WPC WP Carey Inc

 

 

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): October 31, 2023

 

 

 

W. P. Carey Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Maryland		001-13779		45-4549771
(State of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

One Manhattan West, 395 9th Avenue, 58th Floor New York, New York		10001
(Address of principal executive offices)		(Zip Code)

  

Registrant’s telephone number, including area code: (212) 492-1100

 

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 (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

  

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 Par Value		WPC		New York Stock Exchange

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

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.

 

On November 1, 2023, W. P. Carey Inc. (the “Company”) completed the previously announced spin-off (the “Spin-Off”) of Net Lease Office Properties (“NLOP”), pursuant to which the Company contributed certain office properties (the “Office Properties”) to NLOP (the contribution transactions, the “Separation”) and thereafter effected a special dividend to its stockholders of all of the outstanding common shares of beneficial interest of NLOP, $0.001 par value per share (the “NLOP Common Shares”) which were held by the Company (the “Distribution”). In the Distribution, the Company distributed one NLOP Common Share for every 15 shares of common stock of the Company held of record as of close of business on October 19, 2023, the record date for the Distribution.

 

On October 31, 2023, in connection with the Spin-Off, the Company entered into the Separation and Distribution Agreement and the Tax Matters Agreement, and, on November 1, 2023, the Company entered into the U.S. Advisory Agreement and the European Advisory Agreement (each as defined below).

 

The Separation and Distribution were completed on November 1, 2023, and, as a result thereof, NLOP became an independent, publicly traded real estate investment trust.

 

Separation and Distribution Agreement

 

The Separation and Distribution Agreement, dated October 31, 2023, by and between the Company and NLOP (the “Separation and Distribution Agreement”) set forth the various individual transactions to be consummated that comprised the Separation and the Distribution, including the assets transferred to and liabilities assumed by NLOP and its subsidiaries following the Distribution, including the transfer of the Office Properties by the Company to NLOP and the transfer by NLOP to the Company of approximately $382.4 million from borrowings under the NLOP Financing Arrangements (as defined below).

 

The Separation and Distribution Agreement includes various post-closing covenants, including agreements relating to insurance policies, information sharing and other operational matters. The Separation and Distribution Agreement also includes a mutual release by the Company, on the one hand, and NLOP, on the other hand, of the other party from certain specified liabilities, as well as mutual indemnification covenants pursuant to which the Company and NLOP have agreed to indemnify each other from certain specified liabilities, including any claims relating to indebtedness associated with transfers of NLOP assets and any guaranties related thereto. The Separation and Distribution Agreement also contains provisions requiring NLOP to pay (or, if paid by the Company, reimbursed by NLOP) all costs and expenses related to the Separation and Distribution.

 

The foregoing description of the Separation and Distribution Agreement is a summary and does not purport to be complete, and is qualified in its entirety by reference to the full text of the Separation and Distribution Agreement, which is attached as Exhibit 10.1 to this Current Report on Form 8-K (this “Current Report”) and incorporated by reference herein.

 

Tax Matters Agreement

 

The Tax Matters Agreement dated October 31, 2023, by and between the Company and NLOP (the “Tax Matters Agreement”) governs the respective rights, responsibilities and obligations of the Company and NLOP after the Distribution with respect to tax liabilities and benefits, the preparation and filing of tax returns, the control of audits and other tax proceedings, tax covenants, tax indemnification, cooperation and information sharing. The Tax Matters Agreement provides that (a) NLOP and applicable subsidiaries will generally assume liability for all taxes reported, or required to be reported, on an NLOP tax return following the Distribution, (b) the Company will assume liability for all taxes reported, or required to be reported, on (i) a Company tax return or (ii) any joint tax return involving both the Company and NLOP following the Distribution, and (c) NLOP will generally assume sole responsibility for any transfer taxes. The Company’s obligations under the Tax Matters Agreement are not limited in amount or subject to any cap. If the Company is required to pay any liabilities under the circumstances set forth in the Tax Matters Agreement or pursuant to applicable tax law, the amounts may be significant.

 

The foregoing description of the Tax Matters Agreement is a summary and does not purport to be complete, and is qualified in its entirety by reference to the full text of the Tax Matters Agreement, which is attached as Exhibit 10.2 to this Current Report and is incorporated by reference herein.

 

Advisory Agreements

 

On November 1, 2023, (i) NLOP and W. P. Carey Management LLC, a wholly-owned subsidiary of the Company (the “U.S. Advisor”), entered into an advisory agreement (the “U.S. Advisory Agreement”); and (ii) NLOP and W. P. Carey & Co. B.V., a wholly-owned subsidiary of the Company (the “European Advisor” and, together with the U.S. Advisor, the “Advisors”), entered into an advisory agreement (the “European Advisory Agreement” and, together with the U.S. Advisory Agreement, the “Advisory Agreements”), pursuant to which the Advisors will provide NLOP with strategic management services, including asset management, property disposition support and various related services. NLOP will pay management fees to the Advisors and will also reimburse the Advisors for certain expenses incurred in providing services to NLOP.

 

 

Responsibilities and Authority

 

Subject to the authority of the board of trustees of NLOP (the “NLOP Board”), the Advisors will:

 

·

provide advice to NLOP, and act on NLOP’s behalf with respect to managing and monitoring the operating performance of the Office Properties;

 

·

take the action and obtain the services necessary to source, investigate and evaluate prospective disposition, exchange or other transactions with respect to the Office Properties;

 

·

assist the NLOP Board in developing and evaluating potential liquidity and disposition transactions for NLOP and take such actions as may be requested by the NLOP Board or as may otherwise be necessary or desirable to execute any such transactions; and

 

·

provide management services related to NLOP’s business activities and performs various administrative services for NLOP as requested by the NLOP Board.

 

The actual terms and conditions of transactions involving the Office Properties shall be determined in the sole discretion of the applicable Advisor, subject at all times to compliance with the delegation of authority granted by the NLOP Board.

 

Term and Termination

 

The Advisory Agreements have an initial term of three years, and automatically renew for successive one-year terms thereafter without further action by NLOP or the applicable Advisor. Each Advisory Agreement may also be terminated (i) by the applicable Advisor no later than 180 days prior to the expiration of the initial term or any renewal term, as applicable, or (ii) by NLOP upon 90 days’ prior written notice, or immediately for Cause (as defined in the Advisory Agreements). Each applicable Advisor may also terminate the Advisory Agreement (x) immediately for Good Reason (as defined in the Advisory Agreements) or (y) concurrently with or within 90 days following a termination of the other Advisory Agreement. Each Advisory Agreement may be amended only by the written agreement of its parties. All amendments to either Advisory Agreement must be approved by a majority of the independent trustees of the NLOP Board.

 

Fees and Reimbursements

 

NLOP will pay to the Advisors compensation for services they provide to NLOP, including reimbursement for the costs related thereto. Specifically, NLOP will pay the Advisors a management fee of $625,000 per calendar month, paid to the U.S. Advisor and allocated to the European Advisor by the Company, which will be subject to adjustment each month described in the following sentence. Beginning with the first calendar month following the first disposition of a portfolio property of NLOP, the management fee for the following calendar month shall be reduced proportionally by the contractual minimum annualized base rent associated with such portfolio property of NLOP. In no event shall the management fees paid to the Advisors for a given calendar month exceed the fees paid to the Advisors during the preceding calendar month, and in no event shall the aggregate management fees paid to the Advisors for a given fiscal year exceed $7.5 million. Neither Advisor has yet received any compensation for the services contemplated by the Advisory Agreement. The fees shall be payable monthly in arrears, and shall be in addition to the Advisors’ right to reimbursement of expenses, as described below.

 

In addition, NLOP will be required to reimburse each Advisor and its affiliates for other specified costs they may incur in connection with certain other services provided to NLOP pursuant to the applicable Advisory Agreement, where those costs are not directly paid by NLOP. Specifically, NLOP will reimburse the Advisors a base administrative reimbursement amount of $333,333.33 per calendar month, paid to the U.S. Advisor and allocated to the European Advisor by the Company, for certain administrative services, including day-to-day management services, investor relations, accounting, tax, legal, and other administrative matters. In addition to the administrative reimbursement amount, NLOP will reimburse the Advisors for specified out-of-pocket expenses they incur in connection with their services.

 

The foregoing description of the Advisory Agreements is a summary and does not purport to be complete, and is qualified in its entirety by reference to the full text of the U.S. Advisory Agreement and the European Advisory Agreement, which are attached as Exhibits 10.3 and 10.4, respectively, to this Current Report and incorporated by reference herein.

 

 

Item 1.02. Termination of a Material Definitive Agreement.

 

Financing Arrangements

 

As previously disclosed, on September 20, 2023, in connection with the Separation, NLOP and certain of its wholly-owned direct and indirect subsidiaries entered into (i) a $335.0 million senior secured mortgage loan (the “NLOP Mortgage Loan”) with JPMorgan Chase Bank. N.A., together with its successors and/or permitted assigns (collectively, the “Lenders”) and (ii) a $120.0 million mezzanine loan facility with the Lenders (the “NLOP Mezzanine Loan” and, together with the NLOP Mortgage Loan, the “NLOP Financing Arrangements”).

 

As a result of the Spin-Off, on November 1, 2023, NLOP became an independent company, and NLOP and its subsidiaries ceased to be subsidiaries of the Company. Accordingly, the NLOP Financing Arrangements became the sole obligations of NLOP and its subsidiaries, and the Company and its subsidiaries ceased to have any liability or obligations thereunder.

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Departure of Director

 

In connection with the Spin-Off, Jean Hoysradt notified the board of directors of the Company (the “WPC Board”) on October 31,2023 of her decision to resign as a member of the WPC Board, effective as of November 1, 2023, at which time Ms. Hoysradt was appointed to serve as a trustee on the NLOP Board. Ms. Hoysradt’s resignation did not result from any disagreements with the Company or any matter relating to the Company’s operations, policies or practices.

 

Item 7.01 Regulation FD Disclosure.

 

On November 1, 2023, the Company issued a press release announcing the completion of the Spin-Off. A copy of the Company’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section, and shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
10.1*		Separation and Distribution Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.
10.2*		Tax Matters Agreement, dated October 31, 2023, between W. P. Carey Inc. and Net Lease Office Properties.
10.3*		Advisory Agreement, dated November 1, 2023, between W. P. Carey Management LLC and Net Lease Office Properties.
10.4*		Advisory Agreement, dated November 1, 2023, between W. P. Carey & Co. B.V. and Net Lease Office Properties.
99.1		Press release of the Company dated November 1, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

* Certain exhibits and schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted exhibits and schedules upon request by the SEC; provided, however, that the Company may request confidential treatment pursuant to Rule 24b-2 of the Exchange Act for any exhibits or schedules so furnished.

 

 

SIGNATURES

 

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, thereunto duly authorized.

 

			W. P. Carey Inc.
Date:	November 2, 2023	By:	/s/ ToniAnn Sanzone
			ToniAnn Sanzone
			Chief Financial Officer

 

 

Exhibit 10.1

 

 

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

by and between

 

W. P. Carey Inc.

 

and

 

NET LEASE OFFICE PROPERTIES

 

dated as of

 

October 31, 2023

 

 

 

 

TABLE OF CONTENTS

 

Page

 

Article I DEFINITIONS		1
Section 1.1	Definitions	1
Section 1.2	Interpretation	9
Article II THE SEPARATION		10
Section 2.1	Separation Transactions	10
Section 2.2	Transfers of Assets and Assumptions of Liabilities	10
Section 2.3	Release of Guarantees	12
Section 2.4	Termination of Intercompany Agreements.	13
Section 2.5	Settlement of Intercompany Account	14
Section 2.6	Bank Accounts	14
Section 2.7	Rent Allocations	14
Article III CERTAIn actions prior to the distributioN		14
Section 3.1	SEC and Other Securities Filings	14
Section 3.2	NYSE Listing Application	15
Section 3.3	Distribution Agent Agreement	15
Section 3.4	NLOP Advisory Agreements	15
Section 3.5	Governmental Approvals and Consents	15
Section 3.6	Ancillary Agreements	15
Section 3.7	Governance Matters	15
Article IV THE DISTRIBUTION		16
Section 4.1	Dividend to WPC	16
Section 4.2	Delivery to Distribution Agent	16
Section 4.3	Mechanics of the Distribution	16
Article V CONDITIONS		17
Section 5.1	Conditions Precedent to Consummation of the Distribution	17
Section 5.2	Right Not to Close	18
Article VI NO REPRESENTATIONS OR WARRANTIES		18
Section 6.1	Disclaimer of Representations and Warranties	18
Section 6.2	As Is, Where Is	18
Article VII CERTAIN COVENANTS AND ADDITIONAL AGREEMENTS		19
Section 7.1	Insurance Matters	19
Section 7.2	No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities	20
Section 7.3	Cooperation	22

 

 

Article VIII ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE		22
Section 8.1	Agreement for Exchange of Information	22
Section 8.2	Ownership of Information	22
Section 8.3	Compensation for Providing Information	23
Section 8.4	Retention of Records	23
Section 8.5	Limitation of Liability	23
Section 8.6	Production of Witnesses	23
Section 8.7	Confidentiality	24
Section 8.8	Privileged Matters	24
Section 8.9	Financial Information Certifications	26
Article IX MUTUAL RELEASES; INDEMNIFICATION		26
Section 9.1	Release of Pre-Distribution Claims	26
Section 9.2	Indemnification by NLOP	27
Section 9.3	Indemnification by WPC	28
Section 9.4	Procedures for Indemnification	28
Section 9.5	Indemnification Obligations Net of Insurance Proceeds	30
Section 9.6	Contribution	31
Section 9.7	Remedies Cumulative	31
Section 9.8	Survival of Indemnities	31
Section 9.9	Limitation of Liability	31
Article X DISPUTE RESOLUTION		31
Section 10.1	Appointed Representative	31
Section 10.2	Negotiation and Dispute Resolution	31
Section 10.3	Arbitration	32
Article XI TERMINATION		33
Section 11.1	Termination	33
Section 11.2	Effect of Termination	34
Article XII MISCELLANEOUS		34
Section 12.1	Further Assurances	34
Section 12.2	Payment of Expenses	34
Section 12.3	Amendments and Waivers	34
Section 12.4	Entire Agreement	34
Section 12.5	Survival of Agreements	35
Section 12.6	Third Party Beneficiaries	35
Section 12.7	Notices	35
Section 12.8	Counterparts; Electronic Delivery	35
Section 12.9	Severability	35
Section 12.10	Assignability; Binding Effect	36
Section 12.11	Governing Law	36
Section 12.12	Construction	36
Section 12.13	Performance	36
Section 12.14	Title and Headings	36

 

 

Section 12.15	Exhibits and Schedules	36
Section 12.16	Exclusivity of Tax Matters	36

 

Exhibit A:	NLOP Subsidiaries
Exhibit B:	Tax Matters Agreement
Exhibit C:	US Advisory Agreement
Exhibit D:	European Advisory Agreement

 

 

SEPARATION AND DISTRIBUTION AGREEMENT

 

This SEPARATION AND DISTRIBUTION AGREEMENT (this “Agreement”) is entered into as of October 31, 2023, by and between W. P. Carey Inc., a Maryland corporation (“WPC”), and Net Lease Office Properties, a Maryland real estate investment trust and wholly owned subsidiary of WPC (“NLOP”). WPC and NLOP are sometimes referred to herein individually as a “Party” and collectively as the “Parties.” Capitalized terms used but not otherwise defined herein shall have the respective meanings set forth in Section 1.1.

 

RECITALS

 

WHEREAS, WPC, through its Subsidiaries, has previously acquired the NLOP Assets;

 

WHEREAS, the board of directors of WPC has determined that it is advisable and in the best interests of WPC to cause the NLOP Assets to be owned by NLOP and its Subsidiaries and to establish NLOP as an independent publicly traded company; and

 

WHEREAS, pursuant to the terms of this Agreement, the Parties intend to effect the separation of WPC and NLOP by distributing to the holders of WPC’s outstanding shares of common stock, par value $0.001 per share (“WPC Common Stock”), on a pro rata basis, all of the common shares of beneficial interest, $0.001 par value per share, of NLOP (“NLOP Common Shares”), owned by WPC as of the Distribution Date (which shall represent 100% of the issued and outstanding NLOP Common Shares).

 

NOW, THEREFORE, in consideration of the foregoing and the covenants and agreements set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

Article I

 

DEFINITIONS

 

Section 1.1         Definitions. As used in this Agreement, the following terms shall have the meanings set forth in this Section 1.1:

 

“AAA” has the meaning set forth in Section 10.3(a).

 

“Action” means any demand, claim, action, suit, countersuit, arbitration, litigation, inquiry, proceeding or investigation by or before any Governmental Authority or any arbitration or mediation tribunal or authority.

 

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the specified Person; provided, however, that, following the Distribution, (a) no member of the NLOP Group shall be deemed to be an Affiliate of any member of the WPC Group and (b) no member of the WPC Group shall be deemed to be an Affiliate of any member of the NLOP Group. For this purpose, “control” of a Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through ownership of voting securities, by contract or otherwise.

 

“Agreement” has the meaning set forth in the preamble to this Agreement and includes all Exhibits and Schedules attached hereto or delivered pursuant hereto.

 

 

“Agreement Dispute” has the meaning set forth in Section 10.2(a).

 

“Ancillary Agreements” has the meaning set forth in Section 3.6.

 

“Appellate Rules” has the meaning set forth in Section 10.3(g).

 

“Appointed Representative” has the meaning set forth in Section 10.1.

 

“Appropriate Member of the NLOP Group” has the meaning set forth in Section 9.2.

 

“Appropriate Member of the WPC Group” has the meaning set forth in Section 9.3.

 

“Asset” means all rights, properties or other assets, whether real, personal or mixed, tangible or intangible, of any kind, nature and description, whether accrued, contingent or otherwise, and wheresoever situated and whether or not carried or reflected, or required to be carried or reflected, on the books of any Person.

 

“Award” has the meaning set forth in Section 10.3(e).

 

“Business Day” means a day other than a Saturday, a Sunday or a day on which banking institutions located in the State of New York are authorized or obligated by applicable Law or executive order to close.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Confidential Information” means any and all information:

 

(a)            that is required to be maintained in confidence by any Law or under any Contract;

 

(b)            concerning market studies, business plans, computer hardware, computer software (including all versions, source and object codes and all related files and data), software and database technologies, systems, structures and architectures, and other similar technical or business information;

 

(c)            concerning any business and its affairs, which includes earnings reports and forecasts, macro-economic reports and forecasts, business and strategic plans, general market evaluations and surveys, litigation presentations and risk assessments, financing and credit-related information, financial projections, tax returns and accountants’ materials, business plans, strategic plans, Contracts, however documented, and other similar financial or business information;

 

(d)            constituting communications by or to attorneys (including attorney-client privileged communications), memos and other materials prepared by attorneys or under their direction (including attorney work product), communications and materials otherwise related to or made or prepared in connection with or in preparation for any legal proceeding; or

 

(e)            constituting notes, analyses, compilations, studies, summaries and other material that contain or are based, in whole or in part, upon any information included in the foregoing clauses (a) through (d).

 

“Consent” means any consent, waiver or approval from, or notification requirement to, any Person other than a member of either Group.

 

 

“Contract” means any written, oral, implied or other contract, agreement, covenant, lease, license, guaranty, indemnity, representation, warranty, assignment, sales order, purchase order, power of attorney, instrument or other commitment, assurance, undertaking or arrangement that is binding on any Person or entity or any part of its property under applicable Law.

 

“Deferred Asset” has the meaning set forth in Section 2.2(b).

 

“Deferred Liability” has the meaning set forth in Section 2.2(b).

 

“Distribution” means the transactions contemplated by Section 4.3.

 

“Distribution Agent” means Computershare Trust Company, N.A.

 

“Distribution Date” means the date on which the Distribution occurs, such date to be determined by, or under the authority of, the board of directors of WPC, in its sole and absolute discretion.

 

“Distribution Ratio” has the meaning set forth in Section 4.3(a).

 

“Effective Time” means the time at which the Distribution is effective on the Distribution Date.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Governmental Approval” means any notice, report or other filing to be given to or made with, or any release, consent, substitution, approval, amendment, registration, permit or authorization from, any Governmental Authority.

 

“Governmental Authority” means any U.S. federal, state, local or non-U.S. court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

 

“Group” means either the WPC Group or the NLOP Group, as the context requires.

 

“Guarantee” means any guarantee (including guarantees of performance or payment under Contracts, commitments, Liabilities and permits), letter of credit or other credit or credit support arrangement or similar assurance, including surety bonds, bid bonds, advance payment bonds, performance bonds, payment bonds, retention and/or warranty bonds or other bonds or similar instruments.

 

“Indebtedness” of any specified Person means (a) all obligations of such specified Person for borrowed money or arising out of any extension of credit to or for the account of such specified Person (including reimbursement or payment obligations with respect to surety bonds, letters of credit, bankers’ acceptances and similar instruments), (b) all obligations of such specified Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such specified Person upon which interest charges are customarily paid, (d) all obligations of such specified Person under conditional sale or other title retention agreements relating to Assets purchased by such specified Person, (e) all obligations of such specified Person issued or assumed as the deferred purchase price of property or services, (f) all Liabilities secured by (or for which any Person to which any such Liability is owed has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge or other encumbrance on property owned or acquired by such specified Person (or upon any revenues, income or profits of such specified Person therefrom), whether or not the obligations secured thereby have been assumed by the specified Person or otherwise become Liabilities of the specified Person, (g) all capital lease obligations of such specified Person, (h) all securities or other similar instruments convertible or exchangeable into any of the foregoing, and (i) any Liability of others of a type described in any of the preceding clauses (a) through (h) in respect of which the specified Person has incurred, assumed or acquired a Liability by means of a Guarantee.

 

 

“Indemnifiable Loss” has the meaning set forth in Section 9.5.

 

“Indemnifying Party” has the meaning set forth in Section 9.4(a).

 

“Indemnitee” means any WPC Indemnitee or any NLOP Indemnitee.

 

“Indemnity Payment” has the meaning set forth in Section 9.5.

 

“Information Statement” means the information statement, attached as an exhibit to the Registration Statement, and any related documentation to be provided to holders of WPC Common Stock in connection with the Distribution, including any amendments or supplements thereto.

 

“Insurance Policy” means any insurance policies and insurance Contracts, including general liability, property and casualty, environmental liability, umbrella, workers’ compensation, automobile, directors and officers liability, errors and omissions, employee dishonesty and fiduciary liability policies, whether, in each case, in the nature of primary, excess, umbrella or self-insurance overage, together with all rights, benefits and privileges thereunder.

 

“Insurance Proceeds” means those monies (in each case, net of any out-of-pocket costs or expenses incurred in the collection thereof):

 

(a)            received by an insured Person from any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, excluding any proceeds received directly or indirectly (such as through reinsurance arrangements) from any captive insurance Subsidiary of the insured Person; or

 

(b)            paid on behalf of an insured Person by any insurer, insurance underwriter, mutual protection and indemnity club or other risk collective, excluding any such payment made directly or indirectly (such as through reinsurance arrangements) from any captive insurance Subsidiary of the insured Person, on behalf of the insured.

 

“Insurance Termination Date” has the meaning set forth in Section 7.1(d).

 

“Insured Party” has the meaning set forth in Section 7.1(d).

 

“Intercompany Account” means any receivable, payable or loan between any member of the WPC Group, on the one hand, and any member of the NLOP Group, on the other hand, that exists prior to the Effective Time and is reflected in the records of the relevant members of the WPC Group and the NLOP Group, except for any such receivable, payable or loan that arises pursuant to this Agreement or any Ancillary Agreement.

 

“Intercompany Agreement” means any Contract, whether or not in writing, between or among any member of the WPC Group, on the one hand, and any member of the NLOP Group, on the other hand, entered into prior to the Distribution Date, but excluding any Contract to which a Person other than any member of the WPC Group or the NLOP Group is also a party.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

 

“IRS” means the United States Internal Revenue Service or any successor agency.

 

“Law” means any law, statute, ordinance, code, rule, regulation, order, writ, proclamation, judgment, injunction or decree of any Governmental Authority.

 

“Lenders” means JPMorgan Chase Bank, N.A., together with its successors and/or permitted assigns.

 

“Liabilities” means any and all Indebtedness, liabilities and obligations, including environmental liabilities, whether accrued, fixed or contingent, mature or inchoate, known or unknown, reflected on a balance sheet or otherwise, including those arising under any Law, Action or any judgment of any Governmental Authority or any award of any arbitrator of any kind, and those arising under any Contract.

 

“Linked” has the meaning set forth in Section 2.6(a).

 

“Loss Party” has the meaning set forth in Section 7.1(d).

 

“Losses” means any and all damages, losses, deficiencies, Liabilities, obligations, penalties, judgments, settlements, claims, payments, interest costs, Taxes, fines and expenses (including the costs and expenses of any and all Actions and demands, assessments, judgments, settlements and compromises relating thereto and attorneys’, accountants’, consultants’ and other professionals’ fees and expenses incurred in the investigation or defense thereof or the enforcement of rights hereunder).

 

“Mortgaged Properties” means the real properties securing the NLOP Mortgage Loan.

 

“NLOP” has the meaning set forth in the preamble to this Agreement.

 

“NLOP Accounts” has the meaning set forth in Section 2.6(a).

 

“NLOP Advisors” means the NLOP US Advisor and the NLOP European Advisor, together with their Affiliates.

 

“NLOP Advisory Agreements” means the US Advisory Agreement and the European Advisory Agreement.

 

“NLOP Assets” means, except as set forth in Sections 2.5 and 2.6, all of the equity of the NLOP Subsidiaries and all of the other assets owned or to be owned by the NLOP Subsidiaries immediately following the transactions described in Section 2.1, including the assets set forth in Section 1.1(a) of the Disclosure Schedule, and all of the other Assets held or to be held by NLOP set forth on Section 1.1(b) of the Disclosure Schedule. For the avoidance of doubt, the NLOP Assets shall include, but not be limited to, all Assets recorded on the NLOP Balance Sheet; provided, that the amounts set forth on the NLOP Balance Sheet with respect to any Assets shall not be treated as minimum or maximum amounts or limitations on the amount of such Assets that are included in the definition of NLOP Assets.

 

“NLOP Balance Sheet” means the Unaudited Pro Forma Combined Balance Sheet as of June 30, 2023, as included in the Information Statement.

 

“NLOP Business” means the businesses, operations, activities, Assets and Liabilities of WPC and its Subsidiaries prior to the Transactions related to the real properties set forth in Section 1.1(a) of the Disclosure Schedule (other than the WPC Business).

 

 

“NLOP Common Shares” has the meaning set forth in the recitals to this Agreement.

 

“NLOP European Advisor” means W. P. Carey & Co. B.V., a wholly owned subsidiary of WPC.

 

“NLOP European Advisory Agreement” means the European Advisory Agreement to be entered into between NLOP and the European Advisor, substantially in the form attached hereto as Exhibit D, as such agreement may be modified or amended from time to time in accordance with its terms.

 

“NLOP Financing Arrangements” means the NLOP Mortgage Loan and the NLOP Mezzanine Loan.

 

“NLOP Group” means NLOP and the NLOP Subsidiaries.

 

“NLOP Indemnitees” means each member of the NLOP Group and their Affiliates and each of their respective current or former stockholders, trustees, directors, officers, agents and employees (in each case, in such Person’s respective capacity as such) and their respective heirs, executors, administrators, successors and assigns.

 

“NLOP Liabilities” means, except as otherwise expressly provided in this Agreement or one or more of the Ancillary Agreements:

 

(a)            all Liabilities relating to or arising out of the NLOP Assets whether arising prior to, at the time of, or after the Effective Time, including (i) Indebtedness of NLOP or a NLOP Subsidiary that is outstanding at the Effective Time, including mortgage debt relating to the NLOP Assets, (ii) any known or unknown disputes or claims with respect to tenants, property sellers, Governmental Authorities or other third parties relating to the NLOP Business, including all contracts entered into in the name of, or expressly on behalf of, the NLOP Business, including all leases related to the NLOP Assets and all other contractual obligations with respect to service providers, tenants, property sellers and other third parties, and (iii) any insurance charges related to the NLOP Business or the NLOP Assets pursuant to any Insurance Policy held by WPC or NLOP for the benefit of the NLOP Business and NLOP Assets;

 

(b)            all Liabilities recorded on the NLOP Balance Sheet, subject to the satisfaction of any Liabilities subsequent to the date of the NLOP Balance Sheet; provided that the amounts set forth on the NLOP Balance Sheet with respect to any Liabilities shall not be treated as minimum or maximum amounts or limitations on the amount of such Liabilities that are included in the definition of NLOP Liabilities pursuant to this clause (b);

 

(c)            the NLOP Financing Arrangements, and any expenses or Liabilities related thereto;

 

(d)            any potential Liabilities with respect to matters identified on, and subject to the limitations set forth on, Section 1.2 of the Disclosure Schedule;

 

(e)            all Liabilities arising out of claims made by NLOP’s trustees, officers and Affiliates after the Effective Time against WPC or NLOP, to the extent relating to the NLOP Assets; and

 

(f)             all Liabilities that are expressly created by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed or retained by NLOP or any other member of the NLOP Group, and all agreements, obligations and Liabilities of any member of the NLOP Group under this Agreement or any of the Ancillary Agreements.

 

 

“NLOP Mezzanine Borrower” means a subsidiary of NLOP, which is expected to directly or indirectly own 100% of the equity of the NLOP Mortgage Loan Borrowers immediately following the Separation.

 

“NLOP Mezzanine Loan” means the $120.0 million mezzanine loan facility entered into between the NLOP Mezzanine Borrower and the Lenders pursuant to that certain Mezzanine Loan Agreement, dated September 20, 2023, between NLO Mezzanine Borrower LLC and JPMorgan Chase Bank, N.A., and the documents related thereto.

 

“NLOP Mortgage Loan” means the $335.0 million senior secured mortgage loan entered into among the NLOP Mortgage Loan Borrowers and the Lenders pursuant to that certain Loan Agreement, dated September 20, 2023, by and among JPMorgan Chase Bank, N.A. and the borrowers named therein, and the documents related thereto.

 

“NLOP Mortgage Loan Borrowers” means certain subsidiaries of NLOP, which are expected to collectively own the Mortgaged Properties immediately following the Separation.

 

“NLOP US Advisor” means W. P. Carey Management LLC, a wholly owned subsidiary of WPC.

 

“NLOP US Advisory Agreement” means the US Advisory Agreement to be entered into between NLOP and the US Advisor, substantially in the form attached hereto as Exhibit C, as such agreement may be modified or amended from time to time in accordance with its terms.

 

“NLOP Subsidiaries” means the Subsidiaries of NLOP listed in Exhibit A, and any Subsidiary of NLOP formed after the date of this Agreement and prior to the Distribution Date.

 

“NYSE” means the New York Stock Exchange.

 

“NYSE Listing Application” has the meaning set forth in Section 3.2(a).

 

“Party” or “Parties” has the meaning set forth in the preamble to this Agreement.

 

“Period” has the meaning set forth in Section 8.1(a).

 

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, a union, an unincorporated organization or a governmental entity or any department, agency or political subdivision thereof.

 

“Record Date” means the close of business on the date, to be determined by the board of directors of WPC, as the record date for determining holders of WPC Common Stock entitled to receive NLOP Common Shares in the Distribution.

 

“Record Holders” has the meaning set forth in Section 4.2.

 

“Registration Statement” means the registration statement on Form 10 of NLOP with respect to the registration under the Exchange Act of the NLOP Common Shares to be distributed in the Distribution, including any amendments or supplements thereto.

 

“Rules” has the meaning set forth in Section 10.3(a).

 

 

“SEC” means the United States Securities and Exchange Commission.

 

“Security Interests” means any mortgage, security interest, pledge, lien, charge, claim, option, indenture, right to acquire, right of first refusal, deed of trust, licenses to third parties, leases to third parties, security agreements, voting or other restriction, covenant, condition, restriction, encroachment, restriction on transfer, restrictions or limitations on use of real or personal property or any other encumbrance of any nature whatsoever, imperfections in or failure of title or defect of title.

 

“Separation” means the transactions contemplated by Article II.

