ADVISORY AGREEMENT
This Advisory Agreement (this "Agreement") is entered into effective as
of the 1st day of January, 2000 by and among HOST FUNDING, INC., a Maryland
corporation (together with any and all of its wholly-owned subsidiaries, the
"Company"), and XXXXXXXXX XXXXXXXXX, INC. a California corporation (the
"Advisor").
RECITALS
A. The Company desires to engage the Advisor upon the terms and
conditions of this Agreement.
B. Advisor desires to be engaged by the Company upon the terms and
conditions of this Agreement.
ARTICLE I
DEFINITIONS
The capitalized terms used in this Agreement shall have the meanings
set forth in this Article I. All terms used in this Agreement that are not
defined in this Article I shall have the meanings set forth elsewhere in this
Agreement.
"Acquired Assets" shall have the meaning set forth in Section 2.1 of
this Agreement.
"Acquisition Fee" shall have the meaning set forth in Section 9.2 of
this Agreement.
"Additional Company Hotel Properties" shall have the meaning set forth
in Section 2.3 of this Agreement.
"Advisor Property or Properties" means any hotel property or properties
owned by the Advisor or an Affiliate thereof as of the effective date hereof and
hereafter acquired by or contributed to the Company or an Affiliate thereof.
"Affiliate" means with respect to any Person, any director or officer
of such Person, any corporation, association, firm or other entity of which such
Person (or any officer or director of such Person) is a member, director or
officer, and any other Person, directly or indirectly controlling, controlled
by, or under common control with, such Person. For the purposes of this
definition, "control" (including, with correlative meanings, the term
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
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power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"Base Fee" shall have the meaning set forth in Section 9.1 of this
Agreement.
"Board of Directors" means the board of directors of the Company or any
committee authorized by the Board of Directors to perform any of the Company's
responsibilities with respect to this Agreement.
"Bufete" means Bufete Grupo Internacional S.A. de C.V.
"Bufete Property or Properties" means any hotel property or properties
owned by Bufete or an Affiliate thereof as of the effective date hereof and
hereafter acquired by or contributed to the Company or an Affiliate thereof.
"Bylaws" means the Company's Bylaws, as the same may be amended from
time to time.
"Cash Available for Distribution to Shareholders" means all cash funds
of the Company on hand on a quarterly basis after (a) the payment of all Company
costs and expenses (including all payments, principal, interest or otherwise,
with respect to any indebtedness of the Company and including therein, any sums
due on Senior Securities) that are due and payable as of such time, and (b) the
provision for adequate working capital reserves as determined by the Board of
Directors, officers of the Company and the Advisor to be reasonably necessary
for the operation of the Company, including the provision for payments of all
Company costs and expenses (including all payments to thereafter become due and
owing on any indebtedness of the Company and including therein, any sums to
thereafter become due on Senior Securities).
"Cash Investments" shall have the meaning set forth in Section 2.5 of
this Agreement.
"Change of Control" means (a) the occurrence of any event or
circumstance which the Company would be required to report as a "change of
control" on Form 8-K, (b) any transaction which results in any Person
(including, without limitation, any Person constituting a "group," as such term
is defined in Section 13(d)(3) of the Securities Exchange Act of 1934 [as
amended and the rules and regulations thereunder]) becoming the direct or
indirect beneficial owner of securities representing more than fifty percent
(50%) of the combined voting power of the then outstanding securities of the
Company, (c) any consolidation or merger to which the Company is a party and
which requires the approval of any shareholder of the Company, or (d) the sale
or transfer of all or substantially all of the assets of the Company as an
entity, and which requires the approval of any shareholder of the Company.
"Charter" means the Company's charter filed with the Secretary of State
of the State of Maryland, as the same may be amended from time to time.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and to the extent applicable, the regulations promulgated thereunder.
"Company Investments" means the Acquired Assets, including, without
limitation, the Additional Company Hotel Properties, the Existing Company Hotel
Properties, the Other Investments, the Cash Investments, and any and all other
investments originated or consummated by the Advisor pursuant hereto for the
benefit of the Company.
"Disposition Fee" has the meaning set forth in Section 9.3 of this
Agreement.
"Existing Company Hotel Properties" shall have the meaning set forth in
Section 2.2 of this Agreement.
"Independent Directors" means the two (2) independent directors of the
Board of Directors.
"Lessees" shall have the meaning set forth in Section 2.2 of this
Agreement.
"Manager" shall have the meaning set forth in Section 2.2 of this
Agreement.
"MeriStar Transaction" means the transaction pursuant to which the
Company or one of its Affiliates may acquire from MeriStar Hospitality Operating
Partnership and/or Xxxxxxx Williamsburg Associates all or a portion of certain
Additional Company Hotel Properties located in Hanover, Maryland, Ocean City,
Maryland and Richmond, Virginia, respectively.
"Other Investments" shall have the meaning set forth in Section 2.4 of
this Agreement.
"Person" means an individual, corporation, partnership, association,
limited liability company, trust or any unincorporated organization or other
entity.
"REIT" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Senior Securities" means any bond, debenture, note or similar
obligation or instrument constituting a security and evidencing indebtedness,
and any stock of the Company of a class having priority over any other class
(including, without limitation, the Shares) as to the distribution of assets or
payment of dividends.
"Shareholders" means the holders of record of the Company's Shares.
"Shares" means shares of the Class "A" Common Stock of the Company,
$0.01 par value per Share.
"Term" shall have the meaning set forth in Section 11.1 of this
Agreement.
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"Termination Date" shall have the meaning set forth in Section 11.2 of
this Agreement.
