ADVISORY AGREEMENT
between
APPLE RESIDENTIAL INCOME TRUST, INC.
and
APPLE RESIDENTIAL ADVISORS, INC.
ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT, dated as of [DATE], is between APPLE
RESIDENTIAL INCOME TRUST, INC., a Virginia corporation (the "Company"), and
APPLE RESIDENTIAL ADVISORS, INC., a Virginia corporation (the "Advisor").
RECITALS
A. The purpose of the Company is to invest primarily in existing
residential apartment communities in Texas and the southwestern region of the
United States and, to a lesser extent, in certain other permitted investments
described in the Prospectus (as hereinafter defined). The Company intends to
qualify as a real estate investment trust pursuant to Sections 856 through 860
of the Internal Revenue Code of 1986, as amended.
B. The Company desires to engage the Advisor to provide information,
advice, assistance and facilities to the Company and to have the Advisor
undertake the duties and responsibilities hereinafter set forth, all subject to
the supervision of the Company's Board of Directors, on the terms and conditions
set forth herein. In consideration therefor, the Company desires to pay the
Advisor certain fees as herein set forth.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties agree as follows:
1. Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below.
(a) "Affiliate" means (i) any Person directly or indirectly
controlling, controlled by or under common control with another Person,
(ii) any Person owning or controlling 10% or more of the outstanding
voting securities or beneficial interests of such other Person, (iii)
any officer, director, trustee or general partner of such Person and
(iv) if such other Person is an officer, director, trustee or partner
of another entity, then the entity for which that Person acts in any
such capacity. "Affiliated" means being an Affiliate of a specified
Person.
(b) "Articles of Incorporation" means the Company's Articles
of Incorporation filed with the Virginia State Corporation Commission,
including all amendments, restatements or modifications thereof.
(c) "Asset Management Fee" means the fee payable to the
Advisor for its services hereunder. Such fee will be paid pursuant and
subject to Section 11 of this Agreement.
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(d) "Average Invested Assets" for any period means the average
of the aggregate book value of the assets of the Company invested,
directly or indirectly, in equity interests in and loans secured by
real estate, before reserves for depreciation or bad debts or other
similar non-cash reserves, computed by taking the average of such
values at the end of each month during such period.
(e) "Board of Directors" means the Company's Board of
Directors as of any particular time.
(f) "Bylaws" means the Company's Bylaws, including all
amendments, restatements or modifications thereof.
(g) "Calendar Year" means the year ended December 31st and any
portion thereof treated by the Internal Revenue Service as a reporting
period for the Company.
(h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including successor statutes thereto.
(i) "Directors" means, as of any particular time, the
directors of the Company holding office at such time.
(j) "Funds from Operation" means net income (computed in
accordance with generally accepted accounting principles) excluding
gains (or losses) from debt restructuring and sales of property, plus
depreciation of real property, and after adjustments for significant
non-recurring items and unconsolidated partnerships and joint ventures.
Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operation on the same basis.
(k) "Independent Director" means a Director of the Company who
is not Affiliated, directly or indirectly, with the Advisor, whether by
ownership of, ownership interest in, employment by, any material
business or professional relationship with, or serving as an officer or
director of, the Advisor, or an Affiliated business entity of the
Advisor (other than as an Independent Director of up to three other
real estate investment trusts advised by the Advisor or an Affiliate of
the Advisor). An Independent Director may perform no other services for
the Company, except as a Director. Notwithstanding anything to the
contrary herein, any member of a law firm whose only material business
or professional relationship with the Company, the Advisor and their
Affiliates is as legal counsel to any of such entities shall constitute
an Independent Director (unless such person serves as a director for
more than three real estate investment trusts organized by the Advisor
and its Affiliates). An "indirect" affiliation shall be deemed to
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refer to circumstances in which a member of the "immediate family" of a
Director is Affiliated with the Advisor, and a person's "immediate
family" shall mean such person's spouse, parents, children, siblings,
mother and father-in-law, sons and daughters-in-law and brothers and
sisters-in-law.