 

“Subsidiary” means, with respect to any specified Person, any corporation, partnership, limited liability company, joint venture or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or interests having by the terms thereof ordinary voting power to elect at least a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such specified Person or by any one or more of its subsidiaries, or by such specified Person and one or more of its subsidiaries.

 

“Tax Matters Agreement” means the Tax Matters Agreement to be entered into between WPC and NLOP, substantially in the form attached as Exhibit B hereto, as such agreement may be modified or amended from time to time in accordance with its terms.

 

“Tax” has the meaning set forth in the Tax Matters Agreement.

 

“Tax Authority” has the meaning set forth in the Tax Matters Agreement.

 

“Third-Party Claim” has the meaning set forth in Section 9.4(b).

 

“Transactions” means the Separation, the Distribution and any other transactions contemplated by this Agreement or any Ancillary Agreement.

 

“Treasury Regulations” has the meaning set forth in the Tax Matters Agreement.

 

“WPC” has the meaning set forth in the preamble to this Agreement.

 

“WPC Accounts” has the meaning set forth in Section 2.6(a).

 

“WPC Assets” means all Assets owned, directly or indirectly, by WPC, other than any NLOP Assets.

 

“WPC Business” means shall mean, other than the NLOP Business, the businesses, operations and activities of WPC and the WPC Group.

 

“WPC Common Stock” has the meaning set forth in the recitals to this Agreement.

 

“WPC Group” means WPC and the Subsidiaries of WPC other than NLOP and the NLOP Subsidiaries.

 

“WPC Indemnitees” means each member of the WPC Group and its Affiliates (other than NLOP and the NLOP Subsidiaries) and each of their respective current or former stockholders, directors, officers, agents and employees (in each case, in such Person’s respective capacity as such) and their respective heirs, executors, administrators, successors and assigns.

 

 

“WPC Liabilities” means any Liabilities of WPC or any of its Subsidiaries, other than any NLOP Liabilities.

 

Section 1.2         Interpretation. In this Agreement and the Ancillary Agreements, unless the context clearly indicates otherwise:

 

(a)            words used in the singular include the plural and words used in the plural include the singular;

 

(b)            the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”;

 

(c)            the word “or” shall have the inclusive meaning represented by the phrase “and/or”;

 

(d)            relative to the determination of any period of time, “from” means “from and including,” “to” means “to but excluding” and “through” means “through and including”;

 

(e)            accounting terms used herein shall have the meanings historically ascribed to them by WPC and its Subsidiaries in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement;

 

(f)            reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement;

 

(g)            reference to any Law means such Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability;

 

(h)            references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are permitted by this Agreement; any reference to a third party shall be deemed to mean a Person who is not a Party or an Affiliate of a Party;

 

(i)             if there is any conflict between the provisions of the main body of this Agreement or an Ancillary Agreement and the Exhibits and Schedules hereto or thereto, the provisions of the main body of this Agreement or the Ancillary Agreement, as applicable, shall control unless explicitly stated otherwise in such Schedule;

 

(j)             if there is any conflict between the provisions of this Agreement and any Ancillary Agreement, the provisions of such Ancillary Agreement shall control (but only with respect to the subject matter thereof) unless explicitly stated otherwise therein; and

 

(k)            any portion of this Agreement or any Ancillary Agreement obligating a Party to take any action or refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or refrain from taking such action, as the case may be.

 

 

Article II

 

THE SEPARATION

 

Section 2.1         Separation Transactions. On or prior to the Distribution Date, WPC shall, and shall cause NLOP and each other Subsidiary and controlled Affiliate of WPC to, effect each of the transactions set forth in Section 2.1 of the Disclosure Schedule, which transactions shall be accomplished in the order described thereon, and subject to the limitations set forth therein, in each case, with such modifications, if any, as WPC shall determine are necessary or desirable for efficiency or similar purposes.

 

Section 2.2         Transfers of Assets and Assumptions of Liabilities.

 

(a)            Transfer of Assets and Assumption of Liabilities Prior to Effective Time. Subject to Section 2.1 and Section 2.2(b), in accordance with Section 2.1 of the Disclosure Schedule and to the extent not previously effected prior to the date hereof pursuant to Section 2.1 of the Disclosure Schedule, WPC and NLOP agree to take all actions necessary so that, immediately prior to the Effective Time, (i) the NLOP Group will own, to the extent it does not already own, all of the NLOP Assets and none of the WPC Assets, and (ii) the NLOP Group will assume, to the extent it is not already liable for, all NLOP Liabilities. For the avoidance of doubt, Section 2.1 of the Disclosure Schedule shall take precedence in the event of any conflict between the terms of this Article II and Section 2.1 of the Disclosure Schedule, and any transfers of assets or liabilities made pursuant to this Agreement or any Ancillary Agreement after the Effective Time shall be deemed to have been made prior to the Effective Time consistent with Section 2.1 of the Disclosure Schedule.

 

(b)            Deferred Transfers and Assumptions.

 

(i)         Nothing in this Agreement or in any Ancillary Agreement will be deemed to require the transfer of any Assets or the assumption of any Liabilities that by their terms or by operation of Law cannot be transferred or assumed.

 

(ii)        To the extent that any transfer of Assets or assumption of Liabilities contemplated by this Agreement or any Ancillary Agreement is not consummated prior to the Effective Time as a result of an absence or non-satisfaction of any required Consent, Governmental Approval and/or other condition (such Assets or Liabilities, a “Deferred Asset” or a “Deferred Liability,” as applicable), the Parties will use commercially reasonable efforts to effect such transfers or assumptions as promptly following the Effective Time as practicable. If and when the Consents, Governmental Approvals and/or other conditions, the absence or non-satisfaction of which gave rise to the Deferred Asset or Deferred Liability, are obtained or satisfied, the transfer or assumption of the Deferred Asset or Deferred Liability will be effected in accordance with and subject to the terms of this Agreement or the applicable Ancillary Agreement, if any.

 

 

(iii)       From and after the Effective Time until such time as the Deferred Asset or Deferred Liability is transferred or assumed, as applicable, (A) the Party retaining such Deferred Asset will thereafter hold such Deferred Asset for the use and benefit of the Party entitled thereto (at the expense of the Party entitled thereto) and (B) the Party intended to assume such Deferred Liability will pay or reimburse the Party retaining such Deferred Liability for all amounts paid or incurred in connection with the retention of such Deferred Liability; it being agreed that the Party retaining such Deferred Asset or Deferred Liability will not be obligated, in connection with the foregoing clause (A) and clause (B), to expend any money unless the necessary funds are advanced or agreed in writing to be reimbursed by the Party entitled to such Deferred Asset or intended to assume such Deferred Liability. The Party retaining the Deferred Asset or Deferred Liability will use its commercially reasonable efforts to notify the Party entitled to or intended to assume such Deferred Asset or Deferred Liability of the need for such expenditure. In addition, the Party retaining such Deferred Asset or Deferred Liability will, insofar as reasonably practicable and to the extent permitted by applicable Law, (A) treat such Deferred Asset or Deferred Liability in the ordinary course of business consistent with past practice, (B) promptly take such other actions as may be requested by the Party entitled to such Deferred Asset or by the Party intended to assume such Deferred Liability in order to place such Party in the same position as if the Deferred Asset or Deferred Liability had been transferred or assumed, as applicable, as contemplated hereby, and so that all the benefits and burdens relating to such Deferred Asset or Deferred Liability, including possession, use, risk of loss, potential for gain, and control over such Deferred Asset or Deferred Liability, are to inure from and after the Effective Time to such Party entitled to such Deferred Asset or intended to assume such Deferred Liability and (C) hold itself out (including by providing notice, as applicable) to third parties as agent or nominee on behalf of the Party entitled to such Deferred Asset or intended to assume such Deferred Liability.

 

(iv)       In furtherance of the foregoing, the Parties agree that, as of the Effective Time, each Party will be deemed to have acquired beneficial ownership of all of the Assets, together with all rights and privileges incident thereto, and will be deemed to have assumed all of the Liabilities, and all duties, obligations and responsibilities incident thereto, that such Party is entitled to acquire or intended to assume pursuant to the terms of this Agreement or the applicable Ancillary Agreement, if any.

 

(v)        The Parties agree to treat, for all Tax purposes, any Asset or Liability that is not transferred or assumed prior to the Effective Time and which is subject to the provisions of this Section 2.2(b), as (A) owned by the Party to which such Asset was intended to be transferred or by the Party which was intended to assume such Liability, as the case may be, from and after the Effective Time, (B) having not been owned by the Party retaining such Asset or Liability, as the case may be, at any time from and after the Effective Time, and (C) having been held by the Party retaining such Asset or Liability, as the case may be, only as agent or nominee on behalf of the other Party from and after the Effective Time until the date such Asset or Liability, as the case may be, is transferred to or assumed by such other Party. The Parties will not take any position inconsistent with the foregoing unless otherwise required by applicable Law (in which case, the Parties will provide indemnification for any Taxes attributable to the Asset or Liability during the period beginning on the Distribution Date and ending on the date of the actual transfer).

 

(c)            Misallocated Assets and Liabilities.

 

(i)         In the event that, at any time from and after the Effective Time, either Party discovers that it or another member of its Group is the owner of, receives or otherwise comes to possess or benefit from any Asset (including the receipt of payments made pursuant to Contracts and proceeds from accounts receivable with respect to such Asset) that should have been allocated to a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any deliberate acquisition of Assets from a member of the other Group for value subsequent to the Effective Time), such Party shall promptly transfer, or cause to be transferred, such Asset to such member of the other Group, and such member of the other Group shall accept such Asset for no further consideration other than that set forth in this Agreement and such Ancillary Agreement. Prior to any such transfer, such Asset shall be held in accordance with Section 2.2(b).

 

 

(ii)        In the event that, at any time from and after the Effective Time, either Party discovers that it or another member of its Group is liable for any Liability that should have been allocated to a member of the other Group pursuant to this Agreement or any Ancillary Agreement (except in the case of any deliberate assumption of Liabilities from a member of the other Group for value subsequent to the Effective Time), such Party shall promptly transfer, or cause to be transferred, such Liability to such member of the other Group and such member of the other Group shall assume such Liability for no further consideration than that set forth in this Agreement and such Ancillary Agreement. Prior to any such assumption, such Liabilities shall be held in accordance with Section 2.2(b).

 

(d)            Instruments of Transfer and Assumption. The Parties agree that (i) transfers of Assets that may be required by this Agreement or any Ancillary Agreement shall be effected by delivery by the transferor to the transferee of (A) with respect to those Assets that constitute stock or other equity interests, certificates endorsed in blank or evidenced or accompanied by stock powers or other instruments of transfer endorsed in blank, against receipt and (B) with respect to all other Assets, such good and sufficient instruments of contribution, conveyance, assignment and transfer, in form and substance reasonably satisfactory to the Parties, as shall be necessary, in each case, to vest in the designated transferee all of the title and ownership interest of the transferor in and to any such Asset, and (ii) the assumptions of Liabilities required by this Agreement or any Ancillary Agreement shall be effected by delivery by the transferee to the transferor of such good and sufficient instruments of assumption, in form and substance reasonably satisfactory to the Parties, as shall be necessary, in each case, for the assumption by the transferee of such Liabilities. Each Party hereby waives compliance by each other Party and its respective Group members with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to any of the Transactions.

 

Section 2.3         Release of Guarantees. In furtherance of, and not in limitation of, the obligations set forth in this Agreement.

 

(a)            Each of WPC and NLOP shall, at the request of the other Party and with the reasonable cooperation of such other Party and the applicable member(s) of such Party’s Group, use commercially reasonable efforts to, as soon as reasonably practicable following the applicable Transactions, (i) have any member(s) of the WPC Group removed as guarantor of, indemnitor of or obligor for any NLOP Liability, including the termination and release of any Security Interest on or in any WPC Asset that may serve as collateral or security for any such NLOP Liability; and (ii) have any member(s) of the NLOP Group removed as guarantor of, indemnitor of or obligor for any WPC Liability, including the termination and release of any Security Interest on or in any NLOP Asset that may serve as collateral or security for any such WPC Liability.

 

(b)            If and to the extent required:

 

(i)         to obtain a release of any member of the WPC Group from a guarantee or indemnity for any NLOP Liability, NLOP or one or more members of the NLOP Group shall execute a guarantee or indemnity agreement in substantially the form of the existing guarantee or indemnity or such other form as is reasonably agreed to by the relevant parties to such guarantee or indemnity agreement, which agreement shall include the termination and release of any Security Interest on or in any WPC Asset that may serve as collateral or security for any such NLOP Liability; provided, that, no such new guarantee or indemnity shall be required to the extent that the corresponding existing guarantee or indemnity contains representations, covenants or other terms or provisions either (i) with which NLOP or the NLOP Group would be reasonably unable to comply or (ii) which NLOP or the NLOP Group would not reasonably be able to avoid breaching;

 

 

(ii)        to obtain a release of any member of the NLOP Group from a guarantee or indemnity for any WPC Liability any member of the NLOP Group, WPC or one or more members of the WPC Group shall execute a guarantee or indemnity agreement in substantially the form of the existing guarantee or indemnity or such other form as is reasonably agreed to by the relevant parties to such guarantee or indemnity agreement, which agreement shall include the termination and release of any Security Interest on or in any NLOP Asset that may serve as collateral or security for any such WPC Liability; provided, that, no such new guarantee or indemnity shall be required to the extent that the corresponding existing guarantee or indemnity contains representations, covenants or other terms or provisions either (i) with which WPC or the WPC Group would be reasonably unable to comply or (ii) which WPC or the WPC Group would not reasonably be able to avoid breaching.

 

(c)            Until such time as WPC or NLOP has obtained, or has caused to be obtained, any removal or release as set forth in clauses (a) and (b) of this Section 2.3, (i) the Party or the relevant member of its Group that has assumed the Liability related to such guarantee shall indemnify, defend and hold harmless the guarantor or obligor against or from any Liability (in respect of a mortgage or otherwise) arising from or relating thereto in accordance with the provisions of Article IX and shall, as agent or subcontractor for such guarantor, indemnitor or obligor, pay, perform and discharge fully all the obligations or other Liabilities (in respect of mortgages or otherwise) of such guarantor, indemnitor or obligor thereunder; and (ii) each of WPC and NLOP, on behalf of itself and the other members of their respective Group, agree not to renew or extend the term of, increase any obligations under, decrease any rights under or transfer to a third party, any loan, guarantee, lease, contract or other obligation for which the other Party or a member of its Group is or may be liable unless all obligations of such other Party and the members of such other Party’s Group with respect thereto have theretofore terminated by documentation satisfactory in form and substance to such other Party.

 

Section 2.4         Termination of Intercompany Agreements.

 

(a)            Except as set forth in Section 2.4(b), WPC, on behalf of itself and each of the other members of the WPC Group, and NLOP, on behalf of itself and each of the other members of the NLOP Group, hereby terminate, effective as of the Effective Time, any and all Intercompany Agreements. No such terminated Intercompany Agreement will be of any further force or effect from and after the Effective Time and all Parties shall be released from all Liabilities thereunder other than the Liability to settle any Intercompany Accounts as provided in Section 2.4. Each Party shall take, or cause to be taken, any and all actions as may be reasonably necessary to effect the foregoing.

 

(b)            The provisions of Section 2.4(a) shall not apply to any of the following agreements (which agreements shall continue to be outstanding after the Distribution Date and thereafter shall be deemed to be, for each relevant Party (or the member of such Party’s Group), an obligation to a third party and shall no longer be an Intercompany Agreement):

 

(i)         this Agreement and the Ancillary Agreements (and each other agreement or instrument expressly contemplated by this Agreement or any Ancillary Agreement), if any;

 

(ii)        any confidentiality or non-disclosure agreements among any members of either Group or employees of the NLOP Advisors; and

 

(iii)       any agreement listed or described on Section 2.4(b) of the Disclosure Schedule.

 

 

Section 2.5         Settlement of Intercompany Account. Each Intercompany Account outstanding immediately prior to the Distribution Date (other than those set forth on Section 2.5 of the Disclosure Schedule), will be satisfied and/or settled in full in cash or otherwise cancelled and terminated or extinguished by the relevant members of the WPC Group and the NLOP Group prior to the Effective Time, in each case, in the manner agreed to by the Parties. Each Intercompany Account outstanding immediately prior to the Distribution Date set forth on Section 2.5 of the Disclosure Schedule, if any, shall continue to be outstanding after the Distribution Date (unless previously satisfied in accordance with its terms) and thereafter shall be deemed to be, for each Party (or the relevant member of such Party’s Group), an obligation to a third party and shall no longer be an Intercompany Account.

 

Section 2.6         Bank Accounts.

 

(a)            Each Party agrees to use commercially reasonable efforts to take, or cause the members of its Group to take, at the Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend or substitute all contracts or agreements governing each bank and brokerage account owned by NLOP (including any WPC bank or brokerage account that is part of the NLOP Business) or any other member of the NLOP Group (collectively, the “NLOP Accounts”) and all contracts or agreements governing each bank or brokerage account owned by WPC (including any WPC bank or brokerage account that is not part of the NLOP Business) or any other member of the WPC Group (collectively, the “WPC Accounts”) so that each such NLOP Account and WPC Account, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “Linked”) to any WPC Account or NLOP Account, respectively, is de-Linked from such WPC Account or NLOP Account, respectively.

 

(b)            With respect to any outstanding checks issued or payments initiated by WPC, NLOP, or any of the members of their respective Groups prior to the Effective Time, such outstanding checks and payments shall be honored following the Effective Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated, respectively.

 

Section 2.7         Rent Allocations. The Parties further agree that no later than 60 days following the Distribution Date, WPC shall be reimbursed an aggregate of $366,395.83 for certain estimated rent payable with respect to the NLOP Assets that relates to uncollected rent for the period between October 1, 2023 and the Effective Time, which shall be paid by wire transfer to an account designated by WPC in immediately available funds.

 

Article III

 

CERTAIn actions prior to the distributioN

 

Section 3.1         SEC and Other Securities Filings.

 

(a)            Prior to the date of this Agreement, the Parties caused the Registration Statement to be declared effective by the SEC.

 

(b)            Prior to the date of this Agreement, WPC caused the Information Statement to be mailed to the Record Holders.

 

(c)            The Parties shall cooperate in preparing, filing with the SEC and causing to become effective any other registration statements or amendments or supplements thereto that are necessary or appropriate in order to effect the Transactions, or to reflect the establishment of, or amendments to, any employee benefit plans contemplated hereby.

 

 

(d)            The Parties shall take all such action as may be necessary or appropriate under state and foreign securities or “blue sky” Laws in connection with the Transactions.

 

Section 3.2         NYSE Listing Application.

 

(a)            Prior to the date of this Agreement, the Parties caused an application for the listing on the NYSE of NLOP Common Shares to be issued to the Record Holders in the Distribution (the “NYSE Listing Application”) to be prepared and filed.

 

(b)            The Parties shall use commercially reasonable efforts to have the NYSE Listing Application approved, subject to official notice of issuance, as soon as reasonably practicable following the date of this Agreement.

 

(c)            WPC shall give the NYSE notice of the Record Date in compliance with Rule 10b-17 under the Exchange Act.

 

Section 3.3         Distribution Agent Agreement. On or prior to the date of this Agreement, WPC shall, if requested by the Distribution Agent, enter into a distribution agent agreement with the Distribution Agent.

 

Section 3.4         NLOP Advisory Agreements. On or prior to the Distribution Date, NLOP shall enter into the NLOP Advisory Agreements.

 

Section 3.5         Governmental Approvals and Consents. To the extent that any of the Transactions require any Governmental Approval or Consent which has not been obtained prior to the date of this Agreement, the Parties will use commercially reasonable efforts to obtain, or cause to be obtained, such Governmental Approval or Consent prior to the Effective Time.

 

Section 3.6         Ancillary Agreements. Prior to the Effective Time, each Party shall execute and deliver, and shall cause each applicable member of its Group to execute and deliver, as applicable, the NLOP Advisory Agreements and the Tax Matters Agreement, as well as such other written agreements, documents or instruments as the Parties may agree are reasonably necessary or desirable and to the effect the Transactions (collectively, the “Ancillary Agreements”).

 

Section 3.7         Governance Matters.

 

(a)            Organizational Documents. On or prior to the Distribution Date, the Parties shall take all necessary actions to adopt each of the amended and restated declaration of trust of NLOP, the amended and restated bylaws of NLOP and the amended and restated operating agreement of NLOP LLC, each substantially in the forms filed by NLOP with the SEC as exhibits to the Registration Statement.

 

(b)            Officers and Trustees. On or prior to the Distribution Date, the Parties shall take all necessary action so that, as of the Distribution Date, the officers and trustees of NLOP will be as set forth in the Information Statement.

 

 

Article IV

 

THE DISTRIBUTION

 

Section 4.1         Dividend to WPC. On or prior to the Distribution Date, NLOP shall issue to WPC as a stock dividend such number of NLOP Common Shares (or WPC and NLOP shall take or cause to be taken such other appropriate actions to ensure that WPC has the requisite number of NLOP Common Shares) as may be required to effect the Distribution.

 

Section 4.2         Delivery to Distribution Agent. Subject to Section 5.1, on or prior to the Distribution Date, WPC will authorize the Distribution Agent, for the benefit of holders of record of WPC Common Stock at the close of business on the Record Date (the “Record Holders”), to effect the book-entry transfer of all outstanding NLOP Common Shares and will instruct the Distribution Agent to effect the Distribution at the Effective Time in the manner set forth in Section 4.3.

 

Section 4.3         Mechanics of the Distribution.

 

(a)            On the Distribution Date, WPC will direct the Distribution Agent to distribute, effective as of the Effective Time, to each Record Holder, one (1) NLOP Common Share for every fifteen (15) shares of WPC Common Stock held by such Record Holder on the Record Date (the “Distribution Ratio”), subject to Section 4.3(b). All such NLOP Common Shares to be so distributed shall be distributed as uncertificated shares registered in book-entry form through the direct registration system. No certificates therefor shall be distributed. All of the NLOP Common Shares distributed in the Distribution will be validly issued, fully paid and non-assessable.

 

(b)            Record Holders who, after aggregating the number of NLOP Common Shares (or fractions thereof) to which such Record Holder would be entitled on the Record Date, would be entitled to receive a fraction of a NLOP Common Share in the Distribution, will receive cash in lieu of fractional shares. Fractional NLOP Common Shares will not be distributed in the Distribution nor credited to book-entry accounts. The Distribution Agent shall, as soon as practicable after the Distribution Date (i) determine the number of whole shares and fractional shares of NLOP Common Shares allocable to each Record Holder, (ii) aggregate all such fractional shares into whole shares and sell the whole shares obtained thereby in open market transactions at then prevailing trading prices on behalf of the Record Holders who would otherwise be entitled to fractional share interests, and (iii) distribute to each such Record Holder such holder’s ratable share of the net proceeds of such sale, based upon the average gross selling price per share of NLOP Common Shares after making appropriate deductions for any amount required to be withheld for United States federal income tax purposes. NLOP shall bear the cost of brokerage fees and transfer taxes incurred in connection with these sales of fractional shares, which such sales shall occur as soon after the Distribution Date as practicable and as determined by the Distribution Agent. None of WPC, NLOP or the applicable Distribution Agent will guarantee any minimum sale price for the fractional NLOP Common Shares. Neither WPC nor NLOP will pay any interest on the proceeds from the sale of fractional shares. The Distribution Agent will have the sole discretion to select the broker-dealers through which to sell the aggregated fractional shares and to determine when, how and at what price to sell such shares. Neither the Distribution Agent nor the selected broker-dealers will be Affiliates of WPC or NLOP. Any NLOP Common Shares or cash in lieu of fractional shares with respect to NLOP Common Shares that remain unclaimed by any Record Holder after the Distribution Date shall be the responsibility of NLOP, and any such Record Holder shall look only to NLOP, not WPC, for such NLOP Common Shares and/or cash, if any, in lieu of fractional share interests, subject in each case to applicable escheat or other abandoned property laws.

 

(c)            Notwithstanding any other provision of this Agreement, WPC, the Distribution Agent or any Person that is a withholding agent under applicable Law shall be entitled to deduct and withhold from any consideration distributable or payable hereunder the amounts required to be deducted and withheld under the Code, or any provision of any U.S. federal, state, local or foreign Tax Law. Any amounts so withheld shall be paid over to the appropriate Tax Authority in the manner prescribed by Law. To the extent that amounts are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Persons in respect of which such deduction and withholding was made. An applicable withholding agent may collect the deducted or withheld amounts by reducing to cash a sufficient portion of the NLOP Common Shares that a Person would otherwise receive, and may require that such Person bear the brokerage or other costs from this withholding procedure.

 

 

Article V

 

CONDITIONS

 

Section 5.1         Conditions Precedent to Consummation of the Distribution. The Distribution shall not be effected unless and until the following conditions have been satisfied or waived by WPC, in its sole and absolute discretion, at or before the Effective Time:

 

(a)              the Separation shall have occurred;

 

(b)              the NLOP Financing Arrangements shall have been executed and the conditions for borrowing thereunder satisfied, and $382.4 million from the borrowings under the NLOP Financing Arrangements shall have been transferred to WPC, in each case in accordance with Section 2.1 of the Disclosure Schedule;

 

(c)              the board of directors of WPC shall have declared the Distribution, which declaration may be made or withheld at its sole and absolute discretion;

 

(d)              the Registration Statement shall have been declared effective by the SEC, with no stop order in effect with respect thereto, and no proceedings for such purpose shall be pending before, or threatened by, the SEC;

 

(e)              WPC shall have mailed the Information Statement (and such other information concerning NLOP, the Distribution and such other matters as the Parties shall determine and as may otherwise be required by Law) to the Record Holders;

 

(f)               all other actions and filings necessary or appropriate under applicable federal or state securities Laws and state blue sky Laws in connection with the Transactions shall have been taken;

 

(g)              WPC shall not be required to register as an investment company under the Investment Company Act;

 

(h)              NLOP shall not be required to register as an investment company under the Investment Company Act;

 

(i)               the NYSE shall have approved the NYSE Listing Application, subject to official notice of issuance;

 

(j)               the Ancillary Agreements, including the NLOP Advisory Agreements and the Tax Maters Agreement, shall have been executed and delivered by each of the parties thereto and no party to any of the Ancillary Agreements will be in material breach of any such agreement;

 

 

(k)              any material Governmental Approvals and Consents necessary to consummate the Transactions or any portion thereof shall have been obtained and be in full force and effect;

 

(l)               no preliminary or permanent injunction or other order, decree, or ruling issued by a Governmental Authority, and no Law shall be in effect preventing the consummation of, or materially limiting the benefits of, the Transactions; and

 

(m)             no other event or development shall have occurred or failed to occur that, in the judgment of the board of directors of WPC, exercised in its sole discretion, prevents the consummation of the Transactions or any portion thereof or makes the consummation of the Transactions inadvisable.

 

Section 5.2         Right Not to Close. Each of the conditions set forth in Section 5.1 is for the benefit of WPC, and the board of directors of WPC may, in its sole and absolute discretion, determine whether to waive any condition, in whole or in part. Any determination made by the board of directors of WPC concerning the satisfaction or waiver of any or all of the conditions in Section 5.1 will be conclusive and binding on the Parties. The satisfaction of the conditions set forth in Section 5.1 will not create any obligation on the part of WPC to any other Person to effect any of the Transactions or in any way limit WPC’s right to terminate this Agreement and the Ancillary Agreements as set forth in Section 11.1 or alter the consequences of any termination from those specified in Section 11.2.

 

Article VI

 

NO REPRESENTATIONS OR WARRANTIES

 

Section 6.1         Disclaimer of Representations and Warranties. EACH PARTY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF ITS GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN, IN ANY ANCILLARY AGREEMENT OR IN ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT OR ANY ANCILLARY AGREEMENT, NO PARTY IS REPRESENTING OR WARRANTING IN ANY WAY AS TO (A) THE ASSETS, BUSINESSES OR LIABILITIES CONTRIBUTED, TRANSFERRED, DISTRIBUTED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, (B) ANY CONSENTS OR GOVERNMENTAL APPROVALS REQUIRED IN CONNECTION HEREWITH OR THEREWITH, (C) THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF ANY PARTY, (D) THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY ACTION OR OTHER ASSET, INCLUDING ACCOUNTS RECEIVABLE, OF ANY PARTY, OR (E) THE LEGAL SUFFICIENCY OF ANY CONTRIBUTION, DISTRIBUTION, ASSIGNMENT, DOCUMENT, CERTIFICATE OR INSTRUMENT DELIVERED HEREUNDER OR THEREUNDER TO CONVEY TITLE TO ANY ASSET UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF.

 

Section 6.2         As Is, Where Is. EACH PARTY (ON BEHALF OF ITSELF AND EACH OTHER MEMBER OF ITS GROUP) UNDERSTANDS AND AGREES THAT ALL ASSETS TRANSFERRED PURSUANT TO THIS AGREEMENT OR ANY ANCILLARY AGREEMENT ARE BEING TRANSFERRED “AS IS, WHERE IS.”

 

 

Article VII

 

CERTAIN COVENANTS AND ADDITIONAL AGREEMENTS

 

Section 7.1         Insurance Matters.

 

(a)            Prior to the Distribution Date, WPC and NLOP shall use commercially reasonable efforts to obtain separate Insurance Policies for NLOP related to all applicable currently existing WPC Insurance Policies on commercially reasonable terms (it being understood that NLOP shall be responsible for all premiums, costs and fees associated with any new insurance policies placed for the benefit of NLOP pursuant to this Section 7.1).

 

(b)            From and after the Effective Time, (i) WPC shall be entitled to terminate, or cause to be terminated, coverage under existing insurance policies with respect to the NLOP Assets, NLOP Liabilities, WPC Assets, and WPC Liabilities, (ii) WPC shall be entitled to cause the WPC Assets and WPC Liabilities to be covered by existing or new insurance policies of the WPC Group, and (iii) NLOP shall cause the NLOP Assets and the NLOP Liabilities to be covered by existing or new insurance policies of the NLOP Group.

 

(c)            This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of either Group in respect of any insurance policy or any other contract or policy of insurance.

 

(d)            From and after the Effective Time, with respect to any losses, damages and Liability incurred by any member of the NLOP Group or the WPC Group, as the case may be (the “Loss Party”), arising from events or occurrences prior to the date on which the Effective Time occurs (“Insurance Termination Date”), WPC or NLOP, respectively (the “Insured Party”), will provide the Loss Party with access to, and the Loss Party may, upon ten (10) days’ prior written notice to the Insured Party, make claims under the Insured Party’s third-party insurance policies in place prior to the Insurance Termination Date and the Insured Party’s historical policies of insurance, but solely to the extent that such policies provided coverage for members of the Loss Party’s Group prior to the Insurance Termination Date; provided that such access to, and the right to make claims under, such insurance policies, shall be subject to the terms and conditions of such insurance policies, including any limits on coverage or scope, any deductibles and other fees and expenses, and shall be subject to the following additional conditions:

 

(i)         the Loss Party shall report any claim to the Insured Party as promptly as practicable, and in any event in sufficient time so that such claim may be made in accordance with the Insured Party’s claim reporting procedures provided in advance to the Loss Party and in effect immediately prior to the Insurance Termination Date (or in accordance with any modifications to such procedures after the Insurance Termination Date communicated by the Insured Party to the Loss Party in writing in advance of any such claim);

 

(ii)        the Loss Party and the members of its Group shall exclusively bear and be liable for (and neither the Insured Party, nor any member of its Group, shall have any obligation to repay or reimburse Loss Party or any member of its Group for), and shall indemnify, hold harmless and reimburse the Insured Party and the members of its Group for, any deductibles, self-insured retention, fees and expenses incurred by the Insured Party or any members of its Group to the extent resulting from any access by the Loss Party or any other members of its Group to, or any claims made by the Loss Party or any other members of its Group under, any insurance provided pursuant to this Section 7.1(d), including any indemnity payments, settlements, judgments, legal fees and allocated claims expenses and claim handling fees, whether such claims are made by members of the Loss Party’s Group, its employees or third parties; and

 

 

(iii)       any payments and reimbursements by the Loss Party pursuant to this Section 7.1(d) will be made within thirty (30) days after the Loss Party’s receipt of an invoice therefor from the Insured Party. If the Insured Party incurs costs to enforce the Loss Party’s obligations herein, the Loss Party agrees to indemnify and hold harmless the Insured Party for such enforcement costs, including reasonable attorneys’ fees. The Insured Party shall retain the exclusive right to control its insurance policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its insurance policies and programs and to amend, modify or waive any rights under any such insurance policies and programs, notwithstanding whether any such policies or programs apply to any Loss Party Liabilities and/or claims the Loss Party has made or could make in the future, and no member of the Loss Party’s Group shall erode, exhaust, settle, release, commute, buyback or otherwise resolve disputes with the Insured Party’s insurers with respect to any of the Insured Party’s insurance policies and programs, or amend, modify or waive any rights under any such insurance policies and programs. The Loss Party shall cooperate with the Insured Party and share such information as is reasonably necessary in order to permit the Insured Party to manage and conduct its insurance matters as it deems appropriate. Neither the Insured Party nor any of the members of the Insured Party’s Group shall have any obligation to secure extended reporting for any claims under any Liability policies of the Insured Party or any member of the Insured Party’s Group for any acts or omissions by any member of the Loss Party’s Group incurred prior to the Insurance Termination Date.

