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ADVISORY AGREEMENT
BETWEEN
NATIONAL INCOME REALTY TRUST
AND
TARRAGON REALTY ADVISORS, INC.
THIS AGREEMENT dated April 1, 1995, between National Income Realty
Trust, a California real estate investment trust (the "Trust"), and Tarragon
Realty Advisors, Inc., a New York corporation (the "Advisor").
W I T N E S S E T H:
WHEREAS:
1. The Trust owns a complex, diversified portfolio of real
estate, mortgages and other assets, including affordable and
middle income housing complexes, shopping centers, warehouses,
office buildings and mortgages.
2. The Trust has funds available for new investment, primarily in
the acquisition of income-producing real estate.
3. The Advisor and its employees have extensive experience in the
administration of real estate assets and the origination,
structuring and evaluation of real estate and mortgage
investments.
NOW THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties agree as follows:
1. DUTIES OF THE ADVISOR. Subject to the supervision of the
Board of Trustees, the Advisor will be responsible for the day-to-day
operations of the Trust and, subject to Section 17 hereof, shall provide such
services and activities relating to the assets, operations and business plan of
the Trust as may be appropriate, including:
(a) preparing and submitting an annual budget and business plan
for approval by the Board of the Trust (the "Business Plan");
(b) using its best efforts to present to the Trust a continuing
and suitable investment program consistent with the investment
policies and objectives of the Trust as set forth in the
Business Plan;
(c) using its best efforts to present to the Trust investment
opportunities consistent with the Business Plan and such
investment program as the Trustees may adopt from time to
time;
(d) furnishing or obtaining and supervising the performance of the
ministerial functions in connection with the administration of
the day-to-day operations of the Trust including the
investment of reserve funds and surplus cash in short-term
money market investments;
(e) serving as the Trust's investment and financial advisor and
providing research, economic, and statistical data in
connection with the Trust's investments and investment and
financial policies;
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(f) on behalf of the Trust, investigating, selecting and
conducting relations with borrowers, lenders, mortgagors,
brokers, investors, builders, developers and others;
(g) consulting with the Trustees and furnishing the Trustees with
advice and recommendations with respect to the making,
acquiring (by purchase, investment, exchange, or otherwise),
holding, and disposition (through sale, exchange, or
otherwise) of investments consistent with the Business Plan of
the Trust;
(h) obtaining for the Trustees such services as may be required in
acquiring and disposing of investments, disbursing and
collecting funds of the Trust, paying the debts and fulfilling
the obligations of the Trust, and handling, prosecuting, and
settling any claims of the Trust, including foreclosing and
otherwise enforcing mortgage and other liens securing
investments;
(i) obtaining for and at the expense of the Trust such services as
may be required for property management, loan disbursements,
and other activities relating to the investments of the Trust,
provided, however, the compensation for such services shall be
agreed to by the Trust and the service provider;
(j) advising the Trust in connection with public or private sales
of shares or other securities of the Trust, or loans to the
Trust, but in no event in such a way that the Advisor could be
deemed to be acting as a broker-dealer or underwriter;
(k) quarterly, and at any time requested by the Trustees, making
reports to the Trustees regarding the Trust's performance to
date in relation to the Trust's approved Business Plan and its
various components, as well as the Advisor's performance of
the foregoing services;
(l) making or providing appraisal reports, where appropriate, on
investments or contemplated investments of the Trust;
(m) assisting in preparation of reports and other documents
necessary to satisfy the reporting and other requirements of
any governmental bodies or agencies and to maintain effective
communications with shareholders of the Trust; and
(n) doing all things necessary to ensure its ability to render the
services contemplated herein, including providing office space
and office furnishings and personnel necessary for the
performance of the foregoing services as Advisor, all at its
own expense, except as otherwise expressly provided for
herein.
2. NO PARTNERSHIP OR JOINT VENTURE. The Trust 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.
3. RECORDS. At all times, the Advisor shall keep proper books of
account and records of the Trust's affairs which shall be accessible for
inspection by the Trust at any time during ordinary business hours.
