Exhibit 10.1


 


EXECUTION COPY


 


SECOND AMENDED AND RESTATED

ADVISORY AGREEMENT
 
THIS SECOND AMENDED AND RESTATED ADVISORY AGREEMENT (this ”Agreement”) is entered into as of June 3, 2004, by and between AMERICA FIRST APARTMENT INVESTORS, INC., a Maryland corporation (the ”Company”), and AMERICA FIRST APARTMENT ADVISORY CORPORATION, a Maryland corporation (the ”Advisor”).
 
W I T N E S S E T H:
 
WHEREAS, the Company operates as a real estate investment trust (a ”REIT”) under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the ”Code”); and
 
WHEREAS, the Company, directly or through its Subsidiaries, invests in multifamily apartment complexes, mortgage-backed securities and other real estate related investments meeting the investment criteria established from time to time by its Board of Directors; and
 
WHEREAS, the Company has retained the Advisor to manage the operations and investments of the Company and its Subsidiaries and to perform administrative services for the Company and its Subsidiaries, in the manner and on the terms set forth in the First Amended and Restated Advisory Agreement between the Company and the Advisor, dated October 21, 2003, (the “First Amended Agreement”); and
 
WHEREAS, on the date hereof the Company will consummate a merger of America First Real Estate Investment Partners, L.P., a Delaware limited partnership which invests in real estate assets similar to those of the Company (“AFREZ”), with and into the Company; and
 
WHEREAS, as a result of the foregoing, the Company (acting with the concurrence of each of its Independent Directors) and the Advisor believe that it is necessary and appropriate to further amend and restate the terms of the First Amended Agreement as set forth in this Agreement which shall supercede the First Amended Agreement in its entirety;
 
NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto agree as follows:
 


Definitions. 
Capitalized terms used herein shall have the respective meanings
assigned them in this Section 1:


 


(a)                                  “Affiliate”
means, with respect to either party hereto, (i) any person who directly or
indirectly controls or is controlled by or is under common control with the
specified party, (ii) any person who is (or has the power to designate) an
officer of, general partner in or trustee of, or serves (or has the power to
designate a person to serve) in a similar capacity with respect to, the
specified party, and (iii) any person who, directly or indirectly, is the
beneficial owner of 10% or more of any class of equity securities of the
specified party.


 

















 


(b)                                 “AFREZ Property Value” means the value of
the real property and securities which (i) were held by AFREZ on the date on
which the merger of AFREZ and the Company becomes effective and (ii) continue
to be held by the Company, determined in the manner provided in the Amended and
Restated Agreement of Limited Partnership of AFREZ, dated December 31,
2000, for purposes of calculating the administrative fee payable to the general
partner of AFREZ under section 5.05(b) of such Agreement of Limited
Partnership.


 


(c)                                  “Agreement”
means this First Amended and Restated Advisory Agreement between the Company
and the Advisor, as amended from time to time.


 


(d)                                 “Board
of Directors” means the board of directors of the Company.


 


(e)                                  “Foreclosed
Bonds” means any one or more of the tax-exempt housing bonds which
were originally issued by various state or local authorities to America First
Tax Exempt Mortgage Fund 2 Limited Partnership (the predecessor to the Prior
Partnership) in order to provide construction and permanent financing for seven
multifamily housing properties that the Prior Partnership acquired through
foreclosure or deed in lieu of foreclosure.


 


(f)                                    “GAAP”
means accounting principles generally accepted in the United States of America.


 


(g)                                 “Governing
Instruments” means the articles of incorporation and bylaws, in the
case of a corporation, the limited liability company agreement, in the case of
a limited liability company and the partnership agreement, in the case of a
partnership, as such instruments may be amended from time to time.


 


(h)                                 “Independent
Directors” means those members of the Board of Directors who are
neither executive officers of the Company nor executive officers or directors
of the Advisor and who otherwise qualify as independent directors under the
rules of the stock exchange on which the common stock of the Company is listed.


 


(i)                                     “Investment Assets” means Real Estate
Assets, Mezzanine Investments, Mortgage-backed Securities and other real estate
related investments meeting the investment criteria established from time to
time by the Company’s Board of Directors.


 


(j)                                     “MBS Gross Asset Value” means the
outstanding principal balance, in U.S. dollars of the Mortgage-backed Securities
held by the Company determined quarterly on a marked-to-market basis.


 


(k)                                  “Mezzanine Investments” means investments
in the form of subordinate mortgage loans, preferred equity or similar
arrangements consistent with the underwriting or acquisition criteria
established by the Company from time to time made by the Company to
unaffiliated owners of multifamily apartment properties.


