Exhibit 10.25
THIRD AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED BUSINESS MANAGEMENT AGREEMENT (this “Agreement”), dated as of April 1, 2023, is entered into by and between Inland Real Estate Income Trust, Inc., a Maryland corporation (the “Company”), and IREIT Business Manager & Advisor Inc., an Illinois corporation (the “Business Manager”).
WITNESSETH:
WHEREAS, the Company is a Maryland corporation created in accordance with Maryland General Corporation Law and intends to continue to qualify as a REIT (as defined below);
WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and facilities available to the Business Manager and to have the Business Manager undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of, the Board of Directors (as defined below), all as provided herein;
WHEREAS, the Business Manager is willing to undertake to render these services, subject to the supervision of the Board of Directors, on the terms and conditions hereinafter set forth;
WHEREAS, the Company and the Business Manager previously entered into that certain Business Management Agreement, dated as of October 18, 2012, as amended by that certain Amended and Restated Business Management Agreement, dated as of February 11, 2019, as amended by that certain Second Amended and Restated Business Management Agreement, dated as of October 15, 2021 (collectively, the “Original Agreement”); and
WHEREAS, the Company and the Business Manager desire to amend and restate the Original Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties hereto agree as follows:
“Acquisition Expenses” means any and all expenses incurred by the Company, the Business Manager or any Affiliate of either in connection with selecting, evaluating or acquiring any investment in Real Estate Assets, including but not limited to legal fees and expenses, travel and communication, appraisals and surveys, nonrefundable option payments regardless of whether the Real Estate Asset is acquired, accounting fees and expenses, computer related expenses, architectural and engineering reports, environmental and asbestos audits and surveys, title insurance and escrow fees, and personal and miscellaneous expenses.
“Affiliate” or “Affiliates” means, with respect to any other Person: any Person directly or indirectly owning, controlling or holding, with the power to vote, ten percent (10%) or more of the outstanding voting securities of such other Person; any Person ten percent (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; any Person directly or indirectly controlling,
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controlled by or under common control with such other Person; any executive officer, director, trustee, general partner or manager of such other Person; and any legal entity for which such Person acts as an executive officer, director, trustee, general partner or manager.
“Average Invested Assets” means, for any period, the average of the aggregate book value of the assets of the Company, including all intangibles and goodwill, invested, directly or indirectly, in equity interests in, and Loans secured by, Real Estate Assets, and all Real Estate-Related Securities and consolidated and unconsolidated Joint Ventures or other partnerships, before non-cash charges such as depreciation, amortization, impairments and bad debt reserves, computed by taking the average of these values at the end of each month during the relevant calendar quarter.
“Board of Directors” means the persons holding the office of director of the Company as of any particular time under the Charter.
“Business Day” means any day other than Saturday, Sunday or any other day on which national banks are required or are authorized to be closed in Chicago, Illinois.
“Business Management Fee” means the fee payable to the Business Manager under Section 7(a) hereof.
"Cause Event" means (i) a final judgment by any court or governmental body of competent jurisdiction not stayed or vacated within thirty (30) days that the Business Manager, any of its agents or any of its assignees has committed a felony or a material violation of applicable securities laws that has a material adverse effect on the business of the Company or the ability of the Business Manager to perform its duties under the terms of this Agreement, (ii) a decree or order for relief, or the consent by the Business Manager to the entry of an order for relief, in an involuntary bankruptcy case relating to the Business Manager or the authorization or filing of a voluntary bankruptcy petition by the Business Manager, (iii) the appointment of, or consent by the Business Manager to the appointment of or taking possession by, a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Business Manager or for any substantial part of the Business Manager’s property, (iv) the making by the Business Manager of any general assignment for the benefit of creditors or failure of the Business Manager generally to pay its debts as they become due, (v) the dissolution of the Business Manager or order for the winding up or liquidation of the Business Manager’s affairs that is not dismissed within ninety (90) days, or (vi) a determination that the Business Manager has committed fraud against the Company, misappropriated or embezzled funds of the Company, or acted, or failed to act, in a manner constituting bad faith, willful misconduct, gross negligence or reckless disregard in the performance of its duties under this Agreement; provided, however, that if any of the actions or omissions described in this clause (vi) are caused by an employee and/or officer of the Business Manager or one of its Affiliates and the Business Manager takes all necessary action against such person and cures the damage caused by such actions or omissions within thirty (30) days of such determination, then such event shall not constitute a Cause Event.