"Xxxx Transaction" means the transaction pursuant to which the Company
or one of its Affiliates may acquire from Xxxx Limited Partnership all or a
portion of certain Additional Company Hotel Properties located in Abingdon,
Virginia, Fayetteville, North Carolina, Durham, North Carolina, and Augusta,
Georgia, respectively.
ARTICLE II
THE COMPANY
Section 2.1 The Company's Investment Objective
The investment objective of the Company is to acquire certain assets
selected by the Advisor in accordance with underwriting criteria established by
the Board of Directors (the "Acquired Assets") with the intention of creating a
portfolio of investments intended to preserve the capital base of the Company
and generate income for distribution to the Shareholders.
Section 2.2 Managing the Company Investments
The Company currently owns twelve (12) hotel properties (collectively,
the "Existing Company Hotel Properties"). The Company has also executed lease
agreements with non-affiliated companies (the "Lessees") who manage and operate
certain of the Company Properties. The Lessees pay the Company monthly and
quarterly rent and retain any profits generated by the Company Properties after
such rent is paid. The Company has also executed a management agreement relating
to one of the Company Properties in which a non-affiliated company (the
"Manager") operates such property, retains a management fee and an accounting
fee, then pays the Company all operating profits after such management and
accounting fees are paid.
The Company hereby appoints the Advisor as its exclusive agent to
supervise and oversee the Lessees, the Manager, and the Company Investments,
including, without limitation, the Existing Company Hotel Properties. The
Company shall appoint a designated representative with whom the Advisor shall be
entitled to rely upon as the official and duly authorized representative of the
Company for all purposes under this Agreement, and as the representative of the
Board of Directors of the Company. Except where an action under this Agreement
expressly requires the written approval of a majority of the Board of Directors
of the Company, the Advisor shall be entitled to rely on the advice and consent
of the designated representative as the sole and exclusive representative of the
Company for purposes of the administration of this Agreement, and where the
approval of a majority of the Board of Directors is required, the Advisor may
rely on the designated representative to provide or deny such approval in
writing, within a reasonable time after the written request of the Advisor.
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Section 2.3 Acquiring and Disposing of Properties
In addition to the Existing Company Hotel Properties, the Company
intends to make additional investments in hotel and motel properties (the
"Additional Company Hotel Properties") and hereby retains the Advisor as the
Company's exclusive agent in representing the Company in such acquisitions. The
Company may also desire to dispose of certain properties, and the Company hereby
retains the Advisor as the Company's exclusive agent in representing the Company
in any transaction involving the disposition of any of the Existing Company
Hotel Properties. The Company shall pay the Advisor a Fee upon consummation of
each such transaction in which the Company acquires Additional Company Hotel
Properties or disposes of any Existing Company Hotel Properties, as provided in
Section 9.2 of this Agreement.
Section 2.4 Other Investments
The Company, from time to time, may make investments in loans secured
by real estate or other acquisitions or investments in real estate not related
to hotel properties (collectively, the "Other Investments"). The Other
Investments shall be subject to an Acquisition Fee payable to Advisor upon
consummation of each such acquisition or loan transaction, as provided in
Section 9.2 of this Agreement.
Section 2.5 Cash Investments
The Company, from time to time, may deposit cash with financial or
other institutions. The Advisor, as agent for the Company, may direct such
institutions to invest such cash in money market accounts, short term interest
bearing accounts, repurchase agreements, or other interest bearing financial
instruments (collectively, the "Cash Investments") in accordance with criteria
established from time to time by the Board of Directors. Such Cash Investments
shall not be subject to any additional fees payable to Advisor.
Section 2.6 REIT Status
The Company is currently structured so that the Company may qualify in
the future as a Real Estate Investment Trust ("REIT") under the Code. The
Company has not elected to become a REIT, but may elect REIT status in the
future. The Company intends to undertake no activities, create no relationships
with any Persons, or make any investments that would preclude the Company from
qualifying as a REIT, unless otherwise directed by the Board of Directors.
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ARTICLE III
ENGAGEMENT OF THE ADVISOR
Upon the terms and conditions set forth in this Agreement, the Company
hereby engages the the Advisor to perform the services described in this
Agreement and the Advisor agrees to perform the same in accordance with the
terms and conditions, and for the compensation set forth herein.
