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EXHIBIT A
ADVISORY AGREEMENT BETWEEN
AMERICANA HOTELS AND REALTY CORPORATION AND
PCA AMERICANA CORPORATION
This Agreement is made this 9th day of May, 1986, between AMERICANA HOTELS
AND REALTY CORPORATION, a Maryland corporation (hereinafter called the "Company"),
and PCA Americana Corporation, a Massachusetts corporation (hereinafter called the "Advisor")
with reference to the following facts:
A. The Company has been organized under the laws of the State of Maryland
under and by virtue of Articles of Incorporation filed with the Department of Taxation
and Assessments of Maryland on December 3, 1981, as such Articles were amended and
restated as of October 5, 1982.
B. The Company has qualified as a real estate investment trust as defined in t he
Internal Revenue Code for the primary purpose of, but not limited to, the investment in
and disposition of long-term mortgages on and leases of resorts, hotels, motor inns and
other facilities in the accommodations field, which purpose may be changed from time to
time by the Board of Directors of the Company (hereinafter called the "Directors") (al l
such investments and any investment resulting therefrom and all other investments, other
than the temporary investment of cash in money market instruments, being hereinafter
called "investments").
C. The Company is presently involved in a program approved by the Directors on
February 20, 1986 (the "Restructuring Program") of accepting repayment of or selling
certain of its investments in conjunction with the sale and/or refinancing of the
underlying real estate assets, restructuring the terms of other investments and overseeing
the selection of new managers for certain of the properties in which the Company has
investments.
D. The Company previously entered into an advisory agreement with Americana
Realty Advisors, Inc., as advisor to the Company, and Americana Hotels Corporation
dated November 4, 1982, which agreement, the Company agrees, will be terminated no
later than June 30, 1986.
E. The Company desires to avail itself of the experience, sources of information,
advice, assistance and certain facilities available to the Advisor and to have the Advisor
undertake the duties and responsibilities hereinafter set forth, subject to the supervi sion of
the Directors, all as provided herein. Without limiting the generality of the foregoing, t he
Company desires the Advisor to assist it in implementing the Restructuring Program.
F. The Advisor is willing to undertake to render such services, subject to the
supervision of the Directors, on the terms and conditions hereinafter set forth.
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Now, THEREFORE, in consideration of the premises and of the mutual covenants herein
contained, it is agreed as follows:
1. Duties of Advisor. Subject to the supervision of the Directors and upon their
direction, the Advisor shall:
(a) use its best efforts to assist the Company in implementing the
Restructuring Program including without limitation:
(i) negotiating with the Company's lessees and mortgagors and
through them with prospective purchasers regarding the repayment or sale
of certain investments selected by the Directors for disposition;
(ii) advising the Directors as to the reasonableness of sales
proposals in respect of those investments selected by the Directors for
disposition;
(iii) overseeing, for the benefit of the Company, the negotiation of
hotel management agreements with new hotel operating entities in respect
of those investments selected by the Directors for retention by the
Company, such agreements to be subject to the approval of the Directors;
and
(iv) renegotiating the terms of various investments selected by and
subject to the approval of the Directors;
(b) administer the day-to-day investment operations of the Company
(including, without limitation, when requested by the Directors, the solicitation,
investigation, and screening of investment opportunities for the Company) and
perform or supervise the performance of such other administrative functions in
connection with the management of the Company as may be agreed upon by the
Advisor and the Directors;
(c) serve as the Company's manager, investment advisor and consultant in
connection with policy decisions made from time to time by the Directors and, as
requested, furnish reports to the Directors and provide research and economic and
statistical data in connection with the Company's investments and investment
policies of the type customarily provided by other advisors to real estate
investment trusts at such advisors' expense;
(d) on behalf of the Company, investigate, select and conduct relations
with such persons as the Advisor deems necessary or desirable, including, but not
limited to, consultants, researchers, borrowers, lenders, mortgagors and other
mortgage and investment participants, accountants, mortgage loan originators or
brokers, correspondents, servicers, technical advisers, attorneys, appraisers,
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architects, engineers, surveyors, underwriters, brokers and dealers, corporate
fiduciaries, escrow agents, depositaries, custodians, agents for collection, insurers,
insurance agents, banks, builders and developers and other property owners, and
on behalf of the Company, as directed by the Directors, enter into appropriate
contracts with, employ, retain and supervise services performed or to be
performed by such persons in connection with the operations of the Company or
investments which have been or may be acquired, sold or otherwise disposed of
by the Company, and substitute any such person or itself for any other such
person or for itself;(e) consult with the Directors and, when requested by the Directors, use its
best efforts to present to the Directors for their approval a continuing and suitable
investment program, present to the Directors opportunities to acquire real
property investments consistent with the investment policies and objectives of the
Company adopted by the Directors from time to time, and furnish the Directors
with advice and recommendations with respect to the making, the acquiring (by
purchase, investment, exchange, lease, loan or otherwise), the holding and the
disposition (through sale, exchange, assignment or otherwise), consistent with the
aforementioned investment policies and objectives of the Company, of
investments and money market instruments;
(f) act, upon request of the Directors, as attorney-in-fact or agent of the
Company in acquiring and disposing of investments, disbursing and collecting the
funds of the Company, paying the debts and fulfilling the obligations of the
Company, executing deeds, assignments, mortgages or other instruments in
writing for or on behalf of the Company, and handling, prosecuting and settling
any claims of the Company, including foreclosing and otherwise enforcing
mortgage and other liens securing investments and terminating leases, and
exercise its own sound discretion in doing so;
(g) obtain for the Company such services as may be required for property
management (including supervision of refurbishment and renovation programs),
mortgage servicing, construction and development loan disbursements and other
activities relating to the investment portfolio of the Company, all such services to
be paid for by the Company;
(h) upon request of the Directors, invest or reinvest any money of the
Company or borrow money on behalf of the Company as needed for the
Company's operations;
(i) provide office space and office equipment and necessary executive,
clerical and secretarial personnel for the performance of the foregoing services as
Advisor;
j) from time to time or at any time requested by the Directors, make
reports to the Directors of its performance of the foregoing services;
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(k) perform or supervise the performance of such additional functions
necessary in the management of the Company as may be agreed upon by the
Directors and the Advisor; and
(1) obtain an appraisal report, where appropriate, at the expense of the
Company on each property proposed to be the subject of an investment by the
Company.
