claim or action effected without the consent of such indemnified party.
e. The indemnifying party shall pay all legal fees and expenses of the indemnified party in the defense of such claims or actions; provided, however, that the indemnifying party shall not be obliged to pay legal expenses and fees to more than one law firm in connection with the defense of similar claims arising out of the same alleged acts or omissions giving rise to such claims notwithstanding that such actions or claims are alleged or brought by one or more parties against more than one indemnified party. If such claims or actions are alleged or brought against more than one indemnified party, then the indemnifying party shall only be obliged to reimburse the expenses and fees of the one law firm that has been selected by a majority of the indemnified parties against which such action is finally brought; and in the event a majority of such indemnified parties are unable to agree on which law firm for which expenses or fees will be reimbursable by the indemnifying party, then payment shall be made to the first law firm of record representing an indemnified party against the action or claim. Such law firm shall be paid only to the extent of services performed by such law firm and no reimbursement shall be payable to such law firm on account of legal services performed by another law firm.
f. The indemnity agreements contained in this Section shall remain operative and in full force and effect regardless of (a) any investigation made by or on behalf of any Dealer, or any person controlling any Dealer or by or on behalf of the Company, the Dealer Manager or any officer or director thereof, or by or on behalf of any person controlling the Company or the Dealer Manager, (b) delivery of any Shares and payment therefor, and (c) any termination of this Agreement. A successor of any Dealer or of any of the parties to this Agreement, as the case may be, shall be entitled to the benefits of the indemnity agreements contained in this Section.
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g. By virtue of entering into the Selected Dealer Agreement, each Dealer severally will agree to indemnify, defend and hold harmless the Company, the Dealer Manager, each of their respective Indemnified Persons, and each person who signs any Registration Statement, from and against any losses, claims, damages or liabilities to which the Company, the Dealer Manager, or any of their respective Indemnified Persons, or any person who signed the Registration Statement, may become subject, under the Securities Act or otherwise, as more fully described in the Selected Dealer Agreement. The Dealer Manager shall not amend or delete any such Dealer indemnity in the Selected Dealer Agreement without the Companys written consent.
6. Survival of Provisions.
a. The respective agreements, representations and warranties of the Company and the Dealer Manager set forth in this Agreement shall remain operative and in full force and effect regardless of (a) any investigation made by or on behalf of the Dealer Manager or any Dealer or any person controlling the Dealer Manager or any Dealer or by or on behalf of the Company or any person controlling the Company, and (b) the acceptance of any payment for the Shares.
b. The respective agreements of the Company and the Dealer Manager set forth in Sections 4.c. through 4.m. and Sections 5 through 16 of this Agreement shall remain operative and in full force and effect regardless of any termination of this Agreement.
7. Applicable Law. The validity, interpretation and construction of this Agreement shall be governed by, the laws of the State of New York; provided however, that causes of action for violations of federal or state securities laws shall not be governed by this Section. Venue for any action brought hereunder shall lie exclusively in New York, New York.
8. Counterparts. This Agreement may be executed in any number of counterparts. Each counterpart, when executed and delivered, shall be an original contract, but all counterparts, when taken together, shall constitute one and the same Agreement.
9. Successors and Amendment.
a. This Agreement shall inure to the benefit of and be binding upon the Dealer Manager and the Company and their respective successors. Nothing in this Agreement is intended or shall be construed to give to any other person any right, remedy or claim, except as otherwise specifically provided herein. This Agreement shall inure to the benefit of the Dealers to the extent set forth in Sections 1 and 5 hereof.
b. This Agreement may be amended by the written agreement of the Dealer Manager and the Company.
10. Term and Termination. This Agreement shall expire at the end of the Offering. Any party to this Agreement shall have the right to terminate this Agreement on 60 days written notice or immediately upon notice to the other party in the event that such other party shall have failed to comply with any material provision hereof. Upon expiration or termination of this Agreement, (a) the Company shall pay to the Dealer Manager all earned but unpaid compensation and reimbursement for all incurred, accountable compensation to which the Dealer Manager is or becomes entitled under Section 4 pursuant to the requirements of that
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Section 4 at such times as such amounts become payable pursuant to the terms of such Section 4, offset by any losses suffered by the Company or any officer or director of the Company arising from the Dealer Managers breach of this Agreement or an action that would otherwise give rise to an indemnification claim against the Dealer Manager under Section 5 herein, and (b) the Dealer Manager shall promptly deliver to the Company all records and documents in its possession that relate to the Offering other than as required by law to be retained by the Dealer Manager. Upon the expiration or termination of this Agreement, the Dealer Manager shall use its commercially reasonable efforts to cooperate with the Company to accomplish an orderly transfer of management of the Offering to a party designated by the Company.
11. Confirmation. The Company hereby agrees and assumes the duty to confirm on its behalf and on behalf of Dealers who sell the Shares all orders for purchase of Shares accepted by the Company. Such confirmations will comply with the rules of the SEC and FINRA, and will comply with applicable laws of such other jurisdictions to the extent the Company is advised of such laws in writing by the Dealer Manager.
12. Prospectus and Authorized Sales Materials. The Dealer Manager agrees that it is not authorized or permitted to give and will not give any information or make any representation concerning the Shares except as set forth in the Prospectus and any Authorized Sales Materials. The Dealer Manager further agrees (a) not to deliver any Authorized Sales Materials to any investor or prospective investor, to any broker-dealer that has not entered into a Selected Dealer Agreement or Servicing Agreement, or to any representatives or other associated persons of such a broker-dealer, unless it is accompanied or preceded by the Prospectus as amended and supplemented, (b) not to show or give to any investor or prospective investor or reproduce any material or writing that is supplied to it by the Company and marked dealer use only, financial advisor use only or otherwise bearing a legend denoting that it is not to be used in connection with the sale of Shares to members of the public and (c) not to show or give to any investor or prospective investor in a particular jurisdiction (and will similarly require Dealers pursuant to the Selected Dealer Agreement) any material or writing that is supplied to it by the Company if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction. Dealer Manager, in its agreements with Dealers, will include requirements and obligations of the Dealers similar to those imposed upon the Dealer Manager pursuant to this Section.
13. Suitability of Investors. The Dealer Manager, in its agreements with Dealers, will require that the Dealers offer Shares only to persons who meet the financial qualifications set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company and will only make offers to persons in the jurisdictions in which it is advised in writing that the Shares are qualified for sale or that such qualification is not required. In offering Shares, the Dealer Manager, in its agreements with Dealers, will require that the Dealer comply with the provisions of all applicable rules and regulations relating to suitability of investors, including, without limitation, the provisions of Article III.C. of the NASAA Guidelines and any enhanced standard of care applicable under Regulation Best Interest promulgated under the Exchange Act. The Dealer Manager, in its agreements with Dealers, will require that the Dealers shall sell Shares of any class only to those persons who are eligible to purchase Shares of such class as described in the Prospectus and only through those Dealers who are authorized to sell such Shares. The Dealer Manager, in its agreements with the Dealers, shall require the Dealers to maintain, for at least six years, a record of the information obtained to determine that an investor meets the financial qualification and suitability standards imposed on the offer and sale of the Shares.
14. Submission of Orders. The Dealer Manager will require in its agreements with each Dealer that each Dealer comply with the submission of orders procedures set forth in the form of Selected Dealer Agreement attached as Exhibit A or Exhibit B to this Agreement, as applicable. To the extent the Dealer Manager is involved in the distribution process other than through a Dealer, the Dealer Manager will comply with such submission of orders procedures, and will require each person desiring to purchase Shares in the
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Offering to complete and execute a subscription agreement in the form filed as an appendix to the Prospectus (a Subscription Agreement) in the form provided by the Company to the Dealer Manager for use in connection with the Offering and to deliver to the Dealer Manager or as otherwise directed by the Dealer Manager such completed and executed Subscription Agreement together with a check or wire transfer (instrument of payment) in the amount of such persons purchase, which must be at least the minimum purchase amount set forth in the Prospectus for the applicable class of Shares. Subscription Agreements and instruments of payment will be transmitted by the Dealer Manager to the escrow agent described in the Prospectus and Subscription Agreement for any Offering in which there is a minimum offering requirement described in the Prospectus (a Minimum Offering Requirement) that has not yet been satisfied or, after any such Minimum Offering Requirement is satisfied or if no such Minimum Offering is applicable to an Offering, to the Company, as soon as practicable, but in any event by the end of the second business day following receipt by the Dealer Manager. If the Dealer Manager receives a Subscription Agreement or instrument of payment not conforming to the instructions set forth in the form of Selected Dealer Agreement, the Dealer Manager shall return such Subscription Agreement and instrument of payment directly to such subscriber not later than the end of the next business day following its receipt. Instruments of payment of rejected subscribers will be promptly returned to such subscribers.
15. Notice. Notices and other writings contemplated by this Agreement shall be delivered via (i) hand, (ii) first class registered or certified mail, postage prepaid, return receipt requested, (iii) a nationally recognized overnight courier or (iv) electronic mail. All such notices shall be addressed, as follows:
If to the Dealer Manager: | Brookfield Oaktree Wealth Solutions LLC | |
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: General Counsel | ||
Email: BOWS.LR@brookfieldoaktree.com | ||
If to the Company: | Brookfield Real Estate Income Trust Inc. | |
c/o Brookfield Place New York | ||
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: Secretary | ||
Email: realestatenotices@brookfield.com | ||
With copies (which shall not constitute notice) to: | ||
Brookfield REIT Adviser LLC | ||
c/o Brookfield Place New York | ||
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: General Counsel | ||
Email: realestatenotices@brookfield.com |
16. Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes any prior agreement or understanding between them with respect to such subject matter.
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If the foregoing correctly sets forth our understanding, please indicate your acceptance thereof in the space provided below for that purpose, whereupon this letter and your acceptance shall constitute a binding agreement between us as of the date first above written.
Very truly yours, | ||||
BROOKFIELD REAL ESTATE INCOME TRUST INC. | ||||
By: |
/s/ Michelle L. Campbell |
|||
Name: | Michelle L. Campbell | |||
Title: | Secretary |
Accepted and agreed to as of the date first above written: |
||||
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC | ||||
By: |
/s/ Brian Hurley |
|||
Name: | Brian Hurley | |||
Title: | General Counsel |
Signature Page for Dealer Manager Agreement
Schedule 1
Registration Statement(s)
1. Registration Statement on Form S-11, Registration No. 333-255557.
Schedule 2
Compensation
I. |
Selling Commissions |
The Company will pay to the Dealer Manager selling commissions in the amount of (a) up to 3.0% of the transaction price per Share of each sale of Class T Primary Shares, (b) up to 3.5% of the transaction price per Share of each sale of Class S Primary Shares and (c) up to 1.5% of the transaction price per Share of each sale of Class D Primary Shares. All of the selling commissions paid by the Company to the Dealer Manager will be reallowed by the Dealer Manager to the Dealers who sell the Primary Shares giving rise to such selling commissions, as described more fully in the Selected Dealer Agreement entered into with each such Dealer. For avoidance of doubt, the Dealer Manager will not retain any selling commissions.
II. |
Dealer Manager Fees |
The Company will pay to the Dealer Manager dealer manager fees in the amount of up to 0.5% of the transaction price per Share of each sale of Class T Primary Shares. The Company will not pay to the Dealer Manager any dealer manager fees in respect of the purchase of any Class S Shares, Class D Shares, Class I Shares or DRIP Shares. All of the Dealer Manager Fees paid by the Company to the Dealer Manager will be reallowed by the Dealer Manager to the Dealers who sell the Primary Shares giving rise to such dealer manager fees, as described more fully in the Selected Dealer Agreement entered into with each such Dealer. For avoidance of doubt, the Dealer Manager will not retain any dealer manager fees.
III. |
Servicing Fee |
The Company will pay to the Dealer Manager a Servicing Fee with respect to outstanding Class T Shares, payable monthly in an amount equal to 0.85% per annum of the aggregate NAV of such Shares, consisting of an advisor stockholder servicing fee of 0.65% per annum, and a dealer stockholder servicing fee of 0.20% per annum, of the aggregate NAV of such Shares; provided, however, with respect to Class T Shares sold through certain Dealers, the advisor stockholder servicing fee and the dealer stockholder servicing fee may be other amounts, provided that the sum of such fees will always equal 0.85% per annum of the NAV of such Shares. The Company will pay to the Dealer Manager a Servicing Fee with respect to outstanding Class S Shares or Class D Shares, payable monthly in an amount equal to 0.85% per annum of the aggregate NAV of such Class S Shares and in an amount equal to 0.25% per annum of the aggregate NAV of such Class D Shares. The Company will not pay the Dealer Manager a Servicing Fee with respect to Class I Shares. All of the Servicing Fees paid by the Company to the Dealer Manager will be reallowed by the Dealer Manager to the Dealers who sell the Shares giving rise to such Servicing Fees (either in the Initial Public Offering or any other Offering), as described more fully in the Selected Dealer Agreement or Servicing Agreement entered into with each such Dealer or Servicing Dealer. For avoidance of doubt, the Dealer Manager will not retain any Servicing Fees.
EXHIBIT A
FORM OF SELECTED DEALER AGREEMENT
Ladies and Gentlemen:
Brookfield Oaktree Wealth Solutions LLC, as the dealer manager (Dealer Manager) for Brookfield Real Estate Income Trust Inc. (formerly, Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company), invites you (the Dealer) to participate in the distribution of shares of common stock, $0.01 par value per share, of the Company (Common Stock) subject to the terms of this Selected Dealer Agreement (the Agreement).
I. |
Dealer Manager Agreement |
The Dealer Manager has entered into a Dealer Manager Agreement (the Dealer Manager Agreement), dated [ ], 2021, with the Company attached hereto as Exhibit A. Except as otherwise specifically stated herein, all terms used in this Agreement have the meanings provided in the Dealer Manager Agreement.
As described in the Dealer Manager Agreement, the Company has filed one or more registration statements with the SEC that are listed on Schedule 1 to the Dealer Manager Agreement (each, a Registration Statement), which Schedule 1 may be amended from time to time with the written consent of the Company and the Dealer Manager. Any new Registration Statement will be added to Schedule 1 upon its initial effectiveness with the SEC. Each Registration Statement shall register an ongoing offering (each, an Offering) of shares of one or more classes of the Companys Common Stock (the Shares).
Notwithstanding the foregoing, if any new Registration Statement is added to Schedule 1 to the Dealer Manager Agreement, the Dealer Manager will give Dealer written notice of such addition. Schedule 1 to the Dealer Manager Agreement may be amended from time to time with the written consent of the Company and the Dealer Manager. However, the addition or removal of Registration Statements from Schedule 1 to the Dealer Manager Agreement shall only apply prospectively and shall not affect the respective agreements, representations and warranties of the Company, the Dealer Manager and Dealer prior to such amendments to Schedule 1 to the Dealer Manager Agreement. It is possible that more than one Registration Statement may be listed on Schedule 1 during times of transition from one Registration Statement to another, during which time offers or sales may be made pursuant to either Registration Statement. In such event, the Dealer Manager shall (a) communicate to Dealer details about the transition from one Registration Statement to the next, including when sales may be made pursuant to the most recent Registration Statement and when sales will cease pursuant to the older Registration Statement and (b) provide Dealer with sufficient copies of the appropriate Prospectus and other offering materials in order to continue to make offers and sales throughout such transition period.
In this Agreement, unless explicitly stated otherwise, the Registration Statement means, at any given time, each of the registration statements listed on Schedule 1 to the Dealer Manager Agreement, as such Schedule 1 to the Dealer Manager Agreement may be amended from time to time, as each such registration statement is finally amended and revised at the effective date of the registration statement (including at the effective date of any post-effective amendment thereto). In this Agreement, unless explicitly stated otherwise, the Offering means, at any given time, an offering covered by a Registration Statement and Shares means the Shares being offered in an Offering. In this Agreement, unless explicitly stated otherwise, any references to the Registration Statement, the Offering, the Shares or the Prospectus with respect to each other shall mean only those that are all related to the same Registration Statement.
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The Dealer hereby agrees to use its best efforts to sell the Shares for cash on the terms and conditions stated in the Prospectus. Nothing in this Agreement shall be deemed or construed to make the Dealer an employee, agent, representative or partner of the Dealer Manager or of the Company, and the Dealer is not authorized to act for the Dealer Manager or the Company or to make any representations on their behalf except as set forth in the Prospectus and in the Authorized Sales Materials.
By your acceptance of this Agreement, you will become one of the Dealers referred to in the Dealer Manager Agreement between the Company and the Dealer Manager and will be entitled and subject to the indemnification provisions contained in the Dealer Manager Agreement, including the provisions of Section 5 of the Dealer Manager Agreement wherein the Dealers severally agree to indemnify and hold harmless the Company, the Dealer Manager and each officer and director thereof, and each person, if any, who controls the Company or the Dealer Manager within the meaning of the Securities Act.
II. |
Submission of Orders |
Each person desiring to purchase Shares in the Offering will be required to complete and execute a Subscription Agreement and to deliver to the Dealer such completed and executed Subscription Agreement together with a check or wire transfer (instrument of payment) in the amount of such persons purchase, which must be at least the minimum purchase amount set forth in the Prospectus. Those persons who purchase Shares will be instructed by the Dealer to make their instruments of payment payable to or for the benefit of Brookfield Real Estate Income Trust Inc. Purchase orders that include a completed and executed Subscription Agreement in good order and instruments of payment received by the Company at least five business days prior to the first calendar day of any month (unless waived by the Dealer Manager) will be executed as of the first business day of such month (based on the prior months transaction price). Subscribers may not submit an initial purchase order until at least five (5) business days after the date on which the subscriber receives a copy of the Prospectus.
If the Dealer receives a Subscription Agreement or instrument of payment not conforming to the foregoing instructions, the Dealer shall return such Subscription Agreement and instrument of payment directly to such subscriber not later than the end of the next business day following its receipt. Subscription Agreements and instruments of payment received by the Dealer which conform to the foregoing instructions shall be transmitted for deposit pursuant to one of the methods described in this Section II. Transmittal of received investor funds will be made in accordance with one of the following procedures, as applicable:
(i) Where, pursuant to the Dealers internal supervisory procedures, internal supervisory review is conducted at the same location at which Subscription Agreements and instruments of payment are received from subscribers, Subscription Agreements and instruments of payment will be transmitted by the end of the next business day following receipt by the Dealer to the Company or its agent as set forth in the Subscription Agreement or as otherwise directed by the Company.
(ii) Where, pursuant to the Dealers internal supervisory procedures, final internal supervisory review is conducted at a different location, Subscription Agreements and instruments of payment will be transmitted by the end of the next business day following receipt by the Dealer to the office of the Dealer conducting such final internal supervisory review (the Final Review Office). The Final Review Office will in turn, by the end of the next business day following receipt by the Final Review Office, transmit such Subscription Agreements and instruments of payment to the Company or its agent as set forth in the Subscription Agreement or as otherwise directed by the Company.
A-2
III. |
Pricing |
Except as otherwise provided in the Prospectus, which may be amended or supplemented from time to time, the Primary Shares shall be offered to the public at a purchase price payable in cash equal to the then-applicable transaction price (which will generally be (i) the Companys prior months net asset value (NAV) per Share applicable to the class of Shares being purchased (as calculated in accordance with the procedures described in the Prospectus), or (ii) a different offering price made available to investors in cases where the Company believes there has been a material change to the NAV per Share since the end of the prior month), plus any applicable selling commissions and dealer manager fees. For stockholders who participate in the Companys distribution reinvestment plan (DRIP), the cash distributions attributable to the class of Shares that each stockholder owns will be automatically re-invested in additional Shares of the same class. The DRIP Shares will be issued and sold to stockholders of the Company at the transaction price of the applicable class of Shares on the date the distribution is payable. Except as otherwise indicated in the Prospectus or in any letter or memorandum sent to the Dealer by the Company or the Dealer Manager, a minimum initial purchase of $2,500 in Shares is required (or a higher amount as set forth in the Prospectus), and additional investments may be made in cash in minimal increments of at least $500 in Shares. The Shares are nonassessable.
IV. |
Dealers Compensation |
Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended or supplemented from time to time, as compensation for completed sales and ongoing stockholder services rendered by the Dealer hereunder, the Dealer is entitled, on the terms and subject to the conditions herein, to the compensation set forth on Schedule I hereto.
V. |
Representations, Warranties and Covenants of the Dealer |
In addition to the representations and warranties found elsewhere in this Agreement, the Dealer represents, warrants and agrees that:
(i) The Dealer is duly organized and existing and in good standing under the laws of the state, commonwealth or other jurisdiction in which it is organized.
(ii) The Dealer is empowered under applicable laws and by the Dealers organizational documents to enter into this Agreement and perform all activities and services of the Dealer provided for herein and that there are no impediments, prior or existing, or regulatory, self-regulatory, administrative, civil or criminal matters affecting the Dealers ability to perform under this Agreement.
(iii) The execution, delivery, and performance of this Agreement; the incurrence of the obligations set forth herein; and the consummation of the transactions contemplated herein, including the issuance and sale of the Shares, will not constitute a breach of, or default under, any agreement or instrument by which the Dealer is bound, or to which any of its assets are subject, or any order, rule, or regulation applicable to it of any court, governmental body, or administrative agency having jurisdiction over it.
(iv) All requisite actions have been taken to authorize the Dealer to enter into and perform this Agreement.
(v) The Dealer shall notify the Dealer Manager, promptly in writing, of any written claim or complaint or any enforcement action or other proceeding with respect to Shares offered hereunder against the Dealer or its principals, affiliates, officers, directors, employees or agents, or any person who controls the Dealer, within the meaning of Section 15 of the Securities Act.
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(vi) The Dealer will not sell or distribute Shares or otherwise make any such Shares available in any jurisdiction outside of the United States unless the Dealer receives prior written consent from the Dealer Manager.
(vii) The Dealer acknowledges that the Dealer Manager will enter into similar agreements with other broker-dealers, which does not require the consent of the Dealer.
VI. |
Right to Reject Orders or Cancel Sales |
All orders, whether initial or additional, are subject to acceptance by and shall only become effective upon confirmation by the Company, which reserves the right to reject any order for any reason or no reason including, without limitation, orders not accompanied by an executed Subscription Agreement in good order or without the required instrument of payment in full payment for the Shares. Issuance and delivery of the Shares will be made only after actual receipt of payment therefor. If any check is not paid upon presentment, or if the Company is not in actual receipt of clearinghouse funds or cash, certified or cashiers check or the equivalent in payment for the Shares, the Company reserves the right to cancel the sale without notice.
In the event that the Dealer Manager has reallowed any selling commission or dealer manager fee to the Dealer for the sale of one or more Shares and the subscription is rejected, canceled or rescinded for any reason as to one or more of the Shares covered by such subscription, the Dealer shall pay the amount specified to the Dealer Manager within (x) 10 days following mailing of notice or (y) five days following e-mailing of notice, in each case, to the Dealer by the Dealer Manager stating the amount owed as a result of rescinded or rejected subscriptions. Further, if the Dealer has retained selling commissions in connection with an order that is subsequently rejected, canceled or rescinded for any reason, the Dealer agrees to return to the subscriber any selling commission theretofore retained by the Dealer with respect to such order within three business days following mailing of notice to the Dealer by the Dealer Manager stating the amount owed as a result of rescinded or rejected subscriptions. If the Dealer fails to pay any such amounts, the Dealer Manager shall have the right to offset such amounts owed against future compensation due and otherwise payable to the Dealer (it being understood and agreed that such right to offset shall not be in limitation of any other rights or remedies that the Dealer Manager may have in connection with such failure).
VII. |
Prospectus and Authorized Sales Materials; Compliance with Laws |
The Dealer is not authorized or permitted to give and will not give, any information or make any representation concerning the Shares except as set forth in the Prospectus and any Authorized Sales Materials. The Dealer Manager will supply the Dealer with reasonable quantities of the Prospectus, any supplements thereto and any amended Prospectus, as well as any Authorized Sales Materials, for delivery to investors.
The Dealer agrees that it:
(i) shall have delivered to each investor to whom an offer to sell the Shares is made, as of the time of such offer, a copy of the Prospectus and all supplements thereto and any amended Prospectus that have then been supplied to the Dealer by the Dealer Manager; and to each investor that subscribes for an order to purchase Shares, as of the time the Company accepts such investors order to purchase the Shares within the timeframes described in the Prospectus, a copy of the Prospectus and all supplements thereto and any amended Prospectus that have then been supplied to the Dealer by the Dealer Manager;
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(ii) will not send or give any supplement to the Prospectus or any Authorized Sales Materials to an investor unless it has previously sent or given a Prospectus and all previous supplements thereto and any amended Prospectus to that investor or has simultaneously sent or given a Prospectus and all previous supplements thereto and any amended Prospectus with such supplement to the Prospectus or Authorized Sales Materials;
(iii) will not show or give to any investor or prospective investor or reproduce any material or writing which is supplied to it by the Dealer Manager and marked dealer only or otherwise bearing a legend denoting that it is not to be used in connection with the sale of Shares to members of the public;
(iv) will not show or give to any investor or prospective investor in a particular jurisdiction any material or writing that is supplied to it by the Dealer Manager if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction;
(v) will not use in connection with the offer or sale of Shares any material or writing which relates to another company supplied to it by the Company or the Dealer Manager bearing a legend which states that such material may not be used in connection with the offer or sale of any securities other than the company to which it relates; and
(vi) will not use in connection with the offer or sale of Shares any materials or writings which have not been previously approved by the Dealer Manager or the Company in writing.
The Dealer further agrees, if the Dealer Manager so requests, to furnish a copy of any revised Prospectus to each person to whom it has furnished a copy of any previous Prospectus, and further agrees that it will itself mail or otherwise deliver all Prospectuses required for compliance with the provisions of Rule 15c2-8 under the Exchange Act. Regardless of the termination of this Agreement, the Dealer will deliver a Prospectus in transactions in the Shares for a period of 90 days from the effective date of the Registration Statement or such longer period as may be required by the Exchange Act.
On becoming a Dealer, and in offering and selling Shares, the Dealer agrees to comply with all the applicable requirements imposed upon it under (a) the Securities Act, the Exchange Act and the rules and regulations of the SEC promulgated under both such acts, (b) all applicable state securities laws and regulations as from time to time in effect, (c) any other state, federal, foreign and other laws and regulations applicable to the Offering, the sale of Shares or the activities of the Dealer pursuant to this Agreement, including without limitation applicable FINRA rules, the privacy standards and requirements of state and federal laws, including the Gramm-Leach-Bliley Act of 1999 (GLB Act), the laws governing money laundering abatement and anti-terrorist financing efforts, including the applicable rules of the SEC and FINRA, and the Bank Secrecy Act, as amended by the USA PATRIOT Act, and the laws and regulations regarding economic sanctions, including those administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC), and (d) this Agreement and the Prospectus as amended and supplemented. With respect to Dealers use of electronic delivery of offering documents or subscription agreements and electronic signatures, Dealer agrees to comply with the applicable requirements of the Statement of Policy Regarding Use of Electronic Offering Documents and Electronic Signatures of the North American Securities Administrators Association, Inc. (NASAA), as adopted by the NASAA membership on May 8, 2017, as well as the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transactions Act referred to therein, each as may be amended from time to
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time. Notwithstanding the termination of this Agreement or the payment of any amount to the Dealer, the Dealer agrees to pay the Dealers proportionate share of any claim, demand or liability asserted against the Dealer and the other Dealers on the basis that such Dealers or any of them constitute an association, unincorporated business or other separate entity, including in each case such Dealers proportionate share of any expenses incurred in defending against any such claim, demand or liability.
VIII. |
License and Association Membership |
The Dealers acceptance of this Agreement constitutes a representation to the Company and the Dealer Manager that (i) the Dealer is a properly registered or licensed broker-dealer, duly authorized to sell Shares under federal and state securities laws and regulations, and foreign laws, if applicable, and in all states or jurisdictions where it offers or sells Shares, (ii) the Dealer is a member in good standing of FINRA and (iii) there is no provision in the Dealers FINRA membership agreement that would restrict the ability of the Dealer to carry out the Offering as contemplated by this Agreement and the Prospectus. This Agreement shall automatically terminate if the Dealer ceases to be a member in good standing of FINRA. The Dealer agrees to notify the Dealer Manager immediately if the Dealer ceases to be a member in good standing of FINRA. The Dealer also hereby agrees to abide by the Rules of FINRA, including FINRA Rules 2040, 2111, 2121, 2310, 5110 and 5141.
IX. |
Limitation of Offer; Suitability |
The Dealer will offer Shares (both at the time of an initial subscription and at the time of any additional subscription, including initial enrollments and increased participations in the DRIP) only to persons who meet the financial qualifications and suitability standards set forth in the Prospectus or in any suitability letter or memorandum sent to it by the Company or the Dealer Manager and will only make offers to persons in the jurisdictions in which it is advised in writing by the Dealer Manager that the Shares are qualified for sale or that such qualification is not required and in which the Dealer has all required licenses and registrations to offer Shares in such jurisdictions. In offering Shares, the Dealer will comply with the provisions of the Rules set forth in the FINRA Manual, as well as all other applicable rules and regulations relating to suitability of investors, including without limitation, the provisions of Article III.C and Article III.E.1 of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc. (the NASAA Guidelines). Nothing contained in this section shall be construed to relieve Dealer of its suitability obligations under FINRA Rule 2111 or FINRA Rule 2310.
The Dealer will sell Class T Shares, Class S Shares, Class D Shares and Class I Shares only to the extent approved by the Dealer Manager as set forth on Schedule I to this Agreement, and to the extent approved to sell Class T Shares, Class S Shares, Class D Shares and Class I Shares pursuant to this Agreement, sell such Shares only to those persons who are eligible to purchase Class T Shares, Class S Shares, Class D Shares and Class I Shares as described in the Prospectus. Shares are suitable only as a long-term investment for persons of adequate financial means who do not need near-term liquidity from their investment, and the Dealer will only sell Shares to investors that the Dealer reasonably determines are able to hold such Shares as a long-term investment and do not need liquidity from such investment in the near future.
Nothing contained in this Agreement shall be construed to impose upon the Company or the Dealer Manager the responsibility of assuring that prospective investors meet the suitability standards in accordance with the terms and provisions of the Prospectus. The Dealer shall not purchase any Shares for a discretionary account without obtaining the prior written approval of the Dealers customer and such customers completed and executed Subscription Agreement. The Dealer agrees to comply with the record-keeping requirements imposed by (a) federal and state securities laws and the rules and regulations thereunder, (b) the applicable rules of FINRA and (c) the NASAA Guidelines, including the requirement to maintain records (the Suitability Records) of the information used to determine that an investment in
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Shares is suitable and appropriate for each subscriber for a period of six years from the date of the sale of the Shares. The Dealer further agrees to make the Suitability Records available to the Dealer Manager and the Company upon request and to make them available to representatives of the SEC and FINRA and applicable state securities administrators upon the Dealers receipt of a subpoena or other appropriate document request from such agency.
X. |
Disclosure Review; Confidentiality of Information |
The Dealer agrees that it shall have reasonable grounds to believe, based on the information made available to it through the Prospectus or other materials, that all material facts are adequately and accurately disclosed in the Prospectus and provide a basis for evaluating the Shares. In making this determination, the Dealer shall evaluate, at a minimum, items of compensation, physical properties, tax aspects, financial stability and experience of the sponsor, conflicts of interest and risk factors, and appraisals and other pertinent reports. If the Dealer relies upon the results of any inquiry conducted by another member or members of FINRA, the Dealer shall have reasonable grounds to believe that such inquiry was conducted with due care, that the member or members conducting or directing the inquiry consented to the disclosure of the results of the inquiry and that the person who participated in or conducted the inquiry is not the Dealer Manager or a sponsor or an affiliate of the Dealer Manager or sponsor of the Company.
It is anticipated that (i) the Dealer and the Dealers officers, directors, managers, employees, owners, members, partners, home office diligence personnel or other agents of the Dealer that are conducting a due diligence inquiry on behalf of the Dealer and (ii) persons or committees, as the case may be, responsible for determining whether the Dealer will participate in the Offering ((i) and (ii) are collectively, the Diligence Representatives) either have previously or will in the future have access to certain Confidential Information (defined below) pertaining to the Company, the Dealer Manager, Brookfield REIT Adviser LLC (the Adviser) or their respective affiliates. The Dealer agrees to keep, and to cause its Diligence Representatives to keep, all such Confidential Information strictly confidential and to not use, distribute or copy the same except in connection with the Dealers due diligence inquiry. The Dealer agrees to not disclose, and to cause its Diligence Representatives not to disclose, such Confidential Information to the public, or to the Dealers sales staff, financial advisors, or any person involved in selling efforts related to the Offering or to any other third party and agrees not to use the Confidential Information in any manner in the offer and sale of the Shares. The Dealer further agrees to use all reasonable precautions necessary to preserve the confidentiality of such Confidential Information, including, but not limited to (a) limiting access to such information to persons who have a need to know such information only for the purpose of the Dealers due diligence inquiry and (b) informing each recipient of such Confidential Information of the Dealers confidentiality obligation. The Dealer acknowledges that the Dealer or its Diligence Representatives may previously have received Confidential Information in connection with preliminary due diligence on the Company, and agrees that the foregoing restrictions shall apply to any such previously received Confidential Information. The Dealer acknowledges that the Dealer or its Diligence Representatives may in the future receive Confidential Information either in individual or collective meetings or telephone calls with the Company, and agrees that the foregoing restrictions shall apply to any Confidential Information received in the future through any source or medium. The Dealer acknowledges the restrictions and limitations of Regulation F-D promulgated by the SEC and agrees that the foregoing restrictions are necessary and appropriate in order for the Company to comply therewith. Notwithstanding the foregoing, Confidential Information may be disclosed (a) if approved in writing for disclosure by the Company or the Dealer Manager, (b) pursuant to a subpoena or as required by law, or (c) as required by regulation, rule, order or request of any governing or self-regulatory organization (including the SEC or FINRA), provided that the Dealer shall notify the Dealer Manager in advance if practicable under the circumstances of any attempt to obtain Confidential Information pursuant to provisions (b) and (c). For purposes hereof, Confidential Information shall mean and include: (i) trade secrets concerning the business and affairs of the Company, the Dealer Manager or their respective affiliates; (ii) confidential data,
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know-how, current and planned research and development, current and planned methods and processes, investment strategies, marketing lists or strategies, slide presentations, business plans, however documented, belonging to the Company, the Dealer Manager or their respective affiliates; (iii) information concerning the business and affairs of the Company, the Dealer Manager, the Adviser or their respective affiliates (including, without limitation, historical financial statements, financial projections and budgets, investment-related information, models, budgets, plans, market studies and personal information, however documented); (iv) any information marked or designated ConfidentialFor Due Diligence Purposes Only; and (v) any notes, analysis, compilations, studies, summaries and other material containing or based, in whole or in part, on any information included in the foregoing; provided, however, that Confidential Information shall not include information that is or becomes available to the public other than as a result of disclosure by the Dealer or its Diligence Representatives in breach of this Agreement.
XI. |
Dealers Compliance with Anti-Money Laundering Rules and Regulations |
The Dealer hereby represents that it has complied and will comply with Section 326 of the USA PATRIOT Act and the implementing rules and regulations promulgated thereunder in connection with broker/dealers anti-money laundering obligations. The Dealer hereby represents that it has adopted and implemented, and will maintain a written anti-money laundering compliance program (AML Program) including, without limitation, anti-money laundering policies and procedures relating to customer identification in compliance with applicable laws and regulations, including federal and state securities laws, applicable rules of FINRA, and the USA PATRIOT Act and the implementing rules and regulations promulgated thereunder. In accordance with these applicable laws and regulations and its AML Program, the Dealer agrees to verify the identity of its new customers; to maintain customer records; and to check the names of customers against government watch lists, including all such lists maintained by OFAC, as they may be updated from time to time. Additionally, the Dealer will monitor account activity to identify patterns of unusual size or volume, geographic factors and any other red flags for purposes of the USA PATRIOT Act as potential signals of money laundering or terrorist financing. The Dealer will file with the Financial Crimes Enforcement Network any required suspicious activity reports about such activity and further will disclose such activity to applicable federal and state law enforcement when required by law. The Dealer will block or restrict access to such customer funds as is required by law and OFAC regulations. Upon request by the Dealer Manager at any time, the Dealer hereby agrees to furnish (a) a copy of its AML Program to the Dealer Manager for review, and (b) a copy of the findings and any remedial actions taken in connection with the Dealers most recent independent testing of its AML Program. The Dealer agrees to notify the Dealer Manager immediately if the Dealer is subject to a FINRA disclosure event or fine from FINRA related to its AML Program.
XII. |
Privacy. |
The Dealer agrees to abide by and comply in all respects with (a) the privacy standards and requirements of the GLB Act and applicable regulations promulgated thereunder, (b) the privacy standards and requirements of any other applicable federal or state law, including the Fair Credit Reporting Act (FCRA) and (c) its own internal privacy policies and procedures, each as may be amended from time to time.
The parties hereto acknowledge that from time to time, the Dealer may share with the Company and the Company may share with the Dealer nonpublic personal information (as defined under the GLB Act) of customers of the Dealer. This nonpublic personal information may include, but is not limited to a customers name, address, telephone number, social security number, account information and personal financial information. The Dealer shall only be granted access to such nonpublic personal information of each of its customers that pertains to the period or periods during which the Dealer served as the broker dealer of record for such customers account. The Dealer, the Dealer Manager and the Company shall not disclose nonpublic personal information of any customers who have opted out of such disclosures, except (a) to
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service providers (when necessary and as permitted under the GLB Act), (b) to carry out the purposes for which one party discloses such nonpublic personal information to another party under this Agreement (when necessary and as permitted under the GLB Act) or (c) as otherwise required by applicable law. Any nonpublic personal information that one party receives from another party shall be subject to the limitations on usage described in this Section XII. Except as expressly permitted under the FCRA, the Dealer agrees that it shall not disclose any information that would be considered a consumer report under the FCRA.
The Dealer shall be responsible for determining which customers have opted out of the disclosure of nonpublic personal information by periodically reviewing and, if necessary, retrieving a list of such customers (the List) to identify customers that have exercised their opt-out rights. In the event the Dealer, the Dealer Manager or the Company expects to use or disclose nonpublic personal information of any customer for purposes other than as set forth in this Section XII, it must first consult the List to determine whether the affected customer has exercised his or her opt-out rights. The use or disclosure of any nonpublic personal information of any customer that is identified on the List as having opted out of such disclosures, except as set forth in this Section XII, shall be prohibited.
The Dealer shall implement and maintain commercially reasonable measures in compliance with industry best practices designed (a) to assure the security and confidentiality of nonpublic personal information of all customers; (b) to protect such information against any anticipated threats or hazards to the security or integrity of such information; (c) to protect against unauthorized access to, or use of, such information that could result in material harm to any customer; (d) to protect against unauthorized disclosure of such information to unaffiliated third parties; and (e) to otherwise ensure its compliance with all applicable privacy standards and requirements of federal or state law (including, but not limited to, the GLB Act), and any other applicable legal or regulatory requirements. The Dealer further agrees to cause all its agents, representatives, affiliates, subcontractors, or any other party to whom the Dealer provides access to or discloses nonpublic personal information of customers to implement and maintain appropriate measures designed to meet the objectives set forth in this Section XII.
XIII. |
Dealers Undertaking to Not Facilitate a Secondary Market in the Shares |
The Dealer acknowledges that there is no public trading market for the Shares and that there are limits on the ownership, transferability and repurchase of the Shares, which significantly limit the liquidity of an investment in the Shares. The Dealer also acknowledges that the Companys Share Repurchase Plan (the Plan) provides only a limited opportunity for investors to have their Shares purchased by the Company and that the Companys board of directors may, in its sole discretion, amend, suspend, or terminate the Plan at any time in accordance with the terms of the Plan. The Dealer hereby agrees that so long as the Company has not listed the Shares on a national securities exchange, the Dealer will not engage in any action or transaction that would facilitate or otherwise create the appearance of a secondary market in the Shares without the prior written approval of the Dealer Manager and the Company.
XIV. |
Arbitration |
Any dispute, controversy or claim arising between the parties relating to this Agreement (whether such dispute arises under any federal, state or local statute or regulation, or at common law), shall be resolved by final and binding arbitration administered in accordance with the then current commercial arbitration rules of FINRA in accordance with the terms of this Agreement (including the governing law provisions of this Agreement and pursuant to the Federal Arbitration Act (9 U.S.C. §§ 116). The parties will request that the arbitrator or arbitration panel (the Arbitrator) issue written findings of fact and conclusions of law. The Arbitrator shall not be empowered to make any award or render any judgment for punitive damages, and the Arbitrator shall be required to follow applicable law in construing this Agreement, making awards, and rendering judgments. The decision of the Arbitrator shall be final and binding, and judgment upon any
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arbitration award may be entered by any court having jurisdiction. All arbitration hearings will be held at the New York City FINRA District Office or at another mutually agreed upon site. The parties may agree on a single arbitrator, or, if the parties cannot so agree, each party will have the right to choose one arbitrator, and the selected arbitrators will choose a third arbitrator. Each arbitrator must have experience and education that qualify him or her to competently address the specific issues to be designated for arbitration. Notwithstanding the preceding, no party will be prevented from immediately seeking provisional remedies in courts of competent jurisdiction, including but not limited to, temporary restraining orders and preliminary injunctions, but such remedies will not be sought as a means to avoid or stay arbitration.
XV. |
Termination |
The Dealer will suspend or terminate its offer and sale of Shares upon the request of the Company or the Dealer Manager at any time and will resume its offer and sale of Shares hereunder upon subsequent request of the Company or the Dealer Manager. Any party may terminate this Agreement by written notice. Such termination shall be effective 48 hours after the mailing or other transmission of such notice by the methods provided in Section XVII below. This Agreement is the entire agreement of the parties and supersedes all prior agreements, if any, between the parties hereto.
This Agreement may be amended at any time by the Dealer Manager or the Company by written notice to the Dealer, and any such amendment shall be deemed accepted by the Dealer upon placement of an order for sale of Shares by such Dealers customer after the Dealer has received such notice.
The respective agreements and obligations of the Dealer Manager and the Dealer set forth in Sections IV, VI, VII, and XIII through XVII of this Agreement shall remain operative and in full force and effect regardless of the termination of this Agreement.
XVI. |
Use of Company and Brookfield Names |
Except as expressly provided herein, nothing herein shall be deemed to constitute a waiver by the Dealer Manager or the Company of any consent that would otherwise be required under this Agreement or applicable law prior to the use of the Dealer of the name or identifying marks of the Company, the Dealer Manager, Brookfield or Brookfield Asset Management (or any combination or derivation thereof). The Dealer Manager and the Company reserve the right to withdraw its consent to the use of the Companys name at any time and to request to review any materials generated by the Dealer that use the Companys or Brookfields name or mark. Any such consent is expressly subject to the continuation of this Agreement and shall terminate with the termination of this Agreement as provided herein.
XVII. |
Notice |
Notices and other writings contemplated by this Agreement shall be delivered via (i) hand, (ii) first class registered or certified mail, postage prepaid, return receipt requested, (iii) a nationally recognized overnight courier or (iv) electronic mail. All such notices shall be addressed, as follows:
If to the Company: | Brookfield Real Estate Income Trust Inc. | |
c/o Brookfield Place New York | ||
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: Secretary | ||
Email: realestatenotices@brookfield.com |
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XVIII. |
Attorneys Fees and Applicable Law |
In any action to enforce the provisions of this Agreement or to secure damages for its breach, the prevailing party shall recover its costs and reasonable attorneys fees. This Agreement shall be construed under the laws of the State of New York and shall take effect when signed by the Dealer and countersigned by the Dealer Manager. Venue for any action (including arbitration) shall lie exclusively in New York, New York.
XIX. |
No Partnership |
Nothing in this Agreement shall be construed or interpreted to constitute the Dealer as an employee, agent or representative of, or in association with or in partnership with, the Dealer Manager, the Company or the other Dealers; instead, this Agreement shall only constitute the Dealer as a dealer authorized by the Dealer Manager to sell the Shares according to the terms set forth in the Registration Statement and the Prospectus as amended and supplemented and in this Agreement.
XX. |
ERISA Matters |
The parties agree as follows:
(a) Dealer is a broker-dealer registered under the Securities Exchange Act of 1934.
(b) To the extent Dealer (or its registered representatives) uses or relies on any of the information, tools and materials that the Dealer Manager, the Company, the Adviser, the sponsor of the Company or each of their respective affiliates and related parties (collectively, the DM/Company Parties) provides directly to Dealer (or its registered representatives), without direct charge, for use in connection with Dealers Retirement Customers (which include a plan, plan fiduciary, plan participant or beneficiary, individual retirement account (IRA) or IRA owner subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA) or Section 4975 of the Internal Revenue Code of 1986, as amended (the Code)), Dealer will act as a fiduciary under ERISA or the Code (as applicable), and will be responsible for exercising independent judgment in evaluating the retirement account transaction.
(c) Certain of the DM/Company Parties have financial interests associated with the purchase of Shares of the Company, including the fees, expense reimbursements and other payments they anticipate receiving in connection with the purchase of Shares of the Company, as described in the Prospectus.
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(d) To the extent that Dealer provides investment advice to its Retirement Customers, Dealer will do so in a fiduciary capacity under ERISA or the Code, or both, and Dealer is responsible for exercising independent judgment with respect to any investment advice it provides to its Retirement Customers.
(e) Dealer is independent of the DM/Company Parties and none of the DM/Company Parties is undertaking to provide impartial investment advice to Dealer or its Retirement Customers.
XXI. |
Electronic Signatures and Electronic Delivery of Documents |
If Dealer has adopted or adopts a process by which persons may authorize certain account-related transactions and/or requests, in whole or in part, by Electronic Signature (as such term is defined by the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001 et seq., the Uniform Electronic Transactions Act, as promulgated by the Uniform Conference of Commissioners on Uniform State Law in July 1999 and as adopted by the relevant jurisdiction(s) where Dealer is licensed, and applicable rules, regulations and/or guidance relating to the use of electronic signatures issued by the SEC, FINRA and NASAA including, as applicable, the NASAA Statement of Policy Regarding Use of Electronic Offering Documents And Electronic Signatures, adopted May 8, 2017, as amended (collectively, Electronic Signature Law)), to the extent the Company allows the use of Electronic Signature, in whole or in part, Dealer represents that: (i) each Electronic Signature will be genuine; (ii) each Electronic Signature will represent the signature of the person required to sign the Subscription Agreement or other form to which such Electronic Signature is affixed; (iii) Dealer will comply with all applicable terms of the Electronic Signature Law; and (iv) Dealer agrees to the Electronic Signature Use Indemnity Agreement attached hereto as Exhibit B.
If Dealer intends to use electronic delivery to distribute the Prospectus or other documents related to the Company to any person, Dealer will comply with all applicable rules, regulations and/or guidance relating to the electronic delivery of documents issued by the SEC, FINRA, NASAA and individual state securities administrators and any other applicable laws or regulations related to the electronic delivery of offering documents including, as appropriate, Electronic Signature Law. In particular, and without limitation, Dealer shall comply with the requirement under certain Statements of Policy adopted by NASAA that a sale of Shares shall not be completed until at least five business days after the Prospectus has been delivered to the investor. Dealer shall obtain and document its receipt of the informed consent to receive documents electronically of persons, which documentation shall be maintained by Dealer and made available to the Company and/or the Dealer Manager upon request.
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THE DEALER MANAGER: |
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC |
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Date: |
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We have read the foregoing Agreement and we hereby accept and agree to the terms and conditions therein set forth. We hereby represent that the list below of jurisdictions in which we are registered or licensed as a broker or dealer and are fully authorized to sell securities is true and correct, and we agree to advise you of any change in such list during the term of this Agreement.
1. |
Identity of Dealer |
Company name: | ||||
Type of entity: | ||||
(Corporation, Partnership or Proprietorship) | ||||
Organized in the State of: | ||||
Licensed as broker-dealer in all States: | Yes | No | ||
If no, list all States licensed as broker-dealer: | ||||
Tax ID #: |
2. |
Person to receive notices delivered pursuant to the Selected Dealer Agreement |
Name: |
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Company: |
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Address: |
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City, State and Zip: |
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Telephone: |
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Email: |
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AGREED TO AND ACCEPTED BY THE DEALER:
(Dealers Firm Name) |
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By: |
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(Signature) |
Name: |
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Title: |
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Date: |
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SCHEDULE I
ADDENDUM
TO
SELECTED DEALER AGREEMENT WITH
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC
Name of Dealer:
The following reflects the selling commissions, dealer manager fees and Servicing Fees as agreed upon between Brookfield Oaktree Wealth Solutions LLC (the Dealer Manager) and the Dealer, effective as of the effective date of the Selected Dealer Agreement (the Agreement) between the Dealer Manager and the Dealer in connection with the continuous public offering of Shares of Brookfield Real Estate Income Trust Inc. (the Company).
Upfront Selling Commissions
Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended or supplemented from time to time, as compensation for completed sales (as defined below) by the Dealer of Primary Shares that the Dealer is authorized to sell and for services rendered by the Dealer hereunder, the Dealer Manager shall reallow to the Dealer an upfront selling commission in an amount equal to the percentage set forth below of the transaction price per Share on such completed sales of Class T Primary Shares, Class S Primary Shares and Class D Primary Shares, as applicable, by the Dealer. The Dealer shall not receive selling commissions for sales of any DRIP Shares or for sales of any Class I Shares, whether in the Primary Offering or pursuant to the DRIP. For purposes of this Schedule I, a completed sale shall occur if and only if a transaction has closed with a subscriber for Shares pursuant to all applicable offering and subscription documents, payment for the Shares has been received by the Company in full in the manner provided in Section II of the Agreement, the Company has accepted the subscription agreement of such subscriber and the Company has thereafter distributed the selling commission to the Dealer Manager in connection with such transaction.
The Dealer may withhold the selling commissions to which it is entitled pursuant to the Agreement, this Schedule I and the Prospectus from the purchase price for the Shares in the Offering and forward the balance to the Company or its agent if it represents to the Dealer Manager that: (i) the Dealer is legally permitted to do so; and (ii) (A) the Dealer meets all applicable net capital requirements under the rules of FINRA or other applicable rules regarding such an arrangement; (B) the Dealer has forwarded the Subscription Agreement to the Company or its agent within the time required under Section II, and received the Companys written acceptance of the subscription prior to forwarding the purchase price for the Shares, net of the selling commissions to which the Dealer is entitled, to the Company or its agent; and (C) the Dealer has verified that there are sufficient funds in the investors account with the Dealer to cover the entire cost of the subscription. The Dealer shall wire such subscription funds to the Company or its agent as set forth in the Subscription Agreement by the end of the second business day following receipt of the Companys written acceptance of the subscription.
Dealer Manager Fees
Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended or supplemented from time to time, as compensation for completed sales by the Dealer of Class T Primary Shares that the Dealer is authorized to sell and for services rendered by the Dealer hereunder, the Dealer
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Manager shall reallow to the Dealer a dealer manager fee in an amount equal to the percentage set forth below of the transaction price per Share on such completed sales of Class T Primary Shares by the Dealer. The Dealer shall not receive dealer manager fees for sales of any DRIP Shares, or for sales of any Class S, Class D or Class I Shares, whether in the Primary Offering or pursuant to the DRIP.
Volume Discounts
The Dealer shall be responsible for implementing the volume discounts described in or as otherwise provided in the Plan of Distribution section of the Prospectus. Requests to combine purchase orders of Class T Shares, Class S Shares or Class D Shares as a part of a combined order for the purpose of qualifying for discounts as described in the Plan of Distribution section of the Prospectus must be made in writing by the Dealer, and any resulting reduction in selling commissions and/or dealer manager fees will be prorated among the separate subscribers.
Terms and Conditions of the Servicing Fees
The payment of the Servicing Fees to the Dealer is subject to terms and conditions set forth herein and the Prospectus as may be amended or supplemented from time to time. If Dealer elects to sell Shares that are Class T Shares, Class S Shares and/or Class D Shares, eligibility to receive the Servicing Fees with respect to such Shares, as applicable, sold by the Dealer is conditioned upon the Dealer acting as broker-dealer of record with respect to such Shares and complying with the requirements set forth below, including providing stockholder and account maintenance services with respect to such Shares:
(i) |
the existence of an effective Selected Dealer Agreement or ongoing Servicing Agreement between the Dealer Manager and the Dealer, and |
(ii) |
the provision of the following services with respect to such Shares, as applicable, by the Dealer: |
1. |
assistance with recordkeeping, including maintaining records for and on behalf of the Dealers customers reflecting transactions and balances of Shares owned, |
2. |
transmitting stockholder communications to its customers from the Company or the Dealer Manager, including the Prospectus, annual and periodic reports, and proxy statements, |
3. |
establishing an account and providing ongoing account maintenance, |
4. |
assistance with and answering investor inquiries regarding the Company, including distribution payments and reinvestment decisions, |
5. |
helping investors understand their investments, |
6. |
Share repurchase requests, |
7. |
assistance with Share conversion processing, or |
8. |
providing such other similar services as the stockholder may reasonably require in connection with its investment in the Shares. |
For the avoidance of doubt, such services are non-distribution services, other than those primarily intended to result in the sale of Shares.
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With respect to Class T Shares, the financial advisor of the Dealer responsible for the sale of such Class T Shares is expected to provide one or more of the services listed in items (ii)3 through 8 above. In connection with this provision, the Dealer agrees to reasonably cooperate to provide certification to the Company, the Dealer Manager and their agents (including its auditors) confirming the provision of services to each particular class of stockholders upon reasonable request.
The Dealer hereby represents by its acceptance of each payment of the Servicing Fees that it complies with each of the above requirements and is providing the above-described services. The Dealer agrees to promptly notify the Dealer Manager if it is no longer the broker-dealer of record with respect to some or all of the Class T, Class S or Class D Shares giving rise to such Servicing Fees and/or if it no longer satisfies any or all of the conditions set forth above.
Subject to the conditions described herein, the Dealer Manager will reallow to the Dealer the Servicing Fees in an amount described below, on Class T Shares, Class S Shares or Class D Shares, as applicable, sold by the Dealer. To the extent payable, the Servicing Fees will be payable monthly in arrears as provided in the Prospectus. All determinations regarding the total amount and rate of reallowance of the Servicing Fees, the Dealers compliance with the listed conditions, and/or the portion retained by the Dealer Manager will be made by the Dealer Manager in its sole discretion.
Notwithstanding the foregoing, subject to the terms of the Prospectus, upon the date when the Dealer Manager is notified that the Dealer is no longer the broker-dealer of record with respect to such Class T, Class S or Class D Shares or that the Dealer no longer satisfies any or all of the conditions set forth above, then Dealers entitlement to the Servicing Fees related to such Class T, Class S and/or Class D Shares, as applicable, shall cease, and the Dealer shall not receive the Servicing Fees for any portion of the month in which Dealer is not eligible on the last day of the month; provided, however, if there is a change in the broker-dealer of record with respect to the Class T, Class S or Class D Shares, as applicable, made in connection with a change in the registration of record for the Class T, Class S or Class D Shares on the Companys books and records (including, but not limited to, a reregistration due to a sale or a transfer or a change in the form of ownership of the account), then the Dealer shall be entitled to a pro rata portion of the Servicing Fees related to the Class T, Class S and/or Class D Shares, as applicable, for the portion of the month for which the Dealer was the broker-dealer of record.
Thereafter, such Servicing Fees may be reallowed to the then-current broker-dealer of record of the Class T, Class S and/or Class D Shares, as applicable, if any such broker-dealer of record has been designated (the Servicing Dealer), to the extent such Servicing Dealer has entered into a Selected Dealer Agreement or similar agreement with the Dealer Manager (Servicing Agreement) and such Selected Dealer Agreement or Servicing Agreement with the Servicing Dealer provides for such reallowance. In this regard, all determinations will be made by the Dealer Manager in good faith in its sole discretion. The Dealer is not entitled to any Servicing Fees with respect to Class I Shares. The Dealer Manager may also reallow some or all of the Servicing Fees to other broker-dealers who provide services with respect to the Shares (who shall be considered additional Servicing Dealers) pursuant to a Servicing Agreement with the Dealer Manager to the extent such Servicing Agreement provides for such reallowance and such additional Servicing Dealer is in compliance with the terms of such agreement related to such reallowance, in accordance with the terms of such Servicing Agreement.
The Company and the Dealer Manager shall cease paying the Servicing Fees with respect to any Class T Share, Class S Share or Class D Share held in a stockholders account within such account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total selling commissions, dealer manager fees and Servicing Fees paid with respect to the Shares held by such stockholder would exceed, in the aggregate, 8.75% (or a lower limit as set forth in this Schedule I to the Selected Dealer Agreement between the Dealer Manager and the Dealer) of the gross proceeds from the
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sale of such Shares (including the gross proceeds of any Shares issued under the DRIP with respect thereto). At the end of such month, such Class T Share, Class S Share or Class D Share (and any Shares issued under the DRIP with respect thereto) will convert into a number of Class I Shares (including any fractional Shares) with an equivalent aggregate NAV as such Share. In addition, the Company and the Dealer Manager will cease paying the Servicing Fees on Class T Shares, Class S Shares and Class D Shares in connection with this Offering upon the earlier to occur of the following: (i) a listing of Class I Shares, (ii) the merger or consolidation of the Company with or into another entity in which the Company is not the surviving entity, or the sale or other disposition of all or substantially all of the Companys assets, in each case in a transaction in which the Companys stockholders receive cash, securities listed on a national exchange or a combination thereof, or (iii) the date following the completion of this Offering on which, in the aggregate, underwriting compensation from all sources in connection with this Offering, including selling commissions, dealer manager fees, the Servicing Fees and other underwriting compensation, is equal to ten percent (10%) of the gross proceeds from Primary Shares sold in this Offering, as determined in good faith by the Dealer Manager in its sole discretion. For purposes of this Schedule I, the portion of the Servicing Fees accruing with respect to Class T, Class S and Class D Shares of the Companys common stock issued (publicly or privately) by the Company during the term of a particular Offering, and not issued pursuant to a prior Offering, shall be underwriting compensation with respect to such particular Offering and not with respect to any other Offering.
General
Selling commissions, dealer manager fees and Servicing Fees due to the Dealer pursuant to the Agreement will be paid to the Dealer within 30 days after receipt by the Dealer Manager. The Dealer, in its sole discretion, may authorize the Dealer Manager to deposit selling commissions, dealer manager fees, Servicing Fees or other payments due to it pursuant to the Agreement directly to its bank account. If the Dealer so elects, the Dealer shall provide such deposit authorization and instructions in Schedule II to the Agreement.
The parties hereby agree that the foregoing selling commissions and reallowed dealer manager fees and Servicing Fees are not in excess of the usual and customary distributors or sellers commission received in the sale of securities similar to the Primary Shares, that the Dealers interest in the offering is limited to such selling commissions and reallowed dealer manager fees and Servicing Fees from the Dealer Manager and the Dealers indemnity referred to in Section 4 of the Dealer Manager Agreement, and that the Company is not liable or responsible for the direct payment of such selling commissions and reallowed dealer manager fees and Servicing Fees to the Dealer.
Except as otherwise described under Upfront Selling Commissions above, the Dealer waives any and all rights to receive compensation, including the dealer manager fees and Servicing Fees, until it is paid to and received by the Dealer Manager. The Dealer acknowledges and agrees that, if the Company pays selling commissions, dealer manager fees or Servicing Fees, as applicable, to the Dealer Manager, the Company is relieved of any obligation for selling commissions, dealer manager fees or Servicing Fees, as applicable, to the Dealer. The Company may rely on and use the preceding acknowledgement as a defense against any claim by the Dealer for selling commissions, dealer manager fees or Servicing Fees, as applicable, the Company pays to the Dealer Manager but that the Dealer Manager fails to remit to the Dealer. The Dealer affirms that the Dealer Managers liability for selling commissions and dealer manager fees payable and the Servicing Fees are limited solely to the proceeds of selling commissions, dealer manager fees and the Servicing Fees, as applicable, receivable from the Company and the Dealer hereby waives any and all rights to receive payment of selling commissions or any reallowance of dealer manager fees or the Servicing Fees, as applicable, due until such time as the Dealer Manager is in receipt of the selling commission, dealer manager fee or Servicing Fees, as applicable, from the Company. Notwithstanding the above, the Dealer affirms that, to the extent the Dealer retains selling commissions as described above under Upfront Selling
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Commissions, neither the Company nor the Dealer Manager shall have liability for selling commissions payable to the Dealer, and that the Dealer is solely responsible for retaining the selling commissions due to the Dealer from the subscription funds received by the Dealer from its customers for the purchase of Shares in accordance with the terms of the Agreement.
Notwithstanding anything herein to the contrary, the Dealer will not be entitled to receive any selling commissions, dealer manager fees or Servicing Fees which would cause the aggregate amount of selling commissions, dealer manager fees, Servicing Fees and other forms of underwriting compensation (as defined in accordance with applicable FINRA rules) paid from any source in connection with this Offering to exceed ten percent (10.0%) of the gross proceeds raised from the sale of Shares in the Primary Offering.
Due Diligence
In addition, the Dealer Manager or the Company will pay or reimburse the Dealer for reasonable and documented bona fide due diligence expenses incurred by the Dealer in connection with the Offering. Such due diligence expenses may include travel, lodging, meals and other reasonable and documented out-of-pocket expenses incurred by the Dealer and its personnel when visiting the Companys offices or properties to verify information relating to the Company or its properties. The Dealer shall provide a detailed and itemized invoice for any such due diligence expenses and shall obtain the prior written approval from the Dealer Manager for such expenses, and no such expenses shall be reimbursed absent a detailed and itemized invoice. Notwithstanding the foregoing, no such payment will be made if such payment would cause the aggregate of such reimbursements to the Dealer and other broker-dealers, together with all other organization and offering expenses, to exceed 15% of the Companys gross proceeds from the Offering. All such reimbursements will be made in accordance with, and subject to the restrictions and limitations imposed under the Prospectus, FINRA rules and other applicable laws and regulations.
Share Class Election
CHECK EACH APPLICABLE BOX BELOW IF THE DEALER ELECTS TO PARTICIPATE IN THE DISTRIBUTION OF THE LISTED SHARE CLASS
☐ | Class T Shares | ☐ | Class S Shares | ☐ | Class D Shares | ☐ | Class I Shares |
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The following reflects the selling commission and/or the Servicing Fees as agreed upon between the Dealer Manager and the Dealer for the applicable Share Class.
(Initials) |
Upfront Selling Commission of up to 3.0% of the transaction price per Class T Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class T Shares. | ||
(Initials) |
Dealer Manager Fee of up to 0.5% of the transaction price per Class T Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class T Shares. | ||
(Initials) |
Servicing Fee of 0.85% (Annualized Rate) of aggregate NAV of outstanding Class T Shares, consisting of an advisor stockholder servicing fee of 0.65% (Annualized Rate), and a dealer stockholder servicing fee of 0.20% (Annualized Rate), of the aggregate NAV of outstanding Class T Shares. | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. | ||
(Initials) |
Upfront Selling Commission of up to 3.5% of the transaction price per Class S Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class S Shares. | ||
(Initials) |
Servicing Fee of 0.85% (Annualized Rate) of aggregate NAV of outstanding Class S Shares | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. | ||
(Initials) |
Upfront Selling Commission of up to 1.5% of the transaction price per Class D Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class D Shares. | ||
(Initials) |
Servicing Fee of 0.25% (Annualized Rate) of aggregate NAV of outstanding Class D Shares | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. |
* |
Subject to discounts described in the Plan of Distribution section of the Prospectus. |
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IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed as of the date first written above.
DEALER MANAGER | ||
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC | ||
By: |
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Name: | ||
Title: |
DEALER |
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(Print Name of Dealer) |
By: |
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Name: | ||
Title: |
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SCHEDULE II
TO
SELECTED DEALER AGREEMENT WITH
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC
NAME OF ISSUER: |
BROOKFIELD REAL ESTATE INCOME TRUST INC. |
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NAME OF DEALER: | ||
SCHEDULE TO AGREEMENT DATED: |
The Dealer hereby authorizes the Dealer Manager or its agent to deposit selling commissions, Servicing Fees, and other payments due to it pursuant to the Selected Dealer Agreement to its bank account specified below. This authority will remain in force until Dealer notifies the Dealer Manager in writing to cancel it. In the event that the Dealer Manager deposits funds erroneously into the Dealers account, the Dealer Manager is authorized to debit the account with no prior notice to the Dealer for an amount not to exceed the amount of the erroneous deposit.
Bank Name: |
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Bank Address: |
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Bank Routing Number: |
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Account Number: |
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DEALER |
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(Print Name of Dealer) |
By: |
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Name: | ||
Title: |
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Exhibit A
Dealer Manager Agreement
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Exhibit B
Electronic Signature Use Indemnity Agreement
Dealer has adopted a process by which clients may authorize certain account-related transactions or requests, in whole or in part, evidenced by Electronic Signature (as such term is defined in Section XXI hereof). In consideration of the Company allowing Dealer and its clients to execute certain account-related transactions and/or requests, in whole or in part, by Electronic Signature, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Dealer does hereby, for itself and its successors and permitted assigns, covenant and agree to indemnify and hold harmless the Company, the Dealer Manager, each of their affiliates and each of their and their affiliates officers, directors, trustees, agents and employees, in whatever capacity they may act, from and against any and all claims (whether groundless or otherwise), losses, liabilities, damages and expenses, including, but not limited to, costs, disbursements and reasonable counsel fees (whether incurred in connection with such claims, losses, liabilities, damages and expenses or in connection with the enforcement of any rights hereunder), arising out of or in connection with the Dealers representations or covenants set forth in Section XXI hereof or the representations described below.
The Dealer represents that it will comply with all applicable terms of Electronic Signature Law as outlined in Section XXI of this Agreement. Dealer represents that the Company may accept any Electronic Signature without any responsibility to verify or authenticate that it is the signature of Dealers client given with such clients prior authorization and consent. Dealer represents that the Company may act in accordance the instructions authorized by Electronic Signature without any responsibility to verify that Dealers client intended to give the Electronic Signature for the purpose of authorizing the instruction, transaction or request and that Dealers client received all disclosures required by applicable Electronic Signature Law. Dealer agrees to provide a copy of each Electronic Signature and further evidence supporting any Electronic Signature upon request by the Company.
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EXHIBIT B
FORM OF SELECTED DEALER AGREEMENT
This Agreement (the Agreement) is made as of [ ], 20[ ] by and among Brookfield Oaktree Wealth Solutions LLC (the Dealer Manager), the dealer manager for the continuous public offering of shares of common stock, $0.01 par value per share (Common Stock), of Brookfield Real Estate Income Trust Inc. (formerly, Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company), the Company, Brookfield REIT Adviser LLC (the Adviser) and [ ] (Dealer). The parties hereby agree that Dealer will participate in the distribution of the Shares (defined below), subject to the terms of this Agreement. In consideration of the mutual covenants hereinafter contained, the parties agree as follows:
1. |
DEALER MANAGER AGREEMENT |
a. The Company has entered into a dealer manager agreement (the Dealer Manager Agreement) with the Dealer Manager, whereby the Dealer Manager acts as the dealer manager in connection with the Offering of the Shares (each as defined below) to the public and may retain broker-dealers to act as its agents in connection with such Offering.
b. As described in the Dealer Manager Agreement, the Company has filed one or more registration statements with the Securities and Exchange Commission (the SEC) that are listed on Schedule III to this Agreement (each, a Registration Statement), which Schedule III may be amended from time to time with the written consent of the Company and the Dealer Manager. Any new Registration Statement will be added to Schedule III upon its initial effectiveness with the SEC. Each Registration Statement shall register an ongoing public offering (each, an Offering) of Common Stock, which may consist of Class T, Class S, Class D and/or Class I Shares of Common Stock (the Shares).
c. The Offering is and shall be comprised of a maximum amount of Shares set forth in the Prospectus (as defined below) that will be issued and sold to the public at the public offering prices per Share set forth in the Prospectus pursuant to a primary offering (the Primary Shares) and the Companys distribution reinvestment plan (the DRIP Shares). In connection with the Offering, the minimum purchase by any one person shall be as set forth in the Prospectus. In this Agreement, unless explicitly stated otherwise, the Prospectus means, at any given time, each Prospectus contained in a Registration Statement, except that if the prospectus or prospectus supplement filed by the Company pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the Securities Act), shall differ from the Prospectus on file with respect to such Registration Statement at its effective date, the term Prospectus shall include such prospectus or prospectus supplement filed pursuant to Rule 424(b).
d. Notwithstanding the foregoing, if any new Registration Statement is added to Schedule III to this Agreement, the Dealer Manager will promptly give Dealer written notice of such addition. Schedule III to the Dealer Manager Agreement may be amended from time to time with the written consent of the Company and the Dealer Manager. However, the addition or removal of Registration Statements from Schedule III to this Agreement shall only apply prospectively and shall not affect the respective agreements, representations and warranties of the Company, the Adviser, the Dealer Manager and Dealer prior to receipt by Dealer of copies of such amendments to Schedule III to this Agreement. It is possible that more than one Registration Statement may be listed on Schedule III during times of transition from one Registration Statement to another, during which time offers or sales may be made pursuant to either Registration Statement. In such event, the Dealer Manager shall (a) communicate to Dealer details about the transition from one Registration Statement to the next, including when sales may be made pursuant to the most recent Registration Statement and when sales will cease pursuant to the older Registration Statement and (b) provide Dealer with sufficient copies of the appropriate Prospectus and other offering materials in order to continue to make offers and sales throughout such transition period.
B-1
e. In this Agreement, unless explicitly stated otherwise, the Registration Statement means, at any given time, each of the registration statements listed on Schedule III to this Agreement, as such Schedule III may be amended from time to time, as each such registration statement is finally amended and revised at the effective date of the registration statement (including at the effective date of any post-effective amendment thereto). In this Agreement, unless explicitly stated otherwise, the Offering means, at any given time, an offering covered by a Registration Statement and Shares means the Shares being offered in an Offering. In this Agreement, unless explicitly stated otherwise, any references to the Registration Statement, the Offering, the Shares or the Prospectus with respect to each other shall mean only those that are all related to the same Registration Statement.
2. |
AUTHORIZATION |
a. In accordance with the authority granted under the Dealer Manager Agreement and with the consent of the Company, the Dealer Manager hereby appoints Dealer to solicit investors to make investments in the Shares and to perform such other services in accordance with the provisions set forth herein. Dealer hereby accepts such appointment and agrees to use its best efforts to sell the Shares for cash on the terms and conditions stated in the Prospectus and render such services and to assume the obligations set forth herein, on the terms and conditions set forth herein, for the compensation provided for on Schedule I attached hereto. By Dealers acceptance of this Agreement, Dealer will become one of the Dealers referred to in the Dealer Manager Agreement, but Dealer shall only have the obligations explicitly set forth in this Agreement. Except as otherwise specifically stated herein, all terms used in this Agreement have the meanings provided in the Dealer Manager Agreement. The Dealer Manager and Dealer each further agree, and hereby make the representations as set forth below, which shall govern all offers and sales of the Shares made by Dealer.
b. Dealer confirms that it is not authorized to act as agent for Dealer Manager or the Company, except as expressly provided in this Agreement.
3. |
PRICING |
Except as otherwise provided in the Prospectus, which may be amended or supplemented from time to time, the Primary Shares shall be offered to the public at a purchase price payable in cash equal to the then-applicable transaction price (which will be equal to (i) the Companys prior months net asset value (NAV) per Share applicable to the class of Shares being purchased (as calculated in accordance with the procedures described in the Prospectus), or (ii) a different offering price in cases where the Company believes there has been a material change to the NAV per Share since the end of the prior month) plus any applicable selling commissions and dealer manager fees. Except as otherwise provided in the Prospectus, for stockholders who participate in the Companys distribution reinvestment plan (DRIP), the cash distributions attributable to the class of Shares that each stockholder owns will be automatically re-invested in additional Shares of the same class. The DRIP Shares will be issued and sold to stockholders of the Company at the transaction price of the applicable class of Shares on the date the distribution is payable. Except as otherwise indicated in the Prospectus or in any letter or memorandum sent to the Dealer by the Company or the Dealer Manager, a minimum initial purchase of $2,500 in Class T Shares, Class S Shares and Class D Shares is required, a minimum initial purchase of $1,000,000 in Class I Shares is required and additional investments may be made in cash in minimal increments of at least $500 in Shares. The Shares are non-assessable.
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4. |
SUBMISSION OF ORDERS |
a. In order to purchase Shares in the Offering, a subscriber must complete and execute a subscription agreement substantially in the form filed as an appendix to the Prospectus (a Subscription Agreement) and deliver to Dealer such completed and executed Subscription Agreement together with a wire transfer or authorization for Dealer to debit such subscribers account held at Dealer and to send a wire transfer (instruments of payment) in the amount of such persons purchase, which must be at least the minimum purchase amount described in Section 3 herein. Dealer shall deliver to the Company or its agent such completed and executed Subscription Agreement together with the instrument of payment in the amount of such persons purchase. The Dealer Manager acknowledges that subscribers will be instructed to send the Subscription Agreement directly to Dealer, and Dealer will arrange delivery of such documents to the Company or its agent.
b. Those persons who purchase Shares will be instructed by Dealer to make their instruments of payment payable to or for the benefit of Brookfield Real Estate Income Trust Inc. Purchase orders which include a completed and executed Subscription Agreement in good order received by the Company at least five (5) business days prior to the first calendar day of the month and instruments of payment received by the Company at least two (2) business days prior to the first calendar day of the month (unless waived by the Dealer Manager) will be effective as of the first calendar day of such month (based on the prior months transaction price).
c. If Dealer receives a Subscription Agreement or instrument of payment not conforming to the foregoing instructions, Dealer shall promptly return such Subscription Agreement and instrument of payment directly to such subscriber. Subscription Agreements and instruments of payment received by Dealer which conform to the foregoing instructions shall be transmitted for deposit pursuant to one of the methods described in this Section 4. Transmittal of received investor funds will be made in accordance with one of the following procedures, as applicable:
i. Where, pursuant to the Dealers internal supervisory procedures, internal supervisory review is conducted at the same location at which Subscription Agreements and instruments of payment are received from subscribers, Subscription Agreements and instruments of payment will be transmitted by the end of the next business day following receipt by the Dealer to the Company or its agent as set forth in the Subscription Agreement or as otherwise directed by the Company.
ii. Where, pursuant to the Dealers internal supervisory procedures, final internal supervisory review is conducted at a different location, Subscription Agreements and instruments of payment will be transmitted by the end of the next business day following receipt by the Dealer to the office of the Dealer conducting such final internal supervisory review (the Final Review Office). The Final Review Office will in turn, by the end of the next business day following receipt by the Final Review Office, transmit such Subscription Agreements and instruments of payment to the Company or its agent as set forth in the Subscription Agreement or as otherwise directed by the Company.
d. Subscription Agreements received during each month before five (5) business days prior to the first calendar day of the next month will be transmitted at least five (5) business days prior to the first calendar day of the next month and instruments of payment with respect to such transmitted Subscription Agreements will be transmitted at least two (2) business days prior to the first calendar day of the next month as set forth in the Subscription Agreement or as otherwise directed by the Company. Subscription Agreements received from subscribers during the five (5) business day period prior to the first calendar day of a month will be transmitted at least five (5) business days prior to the first calendar day of the month after the next month (the following month) and instruments of payment with respect to such transmitted Subscription Agreements will be transmitted at least two (2) business days prior to the first calendar day of the following month.
