EXHIBIT 10.6
RESTATED ADVISORY, ADMINISTRATIVE SERVICES
AND FACILITIES AGREEMENT
BETWEEN
NATIONAL HEALTH REALTY, INC.
AND
TENNESSEE HEALTHCARE ADVISORS, LLC
THIS RESTATED AGREEMENT is entered into on this 1st day of August, 2005,
but is effective as of December 29, 2004, between NATIONAL HEALTH REALTY, INC.,
a Maryland corporation and its divisions, subsidiaries and partnerships in which
it serves as general partner (collectively "NHR" or "Corporation"), and
TENNESSEE HEALTHCARE ADVISORS, LLC a Tennessee limited liability company
("Advisor"), whose sole member is National HealthCare Corporation ("NHC").
WHEREAS, the original Advisory, Administrative Services and Facilities
Agreement (the "Agreement") between the Corporation and NHC was entered into on
December 29, 1997; and
WHEREAS, with the passage of time and changes in business activities of
NHR and NHC they have agreed to restate the agreement and certain particulars,
including (at the request of NHC) the change of its subsidiary, Tennessee
HealthCare Advisors, LLC, to become the Advisor; and
WHEREAS, NHR is agreeable to these changes, including the substitution of
Tennessee HealthCare Advisors, LLC as Advisor, provided, however, that its
duties and responsibilities under the Restated Agreement are guaranteed by
Advisor's sole member, NHC; and
WHEREAS, the Corporation is qualified as a real estate investment trust as
defined in the Internal Revenue Code of 1986, as amended, as the same may be
amended or modified from time to time; and
WHEREAS, the Corporation desires to continue to avail itself of the
Advisor's experience, sources of information, advice, and assistance and of
certain personnel and facilities available to the Advisor and to have the
Advisor undertake the duties and responsibilities hereinafter set forth, on
behalf of and subject to the supervision of the Board of Directors of the
Corporation (the "Directors"), as provided herein; and
WHEREAS, 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; and
WHEREAS, the relationships established by the Advisor and the Corporation
hereunder are independent contractor relationships;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, Corporation and Advisor agree as follows:
1. Duties of Advisor. The Corporation hereby engages the Advisor, and the
Advisor undertakes to use its best efforts (a) to present to the
Corporation a continuing and suitable investment program consistent with
the investment policies and objectives of the Corporation and investment
opportunities of a character consistent with such investment program as
the Directors may adopt from time to time, (b) to manage the day-to-day
affairs and operations of the Corporation and (c) to provide such
administrative services and facilities as are appropriate for such
management. In performance of such undertakings, subject to the
supervision and approval of the Directors and upon their direction, and
consistent with the provisions of the Articles of Incorporation and Bylaws
of the Corporation and of any policies for the Corporation from time to
time established by the Directors after consultation with the Advisor, the
Advisor shall:
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i. make or have made for the Corporation such research reports,
economic and statistical data, evaluations, analyses, opinions
and recommendations as it may deem necessary or desirable or
as the Directors of the Corporation may request with respect
to investment opportunities available to the Corporation;
ii. formulate a program for the investment of the Corporation's
assets;
iii. select and evaluate potential projects and investments for the
Corporation;
iv. make recommendations as to the nature, terms and amount of
involvement or participation in such project or investments
and the timing thereof;
v. evaluate and make recommendations as to the sale or other
disposition of assets of the Corporation;
vi. make such further recommendations as to the investments of the
Corporation as the Advisor may deem necessary or desirable;
vii. investigate and make recommendations with respect to selection
of and relations with consultants, lenders and others
(including without limitation, tenants, property managers,
accountants, mortgage loan originators, correspondents and
services, architects, engineers and other technical advisors,
attorneys, real estate and mortgage loan bankers, brokers and
dealers, corporate fiduciaries, escrow agents, depositories,
custodians, agents for collection, insurers, insurance agents,
banks, builders and developers, and persons acting in any
other capacity) in connection with the Corporation's
properties;
viii. provide office and clerical facilities adequate for the
Corporation's operations and affairs;
ix. act, or obtain for the Corporation the services of others to
act, as may be required to provide accounting, auditing,
custodial, transfer agent, registrar and other similar
services, to disburse and collect the funds of the
Corporation, to pay the debts and fulfill the obligations of
the Corporation, to handle the prosecution and settlement of
any claims of the Corporation, to oversee, handle, prepare and
distribute or cause to be distributed all communications with
the existing and future holders of the Corporation's
securities, including the holders of the Corporation's Shares
and Debentures, and, in connection with the foregoing, to
investigate, select and conduct relations with custodians,
transfer agents, registrars, proxy solicitors, attorneys,
accountants, auditors, brokers and investors, and others as
necessary in connection with the Corporation's operations;
x. advise the Corporation concerning developments in the
healthcare and real estate investment trust industries
appropriate or useful to the Corporation's existing and
potential future business and investments;
xi. make recommendations to the Directors as to appropriate
distributions by the Corporation to its stockholders; and
xii. maintain or cause to be maintained records of activities
reasonably requested by the Corporation.