“Charter” means the articles of incorporation of the Company, as amended or restated from time to time.
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“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder or corresponding provisions of subsequent revenue laws.
“Equity Stock” means all classes or series of capital stock of the Company authorized under the Charter, including, without limit, its common stock, $.001 par value per share, and preferred stock, $.001 par value per share.
“Fiscal Year” means the calendar year ending December 31.
“GAAP” means generally accepted accounting principles as in effect in the United States of America from time to time or any other accounting basis mandated by the Securities and Exchange Commission.
“Gross Offering Proceeds” means the total proceeds from the sale of up to 150,000,000 Shares in the Offering before deducting Issuer Costs. For purposes of calculating Gross Offering Proceeds, the selling price for all Shares, including those for which volume discounts apply, shall be deemed to be $10.00 per Share. Unless specifically included in a given calculation, Gross Offering Proceeds does not include any proceeds from the sale of Shares under the Company’s distribution reinvestment plan.
“Independent Director” means any director of the Company who is an “Independent Director” for purposes of the Charter.
“Invested Capital” means the aggregate original issue price paid for the Shares, before reduction for Organization and Offering Expenses, reduced by any distribution of Sale or financing proceeds.
“Issuer Costs” means all expenses, other than Selling Commissions and the Marketing Contribution, incurred by, and to be paid from, the assets of the Company in connection with and in preparing the Company for registration and offering its Shares to the public, including, but not limited to, expenses for printing, engraving and mailing, salaries of the employees of the Company, or the Sponsor and its Affiliates, while engaged in sales activity, charges of transfer agents, registrars, trustees, escrow holders, depositaries and experts, expenses of qualifying the sale of the Shares under federal and state laws, including taxes and fees and accountants’ and attorneys’ fees and expenses.
“Joint Venture” means a joint venture, limited liability company, corporation or partnership arrangement in which the Company, or any subsidiary thereof, is a co-venturer, member, stockholder or partner with one or more other Persons or an entity, which acquires, owns or manages Real Estate Assets.
“Key Person” means a natural person who, at the time of the determination: (1) serves as an executive officer of the Company; (2) serves as an executive officer of the Business Manager; or (3) performs services that are integral to the operation of the Company, as mutually agreed upon in writing by the Company and the Business Manager; provided, however, that for purposes of clauses (1) and (2), a “Key Person” shall not include any person that, as of the date on which the Company has mailed or otherwise delivered the Qualifying Internalization Notice, concurrently serves as a director or executive officer of any other REIT(s) sponsored by the
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Sponsor; provided, further, that for purposes of this definition, a secretary of an entity shall not be considered an “executive officer.”
“Liquidity Amount” means: (1) in the case of a Sale of Real Estate Assets, the Net Sales Proceeds realized by the Company from the Sale of Real Estate Assets since the Company’s inception and distributed to Stockholders, in the aggregate, plus the total amount of any other distributions paid by the Company to Stockholders, in the aggregate, from the Company’s inception until the date that the Liquidity Amount is determined, in the aggregate; and (2) in the case of a Liquidity Event, the Market Value, plus the total distributions paid by the Company to Stockholders from the Company’s inception until the date that the Liquidity Amount is determined.
“Liquidity Event” means a Listing or any merger, reorganization, business combination, share exchange or acquisition by any Person or related group of Persons of beneficial ownership of all or substantially all of the Shares in one or more related transactions, or another similar transaction involving the Company, pursuant to which the Stockholders receive cash or the securities of another issuer that are listed on a national securities exchange, as full or partial consideration for their Shares.
“Listing” means, in the aggregate, the filing of a Form 8-A (or any successor form) with the Securities and Exchange Commission to register any or all Shares, or the shares of common stock of any of the Company’s subsidiaries, on a national securities exchange, the approval of the original listing application related thereto by the applicable exchange and the commencement of trading in the Shares, or the shares of common stock of any of the Company’s subsidiaries, on the exchange. Upon a Listing, the Shares, or the shares of common stock of the Company’s subsidiaries, shall be deemed “Listed.” A Listing shall also be deemed to occur on the effective date of a merger in which the consideration received by the holders of the Shares is securities of another issuer that are listed on a national securities exchange; provided, however, that if the merger is effectuated through a wholly owned subsidiary of the Company, a Listing will not occur until the consideration received by the Company shall be distributed to the holders of the Shares.