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e. Subscription funds may be transmitted to the Company net of selling commissions and dealer manager fees, as applicable, subject to the terms and conditions set forth in Schedule I attached hereto. Dealer confirms that such transmittal procedures described in this Section 4 comply with applicable laws governing transmittal of funds, including Rule 15c2-4 and 10b-9 under the Securities Exchange Act of 1934, as amended (the Exchange Act).
f. The Dealer Manager acknowledges that in connection with the Offering, Dealer will utilize with its customers making purchases of Shares (Clients) a subscription agreement (in a form approved in advance by the Dealer Manager) which will provide that the total purchase price paid by a Client for the Shares shall be comprised of (i) the transaction price for the number of Shares the Client intends to purchase, plus (ii) the applicable upfront selling commissions and dealer manager fees payable to Dealer for such Shares. Such commissions and fees will be collected by Dealer prior to the Clients funds being transferred to the Company.
5. |
RIGHT TO REJECT ORDERS OR CANCEL SALES |
All orders, whether initial or additional, are subject to acceptance by and shall only become effective upon confirmation by the Company, which reserves the right to reject any order in its sole discretion, including, without limitation, orders not accompanied by an executed Subscription Agreement in good order or without the required instrument of payment in full payment for the Shares. Dealer agrees that no selling commission or dealer manager fee will be paid to Dealer with respect to the portion of any subscription that is rejected. Issuance and delivery of the Shares will be made only after actual receipt of payment therefor. If any check is not paid upon presentment, or if the Company is not in actual receipt of clearinghouse funds or cash, certified or cashiers check or the equivalent in payment for the Shares, the Company reserves the right to cancel the sale without notice. If the Company is not in actual receipt of clearinghouse funds or cash, or the equivalent in payment for the Shares, the Company reserves the right to cancel the sale. Dealer agrees that no selling commission or dealer manager fee will be paid to Dealer with respect to the portion of any subscription that is rejected. Issuance and delivery of the Shares will be made only after actual receipt of payment therefor.
In the event that the Dealer Manager has reallowed any selling commission or dealer manager fee to Dealer for the sale of one or more Shares and the subscription is rejected, canceled or rescinded for any reason as to one or more of the Shares covered by such subscription, Dealer shall pay the amount specified to the Dealer Manager within five (5) business days following mailing of notice to Dealer by the Dealer Manager stating the amount owed as a result of rescinded or rejected subscriptions. Further, if the Dealer has retained selling commissions in connection with an order that is subsequently rejected, canceled or rescinded for any reason, the Dealer agrees to return to the subscriber any selling commission and dealer manager fee theretofore retained by the Dealer, together with any other related subscription funds then in Dealers control, if any, with respect to such order within three (3) business days following mailing of notice to the Dealer by the Dealer Manager stating the amount owed as a result of rescinded or rejected subscriptions. If Dealer fails to pay any such amounts, the Dealer Manager shall have the right to offset such amounts owed against future compensation due and otherwise payable to Dealer (it being understood and agreed that such right to offset shall not be in limitation of any other rights or remedies that the Dealer Manager may have in connection with such failure).
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6. |
DEALER COMPENSATION |
Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended or supplemented from time to time, as compensation for completed sales and ongoing stockholder services rendered by Dealer hereunder, Dealer is entitled, on the terms and subject to the conditions herein, to the compensation set forth on Schedule I attached hereto
7. |
PROSPECTUS AND SALES LITERATURE |
Dealer agrees that neither it nor any of its principals, directors, officers or employees, is authorized to give any information to investors or prospective investors concerning the Shares, the Company or the Dealer Manager except as set forth in this Section 7.
a. Dealer is not authorized or permitted to give and will not give, any information or make any representation (written or oral) concerning the Shares, including to any Client or prospective Client, except as set forth in the Prospectus and any additional sales literature which has been approved for Client use in advance in writing by the Dealer Manager or the Company (collectively, Authorized Sales Materials). All Authorized Sales Materials have, or will have prior to the date such materials are provided to Dealer, received all required regulatory approvals, which may include but are not limited to, the approval of the SEC and state securities agencies, as applicable, and have been, or will be prior to the date such materials are provided to Dealer, filed with and approved by the Financial Industry Regulatory Authority, Inc. (FINRA), regardless of whether or not such filing is required by the applicable FINRA rules; provided, however, that no such Authorized Sales Materials will be required to be filed if they are excluded from filing requirements pursuant to FINRA Rule 2210(c)(7). The Dealer Manager will supply to Dealer reasonable quantities of the Prospectus, any supplements thereto and any amended Prospectus, as well as any Authorized Sales Materials, for delivery to investors.
b. Dealer agrees that it will provide to each person to whom an offer to sell the Shares is made: (i) a copy of the Prospectus, (ii) all supplements thereto, and (iii) any amended Prospectus, that has then been supplied to Dealer by the Dealer Manager as of the time of such offer. The Dealer Manager agrees to furnish or cause to be furnished to each Client by electronic mail (or where the Client has not agreed to receipt of such information by electronic mail, then by physical delivery), no later than five (5) business days prior to the completion of the sale of Shares to such Client, a copy of any supplement to the Prospectus or amended Prospectus filed with the SEC prior to the Companys acceptance of such Subscription Agreement. Dealer agrees that it will not send or give any supplement to the Prospectus or any Authorized Sales Materials to an investor unless it has previously sent or given a Prospectus and all previous supplements thereto and any amended Prospectus to that investor or has simultaneously sent or given a Prospectus and all previous supplements thereto and any amended Prospectus with such supplement to the Prospectus or Authorized Sales Materials. Dealer agrees that it will not show or give to any investor or prospective investor or reproduce any material or writing which is supplied to it by the Dealer Manager and prominently marked dealer only or otherwise bearing a prominent legend denoting that it is not to be used in connection with the sale of Shares to members of the public. Dealer agrees that it will not show or give to any investor or prospective investor in a particular jurisdiction any material or writing that is supplied to it by the Dealer Manager if such material bears a prominent legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction. Dealer agrees that it will not use in connection with the offer or sale of Shares any material or writing which relates to another company supplied to it by the Company or the Dealer Manager bearing a prominent legend which states that such material may not be used in connection with the offer or sale of any securities other than the company to which it relates.
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c. Dealer agrees to take reasonable steps to comply with the written request of any Client or prospective Client for a copy of the Prospectus (as amended and supplemented) required for compliance with the provisions of Rule 15c2-8 under the Exchange Act for a period of 90 days from the effective date of the Registration Statement or such other period as may be required by the Exchange Act or the rules and regulations thereunder. This obligation shall survive regardless of the termination of this Agreement.
d. Notwithstanding anything herein to the contrary, in the event that the Company files with the SEC any supplements to the Prospectus after the date on which the Company receives a Subscription Agreement from any Client, but prior to the acceptance thereof by the Company, the Dealer Manager agrees to furnish or cause to be furnished to any such Client, immediately following the filing with the SEC, via electronic mail (or where electronic mail is not permitted due to state regulations or Client request, via overnight mail or courier service), a copy of any such supplement to the Prospectus.
8. |
DUTIES OF DEALER |
a. Dealer agrees to deliver to each of its Clients making purchases of Shares, prior to the time of offer, a copy of the Companys then-current Prospectus, including a Subscription Agreement, and may deliver Authorized Sales Materials subject to the terms herein, all as amended from time to time (together with the Prospectus and the form of Subscription Agreement collectively, the Offering Materials).
b. Dealer agrees to maintain records of all purchases and sales of Shares made through Dealer for at least the period required under applicable law and upon request from a regulatory authority or as required under applicable law to furnish such regulatory authority with copies of such records.
c. Except as set forth in Schedule I hereto or as otherwise agreed by Dealer and the Dealer Manager, the parties agree that all out-of-pocket expenses incurred by such party in connection with its activities under this Agreement will be borne by such party.
d. If the Dealer Manager believes that the contact information of a Dealer Shareholder (as defined below) has changed, the Dealer Manager may request such information from Dealer. For purposes of this Agreement, a Dealer Shareholder shall include any person or entity that invests in the Company through Dealer during the term of this Agreement.
e. Dealer will provide the Dealer Manager such information relating to the offer and sale of the Shares by it as the Dealer Manager may from time to time reasonably request to enable the Dealer Manager or the Company, as the case may be, to prepare such reports of sale as may be required to be filed under applicable federal or state securities laws and the rules and regulations thereunder.
9. |
LIMITATION OF OFFER; SUITABILITY |
a. Dealer will offer Shares (both at the time of an initial subscription and at the time of any additional subscription, including initial enrollments and participations in the DRIP) only to persons who meet the financial qualifications and suitability standards set forth in the Prospectus and will only make offers to persons in the jurisdictions in which it is advised in writing by the Dealer Manager that the Shares are qualified for sale or that such qualification is not required and in which Dealer has all required licenses and registrations to offer Shares in such jurisdictions. In offering Shares, Dealer will comply with the provisions of the Rules set forth in the FINRA Manual, as well as all other applicable rules and regulations relating to suitability of investors, including without limitation, the provisions of Article III.C and Article III.E.1 of the Statement of Policy Regarding Real Estate Investment Trusts of the North American Securities Administrators Association, Inc. (the NASAA Guidelines). Nothing contained in this Section 9 shall be construed to relieve Dealer of its suitability obligations under FINRA Rule 2111 or FINRA Rule 2310.
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Dealer will sell Class T Shares, Class S Shares, Class D Shares and/or Class I Shares only to the extent approved by the Dealer Manager as set forth on Schedule I to this Agreement and to the extent approved to sell Class T Shares, Class S Shares, Class D Shares and Class I Shares pursuant to this Agreement, Dealer will sell such Shares only to those persons who are eligible to purchase Class T Shares, Class S Shares, Class D Shares and Class I Shares as described in the Prospectus. Nothing contained in this Agreement shall be construed to impose upon the Company, the Adviser or the Dealer Manager the responsibility of assuring that prospective investors meet the suitability standards in accordance with the terms and provisions of the Prospectus. Dealer shall not purchase any Shares for a discretionary account without obtaining the prior written approval of Dealers customer and such customers completed and executed Subscription Agreement.
b. Dealer agrees to comply with, if applicable, the record-keeping requirements imposed by (i) federal and state securities laws and the rules and regulations thereunder, (ii) the applicable rules of FINRA and (iii) the NASAA Guidelines, including the requirement to maintain records (the Suitability Records) of the information used to determine that an investment in Shares is suitable and appropriate for each subscriber for a period of six (6) years from the date of the sale of the Shares. Dealer further agrees to make the Suitability Records available to representatives of the SEC, FINRA, applicable state securities administrators or other regulatory agencies upon receipt by the Dealer Manager, the Company, the Adviser or the Dealer of a subpoena, inquiry or other appropriate request from such agency. Dealer further agrees to use commercially reasonable efforts to cooperate with reasonable requests by the Company, the Adviser and the Dealer Manager for information required to respond to questions or inquiries from such agencies regarding the Suitability Records.
10. |
DISCLOSURE REVIEW |
The Dealer agrees that it shall have reasonable grounds to believe, based on the information made available to it through the Prospectus or other materials, that all material facts are adequately and accurately disclosed in the Prospectus and provide a basis for evaluating the Shares. In making this determination, the Dealer shall evaluate, at a minimum, items of compensation, physical properties, tax aspects, financial stability and experience of the sponsor, conflicts of interest and risk factors, and appraisals and other pertinent reports. If the Dealer relies upon the results of any inquiry conducted by another member or members of FINRA, the Dealer shall have reasonable grounds to believe that such inquiry was conducted with due care, that the member or members conducting or directing the inquiry consented to the disclosure of the results of the inquiry and that the person who participated in or conducted the inquiry is not the Dealer Manager or a sponsor or an affiliate of the Dealer Manager or sponsor of the Company.
Each of the Company, the Adviser and the Dealer Manager agree that it will timely provide to Dealer all information and documentation necessary for Dealer to conduct the reasonable investigation described in the preceding paragraph on an ongoing basis during the term of this Agreement, as well as any other information and documentation reasonably requested by Dealer.
11. |
REPRESENTATIONS AND WARRANTIES |
I. Dealer Manager and Dealer Representations, Warranties and Covenants. In addition to the representations and warranties found elsewhere in this Agreement, each of the Dealer Manager and Dealer represent, warrant and agree that:
a. it is duly organized and existing and in good standing under the laws of the state, commonwealth or other jurisdiction in which it is organized;
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b. it is a member of FINRA in good standing and a properly registered or licensed broker-dealer, has obtained all necessary approvals, licenses and permits required by applicable law for it to enter into this Agreement and engage in the public offer and sale of securities of the type represented by the Offering of Shares and shall maintain such approvals, licenses and permits for so long as this Agreement is in effect, and it further represents and warrants that it will notify the other party immediately at such time, if any, as it ceases to hold any such necessary approval, license or permit;
c. it has full power and authority under applicable laws, and has taken all action necessary, including obtaining all necessary approvals, to enter into and perform its obligations under this Agreement, that there are no impediments, prior or existing, or regulatory, self-regulatory, administrative, civil or criminal matters affecting Dealers ability to perform under this Agreement and that the person executing this Agreement on its behalf is duly authorized and empowered to execute and deliver this Agreement;
d. execution, delivery, and performance of this Agreement, the incurrence of the obligations set forth herein and the consummation of the transactions contemplated herein, including the issuance and sale of the Shares, will not constitute a breach of, or default under, any agreement or instrument by which it is bound, or to which any of its assets are subject, or any order, rule, or regulation applicable to it of any court, governmental body, or administrative agency having jurisdiction over it;
e. it has developed and will continue to maintain policies and procedures reasonably designed to ensure material compliance with all applicable laws;
f. it has, and will maintain, security policies, procedures and measures in place reasonably designed to minimize the threat of unauthorized access to computing systems or networks including, but not limited to, information technology policies requiring multi-factor authentication for remote login, closed desktop environments and web traffic monitoring; and
g. it agrees to be bound by, and to comply with, applicable federal and state laws and all rules and regulations promulgated thereunder generally affecting the sale or distribution of Shares, including anti-money laundering laws, anti-corruption and anti-bribery statutes and regulations and applicable guidance issued by the Department of the Treasury, the SEC and FINRA.
II. |
Additional Representations, Warranties and Covenants. |
a. Board Approval of Agreement. The Company and the Adviser represent and warrant that a substantially similar form of this Agreement has been approved by the board of directors of the Company and no additional approval of the board of directors or manager of the Company, the Dealer Manager or the Adviser is required for the execution, delivery and performance of this Agreement by either party.
b. Compliance with the Securities Act. The Company represents and warrants that, at the time the Registration Statement becomes effective (the Effective Date) and at the time that any post-effective amendments thereto or any additional registration statement filed under Rule 462(b) of the Securities Act becomes effective, the Registration Statement or any amendment thereto (1) complied, or will comply, as to form in all material respects with the requirements of the Securities Act and the regulations thereunder (the Regulations) and (2) did not or will not (as of such Effective Date) contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. When the Prospectus or any amendment or supplement thereto is filed with the SEC pursuant to Rule 424(b) or 424(c) of the Regulations and at all times subsequent through the last day of the term of
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this Agreement, the Prospectus will comply in all material respects with the requirements of the Securities Act and the Regulations, and will not include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing, the Company makes no representation with respect to any statement or omission made by Dealer specifically for inclusion in the Registration Statement or any amendment thereto or in the Prospectus or any amendment or supplement thereto. Any Prospectus delivered to Dealer will be identical to the electronically transmitted copies thereof filed with the SEC, except to the extent permitted by Regulation S-T.
c. Regulatory Approvals and Prospectus Supplements.
i. SEC Orders. The Company will use its commercially reasonable efforts to cause any amendments to the Registration Statement to become effective as promptly as possible and to maintain the effectiveness of the Registration Statement, and will promptly notify Dealer (a) when any post-effective amendment to the Registration Statement becomes effective, other than ordinary course post-effective amendments, (b) of the issuance by the SEC or any state securities authority of any jurisdiction of any stop order or of the initiation, or any threat for which it has knowledge, of any proceedings for that purpose or of the suspension of the qualification of the Shares for offering or sale in any jurisdiction or of the institution, or any threat for which it has knowledge, of any proceedings for any of such purposes, and (c) if the Registration Statement becomes unavailable for use in connection with the Offering of the Shares for any reason.
ii. FINRA Approval and Blue Sky Qualifications. The Company and the Dealer Manager will endeavor in good faith to seek and maintain the approval of the Offering by FINRA, and to qualify the Shares for offering and sale under the securities laws of all 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands, and to maintain such qualifications; provided, however, the Company shall not be obligated to subject itself to taxation as a party doing business in any such jurisdiction. In each jurisdiction where such qualification shall be effected, the Company shall file and make such statements or reports as are or may reasonably be required by the laws of such jurisdictions, unless the Dealer Manager agrees that such action is not at the time necessary or advisable.
iii. Blue Sky Memorandum. The Company will furnish to Dealer, and Dealer may be allowed to rely upon, a Blue Sky Memorandum (the Blue Sky Memorandum), prepared by counsel reasonably acceptable to Dealer (with the understanding that Alston & Bird LLP shall so qualify), in customary form naming the jurisdictions in which the Shares have been qualified for sale under the respective securities laws of such jurisdiction. The Blue Sky Memorandum shall be promptly updated by counsel and provided to Dealer from time to time to reflect any changes and updates to the jurisdictions in which the Shares have been qualified for sale. In each jurisdiction where the Shares have been qualified, the Company will make and file such statements and reports in each year as are or may be required by the laws of such jurisdiction.
iv. Amendments and Supplements. If during the time when a Prospectus is required to be delivered under the Securities Act, any event relating to the Company shall occur as a result of which it is necessary, in the opinion of the Companys counsel, to amend the Registration Statement or to amend or supplement the Prospectus in order to make the Prospectus not misleading in light of the circumstances existing at the time it is delivered to an investor, or if it shall be necessary, in the opinion of the Companys counsel, at any such time to amend the Registration Statement or amend or supplement the Prospectus in order to comply with the requirements of the Securities Act or Regulations, the Company shall prepare and furnish without expense to Dealer, a reasonable number of copies of an amendment or amendments of the Registration Statement or the Prospectus, or a supplement or supplements to the Prospectus that will amend or supplement the Registration Statement or Prospectus so that as amended or
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supplemented it will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or to make the Registration Statement or the Prospectus comply with such requirements. During the time when a Prospectus is required to be delivered under the Securities Act, the Company shall comply in all material respects with all requirements imposed upon the Company by the Securities Act, as from time to time in force, including the undertaking contained in the Companys Registration Statement pursuant to Item 20.D of the SECs Industry Guide 5 (as interpreted by applicable SEC guidance), so far as necessary to permit the continuance of sales of the Shares in accordance with the provisions hereof and the Prospectus.
d. Notification of Litigation. The Company agrees that it will promptly notify Dealer of any litigation or proceedings which could reasonably be expected to have a material adverse effect on the Company or the Offering.
III. Additional Dealer Representation, Warranties and Covenants. In addition to the representations and warranties found elsewhere in this Agreement, Dealer represents, warrants and agrees that:
a. Dealer shall notify the Dealer Manager, promptly in writing, of any written claim or complaint or any enforcement action or other proceeding with respect to Shares offered hereunder against Dealer or its principals, affiliates, officers, directors, employees or agents, or any person who controls Dealer, within the meaning of Section 15 of the Securities Act.
b. Dealer has policies and procedures reasonably designed to provide for its compliance with the U.S. Foreign Account Tax Compliance Act.
c. Dealer will not sell or distribute Shares or otherwise make any such Shares available in any jurisdiction outside of the United States unless Dealer receives prior consent from the Dealer Manager.
d. Dealer acknowledges that the Dealer Manager will enter into similar agreements with other broker-dealers, which does not require the consent of the Dealer.
e. Dealer agrees to be bound by the terms of any escrow agreement applicable to the Offering, if any, and the Dealer agrees that it will not represent or imply that the escrow agent identified in the Prospectus, has investigated the desirability or advisability of any investment in the Company or has approved, endorsed or passed upon the merits of the Shares or of the Company, nor will the Dealer use the name of said escrow agent in any manner whatsoever in connection with the offer or sale of the Shares other than by acknowledgement that it has agreed to serve as escrow agent.
f. Each of Dealers principals, directors, officers, employees, and agents who will participate or otherwise be involved in the offer or sale of the Shares or the performance of its duties and activities hereunder is either appropriately licensed or exempt from such licensing requirements by the appropriate regulatory agency of each state or other jurisdiction in which it will offer and sell Shares.
g. Dealer will be responsible for confirming that the distribution of Shares to, and subscription by, any Client identified by Dealer complies with all law applicable to Dealer (including, but not limited to, with respect to anti-money laundering and sanctions laws compliance) prior to such Clients subscription for Shares. Dealer will review all Subscription Agreements and assist the Dealer Manager and the Company in ensuring that the Subscription Agreements are fully completed. Dealer will take all reasonable steps to ensure that the Client has provided the necessary information to the Dealer Manager and will promptly inform the Dealer Manager of any basis to believe that such requirements have not been satisfied by the Client.
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h. Dealer agrees that it will not engage a sub-selling agent to assist it in the offer or sale of Shares without the prior written consent of the Dealer Manager which consent will not be unreasonably withheld. Any approved sub-selling agent shall be required to enter into an agreement with Dealer which agreement shall be subject to the Dealer Managers approval. The foregoing shall not prohibit or limit Dealers ability to utilize the assistance of its affiliates to assist Dealer in performing its obligations under this Agreement.
12. |
INDEMNIFICATION |
a. Subject to the limitations below, Dealer shall indemnify, defend and hold harmless the Dealer Manager, the Company, the Adviser and the Companys transfer agent, administrator and custodian and their respective officers, directors (including any person named in the Registration Statement, with his consent, as about to become a director), each other person who has signed the Registration Statement, trustees, employees and agents and any person who may be deemed to be a controlling person of any of the Dealer Manager, the Company or the Adviser (collectively, the Brookfield Indemnified Parties), from and against any and all losses, costs, claims, damages, liabilities and expenses (including the reasonable costs of investigating or defending against such losses, costs, claims, demands or liabilities and any court costs and reasonable attorneys fees in connection therewith) (collectively, Losses), whether joint or several, to which any such Brookfield Indemnified Party may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any material breach of any agreement, representation, warranty or covenant made by Dealer herein or (ii) Dealers gross negligence, willful misconduct or material violation of any applicable law in the performance of, or failure to perform, its obligations under this Agreement, (iii) any untrue statement of a material fact contained (a) in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them or (b) in any blue sky application or other document executed by the Company or on its behalf specifically for the purpose of qualifying any or all of the Shares for sale under the securities laws of any jurisdiction or based upon written information furnished by the Company under the securities laws thereof (any such application, document or information being hereinafter called a Blue Sky Application) or (c) in any Authorized Sales Materials; or (iv) the omission to state in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, or in any Blue Sky Application or Authorized Sales Materials a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, provided that clauses (iii) and (iv) apply, to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company or the Dealer Manager by or on behalf of Dealer specifically for use with reference to Dealer in the preparation of the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them or in preparation of any Blue Sky Application or Authorized Sales Materials, (v) any use of sales literature not authorized or approved by the Company and the Dealer Manager or any use of broker-dealer use only materials with members of the public by Dealer in the offer and sale of the Shares or any use of sales literature in a particular jurisdiction if such material bears a legend denoting that it is not to be used in connection with the sale of Shares to members of the public in such jurisdiction or (vi) any untrue statement made by the Dealer or its representatives or agents or omission to state a fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in connection with the offer and sale of the Shares; provided that in the case of any of (i) through (vi), Dealer will not be liable to and will not have any indemnification obligation to any Brookfield Indemnified Party for the portion of any Losses that is the result of any Brookfield Indemnified Partys material breach of this Agreement, gross negligence, willful misconduct or violation of any applicable law (the Brookfield Disabling Conduct); provided further that any amounts for reimbursement of expenses advanced to an Brookfield Indemnified Party under this subparagraph will be repaid by Dealer Manager to Dealer in the event that such expenses resulted from Brookfield Disabling Conduct.
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b. Subject to the limitations below, the Company, to the extent permitted by the Companys charter, shall indemnify, defend and hold harmless Dealer and its respective officers, directors, trustees and any person who may be deemed to be a controlling person of Dealer (collectively, the Dealer Indemnified Parties), from and against any and all Losses, whether joint or several, to which any such Dealer Indemnified Party may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any material breach of any agreement, representation, warranty or covenant made by the Company in this Agreement; (ii) the Companys gross negligence, willful misconduct or material violation of any applicable law in the performance of, or failure to perform, its obligations under this Agreement; or (iii) any untrue statement of a material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, in any Blue Sky Application, or any Authorized Sales Materials or other written information approved or supplied by the Company or its affiliates to Dealer; provided that in the case of any of (i) through (iii), the Company will not be liable to and will have no indemnification obligation to any Dealer Indemnified Party for the portion of any Losses that is the result of any Dealer Indemnified Partys material breach of this Agreement, gross negligence, willful misconduct or material violation of any applicable law (the Dealer Disabling Conduct); provided further that any amounts for reimbursement of expenses advanced to a Dealer Indemnified Party under this subparagraph will be repaid by Dealer to the Company in the event that such expenses resulted from Dealer Disabling Conduct. Notwithstanding the foregoing provisions of this Section 12 (b), the Company may not indemnify or hold harmless Dealer or any of its affiliates in any manner that would be inconsistent with the provisions to Article II.G of the NASAA Guidelines. In particular, but without limitation, the Company may not indemnify or hold harmless Dealer or any of its affiliates for liabilities arising from or out of a violation of state or federal securities laws, unless one or more of the following conditions are met:
i. There has been a successful adjudication on the merits of each count involving alleged securities law violations;
ii. Such claims have been dismissed with prejudice on the merits by a court of competent jurisdiction; or
iii. A court of competent jurisdiction approves a settlement of the claims against the indemnitee and finds that indemnification of the settlement and the related costs should be made, and the court considering the request for indemnification has been advised of the position of the SEC and of the published position of any state securities regulatory authority in which the securities were offered as to indemnification for violations of securities laws.
Further notwithstanding the foregoing provisions of this Section, the Company will not be liable in any such case to the extent that any such Loss or expense arises out of or is based upon an untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of Dealer specifically for use in the Registration Statement, the Prospectus or any post-effective amendment or supplement to any of them, any Blue Sky Application or any Authorized Sales Materials, and, further, the Company will not be liable for the portion of any Loss in any such case if it is determined that Dealer was at fault in connection with such portion of the Loss, expense or action.
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The foregoing indemnity agreement of this Section is subject to the further condition that, insofar as it relates to any untrue statement or omission made in the Prospectus (or amendment or supplement thereto) that was eliminated or remedied in any subsequent amendment or supplement thereto, such indemnity agreement shall not inure to the benefit of a Dealer Indemnified Party from whom the person asserting any Losses purchased the Shares that are the subject thereof, if a copy of the Prospectus as so amended or supplemented was not sent or given to such person at or prior to the time the subscription of such person was accepted by the Company, but only if a copy of the Prospectus as so amended or supplemented had been supplied to the Dealer prior to such acceptance.
c. Subject to the limitations below, the Adviser shall indemnify, defend and hold harmless the Dealer Indemnified Parties, from and against any and all Losses, whether joint or several, to which any such Dealer Indemnified Party may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any material breach of any agreement, representation, warranty or covenant made by the Adviser in this Agreement; or (ii) the Advisers gross negligence, willful misconduct or material violation of any applicable law in the performance of, or failure to perform, its obligations under this Agreement; provided that in the case of any of (i) and (ii), the Adviser will not be liable to and will have no indemnification obligation to any Dealer Indemnified Party for the portion of any Losses that is the result of any Dealer Disabling Conduct; provided further that any amounts for reimbursement of expenses advanced to a Dealer Indemnified Party under this subparagraph will be repaid by Dealer to the Adviser in the event that such expenses resulted from Dealer Disabling Conduct.
d. Subject to the limitations below, Dealer Manager shall defend and hold Dealer Indemnified Parties free and harmless from and against any and all Losses, whether joint or several, to which any such person may become subject insofar as such Losses (or actions in respect thereof) arise out of or are based upon (i) any material breach of any agreement, representation, warranty or covenant made by Dealer Manager herein or (ii) Dealer Managers gross negligence, willful misconduct or material violation of any applicable law in the performance of, or failure to perform, its obligations under this Agreement or the Dealer Manager Agreement; or (iii) any untrue statement of a material fact set forth in the Prospectus, in any Blue Sky Application or any Authorized Sales Materials provided by the Company or the Dealer Manager to Dealer or any omission to state a fact required to be stated therein to make the statements therein not misleading, to the extent, but only to the extent, that such untrue statement or omission was made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Dealer Manager specifically for use with reference to the Dealer Manager in the preparation of the Prospectus, in any Blue Sky Application or any Authorized Sales Materials or any post-effective amendment or supplement to any of them or in preparation of any Blue Sky Application or Authorized Sales Materials; provided that in the case of any of (i) through (iii), Dealer Manager will not be liable to and will not have any indemnification obligation to any Dealer Indemnified Party for the portion of any Losses that is the result of Dealer Disabling Conduct; provided further that any amounts for reimbursement of expenses advanced to a Dealer Indemnified Party under this subparagraph will be repaid by Dealer to Dealer Manager in the event that such expenses resulted from Dealer Disabling Conduct.
e. Promptly after receipt by a party entitled to indemnity under this Section 12 (an Indemnified Party) of notice of the commencement of an investigation, action, claim or proceeding, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 12, notify the indemnifying party of the commencement therefore, but the omission to notify the indemnifying party will not relieve it from any liability which it may have to any Indemnified Party otherwise under this Agreement. In case any such action is brought against any Indemnified Party, and it notified the indemnifying party thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, assume the defense thereof, with counsel reasonably satisfactory to such Indemnified Party. After notice from the indemnifying party of its intention to assume the defense of an action, the Indemnified Party shall bear the expense of any additional counsel obtained by it and the indemnifying party shall not be liable to such Indemnified Party under this Section 12 for any legal or other expenses subsequently incurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation. In the event that (a) the indemnifying party elects to assume the
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defense of such an action or proceeding and the Indemnified Party reasonably determines in its judgment that having common counsel would present such counsel with a conflict of interest or (b) the indemnifying party chooses not to assume the defense of the action or proceeding, then the Indemnified Party may engage separate counsel reasonably satisfactory to the indemnifying party to represent or defend such Indemnified Party in any such action or proceeding and the indemnifying party will pay the fees and disbursements of such counsel; provided, however, that the indemnifying party will not be required to pay the fees and disbursements of more than one separate counsel for all Indemnified Parties in each jurisdiction in any single action or proceeding, unless the interests of the Indemnified Parties are divergent enough to reasonably require separate counsel.
f. Neither the indemnifying party nor the Indemnified Party will, without the prior written consent of the other party (which consent will not be unreasonably withheld or delayed), settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (a Judgment), whether or not the indemnifying party or the Indemnified Party is an actual or potential party to such claim, action, suit or proceeding; provided, however, each indemnifying party shall have the right to settle or compromise or consent to the entry of any Judgment if such settlement, compromise or consent (i) shall include an unconditional release of the Indemnified Party and each other Indemnified Party hereunder from all liability arising out of such claim, action, suit or proceeding, (ii) shall not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of the Indemnified Party or any other Indemnified Party, and (iii) shall not impose any continuing obligations or restrictions on the Indemnified Party or any other Indemnified Party. The indemnifying party shall not be liable for any settlement of any action effected without its prior written consent (which consent will not be unreasonably withheld or delayed).
g. The foregoing indemnity will be in addition to any rights that the parties may have at common law or otherwise.
h. The indemnity agreements contained in this Section 12 shall remain operative and in full force and effect regardless of (a) any investigation made by or on behalf of Dealer or any person controlling Dealer, (b) delivery of any Shares and payment therefor, and (c) termination of this Agreement. A successor of the Indemnified Party shall be entitled to the benefits of the indemnity agreements contained in this Section 12.
i. Solely with respect to the relationship among the parties pursuant to this Agreement, the provisions of this Section 12 supersede and replace the provisions set forth in Section 5 of the Dealer Manager Agreement; provided that, as between the Company and the Dealer Manager, the original provisions of Section 5 of the Dealer Manager Agreement shall continue to govern. For the avoidance of doubt, neither this Section 12, nor any other provision of this Agreement, amends or modifies in any way the terms of the Dealer Manager Agreement applicable to (i) the relationship between the Company and the Dealer Manager pursuant to the Dealer Manager Agreement or (ii) the relationship between the Dealer Manager and any other dealer pursuant to a selected dealer agreement.
13. |
ANTI-MONEY LAUNDERING |
a. Dealer hereby represents and warrants that it has adopted an anti-money laundering program (AML Program) that complies with the Bank Secrecy Act, as amended by the USA PATRIOT Act of 2001, as amended (the USA PATRIOT ACT of 2001 and any future amendments thereto being referred to herein as the PATRIOT Act, and together with the Bank Secrecy Act, as amended, the Act); the rules and regulations under the Act; the rules, regulations and regulatory guidance of the SEC and FINRA or any other applicable self-regulatory organization or other governmental agency with jurisdiction over Dealer (collectively, AML Rules and Regulations). Dealer further represents that its AML Program,
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at a minimum, (1) designates a compliance officer to administer and oversee the AML Program, (2) provides ongoing employee training, (3) includes an independent audit function to test the effectiveness of the AML Program, (4) establishes internal policies, procedures, and controls that are consistent with Dealers obligations under this Agreement and AML Rules and Regulations, (5) includes a customer identification program consistent with the rules (including beneficial ownership requirements) under section 326 of the Act, (6) provides for the filing of all necessary anti-money laundering reports including, but not limited to, currency transaction reports and suspicious activity reports, (7) provides for compliance with applicable programs administered by the Office of Foreign Asset Control (OFAC) including, without limitation, screening all new and existing Clients against the list of specially designated nationals and blocked persons, and any other government list that is or becomes required under the Act, and (8) prescribes that appropriate regulators be permitted to examine Dealers AML books and records and that Dealer will promptly respond to requests by such regulators for information about Dealers AML Program. Dealer acknowledges and agrees that it (and not the Dealer Manager, Company or its transfer agent(s)) is responsible for monitoring and complying with AML Rules and Regulations and customer identification program requirements applicable to all Clients in respect of their investment in the Company.
b. Dealer hereby acknowledges and agrees that it (and not the Dealer Manager, the Company or its transfer agent or other service providers) is responsible for reviewing and monitoring Clients and complying with AML Rules and Regulations, including customer identification program requirements, with respect to Clients in connection with this Agreement
c. Dealer shall attest to anti-money laundering activities in a form reasonably acceptable to the Company.
Throughout the term of this Agreement, the representations and warranties of each of Dealer, the Dealer Manager, the Company and the Adviser, as applicable, in this Agreement shall be true and correct in all material respects. For as long as this Agreement is in effect, Dealer, the Dealer Manager, the Company and the Adviser, as applicable, agree to promptly provide notice to the other parties in the event that any of the representations and warranties set forth herein becomes materially inaccurate, or in the event that any covenant or condition on their part to be performed or satisfied has been breached or not satisfied in any material respect.
14. |
CONFIDENTIALITY, COMMUNICATIONS, NON-SOLICITATION |
a. Each of the parties acknowledges that it is or may become aware of Confidential Information or Customer Information (each as defined below) each in connection with the performance of this Agreement. For purposes of this Section 14, DM/Brookfield Representatives and Dealer Representatives (each as defined in this Section) may be referred to herein individually and collectively as Representatives.
b. The Dealer Manager, the Company and the Adviser hereby acknowledge that they have received or will receive written and/or oral information, including the names of Clients (such information being referred to in this Section 14 as Customer Information) from Dealer regarding those Clients that subscribe for Shares, as well as any and all technical or business information, including without limitation financial information, business or marketing strategies or plans or product development, but excluding Customer Information (the Proprietary Information), which constitutes the valuable property of the disclosing party, and that all such Customer Information or Proprietary Information has been or will be furnished to it subject to the provisions of this Section 14. The Dealer Manager, the Company and the Adviser agree that they will use, and that they will ensure that all of their employees, officers, directors, representatives, affiliates and agents providing services with respect to the Company (DM/Brookfield Representatives) use, the Customer Information or Proprietary Information solely in connection with the
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subscription for Shares by each Client, the booking of such Shares, communicating with such Clients, the administration of the Company and the performance of their respective roles with respect to the Company and the Shares pursuant to this Agreement and for no other purpose whatsoever. Furthermore, the Dealer Manager, the Company and the Adviser agree that they will not disclose or make available, and will ensure that none of the DM/Brookfield Representatives disclose or makes available, any Customer Information or Proprietary Information to any person or entity that does not have a need to know such Customer Information in connection with the foregoing.
c. Dealer acknowledges and agrees that the DM/Brookfield Representatives may disclose Customer Information or Proprietary Information or portions thereof (i) as may be consented to by Dealer or its Representatives, (ii) to each other; (iii) at the request of or as required by a government, regulatory or tax agency (including any self-regulatory agency) or in connection with an examination of the Dealer Manager, the Company and the Adviser or their Representatives by regulatory examiners; (iv) to their internal or external attorneys or auditors; and (v) as required by law, regulation or court order. In any of the circumstances mentioned in clauses (iii) or (v), the Dealer Manager, the Company and the Adviser shall (to the extent permitted by law and to the extent practicable) give Dealer reasonable prior notice of any such disclosure and, in any event, advise Dealer (to the extent not prohibited by law or regulation) of any such disclosure after it is made. The Dealer Manager, the Company and the Adviser shall be responsible for any breach of this Agreement by its Representatives
d. Dealer hereby acknowledges that it has received or will receive written and/or oral information from the Dealer Manager, the Company and the Adviser considered confidential and/or proprietary in connection with the performance of this Agreement, Dealers due diligence review of the Company or otherwise. For purposes of this Agreement, Confidential Information means any information relating to the Dealer Manager, the Company, the Adviser or their respective affiliates, disclosed to Dealer or Dealer Representatives (as defined below) in the course of performing this Agreement, which is or should reasonably be understood to be, confidential and/or proprietary to the Company, the Adviser and/or the Dealer Manager including, but not limited to, information about the Companys actual or potential portfolio holdings and investments, investment and/or risk management techniques, information concerning the business, financial condition, operations, prospects, assets and liabilities of the Company, the Dealer Manager, the Adviser or their respective affiliates, whether prepared by the Company, its advisors or otherwise (including information or reports prepared by due diligence providers and information received by the Company, the Dealer Manager, the Adviser or their respective affiliates from third parties under confidential conditions). Dealer agrees that it will use any Confidential Information solely in connection with its obligations, duties and undertakings pursuant to this Agreement and for no other purpose whatsoever.
e. Notwithstanding the foregoing, Confidential Information does not include information that (i) is independently developed by Dealer or its Representatives; (ii) is or becomes publicly known without a breach of this Agreement by Dealer or its Representatives; (iii) is disclosed to Dealer or its Representatives by a third party not under an obligation of confidentiality to the disclosing party of which Dealer or its Representatives should reasonably be aware; or (iv) is in Dealers or its Representatives possession prior to the date of this Agreement unless already provided by the Dealer Manager.
f. Dealer agrees to hold, and to cause its employees, officers, directors or agents (collectively, Dealer Representatives) to hold, the Confidential Information in strict confidence.
g. The Confidential Information shall be kept confidential in accordance with the terms hereof by Dealer and its Representatives and shall not be disclosed by Dealer or its Representatives except (i) as may be consented to by the Dealer Manager, the Company and the Adviser or their Representatives; (ii) to each other; (iii) at the request of a government, regulatory or tax agency (including any self-regulatory
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agency) or in connection with an examination of Dealer or its Representatives by regulatory examiners; (iv) to their internal or external attorneys or auditors; or (v) as required by law, regulation or legal or judicial process. In any of the circumstances mentioned in clauses (iii) or (v), Dealer shall (to the extent permitted by law and to the extent practicable) give the Dealer Manager, the Company and the Adviser reasonable prior notice of any such disclosure and, in any event, advise the Dealer Manager, the Company and the Adviser (to the extent not prohibited by law or regulation) of any such disclosure after it is made. Dealer shall be responsible for any breach of this Agreement by its Representatives.
h. Notwithstanding the foregoing, it is anticipated that (i) Dealer, Dealer Representatives and Dealers managers, owners, members, partners, home office diligence personnel or other agents of Dealer that are conducting a due diligence inquiry on behalf of Dealer, and (ii) persons or committees, as the case may be, responsible for determining whether Dealer will continue to participate in the Offering ((i) and (ii) are collectively, Diligence Representatives), either have previously or will in the future have access to Confidential Information in connection with their diligence review. Such Diligence Representatives will be considered Dealer Representatives bound by the terms of this Section 14. In addition to the other obligations contained in this Section 14, Dealer agrees to use all reasonable precautions necessary to: (1) keep, and to cause its Diligence Representatives to keep, all such Confidential Information strictly confidential and to not use, distribute or copy the same except in connection with Dealers due diligence inquiry; (2) not disclose, and to cause its Diligence Representatives to not disclose, such Confidential Information to the public, or to Dealers sales staff, financial advisors, Clients or any person involved in selling efforts related to the Offering, or to any other third party, and agrees not to use the Confidential Information in any manner in the offer and sale of the Shares; and (3) preserve the confidentiality of such Confidential Information provided to Diligence Representatives, including but not limited to (a) limiting access to such information to persons who have a need to know such information only for the purpose of Dealers due diligence inquiry, and (b) informing each recipient of such Confidential Information of Dealers confidentiality obligation. Dealer acknowledges that Dealer or its Diligence Representatives may previously have received Confidential Information in connection with preliminary due diligence on the Company, and agrees that the foregoing restrictions shall apply to any such previously received Confidential Information. Dealer acknowledges that Dealer or its Diligence Representatives may in the future receive Confidential Information either in individual or collective meetings or telephone calls with the Company, and agrees that the foregoing restrictions shall apply to any Confidential Information received in the future through any source or medium. Dealer acknowledges the restrictions and limitations of Regulation F-D promulgated by the SEC and agrees that the foregoing restrictions are necessary and appropriate in order for the Company to comply therewith.
i. Notwithstanding the foregoing, neither Dealer nor its Representatives will be in breach of this Section 14 by distributing to Clients copies of the Offering Materials and any other documents or information approved in advance by the Dealer Manager or the Company in writing.
j. Upon the Dealer Managers written request, Dealer shall return Confidential Information in its possession; provided, however, that Dealer may maintain copies of Confidential Information as required by law or regulation, or Dealer internal recordkeeping policies, and the confidentiality obligations hereunder shall continue to apply to any such copies.
k. Each party agrees to comply with the requirements of applicable law relating to the protection of data and information.
l. The Dealer Manager will not solicit a known client of Dealer or Dealers affiliates to invest in the Company or in any other investment vehicle for which the Dealer Manager acts as a sponsor, adviser, dealer manager or other service provider (a Dealer Manager Company) where the sole and only source of the relationship with such investor originated from an introduction by Dealer or Dealers affiliates in connection with the Offering contemplated by this Agreement. This provision shall not apply if the client approached the Dealer Manager, the Company or their respective affiliates.
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15. |
PRIVACY |
a. The Company, the Dealer Manager and the Adviser acknowledge that, as a result of this Agreement, they may receive PII about Clients and Dealer employees. For the purposes of this Agreement, PII includes Nonpublic Personal Information as that term is defined in Title V of the Gramm-Leach-Bliley Act of 1999 or any successor federal statute, and the rules and regulations thereunder, all as may be amended or supplemented from time to time (GLBA) and personally identifiable information and other data protected under any other applicable laws, rule or regulation of any jurisdiction relating to disclosure or use of personal information (Privacy Laws), including, without limitation, the name and account number of and any other personally identifiable information. The Adviser, the Company and the Dealer Manager each agree that it shall not do or omit to do anything which would cause the Dealer or any of its affiliates to be in breach of any Privacy Laws. The Adviser, the Company and the Dealer Manager shall, and shall cause its representatives to, (i) keep PII confidential, use and disclose PII only as necessary for the purchase of Shares in the Company for which the PII was disclosed to the Adviser, the Company or the Dealer Manager and in accordance with this Agreement, GLBA and Privacy Laws, (ii) implement and maintain an appropriate written information security program, the terms of which shall meet or exceed the requirements for financial institutions under 17 CFR 248.30, to (A) ensure the security and confidentiality of PII, (B) protect against any threats or hazards to the security or integrity of PII, and (C) prevent unauthorized access to, use of or disclosure of PII. The Dealer reserves the right to review the Advisers, the Companys and the Dealer Managers policies and procedures used to maintain the security and confidentiality of PII and the Adviser, the Company or the Dealer Manager shall, and cause its Representatives to, comply with all reasonable requests or directions from the Dealer to enable the Dealer to verify and/or procure that the Adviser, the Company and the Dealer Manager is in full compliance with its obligations under this Agreement in relation to PII.
b. The Adviser, the Company and the Dealer Manager shall immediately notify the Dealer of any disclosure or use of any PII by the Adviser, the Company or the Dealer Manager or any of their representatives in breach of this Agreement. In the event that any of the Adviser, the Company or the Dealer Manager learns or has reason to believe that there (i) has been a breach of its security standards, or (ii) is a weakness in the Adviser, the Company or the Dealer Managers security practices or systems, in each instance irrespective of cause, to the extent such breach or weakness could reasonably be expected to (y) allow unauthorized access to PII or the Companys facilities associated with such PII or (z) adversely impact the facilities the Company will promptly give notice of such event to the Dealer.
c. Furthermore, the Adviser, the Company and the Dealer Manager acknowledge that upon unauthorized access to or acquisition of PII within the Advisers, the Companys or the Dealer Managers custody or control (a Security Event), the law may require that the Adviser, the Company or the Dealer Manager, as applicable, notify the individuals whose information was accessed or disclosed that a Security Event has occurred. The Adviser, the Company and the Dealer Manager must notify the Dealer immediately if the Adviser, the Company or the Dealer Manager learns or has reason to believe a Security Event has occurred. Except to the extent prohibited by mandatory applicable law, the Adviser, the Company and the Dealer Manager agree that they will not notify any Client or Dealer employee until the Adviser, the Company and the Dealer Manager first consult with the Dealer and the Dealer has had an opportunity to review the notification the Adviser, the Company and the Dealer Manager propose to issue to the affected individuals and given its express consent to the same.
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d. Dealer agrees to abide by and comply with the applicable privacy standards and requirements of the GLBA, the privacy standards and requirements of any other applicable Privacy Laws and its own internal privacy policies and procedures, each as may be amended from time to time.
16. |
TERMINATION; AMENDMENT |
a. This Agreement shall become effective as of the date first written above and shall remain in force unless terminated as described in this Agreement.
b. Each party to this Agreement may unilaterally cancel its participation in this Agreement by giving thirty (30) days prior written notice to the other party. In addition, each party to this Agreement may, in the event of a material breach of this Agreement by the other party, terminate this Agreement immediately by giving written notice to the other party, which notice sets forth in reasonable detail the nature of the breach. Further, the Dealer Manager shall have the right to terminate this Agreement immediately by giving written notice to Dealer if Dealer is subject to an investigation under the Foreign Corrupt Practices Act of 1977 or the U.K. Bribery Act of 2010, as each may be amended, or similar law of any relevant jurisdiction, or the rules and regulations thereunder; and Dealer agrees to notify the Dealer Manager immediately if Dealer becomes subject to any such investigation. Such notice shall be deemed to have been given and to be effective on the date on which it was either delivered personally to the other party or any officer or member thereof, or was sent in accordance with Section 23.
c. Additionally, Dealer shall have the right to immediately terminate this Agreement at any time without liability of any party to any other party if: (i) a banking moratorium shall have been declared by a state or federal authority; (ii) the Company shall have sustained a material or substantial loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other calamity or malicious act which, whether or not said loss shall have been insured, will in Dealers good faith opinion make it inadvisable to proceed with the offering and sale of the Shares; or (iii) there shall have been, subsequent to the dates information is given in the Registration Statement and the Prospectus, such change in the business, properties, affairs, condition (financial or otherwise) or prospects of the Company whether or not in the ordinary course of business or in the condition of securities markets generally as in Dealers good faith judgment would make it inadvisable to proceed with the offering and sale of the Shares, or which would materially adversely affect the operations of the Company.
d. Dealer will immediately suspend or terminate its offer and sale of Shares upon the request of the Company or the Dealer Manager at any time and will resume its offer and sale of Shares hereunder upon subsequent request of the Company or the Dealer Manager. Upon the sale of all of the Shares or the termination of the Dealer Manager Agreement, this Agreement shall terminate without obligation on the part of Dealer or the Dealer Manager, except as set forth in this Agreement.
e. This Agreement is not assignable or transferable without the prior written consent of the other party.
f. This Agreement may be amended by Dealer and the Dealer Manager upon mutual written agreement.
17. |
USE OF COMPANY AND BROOKFIELD NAMES |
Except as expressly provided herein, nothing herein shall be deemed to constitute a waiver by the Dealer Manager, the Adviser or the Company of any consent that would otherwise be required under this Agreement or applicable law prior to the use by Dealer of the name or identifying marks of the Company, the Adviser, the Dealer Manager or Brookfield (or any combination or derivation thereof). The Dealer
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Manager, the Adviser and the Company each reserve the right to withdraw its consent to the use of the Companys or Brookfields name at any time and to request to review any materials generated by Dealer that use the Companys or Brookfields name or mark. Any such consent is expressly subject to the continuation of this Agreement and shall terminate with the termination of this Agreement as provided herein.
18. |
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL |
This Agreement shall be governed and construed in accordance with the laws of New York, without regard to conflicts of law principles.
The parties hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in Borough of Manhattan, New York for purposes of any suit, action or other proceeding arising from this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. Each of the parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
19. |
INVESTIGATIONS AND PROCEEDINGS |
The parties to this Agreement agree to cooperate fully in any securities regulatory investigation or proceeding or any judicial proceeding with respect to each partys activities under this Agreement and promptly to notify the other party of any such investigation or proceeding.
20. |
CAPTIONS |
All captions used in this Agreement are for convenience only and are not to be used in construing or interpreting any aspect hereof.
21. |
SEVERABILITY |
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law. If, however, any provision of this Agreement is held, under applicable law, to be invalid, illegal, or unenforceable in any respect, such provision shall be ineffective only to the extent of such invalidity, and the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected or impaired in any way.
22. |
SURVIVAL |
Except as expressly provided therein, the following sections of this Agreement shall survive any termination of this Agreement: Sections 4, 6, 7, 8(b), 8(d), 8(e), 8(f), 9(b), 11 through 13, 14(m), 15 through 28, and Schedule I hereto. The confidentiality obligations contained in Sections 14(a) through 14(l) hereof shall survive for three (3) years following the termination of the last Offering in which Dealer participates.
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23. |
NOTICES |
Notices and other writings contemplated by this Agreement shall be delivered via (i) hand, (ii) first class registered or certified mail, postage prepaid, return receipt requested, (iii) a nationally recognized overnight courier or (iv) electronic mail. All such notices shall be addressed, as follows:
If to the Company: | Brookfield Real Estate Income Trust Inc. | |
c/o Brookfield Place New York | ||
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: Secretary | ||
Email: realestatenotices@brookfield.com | ||
With copies (which shall not constitute notice) to: | ||
Brookfield REIT Adviser LLC | ||
c/o Brookfield Place New York | ||
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: General Counsel | ||
Email: realestatenotices@brookfield.com | ||
If to the Dealer Manager: | Brookfield Oaktree Wealth Solutions LLC | |
250 Vesey Street, 15th Floor | ||
New York, NY 10281 | ||
Attention: General Counsel | ||
Email: BOWS.LR@brookfieldoaktree.com | ||
If to the Dealer: | To the address specified by the Dealer herein. |
24. |
NON-EXCLUSIVITY |
Each of the parties acknowledges and agrees that this Agreement and the arrangements described herein are intended to be non-exclusive and that each of the parties is free to enter into similar agreements and arrangements with other entities, which does not require the consent of the other party.
25. |
ENTIRE AGREEMENT |
a. This Agreement, including the Schedules hereto, contains the entire understanding of the parties hereto with respect to the subject matter contained herein and supersedes all previous agreements and/or understandings of the parties. This Agreement shall be binding upon the parties hereto when signed by the parties.
b. This Agreement may be executed in several counterparts, each of which will be deemed an original but all of which together will constitute one and the same instrument. Facsimiles (including facsimiles of the signature pages of this Agreement) will have the same legal effect hereunder as originals.
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26. |
COUNTERPARTS |
This Agreement may be executed in any number of counterparts. Each counterpart, when executed and delivered, shall be an original contract, but all counterparts, when taken together, shall constitute one and the same agreement.
27. |
NO PARTNERSHIP |
Nothing in this Agreement shall be construed or interpreted to constitute Dealer as an employee, agent or representative of, or in association with or in partnership with, the Dealer Manager, the Company, the Adviser or the other Dealers; instead, this Agreement shall only constitute Dealer as a dealer authorized by the Dealer Manager to sell the Shares according to the terms set forth in the Registration Statement and the Prospectus as amended and supplemented and in this Agreement.
28. |
ERISA MATTERS |
The parties agree as follows:
a. Dealer is a broker-dealer registered under the Exchange Act.
b. To the extent Dealer (or its registered representatives) uses or relies on any of the information, tools and materials that the Dealer Manager, the Company, the Adviser, the sponsor of the Company or each of their respective affiliates and related parties (collectively, the DM/Company Parties) provides directly to Dealer (or its registered representatives), without direct charge, for use in connection with Dealers Retirement Clients (which include a plan, plan fiduciary, plan participant or beneficiary, individual retirement account (IRA) or IRA owner subject to Title I of the Employee Retirement Income Security Act of 1974 (ERISA) or Section 4975 of the Internal Revenue Code of 1986, as amended (the Code)), Dealer will act as a fiduciary under ERISA or the Code (as applicable), and will be responsible for exercising independent judgment in evaluating the retirement account transaction.
c. Certain of the DM/Company Parties have financial interests associated with the purchase of Shares of the Company, including the fees, expense reimbursements and other payments they anticipate receiving in connection with the purchase of Shares of the Company, as described in the Prospectus.
d. To the extent that Dealer provides investment advice to its Retirement Clients, Dealer will do so in a fiduciary capacity under ERISA or the Code, or both, and Dealer is responsible for exercising independent judgment with respect to any investment advice it provides to its Retirement Clients.
e. Dealer is independent of the DM/Company Parties and none of the DM/Company Parties is undertaking to provide impartial investment advice to Dealer or its Retirement Clients.
29. |
ELECTRONIC SIGNATURES AND ELECTRONIC DELIVERY OF DOCUMENTS |
If Dealer has adopted or adopts a process by which persons may authorize certain account-related transactions and/or requests, in whole or in part, by Electronic Signature (as such term is defined by the Electronic Signatures in Global and National Commerce Act, 15 U.S.C. 7001 et seq., the Uniform Electronic Transactions Act, as promulgated by the Uniform Conference of Commissioners on Uniform State Law in July 1999 and as adopted by the relevant jurisdiction(s) where Dealer is licensed, and applicable rules, regulations and/or guidance relating to the use of electronic signatures issued by the SEC, FINRA and NASAA including, as applicable, the NASAA Statement of Policy Regarding Use of Electronic Offering Documents And Electronic Signatures, adopted May 8, 2017, as amended (collectively,
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Electronic Signature Law)), to the extent the Company allows the use of Electronic Signature, in whole or in part, Dealer represents that: (i) each Electronic Signature will be genuine; (ii) each Electronic Signature will represent the signature of the person required to sign the Subscription Agreement or other form to which such Electronic Signature is affixed; (iii) Dealer will comply with all applicable terms of the Electronic Signature Law; and (iv) Dealer agrees to the Electronic Signature Use Indemnity Agreement attached hereto as Exhibit B.
If Dealer intends to use electronic delivery to distribute the Prospectus or other documents related to the Company to any person, Dealer will comply with all applicable rules, regulations and/or guidance relating to the electronic delivery of documents issued by the SEC, FINRA, NASAA and individual state securities administrators and any other applicable laws or regulations related to the electronic delivery of offering documents including, as appropriate, Electronic Signature Law. In particular, and without limitation, Dealer shall comply with the requirement under certain Statements of Policy adopted by NASAA that a sale of Shares shall not be completed until at least five business days after the Prospectus has been delivered to the investor. Dealer shall obtain and document its receipt of the informed consent to receive documents electronically of persons, which documentation shall be maintained by Dealer and made available to the Company and/or the Dealer Manager upon request.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date set forth above.
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC, AS THE DEALER MANAGER | ||
By: |
|
|
Name: | ||
Title: | ||
BROOKFIELD REAL ESTATE INCOME TRUST INC., AS THE COMPANY | ||
By: |
|
|
Name: | ||
Title: | ||
BROOKFIELD REIT ADVISER LLC, AS THE ADVISER | ||
By: |
|
|
Name: | ||
Title: | ||
[_______________________], AS DEALER | ||
By: |
|
|
Name: | ||
Title: |
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SCHEDULE I
Addendum to Selected Dealer Agreement with
Brookfield Oaktree Wealth Solutions LLC, Brookfield Real Estate Income Trust Inc.
and Brookfield REIT Adviser LLC
Name of Dealer:
The following reflects the selling commissions, dealer manager fees and Servicing Fees as agreed upon by and between Brookfield Oaktree Wealth Solutions LLC (the Dealer Manager) and the Dealer, effective as of the effective date of the Selected Dealer Agreement (the Agreement) by and among the Dealer Manager, Brookfield Real Estate Income Trust Inc. (the Company), Brookfield REIT Adviser LLC (the Adviser) and Dealer in connection with the Offering of Shares of the Company. Except as otherwise specifically stated herein, all terms used in this Addendum to Selected Dealer Agreement (the Addendum) have the meanings provided in the Agreement and Dealer Manager Agreement (as defined in the Agreement).
Upfront Selling Commissions and Dealer Manager Fees
Except as may be provided in the Plan of Distribution section of the Prospectus, which may be amended or supplemented from time to time, as compensation for completed sales (as defined below) by the Dealer of Primary Shares that the Dealer is authorized to sell and for services rendered by the Dealer hereunder, the Dealer Manager shall reallow to the Dealer an upfront selling commission in an amount equal to the percentage set forth below of the transaction price per Share on such completed sales of Class T Primary Shares, Class S Primary Shares and Class D Primary Shares, as applicable, by the Dealer. The Dealer shall not receive selling commissions for sales of any DRIP Shares or for sales of any Class I Shares, whether in the Primary Offering or pursuant to the DRIP. For purposes of this Schedule I, a completed sale shall occur if and only if a transaction has closed with a subscriber for Shares pursuant to all applicable offering and subscription documents, payment for the Shares has been received by the Company in full in the manner provided in Section 4 of the Agreement, the Company has accepted the subscription agreement of such subscriber and the Company has thereafter distributed the selling commission to the Dealer Manager in connection with such transaction.
The Dealer may withhold the selling commissions and dealer manager fees, if applicable, to which it is entitled pursuant to the Agreement, this Schedule I and the Prospectus from the purchase price for the Shares in the Offering and forward the balance to the Company or its agent if it represents to the Dealer Manager that: (i) the Dealer is legally permitted to do so; and (ii) (A) the Dealer meets all applicable net capital requirements under the rules of FINRA or other applicable rules regarding such an arrangement; (B) the Dealer has forwarded the Subscription Agreement to the Company or its agent in good order within the time required under Section 4, and received the Companys written acceptance of the subscription prior to forwarding the purchase price for the Shares, net of the selling commissions and dealer manager fees, if applicable, to which the Dealer is entitled, to the Company or its agent; and (C) the Dealer has verified that there are sufficient funds in the investors account with the Dealer to cover the entire cost of the subscription. The Dealer shall wire such subscription funds to the Company or its agent as set forth in the Subscription Agreement by the end of the second business day following receipt of the Companys written acceptance of the subscription.
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Volume Discounts
The Dealer shall be responsible for implementing the volume discounts described in or as otherwise provided in the Plan of Distribution section of the Prospectus. Requests to combine purchase orders of Class T Shares, Class S Shares or Class D Shares as a part of a combined order for the purpose of qualifying for discounts as described in the Plan of Distribution section of the Prospectus must be made in writing by the Dealer, and any resulting reduction in selling commissions and/or dealer manager fees will be prorated among the separate subscribers.
Terms and Conditions of the Servicing Fees
The payment of the Servicing Fees to the Dealer is subject to terms and conditions set forth herein and the Prospectus as may be amended or supplemented from time to time. If Dealer elects to sell Shares that are Class T Shares, Class S Shares and/or Class D Shares, eligibility to receive the Servicing Fees with respect to such Shares, as applicable, sold by the Dealer is conditioned upon the Dealer acting as broker-dealer of record with respect to such Shares and complying with the requirements set forth below, including providing stockholder and account maintenance services with respect to such Shares:
(i) |
the existence of an effective Selected Dealer Agreement or ongoing Servicing Agreement between the Dealer Manager, the Company, the Adviser and Dealer, and |
(ii) |
the provision of the following services with respect to such Shares, as applicable, by the Dealer: |
1. |
assistance with recordkeeping, including maintaining records for and on behalf of the Dealers customers reflecting transactions and balances of Shares owned, |
2. |
transmitting stockholder communications to its customers from the Company or the Dealer Manager, including the Prospectus, annual and periodic reports, and proxy statements, |
3. |
establishing an account and providing ongoing account maintenance, |
4. |
assistance with and answering investor inquiries regarding the Company, including distribution payments and reinvestment decisions, |
5. |
helping investors understand their investments, |
6. |
Share repurchase requests, |
7. |
assistance with Share conversion processing, or |
8. |
providing such other similar services as the stockholder may reasonably require in connection with its investment in the Shares. |
For the avoidance of doubt, such services are non-distribution services, other than those primarily intended to result in the sale of Shares.
With respect to Class T Shares, the financial advisor of the Dealer responsible for the sale of such Class T Shares is expected to provide one or more of the services listed in items (ii)3 through 8 above. In connection with this provision, the Dealer agrees to reasonably cooperate to provide certification to the Company, the Dealer Manager and their agents (including its auditors) confirming the provision of services to each particular class of stockholders upon reasonable request.
B-26
The Dealer hereby represents by its acceptance of each payment of the Servicing Fees that it complies with each of the above requirements and is providing the above-described services. The Dealer agrees to promptly notify the Dealer Manager if it is no longer the broker-dealer of record with respect to some or all of the Class T, Class S or Class D Shares giving rise to such Servicing Fees and/or if it no longer satisfies any or all of the conditions set forth above.
Subject to the conditions described herein, the Dealer Manager will reallow to the Dealer the Servicing Fees in an amount described below, on Class T Shares, Class S Shares or Class D Shares, as applicable, sold by the Dealer. To the extent payable, the Servicing Fees will be payable monthly in arrears as provided in the Prospectus. All determinations regarding the total amount and rate of reallowance of the Servicing Fees, the Dealers compliance with the listed conditions, and/or the portion retained by the Dealer Manager will be made by the Dealer Manager in its sole discretion.
Notwithstanding the foregoing, subject to the terms of the Prospectus, upon the date when the Dealer Manager is notified that the Dealer is no longer the broker-dealer of record with respect to such Class T, Class S or Class D Shares or that the Dealer no longer satisfies any or all of the conditions set forth above, then Dealers entitlement to the Servicing Fees related to such Class T, Class S and/or Class D Shares, as applicable, shall cease, and the Dealer shall not receive the Servicing Fees for any portion of the month in which Dealer is not eligible on the last day of the month; provided, however, if there is a change in the broker-dealer of record with respect to the Class T, Class S or Class D Shares, as applicable, made in connection with a change in the registration of record for the Class T, Class S or Class D Shares on the Companys books and records (including, but not limited to, a reregistration due to a sale or a transfer or a change in the form of ownership of the account), then the Dealer shall be entitled to a pro rata portion of the Servicing Fees related to the Class T, Class S and/or Class D Shares, as applicable, for the portion of the month for which the Dealer was the broker-dealer of record.
Thereafter, such Servicing Fees may be reallowed to the then-current broker-dealer of record of the Class T, Class S and/or Class D Shares, as applicable, if any such broker-dealer of record has been designated (the Servicing Dealer), to the extent such Servicing Dealer has entered into a Selected Dealer Agreement or similar agreement with the Dealer Manager (Servicing Agreement) and such Selected Dealer Agreement or Servicing Agreement with the Servicing Dealer provides for such reallowance. In this regard, all determinations will be made by the Dealer Manager in good faith in its sole discretion. The Dealer is not entitled to any Servicing Fees with respect to Class I Shares. The Dealer Manager may also reallow some or all of the Servicing Fees to other broker-dealers who provide services with respect to the Shares (who shall be considered additional Servicing Dealers) pursuant to a Servicing Agreement with the Dealer Manager to the extent such Servicing Agreement provides for such reallowance and such additional Servicing Dealer is in compliance with the terms of such agreement related to such reallowance, in accordance with the terms of such Servicing Agreement.
The Company and the Dealer Manager shall cease paying the Servicing Fees with respect to any Class T Share, Class S Share or Class D Share held in a stockholders account within such account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total selling commissions, dealer manager fees and Servicing Fees paid with respect to the Shares held by such stockholder would exceed, in the aggregate, 8.75% (or a lower limit as set forth in this Schedule I to the Selected Dealer Agreement between the Dealer Manager and the Dealer) of the gross proceeds from the sale of such Shares (including the gross proceeds of any Shares issued under the DRIP with respect thereto). At the end of such month, such Class T Share, Class S Share or Class D Share (and any Shares issued under the DRIP with respect thereto) will convert into a number of Class I Shares (including any fractional Shares)
B-27
with an equivalent aggregate NAV as such Share. In addition, the Company and the Dealer Manager will cease paying the Servicing Fees on Class T Shares, Class S Shares and Class D Shares in connection with this Offering upon the earlier to occur of the following: (i) a listing of Class I Shares, (ii) the merger or consolidation of the Company with or into another entity in which the Company is not the surviving entity, or the sale or other disposition of all or substantially all of the Companys assets, in each case in a transaction in which the Companys stockholders receive cash, securities listed on a national exchange or a combination thereof, or (iii) the date following the completion of this Offering on which, in the aggregate, underwriting compensation from all sources in connection with this Offering, including selling commissions, dealer manager fees, the Servicing Fees and other underwriting compensation, is equal to ten percent (10%) of the gross proceeds from Primary Shares sold in this Offering, as determined in good faith by the Dealer Manager in its sole discretion. For purposes of this Schedule I, the portion of the Servicing Fees accruing with respect to Class T, Class S and Class D Shares of the Companys common stock issued (publicly or privately) by the Company during the term of a particular Offering, and not issued pursuant to a prior Offering, shall be underwriting compensation with respect to such particular Offering and not with respect to any other Offering.
General
Selling commissions, dealer manager fees and Servicing Fees due to the Dealer pursuant to the Agreement will be paid to the Dealer within 30 days after receipt by the Dealer Manager. The Dealer, in its sole discretion, may authorize the Dealer Manager to deposit selling commissions, dealer manager fees, Servicing Fees or other payments due to it pursuant to the Agreement directly to its bank account. If the Dealer so elects, the Dealer shall provide such deposit authorization and instructions in Schedule II to the Agreement.
The parties hereby agree that the foregoing selling commissions and reallowed dealer manager fees and Servicing Fees are not in excess of the usual and customary distributors or sellers commission received in the sale of securities similar to the Primary Shares, that the Dealers interest in the offering is limited to such selling commissions and reallowed dealer manager fees and Servicing Fees from the Dealer Manager and the Dealers indemnity referred to in Section 5 of the Dealer Manager Agreement, and that the Company is not liable or responsible for the direct payment of such selling commissions and reallowed dealer manager fees and Servicing Fees to the Dealer.
Except as otherwise described under Upfront Selling Commissions above, the Dealer waives any and all rights to receive compensation, including the dealer manager fees and Servicing Fees, until it is paid to and received by the Dealer Manager. The Dealer acknowledges and agrees that, if the Company pays selling commissions, dealer manager fees or Servicing Fees, as applicable, to the Dealer Manager, the Company is relieved of any obligation for selling commissions, dealer manager fees or Servicing Fees, as applicable, to the Dealer. The Company may rely on and use the preceding acknowledgement as a defense against any claim by the Dealer for selling commissions, dealer manager fees or Servicing Fees, as applicable, the Company pays to the Dealer Manager but that the Dealer Manager fails to remit to the Dealer. The Dealer affirms that the Dealer Managers liability for selling commissions and dealer manager fees payable and the Servicing Fees are limited solely to the proceeds of selling commissions, dealer manager fees and the Servicing Fees, as applicable, receivable from the Company and the Dealer hereby waives any and all rights to receive payment of selling commissions or any reallowance of dealer manager fees or the Servicing Fees, as applicable, due until such time as the Dealer Manager is in receipt of the selling commission, dealer manager fee or Servicing Fees, as applicable, from the Company. Notwithstanding the above, the Dealer affirms that, to the extent the Dealer retains selling commissions as described above under Upfront Selling Commissions, neither the Company nor the Dealer Manager shall have liability for selling commissions payable to the Dealer, and that the Dealer is solely responsible for retaining the selling commissions due to the Dealer from the subscription funds received by the Dealer from its customers for the purchase of Shares in accordance with the terms of the Agreement.
B-28
Notwithstanding anything herein to the contrary, the Dealer will not be entitled to receive any selling commissions, dealer manager fees or Servicing Fees which would cause the aggregate amount of selling commissions, dealer manager fees, Servicing Fees and other forms of underwriting compensation (as defined in accordance with applicable FINRA rules) paid from any source in connection with an Offering to exceed ten percent (10.0%) of the gross proceeds raised from the sale of Shares in the Primary Offering.
Due Diligence
In addition, the Dealer Manager or the Company will pay or reimburse the Dealer for reasonable and documented bona fide due diligence expenses incurred by the Dealer in connection with the Offering. Such due diligence expenses may include travel, lodging, meals and other reasonable and documented out-of-pocket expenses incurred by the Dealer and its personnel when visiting the Companys offices or properties to verify information relating to the Company or its properties. The Dealer shall provide a detailed and itemized invoice for any such due diligence expenses and shall obtain the prior written approval from the Dealer Manager for such expenses, and no such expenses shall be reimbursed absent a detailed and itemized invoice. Notwithstanding the foregoing, no such payment will be made if such payment would cause the aggregate of such reimbursements to the Dealer and other broker-dealers, together with all other organization and offering expenses, to exceed 15% of the Companys gross proceeds from the Offering. All such reimbursements will be made in accordance with, and subject to the restrictions and limitations imposed under the Prospectus, FINRA rules and other applicable laws and regulations.
Share Class Election
CHECK EACH APPLICABLE BOX BELOW IF THE DEALER ELECTS TO PARTICIPATE IN THE DISTRIBUTION OF THE LISTED SHARE CLASS
☐ | Class T Shares | ☐ | Class S Shares | ☐ | Class D Shares | ☐ | Class I Shares |
B-29
The following reflects the selling commission, dealer manager fee and/or the Servicing Fees as agreed upon between the Dealer Manager and the Dealer for the applicable Share Class.
(Initials) |
Upfront Selling Commission of up to 3.0% of the transaction price per Class T Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class T Shares. | ||
(Initials) |
Dealer Manager Fee of up to 0.5% of the transaction price per Class T Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class T Shares. | ||
(Initials) |
Servicing Fee of 0.85% (Annualized Rate) of aggregate NAV of outstanding Class T Shares, consisting of an advisor stockholder servicing fee of 0.65% (Annualized Rate), and a dealer stockholder servicing fee of 0.20% (Annualized Rate), of the aggregate NAV of outstanding Class T Shares. | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. | ||
(Initials) |
Upfront Selling Commission of up to 3.5% of the transaction price per Class S Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class S Shares. | ||
(Initials) |
Servicing Fee of 0.85% (Annualized Rate) of aggregate NAV of outstanding Class S Shares | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. | ||
(Initials) |
Upfront Selling Commission of up to 1.5% of the transaction price per Class D Share sold in the Primary Offering* | By initialing here, the Dealer hereby agrees to the terms of the Agreement and this Schedule I with respect to the Class D Shares. | ||
(Initials) |
Servicing Fee of 0.25% (Annualized Rate) of aggregate NAV of outstanding Class D Shares | By initialing here, the Dealer agrees to the terms of eligibility for the Servicing Fee set forth in this Schedule I. Should the Dealer choose to opt out of this provision, it will not be eligible to receive the Servicing Fee and initialing is not necessary. The Dealer represents by its acceptance of each payment of the Servicing Fee that it complies with each of the above requirements. |
* |
Subject to discounts described in the Plan of Distribution section of the Prospectus. |
B-30
IN WITNESS WHEREOF, the parties hereto have caused this Addendum to be executed as of the date first written above.
DEALER MANAGER | ||
BROOKFIELD OAKTREE WEALTH SOLUTIONS LLC | ||
By: |
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Name: | ||
Title: |
DEALER |
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(Print Name of Dealer) |
By: |
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Name: | ||
Title: |
B-31
SCHEDULE II
Addendum to Selected Dealer Agreement with
Brookfield Oaktree Wealth Solutions LLC, Brookfield Real Estate Income Trust Inc.
and Brookfield REIT Adviser LLC
NAME OF ISSUER: | BROOKFIELD REAL ESTATE INCOME TRUST INC. | |
NAME OF DEALER: | ||
SCHEDULE TO AGREEMENT DATED: |
The Dealer hereby authorizes the Dealer Manager or its agent to deposit selling commissions, Servicing Fees, and other payments due to it pursuant to the Selected Dealer Agreement to its bank account specified below. This authority will remain in force until Dealer notifies the Dealer Manager in writing to cancel it. In the event that the Dealer Manager deposits funds erroneously into the Dealers account, the Dealer Manager is authorized to debit the account with no prior notice to the Dealer for an amount not to exceed the amount of the erroneous deposit.
Bank Name: |
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Bank Address: |
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Bank Routing Number: |
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Account Number: |
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DEALER |
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(Print Name of Dealer) |
By: |
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Name: | ||
Title: |
B-32
SCHEDULE III
Registration Statement(s)
1. Registration Statement on Form S-11, Registration No. 333-255557.
B-33
EXHIBIT A
Dealer Manager Agreement
B-34
EXHIBIT B
Electronic Signature Use Indemnity Agreement
Dealer has adopted a process by which clients may authorize certain account-related transactions or requests, in whole or in part, evidenced by Electronic Signature (as such term is defined in Section 29 hereof). In consideration of the Company allowing Dealer and its clients to execute certain account-related transactions and/or requests, in whole or in part, by Electronic Signature, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Dealer does hereby, for itself and its successors and permitted assigns, covenant and agree to indemnify and hold harmless the Company, the Dealer Manager, each of their affiliates and each of their and their affiliates officers, directors, trustees, agents and employees, in whatever capacity they may act, from and against any and all claims (whether groundless or otherwise), losses, liabilities, damages and expenses, including, but not limited to, costs, disbursements and reasonable counsel fees (whether incurred in connection with such claims, losses, liabilities, damages and expenses or in connection with the enforcement of any rights hereunder), arising out of or in connection with the Dealers representations or covenants set forth in Section 29 hereof or the representations described below.