 


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(l)                                     “Mortgage-backed Securities” means
mortgage-backed securities meeting the investment criteria established by the
Company from time to time which have been acquired by the Company.


 


(m)                               “NAREIT Index Rate” means the composite
dividend yield, expressed in terms of an annual percentage rate, as reported by
the National Association of Real Estate Investment Trusts for equity REITs
which invest in residential apartment properties.


 


(n)                                 “Prior
Partnership” means America First Apartment Investors, L.P.,
a Delaware limited partnership which merged with and into the Company as
of the date of this Agreement.


 


(o)                                 “Qualified
REIT Subsidiary” means a corporation, 100% of the stock of which is
held by the Company at all times during the existence of the corporation,
consistent with the definition of Qualified REIT Subsidiary in Section 856(i)(2)
of the Code.


 


(p)                                 “Real Estate Assets” means multifamily
apartment complexes and other real property meeting the investment criteria
established by the Company from time to time which is owned in fee, directly or
indirectly, by the Company


 


(q)                                 “Subsidiary”
shall mean any corporation, whether now existing or in the future established,
of which the Company, directly or indirectly, owns more than 50% of the
outstanding voting securities of any class or classes, or any business trust,
partnership or similar noncorporate form in which the Company, directly or
indirectly, owns more than 50% of the beneficial interests.


 


(r)                                    “Taxable
REIT Subsidiary” means a corporation, the stock of which is held by
the Company, consistent with the definition of Taxable REIT Subsidiary in
Section 856(l) of the Code.


 


General
Duties of the Advisor.  Subject to the supervision of
the Board of Directors, the Advisor shall provide services to the Company, and
to the extent directed by the Board of Directors, shall provide similar
services to any Subsidiary of the Company as follows:


 


(a)                                  administer the day-to-day operations of
the Company and its Subsidiaries and perform or supervise the performance of
such administrative functions necessary in the management of the Company and
its Subsidiaries as may be agreed upon by the Advisor and the Board of
Directors, including, without limitation, collection of revenues and payment of
expenses, debts and obligations and maintenance of appropriate computer
services to provide such administrative functions;


 


(b)                                 serve as the Company’s consultant with
respect to formulation of investment criteria and preparation of policy
guidelines by the Board of Directors;


 


(c)                                  act as the authorized agent of the
Company in connection with the identification, evaluation, purchase, financing,
operation and disposition of Investment 


 


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Assets and, as such, the
officers and designated employees of the Advisor will have the authority to
execute documents in connection therewith on behalf of the Company;


 


(d)                                 furnish reports and statistical and
economic research to the Company regarding the investments, activities and
results of operations of the Company and its Subsidiaries and the services
performed for the Company and its Subsidiaries by the Advisor;


 


(e)                                  monitor and provide to the Board of
Directors on an on-going basis information and other data regarding national
and local real estate markets in which the Company or its Subsidiaries maintain
or expect to acquire Investment Assets;


 


(f)                                    communicate on behalf of the Company with
the holders of equity and debt securities of the Company as required to satisfy
the continuous reporting and other requirements of any governmental or
regulatory bodies or agencies and maintain effective relations with such
holders of the Company’s securities;


 


(g)                                 to the extent not otherwise subject to an
agreement executed by the Company, designate one or more property managers for
the Company’s Real Estate Assets, which managers may be Affiliates of the
Advisor, and monitor and administer such managers;


 


(h)                                 counsel the Company in connection with
policy decisions to be made by the Board of Directors;


 


(i)                                     upon request by, and in accordance with
the directions of, the Board of Directors, invest or reinvest any money of the
Company;


 


(j)                                     engage in hedging activities on behalf of
the Company or any of its Subsidiaries consistent with the Company’s
qualification as a REIT and any other directions of the Board of Directors;


 


(k)                                  provide the executive and administrative
personnel and services required in rendering the foregoing services to the
Company and its Subsidiaries;


 


(l)                                     supervise compliance with REIT provisions
of the Code and maintain exemption from the Investment Company Act of 1940, as
amended;


 


(m)                               qualify and cause the Company to qualify
to do business in all applicable jurisdictions;


 


(n)                                 cause the Company to retain qualified
legal counsel, independent public accountants, tax experts and other
professionals;


 


(o)                                 comply with and use its best efforts to
cause the Company to comply with all applicable laws; and


 


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(p)                                 as approved and directed by the Board of
Directors, perform such other services as may be required from time to time for
management and other activities relating to the assets of the Company and its
Subsidiaries as the Advisor shall deem appropriate under the particular
circumstances.