(l) "Net Income" for any period means the total revenues of
the Company for such period, less expenses applicable to such period
other than additions to reserves for depreciation or bad debts or other
similar non-cash reserves. "Net Income," for purposes of calculating
Operating Expenses in Section 15 of this Agreement, does not include
the gain from the sale of the Company's assets.
(m) "Offering" means the public offering of the Company's
Common Shares.
(n) "Operating Expenses" means all operating, general and
administrative expenses of the Company as determined under generally
accepted accounting principles (including regular compensation payable
to the Advisor), excluding, however, the following:
(i) expenses of raising capital;
(ii) interest payments;
(iii) taxes;
(iv) non-cash expenditures, such as depreciation,
amortization and bad debt reserves;
(v) incentive fees paid to the Advisor, if any;
and
(vi) costs related directly to asset acquisition,
operation and disposition.
(o) "Organizational and Offering Expenses" means all expenses
incurred in connection with the formation and registration of the
Company and in qualifying and marketing the Shares under applicable
federal and state law, and any other expenses actually incurred and
directly related to the qualification, registration, offer and sale of
the Shares, including such expenses as (i) all marketing expenses and
payments made to broker-dealers as compensation or reimbursement for
all costs of reviewing the Offering, including due diligence
investigations and fees and expenses of their attorneys, accountants
and other experts; (ii) registration fees, filing fees and taxes; (iii)
the costs of printing, amending, supplementing and distributing the
registration statement and Prospectus; (iv) the costs of
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obtaining regulatory clearances of, and printing and distributing,
sales materials used in connection with the offer and sale of the
Shares; (v) the costs related to investor and broker-dealer sales
meetings concerning the Offering; and (vi) accounting and legal fees
incurred in connection with any of the foregoing.
(p) "Person" includes an individual, corporation, partnership,
joint venture, association, company, trust, bank or other entity, or
government and any agency and political subdivision of a government.
(q) "Property" or "Properties" means partial or entire equity
interests, including equity participation interests such as general
partnership interests and joint venture interests, owned by the Company
in real property as described in the Prospectus.
(r) "Prospectus" has the meaning given to that term by Section
2(10) of the Securities Act of 1933, as amended, and as used herein,
the term means the Prospectus of the Company pursuant to which the
Shares are offered to the public.
(s) "Return Ratio" means, for any period, the ratio of Funds
from Operation to Total Contributions.
(t) "Shares" or "Common Shares" means the Common Shares of the
Company, no par value.
(u) "Shareholders" means the holders of record of the
Company's Common Shares.
(v) "Total Contributions" means the gross offering proceeds
which have been received by the Company from time to time from the sale
or sales of the Shares. Total Contributions shall be calculated to
reflect the average of the daily amounts during the period in question
of the gross offering proceeds which have been received by the Company
from time to time from the sales of Shares, to extent such Shares are
issued and such sales have actually been closed.
2. Duties of the Advisor. Subject to the terms of the Articles of
Incorporation, the Bylaws, and the supervision of the Board of Directors, the
Advisor, at its own cost and expense, unless otherwise set forth herein, on
behalf of the Company, shall:
(a) serve as the Company's investment advisor and consultant
in connection with 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
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acquisition, financing, refinancing, holding, leasing and disposition
of Properties and other investments of the Company;
(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) investigate, select and, on behalf of the Company, engage
and conduct business with (including, but not limited to, entering into
contracts in the name of the Advisor or the Company) consultants,
accountants, correspondents, lenders, servicers, technical advisors,
attorneys, brokers, underwriters, corporate fiduciaries, escrow agents,
depositaries, custodians, agents for collection, insurers, insurance
agents, banks, builders, developers, property owners, mortgagors, and
other mortgage and investment participants, 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;
(d) act as attorney-in-fact or agent in acquiring, financing,
refinancing, leasing and disposing of Properties and other investments,
in disbursing and collecting funds of the Company, in paying the debts
and fulfilling the obligations of the Company and in handling,
prosecuting and settling any claims of the Company, including the
foreclosure or other enforcement of any mortgage or other lien securing
Properties or other investments, and exercise its own discretion in
doing so; provided that any fees and costs payable to independent
Persons incurred by the Advisor in connection with the foregoing shall
be the responsibility of the Company;
(e) negotiate on behalf of the Company with banks or other