The Dealer represents that it will comply with all applicable terms of Electronic Signature Law as outlined in Section 29 of this Agreement. Dealer represents that the Company may accept any Electronic Signature without any responsibility to verify or authenticate that it is the signature of Dealers client given with such clients prior authorization and consent. Dealer represents that the Company may act in accordance the instructions authorized by Electronic Signature without any responsibility to verify that Dealers client intended to give the Electronic Signature for the purpose of authorizing the instruction, transaction or request and that Dealers client received all disclosures required by applicable Electronic Signature Law. Dealer agrees to provide a copy of each Electronic Signature and further evidence supporting any Electronic Signature upon request by the Company.
B-35
Exhibit 3.1
OAKTREE REAL ESTATE INCOME TRUST, INC.
SECOND ARTICLES OF AMENDMENT
Oaktree Real Estate Income Trust, Inc., a Maryland corporation (the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland (the SDAT) that:
FIRST: The charter of the Corporation (the Charter) is hereby amended by deleting existing Article I in its entirety and substituting in lieu thereof a new article to read as follows:
ARTICLE I
NAME
The name of the corporation (which is hereinafter called the Corporation) is:
Brookfield Real Estate Income Trust Inc.
SECOND: The foregoing amendment to the Charter was approved by at least a majority of the entire Board of Directors of the Corporation as required by law. The amendment set forth herein is made without action by the stockholders of the Corporation, pursuant to Section 2-605(a)(1) of the Maryland General Corporation Law.
THIRD: These Articles of Amendment shall become effective upon acceptance for record by the SDAT.
FOURTH: The undersigned acknowledges these Articles of Amendment to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this 2nd day of November 2021.
ATTEST: | BROOKFIELD REAL ESTATE INCOME TRUST INC. | |||||
/s/ Michelle L. Campbell |
By: |
/s/ Zachary B. Vaughan |
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Name: Michelle L. Campbell | Name: Zachary B. Vaughan | |||||
Title: Secretary | Title: Chief Executive Officer |
Signature page of Articles of Amendment
Exhibit 3.2
BROOKFIELD REAL ESTATE INCOME TRUST INC.
ARTICLES SUPPLEMENTARY
Brookfield Real Estate Income Trust Inc., a Maryland corporation (the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Under a power contained in Section 5.1 of Article V of the charter of the Corporation (the Charter), the Board of Directors of the Corporation (the Board of Directors), by duly adopted resolutions, reclassified 25,000,000 authorized but unissued shares of each of Class D common stock, Class T common stock, Class S common stock and Class C common stock, each $0.01 par value per share, of the Corporation as shares of a new Class E common stock, $0.01 par value per share (the Class E Common Shares), of the Corporation, with the following preferences, rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications, or terms or conditions of redemption, which, upon any restatement of the Charter, shall become part of Article IV or Article V of the Charter, as appropriate, with any necessary or appropriate renumbering or relettering of the sections or subsections hereof. Unless otherwise defined below, capitalized terms used below have the meanings given to them in the Charter.
Class E Common Shares
(1) Authorized Shares. Of the total number of authorized Common Shares, 100,000,000 shares are shares of Class E common stock (the Class E Common Shares).
(2) Definitions. As used herein, the following terms shall have the following meanings unless the context otherwise requires:
Class E NAV Per Share shall mean the net asset value of the Corporation allocable to the Class E Common Shares, determined as described in the Prospectus, divided by the number of outstanding Class E Common Shares.
Class E Conversion Rate shall mean the fraction, the numerator of which is the Class E NAV Per Share and the denominator of which is the Class I NAV Per Share.
(3) Conversion of Class E Common Shares. Each Class E Common Share shall automatically and without any action on the part of the holder thereof convert into a number of Class I Common Shares equal to the Class E Conversion Rate on the earliest of (a) a Listing of Class I Common Shares, and (b) a merger or consolidation of the Corporation with or into another entity in which the Corporation is not the surviving entity, or the sale or other disposition of all or substantially all of the Corporations assets, in each case in a transaction in which the Stockholders receive cash, securities listed on a national exchange or a combination thereof.
(4) Rights Upon Liquidation. Immediately before any liquidation, dissolution or winding up, or any distribution of the assets of the Corporation pursuant to a plan of liquidation, dissolution or winding up, Class E Common Shares will automatically convert to Class I Common Shares at the Class E Conversion Rate. Following such conversion, the aggregate assets of the Corporation available for Distribution to holders of the Common Shares, or the proceeds therefrom, shall be distributed to each holder of Class I Common Shares, ratably with each other holder of Class I Common Shares, which will include all converted Class E Common Shares, in such proportion as the number of outstanding Class I Common Shares held by such holder bears to the total number of outstanding Class I Common Shares then outstanding.
SECOND: The Class E Common Shares have been reclassified by the Board of Directors under the authority contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.
FOURTH: The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be signed in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this 2nd day of November, 2021.
ATTEST: | BROOKFIELD REAL ESTATE INCOME TRUST INC. | |||||
/s/ Michelle L. Campbell |
By: |
/s/ Zachary B. Vaughan |
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Name: Michelle L. Campbell | Name: Zachary B. Vaughan | |||||
Title: Secretary | Title: Chief Executive Officer |
Signature Page of Articles Supplementary
Exhibit 3.3
BROOKFIELD REAL ESTATE INCOME TRUST INC.
CERTIFICATE OF CORRECTION
Class C Common Shares
Brookfield Real Estate Income Trust Inc., a Maryland corporation (the Corporation), hereby certifies to the State Department of Assessments and Taxation of Maryland (the SDAT) that:
First: The title of the document being corrected is Articles Supplementary (the Articles Supplementary). The sole party to the Articles Supplementary is the Corporation. The Articles Supplementary established and fixed the rights and preferences of the Corporations Class C common stock, $0.01 par value per share (the Class C Common Shares), and were filed with and accepted for record by the SDAT on February 10, 2021. The Articles Supplementary require correction as permitted by Section 1-207 of the Maryland General Corporation Law. The Articles Supplementary being corrected inadvertently omitted certain language in Section 3 thereof regarding the automatic conversion of Class C Common Shares.
Second: Section 3 of the Articles Supplementary as previously filed with the SDAT and to be corrected hereby is as follows:
(3) Conversion of Class C Common Shares. Each Class C Common Share shall automatically and without any action on the part of the holder thereof convert into a number of Class I Common Shares equal to the Class C Conversion Rate on the earliest of (a) a Listing of Class I Common Shares and (b) a merger or consolidation of the Corporation with or into another entity, or the sale or other disposition of all or substantially all of the Corporations assets.
Third: Section 3 of the Articles Supplementary as corrected hereby is as follows:
(3) Conversion of Class C Common Shares. Each Class C Common Share shall automatically and without any action on the part of the holder thereof convert into a number of Class I Common Shares equal to the Class C Conversion Rate on the earliest of (a) a Listing of Class I Common Shares, and (b) a merger or consolidation of the Corporation with or into another entity in which the Corporation is not the surviving entity, or the sale or other disposition of all or substantially all of the Corporations assets, in each case in a transaction in which the Stockholders receive cash, securities listed on a national exchange or a combination thereof.
Fourth: The undersigned Chief Executive Officer of the Corporation acknowledges this Certificate of Correction to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned Chief Executive Officer acknowledges that to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury.
[Signature Page Follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be executed under seal in its name and on its behalf by its Chief Executive Officer and attested to by its Secretary on this 2nd of November, 2021.
ATTEST: | BROOKFIELD REAL ESTATE INCOME TRUST INC. | |||||||||
By: |
/s/ Michelle L. Campbell |
By: |
/s/ Zachary B. Vaughan |
(SEAL) | ||||||
Michelle L. Campbell | Zachary B. Vaughan | |||||||||
Secretary | Chief Executive Officer |
Signature page of Certificate of Correction
Exhibit 4.1
BROOKFIELD REAL ESTATE INCOME TRUST INC.
Share Repurchase Plan
Effective as of November 2, 2021
Definitions
Class C shares shall mean the shares of the Companys common stock classified as Class C.
Class D shares shall mean the shares of the Companys common stock classified as Class D.
Class E shares shall mean the shares of the Companys common stock classified as Class E.
Class I shares shall mean the shares of the Companys common stock classified as Class I.
Class S shares shall mean the shares of the Companys common stock classified as Class S.
Class T shares shall mean the shares of the Companys common stock classified as Class T.
Company shall mean Brookfield Real Estate Income Trust Inc. (formerly Oaktree Real Estate Income Trust, Inc.), a Maryland corporation.
NAV shall mean the net asset value of the Company or a class of its shares, as the context requires, determined in accordance with the Companys valuation policies and procedures.
Stockholders shall mean the holders of Class T, Class S, Class D, Class C, Class I or Class E shares.
Transaction Price shall mean the repurchase price per share for each class of common stock, which shall be equal to the then-current offering price before applicable selling commissions and dealer manager fees, as determined monthly.
Share Repurchase Plan
Stockholders may request that the Company repurchase shares of its common stock through their financial advisor or directly with the Companys transfer agent. The procedures relating to the repurchase of shares of the Companys common stock are as follows:
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Under this share repurchase plan, to the extent the Company chooses to repurchase shares in any particular month the Company will only repurchase shares as of the opening of business on the last calendar day of that month (a Repurchase Date). To have shares repurchased, a Stockholders repurchase request and required documentation must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. Settlements of share repurchases will be made within three business days of the Repurchase Date. Repurchase requests received and processed by the Companys transfer agent will be effected at a repurchase price equal to the Transaction Price on the applicable Repurchase Date (which will generally be equal to the Companys prior months NAV per share), subject to any Early Repurchase Deduction (as defined below). |
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A Stockholder may withdraw his or her repurchase request by notifying the transfer agent, directly or through the Stockholders financial intermediary, on the Companys toll-free, automated telephone line, (833) 625-7348. The line is open on each business day between the hours of 9:00 a.m. and 6:00 p.m. (Eastern time). Repurchase requests must be cancelled before 4:00 p.m. (Eastern time) on the last business day of the applicable month. |
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If a repurchase request is received after 4:00 p.m. (Eastern time) on the second to last business day of the applicable month, the purchase order will be executed, if at all, on the next months Repurchase Date at the Transaction Price applicable to that month (subject to any Early Repurchase Deduction), unless such request is withdrawn prior to the repurchase. Repurchase requests received and processed by the Companys transfer agent on a business day, but after the close of business on that day or on a day that is not a business day, will be deemed received on the next business day. |
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Repurchase requests may be made by mail or by contacting a financial intermediary, both subject to certain conditions described in this share repurchase plan. If making a repurchase request by contacting the Stockholders financial intermediary, the Stockholders financial intermediary may require the Stockholder |
to provide certain documentation or information. If making a repurchase request by mail to the transfer agent, the Stockholder must complete and sign a repurchase authorization form, which can be found at the end of this share repurchase plan. Written requests should be sent to the transfer agent at the following address: |
DST Systems, Inc.
PO Box 219663
Kansas City, MO 64121
Overnight Address:
DST Systems, Inc.
430 W 7th St. Suite 219349
Kansas City, MO 64105
Toll Free Number: (833) 625-7348
Corporate investors and other non-individual entities must have an appropriate certification on file authorizing repurchases. A signature guarantee may be required.
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For processed repurchases, Stockholders may request that repurchase proceeds are to be paid by mailed check provided that the amount is less than $100,000 and the check is mailed to an address on file with the transfer agent for at least 30 days. |
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Processed repurchases of more than $100,000 will be paid only via wire transfer. For this reason, Stockholders who own more than $100,000 of the Companys common stock must provide wiring instructions for their brokerage account or designated U.S. bank account. Stockholders who own less than $100,000 of the Companys common stock may also receive repurchase proceeds via wire transfer, provided the payment amount is at least $2,500. For all repurchases paid via wire transfer, the funds will be wired to the account on file with the transfer agent or, upon instruction, to another financial institution provided that the Stockholder has made the necessary funds transfer arrangements. The customer service representative can provide detailed instructions on establishing funding arrangements and designating a bank or brokerage account on file. Funds will be wired only to U.S. financial institutions (ACH network members). |
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A medallion signature guarantee will be required in certain circumstances described below. A medallion signature guarantee may be obtained from a domestic bank or trust company, broker-dealer, clearing agency, savings association or other financial institution which participates in a medallion program recognized by the Securities Transfer Association. The three recognized medallion programs are the Securities Transfer Agents Medallion Program, the Stock Exchanges Medallion Program and the New York Stock Exchange, Inc. Medallion Signature Program. Signature guarantees from financial institutions which are not participating in any of these medallion programs will not be accepted. A notary public cannot provide signature guarantees. The Company reserves the right to amend, waive or discontinue this policy at any time and establish other criteria for verifying the authenticity of any repurchase or transaction request. The Company may require a medallion signature guarantee if, among other reasons: (1) the amount of the repurchase request is over $500,000; (2) a Stockholder wishes to have repurchase proceeds transferred by wire to an account other than the designated bank or brokerage account on file for at least 30 days or sent to an address other than such Stockholders address of record for the past 30 days; or (3) the Companys transfer agent cannot confirm a Stockholders identity or suspects fraudulent activity. |
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If a Stockholder has made multiple purchases of shares of the Companys common stock, any repurchase request will be processed on a first in/first out basis unless otherwise requested in the repurchase request. |
Minimum Account Repurchases
In the event that any Stockholder fails to maintain the minimum balance of $500 of shares of the Companys common stock, the Company may repurchase all of the shares held by that Stockholder at the applicable Transaction Price in effect on the date the Company determines that such Stockholder has failed to meet the minimum balance, less any Early Repurchase Deduction. Minimum account repurchases will apply even in the event that the failure to meet the minimum balance is caused solely by a decline in the Companys NAV. Minimum account repurchases are subject to Early Repurchase Deduction.
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Sources of Funds for Repurchases
The Company may fund repurchase requests from sources other than cash flow from operations, and the Company has no limits on the amounts it may pay from such sources.
Repurchase Limitations
The Company may repurchase fewer shares than have been requested in any particular month to be repurchased under this share repurchase plan, or none at all, in its discretion at any time. In addition, the total amount of aggregate repurchases of Class T shares, Class S shares, Class D shares, Class C shares, Class I shares and Class E shares will be limited to no more than 2% of the Companys aggregate NAV per month and no more than 5% of the Companys aggregate NAV per calendar quarter. In the event that the Company determines to repurchase some but not all of the shares submitted for repurchase during any month, shares submitted for repurchase during such month will be repurchased on a pro rata basis after the Company has repurchased all shares for which repurchase has been requested due to death, disability or divorce and other limited exceptions. All unsatisfied repurchase requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of this share repurchase plan, as applicable.
If the Transaction Price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no repurchase requests will be accepted for such month and Stockholders who wish to have their shares repurchased the following month must resubmit their repurchase requests.
Should repurchase requests, in the Companys judgment, place an undue burden on the Companys liquidity, adversely affect the Companys operations or risk having an adverse impact on the Company as a whole, or should the Company otherwise determine that investing its liquid assets in real properties or other illiquid investments rather than repurchasing the Companys shares is in the best interests of the Company as a whole, the Company may choose to repurchase fewer shares in any particular month than have been requested to be repurchased, or none at all. Furthermore, the Companys board of directors may agree for the benefit of one or more of the Stockholders to restrict repurchases in a manner that is intended to result in the Company being treated as a domestically controlled REIT within the meaning of Section 897(h)(4)(B) of the Internal Revenue Code of 1986, as amended (the Code). In addition, the Companys board of directors may modify or suspend this share repurchase plan if it deems such action to be in the best interest of the Company and the Stockholders. Material modifications, including any amendment to the 2% monthly or 5% quarterly limitations on repurchases, and suspensions of the share repurchase plan will be promptly disclosed to Stockholders in a prospectus supplement (or post-effective amendment if required by the Securities Act of 1933, as amended) or special or periodic report filed by the Company. Material modifications will also be disclosed on the Companys website at www.brookfieldREIT.com. In addition, the Company may determine to suspend this share repurchase plan due to regulatory changes, changes in law or if the Company becomes aware of undisclosed material information that it believes should be publicly disclosed before shares are repurchased. Once this share repurchase plan is suspended, the Companys board of directors must affirmatively authorize the recommencement of this plan before Stockholder requests will be considered again. Upon a suspension of this share repurchase plan, the Companys board of directors will consider at least quarterly whether the continued suspension of this share repurchase plan remains in the best interest of the Company and the Stockholders. However, the Companys board of directors is not required to authorize the recommencement of this share repurchase plan within any specified period of time. The Companys board of directors may also determine to terminate this share repurchase plan if required by applicable law or in connection with a transaction in which Stockholders receive liquidity for their shares of the Companys common stock, such as a sale or merger of the Company or listing of the Companys shares on a national securities exchange.
Early Repurchase Deduction
There is no minimum holding period for shares of the Companys common stock and Stockholders can request that the Company repurchase their shares at any time. However, subject to limited exceptions, shares that have not been outstanding for at least one year will be repurchased at 98% of the Transaction Price (an Early Repurchase Deduction) on the applicable Repurchase Date. This Early Repurchase Deduction will also generally apply to minimum account repurchases. The Early Repurchase Deduction will not apply to shares acquired through the Companys distribution reinvestment plan, to shares Brookfield REIT Adviser LLC, the Companys adviser, elects to receive instead of cash in respect of its management fee, or to shares issued to an affiliate of Brookfield Asset
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Management Inc. in exchange for Class E units of Brookfield REIT Operating Partnership L.P., the operating partnership of the Company (the Operating Partnership), that were issued to such entity in connection with its contribution of certain assets to the Operating Partnership.
The Company may, from time to time, waive the Early Repurchase Deduction in the following circumstances:
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repurchases resulting from death, qualifying disability or divorce; or |
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in the event that a Stockholders shares are repurchased because such Stockholder has failed to maintain the $500 minimum account balance. |
As set forth above, the Company may waive the Early Repurchase Deduction in respect of repurchase of shares resulting from the death of a Stockholder who is a natural person, subject to the conditions and limitations described above, including shares held by such Stockholder through a revocable grantor trust or an IRA or other retirement or profit-sharing plan, after receiving written notice from the estate of the Stockholder, the recipient of the shares through bequest or inheritance, or, in the case of a revocable grantor trust, the trustee of such trust, who shall have the sole ability to request repurchase on behalf of the trust. The Company must receive the written repurchase request within 12 months after the death of the Stockholder in order for the requesting party to rely on any of the special treatment described above that may be afforded in the event of the death of a Stockholder. Such a written request must be accompanied by a certified copy of the official death certificate of the Stockholder. If spouses are joint registered holders of shares, the request to have the shares repurchased may be made if either of the registered holders dies. If the Stockholder is not a natural person, such as certain trusts or a partnership, corporation or other similar entity, the right of repurchase upon death does not apply.
Furthermore, as set forth above, the Company may waive the Early Repurchase Deduction in respect of repurchase of shares held by a Stockholder who is a natural person who is deemed to have a qualifying disability (as such term is defined in Section 72(m)(7) of the Code), subject to the conditions and limitations described above, including shares held by such Stockholder through a revocable grantor trust, or an IRA or other retirement or profit-sharing plan, after receiving written notice from such Stockholder, provided that the condition causing the qualifying disability was not pre-existing on the date that the Stockholder became a Stockholder. The Company must receive the written repurchase request within 12 months of the initial determination of the Stockholders disability in order for the Stockholder to rely on any of the waivers described above that may be granted in the event of the disability of a Stockholder. If spouses are joint registered holders of shares, the request to have the shares repurchased may be made if either of the registered holders acquires a qualifying disability. If the Stockholder is not a natural person, such as certain trusts or a partnership, corporation or other similar entity, the right of repurchase upon disability does not apply.
In addition, as set forth above, the Company may waive the Early Repurchase Deduction in respect of repurchase of shares resulting from the divorce of a Stockholder who is a natural person, subject to the conditions and limitations described above, including shares held by such Stockholder through a revocable grantor trust or an IRA or other retirement or profit-sharing plan, after receiving written notice from the Stockholder of the divorce and the Stockholders instructions to effect a transfer of the shares (through the repurchase of the shares by the Company and the subsequent purchase by the Stockholder) to a different account held by the Stockholder (including trust or an individual retirement account or other retirement or profit-sharing plan). The Company must receive the written repurchase request within 12 months after the divorce of the Stockholder in order for the requesting party to rely on any of the special treatment described above that may be afforded in the event of the divorce of a Stockholder. If the Stockholder is not a natural person, such as certain trusts or a partnership, corporation or other similar entity, the right of repurchase upon divorce does not apply.
In addition, shares of the Companys common stock are sold to certain feeder vehicles primarily created to hold the Companys shares that in turn offer interests in such feeder vehicles to non-U.S. persons. For such feeder vehicles and similar arrangements in certain markets, the Company will not apply the Early Repurchase Deduction to the feeder vehicles or underlying investors, often because of administrative or systems limitations.
Items of Note
When Stockholders make a request to have shares repurchased, they should note the following:
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If Stockholders are requesting that some but not all of their shares be repurchased, they must keep their balance above $500 to avoid minimum account repurchase, if applicable; |
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Stockholders will not receive interest on amounts represented by uncashed repurchase checks; |
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Under applicable anti-money laundering regulations and other federal regulations, repurchase requests may be suspended, restricted or canceled and the proceeds may be withheld; |
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Internal Revenue Service regulations require the Company to determine and disclose on Form 1099-B the adjusted cost basis for shares of the Companys stock sold or repurchased. Although there are several available methods for determining the adjusted cost basis, unless a Stockholder elects otherwise, which such Stockholder may do by checking the appropriate box on the subscription agreement or calling the Companys customer service number at (833) 625-7348, the Company will utilize the first-in-first-out method; and |
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All shares of the Companys common stock requested to be repurchased must be beneficially owned by the Stockholder of record making the request or his or her estate, heir or beneficiary, or the party requesting the repurchase must be authorized to do so by the Stockholder of record of the shares or his or her estate, heir or beneficiary, and such shares of common stock must be fully transferable and not subject to any liens or encumbrances. In certain cases, the Company may ask the requesting party to provide evidence satisfactory to the Company that the shares requested for repurchase are not subject to any liens or encumbrances. If the Company determines that a lien exists against the shares, the Company will not be obligated to repurchase any shares subject to the lien. |
Frequent Trading and Other Policies
The Company may reject for any reason, or cancel as permitted or required by law, any purchase orders for shares of the Companys common stock.
In general, Stockholders may request that the Company repurchase their shares of the Companys common stock once every 30 days. However, the Company prohibits frequent trading. The Company defines frequent trading as follows:
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any Stockholder who requests that the Company repurchase such Stockholders shares of the Companys common stock within 30 calendar days of the purchase of such shares; |
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transactions deemed harmful or excessive by the Company (including, but not limited to, patterns of purchases and repurchases), in the Companys sole discretion; and |
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transactions initiated by financial advisors, among multiple Stockholder accounts, that in the aggregate are deemed harmful or excessive. |
The following are excluded when determining whether transactions are excessive:
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purchases and requests for repurchase of the Companys shares in the amount of $2,500 or less; |
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purchases or repurchases initiated by the Company; and |
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transactions subject to the trading policy of an intermediary that the Company deems materially similar to the Companys policy. |
At the Companys discretion, upon the first violation of the policy in a calendar year, purchase and repurchase privileges may be suspended for 90 days. Upon a second violation in a calendar year, purchase and repurchase privileges may be suspended for 180 days. On the next business day following the end of the 90 or 180 day suspension, any transaction restrictions placed on a Stockholder may be removed.
Mail and Telephone Instructions
The Company and its transfer agent will not be responsible for the authenticity of mail or phone instructions or losses, if any, resulting from unauthorized Stockholder transactions if they reasonably believe that such instructions were genuine. The Company and its transfer agent have established reasonable procedures to confirm that instructions are genuine including requiring the Stockholder to provide certain specific identifying information on file and sending written confirmation to Stockholders of record no later than five days following execution of the instruction. Failure by the Stockholder or its agent to notify the Companys transfer agent in a timely manner, but in no event more than 60 days from receipt of such confirmation, that the instructions were not properly acted upon or any other discrepancy will relieve the Company, the Companys transfer agent and the financial advisor of any liability with respect to the discrepancy.
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REPURCHASE AUTHORIZATION FOR Brookfield Real Estate Income Trust Inc. |
Use this form to request repurchase of your shares in Brookfield Real Estate Income Trust Inc. (the Company). Please complete all sections below.
1. REPURCHASE FROM THE FOLLOWING ACCOUNT
Name(s) on the Account |
Account Number | Social Security Number/TIN |
Financial Advisor Name | Financial Advisor Phone Number |
2. REPURCHASE AMOUNT (Check one) | 3. REPURCHASE TYPE (Check one) | |
☐ All Shares | ☐ Normal | |
☐ Number of Shares | ☐ Death | |
☐ Dollar Amount $ | ☐ Disability | |
☐ Divorce |
Additional documentation is required if repurchasing due to Death or Disability. Contact Investor Relations for detailed instructions at (833) 625-7348.
4. PAYMENT INSTRUCTIONS (Select only one)
Indicate how you wish to receive your repurchase payment below. If an option is not selected, a check will be sent to your address of record. Repurchase proceeds for qualified accounts, including IRAs and other custodial accounts, and certain broker-controlled accounts as required by your broker/dealer of record, will automatically be issued to the custodian or broker/dealer of record, as applicable. All custodial held and broker-controlled accounts must include the custodian and/or broker/dealer signature.
☐ Cash/Check Mailed to Address of Record
☐ Cash/Check Mailed to Third Party/Custodian (Signature Guarantee Required)
Name / Entity Name / Financial Institution | Mailing Address | |||||
City | State | Zip Code | Account Number |
☐ Cash/Direct Deposit Attach a pre-printed voided check. (Non-Custodian Investors Only)
I authorize Brookfield Real Estate Income Trust Inc. or its agent to deposit my distribution into my checking or savings account. In the event that Brookfield Real Estate Income Trust Inc. deposits funds erroneously into my account, they are authorized to debit my account for an amount not to exceed the amount of the erroneous deposit.
Financial Institution Name | Mailing Address | City | State | |||
Your Banks ABA Routing Number | Your Bank Account Number |
PLEASE ATTACH A PRE-PRINTED VOIDED CHECK
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5. SHARE REPURCHASE PLAN CONSIDERATIONS (Select only one)
The Companys share repurchase plan contains limitations on the number of shares that can be repurchased under the plan during any month and quarter. In addition to these limitations, the Company cannot guarantee that it will have sufficient funds to accommodate all repurchase requests made in any applicable repurchase period and the Company may elect to repurchase fewer shares than have been requested in any particular month, or none at all. If the number of shares subject to repurchase requests exceeds the then applicable limitations, or if the Company otherwise does not make all requested repurchases, each shareholders request will be reduced on a pro rata basis after the Company has repurchased all shares for which repurchase has been requested due to death or disability. If repurchase requests are reduced on a pro rata basis, you may elect (at the time of your repurchase request) to either withdraw your entire request for repurchase or have your request honored on a pro-rata basis. If you wish to have the remainder of your initial request repurchased, you must resubmit a new repurchase request for the remaining amount in a subsequent month. Please select one of the following options below. If an option is not selected, your repurchase request will be processed on a pro-rata basis, if needed.
☐ Process my repurchase request on a pro-rata basis each repurchase period until my entire request has been honored.
☐ Withdraw (do not process) my entire repurchase request if amount will be reduced on a pro-rata basis.
6. COST BASIS SELECTION (Select only one)
U.S. federal income tax information reporting rules generally apply to certain transactions involving the Companys shares. Where they apply, the cost basis calculated for the shares involved will be reported to the Internal Revenue Service (IRS) and to you. Generally these rules apply to the Companys shares, including those purchased through the Companys distribution reinvestment plan. You should consult your own tax advisor regarding the consequences of these rules and your cost basis reporting options.
Indicate below the cost basis method you would like the Company to apply.
IMPORTANT: If an option is not selected, your cost basis will be calculated using the FIFO method.
☐ FIFO (First In / First Out)
☐ LIFO (Last In / First Out) Consult your tax advisor to determine whether this method is available to you.
☐ Specific Lots
If you have selected Specific Lots, please identify the lots below:
Date of Purchase: | Amount of Purchase: | |
Date of Purchase: | Amount of Purchase: | |
Date of Purchase: | Amount of Purchase: |
7 AUTHORIZATION AND SIGNATURE
IMPORTANT: Signature Guarantee is required if any of the following applies:
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Amount to be repurchased is $500,000 or more. |
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You wish to have repurchase proceeds transferred by wire to an account other than the designated bank or brokerage account on file for at least 30 days or sent to an address other than your address of record for the past 30 days. |
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The repurchase is to be sent to an address other than the address on record. |
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If name has changed from the name in the account registration, the Company must have a one-and-the-same name signature guarantee. A one-and-the-same signature guarantee must state <Previous Name> is one-and-the-same as <New Name> and you must sign your old and new name. |
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The repurchase proceeds are deposited directly according to banking instructions provided on this form. (Non-Custodial Investors Only) |
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The Companys transfer agent cannot confirm your identity or suspects fraudulent activity. |
Investor Name (Please Print) | Signature | Date |
Co-Investor Name (Please Print) | Signature | Date |
Signature Guarantee (If Required, Affix Medallion or Signature Guarantee Stamp Below) |
Custodian and/or Broker/Dealer Authorization (if applicable) |
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Signature of Authorized Person |
* Please refer to the prospectus you received in connection with your initial investment in Brookfield Real Estate Income Trust Inc., as amended by any amendments or supplements to that prospectus, for a description of the current terms of the Companys share repurchase plan. A copy of the prospectus, as amended and supplemented to date, is located at www.brookfieldREIT.com and at www.sec.gov. The repurchase price will be available in the Companys prospectus supplements and at www. brookfieldREIT.com and www.sec.gov. There are various limitations on your ability to request that the Company repurchase your shares, including, subject to certain exceptions, an early repurchase deduction if your shares have been outstanding for less than one year. Please see a copy of the applicable prospectus, as amended and supplemented to date, for the current repurchase price. The Companys board of directors may determine to amend, suspend or terminate the Companys share repurchase plan without stockholder approval. The Company will provide written notice of any amendment, suspension or termination of the plan in a filing with the SEC at www.sec.gov, which will also be made available at www. brookfieldREIT.com. Repurchase of shares, when requested, will generally be made monthly; provided however, that the board of directors may determine from time to time to adjust the timing of repurchases. All requests for repurchases must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. A stockholder may withdraw his or her repurchase request by notifying the transfer agent, directly or through the stockholders financial intermediary, on the Companys toll-free, automated telephone line, (833) 625-7348. Repurchase requests must be cancelled before 4:00 p.m. (Eastern time) on the applicable Repurchase Date (as defined in the Companys share repurchase plan) (or if such Repurchase Date is not a business day, the prior business day). The Company cannot guarantee that it will have sufficient available funds or that it will otherwise be able to accommodate any or all requests made in any applicable repurchase period.
Mail to: Brookfield Real Estate Income Trust Inc. ∎ DST Systems, Inc. ∎ PO Box 219663 ∎ Kansas City, MO 64121
Overnight Delivery: Brookfield Real Estate Income Trust Inc. ∎ DST Systems, Inc. ∎ DST Systems ∎ 430 W 7th St. Suite 219349 ∎ Kansas City, MO 64105
Investor Relations: (833) 625-7348
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Exhibit 10.1
ADVISORY AGREEMENT
BY AND AMONG
BROOKFIELD REAL ESTATE INCOME TRUST INC.,
BROOKFIELD REIT OPERATING PARTNERSHIP, L.P.
AND
BROOKFIELD REIT ADVISER LLC
TABLE OF CONTENTS
1. |
DEFINITIONS | 1 | ||||
2. |
APPOINTMENT | 5 | ||||
3. |
DUTIES OF THE ADVISER | 5 | ||||
4. |
AUTHORITY OF ADVISER | 8 | ||||
5. |
BANK ACCOUNTS; CUSTODY ACCOUNTS | 9 | ||||
6. |
RECORDS; ACCESS. | 9 | ||||
7. |
LIMITATIONS ON ACTIVITIES | 9 | ||||
8. |
OTHER ACTIVITIES OF THE ADVISER | 9 | ||||
9. |
DIRECTORS AND OFFICERS | 10 | ||||
10. |
MANAGEMENT FEE | 10 | ||||
11. |
EXPENSES | 11 | ||||
12. |
OTHER SERVICES | 14 | ||||
13. |
LIMITATION ON TOTAL OPERATING EXPENSES | 14 | ||||
14. |
NO JOINT VENTURE | 15 | ||||
15. |
TERM OF AGREEMENT | 15 | ||||
16. |
TERMINATION BY THE PARTIES | 15 | ||||
17. |
ASSIGNMENT TO AN AFFILIATE | 15 | ||||
18. |
PAYMENTS TO AND DUTIES OF ADVISER UPON TERMINATION | 15 | ||||
19. |
INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP | 16 | ||||
20. |
INDEMNIFICATION BY THE ADVISER | 16 | ||||
21. |
NON-SOLICITATION | 16 | ||||
22. |
MISCELLANEOUS | 16 | ||||
23. |
INVESTMENT BY ADVISER OR ITS AFFILIATES | 18 |
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (this Agreement), dated as of November 2, 2021 is by and among Brookfield Real Estate Income Trust Inc. (formerly Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company), Brookfield REIT Operating Partnership, L.P., a Delaware limited partnership (the Operating Partnership), and Brookfield REIT Adviser LLC, a Delaware limited liability company (the Adviser). This Agreement shall become effective as of the date hereof (the Effective Date). Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.
BACKGROUND
WHEREAS, the Company conducts its operations to qualify as a REIT and invests its funds in investments permitted by the terms of Sections 856 through 860 of the Code;
WHEREAS, the Company is or will be prior to the Effective Date the general partner of the Operating Partnership and intends to conduct all of its business and make all or substantially all Investments following the Effective Date through the Operating Partnership;
WHEREAS, the Company was formerly externally managed and advised by Oaktree Fund Advisors, LLC (the Former Adviser) pursuant to that certain Advisory Agreement between the Company and the Former Adviser dated April 11, 2018 as amended on January 4, 2021 (the Former Advisory Agreement) that terminated on the Effective Date;
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 Adviser and to have the Adviser 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 Adviser 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 agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the definitions hereinafter indicated:
Acquisition Expenses shall have the meaning set forth in the Charter.
Adviser shall have the meaning set forth in the preamble of this Agreement.
Adviser Expenses shall have the meaning set forth in Section 11(b).
Adviser Investment shall have the meaning set forth in Section 23.
Advisers Act shall mean the Investment Advisers Act of 1940, as amended.
Affiliate shall have the meaning set forth in the Charter and the term Affiliated shall have a correlative meaning.
Agreement shall have the meaning set forth in the preamble of this Agreement.
Average Invested Assets shall have the meaning set forth in the Charter.
Board shall mean the board of directors of the Company, as of any particular time.
Brookfield means, collectively, Brookfield Asset Management Inc., an Ontario, Canada corporation, and any Affiliate thereof.
Business Day shall have the meaning set forth in the Charter.
Bylaws shall mean the bylaws of the Company, as amended from time to time.
Cause shall mean, with respect to the termination of this Agreement, fraud, criminal conduct, willful misconduct or willful or grossly negligent breach of fiduciary duty by the Adviser in connection with performing its duties hereunder.
CFTC shall have the meaning set forth in Section 11(c)(vii).
Change of Control shall mean any event (including, without limitation, issue, transfer or other disposition of shares of capital stock of the Company or equity interests in the Operating Partnership, merger, share exchange or consolidation) after which any person (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company or the Operating Partnership representing greater than 50% or more of the combined voting power of Companys or Operating Partnerships then-outstanding securities; provided, that, a Change of Control shall not be deemed to occur as a result of any widely distributed public offering of the Shares.
Charter shall mean the Articles of Incorporation of the Company filed with the Maryland State Department of Assessments and Taxation in accordance with the Maryland General Corporation Law, as amended and supplemented from time to time.
Class C Common Shares shall have the meaning set forth in the Charter.
Class C NAV Per Share shall have the meaning set forth in the Charter.
Class D Common Shares shall have the meaning set forth in the Charter.
Class D NAV Per Share shall have the meaning set forth in the Charter.
Class E Common Shares shall have the meaning set forth in the Charter.
Class E NAV Per Share shall have the meaning set forth in the Charter.
Class I Common Shares shall have the meaning set forth in the Charter.
Class I NAV Per Share shall have the meaning set forth in the Charter.
Class S Common Shares shall have the meaning set forth in the Charter.
Class S NAV Per Share shall have the meaning set forth in the Charter.
Class T Common Shares shall have the meaning set forth in the Charter.
Class T NAV Per Share shall have the meaning set forth in the Charter.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company shall have the meaning set forth in the preamble of this Agreement.
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Company Management Fee shall have the meaning set forth in Section 10(a).
Director shall mean a member of the Board.
Distributions shall have the meaning set forth in the Charter.
Effective Date shall have the meaning set forth in the preamble of this Agreement.
Excess Amount shall have the meaning set forth in Section 13.
Exchange Act shall have the meaning set forth in the Charter.
Expense Year shall have the meaning set forth in Section 13.
Former Adviser shall have the meaning set forth in the preamble of this Agreement.
Former Advisory Agreement shall have the meaning set forth in the preamble of this Agreement.
GAAP shall mean generally accepted accounting principles as in effect in the United States of America from time to time.
Gross Proceeds shall mean the aggregate purchase price of all Shares sold for the account of the Company through a public Offering, without deduction for Selling Commissions. The purchase price of any Share shall be deemed to be the full, non-discounted offering price at the time of purchase of each such Share.
Independent Appraiser shall have the meaning set forth in the Charter.
Independent Director shall have the meaning set forth in the Charter.
Investment Company Act shall mean the Investment Company Act of 1940, as amended.
Investment Guidelines shall mean the investment guidelines and borrowing policies adopted by the Board, as amended from time to time, pursuant to which the Adviser has discretion to acquire and dispose of Investments for the Company without the prior approval of the Board.
Investments shall mean any investments by the Company or the Operating Partnership, directly or indirectly, in Real Property, Real Estate-Related Assets or other assets (including derivatives).
Joint Ventures shall have the meaning set forth in the Charter.
Management Fee shall have the meaning set forth in Section 10(a).
Mortgages shall have the meaning set forth in the Charter.
NASAA REIT Guidelines shall have the meaning set forth in the Charter.
NAV shall mean the Companys net asset value, calculated pursuant to the Valuation Guidelines.
Net Income shall have the meaning set forth in the Charter.
Offering shall have the meaning set forth in the Charter.
OP Management Fee shall have the meaning set forth in Section 10(a).
Operating Partnership shall have the meaning set forth in the preamble of this Agreement.
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Operating Partnership Agreement shall mean the Limited Partnership Agreement of the Operating Partnership, as amended from time to time.
Organization and Offering Expenses shall have the meaning set forth in the Charter.
Other Brookfield Accounts shall mean the other funds and accounts, including proprietary accounts, that Brookfield and its Affiliates currently manage and may in the future manage.
Performance Participation Interest shall have the meaning ascribed to such term in the Operating Partnership Agreement.
Person shall mean an individual, corporation, business trust, estate, trust, partnership, joint venture, limited liability company or other legal entity.
Prospectus shall have the meaning set forth in the Charter.
Real Estate-Related Assets shall mean any investments (other than investments in Real Property), directly or indirectly, by the Company and the Operating Partnership in interests related to real property of whatever nature, including, but not limited to (i) real estate-related debt, including agency securities, collateralized mortgage backed securities, residential mortgage backed securities, mezzanine loans, commercial first mortgages, residential mortgages, and subordinated secured debt, and (ii) equity securities or interests in corporations (to the extent consistent with the requirements to be a REIT), limited liability companies, partnerships and other joint ventures having an equity interest in real property, REITs, ground leases, tenant-in-common interests, participating mortgages, convertible mortgages or other debt instruments convertible into equity interests in real property by the terms thereof, options to purchase real estate, real property purchase-and-leaseback transactions and other transactions and investments with respect to real estate.
Real Estate-Related Securities shall have the meaning set forth in the Charter.
Real Property shall mean real property owned from time to time by the Operating Partnership or a Subsidiary thereof, either directly or through Joint Ventures, which consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only or (iv) such investments the REIT and the Adviser mutually designate as Real Property to the extent such investments could be classified as Real Property.
Registration Statement shall mean a registration statement on Form S-11, as may be amended from time to time, of the Company filed with the SEC related to the registration of the Shares for a public Offering.
REIT shall have the meaning set forth in the Charter.
SEC shall mean the U.S. Securities and Exchange Commission.
Securities Act shall have the meaning set forth in the Charter.
Selling Commissions shall have the meaning set forth in the Charter.
Shares shall have the meaning set forth in the Charter.
Stockholder Servicing Fee shall have the meaning set forth in the Charter.
Stockholders shall have the meaning set forth in the Charter.
Subsidiary means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
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Termination Date shall mean the date of termination of this Agreement or expiration of this Agreement in the event this Agreement is not renewed for an additional term.
Total Operating Expenses shall have the meaning set forth in the Charter.
Transaction Price shall have the meaning set forth in the Prospectus.
2%/25% Guidelines shall have the meaning set forth in Section 13.
Valuation Guidelines shall mean the valuation guidelines of the Company as have been adopted by the Board, as amended from time to time.
2. APPOINTMENT. The Company and the Operating Partnership hereby appoint the Adviser to serve as their investment adviser on the terms and conditions set forth in this Agreement, and the Adviser hereby accepts such appointment. By accepting such appointment, the Adviser acknowledges that it has a contractual and fiduciary responsibility to the Company and the Stockholders. Except as otherwise provided in this Agreement, the Adviser hereby agrees to use its commercially reasonable efforts to perform the duties set forth herein, provided that the Company reimburses the Adviser for costs and expenses in accordance with Section 13 hereof.
3. DUTIES OF THE ADVISER. Subject to the oversight of the Board and the terms and conditions of this Agreement and consistent with the provisions of the Companys most recent Prospectus, the Investment Guidelines, the Charter, the Bylaws, and the Operating Partnership Agreement, the Adviser will have plenary authority with respect to the management of the business and affairs of the Company and the Operating Partnership and will be responsible for managing and conducting the operations of the Company and the Operating Partnership, including implementing the investment strategy and providing employees to act as officers of the Company. The Adviser will perform (or cause to be performed through one or more of its Affiliates or third parties) such services and activities relating to the selection of investments and rendering investment advice to the Company and the Operating Partnership as may be appropriate or otherwise mutually agreed from time to time, which may include, without limitation:
(a) serving as an advisor to the Company and the Operating Partnership with respect to the establishment and periodic review of the Investment Guidelines for the Companys and the Operating Partnerships investments, financing activities and operations;
(b) purchasing, selling, exchanging, converting, trading, financing, refinancing, mortgaging, encumbering, conveying, assigning, pledging, constructing, lending or otherwise effecting transactions for the Companys portfolio with respect to investment opportunities and the Companys Investments;
(c) investigating, analyzing, evaluating, structuring and negotiating, on the Companys and the Operating Partnerships behalf, potential acquisitions, purchases, sales, exchanges or other dispositions of Investments with sellers, purchasers, and other counterparties and, if applicable, their respective agents, advisors and representatives;
(d) providing the Company with portfolio management and other related services, including managing, operating, improving, developing, redeveloping, renovating and monitoring the Investments;
(e) negotiating, arranging and executing any borrowings or financings;
(f) evaluating and engaging in hedging activities on the Companys and the Operating Partnerships behalf, consistent with the Companys qualification as a REIT;
(g) engaging and supervising, on the Companys and the Operating Partnerships behalf and at the Companys and the Operating Partnerships expense, independent contractors, advisors, consultants, attorneys, accountants, administrators, auditors, appraisers, independent valuation agents, escrow agents, transfer agents and other service providers (which may include Affiliates of the Adviser) that provide various services with respect to the Company and the Operating Partnership, including, without limitation, on-site managers, building and
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maintenance personnel, investment banking, securities brokerage, mortgage brokerage, credit analysis, risk management services, asset management services, loan servicing, other financial, legal or accounting services, due diligence services, underwriting review services, and all other services (including custody and transfer agent and registrar services) as may be required relating to the Companys and the Operating Partnerships activities or Investments (or potential Investments);
(h) coordinating and managing operations of any Joint Venture or co-investment interests held by the Company or the Operating Partnership and conducting matters with the Joint Venture or co-investment partners;
(i) communicating on the Companys and the Operating Partnerships behalf with the holders of any of the Companys or the Operating Partnerships equity or debt securities as required to satisfy the reporting and other requirements of any governmental bodies or agencies or trading markets and to maintain effective relations with such holders;
(j) advising the Company in connection with policy decisions to be made by the Board;
(k) advising the Company regarding the maintenance of the Companys status as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and the regulations promulgated thereunder;
(l) advising the Company regarding the maintenance of the Companys exemption from the Investment Company Act and monitoring compliance with the requirements for maintaining an exemption from such Act;
(m) engaging one or more sub-advisors with respect to the management of the Company and the Operating Partnership, including, where appropriate, Affiliates of the Adviser;
(n) advising the Company as to the Companys and the Operating Partnerships capital structure and capital raising activities;
(o) determining valuations for the Companys Real Property and Real Estate-Related Assets and calculating or overseeing the calculation, as of the last Business Day of each month (or such other date or dates approved by the Board), of the Class C NAV Per Share, Class T NAV Per Share, Class S NAV Per Share, Class D NAV Per Share, Class I NAV Per Share and Class E NAV Per Share in accordance with the Valuation Guidelines, and in connection therewith, obtaining appraisals performed by an Independent Appraiser and other independent third-party appraisal firms concerning the value of the Real Properties and obtaining market quotations or conduct fair valuation determinations concerning the value of Real Estate-Related Assets;
(p) providing input in connection with the appraisals performed by the Independent Appraisers;
(q) monitoring the Companys Real Property and Real Estate-Related Assets for events that may be expected to have a material impact on the most recent estimated values;
(r) monitoring each Independent Appraisers valuation process to ensure that it complies with the Valuation Guidelines;
(s) maintaining on behalf of the Company copies of appraisals obtained in connection with the investments in any Real Property;
(t) providing the Company with all necessary cash management services (including with respect to short-term investments);
(u) placing, or arranging for the placement of, orders of Real Estate-Related Assets pursuant to the Advisers investment determinations for the Company and the Operating Partnership either directly with the issuer or with a broker or dealer (including any Affiliated broker or dealer);
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(v) performing such other services from time to time in connection with the management of the Companys investment activities as the Board shall reasonably request or the Adviser shall deem appropriate under the particular circumstances;
(w) performing (or overseeing, or arranging for, the performance of) the administrative services necessary for the operation of the Company;
(x) providing the Company with clerical, bookkeeping and record-keeping services;
(y) causing the Company to qualify to do business in all applicable jurisdictions and obtaining and maintaining all appropriate licenses;
(z) assisting the Company in publishing the Companys NAV;
(aa) assisting in the administration of the Companys distribution reinvestment plan, Share transfers, Share repurchases and all exception requests;
(bb) assisting the Company in maintaining (i) registration of the Shares under federal and state securities laws with respect to any public Offering and complying with all with all federal, state and local regulatory requirements applicable to the Company with respect to such Offering and the Companys business activities (including the Sarbanes-Oxley Act of 2002, as amended), including, with respect to any public Offering, preparing or causing to be prepared all supplements to the Prospectus, post-effective amendments to the Registration Statement and financial statements required under applicable regulations and contractual undertakings and all reports and documents, if any, required under the Securities Act and the Exchange Act, (ii) applicable exemptions from registration under federal and state securities laws with respect to any private Offering of Shares and (iii) compliance with applicable securities regulations associated with any private Offering of Shares outside of the United States;
(cc) assisting in permissible public relations activities relating to the Company, including but not limited to (i) development and administration of press releases, (ii) media relations, (iii) media coverage and by-lined articles and (iv) subject to regulatory approvals, if required, the development and maintenance of a Company website to provide access for investors to general information relating to the Company, such as NAV, filings with the SEC and sales material related to an Offering;
(dd) preparing reports to the Stockholders and reports and other materials filed with the SEC and overseeing the printing and dissemination of reports to the Stockholders;
(ee) overseeing the preparation and filing of the Companys tax returns, including soliciting Stockholders for required information to the extent provided by the REIT provisions of the Code;
(ff) maintaining the financial and other records that the Company is required to maintain;
(gg) handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Company may be involved or to which the Company may be subject, arising out of the Companys day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board;
(hh) overseeing the payment of the Companys expenses; and
(ii) reporting to the Board about the Advisers performance of its obligations hereunder and furnishing advice and recommendations with respect to such other aspects of the business and affairs of the Company as the Adviser shall determine to be desirable.
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4. AUTHORITY OF ADVISER.
(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 (by virtue of its approval of this Agreement and authorization of the execution hereof by the officers of the Company) hereby delegates to the Adviser the authority to take, or cause to be taken, any and all actions and to execute and deliver any and all agreements, certificates, assignments, instruments or other documents and to do any and all things that, in the judgment of the Adviser, may be necessary or advisable in connection with the Advisers duties described in Section 3, including the making of any Investment or the entry into any financing that is consistent with the Investment Guidelines, policies and limitations and within the discretionary limits and authority as granted to the Adviser from time to time by the Board.
(b) Notwithstanding the foregoing, any Investment or financing that does not fit within the Investment Guidelines will require the prior approval of the Board or any duly authorized committee of the Board, as the case may be. If a transaction requires Board approval, the Adviser will deliver to the Directors all documents and other information required by them to properly evaluate the proposed transaction. Except as otherwise set forth herein, in the Investment Guidelines or in the Charter, any Investment or financing that is consistent with the Investment Guidelines may be made by the Adviser on the Companys or the Operating Partnerships behalf without the prior approval of the Board or any duly authorized committee of the Board.
(c) The prior approval of a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in the transaction will be required for each transaction to which the Adviser or its Affiliate is a party.
(d) The Board will review the Investment Guidelines with sufficient frequency and at least annually and may, at any time upon the giving of notice to the Adviser, amend the Investment Guidelines; provided, however, that such modification or revocation shall be effective upon receipt by the Adviser or such later date as is specified by the Board and included in the notice provided to the Adviser and such modification or revocation shall not be applicable to investment transactions to which the Adviser has committed the Company or the Operating Partnership prior to the date of receipt by the Adviser of such notification, or if later, the effective date of such modification or revocation specified by the Board.
(e) The Adviser may obtain, for and on behalf, and at the sole cost and expense, of the Company, such services as the Adviser deems necessary or advisable in connection with the management and operations of the Company, which may include Affiliates of the Adviser; provided, that any such services may only be provided by Affiliates to the extent such services are approved by a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transactions as being fair and reasonable to the Company and on terms and conditions not less favorable to the Company than those available from non-Affiliated third parties.
(f) The Adviser is not permitted to consummate on the Companys or any Subsidiarys behalf any transaction that involves the sale of any Investment to or the acquisition of any investment from Brookfield, any Other Brookfield Account or any of their Affiliates unless such transaction is approved by a majority of the Directors, including a majority of the Independent Directors, not otherwise interested in such transaction as being fair and reasonable to the Company. In addition, for any such acquisition by the Company or any Subsidiary, the Companys or such Subsidiarys purchase price will be limited to the cost of the property to the Affiliate, including acquisition-related expenses, or if substantial justification exists, the current appraised value of the property as determined by an Independent Appraiser. In addition, the Company and its Subsidiaries may enter into Joint Ventures with Other Brookfield Accounts, or with Brookfield, the Adviser, one or more Directors, or any of their respective Affiliates, only if a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in the transaction approve the transaction as being fair and reasonable to the Company and on substantially the same, or no less favorable, terms and conditions as those received by other Affiliate joint venture partners.
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(g) In performing its duties under Section 3, the Adviser shall be entitled to rely reasonably on qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers) hired by the Adviser at the Companys sole cost and expense.
5. BANK ACCOUNTS; CUSTODY ACCOUNTS.
(a) The Adviser may establish and maintain one or more bank accounts in the name of the Company, the Operating Partnership and any Subsidiary thereof 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, consistent with the Advisers authority under this Agreement, provided that no funds shall be commingled with the funds of the Adviser.
(b) The Adviser may establish and maintain one or more custody accounts in the name of the Company, the Operating Partnership and any Subsidiary thereof and may deposit and hold assets into any such account or accounts, consistent with the Advisers authority under this Agreement, provided that no assets shall be commingled with the assets of the Adviser.
6. RECORDS; ACCESS.
(a) The Adviser shall maintain and keep all books, accounts and other records of the Company that relate to activities performed by the Adviser hereunder and make such records available for inspection by the Board and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours.
(b) The Adviser shall at all reasonable times have access to the books and records of the Company and the Operating Partnership.
7. LIMITATIONS ON ACTIVITIES. The Adviser shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment Guidelines, (ii) would adversely and materially affect the qualification of the Company as a REIT under the Code or the status of either the Company or the Operating Partnership as an entity excluded from investment company status under the Investment Company Act, or (iii) would materially violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Company and the Operating Partnership or of any exchange on which the securities of the Company may be listed or that would otherwise not be permitted by the Charter, the Bylaws or the Operating Partnership Agreement. If the Adviser is ordered to take any action by the Board, the Adviser shall seek to notify the Board if it is the Advisers reasonable judgment that such action would adversely and materially affect such status or violate any such law, rule or regulation or the Charter, the Bylaws, or the Operating Partnership Agreement. Notwithstanding the foregoing, neither the Adviser nor any of its Affiliates shall be liable to the Company, the Operating Partnership, the Board or the Stockholders for any act or omission by the Adviser or any of its Affiliates, except as provided in Section 20 of this Agreement.
8. OTHER ACTIVITIES OF THE ADVISER.
(a) Nothing in this Agreement shall (i) prevent the Adviser or any of its Affiliates, officers, directors or employees from engaging in or earning fees from other businesses or from rendering services of any kind to any other Person (including other REITs), whether or not the investment objectives or policies of any such other Person are similar to those of the Company, including, without limitation, the sponsoring, closing or managing of Other Brookfield Accounts, (ii) in any way bind or restrict the Adviser or any of its Affiliates, officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Adviser or any of its Affiliates, officers, directors or employees may be acting, or (iii) prevent the Adviser or any of its Affiliates, officers, directors or employees from receiving fees or other compensation or profits from such activities described in this Section 8(a), which shall be for the sole benefit of the Adviser (or its Affiliates, officers, directors or employees). While information and advice supplied to the Company shall, in the Advisers reasonable and good faith judgment, be appropriate under the circumstances and in light of the investment objectives and policies of the Company, such information and advice may differ in certain material respects from the information and advice supplied by the Adviser or any Affiliate of the Adviser to others.
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(b) The Adviser shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Company such time as shall be reasonably necessary to conduct the business and affairs of the Company in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Adviser and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Company and may provide services to Persons other than the Company and the Operating Partnership.
(c) The Company and the Operating Partnership acknowledge that the Adviser may face various conflicts of interest, including but not limited to those conflicts disclosed in the Prospectus from time-to-time.
(d) The Adviser shall use its commercially reasonable efforts to conduct the allocation of investment opportunities among the Company and Other Brookfield Accounts in a manner that is consistent with the allocation policy described in the Prospectus, but neither the Adviser nor any Affiliate of the Adviser shall be obligated generally to present any particular investment opportunity to the Company even if the opportunity is of a character that, if presented to the Company, could be taken by the Company. The Company acknowledges that the Adviser and its Affiliates have no obligation to allocate specific investment opportunities to the Company except to the extent described in the Prospectus.
(e) For the avoidance of doubt, it is understood that neither the Company nor the Board has the authority to determine the salary, bonus or any other compensation paid by the Adviser to any director, officer, member, partner, employee, or stockholder of the Adviser or its Affiliates, including any person who is also a Director or officer of the Company.
9. DIRECTORS AND OFFICERS. Subject to Section 7 of this Agreement and to restrictions advisable with respect to the qualification of the Company as a REIT, directors, managers, officers and employees of the Adviser or an Affiliate of the Adviser or any corporate parent of an Affiliate, may serve as a Director or officer of the Company, except that no director, manager, officer or employee of the Adviser or its Affiliates who also is a Director or officer of the Company shall receive any compensation from the Company for serving as a Director or officer other than (a) reasonable reimbursement for travel and related expenses incurred in attending meetings of the Board or (b) as otherwise approved by the Board, including a majority of the Independent Directors, and no such Director shall be deemed an Independent Director for purposes of satisfying the Director independence requirements set forth in the Charter. For so long as this Agreement is in effect, the Adviser shall have the right to nominate, subject to the ultimate approval of such nomination by the Board, up to four Director nominees who are Affiliated with the Adviser to the slate of Directors to be voted on by the Stockholders at the Companys annual meeting of Stockholders; provided, however, that such number of Director nominees shall be reduced as necessary by a number that will result in a majority of the Directors being Independent Directors. Furthermore, the Board shall consult with the Adviser in connection with (i) its selection of each Independent Director for nomination to the slate of Directors to be voted on at the annual meeting of Stockholders, and (ii) filling any vacancies created by the removal, resignation, retirement or death of any Director.
10. MANAGEMENT FEE.(a)
(a) The Company will pay or cause its Subsidiaries to pay the Adviser a management fee (the Company Management Fee) equal to 1.25% of NAV for the Class C Common Shares, Class D Common Shares, Class I Common Shares, Class S Common Shares and Class T Common Shares per annum payable monthly, before giving effect to any accruals for the Management Fee, the Performance Participation Interest, the Stockholder Servicing Fee or any Distributions. The Operating Partnership will pay or cause its Subsidiaries to pay the Adviser a management fee (the OP Management Fee and, together with the Company Management Fee, the Management Fee) equal to 1.25% of the net asset value of the Operating Partnership attributable to Operating Partnership units held by unitholders other than the Company. Notwithstanding the foregoing, no Management Fee shall be paid on Class E Common Shares or Class E units of the Operating Partnership. The Adviser shall receive the Management Fees as compensation for services rendered hereunder.
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(b) The Company Management Fee may be paid, at the Advisers election, in cash or in a number of Class I Common Shares or Class E Common Shares with an equal aggregate value, with each share valued at its Transaction Price as of the last day of the period for which such Company Management Fee was earned, or in any combination of cash and shares valued on the same basis. The OP Management Fee may be paid, at the Advisers election, in cash or in a number of Class I or Class E units of the Operating Partnership with an equal aggregate value, with each unit valued at its net asset value per unit as of the last day of the period for which such OP Management Fee was earned, or in any combination of cash and units valued on the same basis. If the Adviser elects to receive any portion of the Company Management Fee in Class I Common Shares or Class E Common Shares, the Adviser may elect at a later date to have the Company repurchase from the Adviser such Class I Common Shares or Class E Common Shares at a per share price equal to the then-current Transaction Price for a Class I Common Share or Class E Common Share, as the case may be. Class I Common Shares and or Class E Common Shares obtained by the Adviser will not be subject to the repurchase limits of the Companys share repurchase plan or any reduction or penalty for an early repurchase. If the Adviser elects to receive any portion of the OP Management Fee in Class I or Class E units of the Operating Partnership, the Adviser may elect at a later date to have the Operating Partnership repurchase such units for cash unless the Board determines that any such repurchase for cash would be prohibited by applicable law or the Charter, in which case such Operating Partnership units will be repurchased for the Companys Class I Common Shares or Class E Common Shares, as they relate to the class of Operating Partnership units being repurchased, with an equivalent aggregate NAV.
(c) In the event this Agreement is terminated or its term expires without renewal, the Adviser will be entitled to receive its prorated Management Fee through the date of termination. Such pro ration shall take into account the number of days of any partial calendar month or calendar year for which this Agreement was in effect.
(d) In the event the Company or the Operating Partnership commences a liquidation of its Investments during any calendar year, the Company will pay the Adviser the Management Fee from the proceeds of the liquidation.
11. EXPENSES.
(a) As required by the NASAA REIT Guidelines, the cumulative Selling Commissions, Stockholder Servicing Fees and Organization and Offering Expenses paid by the Company in connection with a public Offering will not exceed 15.0% of Gross Proceeds from the sale of Shares in such public Offering.
(b) Subject to Sections 4(e) and 11(c), the Adviser shall be responsible for the expenses related to any and all personnel of the Adviser and its Affiliates who provide investment advisory services to the Company pursuant to this Agreement or who serve as Directors or executive officers of the Company as designated by the Board, including, without limitation, the costs, expenses, fees and liabilities incurred by the Adviser in providing for its normal operating overhead, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of such personnel, and costs of insurance with respect to such personnel (collectively, the Adviser Expenses).
(c) In addition to the compensation paid to the Adviser pursuant to Section 10 hereof, the Company shall pay all of its costs and expenses directly or reimburse the Adviser or its Affiliates for costs and expenses of the Adviser and its Affiliates incurred on behalf of the Company, the Operating Partnership or their Subsidiaries, other than Adviser Expenses, and subject to limitations set forth in the Charter and in Section 13 hereof. Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Company are not Adviser Expenses and shall be the responsibility of and paid by the Company and shall not be paid by the Adviser or Affiliates of the Adviser:
(i) Organization and Offering Expenses; provided that within 60 days after the end of the month in which a public Offering terminates, the Adviser shall reimburse the Company to the extent the Organization and Offering Expenses, Selling Commissions and Stockholder Servicing Fees borne by the Company exceed 15.0% of the Gross Proceeds raised in the completed public Offering;
(ii) Acquisition Expenses, subject to the limitations set forth in the Charter;
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(iii) expenses in connection with the disposition of any assets, whether or not disposed, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses and title insurance premiums and the costs of cooperating with due diligence;
(iv) fees and expenses relating to consummated Investments and proposed but unconsummated Investments, including costs, expenses, fees and liabilities relating to sourcing, developing, evaluating, negotiating, structuring, acquiring, holding, administering, monitoring, financing, refinancing, managing, improving, operating, restructuring, disposing, trading, settling, hedging or enforcing rights in respect thereof, and monitoring the Companys financial, regulatory and legal affairs (in each case, including reasonable travel and related expenses associated therewith, which may include business or first class airfare consistent with the Advisers travel policies as may be in effect from time to time), including agent, appraiser, retainer, finder, placement, adviser, consultant, custodian, subcustodian, depositary, transfer agent, disbursal, brokerage, registration, legal and other similar costs, fees and expenses, in each case, to the extent that such fees and expenses are not reimbursed by other third parties (to the extent an investment opportunity is being considered for the Company and any Other Brookfield Accounts managed by Brookfield, the Advisers out-of-pocket expenses related to the due diligence for such investment will be shared with such Other Brookfield Accounts pro rata based on the anticipated allocation of such investments opportunity between the Company and the Other Brookfield Accounts);
(v) costs, fees and expenses for support services (including data processing, trading, settlement, stockholder relations, administration, custody, transfer agency, accounting, audit, appraisal, capital markets, valuation, NAV calculation, escrow, banking, consulting, prime brokerage, technology, legal and tax support and other services) outsourced to third-party service providers or rendered to the Company by the Adviser or its Affiliates in compliance with Section 4(e);
(vi) appraisal and valuation costs, fees and expenses, including costs, fees and expenses of independent appraisal or valuation services or third-party vendor price quotations;
(vii) costs and expenses of reporting to regulatory authorities in any jurisdiction in which the Company, the Operating Partnership or any of their respective Subsidiaries invests, is organized, is marketed or otherwise directly or indirectly conducts business related to the Company, the Operating Partnership or their Investments (including compliance with sections 1471 through 1474 of the Code), including the SEC, the U.S. Commodities and Futures Trading Commission (CFTC), the U.S. National Futures Association, the U.S. Bureau of Economic Analysis, the U.S. Treasury, the U.S. Internal Revenue Service and other national, state, provincial or local regulatory authorities in any country or territory (for example, Form PF, Form CPO-PQR and Form CTA-PR in the United States and filings related to the offering of interests in the Company in particular jurisdictions to the extent applicable);
(viii) sales, leasing and brokerage fees or commissions, finders fees, placement fees, asset management, property management, development fees, construction fees, loan servicing fees, custodial expenses and other costs, fees and expenses incurred in connection with the Investments, including managing, operating, maintaining and improving the Companys Real Property;
(ix) administrative service expenses, including but not limited to personnel and related employment costs incurred by the Adviser or its Affiliates in performing the administrative services described in Section 3 hereof (including, without limitation, legal, accounting, investor relations, tax, capital markets, financial operations services and other administrative services), including but not limited to the Advisers reasonable estimates of the allocable portion of salaries, bonuses and wages, benefits and overhead of all individuals performing such services, provided that no reimbursement shall be made for Adviser Expenses;
(x) all out-of-pocket expenses, fees, and liabilities that are incurred by the Company, the Operating Partnership or the Adviser on behalf of the Company or the Operating Partnership or that arise out of the operation and activities of the Company or the Operating Partnership, including expenses related to forming, organizing and maintaining Persons, including Joint Ventures and any Subsidiary, through or in which the Investments may be made or held;
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(xi) expenses connected with the payments of dividends or distributions in cash or any other form authorized or caused to be made by the Board to or on account of holders of the securities of the Company and the Operating Partnership, including, without limitation, in connection with any distribution reinvestment plan;
(xii) the compensation and expenses of the Independent Directors and the cost of liability insurance to indemnify the Directors and the Companys officers;
(xiii) the Companys allocable share of costs associated with technology-related expenses, including without limitation, any computer software or hardware, electronic equipment or purchased information technology services from third-party vendors or Affiliates of the Adviser, technology service providers and related software/hardware utilized in connection with the Companys investment and operational activities;
(xiv) the Companys allocable share of expenses incurred by managers, officers, personnel and agents of the Adviser for travel on the Companys behalf and other out-of-pocket expenses incurred by them in connection with the purchase, financing, refinancing, sale or other disposition of an Investment;
(xv) costs, fees and expenses relating to the structuring, incurrence and repayment of indebtedness (together with any interest and other amounts payable thereon and fees and expenses related thereto, including commitment fees, prepayment or redemption fees or premiums, accounting fees, legal fees, closing and other similar costs);
(xvi) license and registration fees;
(xvii) taxes and other governmental charges, fees, duties and penalties;
(xviii) fees and expenses associated with independent audits and outside legal costs, including compliance with applicable federal and state securities laws;
(xix) costs, expenses, fees and liabilities incurred in connection with any merger or consolidation of the Company or the Operating Partnership with, or conversion of the Company or the Operating Partnership to, a different entity;
(xx) costs, fees and expenses of winding up and liquidation;
(xxi) litigation, indemnification and other extraordinary or non-reoccurring expenses, including judgment or settlement of any proceeding against the Company or its Subsidiaries or Directors or officers of the Company in their capacity as such;
(xxii) dues, fees and charges of any trade association of which the Company is a member;
(xxiii) expenses incurred by Directors or officers of the Company or employees of the Adviser or its Affiliates in attending industry or trade conferences on behalf of the Company;
(xxiv) all insurance costs incurred in connection with the operation of the Companys business except for the costs attributable to the insurance that the Adviser elects to carry for itself and its personnel (other than the Directors and officers of the Company in their capacities as such);
(xxv) Bloomberg fees, research and software expenses, and other expenses incurred in connection with data services providing price feeds, news feeds, securities and company information and company fundamental data, all attributable to actual or potential Investments and S&P Index Alerts attributable to actual or potential Investments;
(xxvi) costs, fees and expenses for other third party research, news, industry information, analytics and expert networks/research resources relating to potential investment opportunities or the Investments;
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(xxvii) expenses connected with communications to and meetings of the Directors, including, without limitation, all costs of preparing, printing and hosting on data sites meeting materials, meeting space and costs of food and beverage;
(xxviii) expenses of any lobbying activities on the Companys behalf; and
(xxix) expenses connected with communications to and meetings of the holders of the securities of the Company or the Operating Partnership or securities of any of their respective Subsidiaries and other bookkeeping and clerical work necessary in maintaining relations with holders of such securities and in complying with the continuous reporting and other requirements of governmental bodies or agencies, including, without limitation, all costs of preparing and filing required reports with the SEC, the costs of any transfer agent and registrar, expenses in connection with the listing or trading of the securities on any exchange, the fees payable to any such exchange in connection with a listing, costs of preparing, printing and mailing the Companys annual report to the Stockholders and proxy materials with respect to any meeting of the Stockholders and any other reports or related statements.
(d) If any Other Brookfield Accounts also hold an Investment giving rise to the fees and expenses above, then such fees and expenses will be allocated pro rata to the Company and such Other Brookfield Accounts based on amounts invested or to be invested in such Investment; provided that Brookfield may, subject to the approval of the Independent Directors not otherwise interested in such transaction, allocate such fees and expenses among the Company and such Other Brookfield Accounts on any other basis if Brookfield determines in good faith that such other basis is clearly more equitable (however, Brookfield shall not be required to make any such adjustment or determination).
(e) The Adviser may, at its option, elect not to seek reimbursement for certain expenses during a given period, which determination shall not be deemed to construe a waiver of reimbursement for similar expenses in future periods.
(f) Any reimbursement payments owed by the Company to the Adviser may be offset by the Adviser against amounts due to the Company from the Adviser. Cost and expense reimbursement to the Adviser shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company.
(g) Notwithstanding the foregoing, the Adviser shall pay for all Organization and Offering Expenses (other than Selling Commissions and Stockholder Servicing Fees) incurred prior to July 6, 2022. All Organization and Offering Expenses (other than Selling Commissions and Stockholder Servicing Fees) (i) paid by the Adviser pursuant to this Section 11(g) and (ii) incurred by the Former Adviser pursuant to the Former Advisory Agreement and reimbursable to the Adviser pursuant to the Receivables Purchase Agreement between the Adviser and the Former Adviser entered into as of the Effective Date, shall be reimbursed by the Company to the Adviser in 60 equal monthly installments commencing on July 6, 2022.
(h) The Parties agree that out-of-pocket expenses incurred by the Adviser on behalf of the REIT and the Operating Partnership prior to the Effective Date shall be subject to the reimbursement as set forth in Section 11(g).
12. OTHER SERVICES. Should the Board request that the Adviser or any director, officer or employee thereof render services for the Company or the Operating Partnership other than as set forth in Section 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Adviser and the Independent Directors, subject to the limitations contained in the Charter, and shall not be deemed to be services pursuant to the terms of this Agreement.
13. LIMITATION ON TOTAL OPERATING EXPENSES. The Total Operating Expenses of the Company for any four consecutive fiscal quarters (the Expense Year) shall not exceed (any such excess, the Excess Amount) the greater of 2.0% of Average Invested Assets or 25.0% of Net Income (the 2%/25% Guidelines) for such four fiscal quarters unless the Independent Directors determine that such Excess Amount was justified, based on unusual and nonrecurring factors that the Independent Directors deem sufficient. If the Independent Directors do not approve such Excess Amount as being so justified, the Adviser shall reimburse the
14
Company the amount by which the Total Operating Expenses exceeded the 2%/25% Guidelines. If the Independent Directors determine such Excess Amount was justified, then, within 60 days after the end of any fiscal quarter of the Company for which Total Operating Expenses for the Expense Year exceed the 2%/25% Guidelines, the Adviser, at the direction of the Independent Directors, shall cause such fact to be disclosed to the Stockholders in writing (or the Company shall disclose such fact to the Stockholders in the next quarterly report of the Company or by filing a Current Report on Form 8-K with the SEC within 60 days of such quarter end), together with an explanation of the factors the Independent Directors considered in determining that such excess was justified. The Company will ensure that such determination will be reflected in the minutes of the meetings of the Board. All figures used in the foregoing computation shall be determined in accordance with GAAP applied on a consistent basis.
14. NO JOINT VENTURE. The Company and the Operating Partnership, on the one hand, and the Adviser on the other, are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.
15. TERM OF AGREEMENT. This Agreement shall continue in force for a period of one year from the Effective Date, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties. It is the duty of the Board to evaluate the performance of the Adviser annually before renewing the Agreement, and each such renewal shall be for a term of no more than one year.
16. TERMINATION BY THE PARTIES. This Agreement may be terminated (i) at the option of the Adviser immediately upon a Change of Control of the Company or the Operating Partnership; (ii) immediately by the Company for Cause or upon the bankruptcy of the Adviser; or (iii) by the Company upon 60 days written notice without Cause or penalty by a majority vote of the Independent Directors; or (iv) by the Adviser upon 60 days written notice to the Company. The provisions of Sections 19 through 23 survive termination of this Agreement.
17. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Adviser to an Affiliate of the Adviser with the approval of a majority of the Directors (including a majority of the Independent Directors). The Adviser may assign any rights to receive fees or other payments under this Agreement to any Person without obtaining the consent of the Board. This Agreement shall not be assigned by the Company or the Operating Partnership without the approval of the Adviser, except in the case of an assignment by the Company or the Operating Partnership to a corporation or other organization which is a successor to all of the assets, rights and obligations of the Company or the Operating Partnership, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company or the Operating Partnership, as applicable, is bound by this Agreement. This Agreement shall be binding on successors to the Company resulting from a Change of Control or sale of all or substantially all the assets of the Company or the Operating Partnership, and shall likewise be binding on any successor to the Adviser.
18. PAYMENTS TO AND DUTIES OF ADVISER UPON TERMINATION.
(a) After the Termination Date, the Adviser shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company and the Operating Partnership within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Adviser prior to termination of this Agreement, subject to the 2%/25% Guidelines to the extent applicable.
(b) The Adviser shall promptly upon termination:
(i) pay over to the Company and the Operating Partnership all money collected and held for the account of the Company and the Operating Partnership pursuant to this Agreement, after deducting any accrued compensation and reimbursement for its expenses to which it is then entitled;
(ii) deliver to the Board a full accounting, including a statement showing all payments collected by it and a statement of all money held by it, covering the period following the date of the last accounting furnished to the Board;
(iii) deliver to the Board all assets, including all Investments, and documents of the Company and the Operating Partnership then in the custody of the Adviser (if any); and
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(iv) cooperate with, and take all reasonable actions requested by, the Company and Board in making an orderly transition of the advisory function.
19. INDEMNIFICATION BY THE COMPANY AND THE OPERATING PARTNERSHIP. The Company and the Operating Partnership shall indemnify and hold harmless the Adviser and its Affiliates, including their respective officers, directors, managers, partners and employees, from all liability, claims, damages or losses arising in the performance of their duties hereunder, and related expenses, including reasonable attorneys fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, and to the fullest extent possible without such indemnification being inconsistent with the laws of the State of Maryland, the Charter or the provisions of Section II.G of the NASAA REIT Guidelines.
