AMENDED AND RESTATED
ADVISORY AGREEMENT
BETWEEN
HMG/COURTLAND PROPERTIES, INC.
AND
HMG ADVISORY CORP.
This Advisory Agreement made as of September 20, 2002 and effective as
of January 1, 2003 between HMG/Courtland Properties, Inc., a Delaware
corporation (the "Company"), and HMG Advisory Corp., a Delaware corporation (the
"Adviser");
W I T N E S S E T H:
WHEREAS, the Company was initially established as a
Massachusetts business trust by a Declaration of Trust on October 29, 1971, as
amended and restated from time to time (the "Declaration of Trust"), and was
converted into a corporation on July 31, 1979;
WHEREAS, the Company has qualified as a real estate investment
trust as defined in the Internal Revenue Code of 1986, as the same may be
amended or modified from time to time (which, together with any regulations and
rulings issued from time to time thereunder is hereinafter called the "Code"),
and invests its funds in the investments permitted for a real estate investment
trust;
WHEREAS, the Company desires to continue to avail itself of
the experience, sources of information, advice and assistance of the Adviser and
to have the Adviser perform the duties and responsibilities hereinafter set
forth, on behalf of and subject to the supervision of the directors of the
Company (the "Directors"), as provided herein;
WHEREAS, the Board of Directors of the Company decided on
March 22, 2002 to amend and renew the existing Advisory Agreement June 27, 1997,
subject to approval by the Shareholders;
WHEREAS, the Shareholders approved this Amended and Restated
Advisory Agreement on September 20, 2002; and
WHEREAS, the Adviser is willing to render such services,
subject to the supervision of the Directors, on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, and intending to be legally bound, the
parties hereto agree as follows:
DUTIES OF ADVISER. The Adviser shall consult with the Directors and shall, at
the request of the Directors or the officers of the Company, furnish advice and
recommendations with respect to all aspects of the business and affairs of the
Company. In general, the Adviser shall inform the Directors of any factors which
come to its attention which would influence the policies of the Company. The
Adviser in performing its duties under the Agreement shall at all times be
subject to the supervision of the Directors and will have only such authority as
the Company may delegate to it as its agent. Such duties to be performed by the
Adviser shall include: (a) counseling the Company and presenting to it
investments consistent with the objectives of the Company; (b) performing such
research and investigation as the Directors may request in connection with the
policy decisions as to the type and nature of investments to be made by the
Company; (c) evaluating the desirability of acquisition, retention and
disposition of specific Company assets; (d) conducting the day-to-day investment
operations of the Company; (e) conducting relations with mortgage loan brokers,
originators and servicers, and determining whether loans offered to the Company
meet the requirements of the Company; and (f) providing all of the executive and
administrative personnel, office space and services required in rendering such
services to the Company.
NO PARTNERSHIP OR JOINT VENTURE. The Company and the Adviser are not, and shall
not be deemed to be, partners or joint venturers with each other.
RECORDS. The Adviser shall keep proper books of account and records relating to
services performed hereunder which shall be accessible for inspection by the
Company at any time during ordinary business hours.
REIT QUALIFICATION. Anything else in
this Agreement to the contrary notwithstanding, the Adviser shall refrain from
any action which, in its reasonable judgment, or in the judgment of the
Directors of which the Adviser has written notice, would adversely affect the
status of the Company as a real estate investment trust as defined and limited
in Sections 856, 857 and 858 of the Code or which would violate any law, rule or
regulation of any governmental body or agency having jurisdiction over the
Company or its securities.
BANK ACCOUNTS. The Adviser may establish one or more bank accounts in its own
name, and may deposit into and disburse from such accounts, any money on behalf
of the Company, under such terms and conditions as the Directors may approve,
provided that no funds in any such account shall be commingled with the funds of
the Adviser; and the Adviser shall from time to time render appropriate
accounting of such deposits and payments to the Directors and to the auditors of
the Company.
BOND. The Adviser shall maintain a fidelity bond with the responsible surety
company in such reasonable amount as may be required by the Directors from time
to time covering its officers, employees and agents handling funds and records
of the Company. Such bond shall inure to the benefit of the Company in respect
of losses of such property from acts of such persons through theft,
embezzlement, fraud, negligence, error or otherwise.