 


Additional
Activities of the Advisor.  Nothing herein shall prevent
the Advisor or any of its Affiliates from engaging in other businesses or from
rendering services of any kind to any other person or entity, including
investment in or advisory service to other entities investing in any type of
real estate investment, including investments which meet the principal
investment objectives of the Company and its Subsidiaries.  Directors, officers, employees and agents of
the Advisor or its Affiliates may serve as directors, officers, employees,
agents, nominees or signatories for the Company or any of its Subsidiaries, to
the extent permitted by the Company’s Governing Instruments, or by any
resolutions duly adopted by the Board of Directors.  When executing documents or otherwise acting in such capacities
for the Company, such persons shall use their respective titles in the Company.


 


Bank
Accounts.  At the direction of the Board of Directors,
the Advisor may establish and maintain one or more bank accounts in the name of
the Company or any of its Subsidiaries, and may collect and deposit funds into
any such account or accounts, and disburse funds from any such account or
accounts, under such terms and conditions as the Board of Directors may
approve; and the Advisor shall from time to time render appropriate accounting
of such collections and payments to the Board of Directors and, upon request,
to the auditors of the Company or any of its Subsidiaries.


 


Records;
Confidentiality.  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 representatives of
the Company or any of its Subsidiaries at any time during normal business
hours.  The Advisor shall keep
confidential any and all information it obtains from time to time in connection
with the services it renders under this Agreement and shall not disclose any
portion thereof to nonaffiliated third parties except with the prior written
consent of the Company or any of its Subsidiaries.


 


Obligations
of the Advisor.


 


(a)                                  The Advisor shall establish and maintain
a committee consisting of persons who are qualified to evaluate investments in
real estate and the financing thereof (the “Investment Committee”) which shall
be responsible for the establishment of investment guidelines and criteria
relating to the acquisition and disposition of Investment Assets on behalf of
the Company.  All acquisitions and
dispositions of Real Estate Assets and Mezzanine Investments by the Company
must be reviewed and approved in advance by the Investment Committee.


 


(b)                                 The Advisor shall require each seller or
transferor of Real Estate Assets to the Company, and each property owner in
which the Company makes a Mezzanine Investment, to make such representations
and warranties regarding such Real Estate Assets or the real estate or other
assets securing such Mezzanine Investment, as may, in the judgment of the
Advisor, be necessary and appropriate. 
In addition, the Advisor shall 


 


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take such other action as
it deems necessary or appropriate with regard to the protection of the
Company’s Real Estate Assets and other Investment Assets.


 


(c)                                  The Advisor shall refrain from any action
which, in its sole judgment made in good faith, would adversely affect the
status of the Company as a REIT or, if applicable, any of its Subsidiaries
as either a Qualified REIT Subsidiary, Taxable REIT Subsidiary or a partnership
for federal income tax purposes or which, in its sole judgment made in good
faith, would violate any law, rule or regulation of any governmental or
regulatory body or agency having jurisdiction over the Company or any such
Subsidiary or which would otherwise not be permitted by the Company’s or any
such Subsidiary’s Governing Instruments. 
If the Advisor is ordered to take any such action by the Board of
Directors, the Advisor shall promptly notify the Board of Directors of the
Advisor’s judgment that such action would adversely affect the status of the
Company or any of its Subsidiaries under the Code or violate any such law, rule
or regulation or the Governing Instruments. 
Notwithstanding the foregoing, the Advisor, its directors, officers,
stockholders and employees shall not be liable to the Company, any Subsidiary
of the Company, the Independent Directors or the Company’s or any Subsidiary’s
stockholders for any act or omission by the Advisor, its directors, officers,
stockholders or employees except as provided in Section 10 of this
Agreement.


 


Compensation
of the Advisor.  The Company shall pay to the Advisor, for
ongoing advisory services rendered under this Agreement:


 


(a)                                  an Administrative Fee in an amount equal
to 0.55% per annum of the sum of (A) the original principal amount of the
Foreclosed Bonds (even if such Foreclosed Bonds are subsequently reissued in
different principal amounts), (B) the gross purchase price of any other
Real Estate Assets acquired by the Company or its predecessors, (C) the
aggregate outstanding principal balance of the Mezzanine Investments on the
payment date for the Administrative Fee and (D) the AFREZ Property Value on the
payment date for the Administrative Fee. 
Such Administrative Fee will be payable in arrears on a monthly basis.


 


(b)                                 An MBS Administrative Fee at an annual
rate equal to 0.25% of the MBS Gross Asset Value.  The MBS Administrative Fee will accrue daily and be payable
monthly in arrears.