20. INDEMNIFICATION BY THE ADVISER. The Adviser shall indemnify and hold harmless the Company from contract or other liability, claims, damages, taxes or losses and related expenses including reasonable attorneys fees, to the extent that (i) such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and (ii) are incurred by reason of the Advisers bad faith, fraud, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement; provided, however, that the Adviser shall not be held responsible for any action of the Board in following or declining to follow any advice or recommendation given by the Adviser.
21. NON-SOLICITATION. For two years following the Termination Date, the Company shall not, without the consent of the Adviser, employ or otherwise retain any employee of the Adviser or any of its Affiliates or any person who has been employed by the Adviser or any of its Affiliates at any time within the two-year period immediately preceding the date on which such person commences employment with or is otherwise retained by the Company. The Company acknowledges and agrees that, in addition to any damages, the Adviser may be entitled to equitable relief for any violation of this Section 21 by the Company, including, without limitation, injunctive relief.
22. MISCELLANEOUS.
(a) Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Charter, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand, by courier or overnight carrier, by registered or certified mail or by electronic mail using the contact information set forth herein:
The Company and the Operating Partnership: |
Brookfield Real Estate Income Trust Inc. c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: Secretary Email: realestatenotices@brookfield.com |
|
with required copies (which shall not constitute notice) to: |
Alston & Bird LLP 1201 West Peachtree Street Atlanta, Georgia 30309 Attention: Rosemarie A. Thurston Email: rosemarie.thurston@alston.com |
|
The Adviser: |
Brookfield REIT Adviser LLC c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: General Counsel Email: realestatenotices@brookfield.com |
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with required copies (which shall not constitute notice) to: |
Brookfield Asset Management Inc. c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: General Counsel Email: justin.beber@brookfield.com |
Any party may at any time give notice in writing to the other parties of a change in its address for the purposes of this Section 22(a).
(b) Modification. This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.
(c) Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
(d) Applicable Law; Exclusive Jurisdiction; Jury Trial. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York. The parties hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in Borough of Manhattan, New York for purposes of any suit, action or other proceeding arising from this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. Each of the parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(e) Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
(f) Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
(g) Gender; Number. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.
(h) Headings. The titles and headings of Sections and Subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.
(i) Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
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23. INVESTMENT BY ADVISER OR ITS AFFILIATES. On or prior to the Effective Date, the Adviser or one of its Affiliates shall have contributed $200,000 in cash or property (the Adviser Investment) to the Company in exchange for Class I Common Shares or Class E Common Shares. The Adviser or its Affiliates may not sell any of the Shares purchased with the Adviser Investment while the Adviser acts in an advisory capacity to the Company; provided that the Shares purchased with the Adviser Investment shall be transferrable to other Affiliates of the Adviser. The restrictions included above shall not apply to any Shares acquired by the Adviser or its Affiliates other than the Shares acquired through the Adviser Investment. Neither the Adviser nor its Affiliates shall vote any Shares they now own, or hereafter acquire, or consent that such Shares be voted, on matters submitted to the Stockholders regarding (i) the removal of Brookfield REIT Adviser LLC as the Adviser; (ii) the removal of any member of the Board; or (iii) any transaction by and between the Company and the Adviser, a member of the Board or any of their Affiliates.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Advisory Agreement as of the date and year first above written.
Brookfield Real Estate Income Trust Inc. | ||
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Operating Partnership L.P. | ||
By: |
Brookfield REIT OP GP LLC, its general partner |
|
By: |
Brookfield Real Estate Income Trust Inc., its sole member |
|
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Adviser LLC | ||
By: |
/s/ Melissa Lang |
|
Name: Melissa Lang | ||
Title: Senior Vice President and Secretary |
Signature Page for Advisory Agreement
19
Exhibit 10.2
SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BROOKFIELD REIT OPERATING PARTNERSHIP L.P.
A DELAWARE LIMITED PARTNERSHIP
NOVEMBER 2, 2021
TABLE OF CONTENTS
Page | ||||||
ARTICLE 1 DEFINED TERMS |
2 | |||||
1.1. |
Definitions | 2 | ||||
1.2. |
Interpretation | 13 | ||||
ARTICLE 2 PARTNERSHIP FORMATION AND IDENTIFICATION |
13 | |||||
2.1. |
Formation | 13 | ||||
2.2. |
Name | 13 | ||||
2.3. |
Principal Office and Registered Agent | 14 | ||||
2.4. |
Partners | 14 | ||||
2.5. |
Term and Dissolution | 14 | ||||
2.6. |
Filing of Certificate and Perfection of Limited Partnership | 14 | ||||
2.7. |
Certificates Representing Partnership Units | 14 | ||||
ARTICLE 3 PURPOSE AND BUSINESS OF THE PARTNERSHIP |
15 | |||||
3.1. |
Purpose and Business | 15 | ||||
3.2. |
Representations and Warranties of the Partners | 16 | ||||
ARTICLE 4 CAPITAL CONTRIBUTIONS AND ACCOUNTS |
18 | |||||
4.1. |
Capital Contributions | 18 | ||||
4.2. |
Class C Units, Class D Units, Class E Units, Class T Units, Class I Units and Class S Units | 18 | ||||
4.3. |
Additional Capital Contributions and Issuances of Additional Partnership Interests | 18 | ||||
4.4. |
Additional Funding | 21 | ||||
4.5. |
Capital Accounts | 22 | ||||
4.6. |
Percentage Interests | 22 | ||||
4.7. |
No Interest on Contributions | 22 | ||||
4.8. |
Return of Capital Contributions | 22 | ||||
4.9. |
No Third-Party Beneficiary | 23 | ||||
4.10. |
No Preemptive Rights | 23 | ||||
ARTICLE 5 PROFITS AND LOSSES; DISTRIBUTIONS |
23 | |||||
5.1. |
Allocation of Profit and Loss | 23 | ||||
5.2. |
Distribution of Cash | 28 | ||||
5.3. |
REIT Distribution Requirements | 30 | ||||
5.4. |
No Right to Distributions in Kind | 31 | ||||
5.5. |
Limitations on Return of Capital Contributions | 31 | ||||
5.6. |
Amendments to Reflect Additional Partnership Units | 31 | ||||
5.7. |
Restricted Distributions | 31 | ||||
5.8. |
Distributions Upon Liquidation | 31 | ||||
5.9. |
Substantial Economic Effect | 32 | ||||
5.10. |
Reinvestment | 32 |
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ARTICLE 6 RIGHTS, OBLIGATIONS AND POWERS OF THE GENERAL PARTNER |
33 | |||||
6.1. |
Management of the Partnership | 33 | ||||
6.2. |
Delegation of Authority | 37 | ||||
6.3. |
Indemnification and Exculpation of Indemnitees | 38 | ||||
6.4. |
Liability and Obligations of the General Partner | 39 | ||||
6.5. |
Reimbursement of General Partner and REIT Limited Partner | 41 | ||||
6.6. |
Outside Activities | 42 | ||||
6.7. |
Transactions With Affiliates | 42 | ||||
6.8. |
Title to Partnership Assets | 43 | ||||
6.9. |
Other Matters Concerning the General Partner | 43 | ||||
6.10. |
No Duplication of Fees or Expenses | 43 | ||||
6.11. |
Reliance by Third Parties | 44 | ||||
6.12. |
Repurchases and Exchanges of REIT Shares | 44 | ||||
ARTICLE 7 CHANGES IN GENERAL PARTNER |
45 | |||||
7.1. |
Transfers by General Partner and REIT Limited Partner | 45 | ||||
7.2. |
Admission of a Substitute or Additional General Partner | 45 | ||||
7.3. |
Removal of a General Partner | 46 | ||||
7.4. |
Restriction on Termination Transactions | 46 | ||||
ARTICLE 8 RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS |
47 | |||||
8.1. |
Management of the Partnership | 47 | ||||
8.2. |
Power of Attorney | 47 | ||||
8.3. |
Limitation on Liability of Limited Partners | 49 | ||||
8.4. |
Ownership by Limited Partner of General Partner or Affiliate | 49 | ||||
8.5. |
Redemption Right | 49 | ||||
8.6. |
Outside Activities of Limited Partners | 53 | ||||
8.7. |
Expenses Not Attributable to Class E Units | 53 | ||||
ARTICLE 9 TRANSFERS OF LIMITED PARTNERSHIP INTERESTS |
54 | |||||
9.1. |
Purchase for Investment | 54 | ||||
9.2. |
Restrictions on Transfer of Limited Partnership Interests | 54 | ||||
9.3. |
Admission of Substitute Limited Partner | 56 | ||||
9.4. |
Rights of Assignees of Partnership Interests | 57 | ||||
9.5. |
Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner | 57 | ||||
9.6. |
Joint Ownership of Interests | 58 | ||||
ARTICLE 10 BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS |
58 | |||||
10.1. |
Books and Records | 58 | ||||
10.2. |
Custody of Partnership Funds; Bank Accounts | 58 | ||||
10.3. |
Fiscal and Taxable Year | 58 | ||||
10.4. |
Annual Tax Information and Report | 59 | ||||
10.5. |
Tax Elections; Special Basis Adjustments | 59 | ||||
10.6. |
Reports to Limited Partners | 60 |
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ARTICLE 11 DISSOLUTION, LIQUIDATION AND TERMINATION |
60 | |||||
11.1. |
Dissolution | 60 | ||||
11.2. |
Winding Up | 61 | ||||
11.3. |
Rights of Holders | 63 | ||||
11.4. |
Notice of Dissolution | 63 | ||||
11.5. |
Cancellation of Certificate of Limited Partnership | 63 | ||||
11.6. |
Reasonable Time for Winding-Up | 63 | ||||
ARTICLE 12 PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENT OF AGREEMENT; MEETINGS |
63 | |||||
12.1. |
Procedures of Actions and Consents of Partners Notices | 63 | ||||
12.2. |
Amendment | 63 | ||||
12.3. |
Actions and Consents of the Partners | 66 | ||||
ARTICLE 13 GENERAL PROVISIONS |
67 | |||||
13.1. |
Notices | 67 | ||||
13.2. |
Survival of Rights | 67 | ||||
13.3. |
Additional Documents | 67 | ||||
13.4. |
Severability | 67 | ||||
13.5. |
Side Letters | 67 | ||||
13.6. |
Entire Agreement | 68 | ||||
13.7. |
Pronouns and Plurals | 68 | ||||
13.8. |
Headings | 68 | ||||
13.9. |
Counterparts | 68 | ||||
13.10. |
Governing Law | 68 | ||||
13.11. |
No Partition | 68 | ||||
13.12. |
No Rights as Shareholders | 69 |
EXHIBITS
EXHIBIT A Notice of Exercise of Redemption Right
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SECOND AMENDED AND RESTATED LIMITED PARTNERSHIP AGREEMENT
OF
BROOKFIELD REIT OPERATING PARTNERSHIP L.P.
This Second Amended and Restated Limited Partnership Agreement of Brookfield REIT Operating Partnership L.P. (this Agreement) is entered into as of November 2, 2021, by and among Brookfield REIT OP GP LLC, a Delaware limited liability company, as the General Partner, Oaktree Real Estate Income Trust MGR, LLC, a Delaware limited liability company, as the Withdrawing General Partner, Brookfield Real Estate Income Trust Inc., a Maryland corporation, as the REIT Limited Partner, Brookfield REIT OP Special Limited Partner L.P., a Delaware limited partnership, as the Special Limited Partner, and the other Limited Partners party hereto from time to time. This Agreement shall supersede and replace any and all prior limited partnership agreements of the Partnership, including without limitation the Prior Agreement (defined below).
RECITALS:
WHEREAS, the Partnership was formed on August 9, 2018 as a limited partnership under the laws of the State of Delaware when a certificate of limited partnership was filed with the Secretary of State of the State of Delaware;
WHEREAS, the Partnership was previously named Oaktree Real Estate Income Trust Holdings, L.P. and on November 2, 2021 changed its name to Brookfield REIT Operating Partnership L.P. by filing a certificate of amendment to its certificate of limited partnership with the Secretary of State of the State of Delaware;
WHEREAS, the Partnership was previously governed by that certain Amended and Restated Limited Partnership Agreement of Oaktree Real Estate Income Trust Holdings, L.P., dated as of December 10, 2019 (the Prior Agreement);
WHEREAS, the Withdrawing General Partner, as the date hereof, is resigning as general partner of the Partnership and the General Partner is now appointed as general partner to the Partnership; and
WHEREAS, the parties hereto desire to amend and restate the Prior Agreement as set forth herein.
NOW, THEREFORE, in consideration of the foregoing, of mutual covenants between the parties hereto, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINED TERMS
1.1. Definitions. The following defined terms used in this Agreement shall have the meanings specified below:
Act means the Delaware Revised Uniform Limited Partnership Act, as amended from time to time, or any successor statute thereto.
Additional Funds has the meaning set forth in Section 4.4.
Additional Securities means any additional REIT Shares (other than REIT Shares issued in connection with a redemption pursuant to Section 8.5) or rights, options, warrants or convertible or exchangeable securities containing the right to subscribe for or purchase REIT Shares, as set forth in Section 4.3(a)(iii).
Administrative Expenses means (i) all administrative and operating costs and expenses incurred by the Partnership and its Subsidiaries, (ii) those administrative costs and expenses of the General Partner and the REIT Limited Partner, including any salaries or other payments to directors, officers or employees of the General Partner or the REIT Limited Partner, and any accounting and legal expenses of the General Partner or the REIT Limited Partner, which expenses are expenses of the Partnership and not the General Partner or the REIT Limited Partner, and (iii) to the extent not included in clause (ii) above, REIT Expenses; provided, however, that Administrative Expenses shall not include any administrative costs and expenses incurred by the REIT Limited Partner that are attributable to assets that are not owned directly or indirectly by the Partnership.
Adviser means the Person appointed, employed or contracted with by the REIT Limited Partner and the Partnership and responsible for directing or performing the day-to-day business affairs of the REIT Limited Partner and the Partnership, including any Person to whom the Adviser subcontracts all or substantially all of such functions.
Advisory Agreement means the agreement between the REIT Limited Partner, the Partnership and the Adviser pursuant to which the Adviser will direct or perform the day-to-day business affairs of the REIT Limited Partner and the Partnership, as such agreement may be amended or renewed from time to time.
Advisory Fees means the fees payable to the Adviser pursuant to the Advisory Agreement.
Affiliate means, with respect to any Person, (i) any Person directly or indirectly owning, controlling or holding with the power to vote 10% of more of the outstanding voting securities of such other Person; (ii) any Person 10% or more of whose 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, including any partnership in which such Person is a general partner; (iv) any executive officer, director, trustee or general partner of such other Person; and (v) any legal entity for which such Person acts an executive officer, director, trustee or general partner.
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Aggregate Share Ownership Limit has the meaning set forth in the Charter.
Agreed Value means the fair market value of a Partners non-cash Capital Contribution as of the date of contribution as agreed to by such Partner and the General Partner, reduced by any liabilities either assumed by the Partnership upon such contribution or to which such Property is subject when contributed, as determined under Section 752(c) of the Code and the Regulations thereunder . The Agreed Value of any non-cash Capital Contributions by a Partner as of the date of contribution are set forth on the Partnerships books and records.
Agreement has the meaning set forth in the preamble hereto.
Applicable Percentage has the meaning set forth in Section 8.5(b).
Assignee means a Person to whom a Partnership Interest has been Transferred in a manner permitted under this Agreement, but who has not yet become a Substitute Limited Partner, and who has the rights set forth in Section 9.4.
Attorney in Fact has the meaning set forth in Section 8.2(a).
Board of Directors has the meaning set forth in the Charter.
Brookfield means Brookfield Asset Management Inc., an Ontario corporation.
Brookfield Repurchase Arrangement means that certain Brookfield Share/OP Unit Repurchase Arrangement adopted by the REIT Limited Partner with respect to Class E REIT Shares and Class E Units received by an Affiliate of Brookfield in connection with such Brookfield Affiliates contribution of certain properties to the Partnership or an Affiliate thereof.
Capital Account has the meaning set forth in Section 4.5.
Capital Contribution means the total amount of cash, cash equivalents, and the Agreed Value of any Property or other asset (other than cash or cash equivalents) contributed or agreed to be contributed, as the context requires, to the Partnership by each Partner pursuant to the terms of this Agreement. Any reference to the Capital Contribution of a Partner shall include the Capital Contribution made by a predecessor holder of the Partnership Interest of such Partner.
Carrying Value means, with respect to any asset of the Partnership, the assets adjusted net basis for federal income tax purposes or, in the case of any asset contributed to the Partnership, the fair market value of such asset at the time of contribution, except that the Carrying Values of all assets may, at the discretion of the General Partner, be adjusted to equal their respective fair market values (as determined by the General Partner), in accordance with the rules set forth in Regulations Section 1.704-1(b)(2)(iv)(f), as provided for in Section 4.5. In the case of any asset of the Partnership that has a Carrying Value that differs from its adjusted tax basis, the Carrying Value shall be adjusted by the amount of depreciation, depletion and amortization calculated for purposes of the allocation of net profit or net loss pursuant to Article V hereof rather than the amount of depreciation, depletion and amortization determined for federal income tax purposes.
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Cash Amount means an amount of cash per Partnership Unit equal to the applicable Redemption Price determined by the General Partner.
Certificate means any instrument or document that is required under the laws of the State of Delaware, or any other jurisdiction in which the Partnership conducts business, to be signed and sworn to by any of the Partners of the Partnership (either by themselves or pursuant to the power-of-attorney granted to the General Partner in Section 8.2) and filed for recording in the appropriate public offices within the State of Delaware or such other jurisdiction to perfect or maintain the Partnership as a limited partnership, to effect the admission, withdrawal, or substitution of any Partner of the Partnership, or to protect the limited liability of the Limited Partners as limited partners under the laws of the State of Delaware or such other jurisdiction.
Charter means the charter of the REIT Limited Partner.
Class means a class of REIT Shares or Partnership Units, as the context may require.
Class C REIT Shares means the REIT Shares referred to as Class C Common Shares in the Charter.
Class C Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class C Unit as provided in this Agreement.
Class D REIT Shares means the REIT Shares referred to as Class D Common Shares in the Charter.
Class D Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class D Unit as provided in this Agreement.
Class E REIT Shares means the REIT Shares referred to as Class E Common Shares in the Charter.
Class E Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class E Unit as provided in this Agreement.
Class I REIT Shares means the REIT Shares referred to as Class I Common Shares in the Charter.
Class I Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class I Unit as provided in this Agreement.
Class S REIT Shares means the REIT Shares referred to as Class S Common Shares in the Charter.
Class S Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class S Unit as provided in this Agreement.
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Class T REIT Shares means the REIT Shares referred to as Class T Common Shares in the Charter.
Class T Unit means a Partnership Unit entitling the holder thereof to the rights of a holder of a Class T Unit as provided in this Agreement.
Code means the Internal Revenue Code of 1986, as amended, and as hereafter amended from time to time. Reference to any particular provision of the Code shall mean that provision in the Code at the date hereof and any successor provision of the Code.
Commission means the U.S. Securities and Exchange Commission.
Common Share Ownership Limit has the meaning set forth in the Charter.
Consent means the consent to, approval of or vote in favor or a proposed action by a Partner given in accordance with Article 12.
Contribution Agreements means those certain Contribution Agreements, by and among the REIT Limited Partner, the Partnership and the holders of Class E Units party thereto, as the same may be amended or modified from time to time, pursuant to which an Affiliate of Brookfield will contribute certain properties to the Partnership or an Affiliate thereof in exchange for Class E REIT Shares, Class E Units, or a combination thereof, which such Class E REIT Shares and Class E Units will be subject to the Brookfield Repurchase Arrangement.
Conversion Rate means a fraction, the numerator of which is the Net Asset Value Per Unit for the Class of Partnership Unit being converted and the denominator of which is the Net Asset Value Per Unit for the Class of Partnership Unit being issued in such conversion.
Debt means, as to any Person, as of any date of determination: (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services; (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person; (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any lien on any property owned by such Person, to the extent attributable to such Persons interest in such property, even though such Person has not assumed or become liable for the payment thereof; and (iv) lease obligations of such Person that, in accordance with generally accepted accounting principles, should be capitalized.
Distribution Fee means any ongoing distribution fees, dealer manager fees, stockholder servicing fees or similar fees (as distinguished from up-front or one-time selling commissions and dealer manager fees) payable with respect to outstanding REIT Shares or Partnership Units.
DRIP has the meaning set forth in Section 5.10.
DRIP Participant has the meaning set forth in Section 5.10.
Electronic Signature has the meaning set forth in Section 13.9.
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Event of Bankruptcy as to any Person means the filing of a petition for relief as to such Person as debtor or bankrupt under the Bankruptcy Code of 1978 or similar provision of law of any jurisdiction (except if such petition is contested by such Person and has been dismissed within 90 days); insolvency or bankruptcy of such Person as finally determined by a court proceeding; filing by such Person of a petition or application to accomplish the same or for the appointment of a receiver or a trustee for such Person or a substantial part of his assets; commencement of any proceedings relating to such Person as a debtor under any other reorganization, arrangement, insolvency, adjustment of debt or liquidation law of any jurisdiction, whether now in existence or hereinafter in effect, either by such Person or by another, provided that if such proceeding is commenced by another, such Person indicates his approval of such proceeding, consents thereto or acquiesces therein, or such proceeding is contested by such Person and has not been finally dismissed within 90 days.
Excepted Holder Limit has the meaning set forth in the Charter.
Excess Profits has the meaning set forth in Section 5.2(c)(i).
Exchange Act means the Securities Exchange Act of 1934, as amended from time to time, or any successor statute thereto.
Exchanged REIT Shares has the meaning set forth in Section 6.12(b).
Final Adjustment has the meaning set forth in Section 10.5(c)(ii) hereof.
General Partner means Brookfield REIT OP GP LLC, a Delaware limited liability company, and any Person who becomes a substitute or additional General Partner as provided herein, and any of their successors as General Partner, in such Persons capacity as a General Partner of the Partnership.
General Partnership Interest means any Partnership Interest held by the General Partner, other than any Partnership Interest it holds as a Limited Partner.
Holder means either (i) a Partner or (ii) an Assignee owning a Partnership Interest.
Hurdle Amount for any period during a calendar year means that amount that results in a 5% annualized internal rate of return on the Net Asset Value of the Performance Participation Units outstanding at the beginning of the then-current calendar year and all Performance Participation Units issued since the beginning of the then-current calendar year, taking into account the timing and amount of all distributions accrued or paid (without duplication) on all such Performance Participation Units and all issuances of Performance Participation Units over the period and calculated in accordance with recognized industry practices. The ending Net Asset Value of the Performance Participation Units used in calculating the internal rate of return will be calculated before giving effect to any allocation or accrual to the Performance Participation Interest and any applicable Distribution Fee expenses, provided that the calculation of the Hurdle Amount for any period will exclude any Performance Participation Units repurchased during such period, which Performance Participation Units will be subject to the Performance Participation Interest upon such repurchase as described in Section 5.2(c).
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Incapacity has the meaning set forth in Section 9.5.
Indemnitee means (i) any Person made a party to a proceeding by reason of its status as the General Partner, or a member, director, officer or employee of the General Partner, the REIT Limited Partner or the Partnership (including, without limitation, the Partnership Representative and any designated individual, within the meaning of the Regulations promulgated pursuant to Section 6623 of the Code), (ii) the Adviser, (iii) the Special Limited Partner, (iv) the REIT Limited Partner and (v) such other Persons (including Affiliates of the General Partner, the REIT Limited Partner or the Partnership) as the General Partner may designate from time to time, in its sole and absolute discretion.
Initial Class E Units means the Class E Units issued by the Partnership pursuant to the Contribution Agreements.
Joint Venture means any joint venture or partnership arrangement (other than the Partnership) in which the Partnership or any of its Subsidiaries is a co-venturer or partner established to acquire Real Properties or hold other assets of the Partnership.
Limited Partner means the REIT Limited Partner and any other Person identified as Limited Partner on the books and records of the Partnership, upon the execution and delivery by such Person of an additional limited partner signature page, and any Person who becomes a Substitute Limited Partner, in such Persons capacity as a Limited Partner in the Partnership.
Limited Partnership Interest means the ownership interest of a Limited Partner in the Partnership at any particular time, including the right of such Limited Partner to any and all benefits to which such Limited Partner may be entitled as provided in this Agreement and in the Act, together with the obligations of such Limited Partner to comply with all the provisions of this Agreement and of such Act. A Limited Partnership Interest may be expressed as a number of Partnership Units.
Liquidating Event has the meaning set forth in Section 11.1.
Liquidator has the meaning set forth in Section 11.2(a).
Listing means the listing of the REIT Shares on a national securities exchange. Upon such Listing, the REIT Shares shall be deemed Listed.
Loss has the meaning set forth in Section 5.1(e).
Loss Carryforward Amount shall initially equal zero and shall cumulatively increase by the absolute value of any negative annual Total Return and decrease by any positive annual Total Return, provided that the Loss Carryforward Amount shall at no time be less than zero and provided further that the calculation of the Loss Carryforward Amount will exclude the Total Return related to any Performance Participation Units repurchased during such year, which Performance Participation Units will be subject to the Performance Participation Interest upon such repurchase as described in Section 5.3(c).
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Net Asset Value means (i) for any Partnership Units, the net asset value of such Partnership Units, determined as of the last business day of each month as described in the Prospectus and (ii) for any REIT Shares, the net asset value of such REIT Shares, determined as of the last business day or each month as described in the Prospectus.
Net Asset Value Per REIT Share means, for each Class of REIT Shares, the net asset value per share of such Class of REIT Shares, determined as of the last business day of each month as described in the Prospectus.
Net Asset Value Per Unit means, for each Class of Partnership Unit, the net asset value per unit of such Class of Partnership Unit, determined as of the last business day of each month as described in the Prospectus.
Notice of Redemption means the Notice of Exercise of Redemption Right substantially in the form attached as Exhibit A.
Offer has the meaning set forth in Section 7.4(a)(ii).
Offering means the offering and sale of securities, including without limitation REIT Shares and Units.
Partner means any General Partner, Special Limited Partner or Limited Partner.
Partner Nonrecourse Debt Minimum Gain means an amount with respect to each Partners nonrecourse debt (as defined in Regulations Section 1.704-2(b)(4)) equal to the Partnership Minimum Gain that would result if such partner nonrecourse debt were treated as a nonrecourse liability (as defined in Regulations Section 1.752-1(a)(2)) determined in accordance with Regulations Section 1.704-2(i)(3).
Partnership means Brookfield REIT Operating Partnership L.P., a Delaware limited partnership.
Partnership Interest means an ownership interest in the Partnership held by a Limited Partner, the General Partner or the Special Limited Partner and includes any and all benefits to which the holder of such a Partnership Interest may be entitled as provided in this Agreement, together with all obligations of such Person to comply with the terms and provisions of this Agreement.
Partnership Minimum Gain has the meaning specified in Regulations Sections 1.704-2(b)(2) and 1.704-2(d).
Partnership Record Date means the record date established by the General Partner for the distribution of cash pursuant to Section 5.2, which record date shall be the same as the record date established by the REIT Limited Partner for a distribution to its stockholders of some or all of its portion of such distribution.
Partnership Register has the meaning set forth in Section 4.1 hereof.
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Partnership Representative has the meaning set forth in Section 10.5(a).
Partnership Unit means a fractional, undivided share of the Partnership Interests (other than the General Partnership Interest and the Special Limited Partner Interest) of all Partners issued hereunder, including Class C Units, Class D Units, Class E Units, Class T Units, Class I Units and Class S Units. The allocation of Partnership Units of each Class among the Partners shall be maintained on the books and records of the Partnership.
Partnership Year means the fiscal year of the Partnership.
Percentage Interest means the percentage ownership interest in the Partnership of each Partner, as determined by dividing the Partnership Units owned by a Partner by the total number of Partnership Units then outstanding. The Percentage Interest of each Partner shall be maintained on the books and records of the Partnership.
Performance Participation Interest has the meaning set forth in Section 5.2(c).
Performance Participation Units means Class C Units, Class D Units, Class I Units, Class S Units and Class T Units. Class E Units shall not be considered Performance Participation Units.
Person means an individual, corporation, partnership, limited liability company, estate, trust (including a trust qualified under Sections 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 legal entity.
Prior Agreement has the meaning set forth in the recitals of this Agreement.
Profit has the meaning set forth in Section 5.1(e).
Property means any Real Property, Real Estate Related Assets or other investment in which the Partnership holds an ownership interest.
Prospectus means the prospectus included in the most recent effective registration statement filed by the REIT Limited Partner with the Commission with respect to the applicable Offering, as such prospectus may be amended or supplemented from time to time.
Real Estate Related Assets means any investments (other than investments in Real Property), directly or indirectly, by the Partnership in interests related to real property of whatever nature, including, but not limited to (i) mortgage, mezzanine, bridge and other loans on Real Property, (ii) equity securities or interests in corporations (to the extent consistent with the REIT Requirements), limited liability companies, partnerships and other joint ventures having an equity interest in real property, real estate investment trusts, ground leases, tenant-in-common interests, participating mortgages, convertible mortgages or other debt instruments convertible into equity interests in real property by the terms thereof, options to purchase real estate, real property purchase-and-leaseback transactions and other transactions and investments with respect to real estate, and (iii) debt securities such as collateralized mortgage backed securities, commercial mortgages and other debt securities.
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Real Property means real property owned from time to time by the Partnership or a subsidiary thereof, either directly or through Joint Ventures, which consists of (i) land only, (ii) land, including the buildings located thereon, (iii) buildings only or (iv) such investments the REIT Limited Partner and the Adviser mutually designate as Real Property to the extent such investments could be classified as Real Property.
Received REIT Shares has the meaning set forth in Section 6.12(b).
Redemption has the meaning set forth in Section 8.5(a).
Redemption Price means the Value of the REIT Shares Amount as of the end of the Specified Redemption Date.
Redemption Right has the meaning set forth in Section 8.5(a).
Regulations means the federal income tax regulations promulgated under the Code, as amended and as hereafter amended from time to time. Reference to any particular provision of the Regulations shall mean that provision of the Regulations on the date hereof and any successor provision of the Regulations.
Regulatory Allocations has the meaning set forth in Section 5.1(g).
REIT means a corporation, trust, association or other legal entity (other than a real estate syndication) that is engaged primarily in investing in equity interests in real estate (including fee ownership and leasehold interests) or in loans secured by real estate or both as defined pursuant to Sections 856 through 860 of the Code and any successor or other provisions of the Code relating to real estate investment trusts (including provisions as to the attribution of ownership of beneficial interests therein) and the regulations promulgated thereunder.
REIT Expenses means (i) costs and expenses relating to the formation and continuity of existence and operation of the REIT Limited Partner and any Subsidiaries thereof (which Subsidiaries shall, for purposes of this defined term, be included within the definition of REIT Limited Partner), including taxes, fees and assessments associated therewith, any and all costs, expenses or fees payable to any director, officer, or employee of the REIT Limited Partner or service providers to the REIT Limited Partner (including service providers affiliated with the Adviser), (ii) costs and expenses relating to any public offering and registration of securities by the REIT Limited Partner and all filings, statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling commissions applicable to any such offering of securities, any Distribution Fees, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iii) costs and expenses relating to any private offering of securities by the REIT Limited Partner and all statements, reports, fees and expenses incidental thereto, including, without limitation, underwriting discounts and selling commissions applicable to any such offering of securities, any Distribution Fees, and any costs and expenses associated with any claims made by any holders of such securities or any underwriters or placement agents thereof, (iv) costs and
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expenses associated with any repurchase of any securities by the REIT Limited Partner, (v) costs and expenses associated with the preparation and filing of any periodic or other reports and communications by the REIT Limited Partner under federal, state or local laws or regulations, including filings with the Commission, (vi) costs and expenses associated with compliance by the REIT Limited Partner with laws, rules and regulations promulgated by any regulatory body, including the Commission and any securities exchange, (vii) the Advisory Fee and other fees and expenses payable to other services providers of the REIT Limited Partner, (viii) costs and expenses incurred by the REIT Limited Partner relating to any issuing or redemption of Partnership Interests and/or REIT Shares, (ix) all other operating or administrative costs of the REIT Limited Partner incurred in the ordinary course of its business on behalf of or in connection with the Partnership and (x) without duplication, amounts required to be paid or reimbursed to the Adviser pursuant to Section 11(c) of the Advisory Agreement.
REIT Limited Partner means Brookfield Real Estate Income Trust Inc., a Maryland corporation.
REIT Requirements means the requirements for qualifying as a REIT under the Code and Regulations.
REIT Share means a share of common stock, $0.01 par value per share, of the REIT Limited Partner (or successor entity, as the case may be), including Class C REIT Shares, Class D REIT Shares, Class E REIT Shares, Class T REIT Shares, Class I REIT Shares and Class S REIT Shares.
REIT Shares Amount means a number of REIT Shares having the same Class designation as the Class of Partnership Units offered for exchange by a Tendering Party equal to such number of Partnership Units; provided that in the event the REIT Limited Partner issues to all holders of REIT Shares rights, options, warrants or convertible or exchangeable securities entitling the stockholders to subscribe for or purchase REIT Shares, or any other securities or property (collectively, the rights), and the rights have not expired at the Specified Redemption Date, then the REIT Shares Amount shall also include the rights issuable to a holder of the REIT Shares Amount of REIT Shares on the record date fixed for purposes of determining the holders of REIT Shares entitled to rights.
Related Party means, with respect to any Person, any other Person whose ownership of shares of the REIT Limited Partners capital stock would be attributed to the first such Person under Code Section 544 (as modified by Code Section 856(h)(1)(B)).
Securities Act means the Securities Act of 1933, as amended from time to time, or any successor statute thereto. Reference to any provision of the Securities Act 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.
Service means the United States Internal Revenue Service.
Side Letters has the meaning set forth in Section 13.5.
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Special Limited Partner means Brookfield REIT OP Special Limited Partner L.P., a Delaware limited partnership, which shall be a limited partner of the Partnership and recognized as such under applicable Delaware law, but not a Limited Partner within the meaning of this Agreement (other than to the extent it owns Partnership Units).
Special Limited Partner Interest means the interest of the Special Limited Partner in the Partnership representing solely its right as the holder of an interest in distributions described in Section 5.2 (and any corresponding allocations of income, gain, loss and deduction under this Agreement), and not any interest in Partnership Units it may own from time to time.
Specified Redemption Date means the first business day of the month following the month of the day that is 45 days after the receipt by the General Partner of the Notice of Redemption.
Subsidiary means, with respect to any Person, any corporation or other entity in which such Person has made an equity investment.
Substitute Limited Partner means any Person admitted to the Partnership as a Limited Partner pursuant to Section 9.3.
Successor Entity has the meaning set forth in Section 4.3(a)(ii).
Survivor has the meaning set forth in Section 7.4(b).
Tax Advances has the meaning set forth in Section 5.2(d).
Tax Items has the meaning set forth in Section 5.1(f)(ii).
Tendered Units has the meaning set forth in Section 8.5(a).
Tendering Party has the meaning set forth in Section 8.5(a).
Termination Transaction has the meaning set forth in Section 7.1(b).
Total Return for any period since the end of the prior calendar year shall equal the sum of: (i) all distributions (including any deemed distributions under Section 5.2(a)) accrued or paid (without duplication) on the Performance Participation Units outstanding at the end of such period since the beginning of the then-current calendar year plus (ii) the change in aggregate Net Asset Value of such Performance Participation Units since the beginning of such year, before giving effect to (x) changes resulting solely from the proceeds of issuances of Performance Participation Units, (y) any allocation or accrual to the Performance Participation Interest and (z) any applicable Distribution Fee expenses (including any payments made to the REIT Limited Partner for payment of such expenses). For the avoidance of doubt, the calculation of Total Return will (i) include any appreciation or depreciation in the Net Asset Value of Performance Participation Units issued during the then-current calendar year but (ii) exclude the proceeds from the initial issuance of such Performance Participation Units.
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Transfer has the meaning set forth in Section 9.2(a). Transfers, Transferred, and Transferring have correlative meanings.
Unit Equivalent means, on any given date, a REIT Share, or REIT Shares, or any portion of a REIT Share, of any given Class having the same Value as the Net Asset Value of one Partnership Unit of the same Class on such date.
Value means, for any Class of REIT Shares: (i) if such Class of REIT Shares are Listed, the average closing price per share for the previous 30 trading days, or (ii) if such Class of REIT Shares are not Listed, the Net Asset Value Per REIT Share for REIT Shares of that Class.
Withdrawing General Partner means Oaktree Real Estate Income Trust MGR, LLC, a Delaware limited liability company.
1.2. Interpretation. The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Wherever the context may require, any pronoun used in this Agreement shall include the corresponding masculine, feminine and neuter forms. For all purposes of this Agreement, the term control and variations thereof shall mean possession of the authority to direct or cause the direction of the management and policies of the specified entity, through the direct or indirect ownership of equity interests therein, by contract or otherwise. As used in this Agreement, the words include, includes and including shall be deemed to be followed by the phrase without limitation. As used in this Agreement, the terms herein, hereof and hereunder shall refer to this Agreement in its entirety. Any references in this Agreement to Sections or Articles shall, unless otherwise specified, refer to Sections or Articles, respectively, in this Agreement. Any references in this Agreement to an Exhibit shall, unless otherwise specified, refer to an Exhibit attached to this Agreement, as such Exhibit may be amended from time to time. Each such Exhibit shall be deemed incorporated in this Agreement in full.
ARTICLE 2
PARTNERSHIP FORMATION AND IDENTIFICATION
2.1. Formation. The Partnership was formed and continues as a limited partnership pursuant to the Act and all other pertinent laws of the State of Delaware, for the purposes and upon the terms and conditions set forth in this Agreement. Except as expressly provided herein to the contrary, the rights and obligations of the Partners and the administration and termination of the Partnership shall be governed by the Act. No Partner has any interest in any Partnership property, and the Partnership Interest of each Partner shall be personal property for all purposes.
2.2. Name. The name of the Partnership is Brookfield REIT Operating Partnership L.P. The Partnerships business may be conducted under any other name or names deemed advisable by the General Partner, including the name of the REIT Limited Partner or any Affiliate thereof. The words Limited Partnership, L.P., Ltd. or similar words or letters shall be included in the Partnerships name where necessary for the purposes of complying with the laws of any jurisdiction that so requires. The General Partner in its sole and absolute discretion may change the name of the Partnership at any time and from time to time and shall notify the Partners of such change in the next regular communication to the Partners (or, in the sole discretion of the General Partner, earlier).
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2.3. Principal Office and Registered Agent. The specified office and principal place of business of the Partnership shall be c/o Brookfield Place New York, 250 Vesey Street, 15th Floor, New York, NY 10281. The General Partner may at any time change the location of such office, provided the General Partner gives notice to the Partners of any such change. The name and address of the Partnerships registered agent is Corporation Service Company, 251 Little Falls Drive, Wilmington, DE 19808. The sole duty of the registered agent as such is to forward to the Partnership any notice that is served on him as registered agent. The Partnership may maintain offices at such other place or places within or outside the State of Delaware as the General Partner deems advisable.
2.4. Partners.
(a) The Withdrawing General Partner hereby withdraws as general partner of the Partnership.
(b) The General Partner of the Partnership is Brookfield REIT OP GP LLC, a Delaware limited liability company. Its principal place of business is the same as that of the Partnership.
(c) The Limited Partners are the REIT Limited Partner and any other Persons identified as Limited Partners on the books and records of the Partnership. A Person shall be admitted as a Limited Partner of the Partnership at the time that (i) this Agreement or a counterpart hereof is executed by or on behalf of such Person and (ii) such Person is listed by the General Partner as a Limited Partner of the Partnership in the Partnership Register.
(d) The Special Limited Partner is Brookfield REIT OP Special Limited Partner L.P., a Delaware limited partnership. Its principal place of business is the same as that of the Partnership.
2.5. Term and Dissolution. The Partnership commenced upon the filing for record of the Certificate in the office of the Secretary of State of the State of Delaware on August 9, 2018 and shall continue indefinitely, unless the Partnership is dissolved pursuant to the provisions of Article 11 or as otherwise provided by law.
2.6. Filing of Certificate and Perfection of Limited Partnership. The General Partner shall execute, acknowledge, record and file at the expense of the Partnership, any and all amendments to the Certificate(s) and all requisite fictitious name statements and notices in such places and jurisdictions as may be necessary to cause the Partnership to be treated as a limited partnership under, and otherwise to comply with, the laws of each state or other jurisdiction in which the Partnership conducts business.
2.7. Certificates Representing Partnership Units. At the request of a Limited Partner, the General Partner, at its sole and absolute discretion, may issue (but in no way is obligated to issue) a certificate specifying the number and Class of Partnership Units owned by the Limited Partner as of the date of such certificate. Any such certificate (i) shall be in form and substance as approved by the General Partner, (ii) shall not be negotiable and (iii) shall bear a legend to the following effect:
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This certificate is not negotiable. The Partnership Units represented by this certificate are governed by and transferable only in accordance with the provisions of the Limited Partnership Agreement of Brookfield REIT Operating Partnership L.P., as amended from time to time.
ARTICLE 3
PURPOSE AND BUSINESS OF THE PARTNERSHIP
3.1. Purpose and Business.
(a) The purpose and nature of the business to be conducted by the Partnership is (i) to conduct any business that may be lawfully conducted by a limited partnership organized pursuant to the Act, provided, however, that such business shall be limited to and conducted in such a manner as to permit the REIT Limited Partner at all times to qualify as a REIT, and in a manner such that the REIT Limited Partner will not be subject to any taxes under Section 857 or 4981 of the Code (to the extent the REIT Limited Partner determines not being subject to such taxes is desirable), unless the REIT Limited Partner otherwise ceases to qualify as a REIT, (ii) to enter into any partnership, joint venture or other similar arrangement to engage in any of the foregoing or the ownership of interests in any entity engaged in any of the foregoing and (iii) to do anything necessary or incidental to the foregoing. In connection with the foregoing, and without limiting the REIT Limited Partners right in its sole and absolute discretion to qualify or cease qualifying as a REIT, the Partners acknowledge that the REIT Limited Partner intends to qualify as a REIT for federal income tax purposes and that such qualification and the avoidance of income and excise taxes on the REIT Limited Partner inures to the benefit of all the Partners and not solely to the REIT Limited Partner. Notwithstanding the foregoing, the Partners agree that the REIT Limited Partner may terminate its status as a REIT under the Code at any time to the full extent permitted under the Charter. The REIT Limited Partner on behalf of the Partnership shall also be empowered to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a publicly traded partnership for purposes of Section 7704 of the Code.
(b) Notwithstanding any other provision in this Agreement, the General Partner shall cause the Partnership not to take, or to refrain from taking, any action that, in the judgment of the General Partner, in its sole and absolute discretion, (i) could adversely affect the ability of the REIT Limited Partner to satisfy the REIT Requirements or to qualify as a domestically controlled qualified investment entity (as defined in Section 897(h)(4) of the Code), (ii) could subject the REIT Limited Partner to any taxes under Code Section 857 or Code Section 4981 or any other related or successor provision under the Code, (iii) could violate any law or regulation of any governmental body or agency having jurisdiction over the REIT Limited Partner, its securities or the Partnership or (iv) could cause the REIT Limited Partner not to be in compliance in all material respects with any covenants, conditions or restrictions now or hereafter placed upon the REIT Limited Partner pursuant to an agreement to which it is a party,
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unless, in any such case, such action (or inaction) under clause (i), clause (ii), clause (iii) or clause (iv) above shall have been specifically Consented to by the REIT Limited Partner. The foregoing requirement, and all other requirements, limitations and/or restrictions set forth in this Agreement that are intended for the REIT Limited Partner to maintain compliance as a REIT (or that otherwise are intended to prevent any taxes to be paid by the REIT Limited Partner while it has elected to be a REIT), shall be void and of no effect if the REIT Limited Partner otherwise shall have ceased to, or the REIT Limited Partner determines that the REIT Limited Partner shall no longer, qualify as a REIT.
(c) The Partnership shall be a partnership only for the purposes specified in Section 3.1 hereof, and this Agreement shall not be deemed to create a company, venture or partnership between or among the Partners or any other Persons with respect to any activities whatsoever other than the activities within the purposes of the Partnership as specified in Section 3.1 hereof. Except as otherwise provided in this Agreement, no Partner shall have any authority to act for, bind, commit or assume any obligation or responsibility on behalf of the Partnership, its properties or any other Partner. No Partner, in its capacity as a Partner under this Agreement, shall be responsible or liable for any indebtedness or obligation of another Partner, nor shall the Partnership be responsible or liable for any indebtedness or obligation of any Partner, incurred either before or after the execution and delivery of this Agreement by such Partner, except as to those responsibilities, liabilities, indebtedness or obligations incurred pursuant to and as limited by the terms of this Agreement and the Act.
3.2. Representations and Warranties of the Partners
(a) Each Partner that is an individual (including, without limitation, each additional Limited Partner or Substitute Limited Partner as a condition to becoming an additional Limited Partner or a Substitute Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) the consummation of the transactions contemplated by this Agreement to be performed by such Partner will not result in a breach or violation of, or a default under, any material agreement by which such Partner or any of such Partners property is bound, or any statute, regulation, order or other law to which such Partner is subject, (ii) such Partner has the legal capacity to enter into this Agreement and perform such Partners obligations hereunder, and (iii) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms.
(b) Each Partner that is not an individual (including, without limitation, each additional Limited Partner or Substitute Limited Partner as a condition to becoming an additional Limited Partner or a Substitute Limited Partner) represents and warrants to, and covenants with, each other Partner that (i) all transactions contemplated by this Agreement to be performed by it have been duly authorized by all necessary action, including, without limitation, that of its general partner(s), manager(s), committee(s), trustee(s), beneficiaries, directors and/or stockholder(s) (as the case may be) as required, (ii) the consummation of such transactions shall not result in a breach or violation of, or a default under, its partnership or operating agreement, trust agreement, charter or bylaws (as the case may be) or any material agreement by which such Partner or any of such Partners properties or any of its partners, members, beneficiaries, trustees or stockholders (as the case may be) is or are bound, or any statute, regulation, order or other law to which such Partner or any of its partners, members, trustees, beneficiaries or stockholders (as the case may be) is or are subject, and (iii) this Agreement is binding upon, and enforceable against, such Partner in accordance with its terms
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(c) Each Partner (including, without limitation, each additional Limited Partner or Substitute Limited Partner as a condition to becoming an additional Limited Partner or Substitute Limited Partner) represents, warrants and agrees that (i) it has acquired and continues to hold its interest in the Partnership for its own account for investment purposes only and not for the purpose of, or with a view toward, the resale or distribution of all or any part thereof in violation of applicable laws, and not with a view toward selling or otherwise distributing such interest or any part thereof at any particular time or under any predetermined circumstances in violation of applicable laws and (ii) it is a sophisticated investor, able and accustomed to handling sophisticated financial matters for itself, particularly real estate investments, and that it has a sufficiently high net worth that it does not anticipate a need for the funds that it has invested in the Partnership in what it understands to be a highly speculative and illiquid investment,
(d) The representations and warranties contained in this Section 3.2 shall survive the execution and delivery of this Agreement by each Partner (and, in the case of an additional Limited Partner or a Substitute Limited Partner, the admission of such additional Limited Partner or Substitute Limited Partner as a Limited Partner in the Partnership) and the dissolution, liquidation and termination of the Partnership.
(e) Each Partner (including, without limitation, each additional Limited Partner or Substitute Limited Partner as a condition to becoming an additional Limited Partner or Substitute Limited Partner) hereby acknowledges that no representations as to potential profit, cash flows, funds from operations or yield, if any, in respect of the Partnership or the REIT Limited Partner have been made by any Partner or any employee or representative or Affiliate of any Partner, and that projections and any other information, including, without limitation, financial and descriptive information and documentation, that may have been in any manner submitted to such Partner shall not constitute any representation or warranty of any kind or nature, express or implied.
(f) Notwithstanding the foregoing, the General Partner may, in its sole and absolute discretion, permit the modification of any of the representations and warranties contained in Sections 3.2(a), 3.2(b) and 3.2(c) above as applicable to any Partner (including, without limitation any additional Limited Partner or Substitute Limited Partner or any transferee of either), provided that such representations and warranties, as modified, shall be set forth in a separate writing addressed to the Partnership and the General Partner.
(g) When a Person (such as a broker, dealer, bank, trust company or clearing corporation or an agent of any of the foregoing) is acting as nominee, agent or in some other representative capacity for another Person in acquiring and/or holding Partnership Interests, the representations made in this Section 3.2 shall be made by the beneficial owner of Partnership Interests held by the nominee.
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ARTICLE 4
CAPITAL CONTRIBUTIONS AND ACCOUNTS
4.1. Capital Contributions. The General Partner and the Limited Partners have made Capital Contributions to the Partnership in exchange for Partnership Interests as set forth in the books and records of the Partnership. The General Partner shall cause to be maintained in the principal business office of the Partnership, or such other place as may be determined by the General Partner, the books and records of the Partnership which shall include, among other things, a register that contains the name, address, and number and Class of Partnership Units of each Partner (the Partnership Register) and that reflects periodic changes to the Capital Contributions made by the Partners and redemptions and other purchases of Partnership Units by the Partnership, and corresponding changes to the Partnership Interests of the Partners, without preparing a formal amendment to this Agreement. Any reference in this Agreement to the Partnership Register shall be deemed a reference to the Partnership Register as in effect from time to time. Subject to the terms of this Agreement, the General Partner may take any action authorized hereunder in respect of the Partnership Register without any need to obtain the consent or approval of any other Partner. No action of any Limited Partner shall be required to amend or update the Partnership Register. Except as required by law, no Limited Partner shall be entitled to receive a copy of the information set forth in the Partnership Register relating to any Partner other than itself.
4.2. Class C Units, Class D Units, Class E Units, Class T Units, Class I Units and Class S Units. The General Partner is hereby authorized to cause the Partnership to issue Partnership Units designated as Class C Units, Class D Units, Class E Units, Class T Units, Class I Units and Class S Units. Each such Class shall have the rights and obligations attributed to that Class under this Agreement.
4.3. Additional Capital Contributions and Issuances of Additional Partnership Interests. Except as provided in this Section 4.3 or in Section 4.4, the Partners shall have no right or obligation to make any additional Capital Contributions or loans to the Partnership. The REIT Limited Partner may contribute additional capital to the Partnership, from time to time, and receive additional Partnership Interests in respect thereof, in the manner contemplated in this Section 4.3.
(a) Issuances of Additional Partnership Interests.
(i) General. The General Partner is hereby authorized to cause the Partnership to issue such additional Partnership Interests in the form of Partnership Units for any Partnership purpose at any time or from time to time to the Partners (including the General Partner and the REIT Limited Partner) or to other Persons for such consideration and on such terms and conditions as shall be established by the General Partner in its sole and absolute discretion, all without the approval of any Limited Partners, including but not limited to, Partnership Units issued in connection with the issuance of REIT Shares of, or other interests in, the REIT Limited Partner, Partnership Units issued to the Special Limited Partner in lieu of payments or distributions of the Performance Participation Interest, and Partnership Units issued to the Adviser in lieu of cash fees pursuant to the
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Advisory Agreement. Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units (i) upon the conversion, redemption or exchange of any Debt, Partnership Units, or other securities issued by the Partnership, (ii) for such consideration as the General Partner may determine, (iii) in connection with any merger of any other Person into the Partnership or (iv) upon the contribution of property or assets to the Partnership or otherwise in connection with the Partnerships acquisition of a property or assets. Upon the issuance of any additional Partnership Interest, the General Partner shall, without the Consent of any other Partners, amend the Partnership Register as appropriate to reflect such issuance. Any additional Partnership Interests issued thereby may be issued in one or more Classes (including the Classes specified in this Agreement or any other Classes), or one or more series of any of such Classes, with such designations, preferences and relative, participating, optional or other special rights, voting and other powers and duties, including rights, powers and duties senior to Limited Partnership Interests, all as shall be determined by the General Partner in its sole and absolute discretion and without the approval of any Limited Partner, subject to Delaware law, including, without limitation, (i) the allocations of items of Partnership income, gain, loss, deduction and credit to each such Class or series of Partnership Interests; (ii) the right of each such Class or series of Partnership Interests to share in Partnership distributions; and (iii) the rights of each such Class or series of Partnership Interests upon dissolution and liquidation of the Partnership; provided, however, that no additional Partnership Interests shall be issued to the REIT Limited Partner unless:
(1) the additional Partnership Interests are issued in connection with an issuance of Additional Securities by the REIT Limited Partner in accordance with Section 4.3(a)(iii);
(2) the additional Partnership Interests are issued in exchange for property owned by the REIT Limited Partner or in exchange for other consideration with a fair market value, as determined by the General Partner, in good faith, equal to the value of the Partnership Interests;
(3) the additional Partnership Interests are issued upon the conversion, redemption or exchange of Debt, Partnership Units or other securities issued by the Partnership; or
(4) the additional Partnership Interests are also offered and/or issued to all Partners holding Partnership Units of the same Class or series in proportion to the Partnership Units of such Class or series held by such Partners.
Without limiting the foregoing, the General Partner is expressly authorized to cause the Partnership to issue Partnership Units for less than fair market value, so long as the General Partner concludes in good faith that such issuance is in the best interests of the REIT Limited Partner and the Partnership.
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(ii) Adjustment Events. In the event the REIT Limited Partner (i) declares or pays a dividend on any Class of its outstanding REIT Shares in REIT Shares or makes a distribution to all holders of any Class of its outstanding REIT Shares in REIT Shares, (ii) subdivides any Class of its outstanding REIT Shares, or (iii) combines any Class of its outstanding REIT Shares into a smaller number of REIT Shares with respect to any Class of REIT Shares, then a corresponding adjustment to the number of outstanding Partnership Units of the applicable Class necessary to maintain the proportionate relationship between the number of outstanding Partnership Units of such Class to the number of outstanding REIT Shares of such Class shall automatically be made. Additionally, in the event that any other entity shall become REIT Limited Partner pursuant to any merger, consolidation or combination of the REIT Limited Partner with or into another entity (the Successor Entity), the number of outstanding Partnership Units of each Class shall be adjusted by multiplying such number by the number of shares of the Successor Entity into which one REIT Share of such Class is converted pursuant to such merger, consolidation or combination, determined as of the date of such merger, consolidation or combination. Any adjustment to the number of outstanding Partnership Units of any Class shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event; provided, however, that if the General Partner receives a Notice of Redemption after the record date, but prior to the effective date of such dividend, distribution, subdivision or combination, or such merger, consolidation or combination, the number of outstanding Partnership Units of any Class shall be determined as if the General Partner had received the Notice of Redemption immediately prior to the record date for such dividend, distribution, subdivision or combination or such merger, consolidation or combination. If the REIT Limited Partner takes any other action affecting the REIT Shares other than actions specifically described above and, in the opinion of the General Partner such action would require an adjustment to the number of Partnership Units to maintain the proportionate relationship between the number of outstanding Partnership Units to the number of outstanding REIT Shares, the General Partner shall have the right to make such adjustment to the number of Partnership Units, to the extent permitted by law, in such manner and at such time as the General Partner, in its sole discretion, may determine to be appropriate under the circumstances.
(iii) Upon Issuance of Additional Securities. Upon the issuance by the REIT Limited Partner of any Additional Securities (including pursuant to the REIT Limited Partners distribution reinvestment plan) other than to all holders of REIT Shares, the REIT Limited Partner shall contribute any net proceeds from the issuance of such Additional Securities and from any exercise of rights contained in such Additional Securities, directly and through the REIT Limited Partner, to the Partnership in return for, as the REIT Limited Partner may designate, Partnership Interests or rights, options, warrants or convertible or exchangeable securities of the Partnership having designations, preferences and other rights such that their economic interests are substantially similar to those of the Additional Securities; provided, however, that the REIT Limited Partner is allowed to use net proceeds from the issuance and sale of such Additional Securities to repurchase REIT Shares pursuant to a share repurchase plan; and provided further that the REIT Limited Partner is allowed to issue Additional Securities in connection with an acquisition of assets that would not be owned directly or indirectly by the Partnership, but if and only if, such direct acquisition and issuance of Additional Securities have been approved and determined to be in or not opposed to the best interests of the REIT Limited
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Partner and the Partnership. Without limiting the foregoing, the REIT Limited Partner is expressly authorized to issue Additional Securities for less than fair market value, and to cause the Partnership to issue to the REIT Limited Partner corresponding Partnership Interests, so long as the General Partner concludes in good faith that such issuance is in the best interests of the REIT Limited Partner and the Partnership, including without limitation, the issuance of REIT Shares and corresponding Partnership Units pursuant to an employee share purchase plan providing for employee purchases of REIT Shares at a discount from fair market value or employee stock options that have an exercise price that is less than the fair market value of the REIT Shares, either at the time of issuance or at the time of exercise. Without limiting the foregoing, if the REIT Limited Partner issues REIT Shares of any Class for a cash purchase price and contributes all of the net proceeds of such issuance to the Partnership as required hereunder, the REIT Limited Partner shall be issued a number of additional Partnership Units having the same Class designation as the issued REIT Shares equal to the number of such REIT Shares of that Class issued by the REIT Limited Partner the proceeds of which were so contributed.
(b) Certain Deemed Contributions of Proceeds of Issuance of REIT Shares. In connection with any and all issuances of REIT Shares, to the extent that the REIT Limited Partner shall make Capital Contributions to the Partnership of the proceeds therefrom, if the proceeds actually received and contributed by the REIT Limited Partner in respect of the REIT Shares the proceeds of which were so contributed are less than the gross proceeds of such issuance as a result of any underwriters discount or other expenses paid or incurred in connection with such issuance, then the REIT Limited Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of the gross proceeds of such issuance and the Partnership shall be deemed simultaneously to have paid such offering expenses in accordance with Section 6.5 and in connection with the required issuance of additional Partnership Units to the REIT Limited Partner for such Capital Contributions pursuant to Section 4.3(a), and any such expenses shall be allocable solely to the Class of Partnership Units issued to the REIT Limited Partner at such time. In connection with any and all issuances of REIT Shares pursuant to the REIT Limited Partners distribution reinvestment plan, the REIT Limited Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of the distributions that have been reinvested in respect of the REIT Shares issued by the REIT Limited Partner in return for an equal number of Partnership Units having the same Class designation as the issued REIT Shares.
4.4. Additional Funding. If the General Partner determines that it is in the best interests of the Partnership to provide for additional Partnership funds (Additional Funds) for any Partnership purpose, the General Partner may (i) cause the Partnership to obtain such funds by incurring Debt to any Person upon such terms as the General Partner determines to be appropriate (including making such Debt convertible, redeemable or exchangeable for Partnership Units), (ii) elect to have the REIT Limited Partner or any of its Affiliates provide such Additional Funds to the Partnership through loans, purchase of additional Partnership Interests or otherwise (which the REIT Limited Partner or such Affiliates will have the option, but not the obligation, of providing) or (iii) cause the Partnership to issue additional Partnership Interests and admit additional Limited Partners to the Partnership in accordance with Section 4.3.
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4.5. Capital Accounts. A separate capital account (a Capital Account) shall be established and maintained for each Partner in accordance with Regulations Section 1.704-1(b)(2)(iv), and a Partner shall have a single Capital Account with respect to all Partnership Interests held by such Partner. If (i) a new or existing Partner acquires an additional Partnership Interest in exchange for more than a de minimis Capital Contribution, (ii) the Partnership distributes to a Partner more than a de minimis amount of Partnership property or money as consideration for a Partnership Interest, (iii) the Partnership is liquidated within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), or (iv) the Partnership grants a Partnership Interest (other than a de minimis interest) as consideration for the provision of services to or for the benefit of the Partnership, the General Partner may revalue the property of the Partnership to its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) in accordance with Regulations Section 1.704-1(b)(2)(iv)(f). When the Partnerships property is revalued by the General Partner, the Capital Accounts of the Partners shall be adjusted in accordance with Regulations Sections 1.704-1(b)(2)(iv)(f) and (g), which generally require such Capital Accounts to be adjusted to reflect the manner in which the unrealized gain or loss inherent in such property (that has not been reflected in the Capital Accounts previously) would be allocated among the Partners pursuant to Section 5.1 if there were a taxable disposition of such property for its fair market value (as determined by the General Partner, in its sole and absolute discretion, and taking into account Section 7701(g) of the Code) on the date of the revaluation.
4.6. Percentage Interests. If the number of outstanding Partnership Units increases or decreases during a taxable year, each Partners Percentage Interest shall be adjusted by the General Partner effective as of the effective date of each such increase or decrease to a percentage equal to the number of Partnership Units held by such Partner divided by the aggregate number of Partnership Units outstanding after giving effect to such increase or decrease. If the Partners Percentage Interests are adjusted pursuant to this Section 4.6, the Profits and Losses (or items thereof) for the taxable year in which the adjustment occurs shall be allocated between the part of the year ending on the day when the adjustment occurs and the part of the year beginning on the following day either (i) as if the taxable year had ended on the date of the adjustment or (ii) based on the number of days in each part. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate Profits and Losses (or items thereof) for the taxable year in which the adjustment occurs. The allocation of Profits and Losses (or items thereof) for the earlier part of the year shall be based on the Percentage Interests before adjustment, and the allocation of Profits and Losses (or items thereof) for the later part shall be based on the adjusted Percentage Interests.
4.7. No Interest on Contributions. No Partner shall be entitled to interest on its Capital Contribution.
4.8. Return of Capital Contributions. No Partner shall be entitled to withdraw any part of its Capital Contribution or its Capital Account or to receive any distribution from the Partnership, except as specifically provided in this Agreement. Except as otherwise provided herein, there shall be no obligation to return to any Partner or withdrawn Partner any part of such Partners Capital Contribution for so long as the Partnership continues in existence.
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4.9. No Third-Party Beneficiary. No creditor or other third party having dealings with the Partnership shall have the right to enforce the right or obligation of any Partner to make Capital Contributions or loans or to pursue any other right or remedy hereunder or at law or in equity, it being understood and agreed that the provisions of this Agreement shall be solely for the benefit of, and may be enforced solely by, the parties hereto and their respective successors and assigns. None of the rights or obligations of the Partners herein set forth to make Capital Contributions or loans to the Partnership shall be deemed an asset of the Partnership for any purpose by any creditor or other third party, nor may such rights or obligations be sold, transferred or assigned by the Partnership or pledged or encumbered by the Partnership to secure any debt or other obligation of the Partnership or of any of the Partners. In addition, it is the intent of the parties hereto that no distribution to any Limited Partner shall be deemed a return of money or other property in violation of the Act. However, if any court of competent jurisdiction holds that, notwithstanding the provisions of this Agreement, any Limited Partner is obligated to return such money or property, such obligation shall be the obligation of such Limited Partner and not of the General Partner. Without limiting the generality of the foregoing, a deficit Capital Account of a Partner shall not be deemed to be a liability of such Partner nor an asset or property of the Partnership.
4.10. No Preemptive Rights. Except as expressly provided in this Agreement, no Person, including, without limitation, any Partner or assignee, shall have any preemptive, preferential, participation or similar right or rights to subscribe for or acquire any Partnership Interest or to otherwise make an additional Capital Contribution.
ARTICLE 5
PROFITS AND LOSSES; DISTRIBUTIONS
5.1. Allocation of Profit and Loss.
(a) REIT Limited Partner Gross Income Allocation. There shall be specially allocated to the REIT Limited Partner an amount of (i) first, items of Partnership income and (ii) second, items of Partnership gain during each fiscal year or other applicable period, before any other allocations are made hereunder, in an amount equal to the excess, if any, of the cumulative reimbursements made to the REIT Limited Partner under Section 6.5(b) (other than reimbursements which would properly be treated as guaranteed payments or which are attributable to the reimbursement of expenses which would properly be either deductible by the Partnership or added to the tax basis of any Partnership asset) over the cumulative allocations of Partnership income and gain to the REIT Limited Partner under this Section 5.1(a).
(b) General Allocations. The items of Profit and Loss of the Partnership for each fiscal year or other applicable period shall be allocated among the Partners in a manner that will, as nearly as possible (after giving effect to the allocations under Sections 5.1(a), 5.1(c) and 5.1(g)) cause the Capital Account balance of each Partner at the end of such fiscal year or other applicable period to equal (i) the amount of the hypothetical distribution that such Partner would receive if the Partnership were liquidated on the last day of such period and all assets of the Partnership, including cash, were sold for cash equal to their Carrying Values, taking into account any adjustments thereto for such period, all liabilities of the Partnership were satisfied in
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full in cash according to their terms (limited with respect to each nonrecourse liability to the Carrying Value of the assets securing such liability) and the remaining cash proceeds (after satisfaction of such liabilities) were distributed in full pursuant to Section 5.2, minus (ii) the sum of such Partners share of Partnership Minimum Gain and Partner Nonrecourse Debt Minimum Gain and the amount, if any and without duplication, that the Partner would be obligated to contribute to the capital of the Partnership, all computed as of the date of the hypothetical sale of assets. Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
(c) Regulatory Allocations. Notwithstanding any other provision of this Agreement:
(i) Minimum Gain Chargeback. If there is a net decrease in Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain (determined in accordance with the principles of Regulations Sections 1.704-2(d) and 1.704-2(i)) during any Partnership taxable year, the Partners shall be specially allocated items of Partnership income and gain for such year (and, if necessary, subsequent years) in an amount equal to their respective shares of such net decrease during such year, determined pursuant to Regulations Sections 1.704-2(g) and 1.704-2(i)(5). The items to be so allocated shall be determined in accordance with Regulations Section 1.704-2(f). This Section 5.1(c)(i) is intended to comply with the minimum gain chargeback requirements in such U.S. Regulations Sections and shall be interpreted consistently therewith, including that no chargeback shall be required to the extent of the exceptions provided in Regulations Sections 1.704-2(f) and 1.704-2(i)(4).
(ii) Qualified Income Offset. If any Partner unexpectedly receives any adjustments, allocations, or distributions described in U.S. Treasury Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of Partnership income and gain shall be specially allocated to such Partner in an amount and manner sufficient to eliminate the deficit Capital Account balance created by such adjustments, allocations or distributions as promptly as possible; provided that an allocation pursuant to this Section 5.1(c)(ii) shall be made only to the extent that a Partner would have a deficit Capital Account balance in excess of such sum after all other allocations provided for in this Article 5 have been tentatively made as if this Section 5.1(c)(ii) were not in this Agreement. This Section 5.1(c)(ii) is intended to comply with the qualified income offset requirement of the Code and shall be interpreted consistently therewith.
(iii) Gross Income Allocation. If one or more Partners has a deficit Capital Account at the end of any fiscal year that is in excess of the sum of (i) the amount each such Partner is obligated to restore, if any, pursuant to any provision of this Partnership Agreement, and (ii) the amount each such Partner is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Partner shall be specially allocated items of Partnership income and gain in the amount of such excess as quickly as possible (in proportion to the amount of such deficit); provided that an allocation pursuant to this Section 5.1(c)(iii) shall be made only if and to the extent that a Partner would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article 5 have been tentatively made as if Section 5.1(c)(ii) and this Section 5.1(c)(iii) were not in this Partnership Agreement.
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(iv) Payee Allocation. If any payment to any person that is treated by the Partnership as the payment of an expense is recharacterized by a taxing authority as a Partnership distribution to the payee as a partner, such payee shall be specially allocated, in the manner determined by the General Partner, an amount of Partnership gross income and gain as quickly as possible equal to the amount of the distribution.
(v) Nonrecourse Deductions. Nonrecourse Deductions shall be allocated pro rata based on the number of Partnership Units held by each Partner. Nonrecourse Deductions has the meaning specified in Regulations Sections 1.704-2(b)(1) and 1.704-2(c).
(vi) Partner Nonrecourse Deductions. Partner Nonrecourse Deductions for any taxable period shall be allocated to the Partner who bears the economic risk of loss with respect to the liability to which such Partner Nonrecourse Deductions are attributable in accordance with Regulations Section 1.704-2(j). Partner Nonrecourse Deductions has the meaning specified in Regulations Section 1.704-2(i)(2).
(vii) Any special allocations of income or gain pursuant to Section 5.1(c)(ii) or Section 5.1(c)(iii) hereof shall be taken into account in computing subsequent allocations pursuant to Section 5.1(b) and this Section 5.1(c), so that the net amount of any items so allocated and all other items allocated to each Partner shall, to the extent possible, be equal to the net amount that would have been allocated to each Partner if such allocations pursuant to Section 5.1(c)(ii) or Section 5.1(c)(iii) had not occurred.
(viii) Section 754 Adjustment. To the extent that an adjustment to the adjusted tax basis of any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section 1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital Accounts as the result of a distribution to a Partner in complete liquidation of its interest in the Partnership, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis), and such gain or loss shall be specially allocated to the Partners in accordance with their respective interests in the Partnership in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(2) applies, or to the Partner(s) to whom such distribution was made in the event that Regulations Section 1.704-1(b)(2)(iv)(m)(4) applies.
(ix) Excess Nonrecourse Liabilities. The Partnership shall allocate nonrecourse liabilities (within the meaning of Regulations Section 1.752-1(a)(2)) of the Partnership that are secured by multiple Properties under any reasonable method chosen by the General Partner in accordance with Regulations Section 1.752-3(a)(3) and (b). For purposes of determining a Partners proportional share of the excess nonrecourse liabilities of the Partnership within the meaning of Regulations Section 1.752-3(a)(3), each Partners respective interest in Partnership profits shall be equal to the relative Net Asset Value of the Partners Partnership Units, except as otherwise determined by the General Partner.
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(x) Special Allocations of Class-Specific Items. To the extent that any items of income, gain, loss or deduction of the REIT Limited Partner are allocable to a specific Class or Classes of REIT Shares as provided in the Prospectus, including, without limitation, Distribution Fees, such items, or an amount equal thereto, shall be specially allocated to the Classes or Series of Partnership Units corresponding to such Class or Classes of REIT Shares. Without limiting the foregoing, items of loss or deduction attributable to Distribution Fees, upfront selling commissions, upfront dealer manager fees, Advisory Fees and the Performance Participation Interest shall be allocated to Classes of Partnership Units other than Class E Units.
(d) Allocations Between Transferor and Transferee. If a Partner transfers any part or all of its Partnership Interest, the distributive shares of the various items of Profit and Loss allocable among the Partners during such fiscal year of the Partnership shall be allocated between the transferor and the transferee Partner either (i) as if the Partnerships fiscal year had ended on the date of the transfer, or (ii) based on the number of days of such fiscal year that each was a Partner without regard to the results of Partnership activities in the respective portions of such fiscal year in which the transferor and the transferee were Partners. The General Partner, in its sole and absolute discretion, shall determine which method shall be used to allocate the distributive shares of the various items of Profit and Loss between the transferor and the transferee Partner.
(e) Definition of Profit and Loss. Profit and Loss and any items of income, gain, expense, or loss referred to in this Agreement shall be determined in accordance with the accounting method used by the Partnership for U.S. federal income tax purposes with the following adjustments: (i) all items of income, gain, loss or deduction allocated pursuant to Sections 5.1(a) and 5.1(c)(i) through (viii) and (x) shall not be taken into account in computing such taxable income or loss; (ii) any income of the Partnership that is exempt from U.S. federal income taxation and not otherwise taken into account in computing Profit and Loss shall be added to such taxable income or loss; (iii) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, any depreciation, amortization, gain or loss resulting from a disposition of such asset shall be calculated with reference to such Carrying Value; (iv) upon an adjustment to the Carrying Value of any asset pursuant to the definition of Carrying Value (other than an adjustment in respect of depreciation, amortization or cost recovery deductions), the amount of the adjustment shall be included as gain or loss in computing such taxable income or loss; (v) if the Carrying Value of any asset differs from its adjusted tax basis for U.S. federal income tax purposes, the amount of depreciation, amortization or cost recovery deductions with respect to such asset for purposes of Profit and Loss shall be an amount which bears the same ratio to such Carrying Value as the U.S. federal income tax depreciation, amortization or other cost recovery deductions bears to such adjusted tax basis (provided that if the U.S. federal income tax depreciation, amortization or other cost recovery deduction is zero, the Partners may use any reasonable method for purposes of determining depreciation, amortization or other cost recovery deductions in calculating Profit and Loss; and (vi) except for items in (i) above, any expenditures of the Partnership not deductible in computing taxable income or loss, not properly capitalizable and not otherwise taken into account in computing Profit and Loss pursuant to this definition shall be treated as deductible items.
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(f) Tax Allocations.
(i) All items of income, gain, loss, deduction and credit of the Partnership shall be allocated among the Partners for federal, state and local income tax purposes consistent with the manner that the corresponding constituent items of Profit and Loss shall be allocated among the Partners pursuant to this Partnership Agreement in the manner determined by the General Partner, except as may otherwise be provided herein or by the Code. Notwithstanding the foregoing, the General Partner may make such allocations as it deems reasonably necessary to give economic effect to the provisions of this Agreement, taking into account facts and circumstances as the General Partner deems reasonably necessary for this purpose.
(ii) Section 704(c) Allocations. Notwithstanding Section 5.1(f)(i) hereof, for income tax purposes under the Code and the Regulations, each Partnership item of income, gain, loss and deduction (collectively, Tax Items) with respect to Property that is contributed to the Partnership with an initial Carrying Value that varies from its basis in the hands of the contributing Partner immediately preceding the date of contribution shall be allocated among the Partners for income tax purposes pursuant to Regulations promulgated under Code Section 704(c) so as to take into account such variation under any method approved under Code Section 704(c) and the applicable Regulations as chosen by the General Partner. In the event that the Carrying Value of any Partnership asset is adjusted to equal its respective fair market value, subsequent allocations of Tax Items with respect to such asset shall take account of the variation, if any, between the adjusted basis of such asset and its Carrying Value in the same manner as under Code Section 704(c) and the applicable Regulations and using the method chosen by the General Partner. Allocations pursuant to this Section 5.1(f)(ii) are solely for purposes of federal, state and local income taxes and shall not affect, or in any way be taken into account in computing, any Partners Capital Account or share of Profit, Loss, or any other items or distributions pursuant to any provision of this Agreement.
(iii) For greater certainty, for Canadian tax purposes all items of income, gain, loss or deduction of the Partnership in respect of any Property referred to in Section 5.1(f)(ii) (whether realized directly or indirectly, including in respect of an interest in any entity that has a direct or indirect interest in that Property), shall be allocated to the Partners in the same manner as income, gain, loss or deduction in respect of such Property is allocated to the Partners for US federal, state and local tax purposes under Section 5.1(f)(ii), taking into account such modifications and adjustments as may be necessary to reflect differences in Canadian and US income computations for tax purposes (including, without limitation, timing and characterization differences), but in keeping with the general intention to allocate income, gain, loss or deduction in respect of any such Property in a consistent manner for Canadian and US tax purposes.