2. Servicing Functions. The Advisor also hereby undertakes to provide the
requisite servicing of the Company's investments. Such servicing functions may be
performed directly by the Advisor or by the Advisor's correspondents, but the Advisor
shall in any event be responsible for the supervision of such servicing performed by
others. In this connection, the Advisor may, if approved by the Directors, incur servicing
fees payable to others by the Company. However, anything else in this Agreement to the
contrary notwithstanding, if an investment is serviced by the Advisor or an affiliate of the
Advisor, the Company shall pay no additional servicing fees to the Advisor or such
affiliate. The servicing functions shall include, for all such investments, the review of
appraisal reports and tide opinions or reports from independent counsel for the Company,
the use of reasonable efforts to collect all payments when due, the supervision of the
payment of taxes, prior mortgage debt service, special assessments, fire and other
insurance premiums and any other required payments by the borrower or lessee. In the
event of a default on an investment, the Advisor shall advise the Directors and supervise
foreclosure or other remedies upon the direction of the Directors.
3. Advisor's Responsibility; No Partnership or Joint Venture.(a) The Advisor assumes no responsibility under this Agreement other
than to render the services. called for hereunder in good faith and shall not be
responsible for any action or inaction of the Directors in following or declining to
follow any advice or recommendation of the Advisor. ne Advisor, its affiliates,
stockholders, directors, officers and employees shall have no liability to the
Company, its officers, directors, shareholders or others except by reason of acts
constituting bad faith, willful misfeasance, gross negligence or reckless disregard
of the duties of the Advisor under this Agreement. Subject to the foregoing, the
Company shall reimburse, indemnify, defend and hold harmless the Advisor and
its affiliates, stockholders, directors, officers and employees for, from and against
(i) any and all losses, damages, liabilities, suits, proceedings, judgments,
demands, charges and claims of any nature whatsoever in respect of or arising
from (w) the affairs of the Company, (x) any investments made or committed to
be made by the Company, (y) any agreements or other obligations of the
Company and (z) any acts or omissions performed or omitted to be performed by
the Advisor in good faith and in accordance with the provisions of this Agreement
or the authority granted to it by this Agreement or from time to time by the
Directors; and (ii) all expenses from time to time incurred by the Advisor in
connection with any such losses, damages, liabilities, suits, proceedings,
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judgments, demands, charges and claims, including, without limitation,
reasonable attorneys' fees.(b) The Company and the Advisor are not partners or joint venturers with
each other and nothing herein shall be construed so as to make them such partners
or joint venturers or impose any liability as such on either of them.
4. Records. At all times, the Advisor shall keep proper books of account and
records relating to services performed hereunder, which books of account and records
shall be accessible for inspection by the Directors and their representatives, including t he
accountants of the company at any time during ordinary business hours upon reasonable
prior notice.
5. REIT Qualification and Compliance with Laws. Anything else in this
Agreement to the contrary notwithstanding, the Advisor shall use its best efforts to refrain
from any action (including, without limitation, the managing or operating or furnishing or
rendering of services to tenants of property in which the Company has an investment)
which, in its sole judgment made in good faith, or the judgment of the Directors of which
the Advisor has notice, (a) would adversely affect the status of the Company as a real
estate investment trust as defined and limited in Sections 856-860 of the Internal Revenue
Code of 1954, as amended, including all rules and regulations promulgated thereunder,
unless notified by the Directors that the Company no longer intends to qualify as a real
estate investment trust, or (b) would violate any law, rule, regulation or statement of
policy of which the Advisor has knowledge of any governmental body or agency having
jurisdiction over the Company or over its securities, or would otherwise not be permitted
by the Articles of Incorporation of the Company.
6. Bank Accounts. The Advisor may establish and maintain one or more bank
accounts in its own name or in the name of the Company, and may collect and deposi t
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 Directors may
approve, provided that no funds in any such account shall be commingled with funds of
the Advisor; and the Advisor shall from time to time render appropriate accounting of
such collections and payments to the Directors and to the accountants of the Company.
7. Bond. The Advisor shall maintain a fidelity bond with a responsible surety
company in such amount as may be required by the Directors from time to time, coveri ng
all directors, officers, employees and agents of the Advisor and the Company handling
funds of the Company and any investment documents or records pertaining to
investments of the Company. Subject to such deductible as shall be approved by the
Directors, such bond shall, to the extent available, protect the Advisor and the Company
in respect of losses of any such property from acts of such directors, officers, employees
and agents through theft, embezzlement, fraud, negligence, error or omission or other
similar matters normally covered by such bonds. The premium for said bond shall be an
expense of the Company.
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8. Information Furnished Advisor. The Directors shall at all times keep the
Advisor fully informed with regard to the investment policy of the Company, the
capitalization policy of the Company, and their then current intentions as to the future of
the Company. In particular, the Directors shall notify the Advisor promptly of their
intention to sell or otherwise dispose of any of the Company's investments, or to make
any new investment. The Directors shall furnish the Advisor with a certified copy of all
financial statements of the Company, a signed copy of each report prepared by
independent certified public accountants for the Company, and such other information,
(including all filings with the Securities and Exchange Commission) with regard to the
Company's affairs as the Advisor may from time to time reasonably request.