ARTICLE IV
DUTIES OF THE ADVISOR
As the advisor to the Company, but subject to the terms of the Charter,
Bylaws, this Agreement and the supervision and/or prior approval (if required by
the Charter, Bylaws or this Agreement) of the Board of Directors, the Advisor,
on behalf of the Company, hereby agrees to perform the following services to and
on behalf of the Company :
(a) serve as the Company's advisor and consultant in
connection with the administrative, policy and investment decisions to
be made by the Board of Directors, furnish reports to the Board of
Directors, and provide research, economic and statistical data in
connection with the Existing Company Hotel Properties, the Additional
Company Hotel Properties, the Other Investments, the Cash Investments,
and any and all other Company Investments;
(b) administer the day-to-day operations of the Company and
perform or supervise the various administrative functions reasonably
necessary for the management of the Company;
(c) maintain the Company's books of account and other
records and files;
(d) retain, consultants, accountants, correspondents, lenders,
technical advisors, attorneys, brokers, underwriters, corporate
fiduciaries, depositories, agents for collection, insurers, insurance
agents, banks, builders, property owners, auditors, property managers,
mortgagors, and other mortgage and investment participants, and any and
all agents for any of the foregoing, including Affiliates of the
Advisor, and Persons acting in any other capacity deemed by the Board
of Directors necessary or desirable for the performance of any of the
foregoing services; provided that any fees, costs and expenses payable
to the third parties (including Affiliates of the Advisor) incurred by
the Advisor in connection with the foregoing shall be the sole
responsibility of the Company;
(e) act as attorney-in-fact or agent in disbursing and
collecting funds of the Company, including Cash Investments, in paying
the debts and fulfilling the obligations of the Company and, in
acquiring, disposing of and refinancing the Existing Company Hotel
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Properties, the Additional Company Hotel Properties, the Other
Investments, and/or any other Company Investments, and handling,
prosecuting and settling any claims of the Company, including the
foreclosure or other enforcement of any mortgage or other lien securing
investments, including, without limitation, those related to the Other
Investments, and exercise its own discretion in doing so; provided that
any fees and costs payable to third parties (including Affiliates of
the Advisor) incurred by the Advisor in connection with the foregoing
shall be the sole responsibility of the Company;
(f) advise the Company in its negotiations with banks and
other lenders for loans to be made to the Company, and with investment
banking firms and broker-dealers for the public or private sales of the
securities of the Company (with respect to the Shares, the Senior
Securities or otherwise) or for loans for the Company, but in no event
in such a way so that the Advisor shall be acting as broker-dealer or
underwriter, and provided, further, that any fees, costs and expenses
payable to third parties (including Affiliates of the Advisor) in
connection with the foregoing shall be the sole responsibility of the
Company, subject to the provisions of Articles VII and VIII below;
(g) advise the Company on investment and reinvestment of money
of the Company, including, without limitation, with regard to Cash
Investments;
(h) obtain appraisal reports (which may be prepared by the
Advisor or its Affiliates) on any potential Additional Company Hotel
Properties or properties related to any potential Other Investments,
provided, however, that any fees, costs or expenses payable to third
parties (including Affiliates of the Advisor) in connection with the
foregoing shall be the sole responsibility of the Company;
(i) at any time reasonably requested by the Board of Directors
(but not more than monthly) make reports of its performance of services
to the Board of Directors;
(j) communicate on behalf of the Company with the
Shareholders, the holders of Senior Securities and other Persons, as
required to satisfy the continuous reporting and other requirements of
any governmental bodies or agencies to the Shareholders, holders of
Senior Securities and other Persons, including the Securities and
Exchange Commission, the American Stock Exchange, and any other
securities exchange upon which the securities of the Company are listed
or admitted for trading, and to maintain effective relations with the
Shareholders and the holders of Senior Securities;
(k) counsel the Company in connection with policy decisions to
be made by the Board of Directors;
(l) provide the executive and administrative personnel, office
space and services required in rendering the foregoing services to the
Company;
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(m) consult with the Board of Directors and the officers of
the Company and furnish them with advice and recommendations with
respect to the acquisition, disposition or financing of the Existing
Company Hotel Properties, the Additional Company Hotel Properties, the
Other Investments, or commitments therefor, or any other Company
Investments of, or Company Investments to be considered by, the
Company, and furnish advice and recommendations with respect to other
aspects of the business and affairs of the Company;
(n) present to the Company investment opportunities that are
within the investment objectives described in Section 2.1 hereof and
otherwise in accordance with the policies of the Company;
(o) present to the Company disposition and sale opportunities
with regard to any of the Company Investments, including those
involving any of the Additional Company Hotel Properties, Existing
Company Hotel Properties, or Other Investments, as applicable;
(p) perform such other services as may be required from time
to time for management and other activities of the Company as the
Advisor shall deem appropriate under the particular circumstances or as
the Company may reasonably request; and
(q) unless otherwise notified by the Board of Directors, have
a representative of the Advisor in attendance at all regular and
special meetings of the Board of Directors (and the Board of Directors
shall provide reasonable advance notice to the Advisor of such
meetings).
Notwithstanding the foregoing, the Advisor shall not have any power or
authority to make any acquisition of Additional Company Hotel Properties, or any
disposition of any Existing Company Hotel Properties, or to enter into any
contract, lease, or agreement where the amount contracted to be paid or received
by the Company during any period of less than five years under the contract
would exceed $500,000, or the term would exceed five years, without the prior
written consent of a majority of the Board of Directors of the Company.
ARTICLE V
INFORMATION REGARDING THE COMPANY
In order for the Advisor to fulfill its duties the Board of Directors
shall authorize the Company to provide the Advisor with full information
concerning the Company, its capitalization and investment policies and the
intentions of the Board of Directors with respect to future investments. The
Company shall furnish the Advisor with a copy of all audited statements, a
signed copy of each report prepared by independent accountants, and such other
information with regard to its affairs as the Advisor may from time to time
reasonably request. The Advisor shall at all reasonable times have access to the
books and records of the Company. The Advisor shall keep confidential any and
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all information obtained in connection with the services rendered hereunder
and shall not disclose any such information to non-Affiliated third parties
except with the prior consent of the Company or as required by legal process
or to discharge its duties hereunder.
ARTICLE VI
INVESTMENTS
The Advisor may from time to time be granted, but is not hereby
granted, the power and authority to acquire and dispose of specific Company
Investments and to make and terminate commitments for specific Company
Investments, on behalf of, in the name of and at the sole risk of the Company,
without further or express authority from the Board of Directors; provided,
however that the Board of Directors shall have the power to revoke, suspend,
modify or limit such power and authority at any time or from time to time, but
not retroactively.
ARTICLE VII
COSTS AND EXPENSES TO BE PAID BY THE ADVISOR
Except as otherwise provided herein, the Advisor will pay for its own
account all expenses incurred by the Advisor in connection with the performance
of its obligations under this Agreement without regard to the compensation
received by the Advisor from the Company pursuant hereto. Without limiting the
generality of the foregoing, the Advisor shall bear the following expenses
incurred in connection with the performance of its duties under this Agreement:
(a) employment expenses of the personnel employed by the
Advisor (other than fees paid and reimbursement of expenses made to
independent managers, independent contractors, mortgage servicers,
consultants, managers, local property managers or agents employed by or
on behalf of the Company including such persons or entities which may
be Affiliates of the Advisor when acting in any such capacity, all of
which shall be the responsibility of the Company), including but not
limited to, salaries, wages, payroll taxes and the costs of employee
benefit plans, and, except to the extent such expenses are otherwise
reimbursable pursuant to this Agreement, temporary help expenses.