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(g) Curative Allocations. The allocations set forth in Section 5.1(c) of this Agreement (the Regulatory Allocations) are intended to comply with certain requirements of the Regulations. The General Partner is authorized to offset all Regulatory Allocations either with other Regulatory Allocations or with special allocations of other items of Partnership income, gain, loss or deduction pursuant to this Section 5.1(g). Therefore, notwithstanding any other provision of this Section 5.1 (other than the Regulatory Allocations), the General Partner shall make such offsetting special allocations of Partnership income, gain, loss or deduction in whatever manner it deems appropriate so that, after such offsetting allocations are made, each Partners Capital Account is, to the extent possible, equal to the Capital Account balance such Partner would have had if the Regulatory Allocations were not part of this Agreement and all Partnership items were allocated pursuant to Sections 5.1(a) and 5.1(b).
5.2. Distribution of Cash.
(a) The Partnership shall distribute cash on a monthly (or, at the election of the General Partner, more or less frequent) basis, in an amount determined by the General Partner in its sole and absolute discretion, to the Partners who are Partners on the Partnership Record Date with respect to such month (or other distribution period) in accordance with Section 5.2(b). The Partnership shall be deemed to have distributed cash to the REIT Limited Partner in an amount equal to the amount of distributions by the REIT Limited Partner that are reinvested in REIT Shares issued by the REIT Limited Partner pursuant to the REIT Limited Partners distribution reinvestment plan, and the REIT Limited Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of such distributions in return for an equal number of Partnership Units having the same Class designation as the issued REIT Shares. The Partnership shall be deemed to have distributed cash to a Limited Partner in an amount equal to the amount of distributions by the Partnership that are reinvested in Partnership Units issued by the Partnership to such Limited Partner pursuant to Section 5.10, and such Limited Partner shall be deemed to have made Capital Contributions to the Partnership in the aggregate amount of such distributions in return for such Partnership Units issued pursuant to Section 5.10. The number of Partnership Units issued to any such Limited Partner in respect of such reinvested distributions shall equal the amount of such reinvested distributions divided by the most recent Net Asset Value Per Unit of the applicable Class of Partnership Units at the time of such distribution (after accounting for any reduction in Net Asset Value Per Unit as a result of such distribution).
(b) Except for distributions pursuant to Sections 5.8 in connection with the dissolution and liquidation of the Partnership, and subject to the provisions of Sections 5.2(c), 5.2(d), 5.2(e), 5.3 and 5.4, all distributions of cash (including any deemed distributions pursuant to Section 5.2(a)) shall be made to the Partners in amounts proportionate to the aggregate Net Asset Value of the Partnership Units held by the respective Partners on the Partnership Record Date, except that the amount distributed per Partnership Unit of any Class may differ from the amount per Partnership Unit of another Class (i) on account of differences in Class-specific expense allocations with respect to REIT Shares as described in the Prospectus or with respect to Partnership Units (including without limitation Distribution Fees, Advisory Fees and the Performance Participation Interest which shall be a Class-specific expense allocable to Classes of Partnership Units (and corresponding Classes of REIT Shares) other than Class E Units), or (ii) for other reasons as determined by the Board of Directors of the REIT Limited Partner. Any such
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differences shall correspond to differences in the amount of distributions per REIT Share for REIT Shares of different Classes, with the same adjustments being made to the amount of distributions per Partnership Unit for Partnership Units of a particular Class as are made to the distributions per REIT Share by the REIT Limited Partner with respect to REIT Shares having the same Class designation; provided, however, that such requirement in this sentence shall not apply with respect to Partnership Units of any given Class at any time there are no REIT Shares of the same Class issued and outstanding.
(c) Notwithstanding the foregoing, so long as the Advisory Agreement has not been terminated (including by means of non-renewal), the Special Limited Partner shall be entitled to a distribution (the Performance Participation Interest), promptly following the end of each calendar year (which shall accrue on a monthly basis) in an amount equal to:
(i) First, if the Total Return for the applicable period exceeds the sum of (i) the Hurdle Amount for that period and (ii) the Loss Carryforward Amount (any such excess, Excess Profits), 100% of such Excess Profits until the total amount allocated to the Special Limited Partner equals 12.5% of the sum of (x) the Hurdle Amount for that period and (y) any amount allocated to the Special Limited Partner pursuant to this clause; and
(ii) Second, to the extent there are remaining Excess Profits, 12.5% of such remaining Excess Profits.
Any amount by which Total Return falls below the Hurdle Amount and that does not constitute Loss Carryforward Amount will not be carried forward to subsequent periods.
With respect to all Performance Participation Units that are repurchased at the end of any month in connection with repurchases of REIT Shares pursuant to the REIT Limited Partners share repurchase plan or pursuant to Section 8.5, the Special Limited Partner shall be entitled to such Performance Participation Interest in an amount calculated as described above calculated in respect of the portion of the year for which such Performance Participation Units were outstanding, and proceeds for any such Performance Participation Unit repurchase will be reduced by the amount of any such Performance Participation Interest.
Distributions on the Performance Participation Interest may be payable, at the election of the Special Limited Partner, in cash, Class E Units, Class I Units or any combination of the foregoing. If the Special Limited Partner elects to receive such distributions in Partnership Units, the Special Limited Partner will receive the number of Partnership Units that results from dividing the Performance Participation Interest by the Net Asset Value Per Unit of the applicable Class of Partnership Units at the time of such distribution. If the Special Limited Partner elects to receive such distributions in Partnership Units, the Special Limited Partner may request the Partnership to redeem such Partnership Units from the Special Limited Partner at any time thereafter pursuant to Section 8.5.
The measurement of the change in Net Asset Value Per Unit for the purpose of calculating the Total Return is subject to adjustment by the Board of Directors of the REIT Limited Partner to account for any dividend, split, recapitalization or any other similar change in the Partnerships capital structure or any distributions that the Board of Directors of the REIT Limited Partner deems to be a return of capital if such changes are not already reflected in the Partnerships net assets.
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The Special Limited Partner will not be obligated to return any portion of the Performance Participation Interest paid due to the subsequent performance of the Partnership.
In the event the Advisory Agreement is terminated (including by means of non-renewal), the Special Limited Partner will be allocated any accrued Performance Participation Interest with respect to all Performance Participation Units as of the date of such termination.
(d) To the extent the Partnership is required by law to withhold or to make tax payments (including interest and penalties thereon) on behalf of or with respect to any Partner (Tax Advances), the General Partner may withhold such amounts and make such tax payments as so required. All Tax Advances made on behalf of a Partner shall, at the option of the General Partner, (i) be promptly paid to the Partnership by the Partner on whose behalf such Tax Advances were made or (ii) be repaid by reducing the amount of the current or next succeeding distribution or distributions which would otherwise have been made to such Partner or, if such distributions are not sufficient for that purpose, by so reducing the proceeds of liquidation otherwise payable to such Partner. Whenever the General Partner selects the option set forth in clause (ii) of the immediately preceding sentence for repayment of a Tax Advance by a Partner, for all other purposes of this Partnership Agreement such Partner shall be treated as having received all distributions unreduced by the amount of such Tax Advance. Each Partner hereby agrees to indemnify and hold harmless the Partnership, the General Partner, the REIT Limited Partner and any member, officer or director of the General Partner or REIT Limited Partner from and against any liability with respect to Tax Advances required on behalf of or with respect to such Partner. Each Partner shall furnish the General Partner with such information, forms and certifications as it may require and as are necessary to comply with the regulations governing the obligations of withholding tax agents, as well as such information, forms and certifications as are necessary with respect to any withholding taxes imposed by countries other than the United States and represents and warrants that the information and forms furnished by it shall be true and accurate in all respects. The amount of any taxes paid by or withheld from receipts of the Partnership (or any investment in which the Partnership invests that is treated as a flow-through entity for U.S. federal income tax purposes) allocable to a Partner from an investment shall be deemed to have been distributed to each Partner to the extent that the payment or withholding of such taxes reduced distribution proceeds otherwise distributable to such Partner as provided herein.
(e) In no event may a Partner receive a distribution of cash with respect to a Partnership Unit if such Partner is entitled to receive a cash distribution as the holder of record of a REIT Share for which all or part of such Partnership Unit has been or will be exchanged.
5.3. REIT Distribution Requirements. The General Partner shall use its commercially reasonable efforts to cause the Partnership to distribute amounts sufficient to enable the REIT Limited Partner to make stockholder distributions that will allow the REIT Limited Partner to (i) meet its distribution requirement for qualification as a REIT as set forth in Section 857 of the Code and (ii) avoid any federal income or excise tax liability imposed by the Code.
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5.4. No Right to Distributions in Kind. No Partner shall be entitled to demand property other than cash in connection with any distributions by the Partnership.
5.5. Limitations on Return of Capital Contributions. Notwithstanding any of the provisions of this Article 5, no Partner shall have the right to receive and the General Partner shall not have the right to make, a distribution that includes a return of all or part of a Partners Capital Contributions, unless after giving effect to the return of a Capital Contribution, the sum of all Partnership liabilities, other than the liabilities to a Partner for the return of his Capital Contribution, does not exceed the fair market value of the Partnerships assets.
5.6. Amendments to Reflect Additional Partnership Units. In the event that the Partnership issues additional Partnership Units pursuant to the provisions of Article 4 hereof, the General Partner is hereby authorized, without the Consent of any other Partner, to make such revisions to this Article 5 and other provisions of this Agreement as it determines are necessary or desirable to reflect the issuance of such additional Partnership Units, including, without limitation, making preferential distributions and allocations to Holders of certain Classes of Partnership Units.
5.7. Restricted Distributions. Notwithstanding any provision to the contrary contained in this Agreement, neither the Partnership nor the General Partner, on behalf of the Partnership, shall make a distribution to any Holder if such distribution would violate the Act or other applicable law.
5.8. Distributions Upon Liquidation. Immediately before liquidation of the Partnership, all Class C Units, Class D Units, Class E Units, Class T Units and Class S Units will automatically convert to Class I Units at the applicable Conversion Rate. Upon liquidation of the Partnership, after payment of, or adequate provision for, debts and obligations of the Partnership, including any Partner loans, and after payment of any accrued Performance Participation Interest to the Special Limited Partner and any preferred return owed to any other Partner, any remaining assets of the Partnership shall be distributed to each holder of Class I Units, ratably with each other holder of Class I Units, which will include all converted Class C Units, Class D Units, Class E Units, Class T Units and Class S Units, in such proportion as the number of outstanding Class I Units held by such holder bears to the total number of outstanding Class I Units then outstanding.
Notwithstanding any other provision of this Agreement, the amount by which the value, as determined in good faith by the General Partner, of any property other than cash to be distributed in kind to the Partners exceeds or is less than the Carrying Value of such property shall, to the extent not otherwise recognized by the Partnership, be taken into account in computing Profit and Loss of the Partnership for purposes of crediting or charging the Capital Accounts of, and distributing proceeds to, the Partners, pursuant to this Agreement.
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To the extent deemed advisable by the General Partner, appropriate arrangements (including the use of a liquidating trust) may be made to assure that adequate funds are available to pay any contingent debts or obligations.
5.9. Substantial Economic Effect. It is the intent of the Partners that the allocations of Profit and Loss pursuant to this Agreement have substantial economic effect (or be consistent with the Partners interests in the Partnership in the case of the allocation of losses attributable to nonrecourse debt) within the meaning of Section 704(b) of the Code as interpreted by the Regulations promulgated pursuant thereto. Article 5 and other relevant provisions of this Agreement shall be interpreted in a manner consistent with such intent.
5.10. Reinvestment. Subject to legal, tax, regulatory or other similar considerations, each Limited Partner holding Partnership Units agrees to participate in the reinvestment program of distributions to the holders of Partnership Units (the DRIP and any participating Limited Partner, a DRIP Participant) unless otherwise agreed with the General Partner in writing; provided, however, that each holder of Initial Class E Units shall participate in the DRIP only if such holder delivers a written notice to the General Partner electing to so participate. The following provisions shall apply to the DRIP and any Limited Partners participation therein:
(a) Subject to Section 5.10(b)(v), the General Partner shall, on behalf of each DRIP Participant, reinvest all distributions to be made to such DRIP Participant with respect to its Partnership Units in exchange for such DRIP Participant being issued additional Partnership Units of the same Class of Partnership Units held by such DRIP Participant with respect to which such distribution is being made. Partnership Units issued pursuant to the DRIP shall be purchased at the applicable Net Asset Value Per Unit on the date that the distribution is payable (calculated as of the most recent month end).
(b) In connection with this Section 5.10, each Limited Partner agrees and acknowledges as follows:
(i) The Partnership has designated the General Partner to administer the DRIP and act as agent for the DRIP Participants. The General Partner shall credit distributions to DRIP Participants on the basis of whole or fractional Partnership Units and shall reinvest such distributions in additional Partnership Units of the same Class of Partnership Units held by such DRIP Participant with respect to which such distribution is made.
(ii) A DRIP Participant shall remain in the DRIP until such DRIP Participant withdraws from the DRIP in accordance with Section 5.10(b)(v) or the General Partner terminates or suspends the DRIP.
(iii) A DRIP Participant shall, on the date that the distribution is payable, be deemed to have received a cash distribution from the Partnership and then made a Capital Contribution in the same amount for the purchase of additional Partnership Units (at the then-current Net Asset Value Per Unit, calculated as of the most recent month end). No interest shall be paid on cash distributions pending reinvestment under the terms of the DRIP.
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(iv) No DRIP Participant shall have any authorization or power to direct the time or price at which Partnership Units shall be purchased. The total amount to be invested shall depend on the amount of any distributions paid on the number of Partnership Units owned by the DRIP Participant, as well as any withholding taxes paid on behalf of such DRIP Participant.
(v) DRIP Participants may elect to withdraw from the DRIP with respect to the Partnership Units held in their account in the DRIP by providing 10 days prior written notice of such election to withdraw in a form acceptable to the General Partner and such election to withdraw shall be effective until rescinded by providing written notice of an election to reinstate participation in the DRIP in a form acceptable to the General Partner. Such written notice of such election to withdraw or be reinstated, as the case may be, must be received by the General Partner prior to the last business day of the month in order for a Participants termination to be effective for such month (i.e., a timely termination notice will be effective as of the last business day of the month in which it is timely received and will not affect participation in the DRIP for any prior month). Any transfer of Partnership Units by a DRIP Participant to a non-DRIP Participant will terminate participation in the DRIP with respect to the transferred Partnership Units. If a DRIP Participant requests that the Company repurchase all or any portion of the DRIP Participants Partnership Units, the DRIP Participants participation in the DRIP with respect to the DRIP Participants Partnership Units for which repurchase was requested but that were not repurchased will be terminated. If a DRIP Participant terminates DRIP participation, the REIT Limited Partner may, at its option, ensure that the terminating DRIP Participants account will reflect the whole number of Partnership Units in such DRIP Participants account and provide a check or other instrument of payment for the cash value of any fractional Partnership Unit in such account. Upon termination of DRIP participation for any reason, future distributions will be distributed to the Investor in cash (except for allowable in-kind distributions).
(c) This Section 5.10 shall not apply to any distributions to the REIT Limited Partner made pursuant to Section 5.2(a) or any distributions to the Special Limited Partner pursuant to Section 5.2(c).
ARTICLE 6
RIGHTS, OBLIGATIONS AND
POWERS OF THE GENERAL PARTNER
6.1. Management of the Partnership.
(a) Except as otherwise expressly provided in this Agreement, the General Partner shall have full, complete and exclusive discretion to manage and control the business of the Partnership for the purposes herein stated, and shall make all decisions affecting the business and assets of the Partnership. Subject to the restrictions specifically contained in this Agreement and without limiting any powers of the Adviser pursuant to the Advisory Agreement, the powers of the General Partner shall include, without limitation, the authority to take the following actions on behalf of the Partnership:
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(i) to acquire, purchase, own, operate, lease and dispose of any Property;
(ii) to construct buildings and make other improvements on the properties owned or leased by the Partnership;
(iii) to authorize, issue, sell, redeem or otherwise purchase any Partnership Interests or any securities (including secured and unsecured debt obligations of the Partnership, debt obligations of the Partnership convertible into any Class or series of Partnership Interests, or options, rights, warrants or appreciation rights relating to any Partnership Interests) of the Partnership;
(iv) to borrow or lend money for the Partnership, issue or receive evidences of indebtedness in connection therewith, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such indebtedness, and secure such indebtedness by mortgage, deed of trust, pledge or other lien on the Partnerships assets;
(v) to pay, either directly or by reimbursement, for all operating costs and general administrative expenses of the Partnership to third parties or to the REIT Limited Partner or its Affiliates as set forth in this Agreement;
(vi) to guarantee or become a co-maker of indebtedness of the REIT Limited Partner or any Subsidiary thereof, refinance, increase the amount of, modify, amend or change the terms of, or extend the time for the payment of, any such guarantee or indebtedness, and secure such guarantee or indebtedness by mortgage, deed of trust, pledge or other lien on the Partnerships assets;
(vii) to use assets of the Partnership (including, without limitation, cash on hand) for any purpose consistent with this Agreement, including, without limitation, payment, either directly or by reimbursement, of all operating costs and general administrative expenses of the REIT Limited Partner, the Partnership or any Subsidiary of either of the foregoing, to third parties or to the REIT Limited Partner as set forth in this Agreement;
(viii) to lease all or any portion of any of the Partnerships assets, whether or not any portion of the Partnerships assets so leased are to be occupied by the lessee, or, in turn, subleased in whole or in part to others, for such consideration and on such terms as the General Partner may determine;
(ix) to prosecute, defend, arbitrate, or compromise any and all claims or liabilities in favor of or against the Partnership, on such terms and in such manner as the General Partner may reasonably determine, and similarly to prosecute, settle or defend litigation, including in all such legal proceedings, administrative proceedings, arbitrations or other forms of dispute resolutions, with respect to the Partners, the Partnership, or the Partnerships assets;
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(x) to file applications, communicate, and otherwise deal with any and all governmental agencies having jurisdiction over, or in any way affecting, the Partnerships assets or any other aspect of the Partnership business, including the registration of any Class or series of the Partnership Units under the Securities Act or Exchange Act, and the listing of any debt securities of the Partnership on any securities exchange or trading forum;
(xi) to make or revoke any election permitted or required of the Partnership by any taxing authority;
(xii) to maintain such insurance coverage for public liability, fire and casualty, and any and all other insurance for the protection of the Partnership, for the conservation of Partnership assets, or for any other purpose convenient or beneficial to the Partnership, in such amounts and such types, as the General Partner shall determine from time to time;
(xiii) to determine whether or not to apply any insurance proceeds for any property to the restoration of such property or to distribute the same;
(xiv) to establish one or more divisions of the Partnership, to hire and dismiss employees of the Partnership or any division of the Partnership, and to retain legal counsel, accountants, consultants, real estate brokers, and such other persons, as the General Partner may deem necessary or appropriate in connection with the Partnership business and to pay therefor such remuneration as the General Partner may deem reasonable and proper;
(xv) to retain other services of any kind or nature in connection with the Partnership business, and to pay therefor such remuneration as the General Partner may deem reasonable and proper;
(xvi) to negotiate and conclude agreements on behalf of the Partnership with respect to any of the rights, powers and authority conferred upon the General Partner;
(xvii) to maintain accurate accounting records and to file all federal, state and local income tax returns on behalf of the Partnership;
(xviii) to distribute Partnership cash or other Partnership assets in accordance with this Agreement;
(xix) to form or acquire an interest in, and contribute property to, any further limited or general partnerships, joint ventures or other relationships that the General Partner deems desirable (including, without limitation, the acquisition of interests in, and the contributions of property to, its Subsidiaries and any other Person in which it has an equity interest from time to time);
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(xx) to establish Partnership reserves for working capital, capital expenditures, contingent liabilities, or any other valid Partnership purpose;
(xxi) to merge, consolidate or combine the Partnership with or into another Person;
(xxii) to do any and all acts and things necessary or prudent to ensure that the Partnership will not be classified as a publicly traded partnership for purposes of Section 7704 of the Code;
(xxiii) the exercise of any of the powers of the General Partner enumerated in this Agreement on behalf of or in connection with any Subsidiary of the Partnership, or any other Person in which the Partnership has a direct or indirect interest pursuant to contractual or other arrangements;
(xxiv) to take such other action, execute, acknowledge, swear to or deliver such other documents and instruments, and perform any and all other acts that the General Partner deems necessary or appropriate for the formation, continuation and conduct of the business and affairs of the Partnership (including, without limitation, all actions consistent with allowing the REIT Limited Partner at all times to qualify as a REIT unless the REIT Limited Partner voluntarily terminates its REIT status) and to possess and enjoy all of the rights and powers of a general partner as provided by the Act; and
(xxv) to enter into transactions in derivative instruments (including without limitation structuring an investment as a credit default swap, total return swap or other over-the-counter derivative contract, instrument or participation or using a similar arrangement to leverage, access or enhance investments) and hedging arrangements (including without limitation to reduce the Partnerships equity, currency, commodity price, or interest rate exposure or other risks related to an investment).
(b) Except as otherwise provided herein, to the extent the duties of the General Partner require expenditures of funds to be paid to third parties, the General Partner shall not have any obligations hereunder except to the extent that Partnership funds are reasonably available to it for the performance of such duties, and nothing herein contained shall be deemed to authorize or require the General Partner, in its capacity as such, to expend its individual funds for payment to third parties or to undertake any individual liability or obligation on behalf of the Partnership.
(c) Each of the Limited Partners agrees that the General Partner is authorized to execute and deliver any affidavit, agreement, certificate, consent, instrument, notice, power of attorney, waiver or other writing or document in the name and on behalf of the Partnership and to otherwise exercise any power of the General Partner under this Agreement and the Act on behalf of the Partnership without any further act, approval or vote of the Partners or any other Persons, notwithstanding any other provision of the Act or any applicable law, rule or regulation and, in the absence of any specific corporate action on the part of the General Partner to the contrary, the taking of any action or the execution of any such document or writing by an officer of the
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General Partner, in the name and on behalf of the General Partner, in its capacity as the general partner of the Partnership, shall conclusively evidence (1) the approval thereof by the General Partner, in its capacity as the general partner of the Partnership, (2) the General Partners determination that such action, document or writing is necessary, advisable, appropriate, desirable or prudent to conduct the business and affairs of the Partnership, exercise the powers of the Partnership under this Agreement and the Act or effectuate the purposes of the Partnership, or any other determination by the General Partner required by this Agreement in connection with the taking of such action or execution of such document in writing, and (3) the authority of such officer with respect thereto.
(d) At all times from and after the date hereof, the General Partner may cause the Partnership to establish and maintain working capital and other reserves in such amounts as the General Partner, in its sole and absolute discretion, determines from time to time.
(e) In exercising its authority under this Agreement, the General Partner may, but shall be under no obligation to, take into account the tax consequences to any Partner of any action taken (or not taken) by it, but shall be obligated to take such action as is necessary to ensure satisfaction of the REIT Requirements with respect to the REIT Limited Partner. To the fullest extent permitted by law, the General Partner and the Partnership shall not have liability to a Limited Partner under any circumstances as a result of any income tax liability incurred by such Limited Partner as a result of an action (or inaction) by the General Partner pursuant to its authority under this Agreement. Notwithstanding the foregoing, in connection with the acquisition of properties from Persons to whom the Partnership issues Partnership Interests as part of the purchase price, in order to preserve such Persons tax deferral, the Partnership may contractually agree not to sell or otherwise transfer the properties for a specified period of time, or in some instances, not to sell or otherwise transfer the properties without compensating the sellers of the properties for their loss of the tax deferral.
6.2. Delegation of Authority. The General Partner may delegate any or all of its powers, rights and obligations hereunder to any Person, and may appoint, employ, contract or otherwise deal with any Person for the transaction of the business of the Partnership, which Person (which may include the Adviser) may, under supervision of the General Partner, perform any acts or services for the Partnership as the General Partner may approve. The General Partner is expressly authorized on behalf of the Partnership to cause the Partnership to enter into the Advisory Agreement.
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6.3. Indemnification and Exculpation of Indemnitees.
(a) To the fullest extent permitted by law, the Partnership shall indemnify and hereby agrees to indemnify and hold harmless an Indemnitee from and against any and all losses, claims, damages, liabilities, joint or several, costs and expenses (including reasonable legal fees and expenses), judgments, fines, settlements, penalties and other amounts arising from any and all claims, demands, actions, suits or proceedings, civil, criminal, administrative or investigative, of any nature whatsoever, known or unknown, liquidated or unliquidated (collectively, Losses), that are incurred by any Indemnitee and that relate to the operations of the Partnership as set forth in this Agreement in which any Indemnitee may be involved, or is threatened to be involved, as a party or otherwise. The foregoing indemnification shall not apply to an Indemnitee the extent that any such Losses result from any act or omission by such Indemnitee with respect to which a court of competent jurisdiction (or other similar tribunal) has issued a final non-appealable decision, judgment or order that such Indemnitee acted with actual fraud, acted in bad faith, was grossly negligent or engaged in willful misconduct.
(b) Without limitation, the foregoing indemnity shall extend to any liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any indebtedness of the Partnership or any Subsidiary of the Partnership (including, without limitation, any indebtedness which the Partnership or any Subsidiary of the Partnership has assumed or taken subject to), and the General Partner is hereby authorized and empowered, on behalf of the Partnership, to enter into one or more indemnity agreements consistent with the provisions of this Section 6.3 in favor of any Indemnitee having or potentially having liability for any such indebtedness. It is the intention of this Section 6.3 that the Partnership indemnify each Indemnitee to the fullest extent permitted by law and this Agreement. The termination of any proceeding by judgment, order or settlement does not create a presumption that the Indemnitee did not meet the requisite standard of conduct set forth in this Section 6.3.
(c) The Partnership shall reimburse an Indemnitee for reasonable expenses incurred by an Indemnitee who is a party to a proceeding in advance of the final disposition of the proceeding upon receipt by the Partnership of (i) a written affirmation by the Indemnitee of the Indemnitees good faith belief that the standard of conduct necessary for indemnification by the Partnership as authorized in this Section 6.3 has been met, and (ii) a written undertaking by or on behalf of the Indemnitee to repay the amount if it shall ultimately be determined that the standard of conduct has not been met.
(d) The indemnification provided by this Section 6.3 shall be in addition to any other rights to which an Indemnitee or any other Person may be entitled under any agreement, pursuant to any vote of the Partners, as a matter of law or otherwise, and shall continue as to an Indemnitee who has ceased to serve in such capacity and shall inure to the benefit of the heirs, successors, assigns and administrators of the Indemnitee unless otherwise provided in a written agreement with such Indemnitee or in the writing pursuant to which such Indemnitee is indemnified.
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(e) The Partnership may, but shall not be obligated to, purchase and maintain insurance, on behalf of the Indemnitees and such other Persons as the General Partner shall determine, against any liability that may be asserted against or expenses that may be incurred by such Person in connection with the Partnerships activities, regardless of whether the Partnership would have the power to indemnify such Person against such liability under the provisions of this Agreement.
(f) In no event may an Indemnitee subject the Limited Partners to personal liability by reason of the indemnification provisions set forth in this Agreement.
(g) An Indemnitee shall not be denied indemnification in whole or in part under this Section 6.3 because the Indemnitee had an interest in the transaction with respect to which the indemnification applies if the transaction was otherwise permitted by the terms of this Agreement and the Charter.
(h) The provisions of this Section 6.3 are for the benefit of the Indemnitees, their heirs, successors, assigns and administrators and shall not be deemed to create any rights for the benefit of any other Persons. Any amendment, modification or repeal of this Section 6.3 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the Partnerships liability to any Indemnitee under this Section 6.3 as in effect immediately prior to such amendment, modification or repeal with respect to claims arising from or relating to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when such claims may arise or be asserted.
(i) It is the intent of the parties that any amounts paid by the Partnership to the General Partner pursuant to this Section 6.3 shall be treated as guaranteed payments within the meaning of Code Section 707(c) and shall not be treated as distributions for purposes of computing the Partners Capital Accounts.
6.4. Liability and Obligations of the General Partner.
(a) Notwithstanding anything to the contrary set forth in this Agreement, the General Partner shall not be liable for monetary damages to the Partnership or any Partners for losses sustained or liabilities incurred as a result of errors in judgment or of any act or omission not amounting to willful misconduct or gross negligence. The General Partner shall not be in breach of any duty that the General Partner may owe to the Limited Partners or the Partnership or any other Persons under this Agreement or of any duty stated or implied by law or equity provided the General Partner, acting in good faith, abides by the terms of this Agreement.
(b) The Limited Partners expressly acknowledge that the General Partner is acting on behalf of the Partnership, itself, the REIT Limited Partner and the stockholders of the REIT Limited Partner, and that none of the General Partner, the REIT Limited Partner or the Board of Directors of REIT Limited Partner are under any obligation to consider the separate interests of the Limited Partners other than the REIT Limited Partner (including, without limitation, the tax consequences to Limited Partners or the tax consequences of some, but not all, of the Limited Partners) in deciding whether to cause the Partnership to take (or decline to take) any actions; provided, however, that the General Partner shall be obligated to take or refrain from taking such actions as necessary to ensure that the REIT Limited Partner is able to maintain its status as a REIT. In the event of a conflict between the interests of the REIT Limited Partners stockholders on one hand and the other Limited Partners on the other, the General Partner shall
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endeavor in good faith to resolve the conflict in a manner not adverse to either the REIT Limited Partner or its stockholders or the other Limited Partners; provided, however, that for so long as the REIT Limited Partner directly owns a majority or controlling interest in the Partnership, any such conflict that the General Partner, in its sole and absolute discretion, determines cannot be resolved in a manner not adverse to either the REIT Limited Partner or its stockholders or the other Limited Partners shall be resolved in favor of the REIT Limited Partner and its stockholders. The General Partner shall not be liable for monetary damages for losses sustained, liabilities incurred, or benefits not derived by Limited Partners in connection with such decisions, provided that the General Partner has acted in good faith.
(c) Subject to its obligations and duties as General Partner set forth in Section 6.1 hereof, the General Partner may exercise any of the powers granted to it under this Agreement and perform any of the duties imposed upon it hereunder either directly or by or through its agents. The General Partner shall not be responsible for any misconduct or negligence on the part of any such agent appointed by it in good faith.
(d) Notwithstanding any other provisions of this Agreement or the Act, any action of the General Partner on behalf of the Partnership or any decision of the General Partner to refrain from acting on behalf of the Partnership, undertaken in the good faith belief that such action or omission is necessary or advisable in order (i) to protect the ability of the REIT Limited Partner to continue to qualify as a REIT and as a domestically controlled qualified investment entity within the meaning of Section 897(h)(4) of the Code or the Partnership to be taxed as a partnership, (ii) to prevent the REIT Limited Partner from incurring any taxes under Section 857, Section 4981, or any other provision of the Code, (iii) to ensure that the Partnership will not be classified as a publicly traded partnership under section 7704 of the Code, (iv) for the REIT Limited Partner to otherwise satisfy the REIT Requirements or the Partnership to satisfy the qualifying income requirement of Code Section 7704(c), or (v) for any Affiliate to continue to qualify as a qualified REIT subsidiary within the meaning of Code Section 856(i)(2), is expressly authorized under this Agreement and is deemed approved by all of the Limited Partners (including, without limitation, making prepayments on loans and borrowing money to permit the Partnership to make distributions to the Partners in such amounts as will permit the REIT Limited Partner to prevent the imposition of any federal income tax on the REIT Limited Partner (including, for this purpose, any excise tax pursuant to Code Section 4981), to make distributions to its stockholders and payments to any taxing authority sufficient to permit the REIT Limited Partner to maintain REIT status or otherwise to satisfy the REIT Requirements).
(e) Any amendment, modification or repeal of this Section 6.4 or any provision hereof shall be prospective only and shall not in any way affect the limitations on the General Partners liability to the Partnership and the Limited Partners under this Section 6.4 as in effect immediately prior to such amendment, modification or repeal with respect to matters occurring, in whole or in part, prior to such amendment, modification or repeal, regardless of when claims relating to such matters may arise or be asserted.
(f) To the extent that, at law or in equity, the General Partner has duties (including fiduciary duties) and liabilities relating thereto to the Partnership or the Limited Partners, the General Partner shall not be liable to the Partnership or to any other Partner for its good faith reliance on the provisions of this Agreement. The provisions of this Agreement, to the extent that they restrict or eliminate the duties and liabilities of the General Partner under the Act or otherwise existing at law or in equity to the Partnership or its partners, are agreed by the Partners to replace such other duties and liabilities of such General Partner.
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(g) To the fullest extent permitted by law and notwithstanding any other provision of this Agreement or in any agreement contemplated herein or applicable provisions of law or equity or otherwise, whenever in this Agreement the General Partner or the Liquidator is permitted or required to make a decision (i) in its sole and absolute discretion, sole discretion or discretion or under a grant of similar authority or latitude, the General Partner and the Liquidator, as applicable, shall be entitled to consider only such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest or factors affecting the Partnership or the Partners or any of them, or (ii) in its good faith or under another expressed standard, the General Partner shall act under such express standard and shall not be subject to any other or different standards. If any question should arise with respect to the operation of the Partnership, which is not otherwise specifically provided for in this Agreement or the Act, or with respect to the interpretation of this Agreement, the General Partner is hereby authorized to make a final determination with respect to any such question and to interpret this Agreement in such a manner as it shall deem, in its sole discretion, to be fair and equitable, and its determination and interpretations so made shall be final and binding on all parties. The General Partners sole and absolute discretion, sole discretion and discretion under this Agreement shall be exercised consistently with the General Partners fiduciary duties and obligation under the implied contractual covenant of good faith and fair dealing under the Act.
(h) Notwithstanding anything to the contrary in this agreement, it is understood and/or agreed that the term good faith as used in this agreement shall, in each case, mean subjective good faith as understood and interpreted under Delaware law; provided, however, that for the avoidance of doubt, any resolution of a conflict of interest between the REIT Limited Partner or the interests of stockholders of the REIT Limited Partner, on the one hand, and the Partnership or any Limited Partner on the other hand, in a manner favorable to the REIT Limited Partner or the interests of the stockholders of the REIT Limited Partner shall not be deemed a violation of such subjective good faith standard.
6.5. Reimbursement of General Partner and REIT Limited Partner.
(a) Except as provided in this Section 6.5 and elsewhere in this Agreement (including the provisions of Articles 5 and 6 regarding distributions, payments, and allocations to which it may be entitled), the General Partner shall not be compensated for its services as general partner of the Partnership.
(b) The REIT Limited Partner shall be reimbursed on a monthly basis, or such other basis as the General Partner may determine in its sole and absolute discretion, for all Administrative Expenses incurred by the REIT Limited Partner.
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6.6. Outside Activities.
(a) Subject to Section 6.7 hereof, the Charter and any agreements entered into by the General Partner, the REIT Limited Partner or an Affiliate of either with the Partnership or any of its Subsidiaries, any officer, director, employee, agent, trustee, Affiliate or stockholder of the General Partner or the REIT Limited Partner shall be entitled to and may have, directly or indirectly, business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities substantially similar or identical to those of the Partnership. Neither the Partnership nor any of the Limited Partners shall have any rights by virtue of this Agreement in any such business ventures, interests or activities. None of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any such business ventures, interests or activities, and neither the General Partner nor the REIT Limited Partner shall have any obligation pursuant to this Agreement to communicate or offer any opportunities or interest in any such business ventures, interests and activities to the Partnership or any Limited Partner, even if such opportunity is of a character which, if presented to the Partnership or any Limited Partner, could be taken by such Person, even if it may raise a conflict of interest with the Limited Partners or the Partnership. Neither the General Partner nor the REIT Limited Partner will be liable for breach of any fiduciary or other duty by reason of the fact that such party pursues or acquires for, or directs such opportunity or interest to another Person or does not communicate or offer such opportunity or interest to the Partnership.
(b) No Limited Partner shall, by reason of being a Limited Partner in the Partnership, have any right to participate in any manner in any profits or income earned or derived by or accruing to the General Partner, the REIT Limited Partner or their respective Affiliates, or the respective members, partners, officers, directors, employees, stockholders, agents or representatives thereof from the conduct of any business other than the business of the Partnership or from any transaction in instruments effected by the General Partner, the REIT Limited Partner or their Affiliates or the respective members, partners, stockholders, officers, directors, employees or agents thereof for any account other than that of the Partnership.
6.7. Transactions With Affiliates.
(a) Any Affiliate of the General Partner, the REIT Limited Partner or the Adviser may be employed or retained by the Partnership and may otherwise deal with the Partnership (whether as a buyer, lessor, lessee, manager, furnisher of goods or services, broker, agent, lender or otherwise) and may receive from the Partnership any compensation, price, or other payment therefor which the General Partner determines to be fair and reasonable.
(b) The Partnership may lend or contribute to its Subsidiaries or other Persons in which it has an equity investment, and such Persons may borrow funds from the Partnership, on terms and conditions established in the sole and absolute discretion of the General Partner. The foregoing authority shall not create any right or benefit in favor of any Subsidiary or any other Person.
(c) The Partnership may transfer assets to joint ventures, other partnerships, corporations or other business entities in which it is or thereby becomes a participant, and in which any of its Affiliates may or may not be a participant, upon such terms and subject to such conditions as the General Partner deems are consistent with this Agreement, applicable law, the Charter and the REIT status of the REIT Limited Partner.
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(d) Except as expressly permitted by this Agreement, neither the General Partner nor any of its Affiliates shall sell, transfer or convey any property to, or purchase any property from, the Partnership, directly or indirectly, except pursuant to transactions that are, in the General Partners sole discretion, on terms that are fair and reasonable to the Partnership and in compliance with the Charter. Notwithstanding the foregoing, the Contribution Agreements and the issuance of Initial Class E Units pursuant to the Contribution Agreements are expressly authorized and approved.
6.8. Title to Partnership Assets. Title to Partnership assets, whether real, personal or mixed and whether tangible or intangible, shall be deemed to be owned by the Partnership as an entity, and no Partner, individually or collectively, shall have any ownership interest in such Partnership assets or any portion thereof. Title to any or all of the Partnership assets may be held in the name of the Partnership, the General Partner or one or more nominees, as the General Partner may determine, including Affiliates of the General Partner. The General Partner hereby declares and warrants that any Partnership assets for which legal title is held in the name of the General Partner or any nominee or Affiliate of the General Partner shall be held by the General Partner for the use and benefit of the Partnership in accordance with the provisions of this Agreement; provided, however, that the General Partner shall use its best efforts to cause beneficial and record title to such assets to be vested in the Partnership as soon as reasonably practicable. All Partnership assets shall be recorded as the property of the Partnership in its books and records, irrespective of the name in which legal title to such Partnership assets is held.
6.9. Other Matters Concerning the General Partner.
(a) The General Partner may rely in good faith and shall be protected from liability to the Partnership and the Partners in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, debenture or other paper or document believed by it in good faith to be genuine and to have been signed or presented by the proper party or parties.
(b) The General Partner may consult with legal counsel, accountants, appraisers, management consultants, investment bankers, architects, engineers, environmental consultants and other consultants and advisers selected by it, and the General Partner shall be protected from liability to the Partnership and the Limited Partners for any act taken or omitted to be taken in good faith reliance upon the opinion of such Persons as to matters that the General Partner reasonably believes to be within such Persons professional or expert competence.
6.10. No Duplication of Fees or Expenses. The Partnership may not incur or be responsible for any fee or expense (in connection with an Offering or otherwise) that would be duplicative of fees and expenses paid by the General Partner or the REIT Limited Partner.
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6.11. Reliance by Third Parties. Notwithstanding anything to the contrary in this Agreement, any Person dealing with the Partnership shall be entitled to assume that the General Partner has full power and authority, without the consent or approval of any other Partner, or Person, to encumber, sell or otherwise use in any manner any and all assets of the Partnership and to enter into any contracts on behalf of the Partnership, and take any and all actions on behalf of the Partnership, and such Person shall be entitled to deal with the General Partner as if it were the Partnerships sole party in interest, both legally and beneficially. Each Limited Partner hereby waives, to the fullest extent permitted by law, any and all defenses or other remedies that may be available against such Person to contest, negate or disaffirm any action of the General Partner in connection with any such dealing. In no event shall any Person dealing with the General Partner or its representatives be obligated to ascertain that the terms of this Agreement have been complied with or to inquire into the necessity or expediency of any act or action of the General Partner or its representatives. Each and every certificate, document or other instrument executed on behalf of the Partnership by the General Partner or its representatives shall be conclusive evidence in favor of any and every Person relying thereon or claiming thereunder that (i) at the time of the execution and delivery of such certificate, document or instrument, this Agreement was in full force and effect, (ii) the Person executing and delivering such certificate, document or instrument was duly authorized and empowered to do so for and on behalf of the Partnership and (iii) such certificate, document or instrument was duly executed and delivered in accordance with the terms and provisions of this Agreement and is binding upon the Partnership.
6.12. Repurchases and Exchanges of REIT Shares.
(a) Repurchases. If the REIT Limited Partner repurchases any REIT Shares (other than REIT Shares repurchased with proceeds received from the issuance of other REIT Shares), then the General Partner shall cause the Partnership to purchase from the REIT Limited Partner a number of Partnership Units having the same Class designation as the redeemed REIT Shares for that Class of Partnership Units on the same terms that the REIT Limited Partner repurchased such REIT Shares (including any applicable discount to Net Asset Value).
(b) Exchanges. If the REIT Limited Partner exchanges any REIT Shares of any Class (Exchanged REIT Shares) for, or converts any REIT Shares of any Class to, REIT Shares of a different Class (Received REIT Shares), then the General Partner shall, and shall cause the Partnership to, exchange or convert a number of Partnership Units having the same Class designation as the Exchanged REIT Shares, for Partnership Units having the same Class designation as the Received REIT Shares on the same terms that the REIT Limited Partner exchanged or converted the Exchanged REIT Shares. The exchange of Partnership Units shall occur automatically after the close of business on the applicable date of the exchange of REIT Shares, as of which time the holder of a Class of Partnership Units having the same designation as the Exchanged REIT Shares shall be credited on the books and records of the Partnership with the issuance, as of the opening of business on the next day, of the applicable number of Partnership Units having the same designation as the Received REIT Shares.
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ARTICLE 7
CHANGES IN GENERAL PARTNER
7.1. Transfers by General Partner and REIT Limited Partner.
(a) Except as provided in, or in connection with a transaction contemplated by Section 7.1(b), 7.1(c) or 7.4, (i) the General Partner shall not transfer all or any portion of its General Partnership Interest or withdraw as General Partner without the consent of Limited Partners holding more than 50% of the Percentage Interests and (ii) the REIT Limited Partner shall not transfer all or any portion of its Interest or withdraw as a Partner without the consent of Limited Partners holding more than 50% of the Percentage Interests.
(b) Except as otherwise provided in this Section 7.1 or Section 7.4 hereof, neither the General Partner nor the REIT Limited Partner shall engage in any merger, consolidation or other combination with or into another Person or sale of all or substantially all of its assets (other than in connection with a change in the General Partners or REIT Limited Partners state of incorporation or organizational form) in each case which results in a change of control of the General Partner or REIT Limited Partner, as the case may be (a Termination Transaction), unless the consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners is obtained.
(c) Notwithstanding Section 7.1(a), a General Partner may transfer all or any portion of its General Partnership Interest to the REIT Limited Partner or any Person controlled by the REIT Limited Partner, and following a transfer of all of its General Partnership Interest, may withdraw as General Partner.
7.2. Admission of a Substitute or Additional General Partner. A Person shall be admitted as a substitute or additional General Partner of the Partnership only if the following terms and conditions are satisfied:
(a) the Person to be admitted as a substitute or additional General Partner shall have accepted and agreed to be bound by all the terms and provisions of this Agreement by executing a counterpart thereof and such other documents or instruments as may be required or appropriate in order to effect the admission of such Person as a General Partner, and a certificate evidencing the admission of such Person as a General Partner shall have been filed for recordation and all other actions required in connection with such admission shall have been performed;
(b) if the Person to be admitted as a substitute or additional General Partner is a corporation, partnership, limited liability company or other legal entity, it shall have provided the Partnership with evidence satisfactory to counsel for the Partnership of such Persons authority to become a General Partner and to be bound by the terms and provisions of this Agreement; and
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(c) the Partnership has reasonably determined, based upon the advice of counsel to the Partnership, that (x) the admission of the person to be admitted as a substitute or additional General Partner is in conformity with the Act and (y) none of the actions taken in connection with the admission of such Person as a substitute or additional General Partner will cause (i) the Partnership to be classified other than as a partnership for federal tax purposes, or (ii) the loss of any Limited Partners limited liability.
7.3. Removal of a General Partner. The General Partner may not be removed by the Partners, with or without cause, except with the consent of the General Partner.
7.4. Restriction on Termination Transactions.
(a) Neither the REIT Limited Partner nor the General Partner shall engage in, or cause or permit, a Termination Transaction, unless:
(i) The consent of Limited Partners holding more than 50% of the Percentage Interests of the Limited Partners is obtained;
(ii) as a result of such Termination Transaction all Limited Partners (other than the REIT Limited Partner and the General Partner) will receive for each Partnership Unit of each Class an amount of cash, securities, or other property equal to the greatest amount of cash, securities or other property paid in the Termination Transaction to a holder of one Unit Equivalent having the same Class designation as that Partnership Unit in consideration of such Unit Equivalent; provided that if, in connection with the Termination Transaction, a purchase, tender or exchange offer (Offer) shall have been made to and accepted by the holders of more than 50% of the outstanding REIT Shares, each holder of Partnership Units shall be given the option to exchange its Partnership Units for the greatest amount of cash, securities, or other property which a Limited Partner holding Partnership Units would have received had it (1) exercised its Redemption Right and (2) sold, tendered or exchanged pursuant to the Offer the REIT Shares received upon exercise of the Redemption Right immediately prior to the expiration of the Offer; or
(iii) the REIT Limited Partner or the General Partner, as the case may be, is the surviving entity in the Termination Transaction and either (A) the holders of REIT Shares do not receive cash, securities, or other property in the Termination Transaction or (B) all Limited Partners receive in exchange for their Partnership Units of each Class, an amount of cash, securities, or other property (expressed as an amount per Unit Equivalent) that is no less than the greatest amount of cash, securities, or other property (expressed as an amount per Unit Equivalent) received in the Termination Transaction by any holder of REIT Shares having the same Class designation as the Partnership Units being exchanged.
(b) Notwithstanding 7.4(a), the REIT Limited Partner and/or the General Partner may engage in, or cause or permit, a Termination Transaction, if after such Termination Transaction (i) substantially all of the assets of the successor or surviving entity (the Survivor), other than Partnership Units held by the REIT Limited Partner and the General Partner, are contributed, directly or indirectly, to the Partnership as a Capital Contribution in exchange for Partnership Units with a fair market value equal to the value of the assets so contributed as determined by the Survivor in good faith and (ii) the Survivor expressly agrees to assume all
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obligations of the General Partner and the REIT Limited Partner, as appropriate, hereunder. Upon such contribution and assumption, the Survivor shall have the right and duty to amend this Agreement as set forth in this Section 7.4(b). The Survivor shall in good faith arrive at a new method for the calculation of the Cash Amount and the REIT Shares Amount after any such merger or consolidation so as to approximate the existing method for such calculation as closely as reasonably possible. Such calculation shall take into account, among other things, the kind and amount of securities, cash and other property that was receivable upon such merger or consolidation by a holder of REIT Shares of each Class or options, warrants or other rights relating thereto, and which a holder of Partnership Units of any Class could have acquired had such Partnership Units been exchanged immediately prior to such merger or consolidation. Such amendment to this Agreement shall provide for adjustment to such method of calculation, which shall be as nearly equivalent as may be practicable to the adjustments provided for in Section 4.3(a)(ii). The Survivor also shall in good faith modify the definition of REIT Shares and make such amendments to Section 8.5 so as to approximate the existing rights and obligations set forth in Section 8.5 as closely as reasonably possible. The above provisions of this Section 7.4(b) shall similarly apply to successive mergers or consolidations permitted hereunder.
In respect of any Termination Transaction described in the preceding paragraph, the General Partner and the REIT Limited Partner are required to use commercially reasonable efforts to structure such Termination Transaction to avoid causing the Limited Partners to recognize a gain for federal income tax purposes by virtue of the occurrence of or their participation in such Termination Transaction, provided such efforts are consistent with the exercise of the Board of Directors fiduciary duties to the stockholders of the REIT Limited Partner under applicable law.
ARTICLE 8
RIGHTS AND OBLIGATIONS OF THE LIMITED PARTNERS
8.1. Management of the Partnership. The Limited Partners shall not participate in the management or control of Partnership business nor shall they transact any business for the Partnership, nor shall they have the power to sign for or bind the Partnership, such powers being vested solely and exclusively in the General Partner.
8.2. Power of Attorney(a) .
(a) Each Limited Partner and Assignee hereby irrevocably constitutes and appoints the General Partner, any Liquidator, and authorized officers and attorneys-in-fact of each (the Attorney in Fact), and each of those acting singly, in each case with full power of substitution, as its true and lawful agent and attorney-in-fact, with full power and authority in its name, place and stead to:
(1) execute, swear to, seal, acknowledge, deliver, file and record in the appropriate public offices: (a) all certificates, documents and other instruments (including, without limitation, this Agreement and the Certificate and all amendments, supplements or restatements thereof) that the Attorney in Fact deems appropriate or necessary to form, qualify or continue the existence or
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qualification of the Partnership as a limited partnership (or a partnership in which the limited partners have limited liability to the extent provided by applicable law) in the State of Delaware and in all other jurisdictions in which the Partnership may conduct business or own property; (b) all instruments that the Attorney in Fact deems appropriate or necessary to reflect any amendment, change, modification or restatement of this Agreement duly adopted in accordance with its terms; (c) all conveyances and other instruments or documents that the Attorney in Fact deems appropriate or necessary to reflect the dissolution and winding up of the Partnership pursuant to the terms of this Agreement, including, without limitation, a certificate of cancellation; (d) all conveyances and other instruments or documents that the Attorney in Fact deems appropriate or necessary to reflect the distribution or exchange of assets of the Partnership pursuant to the terms of this Agreement; (e) all instruments relating to the admission, acceptance, withdrawal, removal or substitution of any Partner pursuant to the terms of this Agreement or the Capital Contribution of any Partner; and (f) all certificates, documents and other instruments relating to the determination of the rights, preferences and privileges relating to Partnership Interests; and
(2) execute, swear to, acknowledge and file all ballots, consents, approvals, waivers, certificates and other instruments appropriate or necessary, in the sole and absolute discretion of the Attorney in Fact, to make, evidence, give, confirm or ratify any vote, consent, approval, agreement or other action that is made or given by the Partners hereunder or is consistent with the terms of this Agreement.
Nothing contained herein shall be construed as authorizing the Attorney in Fact to amend this Agreement except in accordance with Sections 5.6 and Article 11 hereof or as may be otherwise expressly provided for in this Agreement.
(b) The foregoing power of attorney is hereby declared to be irrevocable and a special power coupled with an interest, in recognition of the fact that each of the Limited Partners and Assignees will be relying upon the power of the Attorney in Fact to act as contemplated by this Agreement in any filing or other action by it on behalf of the Partnership, and it shall survive and not be affected by the subsequent Incapacity of any Limited Partner or Assignee and the Transfer of all or any portion of such Persons Partnership Interest and shall extend to such Persons heirs, successors, assigns, transferees and personal representatives. Each such Limited Partner and Assignee hereby agrees to be bound by any representation made by the Attorney in Fact, acting in good faith pursuant to such power of attorney; and each such Limited Partner and Assignee hereby waives, to the fullest extent permitted by law, any and all defenses that may be available to contest, negate or disaffirm the action of the Attorney in Fact, taken in good faith under such power of attorney. Each Limited Partner and Assignee shall execute and deliver to the Attorney in Fact, within fifteen (15) days after receipt of the Attorney in Facts request therefor, such further designation, powers of attorney and other instruments as the Attorney in Fact deems necessary to effectuate this Agreement and the purposes of the Partnership. Notwithstanding anything else set forth in this Section 8.2, to the fullest extent permitted by law, no Limited Partner shall incur any personal liability for any action of the Attorney in Fact taken under such power of attorney.
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8.3. Limitation on Liability of Limited Partners. No Limited Partner shall be liable for any debts, liabilities, contracts or obligations of the Partnership. A Limited Partner shall be liable to the Partnership only to make payments of its Capital Contribution, if any, as and when due hereunder. After its Capital Contribution is fully paid, no Limited Partner shall, except as otherwise required by the Act, be required to make any further Capital Contributions or other payments or lend any funds to the Partnership.
8.4. Ownership by Limited Partner of General Partner or Affiliate. No Limited Partner shall at any time, either directly or indirectly, own any stock or other interest in the General Partner or in any Affiliate thereof, if such ownership by itself or in conjunction with other stock or other interests owned by other Limited Partners would, in the opinion of counsel for the Partnership, jeopardize the classification of the Partnership as a partnership for federal tax purposes. The General Partner shall be entitled to make such reasonable inquiry of the Limited Partners as is required to establish compliance by the Limited Partners with the provisions of this Section 8.4.
8.5. Redemption Right.
(a) Subject to this Section 8.5 and the provisions of any agreements between the Partnership and one or more Limited Partners with respect to Partnership Units held by them, each Limited Partner other than the General Partner and the REIT Limited Partner, after holding any Partnership Units for a period of at least twelve full months (or such shorter period as consented to by the General Partner in its sole discretion), shall have the right (subject to the terms and conditions set forth herein) to require the Partnership to redeem (a Redemption) all or a portion of such Partnership Units (the Tendered Units) in exchange (a Redemption Right) for the Cash Amount payable on, or, if determined by the General Partner, in its sole discretion, REIT Shares issuable on, the Specified Redemption Date. Any Redemption Right shall be exercised pursuant to a Notice of Redemption delivered to the Partnership (with a copy to the General Partner and the REIT Limited Partner) by the Limited Partner exercising the Redemption Right (the Tendering Party). A Tendering Party shall be deemed to have offered to sell the Tendered Units described in the Notice of Redemption to the General Partner and to the REIT Limited Partner and either the General Partner or the REIT Limited Partner (or both) may, in its sole and absolute discretion, elect to purchase directly and acquire such Tendered Units by paying to the Tendering Party either the Cash Amount or the REIT Shares Amount. Within 15 days of receipt of a Notice of Redemption, the Partnership will send to the Limited Partner submitting the Notice of Redemption a response stating whether the General Partner and/or the REIT Limited Partner has made such an election and whether the General Partner, in its capacity as the general partner of the Partnership, has determined that the applicable Partnership Units will be redeemed for REIT Shares or the Cash Amount, or partially for REIT Shares and partially for a Cash Amount. In either case, the Limited Partner shall be entitled to withdraw the Notice of Redemption if (i) it provides notice to the Partnership that it wishes to withdraw the request and (ii) the Partnership receives the notice no less than two business days prior to the Specified Redemption Date. Notwithstanding the foregoing, the Special Limited Partner and the Adviser (or in the case of units received in consideration for management fees or the Performance Participation Interest, the assignees of the Special Limited Partner and the Adviser) shall have the right to require the Partnership to redeem all or a portion of their Partnership Units pursuant to this Section 8.5 at any time irrespective of the period the
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Partnership Units have been held by the Special Limited Partner or the Adviser. The Partnership shall redeem any such Partnership Units of the Special Limited Partner or the Advisor for the Cash Amount unless the General Partner or the Board of Directors of the REIT Limited Partner determines that any such redemption for cash would be prohibited by applicable law or this Agreement, in which case such Partnership Units will be redeemed for an amount of Class E REIT Shares with an aggregate Net Asset Value equivalent to the aggregate Net Asset Value of such Partnership Units (subject to the satisfaction of the restrictions set forth in Section 8.5(c) and Section 8.5(e)).
No Limited Partner, other than the Special Limited Partner and the Adviser, may deliver more than two Notices of Redemption during each calendar year. A Limited Partner, other than the Special Limited Partner and the Adviser, may not exercise the Redemption Right for less than 1,000 Partnership Units or, if such Limited Partner holds less than 1,000 Partnership Units, all of the Partnership Units held by such Partner. The Tendering Party shall have no right, with respect to any Partnership Units so redeemed, to receive any distribution paid with respect to Partnership Units if the record date for such distribution is on or after the Specified Redemption Date.
(b) If the General Partner and/or the REIT Limited Partner elects to assume the obligation from the Partnership to redeem Tendered Units and agrees to acquire the Tendered Units for REIT Shares rather than cash, then the Partnership shall direct the General Partner and/or REIT Limited Partner, as applicable, to issue and deliver such REIT Shares to the Tendering Party pursuant to the terms set forth in this Section 8.5(b), in which case, (i) the General Partner and/or REIT Limited Partner, acting as a distinct legal entity, shall assume directly the obligation with respect thereto and shall satisfy the Tendering Partys exercise of its Redemption Right, and (ii) such transaction shall be treated, for federal income tax purposes, as a transfer by the Tendering Party of such Tendered Units to the General Partner and/or REIT Limited Partner, as applicable, in exchange for REIT Shares. The percentage of the Tendered Units tendered for Redemption by the Tendering Party for which the General Partner and/or REIT Limited Partner elects to issue REIT Shares (rather than cash) is referred to as the Applicable Percentage. In making such election to acquire Tendered Units, the General Partner and/or REIT Limited Partner shall act in a fair, equitable and reasonable manner that neither prefers one group or class of Limited Partners over another nor discriminates against a group or class of Limited Partners. If, pursuant to the terms of this Section 8.5, the General Partner and/or REIT Limited Partner will acquire any number of Tendered Units for REIT Shares rather than cash, on the Specified Redemption Date, the Tendering Party shall sell such number of the Tendered Units to the General Partner and/or REIT Limited Partner, as applicable, in exchange for a number of REIT Shares equal to the product of the REIT Shares Amount and the Applicable Percentage. The product of the Applicable Percentage and the REIT Shares Amount, if applicable, shall be delivered by the General Partner and/or REIT Limited Partner as duly authorized, validly issued, fully paid and non-assessable REIT Shares free of any pledge, lien, encumbrance or restriction, other than the Aggregate Share Ownership Limit (as calculated in accordance with the Charter) and other restrictions provided in the Article of Incorporation, the bylaws of the REIT Limited Partner, the Securities Act and relevant state securities or blue sky laws. No Tendering Party whose Tendered Units are acquired by the General Partner and/or the REIT Limited Partner shall have any right to cause or require the General Partner and/or the REIT Limited Partner to register or qualify such REIT Shares with any federal or state securities agency under the Securities Act or to list such REIT Shares on any stock exchange. Notwithstanding the provisions of Section 8.5(a) and this Section 8.5(b), the Tendering Parties shall have no rights under this Agreement that would otherwise be prohibited under the Charter.
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(c) In connection with an exercise of Redemption Rights pursuant to this Section 8.5, the Tendering Party shall submit the following to the Partnership (with a copy to the General Partner and the REIT Limited Partner), in addition to the Notice of Redemption:
(i) A written affidavit, dated the same date as the Notice of Redemption, (a) disclosing the actual and constructive ownership, as determined for purposes of Sections 856(a)(6) and 856(h) of the Code, of REIT Shares by (i) such Tendering Party and (ii) any Related Party and (b) representing that, after giving effect to the Redemption, neither the Tendering Party nor any Related Party will own REIT Shares in excess of the Aggregate Share Ownership Limit or the Common Share Ownership Limit (or, if applicable, the Excepted Holder Limit);
(ii) A written representation that neither the Tendering Party nor any Related Party has any intention to acquire any additional REIT Shares prior to the closing of the Redemption on the Specified Redemption Date;
(iii) An undertaking to certify, at and as a condition to the closing of the Redemption on the Specified Redemption Date, that either (a) the actual and constructive ownership of REIT Shares by the Tendering Party and any Related Party remain unchanged from that disclosed in the affidavit required by Section 8.5(c)(i) or (b) after giving effect to the Redemption, neither the Tendering Party nor any Related Party shall own REIT Shares in violation of the Aggregate Share Ownership Limit (or, if applicable, the Excepted Holder Limit);
(iv) With respect to any Cash Amount to be received by a Tendering Party, a waiver and release in a form acceptable to the General Partner;
(v) An undertaking that all Partnership Units being delivered for redemption are free and clear of all liens, it being understood that the Partnership shall not be under any obligation to acquire Partnership Units which are or may be subject to any liens; and
(vi) Any other documents as the General Partner may reasonably require.
(d) Any Cash Amount to be paid to a Tendering Party pursuant to this Section 8.5 shall be paid on the Specified Redemption Date; provided, however, that the General Partner may elect to cause the Specified Redemption Date to be delayed for up to an additional 180 days to the extent required for the Partnership, the General Partner or the REIT Limited Partner to obtain financing to be used to make such payment of the Cash Amount, by causing additional REIT Shares to be issued or otherwise. Notwithstanding the foregoing, the General Partner agrees to use commercially reasonable efforts to cause the closing of the acquisition of Tendered Units hereunder to occur as quickly as reasonably possible.
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(e) Notwithstanding any other provision of this Agreement, the General Partner shall place appropriate restrictions on the ability of the Limited Partners to exercise their Redemption Rights to prevent, among other things, (a) any person from owning shares in excess of the Common Share Ownership Limit, the Aggregate Share Ownership Limit and the Excepted Holder Limit or the REIT Limited Partner failing to qualify as a domestically controlled qualified investment entity, (b) the REIT Shares from being owned by less than 100 persons and the REIT Limited Partner from being closely held within the meaning of Section 856(h) of the Code, (c) as and if deemed necessary to ensure that the Partnership does not constitute a publicly traded partnership under Section 7704 of the Code, (d) the Partnerships assets being considered plan assets with the meaning of ERISA or any regulations proposed or promulgated thereunder, (e) the violation of the Securities Act or other comparable state law, (f) the registration of the Partnership as an investment company under the Investment Company Act, (g) the registration of the Partnership, the General Partner or any Affiliate thereof (that is not already registered as an investment adviser under the Advisers Act) as an investment adviser under the Advisers Act, (h) the termination of the Partnerships status as a partnership for tax purposes, (i) the violation of any law, rule, regulation by such Limited Partner, the Partnership, the General Partner and their respective officers, directors, employers, shareholders, partners, members or any Affiliate thereof, (j) the Partnership from being deemed a SIFT Partnership as such term is defined in Section 197 of the Income Tax Act (Canada), and (k) a non-exempt prohibited transaction under ERISA. If and when the General Partner determines that imposing such restrictions is necessary, the General Partner shall give prompt written notice thereof to each of the Limited Partners holding Partnership Units, which notice shall be accompanied by a copy of an opinion of counsel to the Partnership which states that, in the opinion of such counsel, restrictions are necessary in order to avoid the foregoing, as applicable. In addition to any other appropriate restrictions placed by the General Partner pursuant to this Section 8.5(e), no Tendering Party (including, without limitation, the Special Limited Partner and the Adviser) shall be entitled to consummate a Redemption if the ownership of or delivery of REIT Shares to such Tendering Party on the Specified Redemption Date by the General Partner would (i) cause the occurrence of any of the circumstances described in clauses (a) through (d) of the first sentence of this Section 8.5(e), (ii) cause the REIT Limited Partner to own, actually or constructively, 10% or more of the ownership interests in a tenant (other than a tenant that is a taxable REIT subsidiary (as defined in Section 856(l) of the Code)) of the REIT Limited Partners, the Partnerships or a Subsidiarys real property, within the meaning of Section 856(d)(2)(B) of the Code, or (iii) otherwise cause the REIT Limited Partner to fail to qualify as a REIT under the Code, including, but not limited to, as a result of any eligible independent contractor (as defined in Section 856(d)(9)(A) of the Code) that operates a qualified lodging facility (as defined in Section 856(d)(9)(D) of the Code) or a qualified health care property (as defined in Section 856(e)(6)(D)(i) of the Code) on behalf of a taxable REIT subsidiary (as defined in Section 856(l) of the Code) failing to qualify as such. The REIT Limited Partner, in its sole and absolute discretion, may waive the restriction on redemption set forth in this Section 8.5(e), provided that the Tendering Party has submitted such information, certification or affidavit as the REIT Limited Partner may reasonably require in connection with the application of the restrictions described in this Section 8.5(e). To the extent any attempted Redemption or exchange for REIT Shares would be in violation of this Section 8.5(e), it shall be null and void ab initio and such Tendering Party shall not acquire any rights or economic interest in any Cash Amount otherwise payable upon such Redemption or the REIT Shares otherwise issuable upon such exchange.
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(f) A redemption fee may be charged (other than to the Special Limited Partner and the Adviser) in connection with an exercise of Redemption Rights pursuant to this Section 8.5.
(g) The General Partner, in its sole discretion, may require a Limited Partner to surrender all or any portion of its Partnership Units and withdraw from the Partnership to the extent such redemption is in the best interest of the Partnership, as determined by the General Partner in good faith at any time for any reason or no reason with or without prior notice to such Limited Partner. A notice of mandatory redemption pursuant to this Section 8.6 shall have the same effect as a request for redemption by a Limited Partner given pursuant to Section 8.5; provided that the mandatory redemption of all or any portion of such Limited Partners Partnership Units shall be effective on the date determined by the General Partner and indicated in such notice.
(h) Notwithstanding anything herein to the contrary, the provisions of this Section 8.5 shall not apply with respect to the Initial Class E Units, and instead the provisions of the Brookfield Repurchase Arrangement shall govern with respect to redemptions or repurchases of Initial Class E Units by the Partnership.
8.6. Outside Activities of Limited Partners. Subject to any agreements entered into pursuant to Section 6.7 hereof and any other agreements entered into by a Limited Partner or any of its Affiliates with the General Partner, the Partnership or a Subsidiary (including, without limitation, any employment agreement), any Limited Partner (other than the REIT Limited Partner) and any Assignee, officer, director, employee, agent, trustee, Affiliate, member or stockholder of any Limited Partner shall be entitled to and may have business interests and engage in business activities in addition to those relating to the Partnership, including business interests and activities that are in direct or indirect competition with the Partnership or that are enhanced by the activities of the Partnership. Neither the Partnership nor any Partner shall have any rights by virtue of this Agreement in any business ventures of any Limited Partner or Assignee. Subject to such agreements, none of the Limited Partners nor any other Person shall have any rights by virtue of this Agreement or the partnership relationship established hereby in any business ventures of any other Person, and such Person shall have no obligation pursuant to this Agreement, subject to Section 6.7 hereof and any other agreements entered into by a Limited Partner or its Affiliates with the General Partner, the Partnership or a Subsidiary, to offer any interest in any such business ventures to the Partnership, any Limited Partner, or any such other Person, even if such opportunity is of a character that, if presented to the Partnership, any Limited Partner or such other Person, could be taken by such Person.
8.7. Expenses Not Attributable to Class E Units. Distribution Fees, upfront selling commissions, upfront dealer manager fees, Advisory Fees and the Performance Participation Interest shall be Class-specific expenses allocable to and borne by Classes of Partnership Units other than Class E Units.
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ARTICLE 9
TRANSFERS OF LIMITED PARTNERSHIP INTERESTS
9.1. Purchase for Investment.
(a) Each Limited Partner hereby represents and warrants to the General Partner and to the Partnership that the acquisition of his Partnership Interest is made as a principal for his account for investment purposes only and not with a view to the resale or distribution of such Partnership Interest.
(b) Each Limited Partner agrees that he will not sell, assign or otherwise transfer his Partnership Interest or any fraction thereof, whether voluntarily or by operation of law or at judicial sale or otherwise, to any Person who does not make the representations and warranties to the General Partner set forth in Section 9.1(a) above and similarly agree not to sell, assign or transfer such Partnership Interest or fraction thereof to any Person who does not similarly represent, warrant and agree.
9.2. Restrictions on Transfer of Limited Partnership Interests.
(a) Subject to the provisions of Section 9.2(b) and (c), no Limited Partner may offer, sell, assign, hypothecate, pledge or otherwise transfer all or any portion of his Limited Partnership Interest, or any of such Limited Partners economic rights as a Limited Partner, whether voluntarily or by operation of law or at judicial sale or otherwise (collectively, a Transfer) without the consent of the General Partner, which consent may be granted or withheld in its sole and absolute discretion; provided that the Special Limited Partner may transfer all or any portion of its Limited Partnership Interest, or any of its economic rights as a Limited Partner, to any of its Affiliates without the consent of the General Partner. Any such purported Transfer undertaken without such consent shall be considered to be null and void ab initio and shall not be given effect. The General Partner may require, as a condition of any Transfer to which it consents, that the transferor assume all costs incurred by the Partnership in connection therewith.
(b) No Limited Partner may withdraw from the Partnership other than as a result of a permitted Transfer (i.e., a Transfer consented to as contemplated by clause (a) above or clause (c) below or a Transfer pursuant to Section 9.5 below) of all of its Partnership Interest pursuant to this Article 9 or pursuant to a redemption of all of its Partnership Units pursuant to Section 8.5. Upon the permitted Transfer or redemption of all of a Limited Partners Partnership Interest, such Limited Partner shall cease to be a Limited Partner.
(c) Notwithstanding Section 9.2(a) and subject to Section 9.2(d), (i) a Limited Partner may Transfer, without the consent of the General Partner, all or a portion of its Partnership Interest to (A) a parent or parents spouse, natural or adopted descendant or descendants, spouse of such descendant, or brother or sister, or a trust created by such Limited Partner for the benefit of such Limited Partner and/or any such person(s), of which trust such Limited Partner or any such person(s) is a trustee, (B) a corporation controlled by a Person or Persons named in clause (A) above, or (C) if the Limited Partner is an entity, its beneficial owners, and (ii) a holder of Initial Class E Units may Transfer, without the consent of the General Partner, all or any portion of such Initial Class E Units to an Affiliate of such holder.
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(d) Notwithstanding anything to the contrary contained herein, no Limited Partner may effect a Transfer of its Limited Partnership Interest, in whole of it part, without the consent of the General Partner, which may be withheld in its sole and absolute discretion, if such proposed Transfer would:
(i) require the registration of the Limited Partnership Interest under the Securities Act, the registration of the Partnership as an investment company under, or would be in violation of, the Investment Company Act or any rules or regulations promulgated thereunder, the registration of the General Partner or any Affiliate thereof (that is not currently registered as an investment adviser) as an investment adviser under the Advisers Act, or cause the Partnership to be treated as (1) a publicly traded partnership within the meaning of U.S. Code Section 7704(b) or (2) a SIFT Partnership within the meaning of Section 197 of the Income Tax Act (Canada), or otherwise violate any applicable federal or state securities or blue sky law (including investment suitability standards);
(ii) (A) result in the Partnerships being treated as an association taxable as a corporation (other than a qualified REIT subsidiary within the meaning of Section 856(i) of the Code and the General Partner determines such treatment would be in the best interest of the Partnership), (B) adversely affect the ability of the REIT Limited Partner to continue to qualify as a REIT or as a domestically controlled qualified investment entity or subject the REIT Limited Partner to any additional taxes under Section 857 or Section 4981 of the Code, (C) cause the Partnership not to qualify for the safe harbor described in Regulations Section 1.7704-1(h) (or such other guidance subsequently published by the IRS setting forth safe harbors under which interests will not be treated as readily tradable on a secondary market (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code), or (D) such Transfer is effectuated through an established securities market or a secondary market (or the substantial equivalent thereof) within the meaning of Section 7704 of the Code;
(iii) be a Transfer to a lender to the Partnership or any Person who is related (within the meaning of Regulations Section 1.752-4(b)) to any lender to the Partnership whose loan constitutes a nonrecourse liability (within the meaning of Regulations Section 1.752-1(a)(2));provided that as a condition to such consent the lender may be required to enter into an arrangement with the Partnership and the General Partner to exchange or redeem for the Cash Amount any Partnership Units in which a security interest is held simultaneously with the time at which such lender would be deemed to be a Partner in the Partnership for purposes of allocating liabilities to such lender under Section 752 of the Code;
(iv) result in the Partnerships assets being considered plan assets within the meaning of ERISA or any regulations proposed or promulgated thereunder;
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(v) result in a violation of any applicable anti-money laundering law, rule or regulation;
(vi) cause the General Partner or the Partnership to be controlled by, or under common control with, owned 50 percent or more, individually or in the aggregate, directly or indirectly, by any Person that (a) is the subject or target of any sanctions administered or enforced by the U.S. Department of the Treasurys Office of Foreign Assets Control (OFAC) the U.S. Department of State (collectively Sanctions) or (b) is located, organized or resident in a country or territory that is, or whose government is, the subject or target of comprehensive Sanctions, including, without limitation, the Crimea region, Cuba, Iran, North Korea, Sudan, and Syria.
(e) Any Transfer in contravention of any of the provisions of this Article 9 shall be void and ineffectual and shall not be binding upon, or recognized by, the Partnership.
(f) Prior to the consummation of any Transfer under this Article 9, the transferor and/or the transferee shall deliver to the General Partner such opinions, certificates and other documents as the General Partner shall request in connection with such Transfer.
9.3. Admission of Substitute Limited Partner.
(a) Subject to the other provisions of this Article 9, an Assignee of the Limited Partnership Interest of a Limited Partner (which shall be understood to include any purchaser, transferee, donee, or other recipient of any disposition of such Limited Partnership Interest) shall be deemed admitted as a Limited Partner of the Partnership only with the consent of the General Partner and upon the satisfactory completion of the following:
(i) The Assignee shall have accepted and agreed to be bound by the terms and provisions of this Agreement by executing a counterpart or an amendment thereof and such other documents or instruments as the General Partner may require in order to effect the admission of such Person as a Limited Partner.
(ii) To the extent required, an amended Certificate evidencing the admission of such Person as a Limited Partner shall have been signed, acknowledged and filed for record in accordance with the Act.
(iii) The Assignee shall have delivered a letter containing the representation set forth in Section 9.1(a) hereof and the agreement set forth in Section 9.1(b) hereof.
(iv) If the Assignee is a corporation, partnership or trust, the assignee shall have provided the General Partner with evidence satisfactory to counsel for the Partnership of the assignees authority to become a Limited Partner under the terms and provisions of this Agreement.
(v) The Assignee shall have executed a power of attorney containing the terms and provisions set forth in Section 8.2 hereof.
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(vi) The Assignee shall have paid all legal fees and other expenses of the Partnership, the General Partner, and the REIT Limited Partner and filing and publication costs in connection with its substitution as a Limited Partner.
(vii) The Assignee has obtained the prior written consent of the General Partner to its admission as a Substitute Limited Partner, which consent may be given or denied in the exercise of the General Partners sole and absolute discretion.
(b) For the purpose of allocating Profits and Losses and distributing cash received by the Partnership, a Substitute Limited Partner shall be treated as having become, and appearing in the records of the Partnership as, a Partner upon the filing of the Certificate described in Section 9.3(a)(ii) hereof or, if no such filing is required, the later of the date specified in the transfer documents or the date on which the General Partner has received all necessary instruments of transfer and substitution.
(c) The General Partner shall cooperate with the Person seeking to become a Substitute Limited Partner by preparing the documentation required by this Section 9.3 and making all official filings and publications. The Partnership shall take all such action as promptly as practicable after the satisfaction of the conditions in this Article 9 to the admission of such Person as a Limited Partner of the Partnership.
9.4. Rights of Assignees of Partnership Interests.
(a) Subject to the provisions of Sections 9.1 and 9.2 hereof, except as required by operation of law, the Partnership shall not be obligated for any purposes whatsoever to recognize the assignment by any Limited Partner of its Partnership Interest until the Partnership has received notice thereof.
