EXHIBIT 10.3
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ADVISORY AGREEMENT
BETWEEN
HOST FUNDING, INC.
and
HOST FUNDING ADVISORS, INC.
, 1995
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ADVISORY AGREEMENT
THIS ADVISORY AGREEMENT (the "Agreement"), dated as of the ___ day of
____ , 1995, between Host Funding, Inc., a Maryland corporation (the "Company"),
and Host Funding Advisors, Inc., a Delaware corporation (the "Advisor"), recites
and provides as follows:
RECITALS
The purposes of the Company are, among other things, to invest debt and
equity in hotel properties (the "Properties"). The Company intends to qualify
as a real estate investment trust pursuant to Sections 856 through 860 of the
Code.
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 (the "Board"), on the terms and
conditions set forth herein. In consideration therefor, the Company desires to
pay the Advisor fees as herein set forth.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings set forth below.
1.1 AFFILIATE shall mean (i) any person that, directly or indirectly,
controls or is controlled by or is under common control with such person, (ii)
any other person that owns, beneficially, directly or indirectly, five percent
(5 %) or more of the outstanding capital stock, shares or equity interests of
such person, or (iii) any officer, director, employee, partner or trustee of
such person or any person controlling, controlled by or under common control
with such person (excluding trustees and persons serving in similar capacities
who are not otherwise an Affiliate of such person). The term "person" means and
includes
individuals, corporations, general and limited partnerships, stock companies or
associations, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts, or other entities and governments and
agencies and political subdivisions thereof. For the purposes of this
definition, "control" (including the correlative meanings of the terms
"controlled by" and "under common control with"), as used with respect to any
person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such person,
through the ownership of voting securities, partnership interests or other
equity interests.
1.2 AVERAGE PRICE shall mean the average closing price for the Shares (if,
at the time of determination, the Shares are traded on a national securities
exchange) or the closing bid price as reported on Nasdaq (if, at the time of
determination, the Shares are traded in the over-the-counter market) for the
first ten trading days in April of the year following a year with respect to
which the Advisor is entitled to additional compensation pursuant to Section
11.3.
1.3 BOARD shall mean the Company's Board of Directors.
1.4 BYLAWS shall mean the Company's Bylaws, as the same may be amended
from time to time.
1.5 CHARTER shall mean 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.
1.6 CODE shall mean the Internal Revenue Code of 1986, as amended, and as
hereafter amended from time to time.
1.7 FISCAL YEAR shall mean the calendar year and any portion thereof by
the Internal Revenue Service as a reporting period for the Company.
1.8 FUNDS FROM OPERATIONS shall mean the Company's net income (computed in
accordance with GAAP), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for unconsolidated
partnerships and joint ventures will be calculated to reflect Funds From
Operations on the same basis.
1.9 FUNDS FROM OPERATIONS PER SHARE shall mean, for any period, Funds From
Operations for such period divided by the weighted average number of shares of
the Company outstanding (as determined by GAAP) during such period.
1.10 GAAP means generally accepted accounting principles,
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consistently applied.
1.11 INDEPENDENT DIRECTORS shall mean a Director of the Corporation who is
not an officer or employee of the Corporation or an Affiliate of (i) any advisor
to the Corporation, (ii) any lessee of any of the Corporation's properties,
(iii) any subsidiary of the Corporation, or (iv) any partnership which is an
Affiliate of the Corporation.
1.12 ORGANIZATION AND OFFERING EXPENSES shall mean all expenses incurred in
connection with the formation of the Company, the registration and qualification
of the Shares under federal and state securities laws, the negotiation and
acquisition of Properties to be acquired by the Company, and the offering and
sale of the Shares, including selling commissions.
1.13 PROPERTIES OR PROPERTY shall mean the hotel properties in which the
Company may make or have investments from time to time, either directly or
indirectly through partnerships in which the Company has an equity interest.
1.14 REIT shall mean a real estate investment trust as defined in the Code.
1.15 SHAREHOLDERS shall mean the holders of record of the Company's Shares.
1.16 SHARES shall mean shares of the common stock of the Company, $.01 par
value per share.