INFORMATION FURNISHED ADVISER. The Directors shall keep the Adviser informed in
writing concerning the investment and financing policies of the Company. The
Directors shall notify the Adviser promptly in writing of their intention to
make any new investments or to dispose of any existing investments. The
Directors shall furnish the Adviser with a certified copy of all financial
statements, a signed copy of each report prepared by independent public
accountants, and such other information with regard to its affairs as the
Adviser may reasonably request.
DEFINITIONS. As used herein, the following terms shall have the meanings set
forth below: "Affiliate" means as to any corporation, partnership or trust any
person who (a) holds beneficially, directly or indirectly, one percent (1%) or
more of the outstanding capital stock, shares or equity interest in such
corporation, partnership or trust, (b) is an officer, director, partner, or
trustee of such corporation, partnership or trust or of any person which
controls, is controlled by, or is under common control with, such corporation,
partnership or trust, or (c) controls, is controlled by, or is under common
control with, such corporation, partnership or trust. "Average Net Worth" is
defined as the average of the amount in the shareholders' equity accounts on the
books of the Company, plus the accumulated non-cash reserves for depreciation,
depletion and amortization shown on the books of the Company, determined at the
close of the last day of each month for the computation period. "Fiscal Year"
shall mean any period for which any income tax return is submitted to the
Internal Revenue Service and which is treated by the Internal Revenue Service as
a reporting period. "Net Profits" is defined as the gross earned income of the
Company (exclusive of gains and losses from the disposition of assets), minus
all expenses other than non-cash charges for depreciation, depletion and
amortization and the incentive compensation payable to the Adviser, and minus
all amounts expended for mortgage indebtedness, excluding extraordinary and
balloon payments. Except as specifically otherwise provided herein, all
calculations made in accordance with this Section 8 shall be based on statements
(which may be unaudited, except as provided herein) prepared on an accrual basis
consistent with generally accepted accounting principles, regardless of whether
the Company may also prepare statements on a different basis.
REGULAR COMPENSATION. For services rendered under this Agreement, the Adviser
shall receive as regular compensation (1) a monthly fee at a rate of $75,000
(seventy-five thousand dollars) and (2) a monthly fee of 20% of the amount of
any unrefunded commitment fees received by the Company with respect to mortgage
loans and other commitments which the Company was not required to fund and which
expired within the next preceding calendar month.
INCENTIVE COMPENSATION. In order to reward further the Adviser for performance
hereunder, the Company shall also pay to the Adviser, on or before the 15th day
after the completion of the annual audit of the Company's financial statements
for each Fiscal Year, incentive compensation in an amount equal to the sum of
(a) 10% of the realized capital gains (net of accumulated net realized capital
losses) and extraordinary nonrecurring items of income of the Company for such
year, plus (b) 10% of the amount, if any, by which Net Profits of the Company
for such fiscal year exceeded 8% per annum of the Average Net Worth of the
Company during such year.
COMPENSATION FOR ADDITIONAL SERVICES. If and to the extent that the Company
shall request the Adviser, or any of its directors, officers or employees, to
render services for the Company, other than those required to be rendered by the
Adviser under this Agreement, such additional services shall be compensated
separately on terms to be agreed upon between such party and the Company from
time to time, which terms shall be fair and reasonable and at least as favorable
to the Company as similar arrangements for comparable transactions of which the
Company is aware with organizations unaffiliated with the Adviser.
The Adviser and its affiliates will not receive from the
Company any brokerage or similar fees for the placement of mortgages or other
investments with the Company. However, the Adviser and its Affiliates may
receive normal brokerage commissions from borrowers, buyers, sellers, lessees or
other third parties in connection with transactions involving the Company,
provided that such commissions are fully disclosed to all Directors prior to
their approval of the transaction and that such commissions (which to the extent
paid by the borrower, buyer, seller, lessee or other third party and retained by
the Adviser or its Affiliates may reduce the yield to the Company) are fair and
reasonable and in accord with the prevailing rates in the locality in which the
transaction is consummated for the type of transaction involved.