The foregoing duties of Advisor will also be rendered, for no
additional fee, to entities directly or indirectly controlled by the
Corporation, including but not limited to NHR/OP, L.P. and its subsidiaries.
2. Delegation. With the consent of the Directors from time to time, the
Advisor may delegate to or use the services of any third party, including
any affiliate of the Advisor, in performing its duties hereunder provided
that such third party is subject to the supervision of the Advisor.
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3. No Partnership or Joint Venture. The Corporation 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 Corporation at any
time during ordinary business hours. Annually, and more frequently as
reasonably requested by the Directors, the Advisor shall report to the
Directors its estimated costs in providing the services for the
Corporation hereunder (by category of services to the extent practicable)
and provide the Directors with such information as is reasonably
obtainable by the Advisor concerning the cost to other real estate
investment trusts specializing in healthcare facility investments of
administrative and advisory services comparable to those that are the
subject matter of this Agreement in order that the Directors may evaluate
the performance of the Advisor and the efficiency of the arrangements
provided for in this Agreement.
5. Qualification as a Real Estate Investment Trust. Anything else in this
Agreement to the contrary notwithstanding, the Advisor shall refrain from
any action which, in its sole judgment made in good faith or in the
judgment of the Directors of which the Advisor has written notice, would
adversely affect the status of the Corporation as a real estate investment
trust as defined and limited in Sections 856-860 of the Internal Revenue
Code of 1986, as amended, which would violate any law, rule, regulation or
statement of policy or any governmental body or agency having jurisdiction
over the Corporation or over its securities, or which would otherwise not
be permitted by the Corporation's Articles of Incorporation and Bylaws.
6. Bank Accounts. The Advisor, at the expense of the Corporation, may
establish and maintain one or more bank accounts in the Corporation's
name, 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
Corporation, 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
auditors of the Corporation.
7. Bond. The Advisor, if and to the extent that the Directors require shall
maintain a fidelity bond with a responsible surety company in such amount
as may be required by the Directors from time to time, covering all
directors, officers, employees and agents of the Advisor handling funds of
the Corporation and any investment documents or records pertaining to
investments of the Corporation. Such bond shall inure to the benefit of
the Corporation 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 otherwise. The
premium for said bond shall be an expense of the Corporation.
8. Information Furnished Advisor. The Directors shall at all times keep the
Advisor fully informed with regard to the investment policy of the
Corporation, the capitalization policy of the Corporation and generally
their then current intentions as to the future of the properties and other
investments of the Corporation. In particular, the Directors shall notify
the Advisor promptly of their intention to sell or otherwise dispose of
any of the Corporation's investments or to make any new investment. The
Corporation shall furnish the Advisor with a certified copy of all
financial statements, a signed copy of each report prepared by the
independent certified public accountants and such other information with
regard to the Corporation's affairs as the Advisor may from time to time
reasonably request.
9. Consultation and Advice. In addition to the services described above, the
Advisor shall consult with the Directors, and shall, at the request of the
Directors or the officers of the Corporation, furnish advice and
recommendations with respect to other aspects of the business and affairs
of the Corporation. In general, the Advisor shall inform the Directors of
any factors which come to its attention which would influence the policies
of the Corporation, except to the extent that giving such information
would involve a breach of fiduciary duty.