 

Section 7.2         No Restrictions on Post-Closing Competitive Activities; Corporate Opportunities.

 

(a)            Each of the Parties agrees that this Agreement shall not include any non-competition or other similar restrictive arrangements with respect to the range of business activities that may be conducted, or investments that may be made, by the Groups. Accordingly, each of the Parties acknowledges and agrees that nothing set forth in this Agreement shall be construed to create any explicit or implied restriction or other limitation on the ability of any Group to engage in any business or other activity that overlaps or competes with the business of the other Group. Except as expressly provided herein, in WPC’s or NLOP’s conflicts of interest policies, or in the Ancillary Agreements, (x) each Group shall have the right to, and shall have no duty to abstain from exercising such right to, (i) engage or invest, directly or indirectly, in the same, similar or related business activities or lines of business as the other Group, (ii) make investments in the same or similar types of investments as the other Group, (iii) do business with any client, customer, vendor or lessor of any of the other Group or (iv) employ or otherwise engage any officer, trustee, director or employee of the other Group, and (y) neither Party or Group, nor any officer, trustee or director thereof, shall be liable to the other Party or Group or its stockholders for breach of any fiduciary duty by reason of any such activities of such Party or Group or of any such Person’s participation therein.

 

(b)            Except as expressly provided herein, in WPC’s or NLOP’s conflicts of interest policies, or in the Ancillary Agreements, and except as WPC and each other member of the WPC Group, on the one hand, and NLOP and each other member of the NLOP Group, on the other hand, may otherwise agree in writing, the Parties hereby acknowledge and agree that if any Person that is a member of a Group, including any officer, trustee or director thereof, acquires knowledge of a potential transaction or matter that may be a corporate opportunity for either or both Groups, neither the other Group nor its stockholders shall have an interest in, or expectation that, such corporate opportunity be offered to it or that it be offered an opportunity to participate therein, and any such interest, expectation, offer or opportunity to participate, and any other interest or expectation otherwise due to such Group with respect to such corporate opportunity, is hereby renounced by such Group on its behalf and on behalf of its stockholders. Accordingly, subject to Section 7.2(c) and except as expressly provided herein, in WPC’s or NLOP’s conflicts of interest policies, or in the Ancillary Agreements, (i) neither Group nor any officer, trustee or director thereof will be under any obligation to present, communicate or offer any such corporate opportunity to the other Group and (ii) each Group has the right to hold any such corporate opportunity for their own account, or to direct, recommend, sell, assign or otherwise transfer such corporate opportunity to any Person or Persons other than the other Group, and, to the fullest extent permitted by Law, neither Group nor the officers, trustees or directors thereof shall have or be under any fiduciary duty, duty of loyalty or duty to act in good faith or in the best interests of the other Group and its stockholders and shall not be liable to the other Group and its stockholders for any breach or alleged breach thereof or for any derivation of personal economic gain by reason of the fact that such Group or any of its officers, trustees or directors pursues or acquires the corporate opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the corporate opportunity to another Person, or such Group and its officers, trustees or directors does not present, offer or communicate information regarding the corporate opportunity to the other Group.

 

 

(c)            Except as expressly provided herein, in the Ancillary Agreements, or in WPC or NLOP’s conflicts of interest policies, and except as WPC and each other member of the WPC Group, on the one hand, and NLOP and each other member of the NLOP Group, on the other hand, may otherwise agree in writing, the Parties hereby acknowledge and agree that in the event that a trustee, director or officer of either Group who is also a trustee, director or officer of the other Group acquires knowledge of a potential transaction or matter that may be a corporate opportunity or is offered a corporate opportunity, if (i) such Person acts in good faith and (ii) such knowledge of such potential transaction or matter was not obtained solely in connection with, or such corporate opportunity was not offered to such Person solely in, such Person’s capacity as trustee, director or officer of either Group, then (A) such trustee, director or officer, to the fullest extent permitted by Law, (1) shall be deemed to have fully satisfied and fulfilled such Person’s fiduciary duty to each Group and their stockholders with respect to such corporate opportunity, (2) shall not have or be under any fiduciary duty to either Group or their stockholders and shall not be liable to either Group or their stockholders for any breach or alleged breach thereof by reason of the fact that the other Group pursues or acquires the corporate opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the corporate opportunity to another Person, or either Group or such trustee, director or officer does not present, offer or communicate information regarding the corporate opportunity to the other Group, (3) shall be deemed to have acted in good faith and in a manner such Person reasonably believes to be in, and not opposed to, the best interests of each Group and its stockholders and (4) shall not have any duty of loyalty to the other Group and its stockholders or any duty not to derive any personal benefit therefrom and shall not be liable to the other Group or its stockholders for any breach or alleged breach thereof and (B) such potential transaction or matter that may be a corporate opportunity, or the corporate opportunity, shall belong to the applicable Group (and not to the other Group).

 

(d)            Except as expressly provided herein, in WPC’s or NLOP’s conflicts of interest policies, or in the Ancillary Agreements, if the NLOP Advisors acquire knowledge of a potential transaction or matter that may be a corporate opportunity for either or both Groups, neither the NLOP Advisors, nor any agent or advisor thereof, shall have any duty to communicate or present such corporate opportunity to either Group and shall not be liable to either Group or to their stockholders for breach of any fiduciary duty by reason of the fact that the NLOP Advisors pursue or acquire the corporate opportunity for itself, or directs, recommends, sells, assigns or otherwise transfers the corporate opportunity to either Group or another Person, or does not present such corporate opportunity to either Group.

 

(e)            For the purposes of this Section 7.2, “corporate opportunities” of a Group shall include business opportunities that such Group is financially able to undertake, that are, by their nature, in a line of business of such Group, are of practical advantage to it and are ones in which any member of the Group has an interest or a reasonable expectancy, and in which, by embracing the opportunities, the self-interest of a Person or any of its officers, trustees or directors will be brought into conflict with that of such Group.

 

 

Section 7.3         Cooperation. Each of the Parties shall establish an appropriate administration system in order to handle in an orderly manner the vesting of any restricted NLOP Common Shares received in the Distribution that relate to shares of restricted WPC Common Stock. The Parties shall work together to unify and consolidate all indicative data and payroll and employment information on regular timetables and make certain that each applicable entity’s data and records in respect of such awards are correct and updated on a timely basis. The foregoing shall include, as applicable, employment status and information required for tax withholding/remittance and reporting, compliance with trading windows and compliance with the requirements of the Exchange Act and other applicable laws.

 

Article VIII

 

ACCESS TO INFORMATION; CONFIDENTIALITY; PRIVILEGE

 

Section 8.1         Agreement for Exchange of Information.

 

(a)            For a period (the “Period”) of three (3) years following the Distribution Date or until the termination of both of the NLOP Advisory Agreements, whichever is longer, as soon as reasonably practicable after written request: (i) WPC shall afford to any member of the NLOP Group and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at the NLOP Group’s expense, provide copies of, all books, records, Contracts, instruments, data, documents and other information in the possession or under the control of any member of the WPC Group immediately following the Distribution Date that relates to any member of the NLOP Group or the NLOP Assets and (ii) NLOP shall afford to any member of the WPC Group and their authorized accountants, counsel and other designated representatives reasonable access during normal business hours to, or, at the WPC Group’s expense, provide copies of, all books, records, Contracts, instruments, data, documents and other information in the possession or under the control of any member of the NLOP Group immediately following the Distribution Date that relates to any member of the WPC Group or the WPC Assets; provided, however, that in the event that NLOP or WPC, as applicable, determine that any such provision of or access to any information in response to a request under this Section 8.1(a) would be commercially detrimental in any material respect, violate any Law or agreement or waive any attorney-client privilege, the work product doctrine or other applicable privilege, the Parties shall take all reasonable measures to permit compliance with such request in a manner that avoids any such harm or consequence; provided, further, that to the extent specific information-sharing or knowledge-sharing provisions are contained in any of the Ancillary Agreements, such other provisions (and not this Section 8.1(a)) shall govern; provided, further, that the Period shall be extended with respect to requests related to any third party litigation or other dispute filed prior to the end of such period until such litigation or dispute is finally resolved.

 

(b)            Without limiting the generality of Section 8.1(a), until the end of the first full fiscal year following the Distribution Date (and for a reasonable period of time thereafter as required for any party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Distribution Date occurs), NLOP shall use its commercially reasonable efforts to cooperate with any requests from any member of the WPC Group pursuant to Section 8.1(a) and WPC shall use its commercially reasonable efforts to cooperate with any requests from any member of the NLOP Group pursuant to Section 8.1(a), in each case to enable the requesting Party to meet its timetable for dissemination of its earnings releases and financial statements and to enable such requesting party’s auditors to timely complete their audit of the annual financial statements and review of the quarterly financial statements.

 

Section 8.2         Ownership of Information. Any information owned by any Person as of the Effective Time that is provided pursuant to Section 8.1(a) shall be deemed to remain the property of the providing Person. Unless specifically set forth herein, nothing contained in this Agreement shall be construed to grant or confer rights of license or otherwise to the requesting Person with respect to any such information.

 

 

Section 8.3         Compensation for Providing Information. A Person requesting information pursuant to Section 8.1(a) agrees to reimburse the providing Person for the actual expenses, if any, of gathering and copying such information, to the extent that such expenses are incurred for the benefit of the requesting Person.

 

Section 8.4         Retention of Records. To facilitate the exchange of information pursuant to this Article VIII after the Distribution Date, for the duration of the Period, except as otherwise required or agreed in writing, the Parties agree to use commercially reasonable efforts to retain, or cause to be retained, all information in their, or any member of their Group’s, respective possession or control on the Distribution Date in accordance with the records retention policies and procedures of WPC as in effect on the Distribution Date or modified in good faith thereafter.

 

Section 8.5         Limitation of Liability. No Person required to provide information under this Article VIII shall have any Liability (a) if any historical information provided pursuant to this Article VIII is found to be inaccurate or incomplete, in the absence of gross negligence or willful misconduct by such Person, or (b) if any information is lost or destroyed despite using commercially reasonable efforts to comply with the provisions of Section 8.4.

 

Section 8.6         Production of Witnesses. At all times from and after the Distribution Date, upon reasonable advance request:

 

(a)            NLOP shall use commercially reasonable efforts to make available, or cause to be made available, to any member of the WPC Group, the trustees, the directors, officers, employees and agents of any member of the NLOP Group as witnesses to the extent that the same may reasonably be required by the requesting party (giving consideration to business demands of such trustees, directors, officers, employees and agents) in connection with any legal, administrative or other proceeding in which the requesting party may from time to time be involved, except in the case of any action, suit or proceeding in which any member of the NLOP Group is adverse to any member of the WPC Group; and

 

(b)            WPC shall use commercially reasonable efforts to make available, or cause to be made available, to any member of the NLOP Group, the trustees, the directors, officers, employees and agents of any member of the WPC Group as witnesses to the extent that the same may reasonably be required by the requesting party (giving consideration to business demands of such trustees, directors, officers, employees and agents) in connection with any legal, administrative or other proceeding in which the requesting party may from time to time be involved, except in the case of any action, suit or proceeding in which any member of the WPC Group is adverse to any member of the NLOP Group.

 

 

Section 8.7         Confidentiality.

 

(a)            NLOP (on behalf of itself and each other member of its Group) and WPC (on behalf of itself and each other member of its Group) shall hold, and shall cause each of their respective Affiliates to hold, and each of the foregoing shall cause their respective trustees, directors, officers, employees, agents, consultants and advisors to hold, in strict confidence, and not to disclose or release or use, for any purpose other than as expressly permitted pursuant to this Agreement or the Ancillary Agreements, any and all Confidential Information concerning any member of the other Group without the prior written consent of such member of the other Group; provided, that each Party and the members of its Group may disclose, or may permit disclosure of, such Confidential Information (i) to other members of their Group and their respective auditors, attorneys, financial advisors, bankers and other appropriate consultants and advisors (including the NLOP Advisors, as applicable) who have a need to know such information for purposes of performing services for a member of such Group and who are informed of their obligation to hold such information confidential to the same extent as is applicable to the Parties and in respect of whose failure to comply with such obligations, such Party will be responsible, (ii) if it or any of its Affiliates are required or compelled to disclose any such Confidential Information by judicial or administrative process or by other requirements of Law or stock exchange rule, or (iii) as necessary in order to permit such Party to prepare and disclose its financial statements, or other disclosures required by Law or such applicable stock exchange. Notwithstanding the foregoing, in the event that any demand or request for disclosure of Confidential Information is made pursuant to the foregoing clause (ii) above, the Party requested to disclose Confidential Information concerning a member of the other Group, shall, to the extent legally permissible, promptly notify such member of the other Group of the existence of such request or demand and, to the extent commercially practicable and legally permissible, shall provide such member of the other Group thirty (30) days (or such lesser period as is commercially practicable and legally permissible) to seek an appropriate protective order or other remedy, which the Parties will cooperate in obtaining at the sole cost of the Party seeking such protective order or remedy. In the event that such appropriate protective order or other remedy is not obtained, the Party that is required to disclose Confidential Information about a member of the Group shall furnish, or cause to be furnished, only that portion of the Confidential Information that is legally required to be disclosed and shall use commercially reasonable efforts to ensure that confidential treatment is accorded such information.

 

(b)            Notwithstanding anything to the contrary set forth herein, the Parties shall be deemed to have satisfied their obligations hereunder with respect to Confidential Information of any member of the other Group if they exercise the same degree of care (but no less than a reasonable degree of care) as they exercise to preserve confidentiality for their own similar Confidential Information.

 

(c)            Upon the written request of a Party or a member of its Group, the other Party shall take, and shall cause the applicable members of its Group to take, reasonable steps to promptly (i) deliver to the requesting Person all original copies of Confidential Information (whether written or electronic) concerning the requesting Person or any member of its Group that is in the possession of the other Party or any member of its Group and (ii) if specifically requested by the requesting Person, destroy (as to electronic Confidential Information, to the extent practical) any copies of such Confidential Information (including any extracts therefrom), unless such delivery or destruction would violate any Law; provided, that the other Party shall not be obligated to destroy Confidential Information that is required by or relates to the business of the other Party or any member of its Group and shall be permitted to retain copies of Confidential Information to the extent necessary to comply with legal, regulatory, audit or document retention policies. Upon the written request of the requesting Person, the other Party shall, or shall cause another member of its Group to cause, its duly authorized officers to certify in writing to the requesting party that the requirements of the preceding sentence have been satisfied in full.

 

Section 8.8         Privileged Matters.

 

(a)            Pre-Distribution Services. The Parties recognize that legal and other professional services that have been and will be provided prior to the Effective Time have been and will be rendered for the collective benefit of the Parties and their Affiliates, and that each of the Parties should be deemed to be the client with respect to such pre-Distribution services for the purposes of asserting all privileges that may be asserted under applicable Law.

 

 

(b)            Post-Distribution Services. The Parties recognize that legal and other professional services will be provided following the Effective Time that will be rendered solely for the benefit of NLOP and its Affiliates or WPC and its Affiliates, as the case may be. With respect to such post-Distribution services, the Parties agree as follows:

 

(i)         WPC shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the WPC Assets, whether or not the privileged information is in the possession of or under the control of WPC or NLOP. WPC shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting WPC Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated by or against any member of the WPC Group, whether or not the privileged information is in the possession of or under the control of WPC or NLOP; and

 

(ii)        NLOP shall be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the NLOP Assets, whether or not the privileged information is in the possession of or under the control of WPC or NLOP. NLOP shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges in connection with privileged information that relates solely to the subject matter of any claims constituting NLOP Liabilities, now pending or which may be asserted in the future, in any lawsuits or other proceedings initiated by or against any member of the NLOP Group, whether or not the privileged information is in the possession of or under the control of WPC or NLOP.

 

(c)            The Parties agree that they shall have a shared privilege, with equal right to assert or waive, subject to the restrictions in this Section 8.8, with respect to all privileges not allocated pursuant to the terms of Section 8.8(b). NLOP may not waive, and shall cause each other member of the NLOP Group not to waive, any privilege that could be asserted by a member of the WPC Group under any applicable Law, and in which a member of the WPC Group has a shared privilege, without the consent of WPC, which consent shall not be unreasonably withheld, conditioned or delayed or as provided in Section 8.8(d) or Section 8.8(e) below. WPC may not waive, and shall cause each other member of the WPC Group not to waive, any privilege that could be asserted by a member of the NLOP Group under any applicable Law, and in which a member of the NLOP Group has a shared privilege, without the consent of NLOP, which consent shall not be unreasonably withheld, conditioned or delayed or as provided in Section 8.8(d) or Section 8.8(e) below.

 

(d)            In the event of any litigation or dispute between or among NLOP and WPC, or any members of their respective Groups, the Parties may waive a privilege in which a member of the other Group has a shared privilege, without obtaining the consent from any other party; provided, that such waiver of a shared privilege shall be effective only as to the use of information with respect to the litigation or dispute between the relevant Parties and/or the applicable members of their respective Groups, and shall not operate as a waiver of the shared privilege with respect to third parties.

 

(e)            If a dispute arises between or among NLOP and WPC, or any members of their respective Groups, regarding whether a privilege should be waived to protect or advance the interest of a party, each Party agrees that it shall negotiate in good faith, shall endeavor to minimize any prejudice to the rights of such party and shall not withhold consent to any request for waiver by such party except to protect its own legitimate interests or the legitimate interests of any other member of its Group.

 

(f)            Upon receipt by either Party, or by any member of its Group, of any subpoena, discovery or other request which requires the production or disclosure of information which such Party knows is subject to a shared privilege or as to which a member of the other Group has the sole right hereunder to assert or waive a privilege, or if either Party obtains knowledge that any of its or any other member of its Group’s current or former trustees, directors, officers, agents or employees have received any subpoena, discovery or other requests which requires the production or disclosure of such privileged information, such Party shall, to the extent legally permissible, promptly notify the other Party of the existence of the request and shall provide the other Party a reasonable opportunity to review the information and to assert any rights it or they may have under this Section 8.8 or otherwise to prevent the production or disclosure of such privileged information.

 

 

(g)            The access to information being granted pursuant to Section 8.1, the agreement to provide witnesses and individuals pursuant to Section 8.6 hereof, and the transfer of privileged information between and among the Parties and the members of their respective Groups pursuant to this Agreement shall not be deemed a waiver of any privilege that has been or may be asserted under this Agreement, any of the Ancillary Agreements or otherwise.

 

Section 8.9         Financial Information Certifications. The Parties agree to reasonably cooperate with each other in such manner as is necessary to enable the principal executive officer or officers, principal financial officer or officers and controller or controllers of each of the Parties to make the certifications required of them under Sections 302, 404 and 906 of the Sarbanes-Oxley Act of 2002.

 

Article IX

 

MUTUAL RELEASES; INDEMNIFICATION

 

Section 9.1         Release of Pre-Distribution Claims.

 

(a)            Except as provided in Section 9.1(c), effective as of the Effective Time, NLOP does hereby, for itself and each other member of the NLOP Group, release and forever discharge each WPC Indemnitee, from any and all Liabilities whatsoever to any member of the NLOP Group, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed at or before the Effective Time, including in connection with the Transactions.

 

(b)            Except as provided in Section 9.1(c), effective as of the Effective Time, WPC does hereby, for itself and each other member of the WPC Group, release and forever discharge each NLOP Indemnitee from any and all Liabilities whatsoever to any member of the WPC Group, whether at law or in equity (including any right of contribution), whether arising under any Contract, by operation of Law or otherwise, existing or arising from any acts or events occurring or failing to occur or alleged to have occurred or to have failed to occur or any conditions existing or alleged to have existed at or before the Effective Time, including in connection with the Transactions.

 

(c)            Nothing contained in Section 9.1(a) or Section 9.1(b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in, or contemplated to continue pursuant to, this Agreement or any Ancillary Agreement. Without limiting the foregoing, nothing contained in Section 9.1(a) or Section 9.1(b) shall release any Person from:

 

(i)         any Liability, contingent or otherwise, assumed by, or allocated to, such Person in accordance with this Agreement or any Ancillary Agreement;

 

(ii)        any Liability that such Person may have with respect to indemnification or contribution pursuant to this Agreement or any Ancillary Agreement for claims brought by third Persons, which Liability shall be governed by the provisions of this Article IX and, if applicable, the appropriate provisions of the Ancillary Agreements;

 

 

(iii)       any unpaid accounts payable or receivable arising from or relating to the sale, provision, or receipt of goods, payment for goods, property or services purchased, obtained or used in the ordinary course of business by any member of the WPC Group from any member of the NLOP Group, or by any member of the NLOP Group from any member of the WPC Group from and after the Effective Time; or

 

(iv)       any Liability the release of which would result in the release of any Person other than an Indemnitee; provided, that the Parties agree not to bring suit, or permit any other member of their respective Group to bring suit, against any Indemnitee with respect to such Liability.

 

(d)            NLOP shall not make, and shall not permit any other member of the NLOP Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or indemnification, against any WPC Indemnitee with respect to any Liabilities released pursuant to Section 9.1(a). WPC shall not make, and shall not permit any member of the WPC Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against any NLOP Indemnitee with respect to any Liabilities released pursuant to Section 9.1(b).

 

Section 9.2         Indemnification by NLOP. Except as provided in Section 9.4 and Section 9.5, NLOP shall, and, in the case of Section 9.2(a) or Section 9.2(b), shall in addition cause each Appropriate Member of the NLOP Group to, indemnify, defend and hold harmless the WPC Indemnitees from and against any and all Losses of the WPC Indemnitees relating to, arising out of or resulting from any of the following (without duplication):

 

(a)            any NLOP Liability, including the failure of any member of the NLOP Group or any other Person to pay, perform or otherwise promptly discharge any NLOP Liabilities in accordance with their respective terms, whether prior to, at or after the Effective Time;

 

(b)            any breach by any member of the NLOP Group of any provision of this Agreement or of any of the Ancillary Agreements, subject to any limitations of liability provisions and other provisions applicable to any such breach set forth therein;

 

(c)            any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information contained in the Registration Statement or the Information Statement other than information that relates solely to the WPC Assets;

 

in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date; provided, however, that no member of the NLOP Group shall have any obligation under this Article IX to indemnify any member of the WPC Group against any Losses to the extent that such Losses arise by virtue of a breach of this Agreement by a member of the WPC Group or the gross negligence, willful misconduct or fraud of any member of the WPC Group. As used in this Section 9.2, “Appropriate Member of the NLOP Group” means the member or members of the NLOP Group, if any, whose acts, conduct or omissions or failures to act caused, gave rise to or resulted in the Loss from and against which indemnity is provided.

 

 

Section 9.3         Indemnification by WPC. Except as provided in Section 9.4 and Section 9.5, WPC shall, and, in the case of Section 9.3(a) or Section 9.3(b), shall in addition cause each Appropriate Member of the WPC Group to, indemnify, defend and hold harmless the NLOP Indemnitees from and against any and all Losses of the NLOP Indemnitees relating to, arising out of or resulting from any of the following (without duplication):

 

(a)            any WPC Liability, including the failure of any member of the WPC Group or any other Person to pay, perform or otherwise promptly discharge any WPC Liabilities in accordance with their respective terms, whether prior to, at or after the Effective Time;

 

(b)            any breach by any member of the WPC Group of any provision of this Agreement or of any of the Ancillary Agreements, subject to any limitations of liability provisions and other provisions applicable to any such breach set forth therein; and

 

(c)            any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, solely with respect to information contained in the Registration Statement or the Information Statement that relates solely to the WPC Assets;

 

in each case, regardless of when or where the loss, claim, accident, occurrence, event or happening giving rise to the Loss took place, or whether any such loss, claim, accident, occurrence, event or happening is known or unknown, or reported or unreported and regardless of whether such loss, claim, accident, occurrence, event or happening giving rise to the Loss existed prior to, on or after the Distribution Date or relates to, arises out of or results from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, on or after the Distribution Date; provided, however, that no member of the WPC Group shall have any obligation under this Article IX to indemnify any member of the NLOP Group against any Losses to the extent that such Losses arise by virtue of a breach of this Agreement by a member of the NLOP Group or the gross negligence, willful misconduct or fraud of any member of the NLOP Group. As used in this Section 9.3, “Appropriate Member of the WPC Group” means the member or members of the WPC Group, if any, whose acts, conduct or omissions or failures to act caused, gave rise to or resulted in the Loss from and against which indemnity is provided.

 

Section 9.4         Procedures for Indemnification.

 

(a)            An Indemnitee shall give prompt notice of any matter that such Indemnitee has determined has given or would reasonably be expected to give rise to a right of indemnification under this Agreement or any Ancillary Agreement (other than a Third-Party Claim which shall be governed by Section 9.4(b)) to any Party that is or may be required pursuant to this Agreement or any Ancillary Agreement to make such indemnification (the “Indemnifying Party”) promptly (and in any event within fifteen (15) days) after making such a determination. Such notice shall state the amount of the Loss claimed, if known, and method of computation thereof, and contain a reference to the provisions of this Agreement or the applicable Ancillary Agreement in respect of which such right of indemnification is claimed by such Indemnitee; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure.

 

 

(b)            If a claim or demand is made against an Indemnitee by any Person who is not a Party to this Agreement or an Affiliate of a Party (a “Third-Party Claim”) as to which such Indemnitee is or reasonably expects to be entitled to indemnification pursuant to this Agreement, such Indemnitee shall promptly notify the Indemnifying Party in writing, and in reasonable detail, of the Third-Party Claim (and in any event within thirty (30) days) after receipt by such Indemnitee of written notice of the Third-Party Claim; provided, however, that the failure to provide notice of any such Third-Party Claim pursuant to this sentence shall not release the Indemnifying Party from any of its obligations except and solely to the extent the Indemnifying Party shall have been materially prejudiced as a result of such failure (except that the Indemnifying Party or Parties shall not be liable for any expenses incurred by the Indemnitee in defending such Third-Party Claim during the period in which the Indemnitee failed to give such notice). Thereafter, the Indemnitee shall promptly deliver to the Indemnifying Party (and in any event within ten (10) days) after the Indemnitee’s receipt thereof, copies of all notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim.

 

(c)            An Indemnifying Party shall be entitled (but shall not be required) to assume, control the defense of, and settle any Third-Party Claim, at such Indemnifying Party’s own cost and expense and by such Indemnifying Party’s own counsel, which counsel must be reasonably acceptable to the Indemnitee, if it gives written notice of its intention to do so (including a statement that the Indemnitee is entitled to indemnification under this Article IX) to the applicable Indemnitees within thirty (30) days of the receipt of notice from such Indemnitees of the Third-Party Claim (failure of the Indemnifying Party to respond within such thirty (30) day period shall be deemed to be an election by the Indemnifying Party not to assume the defense for such Third-Party Claim). After a notice from an Indemnifying Party to an Indemnitee of its election to assume the defense of a Third-Party Claim, such Indemnitee shall have the right to employ separate counsel and to participate in (but not control) the defense, compromise or settlement thereof, at its own expense and, in any event, shall reasonably cooperate with the Indemnifying Party in such defense and make available to the Indemnifying Party all witnesses and information in such Indemnitee’s possession or under such Indemnitee’s control relating thereto as are reasonably required by the Indemnifying Party; provided, however, that such access shall not require the Indemnitee to disclose any information the disclosure of which would, in the good faith judgment of the Indemnitee, result in the loss of any existing privilege with respect to such information or violate any applicable Law.

 

(d)            Notwithstanding anything to the contrary in this Section 9.4, in the event that (i) an Indemnifying Party elects not to assume the defense of a Third-Party Claim, (ii) there exists a conflict of interest or potential conflict of interest between the Indemnifying Party and the Indemnitee, (iii) any Third-Party Claim seeks an order, injunction or other equitable relief or relief for other than money damages against the Indemnitee, (iv) the Indemnitee’s exposure to Liability in connection with such Third-Party Claim is reasonably expected to exceed the Indemnifying Party’s exposure in respect of such Third-Party Claim taking into account the indemnification obligations hereunder, or (v) the Person making such Third-Party Claim is a Governmental Authority with regulatory authority over the Indemnitee or any of its material Assets, such Indemnitee shall be entitled to control the defense of such Third-Party Claim, at the Indemnifying Party’s expense, with counsel of such Indemnitee’s choosing (such counsel to be reasonably acceptable to the Indemnifying Party). If the Indemnitee is conducting the defense against any such Third-Party Claim, the Indemnifying Party shall reasonably cooperate with the Indemnitee in such defense and make available to the Indemnitee all witnesses and information in such Indemnifying Party’s possession or under such Indemnifying Party’s control relating thereto as are reasonably required by the Indemnitee; provided, however, that such access shall not require the Indemnifying Party to disclose any information the disclosure of which would, in the good faith judgment of the Indemnifying Party, result in the loss of any existing privilege with respect to such information or violate any applicable Law.

 

(e)            Unless the Indemnifying Party has failed to assume the defense of the Third-Party Claim in accordance with the terms of this Agreement, no Indemnitee may settle or compromise any Third-Party Claim without the consent of the Indemnifying Party (not to be unreasonably withheld, conditioned or delayed). If an Indemnifying Party has failed to assume the defense of the Third-Party Claim, it shall not be a defense to any obligation to pay any amount in respect of such Third-Party Claim that the Indemnifying Party was not consulted in the defense thereof, that such Indemnifying Party’s views or opinions as to the conduct of such defense were not accepted or adopted, that such Indemnifying Party does not approve of the quality or manner of the defense thereof or that such Third-Party Claim was incurred by reason of a settlement rather than by a judgment or other determination of liability.

 

 

(f)            In the case of a Third-Party Claim, no Indemnifying Party shall consent to entry of any judgment or enter into any settlement of the Third-Party Claim without the consent (not to be unreasonably withheld, conditioned or delayed) of the Indemnitee if the effect thereof is to permit any injunction, declaratory judgment, other order or other non-monetary relief to be entered, directly or indirectly, against any Indemnitee, does not release the Indemnitee from all liabilities and obligations with respect to such Third-Party Claim or includes an admission of guilt or liability on behalf of the Indemnitee.

 

(g)            Absent fraud or intentional misconduct by an Indemnifying Party, the indemnification provisions of this Article IX shall be the sole and exclusive remedy of an Indemnitee for any monetary or compensatory damages or Losses resulting from any breach of this Agreement or any Ancillary Agreement, and each Indemnitee expressly waives and relinquishes any and all rights, claims or remedies such Person may have with respect to the foregoing other than under this Article IX against any Indemnifying Party.