 


(c)                                  An MBS Incentive Fee equal to 20% of the
amount by which (i)(A) the total revenues realized by the Company from its
Mortgage-backed Securities during each calendar month less (B) the total
interest payments made by the Company during such calendar month on borrowings
incurred to finance the acquisition of Mortgage-backed Securities exceeds
(ii)(A) the average dollar amount of the Company’s shareholders’ equity
invested in Mortgage-backed Securities during such month times (B) the
then current NAREIT Index Rate on the payment date for the MBS Incentive
Fee.  The MBS Incentive Fee will be
payable in arrears on a monthly basis.


 


(d)                                 a Property Acquisition Fee in connection
with the identification, evaluation and acquisition of (i) Real Estate
Assets (other than the multifamily properties 


 


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that had originally been
financed by the Foreclosed Bonds or which are include in the assets acquired
from AFREZ) and the financing thereof, including through the reissuance of
Foreclosed Bonds, and (ii) the underwriting and making of Mezzanine
Investments, which shall be in an amount equal to 1.25% of the gross purchase price
paid by the Company for such additional Real Estate Assets or the original
principal amount of such Mezzanine Investments.  The Property Acquisition Fee with respect to an acquisition of a
Real Estate Asset or making of a Mezzanine Investment will be payable at the
time of the closing of the acquisition of such Real Estate Asset or making of
such Mezzanine Investment by the Company.


 


(e)                                  The Company may pay an Affiliate of the
Advisor a reasonable property management fee in connection with the management
of the Company’s Real Estate Assets. 
The property management fee paid with respect to any Real Estate Asset
may not exceed the fees that would be charged for such management services by
independent parties in the same geographic location.


 


(f)                                    If loans are made to the Company by an
Affiliate of the Advisor, the maximum amount of interest that may be charged by
such Affiliate shall be the lesser of the interest rate (i) which would be
charged by an unaffiliated lender to the Company or (ii) which the Advisor
or its Affiliates paid to obtain the funds to make the loan to the Company.


 


Reimbursement
of Expenses Incurred by the Advisor.


 


(a)                                  The Company will reimburse the Advisor
and its Affiliates on a monthly basis for the actual out-of-pocket costs of
direct telephone and travel expenses incurred by them on Company business,
direct out-of-pocket fees, expenses and charges paid by them to third parties
for rendering legal, auditing, accounting, bookkeeping, computer, printing and
public relations services, expenses of preparing and distributing reports to
the Company’s stockholders, an allocable portion of the salaries and fringe
benefits of the employees of the Advisor or its Affiliates (including the
officers of the Advisor except as set forth in paragraph (c) below),
insurance premiums (including premiums for liability insurance which will cover
the Company, the Advisor and their respective Affiliates), the cost of
compliance with all state and federal regulatory requirements, any stock
exchange or NASDAQ listing fees for the Company’s securities, and charges and
other payments to third parties for services rendered to the Company.


 


(b)                                 Expenses incurred by the Advisor on
behalf of the Company shall be reimbursed monthly to the Advisor within
30 days after the end of each month. 
The Advisor shall prepare a statement documenting the expenses incurred
by the Advisor on behalf of the Company during each month, and shall deliver
such statement to the Company within 15 days after the end of each month.


 


(c)                                  The Company will not reimburse the
Advisor or its Affiliates for any items of general overhead, including, but not
limited to, rent, utilities or the use of computers, office equipment or other
capital items owned by the Advisor or its Affiliates.  In addition, the Company will not reimburse the Advisor or its
Affiliates for the salaries, 


 


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fringe benefits or travel
expenses of the officers of the Advisor who are also executive officers of
America First Companies L.L.C., the principal owner of the Advisor or for any
compensation paid to the Board of Managers of America First Companies L.L.C.


 


(d)                                 If, as a result of a review by the
Company’s independent accountants of expense reimbursement paid to the Advisor
under this Section 8, an adjustment thereto is recommended by such
independent accounts, then the Advisor shall credit any excess reimbursement
against any future reimbursements to be paid under this Section 8 or, if
such excess reimbursement is made after the termination of this Agreement,
refund such excess reimbursement to the Company.


 


(e)                                  The Company and its Subsidiaries shall be
responsible for the payment of all of their own expenses.