lenders for loans to be made to the Company, and negotiate on behalf of
the Company with investment banking firms and broker-dealers or
negotiate private sales of the securities of the Company or obtain
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 and costs payable to third parties incurred by
the Advisor in connection with the foregoing shall be the
responsibility of the Company;
(f) invest or reinvest any money of the Company, as directed
by the Board of Directors or subject to such discretionary powers as
the Board of Directors may from time to time delegate;
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(g) if requested by the Company, provide appraisal reports on
any real property that is, or is proposed to be, acquired by the
Company for investment;
(h) at any time reasonably requested by the Board of Directors
(but not more than monthly) make reports of its performance of services
to the Company;
(i) communicate on behalf of the Company with the Shareholders
of the Company as required to satisfy the continuous reporting and
other requirements of any governmental bodies or agencies to the
Shareholders and third parties and to maintain effective relations with
the Shareholders;
(j) counsel the Company in connection with policy decisions to
be made by the Board of Directors;
(k) provide the executive and administrative personnel, office
space and services required in rendering the foregoing services to the
Company; and
(l) perform such other services as may be required from time
to time for management and other activities relating to the assets of
the Company as the Advisor shall deem appropriate under the particular
circumstances.
3. Commitments. In order to meet the investment requirements of the
Company, but only as determined by the Board of Directors, or any authorized
committee thereof, from time to time, the Advisor agrees at the direction of the
Board of Directors or any such committee to issue on behalf of the Company
commitments on such terms as are established by the Board of Directors or any
such committee, for the acquiring of Properties or other assets.
4. Duties of the Board of Directors. In order for the Advisor to
fulfill its duties, the Board of Directors shall, to the extent it deems proper,
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 financial 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.
5. Advice. In addition to the services described in Section 2 above,
the Advisor shall consult with the Board of Directors and the officers of the
Company and shall furnish them with advice and recommendations with respect to
the acquiring of Properties or commitments therefor, or other investments of, or
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investments considered by, the Company, and shall furnish advice and
recommendations with respect to other aspects of the business and affairs of the
Company. In order to facilitate the investment of the funds of the Company and
enable it to avail itself of investment opportunities as they arise, the Advisor
may from time to time be granted, but is not hereby granted, the power and
authority to make and dispose of investments and to make and terminate
commitments for investments, on behalf of and in the name 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. Unless otherwise notified by the Board of Directors, a
representative of the Advisor shall attend all regular and special meetings of
the Board of Directors, and the Board of Directors shall notify the Advisor of
such meetings.
The Advisor shall first present to the Company all investment
opportunities which are suitable for the Company, because such investment
opportunities are within the investment objectives and policies of the Company,
before the Advisor offers such opportunities to any other Person or takes for
its own account. It is expressly understood, however, that the primary
investments of the Company are expected to be existing residential apartment
communities in Texas and the southwestern region of the United States.
6. Bank Accounts. The Advisor may establish and maintain one or more
bank accounts in the name of the Company and may collect and deposit into any
such account or accounts, and disburse from any such account or accounts, any
money on behalf of the Company, under such terms and conditions as the Board of
Directors may approve, provided that all such accounts shall be maintained in
such fashion as to make clear that the funds therein are the property of the
Company and not of the Advisor. The Advisor shall from time to time render
appropriate accountings of such collections and payments to the Board of
Directors and to the auditors of the Company.
7. Investment Undertakings. The Advisor shall use its best efforts to
assure that (i) any mortgage securing a Property of the Company shall be and
remain a valid lien upon the mortgaged property according to its terms; (ii) the
title to any Property is insured by appropriate policies of title insurance;
(iii) any Property is duly insured 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; and (iv) the policies from time to time
specified by the Board of Directors with regard to the protection of the
Company's investments are carried out. Any and all fees and costs incurred by
the Advisor in performing such functions,
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whether payable to its Affiliates or independent Persons shall be borne by the
Company.
