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EXHIBIT 10(e)
ADVISORY AGREEMENT
THIS AGREEMENT is made this [__] day of [________], 1997 between D&N
CAPITAL CORPORATION, a Delaware corporation (the "Company"), and D&N BANK, a
federally chartered savings bank (the "Advisor"). Capitalized terms used herein
shall have the meanings set forth in Section 1 of this Agreement.
WHEREAS, the Company intends to qualify as a "real estate investment
trust" ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code"); and
WHEREAS, the Company desires to avail itself of the experience and
assistance of the Advisor and to have the Advisor undertake, on the Company's
behalf, the duties and responsibilities hereinafter set forth, subject to the
control and supervision of the Board of Directors of the Company (the "Board of
Directors") as provided for herein; and
WHEREAS, the Advisor desires to render such services for the Company
subject to the control and supervision of the Board of Directors, on the terms
and conditions hereinafter set forth.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the respective meanings set forth below:
"Advisor" has the meaning set forth in the forepart of this Agreement.
"Advisor Termination Date" means the date on which this Agreement
terminates.
"Agreement" means this Advisory Agreement, as amended, modified and
supplemented from time to time.
"Board of Directors" has the meaning set forth in the forepart of this
Agreement.
"Code" has the meaning set forth in the forepart of this Agreement.
"Company" has the meaning set forth in the forepart of this Agreement.
"Gross Mortgage Assets" means for any month the weighted average book
value of the real estate mortgage assets held by the Company, before reserves
for depreciation or bad debts or other similar noncash reserves, computed at the
end of such month.
"Independent Directors" means the members of the Board of Directors of
the Company who are either (i) not current directors, officers or employees of
the Company (except as set forth in (iii) below), D&N Financial Corporation,
the Advisor or any affiliate of the Advisor; (ii) owners of not more than one
percent of the outstanding common stock of D&N Financial Corporation; or (iii)
persons elected by the holders of the preferred stock of the Company.
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"Operating Expenses" for any period means all of the operating expenses
of the Company (with the exception of those expenses to be borne by the Advisor
in accordance with Section 4 hereof), including without limitation the
following:
(a) interest, taxes and other expenses incurred in connection with
the mortgage assets of the Company;
(b) expenses related to the officers, directors and employees of
the Company, including without limitation any fees or expenses
of the directors;
(c) fees and expenses payable to accountants, appraisers,
auditors, consultants, attorneys, collection and paying agents
and all other Persons who contract with or are retained by the
Company or by the Advisor on behalf of the Company;
(d) legal and other expenses incurred in connection with advice
concerning, obtaining or maintaining the Company's status as a
REIT, the determination of the Company's taxable income, any
formal or informal administrative action or legal proceedings
which involve a challenge to the REIT status of the Company or
any claim that the activities of the Company, any member of
the Board of Directors or any officer were improper;
(e) expenses relating to communications and reports to
stockholders of the Company, including without limitation the
costs of preparing, printing, duplicating and mailing the
certificates for the stock of the Company, proxy solicitation
materials and reports to stockholders, and the costs of
arranging meetings of stockholders;
(f) the costs of insurance described in Section 2 hereof,
including directors and officers liability insurance covering
the directors and officers of the Company;
(g) expenses relating to the acquisition, disposition and
ownership of mortgage assets, including without limitation and
to the extent not paid by others, legal fees and other
expenses for professional services and fees;
(h) expenses connected with the payments of dividends or interest
or distributions in cash or any other form made or caused to
be made by the Board of Directors to the stockholders of the
Company;
(i) expenses connected with any office or office facilities
maintained by the Company separate from the office of the
Advisor, including without limitation rent, telephone,
utilities, office furniture and equipment and machinery; and
(j) other miscellaneous expenses of the Company which are not
expenses of the Advisor under Section 4.
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"Person" means and includes individuals, corporations, limited
partnerships, general partnerships, joint stock companies or associations,
limited liability companies, joint ventures, associations, consortia, companies,
trusts, banks, savings institutions, trust companies, land trusts, common law
trusts, business trusts or other entities, governments and agencies and
political subdivisions thereof.
"REIT" has the meaning set forth in the forepart of this Agreement.