2. DUTIES OF THE ADVISOR. Subject to the terms of the Charter and the
supervision and/or prior approval (if required by the Charter, Bylaws or this
Agreement) of the Board, the Advisor, at its own cost and expense, unless
otherwise set forth herein, on behalf of the Company, shall use its best efforts
to:
2.1 serve as the Company's investment advisor and consultant in connection
with policy and investment decisions to be made by the Board, furnish reports to
the Board, and provide research, economic and statistical data in connection
with Properties and other Company investments;
2.2 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;
2.3 investigate and recommend to the Company and with the prior approval
of the Board, consultants, accountants, correspondents, lenders, technical
advisors, attorneys, brokers, underwriters, corporate fiduciaries, agents,
depositories, agents
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for collection, insurers, insurance agents, banks, builders, 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 necessary or desirable for the
performance of any of the foregoing services; provided that any fees, costs and
expenses 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;
2.4 act as attorney-in-fact or agent in disbursing and collecting funds of
the Company, in paying the debts and fulfilling the obligations of the Company
and, with specific approval of the Board, in acquiring, disposing of and
refinancing Properties and other 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, 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;
2.5 advise the Company in its negotiations with banks or 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
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;
2.6 advise the Company on investment and reinvestment of money of the
Company;
2.7 obtain appraisal reports (which may be prepared by the Advisor or its
Affiliates) on any Property in which the Company proposes to make an investment;
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;
2.8 at any time reasonably requested by the Board (but not more than
monthly) make reports of its performance of services to the Board;
2.9 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 Shareholders and third parties,
including the Securities and Exchange Commission and the National Association of
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Securities Dealers, Inc., and to maintain effective relations with Shareholders;
2.10 counsel the Company in connection with policy decisions to be made by
the Board;
2.11 provide the executive and administrative personnel, office space and
services required in rendering the foregoing services to the Company;
2.12 consult with the Board and the officers of the Company and furnish
them with advice and recommendations with respect to the acquisition,
disposition or financing of Properties or commitments therefor, or other
investments of, or 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, including maintaining its status as a REIT;
2.13 present to the Company investment opportunities that are within the
investment objectives and policies of the Company; and
2.14 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 or as the
Company may reasonably request.
3. COMMITMENTS To meet the investment objectives of the Company, as
determined by the Board from time to time, the Advisor agrees at the direction
of the Board to issue on behalf and in the name of the Company commitments on
such terms as are established by the Board, including a majority of the
Company's Independent Directors, for the acquisition, disposition or financing
of Properties.
4. INFORMATION REGARDING THE COMPANY. In order for the Advisor to fulfill its
duties, the Board shall, to the extent it deems proper, authorize the Company to
provide the Advisor with full information concerning the Company, its
capitalization and investment policies and the intentions of the Board 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 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 Board or as
required by legal process or to
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discharge its duties hereunder.
5. INVESTMENTS. The Advisor may from time to time be granted, but is not
hereby granted, the power and authority to make and dispose of specific
investments and to make and terminate commitments for specific investments, on
behalf of, in the name of and at the sole risk of the Company, without further
or express authority from the Board; provided, however that the Board 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, a representative of the Advisor shall attend all regular and special
meetings of the Board and the Board shall notify the Advisor of such meetings.
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 may
approve, provided that all such accounts shall be maintained in such fashion as
to make clear that the funds 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 and to the auditors of the Company.
7. INVESTMENT UNDERTAKINGS. The Advisor shall use its best efforts to assure
that (i) the title to any Property is insured by appropriate policies of title
insurance; (ii) any Property forming part of the Company's investments is 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; (iii) the policies from time to
time specified by the Board with regard to the protection of the Company's
investments are carried out; (iv) proper Board approval is received for all of
the Company's investments; and (v) at the end of each month, the Company's
aggregate outstanding debt does not exceed 35% of the Company's investment in
Properties, at cost, and after giving effect to the Company's use of proceeds
from any debt. 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.
8. RECORDS. The Advisor shall maintain records of all its activities
hereunder and make such records available for inspection by the Board and by
counsel, auditors and authorized agents of the Company, at any time or from time
to time during normal business
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hours.
9. LIMITATIONS ON ACTIVITIES. Anything else in this Agreement to the contrary
notwithstanding:
9.1 The Advisor shall use its best efforts to refrain from taking any
action that in its sole judgment made in good faith and in the exercise of
reasonable care, would affect adversely the status of the Company as a REIT,
would subject the Company to regulation under the Investment Company Act of
1940, would violate any law, rule, regulation or statement of policy of any
governmental body or agency having jurisdiction over the Company or its
securities or otherwise is not permitted by the Charter or Bylaws, except if
such action shall be ordered by the Board, in which case the Advisor shall
notify promptly the Board 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. The Advisor shall not take any
action ordered by the Board not to be taken. Notwithstanding the foregoing, the
Advisor and its directors, officers, employees and shareholders shall not be
liable to the Company, or to the Board or the Shareholders for any act or
omission by the Advisor, its directors, officers, employees or shareholders,
except as provided in Section 15 of this Agreement.