 


Monitoring
Services.  The Advisor will monitor the management of
the Company’s Real Estate Assets.  Such
monitoring will include, but not be limited to, the following activities:
serving as the Company’s consultant with respect to the on-site management of
Real Estate Assets; performing periodic on-site inspections of Real Estate
Assets, review and approval of annual operating budgets for Real Estate Assets,
review and approval of capital improvements for Real Estate Assets, collection
of information and submission of reports pertaining to the Real Estate Assets
and to moneys remitted to the Advisor or the Company by property managers;
periodic review and evaluation of the performance of each Real Estate Asset;
acting as a liaison between property managers and the Company and working with
property managers to the extent necessary to improve their performance; review
of and recommendations as to placement of insurance coverage, handling of
insurable losses, easement problems and condemnation, delinquency and
foreclosure procedures with regard to the Real Estate Assets; and review of
property manager’s reports on the Real Estate Assets.  The Advisor may enter into subcontracts with other parties,
including its Affiliates, to provide any such services for the Advisor.  The Advisor will perform similar services
with respect to real properties securing Mezzanine Investments to the extent
requested by the Company.


 


Limits
of Advisor Responsibility.


 


(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 of the Board of
Directors in following or declining to follow any advice or recommendations of
the Advisor, including as set forth in Section 6(c) of this
Agreement.  The Advisor and its
directors, officers, stockholders and employees will not be liable to the
Company, any of its Subsidiaries, the Independent Directors or the stockholders
of the Company or its Subsidiaries for any acts or omissions by the Advisor,
its directors, officers, stockholders or employees under or in connection with
this Agreement, except by reason of acts or omissions constituting bad faith,
willful misconduct, gross negligence or reckless disregard of their
duties.  The Company or its Subsidiaries
shall reimburse, indemnify and hold harmless the Advisor and its stockholders,
directors, officers and employees from and against any and all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever (including, without limitation, reasonable attorneys’ fees) in
respect of or arising from any acts or omissions 


 


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of the Advisor or its
stockholders, directors, officers and employees made in good faith in the
performance of the Advisor’s duties under this Agreement and not constituting
bad faith, willful misconduct, gross negligence or reckless disregard of its
duties.


 


(b)                                 The Advisor shall reimburse, indemnify
and hold harmless the Company, any of its Subsidiaries, or any of their
stockholders, directors, officers and employees from any and all expenses,
losses, damages, liabilities, demands, charges and claims (including, without
limitation, reasonable attorneys’ fees) arising out of any intentional
misstatements of fact made by the Advisor in connection with this Agreement and
the services to be rendered hereunder.


 


Relationship
of the Parties.  The Advisor shall for all purposes be an
independent contractor with respect to the Company and the services provided to
the Company hereunder.  The Company and
the Advisor are not partners or joint venturers with each other and nothing
herein shall be construed to make them partners or joint venturers or impose
any liability as such on either of them.


 


Term. 
This Agreement shall commence on the date hereof shall continue in force
through December 31, 2006, which is a period of five years from the
effective date of the initially Advisory Agreement between the Company and the
Advisor.  This Agreement will be
automatically extended for additional one-year terms unless either the Company
or the Advisor elects not to renew this Agreement and notifies the other party
in writing thereof not less than 60 days prior to the end of the term of this
Agreement or any extension thereof.  Any
decision by the Company not to renew this Agreement shall be made by a majority
of the Independent Directors of the Company.


 


Termination
by the Company for Cause.  At the option of the Company,
this Agreement or any extension hereof shall be and become terminated upon
60 days’ written notice of termination from the Board of Directors to the
Advisor if any of the following events shall occur:


 


(a)                                  if the Advisor shall materially breach
any provision of this Agreement and, after notice of such breach, shall not
cure such breach within 30 days; or


 


(b)                                 there is entered an order for relief or
similar decree or order with respect to the Advisor by a court having competent
jurisdiction in an involuntary case under the federal bankruptcy laws as now or
hereafter constituted or under any applicable federal or state bankruptcy,
insolvency or other similar laws; or the Advisor (i) ceases or admits in
writing its inability to pay its debts as they become due and payable, or makes
a general assignment for the benefit of, or enters into any composition or
arrangement with, creditors, (ii) applies for or consents (by admission of
material allegations of a petition or otherwise) to the appointment of a
receiver, trustee, assignee, custodian, liquidator or sequestrator (or other
similar official) for itself or for any substantial part of its assets or
authorizes such an application or consent, (iii) authorizes or files a
voluntary petition in bankruptcy, or applies for or consents (by admission of
material allegations of a petition or otherwise) to the application of any bankruptcy,
reorganization, arrangement, readjustment of debt, insolvency, dissolution,
liquidation or other similar law of any jurisdiction, or authorizes such
application or consent, or (iv) permits or suffers all or any 


 


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substantial part of its
assets to be sequestered or attached by court order and the order remains
undismissed for 30 days; or proceedings seeking the appointment of a
receiver, trustee, assignee, custodian, liquidator or sequestrator (or other
similar official) for the Advisor or for any substantial part of its assets are
commenced without authorization, consent or application against the Advisor and
continue undismissed for 30 days; or proceedings to sequester or attach
all or any substantial part of the Advisor’s assets are instituted against the
Advisor without authorization, consent and application and are approved as
properly instituted and remain undismissed for 30 days or result in
adjudication of bankruptcy or insolvency.