“Loans” means debt financing evidenced by bonds, notes, debentures or similar instruments or letters of credit and Mortgage Loans.
“Market Value” means the value of the Company measured in connection with an applicable Liquidity Event determined as follows: (1) in the case of a Listing of the Shares, or the shares of common stock of any of the Company’s subsidiaries, by taking the average closing price over the period of thirty (30) consecutive trading days during which the Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, are eligible for trading, beginning on the 180th day after Listing of the Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, multiplied by the number of Shares, or the shares of the common stock of the Company’s subsidiary, as applicable, outstanding on the date of measurement; or (2) in the case of the receipt by Stockholders of securities of another entity that are trading on a national securities exchange prior to, or that become listed on a national securities exchange concurrent with, the consummation of the Liquidity Event, as follows: (a) in the case of securities of another entity that are trading on a national securities exchange prior to the consummation of the Liquidity
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Event, the value ascribed to the securities in the transaction giving rise to the Liquidity Event, multiplied by the number of those securities issued to the holders of the Shares in respect of the transaction; and (b) in the case of securities of another entity that become listed on a national securities exchange concurrent with the consummation of the Liquidity Event, the average closing price over a period of thirty (30) consecutive trading days during which the securities are eligible for trading, beginning on the 180th day after the listing of the securities, multiplied by the number of those securities issued to the holders of the Shares in respect of the transaction. In addition, any distribution of cash consideration received by the Stockholders in connection with any Liquidity Event shall be added to the Market Value determined in accordance with clause (1) or (2).
“Marketing Contribution” means any and all compensation payable to underwriters, dealer managers or other broker-dealers in connection with marketing the sale of Shares, including, without limitation, compensation payable to Inland Securities Corporation, and which includes reimbursement for any out-of-pocket, itemized and detailed due diligence expenses incurred in connection with investigating the Company or any offering of Shares.
“Mortgage Loans” means notes or other evidences of indebtedness or obligations that are secured or collateralized, directly or indirectly, by Real Property or other interests in Real Property.
“Net Sales Proceeds” means the proceeds from any Sale of Real Estate Assets, less any costs incurred in selling the Real Estate Asset(s) including, but not limited to, legal fees and selling commissions and further reduced by the amount of any indebtedness encumbering the Real Estate Asset(s).
“Offering” means the initial public offering of Shares on a “best efforts” basis pursuant to the Prospectus, as amended and supplemented from time to time.
“Organization and Offering Expenses” means the aggregate of all Issuer Costs, plus Selling Commissions and the Marketing Contribution.
“Person” means any individual, corporation, business trust, estate, trust, partnership, limited liability company, association, two or more persons having a joint or common interest or any other legal or commercial entity.
“Priority Return” means a seven percent (7.0%) per annum cumulative, pre-tax non-compounded return on Invested Capital.
“Property” or “Properties” means interests in: (1) Real Property; (2) long-term ground leases; or (3) any buildings, structures, improvements, furnishings, fixtures and equipment, whether or not located on the Real Property, in each case owned or to be owned by the Company either directly or indirectly through one or more Affiliates, Joint Ventures, partnerships or other legal entities.
“Property Improvements” means any monies invested or otherwise funded by the Company, directly or indirectly to develop, construct, renovate, or otherwise physically improve a Real Estate Asset, including, but not limited to major tenant improvements, whether pursuant to allowances, concessions or rent abatements, all to the extent that the monies invested or funded
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for each of these purposes were approved by the Board of Directors as part of the initial plan for the Real Estate Asset.
“Prospectus” has the meaning set forth in Section 2(10) of the Securities Act of 1933, as amended (the “Securities Act”), including a preliminary prospectus, an offering circular as described in Rule 253 of the General Rules and Regulations under the Securities Act, or, in the case of an intrastate offering, any document by whatever name known, utilized for the purpose of offering and selling the Shares to the public.
“Real Estate Assets” means any and all Properties and other direct or indirect investments in equity interests in, or Loans secured, directly or indirectly, by, or otherwise relating to, Property (other than investments in bank accounts, money market funds or other current assets), including any interest in a Joint Venture, owned by the Company, directly or indirectly through one or more of its Affiliates or Joint Ventures. Notwithstanding the foregoing, “Real Estate Assets” shall not include any investments in Real Estate-Related Securities.