STATEMENTS. The Adviser shall furnish to the Company not later than the tenth
day of each calendar month a statement showing the computation of any
compensation payable to it during such month under Section 9 hereof. The Adviser
shall furnish to the Company not later than the 30th day following the end of
each Fiscal Year a statement showing the computation of the fees, if any,
payable in respect to such Fiscal Year under Sections 10 and 11 hereof. The
final settlement of compensation payable under Sections 10 and 11 hereof for
each Fiscal Year shall be subject to adjustments in accordance with, and upon
completion of, the annual audit of the Company's financial statements.
EXPENSES OF THE ADVISER. Without regard to the amount of compensation received
hereunder by the Adviser, the Adviser shall bear the following expenses: all
salary and employment expenses of its own personnel and of the officers and
employees of the Company who are Affiliates of the Adviser other than expenses
relating to options to purchase shares of the Company granted Affiliates of the
Adviser who are also officers or employees of the Company under a plan approved
by the shareholders of the Company; all of the administrative, rent and other
offices expenses (except those relating to a separate office, if any, maintained
by the Company) relating to its services as Adviser; and travel (to the extent
not paid by any party other than the Company or the Adviser) and advertising
expenses incurred in seeking investments for the Company.
EXPENSES OF THE COMPANY. Except as expressly otherwise provided in this
Agreement, the Company shall pay all its expenses not assumed by the Adviser
and, without limiting the generality of the foregoing, it is agreed that the
following expenses of the Company shall be paid by the Company: the cost of
borrowed money; taxes on income, real property and all other taxes applicable to
the Company; legal, accounting, underwriting, brokerage, transfer agent's,
registrar's, indenture trustee's, listing, registration and other fees,
printing, engraving, and other expenses and taxes incurred in connection with
the issuance, distribution, transfer, registration and stock exchange listing of
the Company's securities; fees and expenses of advisers and independent
contractors, consultants, managers and other agents employed directly by the
Company; expenses connected with the acquisition, disposition or ownership of
mortgages or real property or other investment assets, including, to the extent
not paid by any party other than the Company or the Adviser, but not limited to,
costs of foreclosure, costs of appraisal, legal fees and other expenses for
professional services, maintenance, repair and improvement of property; and
brokerage and sales commissions, and expenses of maintaining and managing real
property equity interests; the expenses of organizing or terminating the
Company; all insurance costs (including the cost of Director's liability
insurance) incurred in connection with the protection of the Company's property
as required by the Directors; expenses connected with payments of dividends or
interest or distributions in cash or any other form made or caused to be made by
the Directors to holders of securities of the Company including a dividend
reinvestment plan, if any; all expenses connected with communications to holders
of securities of the Company and the other bookkeeping and clerical work
necessary in maintaining relations with holders of securities, including the
cost of printing and mailing checks, certificates for securities and proxy
solicitation materials and reports to holders of the Company's securities; to
the extent not paid by borrowers from the Company, the expenses of
administering, processing and servicing mortgage, development, construction and
other loans; the cost of any accounting, statistical, or bookkeeping equipment
necessary for the maintenance of the books and records of the Company; general
legal, accounting and auditing fees and expenses; salaries and other employment
expenses of the personnel employed or retained by the Company who are not
Affiliates of the Adviser, fees and expenses incurred by all Directors and
officers in attending Directors' meetings (including meetings of Board
committees); fees and travel and other expenses incurred by the Directors,
officers and employees of the Company who are not Affiliates of the Adviser; and
expenses relating to options to purchase shares of the Company granted to
officers and employees of the Company (including Affiliates of the Adviser)
under a plan approved by the Shareholders of the Company.
OTHER ACTIVITIES OF ADVISER. Nothing herein contained shall prevent the Adviser
from engaging in other business but the Adviser may not (although its Affiliates
may) otherwise engage in activities similar to those to be performed by it for
the Company, including the rendering of services and advice to other persons and
entities, the acting as a Director and the management of other investments
(including the investments of the Adviser and its Affiliates). The Adviser shall
counsel the Company regarding investments and shall present to the Company a
continuing flow of suitable investments which are consistent with the objectives
of the Company.