Notwithstanding the foregoing, any options to purchase the capital
stock of the Company granted by the Company to directors, officers,
managers, members and/or key employees of the Advisor shall not be an
expense to be borne by the Advisor pursuant to this Article VII;
(b) rent, telephone, utilities, office furniture, equipment,
computers and machinery 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 office of the Advisor;
(c) audit fees and expenses of the Advisor;
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(d) insurance of the Advisor; and
(e) except as otherwise provided herein, miscellaneous
administrative and overhead expenses incurred in supervising,
monitoring and inspecting the Company Investments or relating to the
performance by the Advisor of its obligations under this Agreement.
(f) all ordinary and recurring expenses relating to the
continued organization of the Company;
(g) ordinary and recurring administrative expenses of the
Company, except as otherwise provided in Article VIII below;
(h) with respect to the Company's Shares and Senior
Securities outstanding and publicly-registered as of the
effective date of this Agreement, all ordinary and recurring
legal, auditing, accounting, listing, reporting, registration
and other costs and expenses incurred in connection with the
transfer, trading and continued stock exchange listing of such
securities, and with respect to all unregistered securities
outstanding as of the effective date of this agreement, all
ordinary and recurring legal, auditing, accounting, reporting
and other costs and expenses incurred in connection with the
transfer of such securities;
(i) all ordinary expenses connected with processing payments
of dividends authorized by the Board of Directors to be made or caused
to be made by the Company to holders of securities of the Company;
(j) all expenses connected with ordinary and recurring
communications to holders of securities of the Company, whether as to
Shares, Senior Securities or otherwise, and other bookkeeping and
clerical work necessary to maintain relations with holders of
securities, including the cost of printing and mailing certificates for
securities and proxy solicitation materials and reports to holders of
the Company securities, whether in connection with Shares, Senior
Securities or otherwise; and
(k) transfer agent and registrar fees and charges.
ARTICLE VIII
COSTS AND EXPENSES TO BE PAID BY THE COMPANY
In addition to reimbursements elsewhere provided in this Agreement
(including, but not limited to, Articles IV and XV), the Company shall pay
directly or reimburse the Advisor for the following expenses incurred by the
Advisor on behalf of the Company in connection with the services provided by
Advisor to the Company hereunder, in addition to the compensation provided for
in this Agreement:
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(a) financing costs and debt service with respect to
indebtedness of the Company, including discounts, points and similar
fees;
(b) taxes on income and taxes and assessments on real
property, whether with respect to the Existing Company Hotel
Properties, the Additional Company Hotel Properties, the Other
Investments, or otherwise, and all other taxes applicable to the
Company;
(c) taxes and assessments on property and taxes as an expense
of doing business directly related to the Advisor's activities on
behalf of the Company hereunder;
(d) with respect to any Shares or Senior Securities issued
after the effective date of this Agreement, all 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 stock exchange listing of the Company's
securities, including, without limitation, with regard to any Shares or
Senior Securities, whether such expenses are directly incurred by the
Company or are allocated to the Company by the Advisor either pursuant
to this Agreement or as otherwise agreed to by the Board of Directors
from time to time;
(e) expenses of revising, amending, converting, modifying,
reorganizing or terminating the Company or its Charter documents,
by-laws, contracts, leases, and loan agreements;
(f) fees and expenses paid to trust managers and officers who
are not employees or Affiliates of the Advisor, independent advisors,
independent contractors, auditors, mortgage servicers, consultants,
managers, local property managers or management firms, accountants,
attorneys and other agents employed by or on behalf of the Company and
out-of-pocket expenses of the officers, directors and employees of the
Company;
(g) expenses directly connected with the acquisition,
disposition and ownership of the Company Investments, including the
Existing Company Hotel Properties, the Additional Company Hotel
Properties, and the Other Investments (including the costs of
foreclosure, insurance premiums, legal services, brokerage and sales
commissions, franchise fees, maintenance, repair, improvement and local
management and operation of the Existing Company Hotel Properties, and
any Additional Company Hotel Properties or Other Investments), 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
Article VII above, and any expenses allocated to the Company by the
Advisor as agreed to by the Board of Directors from time to time;
(h) all costs, expenses, fees and liabilities incurred in
connection with defending or prosecuting any litigation or arbitration
on behalf of the Company in any matter in which the Company may be a
party or participant, defending or presenting the Company's interests
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in any administrative or governmental proceeding or investigation to
which the Company may be a party, target or other interested
participant, or otherwise participating in any other legal action,
proceeding, dispute or controversy involving the Company, its assets,
business operations or interests; and
(i) all insurance costs incurred in connection with the
Company (including officer and director liability insurance, if any).
The Advisor shall prepare a statement documenting the expenses of the
Company during each month, and shall deliver such statement to the Board of
Directors within twenty (20) days after the end of such month. Any expense paid
or payable to an Affiliate of the Advisor for which the Advisor is seeking
payment or reimbursement hereunder shall be reasonable. Expenses incurred by the
Advisor on behalf of the Company, and reimbursable pursuant to this Article VIII
(or pursuant to any of the other provisions of this Agreement), shall be
reimbursed monthly to the Advisor within ten (10) days following receipt by the
Company of the statement therefor from the Advisor.