4. ADDITIONAL OBLIGATIONS OF THE ADVISOR. The Advisor shall
refrain from any action (including, without limitation, furnishing or rendering
services to tenants of property or managing or operating real property) that
would (a) adversely affect the status of the Trust as a real estate investment
trust, as defined and limited in Sections 856-860 of the Internal Revenue Code,
(b) violate any law, rule, regulation, or statement of policy of any
governmental body or agency having jurisdiction over the Trust or over its
securities, (c) cause the Trust to be required to register as an investment
company under the Investment Company Act of 1940, or (d) otherwise not be
permitted by the Declaration of Trust of the Trust.
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5. BANK ACCOUNTS. The Advisor may establish and maintain one or
more bank accounts in its own 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 Trust, under such terms and conditions as the Trustees 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 Trustees and to
the auditors of the Trust.
6. BOND. The Advisor shall maintain a fidelity bond with a
responsible surety company in such amount as may be required by the Trustees
from time to time, covering all directors, officers, employees, and agents of
the Advisor handling funds of the Trust and any investment documents or records
pertaining to investments of the Trust. Such bond shall inure to the benefit
of the Trust in respect to losses of any such property from acts of such
directors, officers, employees and agents through theft, embezzlement, fraud,
error, or omission or otherwise, the premium for said bond to be at the expense
of the Trust.
7. INFORMATION FURNISHED ADVISOR. The Trustees shall have the
right to change the Business Plan at any time, effective upon receipt by the
Advisor of notice of such change. The Trust shall furnish the Advisor with a
certified copy of all financial statements, a signed copy of each report
prepared by independent certified public accountants, and such other
information with regard to the Trust's affairs as the Advisor may from time to
time reasonably request.
8. CONSULTATION AND ADVICE. In addition to the services
described above, the Advisor shall consult with the Trustees, and shall, at the
request of the Trustees or the officers of the Trust, furnish advice and
recommendations with respect to any aspect of the business and affairs of the
Trust, including any factors that in the Advisor's best judgment should
influence the policies of the Trust.
9. ANNUAL BUSINESS PLAN AND BUDGET. No later than January 15th
of each year, the Advisor shall submit to the Trustees a written Business Plan
for the current Fiscal Year of the Trust. Such Business Plan shall include a
twelve-month forecast of operations and cash flow with explicit assumptions and
a general plan for asset sales or acquisitions, lending, foreclosure and
borrowing activity, other investments or ventures and proposed securities
offerings or repurchases or any proposed restructuring of the Trust. To the
extent possible, the Business Plan shall set forth the Advisor's
recommendations and the basis therefore with respect to all material
investments of the Trust. Upon approval by the Board of Trustees, the Advisor
shall be authorized to conduct the business of the Trust in accordance with the
explicit provisions of the Business Plan, specifically including the borrowing,
leasing, maintenance, capital improvements, renovations and sale of investments
set forth in the Business Plan. Any transaction or investment not explicitly
provided for in the approved Business Plan shall require the prior approval of
the Board of Trustees unless made pursuant to authority expressly delegated to
the Advisor. Within sixty (60) days of the end of each calendar quarter, the
Advisor shall provide the Board of Trustees with a report comparing the Trust's
actual performance for such quarter against the Business Plan.
10. DEFINITIONS. As used herein, the following terms shall have
the meanings set forth below:
(a) "Adjusted Funds From Operations" shall mean, for any period of
time, funds from operations (as defined by the National
Association of Real Estate Investment Trusts) for such period
of time plus (i) any loss due to the write-down or sale of
any real property or mortgage loan acquired prior to January
1, 1989 and (ii) the amount of advisory fees payable to the
Advisor under Article 11 hereof but only to the extent such
fees are considered as current expenses in determining profit
or loss.
(b) "Affiliate" shall mean, as to any Person, any other Person who
owns beneficially, directly, or indirectly, 1% or more of the
outstanding capital stock, shares or equity interests of such
Person or of any other Person which controls, is controlled
by, or is under common control with such
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Person or is an officer, retired officer, director, employee,
partner, or trustee (excluding non-interested trustees not
otherwise affiliated with the entity) of such Person or of any
other Person which controls, is controlled by, or is under
common control with, such Person.
(c) "Appraised Value" shall mean the value of a Real Property
according to an appraisal made by an independent qualified
appraiser who is a member in good standing of the American
Institute of Real Estate Appraisers and is duly licensed to
perform such services in accordance with the applicable state
law, or, when pertaining to Mortgage Loans, the value of the
underlying property as determined by the Advisor.