 

Section 9.5         Indemnification Obligations Net of Insurance Proceeds. The Parties intend that any Loss subject to indemnification or reimbursement pursuant to this Article IX (an “Indemnifiable Loss”) will be net of Insurance Proceeds that actually reduce the amount of the Loss. Accordingly, the amount which an Indemnifying Party is required to pay to any Indemnitee will be reduced by any Insurance Proceeds actually recovered by or on behalf of the Indemnitee in reduction of the related Loss. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Loss and subsequently receives Insurance Proceeds to which the Indemnitee is entitled, the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payments received over the amount of the Indemnity Payments that would have been due if the Insurance Proceeds recovery had been received, realized or recovered before the Indemnity Payments were made. The Indemnitee shall use and cause its Affiliates to use commercially reasonable efforts to recover any Insurance Proceeds to which the Indemnitee is entitled with respect to any Indemnifiable Loss. The existence of a claim by an Indemnitee for insurance proceeds or against a third party in respect of any Indemnifiable Loss shall not, however, delay any payment pursuant to the indemnification provisions contained in this Article IX and otherwise determined to be due and owing by an Indemnifying Party; rather, the Indemnifying Party shall make payment in full of such amount so determined to be due and owing by it against a concurrent written assignment by the Indemnitee to the Indemnifying Party of the portion of the claim of the Indemnitee for such insurance or against such third party equal to the amount of such payment. The Indemnitee shall use and cause its Affiliates to use commercially reasonable efforts to assist the Indemnifying Party in recovering or to recover on behalf of the Indemnifying Party, any Insurance Proceeds to which the Indemnifying Party is entitled with respect to any Indemnifiable Loss as a result of such assignment. The Indemnitee shall make available to the Indemnifying Party and its counsel all employees, books and records, communications, documents, items or matters within its knowledge, possession or control that are necessary, appropriate or reasonably deemed relevant by the Indemnifying Party with respect to the recovery of such Insurance Proceeds; provided, however, that nothing in this sentence shall be deemed to require a Party to make available books and records, communications, documents or items which (i) in such Party’s good faith judgment could result in a waiver of any privilege even if the Parties cooperated to protect such privilege as contemplated by this Agreement or (ii) such Party is not permitted to make available because of any Law or any confidentiality obligation to a third party, in which case such Party shall use commercially reasonable efforts to seek a waiver of or other relief from such confidentiality restriction. Unless the Indemnifying Party has made payment in full of any Indemnifiable Loss, such Indemnifying Party shall use and cause its Affiliates to use commercially reasonable efforts to recover any Insurance Proceeds to which it or such Affiliate is entitled with respect to any Indemnifiable Loss.

 

 

Section 9.6         Contribution. If the indemnification provided for in this Article IX is unavailable to an Indemnitee in respect of any Indemnifiable Loss, then the Indemnifying Party, in lieu of indemnifying such Indemnitee, shall contribute to the Losses paid or payable by such Indemnitee as a result of such Indemnifiable Loss in such proportion as is appropriate to reflect the relative fault of NLOP and each other member of the NLOP Group, on the one hand, and WPC and each other member of the WPC Group, on the other hand, in connection with the circumstances which resulted in such Indemnifiable Loss.

 

Section 9.7         Remedies Cumulative. The remedies provided in this Article IX shall be cumulative and, subject to the provisions of Article X, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

 

Section 9.8         Survival of Indemnities. The rights and obligations of each of the Parties and their respective Indemnitees under this Article IX shall survive the Distribution Date indefinitely, unless a specific survival or other applicable period is expressly set forth herein, and shall survive the sale or other transfer by any Party or any of its Subsidiaries of any Assets or businesses or the assignment by it of any Liabilities.

 

Section 9.9         Limitation of Liability. EXCEPT TO THE EXTENT SPECIFICALLY PROVIDED IN ANY ANCILLARY AGREEMENT, IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY EXEMPLARY, PUNITIVE, SPECIAL, INDIRECT, CONSEQUENTIAL, REMOTE OR SPECULATIVE DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF ANY PROVISION OF THIS AGREEMENT, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

 

Article X

 

DISPUTE RESOLUTION

 

Section 10.1       Appointed Representative. Each Party shall appoint a representative who shall be responsible for administering the dispute resolution provisions in Section 10.2 (each, an “Appointed Representative”). Each Appointed Representative shall have the authority to resolve any Agreement Disputes on behalf of the Party appointing such representative.

 

Section 10.2       Negotiation and Dispute Resolution.

 

(a)            Except as otherwise provided in this Agreement or in any Ancillary Agreement, in the event of a controversy, dispute or claim arising out of, in connection with, or in relation to the interpretation, performance, nonperformance, validity, termination or breach of this Agreement or any Ancillary Agreement or otherwise arising out of, or in any way related to this Agreement or any Ancillary Agreement or any of the transactions contemplated hereby or thereby (each, an “Agreement Dispute”), the Appointed Representatives shall negotiate in good faith for thirty (30) days to settle any such Agreement Dispute.

 

 

(b)            Nothing said or disclosed, nor any document produced, in the course of any negotiations, conferences and discussions in connection with efforts to settle an Agreement Dispute that is not otherwise independently discoverable shall be offered or received as evidence or used for impeachment or for any other purpose, but shall be considered as to have been disclosed for settlement purposes.

 

(c)            If a satisfactory resolution of any Agreement Dispute is not achieved by the Appointed Representatives within thirty (30) days, each Party will be entitled to refer the dispute to arbitration in accordance with Section 10.3.

 

Section 10.3       Arbitration.

 

(a)            If a satisfactory resolution of any Agreement Dispute is not achieved by the Appointed Representatives within thirty (30) days, such Agreement Dispute shall, on the demand of either Party, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 10.3.

 

(b)            There shall be three (3) arbitrators. Each Party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the Parties. If either Party fails to timely select an arbitrator then the Party who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with either Party) and the Party that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the Party fails to select the second (2^nd) arbitrator by that time, the Party who has appointed the first (1^st ) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2^nd) arbitrator; and if such Party should fail to select the second (2^nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2^nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3^rd) and presiding arbitrator (who shall be neutral and impartial and unaffiliated with either Party) within fifteen (15) days of the appointment of the second (2^nd) arbitrator. If the third (3^rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each Party having a limited number of strikes, excluding strikes for cause.

 

(c)            The place of arbitration shall be New York, New York, unless otherwise agreed by the Parties.

 

(d)            There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)            In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the laws of the State of Maryland. Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. Any award shall be subject to the provisions of Section 9.9. The Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. Any monetary award shall be made and payable in U.S. dollars. Subject to Section 10.3(g), the Party against which the Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30^th) day following the date of the Award or such other date as the Award may provide.

 

 

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the Parties, each Party shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees). Each Party shall bear the costs and expenses of its selected arbitrator and the Parties shall equally bear the costs and expenses of the third (3^rd) appointed arbitrator.

 

(g)            Notwithstanding any language to the contrary in this Agreement, the Award, including but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). The Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within (30) days of receipt of the Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, this Section 10.3(g) shall apply to any appeal pursuant to this Section 10.3(g) and the appeal tribunal shall not render an award that would include shifting of any costs or expenses (including attorneys’ fees) of either Party.

 

(h)            Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 10.3(g), the Award shall be final and binding upon the Parties and shall be the sole and exclusive remedy between the Parties relating to the Agreement Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(i)            This Section 10.3 is intended to benefit and be enforceable by the Parties and their respective successors and assigns and shall be binding upon the Parties, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

(j)            The arbitrators may consolidate arbitration under this Agreement with any arbitration arising under or relating to any of the Ancillary Agreements if the subjects of the Agreement Disputes thereunder arise out of or relate essentially to the same set of facts or transactions. Such consolidated arbitration will be determined by the arbitrators appointed for the arbitration proceeding that was commenced first in time.

 

(k)            Unless otherwise agreed in writing, the Parties will continue to provide service and honor all other commitments under this Agreement and each Ancillary Agreement during the course of dispute resolution pursuant to the provisions of this Article X with respect to all matters not subject to such dispute resolution.

 

Article XI

 

TERMINATION

 

Section 11.1       Termination. Upon written notice, this Agreement and each of the Ancillary Agreements, may be terminated at any time prior to the Effective Time by and in the sole discretion of WPC without the approval of any other Party.

 

 

Section 11.2       Effect of Termination. In the event of termination pursuant to Section 11.1, neither Party shall have any Liability of any kind to the other Party.

 

Article XII

 

MISCELLANEOUS

 

Section 12.1       Further Assurances. Subject to the limitations or other provisions of this Agreement, (a) each Party shall, and shall cause the other members of its Group to, use commercially reasonable efforts (subject to, and in accordance with applicable Law) to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly, and to assist and cooperate with the other Party in doing, all things reasonably necessary, proper or advisable to consummate and make effective the Transactions and to carry out the intent and purposes of this Agreement, including using commercially reasonable efforts to obtain satisfaction of the conditions precedent in Article V within its reasonable control, and to perform all covenants and agreements herein applicable to such Party or any member of its Group and (b) neither Party will, nor will either Party allow any other member of its Group to, without the prior written consent of the other Party, take any action which would reasonably be expected to prevent or materially impede, interfere with or delay any of the Transactions. Without limiting the generality of the foregoing, where the cooperation of third parties, such as insurers or trustees, would be necessary in order for a Party to completely fulfill its obligations under this Agreement, such Party shall use commercially reasonable efforts to cause such third parties to provide such cooperation.

 

Section 12.2       Payment of Expenses. All costs and expenses incurred related to this Agreement, the Ancillary Agreements and the Transactions on or prior to the Distribution Date, shall be the responsibility of NLOP and paid by NLOP (or, if paid by WPC, reimbursed by NLOP). Following the Separation, unless as otherwise set forth in the Ancillary Agreements or else agreed in writing by the Parties, each Party shall pay their own costs and expenses.

 

Section 12.3       Amendments and Waivers.

 

(a)            Subject to Section 11.1, this Agreement may not be amended except by an agreement in writing signed by both Parties.

 

(b)            Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party entitled to the benefit thereof and any such waiver shall be validly and sufficiently given for the purposes of this Agreement if it is in writing signed by an authorized representative of such Party. No delay or failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that either Party would otherwise have.

 

Section 12.4       Entire Agreement. This Agreement, the Ancillary Agreements, and the Exhibits and Schedules referenced herein and therein and attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior negotiations, agreements, commitments, writings, courses of dealing and understandings with respect to the subject matter hereof.

 

 

Section 12.5        Survival of Agreements. Except as otherwise expressly contemplated by this Agreement, all covenants and agreements of the Parties contained in this Agreement shall survive the Effective Time and remain in full force and effect in accordance with their applicable terms.

 

Section 12.6        Third Party Beneficiaries. Except (a) as provided in Article IX relating to Indemnitees and for the release of any Person provided under Section 9.1, (b) as provided in Section 7.1 relating to insured persons and (c) as provided in Section 8.1(a), this Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

 

Section 12.7        Notices. All notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) five (5) Business Days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile, (c) when delivered, if delivered personally to the intended recipient, and (d) one (1) Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a Party at the following address for such Party:

 

(a)            If to WPC:

 

One Manhattan West

395 Ninth Avenue

New York, NY 10001

Attention: Chief Legal Officer

 

(b)            If to NLOP:

 

c/o W. P. Carey Inc.

One Manhattan West 

395 Ninth Avenue

New York, NY 10001

Attention: Chief Legal Officer

 

Section 12.8        Counterparts; Electronic Delivery. This Agreement may be executed in multiple counterparts, each of which when executed shall be deemed to be an original, but all of which together shall constitute one and the same agreement. Execution and delivery of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic means shall be deemed to be, and shall have the same legal effect as, execution by an original signature and delivery in person.

 

Section 12.9        Severability. If any term or other provision of this Agreement or the Exhibits and Schedules attached hereto or thereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

 

 

Section 12.10      Assignability; Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided, however, that the rights and obligations of each Party under this Agreement shall not be assignable, in whole or in part, directly or indirectly, whether by operation of law or otherwise, by such Party without the prior written consent of the other Party (such consent not to be unreasonably withheld, conditioned or delayed) and any attempt to assign any rights or obligations under this Agreement without such consent shall be null and void. Notwithstanding the foregoing, either Party may assign its rights and obligations under this Agreement to any of their respective Affiliates provided that no such assignment shall release such assigning Party from any liability or obligation under this Agreement.

 

Section 12.11      Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of New York, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

 

Section 12.12      Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and judgment. The Parties have had access to independent legal advice, have conducted such investigations they thought appropriate, and have consulted with such other independent advisors as they deemed appropriate regarding this Agreement and their rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement, except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents, representatives or attorneys) to disclose any information in connection with the execution of this Agreement or their preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of the other Party as a ground for challenging this Agreement.

 

Section 12.13      Performance. Each Party shall cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party.

 

Section 12.14      Title and Headings. Titles and headings to Sections and Articles are inserted for the convenience of reference only and are not intended to be a part of or to affect the meaning or interpretation of this Agreement.

 

Section 12.15      Exhibits and Schedules. The Exhibits and Schedules attached hereto are incorporated herein by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein.

 

Section 12.16      Exclusivity of Tax Matters. Notwithstanding any other provision of this Agreement (other than Sections 2.2(b)(v), 4.3(b), 4.3(c), and 7.3), the Tax Matters Agreement shall exclusively govern all matters related to Taxes (including allocations thereof) addressed therein.

 

[Signature Page Follows]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their respective officers as of the date first set forth above.

 

	W. P. Carey Inc.
	By:	/s/ ToniAnn Sanzone
		Name:	ToniAnn Sanzone
		Title:	Chief Financial Officer
	Net Lease Office Properties
	By:	/s/ Jason E. Fox
		Name:	Jason E. Fox
		Title:	Chief Financial Officer

 

 

[Signature Page to Separation and Distribution Agreement]

 

 

ExhibiT A

 

NLOP Subsidiaries

 

Subsidiary		State/Country of Incorporation/Formation
NLO OP LLC		Delaware
NLO Mezzanine Borrower LLC		Delaware
NLO Pledgor LLC		Delaware
NLO MB TRS LLC		Delaware
NLO Holding Company LLC		Delaware
NLO SubREIT LLC		Delaware
NLO International Holding LP		Delaware
NLO International Holding GP TRS LLC		Delaware
NLO Financing B.V.		Netherlands
NLO Holding B.V.		Netherlands
308 Route 38 LLC		Delaware
500 Jefferson Tower (TX) LLC		Delaware
6000 Nathan (MN) LLC		Delaware
601 Jefferson Manager (DE) LLC		Delaware
601 Jefferson Tower (TX) LLC		Delaware
ADS2 (CA) LLC		Delaware
AIRLIQ (TX) LLC		Delaware
AUTOPRO (GA) LLC		Delaware
Call LLC		Delaware
Develop (TX) LP		Delaware
Drug (AZ) LLC		Delaware
FLOUR POWER (OH) LLC		Delaware
GRC-II (TX) LLC		Delaware
GRC-II (TX) Limited Partnership		Delaware
Health Landlord (MN) LLC		Delaware
HM Benefits (MI) LLC		Delaware
HNGS AUTO (MI) LLC		Delaware
ICall BTS (VA) LLC		Delaware
JPCENTRE (TX) LLC		Delaware
JPCENTRE Manager (TX) LLC		Delaware
JPTampa Management (FL) LLC		Delaware
Medi (PA) LLC		Delaware
Mercury (MI) LLC		Delaware
Metaply (MI) LLC		Delaware

 

 

Morisek Hoffman (IL) LLC		Delaware
Morrisville Landlord (NC) LP		Delaware
Morrisville Landlord GP (NC) LLC		Delaware
Oak Creek 17 Investor (WI) LLC		Delaware
Popcorn (TX) LLC		Delaware
RACO (AZ) LLC		Delaware
Roosevelt Blvd North (FL) LLC		Delaware
RRD (IL) LLC		Delaware
RUSH IT LLC		Delaware
Spring Forest Road (NC) LLC		Delaware
Stone Oak 17 (TX) LLC		Delaware
Telegraph (MO) LLC		Delaware
Truth (MN) LLC		Delaware
USO Landlord (TX) LLC		Delaware
Vandenburg Blvd (PA) LLC		Delaware
WPC Crown Colony (MA) LLC		Delaware
(CA) ADS, LLC		Delaware
Avasu (AZ) LLC		Delaware
Avasu (AZ) Transferee LLC		Delaware
Boom (MN) LLC		Delaware
Boom (MN) Transferee LLC		Delaware
CII Landlord (IL) LLC		Delaware
CII Landlord (IL) MM LLC		Delaware
GRC GP (TX) LLC		Delaware
GRC (TX) LP		Delaware
Hawk (IA) LLC		Delaware
Hawk Landlord (IA) LLC		Delaware
Hawk JV Landlord (IA) LLC		Delaware
Jax Costa (FL) LLC		Delaware
Jax Costa Transferee LLC		Delaware
Jax Costa Transferee Principal LLC		Delaware
Merge (WI) LLC		Delaware
Merge (WI) Transferee LLC		Delaware
MIS EGN (MN) LLC		Delaware
MIS-EGN (MN) Transferee LLC		Delaware
Orlando Storage 17 (FL) LLC		Delaware
Turbo Headquarters (TX) LLC		Delaware
Turbo Headquarters (TX) Transferee LLC		Delaware
Venice (CA) LP		Delaware
Venice (CA) Transferee LLC		Delaware
Venice (CA) Transferee Principal LLC		Delaware
ØAV 88 AS		Norway
Finnestadveien 44 II AS		Norway
NLO Admir B.V.		Netherlands
NLO Npow B.V.		Netherlands
NLOP Noki Sp. z o.o.		Poland

 

Exhibit 10.2

 

 

TAX MATTERS AGREEMENT

 

BY AND BETWEEN

 

W. P. CAREY INC.

 

AND

 

NET LEASE OFFICE PROPERTIES

 

DATED AS OF OCTOBER 31, 2023

 

 

 

TABLE OF CONTENTS

 

Page

 

Article 1 Definitions			2
	Section 1.1	Definitions	2
	Section 1.2	Interpretation and Rules of Construction	6
Article 2 Allocation of Taxes			7
	Section 2.1	General Rule	7
	Section 2.2	General Allocation Principles	7
	Section 2.3	Allocation Conventions	8
	Section 2.4	Transfer Taxes	8
Article 3 Tax Returns			8
	Section 3.1	WPC Separate Returns and Joint Returns	8
	Section 3.2	NLOP Separate Tax Returns	8
	Section 3.3	Tax Reporting Practices	9
	Section 3.4	Adjustments	9
	Section 3.5	Tax Attributes	9
Article 4 Tax Payments & Benefits			9
	Section 4.1	Taxes Shown on Tax Returns	9
	Section 4.2	Certain Adjustments Resulting in Underpayments	9
	Section 4.3	Indemnification Payments	10
	Section 4.4	Tax Refunds	10
Article 5 [Reserved]			10
Article 6 Assistance and Cooperation			10
	Section 6.1	Assistance and Cooperation	10
	Section 6.2	Tax Return Information	11
Article 7 Tax Records			11
	Section 7.1	Retention of Tax Records	11
	Section 7.2	Access to Tax Records	12
	Section 7.3	Preservation of Privilege	12
Article 8 Tax Contests			12
	Section 8.1	Notice	12
	Section 8.2	Control of Tax Contests	12
Article 9 Tax Treatment of Payments			14
Article 10 Indemnification Payment Escrow			14
Article 11 General Provisions			15
	Section 11.1	Amendments and Waivers	15
	Section 11.2	Survival of Obligations	15

 

 

	Section 11.3	Dispute Resolution	15
	Section 11.4	Notices	16
	Section 11.5	Severability	16
	Section 11.6	Counterparts	17
	Section 11.7	Entire Agreement; No Third-Party Beneficiaries	17
	Section 11.8	Governing Law	17
	Section 11.9	Assignment; Binding Effect	17
	Section 11.10	Remedies	17
	Section 11.11	Waiver of Jury Trial	18
	Section 11.12	Authorship	18

 

 

TAX MATTERS AGREEMENT

 

This TAX MATTERS AGREEMENT (this “Agreement”), dated as of October 31, 2023, is by and between W. P. Carey Inc., a Maryland corporation (“WPC”), and Net Lease Office Properties (“NLOP”), a Maryland real estate investment trust and wholly-owned subsidiary of WPC. Each of WPC and NLOP (and, solely with respect to Section 2.1(a)(iv) and Sections 1(b) and 3 of Appendix B, NLO Mezzanine Borrower LLC (“Mezz Borrower”)) is sometimes referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Separation and Distribution Agreement dated as of October 31, 2023 by and among WPC and NLOP (the “Separation and Distribution Agreement”).

 

RECITALS

 

WHEREAS, WPC, through its Subsidiaries, has previously acquired the NLOP Assets;

 

WHEREAS, NLOP intends to elect to be treated as a real estate investment trust for federal income tax purposes (a "REIT”);

 

WHEREAS, WPC and NLOP have entered into the Separation and Distribution Agreement, pursuant to which the Parties will complete the Separation, as provided for in a series of contribution and transfer agreements pursuant to Article II of the Separation and Distribution Agreement, whereby WPC has contributed (i) certain NLOP Assets and (ii) 100% of the equity interests in each entity holding the remainder of the NLOP Assets, to NLOP or a NLOP Subsidiary;

 

WHEREAS, pursuant to the Separation and Distribution Agreement, on the Distribution Date, WPC will complete the distribution of NLOP Common Shares to each Record Holder, as set forth more fully in Section 4.3 of the Separation and Distribution Agreement (such distribution transaction, the “Distribution”); and

 

WHEREAS, the Parties desire to set forth their agreement on the rights and obligations of the Parties with respect to (A) the administration and allocation of federal, state, local, and foreign Taxes incurred in Tax Periods beginning prior to the date of the Distribution (the “Distribution Date”), (B) Taxes resulting from the Distribution and transactions effected in connection with the Distribution and (C) various other Tax matters;

 

NOW THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

 

 

Article 1
Definitions

 

Section 1.1         Definitions.

 

(a)            For purposes of this Agreement:

 

“Adjustment Request” means any formal or informal claim or request filed with any Tax Authority, or with any administrative agency or court, for the adjustment, refund, or credit of Taxes, including (i) any amended Tax Return claiming adjustment to the Taxes as reported on the Tax Return or, if applicable, as previously adjusted, (ii) any claim for equitable recoupment or other offset, and (iii) any claim for refund or credit of Taxes previously paid.

 

“Agreement Dispute” has the meaning set forth in the Separation and Distribution Agreement.

 

“Allowed Amount” has the meaning set forth in Article 10 of this Agreement.

 

“Ancillary Agreement” has the meaning set forth in the Separation and Distribution Agreement.

 

“Boot” has the meaning set forth in Appendix A.

 

“Business Day” has the meaning set forth in the Separation and Distribution Agreement.

 

“Change in Control” means any transaction or series of related transactions in which (a) all or substantially all of the assets of NLOP or WPC, as applicable, are sold, assigned, hypothecated, pledged or otherwise transferred to a third party; or (b) possession or control of a controlling portion of the equity interests in NLOP or WPC, as applicable, is directly or indirectly acquired by a third party.

 

“Controlling Party” has the meaning set forth in Section 8.2(c) of this Agreement.

 

"Coverage Limit” means the limitation on WPC’s indemnification of NLOP Group under Section 4.2 described in Appendix C.

 

“Coverage Period” has the meaning set forth in Appendix C.

 

“Distribution Date” has the meaning set forth in the recitals to this Agreement.

 

“Escrowed Amount” has the meaning set forth in Article 11 of this Agreement.

 

“Final Determination” means the final resolution of liability for any Tax, which resolution may be for a specific issue or adjustment or for any Tax Period, (i) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of acceptance by or on behalf of the taxpayer, or by a comparable form under the laws of a state, local, or foreign taxing jurisdiction, except that a Form 870 or 870-AD or comparable form shall not constitute a Final Determination to the extent that it reserves (whether by its terms or by operation of law) the right of the taxpayer to file a claim for refund or the right of the Tax Authority to assert a further deficiency in respect of such issue or adjustment or for such Tax Period (as the case may be); (ii) by a decision, judgment, decree, or other order by a court of competent jurisdiction, which has become final and unappealable; (iii) by a closing agreement or accepted offer in compromise under Sections 7121 or 7122 of the Code, or a comparable agreement under the laws of a state, local, or foreign taxing jurisdiction; (iv) by any allowance of a refund or credit in respect of an overpayment of a Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax; (v) by a final settlement resulting from a treaty-based competent authority determination; or (vi) by any other final disposition, including by reason of the expiration of the applicable statute of limitations, the execution of a pre-filing agreement with the IRS or other Tax Authority, or by mutual agreement of the Parties.

 

 

“Governmental Authority” means any U.S. federal, state, local or non-U.S. court, government, department, commission, board, bureau, agency, official or other regulatory, administrative or governmental authority.

 

“Group” means either the NLOP Group or the WPC Group, as the context requires.

 

“Income Tax” means all U.S. federal, state, local and foreign income, franchise or similar Taxes imposed on (or measured by) net income or net profits.

 

“Indemnification Payee” has the meaning set forth in Article 10 of this Agreement.

 

“Indemnification Payment” has the meaning set forth in Article 10 of this Agreement.

 

“Indemnification Payor” has the meaning set forth in Article 10 of this Agreement.

 

“Intended Tax Treatment” means the tax treatment set forth on Appendix A.

 

“Joint Return” means any Tax Return that includes, by election or otherwise, one or more members of the WPC Group together with one or more members of the NLOP Group.

 

“Mezz Borrower” has the meaning set forth in the recitals to this Agreement.

 

“NLOP Assets” has the meaning set forth in the Separation and Distribution Agreement.

 

“NLOP Common Shares” has the meaning set forth in the Separation and Distribution Agreement.

 

“NLOP Financing Arrangements” has the meaning set forth in the Separation and Distribution Agreement.

 

“NLOP Group” means NLOP and the NLOP Subsidiaries.

 

“NLOP Separate Tax Return” means any Tax Return of any member of the NLOP Group (including any consolidated, combined or unitary return) that does not include any member of the WPC Group.

 

“NLOP Subsidiaries” has the meaning set forth in the Separation and Distribution Agreement.

 

“Non-Controlling Party” has the meaning set forth in Section 8.2(c) of this Agreement.

 

“Parties” and “Party” have the meaning set forth in the preamble to this Agreement.

 

“Past Practices” has the meaning set forth in Section 3.3(a) of this Agreement.

 

“Payor” has the meaning set forth in Section 4.3(a) of this Agreement.

 

 

“Positive Tax Opinion or Ruling” has the meaning set forth in Article 10 of this Agreement.

 

“Pre-Distribution Tax Period” means any Tax period ending on or before the Distribution Date.

 

“Prime Rate” means the “prime rate” as published in The Wall Street Journal, Eastern Edition.

 

“Prior Group” means any group that filed or was required to file (or will file or be required to file) a Tax Return, for a Tax Period or portion thereof ending at the close of the Distribution Date, , on an affiliated, consolidated, combined, unitary, fiscal unity or other group basis (including as permitted by Section 1501 of the Code) that includes at least one member of the NLOP Group.

 

“Privilege” means any privilege that may be asserted under applicable law, including, any privilege arising under or relating to the attorney-client relationship (including the attorney-client and work product privileges), the accountant-client privilege and any privilege relating to internal evaluation processes.

 

“Protected REIT” means any entity that (i) has elected or intends to elect to be taxed as a REIT, and (ii) either (A) is an Indemnification Payee or Required Party or (B) owns a direct or indirect equity interest in an Indemnification Payee or Required Party and is treated for purposes of Section 856 of the Code as (x) owning all or a portion of the assets of such Indemnification Payee or Required Party or (y) as receiving all or a portion of such Indemnification Payee’s or Required Party’s income.

 

“Qualifying Income” has the meaning set forth in Article 11 of this Agreement.

 

“Record Holder” has the meaning set forth in the Separation and Distribution Agreement.

 

“REIT” has the meaning set forth in the preamble to this Agreement.

 

“Required Party” has the meaning set forth in Section 4.3(a) of this Agreement.

 

“Responsible Party” means, with respect to any Tax Return, the Party having responsibility for preparing and filing such Tax Return under this Agreement.

 

“Restructuring Transactions” means those transactions identified on Appendix A.

 

“Retention Date” has the meaning set forth in Section 8.1 of this Agreement.

 

“Ruling” means a private letter ruling from the IRS regarding the Tax treatment of all or any part of the transactions contemplated by the Separation and Distribution Agreement.

 

“Separation” has the meaning set forth in the Separation and Distribution Agreement.

 

“Subsidiary” has the meaning set forth in the Separation and Distribution Agreement.

 

 

“Tax” or “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social security, workers compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, escheat, alternative minimum, universal service fund, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any Governmental Authority or political subdivision thereof, and any interest, penalty, additions to tax or additional amounts in respect of the foregoing.

 

“Tax Advisor” means a Tax counsel or accountant, in each case of recognized national standing.

 

“Tax Attribute” means a net operating loss, net capital loss, unused investment credit, unused foreign Tax credit (including credits of a foreign company under Section 902 of the Code), excess charitable contribution, general business credit, excess business interest expense carryforward, earnings and profits, basis, or any other Tax Item that could reduce a Tax or create a Tax Benefit.

 

“Tax Authority” means, with respect to any Tax, the Governmental Authority or political subdivision thereof that imposes such Tax, and the agency (if any) charged with the collection of such Tax for such entity or subdivision.

 

“Tax Benefit” means any refund, credit, or other item that causes reduction in otherwise required liability for Taxes.

 

“Tax Contest” means an audit, review, examination, contest, litigation, investigation or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).

 

“Tax Item” means, with respect to any Income Tax, any item of income, gain, loss, deduction, or credit.

 

“Tax Law” means the law of any Governmental Authority or political subdivision thereof relating to any Tax.

 

“Tax Period” means, with respect to any Tax, the period for which the Tax is reported as provided under the Code or other applicable Tax Law.

 

“Tax Records” means any (i) Tax Returns, (ii) Tax Return workpapers, (iii) documentation relating to any Tax Contests, and (iv) any other books of account or records (whether or not in written, electronic or other tangible or intangible forms and whether or not stored on electronic or any other medium) maintained or required to be maintained under the Code or other applicable Tax Laws or under any record retention agreement with any Tax Authority, in each case filed or required to be filed with respect to or otherwise relating to Taxes.

 

“Tax Return” means any report of Taxes due, any claim for refund of Taxes paid, any information return with respect to Taxes, or any other similar report, statement, declaration, or document filed or required to be filed under the Code or other Tax Law with respect to Taxes, including any attachments, exhibits, or other materials submitted with any of the foregoing, and including any amendments or supplements to any of the foregoing.

 

 

“Transfer Taxes” means all sales, use, transfer, real property transfer, intangible, recordation, registration, documentary, stamp or similar Taxes imposed in connection with the Restructuring Transactions or the Distribution (excluding in each case, for the avoidance of doubt, any Income Taxes).

 

“Treasury Regulations” means the regulations promulgated from time to time under the Code as in effect for the relevant Tax Period.

 

“WPC Group” means WPC and the Subsidiaries of WPC other than NLOP and the NLOP Subsidiaries.

 

“WPC Separate Tax Return” means any Tax Return of any member of the WPC Group (including any consolidated, combined or unitary return) that does not include any member of the NLOP Group.

 

Section 1.2         Interpretation and Rules of Construction. In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

 

(a)            when a reference is made in this Agreement to an Article, Section or Exhibit, such reference is to an Article or Section of, or an Exhibit to, this Agreement;

 

(b)            the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

 

(c)            whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

 

(d)            the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

 

(e)            references to any agreement, instrument, statute, rule or regulation are to the agreement, instrument, statute, rule or regulation as amended, modified, supplemented or replaced from time to time, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession of comparable successor statutes, and all attachments thereto and instruments incorporated therein (and, in the case of statutes, include any rules and regulations promulgated under the statute);

 

(f)            all terms defined in this Agreement have the defined meanings when used in any certificate or other document made or delivered pursuant hereto, unless otherwise defined therein;

 

(g)            the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as the feminine and neuter genders of such terms;

 

(h)            references to a Person are also to its successors and permitted assigns;

 

 

(i)             except when used together with the word “either” or otherwise for the purpose of identifying mutually exclusive alternatives, the term “or” has the inclusive meaning represented by the phrase “and/or”;

 

(j)             all uses of currency or the symbol “$” in this Agreement refer to U.S. dollars; and

 

(k)            where this Agreement states that a Party “shall,” “will” or “must” perform in some manner, it means that the Party is legally obligated to do so under this Agreement.