9.2 Subject to the foregoing, 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 Charter and Bylaws.
10. RELATIONSHIP WITH COMPANY AND LESSEE. Directors, officers, shareholders or
employees of the Advisor may serve as members of the Board and as officers of
the Company, except that no officer, director, partner or 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. None of the officers or employees of the
Advisor (or the Company) shall be (i) officers or employees of Crossroads
Hospitality Tenant Company, LLC, a Delaware limited liability company, which
will be the Lessee of the Properties ("Lessee"); or (ii) officers or employees
of any person who leases the Properties, furnishes or renders services to the
tenants of the Properties, or manages or operates
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the Properties. If a person serves as both (i) a director and officer (or
employee) of the Advisor (or the Company), and (ii) a director of Interstate
Hotels Corporation, a Pennsylvania corporation, or an affiliate of or any person
who leases the Properties, furnishes or renders services to the tenants of the
Properties, or manages or operates the Properties, that person shall not receive
any compensation for serving as a director of the person who leases the
Properties, furnishes or renders services to the tenants of the Properties, or
manages or operates the Properties. If a person serves as both (i) a director
of the Advisor (or the Company), and (ii) a director and officer (or employee)
of an affiliate of or any other person who leases the Properties, furnishes or
renders services to the tenants of the Properties, or manages or operates the
Properties, that person shall not receive any compensation for serving as
director of the Advisor (or the Company).
11. FEE.
11.1. BASE FEE. The Company shall pay to the Advisor, for services
rendered under this Agreement, a base annual fee of $30,000 payable quarterly,
plus the Company shall fully reimburse the Advisor for any and all third party
professional expenses including but not limited to legal and accounting fees,
not paid directly by the Company, that the Advisor has incurred in accordance
with its obligations under this Agreement.
11.2. PERCENTAGE FEE. If and when the market value of the Company's real
property and/or loans secured by real property equals or exceeds $35,000,000,
then the Company shall pay to the Advisor, for services rendered under this
Agreement, an annual fee equal to 1.25% of the total market value of all real
property and/or loans secured by real property owned by the Company at the time
of payment, plus the Company shall fully reimburse the Advisor for any and all
third party professional expenses including but not limited to legal and
accounting fees, not paid directly by the Company, that the Advisor has incurred
in accordance with its obligations under this Agreement.
11.3. PAYMENT OF FEE. The Company shall pay the Advisor the fee under
Section 11.2 of this Agreement for any year on or before March 31 of the
subsequent year; provided, however, that the fee payable for the partial year
commencing on the date hereof and ending December 31, 1995 shall be due on or
before March 31, 1996. However, during the first three years of the Agreement,
if, for any such year, the dividends per share of the Class A Common Stock of
the Company are equal to an amount less than $22.75 per quarter, the Company
shall only be obligated to pay the Advisor fifty percent (50%) of the fee.
During the fourth year of the Agreement and all years thereafter, if the
dividends per share of the Class A Common Stock of the Company are equal to an
amount less than $22.75 per quarter, then the Company shall pay the Advisor
fifty percent (50%) of the fee in cash and fifty percent (50%) of the fee in
stock of the Company; otherwise, the Company shall pay the entire amount of the
fee to the Advisor in cash.
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11.4. STOCK. As additional compensation to the Advisor hereunder,
on or before April 30 of each year beginning in 1996, the Company shall issue to
the Advisor a number of non-registered, restricted Shares equal to the quotient
derived from dividing (i) the product of multiplying (a) 10% of the amount, if
any, by which Funds From Operations per Share in the preceding fiscal year
exceeds Funds From Operations per Share for the fiscal year immediately
preceding such year by (b) the weighted average number of Shares outstanding (as
determined by GAAP) for the preceding fiscal year, (ii) by the Average Price;
provided, however, that no Shares shall be issued to the Advisor which cause the
Advisor, directly or indirectly (within the meaning of Section 856(d)(5) of the
Code), to own 9.9% or more of the then outstanding Shares or otherwise would
jeopardize the Company's status as a REIT. In lieu of distributing to the
Advisor Shares which would cause the Advisor to exceed the ownership limitation
set forth in the preceding sentence, the Company shall have the option to pay to
the Advisor the equivalent value of such Shares in cash. Funds From Operations
for any year shall be calculated utilizing the Company's audited financial
statements for the year. If this Agreement is terminated before the end of a
fiscal year other than pursuant to Section 19, the Advisor shall be entitled to
a pro rata amount of the additional compensation otherwise payable under this
Section 11.4 for such fiscal year, if any (based on the number of days of such
fiscal year before the termination and a 365 day year).