Directors, officers, employees and agents of the Adviser or of
Affiliates of the Adviser may serve as Directors, officers, employees or agents
of the Company. When executing documents or otherwise acting in such capacities
for the Company, such persons shall use their respective titles with the
Company.
TERM: TERMINATION OF AGREEMENT. This Agreement shall continue in full force for
a term expiring on December 31, 2003 and thereafter it may be extended from year
to year by the affirmative vote of a majority of the Directors who are not
Affiliates of the Adviser and the affirmative vote of a majority of the
shareholders of the Company present in person or by proxy at a meeting called to
renew this Agreement.
AMENDMENTS. This Agreement shall not be modified or terminated except by an
instrument in writing signed by both parties hereto, or their respective
successors or assigns, or otherwise as provided herein.
ASSIGNMENT. This Agreement is not assignable without the consent of the
unaffiliated Directors of the Company and of the Adviser.
DEFAULT, BANKRUPTCY, ETC. At the option of the Directors, this Agreement shall
be terminated immediately upon written notice of termination from the Directors
to the Adviser if any of the following events shall occur: If the Adviser shall
violate any provision of this Agreement and, after written notice of such
violation, shall not cure such default within 30 days; If the Adviser shall be
adjudged bankrupt or insolvent by a court of competent jurisdiction, or any
order shall be made by a court of competent jurisdiction for the appointment of
a receiver, liquidator or trustee of the Adviser or of all or substantially all
of its property by reason of the foregoing, or approving any petition filed
against the Adviser for its reorganization; or If the Adviser shall institute
proceedings for voluntary bankruptcy or shall file a petition seeking
reorganization under the Federal bankruptcy laws, or for relief under any law
for the relief of debtors, or shall consent to the appointment of a receiver for
itself or for all or substantially all its property, or shall make a general
assignment for the benefit of its creditors, or shall admit in writing its
inability to pay its debts generally, as they become due.
The Adviser agrees that if any of the events specified in
subsections (b) and (c) of this Section 19 shall occur, it will give written
notice thereof to the Directors within seven days after the occurrence of such
event.
ACTION UPON TERMINATION. The Adviser shall not be entitled to compensation after
the date of termination of this Agreement for further services hereunder but
shall be paid all compensation accruing to the date of termination. The Adviser
shall forthwith upon such termination:
pay over to the Company all monies collected and held for the account of the
Company pursuant to this Agreement, after deducting any accrued compensation and
reimbursement for its expenses to which it is then entitled; deliver to the
Directors a full accounting, including a statement showing all payments
collected by it and a statement of all monies held by it, covering the period
following the date of the last accounting furnished to the Directors; and
deliver to the Directors all property and documents of the Company then in the
custody of the Adviser.
GOVERNING LAW. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Delaware as at the time
in effect.
MISCELLANEOUS. The Adviser assumes no responsibility under this Agreement other
than to render the services called for hereunder in good faith, and shall not be
responsible for any action of the Directors in following or declining to follow
any advice or recommendations of the Adviser. None of the Adviser, its owners,
directors, officers or employees shall be liable to the Company, the Directors
or the holders of securities of the Company except by reason of acts
constituting bad faith, willful misfeasance, gross negligence or reckless
disregard of their duties.
NOTICES. Any communications given hereunder shall be in writing delivered at the
following addresses of the parties hereto:
The Directors and/or the Company:
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
The Adviser:
0000 Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxx 00000
Either party may at any time give notice in writing to the
other party of a change of its address for the purpose of this Section 23.
IN WITNESS WHEREOF, HMG/Courtland Properties, Inc., by an
authorized officer, and HMG Advisory Corp., by an authorized officer, in such
case thereunto duly authorized, have signed these presents on September 20,
2002, effective as of January 1, 2003.
Attest: HMG/COURTLAND PROPERTIES, INC.
By /s/ Xxxxxxxx Xxxxxxxxx By /s/ Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxx
Secretary Chairman of the Board of Directors
Attest: HMG ADVISORY CORP.
By /s/ Xxxxxx Xxxxxxxxx By /s/ Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx Xxxxxxxx Xxxxxxxxx
Assistant Secretary President