SECTION 2. Duties of Advisor. The Advisor shall consult with the Board
of Directors and the officers of the Company and shall, at the request of the
Board of Directors or the officers of the Company, furnish advice and
recommendations with respect to all aspects of the business and affairs of the
Company. Subject to the control and discretion and at the request of the Board
of Directors, the Advisor shall:
(a) administer the day-to-day operations and affairs of the
Company, including without limitation the performance or
supervision of the functions described in this Section 2;
(b) monitor the credit quality of the mortgage loans and other
real estate mortgage assets held by the Company;
(c) advise the Company with respect to the acquisition,
management, financing, disposition of the Company's mortgage
loans and other real estate mortgage assets;
(d) represent the Company in its day-to-day dealings with Persons
with whom the Company interacts, including without limitation
stockholders of the Company, transfer agent, consultants,
accountants, attorneys, servicers of the Company's mortgage
loans, custodians, insurers and banks;
(e) establish and provide necessary services for the Company,
including executive, administrative, accounting, stockholder
relations, secretarial, recordkeeping, copying, telephone,
mailing and distribution facilities;
(f) provide the Company with office space, conference room
facilities, office equipment and personnel necessary for the
services to be performed by the Advisor hereunder;
(g) arrange, schedule and coordinate the regular and special
matters of the Board of Directors required for the conduct of
the affairs of the Company or for timely action on any matters
the Company is required to act upon and implement all
decisions of the Board of Directors, unless otherwise
instructed, with regard to the Company and its assets;
(h) maintain communications and relations with the stockholders of
the Company, including, but not limited to, responding to
inquiries, proxy solicitations, providing
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reports to stockholders and arranging and coordinating all
meetings of stockholders;
(i) arrange for the investment and management of any short-term
investments of the Company;
(j) arrange for the services of third parties to collect and
distribute funds of the Company and to perform such functions
as the Board of Directors shall from time to time require;
(k) monitor and supervise the performance of all parties who have
contracts to perform services for the Company, provided that
the Advisor shall have no duty to assume the obligations or
guarantee the performance of such parties under such
contracts;
(l) establish and maintain such bank accounts in the name of the
Company as may be required by the Company and approved by the
Board of Directors and ensure that all funds collected by the
Advisor in the name or on behalf of the Company shall be held
in trust and shall not be commingled with the Advisor's own
funds or accounts;
(m) make payment on behalf of the Company of all Operating
Expenses;
(n) arrange for the execution and delivery of such documents and
instruments by the officers of the Company as may be required
in order to perform the functions herein described and to take
any other required action;
(o) arrange for insurance for the Company including liability
insurance, errors and omissions policies and officers and
directors policies which shall cover and insure the Company,
members of the Board of Directors and the officers of the
Company in amounts and with deductibles and insurers approved
by the Board of Directors;
(p) maintain proper books and records of the Company's affairs and
furnish or cause to be furnished to the Board of Directors
such periodic reports and accounting information as may be
required from time to time by the Board of Directors,
including, but not limited to quarterly reports of all income
and expenses of and distribution of the Company;
(q) consult and work with legal counsel for the Company in
implementing Company decisions and undertaking measures
consistent with all pertinent Federal, state and local laws
and rules or regulations of governmental or quasi-governmental
agencies, including, but not limited to, Federal and state
securities laws, the Code, as it relates to the Company's
qualification as a REIT, and the regulations promulgated under
each of the foregoing;
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(r) consult and work with accountants for the Company in
connection with the preparation of financial statements,
annual reports and tax returns;
(s) arrange for an annual audit of the books and records of the
Company by the accounting firm designated for such purposes by
the Board of Directors;
(t) prepare and distribute in consultation with the accountants
for the Company, annual reports to stockholders which will
contain audited financial statements;
(u) furnish reports to the Board of Directors and provide
research, economical and statistical data in connection with
the Company's investments; and
(v) as reasonably requested by the Company, make reports to the
Company of its performance of the foregoing services and
furnish advice and recommendations with respect to other
aspects of the business of the Company.
SECTION 3. Compensation. The Company shall pay to the Advisor, for
services rendered by the Advisor hereunder, a management fee payable monthly in
arrears in an amount equal to $10,416.67.
SECTION 4. Expenses of the Advisor.
(a) Without regard to the compensation received pursuant to
Section 3, the Advisor will bear the following expenses:
(i) employment expenses of the personnel employed by the
Advisor, including without limitation salaries,
wages, payroll taxes and the cost of employee benefit
plans; and
(ii) rent, telephone equipment, utilities, office
furniture and equipment and machinery and other
office expenses of the Advisor incurred in connection
with the maintenance of any office facility of the
Advisor.
(b) The Company shall reimburse the Advisor within 30 days of a
written request by the Advisor, for any Operating Expenses
paid or incurred by the Advisor on behalf of the Company.
SECTION 5. Records. The Advisor shall maintain appropriate books of
account and records relating to services performed hereunder, and such books of
account an records shall be accessible for inspection by the Board of Directors
or representatives of the Company at all times.
SECTION 6. REIT Qualification and Compliance. The Advisor shall consult
and work with the Company's legal and tax counsel in maintaining the Company's
qualification as a REIT. Notwithstanding any other provisions of this Agreement
to the contrary, the Advisor shall refrain from any action which, in its
reasonable judgment or in the judgment of the Board of Directors
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(of which the Advisor has received written notice), would adversely affect the
qualification of the Company as a REIT or which would violate any law, rule or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities, or which would otherwise not be permitted by the
certificate of incorporation or by-laws of the Company. Furthermore, the Advisor
shall take any action which, in its judgment or the judgment of the Board of
Directors (of which the Advisor has received written notice), may be necessary
to maintain the qualification of the Company as a REIT or prevent the violation
of any law or regulation of any governmental body or agency having jurisdiction
over the Company or its securities.