8. Records; Confidentiality. The Advisor shall maintain appropriate
records of all its activities hereunder and make such records available for
inspection by the Board of Directors and by counsel, auditors and authorized
agents of the Company, at any time or from time to time during normal business
hours. The Advisor shall at all reasonable times have access to the books and
records of the Company. The Advisor shall keep confidential any and all
information obtained in connection with the services rendered hereunder and
shall not disclose any such information to nonaffiliated Persons except with the
prior consent of the Board.
9. Limitation of Activities. Anything else in this Agreement to the
contrary notwithstanding:
(a) The Advisor shall refrain from taking any action which, in
its sole judgment made in good faith, would adversely affect the status
of the Company as a real estate investment trust as defined in the
Code, subject the Company to regulation under the Investment Company
Act of 1940, violate any law, rule or regulation or would otherwise not
be permitted by the Articles of Incorporation or Bylaws of the Company,
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. Notwithstanding the
foregoing, the Advisor and its stockholders, directors, officers and
employees shall not be liable to the Company, or to the Company's Board
of Directors or Shareholders for any act or omission by the Advisor, or
its stockholders, directors, officers or employees except as provided
in Section 16 of this Agreement.
(b) In performing its duties and obligations under this
Agreement, the Advisor shall abide by and comply with the provisions
and policies set forth in the Articles of Incorporation and Bylaws.
10. Relationship with Board of Directors. Employees of the Advisor may
serve as members of the Board of Directors or any committee thereof and as
officers of the Company, except that no employee of the Advisor who also is a
Director or officer of the Company shall receive any compensation from the
Company for serving as a Director or officer other than for reasonable
reimbursement for travel and related expenses incurred in attending meetings of
the Board of Directors or any committee thereof.
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11. Fees.
(a) Asset Management Fee. The Company shall pay to the Advisor
quarterly, for services rendered under this Agreement, an Asset
Management Fee calculated as follows: The Asset Management Fee for any
calendar quarter shall be a applicable percentage of the Total
Contributions. The applicable percentage used to calculate such Asset
Management Fee shall be based upon the Return Ratio, calculated on a
per annum basis, for the preceding calendar quarter. The Asset
Management Fee shall be as follows with respect to any such quarter:
0.1% of Total Contributions if the Return Ratio for the preceding
calendar quarter is 6.0% per annum or less; 0.15% of Total
Contributions if the Return Ratio for the preceding calendar quarter is
more than 6.0% per annum but not more than 8.0% per annum; and 0.25% of
Total Contributions if the Return Ratio for the preceding calendar is
above 8.0% per annum. If the Asset Management Fee is payable with
respect to any partial calendar quarter, it shall be prorated based on
the number of days elapsed during any such partial calendar quarter.
(b) Payment of Asset Management Fee. The Advisor shall compute
the compensation payable to it under Section 11(a) of this Agreement
within 45 days of the end of each calendar quarter. A copy of the
computations made by the Advisor to calculate its compensation shall
thereafter promptly be delivered to the Board of Directors and, upon
such delivery, payment of the compensation earned under Section 11(a)
of this Agreement shown therein shall be due and payable within 60 days
after the end of such calendar quarter.
12. Expenses.
(a) The Company shall pay directly or reimburse the Advisor
for the following expenses in addition to the compensation provided for
in this Agreement:
(i) all costs of personnel employed by the Company
and involved in the business of the Company;
(ii) expenses incurred in connection with the initial
investment of the funds of the Company, including all direct
expenses incurred in connection with investigation and
acquisition of Properties;
(iii) interest and other costs for borrowed money,
including discounts, points and other similar fees;
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(iv) taxes and assessments on income or property and
taxes as an expense of doing business;
(v) fees and commissions, including finder's fees and
brokerage commissions with respect to the acquisition and
disposition of assets of the Company, whether payable to an
Affiliate of the Advisor or an unrelated Person, including,
without limitation, costs of foreclosure, maintenance, repair
and improvement of Property;
(vi) costs associated with insurance required in
connection with the business of the Company or by the Board of
Directors;
(vii) expenses of managing and operating real
property owned by the Company, whether payable to an Affiliate
of the Advisor or an unrelated Person;
(viii) fees and expenses of legal counsel for the
Company;
(ix) fees and expenses of independent auditors and
accountants for the Company;
(x) all expenses in connection with payments to the
Board of Directors or any committee thereof and meetings of
the Board of Directors or any committee thereof and
Shareholders;
(xi) expenses associated with listing the Shares on a
national stock exchange or quoting the Shares on the NASDAQ
National Market System if requested by the Board of Directors,
or with the issuance and distribution of any additional Shares
of the Company at any time, such as taxes, legal and
accounting fees, listing and registration fees, and other
expenses;
(xii) dividend and dividend distributions;
(xiii) expenses of organizing, revising, amending,
converting, modifying or terminating the Company, the Articles
of Incorporation or the Bylaws; and
(xiv) expenses of maintaining communications with
Shareholders, including the cost of preparation, printing, and
mailing annual reports and other Shareholder reports, proxy
statements and other reports required by governmental
entities.