10. Compensation to Advisor. The Corporation shall pay the Advisor for its
services hereunder the greater of i) two and one-half percent (2.5%) of
Corporation's consolidated gross revenues calculated according to
generally accepted accounting principles, or ii) $500,000. Advisor's
compensation shall be payable in
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monthly installments on the last day of each month, adjusted annually upon
completion of audit.
11. Expenses of the Advisor. Except as provided in Section 12 and without
regard to the amount of compensation received hereunder by the Advisor,
the Advisor shall pay all expenses in performing its obligations
hereunder, including and in addition to the following expenses:
a. the cost of any accounting, statistical or bookkeeping equipment and
services necessary for the maintenance of the books and records of
the Corporation;
b. employment expenses of all personnel of the Advisor and all
expenses, including travel expenses, of the Advisor, incidental to
the investigation and acquisition of properties for the Corporation
prior to the time the investment is made by the Corporation;
c. advertising and promotional expenses incurred in seeking and
disposing of investments for the Corporation;
d. rent, telephone, utilities, office furniture and furnishings and
other office expenses incurred by or allocable to the Advisor for
its own benefit and account regardless of whether incurred or used
in connection with rendering the services to the Corporation
provided for in this Agreement;
e. all miscellaneous administrative and other expenses of the Advisor,
whether or not relating to the performance by the Advisor of its
functions hereunder.
12. Expenses of the Corporation. The Corporation shall pay the following
expenses of the Corporation (except to the extent that the Advisor is
responsible for any such expenses as tenant of any property leased from
the Corporation):
a. dividends;
b. the cost of money borrowed by the Corporation, including interest on
debentures;
c. taxes on income and taxes and assessments on real property and all
other taxes applicable to the Corporation, including without
limitation, franchise and excise fees;
d. except as otherwise provided in Section 11 hereof, all ordinary and
necessary expenses incurred with respect to and allocable to the
prudent operation and business of the Corporation, including without
limitation, any fees, salaries and other employment costs, taxes and
expenses paid to Directors, officers and employees of the
Corporation who are not also employees of the Advisor;
e. fees and expenses paid to independent contractors, appraisers,
consultants, attorneys, managers and other agents retained by or on
behalf of the Corporation and expenses directly connected with the
acquisition, financing, refinancing, disposition and ownership of
real estate interests or of other property (including insurance
premiums, legal services, brokerage and sales commissions,
maintenance, repair and improvement of property);
f. insurance as required by the Directors (including Directors' and
Officers' liability insurance);
g. expenses connected with payments of dividends or distributions in
cash or any other form made or caused to be made by the Directors to
shareholders of the Corporation and expenses connected with payments
of interest to holders of the Corporation's Debentures;
h. all expenses connected with communications to holders of securities
of the Corporation and the other bookkeeping and clerical work
necessary in maintaining relations with holders of securities,
including the cost of printing and mailing certificates for
securities and proxy solicitation materials and reports of the
Corporation's securities;
i. transfer agent's, registrar's, dividend disbursing agent's, dividend
reinvestment plan agent's and
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indenture trustee's fees and charges;
j. legal, auditing fees, Section 404 certification fees, costs and
expenses of the Corporation; and
k. legal, auditing, accounting, underwriting, brokerage, listing,
registration and other fees and printing, engraving and other
expenses and taxes incurred in connection with the organization or
financing of the Corporation, or for the issuance, distribution,
transfer, registration and listing of the Corporation's securities.
13. Other Activities of the Advisor. Nothing herein contained shall prevent
the Advisor or any of its officers, directors or employees or any of its
affiliates from engaging in other business activities related to real
estate investments, from undertaking investments permitted of them by the
Corporation's Bylaws or from acting as advisor to any other person or
entity even though having investment policies similar to the Corporation,
and the Advisor and its officers, directors or employees and any of its
Affiliates shall be free from any obligation to present to the Corporation
any particular investment opportunity which comes to the Advisor or such
persons, regardless of whether such opportunity is within the
Corporation's investment policies; provided, however, that when the
Advisor has the ability to present a particular investment opportunity
which is suitable for purchase by the Corporation and any other entities
as to which the Advisor has advisory responsibility, the Advisor will
review the investment portfolio of each entity and will decide which
entity will acquire a particular property on the basis of such factors as
it deems appropriate including, among others, cashflow, the effect of the
acquisition on diversification of the portfolio of each, the estimated
income tax effects of the purchase, the amount of funds available and the
length of time such funds have been available for investment. In the event
a particular property is equally appropriate for investment by more than
one entity, the Advisor will offer the investment to the entity whose
funds have been available for the longest period of time.