11.5. Notwithstanding anything in subsection 11.4 above, the Advisor shall
not be entitled to any Share issuance based upon the increase in Funds From
Operations per Share for any year unless Funds From Operations per Share for the
year exceeds $.91.
For example, assuming the weighted average number of Shares outstanding is
4,000,000 in each year in this example, if Funds From Operations per Share for
1994 were $.95 and Funds From Operations per Share for 1995 were $1.05, on or
before April 30, 1996, the Advisor would be entitled to receive the number of
Shares determined by multiplying 10% of the $.10 per share increase (or $.01)
times 4,000,000 Shares (or $40,000), divided by the Average Price. If Funds
From Operations per Share for 1996 were $1.00, the Advisor would not be entitled
to receive any Shares since, although 1996 Funds From Operations per Share would
have exceeded 1994 Funds From Operations per Share, it would not have exceeded
the Funds From Operations per Share for the immediately preceding fiscal year.
If 1996 Funds From Operations per Share were $1.00 and 1997 Funds From
Operations per Share were $1.20, on or before April 30, 1998, the Advisor would
be entitled to receive the number of Shares determined by multiplying 10% of the
$.20 per Share increase (or $.02) times 4,000,000 Shares (or $80,000), divided
by the Average Price.
11.6. The Advisor acknowledges and understands that any
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Shares issued to the Advisor by the Company under this Section 11 will not be
registered under the Securities Act of 1933, as amended, or any state securities
laws and cannot be sold or otherwise transferred except pursuant to an exemption
from registration under such laws or an effective registration statement
thereunder.
12. 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 shall be no greater than the prime rate announced
by Citibank, N.A., New York, New York from time to time plus 1%, and the terms
of any such loans shall be no less favorable than the terms available to the
Company from unaffiliated parties for similar commercial loans. If Citibank, N.
A. for any reason fails to announce a prime rate, the maximum amount of interest
that may be charged on such loans shall be no greater than the prime rate
published by the Wall Street Journal from time to time plus 1%. For purposes
hereof, any reimbursement to which the Advisor is entitled from the Company, if
not paid within 30 days after such reimbursement is due, shall bear interest at
such rate from the date on which such reimbursement is due the Advisor until
paid in full.
13. EXPENSES.
13.1 In addition to reimbursements elsewhere provided for in this Agreement
(including, but not limited to, Sections 2 and 7) and subject to a restructuring
of the fee pursuant to Section 11.6, 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:
13.1.1 Organization and Offering Expenses incurred by the Advisor;
13.1.2 expenses incurred in connection with the initial investment
of the funds of the Company;
13.1.3 interest and other costs for borrowed money, including
discounts, points and other similar fees;
13.1.4 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;
13.1.5 fees and commissions, including finder's fees
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and brokerage commissions with respect to the acquisition and disposition of
assets of the Company, including, without limitation, costs of foreclosure,
maintenance, repair and improvement of property; provided, however, that neither
the Advisor nor any of its Affiliates may receive any such finder's fee or
brokerage commission;
13.1.6 costs associated with insurance required either in
connection with the business of the Company or by the Board;
13.1.7 reasonable expenses of managing and operating real property
owned by the Company, whether payable to an Affiliate of the Advisor or an
unrelated person;
13.1.8 fees and expenses of legal counsel for the Company;
13.1.9 fees and expenses of independent auditors, accountants or
other third party advisers, appraisers or consultants engaged by the Company;
13.1.10 all expenses in connection with payments to the Board and
meetings of the Board and Shareholders;
13.1.11 expenses associated with the issuance and distribution of
any Shares of the Company at any time, such as selling commissions and fees,
taxes, legal and accounting fees, listing and registration fees;
13.1.12 dividend and dividend distributions;
13.1.13 expenses of dissolving the Company, or revising, amending,
converting or modifying the Charter or Bylaws;
13.1.14 reasonable 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 the Charter, Bylaws or applicable law;
13.1.15 expenses, costs and, damages for which reimbursement or
indemnification is expressly provided in the Company's Charter or Bylaws; and
13.1.16 expenses related to the investment or prospective investment
in Properties and other Company investments, and other fees relating to
acquiring Properties and making other investments; provided, that the Board must
approve the reimbursement of expenses incurred with respect to any Property
which are incurred after the Company (or the Advisor on behalf of the Company)
enters into a definitive purchase agreement with
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respect to such Property.