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Expenses incurred by the Advisor on behalf of the Company and payable pursuant
to this Section, shall be reimbursed quarterly to the Advisor within 60 days
after the end of each quarter. The Advisor shall prepare a statement documenting
the expenses of the Company during each quarter, and shall deliver such
statement to the Company within 45 days after the end of each quarter.
(b) Except as otherwise provided herein, the Advisor shall pay
all expenses of performing its obligations under this Agreement,
including, without limitation, the following expenses:
(i) employment expenses of the Advisor, including,
but not limited to, salaries, wages, payroll taxes, costs of
employee benefit plans, and temporary help expenses, except to
the extent that such expenses are otherwise reimbursable
pursuant to Section 12(a) of this Agreement or the Articles of
Incorporation or Bylaws;
(ii) audit fees and expenses of the Advisor;
(iii) legal fees and other expenses of professional
services to the Advisor;
(iv) rent, telephone, utilities and other office
expenses of the Advisor;
(v) insurance of the Advisor; and
(vi) all other administrative expenses of the
Advisor.
13. Limitation on the Advisor's Investment Advice. Notwithstanding
anything to the contrary in this Agreement, the Advisor shall not be required
to, and shall not, advise the Company as to any investments in securities,
except when, and to the extent that, the Advisor and the Company specifically
agree (i) that such advice is desirable, and (ii) that such advice can be
rendered consistently with applicable legal requirements, including any
applicable provisions of relevant "investment advisor" laws.
14. Other Services. Should the Board of Directors request that the
Advisor or any employee thereof render material services for the Company other
than set forth in Section 2, such services shall be separately compensated and
shall not be deemed to be services pursuant to the terms of this Agreement.
15. Limitation on Operating Expenses. Within 120 days from the end of
any Calendar Year, the Advisor shall refund to the
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Company the amount, if any, by which the Operating Expenses of the Company,
excluding extraordinary nonrecurring items and those items referred to in
Section 14, during such Calendar Year exceeded the greater of either of the
following limitations:
(a) 2% of the Average Invested Assets of the Company for such
Calendar Year; or
(b) 25% of the Company's Net Income for such Calendar Year,
determined in accordance with generally accepted accounting principles.
The Independent Directors of the Company may determine that, because of unusual
and nonrecurring factors which they deem sufficient, a higher level of Operating
Expenses is justified for such Calendar Year. The Advisor shall be promptly
reimbursed for any payments made under this Section 15 if, in any succeeding
Calendar Year, the Operating Expenses of the Company are less than the permitted
level of Operating Expenses.
16. Advisory Responsibility. The Advisor assumes no responsibility
under this Agreement other than to render the services called for hereunder in
good faith and with integrity, and shall not be responsible for any action
of the Company in following or declining to follow any advice or recommendation
of the Advisor. Neither the Advisor, its shareholders, directors, officers nor
employees nor any of its Affiliates, nor any Person contracting with the Advisor
for services and its shareholders, directors, officers and employees nor any of
its Affiliates shall be liable to the Company or its Shareholders, except by
reason of acts constituting gross negligence or willful misconduct. The Advisor
hereby agrees to look solely to the assets of the Company for satisfaction of
all claims against the Company, and in no event shall any Shareholder, Director,
officer or agent of the Company have any personal liability for the obligation
of the Company under this Agreement.