 


If any of the events specified in this Section 13 shall occur, the Advisor shall give prompt written notice thereof to the Board of Directors upon the happening of such event.
 


Termination
Without Cause.  Either party may terminate this Agreement
without cause upon 60 days’ prior written notice by, (i) in the case
of termination by the Company, a majority vote of the Independent Directors or
by a vote of the holders of a majority of the outstanding shares of the
Company’s common stock, and (ii) in the case of termination by the
Advisor, by a majority vote of the Board of Directors of the Advisor.  In the event this Agreement is terminated by
the Company without cause, or in the event this Agreement is not renewed by the
Company without cause, the Company, in addition to its obligations under
Section 16, shall pay the Advisor a termination or nonrenewal fee equal to
the appraised present value of the amount of Administrative Fees that would
have been earned under this Agreement through December 31, 2016.  In making this calculation, the appraiser
shall give due consideration to the record of the growth in the Company’s
Investment Assets through the date of termination or non-renewal.  Such appraisal shall be conducted by an
independent nationally-recognized appraisal firm mutually agreed upon by the
Independent Directors (on behalf of the Company) and the Advisor and the
costs of such appraisal shall be borne equally by the parties.  If the parties are unable to agree upon such
appraisal firm within 30 days following notice of termination or, in the
event of nonrenewal, the termination date, then the Independent Directors (on
behalf of the Company) and the Advisor shall as soon as reasonably practicable,
but in no event more than 45 days following notice of termination or, in the
event of nonrenewal, the termination date, each choose a nationally-recognized
independent appraisal firm to conduct an appraisal.  In such event, (i) the termination fee shall be deemed to be
the average of the appraisals as conducted by each party’ s chosen appraiser
and (ii) each party shall pay the costs of its appraiser so chosen.  Any appraisal conducted hereunder shall be
performed no later than 45 days following selection of the appraiser or
appraisers.


 


Assignments.


 


(a)                                  Except as set forth in Section 15(b)
of this Agreement, this Agreement shall terminate automatically in the event of
its assignment, in whole or in part, by the Advisor, unless such assignment is
consented to in writing by the Company with the approval of a majority of the
Independent Directors.  Any such
assignment shall bind the assignee hereunder in the same manner as the Advisor
is bound.  In addition, the assignee
shall execute and deliver to the Company a joinder agreement to this Agreement
naming such assignee as Advisor.  This
Agreement shall not be assigned by the Company without the prior written
consent of the Advisor, except in the case of assignment by the 


 


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Company to a REIT or
other organization which is a successor (by merger, consolidation or purchase
of assets) to the Company, in which case such successor organization shall be
bound hereunder and by the terms of such assignment in the same manner as the
Company is bound hereunder.


 


(b)                                 Notwithstanding any provision of this
Agreement, the Advisor may subcontract and assign any or all of its
responsibilities as provided under Section 9 of this Agreement, and the
Company hereby consents to any such assignment and subcontracting.


 


Action
Upon Termination.  From and after the effective date of
termination of this Agreement, pursuant to Sections 13, 14 or 15 of this
Agreement, the Advisor shall not be entitled to compensation for further
services hereunder, but shall be paid all compensation accruing to the date of
termination.  Upon such termination, the
Advisor shall forthwith:


 


(a)                                  after deducting any accrued compensation
and reimbursement for its expenses to which it is then entitled, pay over to
the Company or any of its Subsidiaries all money collected and held for the
account of the Company or any of its Subsidiaries pursuant to this Agreement;


 


(b)                                 deliver to the Board of 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 Board of Directors with respect to the
Company or any of its Subsidiaries; and


 


(c)                                  deliver to the Board of Directors all
property and documents of the Company or any of its Subsidiaries then in the
custody of the Advisor.