9. Directors, Officers and Employees of the Advisor. Directors, officers and
employees of the Advisor or of affiliates of the Advisor may serve as Directors, officers,
agents, nominees or signatories for the Company. When executing documents or
otherwise acting in such capacities for the Company, such persons shall use their
respective titles in the Company. Such persons shall receive from the Company no
compensation for their services to the Company in any such capacities, except that (a) the
Chairman of the Advisor shall also be Chairman of the Board of Directors of the
Company and of the Executive Committee, and (b) the President of the Advisor shall also
be a Director of the Company and may be a member of the Executive Committee and
each shall be compensated on the same terms and conditions as the other Directors. Both
individuals shall also receive reimbursement of all expenses incurred by them as
Directors or members of the Executive Committee in connection with Company business.
10. Compensation for Advisory Functions.(a) Regular Compensation. For each calendar year during the term of this
Agreement, as the same may be extended, the Company shall pay the Advisor as
its regular compensation for services rendered an amount equal to the greater of
(m) $800,000 (such amount to be prorated for the period which commences on the
date hereof and ends on the first succeeding December 31 and for the period
which commences on January 1 of the year in which this Agreement terminates or
expires and ends on the date of such termination or expiration) and (n) 15% of the
first $15,000,000 of the Adjusted Net Income (as hereinafter defined) of the
Company for such year, 12½ % of the next $10,000,000 of the Adjusted Net
Income of the Company for such year and 10% of all remaining Adjusted Net
Income of the Company for such year. As used in this subsection (a), the term
"Adjusted Net Income" shall mean the net income of the Company for the year in
question after provisions for the net liability (after use of all loss carryovers and
credits, if any) for state or federal income taxes or the like, as shown on the
relevant tax returns filed by the Company, except as specifically provided above
as to taxes, calculated on the basis of the Company's results of operation for such
period in accordance with generally accepted accounting principles, except that
(s) no deduction shall be made in the calculation of Adjusted Net Income for fees
payable to the Advisor pursuant to this Section 10 or Section 16 below, (t) if the
Company acquires or has any investments which are depreciable, amortizable or
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are subject to amortizing debt, no deduction shall be made in such calculation for
depreciation or amortization (except that there shall be included as a charge
against income in the calculation of Adjusted Net Income the regular scheduled
payments of loan amortization, if any, but in no event more than the amount that
the amortization payments would be if the loan were amortized on a 25 year
schedule with level monthly debt service payments at the fixed interest rate
payable during the first year of payment of interest on any such loan by the
Company), (u) net gains and losses realized or incurred by the Company * in
connection with the disposition of investments as reported on the Company's
statement of income shall be excluded in such calculation, and (v) Adjusted Net
Income for any period commencing after December 31, 1985 shall be increased
by the amount added to the Company's allowance for possible investment losses
in respect of all investments other than Additional Compensation Investments and
(vi) Adjusted Net Income for any period commencing after December 31, 1985
shall be increased in respect of any Additional Compensation Investments
disposed of during such period by the amount that any allowance for possible
investment losses previously reflected on account of such Additional
Compensation Investments exceeds the net losses recognized on account of such
disposition or dispositions. Such regular compensation shall be payable as
follows:(i) within 15 days after the end of each calendar month during the
term of this Agreement, as the same may be extended, commencing with
the month in which this Agreement is made, the Company shall pay to the
Advisor on account of its regular compensation an amount equal to the
excess, if any, of (I) the greater of (x) the product of $66,666.67 multiplied
by the number of months elapsed in the then current calendar year to and
including the calendar month just ended (including as a fraction any
partial month in such year included within the term hereof) and (y) the
applicable percentage or percentages set forth above of the Adjusted Net
Income for the portion of the Company's current calendar year to and
including the calendar month just ended (appropriately prorated for any
partial month in such year included within the term hereof), over (11) all
amounts theretofore paid to the Advisor pursuant to this subdivision (i) on
account of such current calendar year; and
(ii) within 90 days after December 31, 1986, and within 90 days
after each December 31 thereafter during the term of this Agreement, as
such may hereafter be extended, and within 90 days after the date of
expiration or termination of this Agreement if such date is other than
December 31 in any year, the Company shall pay to the Advisor the
excess, if any, of the regular compensation payable for such calendar year
or portion of such year pursuant to this subsection 10(a) (commencing
January 1, 1987, the calculation of such Adjusted Net Income for each
year to be based on the audited financial statements of the Company for
such year) over the sum of all amounts theretofore paid by the Company
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to the Advisor pursuant to subdivision (i) above on account of such
calendar year (or portion of such year); provided, however, that if the
regular compensation payable pursuant to this subsection 10(a) for such
year (or portion of such year) is less than the sum of all amounts
theretofore paid by the Company to the Advisor pursuant to subdivision (i)
above on account of such year (or portion of such year), then and in such
event the Advisor shall pay to the Company such overpayment within 30
days after delivery of the audited financial statements of the Company
confirming that such overpayment has occurred.(iii) In the event this Agreement is terminated pursuant to the
provisions of subdivision 15(a)(i), (H) or (iii) or 15(b)(ii) below, the
Company shall also pay to the Advisor, on the date of termination of this
Agreement, further regular compensation ("final regular compensation")
as determined below:
(I) If the termination date is prior to the fifth anniversary of
this Agreement, the Advisor shall receive as final regular
compensation the sum of the present values (discounted, as if
received continuously, at the annual yield, as of the date of
termination, on U. S. Treasury obligations maturing on or about
the final regular compensation date (as defined below)) of the
monthly fees (prorated for any partial month) payable each month
from the termination date to a date which is the midpoint between
the termination date and the fifth anniversary date (the "final
regular compensation date"), each such monthly fee to be equal to
the greater of (m) $66,666.67 and (n) if this Agreement shall have
been in effect for at lease one calendar year as at the termination
date, one-twelfth of the regular compensation payable to the
Advisor for the immediately preceding calendar year; and
(II) If the Agreement is terminated after the fifth
anniversary of the date of this Agreement the Advisor shall receive
as final regular compensation an amount such that the regular
compensation for the calendar year in which such termination
occurs, including amounts theretofore payable to the Advisor
during such year, shall be the greatest of (m) $800,000, (n) the
regular compensation payable to the Advisor for the immediately
preceding calendar year, and (o) the regular compensation
theretofore payable to the Advisor during the year in which such
termination occurs.