SECTION 7. Term; Termination. This Agreement shall be in full force and
effect for a term beginning on the date hereof with an initial term of five
years, and will be renewed automatically for additional five year periods unless
the Company delivers a notice of nonrenewal to the Advisor not less than 90 days
prior to the expiration of the initial term of this Agreement or 90 days prior
to the expiration of any renewal term. Notwithstanding the foregoing, at any
time after the initial term, the Company may terminate this Agreement at any
time upon 90 days' prior notice.
SECTION 8. Other Activities of the Advisor.
(a) Nothing herein contained shall prevent the Advisor, an
affiliate of the Advisor or an officer, a director, employee
or stockholder of the Advisor from engaging in any activity,
including without limitation originating, purchasing and
managing mortgage loans and other real estate assets,
rendering of services and investment advice with respect to
real estate investment opportunities to any other Person
(including other REITs) and managing other investments
(including the investments of the Advisor and its affiliates).
(b) Directors, officers, stockholders, employees and agents of the
Advisor or of the affiliates of the Advisor may serve as
directors, officers, employees or agents of the Company but
shall receive no compensation (other than reimbursement for
expenses) from the Company for such service.
SECTION 9. Binding Effect; Assignment. This Agreement shall inure to
the benefit of and shall be binding upon the parties hereto and their respective
successors and assigns. Neither party may assign this Agreement or any of its
respective rights hereunder (other than an assignment to a successor
organization which acquires substantially all of the property of such party or,
in the case of the Advisor, to an affiliate of the Advisor) without the prior
written consent of the other party to this Agreement.
SECTION 10. Subcontracting. The Advisor may at any time subcontract all
or a portion of its obligations under this Agreement to any affiliate of the
Advisor without the consent of the Company or if no affiliate of the Advisor is
engaged in the business of managing mortgage assets to an unaffiliated third
party with the approval of a majority of the Board of Directors as well as a
majority of the Independent Directors. Notwithstanding the foregoing, the
Advisor will not, in
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connection with subcontracting any of its obligations under this Agreement, be
relieved or discharged in any respect from its obligations under this Agreement.
SECTION 11. Liability and Indemnity of the Advisor. The Advisor assumes
no responsibilities under this Agreement other than to perform the services
called for hereunder in good faith. Neither the Advisor nor any of its
affiliates, stockholders, directors, officers or employees will have any
liability to the Company, or stockholders of the Company, or others except by
reason of acts or omissions constituting gross negligence or willful breach of
any of its material obligations under this agreement. The Company shall
indemnify and reimburse (if necessary) the Advisor, its stockholders, directors,
officers, employees and agents for any and all expenses (including without
limitation attorneys' fees), losses, damages, liabilities, demands and charges
of any nature whatsoever in respect of or arising from any acts or omissions by
the Advisor pursuant to this Agreement, provided that the conduct against which
the claim is made was determined by such person, in good faith, to be in the
best interest of the Company and was not the result of gross negligence by such
person or willful breach of any of such person's material obligations by such
person. The Advisor agrees that any such indemnification is recoverable only
from the assets of the Company and not from the stockholders.
SECTION 12. Action Upon Notice of Non-Renewal or Termination. Forthwith
upon giving of notice of non-renewal of this Agreement by the Company or of
termination of this Agreement by the Company, the Advisor shall not be entitled
to compensation after the Advisor Termination Date for further services under
this Agreement but shall be paid all compensation accruing to the Advisor
Termination Date and shall be reimbursed for all expenses of the Company paid or
incurred by the Advisor as of the Advisor Termination Date which are
reimbursable by the Company under this Agreement. The Advisor shall promptly
after the Advisor Termination Date:
(i) deliver to the Company all assets and documents of
the Company then in the custody of the Advisor; and
(ii) cooperate with the Company and take all reasonable
steps requested to assist the Board of Directors in
making an orderly transfer of the administrative
functions of the Company.
SECTION 13. No Joint Venture or Partnership. Nothing in this Agreement
shall be deemed to create a partnership or joint venture between the parties,
whether for purposes of taxation or otherwise.
SECTION 14. Notices. Unless expressly provided otherwise herein, all
notices, request, demands and other communications required or permitted under
this Agreement shall be in writing and shall be made by hand delivery, certified
mail, overnight courier service, telex or telecopier.
Any notice shall be duly addressed to the parties as follows:
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If to the Company:
D&N Capital Corporation
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
If to the Advisor:
D&N Bank
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Secretary
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 14 for the giving of notice.
SECTION 15. Severability. If any term or provision of this Agreement or
the application thereof with respect to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
SECTION 16. 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 Michigan.
SECTION 17. Amendments. This Agreement shall not be amended changed,
modified, terminated or discharged in whole or in part except by an instrument
in writing signed by both parties hereto or their respective successors or
assigns, or otherwise as provided herein.
SECTION 18. Headings. The section headings herein have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the day and year
first above written.
D&N CAPITAL CORPORATION
By: __________________________________________
Name:
Title:
D&N BANK
By: __________________________________________
Name:
Title:
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