The Advisor shall prepare a statement documenting the expenses of the
Advisor and the Company during each quarter, and shall deliver such statement to
the Board within 45 days after the end of such quarter. 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 Section 13,
shall be reimbursed quarterly to the Advisor within 20 days following receipt by
the Company of the statement therefor from the Advisor.
13.2 Except as otherwise provided herein, the Advisor shall pay all of its
expenses incurred in connection with the performance of its obligations under
this Agreement, including, without limitation, the following expenses:
13.2.1 employment expenses of the Advisor, including, but not
limited to, salaries, wages, payroll taxes, costs of employee benefit plans,
and, except to the extent that such expenses are otherwise reimbursable pursuant
to this Agreement, temporary help expenses;
13.2.2 audit fees and expenses of the Advisor;
13.2.3 legal fees and other expenses of professional services of
the Advisor;
13.2.4 insurance of the Advisor; and
13.2.5 all other administrative and overhead expenses of the
Advisor.
14. OTHER SERVICES. Should the Board request that the Advisor or any officer
or employee thereof render services for the Company other than as set forth in
this Agreement, such services shall be separately compensated and not be deemed
to be services pursuant to,this Agreement.
15. ADVISORY RESPONSIBILITY. The Advisor assumes no responsibility under this
Agreement other than to use its best efforts to render the services called for
hereunder in good faith. The Advisor shall not be responsible for any action of
the Board in following or declining to follow any advice or recommendations of
the Advisor. The Advisor, its officers, directors and employees, shall not be
liable to the Company, the Company's Shareholders, or others, except by reason
of acts constituting bad faith, misconduct, illegality, gross negligence or
reckless disregard of duty. The
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Advisor shall reimburse, indemnify and hold harmless the Company, its officers,
directors and employees for and from any and all expenses, losses, damages,
liabilities, demands, charges and claims of any nature (including reasonable
attorneys' fees) (collectively, "Losses"), and respect of or arising from any
acts or omissions of the Advisor or any of its Affiliates constituting bad
faith, misconduct, illegality, gross negligence or reckless disregard of duty.
The Company shall reimburse, indemnify and hold harmless the Advisor, its
officers, directors and employees, for and from any and all Losses in respect of
or arising from any acts or omissions of the Advisor, its officers, directors
and employees, made in good faith in the performance of the Advisor's duties
under this Agreement and not constituting bad faith, misconduct, illegality,
gross negligence or reckless disregard of its duties.
16. 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.
17. OTHER ACTIVITIES.
17.1 Neither the Advisor nor any of its Affiliates shall engage in the
business of brokering the sale or purchase of Properties, except pursuant to the
Post-Formation Acquisition Agreement of which the Company is a party.
17.2 During the term of this Agreement, neither the Advisor nor any of its
Affiliates shall participate in the development of or own any interest in any
hotel or motel property other than those owned by the Company, and/or Affiliates
and those listed on EXHIBIT A hereto; provided, however, that the Advisor or its
Affiliates may own interests in hotel or motel properties to be developed or
constructed after the date hereof if the entity owning such property grants to
the Company a right of first refusal to acquire such property, which would allow
the Company to purchase the property for the same price and on the same terms
offered by any bona fide third party offeree.
17.3 During the term of this Agreement, neither the Advisor nor any of its
Affiliates shall manage or agree to manage any hotel or motel property that is
located within 5 miles of a hotel or motel in which the Company or its has
invested; provided that the Advisor and its Affiliates shall not be deemed to be
in violation of this provision if they manage or agree to manage a hotel or
motel within 5 miles of a hotel or motel in which the Company or its Affiliates
invests subsequent to the time of management or agreement to manage by the
Advisor or its Affiliates.
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17.4. Except as set forth in paragraphs 17.1 and 17.2 above, nothing
contained herein shall limit the right of the Advisor, any officers, directors
or employees of the Advisor whether or not a director, officer, or employee of
the Company, to engage in other business or to render services of any kind to
any other person, or entity.