 

Article 2
Allocation of Taxes

 

Section 2.1         General Rule. All Taxes shall be allocated as follows:

 

(a)            WPC Liability. Except with respect to Taxes described in Section 2.1(b) of this Agreement, WPC shall be liable for, and shall indemnify and hold harmless the NLOP Group from and against any liability for:

 

(i)            Taxes that are allocated to WPC under this Article 2;

 

(ii)           any Tax resulting from a breach of any of WPC’s covenants in Section 3.3, Section 3.4, or Section 4.1 of this Agreement;

 

(iii)          Taxes imposed on NLOP or any member of the NLOP Group pursuant to the provisions of Treasury Regulations § 1.1502-6 (or similar provisions of state, local, or foreign Tax Law) as a result of any such member being or having been a member of a Prior Group; and

 

(iv)          without duplication, any Tax or loss incurred by Mezz Borrower resulting from (x) a breach of WPC’s obligation to make the election described in Section 1(b) of Appendix B or (y) resulting from a breach of WPC’s covenant in Section 3 of Appendix B.

 

(b)            NLOP Liability. NLOP shall be liable for, and shall indemnify and hold harmless the WPC Group from and against any liability for:

 

(i)            Taxes that are allocated to NLOP under this Article 2; and

 

(ii)           Any Tax resulting from a breach of any of NLOP’s covenants in Section 3.3, Section 3.4, or Section 4.1 of this Agreement.

 

Section 2.2         General Allocation Principles. All Taxes shall be allocated as follows:

 

(a)            Allocation of Taxes for Joint Returns. WPC shall be responsible for all Taxes reported, or required to be reported, on any Joint Return that any member of the WPC Group files or is required to file under the Code or other applicable Tax Law.

 

 

(b)            Allocation of Taxes for Separate Returns.

 

(i)            WPC shall be responsible for all Taxes reported, or required to be reported, on a WPC Separate Tax Return.

 

(ii)           NLOP shall be responsible for all Taxes reported, or required to be reported, on a NLOP Separate Tax Return.

 

(c)            Taxes Not Reported on Tax Returns.

 

(i)            WPC shall be responsible for any Tax attributable to any member of the WPC Group that is not required to be reported on a Tax Return.

 

(ii)           NLOP shall be responsible for any Tax attributable to any member of the NLOP Group that is not required to be reported on a Tax Return.

 

Section 2.3         Allocation Conventions. Any Tax Item of NLOP or any member of the NLOP Group arising from a transaction engaged in outside of the ordinary course of business on the Distribution Date after the Effective Time shall be properly allocable to NLOP and any such transaction by or with respect to NLOP or any member of the NLOP Group occurring after the Effective Time shall be treated for all Tax purposes (to the extent permitted by applicable Tax Law) as occurring at the beginning of the day following the Distribution Date in accordance with the principles of Treasury Regulation § 1.1502-76(b) or any similar provisions of state, local or non-U.S. Law.

 

Section 2.4         Transfer Taxes. Any Transfer Taxes shall be allocated solely to NLOP.

 

Article 3
Tax Returns

 

Section 3.1         WPC Separate Returns and Joint Returns. WPC shall prepare and file, or cause to be prepared and filed, all WPC Separate Returns and Joint Returns, and each member of the NLOP Group to which any such Joint Return relates shall execute and file such consents, elections and other documents as WPC may determine, after consulting with NLOP in good faith, are required or appropriate, or otherwise requested by WPC in connection with the filing of such Joint Return. NLOP will elect and join, and will cause its respective Affiliates to elect and join, in filing any Joint Returns that WPC determines are required to be filed or that WPC elects to file, in each case pursuant to this Section 3.1.

 

Section 3.2         NLOP Separate Tax Returns. NLOP shall prepare and file (or cause to be prepared and filed) all NLOP Separate Tax Returns and all Tax Returns with respect to Transfer Taxes.

 

 

Section 3.3         Tax Reporting Practices.

 

(a)            General Rule. Except as provided in Section 3.3(b) of this Agreement, WPC shall prepare all Joint Returns and NLOP shall prepare all NLOP Separate Tax Returns in accordance with past practices, permissible accounting methods, elections or conventions (“Past Practices”) used by the members of the NLOP Group and the members of the WPC Group prior to the Distribution Date. With respect to any Tax Return that NLOP has the obligation and right to prepare, or cause to be prepared, under this Article 3, to the extent such Tax Return could affect WPC, such Tax Return shall be prepared in accordance with Past Practices used by the members of the WPC Group and the members of the NLOP Group prior to the Distribution with respect to such Tax Return, and to the extent any items, methods or positions are not covered by Past Practices, such Tax Return shall be prepared in accordance with reasonable Tax accounting practices selected by NLOP, subject to the consent of WPC (which consent may not be unreasonably withheld, conditioned or delayed).

 

(b)            Consistency with Intended Tax Treatment. The Parties shall (and shall cause each of their Affiliates, as applicable, to) prepare all Tax Returns consistent with the Intended Tax Treatment unless, and then only to the extent, an alternative position is required pursuant to a determination by a Tax Authority; provided, however, that neither Party shall be required to litigate before any court any challenge to the Intended Tax Treatment by a Tax Authority.

 

(c)            Tax Elections & Statements. The Parties shall (and shall cause each of their Affiliates, as applicable, to) take all actions necessary to effectuate the tax elections and file the statements described in Appendix B, in the form and as described in Appendix B.

 

Section 3.4         Adjustments.

 

(a)            NLOP hereby agrees that, unless as required by Law, no member of the NLOP Group (nor its successors) shall file any Adjustment Request with respect to any Tax Return that could affect any Joint Return or any other Tax Return that could affect WPC.

 

(b)           WPC hereby agrees that, unless NLOP consents in writing (which consent may not be unreasonably withheld, conditioned or delayed) or as required by Law, no member of the WPC Group shall file any Adjustment Request with respect to any NLOP Separate Return.

 

Section 3.5         Tax Attributes. Tax Attributes shall not be allocated or apportioned in connection with the Distribution, and shall remain with the taxpayer that is entitled to such Tax Attributes without regard to the Distribution.

 

Article 4
Tax Payments & Benefits

 

Section 4.1         Taxes Shown on Tax Returns. WPC shall pay (or cause to be paid) to the proper Tax Authority the Tax shown as due on any Tax Return that a member of the WPC Group is responsible for preparing under Article 3 of this Agreement, and NLOP shall pay (or cause to be paid) to the proper Tax Authority the Tax shown as due on any Tax Return that a member of the NLOP Group is responsible for preparing under Article 3 of this Agreement.

 

Section 4.2         Certain Adjustments Resulting in Underpayments. Except as provided in the next sentence, in the case of any adjustment pursuant to a Final Determination with respect to any Tax, the Party responsible for filing the Tax Return relating to such Tax pursuant to this Agreement shall pay to the applicable Tax Authority when due any additional Tax required to be paid as a result of such adjustment. In the event of a Tax Contest with respect to Taxes for a Pre-Distribution Period for which NLOP is responsible pursuant to Article II and for which NLOP provides written notice to WPC prior to the end of the Coverage Period, WPC shall indemnify and hold harmless the NLOP Group from any additional Taxes assessed or imposed in connection with such Tax Contest for a Pre-Distribution Period but only to the extent such Taxes are described in the Coverage Limit set forth in Appendix C.

 

 

Section 4.3         Indemnification Payments(a).   To the extent that any Party (the “Payor”) is required under applicable Tax Law to pay to a Tax Authority a Tax that another Party (the “Required Party”) is liable for under this Agreement, the Required Party shall promptly reimburse the Payor within twenty (20) Business Days of delivery by the Payor to the Required Party of an invoice for the amount due, accompanied by evidence of payment and a statement detailing the Taxes paid and describing in reasonable detail the particulars relating thereto. The Required Party shall also pay to the Payor any reasonable third-party costs and expenses related to the foregoing (including reasonable attorneys’ fees and expenses) within five (5) days after the Payor’s written demand therefor.

 

Section 4.4         Tax Refunds(a). WPC shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which WPC is liable hereunder, and NLOP shall be entitled to any refund (and any interest thereon received from the applicable Tax Authority) of Taxes for which NLOP is liable hereunder. A Party receiving a refund to which another Party is entitled hereunder shall pay over such refund to such other Party within thirty (30) Business Days after such refund is received or credited.

 

Article 5
[Reserved]

 

Article 6
Assistance and Cooperation

 

Section 6.1         Assistance and Cooperation.

 

(a)            The Parties shall cooperate (and cause their respective Affiliates to cooperate) with each other and with each other’s agents, including accounting firms and legal counsel, in connection with Tax matters relating to the Parties and their Affiliates, including (i) preparation and filing of Tax Returns, (ii) determining the liability for and amount of any Taxes due (including estimated Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of Tax Returns, and (iv) any administrative or judicial proceeding in respect of Taxes assessed or proposed to be assessed. Such cooperation shall include making all information and documents in their possession relating to any other Party and its Affiliates reasonably available to such other Party as provided in this Article 6. The Parties shall cooperate with each other and take any and all actions reasonably requested by the other in connection with obtaining Positive Tax Opinion or Ruling (including, without limitation, by making any new representation or covenant, confirming any previously made representation or covenant or providing any materials or information requested by any Tax Advisor).

 

 

(b)            Any information or documents provided under this Agreement shall be kept confidential by the Party receiving the information or documents, except as may otherwise be necessary in connection with the filing of Tax Returns or in connection with any administrative or judicial proceedings relating to Taxes. In addition, in the event that NLOP determines that the provision of any information or documents to WPC or any of its Affiliates, or WPC determines that the provision of any information or documents to NLOP or any its Affiliates, could be commercially detrimental, violate any Law or agreement or waive any Privilege, the Parties shall use commercially reasonable efforts to permit each other’s compliance with its obligations under this Article 6 in a manner that avoids any such harm or consequence.

 

Section 6.2         Tax Return Information. Each of NLOP and WPC, and each member of their respective Groups, acknowledges that time is of the essence in relation to any request for information, assistance or cooperation made pursuant to Section 6.1 of this Agreement or this Section 6.2. Each of NLOP and WPC, and each member of their respective Groups, acknowledges that failure to conform to the reasonable deadlines set by the Party making such request could cause irreparable harm. Each Party shall provide to the other Party information and documents relating to its Group reasonably required by the other Party to prepare Tax Returns, including any pro forma returns required by the Responsible Party for purposes of preparing such Tax Returns. Any information or documents the Responsible Party requires to prepare such Tax Returns shall be provided in such form as the Responsible Party reasonably requests and at or prior to the time reasonably specified by the Responsible Party so as to enable the Responsible Party to file such Tax Returns on a timely basis.

 

Article 7
Tax Records

 

Section 7.1         Retention of Tax Records. Each of NLOP and WPC shall preserve and keep all Tax Records exclusively relating to the assets and activities of its Group for Pre-Distribution Periods, for so long as the contents thereof may be or become material in the administration of any matter under the Code or other applicable Tax Law, but in any event until the later of (i) the expiration of any applicable statutes of limitations, or (ii) seven (7) years after the filing of the Tax Return to which they relate (such later date, the “Retention Date”). After the Retention Date, each of NLOP and WPC may dispose of such Tax Records. If, prior to the Retention Date, NLOP or WPC reasonably determine that any Tax Records which it would otherwise be required to preserve and keep under this Article 7 are no longer material in the administration of any matter under the Code or other applicable Tax Law and the other Party agrees, then such first Party may dispose of such Tax Records upon sixty (60) Business Days’ prior notice to the other Party. Any notice of an intent to dispose given pursuant to this Section 7.1 shall include a list of the Tax Records to be disposed of describing in reasonable detail each file, book, or other record accumulation being disposed. The notified Parties shall have the opportunity, at their cost and expense, to copy or remove, within such sixty (60) Business Day period, all or any part of such Tax Records. If, at any time prior to the Retention Date, a Party or any of its Affiliates determines to decommission or otherwise discontinue any computer program or information technology system used to access or store any Tax Records, then such program or system may be decommissioned or discontinued upon ninety (90) Business Days’ prior notice to the other Party and the other Party shall have the opportunity, at its cost and expense, to copy, within such ninety (90) Business Day period, all or any part of the underlying data relating to the Tax Records accessed by or stored on such program or system.

 

 

Section 7.2         Access to Tax Records. The Parties and their respective Affiliates shall make available to each other for inspection and copying during normal business hours upon reasonable notice all Tax Records (and, for the avoidance of doubt, any pertinent underlying data accessed or stored on any computer program or information technology system) in their possession in connection with Tax matters relating to the Parties and their Affiliates as described in Section 6.1(a), and shall permit the other Party and its Affiliates, authorized agents and representatives and any representative of a Tax Authority or other Tax auditor direct access, at the cost and expense of the requesting Party, during normal business hours upon reasonable notice to any computer program or information technology system used to access or store any Tax Records, in each case to the extent reasonably required by the other Party in connection with the preparation of Tax Returns or financial accounting statements, audits, litigation, or the resolution of items under this Agreement.

 

Section 7.3         Preservation of Privilege. The Parties and their respective Affiliates shall not provide access to, copies of, or otherwise disclose to any Person any documentation relating to Taxes existing prior to the Distribution Date to which Privilege may reasonably be asserted without the prior written consent of the other Party, such consent not to be unreasonably withheld, conditioned or delayed.

 

Article 8
Tax Contests

 

Section 8.1         Notice. Each Party shall provide prompt notice to the other Party of any written communication from a Tax Authority regarding any pending Tax audit, assessment or proceeding or other Tax Contest of which it becomes aware (i) related to Taxes for Tax Periods for which it is indemnified by the other Party hereunder or for which it may be required to indemnify the other Party hereunder, (ii) in the case of the NLOP Group, relating to Tax Items for a Pre-Distribution Period that could affect the Taxes payable by the WPC Group, or (iii) otherwise relating to the Intended Tax Treatment. Such notice shall attach copies of the pertinent portion of any written communication from a Tax Authority and contain factual information (to the extent known) describing any asserted Tax liability in reasonable detail and shall be accompanied by copies of any notice and other documents received from any Tax Authority in respect of any such matters.

 

Section 8.2         Control of Tax Contests.

 

(a)            WPC Control. Notwithstanding anything in this Agreement to the contrary, WPC shall have the sole right to control and absolute discretion with respect to any decisions to be made, or the nature of any action to be taken, with respect to any Tax Contest with respect to any Tax matters relating to (i) a Joint Return, (ii) a WPC Separate Tax Return, or (iii) a Tax for which WPC is or may be required to indemnify NLOP; provided, however, that with respect to Tax Contests involving NLOP Separate Tax Returns described in clause (iii), WPC shall not settle any such Tax Contest without NLOP’s prior written consent (which may not be unreasonably withheld, conditioned or delayed).

 

 

(b)            NLOP Control. Except as otherwise provided in this Section 8.2, NLOP shall have the sole right to control any Tax Contest with respect to any Tax matters relating to a NLOP Separate Tax Return or Transfer Taxes.

 

(c)            Except as otherwise provided in Section 8.2(a), in connection with any Tax Contest described in this Section 8.2, the Controlling Party shall have the sole right to contest, litigate, compromise and settle any Tax Contest; provided that to the extent any such Tax Contest (i) could give rise to a claim for indemnity by the Controlling Party or its Affiliates against the Non-Controlling Party or its Affiliates under this Agreement, (ii) is with respect to a NLOP Group Tax Return for a Pre-Distribution Period, or (iii) is with respect to a NLOP Group Tax Return and involves a challenge to the Intended Tax Treatment, then the Controlling Party shall not settle any such Tax Contest without the Non-Controlling Party’s prior written consent (which may not be unreasonably withheld, conditioned or delayed). In connection with any potential adjustment in a Tax Contest described in clauses (i)-(iii) of the preceding sentence: (i) the Controlling Party shall keep the Non-Controlling Party informed in a timely manner of all actions taken or proposed to be taken by the Controlling Party with respect to such Tax Contest; (ii) the Controlling Party shall timely provide the Non-Controlling Party copies of any written materials relating to such potential adjustment in such Tax Contest received from any Tax Authority; (iii) the Controlling Party shall timely provide the Non-Controlling Party with copies of any correspondence or filings submitted to any Tax Authority or judicial authority in connection with such potential adjustment in such Tax Contest; (iv) the Controlling Party shall consult with the Non-Controlling Party and offer the Non-Controlling Party a reasonable opportunity to comment before submitting any written materials prepared or furnished in connection with such potential adjustment in such Tax Contest; and (v) the Controlling Party shall defend such Tax Contest diligently and in good faith; provided, however, that if NLOP is the Controlling Party, (y) WPC shall have the right to participate in the relevant Tax Contest, and (z) NLOP shall not take any action that may negatively impact any Tax Return or Tax liability of WPC without WPC’s prior written consent (which consent may not be unreasonably withheld, conditioned or delayed). The failure of the Controlling Party to take any action specified in the preceding sentence with respect to the Non-Controlling Party shall not relieve the Non-Controlling Party of any liability and/or obligation which it may have to the Controlling Party under this Agreement except to the extent that the Non-Controlling Party was actually harmed by such failure, and in no event shall such failure relieve the Non-Controlling Party from any other liability or obligation which it may have to the Controlling Party. In the case of any Tax Contest described in this Article 8, “Controlling Party” means the Party entitled to control the Tax Contest under such Section 8.2(a) or Section 8.2(b) and “Non-Controlling Party” means (x) WPC if NLOP is the Controlling Party and (y) NLOP if WPC is the Controlling Party.

 

(d)            Power of Attorney. Each member of the WPC Group shall execute and deliver to NLOP (or such member of the NLOP Group as NLOP shall designate) any power of attorney or other similar document reasonably requested by NLOP (or such designee) in connection with any Tax Contest (as to which NLOP is the Controlling Party) described in this Article 8. Each member of the NLOP Group shall execute and deliver to WPC (or such member of the WPC Group as WPC shall designate) any power of attorney or other similar document requested by WPC (or such designee) in connection with any Tax Contest (as to which WPC is the Controlling Party) described in this Article 8.

 

 

Article 9
Tax Treatment of Payments

 

Unless WPC determines, in its reasonable discretion, that an alternative characterization is appropriate, any payment made by WPC or any member of the WPC Group to NLOP or any member of the NLOP Group, or by NLOP or any member of the NLOP Group to WPC or any member of the WPC Group, pursuant to this Agreement shall be treated by the Parties for all Tax purposes as a distribution by NLOP to WPC, or a capital contribution from WPC to NLOP, as the case may be, occurring immediately before the Distribution; provided, however, that any such payment that is made or received by a Person other than WPC or NLOP, as the case may be, shall be treated as if made or received by the payor or the recipient as agent for WPC or NLOP, in each case as appropriate and as reasonable determined by WPC. No Party shall take any position inconsistent with the treatment described in the preceding sentence (including any alternative treatment determined by WPC), and in the event that a Tax Authority asserts that a Party’s treatment of a payment pursuant to this Agreement should be other than as set forth in the preceding sentence, such Party shall use its commercially reasonable efforts to contest such challenge.

 

Article 10
Indemnification Payment Escrow

 

Notwithstanding anything to the contrary in this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement, if one party to this Agreement, the Separation and Distribution Agreement or any Ancillary Agreement (the “Indemnification Payor”) is required to pay another party to such agreement (the “Indemnification Payee”) any indemnification payment that could reasonably result in income to any Protected REIT for U.S. federal income Tax purposes if paid (such payment, an “Indemnification Payment”), then, unless the Indemnification Payee shall have received a tax opinion of a Tax Advisor or a ruling from the IRS to the effect that the Indemnification Payee’s receipt of such payment will be treated as qualifying income with respect to the any applicable Protected REIT for purposes of Section 856(c)(2) and 856(c)(3) of the Code (“Qualifying Income”) or shall be excluded from income for such purposes (such advice or ruling, a “Positive Tax Opinion or Ruling”), and notified the Indemnification Payor in writing of its receipt of such Positive Tax Opinion or Ruling and directed that payment be made otherwise than into escrow as provided below, the amounts payable to the Indemnification Payee shall be limited to the maximum amount (“Allowed Amount”) that can be paid without causing the Indemnification Payee’s receipt of its share of such funds to cause any applicable Protected REIT to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code, determined as if the payment of such amount did not constitute Qualifying Income and the Protected REIT has 0.5% of income from unknown sources during such year that does not constitute Qualifying Income (in addition to any known or anticipated income that is not Qualifying Income), as determined by independent accountants to the Indemnification Payee, and any excess of the amount of the Indemnification Payment over the Allowed Amount (such excess, the “Escrowed Amount”) shall be placed into escrow. Any such Escrowed Amount shall be retained by the escrow agent in a separate interest-bearing, segregated account for the account of the Indemnification Payor. The Indemnification Payee shall pay all costs associated with obtaining any tax opinion of a Tax Advisor or ruling from the IRS described above. The Escrowed Amount shall be fully disbursed (and therefore any unpaid portion of the Indemnification Payment shall be paid to the Indemnification Payee) upon the escrow agent’s receipt of a Positive Tax Opinion or Ruling. To the extent not previously paid, upon any determination by independent accountants to the Indemnification Payee that any additional amount of the Indemnification Payment may be disbursed to the Indemnification Payee without causing any applicable Protected REIT to fail to meet the requirements of Sections 856(c)(2) and 856(c)(3) of the Code, determined as if the payment of such amount did not constitute Qualifying Income and the Protected REIT has 0.5% of income from unknown sources during such year that does not constitute Qualifying Income (in addition to any known or anticipated income that is not Qualifying Income), the determination of such independent accountants shall be provided to the escrow agent and such additional amount shall be disbursed to the Indemnification Payee. At the end of the second calendar year beginning after the date on which the Indemnification Payor’s obligation to pay the Indemnification Payment arose (or earlier if directed by the Indemnification Payee), any remainder of the Escrowed Amount (together with interest thereon) then being held by the escrow agent shall be disbursed to the Indemnification Payor and, in the event that the Indemnification Payment has not by then been paid in full, such unpaid portion shall never be due.

 

 

Article 11
General Provisions

 

Section 11.1         Amendments and Waivers.

 

(a)            Subject to Section 11.1 of the Separation and Distribution Agreement, this Agreement may not be amended except by an agreement in writing signed by both Parties.

 

(b)            Any term or provision of this Agreement may be waived, or the time for its performance may be extended, by the Party entitled to the benefit thereof and any such waiver shall be validly and sufficiently given for the purposes of this Agreement if it is in writing signed by an authorized representative of such Party. No delay or failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy preclude any further exercise thereof or of any other right, power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that either Party would otherwise have.

 

Section 11.2         Survival of Obligations. The representations, warranties, covenants and agreements set forth in this Agreement shall be unconditional and absolute and shall remain in effect without limitation as to time.

 

Section 11.3         Dispute Resolution. Any and all Agreement Disputes arising hereunder shall be resolved through the procedures provided in Article X of the Separation and Distribution Agreement.

 

 

Section 11.4         Notices. All notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) five (5) Business Days following sending by registered or certified mail, postage prepaid, (b) when sent, if sent by facsimile, (c) when delivered, if delivered personally to the intended recipient, and (d) one (1) Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a Party at the following address for such Party:

 

(a)            if to WPC to:

 

One Manhattan West

395 9th Avenue

58th Floor

New York, NY 10001
Attn: Sapna Sanagavarapu, Chief Legal Officer
email: ssanagavarapu@WPCAREY.COM

 

with a copy (which shall not constitute notice) to:

 

Hogan Lovells US LLP
555 13th Street NW
Washington, DC 20004
Attn:         Lauren Clarke
email:         lauren.clarke@hoganlovells.com

 

(b)            if to NLOP to:

 

One Manhattan West

395 9th Avenue

58th Floor

New York, NY 10001
Attn: Sapna Sanagavarapu, Chief Legal Officer
email: ssanagavarapu@WPCAREY.COM

 

with a copy (which shall not constitute notice) to:

 

Hogan Lovells US LLP
555 13th Street NW
Washington, DC 20004
Attn: Lauren Clarke
email: lauren.clarke@hoganlovells.com

 

All notices, requests, claims, consents, demands and other communications under this Agreement shall be deemed duly given or made (A) if delivered in person, on the date delivered, (B) if sent by electronic mail (providing confirmation of transmission), on the date it was received, or (C) if sent by prepaid overnight courier, on the next Business Day (providing proof of delivery). For the avoidance of doubt, counsel for a Party may send notices, requests, claims, consents demands or other communications on behalf of such Party.

 

Section 11.5         Severability. If any term or other provision of this Agreement is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Restructuring Transactions and Distribution is not affected in any manner materially adverse to either Party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to affect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Restructuring Transactions and Distribution are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only as broad as is enforceable.

 

 

Section 11.6         Counterparts

 

. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. Signatures to this Agreement transmitted by electronic mail in .pdf format, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.

 

Section 11.7         Entire Agreement; No Third-Party Beneficiaries. This Agreement constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior negotiations, agreements, commitments, writings, courses of dealing and understandings with respect to the subject matter hereof. This Agreement is solely for the benefit of the Parties and should not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of action or other right in excess of those existing without reference to this Agreement.

 

Section 11.8         Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the substantive laws of the State of New York, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction.

 

Section 11.9         Assignment; Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties and their successors and permitted assigns; provided, however, that the rights and obligations of each Party under this Agreement shall not be assignable, in whole or in part, directly or indirectly, whether by operation of law or otherwise, by such Party without the prior written consent of the other Party (such consent not to be unreasonably withheld, conditioned or delayed) and any attempt to assign any rights or obligations under this Agreement without such consent shall be null and void. Notwithstanding the foregoing, either Party may assign its rights and obligations under this Agreement to any of their respective Affiliates provided that no such assignment shall release such assigning Party from any liability or obligation under this Agreement.

 

Section 11.10         Remedies.

 

(a)            Except as otherwise provided in this Agreement, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.

 

 

(b)            The Parties agree that irreparable damage would occur if any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached, and that monetary damages, even if available, would not be an adequate remedy therefor. It is accordingly agreed that prior to the termination of this Agreement, the non-breaching Party shall be entitled to seek an injunction or injunctions, specific performance or other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement without proof of damages or otherwise, in addition to any other remedy to which such Party is entitled at Law or in equity. Each of the Parties hereby waives (a) any defense in an Action for specific performance that a remedy at law would be adequate to prevent or restrain breaches or threatened breaches and (b) any requirement under any Law to post a security as a prerequisite to obtaining equitable relief. Each Party agrees that the right of specific performance and other equitable relief is an integral part of the transactions contemplated by this Agreement and without that right neither NLOP, on the one hand, nor WPC, on the other hand, would have entered into this Agreement. For the avoidance of doubt, the Parties may pursue both a grant of specific performance or other equitable remedies to the extent permitted by this Section 11.10 and the payment of damages, but shall not be entitled or permitted to receive an award of damages if specific performance or other equitable remedies are awarded and shall not be entitled or permitted to receive an award of specific performance or other equitable remedies if damages are awarded.

 

Section 11.11         Waiver of Jury Trial.

 

EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, 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 WAIVER AND CERTIFICATIONS IN THIS Section 11.11.

 

Section 11.12         Authorship. The Parties agree that the terms and language of this Agreement are the result of negotiations among the Parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any Party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, all as of the date first written above.

 

	W. P. CAREY INC.
	By:	/s/ ToniAnn Sanzone
		Name:	ToniAnn Sanzone
		Title:	Chief Financial Officer
	NET LEASE OFFICE PROPERTIES
	By:	/s/ Jason E. Fox
		Name:	Jason E. Fox
		Title:	Chief Executive Officer
	With respect to Section 2.1(a)(iv) and Sections 1(b) and 3 of Appendix B:
	NLO MEZZANINE BORROWER LLC
	By:	/s/ ToniAnn Sanzone
		Name:	ToniAnn Sanzone
		Title:	Chief Financial Officer

 

[Signature Page to Tax Matters Agreement]

 

 

 

Exhibit 10.3

 

 

 

ADVISORY AGREEMENT

 

dated as of November 1, 2023

 

between

 

Net Lease Office Properties

 

and

 

W. P. Carey Management LLC

 

 

 

 

TABLE OF CONTENTS

 

	Page
SECTION 1. DEFINITIONS	1
SECTION 2. APPOINTMENT AND DUTIES OF THE ADVISOR	5
SECTION 3. OTHER ACTIVITIES OF THE ADVISOR	9
SECTION 4. AGENCY	10
SECTION 5. BANK ACCOUNTS	10
SECTION 6. RECORDS	10
SECTION 7. CONFIDENTIALITY	10
SECTION 8. LIMITATION ON ACTIVITIES; INSURANCE	10
SECTION 9. COMPENSATION	11
SECTION 10. EXPENSES	12
SECTION 11. LIMITATION OF LIABILITY; INDEMNIFICATION	14
SECTION 12. NO JOINT VENTURE	15
SECTION 13. TERM	16
SECTION 14. TERMINATION	16
SECTION 15. TERMINATION FEE	16
SECTION 16. ACTION UPON TERMINATION	17
SECTION 17. ASSIGNMENT	17
SECTION 18. RELEASE OF PROPERTY	18
SECTION 19. NOTICES	18
SECTION 20. SUCCESSORS AND ASSIGNS	19
SECTION 21. ENTIRE AGREEMENT	19
SECTION 22. Arbitration	19
SECTION 23. GOVERNING LAW	21
SECTION 24. NO WAIVERS	21
SECTION 25. HEADINGS	21
SECTION 26. EXECUTION IN COUNTERPARTS	21
SECTION 27. SURVIVAL	22
SECTION 28. Severability	22
Annex A: NLOP Properties

 

 

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT (this “Agreement”) is made as of November 1, 2023 (the “Effective Date”) by and between Net Lease Office Properties, a Maryland real estate investment trust (the “Company”), and W. P. Carey Management LLC, a Delaware limited liability company (together with its permitted assignees, the “Advisor”).

 

W I T N E S S E T H:

 

WHEREAS, the Company, through its own operations and the operations of its Subsidiaries (as defined herein), is in the business of owning, developing, managing and disposing of office real property;

 

WHEREAS, the Company intends to qualify as a Real Estate Investment Trust (a “REIT”) under the Code (as defined herein);

 

WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and certain facilities of, or available to, the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Trustees of, the Company, as provided in this Agreement;

 

WHEREAS, the Company and the European Advisor have, concurrently with the execution of this Agreement, entered into that the European Advisory Agreement; and

 

WHEREAS, the Advisor is willing to render such services on the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1. DEFINITIONS

 

As used in this Agreement, the following terms have the definitions hereinafter indicated:

 

“AAA” has the meaning set forth in Section 22(a) of this Agreement.

 

“Administrative Reimbursement” has the meaning set forth in Section 10(a) of this Agreement.

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisor Costs” has the meaning set forth in Section 10(c) of this Agreement.

 

“Advisor Indemnified Party” has the meaning set forth in Section 11(b) of this Agreement.

 

“Affiliate” means, with respect to any Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with such Person, (ii) any executive officer, general partner or managing member of such Person, (iii) any member of the board of directors or board of managers (or bodies performing similar functions) of such Person and (iv) any legal entity for which such Person acts as an executive officer, general partner or managing member. For the avoidance of doubt, and for purposes of this Agreement, the Company shall not be considered an Affiliate of the Advisor.

 

“Agreement” means this Advisory Agreement, as amended from time to time.

 

 

“Appellate Rules” has the meaning set forth in Section 22(g) of this Agreement.

 

“Applicable Percentage” shall mean, with respect to any NLOP Property, the percentage set forth on Annex A hereto with respect to such NLOP Property.

 

“Applicable Disposition Discount” means, with respect to any NLOP Property, the dollar amount equal to product of (a) the Applicable Percentage, and (b) the Base Management Fee.

 

“Audit Committee” means the audit committee of the Board of Trustees or the committee or body performing similar functions.

 

“Award” has the meaning set forth in Section 22(e) of this Agreement.

 

“Base Management Fee” has the meaning set forth in Section 9(a) of this Agreement.

 

“Board of Trustees” means the board of trustees of the Company.

 

“Cause” means the occurrence of any of the following events:

 

(a)            any material breach of a material term of this Agreement by the Advisor that has not been cured within 30 days following written notice thereof from the Company;

 

(b)            fraud, criminal conduct, willful misconduct or willful or grossly negligent breach by the Advisor in the performance of its duties under this Agreement that, in each case, is determined by a majority of the Company’s Independent Trustees to be materially adverse to the Company;

 

(c)            the commencement of any proceeding relating to the Advisor’s bankruptcy or insolvency, or the dissolution of the Advisor, including an order for relief in an involuntary bankruptcy case or the Advisor authorizing or filing a voluntary bankruptcy petition; or

 

(d)            termination of the European Advisory Agreement by the Company for “Cause” (as defined in the European Advisory Agreement) pursuant to subsections (a), (b) or (c) of the definition thereof.