(b) Additional Compensation. In order further to compensate the Advisor
for its performance hereunder, subject to the further terms of this subsection
10(b), from and after the date hereof the Company shall pay to the Advisor a fee
(the "Additional Compensation") in an amount equal to 10% of the excess, if any,
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of net gains over net losses (as defined in subdivision 10(b)(i) below) realized or
incurred by the Company during each calendar quarter or portion thereof
occurring after the date hereof in connection with the disposition of the Additional
Compensation Investments (as hereinafter defined), as adjusted pursuant to
subdivisions (ii) and (iii) of this subsection 10(b). As used in this Agreement, the
term "Additional Compensation Investments" shall mean the Company's
investments in the properties designated to be retained in the Restructuring
Program and which have not been sold pursuant to a contract or contracts entered
into on or before the first anniversary of the execution hereof (the "Retained
Properties") and all investments by the Company made subsequent to the date
hereof (other than purchase money obligations from the sale, or other investments
resulting from the restructuring, of Company investments made prior to the date
hereof which do not constitute Retained Properties).(i) Net gains or net losses shall be determined for the entire quarter
or portion thereof in question and any amount due to the Advisor on
account of the fee payable for such quarter shall be paid within 15 days
after the end of such quarter. It is understood that in the case of the
disposition of any particular Additional Compensation Investment, net
gain or net loss consists of the amount by which the selling price of such
investment, net of all expenses incurred in connection with such
disposition (including, without limitation, brokerage commissions,
attorneys' fees, title insurance premiums, transfer taxes and the like but not
including the fee payable pursuant to this subsection 10(b)) is greater or
less than the excess of (m) the sum of (x) the amount at which such
investment is then carried on the books of the Company for financial
reporting purposes and (y) any depreciation or reserve, write-down or
other charge (and, if the investment is a partnership interest, plus any non-
cash charges allocable to such interest) previously taken on the
investment, over (n) any amount of mortgage amortization previously
included as a charge against income in the calculation of Adjusted Net
Income pursuant to subsection 10(a) above.
(ii) For the purpose of calculating the amount of the Additional
Compensation payable pursuant to this subsection 10(b), (y) if the selling
price of any investment is payable in installments, the portion of the entire
net gain or net loss resulting from the disposition in question which is
recognized in any quarter of the Company shall be the same percentage of
the entire net gain or net loss as the amount of the selling price
installments received in such quarter (exclusive of interest) bears to the
entire selling price; and (z) in calculating net gains, any gains deferred by
reason of tax-free exchanges shall be deemed not to have been so deferred.
(iii) If in any quarter of the Company commencing with the first
calendar quarter after the date hereof, the amount of net losses incurred by
the Company from the Additional Compensation Investments exceeds the
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amount of net gains realized by the Company (as calculated pursuant to
this subsection 10(b)), the excess shall be carried forward and shall be
deemed to be net losses incurred in the next following quarter of the
Company.(iv) If any of the Additional Compensation Investments is
transferred or otherwise disposed of by the Company other than in a bona
fide, arm's-length transaction, the Advisor shall have the right to have its
Additional Compensation in respect of such investment determined based
on the value of such investment, such value to be determined pursuant to
subsection 16(g) below.
(c) Payment at Termination of this Agreement. If this Agreement expires
or is terminated prior to December 31 of any year, (1) if the date of such
expiration or termination is other than the last day of a calendar month, the
monthly payment provided for in subdivision (a)(i) above shall be appropriately
prorated, and (2) the payment or refund provided for in subdivision (a)(ii) above
shall be based upon the Adjusted Net Income of the Company for the period from
January I of the year in which such expiration or termination occurs to and
including the effective date of such expiration or termination. In addition, the
Advisor shall be entitled to the Additional Compensation provided for in
subsection 10(b) above based upon the excess of net gains over net losses for the
portion of the then current quarter ending with such expiration or termination date
and as further provided for in Section 16 below. In making the calculations
provided for in the preceding sentence, the Advisor shall be credited or charged
with the then present value (discounted at the yield on U. S. Treasury obligations
then having the same term as the average life of the scheduled payments of the
unpaid installments of the selling price, including interest) of the sum of any net
gain or net losses and interest which are to be recognized in installments.
(d) Survival. The provisions of this Section 10 shall survive the expiration
or any termination of this Agreement.
11. Expenses. The Advisor shall pay employment expenses of its own personnel,
rent and general office expenses necessary to carry out its duties and functions as
provided for in Sections I and 2 above. Except as provided in Section 9 above (in regard
to certain officers and Directors of the Company), compensation of Directors and officers
of the Company affiliated with the Advisor shall be paid by the Advisor, but their travel
expenses and other out-of-pocket disbursements shall be reimbursed by the Company.