 


Release
of Money or Other Property Upon Written Request.  The Advisor
agrees that any money or other property of the Company or any of its
Subsidiaries held by the Advisor under this Agreement shall be held by the
Advisor as custodian for the Company or any such Subsidiary, and the Advisor’s
records shall be appropriately marked clearly to reflect the ownership of such
money or other property by the Company or any such Subsidiary.  Upon the receipt by the Advisor of a written
request signed by a duly authorized officer of the Company requesting the
Advisor to release to the Company or any of its Subsidiaries any money or other
property then held by the Advisor for the account of the Company or any of its
Subsidiaries under this Agreement, the Advisor shall release such money or
other property to the Company or any of its Subsidiaries within a reasonable
period of time, but in no event later than 60 days following such request.  The Advisor shall not be liable to the
Company, any Subsidiary of the Company, or any of their respective officers,
directors, stockholders, employees or agents for any acts performed or
omissions to act by the Company or any of its Subsidiaries in connection with
the money or other property released to the Company or any of its Subsidiaries
in accordance with this Section 17. 
The Company and any of its Subsidiaries shall indemnify the Advisor, its
directors, officers, stockholders and employees against any and all expenses,
losses, damages, liabilities, demands, charges and claims of any nature
whatsoever, which arise in connection with the Advisor’s release of such money
or other property to the Company or any of its Subsidiaries in accordance with
the terms of this Section 17. 
Indemnification pursuant to this 


 


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provision shall be in addition to any right of the Advisor to
indemnification under Section 10 of this Agreement.


 


Representations
and Warranties.


 


(a)                                  The Company hereby represents and warrants
to the Advisor as follows:


 


(i)                                     The Company is duly incorporated, validly
existing and in good standing under the laws of Maryland, has full corporate
power and authority to own its assets and to transact the business in which it
is now engaged and is duly qualified or registered as a foreign corporation and
in good standing under the laws of each jurisdiction where its ownership or
lease of property or the conduct of its business requires such qualification or
registration, except where the failure to be so qualified or registered would
not in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of the Company and its Subsidiaries,
taken as a whole.  The Company does not
do business under any fictitious business name.


 


(ii)                                  The Company has the corporate power and
authority to execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to authorize
this Agreement on the terms and conditions hereof and the execution, delivery
and performance of this Agreement and all obligations required hereunder.  No consent of any other person including,
without limitation, stockholders and creditors of the Company, and no license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental or regulatory
authority or agency is required by the Company in connection with this
Agreement or the execution, delivery, performance, validity or enforceability
of this Agreement and all obligations required hereunder.  This Agreement has been, and each instrument
or document required hereunder will be, executed and delivered by a duly
authorized officer of the Company, and this Agreement constitutes, and each
instrument or document required hereunder when executed and delivered hereunder
will constitute, the legally valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium or similar
laws now or hereafter in effect relating to the rights and remedies of
creditors generally, and general principles of equity.


 


(iii)                               The execution, delivery and performance
of this Agreement, and the documents or instruments required hereunder, will
not violate any provision of any existing law or regulation binding on the
Company, or any order, judgment, award or decree of any court, arbitrator or
governmental or regulatory authority or agency binding on the Company, or the
Governing Instruments of, or any securities issued by, the Company or any of
its subsidiaries, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Company or any of its Subsidiaries
is a party or by which the Company, any Subsidiary of the Company or any of
their assets may be bound, the violation of 


 


12

















 


which would have a
material adverse effect on the business operations, assets or financial
condition of the Company and its Subsidiaries, taken as a whole, and will not
result in, or require, the creation or imposition of any lien on any of their
property, assets or revenues pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement, instrument or undertaking.


 


(b)                                 The Advisor hereby represents and
warrants to the Company as follows:


 


(i)                                     The Advisor is duly incorporated, validly
existing and in good standing under the laws of Maryland, has full corporate
power and authority to own its assets and to transact the business in which it
is now engaged and is duly qualified or registered to do business and is in
good standing under the laws of each jurisdiction where its ownership or lease
of property or the conduct of its business requires such qualification or
registration, except where the failure to be so qualified or registered would
not in the aggregate have a material adverse effect on the business,
operations, assets or financial condition of the Advisor and its Subsidiaries,
taken as a whole.  The Advisor does not
do business under any fictitious business name.


 


(ii)                                  The Advisor has the corporate power and
authority to execute, deliver and perform this Agreement and all obligations
required hereunder and has taken all necessary corporate action to authorize
this Agreement on the terms and conditions hereof and the execution, delivery
and performance of this Agreement and all obligations required hereunder.  No consent of any other person including,
without limitation, stockholders and creditors of the Advisor, and no license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any governmental or regulatory
authority or agency is required by the Advisor in connection with this
Agreement or the execution, delivery, performance, validity or enforceability
of this Agreement and all obligations required hereunder.  This Agreement has been and each instrument
or document required hereunder will be executed and delivered by a duly
authorized agent of the Advisor, and this Agreement constitutes, and each
instrument or document required hereunder when executed and delivered hereunder
will constitute, the legally valid and binding obligation of the Advisor
enforceable against the Advisor in accordance with its terms.