 

“Change in Control” means the occurrence of any of the following events:

 

(a)            a transaction or series of transactions whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company or any Subsidiary of the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; provided, however, that no person or group shall be treated for purposes of this clause (b)(ii) as beneficially owning fifty percent (50%) or more of the combined voting power of the Company solely as a result of the voting power held in the Company prior to the consummation of the transaction;

 

(b)            during any period of two (2) consecutive years, individuals who, at the beginning of such period, constitute the Board of Trustees together with any new trustee(s) (other than a trustee designated by a person who shall have entered into an agreement with the Company to effect a transaction described in the preceding clause (i) or the succeeding clause (iii) of this definition) whose election by the Board of Trustees or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the trustees then still in office who either were trustees at the beginning of the two (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

 

 

(c)            the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (A) a merger, consolidation, reorganization, or business combination, (B) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (C) the acquisition of all or substantially all of the assets or stock of another entity, in each case, other than a transaction:

 

(i)            which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and following which the Successor Entity continues to own all or substantially all the assets that the Company owned immediately before the transaction and succeeds to its business, and

 

(ii)           after which no person or group beneficially owns voting securities representing more than fifty percent (50%) of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (b)(ii) as beneficially owning fifty percent (50%) or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

 

(d)            approval by the Company’s shareholders of a liquidation or dissolution of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Share” means a common share of beneficial interest, par value $0.001 per share, of the Company now or hereafter authorized as common voting shares of the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Account” has the meaning set forth in Section 5 of this Agreement.

 

“Company Indemnified Party” has the meaning set forth in Section 11(c) of this Agreement.

 

“Company Termination for Convenience” has the meaning set forth in Section 14(b) of this Agreement.

 

“Cross Default Termination” has the meaning set forth in Section 14(d) of this Agreement.

 

“Disposed Property” has the meaning set forth in Section 9(c) of this Agreement.

 

“Disputes” has the meaning set forth in Section 22(a) of this Agreement.

 

“Effective Date” has the meaning set forth in the preamble to this Agreement.

 

“European Advisor” means W. P. Carey & Co. B.V., a wholly owned subsidiary of WPC.

 

 

“European Advisory Agreement” means that certain European Advisory Agreement entered into by and between the Company and the European Advisor concurrently with this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Expenses” has the meaning set forth in Section 10(d) of this Agreement.

 

“Good Reason” means the occurrence of any of the following events:

 

(a)            any failure to obtain a reasonably satisfactory agreement from any successor to the Company to assume the Company’s obligations under the Agreement;

 

(b)            any material breach of this Agreement by the Company that has not been cured within 30 days following written notice thereof from the Advisor; or

 

(c)            the Advisor has the right to terminate the European Advisory Agreement with “Good Reason” (as defined in the European Advisory Agreement) pursuant to subsection (a) or (b) of the definition thereof.

 

“Governing Instruments” means, with regard to any entity, the declaration of trust and bylaws in the case of a real estate investment trust, the articles of incorporation and bylaws in the case of a corporation, the certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership, the articles of formation and the operating agreement in the case of a limited liability company, or, in each case, comparable governing documents.

 

“Indemnified Party” has the meaning set forth in Section 11(d) of this Agreement.

 

“Independent Trustee” means any member of the Board of Trustees who, on the date at issue, is “independent” as determined by application of the rules and regulations of any applicable securities exchange on which the Common Shares are listed.

 

“Initial Term” has the meaning set forth in Section 13 of this Agreement.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Losses” has the meaning set forth in Section 11(b) of this Agreement.

 

“Management Fee” has the meaning set forth in Section 9(a) of this Agreement.

 

“NLOP Properties” means the real properties of the Company or its Subsidiaries listed in Annex A hereto.

 

“Person” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting in such capacity on behalf of the foregoing.

 

“REIT” has the meaning set forth in the recitals to this Agreement”

 

“Renewal Term” has the meaning set forth in Section 13 of this Agreement.

 

 

“Required Approval” has the meaning set forth in Section 2(d) of this Agreement:

 

“Rules” has the meaning set forth in Section 22(a) of this Agreement.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Subsidiary” means any subsidiary of the Company and any partnership, the general partner of which is the Company or any subsidiary of the Company and any limited liability company, the managing member of which is the Company or any subsidiary of the Company.

 

“Term” has the meaning set forth in Section 13 of this Agreement.

 

“Termination Date” means the effective date of any termination pursuant to Section 14.

 

“Termination Fee” has the meaning set forth in Section 15(a) of this Agreement.

 

“Trailing Annual Fees” has the meaning set forth in Section 15 of this Agreement.

 

“Trustee” means any person holding such office on the Board of Trustees, as of any particular time.

 

“Qualified Disposition” means, for any NLOP Property, the sale, transfer or other disposition of all of the Company’s direct or indirect interest in and title to such NLOP Property to a third party other than the Company or any of its direct or indirect Subsidiaries.

 

“Qualifying Termination” means the occurrence of any of the following events:

 

(a)            Company Termination for Convenience;

 

(b)            Termination by the Advisor with Good Reason; or

 

(c)            Cross Default Termination by the Advisor if the European Advisory Agreement is terminated pursuant to (i) a “Company Termination for Convenience” or (ii) a termination by the Advisor with “Good Reason” (each as defined in the European Advisory Agreement).

 

“Reimbursable Expenses” has the meaning set forth in Section 10(e) of this Agreement.

 

“WPC” means W. P. Carey Inc., a Maryland corporation, of which the Advisor is a wholly owned subsidiary.

 

SECTION 2. APPOINTMENT AND DUTIES OF THE ADVISOR

 

(a)            The Company hereby appoints the Advisor to provide management services with respect to the day-to-day operations of the Company and the NLOP Properties, including strategic management services, asset management, property disposition support, and various related services, and the Advisor hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein. The appointment of the Advisor shall be exclusive to the Advisor, except to the extent that the Advisor elects, pursuant to the terms and conditions of this Agreement, to cause the duties of the Advisor hereunder to be provided by third parties.

 

 

(b)            The Advisor, in its capacity as such, shall at all times be subject to the supervision, direction and management of the Board of Trustees, and will have only such functions and authority as the Company may delegate to it and as set forth in this Agreement. The Board of Trustee has dispositive power in the event of any conflict between the Board of Trustees and the Advisor with respect to the functions and authority delegated to the Advisor above.

 

(c)            The Company and the Board of Trustees, subject to the limitations set forth in Section 2(d), hereby delegates the following functions and authority to the Advisor, and the Advisor agrees to perform (or cause to be performed) such services and activities relating to the NLOP Properties and operations of the Company as may be appropriate, including, without limitation:

 

(i)            sourcing, investigating and evaluating prospective disposition, exchange or other transactions with respect to the NLOP Properties (including potential seller financing related thereto, as may be permitted), and making recommendations with respect thereto to the Board of Trustees, where applicable;

 

(ii)           conducting negotiations with brokers, purchasers and their respective agents and representatives, investment bankers and other parties regarding the disposition, exchange or other transactions with respect to the NLOP Properties (including potential seller financing related thereto, as may be permitted), and subject to any necessary approvals from the Board of Trustees, executing and delivering documentation related thereto and performing the transactions contemplated thereby;

 

(iii)          managing and monitoring the operating performance of NLOP Properties and providing periodic reports to the Board of Trustees, in form, substance and frequency as the Advisor deems reasonably necessary or as the Board of Trustees may otherwise reasonably request;

 

(iv)          assisting the Company in developing criteria that are specifically tailored to the Company’s operations and divestiture objectives;

 

(v)          engaging and supervising independent contractors that provide services relating to the Company or the NLOP Properties, including, but not limited to, investment banking, legal, regulatory, tax, accounting, securities brokerage, property management, real estate, leasing, brokerage and other advisory and consulting services reasonably necessary for Advisor to perform its duties hereunder (it being understood that the Independent Trustees and any committees of the Board of Trustees shall retain the authority to hire its or their own attorneys or other advisors);

 

(vi)          negotiating, on behalf of the Company, the terms of loan documents for the Company’s financings;

 

(vii)         coordinating and managing the operations of any joint venture or co-investment interests held by the Company and conducting and overseeing all matters with respect to the joint venture or co-investment partners;

 

(viii)        coordinating and supervising all property managers, tenant operators, leasing agents and developers for the administration, leasing, management and/or development of any of the NLOP Properties;

 

(ix)          providing executive and administrative personnel, office space and administrative services required in rendering services to the Company;

 

 

(x)           administering bookkeeping and accounting functions as are required for the management and operation of the Company, contracting for audits and preparing such periodic reports and filings as may be required by any governmental authority in connection with the ordinary conduct of the Company’s business, and otherwise advising and assisting the Company with its compliance with applicable legal and regulatory requirements, including, without limitation, periodic reports, returns or statements required under the Exchange Act, the Code and any regulations or rulings thereunder, the securities and tax statutes of any jurisdiction in which the Company is obligated to file such reports, or the rules and regulations promulgated under any of the foregoing;

 

(xi)          advising and assisting in the preparation and filing of all offering documents, registration statements, prospectuses, proxies and other forms or documents filed with the SEC pursuant to the Securities Act or any state securities regulators (it being understood that the Company shall be responsible for the content of any and all of its offering documents, SEC filings or state regulatory filings, and that the Advisor shall not be held liable for any costs or liabilities arising out of any misstatements or omissions in the Company’s offering documents, SEC filings, state regulatory filings or other filings referred to in this subparagraph, whether or not material (except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Advisor’s duties under this Agreement);

 

(xii)         enabling the Company to retain qualified accountants and legal counsel, as applicable, to assist in developing appropriate accounting procedures, compliance procedures and testing systems with respect to financial reporting obligations and compliance with the provisions of the Code applicable to REITs (it being understood that the Board of Trustees and its Audit Committee shall retain authority to determine the Company’s independent public accountant and that the Independent Trustees and any committees of the Board of Trustees shall retain the authority to hire its or their own attorneys or other advisors);

 

(xiii)        counseling the Company regarding the maintenance of its status as a REIT and monitoring compliance with the various REIT qualification tests and other rules set out in the Code and Treasury Regulations thereunder;

 

(xiv)        counseling the Company regarding the maintenance of its exemption from the Investment Company Act and monitoring compliance with the requirements for maintaining an exemption from the Investment Company Act;

 

(xv)         counseling the Company in connection with policy decisions to be made by the Board of Trustees;

 

(xvi)        evaluating and recommending to the Board of Trustees modifications to any hedging strategies in effect on the date hereof and engaging in hedging activities;

 

(xvii)       communicating with the Company’s investors and analysts as required to satisfy reporting or other requirements of any governing body or exchange on which the Company’s securities are traded and to maintain effective relations with such parties;

 

(xviii)      investing and re-investing any moneys and securities of the Company (including investing in short-term investments, payment of fees, costs and expenses, or payments of dividends or distributions to shareholders and partners of the Company) and advising the Company as to its capital structure and capital raising;

 

 

(xix)        causing the Company to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses;

 

(xx)         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 Company’s day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board of Trustees;

 

(xxi)        using commercially reasonable efforts to enable expenses incurred by or on behalf of the Company to be within any expense guidelines or budgets set by the Board of Trustees from time to time;

 

(xxii)       using commercially reasonable efforts to enable the Company to comply with all applicable laws and regulations in all material respects; and

 

(xxiii)      performing such other services as may be required from time to time for management and other activities relating to the assets of the Company as the Board of Trustees and the Advisor shall agree from time to time.

 

Without limiting the foregoing, the Advisor will also perform portfolio management services on behalf of the Company with respect to the NLOP Properties. Such services will include, but not be limited to, consulting with the Company on the purchase and sale of, and other investment opportunities in connection with, the Company’s portfolio of assets; the collection of information and the submission of reports pertaining to the Company’s assets, interest rates and general economic conditions; periodic review and evaluation of the performance of the Company’s portfolio of assets; acting as liaison between the Company and banking, mortgage banking, investment banking and other parties with respect to the purchase, financing and disposition of assets; and other customary functions related to portfolio management. Additionally, the Advisor will perform monitoring services on behalf of the Company with respect to any services provided by third parties, which the Advisor determines are material to the performance of the business.

 

(d)            Notwithstanding anything to the contrary in this Agreement, the Advisor must obtain prior approval by a majority of the Board of Trustees (including a majority of the Independent Trustees and a majority of the members of the Board of Trustees not involved in the applicable transaction) (the “Required Approval”) prior to causing the Company to take any of the following actions (subject to any delegation for which the Required Approval was obtained with respect thereto):

 

(i)            the entry into, or termination or material modification of, any material transaction related to any NLOP Property, including dispositions and joint ventures;

 

(ii)           the entry into, or termination or material modification of, any material financing, loan or securities offering transaction of the Company or its Subsidiaries;

 

(iii)          the retention of the Company’s independent registered public accountants (which shall also require the prior approval of the Audit Committee of the Board of Trustees);

 

(iv)          the entry into, or termination or modification of, any material transaction between the Company, on the one hand, and the Advisor or its Affiliates, on the other hand;

 

 

(v)          the issuance, optional redemption or repurchase of equity or debt securities by the Company or any of its Subsidiaries;

 

(vi)         the grant, termination or material modification of any equity incentive awards by the Company or any of its Subsidiaries;

 

(vii)        the entry into, or termination or material modification of any transaction that would constitute a Change in Control; and

 

(viii)       such other matters as may be determined by the Board of Trustees from time to time.

 

(e)            The Advisor shall make available sufficient experienced and appropriate personnel to perform the services and functions specified herein, including, without limitation, a chief executive officer, chief financial officer, the positions required under the Governing Instruments of the Company and its Subsidiaries and such other positions as the Advisor deems reasonably necessary from time to time. The Advisor shall not be obligated to dedicate any of its officers or other personnel exclusively to the Company nor is the Advisor, its Affiliates or any of their officers or other employees obligated to dedicate any specific portion of its or their time to the Company or its business, except as necessary to perform the services required hereunder.

 

(f)            The Advisor may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of accountants, legal counsel, tax counsel, appraisers, insurers, brokers, business developers, transfer agents, registrars, developers, investment banks, financial advisors, underwriters, banks and other consultants and advisors as the Advisor deems necessary or advisable in connection with the management and operations of the Company. Notwithstanding anything contained herein to the contrary, the Advisor shall have the right to cause any such services to be rendered by its employees or Affiliates (which, for the avoidance of doubt, includes any employees, consultants or agents of any Affiliate of the Advisor). The Advisor shall further be entitled to reasonably rely on qualified experts hired by the Advisor, including any of the foregoing.

 

(g)            Subject to Section 2(d) above, the Advisor may enter into agreements with other parties in connection with its duties hereunder.

 

(h)            Notwithstanding anything to the contrary contained in this Agreement, it is agreed and understood that the European Advisor shall be responsible for providing portfolio management services with respect to the NLOP Properties that are located outside of the United States, and such other services contemplated by, and pursuant to the terms of, the European Advisory Agreement.

 

SECTION 3. OTHER ACTIVITIES OF THE ADVISOR

 

Nothing herein shall prevent the Advisor or its Affiliates (or their members, officers, directors, employees, agents, representatives, advisors or others) from engaging in any other business or activities, or from rendering services of any kind to any other Person, including advisory or other services to others similar to those set forth in this Agreement. The Company recognizes that it is not entitled to preferential treatment in receiving information, recommendations and other services from the Advisor. The Company and the Board of Trustees acknowledge that the Advisor and/or one or more of its Affiliates may be or become subject to various conflicts of interest. The Advisor shall act in good faith to endeavor to identify to the Independent Trustees any conflicts that may arise among the Company, the Advisor and/or any other Person or entity on whose behalf the Advisor may be engaged.

 

 

SECTION 4. AGENCY

 

The Advisor shall act as agent of the Company in making, acquiring, financing and disposing of assets of the Company, disbursing and collecting the Company’s funds, paying the debts and fulfilling the obligations of the Company, supervising the performance of professionals engaged by or on behalf of the Company and handling, prosecuting and settling any claims of or against the Company, the Board of Trustees, holders of the Company’s securities or the Company’s representatives or properties.

 

SECTION 5. BANK ACCOUNTS

 

The Advisor may establish and maintain, subject to any applicable conditions or limitations of the loan documents applicable to the Company, one or more bank accounts in its own name for account of the Company or in the name of the Company or any Subsidiary (any such account, a “Company Account”), and may collect and deposit funds into any such Company Account or Company Accounts, and disburse funds from any such Company Account or Company Accounts. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board of Trustees and, upon request, to the auditors of the Company or any Subsidiary.

 

SECTION 6. RECORDS

 

The Advisor shall maintain appropriate books of accounts and records relating to services performed under this Agreement, and such books of account and records shall be accessible for inspection by representatives of the Company at any time during normal business hours upon reasonable advance notice to the Advisor.

 

SECTION 7. CONFIDENTIALITY

 

The Advisor shall keep confidential any and all non-public information obtained in connection with the services rendered under this Agreement and shall not disclose any such information to any Person, except to (i) its Affiliates, members, officers, directors, employees, agents, representatives or advisors who reasonably need such information for the Advisor to be able to perform its duties hereunder (and the European Advisor to carry out its duties under the European Advisory Agreement, (ii) appraisers, lenders, bankers and other parties as necessary in the ordinary course of the Company’s business, (iii) in connection with any governmental or regulatory filings or requests of the Company or the Advisor or any of their Affiliates, (v) as required by applicable law or regulation, including any applicable disclosure requirements applicable to the Company and the Advisor and their Affiliates under securities or blue sky laws or stock exchange listing requirements, or (vi) with the prior written consent of the Board of Trustees. The confidentiality provisions of this Section 7 shall survive for a period of three (3) years after the Termination Date.

 

SECTION 8. LIMITATION ON ACTIVITIES; INSURANCE

 

(a)            The Advisor shall refrain from any action that, in its sole judgment made in good faith, (i) can reasonably be expected to result in the loss of the Company’s status as a REIT under the Code, or to subject the Company to regulation under the Investment Company Act, or (ii) can reasonably be expected to result in the violation of any law, rule or regulation of any governmental body or agency having jurisdiction over the Company or any Subsidiary that would materially adversely affect the Company or that would otherwise not be permitted by such entity’s Governing Instruments. If the Advisor is ordered to take any such action by the Board of Trustees, the Advisor shall promptly notify the Board of Trustees of the Advisor’s judgment with respect thereto. Notwithstanding the foregoing, the Advisor and its Affiliates, officers and employees shall not be liable to the Company or any Subsidiary, the Board of Trustees, or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Advisor, its Affiliates, officers or employees except as provided in Section 11.

 

 

(b)            The Advisor shall at all times during the term of this Agreement (including the Initial Term and any Renewal Term) maintain such insurance coverage as is customarily maintained by other advisors, managers or servicers of similar assets. No fidelity bond shall be required.

 

(c)            The Advisor acknowledges receipt of the Company’s Code of Business Conduct and Ethics, and Policy on Insider Training, and agrees to require its employees who provide services to the Company to comply with such codes and policies.

 

SECTION 9. COMPENSATION

 

(a)            Management Fee. As compensation for the Advisor’s services under this Agreement, during the Term, the Company will pay the Advisor a management fee of $625,000.00 per calendar month (the “Base Management Fee”), which shall be subject to adjustment as set forth in this Section 9 (as may be adjusted pursuant to this Section 9, the “Management Fee”).

 

(b)            Initial Management Fee Proration. The Management Fee for the initial calendar month following the Effective Time shall be prorated to an amount equal to the product of (i) the Base Management Fee and (ii) the quotient obtained by dividing (a) the number of calendar days remaining in such calendar month following the Effective Date; and (b) the total number of calendar days in such initial calendar month.

 

(c)            Adjustments for Dispositions. If a Qualified Disposition of a NLOP Property (each a “Disposed Property”) occurs during a calendar month, the Management Fee for such calendar month shall be reduced, for each such Disposed Property, by an amount equal to the product of (i) the Applicable Disposition Discount with respect to such Disposed Property, and (ii) the quotient obtained by dividing (a) the number of calendar days remaining in such calendar month following the closing date of such Qualified Disposition and (b) the total number of calendar days in such calendar month. For each full calendar month following any such Qualified Disposition, the Management Fee shall be reduced by the Applicable Disposition Discount with respect to such Disposed Property.

 

(d)            Limitations. In no event shall the Management Fee for any calendar month be greater than the Management Fee in effect during the preceding calendar month (without regard for the adjustments, if any, as set forth in Section 9(b) above), and in no event shall the aggregate Management Fee payable for a given fiscal year exceed $7.5 million. For the avoidance of doubt, the Management Fee shall not be modified or reduced except as expressly set forth in this Section 9, and shall not be modified or reduced for changes and amendments with respect to any NLOP Property, other than a Qualifying Disposition, including, but not limited to (i) new or amended lease arrangements, (ii) property vacancies, (iii) insolvency or bankruptcy, or (iv) changes in the operating performance of such NLOP Property. The Management Fee to be paid to the Advisor under this Section 9, a portion of which shall be paid to the European Advisor as agreed between the Advisor and the European Advisor for the services provided by the European Advisor under the European Advisory Agreement, is not intended to compensate the Advisor with respect to the NLOP Properties that are located outside of the United States.

 

(e)            Invoices. Promptly following the end of each calendar month, the Advisor shall prepare and deliver to the Company a written invoice for such calendar month’s Management Fee. Upon the request of the Board of Trustees, the Advisor shall also provide the supporting calculations with respect to the Management Fee for any given calendar month (provided that such a request, and the Company’s delivery thereof, shall not delay the payment date set forth in Section 9(f) below).

 

 

(f)            Payment. The Management Fee shall be payable, in cash, monthly in arrears, by wire transfer of immediately available funds in accordance with the Advisor’s written invoice, on the later of (i) 30 calendar days following the end of such calendar month or (ii) 20 calendar days following receipt of the Advisor’s invoice for such prior calendar month’s Management Fee.

 

SECTION 10. EXPENSES

 

(a)            Administrative Reimbursement. During the Term, the Company shall pay the Advisor a base administrative reimbursement of $333,333.33 per calendar month (as may be adjusted pursuant to Section 10(b), the “Administrative Reimbursement”) as reimbursement for the Advisor Costs.

 

(b)            Initial Administrative Reimbursement Proration. The Administrative Reimbursement for the initial calendar month following the Effective Time shall be prorated to an amount equal to the product of (i) the Administrative Reimbursement and (ii) the quotient obtained by dividing (a) the number of calendar days remaining in such calendar month following the Effective Date; and (b) the number of calendar days in such initial calendar month.

 

(c)            Advisor Costs. Except as otherwise expressly provided herein or approved by majority vote of the Independent Trustees or the Audit Committee, in exchange for the Administrative Reimbursement, the Advisor shall bear the following expenses incurred in connection with the performance of its duties under this Agreement, and shall not be entitled to reimbursement with respect to such expenses (collectively, the “Advisor Costs”):

 

(i)            base salary, cash incentive compensation and other employment expenses of personnel employed by the Advisor, including, but not limited to, salaries, wages, payroll taxes and the cost of employee benefit plans (other than equity awards granted by the Company pursuant to an equity compensation plan approved by the Board of Trustees);

 

(ii)           fees and travel and other expenses of employees of the Advisor, to the extent not incurred while providing services pursuant to this Agreement;

 

(iii)          rent, telephone, utilities, office furniture, equipment and machinery (including computers, to the extent utilized) and other office expenses of the Advisor, except to the extent such expenses relate solely to an office maintained by the Company separate from the offices of the Advisor; and

 

(iv)         miscellaneous administrative expenses relating to performance by the Advisor of its obligations hereunder.

 

(d)            Expense Reimbursement. Except as expressly otherwise provided in this Agreement, the Company shall pay (or shall reimburse the Advisor for) all of its and its Subsidiaries’ expenses and all costs and expenses associated with the services to be provided pursuant to this Agreement. Without limiting the generality of the foregoing, it is specifically agreed that the following out-of-pocket expenses of the Company and its Subsidiaries shall be paid by the Company (or shall be reimbursed by the Company to the Advisor) (collectively, the “Expenses”):

 

(i)            the cost of borrowed money;

 

(ii)           taxes on income and taxes and assessments on real and personal property, if any, and all other taxes applicable to the Company or its Subsidiaries;

 

 

(iii)          legal, auditing, accounting, underwriting, brokerage, listing, reporting, registration and other fees, and printing, engraving and other expenses and taxes incurred in connection with the issuance, distribution, transfer, trading, registration and listing of the Company’s or any of its Subsidiaries’ securities on a stock exchange, including transfer agent’s, registrar’s and indenture trustee’s fees and charges;

 

(iv)          expenses of organizing, restructuring, reorganizing or liquidating the Company or any of its Subsidiaries, or of revising, amending, converting or modifying the Company’s or any of its Subsidiaries’ Governing Instruments;

 

(v)           fees and travel and other expenses paid to members of the Board of Trustees and officers of the Company or those of individuals in similar positions with any of its Subsidiaries in their capacities as such (but not in their capacities as officers or employees of the Advisor) and fees and travel and other expenses paid to advisors, contractors, mortgage servicers, consultants and other agents and independent contractors employed by or on behalf of the Company and its Subsidiaries (whether or not engaged by the Advisor rather than directly by the Company);

 

(vi)          expenses directly connected with the investigation, disposition or ownership of real estate interests or other property (including third party property diligence costs, appraisal reporting, the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, maintenance, repair, improvement and local management of property), other than expenses with respect thereto of employees of the Advisor, to the extent that such expenses are to be borne by the Advisor pursuant to this Agreement, including Section 10(c);

 

(vii)         all insurance costs (including officer and trustee liability insurance) incurred in connection with the Company and its Subsidiaries or in connection with any officer and trustee indemnity agreement to which the Company or any of its Subsidiaries is a party or arising under the Company’s or any of its Subsidiaries’ Governing Instruments;

 

(viii)        expenses connected with payments of distributions, dividends or interest or contributions in cash or any other form made or caused to be made by the Trustees to holders of securities of the Company or any of its Subsidiaries;

 

(ix)          all expenses connected with communications to holders of securities of the Company or its Subsidiaries and other administrative work necessary to maintaining relations with holders of securities, including the proxy solicitation materials and reports to holders of the Company’s or its Subsidiaries’ securities;

 

(x)           legal, accounting, auditing and other professional services fees and expenses in addition to those described above;

 

(xi)          filing and recording fees and costs for regulatory or governmental filings, approvals and notices;

 

(xii)         the costs and expenses of conceiving, implementing, managing and settling all equity award or compensation plans or arrangements established by the Company or any of its Subsidiaries, including but not limited to the value of awards made by the Company or any of its Subsidiaries to members of the Board of Trustees, the Advisor or its employees, if any, and payment of any employment or withholding taxes in connection therewith; and

 

 

(xiii)        all other costs and expenses of the Company and its Subsidiaries, other than those to be specifically borne by the Advisor pursuant to Section 10(c) above.

 

(e)            Invoices. Promptly following the end of each calendar month, the Advisor shall prepare and deliver to the Company a written invoice for such calendar month’s Expenses paid by the Advisor and for which the Advisor is entitled to reimbursement pursuant to Section 10(d) and such Expenses (as defined in the European Advisory Agreement) paid by the European Advisor and for which the European Advisor is entitled to reimbursement pursuant to the European Advisory Agreement (collectively, the “Reimbursable Expenses”). Upon the request of the Board of Trustees, the Advisor shall also provide the reasonable supporting documentation with respect to the Reimbursable Expenses for any given calendar month (provided that such a request, and the Advisor’s delivery thereof, shall not delay the payment date set forth in Section 10(f) below).

 

(f)            Payment. The Administrative Reimbursement shall be payable, in cash, monthly in arrears, by wire transfer of immediately available funds to the account or accounts designated in writing by the Advisor, on the date that is 30 calendar days following the end of such calendar month. Reimbursable Expenses for which the Advisor is entitled to reimbursement pursuant to Section 10(d) shall be payable, in cash, monthly in arrears, by wire transfer of immediately available funds in accordance with the Advisor’s written invoice, on the later of (i) 30 calendar days following the end of such calendar month or (ii) 20 calendar days following receipt of the Advisor’s invoice for such prior calendar month’s Expenses.

 

(g)            The Administrative Reimbursement and Reimbursable Expenses to be paid to the Advisor under this Section 10, a portion of which shall be paid to the European Advisor as agreed between the Advisor and the European Advisor for the services provided by the European Advisor under the European Advisor Agreement, are not intended to compensate the Advisor with respect to the NLOP Properties that are located outside of the United States.

 

SECTION 11. LIMITATION OF LIABILITY; INDEMNIFICATION

 

(a)            Notwithstanding anything to the contrary in this Agreement, the Advisor shall have no responsibility under this Agreement other than to render the services as required under this Agreement in good faith and shall not be responsible for any action of the Board of Trustees in following or declining to follow any advice or recommendations of the Advisor, including as set forth in Section 8(a). The Advisor, its Affiliates and their members, managers, officers and employees will not be liable to the Company or any Subsidiary, to the Board of Trustees or to the Company’s or any Subsidiary’s shareholders or partners for any acts or omissions by the Advisor, its Affiliates, members, managers, officers or employees pursuant to or in accordance with this Agreement, except by reason of acts constituting bad faith, willful misconduct or gross negligence.

 

(b)            The Company shall, to the full extent lawful, reimburse, indemnify and hold the Advisor, its Affiliates, members, managers, officers and employees, sub-advisors and each other Person, if any, controlling the Advisor or its Affiliates (each, an “Advisor Indemnified Party”), harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) (collectively, “Losses”) in respect of or arising from any acts or omissions of such Advisor Indemnified Party made in good faith in the performance of the Advisor’s duties under this Agreement and not constituting such Advisor Indemnified Party’s bad faith, willful misconduct or gross negligence.

 

(c)            The Advisor shall, to the full extent lawful, reimburse, indemnify and hold the Company, its Subsidiaries, its shareholders, trustees, officers and employees and each other Person, if any, controlling the Company or its Subsidiaries (each, a “Company Indemnified Party”), harmless of and from any and all Losses in respect of or arising from any acts or omissions of the Advisor constituting bad faith, willful misconduct or gross negligence.

 

 

(d)            Promptly after receipt by the Advisor Indemnified Party or the Company Indemnified Party, as applicable (the “Indemnified Party”) of notice of the commencement of any action, such Indemnified Party shall, if a claim in respect thereof is to be made pursuant hereto, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any Indemnified Party pursuant to this Section 11. In case any such action shall be brought against an Indemnified Party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel satisfactory to such Indemnified Party and, after notice from the indemnifying party to such Indemnified Party of its election to assume the defense thereof, the indemnifying party shall not be liable to such Indemnified Party under this Section 11, as applicable, for any legal expenses of other counsel or any of the expenses, in each case subsequently incurred by such Indemnified Party, unless (i) the indemnifying party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and Indemnified Party and representation of both parties by the same counsel would be inappropriate in the reasonable opinion of the Indemnified Party, due to actual or potential differing interests between them.

 

(e)            The Company shall be required to advance funds to an Advisor Indemnified Party for legal expenses and other costs incurred as a result of any legal action or proceeding if a claim in respect thereof is to be made pursuant hereto and if requested by such Advisor Indemnified Party if (i) such suit, action or proceeding relates to or arises out of, or is alleged to relate to or arise out of or has been caused or alleged to have been caused in whole or in part by, any action or inaction on the part of the Advisor Indemnified Party in the performance of its duties or provision of its services on behalf of the Company; and (ii) the Advisor Indemnified Party undertakes to repay any funds advanced pursuant to this Section 11(e) in cases in which such Indemnified Party would not be entitled to indemnification under Section 11(b). If advances are required under this Section 11(e), the Advisor Indemnified Party shall furnish the Company with an undertaking as set forth in clause (ii) of the preceding sentence and shall thereafter have the right to bill the Company for, or otherwise require the Company to pay, at any time and from time to time after such Advisor Indemnified Party shall become obligated to make payment therefor, any and all reasonable amounts for which such Advisor Indemnified Party is entitled to indemnification under this Section 11, and the Company shall pay the same within thirty (30) days after request for payment. In the event that a determination is made by a court of competent jurisdiction or an arbitrator that the Company is not so obligated in respect of any amount paid by it to a particular Advisor Indemnified Party, such Advisor Indemnified Party will refund such amount within sixty (60) days of such determination, and in the event that a determination by a court of competent jurisdiction or an arbitrator is made that the Company is so obligated in respect to any amount not paid by the Company to a particular Advisor Indemnified Party, the Company will pay such amount to such Advisor Indemnified Party within thirty (30) days of such final determination, in either case together with interest at the current prime rate plus two percent (2%) from the date paid until repaid or the date it was obligated to be paid until the date actually paid.