(b) Any Person who is the Assignee of all or any portion of a Limited Partners Limited Partnership Interest, but does not become a Substitute Limited Partner and desires to make a further assignment of such Limited Partnership Interest, shall be subject to all the provisions of this Article 9 to the same extent and in the same manner as any Limited Partner desiring to make an assignment of its Limited Partnership Interest.
9.5. Effect of Bankruptcy, Death, Incompetence or Termination of a Limited Partner. The occurrence of an Event of Bankruptcy as to a Limited Partner, the dissolution of a Limited Partner, the death of a Limited Partner or a final adjudication that a Limited Partner is incompetent (which term shall include, but not be limited to, insanity) (any of the foregoing, Incapacity) shall not cause the termination or dissolution of the Partnership, and the business of the Partnership shall continue if an order for relief in a bankruptcy proceeding is entered against a Limited Partner, the trustee or receiver of his estate or, if he dies, his executor, administrator or trustee, or, if he is finally adjudicated incompetent, his committee, guardian or conservator, shall have the rights of such Limited Partner for the purpose of settling or managing his estate property and such power as the bankrupt, deceased or incompetent Limited Partner possessed to assign all or any part of his Partnership Interest and to join with the assignee in satisfying conditions precedent to the admission of the assignee as a Substitute Limited Partner.
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9.6. Joint Ownership of Interests. A Partnership Interest may be acquired by two individuals as joint tenants with right of survivorship, provided that such individuals either are married or are related and share the same home as tenants in common. The written consent or vote of both owners of any such jointly held Partnership Interest shall be required to constitute the action of the owners of such Partnership Interest; provided, however, that the written consent of only one joint owner will be required if the Partnership has been provided with evidence satisfactory to the counsel for the Partnership that the actions of a single joint owner can bind both owners under the applicable laws of the state of residence of such joint owners. Upon the death of one owner of a Partnership Interest held in a joint tenancy with a right of survivorship, the Partnership Interest shall become owned solely by the survivor as a Limited Partner and not as an assignee. The Partnership need not recognize the death of one of the owners of a jointly-held Partnership Interest until it shall have received notice of such death. Upon notice to the General Partner from either owner, the General Partner shall cause the Partnership Interest to be divided into two equal Partnership Interests, which shall thereafter be owned separately by each of the former owners.
ARTICLE 10
BOOKS AND RECORDS; ACCOUNTING; TAX MATTERS
10.1. Books and Records. At all times during the continuance of the Partnership, the Partners shall keep or cause to be kept at the Partnerships specified office true and complete books of account in accordance with generally accepted accounting principles, including: (a) a current list of the full name and last known business address of each Partner and the Partnership Units held by each such Partner, (b) a copy of the Certificate of Limited Partnership and all Certificates of amendment thereto, (c) copies of the Partnerships federal, state and local income tax returns and reports, (d) copies of this Agreement and amendments thereto and any financial statements of the Partnership for the three most recent years and (e) all documents and information required under the Act. Any Partner or its duly authorized representative, upon paying the costs of collection, duplication and mailing, shall be entitled to inspect or copy such records during ordinary business hours.
10.2. Custody of Partnership Funds; Bank Accounts.
(a) All funds of the Partnership not otherwise invested shall be deposited in one or more accounts maintained in such banking or brokerage institutions as the General Partner shall determine, and withdrawals shall be made only on such signature or signatures as the General Partner may, from time to time, determine.
(b) All deposits and other funds not needed in the operation of the business of the Partnership may be invested in any manner determined by the General Partner in its sole discretion. The funds of the Partnership shall not be commingled with the funds of any other Person except for such commingling as may necessarily result from an investment permitted by this Section 10.2(b).
10.3. Fiscal and Taxable Year. The fiscal and taxable year of the Partnership shall be the calendar year.
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10.4. Annual Tax Information and Report. The General Partner will endeavor to furnish within 180 days after the end of each fiscal year of the Partnership (subject to reasonable delays in the event of the late receipt of any necessary financial statements of the Person in which the Partnership holds an interest), to each person who was a Limited Partner at any time during a fiscal year of the Partnership, the tax information necessary to file such Limited Partners individual tax returns as required by law.
10.5. Tax Elections; Special Basis Adjustments.
(a) The General Partner shall act as or appoint the partnership representative within the meaning of Section 6223(a) of the Code (the Partnership Representative) and the equivalent for applicable state and local tax purposes. As Partnership Representative, the General Partner (or its appointee) shall have the right and obligation to take all actions authorized and required, respectively, by the Code for the Partnership Representative. The General Partner (or its appointee) shall have the right to retain professional assistance in respect of any audit of the Partnership by the Service and all out-of-pocket expenses and fees incurred by the General Partner (or its appointee) on behalf of the Partnership as Partnership Representative shall constitute Partnership expenses.
(b) All elections required or permitted to be made by the Partnership under the Code or any applicable state, local or foreign tax law shall be made by the General Partner in its sole and absolute discretion.
(c) The Partnership Representative is authorized, but not required:
(i) to enter into any settlement with the IRS with respect to any administrative or judicial proceedings for the adjustment of Partnership items required to be taken into account by a Partner for income tax purposes (such administrative proceedings being referred to as a tax audit and such judicial proceedings being referred to as judicial review). In the settlement agreement with respect to any such proceedings, the Partnership Representative may expressly state that such agreement shall bind all Partners;
(ii) in the event that a notice of final partnership adjustment (a Final Adjustment) is mailed to the Partnership Representative, to seek judicial review of such Final Adjustment, including the filing of a petition for readjustment with the United States Tax Court or the United States Claims Court, or the filing of a complaint for refund with the District Court of the United States for the district in which the Partnerships principal place of business is located;
(iii) to file a request for an administrative adjustment with the IRS at any time and, if any part of such request is not allowed by the IRS, to file an appropriate pleading (petition or complaint) for judicial review with respect to such request;
(iv) to enter into an agreement with the IRS to extend the period for assessing any tax that is attributable to any item required to be taken into account by a Partner for tax purposes, or an item affected by such item; and
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(v) to take any other action on behalf of the Partners or any of them in connection with any tax audit or judicial review proceeding to the extent permitted by applicable law or regulations.
The taking of any action and the incurring of any expense by the Partnership Representative in connection with any such proceeding, except to the extent required by law, is a matter in the sole and absolute discretion of the Partnership Representative and the provisions relating to indemnification of the General Partner set forth in Section 6.3 hereof shall be fully applicable to the Partnership Representative in its capacity as such.
In the case of the payment by the Partnership of an assessed imputed underpayment, the Partnership Representative is authorized to allocate the assessed amount among the Partners in a manner it deems equitable in its sole discretion so that each Partner economically bears any taxes paid by the Partnership allocable to such Partners.
(d) In the event of a transfer of all or any part of the Partnership Interest of any Partner, the Partnership, at the option of the General Partner, may elect pursuant to Section 754 of the Code to adjust the basis of the Partnerships assets. Notwithstanding anything contained in Article 5, any adjustments made pursuant to Section 754 of the Code shall affect only the successor in interest to the transferring Partner and in no event shall be taken into account in establishing, maintaining or computing Capital Accounts for the other Partners for any purpose under this Agreement. Each Partner will furnish the Partnership with all information necessary to give effect to such election.
10.6. Reports to Limited Partners. As soon as practicable after the close of each fiscal year, but in no event later than the date on which the General Partner mails its annual report to holders of the REIT Shares, the General Partner shall cause to be mailed to each Limited Partner (other than the REIT Limited Partner and any Limited Partner that is an Affiliate of Brookfield) an annual report containing financial statements of the Partnership, or of the REIT Limited Partner if such statements are prepared solely on a consolidated basis with the REIT Limited Partner, for such fiscal year, presented in accordance with generally accepted accounting principles. The annual financial statements shall be audited by accountants selected by the General Partner.
ARTICLE 11
DISSOLUTION, LIQUIDATION AND TERMINATION
11.1. Dissolution. The Partnership shall not be dissolved by the admission of Substitute Limited Partners or additional Limited Partners or by the admission of a successor General Partner in accordance with the terms of this Agreement. Upon the withdrawal of the General Partner, any successor General Partner is hereby authorized to, and shall, continue the business and affairs of the Partnership without dissolution. However, the Partnership shall dissolve, and its affairs shall be wound up, upon the first to occur of any of the following (each a Liquidating Event):
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(a) the occurrence of an event of withdrawal (as defined in the Act) with respect to a General Partner; provided, the Partnership shall not be dissolved and required to be wound up in connection with any of the events specified in this clause (A) if (1) at the time of the occurrence of such event there is at least one remaining general partner of the Partnership who is hereby authorized to and shall carry on the business of the Partnership, or (2) if at such time there is no remaining General Partner, if within 90 days after such event of withdrawal, Limited Partners holding more than 50% of the Percentage Interests agree in writing or vote to continue the business of the Partnership and to appoint, effective as of the date of withdrawal, one or more additional General Partners;
(b) an election to dissolve the Partnership made by the General Partner;
(c) entry of a decree of judicial dissolution of the Partnership pursuant to the provisions of the Act; or
(d) at any time there are no limited partners of the Partnership, unless the Partnership is continued without dissolution in accordance with the Act.
11.2. Winding Up.
(a) Upon the occurrence of a Liquidating Event, the Partnership shall continue solely for the purposes of winding up its affairs in an orderly manner, liquidating its assets and satisfying the claims of its creditors and the Holders. After the occurrence of a Liquidating Event, no Holder shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Partnerships business and affairs. The General Partner (or, in the event that there is no remaining General Partner or the General Partner has dissolved, become bankrupt within the meaning of the Act or ceased to operate, any Person elected by Limited Partners holding more than 50% of the Percentage Interests (the General Partner or such other Person being referred to herein as the Liquidator)) shall be responsible for overseeing the winding up and dissolution of the Partnership and shall take full account of the Partnerships liabilities and property, and the Partnership property shall be liquidated as promptly as is consistent with obtaining the fair value thereof, and the proceeds therefrom (which may, to the extent determined by the General Partner, include shares of stock in the General Partner) shall be applied and distributed in the following order:
(1) First, to the satisfaction of all of the Partnerships debts and liabilities to creditors other than the Holders (whether by payment or the making of reasonable provision for payment thereof);
(2) Second, to the satisfaction of all of the Partnerships debts and liabilities to the General Partner (whether by payment or the making of reasonable provision for payment thereof), including, but not limited to, amounts due as reimbursements under Section 6.5 hereof;
(3) Third, to the satisfaction of all of the Partnerships debts and liabilities to the other Holders (whether by payment or the making of reasonable provision for payment thereof); and
(4) Fourth, to the Partners in accordance with Section 5.8.
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The General Partner shall not receive any additional compensation for any services performed pursuant to this Article 11 other than reimbursement of its expenses as set forth in Section 6.5.
(b) Notwithstanding the provisions of Section 11.2(a) hereof that require liquidation of the assets of the Partnership, but subject to the order of priorities set forth therein, if the Liquidator determines that an immediate sale of part or all of the Partnerships assets would be impractical or would cause undue loss to the Holders, the Liquidator may, in its sole and absolute discretion, defer for a reasonable time the liquidation of any assets and/or distribute to the Holders, in lieu of cash, as tenants in common and in accordance with the provisions of Section 11.2(a) hereof, undivided interests in such Partnership assets as the Liquidator deems not suitable for liquidation. Any such distributions in kind shall be made only if, in the good faith judgment of the Liquidator, such distributions in kind are in the best interest of the Holders, and shall be subject to such conditions relating to the disposition and management of such properties as the Liquidator deems reasonable and equitable and to any agreements governing the operation of such properties at such time. The Liquidator shall determine the fair market value of any property distributed in kind using such reasonable method of valuation as it may adopt.
(c) To the fullest extent permitted by law, if any Holder has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), except as otherwise agreed to by such Holder or as may otherwise be required with respect to the General Partner in its capacity as the general partner of the Partnership, such Holder shall have no obligation to make any contribution to the capital of the Partnership with respect to such deficit, and such deficit shall not be considered a debt owed to the Partnership or to any other Person for any purpose whatsoever.
(d) In the sole and absolute discretion of the General Partner or the Liquidator, a pro rata portion of the distributions that would otherwise be made pursuant to this Article 11 may be:
(1) distributed to a trust established for the benefit of the General Partner and the Holders for the purpose of liquidating Partnership assets, collecting amounts owed to the Partnership, and paying any contingent, conditional or unmatured liabilities or obligations of the Partnership arising out of or in connection with the Partnership and/or Partnership activities. The assets of any such trust shall be distributed to the Holders, from time to time, in the reasonable discretion of the General Partner or the Liquidator, in the same proportions and amounts as would otherwise have been distributed to the Holders pursuant to this Agreement; or
(2) withheld or escrowed to provide a reasonable reserve for Partnership liabilities (contingent or otherwise) and to reflect the unrealized portion of any installment obligations owed to the Partnership, provided that such withheld or escrowed amounts shall be distributed to the Holders in the manner and order of priority set forth in Section 11.2(a) hereof as soon as practicable.
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(e) The provisions of Section 6.4 hereof shall apply to any Liquidator appointed pursuant to this Article 11 as though the Liquidator were the General Partner of the Partnership.
11.3. Rights of Holders. Except as otherwise provided in this Agreement, (a) each Holder shall look solely to the assets of the Partnership for the return of its Capital Contribution, (b) no Holder shall have the right or power to demand or receive property other than cash from the Partnership and (c) no Holder shall have priority over any other Holder as to the return of its Capital Contributions, distributions or allocations.
11.4. Notice of Dissolution. In the event that a Liquidating Event occurs or an event occurs that would, but for an election or objection by one or more Partners pursuant to Section 11.1 hereof, result in a dissolution of the Partnership, the General Partner or Liquidator shall, within thirty (30) days thereafter, provide written notice thereof to each Holder and, in the General Partners or Liquidators sole and absolute discretion or as required by the Act, to all other parties with whom the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator), and the General Partner or Liquidator may, or, if required by the Act, shall, publish notice thereof in a newspaper of general circulation in each place in which the Partnership regularly conducts business (as determined in the sole and absolute discretion of the General Partner or Liquidator).
11.5. Cancellation of Certificate of Limited Partnership. Upon the completion of the liquidation of the Partnership cash and property as provided in Section 11.2 hereof, the Partnership shall be terminated, a certificate of cancellation shall be filed with the Secretary of State, at which time the Partnership shall terminate, all qualifications of the Partnership as a foreign limited partnership or association in jurisdictions other than the State of Delaware shall be cancelled, and such other actions as may be necessary to terminate the Partnership shall be taken.
11.6. Reasonable Time for Winding-Up. A reasonable time shall be allowed for the orderly winding-up of the business and affairs of the Partnership and the liquidation of its assets pursuant to Section 11.2 hereof, in order to minimize any losses otherwise attendant upon such winding-up, and the provisions of this Agreement shall remain in effect between and among the Partners during the period of liquidation.
ARTICLE 12
PROCEDURES FOR ACTIONS AND CONSENTS OF PARTNERS; AMENDMENT OF AGREEMENT; MEETINGS
12.1. Procedures of Actions and Consents of Partners Notices. The actions requiring Consent of any Partner or Partners pursuant to this Agreement or otherwise pursuant to applicable law, are subject to the procedures set forth in this Article 12.
12.2. Amendment. This Agreement may be amended with the Consent of the Limited Partners holding more than 50% of the Percentage Interests. Notwithstanding the foregoing, the General Partner, without the consent of any Limited Partner, may amend this Agreement for any of the following purposes:
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(1) to add to the obligations of the General Partner or surrender any right or power granted to the General Partner or any Affiliate of the General Partner for the benefit of the Limited Partners;
(2) to reflect issuance of additional Partnership Units in accordance with the terms of this Agreement, the admission, substitution, termination or withdrawal of Partners, the Transfer of any Partnership Interest in accordance with this Agreement, and to amend the Partnership Register in connection with such admission, substitution, withdrawal, Transfer or adjustment;
(3) to reflect a change that is of an inconsequential nature or does not adversely affect the Limited Partners in any material economic respect, or to cure any ambiguity, correct or supplement any provision in this Agreement not inconsistent with law or with other provisions, or make other changes with respect to matters arising under this Agreement that will not be inconsistent with law or with the provisions of this Agreement;
(4) to set forth or amend the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications or terms or conditions of redemption of the Holders of any additional Partnership Interests issued pursuant to Article 4, including, without limitation, amending Articles 5, 8 and 11 hereof, to appropriately reflect the distributions, allocations, partnership rights and rights upon liquidation (including any preference, priority or subordination thereof) of the additional Partnership Interests so issued in accordance with the terms thereof;
(5) to satisfy any requirements, conditions or guidelines contained in any order, directive, opinion, ruling or regulation of a federal or state agency or contained in federal or state law;
(6) (a) to reflect such changes as are reasonably necessary for the REIT Limited Partner to maintain its status as a REIT or as a domestically controlled qualified investment entity or to satisfy the REIT Requirements, (b) to reflect the Transfer of all or any part of a Partnership Interest between the General Partner, the REIT Limited Partner and any Person controlled by the REIT Limited Partner or (c) to ensure that the Partnership will not be classified as a publicly traded partnership under Code Section 7704;
(7) to modify either or both of the manner in which items of Profit or Loss are allocated pursuant to Article 5 or the manner in which Capital Accounts are adjusted, computed, or maintained (but in each case only to the extent otherwise provided in this Agreement and as may be permitted under applicable law);
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(8) to reflect the issuance of additional Partnership Interests in accordance with Article 4;
(9) to reflect any modification to this Agreement as is necessary or desirable (as determined by the General Partner in its sole and absolute discretion) in connection with any merger or consolidation of the Partnership with and into the REIT Limited Partner or any wholly-owned subsidiary of the REIT Limited Partner, or any Transfer by the REIT Limited Partner of its interest in the Partnership to any wholly-owned subsidiary of the REIT Limited Partner;
(10) to reflect any other modification to this Agreement as is reasonably necessary for the business or operations of the Partnership or the REIT Limited Partner;
(11) to effect or facilitate a Termination Transaction that, in accordance with Section 7.1(b) and/or 7.1(c), does not require the consent of any Limited Partner and, if the Partnership is the Surviving Partnership in any Termination Transaction, to modify Section 8.5 or any related definitions to provide that the holders of interests in such Surviving Partnership have rights that are consistent with Section 7.1; and
(12) to reflect modifications as is necessary or desirable to (i) cause the number of Partnership Units issued and outstanding of each Class to equal the number of REIT Shares having the same Class designation as such Class of Partnership Units, (ii) include a provision whereby the distributions made on each Partnership Unit of a given Class shall be the same as distributions made on each REIT Share of the same Class, (iii) include a provision to ensure that the Net Asset Value Per Partnership Unit of a given Class will at all times be equal or substantially equal to the Net Asset Value Per REIT Share of the same Class, and (iv) include a provision whereby the REIT Limited Partner will be issued a Partnership Unit of a particular Class each time it issues a REIT Share of the same Class and contributes (or is deemed to have contributed) the gross proceeds from the issuance of such REIT Share to the Partnership.
Notwithstanding the foregoing, the following amendments shall require the consent of Limited Partners holding more than 50% of the Percentage Interests:
(a) any amendment affecting the operation of the Redemption Right (except as provided in Section 8.5(d), 7.1(b) or 7.1(c)) in a manner adverse to the Limited Partners;
(b) any amendment that would adversely affect the rights of the Limited Partners to receive the distributions payable to them hereunder, other than with respect to the issuance of additional Partnership Units pursuant to Section 4.3;
(c) any amendment that would alter the Partnerships allocations of Profit and Loss to the Limited Partners, other than with respect to the issuance of additional Partnership Units pursuant to Section 4.3; or
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(d) any amendment that would impose on the Limited Partners any obligation to make additional Capital Contributions to the Partnership.
12.3. Actions and Consents of the Partners.
(a) Meetings of the Partners may be called only by the General Partner to transact any business that the General Partner determines. The call shall state the nature of the business to be transacted. Notice of any such meeting shall be given to all Partners entitled to act at the meeting not less than seven (7) days nor more than sixty (60) days prior to the date of such meeting. Partners may vote in person or by proxy at such meeting. Unless approval by a different number or proportion of the Partners is required by this Agreement, the affirmative vote of the General Partner and Limited Partners holding more than 50% of the Percentage Interests shall be sufficient to approve such proposal at a meeting of the Partners. Whenever the vote, consent or approval of Partners is permitted or required under this Agreement, such vote, consent or approval may be given at a meeting of Partners or may be given in accordance with the procedures prescribed in Section 12.3(b) hereof.
(b) Any action requiring the Consent of any Partner or group of Partners pursuant to this Agreement or that is required or permitted to be taken at a meeting of the Partners may be taken without a meeting if a consent in writing or by electronic transmission setting forth the action so taken or consented to is given by Partners whose affirmative vote would be sufficient to approve such action or provide such Consent at a meeting of the Partners. Such consent may be in one instrument or in several instruments, and shall have the same force and effect as the affirmative vote of such Partners at a meeting of the Partners. Such consent shall be filed with the General Partner. An action so taken shall be deemed to have been taken at a meeting held on the effective date so certified. For purposes of obtaining a Consent in writing or by electronic transmission, the General Partner may require a response within a reasonable specified time, but not less than fifteen (15) days, and failure to respond in such time period shall, to the fullest extent permitted by law, constitute a Consent that is consistent with the General Partners recommendation with respect to the proposal; provided, however, that an action shall become effective at such time as requisite Consents are received even if prior to such specified time.
(c) Each Partner entitled to act at a meeting of the Partners may authorize any Person or Persons to act for it by proxy on all matters in which a Partner is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. Each proxy must be signed by the Partner or its attorney-in-fact. No proxy shall be valid after the expiration of eleven (11) months from the date thereof unless otherwise provided in the proxy (or there is receipt of a proxy authorizing a later date). Every proxy shall be revocable at the pleasure of the Partner executing it, such revocation to be effective upon the Partnerships receipt of written notice of such revocation from the Partner executing such proxy, unless such proxy states that it is irrevocable and is coupled with an interest.
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(d) The General Partner may set, in advance, a record date for the purpose of determining the Partners (i) entitled to Consent to any action, (ii) entitled to receive notice of or vote at any meeting of the Partners or (iii) in order to make a determination of Partners for any other proper purpose. Such date, in any case, shall not be prior to the close of business on the day the record date is fixed and shall be not more than ninety (90) days and, in the case of a meeting of the Partners, not less than five (5) days, before the date on which the meeting is to be held. If no record date is fixed, the record date for the determination of Partners entitled to notice of or to vote at a meeting of the Partners shall be at the close of business on the day on which the notice of the meeting is sent, and the record date for any other determination of Partners shall be the effective date of such Partner action, distribution or other event. When a determination of the Partners entitled to vote at any meeting of the Partners has been made as provided in this Section, such determination shall apply to any adjournment thereof
(e) Each meeting of Partners shall be conducted by the General Partner or such other Person as the General Partner may appoint pursuant to such rules for the conduct of the meeting as the General Partner or such other Person deems appropriate in its sole and absolute discretion. Without limitation, meetings of Partners may be conducted in the same manner as meetings of the REIT Limited Partners stockholders and may be held at the same time as, and as part of, the meetings of the REIT Limited Partners stockholders.
ARTICLE 13
GENERAL PROVISIONS
13.1. Notices. All communications required or permitted under this Agreement shall be in writing and shall be deemed to have been given when delivered personally or upon deposit in the United States mail, registered, postage prepaid return receipt requested, to the Partners at the addresses maintained for each Partner on the books and records of the Partnership; provided, however, that any Partner may specify a different address by notifying the General Partner in writing of such different address. Notices to the Partnership shall be delivered at or mailed to its specified office.
13.2. Survival of Rights. Subject to the provisions hereof limiting transfers, this Agreement shall be binding upon and inure to the benefit of the Partners and the Partnership and their respective legal representatives, successors, transferees and assigns.
13.3. Additional Documents. Each Partner agrees to perform all further acts and execute, swear to, acknowledge and deliver all further documents which may be reasonable, necessary, appropriate or desirable to carry out the provisions of this Agreement or the Act.
13.4. Severability. If any provision of this Agreement shall be declared illegal, invalid, or unenforceable in any jurisdiction, then such provision shall be deemed to be severable from this Agreement (to the extent permitted by law) and in any event such illegality, invalidity or unenforceability shall not affect the remainder hereof.
13.5. Side Letters. Notwithstanding anything to the contrary contained herein, it is hereby acknowledged and agreed that the General Partner, on its own behalf or on behalf of the Partnership, and without the approval of any Limited Partner or any other Person, may enter into a side letter or similar agreement (collectively, Side Letters) with one or more Limited Partners which has the effect of establishing rights under, or altering or supplementing the terms hereof. As a result of such Side Letters, certain Limited Partners may receive additional benefits, which
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may be more favorable than those offered to any other Partners. The parties hereto agree that any terms contained in a Side Letter with one or more such Persons shall govern with respect to such Persons notwithstanding anything to the contrary contained herein. Except as required by applicable law, the General Partner will not be required to notify all Limited Partners of any such Side Letters or any of the rights or terms or provisions thereof, and will not be required to offer such additional or different rights or terms to all Limited Partners.
13.6. Entire Agreement. This Agreement, the exhibits attached hereto, the Contribution Agreements, and any Side Letters constitute the entire Agreement of the Partners and supersede all prior written agreements and prior and contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
13.7. Pronouns and Plurals. When the context in which words are used in the Agreement indicates that such is the intent, words in the singular number shall include the plural and the masculine gender shall include the neuter or female gender as the context may require.
13.8. Headings. The Article headings or sections in this Agreement are for convenience only and shall not be used in construing the scope of this Agreement or any particular Article.
13.9. Counterparts. This Agreement may be executed in counterparts, each one of which shall be deemed an original and all of which together shall constitute one and the same Agreement. For the avoidance of doubt, a Persons execution and delivery of this Agreement by electronic signature and electronic transmission (jointly, an Electronic Signature), including via Docusign or other similar method, shall constitute the execution and delivery of a counterpart of this Agreement by or on behalf of such Person and shall bind such Person to the terms of this Agreement. The Partners hereto agree that this Agreement and any additional information incidental hereto may be maintained as electronic records. Any Person executing and delivering this Agreement by Electronic Signature further agrees to take any and all reasonable additional actions, if any, evidencing its intent to be bound by the terms of this Agreement, as may be reasonably requested by the General Partner.
13.10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware.
13.11. No Partition. No Partner nor any successor-in-interest to a Partner shall have the right while this Agreement remains in effect to have any property of the Partnership partitioned, or to file a complaint or institute any proceeding at law or in equity to have such property of the Partnership partitioned, and each Partner, on behalf of itself and its successors and assigns hereby waives any such right. It is the intention of the Partners that the rights of the parties hereto and their successors-in-interest to Partnership property, as among themselves, shall be governed by the terms of this Agreement and that the rights of the Partners and their respective successors-in-interest shall be subject to the limitations and restrictions as set forth in this Agreement.
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13.12. No Rights as Shareholders. Nothing contained in this Agreement shall be construed as conferring upon the Holders of Partnership Units any rights whatsoever as stockholders of the REIT Limited Partner or as members of the General Partner, including without limitation any right to receive dividends or other distributions made to stockholders of the REIT Limited Partner or to vote or to consent or receive notice as stockholders in respect of any meeting of stockholders of the REIT Limited Partner for the election of directors of the REIT Limited Partner or any other matter.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have hereunder affixed their signatures to this Agreement of Limited Partnership, all as of the date first set forth above.
GENERAL PARTNER: | ||
Brookfield REIT OP GP LLC | ||
By: Brookfield Real Estate Income Trust Inc., its sole member | ||
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
WITHDRAWING GENERAL PARTNER: | ||
Oaktree Real Estate Income Trust MGR, LLC | ||
By: Oaktree Real Estate Income Trust, Inc., its sole member | ||
By: |
/s/ Brian Price |
|
Name: Brian Price | ||
Title: Authorized Signatory | ||
By: |
/s/ Derek Smith |
|
Name: Derek Smith | ||
Title: Authorized Signatory | ||
REIT LIMITED PARTNER: | ||
Brookfield Real Estate Income Trust Inc. | ||
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
SPECIAL LIMITED PARTNER: | ||
Brookfield REIT OP Special Limited Partner L.P. | ||
By: BUSI II GP-P LLC, its general partner | ||
By: |
/s/ Melissa Lang |
|
Name: Melissa Lang | ||
Title: Senior Vice President |
Signature page of Second Amended and Restated Limited Partnership Agreement of
Brookfield REIT Operating Partnership L.P.
EXHIBIT A
NOTICE OF EXERCISE OF REDEMPTION RIGHT
In accordance with Section 8.5 of the Second Amended and Restated Limited Partnership Agreement of Brookfield REIT Operating Partnership L.P. (the Agreement), the undersigned hereby irrevocably (i) presents for redemption Partnership Units in Brookfield REIT Operating Partnership L.P. in accordance with the terms of the Agreement and the Redemption Right referred to in Section 8.5 thereof, (ii) surrenders such Partnership Units and all right, title and interest therein, and (iii) directs that the Cash Amount and/or REIT Shares Amount (as defined in the Agreement) as determined by the REIT Limited Partner deliverable upon exercise of the Redemption Right be delivered to the address specified below, and if REIT Shares (as defined in the Agreement) are to be delivered, such REIT Shares be registered or placed in the name(s) and at the address(es) specified below.
Dated:
|
(Name of Limited Partner) |
|
(Signature of Limited Partner) |
|
(Mailing Address) |
|
(City) (State) (Zip Code) |
|
Signature Guaranteed by: |
If REIT Shares are to be issued, issue to: | ||
Name: |
|
|
Social Security or | ||
Tax I.D. Number: |
A-1
Exhibit 10.3
IN ACCORDANCE WITH ITEM 6.01(B)(10) OF REGULATION S-K, CERTAIN PRIVATE OR CONFIDENTIAL MARKED AS [***] HAS BEEN REDACTED FROM THE FILED COPY OF THIS EXHIBIT 10.3 BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.
OPTION INVESTMENTS SUB-ADVISORY AGREEMENT
BY AND AMONG
BROOKFIELD REAL ESTATE INCOME TRUST INC.,
BROOKFIELD REIT OPERATING PARTNERSHIP, L.P.,
BROOKFIELD REIT ADVISER LLC,
AND
OAKTREE FUND ADVISORS, LLC
TABLE OF CONTENTS
1. |
DEFINITIONS |
1 | ||||
2. |
APPOINTMENT |
5 | ||||
3. |
DUTIES OF THE SUB-ADVISER |
5 | ||||
4. |
AUTHORITY OF SUB-ADVISER |
8 | ||||
5. |
PREPARATION OF BUSINESS PLANS AND BUDGETS |
8 | ||||
6. |
BANK ACCOUNTS; CUSTODY ACCOUNTS |
9 | ||||
7. |
RECORDS; ACCESS |
9 | ||||
8. |
LIMITATIONS ON ACTIVITIES |
9 | ||||
9. |
OTHER ACTIVITIES OF THE SUB-ADVISER |
10 | ||||
10. |
COMPENSATION |
10 | ||||
11. |
EXPENSES |
11 | ||||
12. |
OTHER SERVICES |
13 | ||||
13. |
NO JOINT VENTURE |
13 | ||||
14. |
TERM OF AGREEMENT |
13 | ||||
15. |
TERMINATION BY THE PARTIES |
13 | ||||
16. |
ASSIGNMENT TO AN AFFILIATE |
13 | ||||
17. |
REPRESENTATIONS, WARRANTIES AND AGREEMENTS |
13 | ||||
18. |
PAYMENTS TO AND DUTIES OF SUB-ADVISER UPON TERMINATION |
15 | ||||
19. |
INDEMNIFICATION BY THE COMPANY, THE ADVISER AND THE OPERATING PARTNERSHIP |
15 | ||||
20. |
INDEMNIFICATION BY SUB-ADVISER |
15 | ||||
21. |
MISCELLANEOUS |
16 |
SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT (this Agreement), dated and effective as of November 2, 2021 (the Effective Date), by and among Brookfield Real Estate Income Trust Inc. (formerly, Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company), Brookfield REIT Operating Partnership, L.P., a Delaware limited partnership (the Operating Partnership), Brookfield REIT Adviser LLC, a Delaware limited liability company (the Adviser), and Oaktree Fund Advisors, LLC, a Delaware limited liability company (including its assignee pursuant to the terms of this Agreement, the Sub-Adviser). Capitalized terms used herein shall have the meanings ascribed to them in Section 1 below.
BACKGROUND
WHEREAS, the Company is an externally managed, real estate investment trust, that invests primarily in commercial real estate assets and, to a lesser extent, in real estate-related debt investments, including private loans and traded real estate-related securities to help maintain liquidity;
WHEREAS, the Company appointed the Adviser to act as manager and investment adviser pursuant to an advisory agreement, dated as of the date hereof, among the Company, the Operating Partnership and the Adviser (the Advisory Agreement);
WHEREAS, the Advisory Agreement provides that the Adviser shall have the authority to engage one or more sub-advisers with respect to the management of the Company;
WHEREAS, the Sub-Adviser is engaged principally in the business of rendering investment management services and is registered as an investment adviser under the Advisers Act;
WHEREAS, the Adviser and the Board of Directors desire to engage the Sub-Adviser to render asset management services in the manner and on the terms set forth in this Agreement with respect to certain of the Companys real estate equity investments and real estate-related debt investments set forth on Exhibit A hereto (each, an Option Investment and, collectively, the Option Investments) held, directly or indirectly, by Oaktree Segregated REIT Vehicle 1 LLC, a Delaware limited liability company, The Lakes Grand Avenue Partners, LLC, a Delaware limited liability company, or Oaktree Segregated Debt Vehicle LLC, a Delaware limited liability company (collectively, and including such entities successors or assigns, the Segregated Vehicles); and
WHEREAS, the Sub-Adviser is willing to undertake such duties and responsibilities on behalf of the Adviser and the Company, and subject to the supervision of, the Adviser and the Board of Directors on the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, it is hereby agreed between the parties hereto as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have the definitions hereinafter indicated:
Adviser shall have the meaning set forth in the preamble of this Agreement.
Advisers Act shall mean the Investment Advisers Act of 1940, as amended.
Affiliate shall have the meaning set forth in the Charter and the term Affiliated shall have a correlative meaning.
Agreement shall have the meaning set forth in the preamble of this Agreement.
Approved Budget shall have the meaning set forth in Section 5(b).
Approved Business Plan shall have the meaning set forth in Section 5(b).
Board of Directors shall mean the board of directors of the Company, as of any particular time.
Brookfield shall mean, collectively, Brookfield Asset Management Inc., an Ontario, Canada corporation, and any Affiliate thereof.
Brookfield Approved Transaction shall have the meaning set forth in Section 3(b).
Budget shall have the meaning set forth in Section 5(a).
Business Day shall have the meaning set forth in the Charter.
Business Plan shall have the meaning set forth in Section 5(a).
Bylaws shall mean the bylaws of the Company, as amended from time to time.
Carry-Forward Amount shall have the meaning set forth in the definition of Sub-Adviser Performance Interest Amount.
Change of Control shall mean any event (including, without limitation, issue, transfer or other disposition of shares of capital stock of the Company or equity interests in the Operating Partnership, merger, share exchange or consolidation) after which any person (as that term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company or the Operating Partnership representing greater than 50% or more of the combined voting power of Companys and Operating Partnerships then-outstanding securities; provided, that, a Change of Control shall not be deemed to occur as a result of any widely distributed public offering of the Shares.
Charter shall mean the charter of the Company filed with the Maryland State Department of Assessments and Taxation in accordance with the Maryland General Corporation Law, as amended and supplemented from time to time.
Class C NAV Per Share shall have the meaning set forth in the Charter.
Class E NAV Per Share shall have the meaning set forth in the Charter.
Class D NAV Per Share shall have the meaning set forth in the Charter.
Class I NAV Per Share shall have the meaning set forth in the Charter.
Class S NAV Per Share shall have the meaning set forth in the Charter.
Class T NAV Per Share shall have the meaning set forth in the Charter.
Code shall mean the Internal Revenue Code of 1986, as amended.
Company shall have the meaning set forth in the preamble of this Agreement.
Director shall mean a member of the Board of Directors.
Distributions shall have the meaning set forth in the Charter.
Effective Date shall have the meaning set forth in the preamble of this Agreement.
Exchange Act shall have the meaning set forth in the Charter.
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Expense Adjustment shall mean [***].
Independent Appraiser shall have the meaning set forth in the Charter.
Independent Director shall have the meaning set forth in the Charter.
Investment Company Act shall mean the Investment Company Act of 1940, as amended.
Investment Guidelines shall mean the investment guidelines and borrowing policies adopted by the Board of Directors, as amended from time to time.
Joint Ventures shall have the meaning set forth in the Charter.
Management Fee shall have the meaning set forth in Section 10(a).
Mortgages shall have the meaning set forth in the Charter.
NASAA REIT Guidelines shall have the meaning set forth in the Charter.
NAV shall mean net asset value.
Oaktree shall mean, collectively, Oaktree Capital Management, L.P., and any Affiliate thereof.
Offering shall have the meaning set forth in the Charter.
Operating Partnership shall have the meaning set forth in the preamble.
Operating Partnership Agreement shall mean the Limited Partnership Agreement of the Operating Partnership, as amended from time to time.
Option Investments shall have the meaning set forth in the preamble.
Organization and Offering Expenses shall have the meaning set forth in the Charter.
Other Oaktree Accounts shall mean the other funds and accounts that Oaktree and its Affiliates currently manage and may in the future manage.
Performance Fee shall have the meaning set forth in Section 10(a).
Performance Participation Interest shall have the meaning ascribed to such term in the Operating Partnership Agreement.
Person shall mean an individual, corporation, business trust, estate, trust, partnership, joint venture, limited liability company or other legal entity.
Prospectus shall have the meaning set forth in the Charter.
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Real Estate-Related Assets shall mean any investments by the Segregated Vehicles in Mortgages, real estate-related loans and Real Estate-Related Securities.
Real Estate-Related Securities shall have the meaning set forth in the Charter.
Real Property shall have the meaning set forth in the Charter.
Registration Statement shall mean the registration statement on Form S-11 (File No. 333-255557) for the Companys follow-on public offering.
REIT shall have the meaning set forth in the Charter.
SEC shall mean the Securities and Exchange Commission.
Securities Act shall have the meaning set forth in the Charter.
Segregated Vehicles shall have the meaning set forth in the preamble.
Shares shall have the meaning set forth in the Charter.
Special Limited Partner shall have the meaning set forth in the Operating Partnership Agreement.
Stockholders shall have the meaning set forth in the Charter.
Sub-Adviser shall have the meaning set forth in the preamble.
Sub-Adviser Expenses shall have the meaning set forth in Section 11(a).
Sub-Adviser Performance Interest Amount shall mean [***].
Subsidiary means, with respect to any Person, any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests is owned, directly or indirectly, by such Person.
Termination Date shall mean the date of termination of this Agreement or expiration of this Agreement in the event this Agreement is not renewed for an additional term.
2%/25% Guidelines shall have the meaning set forth in the Charter.
Valuation Guidelines shall mean the valuation guidelines of the Company as have been adopted by the Board of Directors, as amended from time to time.
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2. APPOINTMENT. The Adviser, pursuant to its authority under the Advisory Agreement, hereby appoints the Sub-Adviser to act as a sub-adviser to the Adviser and the Company with respect to each of the Option Investments pursuant to the terms herein, and the Sub-Adviser accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. Pursuant to the Advisory Agreement, the Adviser is responsible for managing, operating, directing and supervising the operations and administration of the Company and its subsidiaries and their respective assets, including without limitation all investment activities of the Company and its subsidiaries. The Adviser delegates, and the Sub-Adviser agrees to perform, the duties set forth in Section 3 hereof, subject to the terms and conditions of this Agreement and the limitations set forth in the Advisory Agreement, and consistent with the provisions of the Charter and Bylaws and the continuing and exclusive authority of the Board of Directors over the supervision of the Company and its subsidiaries. The Sub-Adviser also acknowledges that it is a fiduciary with respect to the Company and its Stockholders and the Operating Partnership and its partners and assumes the duties, responsibilities, and obligations of a fiduciary.
3. DUTIES OF THE SUB-ADVISER. Subject to the oversight of the Board of Directors and the Adviser and the terms and conditions of this Agreement and consistent with the provisions of the Companys most recent Prospectus, the Investment Guidelines, the Charter, and the Bylaws, the Sub-Adviser undertakes to use commercially reasonable efforts to, either directly or indirectly by engaging an Affiliate or, if consented to in writing in advance by the Adviser, a third party, perform the duties set forth in this Section 3.
The Sub-Adviser will, subject to the oversight of the Adviser and the Board of Directors, have plenary authority with respect to the management of the business and affairs of each of the Option Investments and will be responsible for managing and conducting the operations of each of the Option Investments. The Sub-Adviser will perform (or cause to be performed through one or more of its Affiliates or third parties) such services and activities relating to rendering investment management advice to each of the Option Investments as may be appropriate or otherwise mutually agreed from time to time, which may include, without limitation:
(a) serving as an advisor to each of the Segregated Vehicles with respect to the asset management of each of the Option Investments activities and operations;
(b) selling, financing (including financing by the Sub-Adviser or its Affiliates that is approved by a majority of the Independent Directors not otherwise interested in such transaction), refinancing, mortgaging, encumbering, conveying, assigning, pledging, constructing, lending or otherwise effecting transactions for the Option Investments; provided, however, that any of the foregoing transactions shall have been approved in advance in writing by Brookfield (any such transaction, a Brookfield Approved Transaction);
(c) investigating, analyzing, evaluating, structuring, negotiating, and executing on a Segregated Vehicles or its Subsidiarys behalf, any Brookfield Approved Transaction with sellers, purchasers, lenders and other counterparties and, if applicable, their respective agents, advisors and representatives;
(d) providing the Segregated Vehicles with portfolio management and other related services, including managing, operating and monitoring the Option Investments consistent with past practices prior to the Effective Date, and to the extent approved in advance in writing by Brookfield, improving, developing, redeveloping, and renovating the Option Investments; provided however, that to the extent that such activities are contained in the Approved Business Plan or the Approved Budget for any Segregated Vehicle, no additional approval by Brookfield shall be required;
(e) consistent with the Approved Business Plan and Approved Budget for each of the Segregated Vehicles, engaging and supervising, on the Segregated Vehicles behalf and at the Companys expense, independent contractors, advisors, consultants, attorneys, accountants, administrators, auditors, appraisers, independent valuation agents, escrow agents, transfer agents and other service providers (which may include Affiliates of the Sub-Adviser) that provide various services with respect to the Segregated Vehicles or any Option Investment, including, without limitation, on-site managers, building and maintenance personnel, investment banking, securities brokerage, mortgage brokerage, credit analysis, risk management services, asset management services, loan servicing, other financial, legal or accounting services, due diligence services, underwriting review services, and all other services (including custody and transfer agent and registrar services) as may be required relating to the Segregated Vehicles activities or Option Investments;
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(f) coordinating and managing operations of any Joint Venture or co-investment interests held by the Segregated Vehicles and conducting matters with the Joint Venture or co-investment partners, including without limitation, the calculation of distribution and other financial or accounting matters set forth in such Joint Venture or co-investment partner agreements and timely providing such information to the Adviser in connection therewith;
(g) advising the Board of Directors in connection with policy decisions to be made related to the Segregated Vehicles;
(h) advising the Company with respect to the Option Investments and the Segregated Vehicles regarding the maintenance of the Companys, the Segregated Vehicles or any of its subsidiaries status as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and the regulations promulgated thereunder;
(i) assisting the Adviser regarding the maintenance of the Segregated Vehicles and the Companys exemptions from the Investment Company Act;
(j) assisting in the valuations for the Option Investments and providing assistance to the Adviser related thereto in connection with the Advisers calculating or overseeing the calculation, as of the last Business Day of each month (or such other date or dates approved by the Board of Directors), of the Class C NAV Per Share, Class T NAV Per Share, Class S NAV Per Share, Class D NAV Per Share, Class E NAV Per Share and Class I NAV Per Share in accordance with the Valuation Guidelines, and in connection therewith, reviewing appraisals performed by an Independent Appraiser and other independent third-party appraisal firms concerning the value of the Segregated Vehicles Real Property and reviewing market quotations or conduct fair valuation determinations concerning the value the Segregated Vehicles Real Estate-Related Assets;
(k) providing input in connection with the appraisals performed by the Independent Appraisers related to the Segregated Vehicles Real Property;
(l) monitoring the Segregated Vehicles Real Property and Real Estate-Related Assets for events that may be expected to have a material impact on the most recent estimated values;
(m) using commercially reasonable efforts to monitor each Independent Appraisers valuation process related to the Segregated Vehicles Real Property to ensure that it complies with the Valuation Guidelines;
(n) providing the Segregated Vehicles with all necessary cash management services (including with respect to short-term investments);
(o) performing such other services from time to time in connection with the management of the Option Investments as the Board of Directors or the Adviser shall reasonably request or the Sub-Adviser shall deem appropriate under the particular circumstances;
(p) performing (or overseeing, or arranging for, the performance of) the administrative services necessary for the operation of the Segregated Vehicles;
(q) providing the Segregated Vehicles with clerical, bookkeeping and record-keeping services;
(r) causing the Segregated Vehicles and any of their respective subsidiaries to qualify to do business in all applicable jurisdictions and obtaining and maintaining all appropriate licenses;
(s) timely providing to the Adviser, at the Advisers request, information concerning the Segregated Vehicles or any Option Investment for purposes of any sales material related to an Offering;
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(t) timely providing the Adviser with information about the Segregated Vehicles and the Option Investments reasonably required for the Companys reports to the Stockholders and reports and other materials filed with, or otherwise requested by, the SEC and any other federal, state or local regulatory agency, including, but not limited to, such reports or materials required to be filed pursuant to the Companys obligations under the Securities Act and Exchange Act or relating to an Offering;
(u) overseeing the preparation and filing of the Segregated Vehicles and its subsidiaries tax returns;
(v) maintaining the financial and other records that the Segregated Vehicles and its subsidiaries are required to maintain, including, but not limited to, monthly GAAP trial balances and investment operating metrics, and timely providing such financial and other records to the Adviser for review;
(w) handling and resolving all claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Segregated Vehicles or any of their respective subsidiaries may be involved or to which the Segregated Vehicles or any of their respective subsidiaries may be subject, arising out of the Segregated Vehicles or such Subsidiarys day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Adviser or the Board of Directors, and promptly informing the Adviser with respect to all actual or threatened material claims, disputes or controversies (including all litigation, arbitration, settlement or other proceedings or negotiations) in which the Segregated Vehicles or any of their respective subsidiaries may be involved or to which the Segregated Vehicles or any of their respective subsidiaries may be subject;
(x) overseeing the payment of the Segregated Vehicles expenses, including any expenses relating to the Option Investments;
(y) timely providing the Adviser with such financial and other materials about the Segregated Vehicles and the Option Investments, including, but not limited to, performance and liquidity forecasting, as it reasonably requests in connection therewith; and
(z) reporting to the Board of Directors and the Adviser about the Sub-Advisers performance of its obligations hereunder and furnishing advice and recommendations with respect to such other aspects of the business and affairs of the Segregated Vehicles as the Sub-Adviser shall determine to be desirable.
The Sub-Adviser further agrees to notify in writing the Adviser and the Company promptly of any material fact known to the Sub-Adviser respecting or relating to the Sub-Adviser that should be but is not contained in the Registration Statement, or any amendment or supplement thereto, or of any statement contained therein regarding the Sub-Adviser that becomes untrue in any material respect.
The Sub-Adviser represents and warrants to the Adviser that the Sub-Adviser will notify the Adviser to the extent the Sub-Adviser receives any comments during any investigation or review of its business by the SEC or any other regulator that relate to the services being provided by the Sub-Adviser pursuant to this Agreement, to the extent permitted by such regulator.
The Sub-Adviser agrees to provide the Adviser with a copy of the Sub-Advisers annual compliance report in accordance with Rule 206(4)-7 under the Advisers Act and a copy of the Sub-Advisers SOC1 report or its equivalent on an annual basis. The Sub-Adviser shall provide the Adviser with reasonable access to information regarding the Sub-Advisers compliance program, which access shall include on-site visits, during normal business hours, by the Adviser with the Sub-Adviser as may be reasonably requested from time to time. No later than March 31 of each year, the Sub-Adviser further agrees to certify in writing that it is in compliance with (i) the terms of this Agreement and (ii) the Advisers Act.
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4. AUTHORITY OF SUB-ADVISER.
(a) Pursuant to the terms of this Agreement (including the restrictions included in this Section 4 and in Section 8), and subject to the continuing and exclusive authority of the Board of Directors over the management of each of the Option Investments, the Adviser (by virtue of its approval of this Agreement and authorization pursuant to the Advisory Agreement) hereby delegates to the Sub-Adviser the authority to take, or cause to be taken, any and all actions and to execute and deliver any and all agreements, certificates, assignments, instruments or other documents and to do any and all things that, in the judgment of the Sub-Adviser, may be necessary or advisable in connection with the Sub-Advisers duties described in Section 3, that is consistent with the policies and limitations and within the discretionary limits and authority as granted to the Sub-Adviser from time to time by the Board of Directors or the Adviser.
(b) If a transaction requires approval of the Adviser or the Board of the Directors, the Sub-Adviser will deliver to the Adviser or the Board of Directors, as applicable, all documents and other information required by them to properly evaluate the proposed transaction. Except as otherwise set forth herein, or in the Charter, any financing or refinancing that is approved in advance in writing by the Adviser may be made by the Sub-Adviser on such Segregated Vehicles or its Subsidiarys behalf without the prior approval of the Board of Directors or any duly authorized committee of the Board of the Directors.
(c) The Sub-Adviser may obtain, for and on behalf, and at the sole cost and expense, of the Company, such services as the Sub-Adviser deems necessary or advisable in connection with the management and operations of the Segregated Vehicles, which may include Affiliates of the Sub-Adviser; provided, that any such services may only be provided by Affiliates to the extent such services are approved by the Adviser and a majority of the Directors (including a majority of the Independent Directors) not otherwise interested in such transactions as being fair and reasonable to the Company and on terms and conditions not less favorable to the Company than those available from non-Affiliated third parties.
(d) In performing its duties under Section 3, the Sub-Adviser shall be entitled to rely reasonably on qualified experts and professionals (including, without limitation, accountants, legal counsel and other professional service providers) hired by the Sub-Adviser at the Companys sole cost and expense; provided, that the Company shall not be required to reimburse the Sub-Adviser for any investment-level expenses.
5. PREPARATION OF BUSINESS PLANS AND BUDGETS.
(a) In connection with the management of the Segregated Vehicles pursuant to the terms of this Agreement, the Sub-Adviser shall be responsible for the preparation of a business plan for the operation, management, improvement and/or renovation of each of the Segregated Vehicles (other than Oaktree Segregated Debt Vehicle LLC) (each, a Business Plan) and an annual operating and capital budget (each, a Budget). Each Business Plan and Budget shall be subject to the approval of the Adviser as provided in Section 5(b) below.
(b) Process for Approval of the Budget and the Business Plan.
i. For the 2022 fiscal year, the Sub-Adviser shall submit a proposed Budget and Business Plan for each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC) by no later than December 1, 2021. For each subsequent fiscal year, the Sub-Adviser shall submit a proposed Budget and Business Plan for each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC) by no later than October 31 of the preceding fiscal year.
ii. The Sub-Adviser shall hold an annual meeting to discuss the proposed Business Plan and Budget for each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC) at such time and at such place as the Sub-Adviser and the Adviser shall mutually agree. For the avoidance of doubt, the meeting may be held either in person or by telephone. The Sub-Adviser shall cause such of its personnel to attend such meeting as is reasonably requested by the Adviser.
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iii. The Adviser shall, after its receipt of the proposed Budget and Business Plan for each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC), in its discretion, either (A) approve the proposed Budget and/or the Business Plan with respect to each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC), or (B) advise the Sub-Adviser in writing of the Advisers specific objections thereto. If the Adviser has any objections to any proposed Budget or Business Plan, the Sub-Adviser and the Adviser shall endeavor to resolve any disagreements with respect thereto as soon as practicable with the goal of agreeing on a Business Plan and Budget by December 31 of such fiscal year. The Business Plan and the Budget with respect to each Segregated Vehicle (other than Oaktree Segregated Debt Vehicle LLC), once approved by the Adviser pursuant to this Section 5(b), shall be referred to herein as an Approved Business Plan and an Approved Budget, respectively.
(c) If a proposed Budget is not approved by the date that is prior to commencement of the applicable fiscal year, then for purposes hereof, until a Budget for such fiscal year is approved by the Adviser, the then most recent Approved Budget shall continue to be in effect but with an increase in each line item of recurring expense in such Approved Budget by inflation equal to five percent (5%); provided, that, (A) to the extent specific line items of the proposed Budget have been approved by the Adviser, then the amount for such specific line items shall be deemed approved; and (B) subject to the preceding clause (A), the amount for any necessary expenses shall be the amount required to pay such expenses to the extent such necessary expenses are included in the then most recent Approved Budget.
6. BANK ACCOUNTS; CUSTODY ACCOUNTS.
(a) The Sub-Adviser may establish and maintain one or more bank accounts in the name of the Segregated Vehicles and any Subsidiary thereof 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 Segregated Vehicles, consistent with the Sub-Advisers authority under this Agreement; provided, that no funds shall be commingled with the funds of the Sub-Adviser.
(b) The Sub-Adviser may establish and maintain one or more custody accounts in the name of the Segregated Vehicles and any Subsidiary thereof and may deposit and hold assets into any such account or accounts, consistent with the Sub-Advisers authority under this Agreement; provided, that no assets shall be commingled with the assets of the Sub-Adviser.
7. RECORDS; ACCESS.
(a) The Sub-Adviser shall maintain and keep all books, accounts and other records of the Segregated Vehicles that relate to activities performed by the Sub-Adviser hereunder in accordance with the Advisers books and records policies and procedures and make such records available for inspection by the Adviser, the Board of Directors and by counsel, auditors and authorized agents of the Company, at any time or from time to time during normal business hours.
(b) The Sub-Adviser shall at all reasonable times have access to the books and records of the Segregated Vehicles.
8. LIMITATIONS ON ACTIVITIES. The Sub-Adviser shall refrain from any action that, in its sole judgment made in good faith, (i) is not in compliance with the Investment Guidelines, (ii) would adversely and materially affect the qualification of the Segregated Vehicles, any of their Subsidiaries or the Company as REITs under the Code or the status of the Segregated Vehicles, any of their Subsidiaries or the Company as entities excluded from investment company status under the Investment Company Act, or (iii) would materially violate any law, rule or regulation of any governmental body or agency having jurisdiction over the Segregated Vehicles, any of their Subsidiaries or the Company or of any exchange on which the securities of the Company may be listed or that would otherwise not be permitted by the Charter or the Bylaws. If the Sub-Adviser is ordered to take any action by the Adviser or the Board of Directors, the Sub-Adviser shall seek to notify the Adviser or the Board of Directors, as applicable, if it is the Sub-Advisers reasonable judgment that such action would adversely and materially affect such status or violate any such law, rule or regulation, the Charter or the Bylaws. Notwithstanding the foregoing, neither the Sub-Adviser nor any of its Affiliates shall be liable to the Segregated Vehicles, the Company, the Board of Directors or the Stockholders for any act or omission by the Sub-Adviser or any of its Affiliates, except as provided in Section 20 of this Agreement.
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9. OTHER ACTIVITIES OF THE SUB-ADVISER.
(a) Nothing in this Agreement shall (i) prevent the Sub-Adviser or any of its Affiliates, officers, directors or employees from engaging in or earning fees from other businesses or from rendering services of any kind to any other Person (including other REITs), whether or not the investment objectives or policies of any such other Person are similar to those of the Company, including, without limitation, the sponsoring, closing or managing of Other Oaktree Accounts, (ii) in any way bind or restrict the Sub-Adviser or any of its Affiliates, officers, directors or employees from buying, selling or trading any securities or commodities for their own accounts or for the account of others for whom the Sub-Adviser or any of its Affiliates, officers, directors or employees may be acting, or (iii) prevent the Sub-Adviser or any of its Affiliates, officers, directors or employees from receiving fees or other compensation or profits from such activities described in this Section 9(a), which shall be for the sole benefit of the Sub-Adviser (or its Affiliates, officers, directors or employees). While information and advice supplied to the Adviser, the Company or the Segregated Vehicles shall, in the Sub-Advisers reasonable and good faith judgment, be appropriate under the circumstances and in light of the investment objectives and policies of the Company and the Segregated Vehicles, such information and advice may differ in certain material respects from the information and advice supplied by the Sub-Adviser or any Affiliate of the Sub-Adviser to others.
(b) The Sub-Adviser shall, and shall cause its Affiliates and their respective employees, officers and agents to, devote to the Segregated Vehicles such time as shall be reasonably necessary to conduct the business and affairs of the Segregated Vehicles in an appropriate manner consistent with the terms of this Agreement. The Company acknowledges that the Sub-Adviser and its Affiliates and their respective employees, officers and agents may also engage in activities unrelated to the Segregated Vehicles and may provide services to Persons other than the Segregated Vehicles.
(c) The Company acknowledges that the Sub-Adviser may face various conflicts of interest, including relating to the use of service providers and other matters, as disclosed in the Prospectus from time to time.
(d) For the avoidance of doubt, it is understood that neither the Adviser nor the Board of Directors has the authority to determine the salary, bonus or any other compensation paid by the Sub-Adviser to any director, officer, member, partner, employee, or stockholder of the Sub-Adviser or its Affiliates, including any person who is also a Director or officer of the Segregated Vehicles or the Company.
10. COMPENSATION.
(a) The Adviser hereby agrees to compensate the Sub-Adviser for its services pursuant to this Agreement. The Sub-Adviser shall be entitled to receive in cash (i) a monthly management fee equal to [***]% per annum of the NAV of the Segregated Vehicles, calculated as of the last business day of each month (the Management Fee) and (ii) a performance fee equal to the Sub-Adviser Performance Interest Amount (the Performance Fee). The Adviser shall provide to the Sub-Adviser a reasonably detailed calculation of fees within a reasonable time of incurrence. The Management Fee will be payable monthly, no later than the fifteenth (15) business day following the end of each month during which this Agreement is in effect. The Performance Fee is payable within 30 days of the Special Limited Partners receipt of the Performance Participation Interest for any period.
(b) In the event this Agreement is terminated or its term expires without renewal, the Sub-Adviser will be entitled to receive its prorated Management Fee and Performance Fee through the date of termination. Such pro ration shall be measured through the calendar month of termination or expiration thereof, taking into account the number of days of any partial calendar month for which this Agreement was in effect. For the avoidance of doubt, following any termination or expiration of this Agreement, any Performance Fee earned by the Sub-Adviser with respect to a partial calendar year shall be payable within 30 days of the Advisers receipt of the Performance Participation Interest for any period.
(c) In the event that any Segregated Vehicle or Subsidiary commences a liquidation of any Option Investment during any calendar year, the Company will pay the Sub-Adviser any Management Fee and Performance Fee due to the Sub-Adviser pursuant to the terms of this Agreement from the proceeds of the liquidation.
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11. EXPENSES.
(a) Subject to Section 4(c), the Sub-Adviser shall be responsible for the expenses related to any and all personnel of the Sub-Adviser and its Affiliates who provide services to the Segregated Vehicles pursuant to or in connection with this Agreement or who serve as Directors or executive officers of the Company, including, without limitation, the costs, expenses, fees and liabilities incurred by the Sub-Adviser in providing for its normal operating overhead, including payroll and other costs of management, administrative services, salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of such personnel, costs of insurance with respect to such personnel and temporary office help, utilities, office supplies and other routine office and administrative expenses (collectively, the Sub-Adviser Expenses).
(b) In addition to the compensation paid to the Sub-Adviser pursuant to Section 10 hereof, the Company shall pay all of its costs and expenses directly or reimburse the Sub-Adviser or its Affiliates for costs and expenses of the Sub-Adviser and its Affiliates incurred on behalf of the Company or the Segregated Vehicles, other than Sub-Adviser Expenses, and subject to limitations set forth in the Charter and in Section 13 hereof. Without limiting the generality of the foregoing, it is specifically agreed that the following costs and expenses of the Company are not Sub-Adviser Expenses and shall be paid by the Company (or by the Option Investments) and shall not be paid by the Sub-Adviser or its Affiliates:
(i) Organization and Offering Expenses;
(ii) expenses in connection with the disposition of any assets, whether or not disposed, including, without limitation, legal fees and expenses, travel and communications expenses, costs of appraisals, accounting fees and expenses and title insurance premiums and the costs of cooperating with due diligence;
(iii) costs, fees and expenses for support services (including data processing, trading, settlement, stockholder relations, administration, custody, transfer agency, accounting, audit, appraisal, valuation, NAV calculation, escrow, banking, consulting, prime brokerage, technology, legal and tax support and other services) outsourced to third-party service providers or rendered to the Segregated Vehicles, any Option Investment, the Adviser, or the Company by the Sub-Adviser or its Affiliates in compliance with Section 4(c), including the costs, fees and expenses for support services provided by Bellwether Asset Management, Inc.;
(iv) appraisal and valuation costs, fees and expenses, including costs, fees and expenses of independent appraisal or valuation services or third-party vendor price quotations;
(v) costs and expenses of reporting to regulatory authorities in any jurisdiction in which the Company, the Segregated Vehicles or any of their respective Subsidiaries invests, is organized, is marketed or otherwise directly or indirectly conducts business related to the Company, the Segregated Vehicles or the Option Investments (including compliance with sections 1471 through 1474 of the Code), including the SEC, the U.S. Commodities and Futures Trading Commission, the U.S. National Futures Association, the U.S. Treasury, the U.S. Internal Revenue Service and other national, state, provincial or local regulatory authorities in any country or territory (for example, Form PF, Form CPO-PQR and Form CTA-PR in the United States and filings related to the offering of interests in the Company or the Segregated Vehicles in particular jurisdictions to the extent applicable);
(vi) sales, leasing and brokerage fees or commissions, finders fees, placement fees, asset management, property management, development fees, construction fees, loan servicing fees, custodial expenses and other costs, fees and expenses incurred in connection with the Option Investments, including managing, operating, maintaining and improving the Segregated Vehicles Real Property consistent with the Sub-Advisers authority pursuant to Section 3 hereof;
(vii) all out-of-pocket expenses, fees, and liabilities that are incurred by the Sub-Adviser or the Segregated Vehicles on behalf of the Company or the Operating Partnership or that arise out of the operation and activities of the Segregated Vehicles, including expenses related to maintaining Persons, including Joint Ventures and any Subsidiary, through or in which the Option Investments may be held;
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(viii) expenses connected with the payments of dividends or Distributions in cash or any other form authorized or caused to be made by the Segregated Vehicles to or on account of holders of the securities of the Segregated Vehicles;
(ix) the compensation and expenses of the Independent Directors and any directors of the Segregated Vehicles or any of their Subsidiaries and the cost of liability insurance to indemnify the Directors and the Companys officers;
(x) the Segregated Vehicles allocable share of costs associated with technology-related expenses, including without limitation, any computer software or hardware, electronic equipment or purchased information technology services from third-party vendors or Affiliates of the Sub-Adviser, technology service providers and related software/hardware utilized in connection with the Segregated Vehicles operational activities;
(xi) costs, fees and expenses relating to the structuring, incurrence and repayment of indebtedness (together with any interest and other amounts payable thereon and fees and expenses related thereto, including commitment fees, prepayment or redemption fees or premiums, accounting fees, legal fees, closing and other similar costs) of the Segregated Vehicles;
(xii) license and registration fees;
(xiii) taxes and other governmental charges, fees and duties;
(xiv) fees and expenses associated with independent audits and outside legal costs, including compliance with applicable federal and state securities laws;
(xv) costs, expenses, fees and liabilities incurred in connection with any merger or consolidation of the Segregated Vehicles with, or conversion of the Segregated Vehicles to, a different entity;
(xvi) costs, fees and expenses of winding up and liquidation;
(xvii) litigation, indemnification and other extraordinary or non-reoccurring expenses, including judgment or settlement of any proceeding against the Company, the Segregated Vehicles or any of their respective Subsidiaries or directors or officers of the Company in their capacity as such (except to the extent inconsistent with the terms of this Agreement);
(xviii) all insurance costs incurred in connection with the operation of the Segregated Vehicles business except for the costs attributable to the insurance that the Sub-Adviser elects to carry for itself and its personnel (other than the Directors and officers of the Company in their capacities as such);
(xix) Bloomberg fees, research and software expenses, and other expenses incurred in connection with data services providing price feeds, news feeds, securities and company information and company fundamental data, all attributable to actual or potential Investments and S&P Index Alerts attributable to actual or potential Investments;
(xx) costs, fees and expenses for other third party research, news, industry information, analytics and expert networks/research resources relating to potential investment opportunities or the Companys Investments; and
(xxi) expenses connected with communications to and meetings of the Directors, including, without limitation, all costs of preparing, printing and hosting meeting materials on data sites.
(c) The Sub-Adviser may, at its option, elect not to seek reimbursement for certain expenses during a given period, which determination shall not be deemed to construe a waiver of reimbursement for similar expenses in future periods.
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(d) Any reimbursement payments owed by the Company to the Sub-Adviser may be offset by the Sub-Adviser against amounts due to the Company from the Sub-Adviser. Cost and expense reimbursement to the Sub-Adviser shall be subject to adjustment at the end of each calendar year in connection with the annual audit of the Company.
12. OTHER SERVICES. Should the Adviser or the Board of Directors request that the Sub-Adviser or any director, officer or employee thereof render services for the Segregated Vehicles other than as set forth in Section 3, such services shall be separately compensated at such rates and in such amounts as are agreed by the Sub-Adviser, the Adviser, and the Independent Directors, as applicable, subject to the limitations contained in the Charter, and shall not be deemed to be services pursuant to the terms of this Agreement.
13. NO JOINT VENTURE. The Company and Adviser, on the one hand, and the Sub-Adviser on the other, are not partners or joint venturers with each other, and nothing in this Agreement shall be construed to make them such partners or joint venturers or impose any liability as such on either of them.
14. TERM OF AGREEMENT. This Agreement shall terminate upon the earliest of (a) the disposition of all of the Option Investments and (b) the expiration of the 12 month period following the earlier of (i) 18 months following the Effective Date and (ii) the date on which the Operating Partnership notifies the Sub-Adviser that the Company has issued $1 billion of its common stock to non-Affiliates after the Effective Date.1
15. TERMINATION BY THE PARTIES. This Agreement may be terminated (a) by the Company, at any time, without payment of any penalty, by majority vote of the Independent Directors, upon no less than 60 days prior written notice to the Sub-Adviser; (b) by the Company or the Sub-Adviser, (i) at any time, if the Sub-Adviser becomes unable to discharge its duties and obligations under this Agreement, including circumstances such as financial insolvency of the Sub-Adviser or other circumstances that could materially adversely affect the Company, or (ii) at any time, without payment of any penalty, if the Sub-Adviser materially breaches the terms of this Agreement or if the Sub-Adviser is not in material compliance with its obligations under the Advisers Act, in each case, after notice of the same and reasonable time to cure to the extent such breach or noncompliance is curable or (c) by the Sub-Adviser, (i) at any time, upon no less than 90 days prior written notice to the Adviser; or (ii) at any time, if the Adviser becomes unable to discharge its duties and obligations under this Agreement, including circumstances such as financial insolvency of the Adviser. The provisions of Sections 17 through 20 survive termination of this Agreement.
16. ASSIGNMENT TO AN AFFILIATE. This Agreement may be assigned by the Sub-Adviser to an Affiliate of the Sub-Adviser with the approval of the Adviser and a majority of the Directors (including a majority of the Independent Directors). The Sub-Adviser may assign any rights to receive fees or other payments under this Agreement to any Person without obtaining the consent of the Board of Directors. This Agreement shall not be assigned by the Company, the Operating Partnership or the Adviser without the approval of the Sub-Adviser, except in the case of an assignment by the Company, the Operating Partnership or the Adviser to a corporation or other organization which is a successor to all of the assets, rights and obligations of the Company, the Operating Partnership, or the Adviser, in which case such successor organization shall be bound hereunder and by the terms of said assignment in the same manner as the Company, the Operating Partnership or the Adviser, as applicable, is bound by this Agreement. This Agreement shall be binding on successors to the Company resulting from a Change of Control or sale of all or substantially all the assets of the Company, and shall likewise be binding on any successor to the Sub-Adviser.
17. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
(a) Each of the Company, the Operating Partnership and the Adviser hereby represents and warrants to, and agrees with, the Sub-Adviser, only with respect to such matters concerning such party, as follows:
1 |
If the Company issues in the aggregate $1 billion of its common stock to non-affiliates after the Transaction Effective Date (as defined herein), the Operating Partnership shall notify the Sub-Adviser within a reasonable time after such occurrence. |
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i. Each of the Company, the Operating Partnership and the Adviser is duly formed and validly existing under the laws of the jurisdiction of its organization;
ii. Each of the Company, the Operating Partnership and the Adviser has full power and authority to enter into this Agreement and to conduct its business to the extent contemplated in this Agreement;
iii. This Agreement has been duly authorized, executed and delivered by each of the Company, the Operating Partnership and the Adviser and, assuming due authorization, execution and delivery by the other parties, constitutes the valid and legally binding agreement of each of the Company, the Operating Partnership and the Adviser, enforceable in accordance with its terms against such party, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws relating to creditors rights generally, and by general equitable principles;
iv. The execution and delivery of this Agreement by each of the Company, the Operating Partnership and the Adviser and the performance of their respective duties and obligations hereunder do not result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, credit agreement, note or other evidence of indebtedness, or any lease or other agreement, or any license, permit, franchise or certificate to which such party is a party or by which it is bound or to which its assets are subject or require any authorization or approval under or pursuant to any of the foregoing, or violate any statute, regulation, law, order, writ, injunction, judgment or decree to which such party is subject;
v. None of the Company, the Operating Partnership and the Adviser is aware of any facts pertaining to such party or its Affiliates that would cause such party, or any of such partys Affiliates, to be unable to discharge timely the obligations of such party or its Affiliates under this Agreement or the obligations of the Company under any agreement to which any of them is a party;
vi. To the knowledge of each of the Company, the Operating Partnership and the Adviser, no consent, approval or authorization of, or filing, registration or qualification with, any court or governmental authority on the part of such party is required for the execution and delivery of this Agreement by such party and the performance of its respective obligations and duties hereunder and such execution, delivery and performance shall not violate any other agreement to which such party is bound;
vii. Each of the Company, the Operating Partnership and the Adviser understands that the Sub-Adviser is relying on the accuracy of the representations set forth herein in entering into this Agreement; and
viii. Each of the Company, the Operating Partnership and the Adviser has all requisite licenses to do and perform all acts as contemplated by this Agreement and the Advisory Agreement.
(b) The Sub-Adviser hereby represents and warrants to, and agrees with, each of the Company, the Operating Partnership and the Adviser as follows:
i. The Sub-Adviser is duly formed and validly existing under the laws of the jurisdiction of its organization;
ii. The Sub-Adviser has full power and authority to enter into this Agreement and to conduct its business to the extent contemplated in this Agreement;
iii. This Agreement has been duly authorized, executed and delivered by the Sub-Adviser and, assuming due authorization, execution and delivery by the other parties, constitutes the valid and legally binding agreement of the Sub-Adviser, enforceable in accordance with its terms against the Sub-Adviser, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar laws relating to creditors rights generally, and by general equitable principles.
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iv. The execution and delivery of this Agreement by the Sub-Adviser and the performance of its duties and obligations hereunder do not result in a breach of any of the terms, conditions or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, credit agreement, note or other evidence of indebtedness, or any lease or other agreement, or any license, permit, franchise or certificate to which the Sub-Adviser is a party or by which it is bound or to which its assets are subject or require any authorization or approval under or pursuant to any of the foregoing, or violate any statute, regulation, law, order, writ, injunction, judgment or decree to which the Sub-Adviser is subject;
v. The Sub-Adviser is not aware of any facts pertaining to the Sub-Adviser or its Affiliates that would cause the Sub-Adviser, or any of its Affiliates, to be unable to discharge timely its obligations under this Agreement;
vi. To the knowledge of the Sub-Adviser, no consent, approval or authorization of, or filing, registration or qualification with, any court or governmental authority on the part of the Sub-Adviser is required for the execution and delivery of this Agreement by the Sub-Adviser and the performance of its obligations and duties hereunder and such execution, delivery and performance shall not violate any other agreement to which the Sub-Adviser is bound;
vii. The Sub-Adviser understands that the other parties are relying on the accuracy of the representations set forth herein in entering into this Agreement; and
viii. The Sub-Adviser has all requisite licenses to do and perform all acts and receive all fees as contemplated by this Agreement, and is registered as investment adviser under the Advisers Act.
18. PAYMENTS TO AND DUTIES OF SUB-ADVISER UPON TERMINATION.
(a) After the Termination Date, the Sub-Adviser shall not be entitled to compensation for further services hereunder except it shall be entitled to receive from the Company or Adviser, as applicable, within 30 days after the effective date of such termination all unpaid reimbursements of expenses and all earned but unpaid fees payable to the Sub-Adviser prior to termination of this Agreement, subject to (i) the terms of the Performance Fee relating to payment thereof and (ii) the 2%/25% Guidelines to the extent applicable. To the extent expenses exceed the 2%/25% Guidelines in any period and the Independent Directors do not approve the excess expenses, the Sub-Advisers expense reimbursement will be reduced by an amount proportionate to the overall reduction by the Adviser and Sub-Adviser of their respective expenses subject to reimbursement.
(b) Promptly upon termination, the Sub-Adviser shall cooperate with, and take all reasonable actions requested by, the Company, the Board of Directors, and Adviser in making an orderly transition of the sub-advisory function.
19. INDEMNIFICATION BY THE COMPANY, THE ADVISER AND THE OPERATING PARTNERSHIP. The Company, the Adviser and the Operating Partnership shall indemnify and hold harmless the Sub-Adviser and its Affiliates, including their respective officers, directors, managers, partners and employees, from all liability, claims, damages or losses arising in the performance of the Sub-Advisers duties hereunder, and related expenses, including reasonable attorneys fees, to the extent such liability, claims, damages or losses and related expenses are not fully reimbursed by insurance, and to the fullest extent possible without such indemnification being inconsistent with the laws of the State of Maryland, the Charter or the provisions of Section II.G of the NASAA REIT Guidelines.
20. INDEMNIFICATION BY SUB-ADVISER. The Sub-Adviser shall indemnify and hold harmless the Company, the Operating Partnership, and the Adviser from contract or other liability, claims, damages, taxes or losses and related expenses including reasonable attorneys fees, to the extent that (i) such liability, claims, damages, taxes or losses and related expenses are not fully reimbursed by insurance and (ii) are incurred by reason of the Sub-Advisers bad faith, fraud, willful misconduct, gross negligence or reckless disregard of its duties under this Agreement; provided, however, that the Sub-Adviser shall not be held responsible for any action of the Adviser or the Board of Directors in following or declining to follow any advice or recommendation given by the Sub-Adviser.