 


(iii)                               The execution, delivery and performance
of this Agreement, and the documents or instruments required hereunder, will
not violate any provision of any existing law or regulation binding on the
Advisor, or any order, judgment, award or decree of any court, arbitrator, or
governmental or regulatory authority or agency binding on the Advisor, or the
Governing Instruments of, or any securities issued by, the Advisor or any of
its Subsidiaries, or any mortgage, indenture, lease, contract or other
agreement, instrument or undertaking to which the Advisor or any of its
Subsidiaries is a party or by which the Advisor or any Subsidiary of the
Advisor or any of its assets may be bound, the violation of which would have a
material adverse effect on the business operations, assets or financial
condition of the Advisor and its Subsidiaries, taken as a whole, and will 


 


13

















 


not result in, or
require, the creation or imposition of any lien on any of their property,
assets or revenues pursuant to the provisions of any such mortgage, indenture,
lease, contract or other agreement, instrument or undertaking.


 


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 deemed to have been duly given, made and
received when delivered or upon actual receipt of registered or certified mail,
postage prepaid, return receipt requested. 
The parties may deliver to each other notice by electronically
transmitted facsimile copies provided that such facsimile notice is followed
within 24 hours by any type of notice otherwise provided for in this
paragraph.  Any notice shall be duly
addressed to the parties as follows:


 


	(a)  If to the Company:
	1004 Farnam Street

	 
	Omaha, Nebraska  68102

	 
	Attention:  Lisa Y. Roskens

	 
	Telephone:  (402) 444-1630

	 
	 

	(b)  If to the Advisor:
	1004 Farnam Street

	 
	Omaha, Nebraska  68102

	 
	Attention:  Lisa Y. Roskens

	 
	Telephone:  (402) 444-1630

	 
	 

	In each case with a copy given
	 

	in the manner prescribed above, to:
	Kutak Rock LLP

	 
	1650 Farnam Street

	 
	Omaha, Nebraska  68102

	 
	Attention:  Steven P. Amen

	 
	Telephone:  (402) 346-6000




 
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 19 for the giving of notice.
 


Binding
Nature of Agreement; Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns as
provided herein.


 


Entire
Agreement; Amendment.  This Agreement contains the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements (including the
First Amended Agreement), understandings, inducements and conditions, express
or implied, oral or written, of any nature whatsoever with respect to the
subject matter hereof.  The express
terms hereof control and supersede any course of performance and/or usage of
the trade inconsistent with any of the terms hereof.  This Agreement may not be modified or amended other than by an
agreement in writing.


 


Controlling
Law.  This Agreement and all questions relating to
its validity, interpretation, performance and enforcement shall be governed by
and construed, interpreted and enforced in 


 


14

















 


accordance with the laws of the State of Nebraska, notwithstanding any
Nebraska provisions relating to conflicts of law to the contrary.


 


No
Waiver.  Neither the failure nor any delay on the
part of a party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. 
No waiver shall be effective unless it is in writing and is signed by
the party asserted to have granted such waiver.


 


Titles
Not To Affect Interpretation.  The titles
of paragraphs and subparagraphs contained in this Agreement are for convenience
only, and they neither form a part of this Agreement nor are they to be used in
the construction or interpretation hereof.


 


Execution
in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. 
This Agreement shall become binding when one or more counterparts
hereof, individually or taken together, shall bear the signatures of all of the
parties reflected hereon as the signatories.


 


Severability
of Provisions.  The provisions of this Agreement are
independent of and separable from each other, and no provision shall be
affected or rendered invalid or unenforceable by virtue of the fact that for
any reason any other or others of them may be invalid or unenforceable in whole
or in part.


 


Interpretation. 
Words used herein, regardless of the number and gender specifically
used, shall be deemed and construed to include any other number, singular or
plural, and any other gender, masculine, feminine or neuter, as the context
requires.


 


 


[Signatures on the following page]
 
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.


 


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  AMERICA FIRST APARTMENT

  INVESTORS, INC., a Maryland corporation,

  as Company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  JOHN H. CASSIDY

  	
   

  
	
   

  	
   

  	
  John H. Cassidy

  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AMERICA FIRST APARTMENT

  ADVISORY CORPORATION, a Maryland

  corporation, as Advisor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/  JOHN H. CASSIDY

  	
   

  
	
   

  	
   

  	
  John H. Cassidy

  President and Chief Executive Officer

  



 


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