Advisory Agreement
-- between --
NB Capital Corporation
-- and --
National Bank of Canada
September 3, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS.........................................................-1-
2. DUTIES OF THE ADVISOR...............................................-2-
3. COMPENSATION OF THE ADVISOR.........................................-4-
4. EXPENSES OF THE ADVISOR.............................................-4-
5. RECORDS.............................................................-4-
6. REIT QUALIFICATION AND COMPLIANCE...................................-4-
7. TERM: TERMINATION..................................................-5-
8. OTHER ACTIVITIES OF THE ADVISOR.....................................-5-
9. BINDING EFFECT: ASSIGNMENT.........................................-5-
10. SUBCONTRACTING......................................................-6-
11. LIABILITY AND INDEMNITY OF THE ADVISOR..............................-6-
12. ACTION UPON NOTICE OF NON-RENEWAL OR TERMINATION....................-6-
13. NO JOINT VENTURE OR PARTNERSHIP.....................................-7-
14. NOTICES.............................................................-7-
15. SEVERABILITY........................................................-8-
16. GOVERNING LAW.......................................................-8-
17. AMENDMENTS..........................................................-8-
18. HEADINGS............................................................-9-
-i-
ADVISORY AGREEMENT
Advisory Agreement (the "Agreement") entered into as of September 3, 1997
BETWEEN: NB CAPITAL CORPORATION, a Maryland
corporation,
(the "Company")
AND: NATIONAL BANK OF CANADA, a Canadian
chartered bank;
(the "Advisor")
WHEREAS the Company intends to qualify as a "real estate investment
trust" ("REIT") under the Internal Revenue Code of 1986, as amended (the
"Code");
AND WHEREAS the Company desires to avail itself of the experience and
assistance of the Advisor and to have the Advisor undertake, on the Company's
behalf, the duties and responsibilities hereinafter set forth, subject to the
control and supervision of the Board of Directors of the Company (the "Board of
Directors") as provided for herein;
AND WHEREAS the Advisor desires to render such services to the Company
subject to the control and supervision of the Board of Directors, on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS
1.1 Definitions
As used herein, the following terms shall have the respective meanings
set forth below:
1.1.1 "Advisor" has the meaning set forth in the forepart of this Agreement.
1.1.2 "Advisor Termination Date" means the date on which this Agreement
terminates.
1.1.3 "Agreement" means this Advisory Agreement, as amended, modified and
supplemented from time to time.
1.1.4 "Board of Directors" has the meaning set forth in the forepart of this
Agreement.
1.1.5 "Company" has the meaning set forth in the forepart of this Agreement.
1.1.6 "Independent Directors" means the members of the Board of Directors
who are not current officers or employees the Company or current
directors, employees or officers of the Advisor or any affiliate of
the Advisor.
1.1.7 "Operating Expenses" for any period means all of the operating
expenses of the Company (with the exception of those expenses to be
borne by the Advisor in accordance with Section 4 hereof).
1.1.8 "Person" means and includes individuals, corporations, limited
partnerships, general partnerships, joint stock companies or
associations, limited liability companies, joint ventures,
associations, consortia, companies, trusts, banks, trust companies,
land trusts, common laws trusts, business trusts or other entities,
governments and agencies and political subdivisions thereof.
1.1.9 "REIT" has the meaning set forth in the forepart of this Agreement.
2. DUTIES OF THE ADVISOR
The Advisor shall consult with the Board of Directors and the officers
of the Company and shall, at the request of the Board of Directors and/or the
officers of the Company, furnish advice and recommendations with respect to all
aspects of the business and affairs of the Company. Subject to the control and
discretion and at the request of the Board of Directors, the Advisor shall:
(a) administer the day-to-day operations and affairs of the Company,
including, without limitation, the performance or supervision of
the functions described in this Section 2;
(b) monitor the credit quality of the real estate mortgage assets
held by the Company;
(c) advise the Company with respect to the acquisition, management,
financing and disposition of the Company's real estate mortgage
assets;
(d) represent the Company in its day-to-day dealings with Persons
with whom the Company interacts, including, without limitation,
stockholders of the Company, the transfer agent of the Company,
consultants, accountants, attorneys, servicers of the Company's
mortgage loans, custodians, insurers and banks;
(e) establish and provide necessary services for the Company,
including executive, administrative, accounting, stockholder
relations, secretarial, recordkeeping, copying, telephone,
mailing and distribution facilities;
-2-
(f) maintain communications and relations with the stockholders of
the Company, including, but not limited to, responding to
inquiries, proxy solicitations, providing reports to stockholders
and arranging and coordinating all meetings of stockholders;
(g) monitor and supervise the performance of all parties who have
contracts to perform services for the Company, provided that the
Advisor shall have no duty to assume the obligations or guarantee
the performance of such parties under such contracts;
(h) arrange for the execution and delivery of such documents and
instruments by the officers of the Company as may be required in
order to perform the functions herein described and to take any
other required action contemplated by the terms of this
Agreement;
(i) maintain proper books and records of the Company's affairs and
furnish or cause to be furnished to the Board of Directors such
periodic reports and accounting information as may be required
from time to time by the Board of Directors, including, but not
limited to, quarterly reports of all income, expenses and
distributions of the Company;
(j) consult and work with legal counsel for the Company in
implementing Company decisions and undertaking measures
consistent with all pertinent federal, provincial and local laws
and rules or regulations of governmental or quasi-governmental
agencies, including, but not limited to, federal and provincial
securities laws and tax laws, as it relates to the Company's
qualification as a REIT, and the regulations promulgated under
each of the foregoing;
(k) consult and work with accountants for the Company in connection
with the preparation of financial statements, annual reports and
tax returns;
(l) prepare and distribute, in consultation with the accountants for
the Company, annual reports to stockholders which will contain
audited financial statements;
(m) furnish reports to the Board of Directors and provide research,
economical and statistical data in connection with the Company's
investments; and
(n) as reasonably requested by the Company, make reports to the
Company of its performance of the foregoing services and furnish
advice and recommendations with respect to other aspects of the
business of the Company.