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21. MISCELLANEOUS.
(a) Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing unless some other method of giving such notice, report or other communication is required by the Charter, the Bylaws, or accepted by the party to whom it is given, and shall be given by being delivered by hand, by courier or overnight carrier, by registered or certified mail or by electronic mail using the contact information set forth herein:
The Company and the Operating Partnership: |
Brookfield Real Estate Income Trust Inc. c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: Secretary Email: realestatenotices@brookfield.com |
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with required copies (which shall not constitute notice) to: |
Alston & Bird LLP 1201 West Peachtree Street Atlanta, Georgia 30309 Attention: Rosemarie A. Thurston Email: rosemarie.thurston@alston.com |
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The Adviser: |
Brookfield REIT Adviser LLC c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: General Counsel Email: realestatenotices@brookfield.com |
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The Sub-Adviser |
Oaktree Fund Advisors, LLC 333 South Grand Ave., 28th Floor, Los Angeles, California 90071 Attention: General Counsel Email: legalnotifications@oaktreecapital.com |
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with required copies (which shall not constitute notice) to: |
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Attention: Benjamin Wells Email: BWells@stblaw.com |
Any party may at any time give notice in writing to the other parties of a change in its address for the purposes of this Section 21(a).
(b) Modification. This Agreement shall not be changed, modified, terminated, or discharged, in whole or in part, except by an instrument in writing signed by the parties hereto, or their respective successors or assignees.
(c) Severability. The provisions of this Agreement are independent of and severable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part.
(d) Applicable Law; Exclusive Jurisdiction; Jury Trial. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of New York. The parties hereby irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the Federal courts of the United States of America located in Borough of Manhattan, New York for purposes of any suit, action or other proceeding arising from this Agreement, and hereby waive, and agree not to assert, as a defense in any action, suit or proceeding for the interpretation or enforcement hereof or thereof, that it is not subject thereto or that such action, suit or proceeding may not be brought or is not maintainable in such courts or that the venue thereof may not be appropriate or that this Agreement or any such document may not be enforced in or by such courts. Each of the parties hereby consent to and grant any such court jurisdiction over the person of such parties and over the subject matter of any such dispute. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT.
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(e) Entire Agreement. This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof. The express terms hereof control and supersede any course of performance or usage of the trade inconsistent with any of the terms hereof.
(f) Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver.
(g) Gender; Number. Words used herein regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires.
(h) Headings. The titles and headings of Sections and Subsections contained in this Agreement are for convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.
(i) Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.
[Signatures on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Option Investments Sub-Advisory Agreement as of the date and year first above written.
Brookfield Real Estate Income Trust Inc. | ||
By: |
/s/ Michelle L. Campbell |
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Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Operating Partnership L.P. | ||
By: |
Brookfield REIT OP GP LLC, its general partner |
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By: |
Brookfield Real Estate Income Trust Inc., its sole member |
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By: |
/s/ Michelle L. Campbell |
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Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Adviser LLC | ||
By: |
/s/ Melissa Lang |
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Name: Melissa Lang | ||
Title: Senior Vice President and Secretary | ||
Oaktree Fund Advisors, LLC | ||
By: |
/s/ Brian Price |
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Name: Brian Price | ||
Title: Senior Vice President | ||
By: |
/s/ Derek Smith |
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Name: Derek Smith | ||
Title: Managing Director |
Signature Page for Option Investments Sub-Advisory Agreement
Exhibit A
OPTION INVESTMENTS
Equity Option Investments
1. |
Lakes at West Covina |
2. |
Anzio |
3. |
Two Liberty |
4. |
Arbors of Las Colinas |
Debt Option Investments
Real Estate-Related Debt Securities
1. |
BX 2019IMC G |
Real Estate-Related Debt
2. |
FURN 2019-MART A (IMC/AMC) |
3. |
111 Montgomery |
4. |
Avery (mortgage and mezzanine) |
Exhibit 10.4
OPTION INVESTMENTS PURCHASE AGREEMENT
BY AND AMONG
BROOKFIELD REAL ESTATE INCOME TRUST INC.,
BROOKFIELD REIT OPERATING PARTNERSHIP L.P.,
BROOKFIELD REIT ADVISER LLC
AND
OAKTREE FUND ADVISORS, LLC
TABLE OF CONTENTS
1. | Definitions | 1 | ||||
2. | Option | 3 | ||||
3. | Closing | 4 | ||||
4. | Representations and Warranties of the Company and the Operating Partnership | 4 | ||||
5. | Representations and Warranties of Oaktree | 5 | ||||
6. | Further Assurances | 6 | ||||
7. | Termination; Amendment; Assignment | 6 | ||||
8. | Expenses | 6 | ||||
9. | Notices | 6 | ||||
10. | Entire Agreement; Severability | 7 | ||||
11. | No Third-Party Beneficiaries | 7 | ||||
12. | Headings | 7 | ||||
13. | Waiver | 7 | ||||
14. | Governing Law; Waiver of Jury Trial | 7 | ||||
15. | Counterparts | 8 |
OPTION INVESTMENTS PURCHASE AGREEMENT
THIS OPTION INVESTMENTS PURCHASE AGREEMENT (this Agreement), dated as of November 2, 2021, is entered into by and among Brookfield Real Estate Income Trust Inc. (formerly Oaktree Real Estate Income Trust, Inc.), a Maryland corporation (the Company), Brookfield REIT Operating Partnership L.P. (formerly Oaktree Real Estate Income Trust Holding, L.P.), a Delaware limited partnership (the Operating Partnership), Oaktree Fund Advisors, LLC, a Delaware limited liability company (Oaktree), and, for the limited purpose of Section 2(d) hereof, Brookfield REIT Adviser LLC, a Delaware limited liability company (the Adviser).
RECITALS:
WHEREAS, the Company entered into that certain Adviser Transition Agreement, dated as of July 15, 2021 (the Transition Agreement), with the Adviser and Oaktree, which provides for certain arrangements related to the planned transition of the Companys external management function from Oaktree to the Adviser (the Adviser Transition);
WHEREAS, in connection with the Adviser Transition, and concurrently with the execution of this Agreement, the Company and the Operating Partnership entered into a sub-advisory agreement, dated November 2, 2021, with Oaktree and the Adviser (the Option Investments Sub-Advisory Agreement), pursuant to which Oaktree will provide certain investment advisory services to the Company and the Operating Partnership with respect to certain real estate equity investments (the Equity Option Investments) and certain real estate-related debt investments and real estate-related debt securities (the Debt Option Investments and together with the Equity Option Investments, the Option Investments), as identified on Schedule 1 hereto; and
WHEREAS, in connection with the Adviser Transition, the Operating Partnership (i) formed (a) Oaktree Segregated REIT Vehicle 1 LLC, a Delaware limited liability company (Segregated Vehicle 1) and (b) Oaktree Segregated Debt Vehicle LLC, a Delaware limited liability company (Segregated Vehicle 2 and, together with Segregated Vehicle 1, the Segregated Vehicles), each a wholly-owned subsidiary of the Operating Partnership and (ii) contributed (a) the Equity Option Investments to Segregated Vehicle 1 (other than Lakes at West Covina) and (b) the Debt Option Investments to Segregated Vehicle 2, in each case, in exchange for interests in such Segregated Vehicle;
WHEREAS, in accordance with the Transition Agreement, the parties have agreed to enter into this Agreement with respect to the Company and the Operating Partnership granting Oaktree an option to purchase the Operating Partnerships entire interest in all of the Equity Option Investments or all of the Debt Option Investments, or both, within the Option Period, as defined herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions.
Adviser shall have the meaning set forth in the preamble.
Adviser Transition shall have the meaning set forth in the recitals.
Agreement shall have the meaning set forth in the preamble.
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Applicable Interests shall have the meaning set forth in Section 2(b).
Charter shall mean the charter of the Company filed with the Maryland State Department of Assessments and Taxation in accordance with the Maryland General Corporation Law, as amended and supplemented from time to time.
Closing Date shall have the meaning set forth in Section 2(b).
Company shall have the meaning set forth in the preamble.
Debt Option Investments shall have the meaning set forth in the recitals.
Encumbrance shall mean any lien, pledge, security interest, charge, claim, encumbrance, option, voting trust, proxy or other similar arrangement or restriction of any kind (other than those set forth in the applicable operating agreement).
Equity Option Investments shall have the meaning set forth in the recitals.
Exercise Date shall have the meaning set forth in Section 2(b).
Follow-on Offering shall mean the Companys second public offering pursuant to its registration statement on Form S-11 (File No. 333-255557).
Independent Director shall have the meaning set forth in the Charter.
Oaktree shall have the meaning set forth in the preamble.
Operating Partnership shall have the meaning set forth in the preamble.
Option shall have the meaning set forth in Section 2(a).
Option Investments shall have the meaning set forth in the recitals.
Option Investments Sub-Advisory Agreement shall have the meaning set forth in the recitals.
Option Notice shall have the meaning set forth in Section 2(b).
Option Period shall mean the twelve (12) month period commencing on the earlier to occur of (i) May 2, 2023, and (ii) the date on which the Operating Partnership notifies Oaktree that the Company has issued one billion dollars ($1,000,000,000) of its common stock to non-affiliates pursuant to the Follow-on Offering.
Purchase and Sale Agreement shall have the meaning set forth in Section 2(c).
Purchase Price shall have the meaning set forth in Section 2(a).
Required Consents shall have the meaning set forth in Section 3(c).
Segregated Vehicle 1 shall have the meaning set forth in the recitals.
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Segregated Vehicle 2 shall have the meaning set forth in the recitals.
Segregated Vehicles shall have the meaning set forth in the recitals.
Transaction Effective Date shall mean the date on which the U.S. Securities and Exchange Commission declares effective the Companys registration statement on Form S-11 (File No. 333-255557).
Transition Agreement shall have the meaning set forth in the recitals.
2. Option.
(a) Grant of Option. During the Option Period, the Company and the Operating Partnership hereby grant to Oaktree the exclusive option to purchase the Operating Partnerships entire interest in (i) all of the Equity Option Investments, (ii) all of the Debt Option Investments, or (iii) all of the Option Investments (the Option), at a price equal to the aggregate fair value of the Equity Option Investments, the Debt Option Investments or the Option Investments, respectively, as determined in connection with the most recently determined net asset value of the Company immediately prior to the Closing Date of such purchase (the Purchase Price). Unless otherwise mutually agreed upon by the parties, upon Oaktrees exercise of the Option in accordance with Section 2(b), each of the Operating Partnership and the Company shall use its commercially reasonable efforts to effect the sale to Oaktree or one or more of its affiliates (i) with respect to the exercise of the Option relating to the Equity Option Investments, the Operating Partnerships entire interest in (a) Segregated Vehicle 1 and (b) Lakes at West Covina REIT LLC, (ii) with respect to the exercise of the Option relating to the Debt Option Investments, the Operating Partnerships entire interest in Segregated Vehicle 2, or (iii) with respect to the exercise of the Option relating to both the Equity Option Investments and the Debt Option Investments, each of the interests set forth in (i) and (ii) hereof, in each case, in accordance with the terms of this Agreement and subject to the receipt of the Required Consents (as defined below).
(b) Exercise of Option. At any time within the Option Period (such date, the Exercise Date), Oaktree may exercise the Option by providing written notice (the Option Notice) to the Company and the Operating Partnership, which notice shall specify (i) the closing date, which date shall not be less than forty-five (45) days following the Exercise Date (the Closing Date), unless mutually agreed upon by the parties, and (ii) whether the Option relates to all of the Equity Option Investments or Debt Option Investments, or both (such interests referred to as, the Applicable Interests).
(c) Purchase and Sale Agreement. Upon receipt by the Company and the Operating Partnership of the Option Notice, the parties agree to negotiate in good faith the terms of a purchase and sale agreement with respect to the sale of the Applicable Interests (the Purchase and Sale Agreement).
(d) Sale of Individual Option Investments. To the extent Oaktree desires to purchase one or more of the Option Investments during the Option Period (in lieu of exercising the aforementioned Option), the Adviser agrees to evaluate, in good faith, whether such sale may be effected and structured in a manner that is consistent with the Advisers fiduciary duties to the Company and its stockholders. Any such sale shall be subject to (i) the approval of a majority of the Independent Directors and the determination by a majority of the Independent Directors that such sale is in the best interests of the Companys stockholders and (ii) any necessary third-party consents.
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3. Closing.
(a) Subject to the terms and conditions set forth in this Agreement, the Purchase and Sale Agreement will provide that the purchase and sale of the Applicable Interests contemplated hereby shall take place at a closing to be held at 9:00 a.m. on the Closing Date at the offices of Alston & Bird LLP, 1201 West Peachtree Street, Atlanta, Georgia 30309, or at such other place or on such other date as the parties may mutually agree upon in writing. On or prior to the Closing Date, the Company and the Operating Partnership shall take, or cause to be taken, all action, and deliver, or cause to be delivered, all documents, signatures and other deliverables, required of any of them or their affiliates to consummate the transactions contemplated by the terms of this Agreement and the Purchase and Sale Agreement.
(b) The Purchase and Sale Agreement will provide that, on the Closing Date, (i) the Operating Partnership shall deliver to Oaktree or its permitted designee a certificate or certificates evidencing its entire interest in the Applicable Interests, free and clear of all Encumbrances, duly endorsed in blank or accompanied by ownership powers or other instruments of transfer duly executed in blank, and (ii) Oaktree or its permitted designee shall deliver to the Operating Partnership the Purchase Price by wire transfer of immediately available funds to an account designated in writing by the Operating Partnership.
(c) The Purchase and Sale Agreement will provide that the purchase and sale of the Applicable Interests contemplated hereby, and the parties obligations set forth in Section 3(b), will be conditioned upon obtaining all governmental, administrative or other third-party consents (including any lender consents) or approvals required by or necessary in connection with the purchase and sale of the Applicable Interests (Required Consents). Pursuant to the authority granted to Oaktree in connection with the Option Investments Sub-Advisory Agreement, upon exercising the Option, each of Oaktree, the Company and the Adviser shall use its commercially reasonable efforts to obtain all Required Consents in connection with the purchase and sale of the Applicable Interests. The Company shall be responsible for any expenses related to obtaining such Required Consents. In connection therewith, each of the Company and the Operating Partnership agrees to (a) use its commercially reasonable efforts to provide all information to Oaktree and any relevant third parties that is reasonably necessary to obtain the Required Consents and (b) cooperate in good faith with Oaktree and any relevant third parties in connection with obtaining the Required Consents, including using commercially reasonable efforts to take any actions reasonably requested by Oaktree or any relevant third parties.
4. Representations and Warranties of the Company and the Operating Partnership. Each of the Company and the Operating Partnership hereby represents and warrants to Oaktree and the Adviser as follows:
(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Maryland. The Operating Partnership is a limited partnership duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) As of the date hereof (and immediately following the completion of the Adviser Transition), Exhibit A attached hereto contains an accurate ownership chart of the Company and the Operating Partnership.
(c) The Company and the Operating Partnership have all requisite power and authority to execute and deliver this Agreement, to carry out their obligations hereunder, and to consummate the transactions contemplated hereby. The Company and the Operating Partnership have obtained all necessary corporate and partnership approvals, as applicable, for the execution and delivery of this Agreement, the performance of their obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by the Company and the Operating Partnership and (assuming due authorization, execution and delivery by the other parties hereto) constitutes the Companys and the Operating Partnerships legal, valid and binding obligation, enforceable against the Company and the Operating Partnership in accordance with its terms.
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(d) The execution, delivery and performance by each of the Company and the Operating Partnership of this Agreement do not conflict with, violate or result in the breach of, any agreement, instrument, order, judgment, decree, law or governmental regulation to which the Company or the Operating Partnership is a party or is subject, after giving effect to obtaining any Required Consents.
(e) No governmental, administrative or other third-party consents or approvals are required by or with respect to the Company or the Operating Partnership in connection with the execution and delivery of this Agreement.
(f) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of the Company or the Operating Partnership, threatened against or by the Company or the Operating Partnership that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
(g) No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or the Operating Partnership.
5. Representations and Warranties of Oaktree. Oaktree hereby represents and warrants to the Company, the Operating Partnership and the Adviser as follows:
(a) Oaktree is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware.
(b) Oaktree has all requisite power and authority to execute and deliver this Agreement, to carry out its obligations hereunder, and to consummate the transactions contemplated hereby. Oaktree has obtained all necessary limited liability company approvals for the execution and delivery of this Agreement, the performance of its obligations hereunder, and the consummation of the transactions contemplated hereby. This Agreement has been duly executed and delivered by Oaktree and (assuming due authorization, execution and delivery by the other parties hereto) constitutes Oaktrees legal, valid and binding obligation, enforceable against Oaktree in accordance with its terms.
(c) The execution, delivery and performance by Oaktree of this Agreement do not conflict with, violate or result in the breach of, any agreement, instrument, order, judgment, decree, law or governmental regulation to which Oaktree is a party or is subject.
(d) No governmental, administrative or other third-party consents or approvals are required by or with respect to Oaktree in connection with the execution and delivery of this Agreement.
(e) There are no actions, suits, claims, investigations or other legal proceedings pending or, to the knowledge of Oaktree, threatened against or by Oaktree that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement.
(f) No broker, finder or investment banker is entitled to any brokerage, finders or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of Oaktree.
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6. Further Assurances. Each of the parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.
7. Termination; Amendment; Assignment. This Agreement shall automatically terminate, without further action by any party, upon the earlier of (a) the mutual agreement of the parties, (b) the termination of the Option Investments Sub-Advisory Agreement in accordance with its terms and (c) the expiration of the Option Period; provided, that with respect to (c) only, the Agreement shall not terminate with respect to any Option Investment that is the subject of an Option Notice and provides for a Closing Date occurring after the expiration of the Option Period in accordance with the terms of this Agreement. Further, where this Agreement does not terminate upon expiration of the Option Period as a result of the proviso in the first sentence of this Section 7, this Agreement shall automatically terminate, without further action by any party, upon the Companys and the Operating Partnerships satisfaction of their respective obligations pursuant to Sections 2(a) and 3(c) of this Agreement where the necessary Required Consents are not obtained within 274 days after the applicable Exercise Date. Upon termination of this Agreement, all obligations of the parties hereto shall terminate. This Agreement may be amended, restated, supplemented or otherwise modified only by a written instrument signed by the parties. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by the parties without the prior written consent of the other parties.
8. Expenses. All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, except as provided in Section 3(c) of this Agreement.
9. Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing and shall be given by being delivered by hand, by courier or overnight carrier, by registered or certified mail, or by electronic mail using the contact information set forth herein:
The Company and the Operating Partnership: |
Brookfield Real Estate Income Trust Inc. c/o Brookfield Place New York 250 Vesey Street, 15th Floor New York, NY 10281 Attention: General Counsel Email: realestatenotices@brookfield.com |
|
with required copies (which shall not constitute notice) to: |
Alston & Bird LLP 1201 West Peachtree Street Atlanta, Georgia 30309 Attention: Rosemarie A. Thurston Email: rosemarie.thurston@alston.com |
|
Oaktree: |
Oaktree Capital Management, L.P. 333 South Grand Ave., 28th Floor, Los Angeles, California 90071 Attention: General Counsel Email: legalnotifications@oaktreecapital.com
|
|
with required copies (which shall not constitute notice) to: |
Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY 10017 Attention: Benjamin Wells Email: BWells@stblaw.com |
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10. Entire Agreement; Severability. This Agreement (including the exhibits hereto and the other agreements and instruments referred to herein), constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. The parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as is enforceable.
11. No Third-Party Beneficiaries. Except as otherwise specifically set forth herein, this Agreement is for the sole benefit of the parties and their permitted assigns, and nothing herein expressed or implied shall give or be construed to give any person, other than the parties and such permitted assigns, any legal or equitable rights hereunder. All references herein to the enforceability of agreements with third parties, the existence or non-existence of third party rights, the absence of breaches or defaults by third parties, or similar matters or statements, are intended only to allocate rights and risks among the parties and are not intended to be admissions against interest, give rise to any inference or proof of accuracy, be admissible against any party by any third party, or give rise to any claim or benefit to any third party.
12. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.
13. Waiver. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
14. Governing Law; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflict of laws (other than to the extent such principles permit the parties agreement to select the laws of the State of New York). Each of the parties: (a) consents to the exclusive personal jurisdiction of the state and federal courts sitting in the State of New York located in Borough of Manhattan, New York in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated by this Agreement; (b) agrees that all claims in respect of such action or proceeding may be heard and determined in any such court; (c) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court; and (d) agrees not to bring any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in any other court. Each of the parties waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of the other parties with respect thereto. To the extent permitted by applicable law, any party may make
7
service on the other parties by sending or delivering a copy of the process to the party to be served at the address and in the manner provided for the giving of notices in Section 9 (Notices). Nothing in this Section 14, however, shall affect the right of any party to serve legal process in any other manner permitted by applicable law. EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF AND THEREOF.
15. Counterparts. This Agreement may be executed in counterparts (including by .PDF or other electronic transmission), all of which shall be considered one and the same agreement. A signed copy of this Agreement delivered by email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
[SIGNATURE PAGE FOLLOWS]
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above.
Brookfield Real Estate Income Trust Inc. | ||
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Operating Partnership L.P. | ||
By: |
Brookfield REIT OP GP LLC, its general partner |
|
By: |
Brookfield Real Estate Income Trust Inc., its sole member |
|
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary | ||
Brookfield REIT Adviser LLC | ||
By: |
/s/ Melissa Lang |
|
Name: Melissa Lang | ||
Title: Senior Vice President and Secretary | ||
Oaktree Fund Advisors, LLC | ||
By: |
/s/ Brian Price |
|
Name: Brian Price | ||
Title: Senior Vice President | ||
By: |
/s/ Derek Smith |
|
Name: Derek Smith | ||
Title: Managing Director |
Signature Page for Option Investments Purchase Agreement
SCHEDULE 1
Option Investments
Equity Option Investments
1. |
Lakes at West Covina |
2. |
Anzio |
3. |
Two Liberty |
4. |
Arbors of Las Colinas |
Debt Option Investments
Real Estate-Related Debt Securities
1. |
BX 2019 - IMC G |
Real Estate-Related Debt
2. |
FURN 2019-MART A (IMC/AMC) |
3. |
111 Montgomery |
4. |
Avery (mortgage and mezzanine) |
Exhibit A
Final Organizational Chart of the Company and the Operating Partnership
Exhibit 10.5
TRADEMARK LICENSE AGREEMENT
This Agreement is effective November 2, 2021 (the Effective Date), by and between Brookfield Office Properties Inc. (Licensor), a corporation organized under the laws of Canada, having an office at Brookfield Place, 181 Bay Street, Suite 300, Toronto, Ontario, M5J 2T3 and Brookfield Real Estate Income Trust Inc. (Licensee), a corporation organized under the laws of Maryland, having an office at Brookfield Place New York, 250 Vesey Street, 15th Floor, New York, New York 10281 (collectively, the Parties).
WHEREAS Licensor is the owner of registered and common law BROOKFIELD formative trademarks worldwide, together with the goodwill symbolized thereby (the Trademarks);
AND WHEREAS Licensee wishes to obtain a worldwide, non-exclusive license to use the trademark BROOKFIELD, in word and design form, as well as the composite mark BROOKFIELD REAL ESTATE INCOME TRUST, in word and design form, and such other marks as the Licensor may agree in writing (the Licensed Marks), in association with a fund, namely a public non-listed REIT named Brookfield Real Estate Income Trust Inc., and services associated with the administration and promotion of the fund (the Goods and Services) upon the terms and subject to the conditions hereinafter set forth;
AND WHEREAS Licensor agrees to grant to Licensee a worldwide, non-exclusive license to use the Licensed Marks, upon the terms and subject to the conditions herein set forth as at the Effective Date, and wishes to put in writing:
NOW THEREFORE in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the sufficiency of which is duly acknowledged, the Parties agree as follows:
1. |
License. As of the Effective Date and during the Term, Licensor grants to Licensee a worldwide, non-exclusive, royalty-free license to use each of the Licensed Marks in connection with the Goods and Services, including as set out in section 3 of this Agreement. |
2. |
Exclusive Ownership of Trademarks. Licensee acknowledges that the Trademarks are the sole and exclusive property of Licensor, its successors and assigns. Licensee shall never object to, oppose, cancel, impugn, or otherwise challenge, directly or indirectly, in any manner or in any forum, Licensors, its successors or assigns ownership, or the validity of the Trademarks, or any future trademarks containing or comprising the term BROOKFIELD, whether applied for, registered or used by Licensor, its successors or assigns, worldwide at any time. |
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3. |
Licensed Marks May Include Additional Marks and Goods and Services Upon Licensors Approval. From time-to-time Licensee shall have the right to notify Licensor that it wishes to use additional trademarks owned by the Licensor and/or expand use under this Agreement to additional goods and/or services. Upon receipt of such a notification from Licensee, Licensor shall promptly either grant or deny Licensees request. Subject to any subsequent written agreement entered into between the Parties, this Agreement shall govern the use of such additional trademarks as Licensed Marks and/or such additional goods and/or services as Goods and Services and all terms and conditions herein will so apply. |
4. |
Licensor Costs. Subject to section 5 herein, Licensor shall be responsible for all costs associated with filing, prosecution and maintenance of applications and registrations for the Trademarks, including all costs associated with any cancellation, opposition or infringement proceedings. |
5. |
Licensee Costs. Licensee shall be responsible for all costs associated with filing, prosecuting and maintaining applications and registrations for Trademarks including all costs associated with any cancellation or opposition proceedings where the costs are incurred at the request of Licensee. |
6. |
Term. This Agreement shall be effective as of the Effective Date and continue in full force and effect, unless and until terminated by either Party as provided under this Agreement (the Term). This Agreement shall only be terminated pursuant to the conditions set out in sections 18 or 19. |
7. |
Quality Control. Licensor shall, at all times, exercise control over the character and quality of all Goods and Services offered by Licensee in association with the Licensed Marks to maintain the goodwill of the Trademarks as it sees fit. Licensor shall have the right, reasonably exercised, to refuse to allow the sale of the Goods or Services, or any advertising material which fails to meet Licensors quality standards, and upon such rejection, Licensee shall promptly cease so using the Licensed Marks. |
8. |
Default. Licensor shall have the right, reasonably exercised, to refuse to allow Licensee to offer or sell Goods and Services, or distribution of any advertising material, in association with the Licensed Marks if Licensee fails to meet any quality control standards set by Licensor. Upon such rejection by Licensor, Licensee shall promptly cease using all Licensed Marks until Licensee cures the default. |
9. |
No Registration. Licensee shall not attempt to register any of the Trademarks anywhere in the world, either alone or in combination with other words or indicia, or attempt to register any trademark (including, without limitation, domain names, telephone numbers and other now existing or future forms of trademarks) which is likely to cause confusion with the Trademarks. Licensee acknowledges the goodwill associated with the Trademarks and agrees that all goodwill, including any increase in the value of the Trademarks as a result of this Agreement, will inure solely to Licensors, and its successors and assigns, benefit. Licensee shall not claim any title or any proprietary right to the Trademarks or in any derivation, adaptation, or variation thereof that is likely to cause confusion with the Trademarks. |
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10. |
Evidence of Use. Upon Licensors request, Licensee shall provide, at Licensors expense, evidence of use or other assistance that Licensor may reasonably request to document the use of the Licensed Marks. |
11. |
Inspection. Licensor shall have the right to inspect the premises and operations of Licensee, the Goods and Services, and all marketing and promotional materials, documents and goods bearing the Licensed Marks, and records relating to the character and quality of the Goods and Services, provided that Licensor provides adequate notice of the inspection and bears the cost of the inspection. |
12. |
Guidelines. Licensee shall comply with all branding manuals, guidelines, instructions, standards and specifications provided to Licensee in writing from time to time by Licensor for use of the Trademarks. |
13. |
Licensor Identification. Licensee shall comply with any reasonable marking requests that Licensor may make in relation to the Licensed Marks. |
14. |
Compliance with Laws. Licensee shall at all times comply with all applicable laws, rules and regulations imposed by the jurisdiction in which the Licensed Marks are used applicable to Licensee in use of the Licensed Marks relating to the Goods and Services. |
15. |
Termination. |
(a) Mutual Termination. Either party may terminate this Agreement upon thirty (30) days prior written notice.
(b) Licensor Termination. Licensor is entitled to terminate this Agreement upon written notice to Licensee on the following events:
(a) |
the bankruptcy, insolvency, receivership or winding-up of Licensee; |
(b) |
the date prior to the date on which the seizure or attachment of the property, assets or undertaking of Licensee, as a result of any action taken against it by any person; |
(c) |
Licensee assigns, sublicenses, pledges, mortgages or otherwise encumbers the Licensed Marks; |
(d) |
Licensee materially defaults in the performance of any term, condition or agreement under this Agreement and Licensee does not remedy the default within thirty (30) days after written notice of the default by Licensor; or |
(e) |
registrations for the Trademarks expire. |
16. |
Licensee Termination. Licensee may terminate this Agreement upon giving thirty (30) days written notice of termination to Licensor in the event of material default in the performance of any term, condition or agreement under this Agreement and the default continues for a period of thirty (30) days after written notice of the breach is given to Licensor. |
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17. |
Consequences of Termination. Upon termination of this Agreement for any reason whatsoever, Licensee shall, except as expressly provided herein, cease to use all marketing materials or other materials on which the Licensed Marks are displayed; provided that Licensee shall have a reasonable period of time following such termination to discontinue and transition its use of the Licensed Marks and (ii) the right to retain historical records of its activities under this Agreement and to use the Licensed Marks as part of archival and historical references to Licensees use of the Trademarks. Licensee and any of its sublicensees shall not thereafter adopt, use or refer to any trademarks, service marks, logos, designs, trade names, trade dress, domain names, social media handles, toll-free numbers or other indicia or identifications that contain the word BROOKFIELD or that are otherwise derived from or that are likely to be confused with, any of the Trademarks. Licensee shall thereafter promptly take steps to cancel any registered trade names that incorporate any of the Trademarks. |
18. |
Enforcement and Cooperation. Licensee shall notify Licensor if it learns of the existence, use, or promotion of any mark, design, trade name, domain name, or any other indicia that may be confused with, or otherwise depreciate the value of the goodwill associated with, any of the Trademarks and/or any claims, demands, lawsuits, proceedings, and actions of any kind made or commenced, or which is threatened to be made or commenced in relation to the Licensed Marks. Without obligation, Licensor may take any action it deems necessary or advisable, in its discretion and at its expense, to enforce or defend its rights in respect of the Trademarks, including the Licensed Marks, and Licensee shall reasonably cooperate with Licensor in any proceeding, at the cost of Licensor, to enforce its rights in respect of the Trademarks. |
19. |
Notice of Infringement. Licensor shall notify Licensee in writing within ten (10) business days of any claims, demands, lawsuits, proceedings, and actions of any kind made or commenced, or which is threatened to be made or commenced against Licensor arising out of or otherwise related to the use of the Licensed Marks by Licensee. |
20. |
Indemnity. Except as expressly provided herein, Licensee agrees to protect, defend and indemnify and save harmless Licensor from and against any and all claims, suits or demands brought by third parties arising out of or relating to the use of the Licensed Marks by Licensee or any breach of this Agreement, including the reasonable costs and legal fees of Licensor incurred in the investigation, defense or settlement of any such claims, demands, actions and causes of action. |
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21. |
Control of Defense. Licensee shall have the right to exercise sole control of the defense and all related settlement negotiations in connection with the indemnity obligation in section 20. Licensor shall provide to Licensee, at Licensees expense all reasonable assistance, information, and authority necessary to perform Licensees indemnity obligation in section 20. Notwithstanding the foregoing, Licensee may not settle any claims, demands, actions and causes of action without the prior written consent of Licensor, which consent may not be unreasonably withheld, delayed or conditioned. |
22. |
Assignability. Licensor may assign this Agreement to any successors or assigns of rights in and to the Licensed Marks. Licensee may assign this Agreement to any person that controls it, is controlled by it or is controlled by the same person that controls it upon giving Licensor prior notice thereof. This Agreement shall inure to the benefit of and be binding upon Licensor, Licensee and their respective permitted successors and assigns. |
23. |
Notices. Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by facsimile transmission, by express courier, or by prepaid mail (except during an interruption of postal services). Any such notice or other communication, if mailed by prepaid mail at any time other than during a general discontinuance of postal service due to strike, lockout or otherwise, will be deemed to have been received on the second business day after the post marked date thereof, or if sent by facsimile, will be deemed to have been received on the business day following the sending, or if delivered by express courier or by hand will be deemed to have been received at the time it is delivered to the applicable address noted below either to the individual designated below or to an individual at such address having apparent authority to accept deliveries on behalf of the addressee. Notice of change of address will also be governed by this section. Notices and other communications will be addressed as follows: |
To Licensee:
Brookfield Real Estate Income Trust Inc.
c/o Brookfield Place
250 Vesey Street, 15th Floor
New York, NY 10281
Attn: realestatenotices@brookfield.com
To Licensor:
Brookfield Office Properties Inc.
c/o Brookfield Place
181 Bay Street, Suite 300
Toronto, ON M5J 2T3
Attn: realestatenotices@brookfield.com
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With a copy to:
Brookfield Asset Management Inc.
c/o Brookfield Place
181 Bay Street, Suite 300
Toronto, ON M5J 2T3
Attn: Chief Legal Officer
24. |
Governing Law. This Agreement will be governed by the laws in force in the State of New York, United States of America, excluding its conflict of law principles. |
25. |
Injunctive Relief. Nothing in this Agreement shall prevent Licensor from immediately seeking injunctive relief or any other equitable or judicial remedy, in any forum that Licensor, in its sole discretion, deems appropriate to protect its rights in the Trademarks. Licensee acknowledges and agrees that its failure to comply with the provisions of this Agreement, which are intended to protect Licensors proprietary rights in the Trademarks, will cause immediate and irreparable harm to Licensor which cannot be reasonably or adequately compensated for in money damages. Accordingly, in the event of a violation, or threatened violation, of this Agreement, in addition to any other right or remedy, Licensor shall be entitled to equitable relief by way of temporary or permanent injunction and any other remedy that a court may deem appropriate. Such rights of Licensor are in addition to the remedies otherwise available at law or equity. |
26. |
Waiver and Modification. No waiver of any breach of this Agreement will constitute a waiver of any subsequent breach, and no waiver will be effective unless in writing and signed by the Party to be charged. This Agreement may not be amended or modified except by a writing signed by both Parties. The failure of either Party at any time to require performance by the other of any provisions of this Agreement will in no way affect the full right of the Party to require the performance of any provisions at any later time. |
27. |
Further Assurances. Licensee agrees that it will, upon Licensors request, do all things and execute all documents that may at any time be necessary or desirable to ensure the validity and distinctiveness of the Licensed Marks and to ensure Licensors, and Licensors successors and assigns title thereto, or to otherwise give effect to the purpose and intent of this Agreement, without further consideration. |
28. |
Interpretation. The paragraph headings of this Agreement are for the convenience of the Parties only, and shall not affect the interpretation of any paragraph, or have any legal effect. This Agreement has been prepared by each of the Parties hereto and the terms hereof will not be construed in favor of or against any party by reason of its participation in the preparation. |
29. |
Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable in any respect by a court or administrative body of competent jurisdiction, then unless otherwise agreed, this Agreement will continue in full force and effect except for such provisions, which will be deemed excised therefrom. In such event, the parties hereto agree to use their best efforts to agree on substitute provisions, which, while valid, will achieve as closely as possible the same economic effects as the invalid provision(s). |
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30. |
Survival. All obligations of the Parties that expressly or by their nature survive expiration or termination of this Agreement shall continue in full force and effect subsequent to and notwithstanding such expiration and termination or until they are satisfied or by their nature expire. |
31. |
Entire Agreement. This Agreement contains all of the agreements, understandings and undertakings by the parties hereto, and all prior negotiations, representations, agreements or understandings not expressly contained herein relating to the subject matter of this Agreement have been merged herein and shall be of no force or effect. |
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
Licensor: | Licensee: | |||
Brookfield Office Properties Inc. | Brookfield Real Estate Income Trust Inc. | |||
By: /s/ Michelle L. Campbell | By: /s/ Michelle L. Campbell | |||
Name: Michelle L. Campbell | Name: Michelle L. Campbell | |||
Title: Secretary | Title: Secretary |
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Exhibit 10.6
To the Borrowers (as defined
in Exhibit D hereto)
c/o Brookfield Place New York
250 Vesey Street, 15th Floor
New York, NY 10281
Uncommitted Unsecured Line of Credit
Ladies and Gentlemen:
Brookfield US Holdings Inc. (the Lender) is pleased to offer to the Persons listed in Exhibit D hereto (as the same may be updated from time to time) an uncommitted unsecured line of credit up to a maximum amount of $125,000,000 (the Line) under which the Lender may, from time to time in its sole discretion, approve requests by one or more Borrowers for Loans. Unless the context otherwise requires, capitalized terms used in this Agreement shall have the meanings given thereto in Exhibit C hereto.
This Agreement and the arrangement described herein do not constitute a commitment by the Lender to extend any credit or to make any financial accommodation to any Borrower, and any decision to extend credit or make any financial accommodation under the Line shall be made by the Lender in its sole discretion. Any extension of credit or financial accommodation that the Lender may make under the Line will be on such terms and conditions as the Lender may require at the time a Borrower requests such extension of credit or financial accommodation and must be evidenced by documents in form and substance satisfactory to the Lender. Each request for a Loan will be considered individually in light of considerations that the Lender, in its sole discretion, may then find pertinent, including any credit exposure which the Lender may have to the Borrowers in connection with the Line and any other transactions with the Borrowers.
Section 1. Purpose. Requests for Loans under the Line may be made from the date hereof to but excluding November 2, 2022 (the Stated Expiration Date), as such date may be extended pursuant to Section 11 hereof. Subject to the terms and conditions of the Master Note, Loans shall be used by the applicable Borrower to provide financing for Investments, to repay debt or pay other obligations, to manage working capital requirements and for other purposes permitted by such Borrowers Constituent Documents.
Section 2. Requesting and Evidencing Loans. (a) In order to request a Loan, a Borrower or Borrowers shall deliver to the Lender a request substantially in the form of Exhibit A hereto or such other form satisfactory to the Lender (a Loan Request), which request may be delivered or furnished by electronic communication. Such Borrower(s) shall use commercially reasonable efforts to deliver a completed Loan Request to the Lender no later than 11:00 a.m., New York City time, on the date of the borrowing. The failure of any Borrower to comply with such time period shall not constitute a default under this Agreement.
(b) Upon the date of execution and delivery of this Agreement, an authorized person of each Borrower party hereto shall execute and deliver to the Lender the Master Note on behalf of such Borrower. Schedule II of the Master Note shall be updated from time to time to reflect changes in the composition of Borrowers after the date hereof. Any and all Loans made to a Borrower shall be evidenced by the Master Note.
Section 3. [Reserved.]
Section 4. Representations and Warranties. Each Borrower hereby represents and warrants to the Lender that (a) it has been duly formed and is validly existing in its jurisdiction of organization; (b) each of the Loan Documents to which it is a party has been duly authorized, executed, and delivered by it and constitutes its legal, valid, and binding obligation, enforceable against it in accordance with the terms thereof, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing, and (iv) the effects of the possible judicial application of foreign laws or foreign governmental or judicial action affecting creditors rights; (c) its execution,
delivery, and performance of this Agreement and the other Loan Documents to be delivered by it have been duly authorized by all requisite action and will not conflict with, violate, result in any default under, or result in the creation of any Lien (as defined in the Master Note) on any of its assets pursuant to its Constituent Documents, any applicable law or regulation, any judgment, order, or decree binding on it or any material agreement or instrument or contractual restriction to which it is party or which is binding on it or its properties; (d) the proceeds of any Loan shall be to provide financing for Investments, to repay debt or pay other obligations, to manage working capital requirements and for other purposes permitted by the applicable Borrowers Constituent Documents; and (e) it is not an investment company as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended.
Section 5. Expenses; Indemnity. (a) Each Borrower shall pay all reasonable and documented costs and expenses (including, without limitation, all reasonable and documented legal fees) incurred in connection with the preparation, execution, delivery and administration of this Agreement and the other Loan Documents.
(b) Each Borrower agrees to indemnify the Lender, its directors, officers, employees and agents (each such Person, an Indemnitee) against, and to hold each Indemnitee harmless from, its proportionate share of any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of (i) the execution or delivery of this Agreement or any other Loan Document or any agreement or instrument contemplated thereby, the performance by the parties thereto (other than the Lender) of their respective obligations thereunder or the consummation of the transactions contemplated thereby, (ii) the use of the proceeds of any of the Loans, or (iii) any claim, litigation, investigation, or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, in each case, to the fullest extent possible without such indemnification being inconsistent with such Borrowers Constituent Documents. The liability of each Borrower under this Section 5 shall be determined in accordance with Section 8(n) of this Agreement.
(c) The provisions of this Section 5 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of all or any portion of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Lender. Upon Borrowers receipt of written demand therefor, all amounts due under this Section 5 shall be payable in accordance with Section 12.
Section 6. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT, OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT, OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 7. Survival. All covenants, agreements, representations, and warranties made by the Borrowers herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the Lender and shall survive the execution and delivery of this Agreement and the making of any Loan, regardless of any investigation made by the Lender or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any default under any Loan Document or incorrect representation or warranty at the time any Loan is extended under the Line, and shall continue in full force and effect as long as any Loan remains outstanding and any amount remains due but unpaid under any Loan Document after the Line has expired or terminated.
Section 8. Miscellaneous. (a) Each Borrower acknowledges and agrees that no provision of this Agreement or any other Loan Document referred to herein, and no course of dealing by the Lender in connection herewith, shall be deemed to create or impose, by implication or otherwise, any commitment or obligation on the part of the Lender to make Loans. Accordingly, each Borrower agrees that any Loan shall be made solely at the Lenders discretion.
2
(b) Neither this Agreement nor any other Loan Document, nor any provision hereof or thereof, may be waived, amended, or modified except pursuant to an agreement or agreements in writing entered into by the Borrowers party thereto and the Lender. No failure or delay by the Lender in exercising any right or power under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. All rights and remedies afforded to the Lender by reason of this Agreement and the other Loan Documents are separate and cumulative remedies, and shall be in addition to all other rights and remedies in favor of the Lender existing at law or in equity or otherwise. None of such remedies, whether or not exercised by the Lender, shall be deemed to exclude, limit or prejudice the exercise of any other legal or equitable remedy or remedies available to the Lender. No waiver of any provision of any Loan Document or consent to any departure by any Borrower therefrom shall in any event be effective unless the same shall be permitted by the first sentence of this Section 8(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of any Loan shall not be construed as a waiver of any default, regardless of whether the Lender may have had notice or knowledge of such default at the time.
(c) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
(d) Each Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court for the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Borrower or its properties in the courts of any jurisdiction.
(e) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in Section 8(d). Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
(f) Each Borrower hereby agrees to the service of process in any legal action or proceeding with respect to this Agreement or any other Loan Document may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage paid, to such Borrower at c/o Brookfield Place New York, 250 Vesey Street, 15th Floor, New York, NY 10281, but the failure of such Borrower to receive such copy shall not affect in any way the service of such process.
(g) The provisions of this Agreement and the other Loan Documents shall be binding upon and inure to the benefit of the parties hereto and thereto and their respective successors and assigns permitted hereby, except that (i) none of the Borrowers may assign or otherwise transfer any of its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void) and (ii) the Lender may not assign or otherwise transfer its rights or obligations hereunder or under any other Loan Document without the prior written consent of the Borrowers (such consent not to be unreasonably withheld, delayed or conditioned); provided, however, the consent of the applicable Borrower(s) shall not be required upon the occurrence and during the continuance of an Event of Default (as defined in the Master Note) set forth in clauses (b), (e) or (f) of such definition. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, the Indemnitees, and their respective successors and assigns permitted hereby) any legal or equitable right, remedy or claim under or by reason of this Agreement or any other Loan Document.
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(h) Each Borrower hereby acknowledges that: (i) the Lender has no fiduciary relationship with or fiduciary duty to any Borrower arising out of or in connection with this Agreement or any other Loan Document, and the relationship between the Lender, on the one hand, and the Borrowers, on the other hand, in connection herewith or therewith is solely that of creditor and debtor; and (ii) no joint venture is created hereby or by any other Loan Document or otherwise exists by virtue of the transactions contemplated hereby between any Borrower and the Lender.
(i) Any provision of any Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.
(j) In accordance with the requirements of Title III of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the Act), the Lender hereby notifies each Borrower that pursuant to the requirements of the Act, it is required to obtain, verify and record information that identifies such Borrower, which information includes the name and address of such Borrower and, subject to applicable confidentiality requirements (as determined by such Borrower), other information that will allow the Lender to identify such Borrower in accordance with the Act.
(k) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine, and neuter forms. The words include, includes and including shall be deemed to be followed by the phrase without limitation. The word will shall be construed to have the same meaning and effect as the word shall. Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented, or otherwise modified (subject to any restrictions on such amendments, supplements, or modifications set forth herein), (ii) any reference herein to any Person shall be construed to include such Persons successors and assigns, (iii) the words herein, hereof and hereunder, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Sections, Exhibits and Schedules shall be construed to refer to Sections of, and Exhibits and Schedules to, this Agreement, (v) the words asset and property shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts, and contract rights, and (vi) all references herein to the term law shall be construed to include statutes and any rules, regulations or orders thereunder.
(l) This Agreement and the other Loan Documents may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall constitute but one agreement. Delivery of an executed signature page of this Agreement or the other Loan Documents by any electronic means that reproduces an image of the actual executed signature page shall be as effective as delivery of a manually executed counterpart of this Agreement or the other Loan Documents.
(m) This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.
(n) Notwithstanding anything herein or in any other Loan Document to the contrary, the liability of the Borrowers under this Agreement and the other Loan Documents with respect to any Obligations attributable to one or more Loans shall be several (but not joint). The liability of the Borrowers under this Agreement and the other Loan Documents with respect to any Obligations that relate to the Loan Documents or the Line generally, and are not attributable to any particular Loans, shall also be several (but not joint). For the avoidance of doubt, the occurrence of a Default (as defined in the Master Note) or an Event of Default with respect to one Borrower shall not, by itself, result in a Default or an Event of Default with respect to any other Borrower.
Section 9. Termination Rights. Each Borrower shall have the right to terminate this Agreement and the other Loan Documents in respect of itself, at any time, upon written notice to the Lender and payment in full of any and all outstanding Obligations of such Borrower. The Lender shall have the right to terminate this Agreement and the other Loan Documents with respect to any or all Borrowers at any time upon delivery of written notice to such Borrower(s). For the avoidance of doubt, the Lender shall not be required to fund new loans once notice has been provided of its intent to terminate this Agreement.
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Section 10. Limited Recourse. Notwithstanding anything to the contrary contained in this Agreement or under provisions of applicable law, none of the Lender and its assignees shall have any recourse to any Investor or any of their respective assets for any indebtedness or other monetary obligation incurred under the Loan Documents; provided, however, that nothing contained herein (a) shall constitute a waiver or release of the Borrowers of any indebtedness or other monetary obligation evidenced by this Agreement or the Master Note or (b) shall limit or otherwise restrict recourse to and enforcement against the applicable Borrower itself.
Section 11. Extension. Provided (a) the Borrowers shall have delivered to the Lender an extension request not less than thirty (30) days prior to the initial Stated Expiration Date, (b) there exists no Event of Default, and (c) the Lender shall have provided its consent, such consent to be given in its sole and absolute discretion, the Borrowers shall have the option to extend the Stated Expiration Date for additional terms of no longer than twelve (12) months each.
Section 12. Demand Obligation. The Loans, together with all accrued and unpaid interest thereon, are payable on the earliest of (i) the date Lender demands payment hereunder, (ii) the Stated Expiration Date and (iii) the occurrence of a Change of Control; provided, that the applicable Borrower(s) shall have 180 days (in the case of clauses (i) and (ii)) or 45 days (in the case of clause (iii)) to make such payment as provided for in this Section 12. Accordingly, the Lender can demand payment in full of the Loans at any time in its sole discretion even if the Borrowers have complied with all of the terms of this Agreement and the other Loan Documents. Upon the earlier of written demand for payment by the Lender in connection with the Obligations of any Borrower and the Stated Expiration Date, to the extent that its Obligations have not otherwise been satisfied, such Borrower shall, promptly following receipt of net cash proceeds from the acceptance of subscriptions from any Investors and any sale or other disposition of any asset, apply such proceeds to the repayment in full of the Loans and the Obligations. For the avoidance of doubt, no Borrower shall be required to use any such net cash proceeds that are (a) required to be distributed by such Borrower in order for it to maintain its REIT status or avoid any entity level tax as determined by such Borrower in its sole discretion, (b) required to meet any repurchase requests up to the maximum repurchase levels of 2% of Borrowers net asset value per calendar month and 5% per fiscal quarter, (c) necessary for such Borrower to close on any acquisition such Borrower entered into prior to Lenders demand for payment, and (d) necessary for such Borrower to distribute to Investors an amount consistent with the actual per share distributions made by such Borrower to its Investors in the immediately preceding fiscal quarter.
[SIGNATURE PAGES FOLLOW]
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Sincerely yours, |
BROOKFIELD US HOLDINGS INC. |
By: /s/ Thomas Corbett |
Name: Thomas Corbett |
Title: Director |
AGREED AND ACCEPTED AS OF THE DATE FIRST ABOVE WRITTEN: |
Brookfield REIT Operating Partnership L.P.
By: Brookfield REIT OP GP LLC, its general partner |
By: Brookfield Real Estate Income Trust Inc., its sole member |
By: /s/ Michelle L. Campbell |
Name: Michelle L. Campbell |
Title: Secretary |
[Signature page to Uncommitted Unsecured Line of Credit Agreement]
EXHIBIT A TO LETTER AGREEMENT
[Form of Loan Request]
BROOKFIELD REAL ESTATE INCOME TRUST INC.
Funding Request Form
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Kindly send swift confirmation on value date to confirm receipt of funds by
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EXHIBIT B TO LETTER AGREEMENT
[Form of Master Note]
PROMISSORY NOTE
[DATE]
New York, New York
FOR VALUE RECEIVED, each of the entities listed on Schedule II hereto (as updated from time to time, collectively, the Borrowers; each, a Borrower), hereby promises to pay to the order of Brookfield US Holdings Inc. (the Lender), at the Lenders office at 181 Bay Street, Suite 300, Toronto ON M5J 2T3 Canada, the aggregate unpaid principal amount of each loan made by the Lender to such Borrower (each a Loan; collectively, the Loans) on the due date for each Loan (as recorded by the Lender on its books and records and/or on Schedule I hereto or continuation thereof).
Loans evidenced hereby are made pursuant to that certain letter agreement dated November 2, 2021 between the Lender and the Borrowers party thereto (as amended, supplemented, or otherwise modified from time to time, the Letter Agreement) providing for an uncommitted unsecured line of credit. This Note is the Master Note as defined in the Letter Agreement. The liability of each Borrower under this Note shall be governed by the terms of Section 8(n) of the Letter Agreement. The recourse to any Investor under this Note shall be limited as provided in Section 10 of the Letter Agreement.
Section 1. Defined Terms. Unless otherwise defined herein, capitalized terms herein shall have the meanings assigned to them in the Letter Agreement. As used herein, the following terms shall have the meanings specified below:
Code means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute or statutes.
Default means any event or condition which, with the passage of time, the giving of notice, or both, would give rise to an Event of Default.
Dollars or $ mean, at any time, the lawful currency of the United States of America.
ERISA means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute or statutes.
ERISA Investor means an Investor in the applicable Borrower that is (a) an employee benefit plan (as such term is defined in Section 3(3) of ERISA) or trust or custody account therefor (or a master trust or custody account therefor) subject to Title I of ERISA, (b) a group trust, as described in Revenue Ruling 81-100 or insurance company separate account that includes one or more Persons described in clause (a) above, or (c) a partnership, insurance company general account, or other account or other fund that is deemed to hold plan assets pursuant to the Plan Asset Regulation of one or more Persons described in clause (a) or (b) above.
Event of Default has the meaning set forth in Section 7 of this Note.
Excluded Taxes means (a) any income or franchise Taxes imposed as a result of a present or former connection between the Lender and the jurisdiction of the governmental authority imposing such Tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising on account of the execution, delivery, performance, filing, recording, or enforcement of, or other activities contemplated in, this Note), (b) any branch profits Taxes imposed by the United States of America or any similar Tax imposed by any other jurisdiction in which the Lender is located, (c) any withholding Taxes resulting from any law in effect on the date hereof (or on the date the Lender designates a new lending office or on the date the Lender assigns this Note to
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another party), except to the extent that Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from a Borrower with respect to such withholding Taxes pursuant to the paragraphs relating to payments made without deduction for Indemnified Taxes, to exemption from or reduction of withholding Tax and to refund of Indemnified Taxes, (d) any Taxes attributable to the Lenders failure to comply with the paragraphs in Section 4 relating to exemptions from or reduction of withholding Taxes (including with respect to FATCA), and (e) any withholding Taxes imposed under FATCA.
FATCA means Sections 1471 through 1474 of the Code as in effect on the date hereof (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations promulgated thereunder or official interpretations thereof, any agreements entered into pursuant to Section 1471(b) of the Code (or any amended or successor version described above), and any fiscal or regulatory legislation, rules or practices adopted pursuant to any intergovernmental agreement, treaty or convention among governmental authorities and implementing the foregoing.
Indemnified Taxes means Taxes, other than Excluded Taxes, imposed on or with respect to payments under this Note.
Interest Payment Date means (i) the last day of the Interest Period; and (ii) the date of any payment of principal.
Interest Period means, with respect to a Loan, the period commencing on the date such Loan is made and ending on the numerically corresponding day one week, two weeks, one calendar month, two calendar months, three calendar months, six calendar months or nine calendar months thereafter, as selected by the applicable Borrower and as recorded by the Lender on its books and records and/or Schedule I hereto or any continuation thereof, or if such day is not a Business Day, then on the immediately succeeding Business Day; provided, that if such Business Day would fall in the next calendar month, such Interest Period shall end on the immediately preceding Business Day; and provided, further, that any Interest Period which commences on the last Business Day of a calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month(s)) shall, subject to the foregoing proviso, end on the last Business Day of the appropriate calendar month.
Libor Rate means, for any Interest Period for each Loan comprising part of the same borrowing, the rate per annum as published on the applicable Bloomberg screen page (or such other commercially available source providing such quotations as may be reasonably designated by the Lender from time to time) at approximately 11:00 a.m., London time, two (2) Business Days prior to the first day of the Interest Period for such Loan as the rate for deposits in Dollars with a maturity comparable to such Interest Period; provided that to the extent a successor rate is mutually agreed upon by the parties hereto, such agreed upon rate shall be applied to the applicable Interest Period in a manner consistent with market practice.
Lien means, (a) with respect to any asset, (x) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset and (y) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset, and (b) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.
Plan Asset Regulations means U.S. Department of Labor Regulation Section 2510.3-101, 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA, and any successor statutory or regulatory provisions.
Taxes means any present or future taxes, levies, imposts, duties, deductions, charges, or withholdings (including backup withholding), assessments or fees imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.
Section 2. Interest. Interest shall accrue on the unpaid balance of the principal amount of each Loan (including PIK Interest) made to a Borrower from and including the date of such Loan to but excluding the date of its repayment at a fixed rate per annum equal to the lowest then-current borrowing rate for any similar credit product offered by a third-party provider to such Borrower or any of its affiliate entities within the structure of the Brookfield Real Estate Income Trust Inc., or, if such rate is not offered, the Libor Rate applicable to such Loan plus 2.25%. Interest shall be calculated on the basis of a year of 360 days for the actual number of days elapsed. All
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accrued and unpaid interest (including any accrued PIK Interest) as of an applicable Interest Payment Date shall be paid in kind by capitalizing such interest and adding it to the principal amount outstanding under this Note (PIK Interest). In the event that any principal of or interest accrued and unpaid hereon shall not be paid when due, interest shall be payable on any such overdue amount upon written demand at a rate per annum equal to 2.0% in excess of the interest rate specified in the immediately preceding sentence (but not at a rate higher than the highest interest rate permitted by applicable law) on any overdue principal and, to the extent permitted by applicable law, on any overdue interest, from the due date thereof to the date of actual payment (after as well as before judgment and during bankruptcy). All payments hereunder shall be made in Dollars and in immediately available funds and in accordance with the last paragraph of Section 8. Notwithstanding any other provision hereof, if the Lender shall determine prior to the commencement of any Interest Period that adequate and reasonable means do not exist for ascertaining the Libor Rate, then the Lender shall promptly give notice thereof to the Borrowers and at the Lenders option it may demand repayment of the affected Loan(s), and even absent such demand, no Loan shall be created or continued for such Interest Period until adequate and reasonable means exist for ascertaining the Libor Rate or the parties hereto mutually agree upon a successor thereto.
Section 3. Prepayment; Repayment. Each Borrower shall have the right voluntarily to prepay without penalty or premium, at any time and from time to time, all or any portion of the outstanding principal balance of any Loan to it; provided, that accrued interest upon the amount prepaid shall be paid at the time of any such prepayment; provided, further, that if any principal of a Loan is paid prior to the last day of the Interest Period therefor set forth in the books and records of the Lender and/or Schedule I hereto or any continuation thereof (whether by acceleration, prepayment or otherwise), such Borrower also agrees to pay to the Lender such amount as is reasonably determined by the Lender to represent the aggregate losses, costs, and expenses incurred or suffered by the Lender as a result of such prepayment. A certificate of the Lender setting forth the foregoing amount shall, absent manifest error, be conclusive and binding for all purposes. The applicable Borrower shall pay the Lender the amount shown as due on any such certificate promptly upon receipt thereof.
Each Loan shall be paid in full by the applicable Borrower, together with all accrued and unpaid interest thereon, in accordance with Section 12 of the Letter Agreement.
Section 4. Taxes. Any and all payments by or on account of a Borrower under this Note shall be made free and clear of and without deduction for any Taxes, except as required by applicable law. If a Borrower shall be required by law to withhold or deduct any Taxes from such payments, then (i) such Borrower shall make such withholdings or deductions, (ii) such Borrower shall pay the full amount withheld or deducted to the relevant taxing authority in accordance with applicable law, and (iii) if the Tax in question is an Indemnified Tax, the sum payable by the Borrower to the Lender shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4), the Lender receives an amount equal to the sum it would have received had no such deductions been made. The applicable Borrower shall indemnify the Lender for the full amount of any Indemnified Taxes payable or paid by the Lender.
To the extent the Lender is entitled to an exemption from or a reduction of withholding Tax with respect to payments made by or on account of a Borrower, the Lender shall deliver to such Borrower, at the time or times reasonably requested by such Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, the Lender, if requested by such Borrower, shall deliver such other documentation prescribed by applicable law or reasonably requested by such Borrower as will enable such Borrower to determine whether or not the Lender is subject to backup withholding or information reporting requirements. The Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall, upon the reasonable request from such Borrower, update such form or certification or promptly notify such Borrower in writing of its legal inability to do so.
If a payment made to the Lender under this Note would be subject to U.S. federal withholding tax imposed by FATCA if the Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), the Lender shall deliver to the relevant Borrower at the time or times prescribed by law and at such time or times reasonably requested by a Borrower such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by a Borrower or as may be necessary for such Borrower to comply with their obligations under FATCA, to determine whether the Lender has or has not complied with such Lenders obligations under FATCA and, if necessary, to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause, FATCA shall include any amendments made to FATCA after the date hereof.
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If the Lender receives a refund in respect of any Indemnified Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section 4, it shall pay over such refund to the applicable Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower pursuant to this Section 4), net of all out-of-pocket expenses of the Lender and without interest (other than any interest paid by the relevant governmental authority with respect to such refund); provided, that such Borrower, upon the request of the Lender, agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant governmental authority) to the Lender in the event the Lender is required to repay such refund to such governmental authority.
Each Borrower shall maintain at one of its offices a copy of each assignment delivered to it and a register for the recordation of the names and addresses of the Lender (and any permitted assignee lender (each, an Assignee)), and principal amount (and stated interest) of the amounts owing to the Lender and each Assignee, as applicable, pursuant to the terms hereof from time to time (the Register). The entries in the Register shall be conclusive absent manifest error, and the applicable Borrower, the Lender and the Assignee(s) (if any) shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as the Lender or an Assignee, as the case may be, hereunder for all purposes of this Note, notwithstanding notice to the contrary. No transfer is effective until the transferee is reflected as such on the Register pursuant to this Section 4. The parties intend for the Loan to be in registered form for tax purposes and to the extent of any conflict with this Section 4, this Section 4 shall be construed in accordance with that intent.
Section 5. Covenants. At any and all times as the principal of or interest on any Loan evidenced hereby remains unpaid, each Borrower agrees that it will:
(a) [reserved];
(b) not amend or modify, or permit any amendment or modification of, its Constituent Documents in a manner that could reasonably be expected to materially and adversely affect the Lender; and
(c) if at any time amounts in respect of unpaid principal or interest for any Loan to it evidenced by this Note become due and payable, make such payments in accordance with the last paragraph of Section 8.
Section 6. Representations and Warranties. Each Borrower, with respect to itself, represents and warrants on the date hereof and on each date that a Loan shall be made that (a) it has been duly formed and is validly existing; (b) it has provided the Lender with a true and complete copy of its Constituent Documents as in effect on the date hereof; (c) this Note has been duly authorized, executed, and delivered by such Borrower and constitutes its legal, valid, and binding obligation, enforceable in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law), (iii) an implied covenant of good faith and fair dealing, and (iv) the effects of the possible judicial application of foreign laws or foreign governmental or judicial action affecting creditors rights; (d) its execution, delivery, and performance of this Note have been duly authorized by all requisite action and will not conflict with, violate, result in any default under, or result in the creation of any Lien on any of its assets pursuant to, its Constituent Documents, any applicable law or regulation, any judgment, order or decree binding on it or any material agreement or instrument or contractual restriction to which it is party or which is binding on it or its properties; (e) [reserved]; (f) [reserved]; and (g) assuming that no portion of the assets used by the Lender in connection with the Loans hereunder constitutes assets of (A) an employee benefit plan (as such term is defined in Section 3(3) of ERISA) or plan (as such term is defined in Section 4975(e) of the Code) or trust or custody account therefor (or master trust or custody account therefor) subject to Title I of ERISA or Section 4975 of the Code, (B) a group trust, as described in Revenue Ruling 81-100 or insurance company separate account that includes one or more Persons described in clause (A) above, or (C) a partnership, insurance company general account, or other account or other fund that is deemed to hold
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plan assets pursuant to the Plan Asset Regulation of one or more Persons described in clause (A) or (B) above, then the transactions contemplated by this Note will not constitute a nonexempt prohibited transaction (as such term is defined in Section 4975(c)(1)(A)-(C) of the Code or Section 406(a) of ERISA) that could subject the Lender to any tax or penalty on prohibited transactions imposed under Section 4975 of the Code or Section 502(i) of ERISA.
Section 7. Events of Default. Any of the following shall, with respect to a Borrower, constitute an Event of Default:
(a) any representation or warranty by such Borrower hereunder proves to be untrue or incorrect in any material respect when made;
(b) any principal or interest, regardless of amount, due with respect to such Borrower under this Note is not paid, with respect to principal, on the date when and as the same shall become due and payable, whether upon maturity, acceleration, demand (subject to the last paragraph of Section 8) or otherwise and, with respect to interest, within five (5) Business Days after the date when and as the same shall become due and payable;
(c) [reserved];
(d) such Borrower shall fail to observe or perform any other term, covenant, condition or agreement contained herein and such failure shall continue for thirty (30) days after notice from the Lender;
(e) an involuntary proceeding shall be commenced or an involuntary petition shall be filed against such Borrower seeking (i) liquidation, reorganization or other relief in respect of such Borrower, or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Borrower, and, in any such case, such proceeding or petition shall continue undismissed for sixty (60) days or an order or decree approving or ordering any of the foregoing shall be entered;
(f) such Borrower shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in clause (e) above, (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for such Borrower for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;
(g) such Borrower shall become unable, admit in writing its inability or fail generally to pay its debts as they become due; or
(h) one or more judgments for the payment of money in an aggregate amount in excess of $25,000,000 shall be rendered against such Borrower and the same shall not be covered by insurance and remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any or any affiliate of them to enforce any such judgment; or
(i) beginning with the first day of the taxable year in which such Borrower qualifies as a REIT under Section 856 of the Code, the date on which such Borrower no longer qualifies as a REIT under Section 856 of the Code.
For the avoidance of doubt, the occurrence of a Default or an Event of Default with respect to one Borrower shall not, by itself, result in a Default or an Event of Default with respect to any other Borrower. If any Event of Default occurs and is continuing, the Lender may declare the entire outstanding principal amount of each Loan to the applicable Borrower and all accrued and unpaid interest owing thereon to be immediately due and payable by such Borrower; provided that if an Event of Default described in Sections 7(b), 7(e) or 7(f) has occurred and is continuing, the outstanding principal amount of each Loan to such Borrower and all accrued and unpaid interest owing thereon shall become immediately due and payable concurrently therewith, without any further action by the Lender, and without presentment, demand, protest, notice of default, notice of acceleration, or of intention to accelerate or other notice of any kind, all of which each of the Borrowers hereby expressly waives.
B-5
Section 8. Miscellaneous.
Each Borrower hereby waives diligence, presentment, demand, protest and notice of any kind whatsoever. Neither the failure nor any delay on the part of the Lender in any particular instance to exercise any right, power or privilege hereunder shall constitute a waiver thereof in that or any subsequent instance. No consent or waiver of the terms of this promissory note (this Note) shall be effective unless in writing. All rights and remedies of the Lender are cumulative and concurrent, and no single or partial exercise by the Lender of any right, power or privilege shall preclude any other or further exercise of any other right, power or privilege.
Except as may be required by law, all payments to be made hereunder by the applicable Borrower shall be made without set-off or counterclaim, in immediately available funds and in Dollars at and for the account of the Lender.
Each Loan evidenced by this Note and all payments and prepayments of the principal thereof and any outstanding balance and interest thereon and the respective dates thereof shall be recorded by the Lender in its books and records (which may be electronic in nature) and at any time and from time to time may be, and shall be prior to any transfer and delivery of this Note, entered by the Lender on Schedule I attached hereto or any continuation thereto, and recorded in the Register in accordance with Section 4. The failure by the Lender to make any such entries or notations on such schedule or in its internal records or any error in such a notation shall not affect the obligations of the applicable Borrower under this Note.
In addition to the other sums payable hereunder, upon receipt of written demand therefor, each Borrower agrees to pay to the Lender all costs and expenses (including reasonable attorneys fees) which may be incurred in connection with the enforcement of such Borrowers obligations hereunder.
All notices or other communications provided for hereunder shall be in writing (including telecommunications) and shall be mailed, facsimiled or delivered, if to a Borrower, at the address of such Borrower set forth underneath such Borrowers signature, if to the Lender, at Brookfield US Holdings Inc., 181 Bay Street, Suite 300, Toronto ON M5J 2T3 Canada, or in each case at such other address as may hereafter be specified by any such Person to the other party in writing. All notices and communications shall be effective (i) if mailed, when received at the address specified above, (ii) if facsimiled, when transmitted and (iii) if delivered, upon delivery.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Each Borrower hereby consents to the service of process in any action or proceeding brought against it by the Lender by means of registered mail to the last known address to such Borrower. Nothing herein, however, shall prevent service of process by any other means recognized as valid by law within or without the State of New York. EACH BORROWER HEREBY WAIVES AND AGREES TO WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM INSTITUTED WITH RESPECT TO ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED TO THIS NOTE. By the execution of this Note, each Borrower hereby submits to the jurisdiction of courts located in the County of New York, State of New York.
This Note may be executed in any number of counterparts, each of which shall be deemed an original, and all of which taken together shall constitute but one agreement.
The Loans are payable on demand, but subject to the terms of Section 12 of the Letter Agreement.
[SIGNATURE PAGE FOLLOWS]
B-6
BORROWER: |
By: |
Name: |
Title: |
Address: c/o Brookfield Place New York 250 Vesey Street, 15th Floor, New York, NY 10281 |
ACCEPTED AND AGREED AS OF THE DATE FIRST ABOVE WRITTEN: |
BROOKFIELD US HOLDINGS INC. |
By: |
Name: |
Title: |
By: |
Name: |
Title: |
[Master Note Signature Page]
B-7
SCHEDULE II TO MASTER NOTE
Borrower |
Jurisdiction of Organization |
|
Brookfield REIT Operating Partnership L.P. | Delaware |
B-9
EXHIBIT C TO LETTER AGREEMENT
CERTAIN DEFINED TERMS
As used in this Agreement, the following terms have meanings specified below:
Act has the meaning given such term in Section 8(j) of this Agreement.
Agreement means this Letter Agreement, together with the Exhibits hereto, as the same may be amended, supplemented, or otherwise modified from time to time.
Borrower means each Person listed on Exhibit D hereto (as such Exhibit may be updated from time to time by the Lender to reflect the addition of any new Persons as borrowers hereunder or termination of any Borrowers as borrowers hereunder).
Business Day means any day on which commercial banks are not authorized or required to close in New York City.
Change of Control means Brookfield REIT Adviser LLC or an affiliate thereof shall not be acting in the capacity as Adviser as set forth in the Advisory Agreement as contemplated by the Constituent Documents of the Borrower(s) or such Adviser shall cease to be directly or indirectly controlled by, or under common control with, Brookfield Asset Management Inc.
Constituent Documents means the constituent, governing, or organizational documents of a Person, including (a) in the case of any limited partnership, exempted limited partnership, joint venture, trust or other form of business entity, the limited partnership, exempted limited partnership, joint venture or other applicable agreement of formation of such Person and any agreement, statement, instrument, filing or notice with respect thereto filed in connection with its formation or registration with the secretary of state or registrar of exempted limited partnership or other department in the jurisdiction of its formation; (b) in the case of any limited liability company, the articles of formation, the articles of association and operating agreement for such Person; and (c) in the case of a corporation or exempted company, the certificate or articles of incorporation and the articles of association or bylaws for such Person; in each case, as the same may be amended, supplemented, or otherwise modified from time to time to the extent not prohibited by this Agreement.
Indemnitee has the meaning given thereto in Section 5 of this Agreement.
Investments means, in respect of any Borrower, direct or indirect investments permitted under the Constituent Documents of such Borrower.
Investor means, in respect of any Borrower, any stockholders, limited partners or any other Persons who subscribe to purchase the shares, limited partnership interests, limited liability company interests or other analogous equity interests in such Borrower.
Lender means Brookfield US Holdings Inc.
Line has the meaning given to such term in the first introductory paragraph of this Agreement.
Loan Documents means, collectively, this Agreement, the Master Note and any other agreements or instruments made or entered into by any Borrower with or in favor of the Lender in connection with this Agreement or the Master Note.
Loan Request has the meaning given thereto in Section 2(a) of this Agreement.
Loans means, collectively, the loans made by the Lender to one or more Borrowers pursuant to this Agreement and the applicable Master Note.
C-1
Master Note means the master promissory note in substantially the form of Exhibit B to this Agreement executed and delivered by the Borrowers to the Lender under this Agreement, as the same may be amended, supplemented, or otherwise modified from time to time.
Obligations means all obligations and liabilities of the Borrowers to the Lender in and under the Loan Documents, whether matured or unmatured, absolute or contingent, now existing or hereafter incurred (including interest accruing after the commencement of any bankruptcy or insolvency proceeding, whether or not allowed or allowable thereunder).
Person means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.
C-2
EXHIBIT D TO LETTER AGREEMENT
Borrowers:
1. |
Brookfield REIT Operating Partnership L.P. |
D-1
Exhibit 10.7
CONTRIBUTION AGREEMENT
This Contribution Agreement (this Agreement) is made as of November 2, 2021, by and among BUSI II-C L.P., a Delaware limited partnership (Assignor), Brookfield REIT Operating Partnership L.P., a Delaware limited partnership (Assignee) and Brookfield Real Estate Income Trust Inc., a Maryland corporation (the REIT), in the presence of Brookfield REIT Lux S.à r.l., a Luxembourg private limited liability company (société à responsabilité limitée), having its registered office at 15, boulevard F.W. Raiffeisen, L-2411 Luxembourg, Grand Duchy of Luxembourg, registered with the Luxembourg Register of Commerce and Companies under number B 260.428 (the Company).
RECITALS
WHEREAS, Assignor holds 100% of the issued and outstanding interests in the Company represented by 30,000 shares of the Company, having a nominal value of GBP 1 each and a fair market value of US$ 99,764,566.42 (collectively, the Assignor Interest);
WHEREAS, as of the date hereof, Assignor is a shareholder of the REIT and holds 16,710.671 shares of class I common stock in the REIT;
WHEREAS, Assignor desires to contribute (a) to the REIT, an amount of the Assignor Interest equivalent to $25,000,000 of REIT Shares (as defined below) represented by 7,427 shares of the Company (the Contributed REIT Interest), and the REIT wishes to accept such contribution, in consideration of 2,088,833.929 shares of class E common stock in the REIT (the REIT Shares) (the Assignor-REIT Contribution) and (b) to Assignee, the remaining portion of the Assignor Interest after taking into account the Assignor-REIT Contribution represented by 22,573 shares of the Company (the Contributed Assignee Interest, and together with the Contributed REIT Interest, the Contributed Interest), and Assignee wishes to accept such contribution, in consideration of 6,246,830.522 class E units in the Assignee (the Assignee Units) (the Assignor-Assignee Contribution), in each case, with the value of such units and shares based on the most recently determined net asset value of Assignees class E units immediately prior to the date hereof; provided that, if such net asset value is not available as of the date hereof, the value of such units and shares shall be based on the most recently determined net asset value of Assignees class I units immediately prior to the date hereof;
WHEREAS, Assignee desires to issue the Assignee Units, and the REIT desires to issue the REIT Shares, in each case, to Assignor, as consideration for the contribution by Assignor of the Contributed Interest, as the case may be;
WHEREAS, the REIT desires to contribute to the Assignee the Contributed REIT Interest, and the Assignee wishes to accept such contribution (the REIT-Assignee Contribution, and together with the Assignor-REIT Contribution and the Assignor-Assignee Contribution, the Contributions);
WHEREAS, the Company desires to acknowledge and agree to the Contributions of the Contributed Interest; and
WHEREAS, the parties hereto desire to document the Contributions of the Contributed Interest, all upon the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, each of which is made a part hereof, and the mutual promises, covenants and conditions contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Contribution and Assumption. In accordance with the terms of this Agreement, (a) Assignor hereby contributes the Contributed REIT Interest to the REIT, (b) Assignor hereby contributes the Contributed Assignee Interest to the Assignee and (c) the REIT hereby contributes the Contributed REIT Interest to the Assignee. In accordance with the terms of this Agreement, each of the REIT and Assignee hereby accept such contributions and expressly assumes the Contributed Interest being assigned, as applicable. Execution of this Agreement by each of the REIT and Assignee constitutes execution by each of the REIT and Assignee of the operating agreement of the Company (as amended from time to time pursuant to the terms thereof, the Operating Agreement).