The Company shall bear all other expenses of the Company and the Advisor incurred in
the performance of the Advisor's duties and functions as provided for in Sections I and 2
above. Without limiting the generality of the foregoing, the expenses to be borne by the
Company shall include:
(a) fees and expenses payable to Directors by the Company;
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(b) employment expenses, including, but not limited to salaries, wages,
payroll taxes and costs of employee benefit plans and temporary help expenses of
any personnel employed by the Company (other than fees and expenses of
employees of the Advisor except as otherwise provided for in Section 9 above);
(c) advertising expenses incurred for the Company;
(d) rent, telephone, utilities, office furniture, equipment and machinery
(including computers to the extent utilized) and other general expenses for any
office the Company shall maintain;
(e) travel and other out-of-pocket expenses (not including salaries or other
compensation except as otherwise provided in Section 9 above) of Directors,
officers and employees of the Company who are affiliates of the Advisor;
(f) legal, audit, tax and accounting fees and expenses of the Company;
(g) investment servicing fees (except that no fee shall be paid on
investments serviced by the Advisor or an affiliate of the Advisor);
(h) the cost of borrowed money;
(i) taxes on income and taxes and assessments on real property and all
other taxes applicable to the Company;
(j) legal, audit. accounting, underwriting, brokerage, listing, registration
(including all Blue Sky applications) and other fees, printing, engraving, and other
expenses and taxes incurred in connection with the issuance, distribution, transfer,
registration and stock exchange listing of any of the Company's securities;
(k) fees and expenses paid to independent contractors, accountants,
consultants, managers and other independent agents (other than the Advisor)
employed directly by the Company in connection with the acquisition, operation,
valuation, maintenance, protection and disposition of Company investments;
(1) expenses directly connected with the acquisition, valuation, disposition
and ownership of investments, including, to the extent not borne by the lessee or
the borrower, the costs of foreclosure or lease termination proceedings, insurance
premiums, legal services, architectural and engineering fees, mortgages, taxes,
appraisal and inspection fees, title and abstract expenses, brokerage and sales
commissions, maintenance, repairs and improvements of property, etc.;
(m) expenses of maintaining, managing and operating properties in which
the Company holds investments;
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(n) premiums for all insurance carried by the Company, including property
damage and Directors and Officers liability insurance and the bond provided for
in Section 7 above;
(o) expenses of organizing or liquidating the Company and expenses of
revising, amending, converting or modifying its Articles of Incorporation;
(p) expenses connected directly with payments to shareholders of
dividends or distributions in cash or in any other form or with payments of
interest and principal on indebtedness of the Company;
(q) all expenses connected with communications to shareholders and
holders of any other securities of the Company and bookkeeping and other work
necessary in maintaining shareholder and other security holder relations,
including the cost of mailing proxy materials and reports to holders of the
Company's securities and the cost of holding shareholder meetings and soliciting
proxies from shareholders.
(r) transfer agent's, registrar's, indenture trustee's, authenticating agent's,
paying agent's and dividend disbursing agent's charges and fees;
(s) realized losses on disposition of assets;
(t) all provisions for depletion, depreciation, write-downs, reserves against
and amortization of Company assets and losses;
(u) legal and other expenses of proceedings challenging the status of the
Company as a real estate investment trust or the determination of its taxable
income or the activities of the Company or any Director, officer or shareholder;
(v) amounts payable to the Advisor pursuant to Section 10 above and
Section 16 below; and
(w) any judgment rendered against the Company or the Advisor, or against
any Director, trustee, stockholder, officer, employee or affiliate of the Company
or the Advisor in his capacity as such for which the Company indemnifies such
person.
12. Other Activities of Advisor, any Affiliate of Advisor and Employees.
Nothing in this Agreement shall limit or restrict the right of the Advisor or any affiliate of
the Advisor or any director, trustee, officer or employee of the Advisor or any affiliate of
the Advisor, including, without limitation, those who may also be Directors, officers or
employees of the Company, to engage in any other business or to render services of any
kind to any other partnership, corporation, firm, individual or association (including, but
not limited to, advising other real estate investment trusts).
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The Advisor may not, with respect to any investment by the Company or any
investment proposed to or by the Company, charge any fees to any borrower or lessee
from the Company or to any loan originator, servicer, broker or other party transacting, or
desiring to transact, business with the Company.
The Advisor shall not offer to present, reject or recommend investments to the
Company as a condition of obtaining any other business or benefit from any borrower or
lessee from the Company or from any other party transacting, or desiring to transact,
business with the Company.
13. Affiliate. The term "affiliate" as used herein shall mean as to any corporat ion,
partnership or trust any person or entity which holds beneficially, directly or indirectly,
5% or more of the outstanding capital stock, shares or equity interests of such
corporation, partnership or trust, or is an officer, director, employee, partner or trustee of
such corporation, partnership or trust, or of any person or entity controlling, controlled by
or under common control with such corporation, partnership or trust.
14. Certain Charges. Where the Advisor or any affiliate of the Advisor acts as
manager of real estate properties or equity interests owned by the Company, it may
charge for such services at a rate which is customary for such services and which shall be
subject to the reasonable approval of a 4 majority of the Directors who are not affiliates
of the Advisor.
15. Term; Termination. This Agreement shall continue in force for a period of
five years from the date hereof, and thereafter will be renewed automatically eac h year
for an additional one year term unless notice is given by one of the parties to the other at
least six months before the expiration date of the then current term. After the e xpiration
of the initial five-year period commencing on the date hereof, this Agreement may be
terminated for any reason upon 120 days' written notice by the Advisor or upon 60 days'
written notice by the Company, upon affirmative vote in the case of the Company of (a)
at least a majority of the Directors who are not affiliates of the Advisor or (b) the holders
of at least a majority of the outstanding shares of Common Stock of the Company.