17. Incorporation of the Articles of Incorporation and Bylaws. To the
extent the Articles of Incorporation and Bylaws impose obligations or
restrictions on the Advisor or grant the Advisor certain rights which are not
set forth in this Agreement, the Advisor shall abide by such obligations or
restrictions and such rights shall inure to the benefit of the Advisor with the
same force and effect as if they were set forth herein.
18. Fiduciary Duty and Indemnification. Subject to Section 16, the
Advisor shall have a fiduciary relationship to the Shareholders. However,
the Company shall indemnify the Advisor, to the fullest extent permitted by law,
for its liabilities and losses arising from the operations of the Company
(including its costs and expenses, including legal fees and expenses, incurred
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in connection with investigating and defending itself against such liabilities
and losses) if the following conditions are met:
(a) the Directors have determined, in good faith, that the
course of conduct which caused the liability or loss was undertaken in
good faith within what the Advisor reasonably believed to be the scope
of its employment or authority and for a purpose which it reasonably
believed to be in the best interests of the Company;
(b) the Directors have determined, in good faith, that the
liability or loss was not the result of willful misconduct, bad faith,
reckless disregard of duties or violation of the criminal law on the
part of the Advisor; and
(c) the indemnified amount is recoverable only out of the
assets of the Company and not from the Shareholders.
Notwithstanding the foregoing, indemnification will not be allowed for
any liability imposed by judgment, and costs associated therewith, including
attorneys' fees, arising from or out of a violation of state or federal
securities laws associated with the Offering of the Common Shares unless (i)
there has been a successful adjudication on the merits of each count involving
alleged securities laws violations as to the particular indemnitee, or (ii) such
claims have been dismissed with prejudice on the merits by a court of competent
jurisdiction as to the particular indemnitee or (iii) a court of competent
jurisdiction approves a settlement of the claims against a particular
indemnitee.
19. Transactions between the Advisor and the Company. All transactions
between the Advisor and the Company shall require the approval by a majority of
the Directors (including a majority of the Independent Directors) and shall
otherwise comply with the conflict of interest provisions of the Bylaws.
20. Relationship of Advisor and Company. The Company and the Advisor
are not partners or joint venturers with each other, and nothing herein shall be
construed to make them such partners or joint venturers or impose any liability
as such on either of them.
21. Other Activities. Except as otherwise expressly provided herein,
nothing contained herein shall limit the right of the Advisor or any of its
officers, directors or employees, whether or not a Director, officer or employee
of the Company, to engage in other business activities or to render services of
any kind to any other Person even if such other business activities or services
may be in direct competition with the Company.
22. Term; Termination of Agreement.
(a) This Agreement shall have an initial term ending one year
from the date of this Agreement, and thereafter
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shall be renewed from year to year upon the consent of the Directors.
(b) Prior to any renewal of this Agreement, the Independent
Directors shall review (i) the performance of the Advisor hereunder to
determine its compliance with the provisions of this Agreement, and
(ii) the fees payable to the Advisor hereunder to determine whether
they are reasonable in relation to the nature and quality of services
performed. The findings of the Independent Directors shall be recorded
in the minutes of the Directors.
(c) This Agreement shall be terminable (i) without cause by
the Advisor or (ii) without cause by a majority of the Independent
Directors, in each case upon 60 days' prior written notice to the
non-terminating party.
(d) In the event of the termination of the Advisor, the
Advisor will cooperate with the Company and take all reasonable steps
requested to assist the Directors in making an orderly transition of
the advisory function to another Person.
(e) At the sole option of a majority of the Independent
Directors, this Agreement may be terminated for cause by written notice
of termination from the Company to the Advisor if any of the following
events occur:
(i) if the Advisor shall violate or default in the
performance of any material provision of this Agreement and,
after written notice of such violation or default, shall not
cure such violation or default within 30 days;
(ii) if 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 30
days; or
(iii) if 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
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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.