-3-
3. COMPENSATION OF THE ADVISOR
The Company shall pay to the Advisor, for services rendered by the
Advisor hereunder, an advisory fee equal to TWENTY-FIVE THOUSAND Dollars
($25,000) per year, payable in equal quarterly installments.
4. EXPENSES OF THE ADVISOR
(a) Without regard to the compensation received pursuant to Section 3
hereof, the Advisor shall bear the following expenses:
(i) employment expenses of the personnel employed by the
Advisor, including, without limitation, salaries, wages,
payroll taxes and the cost of employee benefit plans; and
(ii) rent, telephone equipment, utilities, office furniture and
equipment and machinery and other office expenses of the
Advisor incurred in connection with the maintenance of any
office facility of the Advisor.
(b) The Company shall reimburse the Advisor within 30 days of a
written request by the Advisor for any Operating Expenses paid or
incurred by the Advisor on behalf of the Company.
5. RECORDS
The Advisor shall maintain appropriate books of account and records
relating to services performed hereunder, and such books of account and records
shall be accessible for inspection by the Board of Directors and representatives
of the Company at all times.
6. REIT QUALIFICATION AND COMPLIANCE
The Advisor shall consult and work with the Company's legal counsel in
maintaining the Company's qualification as a REIT. Notwithstanding any other
provisions of this Agreement to the contrary, the Advisor shall refrain from any
action which, in its reasonable judgment or in the judgment of the Board of
Directors (of which the Advisor has received written notice), may adversely
affect the qualification of the Company as a REIT or which would violate any
laws, rule or regulation of any governmental body or agency having jurisdiction
over the Company or its securities, or which would otherwise not be permitted by
the articles of incorporation or by-laws of the Company. Furthermore, the
Advisor shall take any action which, in its judgment or the judgment of the
Board of Directors (of which the Advisor has received written notice), may be
necessary to maintain the qualification of the Company as a
-4-
REIT or prevent the violation of any law or regulation of any governmental body
or agency having jurisdiction over the Company or its securities.
7. TERM: TERMINATION
This Agreement shall be in full force and effect for a term beginning
on the date hereof with an initial term of one year, and may be renewed for
additional one-year periods at the election of the Company. Notwithstanding the
foregoing, at any time after the initial term, the Company may terminate this
Agreement at any time upon 60 days' prior written notice; provided, however,
that as long as any shares of the Company's 8.35% Non Cumulative Exchangeable
Preferred Stock, Series A, par value US$.01 per share, remain outstanding, any
decision by the Company to renew, terminate or modify this Agreement must be
approved by a majority of the Board of Directors, as well as by a majority of
the Independent Directors.
8. OTHER ACTIVITIES OF THE ADVISOR
(a) Nothing herein contained shall prevent the Advisor, an affiliate
of the Advisor or an officer, director, employee or stockholder
of the Advisor from engaging in any activity, including, without
limitation, originating, purchasing and managing real estate
mortgage assets, rendering of services and investment advice
with respect to real estate investment opportunities to any
other Person (including other REITs) and managing other
investments (including the investments of the Advisor and its
affiliates).
(b) Officers, directors, employees, stockholders and agents of the
Advisor or of any affiliate of the Advisor may serve as
officers, directors, employees or agents of the Company, but
shall receive no compensation (other than reimbursement for
expenses) from the Company for such service.
9. BINDING EFFECT: ASSIGNMENT
This Agreement shall inure to the benefit of and shall be binding upon
the parties hereto and their respective successors and assigns. Neither party
may assign this Agreement or any of its respective rights hereunder (other than
an assignment to a successor organization which acquires substantially all of
the property of such party or, in the case of the Advisor, to an affiliate of
the Advisor) without the prior written consent of the other party to this
Agreement.
