Exhibit 10.2
FIRST AMENDMENT TO ADVISORY AGREEMENT
BETWEEN APPLE HOSPITALITY TWO, INC.
AND APPLE SUITES ADVISORS, INC.
This First Amendment to the Advisory Agreement between Apple Hospitality
Two, Inc. (the "Company") and Apple Suites Advisors, Inc. (the "Advisor") is
made as of May 17, 2002.
RECITALS
A. The Company and the Advisor are parties to a certain Advisory Agreement
dated as of April 30, 2001 (the "Advisory Agreement") under which the Advisor
has agreed to provide certain advisory services in connection with the operation
of the Company.
B. The Company has determined to undertake a certain Expansion Offering (as
defined below) of its Shares. The Company and the Advisor acknowledge that the
Expansion Offering will require certain extraordinary services (above and beyond
those contemplated by the Advisory Agreement) from the Advisor. The Advisor is
willing to provide such services on the condition that the Company and the
Advisor enter into an amendment to the Advisory Agreement.
C. The Company and the Advisor therefore have agreed to enter into this
First Amendment to the Advisory Agreement (this "First Amendment") in order to
memorialize their agreements with respect to the amendment of the Advisory
Agreement.
In consideration of the foregoing and of the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt of which is acknowledged, the parties agree as follows:
1. Terms used and not otherwise defined in this First Amendment shall
have the meanings set forth in the Advisory Agreement.
2. There shall be added to the Advisory Agreement a new Section 11(c)
which shall read as follows:
(c) Termination Fee. It is acknowledged and agreed that the Advisor
has undertaken or will undertake certain extraordinary actions, and
has provided or will provide certain extraordinary services, in
connection with the structuring and implementation of the Company's
"Expansion
Offering" (as defined below). Such actions and services include,
without limitation, developing the business strategy associated with
the Expansion Offering, negotiating with the managing dealer for the
offer and sale of the Expansion Offering, coordinating the activities
of attorneys, accountants and other professionals with respect to the
preparation and implementation of the Expansion Offering, and
reviewing documents (including the Registration Statement, as defined
below) related to the Expansion Offering. In recognition of the
extraordinary actions and services taken, to be taken, provided or to
be provided, by the Advisor in connection with the Expansion Offering,
the Advisor shall be entitled to be paid a fee (the "Termination Fee")
in the amount and on the terms and conditions set forth in this
Section 11(c). There shall be no conditions to the payment by the
Company to the Advisor of the Termination Fee other than as expressly
set forth below in this Section 11(c). The "Expansion Offering" means
that certain offering of an additional 10,000,000 Shares pursuant to a
certain Registration Statement on Form S-11 (File No. 333-84098) filed
with the United States Securities and Exchange Commission (the
"Registration Statement").
(i) Amount. The amount of the Termination Fee shall be equal to
the product of (A) $6,480,000 times (B) a fraction, the numerator of
which is the total number of Units (as defined in the Registration
Statement) sold as part of the Expansion Offering at a given time and
the denominator of which is 10,000,000. The intent of this formula
shall be to set the Termination Fee at an amount equal to $6,480,000
multiplied by a percentage which reflects the portion of the total
authorized Expansion Offering amount which has, at any given time,
been sold, and such formula shall be so interpreted for all purposes
of this Section.
(ii) Liquidation. In the event of the liquidation, dissolution or
winding up of the affairs of the Company (other than upon or in
connection with a "Triggering Event," as defined below), the Advisor
shall be paid the Termination Fee promptly upon the occurrence of any
such event; provided, however, that such payment shall be subordinate
to and shall be paid only after the payment (or provision for the
payment) to holders of the Company's Series A Preferred Shares of a
liquidation payment of $10.00 per Series A Preferred Share, as such
amount may be adjusted to reflect any and all adjustments made to the
Common Shares pursuant to the Articles of Incorporation. For purposes
of this Section 11(c)(ii), neither the consolidation of the Company
with nor the merger of the Company into any other corporation, nor the
lease of all, or substantially all, of the Company's properties and
assets shall, without further corporate action, be deemed a
liquidation, dissolution or winding up of the affairs of the Company.
(iii) Triggering Events. Upon the occurrence of a "Triggering
Event," the Advisor shall promptly be paid the Termination Fee. A
"Triggering Event" shall be the occurrence of either of the following:
(A) the transfer of substantially all of the Company's assets, shares
or business, whether through exchange, merger, consolidation, lease,
share exchange or otherwise, or (B) the termination or expiration
without renewal of this Agreement.
(iv) Payment Terms. The Termination Fee shall be paid as soon as
possible after the occurrence of the event giving rise to the
obligation of the Company to make such payment and such obligation
shall become a debt of the Company upon the occurrence of such event,
subordinated only to such payments as are expressly referred to in
this Section 11(c) or as required by law. The Termination Fee shall be
paid in cash in a lump sum unless the Company and the Advisor mutually
agree otherwise.
(v) Survival of Obligation. No termination, non-renewal or any
other event that results in this Agreement no longer being in effect
shall affect the Company's obligation to pay the Termination Fee, when
otherwise due pursuant to this Section 11(c), and the Company's
obligation to pay the Termination Fee shall continue indefinitely,
notwithstanding any such termination, non-renewal or other event,
until such amount is paid.
3. All provisions of this First Amendment shall be given full force and
effect notwithstanding any other or contrary provisions in the
Advisory Agreement. Subject to the foregoing and to the extent that
the provisions of the Advisory Agreement are not inconsistent with
this First Amendment, the provisions of the Advisory Agreement shall
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
to the Advisory Agreement by their duly authorized officers as of the date first
written above.
APPLE HOSPITALITY TWO, INC.,
a Virginia corporation
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
APPLE SUITES ADVISORS, INC.,
a Virginia corporation
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