Notwithstanding any other provision to the contrary, this Agreement may be
terminated as follows:
(a) by the Advisor, at any time,(i) upon dissolution or liquidation of the Company in accordance
with the laws of the jurisdiction of its organization;
(ii) by reason of a transaction of the nature described in
subsections 16(a), (b) or (c) below; or
(iii) in accordance with the provisions of subsection 18(b) below.
(b) by the Company, at any time,
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(i) upon dissolution or liquidation of the Advisor in accordance
with the laws of the jurisdiction of its organization;
(ii) by reason of a transaction of the nature described in
subsections 16(a), (b) or (c) below; or
(iii) in accordance with the provisions of subsection 18(a) below.
16. Termination Fee. It is understood and agreed that the Advisor is entitled to the
additional compensation provided for in subsection 10(b) above (the "Additional
Compensation"), and that, as further provided for below, the payment of such fee shall
not be dependent upon whether or not the Additional Compensation Investments are sold
by the Company while this Agreement is in effect or the manner in which any such sal e is
effectuated. Accordingly, the Company and the Advisor hereby agree as follows:
(a) If this Agreement is terminated upon or by reason of the sale of all or
substantially all of the Company's assets for cash, the Additional Compensation
shall be payable to the Advisor upon such sale, calculated as provided for in
subsection 10(b) above. If the assets of the Company being sold include assets in
addition to the Additional Compensation Investments, and if the Company and the
Advisor are unable to agree upon the portion of the sale price which should be
allocated to the Additional Compensation Investments, such allocation shall be
made on the basis that the value of the Additional Compensation Investments
being sold bears to the value of all of the Company's assets being sold such value
in each case to be determined pursuant to subsection 16(g) below. If any of the
Additional Compensation Investments are not sold in such transaction, the
Additional Compensation in respect of such unsold investments shall be
determined in the manner provided for in subdivisions 16(d)(i) and (ii) below but
shall be payable in cash promptly after the amount of such Additional
Compensation has been determined.
(b) If this Agreement is terminated upon or by reason of the merger or
consolidation of the Company into or with another entity in a transaction in which
the Company's shareholders receive cash in exchange for their shares, the
provisions of subsection (a) above shall be applicable except that:
(i) the book value of the liabilities of the Company immediately
prior to the merger or consolidation shall be added to the amount paid to
the Company's shareholders to determine the consideration paid for the
assets of the Company, and
(ii) if the consideration payable in connection with such merger or
consolidation is paid directly to the Company's shareholders, and not to
the Company for distribution to its shareholders, the Additional
Compensation payable to the Advisor in respect of such transaction shall
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be calculated on and with respect to the amount of cash which would have
to have been paid to the Company such that the amount received by the
Company's shareholders was the net amount remaining after payment of
the Additional Compensation by the Company to the Advisor.
(c) If this Agreement is terminated upon or by reason of the merger or
consolidation of the Company into or with, or the sale of all or substantially all of
the Company's assets to, an entity in a transaction in which the Company or the
Company's shareholders receive securities of another entity, or a combination of
cash and such securities, the provisions of subsection '(a) above shall be
applicable, subject to the following:
(i) the Additional Compensation shall be based upon the aggregate
amount of cash and the value of all securities received by the Company or
its shareholders;
(ii) if the securities received by the Company or the Company's
shareholders do not have a readily-ascertainable market value, such value
shall be determined as follows: (s) the Company and the Advisor shall
attempt to agree upon the market value of the securities and such agreed
upon value, if any, shall be conclusively presumed to be the value of such
securities for the purpose of this subsection 16(c); (t) if the Company and
the Advisor are unable to agree upon such value within 30 days after such
termination, they shall attempt to agree upon one investment banking firm,
whose determination will be binding on each of them and whose fees shall
be shared equally by the Company and the Advisor; and (u) if within 60
days after such termination the Company and the Advisor have not agreed
upon such value or upon one investment banking firm to determine such
value, such value shall be determined as provided in subsection 16(g)
below, except that in lieu of the appraisers provided for in such
subdivision investment banking firms shall instead be appointed;
(iii) the book value of the liabilities of the Company immediately
prior to the merger or consolidation shall be added to the amount paid to
the Company or the Company's shareholders in determination of the
consideration paid for the assets of the Company;
(iv) if the securities or cash and securities received by the
Company's shareholders in such transaction are distributed directly to such
shareholders, and not to the Company for distribution to its shareholders,
subdivision 16(b)(ii) above shall be applicable; and
(v) the Company or the purchaser or surviving entity in such
transaction shall have the right, in lieu of paying the Additional
Compensation due the Advisor in cash following the closing of such
transaction, to pay such Additional Compensation (s) in installments as
- 16 -
provided in subdivision (f) below to the extent of that portion thereof as is
equal to the product of the amount of such Additional Compensation and a
fraction, the numerator of which is the aggregate value of the securities so
received by the Company or the Company's shareholders and the
denominator of which is the sum of the aggregate value of the securities
and the amount of cash, if any, so received by the Company or the
Company's shareholders, or (t) in the same securities as are received by
the Company or the Company's shareholders, ' or if cash and securities are
received by the Company or the Company's shareholders, in cash and such
securities in the same proportion as are-4eceived by the Company or the
Company's shareholders, but only provided that the securities received by
the Advisor are not subject to any contractual, statutory or other
restrictions which would prevent or inhibit in any material respect the
Advisor from selling such securities.
