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§24.801 Terms of advisory agreement under which a related company provides management and administrative services to the corporation The Company and BNE Advisory Group, Inc. The Company, with the approval of the directors, including a majority of the Independent Directors, has entered into an agreement (the “Advisory Agreement”) with BNE Advisory Group, Inc., a wholly-owned subsidiary of Boddie-Noell (the “Advisory Group” or “Advisor”), under which the Advisor will furnish advice and recommendations concerning the affairs of the Company, provide administrative services to the Company and manage the day-to-day operations of the Company. The Advisory Group provides the executive and administrative personnel, office space and services required in rendering such services to the Company. The Advisor is at all times subject to the supervision of the Board of Directors of the Company and has only such functions and authority as the Company may delegate to it as the Company’s agent. The Advisory Agreement expires on June 30, 1990 and may be renewed annually thereafter upon agreement of the parties and approval of the Board of Directors, including a majority of the Independent Directors. The Advisory Agreement may be terminated on sixty (60) days notice by a majority of the Independent Directors. The Advisory Agreement provides for indemnification by the Company of the Advisor and each of its directors, officers and employees against expense or liability arising out of such person’s activities in rendering services to the Company, provided that the conduct against which the claim is made was determined by such person, in good faith, to be in the best interests of the Company and was not the result of negligence or willful misconduct. Such indemnification is subject to certain limitations where claims under securities laws are involved. The Advisor may engage in other activities, including rendering advice to other investors, (including other real estate investment trusts) and the administration of other investments. The Advisor’s charter and bylaws do not limit the right of any director, officer, employee or shareholder of the Advisor to engage in any business (including competitive business activities) or to render services of any kind to any other entity. The Advisor currently has no plans to engage in activities unrelated to the Company. The Advisor will receive as compensation for its services under the Advisory Agreement an annual fee equal to 4.65% of the Company’s net cash available from operations. The Advisor’s fee is payable monthly, subject to adjustment quarterly and at the end of each year based on actual cash available from operations and is subject to waiver as described below. Net cash available from operations for a fiscal year is defined as the Company’s cash available from operations after payment or accrual for payment of all expenses (excluding the Advisor’s fee) and charges relating to that fiscal year as determined in accordance with generally accepted accounting principles. Payment of the Advisor’s fee for each calendar year (or portion thereof) through December 31, 1991 is contingent upon the Company’s ability in each such year to pay dividends to its shareholders out of cash available for distribution at an annual rate of at least $1.20 per share. In the event the Company is unable to pay such dividends in any such year, the Advisor will waive the Advisor’s fee in respect of such year up to the amount required to enable the Company to pay a $1.20 per share dividend. The Advisor will reimburse the Company at the end of each quarter and year for any Advisor’s fee which has been paid but is subject to waiver under the foregoing provision. The Advisor will have no right to recover in later years any fees waived in any year as a result of these provisions.In the event that operating expenses (as defined in the Advisory Agreement) of the Company exceed in any fiscal year the greater of 2% of the average assets of the Company or 25% of the Company’s net income, the Advisor is obligated to reimburse, to the extent of its fees for such fiscal year, the Company for the amount by which the aggregate annual operating expenses paid or incurred by the Company exceed these limitations. The Advisor may recover amounts reimbursed to the Company in subsequent years in which operating expenses are less than the 2% or 25% expense limitations. The advisory fee amounted to $183,756 for the period ended December 31, 1989 and at December 31, 1989 $44,899 of this amount was unpaid. As of December 31, 1989 there was no subordination of the advisory fee.