ARTICLE IX
COMPENSATION OF THE ADVISOR
As the Advisor's compensation for the services to be rendered by the
Advisor pursuant to this Agreement, the Company will, during the Term of this
Agreement, pay to the Advisor the fees set forth in this Article IX, and make
the reimbursements provided for in Article VIII and elsewhere in this Agreement.
Section 9.1 Base Fee
The Company shall pay during the Term to the Advisor a base annual fee
of $350,000 (the "Base Fee"), to be paid in equal monthly installments of
$29,167.00, in advance. Advisor shall not be required to issue invoices for such
installments, which shall be deposited automatically on the first day of each
month during the term of this Agreement to the bank account designated by
Advisor.
Section 9.2 Acquisition Fee
Subject to the provisions of Sections 9.5 and 9.6 below, upon the
consummation or making of each acquisition, loan or investment by the Company of
or in Company Investments involving improved or unimproved real property,
including, without limitation, the acquisition of Additional Company Hotel
Properties or the acquisition of, or the making of loans with respect to, the
Other Investments, the Company shall pay to the Advisor an acquisition fee (the
"Acquisition Fee") in an amount equal to the fee generally paid to independent
advisors and consultants performing such services in the geographical area of
the property acquired, but in no event less than one percent (1%) of the
purchase price of each acquisition or one percent (1%) of the amount of each
loan and/or investment, any such Acquisition Fee to be paid in immediately
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available funds upon the closing of each acquisition, loan and/or
investment transaction; provided, with respect to the MeriStar Transaction and
the Xxxx Transaction, such Acquisition Fee shall be in an amount equal to the
applicable purchase price multiplied by fifty (50) basis points (0.5%).
Section 9.3 Disposition Fee
Upon the consummation of the sale or disposition of any of the Company
Investments, including with regard to any of the Additional Company Hotel
Properties, Existing Company Hotel Properties or Other Investments, as
applicable, the Company shall pay to the Advisor a Disposition Fee in an amount
equal to the fee normally paid to consultants in the geographical area in which
the disposed property is located, but in no event less than one-half of one
percent (0.5%) of the sales price.
Section 9.4 Additional Fee based on Cash Available for Distribution to
Shareholders
In addition to the fees set forth above, the Advisor shall be entitled
to an annual fee equal to 20% of any Cash Available for Distribution to
Shareholders remaining after payment or reservation for payment of an amount
equal to $0.40 per annum for each of the Company's outstanding Shares. Such
amount shall be calculated as of the end of each calendar quarter during the
term of this Agreement, and any such fee that is due shall be paid not later
than 30 days after the end of the quarter for which a payment is due.
Section 9.5 Bufete Property or Properties.
With respect to the Bufete Property or Properties, as applicable, and
notwithstanding anything to the contrary contained in this Agreement, no
Acquisition Fee shall be payable by the Company to the Advisor with regard to
any transaction(s) involving the Bufete Property or Properties.
Section 9.6 Advisor Property or Properties.
With respect to the Advisor Property or Properties, as applicable, and
notwithstanding anything to the contrary contained in this Agreement, upon the
consummation of any transaction(s) involving the Advisor Property or Properties,
the Company shall pay to the Advisor an Acquisition Fee in an amount reasonably
determined by the Independent Directors.
ARTICLE X
ADVISORY RESPONSIBILITY
The Advisor assumes no responsibility under this Agreement other than
to exercise reasonable efforts to render the services called for hereunder in
good faith. The Advisor shall not be responsible for any action of the Board of
Directors in following or declining to follow any advice or recommendations of
the Advisor. The Advisor, its officers, directors, managers, members and
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employees, shall not be liable to the Company, the Board of Directors, its
officers, the Shareholders, the holders of Senior Securities, or any other
Persons, except by reason of acts proven by a court of competent jurisdiction to
constitute bad faith, intentional misconduct, gross negligence or reckless
disregard of duty. Subject to the provisions of the last two (2) sentences of
this Article X, the Advisor shall reimburse, indemnify and hold harmless the
Company, the Board of Directors, its officers, the Shareholders and the holders
of Senior Securities, for and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature (including reasonable
attorneys' fees) (collectively, "Losses"), and in respect of or arising from any
acts or omissions of the Advisor, its officers, directors, managers, members or
employees, or any of its Affiliates, which are determined by a court of
competent jurisdiction to constitute bad faith, intentional misconduct, gross
negligence or reckless disregard of duty.
The Company shall reimburse, defend, indemnify and hold harmless the
Advisor, its officers, directors, managers, members, employees, contractors and
agents, for and from any and all Losses in respect of or arising from any acts
or omissions of the Advisor, its officers, directors, managers, members and
employees, and its Affiliates, made in good faith in the performance of the
Advisor's duties and responsibilities under this Agreement and not constituting
bad faith, intentional misconduct, gross negligence or reckless disregard of its
duties. The Company confirms that in performing services hereunder the Advisor
(including its officers, directors, managers, members, employees and Affiliates)
will be an agent of the Company for the purpose of the indemnification
provisions of the Charter and Bylaws, as from time to time amended.
Notwithstanding anything contained in this Article X to the contrary, the
Advisor, nor its officers, directors, managers, members or Affiliates, shall be
liable to the Company, the Board of Directors, its officers, the Shareholders,
the holders of Senior Securities, or any other Persons, except for such
violations of law or for conduct which would preclude the Advisor, or its
officers, directors, managers, members or Affiliates, from being indemnified
under such provisions.
ARTICLE XI
TERM OF THE AGREEMENT; TERMINATION
Section 11.1 Term
Unless sooner terminated pursuant to Sections 11.2, 11.3, 11.4 or 11.5,
this Agreement shall commence on January 1, 2000, shall remain in force until
December 31, 2002, and shall thereafter automatically renew for additional three
(3) year periods (in any instance, the "Term").