(d) If the term of this Agreement expires or this Agreement is terminated
by the Company other than (x) upon or by reason of a transaction of the nature
described in subsections 16(a), (b) or (c), or (y) pursuant to subdivision 15(b)(i)
above or subsection 18(a) below or if the term of this Agreement is terminated by
the Advisor pursuant to subdivision 15(a)(i) above or subsection 18(b) below, the
Additional Compensation shall be payable to the Advisor as if all of the
Additional Compensation Investments of the Company were being sold for a cash
price equal to their fair market value (hereinafter called the "total fair market
value") as agreed upon by the Company and the Advisor or, if the Company. and
the Advisor cannot so agree, as determined pursuant to subdivisions 16(d) (i) and
(ii) below; provided however that no Additional Compensation shall be payable to
the Advisor if this Agreement is terminated pursuant to subdivision 15(b)(i) above
or subsection 18(a) below.
(i) if the Company and the Advisor are unable to agree upon the
total fair market value within 30 days after such termination, they shall
attempt to agree upon one appraiser, whose determination will be binding
on each of them and whose fees shall be shared equally by the Company
and the Advisor;
(ii) if within 60 days after such termination the Company and the
Advisor shall riot have agreed upon such total fair market value or upon
one appraiser to determine such total value, such total fair market value
shall be determined as provided in subsection 16(g) below.
(e) If the Company shall terminate this Agreement pursuant to subdivision
15(b)(i) above or subsection 18(a) below, the Advisor shall not be entitled to
receive any Additional Compensation by reason of such termination and all rights
of the Advisor then or thereafter to receive any Additional Compensation shall
terminate upon such termination.
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(f) If this Agreement is terminated upon or by reason of a transaction of
the nature described in subsection 16(c) and the Additional Compensation due the
Advisor is payable in whole or in pan, at the election of the Company, in
installments in accordance with subdivision 16(c)(v), such portion of The
Additional Compensation due to the Advisor, which is payable in installments
shall be payable over a period of five years in equal monthly principal
installments in an amount sufficient to pay such Additional Compensation in full
by the end of such five-year period, together with interest on the unpaid balance
of such Additional Compensation at an annual rate equal to the annual interest
rate payable on five-year U.S. Treasury obligations at the date of such expiration
or termination, the first of which installments shall be due on the first day of the
month following the month in which such expiration or termination occurs; and, if
any such installment is not paid when due and such default is not cured within 10
days after written notice thereof from the Advisor, the entire unpaid balance of
such Additional Compensation and all accrued and unpaid interest thereon shall
immediately become due and payable at the option of the Advisor. If the
Additional Compensation due the Advisor is payable in installments, then if the
payor or guarantor of such installments and the interest thereon does not have a
net worth of at least $75,000,000, determined in accordance with generally
accepted accounting principles, the Advisor shall be entitled to receive, as
security for the payment of the unpaid balance of such Additional Compensation
and the interest thereon, a letter of credit issued by a bank and in form and
substance reasonably satisfactory to the Advisor. Such letter of credit shall
provide, among other things, that the Advisor will have the right to draw thereon
in an amount equal to the then unpaid balance of such Additional Compensation
and all accrued and unpaid interest thereon if any such installment is not paid
when due and such default continues for a period of 10 days after notice from the
Advisor to the payor of such installments or if the expiration date of such letter of
credit (or any replacement thereof) is prior to the date on which the last such
installment is due and payable and the Advisor is not provided with an extension
of such expiration date or with a new letter of credit in the appropriate amount at
least 30 days prior to such expiration date. If and when the Advisor is entitled
under the terms of this subsection 16(f) to draw upon such letter of credit, it shall
be entitled to apply the proceeds so drawn to the then unpaid balance of the
Additional Compensation and all interest accrued and unpaid thereon. The initial
amount of such letter of credit shall be equal to the total amount of the Additiona l
Compensation due to the Advisor, together with interest thereon at the annual rate
provided for above for a period of 4 months. Ile payor shall be entitled to reduce
the amount of such letter of credit from time to time, but only so long as the
amount thereof is not less than the unpaid balance of such Additional
Compensation at the time of such reduction, together with interest thereon at the
aforesaid rate for a period of 4 months. If the payor or guarantor of such
installments shall initially have a net worth which does not require the furnishing
of a letter of credit to the Advisor, but thereafter such payor's or guarantor's net
worth falls to an amount such that a letter of credit would be required, the payor
or guarantor shall forthwith be obligated to furnish the Advisor with a letter of
- 18 -
credit as above provided, and failure to do so within 15 days after request therefor
by tile Advisor shall entitle the Advisor to declare immediately due and payable
the entire unpaid balance of the Additional Compensation and all accrued and
unpaid interest thereon. The payor and any guarantor of such installments shall
each be obligated to furnish the Advisor within 120 days after the close of its
fiscal year with a balance sheet and income and loss statement, with an
unqualified opinion of an independent certified public accountant, and within 90
days after each fiscal quarter with interim unaudited quarterly statements for the
quarter then ended, and the Advisor shall be entitled to examine the books and
records of the payor and guarantor from time to time on request. Failure of the
payor or guarantor to comply with any of its obligations under the preceding
sentence within 30 days after notice from the Advisor shall entitle the Advisor to
declare immediately due and payable the entire unpaid balance of the Additional
Compensation and all accrued and unpaid interest thereon. The obligation of the
payor to pay such installments shall be senior to all unsecured borrowings
arranged by such payor subsequent to the date on which the obligation to pay such
Additional Compensation under this Section 16 first arises, and shall be senior to
all unsecured borrowings of the payor existing on said date to the extent the terms
of such existing borrowings so permit;
(g) In the event that the fair market value of any assets or investments is to
be determined pursuant to this subsection 16(g) (said value being the total value
of the assets or of the investments, if more than one, unless the value of individual
assets or investments is required in any calculation provided for in this Section
16), the party desiring such determination shall appoint a disinterested company
with experience and recognized capability in evaluating the real estate portfoli os