(d) "Book Value" of an asset or assets shall mean the value of
such asset or assets on the books of the Trust, before
provision for amortization, depreciation, depletion or
valuation reserves and before deducting any indebtedness or
other liability in respect thereof, except that no asset shall
be valued at more than its fair market value as determined by
the Trustees.
(e) "Business Plan" shall mean the Trust's investment policies and
objectives and the capital and operating budget based thereon,
approved by the Board as thereafter modified or amended.
(f) "Fiscal Year" shall mean any period for which an income tax
return is submitted to the Internal Revenue Service and which
is treated by the Internal Revenue Service as a reporting
period.
(g) "Mortgage Loans" shall mean notes, debentures, bonds, and
other evidences of indebtedness or obligations, whether
negotiable or non-negotiable, and which are secured or
collateralized by mortgages, including first, wraparound,
construction and development, and junior mortgages.
(h) "Net Asset Value" shall mean the Book Value of all the assets
of the Trust minus all the liabilities of the Trust.
(i) "Net Income" for any period shall mean the Net Income of the
Trust for such period computed in accordance with generally
accepted accounting principles after deduction of the Gross
Asset Fee, but before deduction of the Net Income Fee, as set
forth in Sections 11(a) and 11(b), respectively, herein, and
inclusive of gain or loss of the sale of assets.
(j) "Net Operating Income" shall mean rental income less property
operating expenses.
(k) "Person" shall mean and include individuals, corporations,
limited partnerships, general partnerships, joint stock
companies or associations, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts, or other entities and governments and
agencies and political subdivisions thereof.
(l) "Real Property" shall mean and include land, rights in land,
leasehold interests (including but not limited to interests of
a lessor or lessee therein), and any buildings, structures,
improvements, fixtures, and equipment located on or used in
connection with land, leasehold interests, and rights in land
or interests therein.
All calculations made pursuant to this Agreement shall be based on
statements (which may be unaudited, except as provided herein) prepared on an
accrual basis consistent with generally accepted accounting principles,
regardless of whether the Trust may also prepare statements on a different
basis. All other terms shall have the same meaning as set forth in the Trust's
Declaration of Trust and Trustees' Regulations.
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11. ADVISORY COMPENSATION.
(a) No Base Advisory Fee. The Trust shall not be required to pay
to the Advisor any Base Advisory Fee for advisory services for
the term hereof.
(b) Incentive Advisory Fee. As an incentive for successful
investment and management of the Trust's assets, the Trust
shall pay the Advisor a fee equal to 16% per annum of the
Trust's Adjusted Funds from Operation for each Fiscal Year or
portion thereof for which the Advisor provides services. The
Incentive Advisory Fee shall be payable monthly in advance
based on the Adjusted Funds from Operation for the most recent
month for which a monthly financial statement for the Trust
has been prepared. The Incentive Advisory Fee shall be
cumulative within any Fiscal Year, such that if the Trust has
negative Adjusted Funds from Operation in any month, each
subsequent payment shall be adjusted to maintain the 16% per
annum rate.
(c) Acquisition Commission. For supervising the acquisition,
purchase or long-term lease of Real Property for the Trust,
the Trust shall pay to the Advisor an Acquisition Commission
equal to 1% of the acquisition cost for each real property
acquired during the term hereof, except that no such fee shall
be due for any acquisition through or from an affiliate of the
Trust or the Advisor, inclusive of commissions, if any, paid
to nonaffiliated brokers. The aggregate of each purchase
price of each property (including the Acquisition Commissions
and all real estate brokerage fees) may not exceed such
property's Appraised Value at acquisition.
(d) Mortgage Brokerage and Refinancing Fees. For obtaining loans
to the Trust or refinancing on Trust properties, the Advisor
or an Affiliate is to receive a Mortgage Brokerage and
Refinancing Fee equal to the lesser of a) 1% of the amount of
the loan or the amount refinanced or b) a brokerage or
refinancing fee which is reasonable and fair under the
circumstances; provided, however, that no such fee shall be
paid on loans from the Advisor or an Affiliate without the
approval of the Board of Trustees. No fee shall be paid on
loan extensions.