 

SECTION 12. NO JOINT VENTURE

 

Nothing in this Agreement shall be construed to make the Company and the Advisor partners or joint venturers or impose any liability as such on either of them.

 

 

SECTION 13. TERM

 

This Agreement shall have an initial term of three (3) years (the “Initial Term”), and shall automatically renew thereafter for successive one (1) year terms (each a “Renewal Term,” and such term, as renewed, the “Term”) without further action by either the Company or the Advisor, unless earlier terminated in accordance with the terms of this Agreement.

 

SECTION 14. TERMINATION

 

(a)            No later than 180 days prior to the expiration of the Initial Term or any Renewal Term, the Advisor may deliver written notice of its intention not to renew the term, whereupon the term of this Agreement shall not be renewed and extended, and this Agreement shall terminate effective on the expiration date of such Initial Term or Renewal Term, as applicable.

 

(b)            The Company may terminate this Agreement upon 90 days’ prior written notice (a “Company Termination for Convenience”); provided, however, that, if requested by the Company, the Advisor shall provide transition services (including, without limitation, assistance with identifying a replacement advisor) to the Company for up to an additional 90 days following the effective date of such Company Termination for Convenience, which services shall be subject to the same compensation and reimbursements as in effect at the time of such Company Termination for Convenience is delivered.

 

(c)            The Company may terminate this Agreement immediately, without prior notice to the Advisor, for Cause.

 

(d)            The Advisor may terminate this Agreement (i) immediately, without prior notice to the Company, with Good Reason or (ii) effective concurrently with or within 90 days following the Termination Date (as defined in the European Advisory Agreement) of the European Advisory Agreement (a “Cross Default Termination”).

 

SECTION 15. TERMINATION FEE

 

(a)            In the event of a Qualifying Termination, the Company shall pay the Advisor a fee (the “Termination Fee”) in an amount equal to the product of (i) either (a) 2.0, if such Qualifying Termination occurs prior to the end of the Initial Term, or (b) 1.5, if such Qualifying Termination occurs on or after the end of the Initial Term, and (ii) the sum of the Management Fee payable by the Company during the twelve full calendar months preceding such termination (the “Trailing Annual Fees”). In the event of a Qualifying Termination that occurs on or prior to the end of the twelfth full calendar month following the Effective Time, Trailing Annual Fees shall be deemed to equal the product of (i) the average of the sum of the Management Fees payable during each completed calendar month following the Effective Time (or $1,875,000.00, if no calendar month has been completed following the Effective Time), and (ii) twelve. The Termination Fee shall be payable to the Advisor on or before the Termination Date of this Agreement, and shall be in addition to all other earned but unpaid Management Fee and Administrative Reimbursement, and any incurred but unreimbursed Expenses accumulated as of the Termination Date, in each case, in accordance with Section 16.

 

(b)            For the avoidance of doubt, in no event shall a Termination Fee be payable exclusively as a result of the liquidation, dissolution or winding up of the Company.

 

 

SECTION 16. ACTION UPON TERMINATION

 

(a)            From and after the Termination Date, the Advisor shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing through the Termination Date, including, without limitation, any Termination Fee due in connection with such termination.

 

(b)            On the Termination Date or as promptly thereafter as practicable, the Advisor shall forthwith:

 

(i)            after deducting any earned but unpaid Management Fee or Administrative Reimbursement (including, for the avoidance of doubt, the prorated portion of the Management Fee or Administrative Reimbursement for the period between the beginning of the calendar month during which the termination occurred and the Termination Date) and incurred but unreimbursed Expenses accumulated, in each case, through the Termination Date, including, without limitation, any Termination Fee due in connection with such termination, pay over to the Company all money collected and held for the account of the Company or a Subsidiary pursuant to this Agreement;

 

(ii)           deliver to the Board of Trustees a full accounting, including a statement showing all payments collected and money held by it, covering the period following the date of the last accounting furnished to the Board of Trustees with respect to the Company or a Subsidiary; and

 

(iii)          deliver to the Board of Trustees all property and documents of the Company or any Subsidiary then in the custody of the Advisor; provided, however, that the Advisor may retain copies of all such information.

 

(c)            On the Termination Date or as promptly thereafter as practicable, the Company shall (to the extent such amounts have not already been deducted in accordance with Section 16(b)(i) above) forthwith:

 

(i)            pay to the Advisor all earned but unpaid Management Fees and Administrative Reimbursement (including, for the avoidance of doubt, the prorated portion of the Management Fee or Administrative Reimbursement for the period between the beginning of the calendar month during which the termination occurred and the Termination Date) through the Termination Date, including, without limitation, any Termination Fee due in connection with such termination; and

 

(ii)            reimburse the Advisor for all incurred but unreimbursed Expenses payable to the Advisor under this Agreement and payable to the European Advisory under the European Advisory Agreement through the Termination Date.

 

SECTION 17. ASSIGNMENT

 

Neither party may assign this Agreement or its rights hereunder without the written consent of the other party, except that the Advisor may assign this Agreement (i) to an Affiliate (only with respect to an entity described in clause (i) of the definition thereof) or other entity whose business and operations are managed or supervised by WPC, or (ii) to a corporation, partnership, limited liability company, association, trust, or other entity that is a successor (by merger, consolidation or otherwise) to the Advisor.

 

 

SECTION 18. RELEASE OF PROPERTY

 

(a)            The Advisor agrees that any money or other property of the Company or a Subsidiary thereof held by the Advisor under this Agreement shall be held by the Advisor as custodian for the Company or such Subsidiary, and the Advisor’s records shall be appropriately marked clearly to reflect the ownership of such money or other property by the Company or such Subsidiary. Upon the receipt by the Advisor of a written request from the Board of Trustees requesting the Advisor to release to the Company or any Subsidiary any money or other property then held by the Advisor for the account of the Company or any Subsidiary under this Agreement, the Advisor shall release such money or other property to the Company or any Subsidiary within a reasonable period of time, but in no event later than 30 days following such request. The Advisor shall not be liable to the Company, any Subsidiary, the Board of Trustees or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Company or any Subsidiary in connection with the money or other property released to the Company or any Subsidiary in accordance with this Section 18.

 

(b)            The Company agrees to reasonably cooperate with the Advisor to the extent any release of money or other property to the Company or any Subsidiary, and shall refrain from demanding any such release to the extent doing so may compromise the Company’s operations or Advisor’s ability to effectively carry out its duties under this Agreement, or that may materially adversely affect the Company or not be permitted by the Company’s or any Subsidiary’s Governing Instruments. If the Advisor is ordered release any money or other property in a manner that may be adverse to the Company, as described in the preceding sentence, the Advisor shall promptly notify the Board of Trustees of the Advisor’s judgment thereof. Notwithstanding the foregoing, the Advisor and its Affiliates, officers and employees shall not be liable to the Company or any Subsidiary, the Board of Trustees, or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Advisor, its Affiliates, officers or employees except as provided in Section 11.

 

SECTION 19. NOTICES

 

Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by email, facsimile transmission or email against answerback or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:

 

(a)

If to the Company:

 

One Manhattan West 

395 Ninth Avenue 

New York, NY 10001 

Attention: Chief Legal Officer

 

(b)

If to the Advisor:

 

One Manhattan West 

395 Ninth Avenue 

New York, NY 10001

Attention: Chief Legal Officer

 

Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 19 for the giving of notice.

 

 

SECTION 20. SUCCESSORS AND ASSIGNS

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns as provided in this Agreement.

 

SECTION 21. ENTIRE AGREEMENT

 

This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement, 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 of this Agreement. The express terms of this Agreement control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms of this Agreement. This Agreement may not be modified or amended other than by an agreement in writing executed by both parties.

 

SECTION 22. Arbitration

 

(a)            Any disputes, claims or controversies arising out of or relating to this Agreement, the provision of services by the Advisor pursuant to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of the Company or the Advisor or any holder of equity interests (which, for purposes of this Section 22, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of the Company or the Advisor, either on his, her or its own behalf, on behalf of the Company or the Advisor or on behalf of any series or class of equity interests of the Company or the Advisor or holders of any equity interests of the Company or the Advisor against the Company or the Advisor or any of their respective trustees, directors, members, officers, managers (including the Advisor or its successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of the Company or the Advisor (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 22. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of the Company or the Advisor and class actions by a holder of equity interests against those individuals or entities and the Company or the Advisor. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 22, the term “equity interest” shall mean, (i) in respect of the Company, shares of beneficial interest of the Company, and (ii) in respect of the Advisor, “membership interest” in the Advisor as defined in the Delaware Limited Liability Company Act, as amended.

 

(b)            There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

 

(c)            The place of arbitration shall be New York, New York, unless otherwise agreed by the parties.

 

(d)            There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)            In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the laws of the State of Maryland. Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 22(g), each party against which the Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of the Award or such other date as the Award may provide.

 

(f)            Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Company’s or the Advisor’s, as applicable, award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(g)            Notwithstanding any language to the contrary in this Agreement, the Award, including but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). The Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of the Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, this Section 22(f) shall apply to any appeal pursuant to this Section 22(f) and the appeal tribunal shall not render an award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

 

 

(h)            Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 22(g), the Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(i)            This Section 22 is intended to benefit and be enforceable by the Company, the Advisor and their respective holders of equity interests, trustees, directors, officers, managers (including the Advisor or its successor), agents or employees, and their respective successors and assigns and shall be binding upon the Company, the Advisor and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

SECTION 23. GOVERNING LAW

 

This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York, notwithstanding any New York or other conflict-of-law provisions to the contrary.

 

SECTION 24. NO 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.

 

SECTION 25. HEADINGS

 

The titles of paragraphs and subparagraphs 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 of this Agreement.

 

SECTION 26. 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. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. This Agreement shall become binding when one or more counterparts of this Agreement, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

 

SECTION 27. SURVIVAL

 

Sections 1, 7, 11, 15, 16, 20, 22, 23, 25 and 27 shall survive the termination hereof. Any termination of this Agreement shall be without prejudice to the rights of the parties hereto accrued prior to the termination or upon termination.

 

SECTION 28. Severability

 

The provisions of this Agreement are independent of and separable 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.

 

[Remainder of this page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

		COMPANY
		Net Lease Office Properties,
		a Maryland real estate trust
		By:	/s/ Jason E. Fox
			Name:	Jason E. Fox
			Title:	Chief Executive Officer
		ADVISOR
		W. P. Carey Management LLC,
		a Delaware limited liability company
		By:	/s/ ToniAnn Sanzone
			Name:	ToniAnn Sanzone
			Title:	Chief Financial Officer

 

[Signature Page to Advisory Agreement]

 

Exhibit 10.4

 

 

 

ADVISORY AGREEMENT

 

dated as of November 1, 2023

 

between

 

Net Lease Office Properties

 

and

 

W. P. Carey & Co. B.V.

 

 

 

 

TABLE OF CONTENTS

 

	Page
SECTION 1. DEFINITIONS	1
SECTION 2. APPOINTMENT AND DUTIES OF THE ADVISOR	5
SECTION 3. OTHER ACTIVITIES OF THE ADVISOR	8
SECTION 4. AGENCY	8
SECTION 5. BANK ACCOUNTS	9
SECTION 6. RECORDS	9
SECTION 7. CONFIDENTIALITY	9
SECTION 8. LIMITATION ON ACTIVITIES; INSURANCE	9
SECTION 9. COMPENSATION	10
SECTION 10. EXPENSES	10
SECTION 11. LIMITATION OF LIABILITY; INDEMNIFICATION	12
SECTION 12. NO JOINT VENTURE	13
SECTION 13. TERM	13
SECTION 14. TERMINATION	13
SECTION 15. TERMINATION FEE	14
SECTION 16. ACTION UPON TERMINATION	14
SECTION 17. ASSIGNMENT	14
SECTION 18. RELEASE OF PROPERTY	15
SECTION 19. NOTICES	15
SECTION 20. SUCCESSORS AND ASSIGNS	16
SECTION 21. ENTIRE AGREEMENT	16
SECTION 22. Arbitration	16
SECTION 23. GOVERNING LAW	18
SECTION 24. NO WAIVERS	18
SECTION 25. HEADINGS	18
SECTION 26. EXECUTION IN COUNTERPARTS	18
SECTION 27. SURVIVAL	19
SECTION 28. Severability	19
Annex A: Covered Properties

 

 

ADVISORY AGREEMENT

 

THIS ADVISORY AGREEMENT (this “Agreement”) is made as of November 1, 2023 (the “Effective Date”) by and between Net Lease Office Properties, a Maryland real estate investment trust (the “Company”), and W. P. Carey & Co. B.V., a Dutch limited liability company (together with its permitted assignees, the “Advisor”).

 

W I T N E S S E T H:

 

WHEREAS, the Company, through its own operations and the operations of its Subsidiaries (as defined herein), is in the business of owning, developing, managing and disposing of office real property;

 

WHEREAS, the Company intends to qualify as a Real Estate Investment Trust (a “REIT”) under the Code (as defined herein);

 

WHEREAS, the Company desires to avail itself of the experience, sources of information, advice, assistance and certain facilities of, or available to, the Advisor and to have the Advisor undertake the duties and responsibilities hereinafter set forth, on behalf of, and subject to the supervision of the Board of Trustees of, the Company, as provided in this Agreement;

 

WHEREAS, the Company and the US Advisor have, concurrently with the execution of this Agreement, entered into that the US Advisory Agreement; and

 

WHEREAS, the Advisor is willing to render such services on the terms and conditions hereinafter set forth.

 

NOW THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:

 

SECTION 1. DEFINITIONS

 

As used in this Agreement, the following terms have the definitions hereinafter indicated:

 

“AAA” has the meaning set forth in Section 22(a) of this Agreement.

 

“Advisor” has the meaning set forth in the preamble to this Agreement.

 

“Advisor Costs” has the meaning set forth in Section 10(b) of this Agreement.

 

“Advisor Indemnified Party” has the meaning set forth in Section 11(b) of this Agreement.

 

“Affiliate” means, with respect to any Person, (i) any other Person directly or indirectly controlling, controlled by, or under common control with such Person, (ii) any executive officer, general partner or managing member of such Person, (iii) any member of the board of directors or board of managers (or bodies performing similar functions) of such Person and (iv) any legal entity for which such Person acts as an executive officer, general partner or managing member. For the avoidance of doubt, and for purposes of this Agreement, the Company shall not be considered an Affiliate of the Advisor.

 

“Agreement” means this Advisory Agreement, as amended from time to time.

 

“Appellate Rules” has the meaning set forth in Section 22(g) of this Agreement.

 

 

“Audit Committee” means the audit committee of the Board of Trustees or the committee or body performing similar functions.

 

“Award” has the meaning set forth in Section 22(e) of this Agreement.

 

“Board of Trustees” means the board of trustees of the Company.

 

“Cause” means the occurrence of any of the following events:

 

(a)            any material breach of a material term of this Agreement by the Advisor that has not been cured within 30 days following written notice thereof from the Company;

 

(b)            fraud, criminal conduct, willful misconduct or willful or grossly negligent breach by the Advisor in the performance of its duties under this Agreement that, in each case, is determined by a majority of the Company’s Independent Trustees to be materially adverse to the Company;

 

(c)            the commencement of any proceeding relating to the Advisor’s bankruptcy or insolvency, or the dissolution of the Advisor, including an order for relief in an involuntary bankruptcy case or the Advisor authorizing or filing a voluntary bankruptcy petition; or

 

(d)            termination of the US Advisory Agreement by the Company for “Cause” (as defined in the US Advisory Agreement) pursuant to subsections (a), (b) or (c) of the definition thereof.

 

“Change in Control” means the occurrence of any of the following events:

 

(a)            a transaction or series of transactions whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company or any Subsidiary of the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; provided, however, that no person or group shall be treated for purposes of this clause (b)(ii) as beneficially owning fifty percent (50%) or more of the combined voting power of the Company solely as a result of the voting power held in the Company prior to the consummation of the transaction;

 

(b)            during any period of two (2) consecutive years, individuals who, at the beginning of such period, constitute the Board of Trustees together with any new trustee(s) (other than a trustee designated by a person who shall have entered into an agreement with the Company to effect a transaction described in the preceding clause (i) or the succeeding clause (iii) of this definition) whose election by the Board of Trustees or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the trustees then still in office who either were trustees at the beginning of the two (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

 

(c)            the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (A) a merger, consolidation, reorganization, or business combination, (B) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (C) the acquisition of all or substantially all of the assets or stock of another entity, in each case, other than a transaction:

 

(i)             which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and following which the Successor Entity continues to own all or substantially all the assets that the Company owned immediately before the transaction and succeeds to its business, and

 

 

(ii)            after which no person or group beneficially owns voting securities representing more than fifty percent (50%) of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (b)(ii) as beneficially owning fifty percent (50%) or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; or

 

(d)            approval by the Company’s shareholders of a liquidation or dissolution of the Company.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Common Share” means a common share of beneficial interest, par value $0.001 per share, of the Company now or hereafter authorized as common voting shares of the Company.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Company Account” has the meaning set forth in Section 5 of this Agreement.

 

“Company Indemnified Party” has the meaning set forth in Section 11(c) of this Agreement.

 

“Company Termination for Convenience” has the meaning set forth in Section 14(b) of this Agreement.

 

“Covered Properties” means the real properties of the Company or its Subsidiaries located outside of the United States listed in Annex A hereto.

 

“Cross Default Termination” has the meaning set forth in Section 14(d) of this Agreement.

 

“Disputes” has the meaning set forth in Section 22(a) of this Agreement.

 

“Effective Date” has the meaning set forth in the preamble to this Agreement.

 

“European Qualifying Termination” means the occurrence of any of the following events:

 

(a)            Termination for Convenience by the Company;

 

(b)            Termination by the Advisor with Good Reason; or

 

(c)            Cross Default Termination by the Advisor if the US Advisory Agreement is terminated pursuant to (i) a “Termination for Convenience” by the Company or (ii) a termination by the Advisor with “Good Reason” (each as defined in the US Advisory Agreement).

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

 

“Expenses” has the meaning set forth in Section 10(c) of this Agreement.

 

“Good Reason” means the occurrence of any of the following events:

 

(a)            any failure to obtain a reasonably satisfactory agreement from any successor to the Company to assume the Company’s obligations under the Agreement;

 

(b)            any material breach of this Agreement by the Company that has not been cured within 30 days following written notice thereof from the Advisor; or

 

(c)            the Advisor has the right to terminate the US Advisory Agreement with “Good Reason” (as defined in the US Advisory Agreement) pursuant to subsection (a) or (b) of the definition thereof.

 

“Governing Instruments” means, with regard to any entity, the declaration of trust and bylaws in the case of a real estate investment trust, the articles of incorporation and bylaws in the case of a corporation, the certificate of limited partnership (if applicable) and the partnership agreement in the case of a general or limited partnership, the articles of formation and the operating agreement in the case of a limited liability company, or, in each case, comparable governing documents.

 

“Indemnified Party” has the meaning set forth in Section 11(d) of this Agreement.

 

“Independent Trustee” means any member of the Board of Trustees who, on the date at issue, is “independent” as determined by application of the rules and regulations of any applicable securities exchange on which the Common Shares are listed.

 

“Initial Term” has the meaning set forth in Section 13 of this Agreement.

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Losses” has the meaning set forth in Section 11(b) of this Agreement.

 

“Person” means any natural person, corporation, partnership, association, limited liability company, estate, trust, joint venture, any federal, state, county or municipal government or any bureau, department or agency thereof or any other legal entity and any fiduciary acting in such capacity on behalf of the foregoing.

 

“REIT” has the meaning set forth in the recitals to this Agreement”

 

“Renewal Term” has the meaning set forth in Section 13 of this Agreement.

 

“Required Approval” has the meaning set forth in Section 2(d) of this Agreement:

 

“Rules” has the meaning set forth in Section 22(a) of this Agreement.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Subsidiary” means any subsidiary of the Company and any partnership, the general partner of which is the Company or any subsidiary of the Company and any limited liability company, the managing member of which is the Company or any subsidiary of the Company.

 

 

“Term” has the meaning set forth in Section 13 of this Agreement.

 

“Termination Date” means the effective date of any termination pursuant to Section 14.

 

“Trustee” means any person holding such office on the Board of Trustees, as of any particular time.

 

“US Advisor” means W. P. Carey Management LLC, a wholly owned subsidiary of WPC.

 

“US Advisory Agreement” means that certain US Advisory Agreement entered into by and between the Company and the US Advisor concurrently with this Agreement, as such agreement may be modified or amended from time to time in accordance with its terms.

 

“WPC” means W. P. Carey Inc., a Maryland corporation, of which the Advisor is a wholly owned subsidiary.

 

SECTION 2. APPOINTMENT AND DUTIES OF THE ADVISOR

 

(a)            The Company hereby appoints the Advisor to provide management services with respect to the asset management, property disposition support, strategic management services, and related services, in each case, related to the Covered Properties, and the Advisor hereby agrees to use its commercially reasonable efforts to perform each of the duties set forth herein. The appointment of the Advisor shall be exclusive to the Advisor, except to the extent that the Advisor elects, pursuant to the terms and conditions of this Agreement, to cause the duties of the Advisor hereunder to be provided by third parties.

 

(b)            The Advisor, in its capacity as such, shall at all times be subject to the supervision, direction and management of the Board of Trustees, and will have only such functions and authority as the Company may delegate to it and as set forth in this Agreement. The Board of Trustee has dispositive power in the event of any conflict between the Board of Trustees and the Advisor with respect to the functions and authority delegated to the Advisor above.

 

(c)            The Company and the Board of Trustees, subject to the limitations set forth in Section 2(d), hereby delegates the following functions and authority to the Advisor, and the Advisor agrees to perform (or cause to be performed) such services and activities relating to the Covered Properties as may be appropriate, including, without limitation:

 

(i)             sourcing, investigating and evaluating prospective disposition, exchange or other transactions with respect to the Covered Properties (including potential seller financing related thereto, as may be permitted), and making recommendations with respect thereto to the Board of Trustees, where applicable;

 

(ii)            conducting negotiations with brokers, purchasers and their respective agents and representatives, investment bankers and other parties regarding the disposition, exchange or other transactions with respect to the Covered Properties (including potential seller financing related thereto, as may be permitted), and subject to any necessary approvals from the Board of Trustees, executing and delivering documentation related thereto and performing the transactions contemplated thereby;

 

(iii)           managing and monitoring the operating performance of Covered Properties and cooperating with the U.S. Advisor to provide periodic reports to the Board of Trustees, in form, substance and frequency as the Advisor deems reasonably necessary or as the Board of Trustees may otherwise reasonably request;

 

 

(iv)           assisting the Company in developing criteria that are specifically tailored to the Company’s operations and divestiture objectives with respect to the Covered Properties;

 

(v)            engaging and supervising independent contractors that provide services relating to the Covered Properties, including, but not limited to, investment banking, legal, regulatory, tax, accounting, securities brokerage, property management, real estate, leasing, brokerage and other advisory and consulting services reasonably necessary for Advisor to perform its duties hereunder (it being understood that the Independent Trustees and any committees of the Board of Trustees shall retain the authority to hire its or their own attorneys or other advisors);

 

(vi)           cooperating with the U.S. Advisor in the negotiation, on behalf of the Company, of the terms of loan documents for the Company’s financings, if any, with respect to any Covered Property;

 

(vii)          coordinating and managing the operations of any joint venture or co-investment interests held by the Company and conducting and overseeing all matters with respect to the joint venture or co-investment partners, in each case, with respect to the Covered Properties;

 

(viii)         coordinating and supervising all property managers, tenant operators, leasing agents and developers for the administration, leasing, management and/or development of any of the Covered Properties;

 

(ix)            providing executive and administrative personnel, office space and administrative services required in rendering services to the Company;

 

(x)             administering bookkeeping and accounting functions as are required for the management and operation of the Company, contracting for audits and preparing such periodic reports and filings as may be required by any governmental authority in connection with the ordinary conduct of the Company’s business, and otherwise advising and assisting the Company with its compliance with applicable legal and regulatory requirements, including, without limitation, periodic reports, returns or statements required under the Exchange Act, the Code and any regulations or rulings thereunder, the securities and tax statutes of any jurisdiction in which the Company is obligated to file such reports, or the rules and regulations promulgated under any of the foregoing;

 

(xi)           advising and assisting in the preparation and filing of all offering documents, registration statements, prospectuses, proxies and other forms or documents filed with the SEC pursuant to the Securities Act or any state securities regulators (it being understood that the Company shall be responsible for the content of any and all of its offering documents, SEC filings or state regulatory filings, and that the Advisor shall not be held liable for any costs or liabilities arising out of any misstatements or omissions in the Company’s offering documents, SEC filings, state regulatory filings or other filings referred to in this subparagraph, whether or not material (except by reason of acts constituting bad faith, willful misconduct, gross negligence or reckless disregard of the Advisor’s duties under this Agreement);

 

(xii)          causing the Company to qualify to do business in all applicable jurisdictions and to obtain and maintain all appropriate licenses, in each case, with respect to the Covered Properties;

 

(xiii)         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 Company’s day-to-day operations, subject to such limitations or parameters as may be imposed from time to time by the Board of Trustees;

 

 

(xiv)         using commercially reasonable efforts to enable expenses incurred by or on behalf of the Company to be within any expense guidelines or budgets set by the Board of Trustees from time to time;

 

(xv)          using commercially reasonable efforts to enable the Company to comply with all applicable laws and regulations in all material respects;

 

(xvi)         providing reasonable assistance to the U.S. Advisor with respect to any of the duties, functions or responsibilities delegated to the U.S. Advisor under the U.S. Advisory Agreement; and

 

(xvii)        performing such other services as may be required from time to time for management and other activities relating to the assets of the Company as the Board of Trustees and the Advisor shall agree from time to time.

 

Without limiting the foregoing, the Advisor will also perform portfolio management services on behalf of the Company with respect to the Covered Properties. Such services will include, but not be limited to, consulting with the Company on the purchase and sale of, and other investment opportunities in connection with, the Covered Properties; the collection of information and the submission of reports pertaining to the Company’s assets, interest rates and general economic conditions applicable to the Covered Properties; periodic review and evaluation of the performance of the Covered Properties; acting as liaison between the Company and banking, mortgage banking, investment banking and other parties with respect to the purchase, financing and disposition of assets outside of the United States; and other customary functions related to portfolio management. Additionally, the Advisor will perform monitoring services on behalf of the Company with respect to any services provided by third parties, which the Advisor determines are material to the performance of the business.

 

(d)            Notwithstanding anything to the contrary in this Agreement, the Advisor must obtain prior approval by a majority of the Board of Trustees (including a majority of the Independent Trustees and a majority of the members of the Board of Trustees not involved in the applicable transaction) (the “Required Approval”) prior to causing the Company to take any of the following actions (subject to any delegation for which the Required Approval was obtained with respect thereto):

 

(i)             the entry into, or termination or material modification of, any material transaction related to any Covered Property, including dispositions and joint ventures;

 

(ii)            the entry into, or termination or material modification of, any material financing, loan or securities offering transaction of the Company or its Subsidiaries;

 

(iii)           the retention of the Company’s independent registered public accountants (which shall also require the prior approval of the Audit Committee of the Board of Trustees);

 

(iv)           the entry into, or termination or modification of, any material transaction between the Company, on the one hand, and the Advisor or its Affiliates, on the other hand;

 

(v)            the issuance, optional redemption or repurchase of equity or debt securities by the Company or any of its Subsidiaries;

 

 

(vi)           the grant, termination or material modification of any equity incentive awards by the Company or any of its Subsidiaries;

 

(vii)          the entry into, or termination or material modification of any transaction that would constitute a Change in Control; and

 

(viii)         such other matters as may be determined by the Board of Trustees from time to time.

 

(e)            The Advisor shall make available sufficient experienced and appropriate personnel to perform the services and functions specified herein. The Advisor shall not be obligated to dedicate any of its officers or other personnel exclusively to the Company nor is the Advisor, its Affiliates or any of their officers or other employees obligated to dedicate any specific portion of its or their time to the Company or its business, except as necessary to perform the services required hereunder.

 

(f)             The Advisor may retain, for and on behalf, and at the sole cost and expense, of the Company, such services of accountants, legal counsel, tax counsel, appraisers, insurers, brokers, business developers, transfer agents, registrars, developers, investment banks, financial advisors, underwriters, banks and other consultants and advisors as the Advisor deems necessary or advisable in connection with the management and operations of the Covered Properties. Notwithstanding anything contained herein to the contrary, the Advisor shall have the right to cause any such services to be rendered by its employees or Affiliates (which, for the avoidance of doubt, includes any employees, consultants or agents of any Affiliate of the Advisor). The Advisor shall further be entitled to reasonably rely on qualified experts hired by the Advisor, including any of the foregoing.

 

(g)            Subject to Section 2(d) above, the Advisor may enter into agreements with other parties in connection with its duties hereunder.

 

(h)            Notwithstanding anything to the contrary contained in this Agreement, it is agreed and understood that the Advisor shall not be responsible for providing portfolio or asset management services with respect to the real properties owned or controlled by the Company or its Subsidiaries that are located in the United States, and such other services expressly contemplated by, and pursuant to the terms of, the US Advisory Agreement.

 

SECTION 3. OTHER ACTIVITIES OF THE ADVISOR

 

Nothing herein shall prevent the Advisor or its Affiliates (or their members, officers, directors, employees, agents, representatives, advisors or others) from engaging in any other business or activities, or from rendering services of any kind to any other Person, including advisory or other services to others similar to those set forth in this Agreement. The Company recognizes that it is not entitled to preferential treatment in receiving information, recommendations and other services from the Advisor. The Company and the Board of Trustees acknowledge that the Advisor and/or one or more of its Affiliates may be or become subject to various conflicts of interest. The Advisor shall act in good faith to endeavor to identify to the Independent Trustees any conflicts that may arise among the Company, the Advisor and/or any other Person or entity on whose behalf the Advisor may be engaged.

 

SECTION 4. AGENCY

 

The Advisor shall act as agent of the Company in making, acquiring, financing and disposing of assets of the Company, disbursing and collecting the Company’s funds, paying the debts and fulfilling the obligations of the Company, supervising the performance of professionals engaged by or on behalf of the Company and handling, prosecuting and settling any claims of or against the Company, the Board of Trustees, holders of the Company’s securities or the Company’s representatives or properties.

 

 

SECTION 5. BANK ACCOUNTS

 

The Advisor may establish and maintain, subject to any applicable conditions or limitations of the loan documents applicable to the Company, one or more bank accounts in its own name for account of the Company or in the name of the Company or any Subsidiary (any such account, a “Company Account”), and may collect and deposit funds into any such Company Account or Company Accounts, and disburse funds from any such Company Account or Company Accounts. The Advisor shall from time to time render appropriate accountings of such collections and payments to the Board of Trustees and, upon request, to the auditors of the Company or any Subsidiary.

 

SECTION 6. RECORDS

 

The Advisor shall maintain appropriate books of accounts and records relating to services performed under this Agreement, and such books of account and records shall be accessible for inspection by representatives of the Company at any time during normal business hours upon reasonable advance notice to the Advisor.

 

SECTION 7. CONFIDENTIALITY

 

The Advisor shall keep confidential any and all non-public information obtained in connection with the services rendered under this Agreement and shall not disclose any such information to any Person, except to (i) its Affiliates, members, officers, directors, employees, agents, representatives or advisors who reasonably need such information for the Advisor to be able to perform its duties hereunder (and the US Advisor to carry out its duties under the US Advisory Agreement, (ii) appraisers, lenders, bankers and other parties as necessary in the ordinary course of the Company’s business, (iii) in connection with any governmental or regulatory filings or requests of the Company or the Advisor or any of their Affiliates, (v) as required by applicable law or regulation, including any applicable disclosure requirements applicable to the Company and the Advisor and their Affiliates under securities or blue sky laws or stock exchange listing requirements, or (vi) with the prior written consent of the Board of Trustees. The confidentiality provisions of this Section 7 shall survive for a period of three (3) years after the Termination Date.