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Section 11.2 Termination by Company for Cause
At the sole option of a majority vote of the Board of Directors, this
Agreement may be terminated by written notice of termination from the Company to
the Advisor if any of the following events occur:
(a) the Advisor shall violate or default in the performance of
any material provision of this Agreement and, after written notice of
such violation, shall not cure such default within thirty (30) days or,
if the default is of a nature that it cannot reasonably be cured within
thirty (30) days, the Advisor shall not diligently proceed to cure the
default as soon as practicable thereafter;
(b) the Advisor shall be adjudged bankrupt or insolvent by a
court of competent jurisdiction, or an order shall be made by a court
of competent jurisdiction for the appointment of a receiver,
liquidator, or trustee of the Advisor, or of all or substantially all
of its property by reason of the foregoing, or approving any petition
filed against the Advisor for reorganization, and such adjudication or
order shall remain in force or unstayed for a period of one hundred
twenty (120) days; or
(c) any criminal violation involving the Advisor, its
business, assets, operations or capital committed by any officer or
director of the Advisor, or any violation of civil law involving the
Advisor, its business, assets, operations or capital committed by any
officer or director of the Advisor, including without limitation any
violation of federal or state securities laws, or involving allegations
of fraud; or
(d) the Advisor 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 relief of
debtors, or shall consent to the appointment of a receiver for itself
or for all or substantially all of 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.
Any notice of termination under this Section 11.2, or under Sections
11.3 or 11.4 below, shall be effective on the later of the date specified in
such notice, which may be the day on which such notice is given or any date
thereafter, or the date of expiration of any cure period specified herein,
except as modified pursuant to the provisions of Section 11.4 (the "Termination
Date"). The Advisor agrees that if any of the events specified in subsection
(b), (c) or (d) of this Section 11.2 shall occur, it shall give written notice
thereof to the Board of Directors within fifteen (15) days after the occurrence
of such event.
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Section 11.3 Termination by Advisor for Cause
At the sole option of the Advisor, this Agreement may be terminated by
written notice of termination from the Advisor to the Company if any of the
following events occur:
(a) the Company shall violate or default in the performance of
any material provision of this Agreement, and, after written notice of
such violation, shall not cure such default within thirty (30) days or,
if the default is of a nature that it cannot be cured within thirty
(30) days, the Company shall not diligently proceed to cure the default
as soon as practicable thereafter;
(b) the Company shall be adjudged bankrupt or insolvent by a
court of competent jurisdiction, or an order shall be made by a court
of competent jurisdiction for the appointment of a receiver,
liquidator, or trustee of the Company, or of all or substantially all
of its property (including, without limitation, the Company
Investments) by reason of the foregoing, or approving any petition
filed against the Company for reorganization, and such adjudication or
order shall remain in force or unstayed for a period of one hundred
twenty (120) days;
(c) any criminal violation involving the Company, its
business, assets, operations or capital committed by any officer or
director of the Company, or any violation of civil law involving the
Company, its business, assets, operations or capital committed by any
officer or director of the Company, including without limitation any
violation of federal or state securities laws, or involving allegations
of fraud; or
(d) the Company 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 relief of
debtors, or shall consent to the appointment of a receiver for itself
or for all or substantially all of its property ( including, without
limitation, the Company Investments), 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 Company agrees that if any of the events specified in subsection
(b), (c) or (d) of this Section 11.3 shall occur, it shall given written notice
thereof to the Advisor within fifteen (15) days after the occurrence of such
event.
Section 11.4 Termination by Either Party Without Cause
In addition to the rights of termination granted to the parties hereto
pursuant to Sections 11.2 and 11.3 above, this Agreement may be terminated
without cause by either the Company or the Advisor upon written notice to the
other party given not sooner than ninety (90) days prior to the expiration of
the then current three (3) year Term (but with a Termination Date as of the
expiration of the then current three (3) year Term.
Section 11.5 Termination by Company with respect to a Change of
Control
In addition to the rights of termination granted to the Company
pursuant to Sections 11.2 and 11.4 above, this Agreement may be terminated by
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the Company upon thirty (30) days' prior written notice from the Company to the
Advisor of the anticipated occurrence of a Change of Control (but with the
Termination Date being the date of the effectiveness of the Change of Control);
provided, such notice of termination shall automatically be deemed null and void
and if no further force or effect if the anticipated Change of Control does not
occur.
Section 11.6 Compensation, Reimbursements and Fees Upon
Termination
Upon termination of this Agreement by the Company or the Advisor
pursuant to Sections 11.2, 11.3 or 11.4, as applicable, or by the Company
pursuant to Section 11.5, all compensation due to the Advisor through the
Termination Date, and any reimbursements that the Advisor is entitled to receive
hereunder shall be promptly paid by the Company, without deduction or set off of
any kind, unless such deduction or set off is authorized in writing by the
Advisor; provided, in the event of the termination of this Agreement by the
Company pursuant to Sections 11.4 or 11.5, the Advisor shall, in addition to the
foregoing compensation and reimbursements, promptly be paid a termination fee in
an amount equal to two (2) times the Base Fee.
Section 11.6 Duties of Advisor Upon Termination
After the Termination Date of this Agreement, the Advisor shall not be
entitled to compensation for further services hereunder. The Advisor shall
forthwith, as soon as reasonably practicable, and on or about the Termination
Date:
(a) promptly pay over to the Company all monies collected and
held for the account of the Company pursuant hereto, after deducting
any accrued compensation and reimbursement for its expenses, if any, to
which, as applicable, it is then entitled in accordance with the
provisions hereof;
(b) promptly deliver to the Board of 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 Board of Directors;
(c) promptly deliver to the Board of Directors all property
and documents of the Company then in the custody of the Advisor; and
(d) cooperate with the Company to provide an orderly
transition of the services provided hereunder.