(e) Real Estate Brokerage Commission. Subject to approval by the
Board of Trustees, the Trust may pay to the Advisor or an
Affiliate of the Advisor a Real Estate Brokerage Commission
for services rendered upon (i) the purchase of real property
by the Trust or (ii) the sale of real property owned by the
Trust, for which the Advisor or an Affiliate acts as the
broker in such transaction in amounts not to exceed customary
fees charged by nationally-recognized real estate brokers for
normal similar transactions on a non-exclusive basis. The
provision of real estate brokerage services by the Advisor or
an Affiliate shall be on terms not less favorable to the Trust
than the terms on which unaffiliated parties are then
performing similar services for entities comparable to the
Trust not entered into on an exclusive basis. The entry into
the applicable real estate brokerage arrangement between the
Trust and the Advisor shall be approved as required by the
Declaration of Trust.
12. LIMITATION ON THIRD PARTY MORTGAGE PLACEMENTS FEES. The
Advisor or any of its Affiliates shall pay to the Trust, the full amount of any
compensation received by the Advisor or any such Affiliate from third parties
with respect to the origination, placement or brokerage of any loan made by the
Trust.
13. STATEMENTS. The Advisor shall furnish to the Trust not later
than the tenth day of each calendar month, beginning with the second calendar
month of the term of this Agreement, a statement showing the computation of the
fees, if any, payable in respect to the next preceding calendar month (or, in
the case of incentive compensation, for the preceding Fiscal Year, as
appropriate) under the Agreement. The final settlement of incentive
compensation for each Fiscal Year shall be subject to adjustment in accordance
with, and upon completion of, the annual audit of the Trust's financial
statements; any payment by the Trust or repayment
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by the Advisor that shall be indicated to be necessary in accordance therewith
shall be made promptly after the completion of such audit and shall be
reflected in the audited statements to be published by the Trust.
14. COMPENSATION FOR ADDITIONAL SERVICES. If and to the extent
that the Trust shall request the Advisor or any director, officer, partner, or
employee of the Advisor to render services for the Trust other than those
required to be rendered by the Advisor hereunder, such additional services, if
performed, will be compensated separately on terms to be agreed upon between
such party and the Trust from time to time. In particular, but without
limitation, if the Trust shall request that the Advisor perform property
management, leasing, loan disbursement or similar functions, the Trust and the
Advisor shall enter in to a separate agreement specifying the obligations of
the parties and providing for reasonable additional compensation to the Advisor
for performing such services.
15. EXPENSES OF THE ADVISOR. Without regard to the amount of
compensation or reimbursement received hereunder by the Advisor, the Advisor
shall bear the following expenses:
(a) employment expenses of the executive officers, directors or
shareholders of the Advisor (including Trustees, officers, and
employees of the Trust who are directors, officers, or
employees of the Advisor or of any company that controls, is
controlled by, or is under common control with the Advisor),
including, but not limited to, fees, salaries, wages, payroll
taxes, travel expenses, and the cost of employee benefit plans
and temporary help expenses except for those personnel
expenses relating to employees of the Advisor principally
engaged in accounting, shareholder relations or mortgage
servicing;
(b) advertising and promotional expenses incurred in seeking
investments for the Trust;
(c) rent, telephone, utilities, office furniture and furnishings,
and other office expenses of the Advisor, except as any of
such expenses relates to employees of the Advisor principally
engaged in accounting shareholder relations or mortgage
servicing; and
(d) miscellaneous administrative expenses relating to performance
by the Advisor of its functions hereunder.
In addition to the Advisory Compensation described in Section 11, the Advisor
shall be reimbursed for certain costs and expenses monthly on the basis of an
equitable allocation applied on a consistent and timely basis in accordance
with the Advisor's regular procedures. Such procedures provide for
identification of all material costs and expenses to be accounted for as a cost
of particular functions. Only costs and expenses allocable to legal, mortgage
servicing, training and financial departments are reimbursable as well as
certain portions of expenses not specifically identifiable to a particular
department.