(f) Any notice of termination under this Section shall (except
to the extent this Section requires a different notice period) be
effective on the date specified in such notice, which may be the day on
which such notice is given or any date thereafter. The Advisor agrees
that if any of the events specified in subparagraph (ii) or (iii) of
Section 22(e) shall occur, it shall give written notice thereof to the
Board of Directors within 5 days after the occurrence of such event.
23. Action Upon Termination.
(a) From and after the effective date of termination of this
Agreement pursuant to Section 22 hereof, the Advisor shall not be
entitled to compensation for further services rendered hereunder, but
shall be entitled to receive from the Company within 30 days after the
effective date of such termination, an amount in cash equal to all
earned but unpaid Asset Management Fees payable to the Advisor prior to
the termination of this Agreement.
(b) Within a reasonable period of time, but in no event later
than 30 days after the termination of this Agreement, the Advisor
shall:
(i) pay over to the Company all money 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;
(ii) deliver to the Board of Directors a full accounting,
including a statement showing all payments collected by it and
a statement of all money held by it, covering the period
following the date of the last accounting furnished to the
Board of Directors; and
(iii) deliver to the Board of Directors all property and
documents of the Company then in the custody of the Advisor.
The Advisor shall be entitled to receive, promptly after such
30-day period, reimbursement for any additional
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expenses to which it is entitled (and for which it has not been
reimbursed under clause (i) of Section 23(b)).
24. Assignment Prohibition. This Agreement may not be assigned by the
Advisor without the approval of a majority of the Board of Directors; provided,
however, that such approval shall not be required in the case of an assignment
to a corporation, association, trust or organization which may take over the
assets and carry on the affairs of the Advisor, provided that at the time of
such assignment, such successor organization shall be owned substantially by the
Advisor or its Affiliates and that an officer of the Advisor shall deliver to
the Board of Directors a statement in writing indicating the ownership structure
of the successor organization. Such an assignment shall bind the assignees
hereunder in the same manner as the Advisor is bound hereunder. This Agreement
shall not be assigned by the Company without the consent of the Advisor, except
in the case of an assignment by the Company to a corporation or other
organization which is a successor to the Company, in which case such successor
organization shall be bound hereunder and by the terms of said assignment in the
same manner as the Company is bound hereunder.
25. Bylaws. The execution and performance of this Agreement hereby is
expressly made subject to Article VIII of the Bylaws of the Company.
26. Notices. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing unless some other method of
giving such notice, report or other communication is accepted by the party to
whom it is given, and shall be given by being delivered to the addresses set
forth herein:
To the Board of
Directors or
to the Company: Apple Residential Income Trust, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Board of Directors
To the Advisor: Apple Residential Advisors, Inc.
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Either party may at any time give notice in writing to the other party of a
change in its address for the purposes of this Section.
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27. Modification. This Agreement shall not be changed, modified,
amended, 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.
28. Shareholder Liability. No Shareholder of the Company shall be
personally liable for any of the obligations of the Company under this
Agreement.
29. 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 fact that for any reason any other or
others of them may be invalid or unenforceable in whole or in part.
30. Binding. This Agreement shall bind any successors or permitted
assigns of the parties hereto as herein provided.
31. Construction. The provisions of this Agreement shall be construed
and interpreted in accordance with the laws of the Commonwealth of Virginia.
32. Entire Agreement. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements, understandings,
inducements and conditions, express or implied, oral or written, of any nature
whatsoever with respect to the subject matter hereof. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.
33. Indulgences, Not Waivers. Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver shall be effective unless it is
in writing and is signed by the party asserted to have granted such waiver.
34. Gender. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context requires.
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35. Titles Not to Affect Interpretation. The titles of sections and
subsections contained in this Agreement are for convenience only, and they
neither form a part of this Agreement nor are they to be used in the
construction or interpretation hereof.
36. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first written above.
APPLE RESIDENTIAL INCOME TRUST, INC.
a Virginia corporation
By:
---------------------------------
Title:
------------------------------
APPLE RESIDENTIAL ADVISORS, INC.,
a Virginia corporation
By:
---------------------------------
Title:
------------------------------
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