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ARTICLE XII
ASSIGNMENT, AMENDMENTS AND WAIVERS
Section 12.1 Assignment
The Company may terminate this Agreement at any time in the event of
its assignment by the Advisor except an assignment to a corporation,
association, trust or other successor organization which may take over the
property and carry on the affairs of the Advisor; provided, that following such
assignment the Persons who controlled the operations of the Advisor on the date
such Advisor became the advisor to the Company shall control the operation of
the successor organization, including the performance of its duties under this
Agreement, and they shall be bound by the same restrictions by which they were
bound prior to such assignment; however, if at any time subsequent to such an
assignment such Persons shall cease to control the operations of the successor
organization, the Company may thereupon terminate this Agreement, in accordance
with the terms and conditions of Article XI. Such an assignment or any other
assignment of this Agreement by the Advisor shall bind the assignee hereunder in
the same manner as the Advisor is bound hereunder. This Agreement shall not be
assignable by the Company without the prior written consent of the Advisor,
except in the case of any assignment by the Company to a Person which is the
successor to the Company, in which case such successor shall be bound hereby and
by the terms of said assignment in the same manner and to the same extent as the
Company is bound hereby. Any successor organization that is a permitted assignee
under this Section 12.1, whether a successor to the Advisor or to the Company,
shall be obligated to execute such agreements, certificates or other documents
as the nonassigning party shall reasonably request to evidence that such
successor organization is bound hereby.
Section 12.2 Amendments
This Agreement may not be amended, supplemented or discharged, and none
of its provisions may be modified, except expressly by an instrument in writing
signed by the party to be charged, provided that, in the case of the Company,
such amendment, supplement, discharge or modification must be approved by a
majority vote of the Board of Directors or by a vote of the Shareholders as
provided in the Bylaws and, in the case of the Advisor, such amendment,
supplement, discharge or modification must be approved by a majority vote of the
members of the Advisor.
Section 12.3 Waivers
Any term or provision of this Agreement may be waived, but only in
writing by the party which is entitled to the benefit of that provision. No
waiver by any party of any default with respect to any provision, condition or
requirement hereof shall be deemed to be a continuing waiver in the future
thereof or a waiver of any other provision, condition or requirement hereof; nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it thereafter.
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ARTICLE XIII
OTHER ACTIVITIES OF ADVISOR
Nothing herein shall prevent the Advisor or its Affiliates from
engaging in other activities or businesses or from acting as advisor to any
other Person (including any other REIT) or from managing other investments,
including those of investors or investments advised, sponsored or organized by
the Advisor or one of its Affiliates, even though such Person has investment
policies and objectives similar to those of the Company; provided the Advisor
first presents to the Company any investment opportunity which comes to the
Advisor and otherwise meets the investment objectives of the Company discussed
in Article II hereof, and provided, further, that the Advisor shall notify the
Company in writing in the event that it or one of its Affiliates does so act (or
intends to so act) as an advisor to another REIT. The Advisor or its Affiliates
may also render such services to joint ventures, partnerships or limited
liability companies in which the Company is a co-venturer, partner or member and
to the other entities in such joint ventures, partnerships or limited liability
companies. In addition, nothing herein shall prevent any officers, directors,
managers, employees or members of the Advisor from engaging in any other
business or from rendering services of any kind to any other Person (including
competitive business activities), provided, any of such officers, directors,
managers, employees or members have first presented to the Company any
investment opportunity which comes to any of said parties and otherwise meets
the investment objectives of the Company described in Article II hereof.
ARTICLE XIV
BANK ACCOUNTS
The Advisor shall establish and maintain one or more bank accounts in
its own name or, at the direction of the Board of Directors, in the name of the
Company, and shall collect and deposit into such account or accounts and
disburse therefrom any monies on behalf of the Company, provided that no funds
in any such account shall be commingled with any funds of the Advisor or any
other Person. The Advisor shall from time to time render an appropriate
accounting of such collections and payments to the Company and or its designated
auditors.
ARTICLE XV
PROTECTION OF INVESTMENTS
The Advisor shall cooperate with the legal counsel to the Company, as
deemed appropriate in the Advisor's reasonable discretion, to assure that (a)
the title to any Additional Company Hotel Properties and Other Investments, as
applicable, are insured by appropriate policies of title insurance; (b) any
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Additional Company Hotel Properties or Other Investments, as applicable,
forming part of the Company Investments are duly insured, by appropriate
insurance policies, against loss or damage by fire, with extended coverage, and
against such other insurable hazards and risks as is customary and appropriate
in the circumstances; (c) the policies from time to time specified by the Board
of Directors with regard to the protection of the Company Investments are
carried out; and (d) proper Board of Directors approval is received for all of
the Company Investments. Any and all fees and costs incurred by the Advisor in
performing such functions, whether payable to its Affiliates or independent
persons, shall be borne solely by the Company.
ARTICLE XVI
RECORDS
The Advisor shall maintain appropriate books of account and records
relating to services performed pursuant hereto, which books of account and
records shall be available for inspection by representatives of the Company upon
reasonable notice during normal business hours.