16. EXPENSES OF THE TRUST. The Trust shall pay all its expenses
not assumed by the Advisor, including without limitation, the following
expenses:
(a) the cost of money borrowed by the Trust;
(b) income taxes, taxes and assessments on real property, and all
other taxes applicable to the Trust;
(c) legal, auditing, accounting, underwriting, brokerage, listing,
registration and other fees, printing, and engraving and other
expenses, and taxes incurred in connection with the issuance,
distribution, transfer, registration, and stock exchange
listing of the Trust's securities;
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(d) fees, salaries, and expenses paid to officers, and employees
of the Trust who are not directors, officers or employees of
the Advisor, or of any company that controls, is controlled
by, or is under common control with the Advisor other than
employees of the Advisor principally engaged in accounting,
shareholder relations and mortgage servicing;
(e) expenses directly connected with the origination or purchase
of Mortgage Loans and with the acquisition, disposition, and
ownership of real estate equity interests or other property
(including the costs of foreclosure, insurance, legal,
protective, brokerage, maintenance, repair, and property
improvement services) and including all compensation,
traveling expenses, and other direct costs associated with the
Advisor's employees or other personnel engaged in (i) real
estate transaction legal services, (ii) internal auditing,
(iii) foreclosure and other mortgage finance services, (iv)
sale or solicitation for sale of mortgages, (v) engineering
and appraisal services, and (vi) transfer agent services;
(f) expenses of maintaining and managing real estate equity
interests;
(g) insurance, as required by the Trustees (including Trustees'
liability insurance);
(h) the expenses of organizing, revising, amending, converting,
modifying, or terminating the Trust;
(i) expenses connected with payments of dividends or interest or
distributions in cash or any other form made or caused to be
made by the Trustees to holders of securities of the Trust;
(j) all expenses connected with communications to holders of
securities of the Trust and the other bookkeeping and clerical
work necessary to maintaining relations with holders of
securities, including the cost of printing and mailing
certificates for securities and proxy solicitation materials
and reports to holders of the Trust's securities;
(k) the cost of any accounting, statistical, bookkeeping or
computer equipment or computer time necessary for maintaining
the books and records of the Trust and for preparing and
filing Federal, State and Local tax returns;
(l) transfer agent's, registrar's, and indenture trustee's fees
and charges;
(m) legal, accounting, investment banking, and auditing fees and
expenses charged by independent parties performing these
services not otherwise included in clauses (c) and (e) of this
Section 16;
(n) expenses incurred by the Advisor arising from the sales of
Trust properties, including those expenses related to carrying
out foreclosure proceedings;
(o) expenses incurred by the Advisor in connection with the sale
or disposition of Trust assets, including mortgage servicing;
(p) costs and expenses connected with computer services, including
but not limited to employee or other personnel compensation,
hardware and software costs, and related development and
installation costs associated therewith;
(q) costs and expenses associated with risk management (i.e.,
insurance relating to the Trust's assets);
(r) loan refinancing compensation; and
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(s) expenses associated with special services requested by the
Trustees pursuant to Section 14 hereof.
17. OTHER ACTIVITIES OF ADVISOR. The Advisor, its officers,
directors, or employees or any of its Affiliates may engage in other business
activities related to real estate investments or act as advisor to any other
person or entity (including another real estate investment trust), including
those with investment policies similar to the Trust, and the Advisor and its
officers, directors, or employees and any of its Affiliates shall be free from
any obligation to present to the Trust any particular investment opportunity
that comes to the Advisor or such persons, regardless of whether such
opportunity is in accordance with the Trust's Business Plan. However, to
minimize any possible conflict, the Advisor shall consider the respective
investment objectives of, and the appropriateness of a particular investment to
each such entity in determining to which entity a particular investment
opportunity should be presented. If appropriate to more than one entity, the
Advisor shall present the investment opportunity to the entity that has had
sufficient uninvested funds for the longest period of time. The Advisor shall
promptly inform the Trust of each real estate acquisition made by the Advisor
or any Affiliate.
18. LIMITATION ON OPERATING EXPENSES. To the extent that the
operating expenses of the Trust for any Fiscal Year exceeds the limitation set
forth in the Trust's Declaration of Trust, as amended from time to time, or any
similar limitation (if contained) in a successor Declaration of Trust or
Certificate of Incorporation, the Advisor shall refund to the Trust such
portion of its fees payable hereunder as may be required by such Section.
19. TERM; TERMINATION OF AGREEMENT. This Agreement shall continue
in force for a period of one year, and, thereafter, it may be renewed from year
to year, subject to any required approval of the Shareholders of the Trust, and
if any Trustee is an Affiliate of the Advisor, the approval of a majority of
the Trustees who are not so affiliated. Notice of renewal shall be given in
writing by the Trustees to the Advisor not less than 60 days before the
expiration of this Agreement or of any extension thereof. This Agreement may
be terminated for any reason without penalty upon 60 days' written notice by
the Trust to the Advisor or 120 days' written notice by the Advisor to the
Trust, in the former case by the vote of a majority of the Trustees who are not
Affiliates of the Advisor or by the vote of holders of a majority of the
outstanding shares of the Trust. Notwithstanding the foregoing, however, in
the event of any material change in the ownership, control or management of the
Advisor, the Trust may terminate this Agreement without penalty and without
advance notice to the Advisor.