“Real Estate Manager” means Inland Commercial Real Estate Services LLC, a Delaware limited liability company, or any of its successors or assigns, or entities owned or controlled by the Sponsor and engaged by the Company to manage a Property or Properties.
“Real Estate-Related Securities” means investments in equity securities of both publicly traded and private companies, including REITs and pass-through entities, that own Real Estate Assets, including investments in commercial mortgage-backed securities, owned by the Company, directly or indirectly through one or more of its Affiliates or Joint Ventures, but excluding, for these purposes, ownership interests in a Joint Venture.
“Real Property” means land, rights or interests in land (including, but not limited to, leasehold interests), and any buildings, structures, improvements, furnishings, fixtures and equipment located on, or used in connection with, land and rights or interest in land.
“REIT” means a real estate investment trust as defined in Sections 856 through 860 of the Code.
“Sale” means any transaction or series of transactions, regardless of whether Net Sales Proceeds are distributed to Stockholders as a result thereof, whereby: (1) the Company directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof, except for a contribution to a Joint Venture in which the Company, directly or indirectly, has, or will have, an ownership interest; (2) the Company directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of all or substantially all of the interest of the Company in any Joint Venture in which it is a co-venturer or partner; (3) any Joint Venture directly or indirectly (except as described in other subsections of this definition) sells, grants, transfers, conveys, or relinquishes its ownership of any Real Estate Asset or portion thereof (excluding for these purposes any Loans or Mortgage Loans); (4) the Company or any Joint Venture directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of
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any Property or portion thereof, through any event which results in the Company or the Joint Venture, as applicable, receiving a insurance proceeds or condemnation awards; (5) the Company directly or indirectly, including through any Affiliate (except as described in other subsections of this definition), sells, grants, transfers, conveys, or relinquishes its ownership of any other Real Estate Asset not previously described in this definition or any portion thereof. Notwithstanding anything to the contrary herein, the sale, grant, transfer or conveyance of any Real Estate-Related Security shall not be treated as a “Sale” hereunder.
“Selling Commissions” means any and all commissions, not to exceed seven percent (7.0%) of the gross offering price of any Shares, payable to underwriters, dealer managers or other broker-dealers in connection with the sale of Shares.
“Shares” means the shares of common stock, par value $.001 per share, of the Company, and “Share” means one of those Shares.
“Sponsor” means Inland Real Estate Investment Corporation, a Delaware corporation.
“Stockholders” means holders of shares of the Company’s common stock, $.001 par value per share, or any other share of Equity Stock having the right to elect directors of the Company.
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In each case, the Company shall reimburse salaries and related salary expenses pursuant to this Section 8(c) irrespective of whether the services performed by the subject persons could have been performed directly for the Company by independent, non-affiliated third parties.
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The closing of the Qualifying Internalization shall occur on the last business day of the Transition Period or such other date that the Company and the Business Manager mutually agree (the “Completion Date”) This Agreement shall terminate on the Completion Date.
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If to the Company: | Inland Real Estate Income Trust, Inc. 2901 Butterfield Road Oak Brook, IL 60523 Attention: Mr. Mitchell A. Sabshon |
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| Telephone: (630) 218-8000 Email: msabshon@inland-investments.com |
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If to the Business Manager: | IREIT Business Manager & Advisor Inc. 2901 Butterfield Road Oak Brook, IL 60523 Attention: Mr. Daniel Zatloukal Telephone: (630) 218-8000 Email: daniel.zatloukal@inlandgroup.com |
Any party may at any time give notice in writing to the other party of a change of its address for the purpose of this Section 25.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.
COMPANY: |
| BUSINESS MANAGER: | ||
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Inland Real Estate Income Trust, Inc. |
| IREIT Business Manager & Advisor Inc. | ||
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By: | /s/ Mitchell A . Sabshon |
| By: | /s/ Daniel Zatloukal |
Name: | Mitchell A. Sabshon |
| Name: | Daniel Zatloukal |
Its: | President and Chief Executive Officer |
| Its: | Senior Vice President/Asset Management |
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Schedule 2(t)
The Business Manager has entered into the Service Provider Agreements with certain Affiliates of the Sponsor, as summarized below (as used in this Schedule 2(t), the “Service Providers”), to arrange for the services and licenses to be provided by the Business Manager under this Agreement, as summarized below.
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