ARTICLE XVII
LIMITATION ON ACTIVITIES
The Advisor shall refrain from taking any action that in its sole
judgment made in good faith, and on advice of counsel, where appropriate, and in
the exercise of reasonable care, (a) would affect adversely the status of the
Company to qualify as a REIT, (b) would subject the Company to regulation under
the Investment Company Act of 1940, (c) would violate any law, rule, regulation
or statement of policy of any governmental body or agency having jurisdiction
over the Company or its securities, including, without limitation the Shares and
any Senior Securities, or (d) otherwise is not permitted by the Charter or
Bylaws, except if such action shall be ordered by the Board of Directors, in
which case the Advisor shall notify promptly the Board of Directors of the
Advisor's judgment of the potential impact of such action and shall refrain from
taking such action until it receives further clarification or instructions from
the Board of Directors. The Advisor shall not take any action ordered by the
Board of Directors not to be taken. Notwithstanding the foregoing, neither the
Advisor, nor its directors, officers, agents or employees, or Affiliates shall
be liable to the Company, the Board of Directors, its officers, the
Shareholders, the holders of any Senior Securities, or any other Persons, for
any act or omission by the Advisor, its directors, officers, employees, agents
or shareholders, except as provided in Article X of this Agreement. Subject to
the foregoing, in performing its duties and obligations under this Agreement,
the Advisor, its officers, directors, agents, employees and Affiliates shall
abide by and comply with the written policies of the Company which the Company
shall have provided to the Advisor.
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ARTICLE XVIII
SELF-DEALING
Neither the Advisor nor any Affiliate of the Advisor shall sell any
property or assets to the Company or purchase any property or assets from
the Company, directly or indirectly, except as approved by a majority vote of
the Board of Directors and the Advisor, provided that any Person wholly-owned
(directly or indirectly) by the Company may sell property or assets to the
Company or purchase assets from the Company without such approval.
ARTICLE XIX
NO PARTNERSHIP OR JOINT VENTURE
The Company and the Advisor are not partners or joint venturers with
each other and neither the terms of this Agreement nor the fact that the Company
and the Advisor have joint interest in any one or more investments shall be
construed so as to make them such partners or joint venturers or impose any
liability as such on either of them.
ARTICLE XX
FIDELITY BOND
The Advisor shall not be required to obtain or maintain a fidelity bond
in connection with the performance of its services hereunder.
ARTICLE XXI
OTHER SERVICES
Should the Board of Directors request that the Advisor or any officer,
director, manager, member or employee thereof, render services for the Company
other than as specifically set forth in this Agreement, such services shall be
separately compensated and not be deemed to be services pursuant to this
Agreement.
ARTICLE XXII
SHAREHOLDER LIABILITY
No Shareholder or holder of any Senior Securities shall be personally
liable for any of the obligations of the Company, or the Advisor, respectively,
under this Agreement.
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ARTICLE XXIII
LOANS
If any loans are made to the Company by the Advisor or an Affiliate of
the Advisor, the maximum amount of interest that may be charged by the
Advisor or such Affiliate and the terms of any such loans shall be no less
favorable than the interest rate and terms available to the Company from
unaffiliated Persons for similar commercial loans. For purposes hereof, any
fees, compensation and/or reimbursements to which the Advisor is entitled from
the Company, if not paid within fifteen (15) days after such fees, compensation
and/or reimbursements are due, shall bear interest at prevailing rates from the
date on which such fees, compensation and/or reimbursements are due the Advisor
until paid in full.
ARTICLE XIV
NOTICES
Any notice required or permitted to be delivered to any party under the
provisions of this Agreement shall be deemed validly given, whether actually
received or not, when (a) deposited in a United States Postal Service
depository, postage prepaid, registered or certified, return receipt requested,
and addressed to the party at the address specified on the signature pages
hereof, or such other address as shall be specified by written notice delivered
one party to the other, or (b) when hand delivered to such address with delivery
receipt required, or (c) when given to recognized overnight courier service to
such address with delivery receipt required. The time for responding to any
notice hereunder shall begin to run when actual delivery of the notice is made
at the recipients' address.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 25.1 Entire Agreement. This Agreement contains the entire
agreement between the parties relating to the subject matter hereof and all
prior agreements relative hereto which are not contained herein are terminated.
Section 25.2 Law Governing. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
Section 25.3 Successors and Assigns. Subject to the provisions of
Section 12.1 hereof, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective legal representatives,
successors and assigns.
Section 25.4 Severability. The provisions of this Agreement are
independent of and severable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the act that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
22
Section 25.5 Headings. The Article and Section headings appearing in
this Agreement are for convenience of reference only and are not intended, to
any extent or for any purpose, to limit or define the text of any Article or
Section.
Section 25.6 Construction. Whenever required by the context, as used in
this Agreement, the singular number shall include the plural, and vice versa,
and the gender of all words used shall include the masculine, feminine and the
neuter.
Section 25.7 Further Assurances. In connection with this Agreement and
the transactions contemplated hereby, each party shall execute and deliver any
additional documents and instruments and perform any additional acts that may be
necessary or appropriate to effectuate and perform the provisions of this
Agreement and the transactions contemplated hereby.
Section 25.8 Venue and Forum. The parties hereto agree that any
dispute, claim or controversy which may arise between the parties concerning
this agreement shall be resolved by submission to trial without a jury, and all
parties hereby expressly waive any right to a jury trial in connection with any
such dispute. The prevailing party shall be entitled to reimbursement of its
reasonable costs and expenses including attorneys' fees. The proper venue for
such trial of any such matter shall be Oakland, California.
Section 25.9 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be an original, but all of which taken
together shall constitute a single document.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first above written.
HOST FUNDING, INC., a Maryland corporation
By: /s/ Xxxxxxx X. XxXxxxx
Name:
Title: President
Address: 0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
XXXXXXXXX XXXXXXXXX INC.
A California corporation
By: /s/ X. X. Xxxxxxxxx
Name:
Title: President
Address: 0000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
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