20. 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.
21. ASSIGNMENT. This Agreement shall not be assigned by the
Advisor without the prior consent of the Trust. The Trust may terminate this
Agreement in the event of its assignment by the Advisor without the prior
consent of the Trust. Such an assignment or any other assignment of this
Agreement by the Advisor shall bind the assignee hereunder in the same manner
as the Advisor is bound hereunder. This Agreement shall not be assignable by
the Trust without the consent of the Advisor, except in the case of assignment
by the Trust to a corporation, association, trust, or other organization that
is a successor to the Trust. Such successor shall be bound hereunder and by
the terms of said assignment in the same manner as the Trust is bound
hereunder.
22. DEFAULT, BANKRUPTCY, ETC. At the option solely of the
Trustees, this Agreement shall be and become terminated immediately upon
written notice of termination from the Trustees 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 30 days; or
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(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 30 days; or
(c) If the Advisor shall institute proceedings for voluntary
bankruptcy or shall 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 made a general assignment for the benefit
of its creditors, or shall admit in writing its inability to
pay its debts generally, as they become due.
The Advisor agrees that if any of the events specified in subsections
(b) and (c) of this Section 22 shall occur, it will give written notice thereof
to the Trustees within seven days after the occurrence of such event.
23. ACTION UPON TERMINATION. From and after the effective date of
termination of this Agreement, pursuant to Sections 19, 21 or 22 hereof, the
Advisor 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 Trust all monies collected and held for the
account of the Trust pursuant to this Agreement;
(b) deliver to the Trustees a full accounting, including a
statement showing all payments collected by it and a statement
of any monies held by it, covering the period following the
date of the last accounting furnished to the Trustees; and
(c) deliver to the Trustees all property and documents of the
Trust then in the custody of the Advisor.
24. MISCELLANEOUS. The Advisor shall be deemed to be in a
fiduciary relationship to the shareholders of the Trust. 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
Trustees in following or declining to follow any advise or recommendations of
the Advisor. Neither the Advisor nor any of its shareholders, directors,
officers, or employees shall be liable to the Trust, the Trustees, the holders
of securities of the Trust or to any successor or assign of the Trust for any
losses arising from the operation of the Trust if the Advisor had determined,
in good faith, that the course of conduct which caused the loss or liability
was in the best interests of the Trust and the liability or loss was not the
result of negligence or misconduct by the Advisor. However, in no event will
the directors, officers or employees of the Advisor be personally liable for
any act or failure to act unless it was the result of such person's willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.
25. 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
address of the parties hereto:
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The Trustees and/or the Trust:
National Income Realty Trust
280 Park Avenue East Bldg.
20th Floor
New York, New York 10017
Attention: President
The Advisor:
Tarragon Realty Advisors, Inc.
280 Park Avenue East Bldg.
20th Floor
New York, New York 10017
Attention: Executive Vice President and
Chief Financial Officer
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 25.
26. 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.
27. GOVERNING LAW. This Agreement has been prepared, negotiated
and executed in the State of New York. The provisions of this Agreement shall
be construed and interpreted in accordance with the laws of the State of New
York applicable to agreements made and to be performed entirely in the State of
New York.
28. EXECUTION. This instrument is executed and made on behalf of
the Trust by a Trustee of the Trust, not individually but solely as a Trustee
under the Declaration of the Trust, and the obligations under this Agreement
are not binding upon, nor shall resort be had to the private property of, any
of the Trustees, shareholders, officers, employees, or agents of the Trust
personally, but bind only the Trust property.
IN WITNESS WHEREOF, NATIONAL INCOME REALTY TRUST AND TARRAGON REALTY
ADVISORS, INC., by their duly authorized officers, have signed these presents
all as of the day and year first above written.
NATIONAL INCOME REALTY TRUST
BY: /s/ WILLIAM S. FRIEDMAN
-----------------------------------
William S. Friedman
President and Trustee
TARRAGON REALTY ADVISORS, INC.
BY: /s/ JOHN A. DOYLE
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John A. Doyle
President
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