2. Admission. (a) Upon the Assignor-REIT Contribution, the REIT is hereby agreed to be admitted as a shareholder of the Company and it is hereby acknowledged that the REIT shall have all the rights of Assignor as set forth in the Operating Agreement with respect to the Contributed REIT Interest, and (b) upon each of the Assignor-Assignee Contribution and the REIT-Assignee Contribution, Assignee is hereby agreed to be admitted as a shareholder of the Company and it is hereby acknowledged that Assignee shall have all the rights of Assignor and the REIT, as applicable, as set forth in the Operating Agreement with respect to the Contributed Interest.
3. Issuance of Assignee Units and REIT Shares. On the Effective Date and concurrently with the contribution and assumption of the Contributed REIT Interest and Contributed Assignee Interest contemplated herein, (a) Assignee shall issue the Assignee Units to Assignor and (b) the REIT shall issue the REIT Shares to Assignor.
4. Acknowledgement. The Company hereby acknowledges and agrees to the Contributions of the Contributed Interest.
5. Effective Date. This Agreement and the transactions contemplated herein shall be effective as of the date hereof (the Effective Date).
6. Representations and Warranties of Assignor. Assignor represents and warrants to Assignee that immediately prior to the Contributions contemplated herein, Assignor owns 100% of all right, title and interest in and to the Contributed Interest, and has not heretofore contributed, assigned, pledged or otherwise hypothecated the Contributed Interest.
7. Transfer Formalities. Assignor, Assignee and the REIT hereby jointly empower and authorize any manager of the Company, any employee of Alter Domus in Luxembourg and any lawyer or employee of Stibbe Avocats in Luxembourg, each acting individually, to:
(a) |
proceed, on the Effective Date, with the entry of the transfer of (i) the Contributed REIT Interest from the Assignor to the REIT, (ii) the Contributed Assignee Interest from the Assignor to the Assignee and (iii) the Contributed REIT Interest from the REIT to the Assignee, in each case under this Agreement, in the shareholders register of the Company and to sign the shareholders register of the Company as required by article 710-8 of the Luxembourg law of August 10, 1915 on commercial companies as amended and restated (the Company Law); |
(b) |
file a notice of the transfer of (i) the Contributed REIT Interest from the Assignor to the REIT, (ii) the Contributed Assignee Interest from the Assignor to the Assignee and (iii) the Contributed REIT Interest from the REIT to the Assignee, in each case with the Luxembourg Register of Commerce and Companies and publish such notice of transfer in the Luxembourg official gazette, in accordance with applicable provisions of the Company Law; and |
(c) |
perform any operation or act which might be necessary or useful for the performance and the execution of this Agreement and the transactions contemplated hereby. |
8. Further Assurances. The parties hereto agree to use commercially reasonable efforts to execute and deliver, or cause to be executed and delivered, such further instruments or documents or take such other action as may be reasonably necessary (or as reasonably requested by another party) to reflect the transactions contemplated herein.
9. Post-Closing Adjustment. With respect to each Contributed Interest, the Assignor, the REIT and Assignee agree that the consideration for such Contributed Interest is intended by them to be equal to the fair market value of such Contributed Interest and that, if any of them shall subsequently establish to the reasonable satisfaction of the others that the actual fair market value is in excess of or is less than the consideration previously paid hereunder, the other party or parties shall pay to the former party or parties such amount by way of an addition to or reduction of, as the case may be, the consideration originally paid hereunder, or whatever other consideration as mutually agreed upon by the parties, so that the consideration ultimately paid hereunder shall be equal to the fair market value as so established.
10. Counterparts. This Agreement may be executed in any number of counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the parties and delivered to the other party (including via facsimile or other electronic transmission), it being understood that each party need not sign the same counterpart.
11. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws.
12. Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned by any party without the prior written consent of each other party.
13. Headings. The headings in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
14. No Third-Party Beneficiaries. Except as provided for herein, this Agreement is for the sole benefit of the parties hereto and nothing herein, expressed or implied, shall give or be construed to give to any person, other than the parties hereto, any legal or equitable rights hereunder.
[The remainder of this page has been left blank intentionally.]
IN WITNESS WHEREOF, the parties hereto have executed this Contribution Agreement as of the day and year first above written.
By executing this Agreement, the Company accepts and acknowledges the transfer of (i) the Contributed REIT Interest from the Assignor to the REIT, (ii) the Contributed Assignee Interest from the Assignor to the Assignee and (iii) the Contributed REIT Interest from the REIT to the Assignee, in each case in accordance with article 710-13 of the Company Law and article 1690 of the Luxembourg Civil Code and acknowledges the powers granted in Section 7 of this Agreement and undertakes to record, on the Effective Date, in its relevant registers the ownership rights of the Assignee in respect of the Contributed Interest.
Company: | Brookfield REIT Lux S.à r.l., | |||
a Luxembourg private limited liability company (société à responsabilité limitée) | ||||
By: |
/s/ Sara Speed |
|||
Name: Sara Speed | ||||
Title: Manager | ||||
By: |
/s/ Jean-Philippe Fiorucci |
|||
Name: Jean-Philippe Fiorucci | ||||
Title: Manager |
Exhibit 10.8
CONTRIBUTION AGREEMENT
by and among
BOP Nest Domain JV LLC
BOP Nest Domain LLC
BOP Nest Nashville JV LLC
BOP Nest Nashville LLC
and
Brookfield REIT Operating Partnership L.P.
(formerly Oaktree Real Estate Income Trust Holdings, L.P.)
Dated as of
November 2, 2021
Table of Contents
ARTICLE 1 |
|
|||||
GENERAL |
2 | |||||
Section 1.1 |
Certain Defined Terms | 2 | ||||
Section 1.2 |
Rules of Construction | 6 | ||||
ARTICLE 2 |
|
|||||
CONTRIBUTION; ISSUANCE OF INTEREST |
7 | |||||
Section 2.1 |
Closing | 7 | ||||
Section 2.2 |
Contribution; Issuance of Interest | 7 | ||||
Section 2.3 |
Issuance of Interest | 7 | ||||
Section 2.4 |
Intended Tax Treatment | 7 | ||||
ARTICLE 3 |
|
|||||
REPRESENTATIONS AND WARRANTIES |
8 | |||||
Section 3.1 |
BOP JV Entities Representations and Warranties | 8 | ||||
Section 3.2 |
Investor Representations And Warranties | 15 | ||||
Section 3.3 |
Survival of Representations and Warranties | 16 | ||||
ARTICLE 4 |
|
|||||
PRORATIONS AND COSTS |
18 | |||||
Section 4.1 |
Adjustments | 18 | ||||
Section 4.2 |
Transfer Taxes | 20 | ||||
Section 4.3 |
Intent of Prorations | 20 | ||||
Section 4.4 |
Closing Costs | 20 | ||||
Section 4.5 |
Survival | 21 | ||||
ARTICLE 5 |
|
|||||
DISCLAIMERS AND RELEASE |
21 | |||||
Section 5.1 |
Disclaimers by the BOP JV Entities | 21 | ||||
Section 5.2 |
Sale As Is, Where Is | 22 | ||||
Section 5.3 |
Exculpation | 22 | ||||
ARTICLE 6 |
|
|||||
MISCELLANEOUS |
23 | |||||
Section 6.1 |
Notices | 23 | ||||
Section 6.2 |
Governing Law | 24 | ||||
Section 6.3 |
Headings | 24 | ||||
Section 6.4 |
Counterpart Copies | 24 | ||||
Section 6.5 |
Binding Effect | 25 | ||||
Section 6.6 |
Assignment | 25 | ||||
Section 6.7 |
Third Party Beneficiaries | 25 |
i
Section 6.8 |
Interpretation | 25 | ||||
Section 6.9 |
Entire Agreement | 25 | ||||
Section 6.10 |
Amendment | 25 | ||||
Section 6.11 |
Severability | 25 | ||||
Section 6.12 |
Survival | 25 | ||||
Section 6.13 |
Tax Reduction Proceedings | 25 | ||||
Section 6.14 |
Prevailing Party Attorneys Fees | 25 |
ii
EXHIBITS |
||||
Exhibit A-1 |
| Description of Domain Property | ||
Exhibit A-2 |
| Description of Nashville Property | ||
Exhibit B |
| Structure Charts | ||
Exhibit C |
Consideration Values |
SCHEDULES |
||||
Schedule 3.1.6 |
| Pending Assessments | ||
Schedule 3.1.7(ii) |
| Permits | ||
Schedule 3.1.8 |
| Affiliate Contracts | ||
Schedule 3.1.9(i) |
| Rent Roll in respect to each Property | ||
Schedule 3.1.9(ii) |
| Security Deposits | ||
Schedule 3.1.9(iii) |
| List of Lease Defaults, and Other Matters if any | ||
Schedule 3.1.9(iv) |
| Tenant Improvements and Tenant Work Allowances | ||
Schedule 3.1.10 |
| Capital Projects | ||
Schedule 3.1.11 |
| List of Environmental Reports | ||
Schedule 3.1.12 |
| Litigation | ||
Schedule 3.1.13 |
| Existing Debt | ||
Schedule 3.1.18 |
| Insurance Policies | ||
Schedule 3.1.19 |
| Financial Statements | ||
Schedule 3.1.20 |
| Brokerage Agreements | ||
Schedule 3.1.22 |
| Foreign Persons | ||
Schedule 3.1.25A |
| Property Owner Title Insurance Policies |
iii
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this Agreement) is made and entered into as of November 2, 2021, by and among BOP Nest Domain JV LLC, a Delaware limited liability company (BOP Domain JV), BOP Nest Nashville JV LLC, a Delaware limited liability company (BOP Nashville JV and, together with BOP Domain JV, each a BOP JV Entity and collectively the BOP JV Entities), BOP Nest Domain LLC, a Delaware limited liability company (the Domain Company), BOP Nest Nashville LLC, a Delaware limited liability company (the Nashville Company, and, collectively with the Domain Company, the Companies), and Brookfield REIT Operating Partnership L.P. (formerly Oaktree Real Estate Income Trust Holdings, L.P.), a Delaware limited partnership (the Investor).
RECITALS
Subject to and upon the terms and conditions of this Agreement, at Closing (i) BOP Domain JV shall contribute 100% of the membership interests in the Domain Company (the Domain Investor Interests) to the Investor in exchange for a number of class E units in the Investor, having an aggregate value equal to the consideration value for the Domain Investor Interests set forth on Exhibit C attached hereto (the Domain Consideration Value) and having the rights, benefits and obligations set forth in the Investor Operating Agreement; and (ii) BOP Nashville JV shall contribute 100% of the membership interests in the Nashville Company (the Nashville Investor Interests and together with the Domain Investor Interests, the Investor Interests) to the Investor in exchange for a number of class E units in the Investor, having an aggregate value equal to the consideration value for the Nashville Investor Interests set forth on Exhibit C attached hereto (the Nashville Consideration Value and together with the Domain Consideration Value, the Consideration Value) and having the rights, benefits and obligations set forth in the Investor Operating Agreement, in each case, with the value of such units based on the most recently determined net asset value of the Investors class E units immediately prior to the Closing Date (Class E NAV); provided that, if the Class E NAV is not available at Closing, the value of such class E units shall be based on the most recently determined net asset value of the Investors class I units immediately prior to the Closing Date (the Consideration).
For purposes of this Agreement, (i) each Company as constituted as of the Closing Date is sometimes referred to herein as a Pre-Admission Company and (ii) each Company as constituted immediately following the Closing on the Closing Date and the contribution of the Investor Interests to the Investor, may be referred to as a Post-Admission Company.
NOW, THEREFORE, for and in consideration of the recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE 1
GENERAL
Section 1.1 Certain Defined Terms
As used herein:
12 Month Representations has the meaning ascribed thereto in Section 3.3.1.
Acceptable Accounting Method shall mean either (i) GAAP or (ii) International Financial Reporting Standards consistently applied.
Affiliate means, with respect to a specified Person, any other Person who, directly or indirectly through one or more intermediaries Controls, is Controlled by, or is under common Control with such specified Person.
Affiliate Contracts has the meaning ascribed thereto in Section 3.1.8.
Agreement has the meaning ascribed thereto in the preamble to this Agreement.
Apportionment Date has the meaning ascribed thereto in Section 4.1.1.
BOP Domain JV has the meaning ascribed thereto in the preamble to this Agreement.
BOP Nashville JV has the meaning ascribed thereto in the preamble to this Agreement.
BOP JV Entity or BOP JV Entities has the meaning ascribed thereto in the preamble to this Agreement.
BP Parties has the meaning ascribed thereto in Section 5.1.
Breach Notice has the meaning ascribed thereto in Section 3.3.1.
Brokerage Agreements has the meaning ascribed thereto in Section 3.1.20.
Business Day means any day other than (a) Saturday or Sunday and (b) any other day on which banks located in New York City are required or authorized by law to remain closed; provided, that, if any performance is due under this Agreement on any such day, then such period or such performance shall be extended until the second succeeding Business Day.
Capital Project means, any alterations, improvements, major repairs or other construction work undertaken by or at the direction of any Company or its Subsidiaries with respect to the base building of a Property, the costs for which are required to be capitalized under GAAP.
Claimed Damage has the meaning ascribed thereto in Section 3.3.1.
Class E NAV has the meaning ascribed thereto in recitals to this Agreement.
Closing means the closing of the transactions contemplated hereunder on the Closing Date.
Closing Date has the meaning ascribed thereto in Section 2.3.
Closing Statement has the meaning ascribed thereto in Section 4.1.7.
2
Code means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute.
Company or Companies have the meaning ascribed thereto in the preamble to this Agreement.
Consideration has the meaning ascribed thereto in the recitals to this Agreement.
Consideration Value has the meaning ascribed thereto in the recitals to this Agreement.
Contracts means, with respect to each Property, any contracts and agreements relating to the ownership, use, management, operation, leasing, maintenance, repair or improvement of such Property, or otherwise imposing obligations on or affecting a Company or any of its Subsidiaries (including management agreements, leasing agreements, service contracts, equipment leases, maintenance agreements, warranties and other contracts and parking agreements, but excluding any (i) Leases, (ii) Permits, (iii) Brokerage Agreements, (iv) Affiliate Contracts, (v) contracts of record identified on the Property Owner Title Insurance Policies, (vi) agreements relating to the Existing Debt or the transactions contemplated hereunder or (vii) development or construction related contracts or agreements entered into in connection with a Capital Project).
Control or any derivation thereof, when used with respect to a specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, by contract or otherwise; provided, that a Person may still have control of a specified Person notwithstanding that one or more third parties may have rights to participate in major decisions of the specified Person.
Damages has the meaning ascribed thereto in Section 3.3.2(i).
Domain Company has the meaning ascribed thereto in the preamble to this Agreement.
Domain Consideration Value has the meaning ascribed thereto in the recitals to this Agreement.
Domain Investor Interests has the meaning ascribed thereto in the recitals to this Agreement.
Domain Property has the meaning ascribed thereto in Exhibit A-1 to this Agreement, together with all improvements and buildings located thereon.
Employee Benefit Plan has the meaning ascribed thereto in Section 3.1.21.
Environmental Information has the meaning ascribed thereto in Section 3.1.11.
Environmental Laws has the meaning ascribed thereto in Section 3.1.11.
ERISA has the meaning ascribed thereto in Section 3.1.21.
3
Existing Debt has the meaning ascribed thereto in Section 3.1.13(i).
Financial Statements has the meaning ascribed thereto in Section 3.1.19.
GAAP means generally accepted accounting principles as applied in the United States.
Hazardous Materials has the meaning ascribed thereto in Section 3.1.11.
Interest shall mean, for any Person, the equity, partnership, membership or similar legal and beneficial interest in such Person, or any interest convertible into, exercisable for the purchase of or exchangeable for, any such equity, partnership, membership or similar legal and beneficial interest in such Person.
Investor has the meaning ascribed thereto in the preamble to this Agreement.
Investor Interests has the meaning ascribed thereto in recitals to this Agreement.
Investor Parties has the meaning ascribed thereto in Section 5.3.2.
Investor Operating Agreement means the limited partnership agreement of Investor, as amended or restated from time to time in accordance with the terms therein.
Leases means all leases, licenses and other occupancy agreements demising space at any Property, together with all amendments and modifications thereof and supplements relating thereto, which are in effect as of the Closing Date; provided, that Leases shall not include subleases, licenses and occupancy agreements entered into by the tenants thereunder unless a Company or any Subsidiary has entered into an agreement with such subtenant, sublicensee or occupant agreeing to a non-disturb or otherwise entered into privity with the subtenant, sublicensee or occupant.
Lists has the meaning ascribed thereto in Section 3.1.15(ii)(a).
Losses means, with respect to any matter, without duplication, any and all claims, suits, liabilities (including strict liabilities), actions, proceedings, obligations, debts, damages, losses, costs, expenses, fines, penalties, charges, fees, judgments, awards, and amounts paid in settlement of whatever kind or nature, including reasonable legal fees and disbursements of legal counsel and other costs of defense actually incurred or suffered by the Person in question with respect to such matter; provided, however, that the damages recoverable shall be only those that are currently reasonably foreseeable to have arisen from the breach or claim in question, whether denominated actual or consequential.
Material Lease means, with respect to each Property, any commercial Lease at such Property (or one or more Leases with the same tenant at such Property) demising greater than 5,000 rentable square feet at such Property in the aggregate.
Nashville Company has the meaning ascribed thereto in the preamble to this Agreement.
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Nashville Consideration Value has the meaning ascribed thereto in the recitals to this Agreement.
Nashville Investor Interests has the meaning ascribed thereto in the recitals to this Agreement.
Nashville Property has the meaning ascribed thereto in Exhibit A-2 to this Agreement, together with all improvements and buildings located thereon.
Non-Corporate Representations has the meaning ascribed thereto in Section 3.3.1.
Notice and Notices has the meaning ascribed thereto in Section 6.1.
OFAC has the meaning ascribed thereto in Section 3.1.15(i).
Order and Orders have the meaning ascribed thereto in Section 3.1.15(i).
Organizational Documents means the organizational documents for the Companies and their Subsidiaries, including the certificates of formation, certificates of limited partnership, articles of organization, limited liability company agreements, limited partnership agreements and all amendments thereto.
Permits means, with respect to each Property, all certificates of occupancy and governmental licenses and approvals required for the occupancy and operation of such Property that are material to the current occupancy and operation of such Property.
Person means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, unincorporated organization, governmental or regulatory body or other entity.
Post-Admission Company has the meaning ascribed thereto in the recitals to this Agreement.
Post-Closing Statement has the meaning ascribed thereto in Section 4.1.7.
Pre-Admission Company has the meaning ascribed thereto in the recitals to this Agreement.
Proceeding has the meaning ascribed thereto in Section 3.3.1.
Prohibited Country has the meaning ascribed thereto in Section 3.1.15(ii)(d).
Property means each of the Domain Property and the Nashville Property. Properties means all of the foregoing, collectively.
Property Owner Title Insurance Policies has the meaning ascribed thereto in Section 3.1.25.
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Property Owners means, collectively, BOP Nest Domain LLC (owner of the Domain Property) and BOP Nest Nashville LLC (owner of the Nashville Property). Property Owner shall mean any one of the above Property Owners.
Property Taxes has the meaning ascribed thereto in Section 4.1.1(ii).
Rent has the meaning ascribed thereto in Section 4.1.1(i).
SOL Representations has the meaning ascribed thereto in Section 3.3.1.
Structure Charts has the meaning ascribed thereto in Section 3.1.17(i).
Subsidiaries means collectively, all Persons shown on the Structure Charts in which a Company has a direct or indirect interest.
Survival Period has the meaning ascribed thereto in Section 3.3.1.
Tax means (i) any federal, state, local or municipal, or non-U.S. income, gross receipts, franchise, profits, capital gains, capital stock, transfer, sales, use, goods and services, harmonized, occupation, property, escheat, abandoned or unclaimed property, excise, estimated, severance, windfall profits, stamp, duty, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental under section 59A of the Code, customs, social security (or similar), unemployment, disability, registration or any other taxes, assessments, charges, duties, fees, levies, imposts or other similar governmental charges of any kind whatsoever, whether disputed or not, together with all estimated taxes, fines, deficiency assessments, additions to tax, penalties and interest; (ii) any liability for the payment of any amounts of the type described in clause (i) arising as a result of being (or having been) a member of any affiliated group (or being included (or required to be included) in any Tax Return relating thereto); and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the liability of any other Person, including as a transferee or successor, by contract or otherwise.
Tax Certiorari Proceeding has the meaning ascribed thereto in Section 6.13.
Tax Return means any and all returns, reports, declarations, information statements, claims for refund or filings with respect to Taxes, including any schedules, supplements or attachments thereto and including any amendment thereof.
Tenant has the meaning ascribed thereto in Section 3.1.9(iii)(a).
Section 1.2 Rules of Construction. Unless the context otherwise requires:
1.2.1 A capitalized term has the meaning assigned to it;
1.2.2 An accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;
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1.2.3 References in the singular or to him, her, it, itself, or other like references, and references in the plural or the feminine or masculine reference, as the case may be, shall also, when the context so requires, be deemed to include the plural or singular, or the masculine or feminine reference, as the case may be;
1.2.4 References to Articles, Sections and Exhibits shall refer to articles, sections and exhibits of this Agreement, unless otherwise specified;
1.2.5 The headings in this Agreement are for convenience and identification only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Agreement or any provision thereof;
1.2.6 This Agreement shall be construed without regard to any presumption or other rule requiring construction against the party that drafted and caused this Agreement to be drafted;
1.2.7 All monetary figures shall be in United States dollars unless otherwise specified; and
1.2.8 References to including in this Agreement shall mean including, without limitation, whether or not so specified and the word or is not exclusive.
ARTICLE 2
CONTRIBUTION; ISSUANCE OF INTEREST
Section 2.1 Closing. The Closing shall occur concurrently with the execution of this Agreement (the Closing Date).
Section 2.2 Contribution; Issuance of Interest. Subject to the terms and conditions of this Agreement, on the Closing Date, each of the BOP JV Entities does hereby contribute, convey, transfer, and assign to Investor the applicable Investor Interests in exchange for the Consideration, and Investor does hereby accept such contribution, conveyance, transfer and assignment of the Investor Interests in exchange for such Consideration. Execution of this Agreement by Investor constitutes execution by Investor of the applicable Organizational Documents of the Companies.
Section 2.3 Issuance of Interest. Following the foregoing contributions described in Section 2.2, Investor will own 100% of the outstanding limited liability company interest in each of the Companies. Investor is hereby agreed to be admitted as a shareholder of each Company, and it is hereby acknowledged that Investor shall have all the rights of the BOP JV Entities as set forth in the Organizational Documents with respect to the Investor Interests, as applicable.
Section 2.4 Intended Tax Treatment. With respect to the contribution of the Investor Interests, the parties intend that such contribution shall be treated as a contribution of property by the BOP JV Entities to Investor pursuant to Section 721(a) of the Code, and the parties will report such contribution for U.S. federal and all applicable state, local and foreign income tax purposes accordingly.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 BOP JV Entities Representations and Warranties. Each of the BOP JV Entities, solely with respect to such BOP JV Entity, hereby represents and warrants to Investor that each of the following representations and warranties is true and correct as of the Closing Date (it being understood that all representations made with respect to a Company or Subsidiary shall only be made by the BOP JV Entity holding a direct or indirect equity interest in such Company or Subsidiary):
3.1.1 Organization. Each of the Companies and each of their Subsidiaries is duly organized, validly existing and in good standing under the laws of its state of formation, and to the extent necessary, is duly qualified to transact business under the laws of the State of in which the Property it, directly or indirectly, owns is located.
3.1.2 Power and Authority. Each of the Companies has the legal power, right and authority to enter into this Agreement and to consummate the transactions contemplated hereby.
3.1.3 Execution and Delivery. The execution, delivery and performance by each BOP JV Entity and the Companies of this Agreement have been duly authorized by all necessary organizational action of each BOP JV Entity and the Companies, and, assuming due authorization, execution and delivery by the other parties hereto, this Agreement constitutes a legal, valid and binding obligation of each BOP JV Entity and the Companies, enforceable against each BOP JV Entity and the Companies in accordance with its terms, subject to applicable bankruptcy and other like laws affecting the rights of contractual parties and creditors generally and general principles of equity.
3.1.4 Contravention. The execution and delivery of this Agreement and the transactions contemplated hereby will not (a) result in a material breach of any of the material terms and provisions of, or constitute a default under or conflict with, or create a right of termination under, or result in the creation of any mortgage, lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of each BOP JV Entity, the Companies or their Subsidiaries pursuant to any material agreement, indenture, mortgage, lien, lease, consent, license, franchise or other material instrument to which each BOP JV Entity, the Companies or their Subsidiaries is bound or under which the assets of each BOP JV Entity, the Companies or their Subsidiaries are affected, (b) violate any law, rule regulation, judgment, order decree, writ or injunction applicable to each BOP JV Entity, the Companies or their Subsidiaries in any material respect or (c) require any notice to, or approval or consent from, any Person other than any notices, consents or approvals that have been obtained or made on or prior to the Closing Date.
3.1.5 Condemnation Proceedings. There is no condemnation proceeding pending against any part of any Property, and none of the BOP JV Entities, the Companies or their Subsidiaries have received any written notice of any threatened condemnation or similar proceeding affecting any part of any Property.
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3.1.6 Pending Assessments. To the knowledge of the BOP JV Entities, except as set forth on Schedule 3.1.6 attached hereto, neither BOP JV Entity, nor any Company or any Subsidiary has received written notice of any pending or threatened special assessment with respect to any Property.
3.1.7 Contracts/Permits.
(i) Each of the Companies and their Subsidiaries have all of the Contracts necessary to operate and manage the Properties in all material respects in the manner in which they are currently being operated and managed, such Contracts are in full force and effect in all material respects, none of the Companies or their Subsidiaries are in default of any of their material obligations under any such Contracts, and, to the BOP JV Entities actual knowledge, no other party to any such Contract is in default of any of its material obligations under such Contracts.
(ii) To the knowledge of the BOP JV Entities, except as set forth on Schedule 3.1.7(ii), all Permits have been obtained and are in full force and effect in all material respects.
3.1.8 Affiliate Contracts. Schedule 3.1.8 attached hereto contains a complete and accurate description of the contracts and/or relationships affecting each Property that have been entered into by any of the Companies or their Subsidiaries, on one hand, and one or more Affiliates of the BOP JV Entities on the other hand (the Affiliate Contracts). Each of the Affiliate Contracts is valid and binding on the Companies or their Subsidiaries, as applicable, and the Affiliates, and is in full force and effect. Affiliates of the BOP JV Entities are in compliance in all material respects under each of the Affiliate Contracts, which are enforceable against the parties thereto in accordance with the terms of such Affiliate Contracts.
3.1.9 Leases.
(i) Schedule 3.1.9(i) attached hereto contains the rent roll for each of the Properties in which each BOP JV Entity relies upon in operating and maintaining the applicable Property, and which contains all Material Leases in effect with respect to each Property. Each of the Material Leases is, to the BOP JV Entities actual knowledge, in full force and effect.
(ii) Schedule 3.1.9(ii) attached hereto sets forth all security deposits and other security held by or on behalf of the Property Owners under the Material Leases with respect to each Property.
(iii) Except as set forth on Schedule 3.1.9(iii) attached hereto:
(a) no tenant under a Material Lease (a Tenant) is more than 30 days in arrears in the payment of base rent due under its Material Lease;
(b) none of the Companies or their Subsidiaries have given any written notice to any Tenant that such Tenant has failed to perform any of its material obligations under such Material Lease, which failure remains uncured, and, to the BOP JV Entities actual knowledge, no Tenant has failed to perform any of its material obligations under its Material Lease, which failure remains uncured;
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(c) none of the Companies or their Subsidiaries have received written notice from any Tenant that any of the Companies or their Subsidiaries have failed to perform any of its material obligations under such Material Lease, which failure remains uncured, and no Tenant has asserted, in writing, any offset, credit or abatement that is not expressly provided in such Material Lease and has not been resolved, and no Tenant has asserted, in writing, a right to terminate its Lease;
(d) no Tenant has paid any rent for more than one (1) month in advance (other than with respect to security deposits); and
(e) none of the Companies or their Subsidiaries have received written notice from any Tenant that such Tenant is insolvent and/or has filed for bankruptcy and/or reorganization.
(iv) Schedule 3.1.9(iv) sets forth all tenant improvement work and tenant work allowances outstanding with respect to the Material Leases as of the date set forth thereon.
3.1.10 Capital Projects. Except as set forth on Schedule 3.1.10 attached hereto, there are no material ongoing Capital Projects at any Property.
3.1.11 Environmental. Except as disclosed in the environmental reports listed on Schedule 3.1.11 attached hereto (collectively, the Environmental Information), as of the Closing Date, none of the BOP JV Entities, the Companies nor their Subsidiaries has received written notice that any Company, Subsidiary or Property currently materially violates or may be subject to any material obligations or liability to remediate under any law, any material judicial or administrative ruling, order or decree or any permit, license or registration or agency or another governmental authority interpretation applicable to the Companies, their Subsidiaries or the Property that relates to the use, handling, transportation, treatment, storage, disposal, release or discharge of (A) those substances, materials or wastes defined, listed, designated, requested or classified as toxic, hazardous, acutely hazardous, pollutants or contaminants under any Environmental Law; (B) petroleum and petroleum products, by-products and breakdown products; and (C) toxic mold, polychlorinated biphenyls and asbestos containing materials (such substances, collectively, Hazardous Materials, and such laws, collectively, Environmental Laws). Hazardous Materials shall not include commercially reasonable amounts of such materials used or stored in the ordinary course of construction, development, ownership, operation, maintenance and/or use of any Property which are used and stored in accordance, in all material respects, with all applicable Environmental Laws.
3.1.12 Litigation. With respect to each Property, except as set forth on Schedule 3.1.12 attached hereto, there is no suit, action, litigation or proceeding pending, or, to the BOP JV Entities actual knowledge, threatened, against the Companies, any of their Subsidiaries or any Property, which suit, action, litigation or proceeding is not covered by insurance (less customary deductibles).
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3.1.13 Debt/Loan Documents.
(i) Except for the indebtedness listed on Schedule 3.1.13 attached hereto (the Existing Debt), none of the Companies or their Subsidiaries have any outstanding indebtedness for borrowed money with respect to each of the Properties.
(ii) There does not exist any default on the payment of principal or interest by any borrower under the Existing Debt which has not been cured. None of the BOP JV Entities, the Companies or their Subsidiaries have received any notice of default under the loan documents relating to the Existing Debt that has not been cured.
(iii) The principal amount outstanding, the accrued and unpaid interest and the amount of reserves, escrows and holdbacks, held by any lender with respect to each Existing Debt as of the date set forth thereon is set forth on Schedule 3.1.13 attached hereto.
3.1.14 Material Liabilities. None of the Companies or their Subsidiaries have any material liabilities or material obligations, except for liabilities or obligations (i) reflected or adequately reserved against in the Financial Statements, (ii) contemplated by or under this Agreement (iii) incurred in the ordinary course of business and in a manner consistent with past practice since the date of the latest Financial Statements or (iv) that are disclosed on the schedules or exhibits attached to this Agreement.
3.1.15 PATRIOT Act.
(i) The BOP JV Entities, the Companies and the Subsidiaries are in compliance with the requirements of Executive Order No. 13224, 66 Fed. Reg. 49079 (Sept. 25, 2001) (the Order) and other similar requirements contained in the rules and regulations of the Office of Foreign Assets Control, Department of the Treasury (OFAC) and in any enabling legislation or other Executive Orders or regulations in respect thereof (the Order, such other rules, regulations, legislation, or orders are collectively called the Orders).
(ii) None of the BOP JV Entities, the Companies or the Subsidiaries is:
(a) listed on any Specially Designated Nationals and Blocked Persons List maintained by OFAC pursuant to the Order and/or on any other list of terrorists or terrorist organizations maintained pursuant to any of the rules and regulations of OFAC or pursuant to any other applicable Orders (such lists are collectively referred to as the Lists);
(b) a Person subject to the prohibitions contained in the Orders;
(c) owned or controlled by, or acts for or on behalf of, any Person on the Lists or any other Person subject to the prohibitions contained in the Orders;
(d) any of the governments of Cuba, Iran, North Korea, Syria or Crimea or any other country with whom a United States citizen or entity organized under the laws of the United States or its territories is prohibited from transacting business of the type contemplated by this Agreement (each, a Prohibited Country);
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(e) established in, organized under or has their principal place of business in a Prohibited Country; or
(f) a publicly traded company identified by an independent researcher specializing in global security as (1) owning or controlling material property or assets or having employees or facilities located in, (2) providing goods or services to or obtaining goods or services from, (3) having distribution agreements with, issuing credits or loans to or purchasing bonds or commercial paper issued by, or (4) investing in, any Prohibited Country or any company domiciled in any Prohibited Country.
3.1.16 No Bankruptcy. No bankruptcy, insolvency, rearrangement or similar action involving any of the BOP JV Entities, the Companies or their Subsidiaries, whether voluntary or involuntary, is pending, contemplated by or, to the BOP JV Entities actual knowledge, threatened against any of the BOP JV Entities, the Companies or their Subsidiaries.
3.1.17 Capitalization.
(i) The structure charts (the Structure Charts) of the Companies and the Subsidiaries attached hereto as Exhibit B are true and correct in all material respects and list all of the Interests held by each Company and its Subsidiaries following the contributions contemplated hereunder. All of the Interests of each Company and each Subsidiary are duly authorized and validly issued in compliance in all material respects with all applicable laws and their respective Organizational Documents. Except for rights created pursuant to this Agreement and the Organizational Documents, there are no (A) outstanding Interests in any Company or any Subsidiary (in each case, other than those shown on the Structure Charts) or outstanding securities convertible into or exchangeable or exercisable for Interests in any Company or any Subsidiary, (B) bonds, debentures, notes, or other indebtedness having the right to vote on any matters in which any Company or any Subsidiary may vote, (C) outstanding options, warrants, rights, contracts, commitments, understandings or arrangements by which any Company or any Subsidiary is bound to issue, repurchase or otherwise acquire or retire any Interests of any of such entities, or (D) voting agreements, voting trusts, buy-sell agreements, rights of first refusal, options or rights or obligations relating to the members or the Interests in any Company or any Subsidiary.
(ii) True and complete copies of the Organizational Documents have been provided to Investor or Investors counsel on or prior to the Closing Date.
3.1.18 Insurance. All insurance policies held by or on behalf of the Companies or their Subsidiaries relating to or affecting any Property are described in Schedule 3.1.18 hereof, and all of such insurance policies are in full force and effect and none of the BOP JV Entities, the Companies or their Subsidiaries have received any notice of default or notice terminating or threatening to terminate any of such insurance policies that remains uncured.
3.1.19 Financial Statements. The financial statements of the Companies and their Subsidiaries set forth on Schedule 3.1.19 (collectively, the Financial Statements) (a) are true and correct in all material respects, (b) were prepared in accordance with an Acceptable Accounting Method, and (c) fairly represent in all material respects the financial conditions of the applicable Companies and their Subsidiaries as of the dates with respect to which they relate.
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3.1.20 Brokerage. With respect to each Property, Schedule 3.1.20 attached hereto sets forth a true, correct and complete list of all brokerage agreements entered into by the Companies or their Subsidiaries, in each case relating to such Property and that remain in effect and are binding on the Companies or their Subsidiaries as of the Closing Date and under which any future commissions may become due and payable (exclusive of brokerage fees that may become due upon the occurrence of future events, such as the exercise of tenant expansion or renewal options) (the Brokerage Agreements). The BOP JV Entities have no knowledge of any other brokerage commissions, fees or compensation payable to any broker or finder by the Companies or any Subsidiaries with respect to the Properties, other than as set forth in the Brokerage Agreements (exclusive of brokerage fees that may become due upon the occurrence of future events, such as the exercise of tenant expansion or renewal options).
3.1.21 ERISA. None of the BOP JV Entities, the Companies or their Subsidiaries is (i) an employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (ERISA)) (an Employee Benefit Plan), or (ii) an entity any of whose assets include the assets of one or more Employee Benefit Plans.
3.1.22 Foreign Person. Except as set forth on Schedule 3.1.22, none of the BOP JV Entities, the Companies or their Subsidiaries is a foreign person within the meaning of Section 1445(f)(3) of the Code.
3.1.23 Taxes.
(i) The Companies and each Subsidiary thereof have duly and timely filed, or caused to be duly and timely filed, all Tax Returns required to be filed by them on or before the Closing Date, and such Tax Returns were true, correct and complete in all material respects. There are no material U.S. federal, state or local or non-U.S. Taxes due and payable by the Companies or any Subsidiary which have not been timely paid or fully reserved against in its Financial Statements in accordance with an Acceptable Accounting Method.
(ii) There are no liens for Taxes upon any of the Interests of the Companies or the assets of the Companies or any Subsidiary thereof. No governmental authority has threatened in writing that it is in the process of imposing any lien for Taxes on the Interests or assets of the Companies or any Subsidiary thereof.
(iii) At all times since their formation and up to the Closing Date, each of the Companies and their subsidiaries has been classified as a disregarded entity, within the meaning of Treasury Regulation Section 301.7701-3(b)(1)(ii), or as a partnership for U.S. federal income tax purposes.
(iv) No deficiency or proposed adjustment for any amount of Tax has been proposed, asserted or assessed by any governmental authority against the Companies or any Subsidiary thereof.
(v) No claim has ever been made by a governmental authority in a jurisdiction where the Companies or any Subsidiary does not file Tax Returns that the Companies or any such Subsidiary, respectively, is or may be subject to taxation by that jurisdiction.
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(vi) None of the Companies or any of their Subsidiaries is a party to or bound by any Tax allocation or Tax sharing or similar agreement with respect to Taxes other than the Organizational Documents of the Companies or any such Subsidiaries or leases, loan agreement, interest rate cap agreements or similar agreements entered into by a Subsidiary.
(vii) None of the Companies or any of their Subsidiaries is doing business or engaged in a trade or business in any jurisdiction in which it has not filed all required Tax Returns.
(viii) There is no dispute, action, audit, examination, suit, administrative proceeding or claim currently pending or threatened against, or with respect to, any of the Companies or their Subsidiaries concerning any Tax liability of any of the Companies or their Subsidiaries and no material issues have been raised in writing by any governmental authority in connection with the examination of any Tax Returns of any of the Companies or their Subsidiaries.
(ix) None of the Companies or any of their Subsidiaries will be required to include any material item of income in, or exclude any material deduction from, taxable income for any Tax period (or portion thereof) ending after the Closing Date as a result of any (A) Closing Agreement as defined in Section 7121 of the Code (or any corresponding or similar provision of state, local, or foreign income Tax law) of which the Companies or any of their Subsidiaries is a party executed on or prior to the Closing Date, (B) change in method of accounting for a Tax period ending on or prior to the Closing Date, (C) use of an improper method of accounting for a Tax period ending on or prior to the Closing Date, (D) installment sale or open transaction disposition made on or prior to the Closing Date, (E) prepaid amount received on or prior to the Closing Date, or (F) election under Section 108(i) of the Code.
(x) None of the Companies or any of their Subsidiaries have been a party to any reportable transaction, as defined in Section 6707A(c)(1) of the Code and Treasury Regulations Section 1.6011-4(b).
3.1.24 Broker. No broker, agent, or finder has been engaged by or on behalf of the BOP JV Entities in connection with the transactions contemplated under this Agreement.
3.1.25 Title Policies/Encumbrances. Policies of title insurance, as listed on Schedule 3.1.25A (including updates and/or endorsements thereto, each a Property Owner Title Insurance Policy and collectively the Property Owner Title Insurance Policies) have been issued insuring, as of the effective date of such Property Owner Title Insurance Policy, the applicable Property Owners fee simple title to the applicable Property, in each case subject only to the matters disclosed on Schedule B to the applicable Property Owner Title Insurance Policy. As of the Closing Date, (i) to BOP JV Entities actual knowledge, each Property Owner Title Insurance Policy is in full force and effect and (ii) there are no pending or threatened claims under any such Property Owner Title Insurance Policy.
3.1.26 No Options. Except as set forth in the Organizational Documents, neither the BOP JV Entities nor the Companies nor any Property Owner nor any of their respective Affiliates (nor, to the BOP JV Entities knowledge, any other Person), has granted to any Person any right or option to acquire any Property or any portion thereof, and no Person has any such right or option.
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3.1.27 Access to Information; Disclaimer. Each BOP JV Entity (1) has had an opportunity to discuss the business of the Investor with the management of the Investor, (2) has had reasonable access to (i) the books and records of the Investor and (ii) the documents provided by the Investor for purposes of the transactions contemplated hereby, (3) has been afforded the opportunity to ask questions of and receive answers from officers of the Investor and (4) has conducted its own independent investigation of the Investor, its business and the transactions contemplated hereby, and has not relied on any representation, warranty or other statement by any person on behalf of the Investor, other than the representations and warranties of the Investor contained in this Agreement and that all other representations and warranties are specifically disclaimed. Without limiting the foregoing, except for the representations and warranties set forth in this Agreement, each BOP JV Entity further acknowledges and agrees that neither the Investor nor any of its respective stockholders, directors, officers, Affiliates, advisors, agents or other representatives has made any representation or warranty concerning any estimates, projections, forecasts, business plans or other forward-looking information regarding the Investor or its business and operations. Each BOP JV Entity hereby acknowledges that there are uncertainties inherent in attempting to develop such estimates, projections, forecasts, business plans and other forward-looking information with which each BOP JV Entity is familiar, that each BOP JV Entity is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections, forecasts, business plans and other forward-looking information furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, business plans and other forward-looking information), and that each BOP JV Entity will have no claim against the Investor or any of their respective stockholders, directors, officers, Affiliates, advisors, agents or other representatives with respect thereto, except in the case of fraud.
3.1.28 Knowledge. As used in this Section 3.1, the phrase to the BOP JV Entities actual knowledge, BOP JV Entities knowledge or phrases of similar import shall mean the actual knowledge of Matt Smith. There shall be no duty imposed or implied to investigate, inquire, inspect, or audit any such matters. There shall be no personal liability on the part of knowledge Persons listed herein.
Section 3.2 Investor Representations And Warranties. The Investor hereby represents and warrants to each of the BOP JV Entities that each of the following representations and warranties is true and correct as of the Closing Date:
3.2.1 Organization. The Investor is duly organized, validly existing and in good standing under the laws of the State of Delaware.
3.2.2 Power and Authority. The Investor has the legal power, right and authority to enter into this Agreement and to consummate the transactions contemplated hereby.
3.2.3 Execution and Delivery. The execution, delivery and performance by the Investor of this Agreement have been duly authorized by all necessary organizational action of the Investor and, assuming the due authorization, execution and delivery by the other parties hereto, this Agreement constitutes legal, valid and binding obligations of the Investor, enforceable against the Investor in accordance with their terms, subject to applicable bankruptcy and other like laws affecting the rights of contractual parties and creditors generally and general principles of equity.
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3.2.4 PATRIOT Act.
(i) The Investor is in compliance with the Order and other similar requirements contained in the rules and regulations of OFAC and in the Orders;
(ii) The Investor is not:
(a) listed on the Lists;
(b) a Person subject to the prohibitions contained in the Orders;
(c) owned or controlled by, or acts for or on behalf of, any Person on the Lists or any other Person subject to the prohibitions contained in the Orders;
(d) any of the governments of a Prohibited Country;
(e) established in, organized under or has its principal place of business in a Prohibited Country; or
(f) a publicly traded company identified by an independent researcher specializing in global security as (1) owning or controlling material property or assets or having employees or facilities located in, (2) providing goods or services to or obtaining goods or services from, (3) having distribution agreements with, issuing credits or loans to or purchasing bonds or commercial paper issued by, or (4) investing in, any Prohibited Country or any company domiciled in any Prohibited Country.
3.2.5 Broker. No broker, agent, or finder has been engaged on behalf of the Investor in connection with the transactions contemplated under this Agreement.
3.2.6 Funding. The Investor has (i) all funds necessary to pay and/or fund all related fees and expenses in connection with the transaction contemplated hereunder, and (ii) the resources and capabilities (financial or otherwise) to perform its obligations hereunder.
3.2.7 Consideration. The Consideration to be issued in consideration for the contributions contemplated hereby, when so issued in accordance with the terms of this Agreement, will be duly authorized and validly issued and outstanding, fully paid and nonassessable, and subject to no preemptive rights.
Section 3.3 Survival of Representations and Warranties.
3.3.1 Survival Period. Notwithstanding anything contained in this Agreement to the contrary, with respect to the representations and warranties concerning the BOP JV Entities and any applicable Property, Company and Subsidiary, (i) the representations and warranties set forth in Sections 3.1.1 (Organization), 3.1.2 (Power and Authority), 3.1.3 (Execution and Delivery), 3.1.4 (Contravention), 3.1.15 (Patriot Act), 3.1.17 (Capitalization), 3.1.21 (ERISA),
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3.1.22 (Foreign Persons), 3.2.4 and (Patriot Act) shall survive until expiration of the applicable statute of limitations (collectively, the SOL Representations); (ii) the representations and warranties set forth in Sections 3.1.13 (Debt/Loan Documents), 3.1.14 (Material Liabilities), 3.1.19 (Financial Statements), 3.1.23 (Taxes) and 3.2.5 (Broker) (collectively, the 12 Month Representations) shall survive until the date that is twelve (12) months after the Closing Date; and (iii) the representations and warranties contained in this Agreement other than the SOL Representations and the 12 Month Representations (collectively, the Non-Corporate Representations) shall survive until the date that is nine (9) months after the Closing Date (the periods beginning on the Closing Date and ending on such dates described in clauses (i)-(ii) above being herein called the Survival Period). The BOP JV Entities representations and warranties shall automatically be null and void and of no further force and effect after the applicable Survival Period unless, prior to the end of the applicable Survival Period, Investor shall have provided the BOP JV Entities with a notice (a Breach Notice) (a) alleging that any of the BOP JV Entities is in breach of such representation or warranty, (b) specifying in reasonable detail the nature of such breach, and (c) setting forth Investors reasonable calculation of any Losses incurred by Investor directly resulting from such breach (the Claimed Damage). If the applicable BOP JV Entity does not cure the breach of any representation or warranty to the reasonable satisfaction of Investor within forty five (45) days after the delivery of any Breach Notice (it being acknowledged and agreed that the BOP JV Entities shall only have such right to cure such breach of such representation and warranty if such breach is susceptible to cure), Investor may (i) demand payment in writing by the applicable BOP JV Entity of the Claimed Damage set forth in the Breach Notice and (ii) if the applicable BOP JV Entity fails to pay Investor the Claimed Damages set forth in the Breach Notice (or such other amount in respect of any breach of a representation or warranty set forth in any Breach Notice that is agreed to by Investor in its sole and absolute discretion) within fifteen (15) days after the BOP JV Entities receipt of such written demand, commence a legal proceeding or arbitration against the applicable BOP JV Entity alleging that such BOP JV Entity has breached such representation or warranty and that Investor has suffered Losses as a result thereof (a Proceeding), which Proceeding (if any) must be commenced, if at all, on or before the later to occur of (x) the expiration of the applicable Survival Period (if any) or (y) the date which is forty five (45) days following the expiration of such fifteen (15) day period. The foregoing does not eliminate, restrict or limit the right of the BOP JV Entities to contest (x) whether a breach of a representation or warranty has in fact occurred and/or (y) the amount of the Claimed Damage.
3.3.2 Threshold Amount/Maximum Liability. Notwithstanding anything to the contrary set forth in this Agreement:
(i) The BOP JV Entities shall not have any liability for a breach of any representation or warranty hereunder unless and until the Losses suffered by Investor in respect of breaches of representations and warranties (Damages) for any such breach, individually, or together with all other Losses with respect to any one Property or any of the Companies or any Subsidiaries that own such Property or interests therein, is greater than $250,000.00 (in which event Investor will be entitled to recover all such Damages);
(ii) The BOP JV Entities collective aggregate liability for all Damages resulting from breaches of the SOL Representations, the 12 Month Representations and the Non-Corporate Representations shall not exceed, in the aggregate, an amount equal to one and one-half percent (1.5%) of the aggregate Domain Consideration Value or Nashville Consideration Value, as applicable, for all such representations;
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(iii) Investors recovery for any claim against the BOP JV Entities hereunder shall be net of any insurance proceeds and any indemnity, contribution or other similar payment recovered by Investor from any insurance company or other third party; and
(iv) Unless otherwise expressly herein stated to survive, all other representations, covenants, indemnities, conditions and agreements contained herein shall not survive the Closing.
3.3.3 Indemnity. Subject to provisions of Sections 3.3.1 and 3.3.2, the BOP JV Entities shall pay or cause to be paid, and shall indemnify, defend and hold harmless Investor and each of its respective affiliates, their respective members, partners, shareholders, officers, directors, employees, agents, representatives, and successors and assigns, from and against any and all Losses incurred by Investor and resulting from an inaccuracy or breach in any of the representations and warranties of the BOP JV Entities set forth herein.
ARTICLE 4
PRORATIONS AND COSTS
Section 4.1 Adjustments. The parties hereto have agreed that the BOP JV Entities and Investor shall make the prorations set forth in this Section 4.1 and the BOP JV Entities or Investor, as applicable, shall pay to the other any amounts due as a result of such prorations on the Closing Date, as additional consideration, and in addition to the Consideration, for the contributions contemplated in Section 2.2.
4.1.1 Revenues and Expenses. All revenues of each Company and its Subsidiaries allocable to a Property for the period prior to the Closing Date (including cash on hand) shall be for the account of the applicable Pre-Admission Company, and all revenue of such Company and its Subsidiaries allocable to such Property for the period from and after the Closing Date shall be for the account of the applicable Post-Admission Company (in each case, subject to any amounts which are for the benefit of any third party partner or member of any Subsidiary of such Company). Further, all expenses of each Company and its Subsidiaries incurred and allocable to a Property for the period prior to the Closing Date shall be for the account of the applicable Pre-Admission Company, and all expenses of such Company and its Subsidiaries incurred and allocable to such Property for the period from and after the Closing Date shall be for the account of the applicable Post-Admission Company (in each case, subject to any amounts which are for the benefit of any third party partner or member of such Company). In furtherance of the foregoing, the following shall be apportioned between each Pre-Admission Company and applicable Post-Admission Company as of 11:59PM on the day immediately preceding the Closing Date (the Apportionment Date) on the basis of the actual number of days of the month which shall have elapsed as of the Closing Date and based upon the actual number of days in the month and a 365 day year (in each case, subject to any amounts which are for the benefit of any third party partner or member of such Company):
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(i) rents payable pursuant to any Leases (including operating expense escalation payments, real estate tax escalation payments and percentage rent, if any, payable under the Leases) (collectively, Rent);
(ii) real estate taxes, sewer rents and taxes, water rates and charges, vault charges and taxes, business improvement district taxes and assessments and any other governmental taxes, charges or assessments levied or assessed against any Property (collectively, Property Taxes), on the basis of the respective periods for which each is assessed or imposed, to be apportioned in accordance with Section 4.1.3 below;
(iii) administrative charges, if any, permitted under the Leases or applicable law, on security deposits held pursuant to the Leases;
(iv) any amounts prepaid or payable by the applicable Companies and/or any of its Subsidiaries pursuant to any contracts in effect relating to the operation of any Property;
(v) all accrued interest and other required payments related to the Existing Debt;
(vi) all other operating expenses with respect to any Property; and
(vii) such other items as are customarily apportioned in real estate closings of commercial properties in the metropolitan areas in which each of the Properties are located.
4.1.2 [Intentionally Omitted].
4.1.3 Property Taxes. Property Taxes shall be apportioned on the basis of the taxable period for which assessed. If the Closing Date shall occur before an assessment is made or a tax rate is fixed for the taxable period in which such Closing Date occurs, the apportionment of such Property Taxes based thereon shall be made as of the Closing Date by applying the tax rate for the preceding year to the latest assessed valuation, but, promptly after the assessment and/or tax rate for the current year are fixed, the apportionment thereof shall be recalculated. If as of the Closing Date, any Property or any portion thereof shall be affected by any special or general assessments which are or may become payable in installments of which the first installment is then a lien and has become payable, the applicable Pre-Admission Company shall pay the unpaid installments of such assessments which are due prior to the Closing Date and the applicable Company shall be responsible for and shall cause the applicable Property Owner to pay all installments which are due on or after the Closing Date.
4.1.4 Water Meters. If there are water meters at any Property, the unfixed water rates and charges and sewer rents and taxes covered by meters, if any, shall be apportioned (i) on the basis of an actual reading done within thirty (30) days prior to the Closing Date, or (ii) if such reading has not been made, on the basis of the last available reading. If the apportionment is not based on an actual current reading, then upon the taking of a subsequent actual reading, the parties shall, within ten (10) Business Days following notice of the determination of such actual reading, readjust such apportionment based upon the amount determined to be due upon such readjustment.
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4.1.5 Utilities. Charges for all electricity, steam, gas and other utility services shall be apportioned on the basis of actual current readings or, if such readings have not been made, on the basis of the most recent bills that are available. If any apportionment is not based on an actual current reading, then upon the taking of a subsequent actual reading, the parties shall, within ten (10) Business Days following notice of the determination of such actual reading, readjust such apportionment based upon the amount determined to be due upon such adjustment.
4.1.6 Closing Statement. The BOP JV Entities have delivered prior to the date hereof a closing statement to Investor (the Closing Statement). Not later than one hundred twenty (120) days after the date hereof, the Pre-Admission Company will prepare a final closing statement (the Post-Closing Statement) setting forth the final determination of the adjustments and prorations provided for herein and setting forth any items which are not capable of being determined at such time (and the manner in which such items shall be determined and paid). The net amount allocable to any of the Pre-Admission Companies or any of the Post-Admission Companies, if any, by reason of adjustments to the Closing Statement as shown in the Post-Closing Statement shall be paid in cash by the party which owes the other party money as a result of such adjustment within ten (10) Business Days after the Post-Closing Statement is agreed upon.
Section 4.2 Transfer Taxes. In the event that the consummation of the transactions contemplated herein result in any transfer, stamp, documentary, sales, use, registration or other similar Tax (including all applicable real estate transfer Taxes), (i) the parties shall cooperate with each other in connection with the filing of any Tax Returns relating to such Taxes, including joining in the execution of any such Tax Return or other documentation where necessary, and (ii) such Taxes will be borne as between the BOP JV Entities and the Investor in accordance with the local custom of the jurisdiction in which the applicable Property is located.
Section 4.3 Intent of Prorations. The parties hereto acknowledge and agree that the purpose and intent of the provisions set forth in this Article 4 as to prorations and apportionments is that the Pre-Admissions Company bear all expenses of the ownership and operation of the Property for which buyers and sellers of such interests would customarily prorate or apportion and shall receive all income therefrom accruing through the Apportionment Date (in each case, subject to any amounts which are for the benefit of or allocable to any third party partner or member of any Subsidiary of such Company) and the Post-Admission Company shall bear all expenses and receive all income accruing from and after the Apportionment Date. Any revenues and/or expenses affecting any Property that are not otherwise specifically addressed in this Article 4 shall be apportioned consistently with the foregoing provisions.
Section 4.4 Closing Costs. The BOP JV Entities and Investor shall each be responsible for (i) the costs of its own legal counsel, advisors and other professionals employed by it in connection with the negotiation and execution of this Agreement and the transactions contemplated hereby, and (ii) its percentage interest in each Company of all escrow and/or closing fees. Except as otherwise expressly provided in this Article 4, Investor shall be responsible for (x) the costs and expenses associated with its due diligence, and (y) all premiums and fees for title examination and title insurance and endorsements obtained and all related charges and survey costs in connection therewith.
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Section 4.5 Survival. The provisions of this Section 4 shall survive the Closing Date for a period of twelve (12) months after the Post-Closing Statement is prepared and delivered to Investor, except that Tax apportionment provisions shall survive for the applicable statute of limitations.
ARTICLE 5
DISCLAIMERS AND RELEASE
Section 5.1 Disclaimers by the BOP JV Entities. Except as expressly set forth in this Agreement (including the representations and warranties of the BOP JV Entities expressly made under Section 3.1), it is understood and agreed that the BOP JV Entities, their affiliates, and their disclosed and undisclosed, direct and indirect, shareholders, officers, directors, trustees, partners, principals, members, employees, agents, representatives, consultants, accountants, contractors, attorneys and other advisors, and any successors or assigns of the foregoing (collectively, the BP Parties), have not at any time made and are not now making, and they specifically disclaim, any warranties, representations or guaranties of any kind or character, express or implied, with respect to any Property or Investor Interests, and Investor, for itself, its successors and assigns, hereby waives and releases the BP Parties from any present or future claims, at law or in equity, whether known or unknown, foreseeable or otherwise, arising from or relating to any Property, except for claims arising out of representations and warranties set forth in this Agreement (including the representations and warranties of the BOP JV Entities expressly made under Section 3.1 and any indemnity in respect thereof under Section 3.3), including warranties, representations or guaranties as to the following, in each case, except as expressly set forth in this Agreement: (a) matters of title, (b) environmental matters relating to any Property or any portion thereof, including the presence of Hazardous Materials in, on, under or in the vicinity of any Property (and the BOP JV Entities makes no representations or warranties with respect to the accuracy or thoroughness, methodology of preparation or otherwise concerning the contents of such reports), (c) geological conditions, including subsidence, subsurface conditions, water table, underground water reservoirs, limitations regarding the withdrawal of water, and geologic faults and the resulting damage of past and/or future faulting, (d) whether, and to the extent to which any Property or any portion thereof is affected by any stream (surface or underground), body of water, wetlands, flood prone area, flood plain, floodway or special flood hazard, (e) drainage, (f) soil conditions, including the existence of instability, past soil repairs, soil additions or conditions of soil fill, or susceptibility to landslides, or the sufficiency of any undershoring, (g) the presence of endangered species or any environmentally sensitive or protected areas, (h) zoning or building entitlements to which any Property or any portion thereof may be subject, (i) the availability of any utilities to any Property or any portion thereof including water, sewage, gas and electric, (j) usages of adjoining property, (k) access to any Property or any portion thereof, (l) the value, compliance with the plans and specifications, size, location, age, use, design, quality, description, suitability, structural integrity, operation, title to, or physical or financial condition of any Property or any portion thereof, or any income, expenses, charges, liens, encumbrances, rights or claims on or affecting or pertaining to any Property or any part thereof, (m) the condition or use of any Property or compliance of any Property with any or all past, present or future federal, state or local ordinances, rules, regulations or laws, building, fire or zoning ordinances, codes or other similar laws, (n) the existence or non-existence of underground storage tanks, surface impoundments, or landfills, (o) any other matter affecting the stability and integrity of any Property, (p) the potential for further development of any Property, (q) the merchantability of any Property or fitness of any Property for any particular purpose, (r) tax consequences, (s) the Leases affecting any Property, (t) the contracts with respect to any Property or any Subsidiary or (u) any other matter or thing with respect to any Property, the Investor Interests or any other matter or thing pertaining to this Agreement.
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Section 5.2 Sale As Is, Where Is. Investor acknowledges and agrees that it is accepting an interest in each Company and that each Post-Admission Company will own, directly or indirectly, the applicable Property AS IS, WHERE IS, WITH ALL FAULTS, except to the extent expressly provided otherwise in this Agreement or any document executed by the BOP JV Entities and delivered to Investor on the Closing Date. Except for the representations and warranties of the BOP JV Entities set forth in this Agreement (including the representations and warranties of the BOP JV Entities expressly made under Section 3.1), Investor has not relied and will not rely on, and no BP Party has made and is liable for or bound by, any express or implied warranties, guarantees, statements, representations or information pertaining to any Property or relating thereto (including specifically information packages distributed with respect to any Property) made or furnished by any BP Party, or any property manager, real estate broker, agent or third party representing or purporting to represent any BP Party, to whomever made or given, directly or indirectly, orally or in writing. Investor represents that it is a reasonably knowledgeable, experienced and sophisticated buyer of real estate and, except with respect to the express representations, warranties and covenants made by the BOP JV Entities in this Agreement, that it is relying solely on its own expertise and that of its consultants and advisors in purchasing the Properties and shall make an independent verification of the accuracy of any documents and information provided by the BOP JV Entities. Investor will conduct such inspections and investigations of the Properties as to conditions thereof, and shall rely upon same. Investor acknowledges that each of the BOP JV Entities has afforded Investor a full opportunity to conduct such investigations of the Properties as Investor deemed necessary to satisfy itself as to the condition of the Properties and the existence or non-existence or curative action to be taken with respect to any Hazardous Materials on or discharged from the Properties, and will rely solely upon same and not upon any information provided by or on behalf of the BOP JV Entities or their agents or employees with respect thereto, other than such representations, warranties and covenants of the BOP JV Entities as are expressly set forth in this Agreement. Investor agreed to assume the risk that adverse matters, including adverse physical or construction defects or adverse environmental, health or safety conditions, may not have been revealed by Investors inspections and investigations, but without limiting Investors right to rely upon the representations and warranties expressly set forth in this Agreement (including the representations and warranties of the BOP JV Entities expressly made under Section 3.1).
Section 5.3 Exculpation.
5.3.1 Investor agrees that it does not have and will not have any claims or causes of action against any BP Party (other than the BOP JV Entities) arising out of or in connection with this Agreement or the transactions contemplated hereby. Subject to the terms of this Agreement, Investor agrees to look solely to the BOP JV Entities, and their respective assets for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties or other agreements contained herein, and further agrees not to sue or otherwise seek to enforce any personal obligation against any of the BP Parties (other than the BOP JV Entities) with respect to
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any matters arising out of or in connection with this Agreement or the transactions contemplated hereby. Without limiting the generality of the provisions of this Section 5.3, Investor hereby unconditionally and irrevocably waives any and all claims and causes of action of any nature whatsoever it may now or hereafter have against the BP Parties (other than the BOP JV Entities), and hereby unconditionally and irrevocably releases and discharges the BP Parties (other than BOP JV Entities) from any and all liability whatsoever which may now or hereafter accrue in favor of Investor against the BP Parties (other than the BOP JV Entities), in connection with or arising out of this Agreement or the transactions contemplated hereby.
5.3.2 Each of the BOP JV Entities agrees that it does not have and will not have any claims or causes of action against Investor or any of Investors affiliates, or any of their respective disclosed and undisclosed, direct and indirect, shareholders, officers, directors, trustees, partners, principals, members, employees, agents, representatives, consultants, accountants, contractors, attorneys and other advisors, or any successors or assigns of the foregoing (collectively, the Investor Parties) arising out of or in connection with this Agreement or the transactions contemplated hereby. Subject to the terms of this Agreement, each of the BOP JV Entities agrees to look solely to Investor and its assets for the satisfaction of any liability or obligation arising under this Agreement or the transactions contemplated hereby, or for the performance of any of the covenants, warranties or other agreements contained herein, and further agree not to sue or otherwise seek to enforce any personal obligation against any of the Investor Parties (other than Investor as provided herein) with respect to any matters arising out of or in connection with this Agreement or the transactions contemplated hereby. Without limiting the generality of the provisions of this Section 5.3.2, each of the BOP JV Entities hereby unconditionally and irrevocably waives any and all claims and causes of action of any nature whatsoever they may now or hereafter have against the Investor Parties (other than Investor as provided herein), and hereby unconditionally and irrevocably releases and discharges the Investor Parties (other than Investor as provided herein) from any and all liability whatsoever which may now or hereafter accrue in favor of each of the BOP JV Entities against the Investor Parties (other than Investor as provided herein), in connection with or arising out of this Agreement or the transactions contemplated hereby.
ARTICLE 6
MISCELLANEOUS
Section 6.1 Notices. In order to be effective, all notifications or notices, consents, approvals and disapprovals required or permitted by this Agreement to be given (each, a Notice, and collectively, the Notices) must be in writing and (a) delivered by nationally recognized overnight delivery service, (b) personally delivered or (c) sent by electronic email transmission (including via .pdf files), with confirmation of receipt from recipient (that is not automatically generated). Notices shall be deemed received and effective (i) if sent as described in subdivisions (a) or (b), on the date actually received or the date delivery is refused, and (ii) if sent as described in subdivision (c) above, upon confirmation of receipt from the recipient (that is not automatically generated). Notices must be addressed in each case, as follows:
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To each of the BOP JV Entities:
c/o Brookfield Properties, Inc.
Brookfield Place
250 Vesey Street, 15th Floor
New York, NY 10281-1023
Attn: General Counsel
E-mail: realestatenotices@brookfield.com
If to Investor:
Brookfield REIT Operating Partnership L.P.
c/o Brookfield Place New York
250 Vesey Street, 15th Floor
New York, NY 10281
Attention: Secretary
Email: realestatenotices@brookfield.com
Notices shall be valid only if served in the manner provided above. Notices may be sent by the attorneys for the respective parties and each such Notice so served shall have the same force and effect as if sent by such party. Each party will be entitled to change its address for purposes of notice in writing, communicated in the manner in accordance with the provisions of this Section 6.1.
Section 6.2 Governing Law. This Agreement shall be governed by, interpreted under and construed and enforced in accordance with, the laws of the State of Delaware, without reference to conflicts of laws principles. Each of the parties hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of relating to this Agreement. The parties hereto irrevocably elect Delaware as the exclusive judicial forum for the adjudication of any matters arising under or in connection with this Agreement or the transactions contemplated hereby, and consent to the exclusive jurisdiction of the federal or state courts sitting in Delaware. Each of the parties hereto irrevocably waives any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Agreement or the transactions contemplated hereby.
Section 6.3 Headings. The captions and headings herein are for convenience and reference only and in no way define or limit the scope or content of this Agreement or in any way affect its provisions.
Section 6.4 Counterpart Copies. This Agreement may be executed in two or more counterpart copies, all of which counterparts will have the same force and effect as if all parties hereto had executed a single copy of this Agreement. To facilitate execution of this Agreement, the parties may execute and exchange by facsimile or other electronic communication (including by pdf email transmission) counterparts of the signature pages.
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Section 6.5 Binding Effect. This Agreement will be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.
Section 6.6 Assignment. This Agreement may not be assigned by either party without the consent of the other party hereto.
Section 6.7 Third Party Beneficiaries. Except as otherwise expressly provided herein, this Agreement is not intended to give or confer any benefits, rights, privileges, claims, actions, or remedies to any Person as a third party beneficiary, decree, or otherwise.
Section 6.8 Interpretation. This Agreement will not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared by counsel for one of the parties, it being recognized that the BOP JV Entities and Investor have contributed substantially and materially to the preparation and negotiation of this Agreement.
Section 6.9 Entire Agreement. This Agreement contains all of the terms agreed upon between the parties with respect to the subject matter hereof, and all agreements heretofore had or made between the parties hereto are merged in this Agreement which alone fully and completely expresses the agreement of said parties.
Section 6.10 Amendment. This Agreement may not be changed, modified or terminated, nor may any provision hereunder be waived, except by an instrument executed by the parties hereto.
Section 6.11 Severability. If any one or more of the provisions herein is for any reason held to be invalid, illegal, or unenforceable in any respect, that invalidity, illegality, or unenforceability will not affect any other provision herein, and this Agreement will be construed as if the invalid, illegal, or unenforceable provision had never been contained herein.
Section 6.12 Survival. Except as otherwise expressly set forth in this Agreement, the provisions of this Agreement will not survive the Closing Date.
Section 6.13 Tax Reduction Proceedings. To the extent any Company or any of their Subsidiaries shall have the right to file and/or prosecute an application for the reduction of the assessed valuation of any Property or any portion thereof for real estate taxes or a refund of property taxes previously paid (a Tax Certiorari Proceeding) to any governmental or regulatory body, the BOP JV Entities shall have such right as provided herein. The BOP JV Entities shall have the right to withdraw, settle or otherwise compromise Tax Certiorari Proceedings affecting real estate taxes assessed against any Property for any fiscal period prior to the fiscal year in which each Closing Date shall occur without the prior consent of Investor. The amount of any tax refunds (net of attorneys fees, amounts due tenants and other costs of obtaining such tax refunds) with respect to any Property for the tax year in which the Apportionment Date occurs shall be apportioned between the BOP JV Entities and Investor as of the Apportionment Date.
Section 6.14 Prevailing Party Attorneys Fees. Should any party hereto employ an attorney to enforce any of the provisions hereof, the non-prevailing party(ies) in any final judgment agrees to pay the other partys(ies) reasonable attorneys fees and expenses in or out of litigation and, if in litigation, trial, appellate, bankruptcy or other proceedings, expended or incurred in connection therewith, as determined by a court of competent jurisdiction. The provisions of this Section 6.14 shall survive the Closing.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Contribution Agreement as of the Closing Date.
BOP JV ENTITIES: | ||
BOP Nest Domain JV LLC | ||
By: |
/s/ Amanda Seewald |
|
Name: Amanda Seewald | ||
Title: Associate General Counsel and Secretary | ||
BOP Nest Nashville JV LLC | ||
By: |
/s/ Amanda Seewald |
|
Name: Amanda Seewald | ||
Title: Associate General Counsel and Secretary |
[Signature Page to Domain/Nashville Contribution Agreement]
Companies: | ||
BOP Nest Domain LLC | ||
By: |
/s/ Amanda Seewald |
|
Name: Amanda Seewald | ||
Title: Associate General Counsel and Secretary | ||
BOP Nest Nashville LLC | ||
By: |
/s/ Amanda Seewald |
|
Name: Amanda Seewald | ||
Title: Associate General Counsel and Secretary |
[Signature Page to Domain/Nashville Contribution Agreement]
Investor: | ||
Brookfield REIT Operating Partnership L.P. | ||
a Delaware limited partnership | ||
By: Brookfield REIT OP GP LLC, its general partner | ||
By: Brookfield Real Estate Income Trust Inc., its sole member | ||
By: |
/s/ Michelle L. Campbell |
|
Name: Michelle L. Campbell | ||
Title: Secretary |
[Signature Page to Domain/Nashville Contribution Agreement]
EXHIBIT A-1
Description of Domain Property
EXHIBIT A-2
Description of Nashville Property
EXHIBIT B
Structure Charts
EXHIBIT C
Consideration Values
Property |
Consideration Value | |||
Domain |
$ | 26,752,796.25 | ||
Nashville |
$ | 46,658,057.85 |
Exhibit 99.1
BROOKFIELD COMPLETES TRANSITION OF
NON-TRADED REIT FROM OAKTREE
---
Brookfield REIT to be Distributed Through Brookfield Oaktree Wealth Solutions
BROOKFIELD NEWS, November 3, 2021 Brookfield Asset Management Inc. (NYSE: BAM; TSX: BAM.A) (Brookfield) and Oaktree Capital Management, L.P. (Oaktree) today announced the completion of the previously announced transition of the advisory role of Oaktree Real Estate Income Trust, Inc. (Oaktree REIT) to Brookfield and have renamed the non-traded REIT Brookfield Real Estate Income Trust Inc. (Brookfield REIT or the REIT).
Brookfield REIT will be distributed by Brookfield Oaktree Wealth Solutions, a wealth management platform established to offer institutional-caliber alternative investment products to qualified individual investors globally. Pursuant to the new advisory agreement between Brookfield REIT and a subsidiary of Brookfield, individual investors will have exposure to the same investment teams and operating standards that Brookfield applies across its more than $200 billion of real estate assets under management.
We are extremely pleased to formally launch the new Brookfield REIT, combining Brookfields vast global real estate business with Oaktrees leading credit capabilities, said Zach Vaughan, Managing Partner at Brookfield and CEO of Brookfield REIT. With three newly contributed investment properties from Brookfield, the total asset value of the REIT has more than doubled to approximately $1 billion.
Brookfield REITs investment strategy will remain largely the same going forward but will include exposure to certain non-U.S. markets where Brookfield has existing investment portfolios and operating capabilities. Oaktree will continue to maintain an active role by managing certain of Brookfield REITs assets and its liquid securities portfolio pursuant to sub-advisory agreements. Manish Desai, Oaktree REITs former President, has joined Brookfield and will serve as President and COO of Brookfield REIT. Dana Petitto Managing Director of Finance in Brookfields Real Estate Group and 16-year veteran of the organization will serve as CFO of Brookfield REIT.
During the third quarter, the REIT completed the acquisition of 1110 Key Federal Hill, a multifamily property in Baltimore, Maryland, for approximately $75 million. Brookfield REIT is pursuing additional near-term acquisitions across multiple property sectors, including multifamily, logistics and others in which Brookfield has existing investment portfolios and operating capabilities.
# # # #
Brookfield REIT
Brookfield Real Estate Income Trust Inc. (Brookfield REIT) is a public, non-traded, perpetual-life real estate investment trust that seeks to invest in a diversified, global portfolio of high-quality real estate and debt investments that provide stable, recurring income and capital appreciation to individual investors. Brookfield REIT is externally managed by a subsidiary of leading global alternative asset manager Brookfield Asset Management Inc. (NYSE: BAM; TSX: BAM.A), one of the worlds largest investors in real estate with approximately $219 billion of assets under management.
For more information, please visit Brookfield REITs website at www.brookfieldREIT.com.
Brookfield Asset Management
Brookfield is a leading global alternative asset manager with approximately US$650 billion of assets under management across real estate, infrastructure, renewable power, private equity and credit. Brookfield owns and operates long-life assets and businesses, many of which form the backbone of the global economy. Utilizing its global reach, access to large-scale capital and operational expertise, Brookfield offers a range of alternative investment products to investors around the world including public and private pension plans, endowments and foundations, sovereign wealth funds, financial institutions, insurance companies and private wealth investors.
For more information, please visit our website at www.brookfield.com.
MEDIA CONTACT
Kerrie McHugh
Tel: (212) 618-3469
Email: kerrie.mchugh@brookfield.com
FINANCIAL ADVISOR CONTACT
Brookfield Oaktree Wealth Solutions
Tel: (855) 777-8001
Email: info@brookfieldoaktree.com
Forward-Looking Statements:
This communication includes certain statements that are intended to be deemed forward- looking statements within the meaning of, and to be covered by the safe harbor provisions contained in, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are generally identifiable by the use of the words may, will, should, expect, anticipate, seek, estimate, believe, intend, project, continue, or other similar words or terms and include, without limitation, statements describing the pending transition described in this communication and the expected timing thereof. These statements are based on certain assumptions and analyses made in light of managements experience and its perception of historical trends, current conditions, expected future developments and other factors management believes are appropriate. Such statements are subject to a number of assumptions and involve known and unknown risks, uncertainties and other factors that may cause the REITs actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by these forward-looking statements. Such factors may include, but are not limited to, the occurrence of any event, change or other circumstances that could cause the expected benefits of the adviser transition not to be realized. In addition, these forward-looking statements reflect the REITs views as of the
date on which such statements were made. Subsequent events and developments may cause the REITs views to change. The REIT undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.