18. TERM. Unless sooner terminated pursuant to Section 19 or 20, this
Agreement shall remain in force until the last day of December, 199 , and
thereafter it will be submitted to the Independent Directors annually for their
approval to extend the term for an additional one year term.
19. TERMINATION BY COMPANY. At the sole option of a majority of the Directors,
this Agreement may be terminated by written notice of termination from the
Company to the Advisor if any of the following events occur:
19.1 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 30 days or, if the default is of a
nature that it cannot be cured within 30 days, the Advisor shall not diligently
proceed to cure the default as soon as practicable and shall not actually cure
such default within 90 days; or
19.2 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
19.3 the Advisor shall institute proceedings for voluntary 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 or the immediately succeeding Section
shall 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 subsection 19.2 and 19.3 of this Section shall
occur,
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it shall give written notice thereof to the Board within 15 days after the
occurrence of such event
20. TERMINATION BY EITHER PARTY. In addition to Section 19, this Agreement
maybe at any time, without cause or penalty, which on shall be effective not
less than 60 days following receipt of written notice, by a vote of a majority
of the Board, by the Shareholders as provided in the Bylaws, or by the Advisor.
In the event this Agreement is terminated by the Company pursuant to Section
19.2, 19.3, or 20, any and all compensation and reimbursements due to the
Advisor and any of its Affiliates the effective date of on shall be paid in full
by the Company on or before the effective date of the termination, except that
(i) in the event of a termination pursuant to Sections 19.2 or 19.3, the
compensation and reimbursements payable by the Company in accordance with this
Section 20, if any, shall be offset by any amounts owed by the Advisor to the
Company and (ii) computation and payment of fees accrued under Section 11.3 of
this Agreement may be paid on or before April 30 of the year following
termination.
21. ASSIGNMENT PROHIBITION. This Agreement may not be assigned by the Advisor
without the approval of a majority of the Board; 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 substantially all of the
assets and carry on substantially all of the affairs of the Advisor, provided
that at the time of such assignment, at least a majority of the outstanding
capital stock of such successor organization shall be owned substantially by the
current owners of a majority of the outstanding Common Stock of the Advisor and
that an officer of the Advisor shall deliver to the Board 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.
22. DUTIES UPON TERMINATION. After the effective date of termination of this
Agreement, the Advisor shall not be entitled to compensation for further
services hereunder. The Advisor shall forthwith upon such termination:
22.1 promptly pay over to the Company all money collected and held for the
account of the Company pursuant to this Agreement,
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after deducting any accrued compensation and reimbursement for its expenses to
which it is then entitled;
22.2 promptly deliver to the Board 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; and
22.3 promptly deliver to the Board all property and documents of the
Company then in the custody of the Advisor; and
22.4 use its best efforts to cooperate with the Company to ensure an
orderly transition of the services provided hereunder.
23. 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 and
to the Company: Host Funding, Inc.
c/o Xxxxxxx X. XxXxxxx
0000 Xxxxxxx Xxx., Xxxxx 0000
Xxxxxx, XX 00000
To the Advisor: Xxx Xxxxxxx-Xxxxx
Host Funding Advisors, Inc.
0000 Xxx Xxxxxx, Xxxxx 000
Xx Xxxxx, XX 00000
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.
24. MODIFICATION. This Agreement shall not be changed, modified or amended, in
whole or in part, except by an instrument in writing signed by both parties
hereto, or their respective successors or assigns.
25. SHAREHOLDER LIABILITY. No Shareholder of the Company shall be personally
liable for any of the obligations of the Company under this Agreement.
26. 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
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invalid or unenforceable in whole or in part.
27. BINDING. This Agreement shall bind any successors or assigns of the
parties hereto as herein provided.
28. CONSTRUCTION. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of California.
29. 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 or usage of the trade
inconsistent with any of the terms hereof.
30. 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.
Time is of the essence of this Agreement.
31. 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.
32. TITLES NOT TO AFFECT INTERPRETATION. The titles of paragraphs and
subparagraphs 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.
33. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be
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an original as against any party whose signature appears thereupon, 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.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first written above.
HOST FUNDING, INC.,
a Maryland corporation
-------------------------------
By: Xxxxxxx X. XxXxxxx
Its: President
HOST FUNDING ADVISORS, INC.,
a Delaware corporation
-------------------------------
By: Xxxxxxx X. XxXxxxx
Its: President
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EXHIBIT A
Existing Hotel Ownership Interests
20