of major real estate investment trusts or other major real estate companies as
appraiser on its behalf and shall notify the other party of the name of the company
so appointed by it. Within 30 days after the giving of such notice, the other party
shall, by notice to the first party, appoint a second disinterested company
possessing like qualifications as appraiser on its behalf. If the two appraisers thus
appointed cannot reach agreement on the value of the assets or investments in
question within 90 days after the appointment of the second appraiser, then the
two appraisers thus appointed shall appoint a third disinterested company
possessing the aforesaid qualifications and each of the three appraisers thus
appointed shall independently determine such value, provided that (i) if the other
party shall fail to designate an appraiser with the aforesaid qualifications withi n
the 30-day period above provided for, the first appraiser shall alone proceed to
determine such value, and (H) if the two appraisers appointed by the parties shall
be unable to agree, within 90-days after the appointment of the second appraiser,
on the value in question and, if applicable, on the appointment of a third
appraiser, they or either of them shall give written notice of such failure to agree
to the parties and, if the parties fail to agree on the selection of a third appraiser
within 30 days after their receipt of such notice, either of the parties, upon writte n
notice to the other, may apply for such appointment to a court of competent
jurisdiction in the Commonwealth of Massachusetts. For the purposes of this
- 19 -
subsection 16(g) two appraisers appointed by the parties shall be deemed unable
to agree on the value in question if the difference between the values determined
by them is more than 10% of the lower of such values (it being agreed that if such
difference is 10% or less, the average of the values determined by such appraisers
shall constitute the value in question). If a third appraiser is appointed, the
average of the value determined by the other of the two appraisers which is closer
to that of the third appraiser and the value determined by the third appraiser shall
constitute such fair market value. The determination of the appraisers or
appraiser, arrived at as above provided, shall be conclusive upon the parties. The
appraisers or appraiser, as the case may be, shall give written notice to the parties
stating their or its determination. Each party shall pay the fees and expenses of the
appraiser appointed by it and one-half of the expenses of the third appraiser.
(h) If this Agreement is terminated by reason of a transaction described in
subsections 16 (a), (b) or (c) above, and the transaction in question does not
constitute a bona fide, arm's length transaction, the Advisor shall have the right to
have its Additional Compensation determined based on the value of the
Additional Compensation Investments as determined pursuant to subsection
16(19) above.
17. Assignment
This Agreement may not be assigned by the Advisor without the approval of 75%
of the Directors who are not affiliates of the Advisor, except that such approval shall not
be required in the case of an assignment to a corporation, association, trust or other
organization organized to take over the property and to carry on the affairs of the
Advisor, provided that at the time of such assignment such successor organization shall
be owned substantially by the then shareholders of the Advisor and that the shareholders
of Advisor shall deliver to the Directors a statement in writing showing the ownership of
the successor organization. Such an assignment 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 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;
provided, however, that nothing contained in this sentence shall be construed as affecting,
impairing or negating the rights of the Company and the Advisor to terminate this
Agreement pursuant to subdivisions 15(a)(ii) and 15(b)(ii), respectively.
18. Default, etc.(a) At the option solely of the Company, this Agreement shall be and
become terminated immediately upon written notice of termination from the
Directors to the Advisor if any of the following events shall happen:
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(i) The Advisor shall violate any provision of this Agreement in
any material respect and, after notice from the Company of such violation,
the Advisor shall not cure such default within thirty days or such longer
time period required by the Advisor in the exercise of due diligence;
(ii) The Advisor shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(iii) an involuntary case or other proceeding shall be commenced
against the Advisor, seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 90 days.
The Advisor agrees that if any of the events specified in subdivisions 18(a)(ii) and
(iii) shall occur, it will give written notice thereof to the Directors within 7 days after it
has knowledge of the occurrence of such event (without giving effect to any grace
periods included therein).
(b) At the option solely of the Advisor, this Agreement shall be and
become terminated immediately upon written notice of termination from the
Advisor to the Company if any of the following events shall happen:
(i) The Company shall violate any provision of this Agreement in
any material respect and, after notice from the Advisor of such violation,
the Company shall not cure such default (I) within 30 days in regard to the
payment of compensation provided for in Section 10 above, and (II)
within thirty days or such longer time period required by the Company in
the exercise of due diligence in regard to any other provision;
(ii) The Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
- 21 -
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or(iii) an involuntary case or other proceeding shall be commenced
against the Company, seeking liquidation, reorganization or other relief
with respect to it or its debts under bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 90 days.
The Company agrees that if any of the events specified in
subdivision 18(b)(ii) and (ii) shall occur, it will give written notice thereof
to the Advisor within 7 days after it has knowledge of the occurrence of
such event (without giving effect to any grace periods included therein).
19. Action upon Termination. From and after the effective date of termination
of this Agreement, the Advisor shall not be entitled to regular compensation as provided
for in subsection 10(a) above for further services hereunder except as provided for in
subdivision 10(a)(ii) above and, if applicable, subdivision 10(a)(iii) above. The Advisor
shall, forthwith upon such termination:
(a) 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;
(b) deliver to the 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
Directors; and
(c) deliver to the Company all property and documents of the Company
then in the custody of the Advisor.
20. Company’s Name. Nothing in this Agreement shall in any way restrict or
limit the right of the Advisor or any affiliate of the Advisor which is dealing with the
Company to use in any manner the name "Americana".
21. Miscellaneous.(a) AN calculations made in accordance with this Agreement shall be
based an statements (which may be unaudited, except as provided herein)
- 22 -
prepared on an accrual basis consistent with generally accepted accounting
principles, regardless of whether the Company may also prepare statements on a
different basis.(b) Any notice, report or other communication required or permitted to be
given hereund