-5-
10. SUBCONTRACTING
The Advisor may at any time subcontract all or a portion of its
obligations under this Agreement to one or more affiliates of the Advisor that
are involved in the business of managing real estate mortgage assets without the
consent of the Company. If no affiliate of the Advisor is engaged in the
business of managing real estate mortgage assets, the Advisor may, with the
approval of a majority of the Board of Directors, as well as a majority of the
Independent Directors, subcontract all or a portion of its obligations under
this Agreement to unrelated third parties. Notwithstanding the foregoing, the
Advisor will not, in connection with subcontracting any of its obligations under
this Agreement, be discharged or relieved in any respect from its obligations
under this Agreement.
11. LIABILITY AND INDEMNITY OF THE ADVISOR
The Advisor assumes no responsibilities under this Agreement other than
to perform the services called for hereunder in good faith. Neither the Advisor
nor any of its affiliates, stockholders, directors, officers or employees will
have any liability to the Company, stockholders of the Company or others except
by reason of acts or omissions constituting gross negligence or willful breach
of any of the Advisor's material obligations under this Agreement. The Company
shall indemnify and reimburse (if necessary) the Advisor, its stockholders,
directors, officers, employees and agents for any and all expenses (including,
without limitation, attorneys' fees and expenses), losses, damages, liabilities,
demands and charges of any nature whatsoever in respect of or arising from any
acts or omissions by the Advisor pursuant to this Agreement, 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
gross negligence by such Person or willful breach of any of such Person's
material obligations by such Person. The Advisor agrees that any such
indemnification is recoverable only from the assets of the Company and not from
the stockholders.
12. ACTION UPON NOTICE OF NON-RENEWAL OR TERMINATION
Forthwith upon giving of notice of non-renewal of this Agreement by the
Company or of termination of this Agreement by the Company, the Advisor shall
not be entitled to compensation after the Advisor Termination Date for further
services under this Agreement, but shall be paid all compensation accruing to
the Advisor Termination Date and shall be reimbursed for all expenses of the
Company paid or incurred by the Advisor as of the Advisor Termination Date which
are reimbursable by the Company under this Agreement. The Advisor shall promptly
after the Advisor Termination Date:
(a) deliver to the Company all assets and documents of the Company
then in the custody of the Advisor; and
-6-
(b) cooperate with the Company and take all reasonable steps
requested to assist the Board of Directors in making an orderly
transfer of the administrative functions of the Company.
13. NO JOINT VENTURE OR PARTNERSHIP
Nothing in this Agreement shall be deemed to create a joint venture or
partnership between the parties, whether for purposes of taxation or otherwise.
Furthermore, nothing in this Agreement conveys to, or otherwise grants, the
Advisor the authority to conclude contracts in the name of the Company.
14. NOTICES
Unless expressly provided otherwise herein, all notices, requests,
demands and other communications required or permitted under this Agreement
shall be in writing and shall be made by hand delivery, certified mail,
overnight courier service, telex or telecopier. Any notice shall be duly
addressed to the parties as follows:
(a) If to the Company:
NB CAPITAL CORPORATION
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
(b) If to the Advisor:
NATIONAL BANK OF CANADA
▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇)
▇▇▇ ▇▇▇
Attention: Senior Vice-President, Treasury and Financial Markets
Either party may alter the address to which communications or copies
are to be sent by giving notice of such change of address in conformity with the
provisions of this Section 14 for the giving of notice.
-7-
15. SEVERABILITY
If any term or provision of this Agreement or the application thereof
with respect to any Person or circumstance shall, to any extent, be invalid or
unenforceable (other than Section 13), the remainder of this Agreement, or the
application of that term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and be
enforced to the fullest extent permitted by law.
16. GOVERNING LAW
Each of the parties hereto irrevocably and unconditionally submits, for
itself and its property, to the non exclusive jurisdiction of the Quebec courts,
and any appellate court thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
in the courts of any jurisdiction. Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in the
courts of the Province of Quebec. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defence of an inconvenient
forum to the maintenance of such action or proceeding in any such court. The
Company hereby irrevocably appoints Montreal Trust, Place Montreal Trust, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇ ("Company's Process Agent"), as
its agent to receive, on behalf of the Company, service of copies of the summons
and complaint and in any other process that may be served in any such action or
proceeding. Any such service may be made by mailing or delivering a copy of such
process, in care of the Company's Process Agent at the Company's Process Agent's
above address. The Company hereby irrevocably authorizes and directs its agent
to accept such service on its behalf. The parties hereto hereby agree that the
final judgment in any such action or proceeding shall be conclusive and may be
in force in any other jurisdiction by suit on the judgment or in any other
manner provided by law.
17. AMENDMENTS
This Agreement shall not be amended, changed, modified, terminated or
discharged in whole or in part except by an instrument in writing signed by both
parties hereto or their respective successors or assigns, or otherwise as
provided herein.
-8-
18. HEADINGS
The section headings herein have been inserted for convenience of
reference only and shall not be construed to affect the meaning, construction or
effect of this Agreement.
-9-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized as of the date first
written above.
NB CAPITAL CORPORATION
By:
--------------------------------
NATIONAL BANK OF CANADA
By:
--------------------------------