 

SECTION 8. LIMITATION ON ACTIVITIES; INSURANCE

 

(a)            The Advisor shall refrain from any action that, in its sole judgment made in good faith, (i) can reasonably be expected to result in the loss of the Company’s status as a REIT under the Code, or to subject the Company to regulation under the Investment Company Act, or (ii) can reasonably be expected to result in the violation of any law, rule or regulation of any governmental body or agency having jurisdiction over the Company or any Subsidiary that would materially adversely affect the Company or that would otherwise not be permitted by such entity’s Governing Instruments. If the Advisor is ordered to take any such action by the Board of Trustees, the Advisor shall promptly notify the Board of Trustees of the Advisor’s judgment with respect thereto. Notwithstanding the foregoing, the Advisor and its Affiliates, officers and employees shall not be liable to the Company or any Subsidiary, the Board of Trustees, or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Advisor, its Affiliates, officers or employees except as provided in Section 11.

 

(b)            The Advisor shall at all times during the term of this Agreement (including the Initial Term and any Renewal Term) maintain (ii) such insurance coverage as is customarily maintained by other advisors, managers or servicers of similar assets. No fidelity bond shall be required,

 

 

(c)            The Advisor acknowledges receipt of the Company’s Code of Business Conduct and Ethics, and Policy on Insider Training, and agrees to require its employees who provide services to the Company to comply with such codes and policies.

 

SECTION 9. COMPENSATION

 

The Advisor shall be entitled to a portion of the Management Fee (as defined in the US Advisory Agreement) payable to the US Advisor, in accordance with the US Advisory Agreement, which shall be paid to the Advisor by the US Advisor for any such Management Fee in such amount, and on such terms, as may be agreed between the Advisor and the US Advisor.

 

SECTION 10. EXPENSES

 

(a)            Administrative Reimbursement. The Advisor shall be entitled to a portion of the Administrative Reimbursement (as defined in the US Advisory Agreement) payable to the US Advisor, in accordance with the US Advisory Agreement, which shall be reimbursed to the Advisor by the US Advisor for any such Administrative Reimbursement in such amount, and on such terms, as may be agreed between the Advisor and the US Advisor.

 

(b)            Advisor Costs. Except as otherwise expressly provided herein or approved by majority vote of the Independent Trustees or the Audit Committee, in exchange for the Advisor’s portion of the Administrative Reimbursement, the Advisor shall bear the following expenses incurred in connection with the performance of its duties under this Agreement, and shall not be entitled to reimbursement with respect to such expenses (collectively, the “Advisor Costs”):

 

(i)             base salary, cash incentive compensation and other employment expenses of personnel employed by the Advisor, including, but not limited to, salaries, wages, payroll taxes and the cost of employee benefit plans (other than equity awards granted by the Company pursuant to an equity compensation plan approved by the Board of Trustees);

 

(ii)            fees and travel and other expenses of employees of the Advisor, to the extent not incurred while providing services pursuant to this Agreement;

 

(iii)           rent, telephone, utilities, office furniture, equipment and machinery (including computers, to the extent utilized) and other office expenses of the Advisor, except to the extent such expenses relate solely to an office maintained by the Company separate from the offices of the Advisor; and

 

(iv)           miscellaneous administrative expenses relating to performance by the Advisor of its obligations hereunder.

 

(c)            Expense Reimbursement. Except as expressly otherwise provided in this Agreement, the Company shall pay (or shall reimburse the Advisor for) all of its and its Subsidiaries’ expenses and all costs and expenses associated with the services to be provided pursuant to this Agreement. Without limiting the generality of the foregoing, it is specifically agreed that the following out-of-pocket expenses of the Company and its Subsidiaries shall be paid by the Company (or shall be reimbursed by the Company to the Advisor) (collectively, the “Expenses”):

 

(i)             the cost of borrowed money;

 

 

(ii)            taxes on income and taxes and assessments on real and personal property, if any, and all other taxes applicable to the Company or its Subsidiaries;

 

(iii)           legal, auditing, accounting, underwriting, brokerage, listing, reporting, registration and other fees, and printing, engraving and other expenses and taxes incurred in connection with the issuance, distribution, transfer, trading, registration and listing of the Company’s or any of its Subsidiaries’ securities on a stock exchange, including transfer agent’s, registrar’s and indenture trustee’s fees and charges;

 

(iv)           expenses of organizing, restructuring, reorganizing or liquidating the Company or any of its Subsidiaries, or of revising, amending, converting or modifying the Company’s or any of its Subsidiaries’ Governing Instruments;

 

(v)            fees and travel and other expenses paid to members of the Board of Trustees and officers of the Company or those of individuals in similar positions with any of its Subsidiaries in their capacities as such (but not in their capacities as officers or employees of the Advisor) and fees and travel and other expenses paid to advisors, contractors, mortgage servicers, consultants and other agents and independent contractors employed by or on behalf of the Company and its Subsidiaries (whether or not engaged by the Advisor rather than directly by the Company);

 

(vi)           expenses directly connected with the investigation, disposition or ownership of real estate interests or other property (including third party property diligence costs, appraisal reporting, the costs of foreclosure, insurance premiums, legal services, brokerage and sales commissions, maintenance, repair, improvement and local management of property), other than expenses with respect thereto of employees of the Advisor, to the extent that such expenses are to be borne by the Advisor pursuant to this Agreement, including Section 10(b);

 

(vii)          all insurance costs (including officer and trustee liability insurance) incurred in connection with the Company and its Subsidiaries or in connection with any officer and trustee indemnity agreement to which the Company or any of its Subsidiaries is a party or arising under the Company’s or any of its Subsidiaries’ Governing Instruments;

 

(viii)         expenses connected with payments of distributions, dividends or interest or contributions in cash or any other form made or caused to be made by the Trustees to holders of securities of the Company or any of its Subsidiaries;

 

(ix)           all expenses connected with communications to holders of securities of the Company or its Subsidiaries and other administrative work necessary to maintaining relations with holders of securities, including the proxy solicitation materials and reports to holders of the Company’s or its Subsidiaries’ securities;

 

(x)             legal, accounting, auditing and other professional services fees and expenses in addition to those described above;

 

(xi)           filing and recording fees and costs for regulatory or governmental filings, approvals and notices;

 

(xii)          the costs and expenses of conceiving, implementing, managing and settling all equity award or compensation plans or arrangements established by the Company or any of its Subsidiaries, including but not limited to the value of awards made by the Company or any of its Subsidiaries to members of the Board of Trustees, the Advisor or its employees, if any, and payment of any employment or withholding taxes in connection therewith; and

 

 

(xiii)         all other costs and expenses of the Company and its Subsidiaries, other than those to be specifically borne by the Advisor pursuant to Section 10(b) above.

 

(d)            Invoices and Payment. All invoicing of, and reimbursement for, the Expenses shall be conducted by the US Advisor pursuant to, and subject to the terms of, the US Advisory Agreement, and any reimbursable Expenses shall be reimbursed to the Advisor by the US Advisor, in such amounts, and on such terms, as may be agreed between the Advisor and the US Advisor..

 

SECTION 11. LIMITATION OF LIABILITY; INDEMNIFICATION

 

(a)            Notwithstanding anything to the contrary in this Agreement, the Advisor shall have no responsibility under this Agreement other than to render the services as required under this Agreement in good faith and shall not be responsible for any action of the Board of Trustees in following or declining to follow any advice or recommendations of the Advisor, including as set forth in Section 8(a). The Advisor, its Affiliates and their members, managers, officers and employees will not be liable to the Company or any Subsidiary, to the Board of Trustees or to the Company’s or any Subsidiary’s shareholders or partners for any acts or omissions by the Advisor, its Affiliates, members, managers, officers or employees pursuant to or in accordance with this Agreement, except by reason of acts constituting bad faith, willful misconduct or gross negligence.

 

(b)            The Company shall, to the full extent lawful, reimburse, indemnify and hold the Advisor, its Affiliates, members, managers, officers and employees, sub-advisors and each other Person, if any, controlling the Advisor or its Affiliates (each, an “Advisor Indemnified Party”), harmless of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’ fees) (collectively, “Losses”) in respect of or arising from any acts or omissions of such Advisor Indemnified Party made in good faith in the performance of the Advisor’s duties under this Agreement and not constituting such Advisor Indemnified Party’s bad faith, willful misconduct or gross negligence.

 

(c)            The Advisor shall, to the full extent lawful, reimburse, indemnify and hold the Company, its Subsidiaries, its shareholders, trustees, officers and employees and each other Person, if any, controlling the Company or its Subsidiaries (each, a “Company Indemnified Party”), harmless of and from any and all Losses in respect of or arising from any acts or omissions of the Advisor constituting bad faith, willful misconduct or gross negligence.

 

(d)            Promptly after receipt by the Advisor Indemnified Party or the Company Indemnified Party, as applicable (the “Indemnified Party”) of notice of the commencement of any action, such Indemnified Party shall, if a claim in respect thereof is to be made pursuant hereto, notify the indemnifying party in writing of the commencement thereof; but the omission to so notify the indemnifying party shall not relieve it from any liability that it may have to any Indemnified Party pursuant to this Section 11. In case any such action shall be brought against an Indemnified Party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, to assume the defense thereof, with counsel satisfactory to such Indemnified Party and, after notice from the indemnifying party to such Indemnified Party of its election to assume the defense thereof, the indemnifying party shall not be liable to such Indemnified Party under this Section 11, as applicable, for any legal expenses of other counsel or any of the expenses, in each case subsequently incurred by such Indemnified Party, unless (i) the indemnifying party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and Indemnified Party and representation of both parties by the same counsel would be inappropriate in the reasonable opinion of the Indemnified Party, due to actual or potential differing interests between them.

 

 

(e)            The Company shall be required to advance funds to an Advisor Indemnified Party for legal expenses and other costs incurred as a result of any legal action or proceeding if a claim in respect thereof is to be made pursuant hereto and if requested by such Advisor Indemnified Party if (i) such suit, action or proceeding relates to or arises out of, or is alleged to relate to or arise out of or has been caused or alleged to have been caused in whole or in part by, any action or inaction on the part of the Advisor Indemnified Party in the performance of its duties or provision of its services on behalf of the Company; and (ii) the Advisor Indemnified Party undertakes to repay any funds advanced pursuant to this Section 11(e) in cases in which such Indemnified Party would not be entitled to indemnification under Section 11(b). If advances are required under this Section 11(e), the Advisor Indemnified Party shall furnish the Company with an undertaking as set forth in clause (ii) of the preceding sentence and shall thereafter have the right to bill the Company for, or otherwise require the Company to pay, at any time and from time to time after such Advisor Indemnified Party shall become obligated to make payment therefor, any and all reasonable amounts for which such Advisor Indemnified Party is entitled to indemnification under this Section 11, and the Company shall pay the same within thirty (30) days after request for payment. In the event that a determination is made by a court of competent jurisdiction or an arbitrator that the Company is not so obligated in respect of any amount paid by it to a particular Advisor Indemnified Party, such Advisor Indemnified Party will refund such amount within sixty (60) days of such determination, and in the event that a determination by a court of competent jurisdiction or an arbitrator is made that the Company is so obligated in respect to any amount not paid by the Company to a particular Advisor Indemnified Party, the Company will pay such amount to such Advisor Indemnified Party within thirty (30) days of such final determination, in either case together with interest at the current prime rate plus two percent (2%) from the date paid until repaid or the date it was obligated to be paid until the date actually paid.

 

SECTION 12. NO JOINT VENTURE

 

Nothing in this Agreement shall be construed to make the Company and the Advisor partners or joint venturers or impose any liability as such on either of them.

 

SECTION 13. TERM

 

This Agreement shall have an initial term of three (3) years (the “Initial Term”), and shall automatically renew thereafter for successive one (1) year terms (each a “Renewal Term,” and such term, as renewed, the “Term”) without further action by either the Company or the Advisor, unless earlier terminated in accordance with the terms of this Agreement.

 

SECTION 14. TERMINATION

 

(a)            No later than 180 days prior to the expiration of the Initial Term or any Renewal Term, the Advisor may deliver written notice of its intention not to renew the term, whereupon the term of this Agreement shall not be renewed and extended, and this Agreement shall terminate effective on the expiration date of such Initial Term or Renewal Term, as applicable.

 

(b)            The Company may terminate this Agreement upon 90 days’ prior written notice (a “Company Termination for Convenience”); provided, however, that, if requested by the Company, the Advisor shall provide transition services (including, without limitation, assistance with identifying a replacement advisor) to the Company for up to an additional 90 days following the effective date of such Company Termination for Convenience, which services shall be subject to the same compensation and reimbursements as in effect at the time of such Company Termination for Convenience is delivered.

 

 

(c)            The Company may terminate this Agreement immediately, without prior notice to the Advisor, for Cause.

 

(d)            The Advisor may terminate this Agreement (i) immediately, without prior notice to the Company, with Good Reason or (ii) effective concurrently with or within 90 days following the Termination Date (as defined in the US Advisory Agreement) of the US Advisory Agreement (a “Cross Default Termination”).

 

SECTION 15. TERMINATION FEE

 

In the event of a European Qualifying Termination or a Qualifying Termination (as such term is defined in the US Advisory Agreement), the Advisor shall be entitled to a portion of any Termination Fee (as defined in the US Advisory Agreement) payable to the US Advisor, in accordance with the US Advisory Agreement, which shall be paid to the Advisor by the US Advisor for any such Termination Fee in such amount, and on such terms, as may be agreed between the Advisor and the US Advisor.

 

SECTION 16. ACTION UPON TERMINATION

 

(a)            From and after the Termination Date, the Advisor shall not be entitled to compensation for further services under this Agreement, but shall be paid all compensation accruing through the Termination Date.

 

(b)            On the Termination Date or as promptly thereafter as practicable, the Advisor shall forthwith:

 

(i)             after deducting any incurred but unreimbursed Expenses accumulated through the Termination Date due in connection with such termination, pay over to the Company all money collected and held for the account of the Company or a Subsidiary pursuant to this Agreement;

 

(ii)            deliver to the Board of Trustees a full accounting, including a statement showing all payments collected and money held by it, covering the period following the date of the last accounting furnished to the Board of Trustees with respect to the Company or a Subsidiary; and

 

(iii)           deliver to the Board of Trustees all property and documents of the Company or any Subsidiary then in the custody of the Advisor; provided, however, that the Advisor may retain copies of all such information.

 

(c)            On the Termination Date or as promptly thereafter as practicable, the Company shall (to the extent such amounts have not already been deducted in accordance with Section 16(b)(i) above) forthwith:

 

(i)             reimburse the Advisor for all incurred but unreimbursed Expenses through the Termination Date pursuant to Section 10(c) above.

 

SECTION 17. ASSIGNMENT

 

Neither party may assign this Agreement or its rights hereunder without the written consent of the other party, except that the Advisor may assign this Agreement (i) to an Affiliate (only with respect to an entity described in clause (i) of the definition thereof) or other entity whose business and operations are managed or supervised by WPC, or (ii) to a corporation, partnership, limited liability company, association, trust, or other entity that is a successor (by merger, consolidation or otherwise) to the Advisor.

 

 

SECTION 18. RELEASE OF PROPERTY

 

(a)            The Advisor agrees that any money or other property of the Company or a Subsidiary thereof held by the Advisor under this Agreement shall be held by the Advisor as custodian for the Company or such Subsidiary, and the Advisor’s records shall be appropriately marked clearly to reflect the ownership of such money or other property by the Company or such Subsidiary. Upon the receipt by the Advisor of a written request from the Board of Trustees requesting the Advisor to release to the Company or any Subsidiary any money or other property then held by the Advisor for the account of the Company or any Subsidiary under this Agreement, the Advisor shall release such money or other property to the Company or any Subsidiary within a reasonable period of time, but in no event later than 30 days following such request. The Advisor shall not be liable to the Company, any Subsidiary, the Board of Trustees or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Company or any Subsidiary in connection with the money or other property released to the Company or any Subsidiary in accordance with this Section 18.

 

(b)            The Company agrees to reasonably cooperate with the Advisor to the extent any release of money or other property to the Company or any Subsidiary, and shall refrain from demanding any such release to the extent doing so may compromise the Company’s operations or Advisor’s ability to effectively carry out its duties under this Agreement, or that may materially adversely affect the Company or not be permitted by the Company’s or any Subsidiary’s Governing Instruments. If the Advisor is ordered release any money or other property in a manner that may be adverse to the Company, as described in the preceding sentence, the Advisor shall promptly notify the Board of Trustees of the Advisor’s judgment thereof. Notwithstanding the foregoing, the Advisor and its Affiliates, officers and employees shall not be liable to the Company or any Subsidiary, the Board of Trustees, or the Company’s or any Subsidiary’s shareholders or partners for any act or omission by the Advisor, its Affiliates, officers or employees except as provided in Section 11.

 

SECTION 19. NOTICES

 

Unless expressly provided otherwise in this Agreement, all notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received when delivered against receipt or upon actual receipt of (i) personal delivery, (ii) delivery by reputable overnight courier, (iii) delivery by email, facsimile transmission or email against answerback or (iv) delivery by registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below:

 

(a)

If to the Company: One Manhattan West

395 Ninth Avenue

New York, NY 10001

Attention: Chief Legal Officer

 

(b)

If to the Advisor: One Manhattan West

395 Ninth Avenue

New York, NY 10001

Attention: Chief Legal Officer

 

 

Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this Section 19 for the giving of notice.

 

SECTION 20. SUCCESSORS AND ASSIGNS

 

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and permitted assigns as provided in this Agreement.

 

SECTION 21. ENTIRE AGREEMENT

 

This Agreement contains the entire agreement and understanding among the parties hereto with respect to the subject matter of this Agreement, 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 of this Agreement. The express terms of this Agreement control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms of this Agreement. This Agreement may not be modified or amended other than by an agreement in writing executed by both parties.

 

SECTION 22. Arbitration

 

(a)            Any disputes, claims or controversies arising out of or relating to this Agreement, the provision of services by the Advisor pursuant to this Agreement or the transactions contemplated hereby, including any disputes, claims or controversies brought by or on behalf of the Company or the Advisor or any holder of equity interests (which, for purposes of this Section 22, shall mean any holder of record or any beneficial owner of equity interests or any former holder of record or beneficial owner of equity interests) of the Company or the Advisor, either on his, her or its own behalf, on behalf of the Company or the Advisor or on behalf of any series or class of equity interests of the Company or the Advisor or holders of any equity interests of the Company or the Advisor against the Company or the Advisor or any of their respective trustees, directors, members, officers, managers (including the Advisor or its successor), agents or employees, including any disputes, claims or controversies relating to the meaning, interpretation, effect, validity, performance or enforcement of this Agreement, including this arbitration agreement or the governing documents of the Company or the Advisor (all of which are referred to as “Disputes”), or relating in any way to such a Dispute or Disputes shall, on the demand of any party to such Dispute or Disputes, be resolved through binding and final arbitration in accordance with the Commercial Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) then in effect, except as those Rules may be modified in this Section 22. For the avoidance of doubt, and not as a limitation, Disputes are intended to include derivative actions against the trustees, directors, officers or managers of the Company or the Advisor and class actions by a holder of equity interests against those individuals or entities and the Company or the Advisor. For the avoidance of doubt, a Dispute shall include a Dispute made derivatively on behalf of one party against another party. For purposes of this Section 22, the term “equity interest” shall mean, (i) in respect of the Company, shares of beneficial interest of the Company, and (ii) in respect of the Advisor, “membership interest” in the Advisor as defined in the Delaware Limited Liability Company Act, as amended.

 

 

(b)            There shall be three (3) arbitrators. If there are only two (2) parties to the Dispute, each party shall select one (1) arbitrator within fifteen (15) days after receipt by respondent of a copy of the demand for arbitration. The arbitrators may be affiliated or interested persons of the parties. If there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, shall each select, by the vote of a majority of the claimants or the respondents, as the case may be, one (1) arbitrator within fifteen (15) days after receipt of the demand for arbitration. The arbitrators may be affiliated or interested persons of the claimants or the respondents, as the case may be. If either a claimant (or all claimants) or a respondent (or all respondents) fail(s) to timely select an arbitrator then the party (or parties) who has selected an arbitrator may request AAA to provide a list of three (3) proposed arbitrators in accordance with the Rules (each of whom shall be neutral, impartial and unaffiliated with any party) and the party (or parties) that failed to timely appoint an arbitrator shall have ten (10) days from the date AAA provides the list to select one (1) of the three (3) arbitrators proposed by AAA. If the party (or parties) fail(s) to select the second (2nd) arbitrator by that time, the party (or parties) who have appointed the first (1st) arbitrator shall then have ten (10) days to select one (1) of the three (3) arbitrators proposed by AAA to be the second (2nd) arbitrator; and, if he/they should fail to select the second (2nd) arbitrator by such time, AAA shall select, within fifteen (15) days thereafter, one (1) of the three (3) arbitrators it had proposed as the second (2nd) arbitrator. The two (2) arbitrators so appointed shall jointly appoint the third (3rd) and presiding arbitrator (who shall be neutral, impartial and unaffiliated with any party) within fifteen (15) days of the appointment of the second (2nd) arbitrator. If the third (3rd) arbitrator has not been appointed within the time limit specified herein, then AAA shall provide a list of proposed arbitrators in accordance with the Rules, and the arbitrator shall be appointed by AAA in accordance with a listing, striking and ranking procedure, with each party having a limited number of strikes, excluding strikes for cause.

 

(c)            The place of arbitration shall be New York, New York, unless otherwise agreed by the parties.

 

(d)            There shall be only limited documentary discovery of documents directly related to the issues in dispute, as may be ordered by the arbitrators. For the avoidance of doubt, it is intended that there shall be no depositions and no other discovery other than limited documentary discovery as described in the preceding sentence.

 

(e)            In rendering an award or decision (the “Award”), the arbitrators shall be required to follow the laws of the State of Maryland. Any arbitration proceedings or award rendered hereunder and the validity, effect and interpretation of this arbitration agreement shall be governed by the Federal Arbitration Act, 9 U.S.C. §1 et seq. The Award shall be in writing and shall state the findings of fact and conclusions of law on which it is based. Any monetary award shall be made and payable in U.S. dollars free of any tax, deduction or offset. Subject to Section 22(g), each party against which the Award assesses a monetary obligation shall pay that obligation on or before the thirtieth (30th) day following the date of the Award or such other date as the Award may provide.

 

(f)             Except to the extent expressly provided by this Agreement or as otherwise agreed by the parties thereto, each party involved in a Dispute shall bear its own costs and expenses (including attorneys’ fees), and the arbitrators shall not render an award that would include shifting of any such costs or expenses (including attorneys’ fees) or, in a derivative case or class action, award any portion of the Company’s or the Advisor’s, as applicable, award to the claimant or the claimant’s attorneys. Each party (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand, respectively) shall bear the costs and expenses of its (or their) selected arbitrator and the parties (or, if there are more than two (2) parties to the Dispute, all claimants, on the one hand, and all respondents, on the other hand) shall equally bear the costs and expenses of the third (3rd) appointed arbitrator.

 

(g)            Notwithstanding any language to the contrary in this Agreement, the Award, including but not limited to, any interim Award, may be appealed pursuant to the AAA’s Optional Appellate Arbitration Rules (“Appellate Rules”). The Award shall not be considered final until after the time for filing the notice of appeal pursuant to the Appellate Rules has expired. Appeals must be initiated within thirty (30) days of receipt of the Award by filing a notice of appeal with any AAA office. Following the appeal process, the decision rendered by the appeal tribunal may be entered in any court having jurisdiction thereof. For the avoidance of doubt, and despite any contrary provision of the Appellate Rules, this Section 22(f) shall apply to any appeal pursuant to this Section 22(f) and the appeal tribunal shall not render an award that would include shifting of any costs or expenses (including attorneys’ fees) of any party.

 

 

(h)            Following the expiration of the time for filing the notice of appeal, or the conclusion of the appeal process set forth in Section 22(g), the Award shall be final and binding upon the parties thereto and shall be the sole and exclusive remedy between those parties relating to the Dispute, including any claims, counterclaims, issues or accounting presented to the arbitrators. Judgment upon the Award may be entered in any court having jurisdiction. To the fullest extent permitted by law, no application or appeal to any court of competent jurisdiction may be made in connection with any question of law arising in the course of arbitration or with respect to any award made except for actions relating to enforcement of this agreement to arbitrate or any arbitral award issued hereunder and except for actions seeking interim or other provisional relief in aid of arbitration proceedings in any court of competent jurisdiction.

 

(i)             This Section 22 is intended to benefit and be enforceable by the Company, the Advisor and their respective holders of equity interests, trustees, directors, officers, managers (including the Advisor or its successor), agents or employees, and their respective successors and assigns and shall be binding upon the Company, the Advisor and their respective holders of equity interests, and be in addition to, and not in substitution for, any other rights to indemnification or contribution that such individuals or entities may have by contract or otherwise.

 

SECTION 23. GOVERNING LAW

 

This Agreement and all questions relating to its validity, interpretation, performance and enforcement shall be governed by and construed, interpreted and enforced in accordance with the laws of the State of New York, notwithstanding any New York or other conflict-of-law provisions to the contrary.

 

SECTION 24. NO 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.

 

SECTION 25. HEADINGS

 

The titles of paragraphs and subparagraphs 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 of this Agreement.

 

SECTION 26. 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. Counterparts may be delivered via facsimile, electronic mail (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. This Agreement shall become binding when one or more counterparts of this Agreement, individually or taken together, shall bear the signatures of all of the parties reflected hereon as the signatories.

 

 

SECTION 27. SURVIVAL

 

Sections 1, 7, 11, 15, 16, 20, 22, 23, 25 and 27 shall survive the termination hereof. Any termination of this Agreement shall be without prejudice to the rights of the parties hereto accrued prior to the termination or upon termination.

 

SECTION 28. Severability

 

The provisions of this Agreement are independent of and separable 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.

 

[Remainder of this page intentionally left blank]

 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	COMPANY
	Net Lease Office Properties,
	a Maryland real estate trust
	By:	/s/ Jason E. Fox
		Name:	Jason E. Fox
		Title:	Chief Financial Officer
	ADVISOR
	W. P. Carey & Co. B.V.,
	a Dutch limited liability company
	By:	/s/ Gregory M. Butchart
		Name:	Gregory M. Butchart
		Title:	Director A
	By:	/s/ Ramses van Toor
		Name:	Ramses van Toor
		Title:	Director B

 

[Signature Page to Advisory Agreement]

 

 

Exhibit 99.1

 

 

W. P. Carey Announces Completion of Spin-Off of Net Lease Office Properties

 

NLOP Common Shares to Begin “Regular Way” Trading on the NYSE on November 2, 2023

 

NEW YORK, Nov. 1, 2023 -- W. P. Carey Inc. (W. P. Carey, NYSE: WPC) today announced that it has completed the previously announced spin-off of 59 office properties (the “Spin-Off”) into Net Lease Office Properties (“NLOP”), a separate, publicly-traded real estate investment trust that will be listed on the New York Stock Exchange (“NYSE”) under the symbol “NLOP.”

 

Under the terms of the Spin-Off, W. P. Carey stockholders received one NLOP common share for every 15 shares of W. P. Carey common stock held as of the record date of October 19, 2023. W. P. Carey stockholders will receive cash in lieu of any fractional shares they would otherwise have been entitled to receive in the distribution.

 

Since October 27, 2023, NLOP common shares have traded on a “when-issued” basis on the NYSE under the symbol “NLOP WI.” The “when-issued” trading of NLOP ended at the close of market on November 1, 2023. On November 2, 2023, the “regular way” trading of NLOP common shares will begin on the NYSE under the symbol “NLOP.” Shares of W. P. Carey will continue to trade under the symbol “WPC.”

 

J.P. Morgan served as exclusive financial advisor, Latham & Watkins LLP acted as legal advisor, and Hogan Lovells US LLP acted as legal advisor with respect to tax and Maryland law matters to W. P. Carey in connection with the Spin-Off.

 

W. P. Carey Inc.

 

Celebrating its 50th anniversary, W. P. Carey ranks among the largest net lease REITs with a well-diversified portfolio of high-quality, operationally critical commercial real estate, which includes 1,416 net lease properties covering approximately 171 million square feet and a portfolio of 85 self-storage operating properties, pro forma for the spin-off of NLOP, as of June 30, 2023. With offices in New York, London, Amsterdam and Dallas, the company remains focused on investing primarily in single-tenant, industrial, warehouse and retail properties located in the U.S. and Northern and Western Europe, under long-term net leases with built-in rent escalations.

 

www.wpcarey.com

 

Net Lease Office Properties

 

Net Lease Office Properties (NYSE: NLOP) is a publicly traded real estate investment trust with a portfolio of 59 high-quality office properties, totaling approximately 9.2 million leasable square feet primarily leased to corporate tenants on a single-tenant net lease basis. The vast majority of the office properties owned by NLOP are located in the U.S., with the balance in Europe. The portfolio consists of 62 corporate tenants operating in a variety of industries, generating annualized based rent of more than $141 million as of June 30, 2023. NLOP’s business plan is focused on realizing value for its shareholders primarily through strategic asset management and disposition of its property portfolio over time.

 

www.nloproperties.com

 

 

Cautionary Statement Concerning Forward-Looking Statements

 

Certain of the matters discussed in this communication constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, both as amended by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include, among other things, statements regarding the intent, belief or expectations of W. P. Carey and NLOP and can be identified by the use of words such as “may,” “will,” “should,” “would,” “will be,” “goals,” “believe,” “project,” “expect,” “anticipate,” “intend,” “estimate” “opportunities,” “possibility,” “strategy,” “maintain” or the negative version of these words and other comparable terms. These forward-looking statements include, but are not limited to, statements regarding the trading of NLOP common shares on the NYSE and NLOP’s business plan. These statements are based on the current expectations of W. P. Carey’s and NLOP’s management, and it is important to note that W. P. Carey’s and NLOP’s actual results could be materially different from those projected in such forward-looking statements. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Other unknown or unpredictable risks or uncertainties, like the risks related to inflation and increased interest rates, the effects of pandemics and global outbreaks of contagious diseases (such as the COVID-19 pandemic) and domestic or geopolitical crises, such as terrorism, military conflict (including the ongoing conflict between Russia and Ukraine and the global response to it), war or the perception that hostilities may be imminent, political instability or civil unrest, or other conflict, and those additional risk factors discussed in reports that W. P. Carey and NLOP have filed with the SEC, could also have material adverse effects on W. P. Carey and NLOP’s future results, performance or achievements. Discussions of some of these other important factors and assumptions are contained in W. P. Carey’s and NLOP’s filings with the SEC and are available at the SEC’s website at http://www.sec.gov, including Part I, Item 1A. Risk Factors in W. P. Carey's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and the risk factors listed under the caption “Risk Factors” in NLOP’s Registration Statement on Form 10 filed with the SEC on October 4, 2023, the final version of which was included as Exhibit 99.1 to NLOP’s Current Report on Form 8-K/A filed with the SEC on October 11 ,2023. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this communication, unless noted otherwise. Except as required under the federal securities laws and the rules and regulations of the SEC, W. P. Carey and NLOP do not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this communication or to reflect the occurrence of unanticipated events.

 

Institutional Investors:

Peter Sands

1 (212) 492-1110

institutionalir@wpcarey.com

 

Individual Investors:

W. P. Carey Inc.

1 (212) 492-8920

ir@wpcarey.com

 

Press Contact:

Anna McGrath

1 (212) 492-1166

amcgrath@wpcarey.com

 

 

v3.23.3

Cover	Oct. 31, 2023
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Oct. 31, 2023
Entity File Number	001-13779
Entity Registrant Name	W. P. Carey Inc.
Entity Central Index Key	0001025378
Entity Tax Identification Number	45-4549771
Entity Incorporation, State or Country Code	MD
Entity Address, Address Line One	One Manhattan West
Entity Address, Address Line Two	395 9th Avenue
Entity Address, Address Line Three	58th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10001
City Area Code	212
Local Phone Number	492-1100
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 Par Value
Trading Symbol	WPC
Security Exchange Name	NYSE
Entity Emerging Growth Company	false

---