14. Term; Termination of Agreement. This Agreement shall continue in force
from the date hereof for an indefinite term; provided that either party
may terminate this Agreement upon written notice of termination given to
the other party at least ninety days prior to the effective date of such
termination; provided, further, that the Corporation may terminate this
Agreement at any time upon the continuation of any event described in
Section 17 hereof or otherwise for cause. Upon termination of this
Agreement for any reason the Advisor shall cooperate with the Corporation
to provide for an orderly transition.
15. Amendments. This Agreement shall not be 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.
16. Assignment. This agreement shall not be assigned or otherwise transferred
by the Advisor without the prior written consent of a majority of the
Directors, including a majority of the Directors not affiliated with the
Advisor. This Agreement shall not be assigned by the Corporation without
the consent of the Advisor, except in the case of assignment by the
Corporation to a corporation, association, trust or other organization
which is a successor to the Corporation. Such successor shall be bound
hereunder and by the terms of said assignment in the same manner as the
Corporation is bound hereunder.
17. Default, Bankruptcy, etc. At the option solely of the Corporation upon
vote of a majority of its Directors, this Agreement shall be and become
terminated immediately upon written notice of termination from the
Corporation to the Advisor if any of the following events shall occur:
a. If the Advisor shall violate any provision of this Agreement, and
after notice of such violation shall not cure such default within
thirty days; or
b. If 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 its reorganization, and such adjudication or
order shall remain in force or unstayed for a period of thirty days;
or
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c. If the Advisor shall institute proceedings for voluntary bankruptcy
or file a petition seeking reorganization under the Federal
bankruptcy laws, or for relief under any law for the relief of
debtors, or shall consent to the appointment of a receiver of itself
or of all or substantially all its property, or shall make a general
assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally, as they become due.
The Advisor agrees that if any event specified in subsections (b) and (c)
of this Section 17 shall occur, it will give written notice thereof to the
Directors within seven (7) days after the occurrence of such event.
18. Action Upon Termination. From and after the effective date of termination
of this Agreement, pursuant to Section 14, 16 or 17 hereof, the Advisor,
except as provided in Section 10, shall not be entitled to compensation
for further services hereunder but shall be paid all compensation accruing
to the date of termination. The Advisor shall forthwith upon such
termination:
a. pay over to the Corporation all moneys collected and held for the
account of the Corporation 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 moneys
held by it, covering the period following the date of the last
accounting furnished to the Directors;
c. deliver to the Directors all property and documents of the
Corporation then in the custody of the Advisor in its capacity as
such; and
d. cooperate with the Directors to provide an orderly management
transition.
19. Miscellaneous. 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 of the Directors in following or
declining to follow any advice or recommendations of the Advisor. Neither
party nor its partners nor any shareholders, directors, officers or
employees of any of its partners shall be liable to the other party, its
Directors, the holders of securities of the Corporation or to any
successor or assign of the Corporation for any act taken in good faith and
in a manner reasonably believed by the person acting on behalf of the
party to be in the best interests of the party, or for any other act
except an act constituting bad fath, willful misfeasance, gross negligence
or reckless disregard of its duties.
20. 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 at the
following addresses of the parties hereto:
The Corporation: Xxxxxx X. Xxxxx
National Health Realty, Inc.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxx 00000
The Advisor: R. Xxxxxxx Xxxxxx
Tennessee HealthCare Advisors
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxx 00000
Either party may at any time give notice in writing to the other party of
a change of its address for the purpose of this Section 20.
21. Headings. The section headings hereof have been inserted for convenience
of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
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22. Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the State of Tennessee as at
the time in effect.
IN WITNESS WHEREOF, the Corporation and the Advisor, each by a duly
authorized officer have signed and delivered this Agreement under their
respective corporate seals all as of the day and year first above written.
NATIONAL HEALTH REALTY, INC.
By /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: President
TENNESSEE HEALTHCARE ADVISORS
By /s/ R. Xxxxxxx Xxxxxx
-----------------------------------
Name: R. Xxxxxxx Xxxxxx
Title: Vice President & Secretary
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